<PAGE> 1
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UNITED STATES
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 SEPTEMBER 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NO. 0-27506
COHR INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------
<TABLE>
<S> <C>
DELAWARE 95-4559155
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(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION)
21540 PLUMMER STREET 91311
CHATSWORTH, CALIFORNIA ----------
---------------------------------------- (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (818) 773-2647
--------------
------------------------
FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST
REPORT:
FORMER ADDRESS: 201 NORTH FIGUEROA STREET, SUITE 400, LOS ANGELES CALIFORNIA
90012
FORMER TELEPHONE NUMBER: (213) 250-5600
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X NO _
As of November 1, 1996, there were outstanding 4,582,000 shares of the
Registrant's Common Stock, par value $0.01.
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COHR INC. AND SUBSIDIARIES
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
NUMBER
------
<S> <C> <C>
PART I FINANCIAL INFORMATION
Item 1 Financial Statements...................................................... 1
Consolidated Balance Sheets as of September 30, 1996 and March 31, 1996... 1
Consolidated Statements of Income for the three months ended September 30,
1996, and September 30, 1995 and the six months ended September 30, 1996
and September 30, 1995.................................................... 2
Consolidated Statements of Cash Flows for the six months ended September
30, 1996, and September 30, 1995.......................................... 3
Notes to Financial Statements............................................. 4
Item 2 Management's Discussion and Analysis of Financial Condition and Results of
Operations................................................................ 5
General................................................................... 5
Results of Operations..................................................... 5
PART II OTHER INFORMATION
Item 1 Legal Proceedings......................................................... 8
Item 4 Submission of Matters to a Vote of Security-Holders....................... 8
Item 6 Exhibits and Reports on Form 8-K.......................................... 8
</TABLE>
i
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PART I
ITEM 1. FINANCIAL STATEMENTS
COHR INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT NUMBER OF SHARES)
ASSETS
<TABLE>
<CAPTION>
SEPTEMBER 30, MARCH 31,
1996 1996
------------- ---------
(UNAUDITED)
<S> <C> <C>
CURRENT ASSETS:
Cash............................................................... $ 9,498 $19,314
Accounts receivable, Trade, net of allowance for doubtful accounts
of $1,043 (September 30, 1996) and $835 (March 31, 1996)........ 17,988 12,644
Other........................................................... 218 1,233
Inventory.......................................................... 5,080 3,486
Prepaid expenses and other......................................... 808 620
Deferred income tax asset.......................................... 904 806
------- -------
Total Current assets....................................... 34,496 38,103
Equipment & Improvements, net........................................ 5,389 3,718
Intangible assets, net of accumulated amortization of $393 (September
30, 1996) and $280 (March 31, 1996)................................ 5,827 2,530
Other assets......................................................... 260 121
------- -------
TOTAL................................................................ $45,972 $44,472
======= =======
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable -- trade.......................................... $ 2,072 $ 2,092
Accrued expenses................................................... 3,323 3,372
Accrued liabilities -- COHR MasterPlan............................. 2,285 4,498
Deferred Revenue................................................... 3,517 4,586
Income tax liability............................................... 369
Current portion of long-term debt.................................. 1,291 85
------- -------
Total Current liabilities.................................. 12,857 14,633
Deferred income tax liability........................................ 402 448
Long term debt....................................................... 1,423 276
STOCKHOLDERS' EQUITY
Preferred Stock, $.01 par value; 2,000,000 shares authorized; no
shares issued and outstanding
Common Stock, $.01 par value; 20,000,000 shares authorized;
4,582,000 (September 30, 1996) and 4,562,000 (March 31, 1996)
shares issued and outstanding................................... 869 869
Additional paid in capital......................................... 22,284 22,104
Retained earnings.................................................. 8,137 6,142
------- -------
Total stockholders' equity................................. 31,290 29,115
------- -------
TOTAL................................................................ $45,972 $44,472
======= =======
</TABLE>
1
<PAGE> 4
COHR INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------- -------------------
1996 1995 1996 1995
------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenues............................................ $21,205 $15,465 $41,670 $30,834
Direct operating expenses........................... 15,272 11,236 29,992 22,311
------- ------- ------- -------
Gross margin........................................ 5,933 4,229 11,678 8,523
Selling, general and administrative expenses........ 4,208 3,391 8,625 6,951
------- ------- ------- -------
Operating income.................................... 1,725 838 3,053 1,572
Interest income..................................... 83 53 315 79
Interest expense.................................... 0 (34) (9) (34)
------- ------- ------- -------
Income before income taxes.......................... 1,808 857 3,359 1,617
Provision for income taxes.......................... 744 343 1,364 646
------- ------- ------- -------
Net Income.......................................... $ 1,064 $ 514 $ 1,995 $ 971
======= ======= ======= =======
Net Income Per Share................................ $ 0.22 $ 0.24 $ 0.41 $ 0.46
------- ------- ------- -------
Weighted Average Number of Common Stock and Common
Stock Equivalents Outstanding..................... 4,832 2,112 4,832 2,112
======= ======= ======= =======
</TABLE>
2
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COHR INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
SEPTEMBER 30,
-----------------
1996 1995
------- -------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income............................................................... $ 1,995 $ 971
------- -------
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization......................................... 462 436
Provision for losses on accounts receivable........................... 140 30
Deferred income tax asset -- current portion.......................... 0 (41)
Deferred income taxes payable, net.................................... (79) 10
Change in assets and liabilities, net of effect of acquisition of
certain assets:
Accounts receivable:
Trade............................................................... (4,475) 1,054
Other............................................................... 288 (58)
Inventory............................................................. (1,199) (700)
Prepaid expense and other............................................. (180) 110
Other assets.......................................................... (132) (59)
Accounts payable -- trade............................................. 83 (399)
Accrued expenses...................................................... 74 156
Accrued liabilities -- COHR MasterPlan................................ (2,213) (11)
Deferred revenue...................................................... (1,343) (1,959)
Income taxes payable.................................................. 323 (360)
------- -------
Total Adjustments..................................................... (8,251) (1,791)
------- -------
Net cash used in operating activities................................. (6,256) (820)
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures..................................................... (1,291) (437)
Payment for acquisition of certain assets................................ (3,886)
------- -------
Net cash used in investing activities................................. (5,177) (437)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of dividends to parent company................................... (247)
Issuance of long-term debt............................................... 1,498
Payments and maturities on long-term debt................................ (61) (16)
Exercise of stock options................................................ 180
------- -------
Net cash provided by (used in) financing activities...................... 1,617 (263)
------- -------
NET DECREASE IN CASH AND CASH EQUIVALENTS.................................. (9,816) (1,520)
CASH AND CASH EQUIVALENTS, beginning of period............................. 19,314 4,453
------- -------
CASH AND CASH EQUIVALENTS, end of period................................... $ 9,498 $ 2,933
======= =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION - Cash paid during the
period for:
Income taxes.......................................................... $ 1,010 $ 1,047
======= =======
Interest.............................................................. $ 9 $ 2
======= =======
DETAILS OF BUSINESSES OR ASSETS ACQUIRED AT FAIR VALUE ARE AS FOLLOWS:
Current assets........................................................ $ 1,988
Equipment............................................................. 905
Goodwill and other intangibles........................................ 3,410
-------
6,303
Liabilities assumed................................................... 2,417
-------
Net cash paid for acquisitions............................................. $ 3,886
=======
</TABLE>
3
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COHR INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS AND THE THREE MONTHS ENDED
SEPTEMBER 30, 1996
(UNAUDITED)
1. BASIS OF PRESENTATION
In the opinion of management, the accompanying consolidated financial
statements include all adjustments (which consist only of normal recurring
adjustments) necessary for a fair presentation of the financial position of COHR
Inc. ("COHR") and subsidiaries (collectively, the "Company"), and the results of
its operations and its cash flows for the interim periods presented. Although
COHR believes that the disclosures in these consolidated financial statements
are adequate to make the information presented not misleading, certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to the rules and regulations of the Securities and
Exchange Commission. Results of operations for the interim periods are not
necessarily indicative of results to be expected for any other interim period or
for the full year.
