<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the Period Ended April 30, 1995
--------------
or
[_] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the Transition Period from __________________
to _________________
Commission File Number 0-8567
-------
Datametrics Corporation
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 95-3545701
- --------------------------------------------------------------------------------
(State or other jurisdiction (I.R.S. Employer
incorporation or organization) Identification Number)
21135 Erwin St.
Woodland Hills, California
- --------------------------------
(Address of principal executive offices) (Zip Code)
(818)598-6200
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Not applicable
- --------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last report
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
------- --------
Applicable Only to Issuers Involved in Bankruptcy
Proceedings During the Preceding Five Years
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by the court.
Yes No
--------- ---------
Applicable Only to Corporate Issuers
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date.
Common Stock. $.01 Par Value--9,419,460 shares as of May 17, 1995
<PAGE>
ITEM 1. FINANCIAL STATEMENTS
BALANCE SHEETS Datametrics Corporation
(unaudited)
<TABLE>
<CAPTION>
April 30, October 30,
(In thousands, except for share data) 1995 1994
============================================================== ============= =============
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $676 $988
Accounts receivable 4,060 8,730
Inventory 5,998 6,038
Income taxes receivable 447 325
Prepaid expenses 278 267
Deferred tax asset 449 571
------------- -------------
Total current assets 11,908 16,919
Property and equipment, at cost:
Machinery and equipment 4,667 3,710
Furniture, fixtures & computer equipment 2,430 2,172
Leasehold improvements 374 363
------------- -------------
7,471 6,245
Accumulated depreciation and amortization (4,311) (3,970)
------------- -------------
Net property and equipment 3,160 2,275
Deferred tax assets 64 64
Other assets 821 692
------------- -------------
$15,953 $19,950
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Note payable to bank - $600
Accounts payable $1,172 1,917
Accrued commissions and payroll 578 845
Accrued warranty 144 182
Other accrued liabilities 460 368
Advance payments and progress payments on contracts 286 538
Current portion of capital lease and loan obligations 514 108
------------- -------------
Total current liabilities 3,154 4,558
CAPITAL LEASE OBLIGATIONS 117 32
LONG TERM DEBT DUE AFTER ONE YEAR 1,369 -
OTHER LONG-TERM LIABILITIES 132 150
DEFERRED TAX LIABILITY 76 76
EXCESS OF ACQUIRED NET ASSETS OVER COST 381 533
SERIES B REDEEMABLE PREFERRED STOCK 939 940
613,110 shares authorized, 545,950 shares issued and outstanding
in 1995 (564,556 in 1994) (liquidation preference and
redemption price $955 in 1995 and $988 in 1994)
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value--15,000,000 shares
authorized; 9,417,582 shares issued and
outstanding in 1995 (9,258,452 in 1994) 94 93
Additional paid-in capital 14,813 14,608
Accumulated deficit (5,122) (1,040)
------------- -------------
Total stockholders' equity 9,785 13,661
------------- -------------
$15,953 $19,950
============= =============
</TABLE>
See accompanying notes
1
<PAGE>
STATEMENTS OF OPERATIONS Datametrics Corporation
(Unaudited)
<TABLE>
<CAPTION>
For The Three Months For The Six Months
Ended Ended
-----------------------------------------------
April 30, May 1, April 30, May 1,
(In thousands, except per share data) 1995 1994 1995 1994
=============================================================================================================
<S> <C> <C> <C> <C>
SALES $3,897 $6,733 $7,348 $12,367
Cost of sales 3,354 4,341 6,057 8,290
-----------------------------------------------
Gross profit 543 2,392 1,291 4,077
OPERATING EXPENSES:
Research & development 1,611 566 2,646 975
Selling, general & administrative 1,450 1,846 2,806 3,528
-----------------------------------------------
3,061 2,412 5,452 4,503
-----------------------------------------------
Loss from operations (2,518) (20) (4,161) (426)
INTEREST EXPENSE, NET 31 16 39 58
AMORTIZATION OF EXCESS OF ACQUIRED NET ASSETS OVER COST (76) (85) (152) (141)
-----------------------------------------------
Income (loss) before provision for income taxes (2,473) 49 (4,048) (343)
PROVISION (BENEFIT) FOR INCOME TAXES 2 20 2 (130)
-----------------------------------------------
NET INCOME (Loss) (2,475) 29 (4,050) (213)
Preferred stock accretion (16) (16) (32) (30)
-----------------------------------------------
NET INCOME (Loss) applicable to common stockholders ($2,491) $13 ($4,082) ($243)
===============================================
NET INCOME (loss) per share of common stock ($0.24) - ($0.40) ($0.03)
===============================================
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
Primary 10,223 7,985 10,186 7,682
Fully diluted 10,223 7,985 10,186 7,682
</TABLE>
See accompanying notes.
2
<PAGE>
STATEMENTS OF CASH FLOWS Datametrics Corporation
(Unaudited)
<TABLE>
<CAPTION>
For The Six Months
Ended
------------------------
April 30, May 1,
(In thousands) 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITES:
Net loss ($4,050) ($213)
Adjustments:
Amortization of excess of acquired net assets (152) (141)
Depreciation and amortization 397 290
Changes in balance sheet items:
Accounts receivable 4,670 2,963
Inventory 40 (528)
Prepaid expenses (11) (21)
Accounts payable (745) (1,222)
Accrued commissions and payroll (267) (446)
Advance and progress payments from customers (252) 464
Other accrued liabilities 92 (72)
Income taxes - (172)
Other (218) (385)
-----------------------
Net cash provided by (used in) operating activities (496) 517
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures for property and equipment (1,084) (189)
-----------------------
Net cash used in investing activities (1,084) (189)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on notes payable 750 3,500
Payments on notes payable (1,350) (4,650)
Proceeds from the issuance of common stock 206 5,192
Borrowings of long-term debt 1,841 -
Payments on long-term debt (95) -
Payments on capital lease obligations (84) (68)
-----------------------
Net cash provided by financing activities 1,268 3,974
Net increase(decrease) in cash and cash equivalents (312) 4,302
Cash and cash equivalents at the beginning of the
period 988 199
-----------------------
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD $676 $4,501
=======================
Cash paid during the period for:
Interest $61 $69
Income Taxes - 19
Noncash investing and financing activities:
Accretion on preferred stock 16 30
Issuance of capital lease obligations 199 -
</TABLE>
See accompanying notes.
3
<PAGE>
NOTES TO FINANCIAL STATEMENTS
April 30, 1995
(Unaudited)
Note 1. BASIS OF PRESENTATION
Financial statements included herein have been prepared by the Company, without
audit, pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosure normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures are adequate to
make the information presented not misleading. It is suggested that these
condensed financial statements be read in conjunction with the statements and
notes thereto included in the Company's latest Annual Report on Form 10-K filed
with the Securities and Exchange Commission.
