1

                       SECURITIES AND EXCHANGE COMMISSION

                            WASHINGTON, D.C.  20549

                                   Form 10-Q
 (Mark One)
   [ X ]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934
                 For the quarterly period ended April 30, 1994

                                       OR

   [   ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934
       For the Transition period from_______________ to ________________

                           Commission File No. 1-7819

                              Analog Devices, Inc.
             (Exact name of registrant as specified in its charter)


           Massachusetts                                   04-2348234
   (State or other jurisdiction of                      (I.R.S. Employer
   incorporation or organization)                      Identification No.)


     One Technology Way, Norwood, MA                       02062-9106
   (Address of principal executive offices)                (Zip Code)


                                 (617) 329-4700
              (Registrant's telephone number, including area code)
                            ______________________


    Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.  YES   X   NO

    The number of shares outstanding of each of the issuer's classes of Common
Stock as of May 27, 1994 was 49,608,246 shares of Common Stock.





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                                     PART I
                             FINANCIAL INFORMATION


ITEM 1.     FINANCIAL STATEMENTS


ANALOG DEVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(thousands except per share amounts)

Three Months Ended ------------------ April 30, 1994 May 1, 1993 -------------- ----------- Net sales $192,027 $162,912 Cost of sales 98,508 86,330 -------- -------- Gross margin 93,519 76,582 Operating expenses: Research and development 26,360 23,094 Selling, marketing, general and administrative 42,204 38,745 -------- -------- 68,564 61,839 -------- -------- Operating income 24,955 14,743 Nonoperating expenses (income): Interest expense 1,829 1,766 Other (103) (36) -------- -------- 1,726 1,730 -------- -------- Income before income taxes 23,229 13,013 Provision for income taxes 5,345 2,861 -------- -------- Net income $ 17,884 $ 10,152 ======== ======== Shares used to compute earnings per share 51,381 50,498 ======== ======== Earnings per share of common stock $0.35 $0.20 ===== =====
See accompanying notes. 2 3 ANALOG DEVICES, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (thousands except per share amounts)
Six Months Ended ---------------- April 30, 1994 May 1, 1993 -------------- ----------- Net sales $373,115 $314,215 Cost of sales 193,101 165,308 -------- -------- Gross margin 180,014 148,907 Operating expenses: Research and development 50,616 44,846 Selling, marketing, general and administrative 83,201 77,416 -------- -------- 133,817 122,262 -------- -------- Operating income 46,197 26,645 Nonoperating expenses (income): Interest expense 3,659 3,293 Other (131) 179 -------- -------- 3,528 3,472 -------- -------- Income before income taxes 42,669 23,173 Provision for income taxes 9,525 4,893 -------- -------- Net income $ 33,144 $ 18,280 ======== ======== Shares used to compute earnings per share 51,175 50,096 ======== ======== Earnings per share of common stock $0.65 $0.36 ===== =====
See accompanying notes. 3 4 ANALOG DEVICES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (thousands except share amounts)
Assets April 30, 1994 October 30, 1993 May 1, 1993 -------------- ---------------- ----------- Cash and cash equivalents $131,317 $ 80,668 $ 54,938 Accounts receivable, net 162,066 145,663 124,672 Inventories: Finished goods 50,087 51,359 50,419 Work in process 73,638 80,418 75,758 Raw materials 14,276 18,645 25,028 -------- -------- -------- 138,001 150,422 151,205 Prepaid income taxes 23,106 22,207 20,000 Prepaid expenses 5,612 4,240 4,698 -------- -------- -------- Total current assets 460,102 403,200 355,513 -------- -------- -------- Property, plant and equipment, at cost: Land and buildings 84,173 81,110 80,463 Machinery and equipment 461,365 451,248 423,914 Office equipment 40,892 33,170 30,752 Leasehold improvements 31,094 26,429 23,187 -------- -------- -------- 617,524 591,957 558,316 Less accumulated depreciation and amortization 370,882 343,527 316,148 -------- -------- -------- Net property, plant and equipment 246,642 248,430 242,168 -------- -------- -------- Intangible assets, net 20,283 21,306 22,341 Deferred charges and other assets 6,006 5,556 5,218 -------- -------- -------- Total other assets 26,289 26,862 27,559 -------- -------- -------- $733,033 $678,492 $625,240 ======== ======== ========
See accompanying notes. 4 5 ANALOG DEVICES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (thousands except share amounts)
Liabilities and Stockholders' Equity April 30, 1994 October 30, 1993 May 1, 1993 -------------- ---------------- ----------- Short-term borrowings and current portion of long-term debt $ 23,108 $ 2,006 $ 3,256 Obligations under capital leases 348 335 324 Accounts payable 49,105 48,779 41,866 Deferred income on shipments to domestic distributors 19,769 16,417 13,331 Income taxes payable 17,346 15,405 3,946 Accrued liabilities 60,683 49,893 45,678 -------- -------- -------- Total current liabilities 170,359 132,835 108,401 -------- -------- -------- Long-term debt 80,000 100,000 100,000 Noncurrent obligations under capital leases 119 297 468 Deferred income taxes 8,201 8,540 14,000 Other noncurrent liabilities 5,342 4,802 4,182 -------- -------- -------- Total noncurrent liabilities 93,662 113,639 118,650 -------- -------- -------- Commitments and Contingencies Stockholders' equity: Preferred stock, $1.00 par value, 500,000 shares authorized, none outstanding - - - Common stock, $.16 2/3 par value, 150,000,000 shares authorized, 51,175,331 shares issued (50,924,637 in October 1993, 50,599,899 in May 1993) 8,529 8,488 8,434 Capital in excess of par value 146,099 143,502 138,851 Retained earnings 320,842 287,698 261,521 Cumulative translation adjustment 5,781 5,473 5,645 -------- -------- -------- 481,251 445,161 414,451 Less 1,577,703 shares in treasury, at cost (1,727,396 in October 1993 and 2,159,486 in May 1993) 12,239 13,143 16,262 -------- -------- -------- Total stockholders' equity 469,012 432,018 398,189 -------- -------- -------- $733,033 $678,492 $625,240 ======== ======== ========
See accompanying notes. 5 6 ANALOG DEVICES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(thousands) Six Months Ended ---------------- April 30, 1994 May 1, 1993 -------------- ----------- OPERATIONS Cash flows from operations: Net income $ 33,144 $ 18,280 Adjustments to reconcile net income to net cash provided by operations: Depreciation and amortization 30,550 29,110 Deferred income taxes (385) 1,323 Other noncash expenses 1,257 1,274 Changes in operating assets and liabilities 10,498 (15,564) -------- -------- Total adjustments 41,920 16,143 -------- -------- Net cash provided by operations 75,064 34,423 -------- -------- INVESTMENTS Cash flows from investments: Additions to property, plant and equipment, net (26,723) (31,458) -------- -------- Net cash used for investments (26,723) (31,458) -------- -------- FINANCING ACTIVITIES Cash flows from financing activities: Proceeds from employee stock plans 1,900 3,088 Net increase (decrease) in variable rate borrowings 906 (29,007) Payments on capital lease obligations (165) (153) Proceeds from issuance of long-term debt - 80,000 Payments on fixed rate borrowings - (20,096) -------- -------- Net cash provided by financing activities 2,641 33,832 -------- -------- Effect of exchange rate changes on cash (333) 411 -------- -------- Net increase in cash and cash equivalents 50,649 37,208 Cash and cash equivalents at beginning of period 80,668 17,730 -------- -------- Cash and cash equivalents at end of period $131,317 $ 54,938 ======== ======== SUPPLEMENTAL INFORMATION Cash paid during the period for: Income taxes $ 5,704 $ 1,907 ======== ======== Interest $ 3,573 $ 2,935 ======== ========
See accompanying notes. 6 7 Analog Devices, Inc. Notes to Condensed Consolidated Financial Statements April 30, 1994 Note 1 - In the opinion of management, the information furnished in the accompanying financial statements reflects all adjustments, consisting only of normal recurring adjustments, which are necessary to a fair statement of the results for this interim period and should be read in conjunction with the most recent Annual Report to Stockholders. Note 2 - Commitments and Contingencies The Company is involved in claims as a defendant in various lawsuits including patent infringement and anti-trust matters as previously disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended October 30, 1993. The lawsuit brought by Crystal Semiconductor Corporation ("Crystal") against the Company on November 12, 1992 in the United States District Court for the Western District of Texas (Austin Division) for patent infringement (as previously reported in the Company's Annual Report on Form 10-K for the fiscal year ended October 30, 1993) has been dismissed pursuant to a Memorandum of Understanding executed by Crystal and the Company. The Memorandum of Understanding provides for a cross-license arrangement between the Company and Crystal and the payment of license fees for technology to be used pursuant to this arrangement. The Memorandum of Understanding also provides for the execution of a definitive cross-licensing agreement and, in the event the parties cannot agree to the terms of such definitive agreement, resolution of such terms by binding arbitration. The Company does not believe that compliance with the terms of such cross-licensing agreement will have a material adverse effect on the Company's financial position or overall trends in the results of operations. 7 8 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Second Quarter of Fiscal 1994 Compared to the Second Quarter of Fiscal 1993 Net sales of $192.0 million for the second quarter of fiscal 1994 grew $29.1 million or 18% from net sales of $162.9 million for the second quarter of 1993. Second quarter sales growth was led by both a significant increase in system-level IC sales volumes coupled with a solid increase in sales of standard linear ICs. Together, sales in these two product groups grew 21% overall compared to the same period last year and accounted for approximately 90% of total worldwide sales in the second quarter of 1994. On a geographic basis, the largest sales gains were experienced in the Pacific Rim and in Japan with sales in Japan aided in part by the translation of local currency sales to a weaker U.S. dollar. Sales to North American customers also increased year-over-year driven in large part by sales through distributors. Sales to Western Europe were essentially flat to the year ago period due to weaker economic conditions. Gross margin increased to 48.7% of sales from 47.0% in the second quarter of 1993. This increase resulted principally from continued improvement in gross margin for system-level IC products as variable manufacturing costs declined and fixed costs were spread over a larger revenue base. Gross margin on all integrated circuit products, which include both standard linear ICs as well as system-level ICs, exceeded 50% of sales. R&D expenses for the second quarter of 1994 grew $3.3 million over the same quarter last year but as a percentage of sales declined to 13.7% compared to 14.2% in the second quarter of 1993. R&D spending is expected to increase slightly during the balance of fiscal 1994 as the Company continues to invest in computer and communications products. Selling, marketing, general and administrative (SMG&A) expense growth was held to 8.9% compared to the second quarter of 1993 as the Company continued to constrain spending growth to a rate significantly below sales growth. As a result, the SMG&A-to-sales ratio decreased to 22.0% from 23.8% in the second quarter of 1993. The 8.9% or $3.5 million increase in SMG&A expenses primarily reflected increased strategic advertising and marketing expenses and increased incentive expense associated with the Company's improved performance. In total, operating expenses were reduced to 35.7% of sales, down from 38.0% one year ago, in line with the Company's focus on growing revenues more rapidly than expenses. A key factor in controlling operating expenses has been holding worldwide employment virtually flat at approximately 5,400 employees, despite continuing sales growth. As a result of the improvement in gross margin coupled with a slower rate of expense growth versus sales, operating profit strengthened from 9.0% of sales in 1993's second quarter to 13.0% in the second quarter of 1994. Interest expense was essentially unchanged at $1.8 million for both the second quarter of 1993 and 1994. Interest expense net of interest income was reduced to $898,000 from $1.5 million one year ago due to increased interest income earned on a significantly higher level of invested cash. 8 9 The effective income tax rate increased slightly from 22% for the year ago quarter to 23% for the second quarter of 1994 due to a shift in the mix of worldwide profits. The growth in sales and performance gains in gross margin and operating expenses as a percent of sales led to the generation of net income of $17.9 million or $0.35 per share, up 76% from $10.2 million or $0.20 per share compared to the year-earlier period. Second Quarter of Fiscal 1994 Compared to the First Quarter of Fiscal 1994 Net sales rose from $181.1 million for the first quarter of 1994 to $192.0 million for the second quarter of 1994, an increase of $10.9 million or 6%. The sales increase resulted primarily from increased revenues of standard linear ICs. Sales demand was greatest in Europe, which recovered from a weak first quarter, and in North America. Sales in Japan also improved from first quarter levels with a weaker average dollar exchange rate contributing to some of this increase. Gross margin improved from the previous quarter's 47.8% of sales to 48.7% in the second quarter due primarily to higher gross margins in system-level IC products as well as a greater mix of higher-margin standard linear IC products. R&D expenses for the second quarter rose $2.1 million to 13.7% of sales from 13.4% of sales for the first quarter. The quarter-to- quarter increase in R&D spending reflected increased funding of initiatives in communications and computer products and an expansion in scope of development work in micromachined accelerometers. SMG&A expenses increased by $1.2 million or 2.9% from the first quarter but as a percentage of sales decreased to 22.0% versus 22.6% in the prior quarter. The improved gross margin and further reduction in operating expenses as a percent of sales generated a sequential gain in operating income of 17% with operating income reaching 13.0% of sales compared to 11.7% in the previous quarter. Interest expense at $1.8 million was flat to the first quarter while interest expense net of interest income decreased to $898,000 compared to $1.2 million in the prior quarter due to a higher level of invested cash. The effective tax rate increased to 23.0% compared to a 21.5% effective rate in the first quarter reflecting a shift in the mix of worldwide profits to higher tax rate jurisdictions. The Company recorded net income of $17.9 million or $0.35 per share compared to $15.3 million or $0.30 per share for the first quarter of 1994. First Six Months of 1994 Compared to the First Six Months of 1993 Net sales of $373.1 million increased $58.9 million or approximately 19% from the same period of 1993. The sales increase was due both to growth in sales of system-level ICs and standard linear IC products. Sales of system-level IC products were strongest in the Pacific Rim while the largest sales gains for standard products were made through North American distributors. Sales to customers in Japan also increased over the year ago period in part aided by currency. Sales to Europe were flat compared to the first six months of 1993 due to weakened economic conditions, in particular during the first quarter of 1994. 9 10 Gross margin improved to 48.2% of sales for the first half of 1994 compared to 47.4% for the first half of 1993 as gross margins for standard products remained at a high level and progress continued to be made in improving gross margins for system-level ICs. Total operating expenses as a percentage of sales were reduced three percentage points to 35.9% consistent with the Company's continuing commitment to maintaining tight control over all costs in order to gain good operating leverage on increased revenues. Given the increased sales and improved operating performance, operating income of $46.2 million or 12.4% of sales for the first six months of 1994 was significantly higher than the $26.6 million or 8.5% of sales for the first six months of 1993. Net interest expense decreased to $2.1 million for the first half of 1994 compared to $2.8 million for the comparable period of 1993 due to increased interest income on higher invested cash balances. The effective tax rate increased to 22.3% from the year ago period due to a change in the mix of worldwide income. Liquidity and Capital Resources As of April 30, 1994, cash and cash equivalents were $131.3 million, an increase of $50.6 million and $76.4 million from the end of the fourth and second quarters of 1993, respectively. Cash and cash equivalents also increased $37.0 million over the first quarter of 1994. The increase in cash and cash equivalents compared to all of these periods was due principally to a substantial improvement in cash provided from operations. For the first half of 1994, the Company generated cash flow from operations of $75.1 million or 20.1% of sales compared to $34.4 million or 11.0% of sales for the comparable period of 1993. Cash flow from operations generated for the second quarter of 1994 was $53.7 million or 28.0% of sales versus $21.3 million or 11.8% of sales for the prior quarter and $26.3 million or 16.2% of sales for the second quarter of 1993. The increase in operating cash flows compared to the year-earlier periods primarily reflected higher net income combined with a reduction in inventories and an increase in accrued liabilities. The increase in cash flow from operations compared to the first quarter of 1994 was mainly attributable to a large increase in accrued liabilities. Accounts receivable of $162.1 million increased $16.4 million or 11.3% from the end of fiscal 1993 and $37.4 million or 30% from the end of the second quarter of 1993. The primary factors contributing to the six month and year-over-year increases were higher sales levels, a greater mix of sales outside the U.S. where payment terms are longer and a significant increase in receivables from the Company's domestic distributors due to the Company's decision in the fourth quarter of 1993 to eliminate prompt payment discounts previously offered to domestic distributors which altered the distributor payment cycle. Accounts receivable also rose $11.0 million or 7.3% from the first quarter of 1994 due to the increase in sales, an increase in receivables from the Company's domestic distributors and the translation of yen-denominated receivables to a weaker U.S. dollar. 10 11 The increase in accrued liabilities over the fourth and second quarters of 1993 was principally attributable to an increased level of employee compensation, incentive and benefit accruals at the end of the second quarter of 1994. The increase in accrued liabilities from the end of the prior quarter reflected both increased incentive accruals and increased salary accruals due to timing of payment relative to the end of the second quarter. Cash flow from operations for both the second quarter and first six months of 1994 was used largely to fund capital expenditures of $16.7 million and $26.7 million, respectively. Additions to property, plant and equipment for fiscal 1994 are currently estimated to be $90 million and are expected to be financed with existing cash and cash equivalents combined with internally generated cash from operations. During the second quarter, the Company announced plans to expand its existing Limerick, Ireland facilities to include 6-inch submicron wafer fabrication capability intended primarily to meet the Company's requirements for advanced BiCMOS technology not available through external foundries. The expanded facility is also intended to provide backup capability for the fabrication of a portion of the Company's CMOS wafers that are currently being outsourced. The current capital expense budget for this expansion through the end of fiscal 1996 is less than $100 million. The Company's preliminary capital spending budget for fiscal 1995 calls for approximately $125 million, including capital expenditures associated with the Limerick facility wafer fabrication expansion. Fiscal 1995 capital expenditures are currently expected to be financed with cash and cash equivalents on hand together with internally generated cash flow from operations. The Company believes that its strong financial condition, existing sources of liquidity, available capital resources and cash expected to be generated from operations leave it well positioned to obtain the funds required to meet its current and future business requirements. 11 12 PART II - OTHER INFORMATION ANALOG DEVICES, INC. Item 6. Exhibits and reports on Form 8-K (a) See Exhibit Index (b) There were no reports on Form 8-K filed for the three months ended April 30, 1994. 12 13 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Analog Devices, Inc. ------------------- (Registrant) Date: June 10, 1994 By: /s/ Ray Stata ---------------------------- Ray Stata Chairman of the Board and Chief Executive Officer (Principal Executive Officer) Date: June 10, 1994 By: /s/ Joseph E. McDonough ---------------------------- Joseph E. McDonough Vice President-Finance and Chief Financial Officer (Principal Financial and Accounting Officer) 13 14 EXHIBIT INDEX Analog Devices, Inc. Item 10 (a) Guaranty dated as of May 1, 1994 between Analog Devices, Inc. and Metropolitan Life Insurance Company relating to the premises at 3 Technology Way, Norwood, Massachusetts. 10 (b) Letter Agreement dated as of May 18, 1994 between Analog Devices, Inc. and Metropolitan Life Insurance Company relating to the premises at 3 Technology Way, Norwood, Massachusetts. 14
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                                                        EXHIBIT 10(a)



