<PAGE> 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: March 29, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OF 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-4817
BOWMAR INSTRUMENT CORPORATION
(Exact name of registrant as specified in its charter)
INDIANA 35-0905052
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5080 NORTH 40TH STREET, SUITE 475
PHOENIX, ARIZONA 85018
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 602/957-0271
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
--- ---
At May 7, 1997, 6,659,492 shares of the Registrant's Common Stock, and 119,906
shares of the Registrant's Preferred Stock were outstanding.
<PAGE> 2
BOWMAR INSTRUMENT CORPORATION
AND
SUBSIDIARIES
Index
<TABLE>
<S> <C>
PART I FINANCIAL INFORMATION......................................................................... 2-8
Item 1. Financial Statements
Consolidated Balance Sheets (Unaudited)....................................................... 2
March 29, 1997 and September 28, 1996
Consolidated Statements of Income (Unaudited)................................................. 3
Second Quarter and Six Months Ended
March 29, 1997 and March 30, 1996
Consolidated Statements of Cash Flows (Unaudited)............................................. 4
Six Months Ended March 29, 1997 and
March 30, 1996
Notes to Consolidated Financial............................................................... 5
Statements (Unaudited)
Item 2. Management's Discussion and Analysis............................................... 6
of Financial Condition and Results
of Operations
Item 3 Quantitative and Qualitative Disclosures about Market Risk......................... 8
PART II OTHER INFORMATION.................................................................. 8
Item 4. Submission of Matters to a Vote of Security Holders................................ 8
Item 6. Exhibits and Reports on Form 8-K................................................... 9
</TABLE>
1
<PAGE> 3
BOWMAR INSTRUMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(In thousands of dollars)
<TABLE>
<CAPTION>
================================================================================
March 29, 1997 September 28, 1996
================================================================================
<S> <C> <C>
ASSETS
Current Assets
Cash $ 71 $ 108
Accounts receivable, net 4,936 3,992
Inventories 6,416 6,059
Prepaid expenses 368 402
Deferred income taxes 1,630 1,652
- --------------------------------------------------------------------------------
Total Current Assets 13,421 12,213
Property, Plant and Equipment, net 1,244 1,122
Deferred Income Taxes 1,082 1,524
Other Assets, net 1,618 1,679
- --------------------------------------------------------------------------------
Total Assets $17,365 $16,538
================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt $ 607 $ 556
Accounts payable 1,696 933
Accrued salaries and benefits 916 1,503
Accrued expenses 629 719
- --------------------------------------------------------------------------------
Total Current Liabilities 3,848 3,711
Long-Term Debt 3,480 3,675
Other Long-Term Liabilities 339 339
- --------------------------------------------------------------------------------
Total Liabilities 7,667 7,725
- --------------------------------------------------------------------------------
Shareholders' Equity 9,698 8,813
- --------------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity $17,365 $16,538
================================================================================
</TABLE>
See Notes to Consolidated Financial Statements
2
<PAGE> 4
BOWMAR INSTRUMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(In thousands of dollars, except share data)
<TABLE>
<CAPTION>
=============================================================================================================
Second Quarter First Six Months
------------------------------- -------------------------------
1997 1996 1997 1996
=============================================================================================================
<S> <C> <C> <C> <C>
Sales $ 6,698 $ 6,951 $ 13,186 $ 12,930
Cost of sales 4,089 4,462 7,999 8,335
- -------------------------------------------------------------------------------------------------------------
Gross margin 2,609 2,489 5,187 4,595
- -------------------------------------------------------------------------------------------------------------
Expenses:
Selling, general and
administrative 1,845 1,783 3,609 3,384
Product development 175 165 278 318
Interest expense 98 123 203 261
Other income, net (172) (99) (278) (225)
- -------------------------------------------------------------------------------------------------------------
Total expenses 1,946 1,972 3,812 3,738
- -------------------------------------------------------------------------------------------------------------
Income before income taxes 663 517 1,375 857
Provision for income taxes 265 209 550 345
- -------------------------------------------------------------------------------------------------------------
NET INCOME $ 398 $ 308 $ 825 $ 512
=============================================================================================================
NET INCOME PER COMMON SHARE:
Primary $ 0.05 $ 0.03 $ 0.10 $ 0.05
- -------------------------------------------------------------------------------------------------------------
Weighted average number of
common shares and equivalents:
Primary 6,673,673 6,624,184 6,616,810 6,628,506
Fully diluted 8,272,020 8,223,651 8,223,883 8,227,973
=============================================================================================================
</TABLE>
Note: For the second quarter and first six months of 1997 and 1996, fully
diluted net income per share is considered to be the same as primary net
income per share since the effect of the potentially dilutive preferred
stock is currently antidilutive.
See Notes to Consolidated Financial Statements
3
<PAGE> 5
BOWMAR INSTRUMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(In thousands of dollars)
<TABLE>
<CAPTION>
=====================================================================================
FIRST SIX MONTHS
---------------------
MARCH 29, MARCH 30,
1997 1996
=====================================================================================
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 825 $ 512
Adjustments to reconcile net income
to net cash provided by (used in) operations:
Depreciation and amortization 277 262
Deferred income taxes 464 276
Net changes in balance sheet accounts:
Accounts receivable (944) 91
Inventories (357) (814)
Prepaid expenses 34 46
Accounts payable 763 (332)
Accrued salaries & expenses (677) (796)
Other 44 17
- -------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities 429 (738)
- -------------------------------------------------------------------------------------
INVESTING ACTIVITIES:
Purchases of property, plant and equipment (377) (121)
- -------------------------------------------------------------------------------------
FINANCING ACTIVITIES:
Borrowings under notes payable 117 4,610
Retirement of debt (261) (4,303)
Payment of dividends on preferred stock (180) (180)
Issuance of common stock 241
Other (6) (7)
- -------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities (89) 120
- -------------------------------------------------------------------------------------
Net change in cash 37 (739)
Cash at beginning of period 108 739
- -------------------------------------------------------------------------------------
Cash at end of period $ 71 $ 0
=====================================================================================
SUPPLEMENTAL CASH FLOW INFORMATION:
Net cash paid during the period for:
Interest $ 200 $ 277
Income taxes $ 95 $ 77
SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Equipment acquired under capital lease $ 190 $ 0
=====================================================================================
</TABLE>
See Notes to Consolidated Financial Statements
4
<PAGE> 6
BOWMAR INSTRUMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. CONSOLIDATED FINANCIAL STATEMENTS
The consolidated balance sheets as of March 29, 1997 and September 28, 1996, the
consolidated statements of income for the second quarter and six months ended
March 29, 1997 and March 30, 1996, and the consolidated statements of cash flows
for the first six months ended March 29, 1997 and March 30, 1996, have been
prepared by the Registrant without audit. In the opinion of management all
adjustments which are of a normal recurring nature necessary to present fairly
such financial statements have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been omitted. It is suggested that these consolidated financial statements
be read in conjunction with the consolidated financial statements and notes
thereto included in the Registrant's Annual Report on Form 10-K for the fiscal
year ended September 28, 1996. The results of operations for the above noted
periods ended are not necessarily indicative of the operating results for the
full year.
2. NEWLY ISSUED ACCOUNTING STANDARDS
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128 Earnings Per Share (FAS 128) which
specifies the computation, presentation, and disclosure requirements for
earnings per share. FAS 128 replaces the presentation of primary and fully
diluted EPS pursuant to Accounting Principles Board Opinion No. 15 Earnings Per
Share (APB 15) with the presentation of basic and diluted EPS. Basic EPS
excludes dilution and is computed by dividing net income available to common
stockholders by the weighted average number of shares outstanding for the
period. Diluted EPS reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or converted
into common stock. The company is required to adopt FAS 128 with its December
28, 1997 financial statements and restate all prior period EPS information. The
Company will continue to account for EPS under APB 15 until that time. The
adoption of FAS 128 is not expected to have a significant impact on the
Company's reported earnings per share.
3. INVENTORIES
Inventories consist of the following (in thousands):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
March 29, 1997 September 28, 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
Raw Materials $3,185 $3,330
Work-in-process 2,936 2,531
Finished Goods 295 198
------ ------
$6,416 $6,059
====== ======
- --------------------------------------------------------------------------------
</TABLE>
5
<PAGE> 7
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Sales
Sales for the second quarter ended March 29, 1997, were $6,698,000 compared to
prior year sales for the same fiscal 1996 period of $6,951,000. For the first
six months of fiscal 1997 sales were $13,186,000 compared to sales of
$12,930,000 for the same period in fiscal 1996.
