U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1996.
Commission File No. 2-69336
CRAMER, INC.
KANSAS I.R.S. EMPLOYER IDENTIFICATION
NUMBER 48-0638707
625 ADAMS STREET, KANSAS CITY, KS 66105
TELEPHONE: (913) 621-6700
Securities registered under Section 12(g) of the Exchange Act:
Common Stock
Check whether the issuer: (1) has filed all reports required to
be filed by Sections 13 or 15(d) of the Exchange Act during the
past 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 __
Check if no disclosure of delinquent filers in response to Item
405 of Regulation S-B is contained in this form, and no
disclosure will be contained, to the best of registrant's
knowledge, in definitive proxy or other information statements
incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [X]
The issuer's revenues for the 1996 fiscal year were $11,872,000.
As of December 31, 1996 the aggregate market value of the common
shares of Cramer, Inc. held by non-affiliates was approximately
$247,000. (Calculated assuming a $0.14 book value per share on
December 31, 1996.)
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date:
3,840,650 shares of common stock.
Transitional Small Business Disclosure Format (check one): Yes__
No X
<PAGE>
INDEX
PAGE NO.
PART I
Item 1. Description of Business 1
Item 2. Description of Property 6
Item 3. Legal Proceedings 6
Item 4. Submission of Matters to a Vote of Security
Holders 6
PART II
Item 5. Market for Common Equity and Related
Stockholder Matters 7
Item 6. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
Item 7. Financial Statements 11
Item 8. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 24
PART III
Item 9. Directors, Executive Officers, Promoters and
Control Persons; Compliance with Section 16(a)
of the Exchange Act 25
Item 10. Executive Compensation 26
Item 11. Security Ownership of Certain Beneficial Owners
and Management 27
Item 12. Certain Relationships and Related Transactions 28
Item 13. Exhibits and Reports on Form 8-K 28
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Cramer, Inc. is a Kansas corporation engaged in the manufacture
and sale of seating and utility products for office, industrial
and home use. The Company was established in 1886 as a
manufacturer of safes and office products. The Company was owned
by descendants of the Cramer family until 1961 when it was sold
to OLIX Industries, a public company located in Austin, Texas.
In January 1981, OLIX made a public distribution of its Cramer
common stock.
Business of Issuer
The Company's seating products compete in the $10 billion
domestic market for office furniture, which includes seating,
desks, files, and panel systems. Major companies serving this
market are Steelcase, Herman Miller, Knoll, Haworth, Kimball, and
HON Industries. These six companies supply products in all major
categories of this market. Together they account for an
estimated 60% of sales in this market. The remaining 40% of the
market is served by smaller companies (typically sales of less
than $75 million) that primarily compete only in selected
segments. These segments are delineated either by product type,
such as seating or casegoods, or by customer category, for
example high-style, or wood-finish, or budget-price.
Cramer's seating products are non-wood characterized by painted
metal finish and upholstered seats and backs. The product line
includes standard height chairs and a wide range of raised height
models and stools. All offer ergonomic design with varying
degrees of adjustability to accommodate individual users. Cramer
manufactures and sells chairs for a variety of demanding
commercial applications, including intensive (24-hour) use,
production facilities, laboratories, hospitals, schools as well
as conference, secretarial and management seating for the general
office. The Company also manufactures Cleanroom and Electro-Static
Discharge seating which meets the needs of certain
specialized manufacturing and research environments. The
Company's seating products are recognized for quality
construction and lasting durability.
The Company's utility products include the Kik-Step[Registered
Trademark], a round, all-steel, 2-step stool that rolls on
retractable casters and is frequently used in libraries, file
rooms, and warehouses. This product was designed by Cramer in
1957 and continues to be an important part of the Company's
product line. In addition to the Kik-Step[Registered Trademark],
Cramer manufactures a range of steel and light-weight aluminum
ladders featuring the same retractable caster concept. The
Company's utility product line also includes step stools and foot
rests manufactured by the Company, a variety of other products
such as step ladders purchased from other manufacturers, a line
of durable, self-skinned urethane chairs and stools, and steel or
aluminum framed industrial grade seating products.
<PAGE>
Marketing and Competition
The domestic office furniture market is highly competitive.
Cramer competes by focusing on the non-wood task seating market
niche with products that have high-quality and a reputation for
long-term reliability. The Company also differentiates itself by
a commitment to customer service and on-time delivery. The
Company's 110+ year history and the proven reliability of its
products support a strong reputation and product awareness in the
marketplace. Cramer frequently competes in its narrow market
area against similar-sized niche manufacturers. In addition, the
Company has been able to effectively compete against the major
companies in the industry when Cramer's special product features,
reputation for quality, and Cramer's quality of customer service
offer the customer a better price-value relationship than the
large competitors.
Cramer's products are sold throughout the United States.
International sales are not significant.
The majority of the Company's office products are sold to
independent office furniture dealers who resell the products to
end users. Cramer has approximately 1,500 of these accounts.
For the past several years, sales to independent office furniture
dealers have accounted for approximately 75% of the Company's
revenue. These sales efforts are focused through approximately
20 independent sales representative organizations located in
major markets throughout the United States. These sale
organizations typically employ from 1 to 6 people, and represent
3 to 6 complimentary product lines such as desks, panel systems,
and lighting. Average tenure for the Company's sales
representatives is more than four years. These representatives
initiate and develop business directly with end users, designers
and architects for specification projects and coordinate and
manage the Company's business relationships with the independent
office furniture dealers in their territories.
The Company's industrial products are sold primarily to
approximately 100 wholesale and catalog distributors. These
distributors include major office supply and industrial
suppliers, and specialty distributors serving end-users' health-
care, scientific, and safety needs. While other manufacturers
produce competing products, as a result of the Company's
favorable price/value relationship, the variety of applicable
products Cramer has to offer the specific wholesale or catalog
distributor, and its attention to customer service, these
competitors have, thus far, not been successful in reducing the
Company's market share of these products. However, there is no
guarantee that competitors will not be successful in the future.
While eight wholesale and catalog distributors accounted for 72%
of the Company's 1996 industrial product sales, no single
customer accounted for more than 10% of the Company's total sales
in 1995 or 1996.
An emerging area for the Company is home products. These include
Kik-Steps[Registered Trademark] which are sold primarily through
specialty catalog distributors serving domestic kitchen and
workroom needs. In addition, seating products are sold by office
furniture dealers for home office use.
Cramer regularly participates in national office and industrial
products trade shows and conferences. Sales representatives
display product samples and provide demonstration chairs for
dealers and end-users. The Company maintains permanent product
displays in showrooms in Los Angeles, Chicago, and New York.