The information reflects all adjustments (consisting of normal recurring
adjustments) which are, in the opinion of Management, necessary to present a
fair statement of the results of operations for the interim periods. Much of
the Company's business is longer term and involves varying development,
production, and delivery schedules. Accordingly, results of a particular quarter
or quarter-to-quarter comparisons of recorded sales and profits may not be
indicative of future operating results or results for the fiscal year ending
October 29, 1995.
From our latest Annual Report on Form 10-K for which the following notes have
been omitted: note (2) pertains to an acquisition; note (3) pertains to accounts
receivable; note (4) pertains to inventory; note (5) pertains to income taxes;
note (7) pertains to leases; note (8) pertains to preferred stock; note (9)
pertains to stock option plans and warrants; note (10) pertains to
contingencies; note (11) pertains to employee benefit plans; and note (12)
pertains to quarterly financial data (unaudited).
4
<PAGE>
Note 2. SUMMARY OF SIGNIFICANT POLICIES
BUSINESS Datametrics Corporation, a Delaware corporation ("the Company"), is
engaged primarily in the design, development, manufacture and sale of high-
speed, color printers; high-resolution, non-impact printer/plotters; and
ruggedized computers and workstations. The Company's fiscal year ends on the
last Sunday of each October.
REVENUE RECOGNITION Revenues include both product sales and revenues applicable
to long-term design and production contracts. A majority of revenues from
product sales and long-term contracts are recorded as units are shipped.
Revenues applicable to certain fixed-price, long-term contracts (principally
design and development contracts) are recognized on the percentage-of-completion
(cost-to-cost) method, whereby revenue is measured by relating costs incurred to
total estimated costs. Sales under cost-reimbursement-type contracts are
recorded as costs are incurred. Applicable estimated profits are included in
sales in the proportion that incurred costs bear to total estimated costs. Any
anticipated losses on contracts are charged to income when identified.
The Company provides an accrual for future warranty costs at the time of revenue
recognition based upon the relationship of prior year sales to actual warranty
costs. The warranty for the Company's products generally covers defects in
material and workmanship. The current accrual represents the average outstanding
warranty of approximately nine months.
MAJOR CUSTOMERS Approximately 76%, 85% and 69% of the Company's sales during
the six month period ended April 30, 1995, and the fiscal years 1994 and 1993,
respectively, were to various U.S. Government agencies under prime contracts or
to prime contractors having sales to such agencies.
CASH AND CASH EQUIVALENTS The Company considers securities purchased within
three months of their date of maturity to be cash equivalents. Due to the short
maturity of these instruments, carrying value on the Company's balance sheet
approximates fair value.
5
<PAGE>
INVENTORY Stockroom inventory is stated at the lower of cost (first-in, first-
out) or market. The Company evaluates at least annually its stockroom inventory
for potential obsolescence or excessive levels based upon backlog and forecasted
usage. Contract inventory costs include purchased materials, direct labor and
manufacturing overhead. General and administrative costs are expenses in the
period incurred.
Inventories as of April 30, 1995 are as follows:
Raw Material $4,522,000
Work-in Process 1,476,000
----------
$5,998,000
==========
PROPERTY AND EQUIPMENT Depreciation and amortization of property and equipment
are provided, using the straight-line method, over the following estimated
useful lives:
Machinery and equipment 2 to 5 years
Furniture, fixtures and computer equipment 3 to 8 years
Leasehold improvements Shorter of the remaining
term of the lease
or the life of the asset
NET INCOME PER SHARE Primary net income per share is based on the weighted
average number of shares of common stock outstanding and common stock
equivalents after reducing net income by preferred stock accretion. Fully
diluted net income per share additionally assumes the conversion of the
outstanding convertible preferred stock and the elimination of the related
dividend.
Note 3. DEBT
The Company has entered into a revolving line of credit agreement (the "Credit
Agreement") with a bank. The advance rate is eighty (80%) of eligible accounts
receivable, plus eighty (80%) of eligible progress billings receivables, to a
maximum of the progress billing receivables sublimit, which will not exceed the
lesser of ten percent (10%) of eligible receivables or $500,000. The lending
facility is capped at $7,000,000 and expires on March 4, 1996. The interest rate
is prime plus .25%. The loan is secured by substantially all the Company's
assets. There was no outstanding balance at April 30, 1995. As of May 17, 1995
the Company had borrowings outstanding of $1,200,000 under the Credit Agreement
and remaining availability of approximately $1,000,000 under the terms of the
Credit Agreement.
The Credit Agreement requires the Company to maintain certain financial ratios
and restricted or limited the Company's ability to (i) create certain liens,
(ii) convey, transfer, or sell assets, (iii) incur additional indebtedness, (iv)
redeem or repurchase any class of stock, and (v) pay dividends on its preferred
or common stock. The Company is in compliance with all its covenants.
Note 4. SUBSEQUENT EVENTS
The Company plans to file on or about May 19, 1995, a registration statement and
prospectus in connection with an underwritten public offering of 2,000,000
shares of its common stock. Management expects that the proceeds of the proposed
offering will be used to reduce borrowings, if any, under the Company's
revolving line of credit, redeem the Series B Redeemable Preferred Stock, and
fund the continuing research and development costs for its high-speed color
digital printer technology.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
RESULTS OF OPERATIONS
- ---------------------
Six Month Period Ended April 30, 1995 Compared
- ----------------------------------------------
To The Six Month Period Ended May 1, 1994
- -----------------------------------------
The Company's operating cycle is long term and involves various types of
production contracts and varying production delivery schedules. Management
believes that inflation and changing prices have not had a material effect on
the Company's results of operations for the periods covered by the financial
statements included herein. The contract process in which products are offered
for sale is generally set before costs are incurred and the prices are based on
estimates of these costs which include the anticipated impact of inflation.
Accordingly, results of a particular quarter, or quarter-to-quarter comparisons
of recorded sales and profits, may not be indicative of future operating
results. The following comparative analysis should be viewed in this context.
Sales for the six month period ended April 30, 1995 were $7,348,000, a decrease
of $5,019,000 or 41% compared to $12,367,000 for the same period the prior year.
Sales from printer and workstation contracts relating to the MILSTAR program
declined $4,800,000 to $1,300,000, while other defense related workstation sales
remained constant, other defense related printer sales increased $400,000 and
sales to other customers declined $619,000. The MILSTAR program, which accounted
for $4,600,000 in sales in the second half of fiscal 1994, is expected to
account for less than $500,000 in the second half of fiscal 1995. There can be
no assurance that other DoD-related sales will replace the MILSTAR program
sales.