Sales in the microelectronic segment for the second quarter of fiscal 1997
increased by approximately $726,000 versus the same period in fiscal 1996. Sales
for the first six months of fiscal 1997 were up by approximately $965,000 versus
the same period in fiscal 1996. Approximately 80% of the increase in the
microelectronic segment sales for the second quarter were related to initial
stocking orders for new distributors. This also accounted for a significant
portion of the year-to-date sales increase, with the remaining increase being in
the military memories product line.
Sales in the electromechanical segment for the second quarter of fiscal 1997
were $979,000 lower, versus the same period in fiscal 1996. Sales for the first
six months of fiscal 1997 were down by approximately $709,000 versus the same
period in fiscal 1996. The decline in sales for the electromechanical segment
resulted principally from the sale of the Ordnance and rapid heat transfer
("RHT") sterilizer product lines in late fiscal 1996.
The Company continues to believe that changes in defense spending by the U. S.
government will not have a material adverse effect on the Company's overall
results. However, it appears that although the Company's microelectronic segment
could experience growth as a result of such changes in defense spending, the
Company's electromechanical segment has been negatively impacted. Accordingly,
the Company continues to pursue its goal of reduced dependency on the defense
industry by pursuing commercial business while emphasizing niche military
markets where the Company has a competitive advantage.
Gross Margin
Gross margin dollars for the second quarter of fiscal 1997 were approximately
$120,000 more than the same period in fiscal 1996. The gross margin dollars for
the first six months were $592,000 above the same period for fiscal 1996. The
fiscal 1997 second quarter gross margin percentage increased to 38.9% from 35.8%
for the same fiscal 1996 period, and the gross margin percentages for the first
six months of fiscal 1997 increased to 39.3% from 35.5% for the
same period of fiscal 1996. The increased margin dollars resulted from the sales
increases discussed above. Gross margins in the microelectronic segment for the
second quarter and six months of fiscal 1997 were 40.6% and 40.9%, respectively,
versus 42.0% and 41.0%, respectively, for the same periods of fiscal 1996. The
decline in the gross margin percentages primarily resulted from a decline in the
selling price for commercial memories.
The gross margin percentage in the electromechanical segment for the second
quarter and first six months of fiscal 1997 were 30.6% and 33.0% respectively,
versus 20.6% and
6
<PAGE> 8
19.3% respectively, in the same periods of the fiscal 1996. The
electromechanical gross margin dollars were lower for the second quarter because
of the decreased sales previously discussed. However, the gross margin
percentage is higher for the quarter and the fiscal year as a result of improved
efficiencies and product mix.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased by $62,000 for the second
quarter of fiscal 1997 as compared with the same period of fiscal 1996, and
increased by $225,000 for the first six months of fiscal 1997 as compared with
the same period of fiscal 1996. The increases were in the microelectronics
division and resulted from the increased sales efforts and the legal expenses
related to the continuing investigation by the U.S. Attorney's Office.
Product Development Expenses
Product development expenses for the second quarter of fiscal 1997 were
approximately $10,000 higher than the same period of fiscal 1996 and were
$40,000 lower for the first six months of fiscal 1997 as compared to the same
period of fiscal 1996. The decrease for the first six months was a result of a
major new product development effort at the microelectronics segment in the same
period of fiscal 1996, which was not duplicated in the first six months of this
fiscal year.
Interest Expense
Interest expense for the second quarter and the first six months in fiscal 1997
decreased by $25,000 and $58,000, respectively, as compared to the same periods
of fiscal 1996. This was a result of a combination of lower interest rates and
lower borrowings in fiscal 1997 periods.
Other Income
Other income was greater for the second quarter and the first six months of
fiscal 1997 by $73,000 and $53,000, respectively, as compared to the same
periods of fiscal 1996. This increase was a result of the February 1997 sale of
a stock investment. This gain was partially offset by the loss of rental income
as a result of the expiration in February 1997 of the lease on a building in
Acton, Massachusetts. The building is currently listed for sale, and the Company
anticipates no loss as a result of the sale. However, the loss of rental income
will lower other income by approximately $120,000 per quarter, and until the
building is sold, it is anticipated that the cost of maintaining the building
and the related taxes will be $30,000 per quarter.
Provision for Income Taxes
The provision for income taxes increased by approximately $56,000 for the second
quarter of fiscal 1997 and by $205,000 for the six months ended March 29, 1997
as compared to the same fiscal 1996 periods. The increase was a result of higher
income before income taxes in the first six months of fiscal 1997.
7
<PAGE> 9
FINANCIAL CONDITION AND LIQUIDITY
In the first six months of fiscal 1997 working capital increased to $9,573,000
from $8,502,000, in the same period of fiscal 1996 principally as a result of
the profitability of the Company.
Changes in the components of working capital are detailed in the Consolidated
Statements of Cash Flows.
During the second quarter of fiscal 1997 the Company executed a modification to
its credit facility with its principal bank, which, among other things, extended
to the Company an additional credit line of up to $1,200,000 to finance
leasehold improvements for the new microelectronic segment facility.
The Company's operations provided $429,000 of cash in the first six months of
fiscal 1997. The Company expects that revenues from operations, when combined
with the Company's available credit facilities, should be sufficient in
management's opinion to fund the Company's cash needs for the foreseeable
future.
ITEM 3
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable
PART II OTHER INFORMATION
ITEM 4
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Annual Meeting of Shareholders was held on January 30, 1997.
(b) At that meeting all of the current directors were re-elected. The vote was
as follows:
<TABLE>
<CAPTION>
Name For Against
------------------- --------- -------
<S> <C> <C>
Fred N. Gerard 5,890,157 99,315
Thomas K. Lanin 5,890,307 99,165
Steven P. Matteucci 5,890,207 99,265
Dan L. McGurk 5,890,157 99,315
Thomas M. Reahard 5,890,507 98,965
Edward A. White 5,875,427 114,045
</TABLE>
(c) At that meeting the shareholders ratified the selection of Coopers &
Lybrand L.L.P. as the Company's independent auditors for fiscal 1997. The
vote was as follows:
<TABLE>
<S> <C>
For 5,892,113
Against 43,235
Abstain 54,124
</TABLE>
8
<PAGE> 10
ITEM 6
EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits.
3.1 Amended and Restated Articles of Incorporation. (Previously filed as
Exhibit A to the Registrant's definitive Proxy Statement prepared in connection
with the 1993 Annual Meeting of Shareholders, which is incorporated herein by
this reference.)
3.2 Amended and Restated Code of By-laws, as further amended on July 28,
1995. (The former having been previously filed as Exhibit 3 to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1993, and the
latter having been previously filed as Exhibit 5(a) to the Current Report on
Form 8-K dated October 16, 1995, both of which are incorporated here by this
reference.)
4.1 Indenture, Bowmar Instrument Corporation 13-1/2% Convertible
Subordinated Debentures due December 15, 1995. (Previously filed as Exhibit 4.4
to the Registration Statement of Form S-7, File No. 2-70025, on November 25,
1980, which is incorporated herein by this reference.)
4.2 Amended and Restated Articles of Incorporation (See Exhibit 3.1,
above.)
4.3 Rights Agreement, dated as of December 6, 1996 between Bowmar
Instrument Corporation and American Stock Transfer and Trust Corporation.
(Previously filed as Exhibit 5C to the Form 8-K filed by the Registrant on
December 19, 1996.)
10.4(d) Third Modification Agreement dated March 28, 1997 pursuant to the Loan
Agreement dated August 28, 1995 by and between Bank One, Arizona NA and the
Registrant.*
10.4(e) Modification of Mortgage (Massachusetts) dated March 28, 1997 by and
between Bank One, Arizona NA and the Registrant, and its wholly owned
subsidiary, Bowmar/ALI.*
10.4(f) Modification of Mortgage (Indiana) dated March 28, 1997 by and between
Bank One, Arizona NA and the Registrant.*
10.4(g) Revolving Promissory Note (RLT) dated March 28, 1997 by and between
Bank One, Arizona NA and the Registrant, for up to $1,200,000. *
11 Computation of Net Income Per Common Share.*
27 Financial Data Schedule.*
*Filed herewith.
b. Reports on Form 8-K.
None
9
<PAGE> 11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereto duly authorized.
BOWMAR INSTRUMENT CORPORATION
/s/ Joseph G. Warren, Jr.
- -------------------------------
Joseph G. Warren, Jr.