<PAGE>
Sales in the contract furnishing industry, where Cramer's office
products compete, follow a seasonal pattern of lower volume in
the winter and summer and higher volume in the spring and fall.
Industrial product sales are generally equal through each quarter
of the year.
Products
The Company's flagship seating product is the Triton[Registered
Trademark] chair, which was introduced in 1992. The Company
believes this chair is unique in the industry because it combines
steel structural components with full ergonomic adjustability.
This design significantly upgrades the user's ability to meet
emerging ergonomic adjustability requirements, yet have a chair
that exceeds industry durability specifications. The
Triton[Registered Trademark] is designed to meet or exceed all
current standards of adjustability for prevention of repetitive
stress trauma including the San Francisco VDT work-station
standards; meet or exceed all flame-retarding specifications,
including Boston Fire Marshal, California TB 117, and California
TB 133; and meet or exceed industry testing for strength and
component failure (ANSI/BIFMA specifications).
In addition, during 1995, with only minor modifications, a
version of the Triton[Registered Trademark] was independently
certified to pass the more rigorous U.S. Federal General Services
Administration Intensive Use Seating specifications. This
product began delivery in the first half of 1996.
Typical purchasers of the Triton[Registered Trademark] are
health-care facilities, professional offices, production lines,
airline reservation centers, police and emergency dispatch
stations and similar 24-hour use applications. During 1996, the
Company introduced a larger version of the Triton[Registered
Trademark] called the Triton Max. This version was specifically
designed to accommodate larger-sized users.
Other significant seating products include the Fusion[Registered
Trademark], Rhino, and Cirrus/Nimbus. The Fusion[Registered
Trademark] chair provides full ergonomic task seating at a
moderate price. This chair's design and function follow the
strict standards found in all of the Company's active ergonomic
seating lines. The product is designed to function within
office, light assembly and laboratory settings. The chair line
is designed to complement the Triton[Registered Trademark] line
with its unique steel seat pan.
The Rhino product line, introduced in 1994, is distinguished by
its seat and back which are made from "tough-skinned" urethane
foam. This technology offers industrial-strength reliability for
factory seating, including the ability to wash the chair without
damaging the upholstery. The product-line includes a large
"task" chair and a smaller "operational" chair. The third
product in the Rhino line is a small sit-stand designed to
relieve weight from an individual's feet in industrial situations
which do not allow a fully seated position.
The Cirrus and Nimbus chairs are conference chairs with passive
ergonomic mechanisms. While introduced in the 1980's, these
products continue to have good market acceptance, particularly by
government purchasers.
The Company believes that systematic development and introduction
of new products is important for the Company's growth and
continued profitability. In 1997, the <PAGE> Company intends to
introduce new stacking guest chairs as well as other seating
products.
The Company's step stool and aluminum ladders have been in use in
the United States since the 1950s. The design of these products
and the retractable caster concept are well recognized and
accepted in the marketplace. In 1996, the Company began
providing steel versions of its popular retractable caster
ladders.
Production, Trademarks and Government Regulation
The Company's products are fabricated from raw materials such as
steel sheet and tubing, aluminum tubing, foam, and fabric
purchased from sources locally and throughout the United States.
Specialized components and subassemblies are likewise purchased
from vendors throughout the United States. Cramer understands
the importance of developing partnerships with its vendors, and
has undertaken a program to work closely with suppliers to
improve quality, delivery, and price, while offering technical
assistance and production planning forecasts. Although this
approach includes focusing greater purchases with fewer vendors,
the Company believes it retains the ability to change to
alternative suppliers in most cases.
Certain components of the Company's products are sourced from a
single vendor. Any disruption in such supply arrangements could
result in temporary shipment delays or increased costs. However,
the Company believes it has the ability to substitute suppliers
for any component in less than a three month period of time.
Production machinery and equipment used in the manufacture of the
Company's products are owned and maintained by the Company, and
primarily located in the Company's factory in Kansas City,
Kansas. Certain tooling for the fabrication of specialized
components is owned by the Company, but located at vendors who
manufacture the components. The production equipment ranges from
older-model metalworking machinery to a modern powder coat
painting system. The Company systematically maintains its
equipment at high levels of operation. Cramer has sufficient
production capacity for substantially increased sales
requirements.
The Company manufactures approximately 60% of all of its orders
specifically to customer requirements. Cramer is able to
customize product specifications for particular needs. The
Company's delivery schedule typically is four weeks for seating
products and two weeks for utility products. This schedule is
typical for the business areas where the Company competes. The
Company has sufficient manufacturing flexibility to provide
shorter lead times when necessary for special customer needs.
This ability, plus a small inventory of finished chairs in stock
for immediate delivery, can be a competitive advantage in certain
situations. At December 31, 1996, the Company's backlog of
unfilled orders was $972,000, the majority of which are scheduled
to be shipped in the first quarter of 1997.
While approximately 40% of the Company's sales are shipped from
stock, the Company maintains a finished goods inventory of only
$185,000. This inventory consists of a small inventory of Kik-
Step[Registered Trademark] stools and ladders and the Quick Ship
seating inventory described above. The Company believes its
ability to maintain its high inventory turnover ratio in this
area (26 times in 1996) is a competitive advantage.
<PAGE>
The Company's Kik-Step[Registered Trademark], Aeros[Registered
Trademark], Triton[Registered Trademark], and Fusion[Registered
Trademark] product names are registered trademarks. The
Company's other major contract seating products are marketed
under the Cirrus, Nimbus, and Rhino trademarks.
No government approval is required for Cramer's products. The
Company designs its products to meet voluntary industry standards
for strength and reliability (ANSI/BIFMA). The Company maintains
ANSI/BIFMA test equipment at its factory and has implemented a
program of systematically testing its products for reliability.
Certain products are designed to meet the more rigorous
requirements of the General Services Administration. This
provides the Company with competitive advantages in certain
situations.
The Company's production processes use no known hazardous or
polluting substances. The Company is subject to various federal,
state, and local laws and regulations governing the protection of
its employees and the environment. The Company believes that it
is in substantial compliance with such laws, and that continued
compliance will not have a material adverse effect on its
business.
Employees
As of December 31, 1996, the Company employed 94 full time
people; 36 office, supervisory, managerial, and executive
personnel, and 58 factory workers. Cramer management considers
the ability to attract, train, and retain skilled professional
employees and production workers to be an important aspect of the
Company's competitive advantage. Management believes that it
enjoys a good, interdependent relationship with its employees,
and has instituted personnel policies intended to maintain this
relationship. The Company is an equal opportunity employer and
an active non-discrimination policy is integral to this concept.