The consolidated financial statements for the three month and six month
periods ended September 30, 1996 and September 30, 1995 are unaudited and should
be read in conjunction with the consolidated financial statements and notes
thereto included in COHR's Annual Report on Form 10-K, for the year ended March
31, 1996.
Consolidation of Subsidiaries -- The Company's financial statements include
the activity of all of its wholly owned subsidiaries over which the Company has
direct or indirect unilateral and perpetual control. All intercompany
transactions have been eliminated in consolidation.
Net Income Per Common Share -- Net income per common share is computed
based on the weighted average number of shares outstanding, giving retroactive
effect to all stock splits, including a 20,000-for-1 Common Stock dividend
effective November 1, 1995.
2. SUBSEQUENT EVENTS
Subsequent to September 30, 1996, the Company acquired the business of a
company similar to that of COHR Inc. The acquisition included the purchase of
certain assets including inventory, equipment, and other assets, for a purchase
price of $160,000, of which $80,000 was paid in cash, with a short term note
issued for the remainder.
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<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
The Company is a leading national outsourcing service organization
providing equipment servicing, group purchasing and other services to hospitals,
integrated health systems and alternate site providers. The Company operates 28
regional service and sales sites to support its equipment services operations
and nine regional sales and customer service sites to support its group
purchasing activities.
RESULTS OF OPERATIONS
SIX MONTHS ENDED SEPTEMBER 30, 1996 VERSUS SIX MONTHS ENDED SEPTEMBER 30, 1995
Revenues -- The Company's revenues for the six months ended September 30,
1996 totaled $41.7 million, an increase of $10.9 million or 35.1% over revenues
of $30.8 million for the six months ended September 30, 1995. Of the $10.9
million increase in revenues, $8.3 million resulted from growth in COHR
MasterPlan. The $8.3 million was primarily from increases in revenues from
growth generated internally. The Company acquired or opened 11 new service and
sales sites in the six months to September 30, 1996.
Direct Operating Expenses -- The Company's direct expenses for the six
months ended September 30, 1996 totaled $30.0 million which represented an
increase of $7.7 million or 34.4% over the six months ended September 30, 1995
total of $22.3 million. Direct operating expenses as a percentage of revenues
for the six months ended September 30, 1996 decreased to 72.0% from 72.4% for
the six months ended September 30, 1995. This decrease was a result of certain
economies of scale being achieved over the prior period.
Gross Margin. The Company's gross margin for the six months ended September
30, 1996 totaled $11.7 million, an increase of $3.2 million or 37.0% over the
six months ended September 30, 1995 total of $8.5 million. Gross margin as a
percentage of revenues increased to 28.0% for the six months ended September 30,
1996 from 27.6% for the six months ended September 30, 1995.
Selling, General and Administrative Expenses. The Company's selling,
general and administrative expenses for the six months ended September 30, 1996
totaled $8.6 million, an increase of $1.6 million or 24.1% over the six months
ended September 30, 1995 total of $7.0 million. As a percentage of revenues,
selling, general and administrative expenses decreased during the six months
ended September 30, 1996 to 20.7% from 22.5% during the six months ended
September 30, 1995. The absolute increase in expenses reflected the increase in
costs necessary to support the Company's expanded operations. The decrease in
selling, general and administrative expenses as a percentage of revenues
reflected the growth in revenues without a corresponding increase in
administrative costs, as well as other cost savings achieved through economies
of scale.
Operating Income. The Company's operating income for the six months ended
September 30, 1996 totaled $3.1 million, an increase of $1.5 million or 94.2%
over the six months ended September 30 ,1995 total of $1.6 million. Operating
income as a percentage of revenues for the six months ended September 30, 1996
increased to 7.3% as compared to 5.1% for the six months ended September 30,
1995.
Provision for Income Taxes. The Company's provision for income taxes for
the six months ended September 30, 1996 totaled $1.4 million, an increase of
$0.8 million or 111.1% over the six months ended September 30, 1995 total of
$646,000, due to the increase in pre-tax income for the period. The Company's
effective tax rate for the six months ended September 30, 1996 was 40.6% as
compared to 40.0% for the six months ended September 30, 1995.
Net Income. The Company's net income for the six months ended September 30,
1996 totaled $2.0 million, an increase of $1.0 million or 105.5% over the six
months ended September 30, 1995 total of $971,000. As a percentage of revenues,
net income increased to 4.8% in the six months ended September 30, 1996 from
3.1% in the six months ended September 30, 1995.
5
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THREE MONTHS ENDED SEPTEMBER 30, 1996 VERSUS THREE MONTHS ENDED SEPTEMBER 30,
1995
Revenues -- The Company's revenues for the three months ended September 30,
1996 totaled $21.2 million, an increase of $5.7 million or 37.1% over revenues
of $15.5 million for the three months ended September 30, 1995. Of the $5.7
million increase in revenues, $4.5 million resulted from growth in COHR
MasterPlan. The $4.5 million was primarily from increases in revenues from
growth generated internally. The Company acquired or opened six new service and
sales sites in the three months to September 30, 1996.
Direct Operating Expenses -- The Company's direct expenses for the three
months ended September 30, 1996 totaled $15.3 million which represented an
increase of $4.1 million or 35.9% over the three months ended September 30, 1995
total of $11.2 million. Direct operating expenses as a percentage of revenues
for the three months ended September 30, 1996 decreased to 72.0% from 72.7% for
the three months ended September 30, 1995. This decrease was a result of certain
economies of scale being achieved over the prior period.
Gross Margin. The Company's gross margin for the three months ended
September 30, 1996 totaled $5.9 million, an increase of $1.7 million or 40.3%
over the three months ended September 30, 1995 total of $4.2 million. Gross
margin as a percentage of revenues increased to 28.0% for the three months ended
September 30, 1996 from 27.3% for the three months ended September 30, 1995.
Selling, General and Administrative Expenses. The Company's selling,
general and administrative expenses for the three months ended September 30,
1996 totaled $4.2 million, an increase of $0.8 million or 24.1% over the three
months ended September 30, 1995 total of $3.4 million. As a percentage of
revenues, selling, general and administrative expenses decreased during the
three months ended September 30, 1996 to 19.8% from 21.9% during the three
months ended September 30, 1995. The absolute increase in expenses reflected the
increase in costs necessary to support the Company's expanded operations. The
decrease in selling, general and administrative expenses as a percentage of
revenues reflected the growth of revenues without a corresponding increase in
administrative costs, as well as other cost savings achieved through economies
of scale.