                                    GUARANTY
                                    --------

     THIS GUARANTY (this "Guaranty"), dated as of May 1, 1994, is from ANALOG
DEVICES, INC., a Massachusetts corporation (the "Guarantor"), to and for the
benefit of METROPOLITAN LIFE INSURANCE COMPANY (the "Purchaser"), its
successors and assigns and any and all other Beneficiaries (as such term is
defined in Section 9 hereof).

                                    RECITALS

     A.   The Purchaser has agreed to purchase $10,500,000.00 in aggregate
original principal amount of the 8.87% Senior Secured Notes due May 1, 2007
(the "Notes"), of Francis J. Perry, Jr. and William J. Walker, not in their
individual capacities, but solely as trustees of Everett Street Trust, a
Massachusetts nominee trust established under Declaration of Trust, dated May
9, 1980 (the "Debtor"), to be issued pursuant to the terms of a Note Purchase
Agreement (the "Note Agreement"), dated May 18, 1994, between the Debtor and
the Purchaser.

     B.   The Guarantor is the lessee (in its capacity as such, the
Guarantor is hereinafter sometimes referred to as the "Lessee") under an
Amended and Restated Lease Agreement, dated as of May 1, 1992 (as the same may
be further amended or supplemented from time to time, the "Lease"), each with
the Debtor, as lessor.  The Debtor will use the proceeds from the sale of the
Notes to refinance certain indebtedness with respect to and to make certain
improvements to the Premises (as defined in the Lease) for the benefit of the
Lessee.

     C.   It is a condition to the purchase by the Purchaser of the Notes
under the Note Agreement that the Guarantor execute and deliver this Guaranty.

     NOW, THEREFORE, the Guarantor hereby agrees as follows:

1.   Guaranty of Payment and Performance of Obligations.
     --------------------------------------------------

          (a)  The Guarantor unconditionally guarantees to each of the
Beneficiaries the full and punctual payment of the Obligations (as defined in
subsection (b) below).  This Guaranty is an absolute, unconditional and
continuing guaranty of the full and punctual payment by the Debtor of each of
the Obligations, and not of collectibility only, and is in no way conditioned
upon any requirement that any Beneficiary first attempts to collect payment
from the Debtor or any other guarantor or surety or resorts to any security or
other means of obtaining payment of all or any of the Obligations or upon any
other contingency.  Upon any Event of Default (as defined in the Mortgage) by
the Debtor in the full and punctual payment of any of the Obligations, the
liabilities and obligations of the Guarantor hereunder shall, at the option of
any Beneficiary, become forthwith due and payable without demand or notice of
any nature, all such demands and notices being expressly waived by the
Guarantor.

          (b)  As used herein, the term "Obligations" means all
indebtedness, obligations and liabilities of any kind of the Debtor to any or
all of the Beneficiaries or otherwise arising under or in connection with the
Notes, the Note Agreement or any other Obligation Agreement (as defined


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below), howsoever incurred, arising or evidenced, whether now or hereafter
existing, due or to become due or of payment, and including without limitation
the Debtor's obligation to pay (i) all principal of, interest on and premium,
if any, including any Make-Whole Payments (as defined in the Mortgage), with
respect to the Notes when and as the same shall become due and payable
(whether at maturity or by declaration or otherwise) and (ii) all costs and
expenses (including court costs, reasonable attorneys' fees and other legal
expenses) incurred by any Beneficiary in exercising and enforcing any of its
rights, powers and remedies under the Notes, the Note Agreement or any other
Obligation Agreement, including without limitation its rights and remedies
following an Event of Default (as defined in the Mortgage) by Debtor.  The
term "Obligation Agreement" means the Notes, the Note Agreement, the Mortgage
(as defined in the Note Agreement), the Lease Assignment (as defined in the
Note Agreement) and any other agreement, document or instrument referred to in
any thereof.

2.   Guaranty Continuing and Liability Unlimited.
     -------------------------------------------

          (a)  This is a continuing guaranty and shall be binding upon the
Guarantor regardless of (a) how long before or after the date hereof any part
of the Obligations was or is incurred by the Debtor and (b) the amount of the
Obligations at any time outstanding (whether more or less than the original
principal amount of the Notes).  This Guaranty may be enforced by any or all
of the Beneficiaries from time to time and as often as occasion for such
enforcement may arise.

          (b)  If after receipt of any payment of, or the proceeds of any
collateral for, all or any part of the Obligations, the Beneficiaries are
compelled to surrender or voluntarily surrender such payment or proceeds to
any person because such payment or application of proceeds is or may be
avoided, invalidated, recaptured, or set aside as a preference, fraudulent
conveyance, impermissible setoff or for any other reason, whether or not such
surrender is the result of (i) any judgment, decree or order of any court or
administrative body having jurisdiction over the Beneficiaries, or (ii) any
settlement or compromise by the Beneficiaries of any claim as to any of the
foregoing with any person (including the Debtor), then the Obligations or part
thereof affected shall be reinstated and continue and this Guaranty shall be
reinstated and continue, in full force as to such Obligations or part thereof
as if such payment or proceeds had not been received, notwithstanding any
previous cancellation of any instrument evidencing any such Obligation or any
previous instrument delivered to evidence the satisfaction thereof.  The
provisions of this Section 2(b) shall survive the termination of this Guaranty
and any satisfaction and discharge of the Debtor by virtue of any payment,
court order or any federal or state law.