The factory workers are covered by a collective bargaining
agreement with the United Steelworkers of America which expires
on September 30, 1998. The Company believes that strong labor
relations are important to its ability to achieve product
quality, on-time delivery, and continuous improvement in the
workplace. No work stoppages have occurred over the past ten
years. The State of Kansas is a right-to work state, so not all
factory workers belong to the Union. At year end, 24 of the 58
factory workers were not dues-paying members. The Company
considers its labor relations to be good.
Research and Development
New products are developed internally by a technical staff who
have an average of 5 years experience with seating and industrial
products. New designs are developed on state-of-the-art CAD
equipment to shorten development time, improve documentation, and
facilitate sourcing of high-quality components from outside
vendors. The Company spent approximately $80,000 and $70,000 on
engineering, research and development in 1996 and 1995,
respectively.
Cramer employees are committed to continuous improvement of
products and processes. The Company believes that this
philosophy is working to develop products with higher
reliability, lower cost, and improved product features.
<PAGE>
Item 2. DESCRIPTION OF PROPERTY
The Company's corporate headquarters and manufacturing facility
are located on a 5-acre tract at 625 Adams Street, Kansas City,
KS in a building owned and occupied by the Company since 1957.
This facility comprises 165,000 square feet, including 20,000
office, 2,000 showroom, and 143,000 manufacturing space.
The Company considers the facility appropriate for its type of
manufacturing, with sufficient expansion potential for
foreseeable growth. The facility is in good condition. No
expansions, renovations, or significant changes are necessary or
planned. The location is in proximity to a large labor pool and
has good access to transportation, including rail service.
The Company believes that its facilities are adequately insured.
Sales showrooms located in furniture design centers in Los
Angeles, Chicago, and New York are subleased by Cramer for
permanent display of the Company's products. None of these
subleases have terms longer than one year.
ITEM 3. LEGAL PROCEEDINGS
The Company is a defendant in several lawsuits relating to
product liability claims arising from accidents allegedly
occurring in connection with the use of its products. The claims
are covered by insurance and are being defended by the Company's
independent counsel or by counsel assigned by the Company's
insurance carriers, but are subject to deductibles ranging from
$0 to $100,000. A number of the claimants allege substantial
damages. While management believes the Company has substantial
defenses with respect to the claims, the ultimate outcome of such
litigation cannot be predicted with certainty. The Company has
reasonably estimated and accrued in its financial statements its
portion of the deductible as a product liability contingency.
Such claims are an ordinary aspect of the Company's business.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
<PAGE>
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Cramer stock is not listed on NASDAQ or any exchange and there is
no public trading market for the Company's stock.
The Company is aware of a limited number of privately negotiated
transactions in the Company's stock. In such cases, the Company
has been informed that the price per share approximated the net
book value of the Company's stock.
As of December 31, 1996, there were 701 shareholders of record.
Since being publicly held, the Company has never paid cash
dividends and does not anticipate paying any cash dividends in
the foreseeable future. The Company's ability to pay cash
dividends on its common stock will depend upon its capital
surplus and cash requirements.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Except for the historical information contained herein, the
following discussion and other sections of this report on Form
10-KSB contain forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ
materially. Factors that could cause or contribute to such
differences include, but are not limited to, those discussed in
the section entitled "Factors That May Affect Future Results of
Operations," as well as those discussed elsewhere in the
Company's reports filed with the Securities and Exchange
Commission.
RESULTS OF OPERATIONS
Cramer's net order income increased by 1% in 1996 to $12,074,000
as compared to a decline of 10% during 1995. The increase in
order income levels was the result of improved sales
representative performance, new products and programs. At
December 31, 1996, Cramer's backlog of unfilled orders was
$972,000 as compared to $973,000 at December 31, 1995.
Substantially all of the December 31, 1996 backlog was scheduled
to ship within the first quarter of 1997.
At $11,872,000, 1996's net sales were 7% less than in 1995.
However, net sales in 1995 included approximately $750,000
generated by a reduction in the abnormally high backlog that had
built up in the latter portions of 1994 when the Company was
experiencing operating difficulties. Excluding this one-time
event, sales results for 1996 were almost equal to 1995.
<PAGE>
The Company's total gross margin in 1996, $3,310,000, was $87,000
higher than in 1995. As a percentage of net sales, margins
improved from 25% in 1995 to 28% in 1996. The increase in
margins is due to higher average selling prices in 1996 and to
material cost reductions achieved from improved purchasing
practices and improvements in product design.
Selling expenses increased by $381,000 in 1996 as compared to
1995. The increase was primarily due to the costs of recruiting
a new and expanded executive sales management team. The Company
also incurred increased advertising and promotional activities
related to an increase in new product introductions in 1996 as
compared to 1995. Additionally, in 1996, the Company incurred
increased costs to negotiate and sign multi-year direct sales
contracts with the General Services Administration and other
federal agencies. Finally, the Company's commission expenses
were higher as a percentage of sales in 1996 as compared to 1995
due to the success of its programs to increase direct sales to
government agencies and other end users. These programs require
commission payments to a participating furniture dealer.
General and administrative expenses decreased by $146,000 between
1995 and 1996. The decrease was due in part to the transfer of
certain administrative personnel into sales related positions and
to an approximately $70,000 reduction in costs associated with
product liability claims.
Interest expense was $47,000 lower in 1996 as compared to 1995.
The 31% reduction in expense was due to lower average borrowings,
$1,299,000 in 1996 as compared to $1,444,000 in 1995. In
addition, the Company benefited from a significant reduction in
interest rates as a result of the consolidated Rotherwood (the
Company's parent) borrowing arrangements instituted during the
year (see Note 3 to the Financial Statements).
As a result of a significant tax net operating loss carryforwards
originating in the 1980s, the Company paid only $3,000 in income
taxes for 1995 and expects to pay none for 1996. Deferred tax
assets arising from these tax loss carryforwards and other
temporary differences have not been recorded due to the
uncertainty of future operating success.
While the total gross margin increased in 1996 as compared to
1995, higher selling expenses resulted in an $80,000 decrease in
net income. As a result of option exercises in mid-1995,
weighted average shares outstanding increased by 481,000 during
1996. Net income per share in 1996 was $0.08 as compared to
$0.12 in 1995.
