SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly period ended: April 1, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 0-9487
CORCOM, INC.
(Exact name of registrant as specified in its charter)
Illinois 36-2307626
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
844 E. Rockland Road, Libertyville, Illinois 60048
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (708) 680-7400
Indicate by checkmark 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 [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the last practical date.
Common Stock, No Par Value--3,658,386 Shares as of April 19, 1995
<PAGE>
CORCOM, INC.
INDEX
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheets --
April 1, 1995 (Unaudited) and
December 31, 1994
Consolidated Condensed Statements of Operations (Unaudited)
for the Thirteen Weeks Ended April 1, 1995 and
April 2, 1994
Consolidated Condensed Statements of Cash Flows
(Unaudited)--For the Thirteen Weeks Ended
April 1, 1995 and April 2, 1994
Notes to Consolidated Condensed Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
PART II -- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
Signatures
Exhibit 4.1 -- Loan Agreement and Note with American National
Bank and Trust Company of Chicago
Exhibit 11.1 -- Computation of Earnings per Share
Exhibit 27.1 -- Financial Data Schedule (EDGAR ONLY)
<PAGE>
<TABLE>
PART I. -- FINANCIAL INFORMATION
CORCOM, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(In Thousands, except Share Data)
<CAPTION>
April 1, December 31,
1995 1994
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 339 $ 202
Accounts receivable--net 4,832 4,225
Inventories--Note B 6,501 6,418
Other current assets 412 572
Total current assets 12,084 11,417
PROPERTY, PLANT AND EQUIPMENT--AT COST 16,680 16,302
Less allowances for depreciation
and amortization 13,210 12,903
Net Property Plant & Equipment 3,470 3,399
TOTAL ASSETS $15,554 $14,816
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Cash overdraft $ 0 $ 130
Current portion of long-term debt 278 300
Accounts payable 1,449 1,235
Other accrued liabilities 1,090 1,257
Notes payable 428 249
Total current liabilities 3,245 3,171
LONG-TERM DEBT 200 213
STOCKHOLDERS' EQUITY
Common stock, no par value:
Authorized 10,000,000 shares; issued
(including shares in treasury) -
3,658,543 shares in 1995 and
3,619,543 in 1994 13,839 13,749
(Accumulated deficit) (1,729) (2,235)
Accumulated exchange rate adjustment (1) (82)
12,109 11,432
Less cost of common stock in treasury--
157 shares in 1995 and 1994 0 0
12,109 11,432
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $15,554 $14,816
<FN>
See notes to Consolidated Condensed Financial Statements.
</TABLE>
<TABLE>
CORCOM, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
(In Thousands, except Share Data)
<CAPTION>
Thirteen Weeks Ended
April 1, 1995 April 2, 1994
<S> <C> <C>
Net sales $6,920 $6,496
Costs and expenses:
Cost of sales 4,464 4,519
Engineering expenses 298 299
Selling, administrative
and other expenses 1,601 1,181
Interest expense 25 86
Total cost and expenses 6,388 6,085
Earnings before income taxes 532 411
Income taxes 26 8
Net earnings $ 506 $ 403
Average number of common and common
equivalent shares outstanding 3,798,144 3,638,637
Net earnings per common and common
equivalent share--Note C $ 0.13 $ 0.11
<FN>
Cash dividends have not been declared in the periods covered by these statements.
<FN>
See notes to Consolidated Condensed Financial Statements.
</TABLE>
<TABLE>
CORCOM, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In Thousands)
<CAPTION>
Thirteen Weeks Ended
April 1, 1995 April 2, 1994
<S> <C> <C>
OPERATING ACTIVITIES
Net cash flows from operating
activities $ 364 $ (75)
INVESTING ACTIVITIES
Additions to property, plant
and equipment, net (331) (69)
Proceeds from sale of property 0 2,541
TOTAL INVESTING ACTIVITIES (331) 2,472
FINANCING ACTIVITIES
Proceeds from borrowings under notes
payable and long-term debt 190 0
Stock options exercised 90 0
Repayments of notes payable and
long-term debt (46) (2,230)
Change in cash overdraft (130) (241)
TOTAL FINANCING ACTIVITIES 104 (2,471)
Effect of exchange rate changes on cash
and cash equivalents 0 2
INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS 137 (72)
Cash and cash equivalents at beginning
of year 202 238
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $ 339 $ 166
<FN>
See notes to Consolidated Condensed Financial Statements
</TABLE>
<PAGE>
CORCOM, INC
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
NOTE A--BASIS OF PRESENTATION
The accompanying unaudited condensed 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 Rule 10-01
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
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the thirteen weeks
ended April 1, 1995 are not necessarily indicative of the results that may
be expected for the year ending December 31, 1995. For further information,
refer to the consolidated financial statements and footnotes thereto included
in the Company's annual report on Form 10-K for the year ended
December 31, 1994.
NOTE B--INVENTORIES
Major classes of the Company's inventories are as follows (in thousands):
April 1, 1995 April 2, 1994
Finished products $2,760 $2,848
Materials and work-in-process 3,741 3,570
$6,501 $6,418
NOTE C--EARNINGS PER SHARE
Net earnings per common and common equivalent share are based upon the
weighted average number of shares of common stock and common stock
equivalents (dilutive stock options) outstanding during each period.
NOTE D--INCOME TAXES
The provision for income taxes in 1995 as a percentage of earnings before
income taxes is less than the federal statutory rate due principally to the
effect of utilization of net operating loss carryovers.
The components of the net deferred tax asset, tax effected, recognized in
the accompanying balance sheet as of April 1, 1995 are as follows (in
thousands):
Deferred tax assets $4,832
Less valuation allowance (4,832)
Net deferred tax assets $ 0
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations - First Quarter 1995 vs. First Quarter 1994
Net sales for the first quarter 1995 were $6,920,000, an increase of 6.5 %
from the $6,496,000 reported in the first quarter of 1994. This increase
was commensurate with the increase in the overall electronics market.
Cost of sales for the current quarter were 64.5% of net sales compared to
69.6% for the first quarter of 1994. The improvement is due to lower costs
at the Company's North American manufacturing facilities.
Engineering expenses, at $298,000 in the first quarter of 1995, were about
the same as the $299,000 reported in the first quarter of 1994. Selling,
administrative, and other expenses rose in the first quarter of 1995
to $1,601,000 from the $1,181,000 reported in the first quarter of 1994 due
principally to the fact that a $241,000 one-time gain on the sale of real
estate in the first quarter of 1994 was not repeated in 1995 and also to the
fact more sales commission were paid on the higher level of sales in 1995.