3.   Unconditional Nature of Guarantor's Obligations and Liabilities.
     ---------------------------------------------------------------

     The obligations and liabilities of the Guarantor hereunder shall be
absolute and unconditional, shall not be subject to any counterclaim, set-off,
deduction or defense based upon any claim the Guarantor may have against the
Debtor, any other guarantor, or any other person or entity, and shall remain
in full force and effect until all of the Obligations have been fully
satisfied, without regard to any event, circumstance or condition (whether or
not the Guarantor shall have knowledge or notice thereof) which but for the
provisions of this Section might constitute a legal or equitable defense or
discharge of a guarantor or surety or which might in any way limit recourse
against the Guarantor, including without limitation:  (a) any amendment or
modification or supplement to the terms of the Note Agreement, the Lease, the
Notes or any other Obligation Agreement; PROVIDED, HOWEVER that the Guarantor
shall not be liable under this Guaranty for any increase in the Obligations





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which results solely from an amendment, modification or supplement to the
Notes or the Note Agreement to which the Guarantor has not consented; (b) any
waiver, consent or indulgence by any Beneficiary, or any exercise or non-
exercise by any Beneficiary of any right, power or remedy, under or in respect
of this Guaranty, the Note Agreement, the Notes, the Lease or any other
Obligation Agreement (whether or not the Guarantor or the Debtor has or have
notice or knowledge of any such action or inaction); (c) the invalidity or
unenforceability, in whole or in part, of the Note Agreement, the Lease, the
Notes or any other Obligation Agreement, or the termination, cancellation or
frustration of any thereof, or any limitation or cessation of the Debtor's
liability under any thereof, including without limitation any invalidity,
unenforceability or impaired liability resulting from the Debtor's lack of
capacity, power and/or authority to enter into the Note Agreement, the Notes,
the Lease or any other Obligation Agreement and/or to incur any or all of the
Obligations, or from the execution and delivery of any Obligation Agreement by
any person acting for the Debtor without or in excess of authority; (d) any
actual, purported or attempted sale, assignment or other transfer by any or
all of the Beneficiaries or by the Debtor of any Obligation Agreement or of
any of its rights, interests or obligations thereunder;  (e) any defect in the
Debtor's title to the Premises or any item(s) of the Mortgaged Property (as
defined in the Note Agreement) or in the design, quality, condition,
durability, operation, merchantability or fitness for any particular use or
purpose of any thereof, or the failure of any such item to meet the
requirements or specifications of any law, regulation, judgment,
administrative order or decision or of any agreement between the Debtor and
any other party; (f) any actual, purported or attempted sale, assignment,
leasing, transfer, encumbrance, redelivery or other temporary or permanent
disposition of the Premises or any item(s) of the Mortgaged Property, or any
damage to or destruction, seizure, condemnation, theft, repossession or any
other partial or total loss or loss of use of any thereof; (g) the Debtor's
failure to obtain, protect, preserve or enforce any rights in the Premises or
any item(s) of the Mortgaged Property against any party, or the invalidity or
unenforceability of any such rights; (h) the taking or holding by any or all
of the Beneficiaries of a security interest, lien or other encumbrance in or
on any other property as security for any or all of the Obligations or any
exchange, release, non-perfection, loss or alteration of, or any other dealing
with, any such security; (i) the addition of any party as a guarantor or
surety of all or any part of the Obligations or any limitation of the
liability of any additional guarantor or surety of all or any part of the
Obligations under any other agreement; (j) any merger or consolidation of the
Debtor into or with any other entity, or any sale, lease, transfer or other
disposition of any or all of Debtor's assets or any sale, transfer or other
disposition of any or all of the beneficial interests in the Debtor to any
other person or entity; and (k) any change in the financial condition of the
Debtor or the Debtor's entry into an assignment for the benefit of creditors,
an arrangement or any other agreement or procedure for the restructuring of
its liabilities, or the Debtor's insolvency, bankruptcy, reorganization,
dissolution, liquidation or any similar action by or occurrence with respect
to the Debtor.

4.   Guarantor's Waiver.
     ------------------

     The Guarantor unconditionally waives, to the fullest extent permitted by
law:  (a) notice of any of the matters referred to in Section 3 hereof; (b)
any right to the enforcement, assertion or exercise by any or all of the
Beneficiaries of any of its or their respective rights, powers or remedies
under, against or with respect to (i) the Note Agreement, the Lease, the Notes
or any other Obligation Agreement, (ii) any other guarantor or surety, or
(iii) any security for all or any part of the Obligations, including, without
limitation, the Mortgaged Property; (c) any requirement of diligence and any





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defense based on a claim of laches; (d) all defenses which may now or
hereafter exist by virtue of any statute of limitations, or of any stay,
valuation, exemption, moratorium or similar law; (e) any requirement that the
Guarantor be joined as a party in any action or proceeding against the Debtor
to enforce any of the provisions of the Note Agreement, the Lease, the Notes
or any other Obligation Agreement; (f) any requirement that any Beneficiary
mitigate or attempt to mitigate damages resulting from a default by the
Guarantor hereunder or from a default by the Debtor under the Lease or any of
the Obligation Agreements; (g) acceptance of this Guaranty by any Beneficiary;
and (h) all presentments, protests, notices of dishonor, demands for
performance and any and all other demands upon and notices to the Debtor, and
any and all other formalities of any kind, the omission of or delay in
performance of which might but for the provisions of this Section constitute
legal or equitable grounds for relieving or discharging the Guarantor in whole
or in part from its irrevocable, absolute and continuing obligations
hereunder, it being the intention of the Guarantor that its obligations
hereunder shall not be discharged except by payment and performance and then
only to the extent thereof; PROVIDED, HOWEVER, that the Beneficiaries agree
that if, at any time, such Beneficiaries have the right to assert an identical
claim against the Guarantor both under this Guaranty and under the Put
Agreement (as defined in the Note Agreement), then, so long as the Put
Agreement is in full force and effect and the Guarantor is not in default in
any of its obligations thereunder, the Beneficiaries shall first assert such
claim against the Guarantor under the Put Agreement; PROVIDED FURTHER,
HOWEVER, that the Beneficiaries may immediately assert such claim under this
Guaranty without the necessity of asserting such claim under the Put Agreement
if the Guarantor at any time fails to make payment of all or any portion of
such claim as and when due under the Put Agreement or otherwise is in default
of its obligations thereunder.

5.   Representations and Warranties.
     ------------------------------

     The Guarantor represents and warrants that:

     (a)  Organization and Power.  The Guarantor (i) is a corporation duly
          ----------------------  organized and validly existing under the laws 
of the Commonwealth of  Massachusetts; and (ii) has all requisite corporate
power and authority and all necessary licenses and permits under the laws of
the Commonwealth of Massachusetts to enter into this Guaranty, the Lease, Put
Agreement and Lease Assignment (herein, collectively, the "Guarantor 
Documents"), to perform and observe the terms and conditions of such
instruments and to own its properties and conduct its business as currently
conducted.  The Guarantor is qualified to do business as a foreign corporation
in all jurisdictions where its ownership of property or the nature of its
business requires such qualification.  Each of the Guarantor's Subsidiaries (i)
is a corporation duly organized and validly existing under the laws of such
Subsidiary's state of incorporation, (ii) has all requisite corporate power and
authority to own its properties and conduct its business as currently conducted
and (iii) is qualified to do business as a foreign corporation in all
jurisdictions where its ownership of property or the nature of its business
requires such qualification.  The Guarantor Documents have been duly
authorized, executed and delivered by the Guarantor and constitute the legal,
valid and binding obligations of the Guarantor enforceable against the
Guarantor in accordance with their respective terms, except that certain rights
and remedies as set forth in such Guarantor Documents may be limited by
bankruptcy, reorganization and other laws of general application relating to or
affecting the enforcement of creditors' or lessors' rights.

     (b)  Litigation; Taxes.  There are no actions, suits or proceedings
          -----------------  pending or, to its knowledge, threatened against 
or affecting the Guarantor at 






                                    - 4 -




   5




law or in equity before any court or administrative officer or agency an
adverse determination in which could, individually or in the aggregate, have
a material adverse effect on the business, property, assets or financial
condition of the Guarantor.  The Guarantor is not in default (i) in the payment
of any taxes levied or assessed against it or its assets or (ii) under or in
violation of any statute, rule, order, decree, writ, injunction or regulation
of any governmental body (including any court).

     (c)  Compliance with Other Instruments.  The Guarantor is not a party
          --------------------------------- to any contract or agreement or 
subject to any restriction or to any order, rule, regulation, writ, injunction
or decree of any court or governmental  authority or to any statute which
materially and adversely affects its business, property, assets or financial
condition.  Neither the execution, delivery or performance by the Guarantor of
this Guaranty or the other Guarantor Documents nor its compliance herewith or
therewith (A) conflicts or will conflict with or results or will result in a
breach of or constitutes or will constitute a default under (i) any law in
effect as of the date of delivery of this Guaranty, (ii) the articles of
incorporation or by-laws of the Guarantor, (iii) any agreement or instrument to
which the Guarantor is a party or by which it is bound, or (iv) any order,
writ, injunction or decree of any court or other governmental authority, or (B)
results or will result in the creation or imposition of any lien, charge or
encumbrance upon the Guarantor's property pursuant to such agreement or
instrument.

     (d)  Governmental Authorization; Consents.  No authorization, consent
          ------------------------------------  or approval of or filing with 
any governmental authority is required for the execution, delivery and
performance of this Guaranty or any other Guarantor Document.  If, on the
Closing Date (as defined in the Note Agreement), any such authorization,
consent, approval or filing shall be required, the same shall have been
obtained or made on or prior to the Closing Date and true and complete copies
of each thereof shall have been provided to the Purchaser. The execution,
delivery and performance by the Guarantor of this Guaranty or any other
Guarantor Document do not require any stockholder approval or the consent or
approval of any of the Guarantor's creditors (except as have already been
obtained in writing).

     (e)  Event of Default.  No event has occurred and is continuing with
          ----------------  respect to the Guarantor which would constitute a 
Default or an Event of Default.

     (f)  Obligations to Others.  The Guarantor has no unsatisfied
          ---------------------  obligations in excess of $25,000 in the 
aggregate to any Person arising out of or incurred in connection with the
acquisition, construction, leasing or remodeling by the Guarantor of its
interests in the Premises.

     (g)  Margin Stock.  The Guarantor does not own or have any present
          ------------  intention of acquiring any "margin stock" as defined 
in Regulation G (12 C.F.R., Chapter II, Part 207) of the Board of Governors of
the Federal Reserve System.  None of the proceeds of the Notes will be
used, directly or indirectly, for the purpose, whether immediate, incidental or
ultimate, of purchasing or carrying any such margin stock or for the purpose of
maintaining, reducing or retiring any indebtedness which was originally
incurred to purchase or carry any such stock that is currently a margin stock
or for any other purpose which might constitute this transaction a "purpose
credit" within the meaning of said Regulation G.  Neither the Guarantor nor any
agent acting on its behalf has taken or will take any action which might cause
the transactions contemplated herein to violate such Regulation G, Regulation T
(12 C.F.R., Chapter II, Part 220) or Regulation X (12 C.F.R., Chapter II, Part
224) or any other regulation of the 




                                    - 5 -




   6


Board of Governors of the Federal Reserve System or to violate the Securities
Exchange Act of 1934, in each case as now in effect or as the same may 
hereafter be in effect.

     (h)  ERISA.  The Guarantor is in compliance in all material respects
          -----  with all material applicable provisions of the Employee 

Retirement Income Security Act of 1974, as amended ("ERISA"), and the
regulations and published interpretations thereunder.  No "reportable event", 
as such term is defined in Section 4043 of ERISA, has occurred with respect to 
any employee pension benefit plan (as defined in ERISA), and the Guarantor has
not incurred, nor does it reasonably expect to incur, any liability to
the Pension Benefit Guaranty Corporation under Section 4062 of ERISA or to any
multiemployer plan (as defined in ERISA) under Section 4201 of ERISA.  The
Guarantor has not incurred any accumulated funding deficiency within the
meaning of Section 302 of ERISA nor is it subject to any lien arising under
Section 307 of ERISA or Section 401(a)(29) or 412(n) of the Internal Revenue
Code of 1986, as amended.

     (i)  Solvency.  The Guarantor's assets are not less than its
          --------  liabilities, both determined in accordance with generally 
accepted accounting principles, and the Guarantor is solvent.  The transactions
contemplated by this Guaranty and the other Guarantor Documents are being
consummated by the Guarantor in furtherance of the Guarantor's ordinary
business purposes and in furtherance of its corporate purposes within the
meaning of M.G.L. c156B, #9, with no contemplation of insolvency and with no
intent to hinder, delay or defraud any of its present or future creditors. 
Neither before nor as a result of the transactions contemplated by this
Guaranty will the Guarantor be or be rendered insolvent or have an unreasonably
small capital for the conduct of its business and the payment of its
anticipated obligations.  The Guarantor's assets and cash flow enable it to
meet its present obligations in the ordinary course of business as they become
due, and the Guarantor does not believe that it will incur debts beyond its
ability to pay.

     (j)  Title to the Premises.  The Premises are free and clear of any
          ---------------------  liens or encumbrances which result from 
claims against the Guarantor.