FINANCIAL CONDITION AND LIQUIDITY
The Company's December 31, 1996 accounts receivable balance
decreased by $68,000 as compared to the balance at December 31,
1995. The decrease is consistent with the lower sales level in
December 1996 as compared to December 1995 and management's
continued emphasis on reducing the days sales in receivables,
which decreased from 31 days at December 31, 1995 to 30 days at
December 31, 1996.
<PAGE>
The Company's December 31, 1996 inventory decreased by $202,000
(or 14%) from the 1995 year-end balance. The reduction was due
to tighter inventory controls and continued management emphasis
on improving inventory turnover, which increased from 8.2 times
per year in 1995 to 8.6 times per year in 1996.
Capital expenditures in 1996 aggregated $227,000 and consisted of
investments in factory tooling and office equipment. Purchases
of capital equipment increased significantly in 1996 over the
1995 level as the Company returned to normal operating practices
concerning equipment replacement and improvement. Purchases of
such assets had been curtailed in 1995 due to the Company's
financial constraints.
The Company's short-term notes payable increased and long-term
notes decreased at December 31, 1996 as compared to December 31,
1995 due to the Company's participation in a new consolidated
Rotherwood credit facility. The consolidated credit facility
matures in August 1997 and all borrowings are classified as
current liabilities at December 31, 1996. The Company used its
borrowings under the new facility to retire all outstanding long-
term notes payable to banks and its previous working capital line
with United Missouri Bank. Total borrowings at December 31 1996
under the new credit facility, $1,059,000, are substantially
equivalent to total borrowings from banks, $1,064,000, at
December 31, 1995.
In order to improve relations with the Company's vendors, trade
accounts payable were decreased by $352,000 during 1996. The
reduction was achieved by applying a portion of the cash
generated from operations to these liabilities.
Long-term notes from parties other than banks were reduced by
$82,000 during 1996 in accordance with established payment
schedules. All remaining payments on such debts are due within
the succeeding twelve months and therefore are shown entirely as
current liabilities.
During 1996, Rotherwood negotiated a new credit facility with
Mark Twain Bank (the Bank). The new credit facility provides
Rotherwood, and each of its four participating subsidiaries
(including Cramer), with access to a $3,750,000 credit line with
interest charged on outstanding borrowings at one-eighth less
than the Bank's prime interest rate. This is a reduction in
interest rates as compared to the Company's prior borrowing
arrangements with banks. The Company may borrow up to the
maximum amount of the credit line less any amounts already
borrowed by the other participating Rotherwood companies.
The combined credit facility is secured by the inventory,
accounts receivable, and equipment of all of the Rotherwood
subsidiaries. In addition, each participating Rotherwood
subsidiary has guaranteed repayment of the total amount borrowed
under the credit facility. However, the current assets pledged
by the other Rotherwood subsidiaries in support of the credit
facility exceeded $4 million at December 31, 1996. In addition,
Rotherwood's founder has pledged publicly traded equity
securities with a market value in excess of $4 million as
additional collateral for the loan. Management believes that the
reduction in interest rates and the access to a larger credit
facility more than offset the risk that it would suffer losses
under the guarantee provisions of the credit facility in the
event that one or more of the other Rotherwood subsidiaries would
default under their portion of the credit line.
<PAGE>
There is a risk that Cramer will not have access to sufficient
funds for its operations if the other participating Rotherwood
subsidiaries have borrowed more of the funds under the credit
line than anticipated. However, the $3,750,000 credit line is
substantially in excess of the total aggregate prospective
borrowing needs of Cramer and the other Rotherwood subsidiaries
over the next 12 months. Furthermore, Cramer management
participates in regular assessments of the borrowing needs of all
Rotherwood subsidiaries and believes it would be aware of
anticipated credit shortages in time to arrange new or additional
sources of capital. Therefore, the Company believes that the
current consolidated credit line, coupled with anticipated cash
flow from operations, will be sufficient to meet current
operating requirements over the next 12 months.
Management believes that 1997's results will improve on those in
1996. Intake of orders and sales are expected to increase as the
Company realizes the benefits of the new products introduced and
of the marketing and distribution enhancements made in 1996.
Overall profitability should be enhanced as a result of realizing
a full year's benefit of cost reductions made in 1996.
Profitability on individual orders should be further enhanced as
the increased production volume will allow lower allocation of
fixed costs to individual orders. Due to these factors,
profitability is anticipated to increase at a faster rate than
sales volume.
FACTORS THAT MAY AFFECT FUTURE RESULTS OF OPERATIONS
In connection with the "Safe Harbor Provisions of the Private
Securities Litigation Reform Act of 1995," Cramer, Inc. is hereby
filing cautionary statements identifying important factors that
could cause the Company's actual results to differ materially
from those projected in forward-looking statements of the Company
made by, or on behalf of, the Company. When used in this Form
10-KSB and in future filings by the Company with the Securities
and Exchange Commission, in the Company's press releases and in
oral statements made with the approval of an authorized executive
officer, words or phrases such as "believes", "will likely
result", "are expected to", "will continue", "is anticipated",
"estimate", "project" or similar expressions are intended to
identify forward-looking statements. The Company wishes to
caution readers not to place undue reliance on such forward-
looking statements.
There are a number of reasons why investors should not place
undue reliance on forward-looking statements. Among the risks
and uncertainties that could cause the Company's actual results
for future periods to differ materially from any forward-looking
statements made are the following:
. Fluctuations or reductions in product demand and market
acceptance
. The level of product development by the Company
. Capacity and supply constraints or difficulties
. The results of financing efforts
. The effect of new laws and regulations
. Unexpected additional expenses or operating losses
. Competition
. The Company's reliance on certain vendors for key
components
The foregoing list of risks and uncertainties is not meant to be
complete.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS
The following financial statements of Cramer, Inc., are included
herewith:
Page No.
Independent Auditor's Report F-1
Balance Sheet - December 31, 1996 F-2
Statements of Income for the Years Ended
December 31, 1995 and 1996 F-3
Statements of Stockholders' Equity (Deficit) for
the Years Ended December 31, 1995 and 1996 F-4
Statements of Cash Flows for the Years Ended
December 31, 1995 and 1996 F-5
Notes to Financial Statements F-6
<PAGE>
Report of Independent Auditors F-1
The Board of Directors and Stockholders
Cramer, Inc.
We have audited the accompanying balance sheet of Cramer, Inc. as
of December 31, 1996, and the related statements of income,
shareholders' equity (deficit), and cash flows for each of the
two years in the period then ended. These financial statements
are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Cramer, Inc. at December 31, 1996, and the results of its
operations and its cash flows for each of the two years in the
period then ended, in conformity with generally accepted
accounting principles.