Gross profits for the six month period ended April 30, 1995 were $1,291,000 (18%
of sales), a decrease of $2,786,000 or 68% compared to $4,077,000 (33% of
sales) for the same period the prior year. Gross profits as a percentage of
sales were adversely impacted by the Company's product mix shifting to lower
margin ruggedized products from higher margin full mil-spec products and lower
production levels without a corresponding reduction in expenses.
Research and development expenses were $2,646,000 for the six month period ended
April 30, 1995, an increase of $1,671,000 or 171%, compared with $975,000 for
the same period the prior year. Substantially all fiscal 1995 expenditures
related to the development of the Company's high-speed color digital printer
products.
7
<PAGE>
Selling, general, and administrative expenses for the six month period ended
April 30, 1995 were $2,806,000 (38% of sales), a decrease of $722,000 or 20%
compared with $3,528,000 (29% of sales) for the same period the prior year.
This decrease was attributable to lower defense-related sales and marketing
expenses, consisting primarily of reduced commissions and payroll, partially
offset by increased marketing expenses for the Company's high-speed color
digital printer.
Net interest expense amounted to $39,000 for the six month period ended April
30, 1995, a net decrease of $19,000 compared with $58,000 for the same period
the prior year. This decrease was due to lower borrowings and higher interest
income partially offset by increased capital leases. Amortization of excess of
acquired net assets over cost was $152,000 for the six month period ended April
30, 1995 compared to $141,000 for the same period last year. The amortization
was a result of the acquisition of Rugged Digital in August 1993.
The net loss for the six months ended April 30, 1995 amounted to $4,050,000,
compared with a net loss of $213,000 for the same period in the prior year. This
was due to a decrease in gross profit of $2,786,000, an increase in research and
development costs of $1,671,000, and an increase in taxes of $132,000, the
aggregate of which was partially offset by a decrease in selling, general, and
administrative expenses of $722,000, a decrease in net interest expense of
$19,000, and an increase in amortization of excess of acquired net assets over
costs of $11,000.
Reduced military sales during fiscal 1995, along with increased competition in
the ruggedized peripheral market, increased research and development costs, and
higher interest expense due to capital leases and loans are expected to cause a
substantial loss for the Company in fiscal 1995.
Three Month Period Ended April 30, 1995 Compared
- ------------------------------------------------
To The Three Month Period Ended May 1, 1994
- -------------------------------------------
Sales for the three month period ended April 30, 1995 were $3,897,000, a
decrease of $2,836,000 or 42.1% compared to $6,733,000 for the same period the
prior year. Sales from printer and workstation contracts relating to the
MILSTAR program, which should be completed during fiscal 1995, declined
$2,700,000 dollars while other defense related workstation sales decreased
$700,000, other defense related printer sales increased $800,000 and sales to
other customers declined $200,000.
8
<PAGE>
Gross profits for the three month period ended April 30, 1995 were $543,000 (14
% of sales), a decrease of $1,849,000 or 77% compared to $2,392,000 (36% of
sales) for the same period the prior year. Gross profits as a percentage of
sales were adversely impacted by the Company's product mix shifting to lower
margin ruggedized products from higher margin full mil-spec products and lower
production levels without a corresponding reduction in expenses.
Research and development expenses were $1,611,000 for the three month period
ended April 30, 1995, an increase of $1,045,000 or 185%, compared with $566,000
for the same period the prior year. Substantially all fiscal 1995 expenditures
relate to the development of the Company's high-speed color digital printer
product.
Selling, general, and administrative expenses for the three month period ended
April 30, 1995 were $1,450,000 (37% of sales), a decrease of $396,000 or 22%
compared with $1,846,000 (27% of sales) for the same period the prior year. This
decrease is attributable to lower military sales and marketing expenses,
consisting primarily of reduced commissions and payroll, partially offset by
increased marketing expenses for the Company's high-speed color digital printer.
Interest expense amounted to $54,000 (offset by $23,000 of interest income) for
the three month period ended April 30, 1995, a net increase of $15,000 compared
with $16,000 of net interest expense for the same period the prior year. This
increase is due to lower borrowings and higher interest income offset by
increased capital leases. Amortization of excess of acquired net assets over
cost of was $76,000 for the three month period ended April 30, 1995 compared to
$85,000 for the same period last year. The amortization is a result of the
acquisition of Rugged Digital in August 1993.
The net loss for the three months ended April 30, 1995 amounted to $2,475,000,
compared with a net income of $29,000 for the same period in the prior year, due
to a decrease in gross profit of $1,849,000, an increase in research and
development costs of $1,045,000, and an increase in net interest expense of
$15,000. This was partially offset by a decrease in selling, general, and
administrative expenses of $396,000, a decrease in taxes of $18,000 and a
decrease in amortization of excess of acquired net assets over costs of $9,000.
9
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
The Company has entered into a revolving line of credit with a bank (the "Credit
Agreement"). The advance rate is eighty percent (80%) of eligible accounts
receivable, plus eighty percent (80%) of eligible progress billing receivables,
to a maximum of the progress billing receivable sublimit, which will not exceed
the lesser of ten percent(10%) of eligible accounts receivables or $500,000. The
lending facility is capped at $7,000,000 and expires on March 4, 1996. The
interest rate is prime plus .25%. The loan is secured by substantially all the
Company's assets. There was no outstanding balance at April 30, 1995. As of May
17, 1995, the Company had borrowings outstanding of $1,200,000 under the Credit
Agreement and remaining availability of approximately $1,000,000 under the terms
of the Credit Agreement.
The Credit Agreement requires the Company to maintain certain financial ratios
and restricts or limits the Company's ability to (i) create certain liens, (ii)
convey, transfer, or sell assets out of the ordinary course, (iii) incur
additional indebtedness, (iv) redeem or repurchase any class of stock, and (v)
pay dividends on its preferred or common stock. The Company is in compliance
with all of its covenants.
From time to time the Company receives advance payments on certain contracts.
These funds may be used for working capital requirements and other general
corporate purposes until needed to complete the contracts. At April 30, 1995,
the Company had $24,000 of advance payments in excess of costs.
The Company's working capital and current ratios at the end of fiscal years
1992, 1993, 1994 and the period ending April 30, 1995 were $4,856,000,
$8,708,000, $12,361,000 and $8,754,000 and 2.4, 2.6, 3.7 and 3.8, respectively.
The Company expects to purchase approximately $1,700,000 of capital equipment
(including capitalized leases) during fiscal 1995, of which $1,283,000 of
such equipment had been purchased as of April 30, 1995. The Company's other
principal commitments for fiscal 1995 are lease obligations for the Company's
facility, operating leases, principal and interest due on equipment borrowings,
redemption of the Series B Preferred Stock and interest on bank borrowings.