Operating Income. The Company's operating income for the three months ended
September 30, 1996 totaled $1.7 million, an increase of $900,000 or 105.8% over
the three months ended September 30, 1995 total of $0.8 million. Operating
income as a percentage of revenues for the three months ended September 30, 1996
increased to 8.1% as compared to 5.4% for the three months ended September 30,
1995.
Provision for Income Taxes. The Company's provision for income taxes for
the three months ended September 30, 1996 totaled $744,000, an increase of
$401,000 or 116.9% over the three months ended September 30, 1995 total of
$343,000, due to the increase in pre-tax income for the period. The Company's
effective tax rate for the three months ended September 30, 1996 was 41.2% as
compared to 40.0% for the three months ended September 30, 1995.
Net Income. The Company's net income for the three months ended September
30, 1996 totaled $1.1 million, an increase of $0.6 million or 107.0% over the
three months ended September 30, 1995 total of $0.5 million. As a percentage of
revenues, net income increased to 5.0% in the three months ended September 30,
1996 from 3.3% in the three months ended September 30, 1995.
LIQUIDITY AND CAPITAL RESOURCES
The Company had working capital of $21.6 million and $23.5 million as of
September 30, 1996 and March 31, 1996 respectively. The Company had cash and
cash equivalents of $9.5 million and $19.3 million for the same respective
periods.
Net cash used in operating activities was $6.3 million and $0.8 million for
the six months ended September 30, 1996 and 1995, respectively. The fluctuations
in cash used in operations is due primarily to changes in accounts receivable,
inventories, accounts payable, accrued liabilities and deferred revenue.
Net cash used in investing activities was $5.2 million and $0.4 million for
the six months ended September 30, 1996 and 1995 respectively. The principal
uses of this cash were for the purchase of businesses,
6
<PAGE> 9
customer lists and related assets. Capital expenditures during these periods
amounted to $1.3 million and $0.4 million respectively.
Cash flows provided by (used in) financing activities were due to exercise
of stock options and acquiring new debt.
INFLATION
The Company believes that its operations have not been materially adversely
affected by inflation. The Company expects that salary and wage increases for
its skilled staff will continue to be higher than average wage increases, as is
common in the Company's industry.
7
<PAGE> 10
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is involved from time to time in various legal proceedings
incidental to its business. In the opinion of the Company's management, no such
pending litigation is likely to have a material adverse effect on the Company's
business.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
The annual meeting of stockholders of the Company was held on July 26,
1996. At the meeting, Paul Chopra and Lynn Reitnouer were nominated for election
as directors of the Company, each to hold office until the 1999 annual meeting
of stockholders, and there were no other nominations. There were present at the
meeting, in person or by proxy, holders of 3,692,929 shares of the Company, or
79.3% of the total shares outstanding. The votes cast for election of directors
was as follows:
<TABLE>
<CAPTION>
NOMINEE VOTES FOR VOTES WITHHELD
--------------------------------------------------- --------- --------------
<S> <C> <C>
Paul Chopra........................................ 3,687,529 5,400
Lynn Reitnouer..................................... 3,687,429 5,500
</TABLE>
There was no other action taken at the meeting. Following the meeting James D.
Barber, Michael I. Matsuura and Frederick C. Meyer continued to serve as
directors with the terms expiring at the 1997 annual meeting and Stephen W.
Gamble, Ronnie J. Messenger and Louis A. Simpson continued to serve as directors
with the terms expiring at the 1998 annual meeting.
ITEM 6. EXHIBITS & REPORTS ON FORM 8-K
(a) Exhibits included or incorporated herein:
See Index to Exhibits
(b) Reports on Form 8-K
Not applicable
8
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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.
COHR INC.
--------------------------------------
(Registrant)
Date: November 13, 1996 /S/ PAUL CHOPRA
--------------------------------------
Paul Chopra
Chairman, President and Chief
Executive Officer
(Principal Executive Officer)
Date: November 13, 1996 /S/ UMESH MALHOTRA
--------------------------------------
Umesh Malhotra
Chief Financial Officer and Assistant
Secretary
(Principal Financial Officer)
9
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COHR INC.
INDEX TO EXHIBITS
ITEM (6)
(a) Exhibits
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
-------- ----------------------------------------------------------------- ------------
<S> <C> <C>
1.1* Form of Underwriting Agreement...................................
3.1* Certificate of Incorporation of Registrant.......................
3.2* By-laws of Registrant............................................
4.1* Form of Warrant to be issued to the Representatives of the
Underwriters.....................................................
4.2* Form of Registration Rights Agreement between Registrant,
Healthcare Association of Southern California ("HASC") and
Hospital Council Coordinated Programs, Inc.......................
4.3* Specimen Stock Certificate.......................................
10.1* Form of Indemnity Agreement entered into between Registrant and
each of its executive officers and directors.....................
10.2* Employment Agreement between Registrant and Paul Chopra,
effective January 1, 1996........................................
10.3* Executive Long-Term Incentive Plan of Registrant.................
10.4* Form of 1995 Stock Option Plan of Registrant and Form of
Nonstatutory Option Grant Under the Plan.........................
10.5 Revolving Credit Agreement between Registrant and 1st Business
Bank, dated June 11, 1996, together with Promissory Note, General
Security Agreement and Continuing Guarantee made by HASC.........
10.8* Consulting Agreement between Registrant and Stephen W. Gamble dba
Gamble's Victory Marine, dated August 1, 1994....................
10.9* Administrative Services Agreement between Registrant and
Healthcare Association of Southern California, dated January 1,
1996.............................................................
10.10** Office Lease between TCEP II properties and Registrant dated May
8, 1996..........................................................
11 Computation of Per Share Earnings................................
21.1*** Subsidiaries of Registrant.......................................
27 Financial Data Schedule..........................................
</TABLE>
- ---------------
* Previously filed as exhibits to Registrant's Registration Statement on Form
S-1, Registration No. 33-80635.
** Previously filed as exhibit to Registrant's Annual Report on Form 10-K for
the fiscal year ended March 31, 1996, Commission File No. 0-27506.
*** Previously filed as exhibit to Registrant's Registration Statement on Form
S-1, Registration No. 333-14979.
10
<PAGE> 1
EXHIBIT 10.5
1ST BUSINESS
BANK
PROMISSORY NOTE
#11455
BORROWER: COHR, INC. LENDER: 1ST BUSINESS BANK
21540 PLUMMER STREET HEADQUARTERS
CHATSWORTH, CA 91311 601 WEST FIFTH ST.
LOS ANGELES, CA 90071
PRINCIPAL AMOUNT: $2,000,000.00
INITIAL RATE: 8.250%
DATE OF NOTE: JULY 11, 1996
PROMISE TO PAY. COHR, INC. ("BORROWER") PROMISES TO PAY TO 1ST BUSINESS BANK
("LENDER"), OR ORDER, IN LAWFUL MONEY OF THE UNITED STATES OF AMERICA, THE
PRINCIPAL AMOUNT OF TWO MILLION & 00/100 DOLLARS ($2,000,000.00) OR SO MUCH AS
MAY BE OUTSTANDING, FROM TIME TO TIME WITH INTEREST THEREON FROM THE DATE OF
THE ADVANCE UNTIL PAID IN FULL.