Interest expense was $25,000 in the first quarter of 1995 as compared to
$86,000 in the first quarter of 1994, the result of lower borrowings in the
current period.
Income tax expense was $26,000 in the first quarter of 1995 as compared to
$8,000 in the first quarter of 1994.
Net earnings for the first quarter of 1995 were $506,000 ($0.13 per share
on average shares outstanding of 3,798,144). This compares to earnings of
$403,000 including the gain on sale of real estate ($0.11 per share on
3,638,637 average shares outstanding) for the first quarter of 1994.
Liquidity and Capital Resources
On April 3, 1995, the Company entered into a new loan agreement with American
National Bank and Trust Company of Chicago. This agreement is a one year,
presently unsecured line of credit with maximumborrowings of $4,000,000, or
80% of eligible accounts receivable, whichever is less. Interest on this
loan is the Company's choice of either LIBOR plus one hundred fifty basis
points, or the Bank's prime rate. This agreement replaces the secured line
of credit with Norwest Business Credit, Inc. which had been established in
June 1991. Maximum borrowings under the old agreement were $5,000,000, of
which $4,600,000 was a revolving credit facility and $400,000 was a term
loan. The borrowings were collateralized by domestic inventory and
receivables. The interest rate under the old loan agreement was the Bank's
prime rate plus two and one half percent.
The Company was borrowing $478,000 against its line of credit as of
April 1, 1995. This compares to borrowings of $513,000 as of
December 31, 1994.
The Company does not believe that it will need to identify additional sources
of capital over the next year and feels that cash provided by operating
activities and the existing credit facility will be sufficient to meet its
operating needs and capital resource requirements.
<PAGE>
PART II. OTHER INFORMATION
CORCOM, INC.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit No. Description
4.1 Loan Agreement with American
National Bank and Trust Company
of Chicago
11.1 Computation of Earnings
per share
27.1 Financial Data Schedule (EDGAR ONLY)
(b) The Company did not file any reports on Form 8-K
during the thirteen week period ended April 1, 1995.
<PAGE>
CORCOM, INC.
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.
CORCOM, INC.
Dated: April 25, 1995 Thomas J. Buns
By: Thomas J. Buns
Vice President and Treasurer
(Principal Financial Officer)
<PAGE>
Exhibit 4.1
LOAN AGREEMENT
This Loan Agreement (this "Agreement"), made as of the 28th day of March,
1995, by and between AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO
("Bank"), a national banking association with its principal place of
business at 33 North LaSalle Street, Chicago, Illinois 60690, and
CORCOM, INC., ("Borrower"), a corporation with its principal place of
business at 844 East Rockland Road, Libertyville, Illinois, has reference
to the following facts and circumstances:
Pursuant to Borrower's request, Bank will lend monies to Borrower pursuant
hereto.
NOW, THEREFORE, in consideration of the promises set forth herein, Borrower
agrees to borrow monies from Bank, and Bank agrees to lend monies to
Borrower, upon the following terms and conditions.
1. DEFINITIONS AND TERMS
1.1 The following words, terms and/or phrases shall have the meanings set
forth thereafter and such meanings shall be applicable to [singular and
plural form thereof, giving effect to the numerical difference; whenever
the context so requires], the use of "it" in reference to Borrower shall
mean Borrower as identified at the beginning of this Agreement:
A. "Borrower's Liabilities": all obligations and liabilities of Borrower
to Bank (including without limitation all debts, claims, and indebtedness)
whether primary, secondary, direct, contingent, fixed or otherwise,
heretofore, now and/or from time to time hereafter owing, due or payable,
however evidenced, created, incurred, acquired or owing and however arising,
whether under this Agreement or the "Other Agreements" (hereinafter defined)
or operation of law or otherwise.
B. "Charges": all national, federal, state, county, city, municipal and/or
other governmental (or any instrumentality, division, agency, body or
department thereof, including without limitation the Pension Benefit
Guaranty Corporation) taxes, levies, assessments, charges, liens, claims or
encumbrances upon and/or relating to the Borrower's Liabilities, Borrower's
business, Borrower's ownership and/or use of any of its assets, and/or
Borrower's income and/or gross receipts.
C. "Indebtedness": (i) indebtedness for borrowed money or for the deferred
purchase price of property or services, (ii) obligations as lessee under
leases which shall have been or should be, in accordance with generally
accepted accounting principles, recorded as capital leases, (iii)
obligations under direct or indirect guaranties in respect of, and
obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clauses (i) or (ii) above,
and (iv) liabilities in respect of unfunded vested benefits under plans
covered by Title IV of the Employee Retirement Income Security Act of 1974,
as the same may be amended and in effect from time to time.
D. "Other Agreements": all agreements, instruments and documents, including
without limitation guaranties, mortgages, deeds of trust, notes, pledges,
powers of attorney, consents, assignments, contracts, notices, security
agreements, leases, financing statements and all other written matter
heretofore, now and/or from time to time hereafter executed by and/or on
behalf of Borrower and delivered to Bank.
E. "Persons": any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation,
institution, entity, party or government (whether national, federal, state,
county, city, municipal or otherwise, including without limitation, any
instrumentality, division, agency, body or department thereof).
1.2 Except as otherwise defined in this Agreement or the Other Agreements,
all words, terms and/or phrases used herein and therein shall be defined by
the applicable definition therefor (if any) in the Uniform Commercial Code
of the State of Illinois.
2. LOANS
2.1 Loans made by Bank to Borrower pursuant to this Agreement shall be
evidenced by notes or other instruments issued or made by Borrower to Bank.
Except as otherwise provided in this Agreement or in any notes executed and
delivered by Borrower to Bank in connection herewith, the principal portion
of Borrower's Liabilities shall be payable by Borrower to Bank on the
maturity date(s) described in any such note(s) (as the same may be amended
or renewed) and all costs, fees and expenses payable hereunder or under the
Other Agreements, shall be payable by Borrower to Bank on demand, in either
case at Bank's principal place of business or such other place as Bank shall
specify in writing to Borrower.
2.2 Notwithstanding anything contained in this Agreement or the Other
Agreements to the contrary, the principal portion of Borrower's Liabilities
outstanding at any one time shall not exceed the lesser of $4,000,000.00 in
the aggregate and (ii) the "Borrowing Base" as hereinafter defined.
2.3 Each loan made by Bank to Borrower pursuant to this Agreement or the
Other Agreements shall constitute an automatic warranty and representation
by Borrower to Bank that there does not then exist an "Event of Default"
(as hereinafter defined) or any event or condition which with notice, lapse
of time and/or the making of such loan would constitute an Event of Default.