Due to the Company's significant level of research and development costs and the
reduced sales and margins in its military business, the Company has experienced
negative cash flow from operations of $496,000 for the first six months of
fiscal year 1995. This negative cash flow from operations is expected to
continue for the remainder of fiscal year 1995.
10
<PAGE>
The Company intends to fund its continued investment in its high-speed color
digital printers through a public offering of common stock. The proceeds of such
offering are necessary to provide the needed liquidity to maintain this expected
significant level of research and development and to make anticipated production
deliveries in calendar 1995. The Company intends to finance its defense-related
capital requirements and other liquidity needs from the existing line of credit,
capital leases and working capital. In addition, pursuant to an agreement
reached in February 1995, the Company expects that in the third fiscal quarter
of 1995, Cruttenden Roth Incorporated will exercise the warrants previously
granted to it in connection with the Company's public offering consummated in
March 1994, and the Company will receive the aggregate warrant exercise price of
$535,500 in cash.
BUSINESS ENVIRONMENT
As part of its business strategy, the Company has been investing substantial
resources in developing its commercial business. Results for 1995 are expected
to be impacted by continued significant investment in the Company's CYMax high-
speed color digital printer program, during which time the Company expects to
introduce products to the market for field evaluation. During calendar 1995, the
Company expects to make initial customer deliveries and to slowly increase
production, which the Company anticipates will begin generating incremental
commercial revenues.
Companies engaged in supplying equipment and services to U.S. government defense
programs are subject to special risks including dependence on government
appropriations, contract termination without cause, contract renegotiation, and
the intense competition for the available defense business. Over the past
several years, the Company has been significantly impacted by market changes in
the U.S. Department of Defense. U.S. Department of Defense budget forecasts
indicate that overall funding will continue to decrease for the foreseeable
future, and the Company anticipates that the results of its military business
operations will continue to be adversely affected by such decreases.
Reduced military sales during fiscal 1995, along with increased competition in
the ruggedized peripheral market, increased research and developement costs, and
higher interest expense due to capital leases and loans are expected to cause a
substantial loss for the Company in fiscal 1995.
Because of the foregoing, as well as other factors affecting the Company's
operating results, past financial performance should not be considered to be a
reliable indicator of future performance.
11
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a vote of security holders.
Registrant held its Annual Meeting of Stockholders on April 11, 1995.
The following matter was voted upon at the meeting:
Election of Directors Votes for
---------
Dann V. Angeloff 7,486,891
Richard A Foster 7,492,891
Burton L. Kaplan 7,486,391
Richard W. Muchmore 7,486,391
Garland S. White 7,488,541
Sidney E. Wing 7,488,541
Kenneth Zeiger 7,492,891
Item 6. Exhibits and Reports on Form 8-K
(a) List of Exhibits:
----------------
Exhibit
Numbers Description of Exhibits
------- -----------------------
10.1 Security and Loan Agreement between Datametrics
Corporation and Imperial Bank executed March 21, 1995, as
amended May 15, 1995.
10.2 Agreement between Datametrics Corporation and The Angeloff
Company dated February 15, 1995.
27.1 Financial Data Schedule.
(b) Reports on Form 8-K.
-------------------
None.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DATAMETRICS CORPORATION
-----------------------
(Registrant)
Dated: May 18, 1995 /s/ SIDNEY E. WING
------------------------------ ----------------------------------
Sidney E. Wing
President and Chief
Executive Officer
Dated: May 18, 1995 /s/ JOHN J. VAN BUREN
------------------------------ ----------------------------------
John J. Van Buren
Sr. Vice President and
Chief Financial Officer
13
<PAGE>
EXHIBIT 10.1
IMPERIAL BANK
MEMBER FDIC
SECURITY AND LOAN AGREEMENT
(ACCOUNTS RECEIVABLE)
This Agreement is entered into between DATAMETRICS CORPORATION, a Delaware
corporation (herein called "Borrower") and IMPERIAL BANK (herein called "Bank").
1. Bank hereby commits, subject to all the terms and conditions of this
Agreement and prior to the termination of its commitment as hereinafter
provided, to make loans to Borrower from time to time in such amounts as
may be determined by Bank up to, but not exceeding in the aggregate unpaid
principal balance, the following Borrowing Base:
80.000% of Eligible Accounts plus 80.000% of Eligible Progress Billing
Accounts to a maximum Progress Billing Account Sublimit, which will not
exceed the lesser of 10.000% of Eligible Accounts or $500,000.00, and in no
event more than $7,000,000.00.
2. The amount of each loan made by Bank to Borrower hereunder shall be debited
to the loan ledger account of Borrower maintained by Bank (herein called
"Loan Account") and Bank shall credit the Loan Account with all loan
repayments made by Borrower. Borrower promises to pay Bank (a) the unpaid
balance of Borrower's Loan Account and (b) on or before the tenth day of
each month, interest on the average daily unpaid balance of the Loan
Account during the immediately preceding month at the rate of No &
250/1000ths percent (0.250%) per annum in excess of the rate of interest
which Bank has announced as its prime lending rate ("Prime Rate") which
shall vary concurrently with any change in such Prime Rate. Interest shall
be computed at the above rate on the basis of the actual number of days
during which the principal balance of the loan account is outstanding
divided by 360, which shall for interest computation purposes be considered
one year. The amount of interest payable each month by Borrower shall not
be less than a minimum monthly charge of $250.00, Bank is hereby authorized
to charge Borrower's deposit account(s) with Bank for all sums due Bank
under this Agreement.
3. Requests for loans hereunder shall be in writing duly executed by Borrower
in a form satisfactory to Bank and shall contain a certification setting
forth the matters referred to in Section 1, which shall disclose that
Borrower is entitled to the amount of loan being requested.
4. As used in this Agreement, the following terms shall have the following
meanings:
A. "Accounts" means any right to payment for goods sold or leased, or to
be sold or to be leased, or for services rendered or to be rendered no
matter how evidenced, including accounts receivable, contract rights,
chattel paper, instruments, purchase orders, notes, drafts,
acceptances, general intangibles and other forms of obligations and
receivables.
B. "Collateral" means any and all personal property of Borrower which is
assigned or hereafter is assigned to Bank as security or in which Bank
now has or hereafter acquires a security interest.
C. "Eligible Accounts" means all of Borrower's Accounts excluding,
however, (1) all Accounts under which payment is not received within
90 days from any invoice date, (2) all Accounts against which the
account debtor or any other person obligated to make payment thereon
asserts any defense, offset, counterclaim or other right to avoid or
reduce the liability represented by the Account and (3) any Accounts
if the account debtor or any other person liable in connection
therewith is insolvent, subject to bankruptcy or receivership
proceedings or
<PAGE>
has made an assignment for the benefit of creditors or whose credit
standing is unacceptable to Bank and Bank has so notified Borrower.