     (k)  Full Disclosure.  Neither (i) the financial statements for the
          ---------------  Guarantor's fiscal years ending in 1993, 1992, 1991, 
1990 and 1989 nor (ii) the Form 10-Q of the Guarantor for the fiscal quarter 
ended January 31, 1994 nor (iii) the Form 10-K of the Guarantor for the fiscal 
year ended October 30, 1993 nor (iv) any Guarantor Document nor (v) any written
statement furnished by the Guarantor to the Purchaser in connection with the
offering and sale of the Notes, contains any untrue statement of a material
fact or omits a material fact necessary to make the statements contained
therein not misleading.  There is no fact applicable to the Guarantor which the
Guarantor has not disclosed to the Purchaser in writing which materially
affects adversely nor so far as the Guarantor can now reasonably foresee will
materially affect adversely the properties, business, prospects, profits or
condition (financial or otherwise) of the Guarantor.  The Guarantor represents
to the Purchaser that all of the financial statements and reports specified
above have been prepared in accordance with generally accepted accounting
principles, consistently applied.


     (l)  No Material Adverse Change.  There has been no material adverse
          --------------------------  change in the business, properties, 
prospects or condition, financial or otherwise, of the Guarantor since October
30, 1993.

     (m)  Offering of the Notes.  The Guarantor has not, directly or through
          ---------------------  an agent, offered the Notes or any part 
thereof or any similar security for sale to, solicited offers to buy any
thereof from or otherwise approached or negotiated with anyone other than the
Purchaser.  Neither the Guarantor nor any agent on its behalf will sell or
offer any part of the Notes or any part






                                    - 6 -




   7

thereof or any similar security for sale to, solicit any offers to buy any
thereof from or otherwise approach or negotiate in respect thereof with any
other Person or Persons so as thereby to require registration of the Notes
under Section 5 of the Securities Act of 1933, as amended.

6.   Certain Covenants and Agreements.
     --------------------------------

     In addition to its covenants and agreements set forth elsewhere in this
Guaranty, the Guarantor hereby further covenants and agrees, for so long as
any Obligation is outstanding and unpaid, as follows:

          (a)  Payment of Obligations.  The Guarantor will pay and discharge, 
               ----------------------  and will cause each Subsidiary to pay 
and discharge, at or before maturity, all their respective material
obligations and liabilities, including, without limitation, tax liabilities,
except where the same may be contested in good faith by appropriate
proceedings, and will maintain and will cause each Subsidiary to maintain, in
accordance with generally accepted accounting principles, appropriate reserves
for the accrual of any of the same.

          (b)  Maintenance of Property; Insurance.  (i) The Guarantor will
               ----------------------------------   keep, and will cause each 
Subsidiary to keep, all property useful and necessary in its business in
good working order and condition, ordinary wear and tear and fully insured
casualty excepted.

               (ii) The Guarantor will maintain, and will cause each
Subsidiary to maintain, insurance with financially sound and reputable
insurance companies or associations in such amounts and covering such risks as
are usually carried by companies engaged in the same or a similar business and
similarly situated, which insurance may provide for reasonable deductibility
from coverage thereof.

          (c)  Conduct of Business and Maintenance of Existence.  The Guarantor 
               ------------------------------------------------  will continue, 
and will cause each Subsidiary to continue, to engage   in business of the 
same general type as now conducted by the Guarantor and its Subsidiaries, and 
will preserve, renew and keep in full force and effect, and will cause each
Subsidiary to preserve, renew and keep in full force and effect their 
respective corporate existence and their respective rights, privileges and
franchises necessary or desirable in the normal conduct of business; PROVIDED
that nothing in this Section 6(c) shall prohibit (i) the merger of a Subsidiary
into the Guarantor or the merger or consolidation of a Subsidiary with or into
another Person if the corporation surviving such consolidation or merger is a
Subsidiary and if, in each case, after giving effect thereto, no Default or
Event of Default shall have occurred and be continuing or (ii) the termination
of the corporate existence of any Subsidiary if the Guarantor in good faith
determines that such termination is in the best interest of the Guarantor and
is not materially disadvantageous to the Beneficiaries.

          (d)  Compliance with Laws.  The Guarantor will comply, and cause
               -------------------- each Subsidiary to comply, in all material 
respects with all applicable laws, ordinances, rules, regulations, and
requirements of governmental authorities except where the necessity of
compliance therewith is contested in good faith by appropriate proceedings.

          (e)  Inspection of Property, Books and Records.  The Guarantor
               -----------------------------------------  will keep, and will 
cause each Subsidiary to keep, proper books of record and account in which 
full, true and correct entries shall be made of all dealings and transactions 
in relation to its business and activities; and will permit, and will cause
each Subsidiary to permit, representatives of any Beneficiary, 



                              - 7 -

   8


at such Beneficiary's expense, to visit and inspect any of their respective
properties, to examine and make abstracts from any of their respective
books and records and to discuss their respective affairs, finances and
accounts with their respective officers, employees and independent public
accountants, all at such reasonable times and as often as may reasonably be
desired.

          (f)  Transactions With Affiliates.  Neither the Guarantor nor any
               ----------------------------  Subsidiary will enter into any 
transaction, including, without limitation, the purchase or sale of any
property or the rendering of any service, with any Affiliate except for
transactions entered into in the ordinary course of, and pursuant to the
reasonable requirements of, the Guarantor's or such Subsidiary's business and
upon fair and reasonable terms no less favorable to the Guarantor or such
Subsidiary than would be obtained in a comparable arm's- length transaction
with a person not an Affiliate.

          (g)  Leverage Ratio.  The Guarantor shall maintain at all times a
               --------------  ratio of Total Liabilities to Consolidated 
Tangible Net Worth of not greater than 1 to 1.

          (h)  Minimum Consolidated Tangible Net Worth.  The Guarantor will
               ---------------------------------------   at no time permit 
Consolidated Tangible Net Worth to be less than the sum of (A) $312,000,000 
PLUS (B) 50% of consolidated net income for the period from October 30, 1993, 
through the end of the Guarantor's then most recent fiscal quarter (treated for
this purpose as a single accounting period); PROVIDED, HOWEVER, that in the
event that the Guarantor incurs a net loss in one of more of its fiscal
quarters ending after October 30, 1993, then the results of such quarter or
quarters shall be excluded in calculating consolidated net income for the
purposes of clause (B) above.

          (i)  Restricted Payments.  Neither the Guarantor nor any
               -------------------   Subsidiary will declare or make any 
Restricted Payment if either (A) a Default or Event of Default exists or (B)
after giving effect thereto, the aggregate of all Restricted Payments
declared or made subsequent to October 30, 1993, would exceed an amount equal
to (x) $48,000,000 PLUS (y) 50% of consolidated net income for the period from
October 30, 1993, through the end of the Guarantor's then most recent fiscal
quarter (treated for this purpose as a single accounting period).  Nothing in
this subparagraph (i) shall prohibit the payment of any dividend or
distribution within 45 days after declaration thereof, if such declaration was
not prohibited by this subparagraph (i).

          (j)  Investments.  The Guarantor will not make, or permit any of
               -----------  its Subsidiaries to make, any loan or advance to 
any Person or purchase or otherwise acquire, or permit any such Subsidiary to
purchase or otherwise acquire any capital stock, assets, obligations or other
securities of, make any capital contribution to, or otherwise invest in, or
acquire any interest in, any Person (all such transactions being herein called
"Investments"), except:

          (i)  Investments in Liquid Assets;

          (ii) Investments in the Guarantor or any of its Consolidated
     Subsidiaries;

          (iii) Investments in accounts, contract rights and general
     intangibles (as defined in the Uniform Commercial Code as in effect in
     the Commonwealth of Massachusetts from time to time) or notes or other
     instruments receivable, arising from the sale, lease or other furnishing
     of goods or services by the Guarantor or any Consolidated Subsidiary in
     the ordinary course of business;




                                    - 8 -


   9


          (iv) Investments in equity interests (including stocks and
     convertible debt securities) of corporations which do not become
     Consolidated Subsidiaries made with the proceeds of the issuance of
     stock by the Guarantor;

          (v)  Acquisitions permitted by Section 6(q);

          (vi) Investments (including stocks, equity interests and
     convertible debt securities) of corporations that do not become
     Consolidated Subsidiaries made with the proceeds of the sale or other
     disposition of any capitalized investment permitted by clause (iv),
     providing that the Guarantor gives the Beneficiaries notice of such
     Investment under this clause; and

          (vii) additional Investments not exceeding in the aggregate at any
     one time outstanding $20,000,000.

          (k)  Negative Pledge.  Neither the Guarantor nor any Subsidiary
               ---------------  will create, assume or suffer to exist any 
Lien on any asset now owned or hereafter acquired by it, except:

          (i) Liens securing Indebtedness specified on Exhibit A hereto;

          (ii) Liens for taxes or assessments or other government charges or
     levies if not yet due and payable or, if due and payable, they are being
     contested in good faith by appropriate proceedings and for which
     appropriate reserves are maintained;

          (iii) Liens imposed by law, such as mechanic's, materialmen's,
     landlord's, warehousemen's and carrier's Liens, and other similar Liens,
     securing obligations incurred in the ordinary course of business which
     are not past due for more than 30 days, or which are being contested in
     good faith by appropriate proceedings and for which appropriate reserves
     have been established;

          (iv)  Liens under workmen's compensation, unemployment insurance,
     social security or similar legislation;

          (v) Liens, deposits or pledges to secure the performance of bids,
     tenders, contracts (other than contracts for the payments of money),
     leases (as may be permitted under this Guaranty), public or statutory
     obligations, surety, stay, appeal, indemnity, performance or other
     similar bonds, or other similar obligations arising in the ordinary
     course of business;

          (vi) easements, rights-of-way, restrictions and other similar
     encumbrances which, in the aggregate do not materially interfere with
     the occupation, use and enjoyment by the Guarantor or any Subsidiary of
     the property or assets encumbered thereby in the normal course of
     business or materially impair the value of the property subject thereto;

          (vii) Liens securing obligations of a Subsidiary to the Guarantor
     or to another Subsidiary;

          (viii) Judgment and other similar Liens arising in connection with
     court proceedings; PROVIDED that the execution or other enforcement of
     such Liens is effectively stayed and the claims secured thereby are
     being actively contested in good faith and by appropriate proceedings;



                                    - 9 -

   10

          (ix) Liens on any assets of any corporation at the time such
     corporation becomes a Subsidiary;

          (x)  Liens on any assets at the time of acquisition of such
     assets by the Guarantor or a Subsidiary;

          (xi) Liens on any assets of a corporation existing at the time
     such corporation is merged into or consolidated with the Guarantor or a
     Subsidiary or at the time of a purchase, lease or other acquisition of
     the assets of a corporation or firm as an entirety or substantially as
     an entirety by the Guarantor or a Subsidiary;

          (xii) Liens granted in connection with the Guarantor's or any
     Subsidiary's refinancing of Indebtedness secured by a Lien on any of
     their respective assets on the date of the closing for the sale of the
     Notes; PROVIDED, HOWEVER, that in no event shall the principal amount of
     Indebtedness secured by such Lien exceed 100% of the Indebtedness
     originally secured by the Lien to be released in connection with such
     refinancing; and

          (xiii)  Liens not otherwise permitted by the foregoing clauses (i)
     - (xii) of this Section securing Indebtedness in an aggregate principal
     amount and Swap Obligations with an aggregate mark to market value (net
     of mark of market thresholds, if any) at any one time outstanding not to
     exceed 30% of Consolidated Tangible Net Worth.

          (l)  Consolidations, Mergers and Sales of Assets.  (A) The
               -------------------------------------------  Guarantor will not 
merge or consolidate with or sell, assign, 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
any Person unless: (i) the corporation which results from such merger, sale or
consolidation or to which such disposition is made is either (A) the Guarantor
or (B) a corporation organized under the laws of the United States or any state
thereof or the District of Columbia; (ii) the surviving corporation (if not the
Guarantor) or the corporation to which such disposition is made expressly
assumes the Guarantor's obligations hereunder and under the Lease, the Lease
Amendment, the Put Agreement and the Lease Assignment pursuant to documentation
satisfactory in form and substance to the Beneficiaries; (iii) no Default or
Event of Default exists or will result from such merger, sale or consolidation;
(iv) no default by the Debtor exists in respect of payment of any amount due
under the Notes, whether in respect of principal, interest or premium, if any;
and (v) such merger, sale or consolidation will not have a material adverse
effect on the financial condition of the Guarantor or such surviving or
transferee corporation, as the case may be.

     (B) No Subsidiary shall merge or consolidate with or sell, assign, lease
or otherwise dispose of (whether in one transaction or in a series of
transactions) all or any part of its assets (whether now owned or hereafter
acquired) to any Person or acquire all or substantially all of the assets or
the business of any Person nor shall the Guarantor permit any of its
Subsidiaries to do so, except that: (i) any Subsidiary may merge into or
transfer assets to the Guarantor; (ii) any Subsidiary may merge into or
transfer assets to any other Subsidiary; and (iii) any Subsidiary may
consummate an Acquisition as permitted under Section 6(q).