2.4 This Agreement shall be in effect until all of Borrower's Liabilities
have been paid in full and any and all commitments of Bank to make loans
have terminated.
2.5 Bank's commitment to loan shall expire on the earlier of (i) the date on
which Borrower's Liabilities mature under the terms of any note given by
Borrower to Bank evidencing such liabilities, or (ii) the occurrence of the
Event of Default pursuant to Section 7 hereof.
2.6 Provided that an Event of Default does not then exist or would not then
be created thereby or any event which with notice or lapse of time or both
would constitute an Event of Default does not then exist, Bank shall loan to
Borrower an amount (the "Borrowing Base") equal to (i) the sum of 80% of the
face amount (less maximum discounts, credits and allowances which may have
been taken by or granted to obligors in connection therewith) of all then
existing "Eligible Accounts" (as hereinafter defined) that are scheduled on
the initial Schedule of Accounts delivered to Bank, and (ii) the sum of 80%
of the face amount (less maximum discounts, credits and allowances which may
be taken by or granted to Obligors in connection therewith) of all then
existing Eligible Accounts that are scheduled on each related subsequent
Schedule of Accounts delivered to Bank (excepting therefrom those Eligible
Accounts theretofore scheduled to Bank on the initial Schedule of Accounts
or any subsequent Schedule of Accounts delivered to the Bank theretofore).
Upon Bank's request therefore, Borrower shall attach to each Schedule of
Accounts a true and correct copy of such invoices, delivery receipts and
other documents relating to the account's scheduled thereon, as Bank may
request.
2.7 An "Eligible Account" is an Account of Borrower which meets each of the
following requirements: (a) if it arises from the sale or lease of goods,
such goods have been shipped or delivered to the Obligor thereof; (b) it is
valid, legally enforceable obligation of the Obligor thereunder, to the
extent it is not subject to any offset, counterclaim or other defense on the
part of such Obligor denying liability thereunder in whole or in part: (c)
it is not subject to any lien or security interest whatsoever, except those
of Bank; (d) it is evidenced by an invoice (dated not later than the date of
shipment to the Obligor or performance and having a due date not more than
30 days after the date of invoice) rendered to such Obligor, and is not
evidenced by any instrument or chattel paper; (e) it is payable in United
States dollars; (f) it is not owing by any Obligor involved in any
bankruptcy or insolvency proceeding; (g) it is not owing by any affiliate of
Borrower; (h) it is not unpaid more than 90 days after the date of such
invoice; (i) it is not owing by an Obligor which then shall have failed to
pay in full any invoice evidencing any account within 90 days after the date
of such invoice, unless the total invoice amounts of such Obligor which then
have not been paid within 90 days of the date of such invoice represent less
than 25% of the total invoice amounts then outstanding of such Obligor; and
(j) it is not an Account as to which Bank, at any time or times hereafter,
reasonably determines, in good faith, that the prospect of payment or
performance by the Obligor thereof is or will be impaired. An Account which
is at any time an Eligible Account, but which subsequently fails to meet any
of the foregoing requirements, shall forthwith cease to be an Eligible
Account. Borrower, immediately upon demand from Bank, shall pay to Bank an
amount of money equal to the monies theretofore advanced Bank to Borrower
upon an Account that is no longer an Eligible Account. Borrower warrants and
represents to and covenants with Bank that the aggregate of the then
outstanding amounts (less maximum discounts, credits and allowances which
may be taken by or granted to Obligors in connection therewith) of all then
existing Eligible Accounts shall at all times hereafter be at least 125% of
the principal portion of Borrower's Liabilities represented by loans made
by Bank to Borrower pursuant to paragraph 2.6 above.
2.8 With respect to Eligible Accounts, except as otherwise disclosed by
Borrower to Bank in writing, Borrower warrants and represents to Bank that:
(a) they are genuine, in all respects what they purport to be and are not
evidenced by a judgment; (b) they represent undisputed, bona fide
transactions completed in accordance with the terms and provisions contained
in the invoices and other documents delivered to Bank with respect thereto;
(c) the amounts thereof, which may be shown on any Schedule of Accounts
and/or all invoices and statements delivered to Bank with respect thereto,
are actually and absolutely owing to Borrower and are not contingent for any
reason; (d) no payments have been or shall be made thereon except payments
immediately delivered to Bank pursuant to this Agreement; (e) there are no
setoffs, counterclaims or disputes existing or asserted with respect thereto
and Borrower has not made any agreement with any Obligor thereof for any
deduction therefrom except a regular discount allowed by Borrower in the
ordinary course of its business for prompt payment; (f) there are no facts,
events or occurrences which in any way impair the validity or enforcement
thereof or tend to reduce the amount payable thereunder from the amount
thereof, which may be shown on any Schedule of Accounts and on all invoices
and statements delivered to Bank with respect thereto; (g) to the best of
Borrower's knowledge, all Obligors thereof have the capacity to contract and
are solvent; (h) the services furnished and/or goods sold giving rise
thereto are not subject to any lien, claim, encumbrance or security interest
except that of Bank; (i) Borrower has no knowledge of any fact or
circumstance which would impair the validity or collectability thereof;
(j) to Borrower's knowledge, there are no proceedings or actions which are
threatened or pending against any Obligor thereof which might result in any
material adverse change in its financial condition; and (k) the Obligors
thereof are not located in Minnesota or New Jersey, or if so located,
Borrower has filed a Notice of Business Activities Report with the New
Jersey Division of Taxation or Minnesota Department of Revenue for the
then current year.
2.9 Any of Bank's officers, employees or agents shall have the right, at any
time or times hereafter, in Bank's name or in the name of a nominee of Bank,
to verify the validity, amount or any other matter relating to any Accounts
by mail, telephone, telegraph or otherwise. All reasonable costs, fees and
expenses relating thereto incurred by Bank (or for which Bank becomes
obligated) shall be part of Borrower's Liabilities, payable by Borrower to
Bank on demand.