Eligible Accounts shall only include such accounts as Bank in its sole
discretion shall determine are eligible from time to time.
5. Borrower hereby assigns to Bank all Borrower's present and future Accounts,
including all proceeds due thereunder, all guaranties and security
therefor, and hereby grants to Bank a continuing security interest in all
moneys in the Collateral Account referred to in Section 6 hereof, as
security for any and all obligations of Borrower to Bank, whether now owing
or hereafter incurred and whether direct, indirect, absolute or contingent.
So long as Borrower is indebted to Bank or Bank is committed to extend
credit to Borrower, Borrower will execute and deliver to Bank such
assignments, including Bank's standard forms of Specific or General
Assignment covering individual Accounts, notices, financing statements, and
other documents and papers as Bank may require in order to affirm,
effectuate or further assure the assignment to Bank of the Collateral or to
give any third party, including the account debtors obligated on the
Accounts, notice of Bank's interest in the Collateral.
6. Until Bank exercises its rights to collect the Accounts pursuant to
paragraph 10, Borrower will collect with diligence all Borrower's Accounts,
provided that no legal action shall be maintained thereon or in connection
therewith without Bank's prior written consent. Any collection of Accounts
by Borrower, whether in the form of cash, checks, notes, or other
instruments for the payment of money (properly endorsed or assigned where
required to enable Bank to collect same), shall be in trust for Bank, and
Borrower shall keep all such collections separate and apart from all other
funds and property so as to be capable of identification as the property of
Bank and deliver said collections daily to Bank in the identical form
received. The proceeds of such collections when received by Bank may be
applied by Bank directly to the payment of Borrower's Loan Account or any
other obligation secured hereby. Any credit given by Bank upon receipt of
said proceeds shall be conditional credit subject to collection. Returned
items at Bank's option may be charged to Borrower's general account. All
collections of the Accounts shall be set forth on an itemized schedule,
showing the name of the account debtor, the amount of each payment and such
other information as Bank may request.
7. Until Bank exercises its rights to collect the Accounts pursuant to
paragraph 10, Borrower may continue its present policies with respect to
returned merchandise and adjustments. However, Borrower shall immediately
notify Bank of all cases involving returns, repossessions, and loss or
damage of or to merchandise represented by the Accounts and of any credits,
adjustments or disputes arising in connection with the goods or services
represented by the Accounts and, in any of such events, Borrower will
immediately pay to Bank from its own funds (and not from the proceeds of
Accounts or inventory) for application to Borrower's Loan Account or any
other obligation secured hereby the amount of any credit for such returned
or repossessed merchandise and adjustments made to any of the Accounts.
8. Borrower represents and warrants to Bank: (i) If Borrower is a corporation,
that Borrower is duly organized and existing in the State of its
incorporation and the execution, delivery and performance hereof are within
Borrower's corporate powers, have been duly authorized and are not in
conflict with law or the terms of any charter, by-law or other
incorporation papers, or of any indenture, agreement or undertaking to
which Borrower is a party or by which Borrower is found or affected; (ii)
Borrower is, or at the time the collateral becomes subject to Bank's
security interest will be, the true and lawful owner of and has, or at the
time the Collateral becomes subject to Bank's security interest will have,
good and clear title to the Collateral, subject only to Bank's rights
therein; (iii) Each Account is, or at the time the Account comes into
existence will be, a true and correct statement of a bona fide indebtedness
incurred by the debtor named therein in the amount of the Account for
either merchandise sold or delivered (or being held subject to Borrower's
delivery instructions) to, or services rendered, performed and accepted by,
the account debtor; (iv) That there are or will be no defenses,
counterclaims, or setoffs which may be asserted against the Accounts; and
(v) any and all financial information, including information relating to
the Collateral, submitted by Borrower to Bank, whether previously or in the
future, is or will be true and correct.
<PAGE>
9. Borrower will: (i) Furnish Bank from time to time such financial
statements and information as Bank may reasonably request and inform Bank
immediately upon the occurrence of a material adverse change therein; (ii)
Furnish Bank periodically, in such form and detail and at such times as
Bank may require, statements showing aging and reconciliation of the
Accounts and collections thereon; (iii) Permit representatives of Bank to
inspect the Borrower's books and records relating to the Collateral and
make extracts therefrom at any reasonable time and to arrange for
verification of the Accounts, under reasonable procedures, acceptable to
Bank, directly with the account debtors or otherwise at Borrower's expense;
(iv) Promptly notify Bank of any attachment or other legal process levied
against any of the Collateral and any information received by Borrower
relative to the Collateral, including the Accounts, the account debtors or
other persons obligated in connection therewith, which may in any way
affect the value of the Collateral or the rights and remedies of Bank in
respect thereto; (v) Reimburse Bank upon demand for any and all legal
costs, including reasonable attorneys' fees, and other expense incurred in
collecting any sums payable by Borrower under Borrower's Loan Account or
any other obligation secured hereby, enforcing any term or provision of
this Security Agreement or otherwise or in the checking, handling and
collection of the Collateral and the preparation and enforcement of any
agreement relating thereto; (vi) Notify Bank of each location and of each
office of Borrower at which records of Borrower relating to the Accounts
are kept; (vii) Provide, maintain and deliver to Bank policies insuring the
Collateral against loss or damage by such risks and in such amounts, forms
and companies as Bank may require and with loss payable solely to Bank,
and, in the event Bank takes possession of the Collateral, the insurance
policy or policies and any unearned or returned premium thereon shall at
the option of Bank become the sole property of Bank, such policies and the
proceeds of any other insurance covering or in any way relating to the
Collateral, whether now in existence or hereafter obtained, being hereby
assigned to Bank; and (viii) in the event the unpaid balance of Borrower's
Loan Account shall exceed the maximum amount of outstanding loans to which
Borrower is entitled under Section 1 hereof, Borrower shall immediately pay
to Bank, from its own funds and not from the proceeds of Collateral, for
credit to Borrower's Loan Account the amount of such excess.
10. Bank may at any time, without prior notice to Borrower, collect the
Accounts and may give notice of assignment to any and all account debtors,
and Borrower does hereby make, constitute and appoint Bank its Irrevocable,
true and lawful attorney with power to receive, open and dispose of all
mail addressed to Borrower, to endorse the name of Borrower upon any checks
or other evidences of payment that may come into the possession of Bank
upon the Accounts to endorse the name of the undersigned upon any document
or instrument relating to the Collateral; in its name or otherwise, to
demand, sue for, collect and give acquittances for any and all moneys due
or to become due upon the Accounts; to compromise, prosecute or defend any
action, claim or proceeding with respect thereto; and to do any and all
things necessary and proper to carry out the purpose herein contemplated.