     (m)  Sales and Leasebacks.  The Guarantor and its Subsidiaries will not
          --------------------  sell or transfer any of their respective assets
and become, directly or indirectly, liable as the lessee under a lease of such
assets if, as a result of such a sale and leaseback transaction, the combined
fair market value (as 




                                    - 10 -




   11



determined in good faith by the Guarantor) of all assets of the Guarantor and
its Subsidiaries subject to a sale and leaseback transaction entered
into from and after the date of the sale of the Notes to any date of
determination would exceed 30% of Consolidated Tangible Assets.

     (n)  Subsidiary Indebtedness.  The Guarantor will not permit a Subsidiary 
          -----------------------
to incur any Indebtedness except:

          (i)  Indebtedness listed on Exhibit B hereto;

          (ii) Indebtedness incurred pursuant to the refinancing of
     Indebtedness permitted pursuant to clause (i) above;

          (iii) Guaranties of Indebtedness of the Guarantor;

          (iv) Indebtedness to any other Subsidiary or to the Guarantor;
     and

          (v) Indebtedness not permitted by any of the preceding clauses (i)
     - (iv); PROVIDED, HOWEVER, that the aggregate amount of Indebtedness
     outstanding at any time pursuant to this clause (v) shall not exceed 20%
     of Consolidated Tangible Net Worth; and PROVIDED FURTHER that no
     Indebtedness incurred as permitted by clause (iv) above may be sold,
     transferred or otherwise assigned at any time to any Person that is not
     a Subsidiary or is not the Guarantor.

     (o)  Financial Statements.  The Guarantor will deliver to each Beneficiary:
          --------------------

     (i)  Copies of all public financial statements, including any special
          or interim statements of the Guarantor, and any information sent
          to shareholders; PROVIDED, HOWEVER, that if such statements do not
          include the following information required by this clause (o), the
          Guarantor will deliver to said Beneficiaries the following:

               (A)  Within 120 days after the end of each fiscal
               year of the Guarantor, a consolidated balance sheet of
               the Guarantor and its Consolidated Subsidiaries as at
               the end of such year and consolidated statements of
               income, retained earnings and changes in financial
               position of the Guarantor and its Consolidated
               Subsidiaries for such year, setting forth in each
               case, in comparative form, the corresponding figures
               for the preceding fiscal year in reasonable detail and
               scope, certified by independent certified public
               accountants of nationally recognized standing selected
               by the Guarantor; and within 60 days after the end of
               the first three fiscal quarters of the Guarantor,
               consolidated balance sheets of the Guarantor and its
               Consolidated Subsidiaries as at the end of such
               quarter and consolidated statements of income,
               retained earnings and changes in financial position of
               the Guarantor and its Consolidated Subsidiaries for
               such quarter,  setting forth in each case, in
               comparative form, the corresponding figures for the
               similar quarter of the preceding year, in reasonable
               detail and scope, and certified by the treasurer or
               chief financial officer of the Guarantor;





                                    - 11 -



   12


               (B)  With reasonable promptness such additional
               information (including copies of public reports filed
               by the Guarantor) regarding the business affairs and
               financial condition of the Guarantor as any
               Beneficiary may reasonably request; and

               (C)  Upon the occurrence of any Default or
               Event of Default hereunder or under and as
               defined in the Lease, the Guarantor promptly
               shall give written notice thereof to each
               Beneficiary.

     All financial statements specified in clause (A) above shall be
accompanied by the certificate of the treasurer or chief financial officer of
the Guarantor stating that (A) no Default or Event of Default hereunder or
under and as defined in the Lease has occurred and is continuing, (B) if any
such Default or Event of Default has occurred, specifying the nature and the
period of existence thereof and what action the Guarantor has taken or is
taking with respect thereto, (C) the Guarantor has fulfilled all its
obligations hereunder and under the Lease and (D) such financial statements
present fairly and completely the financial condition of the Guarantor and its
Consolidated Subsidiaries.  As soon as available and in any event within 120
days after the end of each fiscal year of the Guarantor, the certification of
the independent certified public accountants referred to in clause (A) above
shall be accompanied by a letter from said accountants stating whether as a
result of their examination anything has come to their attention to cause them
to believe that a Default or Event of Default hereunder or under and as
defined in the Lease has occurred, and, if so, specifying the nature and
period of existence thereof.

     (p)  Payment of Certain Expenses.  Whether or not the transactions
          ---------------------------  contemplated by this Guaranty or the 
Note Agreement shall be consummated, the Guarantor will:

          (i)  Pay all reasonable fees and expenses incurred by the
     Purchaser and the Debtor in connection with the transactions described
     in the Note Agreement and all reasonable fees and expenses incurred by
     the Purchaser or any other Beneficiary in connection with any
     modification, supplement or amendment of this Guaranty, the Lease, the
     Put Agreement or any of the Obligation Agreements or Guarantor Documents
     or any waiver or consent under or in respect of this Guaranty, the
     Notes, the Lease, the Put Agreement or any of the Obligation Agreements
     or Guarantor Documents, whether or not such modification, supplement,
     amendment, waiver or consent is obtained or becomes effective, including
     in each such instance, without limitation, printing, word processing and
     reproduction expenses, reasonable legal fees (including reasonable legal
     fees and expenses of each Beneficiary's counsel), fees and expenses of
     any appraisers and environmental engineers and consultants and all
     recording, registration and filing fees, taxes and expenses.  The
     Guarantor agrees to pay all expenses incurred by any Beneficiary
     (including reasonable counsel fees and the fees, expenses and
     disbursements of an investment bank or other firm acting as such
     Beneficiary's financial advisor) following the occurrence and during the
     continuance of any Default or Event of Default or any workout
     restructuring or similar negotiations or any bankruptcy proceeding
     involving the Guarantor, the Debtor or any holder of a beneficial
     interest in the Debtor and to pay all costs of collection and
     enforcement, including reasonable attorneys' fees and disbursements,
     with respect to this Guaranty, the Notes, the Lease, the Put Agreement
     or any other Obligation Agreement or Guarantor Document;



                                    - 12 -


   13


          (ii)  Pay and save each Beneficiary harmless from and against any
     and all liability and loss with respect to or resulting from the
     nonpayment or delayed payment of any and all stamp and other similar
     taxes (other than transfer taxes), fees and excises, if any, including
     any interest and penalties, which may be, or be determined to be,
     payable in connection with the transactions contemplated by the Note
     Agreement and this Guaranty, or in connection with any modification,
     supplement or amendment of this Guaranty, the Notes, the Lease, the Put
     Agreement or any of the Obligation Agreements or Guarantor Documents or
     any waiver or consent under or in respect of any thereof; and

          (iii)  Hold each Beneficiary harmless from and against any and all
     finders' or brokerage fees and commissions which may be payable in
     connection with the transactions contemplated hereby and by the Note
     Agreement or in connection with any modification, supplement or
     amendment of this Guaranty, the Notes, the Lease, the Put Agreement or
     any of the Obligation Agreements or Guarantor Documents or any waiver or
     consent under or in respect of any thereof.

     Notwithstanding anything to the contrary contained in this Guaranty, the
Guarantor's obligations under this Section 6(p) shall survive payment of the
Obligations.

     (q)  Acquisitions.  The Guarantor shall not, and shall not permit any
          ------------  of its Subsidiaries to, consummate any Acquisition, or
sell, lease, assign or otherwise dispose of (whether in one transaction or in
a series of related transactions) all or any substantial part of its assets,
whether now owned or hereafter acquired, or be a party to any merger or
consolidation, except that:

          (i)  the Guarantor and its Subsidiaries may sell inventory or
     used or surplus equipment in the ordinary course of business; and

          (ii) the Guarantor and any of its Subsidiaries may consummate any
     Acquisition (including any Acquisition by way of merger); PROVIDED that:
     (i) with respect to any such Acquisition, the Guarantor shall provide to
     the Beneficiaries twenty (20) days or more prior written notice thereof;
     (ii) with respect to all such Acquisitions the aggregate value, on a
     current market value basis (determined at the time of each such
     Acquisition), of the consideration therefor paid and to be paid by the
     Guarantor and Subsidiaries shall not exceed 33 1/3% of Consolidated
     Tangible Net Worth as of the end of the immediately preceding fiscal
     quarter; (iii) after giving effect to such Acquisition, the Guarantor
     shall be in compliance with all of the terms and conditions hereof; (iv)
     the Guarantor or such Subsidiary consummating such Acquisition shall
     not, after giving effect to such Acquisition, be in violation of Section
     6(c); (v) no such Acquisition shall have a material adverse effect on
     the financial condition of the Guarantor and the Subsidiaries taken as a
     whole; and (vi) in respect of each such Acquisition, the Guarantor or
     such Subsidiary shall be the surviving or continuing entity.

     For the purposes of this Guaranty, the following definitions shall
apply:

     "Acquisition" means any transaction or series of related transactions,
consummated after the date of this Guaranty, by which the Guarantor or any of
its Subsidiaries (i) acquires any going business or all or substantially all
of the assets of any firm, corporation or division thereof, whether through
purchase of assets, merger or otherwise, or (ii) directly or indirectly
acquires (in one transaction or as the most recent transaction in a series of
transactions) at least a majority (in number of votes) of the securities of a





                                    - 13 -



   14



corporation which have ordinary voting power for the election of directors
(other than securities having such power only by reason of the happening of a
contingency).

     "Affiliate" means (i) any Person that directly, or indirectly through
one or more intermediaries, controls the Guarantor (a "Controlling Person") or
(ii) any Person (other than the Guarantor or a Subsidiary of the Guarantor)
which is controlled by or is under common control with a Controlling Person.
As used herein, the term "control" means possession, directly or indirectly,
of the power to direct or cause the direction of the management or policies of
a Person, whether through the ownership of voting securities, by contract or
otherwise.

     "Consolidated Subsidiary" means any Subsidiary whose accounts are or are
required to be consolidated with the accounts of the Guarantor.

     "Consolidated Tangible Assets" means the gross book value of all assets
of the Guarantor and its Consolidated Subsidiaries, determined on a
consolidated basis, minus the following items (without duplication of
deductions) appearing on the balance sheet of the Guarantor and its
Consolidated Subsidiaries:


     (a)  reserves for depreciation, depletion and amortization and other
          reserves against assets, reserves for investments, receivables and
          income taxes and other liability reserves;

     (b)  all deferred charges (less amortization), unamortized debt
          discount and expense and corporate organizational expenses;

     (c)  the book amount of all assets (including, without limitation,
          goodwill, patents, trademarks and copyrights) which would be
          treated as intangibles under generally accepted accounting
          principles;

     (d)  the amount by which aggregate inventories appearing on the asset
          side of such balance sheet exceed the lower of cost or market
          value (at the date of such balance sheet) thereof;

     (e)  any write-up in the book amount of any asset or investment
          subsequent to April 30, 1994, resulting from a reevaluation or
          reappraisal thereof from the amount entered in accordance with
          generally accepted accounting principles by the Guarantor or its
          Subsidiary on its books with respect to its acquisition of the
          asset or investment; and

     (f)  the book amount of the minority interest in any Subsidiary.

     "Consolidated Tangible Net Worth" means the Tangible Net Worth of the
Guarantor and its Consolidated Subsidiaries on a consolidated basis.

     "Default" means any condition or event which with the giving of notice
or lapse of time or both would, unless cured or waived, become an Event of
Default.

     "Environmental Laws" has the meaning specified in Section 7 of this
Guaranty.

     "Event of Default" has the meaning specified in Section 8 of this
Guaranty.




                                    - 14 -




   15




     "Guaranty" by any Person means any agreement, undertaking or
arrangement, by which such Person assumes, guarantees, endorses or otherwise
is or becomes, directly or contingently responsible or liable (including, but
not limited to, an agreement to purchase any obligation, stock, assets, goods
or services or to supply or advance any funds, assets, goods or services, or
an agreement to maintain or cause such Person to maintain a minimum working
capital or net worth or otherwise to assure the creditors of any Person
against loss) for the obligations of any Person.

     "Indebtedness" means, with respect to any Person (without duplication),
(a) indebtedness for borrowed money which, in accordance with generally
accepted accounting principles, would be classified on a balance sheet as
liabilities of such Person, (b) indebtedness for borrowed money secured by any
mortgage, pledge or other Lien on any property of such Person, (c) Guarantees
and (d) letters of credit to support Indebtedness of others.

     "Lien" means, with respect to any asset, any lien (statutory or
otherwise), security interest, mortgage, deed of trust, priority, pledge,
charge, conditional sale, title retention agreement, financing lease or other
encumbrance or similar right of others or any agreement to give any of the
foregoing.