3. NEGATIVE PLEDGE
3.1 Borrower shall not, and shall not permit any of its subsidiaries to
create, incur, permit, or suffer to exist any lien upon any of its property
or assets, now owned or hereafter acquired, except for the following
permitted liens: (a) pledges or deposits made to secure payment of worker's
compensation insurance; (b) liens imposed by mandatory provisions of law
such as for materialmen, mechanics, warehousemen and other liens arising in
the ordinary course of business; (c) liens for taxes, assessments and
governmental charges or levies imposed upon the Borrower's income or profits
or property, if the same are not yet due and payable or if the same are
being contested in good faith and as to which adequate cash reserves have
been provided; (d) liens arising out of good faith deposits in connection
with tenders, leases, real estate bids or contracts (other than contracts
involving the borrowing of money), pledges, or deposits to secure (or in
lieu of) surety, stay, appeal or customs bonds and deposits to secure the
payment of taxes, assessments, customs duties or similar charges; and (e)
encumbrances consisting of zoning restrictions, easements, or other
restrictions on the use of real property, provided that such items do not
materially impair the use of such property for the purposes intended by
Borrower, and none of which is violated by existing structures or land use.
4. WARRANTIES, REPRESENTATIONS AND
COVENANTS: INSURANCE AND TAXES
4.1 Borrower, at its sole cost and expense, shall keep and maintain
business interruption insurance and public liability and property damage
insurance. All such policies of insurance shall be in form, with insurers
and in such amounts as may be reasonably satisfactory to Bank. Borrower
shall deliver to Bank the original (or certified) copy of each policy of
insurance, or a certificate of insurance.
4.2 Borrower shall pay promptly, when due, all of the Charges, and shall not
permit the Charges to arise, or to remain and will promptly discharge the
same except to the extent the same are contested in good faith and as to
which adequate reserves have been provided.
5. WARRANTIES, REPRESENTATIONS AND
COVENANTS: GENERAL
5.1 Borrower warrants and represents to and covenants with Bank that:
(a) Borrower has the right, power and capacity and is, or upon execution
will be, duly authorized and empowered to enter into, execute, deliver and
perform this Agreement and Other Agreements; (b) the execution, delivery
and/or performance by Borrower of this Agreement and Other Agreements shall
not, by the lapse of time, the giving of notice or otherwise, constitute a
violation of any applicable law or a breach of any provision contained in
Borrower's Articles of Incorporation, By-Laws, Articles of Partnership or
similar document, or contained in any agreement, instrument or document to
which Borrower is now or hereafter a party or by which it is or may be
bound; (c) Borrower is now and at all times hereafter shall be solvent and
generally paying its debts as they mature and Borrower now owns and shall at
all times hereafter own property which, at a fair valuation, is greater than
the sum of its debts; (d) Borrower is not and will not be during the term
hereof in violation of any applicable federal, state or local statute,
regulation or ordinance, in any respect materially and adversely affecting
its business, property, assets, operations or condition, financial or
otherwise; and (e) Borrower is not in default with respect to any indenture,
loan agreement, mortgage, deed or other similar agreement relating to the
borrowing of monies to which it is a party or by which it is bound.
5.2 Borrower warrants and represents to and covenants with Bank that
Borrower shall not, without Bank's prior written consent thereto: (a)
enter into any transaction not in the ordinary course of business which
materially and adversely affects Borrower's ability to repay Borrower's
Liabilities or Indebtedness; (b) other than as specifically permitted in or
contemplated by this Agreement, encumber, pledge, mortgage, sell, lease or
otherwise dispose of or transfer, whether by sale, merger, consolidation or
otherwise, any of Borrower's assets, other than sales in the ordinary course
of business; and (c) incur Indebtedness except renewals or extensions of
existing Indebtedness and interest thereon, except ordinary trade payables,
and except other Indebtedness that is unsecured and is to Persons who
execute and deliver to Bank in form and substance acceptable to Bank and its
counsel subordination agreements subordinating their claims against Borrower
therefor to the payment of Borrower's Liabilities.
5.3 Borrower covenants with Bank that Borrower shall furnish to Bank:
(a) as soon as available but not later than ninety (90) days after the
close of each fiscal year of Borrower, financial statements of Borrower
prepared in accordance with generally accepted accounting principles,
consistently applied, audited by a firm of independent certified public
accountants selected by Borrower and reasonably acceptable to Bank; (b)
as soon as available but not later than thirty (30) days after the end of
each calendar quarter hereafter, financial statements (10Q's) of Borrower
certified by Borrower to be prepared in accordance with generally accepted
accounting principles and to present fairly the financial position and
results of operations of Borrower for such period; and (c) such other data
and information (financial and otherwise) as Bank, from time to time, may
request.
5.4 Borrower covenants with Bank the following:
A. Borrower shall not permit its ratio of Cash Flow Available to Debt
Service ("Cash Flow Ratio") to be less than 1.25:1.00. For purposes of the
Cash Flow Ratio, "Cash Flow Available" on any date means the Borrower's
earnings before interest and taxes, plus (i) the Borrower's depreciation,
amortization and other "non-cash expense items" (ii) plus or minus net
changes in deferred taxes and LIFO adjustments less (iii) the Borrower's
cash payments for capital expenditures not reflected as an expense, net of
any borrowings to support the expenditures. For the purposes of Cash Flow
Ratio, "Debt Service" on any date means the sum of the following: (i) actual
amount of total principal and interest payments that Borrower's obligated to
the Bank during the period; (ii) actual amount of total principal and
interest payments Borrower is obligated to make to financing sources other
than the Bank during the period; (iii) anticipated tax payments for the
current period; and (iv) any other cash distributions including, but not
limited to, dividends or stock repurchases.
B. Borrower shall not permit the ratio of its total debt ("Total Debt") to
Tangible Net worth ("TNW") to at any time be greater than or equal to
1.0:1.0. As used in this Agreement, Total Debt shall mean as of any time
the aggregate of all indebtedness, obligations, liabilities, reserves and/or
other items which will be listed as a liability on the balance sheet of
Borrower in accordance with generally accepted accounting principles. TNW
shall mean the value of the assets of Borrower after subtracting therefrom
the aggregate of any intangible assets of Borrower, including without
limitation, prepaids, other accounts receivable, goodwill, franchises,
licenses, patents, trademarks, tradenames, copyrights and brand names, minus
the aggregate of all contingent and non-contingent liabilities of Borrower.
C. Borrower shall not declare or pay a Dividend if such Dividend plus any
Dividends paid in the previous three calendar quarters exceeds Borrower's
Net Income of the previous four calendar quarters. "Net Income" shall mean
Net Income as set forth in Borrower's Financial Statements supplied to Bank
pursuant to Section 5.3, of this Agreement. "Dividend" shall mean a
distribution of Borrower's assets to shareholders.