Vice President Finance
Dated: May 9, 1997
10
<PAGE> 1
EXHIBIT 10.4(d)
THIRD MODIFICATION AGREEMENT
DATE: March 28, 1997
PARTIES: Borrower: BOWMAR INSTRUMENT CORPORATION,
an Indiana corporation
Lender: BANK ONE, ARIZONA, NA,
a national banking association
RECITALS:
A. Pursuant to that Loan Agreement dated August 28, 1995 (the "Loan
Agreement"), Lender has extended to Borrower the following credit facilities
(the "Loans"):
1. A revolving line of credit (the "RLC") in the principal amount of
$4,000,000.00, evidenced by the Revolving Promissory Note, dated August
28, 1995 ("RLC Note"). The unpaid principal of the RLC as of August 2,
1996 was $1,603,150.75.
2. A term loan (the "Term Loan") in the principal amount of
$4,200,000.00, evidenced by the Promissory Note (Term Note), dated
August 28, 1995 ("Term Note"). The unpaid principal of the Term Note as
of August 2, 1996 was $3,895,000.00.
B. The Loans are secured by, among other things, the following:
1. Mortgage, Security Agreement, Assignment of Rents and Fixture
Filing, dated August 28, 1995 (the "Indiana Mortgage"), by Borrower, as
debtor, in favor of Lender, as secured party, covering real property
located in Wayne County, Indiana.
2. Mortgage, Security Agreement, Assignment of Rents and Fixture
Filing, dated August 28, 1995 ("Massachusetts Mortgage"), by
Bowmar/ALI, Inc., a Massachusetts corporation ("Bowmar/ALI"), as
debtor, in favor of Lender, as secured party, covering real property
located in Middlesex County, Massachusetts.
3. Security Agreement dated August 28, 1995 (the "Security
Agreement"), by Borrower, as debtor, in favor of Lender, as secured
party, covering the personal property described therein.
The agreements, documents, and instruments securing the Loans are referred to
individually and collectively as the "Security Documents."
<PAGE> 2
C. Lender and Borrower have previously executed a Modification
Agreement dated April 26, 1996 and a Second Modification dated August 9, 1996
(collectively, the "Modifications"), modifying the terms of the Loans, the RLC
Note, the Term Note, the Loan Agreement and/or the Security Documents. The RLC
Note and the Term Note are sometimes referred to individually and collectively
as the "Note." The Note, the Loan Agreement, the Security Documents, any
arbitration resolution, any environmental certification and indemnity agreement,
and all other agreements, documents, and instruments evidencing, securing, or
otherwise relating to the Loans, as modified by the Modifications, are sometimes
referred to individually and collectively as the "Loan Documents." Hereinafter,
"Note," "Loan Agreement," and each "Security Document," shall mean such document
as modified in the Modifications.
D. Borrower has requested that Lender provide Borrower with an
additional revolving line of credit/term loan in the amount of $1,200,000.00
(the "RLT") and modify certain provisions in the Loan Documents as provided
herein. Lender is willing to extend to Borrower such additional loan and so
modify the Loan Documents, subject to the terms and conditions herein.
AGREEMENT:
For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Borrower and Lender agree as follows:
SECTION 1. ACCURACY OF RECITALS.
Borrower acknowledges the accuracy of the Recitals.
SECTION 2. MODIFICATION OF LOAN DOCUMENTS; OTHER AGREEMENTS.
2.1 Effective as of February 28, 1997, the definition of "Floating
Rate" on the first page of the RLC Note is hereby amended in its entirety to
read as follows:
"Floating Rate" means the rate per annum equal to the sum of (i)
one-half of one percent (O.5%) per annum, and (ii) the Prime Rate per
annum as in effect from time to time. The Floating Rate will change on
each day that the "Prime Rate" changes.
2.2 The maturity date of the RLC and the RLC Note is changed from
February 28, 1998, to February 28, 1999. The definition of "Maturity Date" on
the first page of the RLC Note is hereby amended in its entirety to read as
follows:
"Maturity Date" means February 28, 1999.
2.3 Recital C on page 1 of the Loan Agreement is hereby amended in its
entirety to read as follows:
-2-
<PAGE> 3
C. Borrower has also applied to Lender for a revolving line of
credit/term loan facility (the "RLT" and with the RLC and the Term
Loan, the "Loans") in, the principal amount of ONE MILLION TWO HUNDRED
THOUSAND AND NO/100 DOLLARS ($1,200,000.00) (the "RLT Amount") for the
purpose of financing leasehold improvements on Borrower's new
manufacturing facility.
2.4 The following definitions are either added to Section 1.1 of the
Loan Agreement or are set forth in Section 1.1 of the Loan Agreement and are
hereby amended in their entirety to read as follows:
"Advance" means RLC Advances, the Term Advance and RLT Advances.
"Borrowing Base" means an amount equal to:
(a) Eighty percent (80%) of the outstanding amount of all
Eligible Accounts Receivable of Borrower, as determined in
accordance with GAAP; plus
(b) The lesser of (i) forty percent (40%) of the lower of cost
or market value on an inventory line item basis the Net Eligible
Inventory of Borrower, as determined in accordance with GAAP, and
(ii) $1,500,000.00.
"Floating Rate Factor" means:
(a) For the RLC, one-half of one percent (0.5%).
(b) For the Term Loan, one and one quarter percent (1.25%).
(c) For the RLT, prior to the RLT Termination Date, one half
of one percent (0.5%).
(d) For the RLT, commencing on the RLT Termination Date and
continuing thereafter, one percent (1.0%).
"Loans" means the RLC, the Term Loan and the RLT, each being a Loan.
"Notes" means the RLC Note, the Term Note and the RLT Note, each
being a Note.
"RLC Maturity Date" means February 28, 1999.
-3-
<PAGE> 4
"RLT": See Recital C hereto.
"RLT Advance" means a disbursement of the proceeds of the RLT.
"RLT Amount" means the sum of ONE MILLION TWO HUNDRED THOUSAND AND
NO/100 DOLLARS ($1,200,000.00).
"RLT Fee": See Section 5.4 hereof.
"RLT Maturity Date" means March 31, 2002.
"RLT Note" means the Promissory Note dated March 28, 1997 in the
amount of the RLT executed by Borrower and delivered pursuant to the
terms of this Loan Agreement, together with any renewals, extensions,
modifications or replacements thereof.
"RLT Termination Date" means the date that is twelve (12) months
after the date of the RLT Note.
"Unused RLT Fee": See Section 5.5 hereof.
2.5 Section 2.2 of the Loan Agreement is hereby amended in its entirety
to read as follows:
2.2 Revolving Line. Subject to the terms and conditions set forth in
this Loan Agreement, the RLC shall be a revolving line of credit,
against which RLC Advances may be made to Borrower, repaid by Borrower,
and new RLC Advances made to Borrower, as Borrower may request,
provided that (i) no RLC Advance shall be made if an Event of Default
shall be continuing, or if any event has occurred which, with the
giving of notice or passage of time, or both, would constitute an Event
of Default, (ii) no RLC Advance shall be made that would cause the
outstanding principal balance of the RLC to exceed the lesser of (A)
the RLC Commitment, or (B) an amount equal to the Borrowing Base less
the principal balance of the RLT outstanding from time to time, and
(iii) no RLC Advance shall be made on or after the RLC Maturity Date.
2.6 Section 2.5 of the Loan Agreement is hereby amended in its entirety
to read as follows:
2.5 Excess Balance Repayment. There shall be due and payable from
Borrower to Lender, and Borrower shall immediately repay to Lender,
without notice or demand, from time to time, any amount by which the
outstanding principal balance of the RLC exceeds the lesser of (i) the
RLC Commitment, or (ii)
-4-
<PAGE> 5
an amount equal to the Borrowing Base less the principal balance of the
RLT outstanding from time to time.
2.7 Article 4 of the Loan Agreement is hereby amended in its entirety
to read as follows:
ARTICLE 4
THE RLT
4.1 RLT Commitment. Lender agrees to loan to or for the benefit of
Borrower, and Borrower agrees to draw upon and borrow, in the manner
and upon the terms and conditions contained in this Loan Agreement,
amounts that in the aggregate at any time outstanding shall not exceed
the RLT Amount.