     "Liquid Assets" means at any time (i) cash; (ii) current accounts with
banks; (iii) bankers' acceptances, certificates of deposit, and time deposits
evidenced by instruments or documents other than certificates of deposit, in
each case only if due within 1 year, not past due, and issued by United States
commercial banks having assets of $500,000,000 or more; (iv) direct debt
obligations of, or obligations guaranteed by, the United States or of agencies
of the United States, due within 1 year and not past due; and (v) direct debt
obligations of any issuer, due within 1 year and not past due, rated A or MIG-
2 or higher by Moody's Investors Services, Inc.

     "Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.

     "Restricted Payment" means any dividend or other distribution on any
shares of the Guarantor's capital stock (except dividends payable solely in
shares of its capital stock).

     "Subsidiary" means, as to any Person, any corporation or other entity of
which at least a majority of the securities or other ownership interests
having ordinary voting power for the election of directors or other persons
performing similar functions are at the time owned directly or indirectly by
such Person.

     "Swap Obligations" means obligations of the Guarantor and its
Subsidiaries in respect of rate swap transactions, basis swaps, forward rate
transactions, commodity swaps, commodity options, interest rate options,
foreign exchange transactions, cap transactions, floor transactions, collar
transactions, currency swap transactions, cross-currency rate swap
transactions, currency options or any other similar transactions (including
any options with respect to any such transactions) or combinations of such
transactions.

     "Tangible Net Worth" means the excess of total assets over total
liabilities, excluding, however, from the determination of total assets (i)
goodwill; (ii) patents, copyrights and trademarks; (iii) trade names; (iv)
licenses; (v) organizational expenses; and (vi) treasury stock.





                                    - 15 -



   16


     "Total Liabilities" means at any time all Indebtedness, obligations and
liabilities of the Guarantor and its Consolidated Subsidiaries, on a
consolidated basis, which should be classified as liabilities of such
corporations on a consolidated balance sheet, and in any event shall include
(without duplication):

     (1)  all Indebtedness, obligations and liabilities guaranteed by any
Guaranty, and all Indebtedness, obligations and liabilities secured by any
mortgage, lien, assignment, pledge, security interest, charge or encumbrance
upon or in property owned by the respective corporation, even though the
respective corporation has not assumed or become liable for the payment of the
same, to the extent that such Indebtedness, obligations and liabilities
actually outstanding exceed $4,000,000;

     (2)  the aggregate amount of reserves established on the books of the
Guarantor and its Consolidated Subsidiaries in respect of contingent
liabilities and other contingencies, including contingent obligations to make
payments under contracts; and

     (3)  contingent liabilities in excess of 20% of Consolidated Tangible
Net Worth.

     For the purposes of this Section 6, all definitions and calculations
made or to be made in connection therewith shall be governed by generally
accepted accounting principles, consistently applied, as in effect from time
to time.

7.   Environmental Matters.
     ---------------------

     (a)  Representations, Warranties and Covenants.  The Guarantor represents,
          -----------------------------------------
covenants and warrants to the Beneficiaries that:

     (i)       at all times during the term of the Lease, the Premises and
               the Lessee shall comply in all respects with all applicable
               Environmental Laws; the Lessee has obtained all permits,
               licenses, and any other authorizations to conduct operations
               at the Premises that are required under all applicable
               Environmental Laws; the Lessee is in compliance with all
               terms and conditions of all permits, licenses, and any other
               authorizations required under all applicable Environmental
               Laws relating to the Premises;

     (ii)      as of the commencement of the term of the Lease, no notices,
               complaints or orders of violation or non-compliance of any
               nature whatsoever had been issued to the Lessee or, to the
               best of the Lessee's knowledge, to any person regarding the
               Premises, and no federal, state or local environmental
               investigation or legal action by a private party is pending
               or overtly threatened, in each case with regard to the
               Premises or any use thereof or any alleged violation of, or
               strict liability arising under, Environmental Laws with
               regard to the Premises; no liens have been placed upon the
               Premises in connection with any actual or alleged liability
               under any Environmental Laws;

     (iii)     the Premises (a) have not been used by the Lessee or by any
               other person to generate, manufacture, refine, produce or
               process any Hazardous Substance or to store, handle,
               transfer or transport any Hazardous Substance other than
               normal and lawful uses of such Hazardous Substances, taking





                                    - 16 -




   17



               into account the Lessee's use of the Premises, in lawful
               quantities and in compliance with Environmental Laws, and
               (b) will not be used by the Lessee or any other Person at
               any time during the term of the Lease to generate,
               manufacture, refine, produce or process any Hazardous
               Substance or to store, handle, transfer or transport any
               Hazardous Substance, other than normal and lawful uses of
               such Hazardous Substances, taking into account the Lessee's
               intended use of the Premises, in lawful quantities and in
               compliance with Environmental Laws where such uses will have
               no material adverse effect upon the Premises;

     (iv)      no surface impoundments are constructed, operated or
               maintained in or on the Premises in violation of applicable
               Environmental Laws and no underground storage tanks are
               constructed, operated or maintained in or on the Premises;
               there is no asbestos nor asbestos-containing material
               located in, on, at or under the Premises nor is there any
               polychlorinated biphenyl containing equipment, including
               transformers located in, on, at or under the Premises; and

     (v)       the Premises are and at all times during the term of the
               Lease will be maintained (a) free of Hazardous Substances to
               which Persons working on or visiting the Premises could be
               exposed, the removal or remediation of which is required or
               the maintenance of which is prohibited or penalized by any
               applicable legal requirements of any local, state or federal
               agency, authority or governmental unit having jurisdiction
               or which would have a material adverse effect upon the
               Premises and (b) free of asbestos and asbestos-containing
               material and free of polychlorinated biphenyl containing
               equipment, including transformers.

     (b)  Compliance with Environmental Laws.  The Guarantor and the Lessee
          ----------------------------------  shall (i) fully comply with all 
Environmental Laws relating to the Premises, (ii) prohibit the use of the
Premises for the generation, manufacture, refinement, production or processing
of any Hazardous Substances or for the storage, handling, transfer or 
transportation of any Hazardous Substances (other than normal and lawful
uses of such products in lawful quantities in compliance with Environmental
Laws where such uses will have no material adverse effect upon the Premises),
(iii) refrain from installing or permitting the installation on the Premises of
any underground storage tanks or asbestos-containing materials or, except in 
accordance with applicable Environmental Laws, surface impoundments and
(iv) cause any alterations of, or construction on, the Premises to be done in
accordance with applicable Environmental Laws, and in connection with any such
alterations or construction, remove and dispose of, in compliance with
applicable Environmental Laws, any Hazardous Substances present upon the
Premises not in compliance with Environmental Laws.

     (c)  Notices.  Promptly upon obtaining knowledge thereof, the Guarantor
          -------  shall give to the Beneficiaries notice of the occurrence of
any of the following events:  (i) the failure of the Premises or the Lessee or
the Guarantor to comply with any Environmental Law in any manner whatsoever;    
(ii) the issuance to the Lessee of any notice, complaint or order of violation
or non-compliance of any nature whatsoever with regard to the Premises or the
use thereof with respect to Environmental Laws; or (iii) any notice of a
pending or threatened investigation to determine whether the Lessee's
operations on the Premises are in violation of any Environmental Law.






                                    -  17 -




   18



     If any Beneficiary at any time receives notice that an adverse change in
the environmental condition of the Premises has occurred or that an adverse
environmental condition with respect to the Premises has been discovered, such
Beneficiary may give notice thereof to the Guarantor, and if the Guarantor has
not (i) diligently commenced to cure such condition, to the extent necessary
to meet legal requirements or comply fully with applicable Environmental Laws
or to prevent a material diminution in the fair market value of the Premises,
within 30 days after receipt of such notice (or such shorter period as may be
required by law or in the event of an emergency) and (ii) thereafter
diligently prosecuted to completion such cure, then the Beneficiaries may
cause to be performed an environmental audit or risk assessment of the
Premises and the then uses thereof, and may take such actions as they may deem
necessary to cure such condition.  Such environmental audit or assessment
shall be performed by an environmental consultant satisfactory to the
Beneficiaries and shall include a review of the uses of the Premises and
compliance of the same with all Environmental Laws.  All costs and expenses
incurred by the Beneficiaries in connection with such environmental audit or
assessment and any remediation required shall be paid by the Guarantor upon
demand.

     (d)  Indemnification.  The Guarantor agrees to indemnify, defend and
          ---------------  hold harmless each Beneficiary (herein, the 
"Indemnified Parties") from and against any and all losses, liabilities,
damages, judgments, penalties,  claims, charges, costs and expenses (including,
without limitation, fees and disbursements of counsel and consultants for such
Indemnified Party), which may be suffered or incurred by, or asserted against
such Indemnified Party to the extent directly or indirectly arising out of, or
related to, the Premises, or any Indemnified Party's interest therein pursuant
to the Mortgage or the Lease Assignment, or the enforcement or exercise of any
right or remedy of such Indemnified Party thereunder, or the presence, use,
storage, transportation, disposal, release, threatened release, discharge,
emission or generation of any Hazardous Substances at the Premises, or the
violation by the Lessee or the Guarantor of any Environmental Law or the 
breach by the Guarantor of any representation or covenant contained in this 
Section 7.

     The warranties and obligations of the Guarantor and the rights and
remedies of each Indemnified Party under this Section 7 are in addition to and
not in limitation of any other warranties, obligations, rights and remedies
provided in the Lease or otherwise at law or in equity.

     In the event of the termination of the Lease as therein provided or the
Lessee's abandonment of the Premises, the obligations and liabilities of the
Guarantor with respect to each Indemnified Party, actual or contingent, under
this Section 7 shall survive such termination or abandonment.

     For the purposes of this Section 7, the following definitions shall
apply:

     "Environmental Laws" means and includes but shall not be limited to the
Resource Conservation and Recovery Act (42 U.S.C. #6901 ET SEQ.) ("RCRA"), as
amended by the Hazardous and Solid Waste Amendments of 1984, the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. #9601 et
seq.) ("CERCLA"), as amended by the Superfund Amendments and Reauthorization
Act of 1986 (Pub. Law 99-499, 100 Stat. 1613) ("SARA"), the Hazardous
Materials Transportation Act (49 U.S.C. #1801 ET SEQ.) ("HMTA"), the Toxic
Substances Control Act (15 U.S.C. #2601 ET SEQ.), Clean Air Act (42 U.S.C.
#9402 ET SEQ.), the Clean Water Act (33 U.S.C. #1251 ET SEQ.), the Federal
Insecticide, Fungicide and Rodenticide Act (7 U.S.C. #136 ET SEQ.), the
Occupational Safety and Health Act (29 U.S.C. #651 ET SEQ.) ("OSHA") and all
applicable federal, state and local environmental laws, including obligations





                                    - 18 -


   19


under the common law, ordinances, rules, regulations, private agreements (such
as covenants, conditions and restrictions) and publications, as any of the
foregoing may have been or may be from time to time amended, supplemented or
supplanted, and any other federal, state or local laws, including obligations
under the common law, ordinances, rules, regulations, private agreements (such
as covenants, conditions and restrictions) and publications, now or hereafter
existing relating to regulation or control of Hazardous Substances or
environmental health and safety.

     "Hazardous Substances" means (i) those substances included within the
definitions of or identified as "hazardous substances", "hazardous materials",
or "toxic substances" in or pursuant to, without limitation, CERCLA, SARA,
RCRA, OSHA and HMTA and in the regulations promulgated pursuant to said laws,
all as amended; (ii) those substances listed in the United States Department
of Transportation Table (40 CFR 172.101 and amendments thereto) or by the
Environmental Protection Agency (or any successor agency) as hazardous
substances (40 CFR Part 302 and amendments thereto); (iii) any material, waste
or substance which is or contains (A) petroleum, including crude oil or any
fraction thereof, natural gas, or synthetic gas usable for fuel or any mixture
thereof, (B) asbestos, (C) polychlorinated biphenyls, (D) designated as
"hazardous substance" pursuant to Section 311 of the Clean Water Act, 33
U.S.C. #1251 ET SEQ., (33 U.S.C. #1321) or listed pursuant to Section 307 of
the Clean Water Act (33 U.S.C. #1317); (E) flammable explosives; (F)
radioactive materials; and (iv) such other substances, materials and wastes
which are or become regulated as hazardous, toxic or "special wastes" under
applicable local, state or federal law, or by the United States government, or
which are classified as hazardous, toxic or as "special wastes" under federal,
state or local laws or regulations.