6. SETOFF AND SPRINGING LIEN
6.1 To assure the prompt payment to Bank of Borrower's Liabilities and the
prompt, full and faithful performance by Borrower of all the provisions to
be kept, observed or performed by Borrower under this Agreement and/or the
Other Agreements, Borrower expressly acknowledges Bank's right to setoff
all of Borrower's now or hereafter existing monies, reserves, deposits,
deposit accounts and interest given thereon, securities, cash, cash
equivalents and other property now or at any time or times hereafter in
possession or control of Bank or its bailee.
6.2 Springing Lien. To secure the prompt payment to Bank of Borrower's
Liabilities and the prompt, full and faithful performance by Borrower of
all the provisions to be kept, observed or performed by Borrower under this
Agreement and/or the Other Agreements, Borrower conditionally grants to Bank
a security interest in and to and collaterally assigns to Bank, the
following property, wherever located, whether now or hereafter existing,
owned, licensed, leased (to the extent Borrower's ownership interest
therein) arising and/or acquired, of Borrower's (i) accounts (sometimes
hereinafter individually and collectively referred to as "Accounts") and all
goods from the sale, lease or other disposition by Borrower and giving rise
to Accounts and have been returned to or repossessed or stopped in transit
by Borrower; (ii) inventory; (iii) liens, guaranties or other rights and
privileges pertaining to any of the collateral; (iv) all accessions to the
foregoing and all substitutions, renewals, improvements or replacements or
additions to the foregoing; (v) all books, records and computer records in
way relating to the collateral herein described; and (vi) all products and
proceeds of the foregoing, including without limitation proceeds of
insurance policies insuring the foregoing (individually and collectively,
also the "collateral" upon effectiveness of Bank's lien thereof, but prior
to such effectiveness, the "Future Collateral"). Borrower shall make all
appropriate entries upon its financial statements and its books and records
disclosing the Bank's security interest in the Collateral but no such entry
shall be made with regard to Future Collateral unless and until Bank's lien
thereon becomes effective. The term "Accounts" shall include any and all
now existing or hereafter arising rights to payment or amounts due Borrower
in the form of obligations or receivables from whatever source for services
rendered or products sold or leased. Prior to a default, nothing contained
in this Agreement shall inhibit Borrower's ability to sell its inventory in
the ordinary course of business.
The grant of security contained in this Section 6.2 (the "Future Security
Lien") shall only become effective upon the violation by Borrower of
covenants set forth in Section 5.4 of this Agreement, or any Event of
Default under this Agreement or the Other Agreements (the "Triggering
Conditions").
Concurrent with the execution of this Agreement, Borrower shall deliver to
Bank UCC-1 Financing Statements covering the property subject to the Future
Security Lien fully and properly executed by Borrower in a form and
substance acceptable to Bank. Bank shall have no right to record the
above-mentioned UCC-1 Financing Statements covering the property subject to
the Future Security Lien until one of the Triggering Conditions shall occur.
If a Triggering Condition shall occur, Bank shall be entitled to file or
record any and all of the Future Lien Documents. Borrower shall cooperate
with Bank in accomplishing the attachment and perfection of the future lien.
If the Bank does not perfect all or any part of the Future Security Lien at
the time of a Triggering Condition, this shall not constitute a waiver of the
Bank's right to perfect such liens at a later time.
6.3 All of Borrower's Liabilities shall constitute one loan secured by Bank's
security interest in the collateral and by all other security interest,
liens, claims and encumbrances heretofore now and/or from time to time
granted by Borrower to Bank.
6.4 Borrower shall now and hereafter execute and deliver to Bank, at the
request of Bank, all agreements, instruments and documents (the
"Supplemental Documentation") that Bank may reasonably request in a form and
substance acceptable to Bank, to perfect and maintain perfected Bank security
interest in the collateral and to consummate the transaction contemplated in
or by this Agreement or the Other Agreement. Borrower agrees that a carbon,
photographic or photostatic copy, or other reproduction of this Agreement or
of any financing statement shall be sufficient as a financing statement.
6.5 Bank shall have the right, at any time during Borrower's usual business
hours, to inspect the Collateral or Future Collateral and all related records
and to verify the amount in condition of any other matter relating to the
Collateral or Future Collateral.
6.6 Upon an Event of Default, Borrower shall receive, for the Bank and as
trustee for Bank, all monies, checks, notes, drafts and all other payment for
and/or proceeds of collateral and future collateral which may come into the
possession or under the control of Borrower and immediately receipt thereof,
Borrower shall remit the same (or cause the same to be remitted) in kind, to
Bank or at Bank's direction.
6.7 Upon an Event of Default, Bank, in its sole and absolute discretion, may
take control, in any manner, and may endorse Borrower's name to any of the
items in payment or proceeds provided in Paragraph 6.6 above and shall apply
the same to and on account of Borrower's Liabilities.
6.8 Bank, in its sole and absolute discretion, may at any time or times
hereafter, but shall not be under any obligation to pay, acquire or accept
an assignment of any security interest, lien, encumbrance or claim asserted
by any person or entity against the Collateral other than a permitted lien
under paragraph 3.1.
6.9 In no event shall Borrower make any sale, transfer or other disposition
of any of the Collateral or Future Collateral except as authorized by this
Agreement or in writing executed by Bank and delivered to Borrower. Nothing
contained herein shall limit Borrower's ability to sell inventory in the
normal course of business prior to a default. No such authorization given
by Bank to sell or specify any portion of Collateral or any items thereof,
and no waiver by Bank in connection therewith shall establish or constitute
a waiver or the prohibition of the prohibition contained in this Agreement
against the sales, but except any portion or any item thereof not covered by
such authorization.