PAYMENT. BORROWER WILL PAY ALL OUTSTANDING PRINCIPAL PLUS ALL ACCRUED UNPAID
INTEREST ON OR BEFORE JUNE 30, 1997. IN ADDITION, BORROWER WILL PAY, MONTHLY,
INTEREST, BEGINNING JULY 31, 1996, AND ON THE LAST DAY OF EACH MONTH AFTER
THAT. Interest on this Note is computed on a 365/360 simple interest basis;
that is, by applying the ratio of the annual interest rate over a year of 360
days, multiplied by the outstanding principal balance, multiplied by the actual
number of days the principal balance is outstanding. Borrower will pay Lender
Principal and Interest at Lender's address shown above or at such other place
as Lender may designate in writing. Unless otherwise agreed or required by
applicable law, payments will be applied first to any unpaid collection costs
and any late charges, then to any unpaid interest, and any remaining amount to
principal.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to change
from time to time based on changes in an index which is the 1st Business Bank
Reference Rate (the "Reference Rate"). Any change in the interest rate
resulting from a change in the Reference Rate shall be effective on and as of
the date of such change. Lender will tell Borrower the current Reference Rate
upon Borrower's request. Borrower understands that Lender may make loans based
on other rates as well. THE REFERENCE RATE CURRENTLY IS 8.250% PER ANNUM. THE
INTEREST RATE TO BE APPLIED LO THE UNPAID PRINCIPAL BALANCE OF THIS NOTE WILL
BE AT A RATE EQUAL TO THE REFERENCE RATE, RESULTING IN AN INITIAL RATE OF
8.250% PER ANNUM. NOTICE: Under no circumstances will the interest rate on
this Note be more than the maximum rate allowed by applicable law.
PREPAYMENT. Borrower may pay without penalty all or a portion of the amount
owed earlier than it is due. Amounts repaid may be reborrowed in accordance
with the terms of this Note.
DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment when due. (b) Borrower breaks any promise
Borrower has made to Lender, or Borrower fails to comply with or to perform
when due any other term, obligation, covenant, or condition contained in this
Note or any agreement related to this Note, or in any other agreement or loan
Borrower has with Lender. (c) Any representation or statement made or furnished
to Lender by Borrower or on Borrower's behalf is false or misleading in any
material respect either now or at the time made or furnished. (d) Borrower
becomes insolvent, a receiver is appointed for any part of Borrower's property,
Borrower makes an assignment for the benefit of creditors, or any proceeding is
commenced either by Borrower or against Borrower under any bankruptcy or
insolvency laws. (e) Any creditor tries to take any of Borrower's property on
or in which Lender has a lien or security interest. This includes a
garnishment of any of Borrower's accounts with Lender. (f) Any guarantor dies
or any of the other events described in this default section occurs with
respect to any guarantor of this Note. (g) A material adverse change occurs in
Borrower's financial condition, or Lender believes the prospect of payment or
performance of the Indebtedness is impaired. (h) Lender in good faith deems
itself insecure.
ADDITIONAL DEFAULT PROVISION. BORROWER WILL ALSO BE IN DEFAULT IF ANY OF THE
FOLLOWING HAPPENS: BORROWER'S FAILURE TO SUBMIT FINANCIAL STATEMENTS, TAX
RETURNS AND SUCH OTHER FINANCIAL INFORMATION TO THE HOLDER HEREOF WHEN
REQUESTED; THE OCCURRENCE OF AN EVENT WHICH CAUSES A MATERIAL ADVERSE CHANGE IN
BORROWER'S FINANCIAL CONDITION; THE GOOD FAITH BELIEF BY LENDER THAT THERE
EXISTS, OR THE ACTUAL EXISTENCE OF, ANY DETERIORATION OF BORROWER'S ABILITY TO
MEET BORROWER'S OBLIGATIONS TO LENDER OR TO BORROWER'S OTHER CREDITORS OR IN
THE VALUE OF ANY COLLATERAL SECURING THE OBLIGATIONS OF THE UNDERSIGNED
HEREUNDER; BORROWER CEASES TO EXIST OR ANY GENERAL PARTNER IN BORROWER CEASES
TO EXIST OR IS NO LONGER A GENERAL PARTNER IN BORROWER.
LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal
balance on this Note and all accrued unpaid interest immediately due, without
notice, and then Borrower will pay that amount. Upon Borrower's failure to pay
all amounts declared due pursuant to this section, including failure to pay
upon final maturity, Lender, at its option, may also, if permitted under
applicable law, increase the variable interest rate on this Note to 5.000
percentage points over the Reference Rate. Lender may hire or pay someone else
to help collect this Note if Borrower does not pay. Borrower also will pay
Lender all costs and expenses of collection. This includes, subject to any
limits under applicable law, Lender's attorneys' fees and Lender's legal
expenses whether or not there is a lawsuit, including attorneys' fees and legal
expenses for bankruptcy proceedings (including efforts to modify or vacate any
automatic stay or injunction), appeals, and any anticipated post-judgment
collection services. Borrower also will pay any court costs, in addition to
all other sums provided by law. THIS NOTE HAS BEEN DELIVERED TO LENDER AND
ACCEPTED BY LENDER IN THE STATE OF CALIFORNIA. IF THERE IS A LAWSUIT, BORROWER
AGREES UPON LENDER'S REQUEST TO SUBMIT TO THE JURISDICTION OF THE COURTS OF LOS
ANGELES COUNTY, THE STATE OF CALIFORNIA. LENDER AND BORROWER HEREBY WAIVE THE
RIGHT TO ANY JURY TRIAL IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM BROUGHT BY
EITHER LENDER OR BORROWER AGAINST THE OTHER. THIS NOTE SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.
COLLATERAL. This Note is secured by personal property collateral referred to
in a security/pledge agreement dated November 3, 1995. Reference should be
made to such document for events of default which may accelerate payments of
this note.
ADVANCES. Advances under this Note may be requested either orally or in
writing by Borrower or by an authorized person. Lender may, but need not,
require that all oral requests be confirmed in writing. All communications,
instructions, or directions by telephone or otherwise to Lender are to be
directed to Lender's office shown above. Borrower agrees to be liable for all
sums either: (a) advanced in accordance with the instructions of an authorized
person or (b) credited to any of Borrower's accounts with Lender. The unpaid
principal balance owing on this Note at any time may be evidenced by
endorsements on this Note or by Lender's internal records, including daily
computer print-outs.
PRIOR NOTE. THIS IS A RENEWAL OF THAT CERTAIN PROMISSORY NOTE NO. 11455 DATED
NOVEMBER 3, 1995.
GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its rights or
remedies under this Note without losing them. Borrower and any other person
who signs, guarantees or endorses this Note, to the extent allowed by law,
waive any applicable statute of limitations, presentment, demand for payment,
protest and notice of dishonor. Upon any change in the terms of this Note, and
unless otherwise expressly stated in writing, no party who signs this Note,
whether as maker, guarantor, accommodation maker or endorser, shall be released
from liability. All such parties agree that Lender may renew or extend
(repeatedly and for any length of time) this loan, or release any party or
guarantor or collateral; or impair, fail to realize upon or perfect Lender's
security interest in the collateral; and take any other action deemed necessary
by Lender without the consent of or notice to anyone. All such parties also
agree that Lender may modify this loan without the consent of or notice to
anyone other than the party with whom the modification is made.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO
THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THE NOTE.
BORROWER:
COHR, INC.