11. Until Borrower's Loan Account and all other obligations secured hereby
shall have been repaid in full, Borrower shall not sell, dispose of or
grant a security interest in any of the Collateral other than to Bank, or
execute any financing statements covering the Collateral in favor of any
secured party or person other than Bank.
12. Should: (i) Default be made in the payment of any obligation, or breach be
made in any warranty, statement, promise, term or condition, contained
herein or hereby secured; (ii) Any statement or representation made for the
purpose of obtaining credit hereunder prove false; (iii) Bank deem the
Collateral inadequate or unsafe or in danger of misuse; (iv) Borrower
become insolvent or make an assignment for the benefit of creditors; or (v)
Any proceeding be commended by or against Borrower under any bankruptcy,
reorganization, arrangement, readjustment of debt or moratorium law or
statute; then in any such event, Bank may, at its option and without demand
first made and without notice to Borrower, do any one or more of the
following: (a) Terminate its obligation to make loans to Borrower as
provided in Section 1 hereof; (b) Declare all sums secured hereby
immediately due and payable; (c) immediately take possession of the
Collateral wherever it may be found, using all necessary force so to do, or
require Borrower to assemble the Collateral and make it available to Bank
at a place designated by Bank which is reasonably convenient to Borrower
and Bank, and Borrower waives all
<PAGE>
claims for damages due to or arising from or connected with any such
taking; (d) Proceed in the foreclosure of Bank's security interest and sale
of the Collateral in any manner permitted by law, or provided for herein;
(e) Sell, lease or otherwise dispose of the Collateral at public or private
sale, with or without having the Collateral at the place of sale, and upon
terms and in such manner as Bank may determine, and Bank may purchase same
at any such sale; (f) Retain the Collateral in full satisfaction of the
obligations secured thereby; (g) Exercise any remedies of a secured party
under the Uniform Commercial Code. Prior to any such disposition, Bank
may, at its option, cause any of the Collateral to be repaired or
reconditioned in such manner and to such extent as Bank may deem advisable,
and any sums expended therefor by Bank shall be repaid by Borrower and
secured hereby. Bank shall have the right to enforce one or more remedies
hereunder successively or concurrently, and any such action shall not estop
or prevent Bank from pursuing any further remedy which it may have
hereunder or by law. If a sufficient sum is not realized from any such
disposition of Collateral to pay all obligations secured by this Security
Agreement, Borrower hereby promises and agrees to pay Bank any deficiency.
13. If any writ of attachment, garnishment, execution or other legal process be
issued against any property of Borrower, or if any assessment for taxes
against Borrower, other than real property, is made by the Federal or State
government or any department thereof, the obligation of Bank to make loans
to Borrower as provided in Section 1 hereof shall immediately terminate and
the unpaid balance of the Loan Account, all other obligations secured
hereby and all other sums due hereunder shall immediately become due and
payable without demand, presentment or notice.
14. Borrower authorizes Bank to destroy all invoices, delivery receipts,
reports and other types of documents and records submitted to Bank in
connection with the transactions contemplated herein at any time subsequent
to four months from the time such items are delivered to Bank.
15. Nothing herein shall in any way limit the effect of the conditions set
forth in any other security or other agreement executed by Borrower, but
each and every condition hereof shall be in addition thereto.
16. Additional provisions: SEE ADDENDUM ATTACHED
Executed this 21st day of March, 1995
IMPERIAL BANK DATAMETRICS CORPORATION
-----------------------------------------
(Name of Borrower)
BY: /s/ Roger R. Kratz, V.P. BY: /s/ John J. Van Buren, C.F.O.
------------------------ -----------------------------------------
Title (Authorized Signature and Title)
BY:
-----------------------------------------
(Authorized Signature and Title)
<PAGE>
ADDENDUM TO SECURITY AND LOAN AGREEMENT
("SECURITY AND LOAN AGREEMENT")
BETWEEN DATAMETRICS CORPORATION AND IMPERIAL BANK
DATED: March 21, 1995
This Addendum is made and entered into as of March 21, 1995, between Datametrics
Corporation ("Borrower") and Imperial Bank ("Bank"). This Addendum amends and
supplements the Security and Loan Agreement. In the event of any inconsistency
between the terms herein and the terms of the Security and Loan Agreement, the
terms herein shall in all cases govern and control. All capitalized terms
herein, unless otherwise defined herein, shall have the meaning set forth in the
Security and Loan Agreement.
1. Any commitment of Bank, pursuant to the terms of the Security and Loan
Agreement, to make advances against Eligible Accounts shall expire on March 4,
1996, subject to Bank's right to renew said commitment in its sole discretion.
Any such renewal of the commitment shall not be binding upon Bank unless it is
in writing and signed by an officer of the Bank.
2. Borrower represents and warrants that:
a. Litigation. There is no litigation or other proceeding pending or
threatened against or affecting Borrower, except as previously disclosed in
writing by Borrower to Bank, and Borrower is not in default with respect to any
order, writ, injunction, decree or demand of any court or other governmental or
regulatory authority.
b. Financial Condition. The balance sheet of Borrower of January 29,
1995, and the related profit and loss statement on that date, a copy of which
has heretofore been delivered to Bank by Borrower, and all other statements and
data submitted in writing by Borrower to Bank in connection with this request
for credit are true and correct, and said balance sheet and profit and loss
statement truly present the financial condition of Borrower as of the date
thereof and the results of the operations of Borrower for the period covered
thereby, and have been prepared in accordance with generally accepted accounting
principles on a basis consistently maintained. Since such date, there have been
no materially adverse changes. Borrower has no knowledge of any liabilities,
contingent or otherwise, at such date not reflected in said balance sheet, and
Borrower has not entered into any special commitments or substantial contracts
which are not reflected in said balance sheet, other than in the ordinary and
normal course of its business, which may have a materially adverse effect upon
its financial condition, operations or business as now conducted.
c. Trademarks, Patents. Borrower, as of the date hereof, possesses all
necessary trademarks, trade names, copyrights, patents, patent rights, and
licenses to conduct its business as now operated, without any known conflict
with valid trademarks, trade names, copyrights, patents and license rights of
others.
2.d. Tax Status. Borrower has no liability for any delinquent state, local
or federal taxes, and, if Borrower has contracted with any government agency,
Borrower has no liability for renegotiation of profits.