7. DEFAULT
7.1 The occurrence of any one of the following events shall constitute a
default ("Event of Default"): (a) if Borrower fails or neglects to perform,
keep or observe any term, provision, condition, covenant, warranty or
representation contained in this Agreement or in the Other Agreements and
the same is not remedied or cured within thirty (30) days, which is required
to be performed, kept or observed by Borrower; (b) if Borrower fails to pay
any of Borrower's Liabilities, when due and payable or declared due and
payable within five (5) days of such due date; (c) if any of Borrower's
assets are attached, seized, subjected to a writ of distress warrant, or are
levied upon, or become subject to any lien, or come within the possession of
any receiver, trustee, custodian or assignee for the benefit of creditors;
(d) if Borrower becomes insolvent or generally fails to pay, or admits in
writing its inability to pay, debts as they become due, if a petition under
Title 11, United States Code or any similar law or regulation shall be filed
by or against Borrower, and if filed against Borrower is not dismissed within
sixty (60) days of such filing, or if Borrower shall make an assignment for
the benefit of its creditors or if any case or proceeding is filed by or
against Borrower or if Borrower shall make an assignment for the benefit of
its creditors or if any case or proceeding is filed by or against Borrower
for its dissolution or liquidation, or if Borrower is enjoined, restrained or
in any way prevented by court order from conducting all or any material part
of its business affairs; (e) if a notice of lien, levy or assessment if filed
of record or given to Borrower with respect to all or any substantial part of
Borrower's assets by any federal, state or local department or agency; (f) if
a contribution failure occurs with respect to any pension plan maintained by
Borrower or any corporation, trades or business that is, along with Borrower,
a member of a controlled group of corporations or controlled group of trades
or businesses (as described in Section 414(b) and (c) of the Internal Revenue
Code of 1986 or Section 4001, of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA")) sufficient to give rise to a lien under
Section 302(f) of ERISA; (g) if Borrower is in default in the payment of any
obligations, indebtedness or other liabilities in excess of $50,000 to any
third parties and such default is declared and is not cured within the time,
if any, specified therefor in any agreement governing the same; (h) the
occurrence of a default (subject to applicable grace or cure periods) or an
Event of Default under any of the Other Agreements; or (i) the reasonable
insecurity of Bank.
7.2 All of Bank's rights and remedies under this Agreement and the Other
Agreements are cumulative and non-exclusive.
7.3 Upon an Event of Default without notice by Bank to or demand by Bank of
Borrower, Bank shall have no further obligation to any may then forthwith
cease advancing monies or extending credit to or for the benefit of Borrower
under this Agreement and the Other Agreements. Upon an Event of Default,
without notice by Bank to or demand by Bank of Borrower, Borrower's
Liabilities shall be due and payable, forthwith.
7.4 Any notice required to be given by Bank to Borrower deposited in the
United States mail, postage prepaid shall be delivered by registered or
certified mail to the address specified at the beginning of this Agreement
not less than ten (10) days prior to such proposed action, shall constitute
commercially reasonable and fair notice to Borrower thereof.
7.5 Under an event of default Borrower waives and releases any cause of
action and claim against Bank's possession or collection of the monies,
reserves, deposits, deposit accounts and interest or dividends thereof,
cash or cash equivalents, collectively the "Monies", in conjunction with this
Loan Agreement, absent gross negligence or willful misconduct.
8. GENERAL
8.1 Borrower covenants, warrants and represents to Bank that all
representations and warranties of Borrower contained in this Agreement and
the Other Agreements shall be true from time of Borrower's execution of this
Agreement to the end of the original term and each renewal term hereof.
All of Borrower's warranties, representations, undertakings, and covenants
contained in this Agreement or the Other Agreements shall survive the
termination or cancellation of the same, until payment of all of Borrower's
Liabilities.
8.2 The terms and provisions of this Agreement and the Other Agreements
shall supersede any prior agreement or understanding of the parties hereto,
and contain the entire agreement of the parties hereto with respect to the
matter covered hereby. This Agreement and the Other Agreements may not be
modified, altered, or amended except by an agreement in writing signed by
Borrower and Bank. Except for the provisions of Section 2 hereof, this
Agreement shall continue to full force and effect so long as any portion or
component of Borrower's Liabilities shall be outstanding. Should a claim
("Recovery Claim") be made upon the Bank at any time for recovery of any
amount received by the Bank in payment of Borrower's Liabilities (whether
received from Borrower or otherwise) and should the Bank repay all or part
of said amount by reason of (1) any judgment, decree or order of any court
or administrative body having jurisdiction over Bank or any of its property;
or (2) any settlement or compromise of any such Recovery Claim effected by
the Bank with the claimant (including Borrower), this Agreement shall
continue in effect with respect to the amount so repaid to the same extent
as if such amount had never originally been received by the Bank,
notwithstanding any prior termination of this Agreement, the return of this
Agreement to Borrower, or the cancellation of any note or other instrument
evidencing Borrower's Liabilities. Borrower may not sell, assign or transfer
this Agreement, or the Other Agreements or any portion thereof.
8.3 Bank's failure to require strict performance by Borrower of any
provision of this Agreement shall not waive, affect or diminish any right of
Bank thereafter to demand strict Default by Borrower under this Agreement or
the Other Agreements, whether the same is prior or subsequent thereto and
whether of the same or of a different type. None of the undertakings, or the
Other Agreements and no Event of Default by Borrower under this Agreement or
the Other Agreements shall be deemed to have been suspended or waived by Bank
unless such suspension or waiver is by an instrument in writing signed by an
officer of Bank and directed to Borrower specifying such suspension or waiver.
8.4 If any provision of this Agreement or the Other Agreements or the
application thereof to any Person or circumstance is held invalid or
unenforceable, the remainder of this Agreement and the Other Agreements and
the application of such provision to other Persons or circumstances will not
be affected thereby and the provisions of this Agreement and the Other
Agreements shall be severable in any such instance.
8.5 This Agreement and the Other Agreements shall be binding upon and
inure to the benefit of the successors and assigns of Borrower and Bank.
This provision, however, shall not be deemed to modify Paragraph 8.2 hereof.
8.6 Borrower hereby appoints Bank as Borrower's agent and attorney-in-fact
for the purpose of carrying out the provisions of this Agreement in the event
of Bank's commitment to Borrower is outstanding and taking any action and
executing any agreement, instrument or document which Bank may deem necessary
or advisable to accomplish the purposes hereof which appointment is
irrevocable and coupled with an interest. All monies paid for the purposes
herein, and all costs, fees and expenses paid or incurred in connection
therewith, shall be part of Borrower's Liabilities, payable by Borrower to
Bank on demand.
8.7 Except as otherwise provided in the Other Agreements, if any provision
contained in this Agreement is in conflict with, or inconsistent with any
provision in the Other Agreements, the provision contained in this Agreement
shall govern and control.
8.8 Except as otherwise specifically provided in this Agreement, Borrower
waives any and all notice or demand which Borrower might be entitled to
receive by virtue of any applicable statute of law, and waives presentment,
demand and protest and notice of presentment, protest, default, dishonor,
non-payment, maturity, release, compromise, settlement, extension or renewal
of any and all agreements, instruments or documents at any time held by Bank
on which Borrower may in any way be liable.
8.9 Until Bank is notified by Borrower to the contrary in writing by
registered or certified mail directed to Bank's principal place of business,
the signature upon this Agreement or upon any of the Other Agreements or any
partner, manager, employee or agent of the Borrower, or of any other Person
designated in writing to Bank by any of the foregoing, shall bind Borrower
and be deemed to be the duly authorized act of Borrower.