X [SIG]
----------------------------------
Authorized Officer
<PAGE> 2
REVOLVING CREDIT AGREEMENT
This Agreement is made and entered into as of July 11, 1996, by and
between COHR, INC., ("BORROWER"), a Delaware corporation, and 1ST BUSINESS
BANK, a California banking corporation ("BANK").
RECITAL
Borrower has requested from Bank the credit accommodations described
below and Bank has agreed to provide said credit accommodations to Borrower on
the terms and conditions contained herein.
Now, therefore, Bank and Borrower hereby agree as follows:
SECTION 1
THE CREDIT
1.1 REVOLVING LINE OF CREDIT. From the date the Borrower has
satisfied all conditions precedent as set forth in Section 2 hereof, to and
until June 30, 1997, Bank agrees to make advances to Borrower from time to time
up to maximum amount of TWO MILLION DOLLARS ($2,000,000.00). Borrower may
borrow and repay and reborrow all or part of the Line of Credit for its short
term working capital requirements of Borrower's business. The indebtedness of
Borrower to Bank pursuant to the Line of Credit shall be evidenced by the
Revolving Note on the form used by Bank for such purposes. Bank shall enter
each amount borrowed and repaid on the back of the Revolving Note, and such
entries shall be PRIMA FACIE evidence of the amount of the Line of Credit
outstanding, but the failure of the Bank to make any such notation shall not
release Borrower from the obligation to repay amount borrowed hereunder.
1.2 INTEREST. The unpaid principal balance on the Revolving Note
shall bear interest at the rate which Bank announces from time to time as its
Reference Rate per annum and shall vary concurrently with any change in such
Reference Rate. Interest on the Revolving Note shall be computed on the basis
of a 360 day year and the actual number of day elapsed. The Revolving Note
shall provide for the monthly payments of interest only, calculated on the
outstanding principal balance thereunder, payable on the first day of each
month commencing August 1, 1996 and continuing thereafter until June 30, 1997
at which time all unpaid interest shall be due and payable together with all
unpaid principal.
1.3 PROCEEDS. Upon execution hereof, and upon satisfaction of all
conditions precedent set forth in Section 2 hereof, Bank shall disburse the
proceeds of the Revolving Line to Borrower for Borrower's short term working
capital purposes as Borrower shall instruct Bank in writing from time to time
on Bank's standard forms and documents.
1.4 METHOD OF PAYMENT. All payments made by Borrower of principal
and interest shall be made to Bank at its address referred to in Section 8 in
immediately available funds and without deduction or offset, to be applied in
accordance with this Agreement. Whenever any payment or other action to be
made pursuant to this Agreement shall be stated to be due on Saturday, Sunday
or a
<PAGE> 3
designated holiday under the laws of the State of California, such payment may
be made on the next succeeding business day, and such extension of time shall
in each case be included as a period during which principal is outstanding for
the computation of interest due under the Line of Credit.
1.5 COLLATERAL. Borrower shall grant or cause to be granted to
Bank a first priority lien on the following assets subject only to such
exceptions as are acceptable to Bank: the Accounts; the Equipment; the General
Intangibles; the Negotiable Collateral; the Inventory; any money, deposit
accounts or other assets of Borrower in which Bank receives a security interest
or which hereafter come into the possession, custody or control of Bank; and
the proceeds of any of the foregoing, including, but not limited to, proceeds
of insurance covering the Collateral and any and all Accounts, General
Intangibles, Negotiable Collateral, Inventory, Equipment, money, deposit
accounts or other tangible and intangible property of Borrower resulting from
the sale or other disposition of the Collateral, and the proceeds thereof.
Security for the payment and performance of all sums and all other obligations
under the Loan shall be evidenced by the documents executed by Borrower and/or
accommodation pledgor in connection with the Loan. Collateral shall be
security for all obligations to Bank. Bank shall be named as Loss Payee on the
insurance policies covering such collateral.
SECTION 2
CONDITIONS PRECEDENT TO THE LOANS
Bank shall not be obligated to disburse all or any portion of the
proceeds of the Line of Credit unless at or prior to the time for making of
such disbursement, the following conditions have been fulfilled:
2.1 COMPLIANCE. Borrower shall have performed and complied with
all terms and conditions required by this Agreement to be performed or complied
with by it prior to or at the date of the making of any disbursement and shall
have executed and delivered to Bank the Revolving Note.
2.2 RESOLUTIONS. Borrower shall have provided Bank with certified
copies of resolutions in the form provided by the Bank, duly adopted by the
Board of Directors of Borrower.
2.3 CONDITIONS TO DISBURSEMENTS. On the date any requested
disbursement is to be made: (i) all representations and warranties contained in
Section 3 hereof shall be true and correct as if made on such date, and (ii)
there shall not exist, after giving effect to such disbursement, any event,
condition or act which constitutes an Event of Default or which with notice,
lapse of time or both, would constitute an Event of Default.
SECTION 3
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants that:
3.1 BUSINESS. The business of Borrower is that of a for-profit
corporation and it is engaged in the business of group purchasing and repair
service for healthcare providers.
<PAGE> 4
3.2 ORGANIZATION AND AUTHORITY GENERALLY. Borrower is duly
organized and existing under the laws of the state of incorporation, without
limitation to its existence, has the power and authority to carry on the
business in which it is engaged; and Borrower is duly qualified and in good
standing as a foreign corporation wherever such qualification is required.
3.3 POWER TO PERFORM. Borrower has the power and authority to
enter into this Agreement and to execute and deliver the Revolving Note and all
of the documents required by this Agreement.
3.4 DUE AUTHORIZATION. This Agreement and all things required by
this Agreement to be performed by the Borrower have been duly authorized by all
requisite corporate action of Borrower, and this Agreement and the Revolving
Note are valid and binding against Borrower, enforceable in accordance with
their respective terms.
3.5 CONFLICT WITH OBLIGATIONS. The execution, performance and
delivery of this Agreement, the Revolving Note and all other agreements and
instruments required by Bank in connection with the Line of Credit are not in
contravention of any of the terms of any indenture, agreement or undertaking to
which Borrower is a party or by which it or any of its property is bound or
affected.
3.6 FINANCIAL STATEMENTS. An audited statement of financial
condition of Borrower dated March 31, 1996, together with supporting schedules
and a balance sheet and statement of revenue and expense has heretofore been
furnished to Bank, and is true and complete and fairly represents the financial
condition of Borrower during the period covered thereby. Since March 31, 1996
there has been no material adverse change in the financial position or
operations of Borrower.
3.7 TITLE TO PROPERTIES. Except for property which may have been
disposed of in the ordinary course of business, Borrower has good and
marketable title, free and clear of all liens, encumbrances, security interests
and adverse claims, to all of the property reflected in the statement of
financial condition at March 31, 1996, and to all property acquired by Borrower
since that date, except for liens, encumbrances, security interests and adverse
claims reflected in such statement of financial condition.
3.8 LITIGATION. There is no litigation or proceeding pending or
threatened against Borrower, or any of its properties, the result of which, if
decided adversely, might substantially affect the financial condition,
properties or business of Borrower in an adverse manner or result in liability
in excess of the applicable insurance coverage.
3.9 DEFAULT ON MATERIAL OBLIGATION. The Borrower is not in
default in the payment of any of its material obligations.