/s/ Ernst & Young LLP
Kansas City, Missouri
February 17, 1997
<PAGE>
CRAMER INC. F-2
BALANCE SHEET
(Amounts in Thousands, Except Share Data)
ASSETS December 31, 1996
Current Assets:
Cash $ 117
Accounts receivable, net of allowance of $21 1,034
Inventories 1,286
Prepaid expenses 284
Total Current Assets 2,721
Property, Plant and Equipment, net 658
Other Assets:
Intangible pension asset 264
Total Assets $ 3,643
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Note payable $ 1,059
Current portion of long-term notes 76
Accounts payable 672
Accrued liabilities 573
Total Current Liabilities 2,380
Noncurrent Liabilities:
Pension benefits payable 552
Other 159
Total Noncurrent Liabilities 711
Stockholders' Equity:
Common stock, no par value; authorized, 6,000,000
shares; issued and outstanding 3,840,650 shares 3,508
Accumulated deficit (2,914)
594
Minimum pension liability adjustment (42)
Net Stockholders' Equity 552
Total Liabilities and Stockholders' Equity $ 3,643
The accompanying notes are an integral part of these financial
statements.
<PAGE>
CRAMER INC. F-3
STATEMENTS OF INCOME
(Amounts in Thousands, Except Per Share Data)
Year Ended December 31,
1996 1995
Net Sales $11,872 $12,785
Cost of Sales 8,562 9,562
Gross Profit 3,310 3,223
Operating Expenses:
Selling 1,933 1,552
General and administration 921 1,067
Total Operating Expenses 2,854 2,619
Income from Operations 456 604
Other Income (Expense):
Interest expense (105) (152)
Other (26) (44)
Income Before Income Taxes 325 408
Income Taxes 0 3
Net Income $ 325 $ 405
Net Income Per Common and Common
Equivalent Share $ 0.08 $ 0.12
Weighted Average Number of Common and
Common Equivalent Shares Outstanding 3,841 3,360
The accompanying notes are an integral part of these financial
statements.
<PAGE>
CRAMER, INC. F-4
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(Amounts in Thousands)
Total
Minimum Stock-
Pension holders'
Number of Common Accumulated Treasury Liability Equity
Shares Stock Deficit Stock Adjustment (Deficit)
Balance at
December 31, 1994 2,707 $3,425 $(3,644) $(147) $(76) $(442)
Issuances of Common
Stock Upon
Option Exercise 1,150 230 230
Adjustment to
Additional Minimum
Pension Liability 17 17
Retirement of
Treasury Stock (16) (147) 147
Net Income 405 405
Balance at
December 31, 1995 3,841 3,508 (3,239) 0 (59) 210
Adjustment to
Additional Minimum
Pension Liability 17 17
Net Income 325 325
Balance at
December 31, 1996 3,841 $3,508 $(2,914) $0 $(42) $552
The accompanying notes are an integral part of these financial statements.
<PAGE>
CRAMER, INC. F-5
STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
Year Ended December 31,
1996 1995
Cash flows from operating activities:
Net income $ 325 $ 405
Income from settlement of property
taxes 0 (137)
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 177 162
Changes in operating assets and
liabilities:
Accounts receivable 68 156
Inventories 202 133
Prepaid expenses (38) 110
Other assets 52 52
Accounts payable and accrued
liabilities (437) (498)
Noncurrent pension benefits payable (26) (24)
Other noncurrent liabilities 24 135
Net cash provided by operating
activities 347 494
Cash flows from investing activities:
Capital expenditures (227) (57)
Cash flows from financing activities:
Principal payments on notes payable
and long-term notes (6,840) (13,212)
Proceeds from issuance of notes payable
and long-term notes 6,753 12,628
Proceeds from exercise of stock options 0 230
Net cash used in financing activities (87) (354)
Net increase in cash 33 83
Cash at beginning of year 84 1
Cash at end of year $ 117 $ 84
Supplemental disclosures of cash
flow information:
Cash paid during the year for:
Interest $ 102 $ 162
Income tax $ 0 $ 2
The accompanying notes are an integral part of these financial
statements.
<PAGE>
Cramer, Inc. F-6
Notes to Financial Statements
December 31, 1996
1. SUMMARY OF ACCOUNTING POLICIES
ORGANIZATION
Cramer is a manufacturer of seating and utility products for
office and industrial use. The Company sells its products
throughout the United States. International sales are limited.
The Company's principal customers are office furniture dealers
(seating products) and wholesale catalog distributors (utility
and seating products). Cramer is a 54% owned subsidiary of
Rotherwood Corporation (Rotherwood), a Minneapolis, Minnesota
based holding company.
INVENTORIES
Inventories are valued at the lower of cost (determined by the
first-in, first-out method) or market. The closing inventory is
comprised of raw material $804,000, work in progress $297,000,
and finished goods $185,000.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are carried at cost. Depreciation
is provided for in amounts sufficient to charge the cost of
depreciable assets to operations over their estimated service
lives, principally on a straight-line basis.
Estimated
Useful
Cost Life
(In Thousands) (In Years)
Land $ 29 ------
Buildings 715 20-40
Machinery and Equipment 3,330 3-10
Furniture and Office Equipment 1,245 5-10
5,319
Less Accumulated Depreciation 4,661
Net Property, Plant and Equipment $ 658
INCOME TAXES
Income taxes have been provided using the liability method in
accordance with FASB Statement No. 109, Accounting for Income
Taxes.
<PAGE>
USE OF ESTIMATES
The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported
in the financial statements and accompanying notes. Actual
results could differ from those estimates.
WARRANTIES
Depending on the model, the Company warranties its products for
periods up to 15 years. The Company's reserve for anticipated
warranty costs of $180,000 is included in accrued liabilities.
The warranty reserve is estimated based on durability testing,
engineering studies, and actual costs in prior years.
2. BENEFIT PLANS
DEFINED BENEFIT PLAN
The Company has a defined benefit pension plan covering all of
its bargaining unit employees working as of September 30, 1988.
Effective September 30, 1988, the plan was amended to freeze
future benefit accruals. As a result of freezing the benefits,
no further benefits accrue to plan participants. The amount of
pension a participant will receive was frozen at $9.00 multiplied
by the number of years of service from the later of the date of
hire or January 1, 1942, through September 30, 1988. Effective
September 30, 1988, new employees have not accrued benefits under
the defined benefit plan. The Company's funding of the plan is
equal to, or exceeds, the minimum contribution required by ERISA
and totaled $181,400 and $80,500 in 1996 and 1995, respectively.