8.10 This Agreement and the Other Agreements shall be governed and
controlled by the laws of the State of Illinois.
8.11 After an Event of Default, if at anytime or time hereafter whether or
not Borrower's Liabilities are outstanding at such time, Bank: (a) employs
counsel for advice or other representation (i) with respect to this
Agreement, the Other Agreements or the administration of Borrower's
Liabilities, (ii) to represent Bank in any litigation, arbitration contest,
dispute, suit or proceeding or to commence, defend or intervene or to take
any other action in or with respect to any litigation, arbitration, contest,
dispute, suit or proceeding or to commence, defend or intervene or to take
any other action in or with respect to any litigation, arbitration, contest,
dispute, suit or proceeding (whether instituted by Bank, Borrower or any
other Person) in any way or respect relating to this Agreement, the Other
Agreements, or Borrower's affairs, or (iii) to enforce any rights of Bank
against Borrower or any other Person which may be obligated to Bank by virtue
of this Agreement or the other Agreements, including, without limitation, any
Obligor attempts to or enforces any of Bank's rights or remedies under this
Agreement or the Other Agreements, including the reasonable costs and
expenses incurred by Bank in any manner or way with respect to the foregoing,
shall be part of Borrower's Liabilities, payable by Borrower to Bank on
demand.
8.12 BORROWER IRREVOCABLY AGREES THAT , SUBJECT TO BANK'S SOLE AND ABSOLUTE
ELECTION, ALL ACTIONS OR PROCEEDINGS IN ANY WAY, MANNER OR RESPECT, ARISING
OUT OF OR FROM OR RELATED TO THIS AGREEMENT, THE OTHER AGREEMENTS SHALL BE
LITIGATED ONLY IN COURTS HAVING SITUS WITHIN THE CITY OF CHICAGO, STATE OF
ILLINOIS. BORROWER HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY
LOCAL, STATE OR FEDERAL COURT LOCATED WITHIN SAID CITY AND STATE. BORROWER
HEREBY WAIVES ANY RIGHT IT MAY HAVE TO TRANSFER OR CHANGE THE VENUE OF ANY
LITIGATION BROUGHT AGAINST BORROWER BY BANK IN ACCORDANCE WITH THIS
PARAGRAPH.
8.13 BORROWER HEREBY IRREVOCABLY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY
ACTION, SUIT, COUNTERCLAIM OR PROCEEDING (I) TO ENFORCE OR DEFEND ANY RIGHTS
UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE OTHER AGREEMENTS, OR ANY
AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE
FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH, OR (II) ARISING
FROM ANY DISPUTE OR CONTROVERSY ARISING IN CONNECTION WITH OR RELATED TO THIS
AGREEMENT, THE OTHER AGREEMENTS, OR ANY SUCH AMENDMENT, INSTRUMENT, DOCUMENT
OR AGREEMENT, AND AGREES THAT ANY SUCH ACTION, SUIT, COUNTERCLAIM OR
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day and
year specified at the beginning hereof.
CORCOM, INC.
By: s/s Thomas J. Buns
Its: Vice President Finance
ATTEST:
By: s/s Walter Roth
Its: Secretary
Accepted this 28th day of March, 1995, at Bank's principal place of business
in the City of Chicago, State of Illinois.
AMERICAN NATIONAL BANK AND
TRUST COMPANY OF CHICAGO
By: s/s Todd B. Younger
Its: Officer
<PAGE>
AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO
REVOLVING LINE OF CREDIT
NOTE
$4,000,000.00 Date: March 28, 1995
Chicago, Illinois Due: December 31, 1995
FOR VALUE RECEIVED, the undersigned, (jointly and severally if more than
one) ("Borrower"), promises to pay to the order of American National Bank
and Trust Company of Chicago ("Bank"), at its principal place of business
in Chicago, Illinois or such other place as Bank may designate from time to
time hereafter, the principal sum of Four Million and No/100 Dollars
($4,000,000.00) or such lesser principal sum as may be owed by Borrower to
Bank hereunder, such payment to occur on December 31, 1995. Borrower's
obligations under this Note shall be defined and referred to herein as
"Borrower's Liabilities."
Borrower may prepay all or part of the principal, together with accrued
interest on the amount so prepaid, without penalty during the term of the
Note. All prepayments shall be applied upon installments of the most remote
maturity.
The principal amount of this Note is available to the Borrower on a revolving
basis. The undersigned may borrower, repay and reborrow any amount, subject
to the limitations contained in the Loan Agreement of even date herewith
executed by and between Corcom, Inc. and Bank (the "Loan Agreement"),
provided that the total outstanding principal balance does not exceed the
principal amount of this Note and that Borrower has complied with all the
terms of this Note and the Loan Agreement. The books and records of the Bank
shall be determinative of the unpaid balance of this Note from time to time
outstanding, absent manifest error.
Reference is hereby made to the Loan Agreement for a statement of the terms
and conditions under which the loan evidenced hereby has been made, is to be
repaid and for a statement of Bank's remedies upon the occurrence of an
"Event of Default" as defined in the Loan Agreement. The terms and
conditions of the Loan Agreement are incorporated herein by reference in
their entirety.
Borrower's Liabilities unpaid from time to time shall bear interest
(computed on the basis of a 360-day year and actual days elapsed) from the
date hereof until paid at a per annum rate at all times equal to the Bank's
Base Rate or equivalent as announced or published publicly from time to time
(the "Base Rate"). Therefore, interest shall be calculated for each day at
1/360th of the applicable per annum rate. The Base Rate is not indicative of
the lowest or best rate offered by the Bank to any customer or group of
customers. A change in the Base Rate shall constitute a corresponding change
in the interest rate hereunder effective on and as of the date of such change
in the Base Rate. The above notwithstanding, Borrower may elect to and cause
all or a portion of the principal outstanding on this Note to bear interest
at a daily rate equal to one and one-half percent (1 1/2) in excess of the
London Interbank Offered Rate ("LIBOR") as announced by Bank from time to
time pursuant to the terms and conditions of that certain London Interbank
Offered Rate Borrowing Agreement between Borrower and Bank of even date
herewith. Interest accruing prior to maturity shall be payable by Borrower
to Bank monthly, or as billed by Bank to Borrower, at Bank's principal place
of business, or at such other place as Bank may designate from time to time
hereafter. All unpaid interest at maturity shall be paid with the principal
amount of Borrower's Liabilities due hereunder.