3.10 EVENT OF DEFAULT. There exists no event, condition or act
which constitutes an Event of Default as defined in Section 6 hereof and no
condition, event or act which with notice or lapse of time would constitute
such Event of Default.
3.11 401K PLANS. Borrower's 401 K plan has been funded in
accordance with principles that are actuarily sound and no "reportable event"
has occurred and is continuing with respect to any such plan; and no fact
exists in connection with any of such defined-benefit pension plans which
<PAGE> 5
constitutes grounds under the Employee Retirement Income Security Act of 1974,
as presently in effect ("ERISA"), for the termination of any of such plans by
the Pension Benefit Guaranty Corporation or for the appointment by an United
States District Court of a trustee to administer any of such plans.
3.12 VIOLATIONS OF FEDERAL LAWS AND REGULATIONS. No action has
been taken or is currently planned by the Borrower, or any agent acting on
their behalf, which would cause this Agreement or the Revolving Note to violate
Regulation U or any other regulation of the Board of Governors of the Federal
Reserve System or to violate the Securities Act of 1933 or the Securities
Exchange Act of 1934.
SECTION 4
AFFIRMATIVE COVENANTS OF BORROWER
Until this Agreement has terminated and Bank has been paid in full,
unless Bank waives compliance in writing, Borrower agrees that:
4.1 USE OF PROCEEDS. Borrower will use the net proceeds of the
Line of Credit only for the purposes set forth in Section 1.1, and 1.3.
4.2 DEPOSITORY RELATIONSHIP. Borrower will, unless otherwise
approved in writing by Bank, maintain its complete commercial banking deposit
relationship with Bank throughout the term of this agreement and any renewals
or extensions thereof.
4.3 OVERDRAFTS. Bank shall have no obligation to pay any
overdraft on any account maintained by Borrower at Bank. Further, Borrower
shall not draw any check against uncollected funds or create an overdraft
regarding any such account maintained at Bank.
4.4 PAYMENT OF OBLIGATIONS. Borrower will pay and discharge
promptly all taxes, assessments and other governmental charges and claims
levied or imposed upon it or upon its properties, or any part thereof;
provided, however, that Borrower shall have the right in good faith to contest
any such taxes, assessments, charges or claims and, pending the outcome of such
contest, to delay or refuse payment thereof provided that adequate funded
reserves are established by it to pay and discharge any such taxes,
assessments, charges and claims.
4.5 MAINTENANCE OF CORPORATE EXISTENCE. Borrower will maintain
and preserve its existence and assets and all rights, franchises and other
authority necessary for the conduct of its business, and Borrower will also
maintain and preserve all its properties, equipment and facilities in good
order, condition and repair.
4.6 MANAGEMENT OF BORROWER. Borrower will continue to employ Paul
Chopra on a full time basis as it's President.
4.7 RECORDS. Borrower will keep and maintain, full and accurate
accounts and records of its operations according to generally accepted
accounting principles and practices and Borrower will permit Bank to have
access thereto, to make examination thereof, and to make audits during regular
business hours.
<PAGE> 6
4.8 INFORMATION FURNISHED. Borrower will furnish to Bank:
(i) Within forty five (45) days after the close of each
fiscal quarter, the balance sheet of the Borrower, the revenue and expense
statement of the Borrower with supportive schedules and a statement of retained
earnings for that month, prepared in accordance with generally accepted
accounting principles and examined and certified as correct to the best of the
knowledge and belief of Paul Chopra, President.
(ii) Within ninety (90) days after the close of Borrower's
fiscal year, the balance sheet of the Borrower as of the close of such year,
the revenue and expense statement of the Borrower with supportive schedules and
a statement of retained earnings, for such year, prepared in accordance with
generally accepted accounting principles applied on a basis consistent with
that of the previous year on an audited basis by Borrower's independent
certified public accountant acceptable to Bank and examined and certified as
correct to the best of the knowledge and belief of Paul Chopra, President.
(iii) Such other financial statements and information as
Bank may reasonably request from time to time.
4.9 TOTAL DEBT TO TANGIBLE NET WORTH. Borrower will maintain a
ratio of total debt to tangible net worth of not greater than 1.75 to 1.00, to
be determined as of each fiscal quarter end. The term "DEBT" means and
includes all of the Borrower's debts and liabilities as determined in
accordance with generally accepted accounting principles consistently applied.
The term "TANGIBLE NET WORTH" means net worth as determined in accordance with
generally accepted accounting principles consistently applied, increased by
debt subordinated to Bank and decreased by the following: patents, licenses,
goodwill, subscription lists, organization expenses, and monies due from
affiliates (including officers, directors, and shareholders).
4.10 WORKING CAPITAL-CURRENT RATIO. Borrower will maintain Net
Working Capital equal to at least Four Million Dollars ($4,000,000), and a
ratio of Current Assets over Current Liabilities of at least 1.50 to 1.0, to be
determined as of each fiscal quarter end. "NET WORKING CAPITAL", as used
herein, shall mean the excess of Current Assets over Current Liabilities of
Borrower. "CURRENT ASSETS" and "CURRENT LIABILITIES", as used herein, shall
mean those assets and liabilities which are so classified by the Borrower's
certified public accountant in accordance with generally accepted accounting
principles, except that prepaid assets and due from affiliated entities shall
be excluded from Current Assets for purposes of this calculation.
4.11 QUICK RATIO. Borrower will maintain a quick ratio of cash,
trade accounts receivable and marketable securities to current liabilities of
at least 1.00 to 1.00, to be determined as of each fiscal quarter end.
4.12 CASH FLOW COVERAGE. Borrower will maintain a net cash flow
equal to at least two hundred percent (200%) of debt service and cash
dividends, if any. Calculations to determine compliance with this section
shall be made as of the end of each fiscal quarter. "NET CASH FLOW", as used
herein, shall mean the sum of: (i) net income of Borrower after taxes plus (ii)
the amount of depreciation and amortization charges, computed for the twelve
(12) month period ending with the
<PAGE> 7
applicable fiscal quarter. "DEBT SERVICE", as used herein, shall mean the sum
of: (i) the principal payments due within the twelve (12) months of the
applicable fiscal quarter end, on all Long Term Debt and (ii) rental payments
due within twelve (12) months of the applicable fiscal quarter end on all Long
Term Capital Leases. "LONG TERM DEBT" and "LONG TERM LEASES", as used herein,
shall mean those debt and lease obligations on renewals on extensions thereof
whose original terms exceed one (1) year.
4.13 MINIMUM PROFITABILITY. Borrower's net quarterly pre-tax
operating profit, as determined in accordance with GAAP and as reported on
Borrower's quarterly financial statements, shall be at least One Hundred Fifty
thousand dollars ($150,000) for each of Borrower's fiscal quarters.
4.14 CLEAN-UP PROVISION. Borrower agrees that for at least thirty
(30) consecutive days during the term of the Line of Credit, there shall be a
zero balance owing Bank under the Line of Credit.
4.15 INSURANCE. Borrower will maintain, with financially sound and
reputable insurers, insurance with respect to its properties and business
against loss or damage of the kind customarily insured against by corporations
of established reputation engaged in the same or a similar business and
similarly situated, in such types and amounts as are customarily carried under
similar circumstances by such other corporations. Borrower will furnish Bank,
upon request, with full information as to the insurance carried by it. Borrower
will maintain adequate amounts of worker's compensation insurance, product
liability insurance and insurance against liability for damage to persons or
property.