3. Borrower agrees that so long as it is indebted to Bank, it will not,
without Bank written consent, which will not be unreasonably withheld:
a. Type of Business. Management: Executives' Compensation. Make any
substantial change in the character of its business; or make any change in its
executive management, defined as consisting of Borrower's Chief Executive
Officer, Chief Financial Officer, Senior Vice President of Defense Products
Unit, and Vice President of Commercial Products Unit.
b. Outside Indebtedness. Create, incur, assume or permit to exist any
indebtedness for borrowed moneys other than loans from Bank except obligations
now existing as shown in financial statement dated January 29, 1995, except as
previously disclosed in writing, by Borrower to Bank, excluding those being
refinanced by Bank; or sell or transfer, either with or without recourse, any
accounts or notes receivable or any moneys due to become due. Notwithstanding
the foregoing, Borrower may incur indebtedness for up to $59,000 of borrowed
monies under Borrower's leasing line of credit with NationsBanc Leasing
Corporation, plus up to $565,000 collateralized by cash surrender value of life
insurance.
<PAGE>
ADDENDUM TO SECURITY AND LOAN AGREEMENT
Page 6
c. Liens and Encumbrances. Except as agreed in 3.b., create, incur,
assume any mortgage, pledge, encumbrance, lien or charge of any kind (including
the charge upon property at any time purchased or acquired under conditional
sale or other title retention agreement) upon any asset now owned or hereafter
acquired by it, other than liens for taxes not delinquent and liens in Bank's
favor.
d. Loans, Investments, Secondary Liabilities. Make any loans or advances
to any person or other entity other than in the ordinary and normal course of
its business as now conducted or make any investment in the securities of any
person or other entity having less than an A1P1 rating by Moody's Investors
Service; or guarantee or otherwise become liable upon the obligation of any
person or other entity, except by endorsement of negotiable instruments for
deposit or collection in the ordinary and normal course of its business.
e. Acquisition or Sale of Business; Merger or Consolidation. Purchase or
otherwise acquire the assets or business of any person or other entity; or
liquidate, dissolve, merge or consolidate, or commence any proceedings
therefore; or sell any assets except in the ordinary and normal course of its
business or fixed assets, or any property or other assets necessary for the
continuance of its business as now conducted, including without limitation the
selling of any property or other asset accompanied by the leasing back of the
same.
f. Dividends, Stock Payments. Declare or pay any dividend (other than
dividends payable in common stock of Borrower) or make any other distribution on
any of its capital stock now outstanding (except for dividends required to be
paid on Series B Redeemable Preferred Stock) or hereafter issued or purchase,
redeem or retire any of such stock (except for Series B Redeemable Preferred
Stock).
g. Capital Expenditures. Make or Incur obligations for capital
expenditures in excess of $900,000 in the period from the date hereof to October
31, 1995 or in excess of $900,000 in any one fiscal year thereafter.
h. Lease Liability. Make or incur liability for payments of rent under
leases of real property in excess of $850,000 and personal property in excess of
$700,000 in any one fiscal year.
4. Should there be a default under the Security and Loan Agreement, the
General Security Agreement or under the Note, all obligations, loans and
liabilities of Borrower to Bank, due or to become due, whether now existing or
hereafter arising, shall, at the option of Bank, become immediately due and
payable without notice or demand, and Bank shall thereupon have the right to
exercise all of its default rights and remedies. Default shall include any
material adverse change in the financial condition or business of Borrower.
5. In addition to the provisions in the Security and Loan Agreement, Eligible
Accounts and Eligible Progress Billing Accounts shall only include such accounts
as Bank in its sole discretion shall determine are eligible from time to time.
"Eligible Accounts" and "Eligible Progress Billing Accounts" shall also not
include any of the following:
a. Accounts with respect to which the account debtor is an officer,
director, shareholder, employee, subsidiary or affiliate of Borrower.
b. Accounts with respect to which 25% or more of the account debtor's
total accounts or obligations outstanding to Borrower are more than 90 days from
invoice date are not eligible.
c. Accounts representing billings for service or maintenance contracts or
for inventory or equipment on rent to the account debtor.
d. For accounts representing more than 25% of total accounts receivable,
the balance in excess of the 25% is not eligible. However, the Bank may deem,
at its sole discretion, the entire amount eligible.
<PAGE>
ADDENDUM TO SECURITY AND LOAN AGREEMENT
Page 7
e. Accounts with respect to international transactions unless insured, or
covered by letters of credit.
f. Accounts receivable from creditors (contra accounts) to the extent of
the offsetting accounts payable.
g. Credit balances greater than 90 days.
6. All financial covenants and financial information referenced herein shall
be interpreted and prepared in accordance with generally accepted accounting
principles applied on a basis consistent with previous years. Compliance with
financial covenants shall be calculated and monitored on a quarterly basis.
7. Borrower affirmatively covenants that so long as any loans, obligations or
liabilities remain outstanding or unpaid to Bank, it will:
a. Maintain a minimum of tangible net worth (meaning the excess of all
assets, excluding any value for goodwill, trademarks, patents, copyrights,
organization expense, and other similar intangible items, over its liabilities)
of not less than $10,000,000 presently and thereafter.
b. At all times maintain working capital (Borrower's current assets minus
current liabilities) of not less than $8,750,000 presently and thereafter.
c. At all times maintain a current ratio of at least 1.75 to 1.0 "Current
ratio" is the ratio of current assets to current liabilities.
d. Maintain a maximum ratio of total debt to tangible net worth not to
exceed 1.10 to 1.0.
e. Except for payroll and income tax depository accounts, maintain all
significant bank accounts and banking relationship with Bank.
f. As of and within 15 working days from each month-end, deliver to Bank,
a borrowing certificate certified by an officer or the company, an accounts
receivable aging reconciled to the general ledger of Borrower, a detailed
accounts payable aging reconciled to the Borrower's general ledger and setting
forth the amount of any book overdraft or the amount of checks issued but not
sent. All the foregoing will be in a form and with such detail as Bank may
request from time to time.
g. Within 45 days after the end of each quarter, deliver to Bank
Borrower's Form 10-Q, including a profit and loss statement and a balance sheet
in form satisfactory to Bank all certified by an officer of Borrower.
h. Within 90 days after the end of Borrower's fiscal year, deliver to
Bank Borrower's Form 10-K, including the same financial statements as otherwise
provided quarterly together with Changes in Financial Position Statement,
certified with a unqualified opinion by an independent certified public
accountant selected by Borrower but acceptable to Bank.
i. Within 5 days of filing, deliver to Bank copies of the income tax
returns of Borrower.
j. Rights and Facilities. Maintain and preserve all rights, franchises
and other authority adequate for the conduct of its business; maintain its
properties, equipment and facilities in good order and repair; conduct its
business or partnership, maintain and preserve its existence.