4.2 Revolving Line. Subject to the terms and conditions set forth in
this Loan Agreement, prior to the RLT Termination Date, the RLT shall
be a revolving line of credit, against which RLT Advances may be made
to Borrower, repaid by Borrower, and new RLT Advances made to Borrower,
as Borrower may request, provided that (i) no RLT Advance shall be made
if an Event of Default shall be continuing, or if any event has
occurred which, with the giving of notice or passage of time, or both,
would constitute an Event of Default, (ii) no RLT Advance shall be made
that would cause the outstanding principal balance of the RLT to exceed
the RLT Amount, (iii) no RLT Advance shall be made on or after the RLT
Termination Date, and (iv) no RLT Advance shall be made if, after the
making of such Advance, the outstanding principal balance of the RLT
plus the outstanding principal balance of the RLC would exceed the
Borrowing Base. On and after the RLT Termination Date, the RLT shall no
longer constitute a revolving line of credit and no further RLT
Advances shall be made to Borrower under the RLT.
4.3 RLT Note. The RLT shall be evidenced by the RLT Note, and shall
bear interest and be payable to Lender upon the terms and conditions
contained therein.
4.4 Principal Prepayments. Borrower may prepay the outstanding
principal balance of the RLT Note in accordance with the terms and
provisions of the RLT Note, including without limitation, any
prepayment premium required therein.
4.5 Notice of RLT Advance. RLT Advances shall be made by Lender to
Borrower upon written notice or telephonic notice followed by facsimile
notice from Borrower to Lender specifying the date and amount of the
requested RLT Advance.
-5-
<PAGE> 6
4.6 Excess Balance Repayment. There shall be due and payable from
Borrower to Lender, and Borrower shall immediately repay to Lender,
without notice or demand, from time to time, (i) any amount by which
the outstanding principal balance of the RLT exceeds the RLT Amount,
and (ii) any amount by which the outstanding principal balance of the
RLT plus the outstanding principal balance of the RLC exceeds the
Borrowing Base.
4.7 Method of Payment. All payments of principal of, and interest
on, the RLT Note shall be made to Lender before 2:00 p.m. (Phoenix,
Arizona time), in immediately available funds. All payments made on the
RLT Note shall be applied, to the extent of the amount thereof, in the
order of priority to be determined by Lender in its sole discretion:
(i) to the payment of costs, fees or other charges incurred in
connection with the RLT; (ii) to the payment of accrued interest on the
RLT; and/or (iii) to the reduction of the principal balance.
4.8 Conditions. Lender shall have no obligation to make any RLT
Advance unless and until all of the conditions and requirements of this
Loan Agreement are fully satisfied. However, Lender in its sole and
absolute discretion may elect to make one or more RLT Advances prior to
full satisfaction of one or more such conditions and/or requirements.
Notwithstanding that such an RLT Advance or RLT Advances are made, such
unsatisfied conditions and/or requirements shall not be waived or
released thereby. Borrower shall be and continue to be obligated to
fully satisfy such conditions and requirements, and Lender, at any
time, in Lender's sole and absolute discretion, may stop making RLT
Advances until all conditions and requirements are fully satisfied.
4.9 Other RLT Advances by Lender. Lender, after giving ten (10) days
written notice to Borrower, from time to time, may make RLT Advances in
any amount in payment of (i) insurance premiums, taxes, assessments,
liens or encumbrances existing against property encumbered by the
Security Documents, (ii) interest accrued and unpaid upon the RLT,
(iii) any charges and expenses that are the obligation of Borrower
under this Loan Agreement or any Security Document, and (iv) any
charges or matters necessary to preserve the property encumbered by the
Security Documents or to cure any Event of Default.
4.10 Assignment. Borrower shall have no right to any RLT Advance
other than to have the same disbursed by Lender in accordance with the
disbursement provisions contained in this Loan Agreement. Any
assignment or transfer, voluntary or involuntary, of this Loan
Agreement or any right hereunder shall not be binding upon or in any
way affect Lender without its written consent; Lender may make RLT
Advances under the disbursement provisions herein, notwithstanding any
such assignment or transfer.
2.8 The following new Sections 5.4 and 5.5 are hereby added to the Loan
Agreement:
-6-
<PAGE> 7
5.4 RLT Fee. In connection with the RLT, Lender has earned and
Borrower shall pay to Lender on or before the closing of the RLT a
non-refundable RLT Fee (the "RLT Fee") in the amount of $1,000.00.
5.5 Unused RLT Fee. Prior to the RLT Termination Date, an unused RLT
fee (the "Unused RLT Fee") computed at the rate of one-quarter of one
percent (.25%) per annum on the unused portion of the RLT Amount,
calculated from the date of the RLT Note shall be payable monthly in
arrears. For each month (or portion thereof), the unused commitment fee
shall be equal to (A) the RLT Amount minus (B) the "average monthly
outstandings" for the month (or portion thereof) with respect to which
the Unused RLT Fee is being computed, with the resulting number
multiplied by (C) one-twelfth (1/12th) of the rate per annum set forth
above. As used herein, "average monthly outstandings" means the sum of
the outstanding amount of the RLT Advances on each day during the month
(or portion thereof for which the unused RLT Fee is being computed)
with respect to which the Unused RLT Fee is being computed, divided by
the number of days in that month (or portion thereof). If the unused
RLT Fee is being computed for less than a full month, the percentage
used in clause (C) above shall be computed on a daily basis for the
number of days for which the fee is being computed.
2.9 The Security Agreement is hereby amended to secure, in addition to
the obligations and indebtedness described therein, the RLT. Section 2(c) of the
Security Agreement is hereby amended in its entirety to read as follows:
(c) Payment of the sum of $1,200,000.00 according to the terms of
that Revolving Promissory Note dated March 28, 1997, made by Debtor,
payable to the order of Secured Party, evidencing a revolving line of
credit, all or any part of which may be advanced to Debtor, repaid by
Debtor and readvanced to Debtor, from time to time, subject to the
terms and conditions thereof, with interest thereon, extension and
other fees, late charges, prepayment premiums and attorneys' fees,
according to the terms thereof, and all extensions, modifications,
renewals or replacements thereof (hereinafter called the "RLT Note")
(the RLC Note, the Term Note and the RLT Note are hereinafter severally
and collectively called the "Note");
2.10 Borrower agrees that pursuant to that Modification of Mortgage
(Massachusetts) and that Modification of Mortgage (Indiana) the Massachusetts
Mortgage and the Indiana Mortgage shall be modified to secure repayment of the
RLT.
2.11 Each of the Loan Documents is modified to provide that it shall be
a default or an event of default thereunder if Borrower shall fail to comply
with any of the covenants of Borrower herein or if any representation or
warranty by Borrower herein is materially incomplete, incorrect, or misleading
as of the date hereof.
-7-
<PAGE> 8
2.12 Each reference in the Loan Documents to any of the Loan Documents
is hereby amended to be a reference to such document as modified herein and in
any modification of mortgage executed in connection herewith.
SECTION 3. RATIFICATION OF LOAN DOCUMENTS AND COLLATERAL.
The Loan Documents are ratified and affirmed by Borrower and shall
remain in full force and effect as modified herein. Any property or rights to or
interests in property granted as security in the Loan Documents shall remain as
security for the Loans and the obligations of Borrower in the Loan Documents.
SECTION 4. BORROWER REPRESENTATIONS AND WARRANTIES.
Borrower represents and warrants to Lender:
4.1 No default or event of default under any of the Loan Documents as
modified herein, nor any event, that, with the giving of notice or the passage
of time or both, would be a default or an event of default under the Loan
Documents as modified herein has occurred and is continuing.
4.2 There has been no material adverse change in the financial
condition of Borrower or any other person whose financial statement has been
delivered to Lender in connection with the Loans from the most recent financial
statement received by Lender.
4.3 Each and all representations and warranties of Borrower in the Loan
Documents are accurate on the date hereof.
4.4 Borrower has no claims, counterclaims, defenses, or set-offs with
respect to the Loans or the Loan Documents as modified herein.
4.5 The Loan Documents as modified herein are the legal, valid, and
binding obligation of Borrower, enforceable against Borrower in accordance with
their terms.
4.6 Borrower is validly existing under the laws of the State of its
formation or organization and has the requisite power and authority to execute
and deliver this Agreement and to perform the Loan Documents as modified herein.
The execution and delivery of this Agreement and the performance of the Loan
Documents as modified herein have been duly authorized by all requisite action
by or on behalf of Borrower. This Agreement has been duly executed and delivered
on behalf of Borrower.
-8-
<PAGE> 9
SECTION 5. BORROWER COVENANTS.
Borrower covenants with Lender:
5.1 Borrower shall execute, deliver, and provide to Lender such
additional agreements, documents, and instruments as reasonably required by
Lender to effectuate the intent of this Agreement.