8.   Events of Default.  An "Event of Default" shall exist if any of the
     -----------------  following occurs and is continuing:

     (a)  if default shall be made in any payment due hereunder by the
Guarantor;

     (b)  if the Guarantor shall fail to make any payment when due, whether
in respect of principal or interest, on Indebtedness of the Guarantor
aggregating in excess of $5,000,000;

     (c)  if the Guarantor shall default in the observance or performance of
any other covenant, condition or agreement contained in any instrument(s)
evidencing any Indebtedness of the Guarantor aggregating in excess of
$5,000,000, or under any agreement(s) securing or relating to such
Indebtedness, the effect of which is to cause the holder(s) thereof (or a
trustee therefor) to cause such Indebtedness, or a portion thereof, to become
due prior to its stated maturity or prior to its regularly scheduled date or
dates of payment;

     (d)  if any representation or warranty of the Guarantor set forth in (i)
any certificate delivered in connection with the issuance of the Notes, (ii)
the Lease in its capacity as Lessee, (iii) this Guaranty, (iv) the Put
Agreement (as defined in the Note Agreement), (v) the Lease Assignment (as
defined in the Note Agreement), or (vi) any certificate, notice, demand, or
request delivered to any Beneficiary pursuant to this Guaranty shall be
misleading or inaccurate in any material respect, as of the time when the same
shall have been made;

     (e)  if default shall be made in the due observance or performance of
any covenant, agreement or condition set forth in Section 6 or Section 7 of
this Guaranty, or if any material term of this Guaranty shall cease to be in





                                    - 19 -


   20


full force or effect or if such material term shall be disavowed by the
Guarantor;

     (f)  if default shall be made in the due observance or performance of
any other covenant, condition, or agreement of the Guarantor contained herein
or in the Lease in its capacity as Lessee and the Guarantor shall not, within
30 days after written notice to the Guarantor specifying such default, have
commenced diligently to correct the default or at any time thereafter shall
not diligently pursue such correction to completion;

     (g)  if a receiver, trustee, or liquidator (or other similar official)
of the Guarantor or of any property of the Guarantor shall be appointed in any
proceeding or by any federal or state officer or agency and shall not be
discharged within 90 days after such appointment or if the Guarantor shall
consent to such appointment or if a custodian for purposes of any federal
bankruptcy statute of substantially all of the Guarantor's property is
appointed or otherwise takes possession thereof or if the Guarantor shall be
adjudicated a bankrupt or be declared insolvent under any federal or state
bankruptcy laws, or if an order for relief shall be entered in any bankruptcy
proceeding;

     (h)  if the Guarantor shall file a petition commencing a voluntary case
under any federal bankruptcy or similar law or in bankruptcy or for
reorganization or for any arrangement pursuant to any state bankruptcy or
similar law or shall make an assignment for the benefit of its creditors or
shall admit in writing its inability, or shall fail, to pay its debts
generally as they become due or shall consent to the appointment of a receiver
of any property of the Guarantor, or if a petition or an answer proposing the
reorganization of the Guarantor pursuant to the Federal Bankruptcy Code or any
similar law, federal or state, shall be filed in, and approved by, any court;

     (i)  if an involuntary case against the Guarantor, as debtor, is
commenced by a petition for reorganization or liquidation under any federal
bankruptcy or similar law, federal or state, and if such petition shall not be
discharged or denied within 90 days after the date on which such petition was
filed; or

     (j)  if any final judgment or judgments for the payment of money in
excess of $5,000,000 in the aggregate shall be rendered against the Guarantor,
and the Guarantor shall not discharge the same or cause the same to be
discharged by the later of (A) 30 days from the entry thereof and (B) the date
payment is required pursuant to the judgment, if later than 30 days after such
date of entry, or shall not appeal therefrom or from the order, decree or
process upon which or pursuant to which said judgment was granted, based or
entered, and secure a stay of execution pending such appeal.

9.   Successors and Assigns.
     ----------------------

     This Guaranty shall be binding upon the Guarantor and its respective
successors and assigns (including without limitation any and all successors
and transferees which may assume the Guarantor's obligations as provided in
Section 6(l) hereof), and shall inure to the benefit of and be enforceable by
the Purchaser, its successors and assigns, and each successive holder of any
of the Notes (herein, collectively, called the "Beneficiaries").

10.  Subordination of Obligations to Guarantor.
     -----------------------------------------

     Any and all indebtedness and other obligations of the Debtor to the
Guarantor (including without limitation any such obligations resulting from
any rights of subrogation on the part of the Guarantor as a result of any





                                    - 20 -




   21



payment by the Guarantor hereunder) shall during the term of this Guaranty be
subordinated to the Obligations and to any other indebtedness of the Debtor to
any or all of the Beneficiaries.

11.  Governing Law and Consent to Jurisdiction.
     -----------------------------------------

     This Guaranty shall be governed by the laws of the Commonwealth of
Massachusetts.  The Guarantor hereby irrevocably and unconditionally submits,
for itself and its property, to the non-exclusive jurisdiction of any New York
state court or federal court of the United States of America sitting in New
York, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to this Guaranty or for recognition and enforcement
of any judgment, and irrevocably and unconditionally consents to all claims in
respect of any such action or proceeding being heard and determined in such
New York state court or, to the extent permitted by law, in such Federal
court.  A final judgment in any such action or proceeding shall be conclusive
and may be enforced in other jurisdictions by suit on the judgment or in any
manner provided by law.  Nothing in this Guaranty shall affect any right that
any party may otherwise have to bring any action or proceeding relating to
this Guaranty against the Guarantor or its properties in the courts of any
jurisdiction.

     The Guarantor hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Guaranty in any New York state
or Federal court.  The Guarantor hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.

     The Guarantor irrevocably consents to service of process in the manner
provided for notices in Section 13.  Nothing in this Guaranty will affect the
right of any party to serve process in any other manner permitted by law.

12.  Severability.
     ------------

     Wherever possible, each provision of this Guaranty shall be construed in
such manner as to be valid and enforceable against the Guarantor under
applicable law, but if any provision hereof shall be deemed invalid or
unenforceable to any extent against the Guarantor in any jurisdiction, such
provision shall be ineffective only to the extent of such invalidity or
unenforceability without invalidating or rendering unenforceable the remainder
of such provision or any of the other provisions hereof, and any such
invalidity or unenforceability against the Guarantor in one jurisdiction shall
not render such provision ineffective in any other jurisdiction.

13.  Notices.
     -------

     All notices, requests, demands and other communications provided for
herein shall be in writing, and shall be sent by (i) reputable overnight
delivery service, and the giving of such communication shall be complete on
the immediately succeeding business day after the same is deposited with such
delivery service or (ii) legible confirmed fax with original to follow the
next day by overnight delivery service as specified in clause (i), and the
giving of such communication shall be complete when such fax is received.
Notices shall be addressed (a) to the Guarantor at One Technology Way,
Norwood, Massachusetts 02026-9106, fax number (617) 461-3491, Attention: Chief
Financial Officer, (b) to the Purchaser at its address and fax number set
forth in the Note Agreement, and (c) to any other Beneficiary, at the address
and fax number of such Beneficiary provided by such Beneficiary in writing to





                                    - 21 -



   22


the Purchaser and the Guarantor or to such other address or fax number as the
Guarantor, the Purchaser or any other Beneficiary shall theretofore have
transmitted to the other parties in writing by any of the means specified in
this Section.  Each of the Guarantor, the Purchaser and the Beneficiaries
agree that it will send a courtesy copy of any notice delivered by such party
hereunder to the Debtor at 1416 Providence Highway, Norwood, Massachusetts
02062; PROVIDED, HOWEVER, that the failure to send such a copy to the Debtor
shall not render ineffective any notice otherwise delivered by any such party
in accordance with the terms of this Section 13.

14.  Headings; Counterparts.
     ----------------------

     Section headings appearing in this Guaranty are for convenience of
reference only and shall not define, limit, amplify or otherwise modify any
provision hereof.  This Guaranty may be executed in two or more counterparts,
each of which when executed shall be deemed to be an original but all of which
together shall constitute one and the same agreement.

15.  Amendments.
     ----------

     No provision of this Guaranty may be amended, modified, waived,
discharged or terminated except by a writing signed by each of the
Beneficiaries and the Guarantor expressly referring to the provisions of this
Guaranty to which such writing relates.  No course of dealing with respect to
any of the rights, powers and remedies of any or all of the Beneficiaries
hereunder, and no delay or omission on the part of any or all of the
Beneficiaries in exercising any such right, power or remedy, shall operate as
a waiver thereof or otherwise be prejudicial thereto.





                                    -  22 -


   23


     IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be
executed under seal on its behalf by an officer thereunto duly authorized as
of the date first above written.


                              ANALOG DEVICES, INC.

                              By: /s/ William A. Martin
                                  --------------------------
                                  Name: William A. Martin
                                  Title: Treasurer




   24






                                   EXHIBIT A


                         Existing Secured Indebtedness
                         -----------------------------

Amounts Outstanding as of 4/30//94 ------------------- Capital Lease $ 467,000.00 Obligations
25 EXHIBIT B Existing Subsidiary Indebtedness --------------------------------
Amounts Outstanding Country Bank Facility as of 4/30/94 - - ------- ---- -------- ------------------- France Bank of America Overdraft $ 970,522.00 Belgium Credit Lyonnais Overdraft $2,137,833.00 ------------- $3,108,355.00
   1



                                                        EXHIBIT 10(b)


                              ANALOG DEVICES, INC.
                               One Technology Way
                                 P. O. Box 9106
                       Norwood, Massachusetts 02062-9106



                                          May 18, 1994

Metropolitan Life Insurance Company
One Madison Avenue
New York, New York   10010

Attention:  Treasurer

            Re:  8.87% Senior Secured Notes Due May 1, 2007
                 ------------------------------------------
Gentlemen:

          Capitalized terms used herein but not otherwise defined shall have

the meanings specified in the Note Agreement, as hereinafter defined.



          In connection with the $10,500,000 loan (the "Loan") made by

Metropolitan Life Insurance Company (together its with successors and assigns,

"Metropolitan") to Francis J. Perry, Jr. and William J. Walker, not in their

individual capacities but solely as Trustees of Everett Street Trust under

Declaration of Trust, dated May 9, 1980 (the "Borrower"), pursuant to and as

described in the Note Purchase Agreement, dated May 18, 1994, between

Metropolitan and the Borrower (the "Note Agreement") and the Notes evidencing

the Loan executed by the Borrower to Metropolitan or its registered assigns

(the "Notes"), Analog Devices, Inc. (the "Company") agrees with Metropolitan

as follows:


                                     -1-





   2



                                   ARTICLE I
                                   ---------

                            OBLIGATION TO PURCHASE
                            ----------------------


          1.1  Purchase.    (a) Upon the occurrence and during the continuance
               --------
 of (i) an "Event of Default", as defined in the Mortgage, Security Agreement 

and Fixture Filing, dated as of May 1, 1994 (the "Mortgage"), from the 

Borrower, as mortgagor, to Metropolitan, as mortgagee, or (ii) an "Event

of Default", as defined in the Guaranty, dated as of May 1, 1994 (the

"Guaranty"), from the Company to Metropolitan or (b) at such time when all

principal payable under the Notes has become or has been declared due and

payable, whether upon the stated maturity of the Notes of May 1, 2007 or

otherwise, or (c) at any time if the Lease (as defined in the Notes) is

terminated by either the Borrower or the Company prior to May 1, 2007, or (d)

at any time if the Fixed Rent (as defined in the Lease) payable under the

Lease is reduced or suspended so that the Debt Service Portion of Fixed Rent

(as defined in the Lease) is not sufficient to pay in full the Installment

Payments (as defined in the Notes) then due under the Notes or (e) upon the

determination by Metropolitan of the existence of a Material Environmental

Condition (as hereinafter defined) with respect to the Property, the Company

will, upon written demand by Metropolitan, and at the time, in the manner and

otherwise as hereinafter set forth, purchase and pay for the Notes.  The

purchase shall be made within 15 days after such demand is made, for an amount

(the "Purchase Price") payable in immediately available funds equal to the

aggregate outstanding principal amount of the Notes, together with all accrued

and unpaid interest thereon and all other costs, fees and charges due and

payable under or with respect to the Guaranty and the Mortgage, including,

without limitation, the Make-Whole Payment (as defined in the Mortgage), if

any.  Notwithstanding the foregoing, Metropolitan and the Company agree that

the Purchase Price payable hereunder (x) upon the termination of the Lease




                                      -2-





   3





pursuant to Section 7.1 of the Lease solely on account of a casualty in the

final 3 years of the term of the Lease or (y) upon the termination of the

Lease pursuant to Section 7.2 of the Lease solely on account of a taking of

the Property at any time or (z) upon a purchase contemplated by subparagraph

(e) above, shall not include the Make-Whole Payment.  Upon any purchase,

Metropolitan shall, without representation or warranty, express or implied,

other than as to the ownership by Metropolitan of the Notes free and clear of

any encumbrances created by or through Metropolitan, and without recourse on

the part of Metropolitan, endorse and deliver the Notes and assign the Note

Agreement and any related documents to the Company.