Upon the occurrence of an Event of Default, as hereinafter defined, interest
on the unpaid principal balance shall accrue at a rate equal to the then
existing Base Rate plus three percent (3%) per annum.
Borrower agrees that in any action or proceeding instituted to collect or
enforce collection of this Note, the amount recorded on the books and records
of the Bank shall be prima facie evidence of the unpaid principal balance of
this Note; provided that the failure of the Bank to record any advance
hereunder shall not limit or otherwise affect the obligation of the Company
to repay the principal amount owing on this Note together with accrued
interest thereon.
If any payment becomes due and payable on a Saturday, Sunday or legal holiday
under the laws of the State of Illinois, the due date of such payment shall
be extended to the next business day. If the date for any payment of
principal is thereby extended or is extended by operation of law or
otherwise,interest thereon shall be payable at the then applicable rate of
interest for such extended time.
Borrower warrants and represents to Bank that Borrower shall use the proceeds
represented by this Note solely for the proper business purposes, and
consistently with all applicable laws and statutes.
All of Bank's rights and remedies under this Note are cumulative and
non-exclusive. The acceptance by Bank of any partial payment made hereunder
after the time when any of Borrower's Liabilities become due and payable will
not establish a custom, or waive any rights of Bank to enforce prompt payment
thereof. Bank's failure to require strict performance by Borrower of any
provision of this Note shall not waive, affect or diminish any right of Bank
thereafter to demand strict compliance and performance therewith. Any waiver
of an Event of Default hereunder shall not suspend, waive or affect any other
Event of Default hereunder. Borrower and every endorser waive presentment,
demand and protest and notice of presentment, protest, default, non-payment,
maturity, release, compromise, settlement, extension or renewal of this Note,
and hereby ratify and confirm whatever Bank may do in this regard. Borrower
further waives any and all notice or demand to which Bank might to entitled
with respect to this Note by virtue of any applicable statute or law (to the
extent permitted by law).
Borrower agrees to pay, upon Bank's demand therefore, any and all reasonable
costs, fees and expenses (including attorneys' fees, costs and expenses)
incurred in enforcing any of Bank's rights hereunder, and to the extent not
paid the same shall become part of Borrower's Liabilities hereunder.
If any provision of this Note or the application thereof to any party or
circumstance is held invalid or unenforceable, the remainder of this Note and
the application thereof to other parties or circumstances will not be
affected thereby, the provisions of this Note being severable in any such
instance.
This Note is submitted by Borrower to Bank at Bank's principal place of
business and shall be deemed to have been made there at. This Note shall be
governed and controlled by the laws of the State of Illinois as to
interpretation, validity, construction, affect, choice of law and in all
other respects.
No modification, waiver, estoppel, amendment, discharge or change of this
Note or any related instrument shall be valid unless the same is in writing
and signed by the party against which the enforcement of such modification,
waiver, estoppel, amendment, discharge or change is sought.
TO INDUCE BANK TO ACCEPT THIS NOTE, BORROWER IRREVOCABLY AGREES THAT, SUBJECT
TO BANK'S SOLE AND ABSOLUTE ELECTION, ALL ACTIONS OR PROCEEDINGS IN ANY WAY,
MANNER OR RESPECT, ARISING OUT OF OR FROM OR RELATED TO THIS NOTE SHALL BE
LITIGATED IN COURTS HAVING SITUS WITHIN THE CITY OF CHICAGO, STATE OF
ILLINOIS. BORROWER HEREBY CONSENTS TOT HE JURISDICTION OF ANY LOCAL, STATE
OR FEDERAL COURT LOCATED WITHIN SAID CITY AND STATE AND WAIVES ANY OBJECTION
IT MAY HAVE BASED ON IMPROPER VENUE OR FORUM NON CONVENIENS TO THE CONDUCT OF
ANY PROCEEDING INSTITUTED HEREUNDER.
BORROWER AND BANK IRREVOCABLY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTION
OR PROCEEDING (I) TO ENFORCE OR DEFEND ANY RIGHTS UNDER OR IN CONNECTION WITH
THIS NOTE OR ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR
WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR (II) ARISING
FROM ANY DISPUTE OR CONTROVERSY IN CONNECTION WITH OR RELATED TO THIS NOTE OR
ANY SUCH AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT, AND AGREE THAT ANY
SUCH ACTION NOR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A
JURY.
BORROWER:
CORCOM, INC.
By: s/s Thomas J. Buns
Its: Vice President Finance
Attested:
By: s/s Walter Roth
Its: Secretary
Exhibit 11.1
<TABLE>
CORCOM, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE (UNAUDITED)
(In Thousands, except Per Share Data)
<CAPTION>
Thirteen Weeks Ended
April 1, 1995 April 2, 1994
<S> <C> <C>
Net earnings per common
and common equivalent share:
Average shares outstanding 3,632 3,560
Additional shares assuming
exercise of dilutive stock
options-based on the treasury
stock method using average
market price 166 79
AVERAGE NUMBER OF COMMON AND
COMMON EQUIVALENT SHARES 3,798 3,639
Net earnings $ 506 $ 403
Net earnings per common
and common equivalent share $ .13 $ .11
Net earnings per common
and common equivalent share-
assuming full dilution:
Average shares outstanding 3,632 3,560
Additional shares assuming
exercise of dilutive stock
options-based on the treasury
stock method using the period
end price if higher than the
average market price 176 79
FULLY-DILUTED AVERAGE NUMBER
OF COMMON AND COMMON
EQUIVALENT SHARES 3,808 3,639
Net earnings $ 506 $ 403
Net earnings per common
and common equivalent share $ .13 $ .11
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED CONDENSED BALANCE SHEET AND CONSOLIDATED CONDENSED STATEMENT OF
OPERATIONS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> APR-01-1995
<CASH> 339
<SECURITIES> 0
<RECEIVABLES> 4832
<ALLOWANCES> 0
<INVENTORY> 6501
<CURRENT-ASSETS> 12084
<PP&E> 16680
<DEPRECIATION> 13210
<TOTAL-ASSETS> 15554
<CURRENT-LIABILITIES> 3245
<BONDS> 0
<COMMON> 13839
0
0
<OTHER-SE> (1730)
<TOTAL-LIABILITY-AND-EQUITY> 15554
<SALES> 6920
<TOTAL-REVENUES> 6920
<CGS> 4464
<TOTAL-COSTS> 6363
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 25
<INCOME-PRETAX> 532
<INCOME-TAX> 26
<INCOME-CONTINUING> 506
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 506
<EPS-PRIMARY> .13
<EPS-DILUTED> .13