5.2 Borrower fully, finally, and absolutely and forever releases and
discharges Lender and its present and former directors, shareholders, officers,
employees, agents, representatives, successors and assigns, and their separate
and respective heirs, personal representatives, successors and assigns, from any
and all actions, causes of action, claims, debts, damages, demands, liabilities,
obligations, and suits, of whatever kind or nature, in law or equity of
Borrower, whether now known or unknown to Borrower, and whether contingent or
matured, (i) in respect of the Loans, the Loan Documents, or the actions or
omissions of Lender in respect of the Loans or the Loan Documents and (ii)
arising from events occurring prior to the date of this Agreement.
SECTION 6. CONDITIONS PRECEDENT.
The agreements of Lender and the modifications contained herein shall
not be binding upon Lender until Lender has executed and delivered this
Agreement and Lender has received, at Borrower's expense, all of the following,
all of which shall be in form and content satisfactory to Lender and shall be
subject to approval by Lender:
6.1 An original of this Agreement fully executed by the Borrower and
Bowmar/ALI;
6.2 An original Modification of Mortgage (Indiana) fully executed by
the Borrower;
6.3 An original Modification of Mortgage (Massachusetts) fully executed
by Bowmar/ALI;
6.4 An RLT fee in the amount of $1,000.00;
6.5 Commitments from the title insurance companies that issued the
lender's ALTA extended coverage title insurance policies in connection with the
Loans (the "Title Policies") to issue endorsements, in form satisfactory to
Lender, to the Title Policies, insuring that the Massachusetts Mortgage and the
Indiana Mortgage, as modified by the applicable Modification of Mortgage,
continue to be first liens upon the real property described therein, as security
for the RLC, the Term Loan and the RLT, as modified herein, subject only to
those exceptions contained in the Title Policies and to such additional
exceptions as Lender may specifically approve in writing
-9-
<PAGE> 10
6.6 If Borrower or Bowmar/ALI is a corporation, limited liability
company, partnership or trust, such resolutions or authorizations and such other
documents as Lender may require relating to the existence and good standing of
that corporation, partnership or trust, and the authority of any person
executing this Agreement or other documents on behalf of that corporation,
limited liability company, partnership or trust; and
6.7 Payment of all the internal and external costs and expenses
incurred by Lender in connection with this Agreement (including, without
limitation, outside attorneys, appraisal, appraisal review, processing, title,
filing and recording costs, expenses, and fees).
SECTION 7. INTEGRATION, ENTIRE AGREEMENT, CHANGE, DISCHARGE TERMINATION,
OR WAIVER.
The Loan Documents as modified herein contain the complete
understanding and agreement of Borrower and Lender in respect of the Loans and
supersede all prior representations, warranties, agreements, arrangements,
understandings, and negotiations. No provision of the Loan Documents as modified
herein may be changed, discharged, supplemented, terminated, or waived except in
a writing signed by the parties thereto.
SECTION 8. BINDING EFFECT.
The Loan Documents as modified herein shall be binding upon and shall
inure to the benefit of Borrower and Lender and their successors and assigns and
the executors, legal administrators, personal representatives, heirs, devisees,
and beneficiaries of Borrower, provided, however, Borrower may not assign any of
its right or delegate any of its obligation under the Loan Documents and any
purported assignment or delegation shall be void.
SECTION 9. CHOICE OF LAW.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Arizona, without giving effect to conflicts of law
principles.
SECTION 10. COUNTERPART EXECUTION.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original and all of which together shall constitute one
and the same document.
-10-
<PAGE> 11
Signature pages may be detached from the counterparts and attached to a single
copy of this Agreement to physically form one document.
DATED as of the date first above stated.
BOWMAR INSTRUMENT CORPORATION, an
Indiana corporation
By: /s/ Joseph G. Warren Jr.
-------------------------------
Name: Joseph G. Warren Jr.
-----------------------------
Title: Vice President
----------------------------
BORROWER
BANK ONE, ARIZONA, NA, a national banking
association
By: /s/ Michael McCann
-------------------------------
Name: Michael McCann
-----------------------------
Title: Vice President
-----------------------------
LENDER
-11-
<PAGE> 12
CONSENT AND AGREEMENT
The undersigned, as the debtor under the Massachusetts Mortgage
described in the foregoing Third Modification Agreement, hereby consents and
agrees to the modification of the Loan Documents, the extension of the RLT to
Borrower and all other matters contained in the foregoing Third Modification
Agreement and agrees that the Massachusetts Mortgage shall hereinafter secure
payment of the RLT.
BOWMAR/ALI, INC., a Massachusetts corporation
By: /s/ Joseph G. Warren Jr.
-----------------------------------------
Name: Joseph G. Warren Jr.
-----------------------------------------
Title: Vice President
-----------------------------------------
-12-
<PAGE> 1
EXHIBIT 10.4(e)
When recorded, mail to:
STREICH LANG, P.A.
Renaissance One
Two North Central Avenue
Phoenix, Arizona 85004-2391
Attn: Matthew Mehr, Esq.
MODIFICATION OF MORTGAGE
(Massachusetts)
DATE: March 28, 1997
DESCRIPTION OF MORTGAGE (the "Mortgage"):
PARTIES: Mortgagor: BOWMAR/ALI, INC.,
a Massachusetts corporation
Mortgagor 5080 North 40th Street, Suite 475
Address: Phoenix, Arizona 85018
Attention: Joseph G. Warren, Jr.
Bank: BANK ONE, ARIZONA, NA,
a national banking association.
Bank Post Office Box 71
Address: Phoenix, Arizona 85001
Attention: Commercial Banking A593
RECORDING
DATA: Mortgage, Security Agreement, Assignment of
Rents and Fixture Filing dated August 28, 1995,
by Mortgagor in favor of Bank, recorded November
17, 1995, in Book 25827 Page 174 with the
Middlesex South Registry of Deeds, Middlesex
County, Massachusetts.
FOR VALUE RECEIVED, IT IS AGREED AS FOLLOWS:
1 . The promissory notes and other indebtedness secured by the Mortgage
has been modified by that certain Third Modification Agreement of even date
herewith between Bowmar Instrument Corporation, an Indiana corporation
("Borrower") and Bank and consented to by Mortgagor (the "Third Modification
Agreement"). In addition, pursuant to the Third Modification
<PAGE> 2
Agreement, Bank has agreed to provide Borrower with an additional revolving line
of credit/term loan in the principal amount of $1,200,000.00 (the "RLT")
secured by, among other things, the Mortgage. In connection with the
modification of such indebtedness and the extension of such additional credit,
the Mortgage is hereby modified as provided in this Modification.
2. The Mortgage is hereby amended to secure, in addition to the
indebtedness and obligations of Borrower and Mortgagor described therein, the
obligation of Borrower to repay all advances made by the Bank to the Borrower
under the RLT. Hereinafter, the term "Obligations," as defined in the Mortgage,
shall include, in addition to the other indebtedness described in the Mortgage,
the RLT. The final maturity date of the RLT is March 31, 2002.
3. This Modification shall not affect or impair the lien or priority of
the Mortgage, as amended, with respect to the property subjected to the
Mortgage.
4. All terms and provisions of the Mortgage shall remain in full force
and effect except as specifically modified herein and in the Third Modification
Agreement.
5. This Modification may be executed in counterparts, all of which
executed counterparts shall together constitute a single document. Signature
pages may be detached from the counterparts and attached to a single copy of
this Modification to physically form one document.
IN WITNESS WHEREOF, these presents have been executed as of the date
first written above.
BOWMAR/ALI, INC., a Massachusetts corporation
By: /s/ Thomas K. Lanin
------------------------------------
Name Thomas K. Lanin
------------------------------------
Title: President
-----------------------------------
By: /s/ Joseph G. Warren Jr.
------------------------------------
Name Joseph G. Warren Jr.
------------------------------------
Title: Treasurer
-----------------------------------
MORTGAGOR
-2-
<PAGE> 3
BANK ONE, ARIZONA, NA, a national banking
association
By: /s/ Michael V. McCann
------------------------------------
Name Michael V. McCann
------------------------------------
Title: Vice President
-----------------------------------
BANK
-3-
<PAGE> 4
STATE OF ARIZONA )
) ss:
County of Maricopa )
Before me, a Notary Public in and for the above County and State,
personally appeared Thomas K. Lanin, the President, of BOWMAR/ALI, INC.,
a Massachusetts corporation, who as such officer acknowledged the execution of
the foregoing Modification of Mortgage for and on behalf of the corporation.