Net pension costs included the following components (in
thousands):
Year Ended December 31,
1996 1995
Service cost - benefits earned during
the period $ 0 $ 0
Interest cost on projected benefit
obligation 79 92
Expected return on plan assets (33) (42)
Net amortization and deferral 52 52
Net regular periodic pension cost 98 102
Settlement costs 68 0
Total pension costs $ 166 $ 102
<PAGE>
Net regular periodic pension cost was calculated using the
following assumptions:
Year Ended December 31,
1996 1995
Weighted Average Discount Rate 8.0% 8.0%
Expected Long-Term Rate of Return 8.9% 8.9%
The plan's funded status as of December 31, 1996 is summarized
below (in thousands):
Actuarial present value of projected benefit
obligation $ 875
Plan assets at fair value 291
Projected benefit obligation in excess of
plan assets (584)
Remaining unrecognized net transition
obligation 244
Unrecognized prior service cost 20
Unrecognized net loss 42
Adjustment required to recognize minimum
liability (306)
Net pension liability recognized $ (584)
Of the net pension liability, $32,000 is reflected as the current
portion and included in accrued liabilities. An intangible asset
of $264,000 equal to the unrecognized prior service cost and
transition obligation has been included in the balance sheet.
The remaining additional minimum liability of $42,000 related to
the unrecognized net loss has been recorded as a decrease in
stockholders' equity at December 31, 1996.
In order to reduce administrative costs, in 1996 the Company
settled its pension obligation with retirees that had a vested
benefit of less than $3,500. The Company also transferred its
pension obligation for certain retirees to an insurance company
in exchange for the portion of the Plan assets for which the
insurance company had previously served as trustee. These
transactions reduced the accumulated plan benefit obligation by
approximately $159,000 and was accounted for as a settlement
under Statement of Financial Accounting Standards No. 88,
Employers Accounting for Settlements and Curtailments of Defined
Benefit Pension Plans and for Termination Benefits. Settlement
costs of $68,000 are included as a portion of 1996's other non-
operating income and expense.
Plan assets are held by trust funds devoted to servicing pension
benefits and are invested in a diversified portfolio of fixed
income and equity securities.
DEFINED CONTRIBUTION PLAN
The Company sponsors a 401(k) plan covering substantially all
employees. Participants may contribute from one percent (1%) to
fifteen percent (15%) of compensation, subject to annual
limitations. Company contributions are at the <PAGE> discretion of the
Board of Directors. There were no Company contributions in 1996
or 1995.
3. SHORT-TERM BORROWINGS
The Company, Rotherwood, and certain other subsidiaries of
Rotherwood participate in a combined credit facility with Mark
Twain Bank. The credit facility provides Rotherwood and its
participating subsidiaries with access to a credit line of
$3,750,000 with interest charged at a rate of one-eighth of a
percent less than the Bank's prime rate (8.125% at December 31,
1996). The Company's share of these borrowings at December 31,
1996 was $1,059,000. The total amount borrowed by all Rotherwood
companies at December 31, 1996 was $1,128,000.
The combined credit facility, which matures in August 1997, is
secured by the inventory, accounts receivable and equipment of
all of the participating Rotherwood subsidiaries.
The Company, and each of the other Rotherwood subsidiaries, has
guaranteed repayment of the total debt to Mark Twain Bank. The
current assets pledged by the other Rotherwood subsidiaries
exceeded $4 million at December 31, 1996. In addition,
Rotherwood's founder has pledged publicly traded equity
securities with a market value in excess of $4 million as
additional collateral for the loan. The Company's management
believes that there is minimal risk associated with the guarantee
provisions of the credit facility.
4. LONG-TERM NOTES
December 31,
1996
(Amounts in
Thousands)
Note payable to Wyandotte County on real estate
taxes - unsecured, payable in seven monthly
installments of $10,340 through July 1997.
The note is non-interest bearing and is net
of unamortized discount of $2,811 calculated
using an imputed interest rate of 12%. $70
Note payable in settlement of a mediated agreement
in an age discrimination suit, payable in monthly
installments of $2,000 through March 1997. 6
Total Long-Term Notes, All Current $76
<PAGE>
5. STOCKHOLDERS' EQUITY
The Company has a stock option plan (the Plan) which provides for
the grant of incentive awards to directors, officers and other
key employees. Under the Plan, stock options are granted at the
fair market value of the Company's common stock at the date of
the grant. Because the stock is not actively traded, the Company
uses book value to approximate fair market value. All option
grants were made prior to December 31, 1994 and, in accordance
with APB opinion No. 25, Accounting for Stock Issued to
Employees, no compensation expense was recognized. There were no
stock option grants in 1995 or 1996.
In 1989, a principal shareholder was granted an option to
purchase 1,100,000 shares of the Company's stock at $0.20 per
share in recognition of his assistance in obtaining new debt
financing for the Company. The shareholder subsequently
transferred this option to Rotherwood Corporation, an affiliate
of the stockholder. During 1995, Rotherwood exercised these
options and the stock was issued by the Company.
During 1995, 50,000 shares of stock were issued by the Company to
a former employee of the Company upon exercise of his options.
These options had an exercise price of $0.20 per share.
During 1995, 245,500 options that were previously vested canceled
in conjunction with the termination of employment of certain
former members of the Company's management. All currently
outstanding stock options expire in November 1998. At December
31, 1996, the Company had the following stock options
outstanding:
Number Number Number
of Shares of Shares of Shares Exercise
Name Authorized Granted Vested Price
Management 829,900 20,000 20,000 $ 0.40
During 1995, the Company's Board of Directors approved the
retirement of the Company's treasury stock. The cost of the
treasury stock, approximately $147,000, was charged to the common
stock account.
6. NET INCOME PER SHARE
Net income per share has been calculated by dividing the net
income by the weighted average of common and common equivalent
shares outstanding during 1996 and 1995, 3,840,650 and 3,359,690,
respectively. Common equivalent shares, which consist of
outstanding shares and options authorized under the stock option
plans, are determined using the treasury stock method based on
the Company's net book per share during the period, which the
Company believes to approximate the fair market value per share
of the Company stock. As the option exercise price exceeds the
net book value per share, options are not considered in the 1996
and 1995 calculations as their effect would be antidulitive.