4.16 NOTICE OF DEFAULT. Borrower will give prompt written notice
to Bank of all Events of Default under any of the terms or provisions of this
Agreement or of any other agreement, contract, document or instrument entered,
or to be entered by it, changes in management of it, litigation against it, and
of any other matter which has resulted in, or might result in, a materially
adverse change in Borrower's financial condition or operations.
4.17 EXECUTION OF OTHER DOCUMENTS. Borrower will promptly, upon
demand by Bank, execute all such additional agreements, contracts, indentures,
documents and instruments in connection with this Agreement as Bank, in its
sole discretion, may consider necessary.
4.18 LITIGATION AND ATTORNEY'S FEES. Borrower will pay promptly to
Bank, with interest thereon from the date of expenditure at the rate of fifteen
percent (15%) per annum, reasonable attorney's fees and all costs and other
expenses paid or incurred by Bank in collecting or compromising the Credit or
in enforcing or exercising its rights or remedies created by, connected with or
provided in this Agreement or any other agreement or instrument required by in
this Agreement, or any other agreement or instrument required by Bank in
connection with the Credit whether or not suit is filed.
<PAGE> 8
SECTION 5
NEGATIVE COVENANTS OF BORROWER
Until this Agreement has terminated and Bank has been paid in full,
unless Bank waives compliance in writing, Borrower agrees that:
5.1 ENCUMBRANCES AND LIENS. It will not, create, assume or
suffer to exist, any mortgage, pledge, security interest, encumbrance or lien
(other than for taxes not delinquent and for taxes and other items being
contested in good faith) on property of any kind, real, personal or mixed, now
owned or hereafter acquired, or upon the income or profits thereof, except to
Bank.
5.2 BORROWINGS. It will not sell or discount any receivables or
evidence of indebtedness, except to Bank, or borrow any money, or incur,
directly or indirectly, any liabilities for borrowed money.
5.3 ACQUISITIONS. It will not, during the term of this agreement,
make, or commit to make, any acquisition of other businesses, either in whole
or in part, involving total consideration to be paid by Borrower in any one
acquisition of more than Five Million Dollars ($5,000,000), or in aggregate
more than Fifteen Million Dollars ($15,000,000) during the term of this
agreement without the prior written consent of Bank, which such consent shall
not be unreasonably withheld.
5.4 LOANS, ADVANCES AND GUARANTIES. And will not:
(a) except in the ordinary course of business, make any
loans or advances, or become a guarantor or surety, or pledge its credit or
properties in any manner, or extend credit;
(b) form or acquire any subsidiary, enter into a
partnership or joint venture agreement, or purchase the debt or equity of
another person or entity;
(c) invest in debt or equity securities of another person
or entity except for interest bearing accounts and certificates of deposit at
banks where it maintains commercial banking relationships, direct U.S.
Government obligations and commercial paper issued by corporations with top
ratings of Moody's or Standard & Poor's, provided all such permitted
investments shall mature within twelve (12) months.
5.5 RETIREMENT OF STOCK. It will not acquire or retire any shares
of its capital stock in an amount exceeding fifty thousand dollars ($50,000)
cumulative for the term of this Agreement, except as approved in writing by
Bank. Such approval shall not be unreasonably withheld.
5.6 DEFAULT UNDER OTHER AGREEMENTS OR CONTRACTS. It will not
commit or do, or fail to commit to do, any act or thing which would constitute
an event of default under any of the terms or provisions of any other
agreement, contract, document or instrument executed, or to be executed, by it
and concerning the borrowing of money.
5.7 CONSOLIDATION MERGER. It will not consolidate with or merge
into any other corporation or entity.
<PAGE> 9
5.8 SALES OR TRANSFER OF ASSETS. It will not sell, lease, abandon
or otherwise dispose of, directly or indirectly, a material amount of the
assets of the Borrower including but not limited to its inactive and/or any
other subsidiary; provided, however, that under no circumstances may any share
of stock in the corporation owned by Borrower be sold, leased, abandoned,
encumbered, pledged or otherwise disposed of.
5.9 PAYMENT OF DIVIDENDS. It will not, without Bank's prior
written consent, make any distribution or declare or pay any cash dividends on
any of it's capital stock, of any class, whether now or hereafter outstanding
in excess of twenty five percent of Borrower's net profit after taxes, as
determined by Borrower's independent Certified Public Accountant and shown on
Borrower's fiscal year-end CPA audited financial statement prepared in
accordance with generally accepted accounting practices, for any fiscal year.
SECTION 6
EVENT OF DEFAULT
6.1 EVENT OF DEFAULT. If one or more of the following described
Events of Default shall occur:
(A) Borrower shall default in the due and punctual
payment of the principal of or the interest on the Revolving Note issued
hereunder and such default shall not be cured within five (5) business days
after the occurrence thereof; or
(B) Any representation or warranty made by Borrower
herein or in any certificate or financial or other statement heretofore or
hereafter furnished by Borrower or its officers shall prove to be in any
material respect false and misleading; or
(C) Default shall be made by Borrower or any guarantor in
the due performance or observance of any covenant or condition of this
Agreement and such default shall not have been cured within thirty (30) days of
the occurrence thereof or within ten (10) days after notice thereof shall have
been received by Borrower from Bank, whichever is sooner; or
(D) Any of the following events shall occur:
(i) the Borrower commences a voluntary case under
the federal Bankruptcy Code; or
(ii) an involuntary case is commenced against the
Borrower under the federal Bankruptcy Code and relief is ordered against the
Borrower or the petition is controverted but is not dismissed within 30
days after the commencement of the case; or
(iii) a custodian (as defined in the federal
Bankruptcy Code is appointed for, or takes charge of, all or substantially all
of the property of the Borrower; or
(iv) the Borrower commences any other proceeding
under any reorganization, arrangement, readjustment of debt, relief of debtors,
dissolution, insolvency, liquidation or similar law of any jurisdiction
relating to the Borrower (where now or hereafter in
<PAGE> 10
effect), or there is commenced against the Borrower any such proceeding which
remains undismissed for a period of thirty (30) days, or the Borrower is
adjudicated insolvent or bankrupt, or the Borrower fails to controvert in a
timely manner any such case under the federal Bankruptcy Code or any such
proceeding, or any order of relief or other order approving any such case or
proceeding is entered; or
(v) the Borrower, by any act or failure to act
indicates its consent to, approval of or acquiescence in any such case or
proceeding or in the appointment of any custodian of or for it or any
substantial part of its property or suffers any such appointment to continue
undischarged or unstayed for a period of thirty (30) days; or
(vi) the Borrower makes a general assignment for
the benefit of creditors; or
(vii) any corporate action is taken by the Borrower
for the purpose of effecting any of the foregoing; or
(E) The levy of the attachment, execution or other like
process in an amount in excess of Fifty Thousand Dollars ($50,000) against any
of Borrower's property and cumulatively at any one time, One Hundred Thousand
Dollars ($100,000), if such attachment(s), execution(s) or process(es) is not
released within thirty (30) days thereafter; or
(F) The voluntary suspension of business by Borrower; or
(G) The entry of any decree or order of a court having
jurisdiction in the premises appointment a receiver of all or any substantial
part of Borrower's property, if such order or decree is not reversed or vacated
within thirty (30) days thereafter; or
(H) Borrower shall commit to do, or fail to commit or do,
any act or thing which would constitute an event of default under any of the
terms of any other agreement, document or instrument executed, or to be
executed by it and concerning the borrowing of money; or
(I) If, in the sole opinion of the Bank, there is a
materially adverse change in the financial condition of Borrower or if for any
reason Bank believes that the prospect of payment or performance pursuant to
the Revolving Note and/or any other indebtedness of Borrower to Bank, this
Agreement or any other agreement or instrument required by Bank in connection
with the Credit has been impaired; or
(J) Any "reportable event" under ERISA shall have
occurred and be continuing for thirty (30) days which the Bank in good faith
determines constitutes grounds for the imposition of liability against the
Borrower under Part IV, Subtitle D of ERISA; or
(K) A final judgement for money, in an amount in excess
of One Hundred Thousand Dollars ($100,000) is entered against the Borrower and
within thirty (30) days after entry of such judgment Borrower has not caused
such judgment to be discharged, satisfied or the execution thereof stayed
pending appeal; or
<PAGE> 11
THEN, or at any time thereafter, the commitment of Bank to
advance on the Line of Credit shall automatically terminate and the entire
unpaid principal balance of the Revolving Note(s), all interest accrued and
unpaid thereon and all other amounts payable hereunder automatically become and
be forthwith due and payable, without presentment, demand, protest or notice of
any kind, all of which are hereby expressly waived by Borrower; and during the
pendency of any cure period described in Section 6.1 all borrowing and/or
reborrowing pursuant to Section 1.1 and 1.2 shall be suspended until such
default is cured in a timely fashion.