WITNESS my hand and Notarial seal this 1st day of April, 1997.
Signature: /s/ Cheryl A. Curtis
------------------------------
Printed: Cheryl A. Curtis
------------------------------
Notary Public
"OFFICIAL SEAL"
My Commission Expires: Cheryl A. Curtis
[SEAL] Notary Public-Arizona
Maricopa County
My County of Residence: My Commission Expires 3/3/2000
STATE OF ARIZONA )
) ss:
County of Maricopa )
Before me, a Notary Public in and for the above County and State,
personally appeared Joseph G. Warren, Jr., the Treasurer, of BOWMAR/ALI, INC., a
Massachusetts corporation, who as such officer acknowledged the execution of the
foregoing Modification of Mortgage for and on behalf of the corporation.
WITNESS my hand and Notarial seal this 1st day of April, 1997.
Signature: /s/ Cheryl A. Curtis
------------------------------
Printed: Cheryl A. Curtis
------------------------------
Notary Public
"OFFICIAL SEAL"
My Commission Expires: Cheryl A. Curtis
[SEAL] Notary Public-Arizona
Maricopa County
My County of Residence: My Commission Expires 3/3/2000
-4-
<PAGE> 5
STATE OF ARIZONA )
) ss:
County of Maricopa )
Before me, a Notary Public in and for the above County and State,
personally appeared Michael V. McCann, the Vice President, of BANK ONE, ARIZONA,
NA, a national banking association, who as such officer acknowledged the
execution of the foregoing Modification of Mortgage for and on behalf of the
association.
WITNESS my hand and Notarial seal this 10th day of April, 1997.
Signature: /s/ Joy L. Peckham
------------------------------
Printed: Joy L. Peckham
------------------------------
Notary Public
"OFFICIAL SEAL"
My Commission Expires: 2/27/99 Joy L. Peckham
------- [SEAL] Notary Public-Arizona
Maricopa County
My County of Residence: Maricopa My Comm. Expires Feb. 27, 1999
--------
THIS INSTRUMENT PREPARED BY: /s/
-------------------------------------------------
Attorney-at-law
Streich Lang
Renaissance One
Two North Central Avenue
Phoenix, Arizona 85003-2391
Telephone: (602) 229-5200
-5-
<PAGE> 1
EXHIBIT 10.4(f)
When recorded, mail to:
STREICH-LANG, P.A.
Renaissance One
Two North Central Avenue
Phoenix, Arizona 85004-2391
Attn: Matthew Mehr, Esq.
MODIFICATION OF MORTGAGE
(Indiana)
DATE: March 28, 1997
DESCRIPTION OF MORTGAGE (the "Mortgage"):
PARTIES: Mortgagor: BOWMAR INSTRUMENT CORPORATION,
an Indiana corporation
Mortgagor 5080 North 40th Street, Suite 475
Address: Phoenix, Arizona 85018
Attention: Joseph G. Warren, Jr.
Bank: BANK ONE, ARIZONA, NA,
a national banking association.
Bank Post Office Box 71
Address: Phoenix, Arizona 85001
Attention: Commercial Banking A593
RECORDING
DATA: Mortgage, Security Agreement, Assignment of
Rents and Fixture Filing dated August 28,
1995, by Mortgagor in favor of Bank, recorded
November 17, 1995, in Instrument Number
95-053967, official records of Allen County,
Indiana.
FOR VALUE RECEIVED, IT IS AGREED AS FOLLOWS:
1. The promissory notes and other indebtedness secured by the Mortgage
has been modified by that certain Third Modification Agreement of even date
herewith between Mortgagor and Bank (the "Third Modification Agreement"). In
addition, pursuant to the Third Modification Agreement, Bank has agreed to
provide Mortgagor with an additional revolving line of credit/term loan in the
principal amount of $1,200,000.00 (the "RLT") secured by, among other things,
the
<PAGE> 2
Mortgage. In connection with the modification of such indebtedness and the
extension of such additional credit, the Mortgage is hereby modified as provided
in this Modification.
2. The Mortgage is hereby amended to secure, in addition to the
indebtedness and obligations of Mortgagor described therein, the obligation of
Mortgagor to repay all advances made by the Bank to the Mortgagor under the RLT.
Hereinafter, the term "Obligations," as defined in the Mortgage, shall include,
in addition to the other indebtedness described in the Mortgage, the RLT. The
final maturity date of the RLT is March 31, 2002.
3. This Modification shall not affect or impair the lien or priority of
the Mortgage, as amended, with respect to the property subjected to the
Mortgage.
4. All terms and provisions of the Mortgage shall remain in full force
and effect except as specifically modified herein and in the Third Modification
Agreement.
5. This Modification may be executed in counterparts, all of which
executed counterparts shall together constitute a single document. Signature
pages may be detached from the counterparts and attached to a single copy of
this Modification to physically form one document.
IN WITNESS WHEREOF, these presents have been executed as of the date
first written above.
BOWMAR INSTRUMENT CORPORATION, an
Indiana corporation
By: /s/ Joseph G. Warren, Jr.
-------------------------
Name: Joseph G. Warren, Jr.
-------------------------
Title: Vice President
-------------------------
MORTGAGOR
BANK ONE, ARIZONA, NA, a national banking
association
By: /s/ Michael V. McCann
-------------------------
Name: Michael V. McCann
-------------------------
Title: Vice President
-------------------------
BANK
-2-
<PAGE> 3
STATE OF ARIZONA )
)ss:
County of Maricopa )
Before me, a Notary Public in and for the above County and State,
personally appeared Joseph G. Warren, Jr., the Vice President, of BOWMAR
INSTRUMENT CORPORATION, an Indiana corporation, who as such officer acknowledged
the execution of the foregoing Modification of Mortgage for and on behalf of the
corporation.
WITNESS my hand and Notarial seal this 1st day of April, 1997.
Signature: /s/ Cheryl A. Curtis
---------------------
Printed: Cheryl A. Curtis
---------------------
Notary Public
"OFFICIAL SEAL"
[SEAL] Cheryl A. Curtis
My Commission Expires: Notary Public - Arizona
Maricopa County
My County of Residence: My Commission Expires 3/3/2000
-3-
<PAGE> 4
STATE OF ARIZONA )
)ss:
County of Maricopa )
Before me, a Notary Public in and for the above County and State,
personally appeared Michael V. McCann, the Vice President, of BANK ONE,
ARIZONA, NA, a national banking association, who as such officer acknowledged
the execution of the foregoing Modification of Mortgage for and on behalf of the
association.
WITNESS my hand and Notarial seal this 10th day of April, 1997.
Signature: /s/ Joy L. Peckham
------------------------------
Printed: Joy L. Peckham
------------------------------
Notary Public
"OFFICIAL SEAL"
My Commission Expires: 2/27/99 Joy L. Peckham
------- [SEAL] Notary Public-Arizona
Maricopa County
My County of Residence: Maricopa My Commission Expires Feb. 27, 1999
--------
THIS INSTRUMENT PREPARED BY: /s/
-------------------------------------------------
Attorney-at-law
Streich Lang
Renaissance One
Two North Central Avenue
Phoenix, Arizona 85004-2391
Telephone: (602) 229-5200
-4-
<PAGE> 1
EXHIBIT 10.4(g)
REVOLVING PROMISSORY NOTE
(RLT)
$1,200,000.00 Phoenix, Arizona
March 28, 1997
FOR VALUE RECEIVED, the undersigned BOWMAR INSTRUMENT CORPORATION, an
Indiana corporation (hereinafter called "Maker"), promises to pay to the order
of BANK ONE, ARIZONA, NA, a national banking association (the "Payee"; Payee and
each subsequent transferee and/or owner of this Note, whether taking by
endorsement or otherwise, are herein successively called "Holder") at Post
Office Box 71, Phoenix, Arizona 85001, Attention: Commercial Banking A593, or at
such other place as Holder may from time to time designate in writing, the
principal sum of ONE MILLION TWO HUNDRED THOUSAND AND NO/100 DOLLARS
($1,200,000.00) or so much thereof as Holder may advance to or for the benefit
of Maker plus interest calculated on a daily basis (based on a 360-day year)
from the date hereof on the principal balance from time to time outstanding as
hereinafter provided, principal, interest and all other sums payable hereunder
to be paid in lawful money of the United States of America as follows:
A. Interest shall accrue on the unpaid principal balance of
this Note at the Floating Rate, provided, that Maker may elect, upon
written notice that is received by Holder at least ten (10) days prior
to the Conversion Date, that interest on the entire outstanding
principal balance of this Note accrue at the Conversion Rate, in which
case, commencing on the Conversion Date and continuing thereafter,
interest shall accrue at the Conversion Rate. During the period that
interest accrues at the Floating Rate, the interest rate on this Note
shall change from time to time on the effective date of, and in
conformity with, changes in the Prime Rate.
B. All accrued interest shall be due and payable on each
Payment Date prior to the RLT Termination Date.
C. Commencing on the first Payment Date on or after the RLT
Termination Date and continuing on each Payment Date thereafter, unless
and until Maker shall elect that interest accrue under this Note at the
Conversion Rate, monthly installments of interest and principal shall
be due and payable on each Payment Date each in a principal amount
sufficient to amortize the principal balance outstanding on the RLT
Termination Date over forty-eight (48) equal monthly installments, plus
all accrued and unpaid interest.
<PAGE> 2
D. Should Maker elect that this Note bear interest at the
Conversion Rate, equal payments of principal and interest shall be due
and payable in consecutive monthly installments commencing on the first
Payment Date after the Conversion Date, and continuing on each Payment
Date thereafter, each in an amount sufficient to fully amortize the
principal amount of this Note outstanding on the Conversion Date, at
the Conversion Rate, over an amortization period equal to forty-eight
(48) months less the number of full months that have elapsed between
the RLT Termination Date and the Conversion Date.
E. The entire unpaid principal balance, all accrued and unpaid
interest, and all other amounts payable under this Note shall be due
and payable in full on the Maturity Date.
As used in this Note:
"Business Day" means a day of the year on which banks are not
required or authorized to close in Phoenix, Arizona.
"Conversion Date" means the date, on or after the RLT
Termination Date, selected by Maker after which interest shall accrue
under this Note at the Conversion Rate.
"Conversion Rate" means the rate per annum equal to the sum
of (i) three and six tenths of one percent (3.60 %) per annum, and (ii)
the yield to maturity of Treasury Obligations having a maturity date
nearest to the Maturity Date determined two Business Days before the
Conversion Date. The maturity date and yield of said Treasury
Obligations shall be determined by Holder, in its absolute and sole
discretion, on the basis of quotations published in The Wall Street
Journal or other comparable sources.
"Default Rate" means an interest rate per annum equal to four
percent (4%) above the rate that would otherwise be payable under the
terms of the respective Notes.
"Floating Rate" means (A) prior to the RLT Termination Date,
the rate per annum equal to the sum of (i) one half of one percent
(0.5%) per annum, and (ii) the Prime Rate per annum as in effect from
time to time, and (B) commencing on the RLT Termination Date and
continuing thereafter, the rate per annum equal to the sum of (1) one
percent (1%) per annum, and (2) the Prime Rate per annum as in effect
from time to time. The Floating Rate will change on each day that the
"Prime Rate" changes.
"Maturity Date" means March 31, 2002.
-2-
<PAGE> 3
"Payment Date" means the first day of the first month after
the initial advance of proceeds under this Note and the first day of
each month thereafter, provided that if any such day is not a Business
Day, then such Payment Date should be the next successive Business Day.
"Prime Rate" means the interest rate per annum publicly
announced by Bank One, Arizona, NA, a national banking association, or
its successors, in Phoenix, Arizona as its "prime rate" as in effect
from time to time. Maker acknowledges that the Prime Rate is not
necessarily the best or lowest rate offered by such Bank and such Bank
may lend to its customers at rates that are at, above or below its
Prime Rate.
"RLT Termination Date" means the date that is twelve (12)
months after the date of this Note.
"Treasury Obligations" means United States Treasury debt
obligations.
Prior to the RLT Termination Date, the principal balance of this Note
represents a revolving credit all or any part of which may be advanced to Maker,
repaid by Maker, and re-advanced to Maker from time to time, subject to the
other terms hereof and the conditions, if any, contained in the Loan Agreement,
defined below, and provided that the principal balance outstanding at any one
time shall not exceed the face amount hereof. On and after the RLT Termination
Date, this Note shall no longer constitute a revolving line of credit and no
further advances hereunder shall be made to Maker.
Maker agrees to an effective rate of interest that is the rate stated
above plus any additional rate of interest resulting from any other charges in
the nature of interest paid or to be paid by or on behalf of Maker, or any
benefit received or to be received by Holder, in connection with this Note.
If any payment required under this Note is not paid when due, within
fifteen (15) days after the date such payment is due, then, at the option of
Holder, Maker shall pay a "late charge" equal to four percent (4%) of the
amount of that payment to compensate Holder for administrative expenses and
other costs of delinquent payments. This late charge may be assessed without
notice, shall be immediately due and payable and shall be in addition to all
other rights and remedies available to Holder.
All payments made on this Note shall be applied, to the extent of the
amount thereof, in the order of priority to be determined by Holder in its sole
discretion: (i) to the payment of costs, fees or other charges incurred in
connection with the indebtedness evidenced hereby: (ii) to the payment of
accrued interest; and/or (iii) to the reduction of the principal balance.
This Note is issued pursuant to that Loan Agreement (as modified as
described below, the "Loan Agreement") dated August 28, 1995 between Maker and
Payee, as amended by that
-3-
<PAGE> 4
Modification Agreement dated April 26, 1996, the Second Modification
Agreement dated August 9, 1996 and that Third Modification Agreement of even
date herewith, and is secured by, among other things, Mortgages dated August
28, 1995, executed by Maker and Bowmar/ALI, Inc., a Massachusetts
corporation, as mortgagor in favor of Payee, as mortgagee, encumbering
property situate in Fort Wayne, Indiana and Acton, Massachusetts, as
modified by Modifications of Mortgage of even date herewith. Such Mortgages
and all other documents or instruments securing the indebtedness evidenced
by this Note or executed or delivered in connection with the indebtedness
evidenced by this Note are hereinafter called the "Security Documents."
Time is of the essence of this Note. At the option of Holder, the
entire unpaid principal balance, all accrued and unpaid interest and all
other amounts payable hereunder shall become immediately due and payable
without notice upon the failure to pay any sum due and owing hereunder as
provided herein if such failure continues for fifteen (15) days after notice
thereof to Maker or upon the occurrence of any Event of Default, as defined
in the Loan Agreement or any of the Security Documents.
After maturity, including maturity upon acceleration, the unpaid
principal balance, all accrued and unpaid interest and all other amounts
payable hereunder shall bear interest at the Default Rate. Maker shall pay
all costs and expenses, including reasonable attorneys' fees and court
costs, incurred in the collection or enforcement of all or any part of this
Note. All such costs and expenses shall be secured by the Mortgages and by
all other Security Documents. In the event of any court proceedings, court
costs and attorneys' fees shall be set by the court and not by jury and
shall be included in any judgment obtained by Holder or Maker.
Maker may prepay the outstanding principal balance hereof, in
whole or in part, at any time prior to the Maturity Date. Subject to
the right of Maker to prepay this Note in full without prepayment
premium in the event the RLC (as defined in the Loan Agreement) is not
renewed by Holder upon any scheduled maturity thereunder, after the
Conversion Date, with any such prepayments (whether made voluntarily or
involuntarily as a result of an acceleration of the Maturity Date or
otherwise), Maker shall also pay (a) all accrued and unpaid interest on
the principal being prepaid, (b) all other amounts then due and
payable by Maker to Holder under this Note, the Loan Agreement and the
Security Documents, and (c) a prepayment premium, if any, equal to the
product of (i) the Average Lost Monthly Interest Income and (ii) the
number of months from the date of prepayment to the Maturity Date (with
any fraction of a month counted as a month), discounted to present
value at the Discount Rate over a period equal to one-half of the
number of months in (ii) above. At the option of Holder, in its
absolute and sole discretion, any prepayment shall be applied to
installments coming due hereunder in the inverse order of their due
dates.
As used in the preceding paragraph:
"Average Lost Monthly Interest Income" means the amount
determined by dividing (i) the product of the Average Principal and the
Lost Rate, by (ii) 12, where:
-4-
<PAGE> 5
"Average Principal" means the amount equal to either
(i) one half the sum of (A) the amount of principal being
prepaid and (B) the amount of principal that is scheduled to
be due on the Maturity Date ("Balloon Amount"), or (ii) the
amount of principal being prepaid, if such amount is less
than the Balloon Amount; and
"Lost Rate" means the rate per annum equal to the
percentage, if any, by which (i) the yield to maturity of
Treasury Obligations having a maturity date nearest to the
Maturity Date determined on the date hereof exceeds (ii) the
yield to maturity of Treasury Obligations having a maturity
date nearest to the Maturity Date determined on the date of
prepayment.