          As a condition of Metropolitan's making the Loan, Metropolitan has

required the Company to complete an Environmental Due Diligence Questionnaire

(the "Questionnaire") with respect to the Property.  The Company agrees that

if upon completion and delivery to Metropolitan of the Questionnaire, together

with any supplements thereto as may be required by Metropolitan, Metropolitan

in good faith determines that further environmental testing, monitoring,

investigation or other review of the Property is warranted, then the Company

shall, at its sole cost and expense, engage a firm of independent qualified

environmental engineers acceptable to Metropolitan (the "Independent

Engineers") to conduct such testing, monitoring, investigation and review,

including, without limitation, preparation of a "Phase I" environmental site

assessment (the "Phase I ESA").  If, based upon review of the Phase I ESA or

such other tests, reports, evaluations or reviews as are prepared by the

Independent Engineers, Metropolitan determines in good faith that additional

testing of the Property is warranted, the Company agrees to provide for such

additional testing, at its sole cost and expense, by a firm of Independent

Engineers.



          Upon the conclusion of all environmental testing, investigation and

review with respect to the Property which Metropolitan has required as 


                                      -3-





   4


permitted above, Metropolitan shall inform the Company in writing of whether

Metropolitan believes that a "Material Environmental Condition" exists with

respect to the Property.  A "Material Environmental Condition" shall exist if

Metropolitan in good faith determines, based on its review of the

Questionnaire, any supplement thereto, any Phase I ESA and/or any other report

prepared in connection with the Property, that an environmental condition

exists with respect to the Property that could materially adversely affect

Metropolitan's investment in the Notes or the Property as collateral therefor

or could materially adversely affect the Company's business, prospects or

financial condition.



          Upon receipt of written notice from Metropolitan that a Material

Environmental Condition exists, the Company will purchase and pay for the

Notes in accordance with the terms of this Agreement.



            1.2  Taxes, Authorizations, Etc.   The Company will pay any stamp,
                 --------------------------
with respect to the purchase of the Notes pursuant to this Agreement other than

any gross receipts or net income or similar tax of Mortgagee payable with       

respect to such purchase.  If any such tax is paid by Metropolitan, the Company

will, upon demand of Metropolitan and whether or not such tax will be correctly

or legally asserted, promptly pay to Metropolitan all such amounts incurred by

Metropolitan for such payment, together with any interest, penalties and

expenses in connection  therewith.  The Company hereby  indemnifies and holds

harmless Metropolitan for such payment, together with all such interest,

penalties and expenses incurred in connection therewith, in the event of the

failure of the Company to pay such stamp or other tax as hereinabove set forth. 

The provisions of this Section 1.2 shall survive the purchase of the Notes

contemplated herein.




                                     -4-





   5





          The Company will obtain any authorization or approval or other

action by, and will give any notice to or make any filing with, any

governmental authority or regulatory body required in connection with the

transfer of the Notes and related documents to the Company upon any purchase

pursuant to this Agreement.  Nothing in this paragraph shall obligate the

Company to obtain any such authorization or approval or other action by, or

give any such notice to or make any such filing if any such authorization,

approval, action, notice, or filing is required solely by or with respect to

Metropolitan.



          1.3  Obligation Absolute.  The Company acknowledges and agrees
               -------------------
that the obligations of the Company as set forth in this Agreement are

material inducements to Metropolitan in purchasing the Notes from the

Borrower.  The Company hereby agrees that its obligations under this Agreement

are absolute and unconditional, independent of the ability of the Borrower to

perform any of its obligations to Metropolitan or to the Company or the

performance by any person or entity of his or its respective obligations, and

without regard to any law, regulation or order now or hereafter in effect in

any jurisdiction affecting the Notes or any of the terms of the Note

Agreement, the Notes, the Mortgage, the Lease, the Guaranty or any other

document related thereto or the rights of Metropolitan with respect thereto,

and irrespective of the following:



          (a)  Any lack of genuineness, legality, validity, enforceability

or value of the Note Agreement or Notes or any other agreement or instrument

relating thereto or any collateral therefor;



          (b)  Any change in the time, manner or place of payment of any

obligations under the Notes, or any term of the Note Agreement, the Mortgage

or the Notes or any amendment or waiver of or any consent to departure from


                                     -5-





   6




the terms of the Note Agreement, the Mortgage or the Notes or any other

related documents;



          (c)  Any exchange, release or non-perfection of any collateral

including, without limitation, the Mortgaged Property (as defined in the

Mortgage);



          (d)  Any failure to pay any taxes which may be payable with

respect to the issuance or transfer of any Note and related documents; or any

failure to obtain any authorization or approval from, or other action by, or

to notify or file with, any governmental authority or regulatory body required

in connection with the issuance or transfer of any Note and related documents;



          (e)  Any impossibility or impracticality of performance, force
                                                                   -----
majeure, or any act of any government, or any other circumstance which might
- - -------
constitute a defense available to, or a discharge of, the Borrower in respect

of the obligations under the Note Agreement, the Mortgage or the Notes or any

party obligated thereunder or any circumstance, event or happening whatsoever,

whether foreseen or unforeseen and whether similar or dissimilar to anything

referred to in this Section 1.3(e), which in any manner would constitute a

legal, equitable or other excuse for non-performance by the Borrower or the

Company;



          (f)  The validity of the organization of the Borrower or the

Company or any other entity, the termination of existence of the Borrower, the

Company or any person or entity or the receipt or non-receipt of any

approvals, directions or consents or other authorizations to act on behalf of

the Company or the Borrower;





                                     -6-





   7





          (g)  Any defense, claim, setoff, recoupment, abatement or other

right, existing or future, which the Company may have against the Borrower or

any other person or entity;



          (h)  The inaccuracy of any representation, warranty or statement

made by or on behalf of any person or entity in connection with the issuance

of the Notes (other than those representations, warranties and statements

contained in Sections 7.1 and 7.2 of the Note Agreement);



          (i)  The bankruptcy, insolvency, reorganization, liquidation,

dissolution, winding up, arrangement, composition, readjustment of debt or

similar event with respect to the Borrower or the Company or any other person

or entity.



          This Agreement shall continue to be effective or be reinstated, as

the case may be, if at any time any payment under or with respect to any Note

is rescinded or must otherwise be returned by Metropolitan upon the

insolvency, bankruptcy or reorganization of the Borrower or otherwise, all as

though such payment had not been made.  The obligations of the Company under

this Agreement shall not be subject to reduction, termination or other

impairment by reason of any setoff, recoupment, counterclaim or defense or for

any other reason.



          1.4  Waiver.  The Company hereby waives promptness, diligence and
               ------
notice of acceptance with respect to the Note Agreement, the Mortgage and the

Notes, and any requirement that Metropolitan protect, secure, perfect or

insure any security interest in or lien on any property including, without

limitation, the Mortgaged Property, which may become subject thereto or

exhaust any right or take any action against the Borrower, or any other person

or entity or any collateral including, without limitation, the Mortgaged

Property and the Guaranty.
                                     -7-


   8





          1.5   Subrogation.    Until all sums owing hereunder have been
                -----------
paid in full to Metropolitan, any rights of subrogation or other rights or

remedies which the Company might have against the Borrower as a result of any

payments made hereunder or otherwise in connection with its undertaking under

this Agreement shall be subordinate to the rights of Metropolitan under the

Notes, Note Agreement, the Mortgage and other related documents and the

Company shall not exercise any such rights and remedies without the consent of

Metropolitan.


                                ARTICLE II
                                ----------

                                 REMEDIES
                                 --------


          2.1   Failure to Purchase.  If the Company shall fail to pay the
                -------------------
Purchase Price for the Notes within the time period and in the manner set

forth above, the Company (i) agrees that it will be unconditionally liable to

Metropolitan for liquidated damages (for the loss of a bargain and not as a

penalty) for the amount of such Purchase Price as well as for all costs and

expenses, if any, incurred by Metropolitan in enforcing this Agreement, and

(ii) irrevocably waives to the full extent permitted by applicable law any

right or defense the Company may have to cause Metropolitan to prove the cause

or amount of such damages or to mitigate the same.



          2.2   Additional Remedies.  The Company agrees that Metropolitan
                -------------------
may bring hereunder and prosecute against the Company a separate action or

actions whether or not the Company brings an action against the Borrower and

whether or not the Borrower is joined in any such action or actions.

Metropolitan shall have, in its sole discretion and without limitation of any

other remedies of Metropolitan with respect to this Agreement and the

performance obligations called for hereby, a right of specific performance of

the obligations of the Company under this Agreement, including but not limited


                                     -8-



   9



to the obligation to purchase the Notes for the Purchase Price, and the right 

to commence suit for compensatory, consequential and liquidated damages.



          2.3   Idemnification.   The Company agrees to indemnify and defend
                --------------
Metropolitan against and hold Metropolitan harmless from all liabilities,

damages, costs and expenses (including, without limitation, reasonable

attorneys' fees), sustained or incurred (a) as a result of the failure of the

Company to comply with its obligations hereunder or (b) in connection with

Metropolitan's purchase of the Notes from the Borrower or enforcement of any

of its rights with respect thereto.



                                  ARTICLE III



                                 Miscellaneous
                                 -------------


          Section   3.1   General Provisions.  This Agreement cannot be
                          ------------------
changed, discharged or terminated orally, but only by an instrument in writing

signed by the party against which enforcement of the same is sought; provided,
                                                                     --------
however, that the terms of Section 1.1 of this Agreement may not be amended in
- - -------
any manner which would materially and adversely affect the Borrower's

interests and rights with respect to the Property without the consent of the

Borrower, which consent shall not be unreasonably withheld or delayed.  All

the terms of this Agreement shall be binding upon, inure to the benefit of and

be enforceable by the respective successors and assigns of the parties hereto,

and, in particular, shall inure to the benefit of and be enforceable by any

registered owner or holder of any of the Notes.  The headings to the various

sections of this Agreement have been inserted for the convenience of reference

only and shall not limit or otherwise affect any of the terms hereof.  This

Agreement may be executed in any number of counterparts, each of which shall

be an original, but all of which together shall constitute one and the same


                                     -9-



   10



instrument.  This Agreement shall be construed and enforced in accordance

with, and governed by, the laws of the Commonwealth of Massachusetts.



          Section 3.2  Consent to Jurisdiction.  The Company hereby
                       -----------------------
irrevocably and unconditionally submits, for itself and its property, to the

non-exclusive jurisdiction of any New York state court or federal court of the

United States of America sitting in New York, and any appellate court from any

thereof, in any action or proceeding arising out of or relating to this

Agreement, or for recognition and enforcement of any judgment, and irrevocably

and unconditionally consents to all claims in respect of any such action or

proceeding being heard and determined in such New York state court or, to the

extent permitted by law, in such Federal court.  A final judgment in any such

action or proceeding shall be conclusive and may be enforced in other

jurisdictions by suit on the judgment or in any manner provided by law.

Nothing in this Agreement shall affect any right that any party may otherwise

have to bring any action or proceeding relating to this Agreement against the

Company or its properties in the courts of any jurisdiction.



     The Company hereby irrevocably and unconditionally waives, to the

fullest extent it may legally and effectively do so, any objection which it

may now or hereafter have to the laying of venue of any suit, action or

proceeding arising out of or relating to this Agreement in any New York state

or Federal court.  The Company hereby irrevocably waives, to the fullest

extent permitted by law, the defense of an inconvenient forum to the

maintenance of such action or proceeding in any such court.



     The Company irrevocably consents to service of process in the manner

provided for notices in Section 13 of the Guaranty.  Nothing in this Agreement

will affect the right of any party to serve process in any other manner

permitted by law.


                                     -10-





   11





     If you are in agreement with the foregoing, please sign the enclosed

counterparts and return one to the Company whereupon this Agreement shall

become a binding contract under seal between you and the Company.


                                   Very truly yours,

                                   ANALOG DEVICES, INC.



                                   By: /s/   William A. Martin
                                       -----------------------
                                       Name: William A. Martin
                                       Title: Treasurer



The foregoing Agreement is
hereby agreed to as of the
date first above written.

METROPOLITAN LIFE INSURANCE COMPANY

By: /s/   Francis M. Donnantuono
    ----------------------------
    Name: Francis M. Donnantuono
    Title:

By: /s/   Richard G. Clarke
    ----------------------------
    Name: Richard G. Clarke
    Title: