SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED SEPTEMBER 30, 1996
Commission file number 0-16182
VERNITRON CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 11-1962029
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
645 Madison Avenue
New York, New York 10022
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 593-7900
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
--- ---
2,561,920 shares of Common Stock, $.01 par value, were outstanding as of
November 7, 1996.
<PAGE>
VERNITRON CORPORATION
INDEX
Page
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited):
Condensed Consolidated Statements of Operations -
Quarter Ended September 30, 1996 and 1995 3
Condensed Consolidated Statements of Operations -
Nine Months Ended September 30, 1996 and 1995 4
Condensed Consolidated Balance Sheets -
September 30, 1996 and December 31, 1995 5
Condensed Consolidated Statements of Cash Flows-
Nine Months Ended September 30, 1996 and 1995 6
Notes to Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 14
2
<PAGE>
PART 1. FINANCIAL INFORMATION
ITEM I. Financial Statements
VERNITRON CORPORATION
Condensed Consolidated Statements of Operations
(Unaudited, dollars in thousands, except per share data)
Quarter Ended September 30,
-------------------------
1996 1995
----------- -----------
Net Sales $ 27,640 $ 15,633
Cost of sales 20,863 11,806
Selling, general and administrative expenses 4,938 2,848
Amortization of intangible assets 79 53
----------- -----------
Operating income 1,760 926
Interest expense 1,012 497
Other (income) expense (4) 234
----------- -----------
Income before taxes 752 195
Charge in lieu of taxes 323 76
----------- -----------
Net income 429 119
Preferred stock dividends 221 159
----------- -----------
Net income (loss) applicable to common shareholders $ 208 $ (40)
=========== ===========
Earnings (loss) per share: $ 0.08 $ (0.02)
=========== ===========
Weighted average common shares outstanding 2,757,746 2,508,155
=========== ===========
See notes to condensed consolidated financial statements.
3
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VERNITRON CORPORATION
Condensed Consolidated Statements of Operations
(Unaudited, dollars in thousands, except per share data)
Nine Months Ended
September 30,
------------------------
1996 1995
------------- --------
Net Sales $ 70,733 $ 49,383
Cost of sales 52,781 36,230
Selling, general and administrative expenses 12,784 9,973
Amortization of intangible assets 197 157
----------- ----------
Operating income 4,971 3,023
Interest expense 2,333 1,534
Other (income) expense (25) 249
----------- ----------
Income before taxes and extraordinary item 2,663 1,240
Charge in lieu of taxes 1,115 484
----------- ----------
Income before extraordinary item 1,548 756
Extraordinary loss on early extinguishment
of debt, net of tax benefit (173) --
----------- ----------
Net income 1,375 756
Preferred stock dividends 626 417
----------- ----------
Net income applicable to common shareholders $ 749 $ 339
=========== ==========
Earnings per share:
Earnings before extraordinary charge $ 0.34 $ 0.14
Extraordinary charge (0.06) --
----------- ----------
$ 0.28 $ 0.14
=========== ==========
Weighted average common shares outstanding 2,662,650 2,507,789
=========== ==========
See notes to condensed consolidated financial statements.
4
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VERNITRON CORPORATION
Condensed Consolidated Balance Sheets
(Dollars in thousands)
September 30, December 31,
1996 1995
------------- -------------
(Unaudited)
ASSETS
CURRENT ASSETS
Cash $ 5,552 $ 91
Accounts receivable - net 13,936 8,525
Inventories - net 28,511 16,544
Other current assets 697 651
------------- -------------
TOTAL CURRENT ASSETS 48,696 25,811
PROPERTY, PLANT AND EQUIPMENT - net 16,600 7,603
EXCESS OF COST OVER NET ASSETS ACQUIRED - net 9,755 6,624
OTHER ASSETS 1,959 447
------------- -------------
TOTAL ASSETS $77,010 $40,485
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 8,755 $ 5,315
Accrued expenses and other liabilities 9,211 5,696
Current portion of long-term debt and 4,368 466
capital lease obligations ------------- -------------
TOTAL CURRENT LIABILITIES 22,334 11,477
LONG-TERM DEBT & CAPITAL LEASES, less current portion 34,807 11,047
OTHER LONG-TERM LIABILITIES 2,314 2,697
DEFERRED INCOME 420 519
SHAREHOLDERS' EQUITY:
Preferred Stock, issued and outstanding 738,584
shares in 1996 and 781,642 shares in 1995 7 8
Common Stock, issued and outstanding 2,561,920
shares in 1996 and 2,520,821 shares in 1995 26 25
Capital in Excess of Par 15,817 14,712
Retained Earnings 1,285 --
------------- -------------
TOTAL SHAREHOLDERS' EQUITY 17,135 14,745
------------- -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $77,010 $40,485
============= =============
See notes to condensed consolidated financial statements.
5
<PAGE>
VERNITRON CORPORATION
Condensed Consolidated Statements of Cash Flows
(Unaudited, dollars in thousands)
Nine Months Ended
September 30,
-------------------
1996 1995
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,375 $ 756
Adjustments to reconcile net income to cash
used in operating activities:
Extraordinary loss, net 173 --
Realization of net operating loss carryforward 877 436
Depreciation and amortization 2,334 1,179
Increase in current assets, other than cash (2,566) (1,085)
Decrease in current liabilities (946) (1,158)
Decrease in long-term liabilities (508) (615)
Other - net 354 (343)
-------- --------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 1,093 (830)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (1,272) (727)
Acquisition of business, net of cash acquired (Note 2) (4,835) --
Proceeds from sale of assets 206 2,929
-------- --------
NET CASH PROVIDED BY (USED IN) INVESTING
ACTIVITIES (5,901) 2,202
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 62,786 51,831
Repayment of borrowings (52,097) (53,149)
Redemption of preferred stock odd lot shares (420) --
-------- --------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 10,269 (1,318)
-------- --------
NET INCREASE IN CASH 5,461 54
CASH AT BEGINNING OF PERIOD 91 27
-------- --------
CASH AT END OF PERIOD $ 5,552 $ 81
======== ========
See notes to condensed consolidated financial statements.
6
<PAGE>
VERNITRON CORPORATION
Notes to Condensed Consolidated Financial Statements (Unaudited)
(Dollars in thousands)
Note 1 - Basis of Presentation
The accompanying unaudited condensed consolidated financial statements include
Vernitron Corporation and its subsidiaries (the "Company"). These financial
statements have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to Form
10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments considered necessary for a fair presentation (consisting of normal
recurring accruals) have been included. Operating results for the quarter and
nine months ended September 30, 1996 are not necessarily indicative of the
results that may be expected for the year ending December 31, 1996. For further
information, refer to the financial statements and footnotes thereto included in
the Company's Annual Report on Form 10-K for the year ended December 31, 1995
and the Company's Current Reports on Form 8-K.
Certain reclassifications have been made to previously reported financial
statements to conform to current classifications.
Earnings per share data for the periods were computed by dividing net income
applicable to common shareholders by the weighted average number of shares of
common stock outstanding during such periods. The calculation of weighted
average number of shares assumes the conversion of those common stock
equivalents which have a dilutive effect on earnings for the period presented.
Common stock equivalents consist of warrants issued in connection with the
Company's new credit facility (see Note 5) and employee stock options.
Note 2 - Supplemental Cash Flow Information
Nine Months Ended
September 30,
--------------------
1996 1995
------ ------
Cash paid for:
Interest $1,395 $1,446
====== ======
Income Taxes $ 441 $ 55
====== ======
Non-cash investing and financing acitivities:
Equipment acquired under capital leases $ 590 $ --
====== ======
Note 3 - Acquisition of Precision Aerotech, Inc.
On April 25, 1996, the Company completed its previously announced acquisition of
Precision Aerotech, Inc. ("PAI"). Pursuant to the Agreement and Plan of Merger
dated February 16, 1996, each outstanding share of common stock of PAI was
canceled and converted into the right to receive $5.00 per share in cash. Based
on 789,208 shares of PAI Common Stock outstanding immediately prior to the
acquisition, the aggregate consideration paid therefor was $3.9 million. In
addition, the Company repaid $12 million of borrowings under PAI term loans.
Precision Aerotech designs, manufactures and markets laser scanners, precision
metal optics, high performance air bearings and precision machined parts sold
predominantly in commercial markets.
7
<PAGE>
VERNITRON CORPORATION
Notes to Condensed Consolidated Financial Statements (Unaudited)
(Dollars in thousands)
The acquisition has been accounted for under the purchase method of accounting
and, accordingly, the results of operations of PAI have been included in the
accompanying consolidated financial statements since the date of acquisition.
The cost of the acquisition has been allocated on the basis of the estimated
fair market value of the assets acquired and liabilities assumed. This
allocation resulted in an excess of cost over net assets acquired of
approximately $3.3 million, which is being amortized over 35 years.
Summarized below are the unaudited pro forma results of operations of the
Company as if PAI had been acquired at the beginning of the periods presented:
Pro Forma
Nine Months Ended
September 30,
--------------------
1996 1995
------- --------
Net sales $84,269 $81,848
Income before extraordinary item 1,358 1,890
Net income 1,185 1,890
Earnings per share:
Income before extraordinary item 0.27 0.59
Net income 0.21 0.59
The pro forma financial information presented above is not necessarily
indicative of either the results of operations that would have occurred had the
acquisition taken place at the beginning of the periods presented or the future
operating results of the combined companies. Pro forma income before
extraordinary item and net income for the nine months ended September 30, 1996
include certain special charges totaling approximately $450.
Note 4 - Inventories
Inventories have been determined generally by lower of cost (first-in, first-out
or average) or market. Inventories consist of:
September 30, December 31,
1996 1995
------- -------
Raw materials $ 9,915 $ 7,203
Work-in-process 13,999 5,293
Finished goods 10,536 9,255
------- -------
34,450 21,751
Less reserves 5,939 5,207
------- -------
$28,511 $16,544
======= =======
8
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VERNITRON CORPORATION
Notes to Condensed Consolidated Financial Statements (Unaudited)
(Dollars in thousands)
Note 5 - Long-Term Debt
In order to obtain the funds necessary to finance the Company's acquisition of
PAI (see Note 3), to refinance PAI's and the Company's existing debt and pay the
fees and expenses related to the acquisition and refinancing, Vernitron entered
into a Credit Agreement, dated April 25, 1996 (and subsequently amended as of
September 25, 1996), between the Company, the various banks named therein and
Banque Paribas, as agent, providing for borrowings under a $37 million senior
secured credit facility (the "Credit Facility"). The Credit Facility is
comprised of (i) a term loan in the principal amount of $14 million maturing in
four years, (ii) a term loan in the principal amount of $12 million maturing in
six years and (iii) a revolving credit line in an aggregate principal amount of
up to the lesser of $11 million or the borrowing base in effect from time to
time, maturing in four years. The Credit Facility contains certain provisions
and covenants which, among other things, impose limitations with respect to the
incurrence of additional liens and indebtedness, mergers, consolidations and
specified sales of assets, and requires the Company to meet certain financial
tests including minimum levels of earnings and net worth and various other
financial ratios. In addition, the Credit Facility prohibits the payment of cash
dividends. The cumulative dividends in arrears on the Company's Preferred Stock
as of September 30, 1996 was $536.
In connection with the acquisition and financing and before giving effect to the
one-for-five reverse stock split (see Note 6), the Company granted to Banque
Paribas a warrant (the "Banque Paribas Warrant") to acquire up to 666,312 shares
of Common Stock at an exercise price of $.01 per share and a warrant to an
affiliate of Banque Paribas, Paribas Principal, Inc., (the "Paribas Principal
Warrant"), to acquire up to 776,388 shares of Common Stock at an exercise price
of $1.25 per share. In connection therewith, the parties entered into a Warrant
Purchase Agreement containing customary terms and conditions. The Company also
authorized the granting to an affiliate of Donaldson, Lufkin & Jenrette
Securities Corporation of a warrant (the "Donaldson Lufkin Jenrette Warrant") to
acquire up to 100,000 shares of Common Stock at an exercise price of $1.25 per
share. Adjusted to give effect to the reverse stock split, the Banque Paribas
Warrant entitles the holder thereof to acquire up to 133,263 shares of at an
exercise price of $.05 per share, the Paribas Principal Warrant entitles the
holder thereof to acquire up to 155,278 shares at an exercise price of $6.25 per
share and the Donaldson Lufkin & Jenrette Warrant entitles the holders thereof
to acquire up to 20,000 shares at an exercise price of $6.25 per share.
Note 6 - Common Stock
On July 25, 1996, the Company completed a one-for-five reverse stock split of
its $0.01 par value common stock following approval of the reverse stock split
by the Company's stockholders at the Company's 1996 Annual Meeting of
Stockholders. In conjunction with the split, the Company's Certificate of
Incorporation has been amended to reduce the number of shares of Common Stock
authorized for issuance to 4,000,000. The reverse stock split reduced the number
of shares of common stock outstanding from 12,758,737 to 2,552,195. The stated
par value of each share was not changed from $0.01. All earnings per share data
presented in this report has been restated to reflect the reverse stock split.
9
<PAGE>
VERNITRON CORPORATION
Notes to Condensed Consolidated Financial Statements (Unaudited)
(Dollars in thousands)
Note 7 - Other Information
September 30, December 31,
1996 1995
------ ------
Allowance for doubtful accounts $ 456 $ 278
====== ======
Accumulated depreciation and amortization
of property, plant and equipment $7,136 $5,075
====== ======
Accumulated amortization of excess of cost
over net assets acquired $1,033 $ 836
====== ======
10
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (Dollars in thousands)
Results of Operations
On April 25, 1996, the Company completed its acquisition of PAI. The acquisition
has been accounted for under the purchase method of accounting and, accordingly,
the results of operations of PAI have been included in the Condensed
Consolidated Statements of Operations since the date of acquisition. The sales
of PAI's laser scanner, precision metal optics and high performance air bearing
product lines are included in the Motion Control product group. The sales of the
remaining PAI product line, precision machined parts, comprise the new Precision
Machining product group.
Net sales by product group were as follows:
Quarter Ended Nine Months Ended
September 30, September 30,
------------------- -------------------
1996 1995 1996 1995
------- ------- ------- -------
Motion Control $13,998 $ 5,634 $32,098 $18,681
Industrial Components 10,235 9,999 32,680 30,702
Precision Machining 3,407 5,955
------- ------- ------- -------
Net Sales $27,640 $15,633 $70,733 $49,383
======= ======= ======= =======
Quarter Ended September 30, 1996 Compared to the Quarter Ended September 30,
1995
Net sales for the third quarter of 1996 increased by $12 million or 77%,
compared to the same period in 1995. The acquisition of PAI accounted for $11
million of the increase.
The Motion Control group's sales (electromagnetic components and subsystems,
laser scanners, precision metal optics and high performance air bearings)
increased in 1996 by $8.4 million, or 149%, as compared to 1995. The acquisition
of PAI accounted for $7.6 million of the increase. Bookings for the group were
$13.9 million in the third quarter of 1996, an increase of $9.2 million, or
196%, compared to the comparable quarter in 1995. The acquisition of PAI
resulted in an increase in bookings of $8.8 million. The nature of the Motion
Control group's bookings results in an uneven pattern from quarter to quarter
and does not necessarily reflect overall business trends. Backlog at September
30, 1996, was $38.3 million, compared to $16.1 million at December 31, 1995. Of
the $38.3 million backlog at September 30, 1996, $24.1 million relates to the
PAI product lines.
The Industrial Components group's sales (bearings and connectors) increased in
1996 by $.2 million, or 2%, compared to 1995. Bookings for the group were $10
million, a decrease of $.4 million, or 4%, compared to 1995, primarily as a
result of lower bookings in the bearing product line reflecting a softening of
orders from original equipment manufacturers. Backlog at September 30, 1996 was
$10.8 million, compared to $11.9 at December 31, 1995.
The sales of the Precision Machining group (precision machined parts), acquired
as a result of the acquisition of PAI, were $3.4 million. Bookings were $5.3
million in the third quarter of 1996. Backlog at September 30, 1996 was $16.8
million.
Operating income was $1.8 million in 1996, as compared to $.9 million in 1995,
representing a $.9 million increase. This increase was primarily due to the
higher sales volume. Gross margin on sales was 24.5% in both 1996 and 1995.
Selling, general and administrative expenses increased by $2.1 million in 1996
primarily due to the acquisition of PAI. Selling, general and administrative
expenses as a percentage of sales was 18% in both 1996 and 1995.
11
<PAGE>
Interest expense increased by $.5 million in 1996 as a result of higher average
borrowings due to the acquisition of PAI. This was partially offset by the
effect of lower interest rates resulting from a lower prime rate and more
favorable terms under the Company's new credit facility (see Note 5 to the
Condensed Consolidated Financial Statements).
Nine Months Ended September 30, 1996 Compared to the Nine Months Ended September
30, 1995
Net sales for the first nine months of 1996 increased by $21.3 million, or 43%
compared to the same period in 1995. The acquisition of PAI accounted for $19.3
million of the increase.
The Motion Control group's sales (electromagnetic components and sub-systems,
laser scanners, precision metal optics and high performance air bearings)
increased in 1996 by $13.4 million, or 72%, as compared to 1995. The acquisition
of PAI accounted for substantially all of the increase in sales. Bookings for
the group were $31.4 million in 1996, an increase of $12.1 million or 63%,
compared to 1995. The acquisition of PAI resulted in an increase in bookings of
$14.6 million while the remaining product lines in the group had a decrease in
bookings of $2.5 million This decrease is primarily due to lower European orders
for industrial resolvers and lower government spare parts orders for
potentiometers. The nature of the Motion Control group's bookings results in an
uneven pattern from quarter to quarter and does not necessarily reflect overall
business trends.
The Industrial Components group's sales (bearings and connectors) increased in
1996 by $2 million, or 6%, compared to 1995. Sales of bearings were up by 13%,
reflecting increased business with original equipment manufacturers. Industrial
Component's bookings were $31.7 million, a decrease of $.3 million, or 1%,
compared to 1995.
The sales and bookings of the Precision Machining group (precision machined
parts), acquired as a result of the acquisition of PAI, were $6 million and $8.9
million, respectively.
Operating income was $5 million in 1996, as compared to $3 million in 1995,
representing a $2 million increase. This increase was primarily due to the
higher sales volume partially offset by an unfavorable sales mix of lower margin
products in the Motion Control Group. Gross margin on sales was 25.4% in 1996,
as compared to 26.6% in 1995.
Selling, general and administrative expenses increased by $2.8 million in 1996
primarily due to the acquisition of PAI. Selling, general and administrative
expenses as a percentage of sales decreased to 18% in 1996, compared to 20% in
1995.
Interest expense increased $.8 million in the first nine months of 1996 as a
result of higher average borrowings due to the acquisition of PAI. This was
partially offset by the effect of lower interest rates resulting from a lower
prime rate and the more favorable terms under the Company's new credit facility
(see Note 5 to the Condensed Consolidated Financial Statements).
Liquidity and Capital Resources
Cash provided by operations was $1 million in 1996 as compared to cash used of
$.8 million in 1995. This improvement was primarily due to higher cash earnings
in the current year partially offset by an increased level of investment in
working capital.
Cash used in investing activities was $5.9 million in 1996 as compared to cash
provided of $2.2 million in 1995. During the second quarter of 1996 the Company
acquired PAI (see Note 3 to the Condensed Consolidated Financial Statements).
During the first nine months of 1995, $2.9 million was generated from the sale
of assets of the Electronics Components business which was discontinued during
1994 and from the sale of its idle Deer Park, New York facility.
Cash provided by financing activities was $10.3 million in 1996 as compared to
cash used of $1.3 million in 1995. The increase is primarily due to the
borrowings used to fund the aforementioned acquisition of PAI (see Note 3 to the
Condensed
12
<PAGE>
Consolidated Financial Statements) and an unusually high cash balance at the end
of the quarter due to the timing of cash receipts and reductions of borrowing
under the Company's revolving credit line.
The Company had no material commitments for capital expenditures as of September
30, 1996.
As discussed in Note 5 to the Condensed Consolidated Financial Statements, the
Company entered into a new $37 million senior secured credit facility in
connection with its acquisition of PAI. The Company believes this new credit
facility and cash generated from the combined operations will be sufficient to
meet the future capital expenditure and working capital requirements of the
combined companies and required debt amortization under its new credit facility.
13
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits:
Exhibit 3: Amendment to Articles of Incorporation
Exhibit 10: Amendment No. 1 to Bank Credit Agreement
Exhibit 27: Financial Data Schedule (for SEC use only).
Exhibit 99: Press release, dated October 7, 1996.
b) Reports on Form 8-K
None.
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.
Date: November 13, 1996 VERNITRON CORPORATION
By: /s/ Stephen W. Bershad
----------------------------
Stephen W. Bershad
Chief Executive Officer
By: /s/ Raymond F. Kunzmann
----------------------------
Raymond F. Kunzmann
Vice President - Finance, Controller
and Chief Financial Officer
EXHIBIT 3
---------
State of Delaware
Office of the Secretary of State
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT
OF "VERNITRON CORPORATION", FILED IN THIS OFFICE ON THE TWENTY-FIFTH DAY OF
JULY, A.D. 1996, AT 9 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDED OF DEEDS FOR RECORDING.
-----------------------------------
GREAT SEAL OF THE STATE OF DELAWARE
[LOGO]
* 1793 * 1847 * 1907 *
-----------------------------------
[SEAL] /s/ Edward J. Freel
-----------------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION: 8042612
DATE: 07-26-96
<PAGE>
Exhibit 3
---------
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
VERNITRON CORPORATION
Vernitron Corporation, a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), does hereby certify:
FIRST, that by action by written consent by the Board of Directors of the
Corporation, resolutions were duly adopted setting forth a proposed amendment to
the Certificate of Incorporation of the Corporation, declaring the amendment to
be advisable and calling for consideration thereof at the Annual Meeting of
Stockholders of the Corporation. The proposed amendment is as follows:
Section 4 of the Certificate of Incorporation of the Corporation shall be
amended by: (i) amending and restating in its entirety Section 4(a) thereof,
said Section 4(a) to read, as amended and restated, as follows: "4(a) The
aggregate number of shares which the Corporation shall have authority to issue
is 8,000,000, of which 4,000,000 shares of the par value $.01 per share shall be
designated "Preferred Stock", and 4,000,000 shares of the par value $.01 per
share shall be designated "Common Stock"; and (ii) by adding to the end of
Section 4 the following: "Upon the filing with the Secretary of the State of the
State of Delaware of a Certificate of Amendment whereby Section 4(a) of the
Certificate of Incorporation of the Corporation is so amended and restated, each
share of common stock, par value $.01, of the Corporation issued and outstanding
immediately prior thereto shall be combined into 0.20 shares of Common Stock. In
lieu of the issuance of a fractional share that would otherwise result from the
reverse stock split, the Corporation shall deliver to any stockholder that would
otherwise receive a fractional share one additional share."
SECOND, that, thereafter the Annual Meeting of Stockholders of the
Corporation was duly called and held, upon notice in accordance with Section 222
of the General Corporation Law of the State of Delaware, at which meeting the
necessary number of shares as required by statute were voted in favor of the
proposed amendment.
THIRD, that the proposed amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, the Corporation has caused this certificate to be
signed by Stephen W. Bershad, its Chairman of the Board and Chief Executive
Officer and attested by Elliot N. Konopko, its Secretary, this 25th day of July,
1996.
VERNITRON CORPORATION
By: /s/ Stephen W. Bershad
---------------------------------
Stephen W. Bershad
Chairman of the Board and
Chief Executive Officer
ATTEST:
/s/ Elliot N. Konopko
- ----------------------------
Elliot N. Konopko, Secretary
FIRST AMENDMENT TO CREDIT AGREEMENT
FIRST AMENDMENT TO CREDIT AGREEMENT (this "First Amendment"), dated
as of September 25, 1996, among VERNITRON CORPORATION, a corporation organized
and existing under the laws of the State of Delaware (the "Borrower"), the
financial institutions party to the Credit Agreement referred to below (each a
"Bank" and, collectively, the "Banks"), and BANQUE PARIBAS, as agent (the
"Agent"). All capitalized terms used herein and not otherwise defined shall have
the respective meanings provided such terms in the Credit Agreement.
W I T N E S S E T H :
WHEREAS, the Borrower, the Banks and the Agent are parties to a
Credit Agreement, dated as of April 25, 1996 (the "Credit Agreement");
WHEREAS, the Borrower desires to purchase the business and certain
assets (the "Purchased Assets") of Lockheed Martin Beryllium Corporation and
enter into related transactions for an aggregate purchase price of approximately
$5,000,000 and to pay related fees and expenses not to exceed $200,000 in the
aggregate (collectively, the "Acquisition"), and the Banks are willing to
consent to the Acquisition, subject to and on the terms and conditions set forth
herein; and
WHEREAS, the Borrower has requested that the Banks agree to amend
certain provisions of the Credit Agreement, and the Banks are willing to amend
such provisions, subject to and on the terms and conditions set forth herein;
NOW, THEREFORE, it is agreed:
1. Notwithstanding anything to the contrary contained in the Credit
Agreement, the undersigned Banks hereby consent to the Borrower effecting the
Acquisition, provided that (i) approximately $1,500,000 of the purchase price
for the Acquisition shall be obtained by the Borrower from the sale (including
as part of a sale-leaseback transaction) by the Borrower, contemporaneous with
the closing of the Acquisition, of a portion of the Purchased Assets, (ii) in
connection with the Acquisition, and promptly after the consummation thereof,
the Borrower shall receive cash proceeds (together with the proceeds described
in clause (i) above, the "Specified Proceeds") of approximately $800,000 from
the sale of a second portion of the Purchased Assets and (iii) no later than
thirty days after the closing of the Acquisition the Borrower shall grant to the
Collateral Agent a first priority perfected security interest in all Purchased
Assets (other than the property sold in the manner described in clauses (i) and
(ii) above), as set forth in Section 8.17 of the Credit Agreement.
Notwithstanding anything to the contrary contained in the Credit Agreement, the
Banks
<PAGE>
SCHEDULE I
Page 2
hereby further agree that (i) the Specified Proceeds shall not be required to be
applied as a mandatory repayment or commitment reduction, (ii) the acquisition
of the Purchased Assets shall not constitute a Capital Expenditure and (iii) the
Borrower shall be permitted to make an intercompany loan or advance to
Speedring, Inc. in connection with the consummation of the Acquisition.
2. Section 1.01(c)(iii) of the Credit Agreement is hereby amended by
(1) inserting the text "the sum of (I)" immediately after the clause heading
"(y)" appearing therein; and (2) inserting the following new clause (II)
immediately after the text "at such time" appearing at the end of existing
clause (y):
"and (II) the aggregate principal amount of all Swingline Loans (exclusive
of Swingline Loans which are repaid with the proceeds of, and
simultaneously with the incurrence of, the respective incurrence of
Revolving Loans) then outstanding".
3. Section 1.01 of the Credit Agreement is hereby further amended by
inserting in the appropriate order the following new paragraphs (d) and (e):
"(d) Subject to and upon the terms and conditions set forth herein,
the Swingline Bank agrees to make at any time and from time to time after
the First Amendment Effective Date and prior to the Swingline Expiry Date,
a loan or loans (each a "Swingline Loan," and collectively, the "Swingline
Loans") to the Borrower, which Swingline Loans:
(i) shall be made and maintained as Base Rate Loans;
(ii) may be repaid and reborrowed in accordance with the
provisions hereof;
(iii) shall not exceed in aggregate principal amount at any
time outstanding, when combined with (x) the aggregate principal
amount of all Revolving Loans then outstanding and (y) the amount of
all Letter of Credit Outstandings at such time, an amount equal to
the Total Revolving Loan Commitment at such time (after giving
effect to any reductions to the Total Revolving Loan Commitment on
such date); and
(iv) shall not exceed in aggregate principal amount at any
time outstanding the Maximum Swingline Amount.
<PAGE>
SCHEDULE I
Page 3
The Swingline Bank shall not be obligated to make any Swingline Loans at a
time when a Bank Default exists unless the Swingline Bank has entered into
arrangements satisfactory to it to eliminate the Swingline Bank's risk
with respect to the Bank which is subject of such Bank Default, including
by cash collateralizing such Bank's Percentage of the outstanding
Swingline Loans. Notwithstanding anything to the contrary contained in
this Section 1.01(d), the Swingline Bank shall not make any Swingline Loan
after receiving a written notice from the Borrower or the Required Banks
stating that a Default or an Event of Default exists and is continuing
until such time as the Swingline Bank shall have received written notice
of (i) rescission of all such notices from the party or parties originally
delivering such notice, (ii) the waiver of such Default or Event of
Default by the Required Banks or (iii) the Agent in good faith believes
that such Default or Event of Default has ceased to exist.
(e) On any Business Day, the Swingline Bank may, in its sole
discretion, give notice to the Banks that its outstanding Swingline Loans
shall be funded with a Borrowing of Revolving Loans (provided that such
notice shall be deemed to have been automatically given upon the
occurrence of a Default or an Event of Default under Section 10.05 or upon
the exercise of any of the remedies provided in the last paragraph of
Section 10), in which case a Borrowing of Revolving Loans constituting
Base Rate Loans (each such Borrowing, a "Mandatory Borrowing") shall be
made on the immediately succeeding Business Day from all Banks with a
Revolving Loan Commitment (without giving effect to any terminations
and/or reductions thereto pursuant to the last paragraph of Section 10)
pro rata on the basis of their respective Percentages (determined before
giving effect to any termination of the Revolving Loan Commitments
pursuant to the last paragraph of Section 10) and the proceeds thereof
shall be applied directly to the Swingline Bank to repay the Swingline
Bank for such outstanding Swingline Loans. Each such Bank hereby
irrevocably agrees to make Revolving Loans upon one Business Day's notice
pursuant to each Mandatory Borrowing in the amount and in the manner
specified in the preceding sentence and on the date specified in writing
by the Swingline Bank notwithstanding (i) the amount of the Mandatory
Borrowing may not comply with the minimum amount for Borrowings otherwise
required hereunder, (ii) whether any conditions specified in Section 5 or
6 are then satisfied, (iii) whether a Default or an Event of Default then
exists, (iv) the date of such Mandatory Borrowing, and (v) the amount of
the Total Revolving Loan Commitment at such time. In the event that any
Mandatory Borrowing cannot for any reason be made on the date otherwise
required above (including, without limitation, as a result of the
commencement of a proceeding under
<PAGE>
SCHEDULE I
Page 4
the Bankruptcy Code with respect to the Borrower), then each such Bank
hereby agrees that it shall forthwith purchase (as of the date the
Mandatory Borrowing would otherwise have occurred, but adjusted for any
payments received from the Borrower on or after such date and prior to
such purchase) from the Swingline Bank such participations in the
outstanding Swingline Loans as shall be necessary to cause such Banks to
share in such Swingline Loans ratably based upon their respective
Percentages (determined before giving effect to any termination of the
Revolving Loan Commitments pursuant to the last paragraph of Section 10);
provided, that (x) all interest payable on the Swingline Loans shall be
for the account of the Swingline Bank until the date as of which the
respective participation is required to be purchased and, to the extent
attributable to the purchased participation, shall be payable to the
participant from and after such date and (y) at the time any purchase of
participations pursuant to this sentence is actually made, the purchasing
Bank shall be required to pay the Swingline Bank interest on the principal
amount of participation purchased for each day from and including the day
upon which the Mandatory Borrowing would otherwise have occurred to but
excluding the date of payment for such participation, at the rate
otherwise applicable to Revolving Loans maintained as Base Rate Loans
hereunder for each day thereafter.
4. Section 1.02 of the Credit Agreement is hereby amended by
inserting the following proviso to the first sentence appearing therein:
"provided that Mandatory Borrowings shall be in the amounts required by
Section 1.01(e)".
5. Section 1.03 of the Credit Agreement is hereby amended by (1)
inserting the following parenthetical immediately after the text "Whenever the
Borrower desires to make a Borrowing hereunder" appearing in the first sentence
of paragraph (a):
"(excluding Borrowings of Swingline Loans and Mandatory Borrowings)";
(2) redesignating paragraph "(b)" as paragraph "(c)"; (3) inserting the text ",
the Swingline Bank" immediately after the word "Agent" each place it appears in
the new paragraph (c); (4) inserting the text ", the Swingline Bank's"
immediately after the word "Agent's" where it appears in the new paragraph (c);
and (5) inserting the following new paragraph (b):
"(b) (i) Whenever the Borrower desires to make a Borrowing of
Swingline Loans hereunder, it shall give the Swingline Bank not later than
1:00 p.m. (New York
<PAGE>
SCHEDULE I
Page 5
time) on the date that a Swingline Loan is to be made, written notice (or
telephonic notice confirmed in writing) of each Swingline Loan to be made
hereunder. Each such notice shall be irrevocable and specify in each case
(A) the date of Borrowing (which shall be a Business Day) and (B) the
aggregate principal amount of Swingline Loans to be made pursuant to such
Borrowing.
(ii) Mandatory Borrowings shall be made upon the notice specified in
Section 1.01(e), with the Borrower irrevocably agreeing, by its incurrence
of any Swingline Loan, to the making of the Mandatory Borrowings as set
forth in Section 1.01(e)."
6. Section 1.04 of the Credit Agreement is hereby amended by
deleting the first sentence appearing therein in its entirety and inserting in
lieu thereof the following new sentence:
"No later than 12:00 Noon (New York time) on the date specified in each
Notice of Borrowing (or (x) in the case of Swingline Loans, no later than
the close of business on the date specified pursuant to Section 1.03(b)(i)
or (y) in case of Mandatory Borrowings, not later than 12:00 Noon (New
York time) on the date specified in Section 1.01(e)), each Bank with a
Commitment of the respective Tranche will make available its pro rata
portion of each Borrowing requested to be made on such date (or in the
case of Swingline Loans, the Swingline Bank shall make available the full
amount thereof)."
7. Section 1.05(a) of the Credit Agreement is hereby amended by (1)
deleting the word "and" appearing immediately before clause (iii); inserting the
word "and" immediately after clause (iii); and (3) inserting in the appropriate
order the following new clause (iv):
"(iv) if Swingline Loans, by a promissory note duly executed and
delivered by the Borrower substantially in the form of Exhibit B-4, with
blanks appropriately completed in conformity herewith (the "Swingline
Note")".
8. Section 1.05 of the Credit Agreement is hereby further amended by
inserting in the appropriate order the following new paragraph (f):
"(f) The Swingline Note issued to the Swingline Bank shall (i) be
executed by the Borrower, (ii) be payable to the order of the Swingline
Bank or its registered
<PAGE>
SCHEDULE I
Page 6
assigns and be dated the Initial Borrowing Date, (iii) be in a stated
principal amount equal to the Maximum Swingline Amount and be payable in
the principal amount of the outstanding Swingline Loans evidenced thereby
from time to time, (iv) mature on the Swingline Expiry Date, (v) bear
interest as provided in the appropriate clause of Section 1.08 in respect
of the Base Rate Loans evidenced thereby, (vi) be subject to voluntary
repayment as provided in Section 4.01 and mandatory repayment as provided
in Section 4.02 and (vii) be entitled to the benefits of this Agreement
and the other Credit Documents."
9. Section 1.06 of the Credit Agreement is hereby amended by
inserting after the text "of the outstanding principal amount of the Loans" the
first time it appears therein the following parenthetical:
"(other than Swingline Loans which may not be converted pursuant to
this Section 1.06)".
10. Section 1.12(x)(i) of the Credit Agreement is hereby amended by
(1) deleting the word "and" appearing immediately before clause (y); inserting
the word "and" immediately after clause (y); and inserting in the appropriate
order the following new clause (z):
"(z) the Swingline Bank an amount equal to such Replaced Bank's Percentage
of any Mandatory Borrowing to the extent such amount was not theretofore
funded by such Replaced Bank".
11. Section 2.01(c) of the Credit Agreement is hereby amended by
inserting the text "and Swingline Loans" immediately after the text "all
Revolving Loans" appearing in clause (i)(y).
12. Section 4.01 of the Credit Agreement is hereby amended by (1)
inserting immediately after the text "one Business Day's prior written notice in
the case of Base Rate Loans" appearing in clause (i) the following
parenthetical:
"(or same day notice in the case of Swingline Loans provided such notice
is given prior to 12:00 noon (New York time))"; and
(2) inserting immediately after the number "$100,000" appearing in clause (ii)
the following parenthetical:
<PAGE>
SCHEDULE I
Page 7
"(or, in the case of Swingline Loans, $50,000 and, if greater, in an
integral multiple of $50,000)".
13. Section 4.02(A)(a) of the Credit Agreement is hereby amended by
(1) inserting immediately after the text "the aggregate outstanding principal
amount of the Revolving Loans" appearing in the first sentence, the new text ",
Swingline Loans"; (2) inserting immediately after the text "the Borrower shall
prepay" appearing in the first sentence, the new text "on such day principal of
Swingline Loans and after the Swingline Loans have been repaid in full,"; and
(3) inserting immediately before the text "all outstanding Revolving Loans"
appearing in the second sentence, the new text "all outstanding Swingline Loans
and".
14. The Credit Agreement is hereby further amended by deleting
Section 4.02(B)(c) in its entirety and inserting in lieu thereof the following
new Section 4.02(B)(c):
"(c) Notwithstanding anything to the contrary contained elsewhere in
this Agreement, (i) all then outstanding Swingline Loans shall be repaid
in full on the Swingline Expiry Date and (ii) all other outstanding Loans
under each Tranche shall be repaid in full on the Maturity Date applicable
to such Tranche."
15. Section 4.03 of the Credit Agreement is hereby amended by
inserting immediately after the parenthetical "(New York time)" appearing
therein the following new parenthetical:
"(or 1:00 p.m. (New York time) in the case of Swingline Loans)".
16. The Credit Agreement is hereby further amended by deleting
Section 6.04(a) in its entirety and inserting in lieu thereof the following new
Section 6.04(a):
"(a) Prior to the making of each Loan (other than a Swingline Loan
or a Mandatory Borrowing), the Agent shall have received a Notice of
Borrowing meeting the requirements of Section 1.03. Prior to the making of
each Swingline Loan, the Swingline Bank shall have received the notice
referred to in Section 1.03(b)(i)."
<PAGE>
SCHEDULE I
Page 8
17. Section 7.08(b) of the Credit Agreement is hereby amended by
inserting immediately after the text "All proceeds of Revolving Loans" where it
appears therein, the text "and Swingline Loans".
18. Section 11 of the Credit Agreement is hereby amended by deleting
the definitions of 'Applicable Margin', 'Bank Default', 'Base Rate Loan',
'Borrowing', 'Loan', 'Note', 'Required Banks', 'Total Unutilized Revolving Loan
Commitment' and 'Tranche', and inserting in lieu thereof the following new
definitions in the appropriate alphabetical order:
"'Applicable Margin' shall mean a percentage per annum equal to (i)
(A) in the case of A Term Loans, Revolving Loans and Swingline Loans which
are maintained as Base Rate Loans, 1.75% and (B) in the case of B Term
Loans which are maintained as Base Rate Loans, 2.25% and (ii) (A) in the
case of A Term Loans and Revolving Loans which are maintained as
Eurodollar Loans, 3.25% and (B) in the case of B Term Loans which are
maintained as Eurodollar Loans, 3.75%.
'Bank Default' shall mean (i) the refusal (which has not been
retracted) of a Bank to make available its portion of any Borrowing
(including a Mandatory Borrowing) or to fund its portion of any
unreimbursed payment under Section 2.04(c) or (ii) a Bank having notified
in writing the Borrower and/or the Agent that it does not intend to comply
with its obligations under Section 1.01 or 2, including in either case as
a result of any takeover of such Bank by any regulatory authority or
agency.
'Base Rate Loan' shall mean (i) each Swingline Loan and (ii) each
Loan designated or deemed designated as such by the Borrower at the time
of the incurrence thereof or conversion thereto.
'Borrowing' shall mean the borrowing of one Type of Loan of a single
Tranche from all the Banks having Commitments with respect to such Tranche
(or from the Swingline Bank in the case of Swingline Loans) on a pro rata
basis on a given date (or resulting from a conversion or conversions on
such date) having in the case of Eurodollar Loans the same Interest
Period; provided, that Base Rate Loans incurred pursuant to Section
1.10(b) shall be considered part of the related Borrowing of Eurodollar
Loans.
'Loan' shall mean each Term Loan, each Revolving Loan and each
Swingline Loan.
<PAGE>
SCHEDULE I
Page 9
'Note' shall mean each A Term Note, each B Term Note, each Revolving
Note and the Swingline Note.
'Required Banks' shall mean Banks the sum of whose outstanding Term
Loans, Term Loan Commitments (to the extent not theretofore terminated)
and Revolving Loan Commitments (or after the termination thereof, the sum
of outstanding Revolving Loans, Swingline Loans and Letter of Credit
Outstandings), represent an amount greater than 50% of the sum of all
outstanding Term Loans, the then Total Term Loan Commitments (to the
extent not theretofore terminated) and the Total Revolving Loan Commitment
(or after the termination thereof, the sum of the then total outstanding
Revolving Loans, Swingline Loans and Letter of Credit Outstandings).
'Total Unutilized Revolving Loan Commitment' shall mean, at any
time, an amount equal to the remainder of (x) the then Total Revolving
Loan Commitment, less (y) the sum of the aggregate principal amount of
Revolving Loans and Swingline Loans then outstanding plus the then
aggregate amount of Letter of Credit Outstandings.
'Tranche' shall mean the respective facility and commitments
utilized in making Loans hereunder, with there being four separate
Tranches, i.e., whether A Term Loans, B Term Loans, Revolving Loans or
Swingline Loans."
19. Section 11 of the Credit Agreement is hereby further amended by
inserting into the definition of 'Excess Cash Flow' the text "or Swingline
Loans" immediately after the term "Revolving Loans" appearing in the
parenthetical contained in the proviso to clause (ii)(b).
20. Section 11 of the Credit Agreement is hereby further amended by
inserting the following new definitions in the appropriate alphabetical order:
"'First Amendment' shall mean the First Amendment, dated as of
September 25, 1996, to this Agreement.
'First Amendment Effective Date' shall have the meaning provided in
the First Amendment.
<PAGE>
SCHEDULE I
Page 10
'Mandatory Borrowings' shall have the meaning provided in Section
1.01(e).
'Maximum Swingline Amount' shall mean $2,000,000.
'Swingline Bank' shall mean Banque Paribas, in its capacity as the
lender of Swingline Loans.
'Swingline Expiry Date' shall mean the date which is three Business
Days prior to the Revolving Loan Maturity Date.
'Swingline Loans' shall have the meaning provided in Section
1.01(d).
'Swingline Note' shall have the meaning provided in Section
1.05(a)."
21. Section 13.12 of the Credit Agreement is hereby amended by
inserting the following new clause "(t)" in the appropriate order in the second
proviso to paragraph (a):
"(t) without the consent of the Swingline Bank, amend, modify or waive any
provision relating to the rights or obligations of the Swingline Bank or
with respect to Swingline Loans (including, without limitation, the
obligations of the other Banks with Revolving Loan Commitments to fund
Mandatory Borrowings); or".
22. The Credit Agreement is hereby further amended by inserting
Exhibit B-4 attached hereto as a new Exhibit thereto.
23. On and after the First Amendment Effective Date, Schedule I to
the Credit Agreement is hereby amended by deleting the same in its entirety and
inserting in lieu thereof as a new Schedule I thereto the Schedule I attached
hereto which increases the Total Revolving Loan Commitment from $10,000,000 to
$11,000,000. Banque Paribas, in its capacity as a Bank, (the "Increasing Bank")
hereby acknowledges and agrees that from and after the First Amendment Effective
Date its Revolving Loan Commitment shall be the amount set forth opposite the
Increasing Bank's name on Schedule I attached hereto, as such amount may be
reduced from time to time in accordance with the terms of the Credit Agreement.
24. The Company hereby agrees that on or after the First Amendment
Effective Date and upon the request of the Collateral Agent, it will execute
such amendments
<PAGE>
SCHEDULE I
Page 11
to the Mortgages as the Collateral Agent shall require in connection with the
transactions contemplated by this First Amendment.
25. In order to induce the Banks to enter into this First Amendment,
the Borrower hereby represents and warrants that on the First Amendment
Effective Date, both before and after giving effect to this First Amendment, (1)
no Default or Event of Default shall exist and (2) all of the representations
and warranties contained in the Credit Documents shall be true and correct in
all material respects, with the same effect as though such representations and
warranties had been made on and as of the First Amendment Effective Date (it
being understood that any representation or warranty made as of a specific date
shall be true and correct in all material respects as of such specific date).
26. This First Amendment is limited as specified and shall not
constitute a modification, acceptance or waiver of any other provision of the
Credit Agreement or any other Credit Document.
27. This First Amendment may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which counterparts when executed and delivered shall be an original, but all
of which shall together constitute one and the same instrument. A complete set
of counterparts shall be lodged with the Borrower and the Agent.
28. THIS FIRST AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW
OF THE STATE OF NEW YORK.
29. The headings of the several sections of this First Amendment are
inserted for convenience only and shall not in any way affect the meaning or
construction of any provision hereof.
30. This First Amendment shall become effective as of the date
hereof (the "First Amendment Effective Date") when (1) each of the Borrower,
each Bank and the Collateral Agent shall have signed a copy hereof (whether the
same or different copies) and shall have delivered (including by way of
telecopier) the same to the Agent, (2) the Borrower shall have executed and
delivered to the Agent for the benefit of the Increasing Bank a new Revolving
Note reflecting the increase in the Revolving Loan Commitment of the Increasing
<PAGE>
SCHEDULE I
Page 12
Bank and (4) the Borrower shall have executed and delivered to the Agent for the
benefit of the Swingline Bank a Swingline Note in the form of Exhibit B-4
hereto.
* * *
<PAGE>
SCHEDULE I
Page 13
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this First Amendment to be duly executed and delivered as of the
date first above written.
VERNITRON CORPORATION
By /s/ Elliot N. Konopko
---------------------------------
Name: Elliot N. Konopko
Title: Vice President
BANQUE PARIBAS,
Individually, as Agent and as Collateral Agent
By /s/ Donald J. Ercole
---------------------------------
Name: Donald J. Ercole
Title: Vice President
By /s/ Judith A. Kirstsner
---------------------------------
Name: Judith A. Kirstsner
Title: Assistant Vice President
PRIME INCOME TRUST
By /s/ /Rafael Scolari
---------------------------------
Name: Rafael Scolari
Title: Vice President -
Portfolio Manager
<PAGE>
SCHEDULE I
Page 14
FIRST SOURCE FINANCIAL LLP,
By First Source Financial, Inc.,
its Agent/Manager
By /s/ Thomas F. Thompson
---------------------------------
Name: Thomas F. Thompson
Title: Assistant Vice President
IBJ SCHRODER BANK & TRUST COMPANY
By /s/ Alllan J. Pagnotta
---------------------------------
Name: Allan J. Pagnotta
Title: Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By /s/ S. Thomas Knoff
---------------------------------
Name: S. Thomas Knoff
Title: Vice President
<PAGE>
SCHEDULE I
Page 15
COMMITMENTS
A Term Loan B Term Loan Revolving Loan
Bank Commitment Commitment Commitment
- ---- ----------- ----------- --------------
Banque Paribas $4,700,000 $ 0 $4,300,000
Prime Income Trust 0 4,000,000 0
First Source 3,500,000 3,000,000 2,500,000
Financial LLP
IBJ Schroder Bank & 2,900,000 2,500,000 2,100,000
Trust Company
The First National 2,900,000 2,500,000 2,100,000
Bank of Chicago
----------- ----------- -----------
Totals: $14,000,000 $12,000,000 $11,000,000
<PAGE>
EXHIBIT B-4
SWINGLINE NOTE
$2,000,000 New York, New York
April 25, 1996
FOR VALUE RECEIVED, VERNITRON CORPORATION, a Delaware corporation
(the "Borrower"), hereby promises to pay to the order of BANQUE PARIBAS (the
"Bank"), in lawful money of the United States of America in immediately
available funds, at the office of Banque Paribas (the "Agent") located at 787
Seventh Avenue, New York, New York 10019, on the Swingline Expiry Date (as
defined in the Agreement referred to below) the principal sum of TWO MILLION
DOLLARS ($2,000,000) or, if less, the then unpaid principal amount of all
Swingline Loans (as defined in the Agreement referred to below) made by the Bank
pursuant to the Agreement.
The Borrower promises also to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at
the rates and at the times provided in Section 1.08 of the Agreement referred to
below.
This Note is the Swingline Note referred to in the Credit Agreement,
dated as of April 25, 1996, among the Borrower, the financial institutions from
time to time party thereto (including the Bank) and the Agent (as from time to
time in effect, the "Agreement") and is entitled to the benefits thereof. This
Note is also entitled to the benefits of the Subsidiaries Guaranty (as defined
in the Agreement) and is secured by and entitled to the benefits of the Security
Documents (as defined in the Agreement). As provided in the Agreement, this Note
is subject to voluntary prepayment and mandatory repayment prior to the
Swingline Expiry Date, in whole or in part.
In case an Event of Default (as defined in the Agreement) shall
occur and be continuing, the principal of and accrued interest on this Note may
be declared to be due and payable in the manner and with the effect provided in
the Agreement.
The Borrower hereby waives presentment, demand, protest or notice of
any kind in connection with this Note.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY
THE LAW OF THE STATE OF NEW YORK.
VERNITRON CORPORATION
By__________________________
Title:
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET OF VERNITRON CORPORATION AS OF SEPTEMBER 30, 1996 AND
THE RELATED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1996 AND 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 5,552
<SECURITIES> 0
<RECEIVABLES> 14,392
<ALLOWANCES> 456
<INVENTORY> 28,511
<CURRENT-ASSETS> 48,696
<PP&E> 23,736
<DEPRECIATION> 7,136
<TOTAL-ASSETS> 77,010
<CURRENT-LIABILITIES> 22,334
<BONDS> 0
0
7
<COMMON> 26
<OTHER-SE> 15,817
<TOTAL-LIABILITY-AND-EQUITY> 77,010
<SALES> 70,733
<TOTAL-REVENUES> 70,733
<CGS> 52,781
<TOTAL-COSTS> 52,781
<OTHER-EXPENSES> 12,981
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,333
<INCOME-PRETAX> 2,663
<INCOME-TAX> 1,115
<INCOME-CONTINUING> 1,548
<DISCONTINUED> 0
<EXTRAORDINARY> (173)
<CHANGES> 0
<NET-INCOME> 1,375
<EPS-PRIMARY> .28
<EPS-DILUTED> .28
</TABLE>
CONTACT:
Elliot Konopko
Vernitron Corporation
(212) 593-7900
New York, New York, October 7, 1996 -- Vernitron Corporation (NASDAQ: VRNT)
announced today that its subsidiary, Speedring, Inc., has acquired substantially
all of the assets of Lockheed Martin Beryllium Corporation (formerly Loral
American Beryllium Corporation). Both Speedring, Inc. and Lockheed Martin
Beryllium are engaged in the precision machining of beryllium and other exotic
materials for use in commercial satellite systems and other aerospace
applications. The purchase price was not disclosed.
Vernitron Corporation manufactures and distributes precision actuation and
optical scanning systems and related components, including precision metal
optics, motor and position feedback devices, ball and air bearings and
interconnect devices for use in high-performance commercial, industrial and
defense applications.