<PAGE>
7. INCOME TAXES
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used
for income tax purposes. Significant components of the Company's
deferred tax assets and liabilities as of December 31, 1996 are
as follows (in thousands):
Deferred tax Assets:
Net operating loss carryforwards $ 3,541
Tax credit carryforwards 317
Pension costs 218
Warranty accrual 70
Product liability accrual 65
Vacation accrual 19
Inventory 8
Other - net 26
Total deferred tax assets 4,264
Deferred tax liabilities:
Depreciation (12)
Net deferred tax assets 4,252
Valuation allowance (4,252)
$ 0
A reconciliation of the income tax provision to the amounts
computed at the federal statutory rate is as follows (in
thousands):
Year Ended December 31,
1996 1995
Tax provision at statutory rate $ 110 $ 139
State income taxes, net of
federal taxes 15 19
Changes in valuation reserve
related to utilization of
net operating loss carryforward (130) (158)
Other 5 3
$ 0 $ 3
At December 31, 1996, the Company has available the following net
operating loss and credit carryfowards to reduce future income
taxes. These amounts are subject to applicable limitations.
(Amounts in thousands.)
Amount Expiration
Available Dates
Net operating losses $ 9,078 2001 - 2009
Targeted jobs tax credit $ 261 1999 - 2001
Investment tax credit $ 56 1999 - 2000
Contributions $ 4 1996 - 1999
<PAGE>
8. FINANCIAL INSTRUMENTS
The Company grants credit to customers who meet the Company's
pre-established credit requirements. Credit losses are provided
for in the Company's financial statements based on factors
surrounding the credit risk of specific customers, historical
trends and other information and have consistently been within
management's expectations.
The Company's concentrations of credit risk with respect to trade
receivables arising from the sale to office furniture dealers are
minor due to the large number of entities comprising the
Company's customer base. However, as of December 31, 1996, the
Company had approximately $171,000 of receivables from eight
companies, all of whom are wholesale catalogers of office or
industrial products and who are the principal purchasers of the
Company's utility products.
At December 31, 1996, the carrying value of the Company's cash,
accounts receivable, and accounts payable approximate fair value.
Based on borrowing rates currently available to the Company for
bank loans with similar terms and collateral, the fair value of
the Company's short-term notes payable and long-term notes
approximate their carrying value.
9. COMMITMENTS AND CONTINGENCIES
The Company is a defendant in several lawsuits relating to
product liability claims arising from accidents allegedly
occurring in connection with the use of its products. The claims
are covered by insurance and are being defended by the Company's
counsel or by counsel assigned by the Company's insurance
carriers, but are subject to deductibles ranging from $0 to
$100,000. A number of the claimants allege substantial damages.
The ultimate outcome of such litigation cannot be predicted at
this time. However, management believes the Company has
substantial defenses with respect to the claims and that the
ultimate outcome of these claims will not have a material adverse
effect on the Company's financial position. The company has
accrued and included with other noncurrent liabilities the
estimated amount of losses not covered by insurance which may be
incurred from presently known and anticipated product liability
claims.
10. NON-OPERATING INCOME
During 1995, the Company negotiated a reduction in previously
assessed and unpaid real estate and personal property taxes due
Wyandotte County, Kansas, the site of the Company's manufacturing
facilities. Wyandotte County also agreed to allow payment of the
remaining amounts due over a 24-month period. Income of $137,000
was recorded from this settlement and is included as a component
of 1995's other nonoperating income and expense.
<PAGE>
11. RELATED PARTY TRANSACTIONS
Rotherwood, the Company's majority owner, provides management
services to the Company. Certain employees of the Company
provide management service to other subsidiaries of Rotherwood.
In 1996 and 1995, the net cost to the Company for these services
was approximately $46,000 and $21,000, respectively. (See Note 5
for discussion of Rotherwood's 1995 stock option exercise.)
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
<PAGE>
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE
ACT
A. IDENTIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS:
The Company's Board of Directors is composed of three (3) members
elected to serve for terms as indicated. The officers and
directors of the Company are as follows:
Officer or
Director of
the Company Term to
Name Age Office Since Expire
James R. Zicarelli 45 Chairman of the Board & CEO 1992 1997
David E. Crandall 53 Director 1992 1997
James E. Workman 47 Director 1994 1997
James Lockley 46 Vice President,
Sales & Marketing 1996
David C. Mettlach 44 Vice President,
Business Development 1992
Gary A. Rubin 39 Vice President, Finance
Secretary & Treasurer 1995
George Kruse 53 Vice President, Operations 1996
Past Business Experience
James R. Zicarelli President of Rotherwood Corporation, a
holding company and majority stockholder of
the Company. In addition, Mr. Zicarelli
serves as a board member or officer of The
American Company, Inc., Pacer Corporation,
and Sagebrush Technology Inc. Prior to 1992,
Mr. Zicarelli was the President of DRC, a
data services company.
David E. Crandall Chairman and CEO of PPA Industries, a
manufacturing Company located in Dallas,
Texas. In addition, Mr. Crandall serves as
board member of PPA Industries, Inc., and
Information Retrieval Methods.
James E. Workman President, Workman Consulting International
and General Manager, Pacer Trading Company, a
subsidiary of Rotherwood Corporation.
Formerly Director of Purchasing, IAMS
Company. IAMS is a premium pet food
manufacturer. Prior to 1990, Mr. Workman was
a materials manager for Cramer, Inc.
<PAGE>
James Lockley Vice President, Sales and Marketing of Cramer
since April 1996. Twenty-three years of
sales and sales management experience in the
office products and contract furniture
industries. Most recently, Director of Sales
& Marketing for Johnson Industries.
David C. Mettlach Vice President of Cramer since October 1992.
Prior background in developing, marketing and
manufacturing contract furniture products for
Haworth and Universal Woods, inc. These
products included seating lines, casegoods
(wood and metal) and panel systems.
Gary A. Rubin Vice President, Finance of Cramer since April
1995. Formerly Vice President, Finance and
Administration for a capital equipment
manufacturer and Senior Audit Manager for
Deloitte & Touche. Certified Public
Accountant.
George Kruse Vice President, Operations of Cramer since
March 1996. Formerly Director of Operations
for Cramer, Inc. since January 1995. Prior
background in manufacturing and operations
management with Johnson & Johnson and
Honeywell, Inc. Most recently West Coast
General Manager for PPA Industries, Inc.
No director or officer has any family relationship with any other
director or officer.
ITEM 10. EXECUTIVE COMPENSATION
Board member James Zicarelli serves as the Company's CEO. Mr.
Zicarelli is an employee of Rotherwood Corporation and does not
receive any compensation from the Company for serving as CEO.
Mr. Zicarelli's compensation from Rotherwood is not specifically
related to Cramer's performance or the time spent by him in
Cramer management. However, the Company paid certain management
fees to Rotherwood in 1995 and 1996. See Section 12 of this
report for further discussion of Cramer's transactions with
Rotherwood. None of the Company's other executive officers'
compensation exceeded $100,000 in 1996.