"Discount Rate" means the rate per annum equal to the yield to
maturity of Treasury Obligations having a maturity date nearest to the
Maturity Date determined on the date of prepayment.
The maturity date and yield to maturity of Treasury Obligations shall be
determined by Holder, in its absolute and sole discretion, on the basis of
quotations published in The Wall Street Journal or other comparable sources.
Failure of Holder to exercise any option hereunder shall not constitute
a waiver of the right to exercise the same in the event of any subsequent
default or in the event of continuance of any existing default after demand for
strict performance hereof.
Maker and all sureties, guarantors and/or endorsers hereof (or of any
obligation hereunder) and accommodation parties hereon (severally each
hereinafter called a "Surety") each: (a) agree that the liability under this
Note of all parties hereto is joint and several; (b) severally waive any
exemption laws and right thereunder affecting the full collection of this Note;
(c) severally waive any and all formalities in connection with this Note to the
maximum extent allowed by law, including (but not limited to) demand, diligence,
presentment for payment, protest and demand, and notice of extension, dishonor,
protest, demand and nonpayment of this Note; and (d) consent that Holder may
extend the time of payment or otherwise modify the terms of payment of any part
or the whole of the debt evidenced by this Note, at the request of any other
person liable hereon, and such consent shall not alter nor diminish the
liability of any person hereon.
In addition, each Surety waives and agrees not to assert: (a) any right
to require Holder to proceed against Maker or any other Surety, to proceed
against or exhaust any security for the Note, to pursue any other remedy
available to Holder, or to pursue any remedy in any particular order or manner;
(b) the benefit of any statute of limitations affecting its liability hereunder
or the enforcement hereof; (c) the benefits of any legal or equitable doctrine
or principle of marshalling; (d) notice of the existence, creation or incurring
of new or additional indebtedness of Maker to Holder; (e) the benefits of any
statutory provision limiting the liability of a surety, including without
limitation the provisions of Sections 12-1641, et seq., of the Arizona Revised
Statutes;
-5-
<PAGE> 6
(f) any defense arising by reason of any disability or other defense of Maker
or by reason of the cessation from any cause whatsoever (other than payment in
full) of the liability of Maker for payment of the Note; and (g) the benefits
of any statutory provision limiting the right of Holder to recover a
deficiency judgment, or to otherwise proceed against any person or entity
obligated for payment of the Note, after any foreclosure or trustee's sale of
any security for the Note, including without limitation the benefits, if any,
to a Surety of Arizona Revised Statutes Section 33-814. Until payment in full
of the Note, no Surety shall have any right of subrogation and each hereby
waives any right to enforce any remedy which Holder now has, or may hereafter
have, against Maker or any other Surety, and waives any benefit of, and any
right to participate in, any security now or hereafter held by Holder.
Maker agrees that to the extent Maker or any Surety makes any payment
to Holder in connection with the indebtedness evidenced by this Note, and all
or any part of such payment is subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid by Holder or
paid over to a trustee, receiver or any other entity, whether under any
bankruptcy act or otherwise (any such payment is hereinafter referred to as a
"Preferential Payment"), then the indebtedness of Maker under this Note shall
continue or shall be reinstated, as the case may be, and, to the extent of
such payment or repayment by Holder, the indebtedness evidenced by this Note
or part thereof intended to be satisfied by such Preferential Payment shall be
revived and continued in full force and effect as if said Preferential Payment
had not been made.
Without limiting the right of Holder to bring any action or
proceeding against Maker or any Surety or against any property of Maker or any
Surety (an "Action") arising out of or relating to this Note or any
indebtedness evidenced hereby in the courts of other jurisdictions, Maker and
each Surety hereby irrevocably submit to the jurisdiction, process and venue
of any Arizona State or Federal court sitting in Phoenix, Arizona, and hereby
irrevocably agree that any Action may be heard and determined in such Arizona
State court or in such Federal court. Maker and all Sureties each hereby
irrevocably waives, to the fullest extent it may effectively do so, the
defenses of lack of jurisdiction over any person, inconvenient forum or
improper venue, to the maintenance of any Action in any jurisdiction.
This Note shall be binding upon Maker and its successors and assigns
and shall inure to the benefit of Payee, and any subsequent holders of this
Note, and their successors and assigns.
All notices required or permitted in connection with this Note shall
be given at the place and in the manner provided in the Loan Agreement for the
giving of notices.
-6-
<PAGE> 7
This Note shall be governed by and construed according to the laws of
the State of Arizona.
IN WITNESS WHEREOF, these presents are executed as of the date first
written above.
BOWMAR INSTRUMENT CORPORATION, an
Indiana corporation
By: /s/ Joseph G. Warren, Jr.
------------------------------
Name: Joseph G. Warren, Jr.
------------------------------
Title: Vice President
------------------------------
MAKER
-7-
<PAGE> 1
EXHIBIT 11
BOWMAR INSTRUMENT CORPORATION
COMPUTATION OF NET INCOME PER COMMON SHARE
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
SECOND QUARTER FIRST SIX MONTHS
FISCAL FISCAL FISCAL FISCAL
1997 1996 1997 1996
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PRIMARY NET INCOME PER
COMMON SHARE:
NET INCOME:
Net Income $ 398,000 $ 308,000 $ 825,000 $ 512,000
Less: Dividends on Preferred Stock 90,000 90,000 180,000 180,000
---------- ---------- ---------- ----------
Net Income Applicable to Common Stock $ 308,000 $ 218,000 $ 645,000 $ 332,000
========== ========== ========== ==========
SHARES:
Weighted Average Number of Common
Shares Outstanding 6,658,980 6,454,355 6,610,843 6,453,629
Number of Common Stock Equivalents
Assuming Exercise of Options Reduced
by the Number of Shares Which Could
Have Been Purchased With the Proceeds
From Exercise of Such Options 14,693 169,829 5,967 174,877
---------- ---------- ---------- ----------
Weighted Average Number of Shares
and Common Stock Equivalents 6,673,673 6,624,184 6,616,810 6,628,506
========== ========== ========== ==========
PRIMARY NET INCOME PER
COMMON SHARE $ 0.05 $ 0.03 $ 0.10 $ 0.05
========== ========== ========== ==========
===============================================================================
FULLY DILUTED NET INCOME PER
COMMON SHARE:
NET INCOME:
Net Income $ 398,000 $ 308,000 $ 825,000 $ 512,000
========== ========== ========== ==========
SHARES:
Weighted Average Number of Shares
and Common Stock Equivalents 6,673,673 6,624,184 6,625,536 6,628,506
Number of Shares of Common Stock
Issued Upon Conversion of
Preferred Stock 1,598,347 1,599,467 1,598,347 1,599,467
---------- ---------- ---------- ----------
Weighted Average Number of Shares
and Common Stock Equivalents
Assuming Conversion of Preferred Stock 8,272,020 8,223,651 8,223,883 8,227,973
========== ========== ========== ==========
FULLY DILUTED NET INCOME PER
COMMON SHARE (SEE NOTE)
========== ========== ========== ==========
</TABLE>
Note: For the second quarter and first six months of 1997 and 1996, fully
diluted Net Income per share is considered to be the same as primary Net Income
per share since the effect of the potentially dilutive preferred stock is
currently antidilutive.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-28-1996
<PERIOD-START> DEC-28-1996
<PERIOD-END> MAR-29-1997
<CASH> 71
<SECURITIES> 0
<RECEIVABLES> 4,936
<ALLOWANCES> 0
<INVENTORY> 6,416
<CURRENT-ASSETS> 13,421
<PP&E> 7,267
<DEPRECIATION> (6,023)
<TOTAL-ASSETS> 17,365
<CURRENT-LIABILITIES> 3,848
<BONDS> 3,480
0
120
<COMMON> 670
<OTHER-SE> 8,908
<TOTAL-LIABILITY-AND-EQUITY> 17,365
<SALES> 13,186
<TOTAL-REVENUES> 13,186
<CGS> 7,999
<TOTAL-COSTS> 7,999
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 203
<INCOME-PRETAX> 1,375
<INCOME-TAX> 550
<INCOME-CONTINUING> 825
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 825
<EPS-PRIMARY> .10
<EPS-DILUTED> .10
</TABLE>