SECTION 7
MISCELLANEOUS PROVISIONS
7.1 ATTORNEY'S FEES. Borrower will pay promptly to Bank without
demand after notice, with interest thereon from the date of expenditure at the
rate of fifteen percent (15%) per annum, reasonable attorney's fees and all
costs and expenses paid or incurred by Bank in collecting or compromising the
Credit whether or not suit is filed. If suit is brought to enforce any
provision of this Agreement, the prevailing party shall be entitled to recover
its reasonable attorney's fees and court costs in addition to any other remedy
or recovery awarded by the court.
7.2 ADDITIONAL REMEDIES. The rights, powers and remedies given to
Bank hereunder shall be cumulative and not alternative and shall be in addition
to all rights, powers and remedies given to Bank by law against Borrower or any
other person, including but not limited to Bank's rights of set off or Banker's
lien.
7.3 NON-WAIVER. Any forbearance or failure or delay by Bank in
exercising any right, power or remedy hereunder shall not be deemed a waiver
thereof and any single or partial exercise of any right, power or remedy shall
not preclude the further exercise thereof.
7.4 INUREMENT. The benefits of this Agreement shall insure to the
successors and assigns of Bank and the permitted successors and assignees of
Borrower.
7.5 APPLICABLE LAW. This Agreement and all other agreements and
instruments required by Bank in connection therewith shall be governed by and
construed according to the laws of the State of California, to the jurisdiction
of whose courts the parties hereby agree to submit.
7.6 SEVERABILITY. Should any one or more provisions of this
Agreement be determined to be illegal or unenforceable, all other provisions
nevertheless shall be effective.
7.7 OFFSET. In addition to and not in limitation of all rights of
offset that Bank, or other holder of a Revolving Note may have under applicable
law, Bank, or other holder of a Revolving Note shall, upon the occurrence of
any Event of Default or any unmatured Event of Default which would constitute
such an Event of Default, have the right to appropriate and apply to the
payment of such Revolving Note any and all balances, credits, deposits,
accounts or moneys of the Borrower then or thereafter with Bank or other
holder.
<PAGE> 12
7.8 TIME OF THE ESSENCE. Time is hereby declared to be of the
essence of this Agreement and of every part hereof.
7.9 INTEGRATION CLAUSE. Except for documents and instruments
specifically referenced herein, this Agreement constitutes the entire agreement
between Bank and Borrower regarding the Revolving Note and all prior
communications verbal or written between Borrower and Bank shall be of no
effect or evidentiary value.
7.10 AMENDMENT. No provision of this Agreement or the Revolving
Note may be amended, modified, supplemented, changed, waived, discharged or
terminated, except pursuant to a writing signed by or on behalf of Bank and
Borrower.
7.11 HEADINGS AND CAPTIONS. All section headings and captions are
for convenience and ease of reference only and are not intended to supplement,
augment or modify any term of this Agreement.
SECTION 8
SERVICE OF NOTICE
8.1 ADDRESSES: Any notices or other communications provided for or
allowed hereunder shall be considered to have been validly given if delivered
personally or 48 hours after being deposited in the United States mail, postage
prepaid and addressed:
IF TO BORROWER:
COHR, INC.
21540 PLUMMER STREET
CHATSWORTH, CA 91311
If TO BANK:
1ST BUSINESS BANK
601 WEST 5TH STREET
LOS ANGELES, CA 90071
The addresses to which notices or demands are to be given may be
changed from time to time by notice served as provided above.
This Agreement is executed on behalf of the parties by duly authorized
officers as of the date first above written.
For this Revolving Credit Agreement to be effective, an executed copy
of this agreement and all other referenced and required documents which have
been properly executed shall be returned to the Bank by July 31, 1996.
<PAGE> 13
1ST BUSINESS BANK
By [SIG]
------------------------------
Title Vice President
----------------------------
By [SIG]
------------------------------
Title Chairman and CEO
----------------------------
BORROWER:
COHR, INC.
By [SIG]
------------------------------
Title CEO
----------------------------
By [SIG]
------------------------------
Title CFO
----------------------------
<PAGE> 1
EXHIBIT 11
COHR INC. AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS
(IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------- -----------------
1996 1995 1996 1995
------ ------ ------ ------
<S> <C> <C> <C> <C>
NET INCOME ATTRIBUTABLE TO COMMON STOCK................. $1,064 $ 514 $1,995 $ 971
====== ====== ====== ======
PRIMARY EARNINGS PER SHARE:
Weighted average number of common shares
outstanding........................................ 4,570 2,112 4,566 2,112
Dilutive effect of stock options and warrants after
application of treasury stock method............... 262 266
------ ------ ------ ------
Number of shares used to compute primary earnings per
share.............................................. 4,832 2,112 4,832 2,112
Primary earnings per share.............................. $ 0.22 $ 0.24 $ 0.41 $ 0.46
====== ====== ====== ======
</TABLE>
11
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 9,498
<SECURITIES> 0
<RECEIVABLES> 19,031
<ALLOWANCES> 1,043
<INVENTORY> 5,080
<CURRENT-ASSETS> 34,496
<PP&E> 9,248
<DEPRECIATION> 3,859
<TOTAL-ASSETS> 45,972
<CURRENT-LIABILITIES> 12,857
<BONDS> 0
0
0
<COMMON> 869
<OTHER-SE> 30,421
<TOTAL-LIABILITY-AND-EQUITY> 45,972
<SALES> 41,670
<TOTAL-REVENUES> 41,670
<CGS> 29,992
<TOTAL-COSTS> 29,992
<OTHER-EXPENSES> 8,625
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9
<INCOME-PRETAX> 3,359
<INCOME-TAX> 1,364
<INCOME-CONTINUING> 1,995
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,995
<EPS-PRIMARY> 0.41
<EPS-DILUTED> 0.41
</TABLE>