<PAGE>
ADDENDUM TO SECURITY AND LOAN AGREEMENT
Page 8
k. Insurance. Maintain public liability, property damage and workers
compensation insurance and insurance on all its insurable property against fire
and other hazards with responsible Insurance carriers to the extent usually
maintained by similar businesses. Borrower shall provide evidence of property
insurance in amounts and types acceptable to the Bank. Bank to be named as Loss
Payee.
l. Taxes and Other Liabilities. Pay and discharge, before the same
become delinquent and before penalties accrue thereon, all taxes, assessments
and governmental charges upon or against it or any of its properties, and any of
its other liabilities at any time existing, except to the extent and so long as:
(a) The same are being contested in good faith and by appropriate
proceedings in such manner as not to cause any materially adverse
affect upon its financial condition or the loss of any right of
redemption from any sale thereunder; and
(b) It shall have set aside on its books reserves (segregated to
the extent required by generally accepted accounting practice)
deemed by it adequate with respect thereto.
m. Records and Reports. Maintain a standard and modern system of
accounting in accordance with generally accepted accounting principles or a
basis consistently maintained; permit Bank's representatives to have access to,
and to examine its properties, books and records at all reasonable times.
8. The rate of interest applicable to the Loan Account shall be 0.25% per year
in excess of the rate of interest which Bank has announced as its prime lending
rate ("Prime Rate") which shall vary concurrently with any change in such Prime
Rate. Interest shall be computed at the above rate on the basis of the actual
number of days during which the principal balance of the loan account is
outstanding divided by 360, which shall for interest computation purposes be
considered one year.
9. Miscellaneous Provisions. Failure or Indulgence Not Waiver. No failure or
delay on the part of your Bank or any holder or Notes Issued hereunder, in the
exercise of any power, right or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise thereof or of any other right,
power or privilege. All rights and remedies existing under this agreement or
any not issued in connection with a loan that your Bank may make hereunder, are
cumulative to, and not exclusive of, any rights or remedies otherwise available.
10. This addendum is executed by and on behalf of the parties as of the date
first above written.
DATAMETRICS CORPORATION "BORROWER" IMPERIAL BANK "BANK"
BY: /s John J. Van Buren BY: /s/ Roger R. Kratz
------------------------------- --------------------------------------
John J. Van Buren Roger R. Kratz
SVP, Chief Financial Officer VP, Commercial Loan Officer
<PAGE>
FIRST AMENDMENT TO ADDENDUM TO SECURITY AND LOAN AGREEMENT
("SECURITY AND LOAN AGREEMENT")
BETWEEN DATAMETRICS CORPORATION AND IMPERIAL BANK
DATED: MARCH 21, 1995
The Security and Loan Agreement between Datametrics Corporation ("Borrower") and
Imperial Bank ("Bank"), dated March 21, 1995, is amended as follows:
Borrower agrees that it will:
1. At all times maintain working capital (Borrower's current assets minus
current liabilities) of not less than $7,750,000 presently and thereafter.
2. At all times maintain a minimum tangible net worth (meaning the excess of all
assets, excluding any value for goodwill, trademarks, patents, copyrights,
organization expense, and other similar intangible items, over its
liabilities) of not less than $9,000,000 presently and thereafter.
All other terms and conditions of Bank's loan to Borrower remain unchanged.
Agreed: May 15, 1995
Datametrics Corporation Imperial Bank
/s/ John J. Van Buren /s/ R. R. Kratz
By:_____________________________ By:______________________________
C.F.O. Vice President
Title:__________________________ Title:___________________________
<PAGE>
THE ANGELOFF COMPANY
CORPORATE FINANCIAL ADVISORS
Established 1976
EXHIBIT 10.2
------------
February 15, 1995
Mr. Sidney E. Wing
President
Datametrics Corporation
21135 Erwin Street
Woodland Hills, California 91367
Dear Sid:
This letter will amend the November 26, 1993 agreement regarding The Angeloff
Company (TAC) acting as the corporate financial advisor to Datametrics (DMC).
The Angeloff Company will provide advisory services in connection with board
governance, merger/acquisition direction, strategic partnering, public offerings
and financing sources including commercial and investment bankers. We shall
devote 2 1/2 days per month or thirty days per year for the next year providing
such services.
As compensation for these services, DMC will pay TAC $6,000 per month and
reasonable out-of-pocket expenses payable on the 15th of each month. In
addition, if you request our services to assist you in capital raising,
excluding commercial bank financing, you will pay us a capital raising
assignment retainer of $10,000 per month. If you request our services to assist
you in merger/acquisition activity, you will pay us a merger/acquisition
assignment retainer of $7,500 per month. Each assignment retainer will be
communicated in writing by you and will have a minimum of a two month term.
The agreement shall be effective February 15, 1995 through February 15, 1996
and will continue thereafter unless written notice is given by either party
sixty days after that date or thereafter.
We will continue to waive our receiving cash director's compensation as long
as TAC is compensated as a corporate financial advisor in an amount not less
than $36,000 per year. We will be entitled to receive all non cash forms of
director compensation, if any, including stock options, etc.
<PAGE>
Mr. Sidney E. Wing
February 15, 1995
Page 2
If the terms and conditions meet with your approval, would you please so
indicate by signing in the space provided below and mail the original agreement
to me in the enclosed envelope and retain a copy for your files. We are looking
forward to continuing to work with you and the DMC team in building a bright and
successful future direction of the Company.
Sincerely yours,
/s/ DANN V. ANGELOFF
---------------------------
Dann V. Angeloff, President
The Angeloff Company
Accepted and Approved
February 20, 1995
/s/ SIDNEY E. WING
- -------------------------
Sidney E. Wing, President
Datametrics Corporation
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
ACCOMPANYING CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF DATAMETRICS
CORPORATION AS OF AND FOR THE SIX MONTH PERIOD ENDING APRIL 30, 1995 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-29-1995
<PERIOD-END> APR-30-1995
<CASH> 676
<SECURITIES> 0
<RECEIVABLES> 4,066
<ALLOWANCES> 6
<INVENTORY> 5,998
<CURRENT-ASSETS> 11,908
<PP&E> 7,471
<DEPRECIATION> 4,311
<TOTAL-ASSETS> 15,953
<CURRENT-LIABILITIES> 3,154
<BONDS> 0
<COMMON> 94
0
939
<OTHER-SE> 14,813
<TOTAL-LIABILITY-AND-EQUITY> 15,953
<SALES> 7,348
<TOTAL-REVENUES> 7,348
<CGS> 6,057
<TOTAL-COSTS> 6,057
<OTHER-EXPENSES> 5,452
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 39
<INCOME-PRETAX> (4,048)
<INCOME-TAX> 2
<INCOME-CONTINUING> (4,050)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
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</TABLE>