<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth the ownership of the Company's
common stock by each person known to the Company to be the
beneficial owner of more than 5% of its outstanding common stock,
by individual directors of the Company, and by the officers and
directors of the Company as a group:
Amount and
Nature of
Name and Address Beneficial Percent of
Title of Class of Beneficial Owner Ownership /a/ Class /h/
Common stock Rotherwood Corporation /b/ 2,081,236 53.9%
1400 Northland Plaza
3800 W. 80th Street
Bloomington, MN 55431
Common stock James L. Marvin /c/ 300,000 7.8%
155 W. Lake Avenue
Suite 203
Colorado Springs, CO 80906
Common stock David E. Crandall /d/ 125,341 3.2%
5415 Edlen Drive
Dallas, TX 75220
Common stock James R. Zicarelli /e/ 0 0%
1400 Northland Plaza
3800 W. 80th Street
Minneapolis, MN 55431
Common stock James E. Workman /f/ 30,000 0.8%
2245 Rockingham Drive
Troy, OH 45373
All Officers and Directors as a Group
(7 persons) 175,341 /g/ 4.5%
/a/ Represents shares over which the designated party has sole
investment and voting power.
/b/ Rotherwood Corporation may be deemed a "parent" of the
Company by virtue of its percentage of stock ownership.
/c/ Consists of 300,000 shares of common stock which are held by
Foothills Company, an affiliate of Mr. Marvin.
/d/ Mr. Crandall is a Director of the Company.
/e/ Mr. Zicarelli is a Director, Chairman and CEO of the Company
and an Officer of Rotherwood Corporation.
/f/ Mr. Workman is a Director of the Company and an employee of
Rotherwood Corporation.
/g/ Includes options to purchase 20,000 shares of common stock,
which can be immediately exercised.
/h/ Percentage based on common and common equivalent shares.
<PAGE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
By virtue of its 54% ownership of the Company's common stock,
Rotherwood Corporation (Rotherwood) is a "parent" of the Company.
In order to provide needed capital during 1995, the Company
issued 1,100,000 shares of common stock to Rotherwood upon
exercise of stock options. The option exercise price was $0.20
per share. See discussion at Note 5 to the Financial Statements.
Mr. James Zicarelli, Chairman of the Company's Board of
Directors, has served as the Company's CEO since February 1995.
Mr. Zicarelli is an employee of Rotherwood. Mr. Workman, a
member of the Company's Board of Directors, is also an employee
of Rotherwood. In 1995, Cramer began paying fees to Rotherwood
for management services including those provided by Mr.
Zicarelli. In 1995 and 1996, the Company also paid fees to other
affiliates of Rotherwood for consultation and assistance provided
in the area of Human Resources and Labor Relations. In 1995 and
1996, certain employees of Cramer provided operating and
financial consulting services to other subsidiaries of Rotherwood
in return for fees paid to the Company. Total amounts charged
for the foregoing services were:
1996 1995
Paid by the Company to Rotherwood
and its affiliates $102,000 $41,000
Paid to the Company by Rotherwood
and its affiliates $ 56,000 $20,000
The Company believes that the amounts charged for services
provided or received were not less favorable than those charged
by third parties.
The Company participates in a combined Rotherwood credit facility
with Mark Twain Bank (see Management's Discussion and Analysis
and Note 3 to Financial Statements).
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit 10.1 1989 Incentive Stock Option Plan
Exhibit 10.2 1996 Loan Documents - Mark Twain Bank
10.2a Corporate Resolution of Rotherwood Corporation
10.2b Commercial Security Agreement of Rotherwood
Corporation
10.2c Commercial/Agricultural Revolving or Draw Note -
Variable Rate
10.2d Loan Agreement, dated August 27, 1996
10.2e Revised Facility Description Rider to the Loan
Agreement, dated August 27, 1996
10.2f Continuing Contract of Guaranty
10.2g Commercial Security Agreement of Cramer, Inc.
Exhibit 23a Consent of Ernst & Young
There were no current reports filed by the Company in 1996.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned, as
duly authorized.
CRAMER, INC.
March 14, 1997 /s/ James R. Zicarelli
James R. Zicarelli
President & CEO
(Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the date
indicated.
March 14, 1997 /s/ James R. Zicarelli
James R. Zicarelli
Director
March 14, 1997 /s/ David E. Crandall
David E. Crandall
Director
March 14, 1997 /s/ James E. Workman
James E. Workman
Director
March 14, 1997 /s/ Gary A. Rubin
Gary A. Rubin
Vice President, Finance
(Principal Financial and Accounting
Officer)
<PAGE>
EXHIBIT INDEX
Number
10.1 1989 Incentive Stock Option Plan (previously filed)
10.2 1996 Loan Documents - Mark Twain Bank
10.2a Corporate Resolution of Rotherwood Corporation
10.2b Commercial Security Agreement of Rotherwood Corporation
10.2c Commercial/Agricultural Revolving or Draw Note - Variable Rate
10.2d Loan Agreement, dated August 27, 1996
10.2e Revised Facility Description Rider to the Loan Agreement, dated
August 27, 1996
10.2f Continuing Contract of Guaranty
10.2g Commercial Security Agreement of Cramer, Inc.
23a Consent of Ernst & Young
CORPORATE RESOLUTION
ROTHERWOOD CORPORATION
Name of Corporation
625 ADAMS ST KANSAS CITY, KS 66105-1402
Address City & State
I, the undersigned, hereby certify to the MARK TWAIN KANSAS
CITY BANK SHAWNEE, KANSAS, hereinafter referred to as "Bank",
that I am the Secretary of ROTHERWOOD CORPORATION a corporation
duly organized and existing under the laws of the State of
MINNESOTA that the following is a true copy of resolutions duly
adopted by the Board of Directors of said Corporation at a
meeting duly held at the corporate offices on the 3RD day of
FEBRUARY, 1997, at which a quorum was present throughout; and
that such resolutions have not been rescinded or modified.
WHEREAS, from time to time this corporation is in need of
funds for its corporate purposes; and
WHEREAS, the officers have arranged with the MARK TWAIN
KANSAS CITY BANK SHAWNEE, KANSAS for said Bank to make funds
available to this corporation upon execution and delivery by
authorized officers of written evidence of such loan or advance,
with or without the pledging of corporate assets, all in form and
substance satisfactory to said Bank;
NOW, THEREFORE BE IT RESOLVED, that any ONE of the listed
officers of this corporation is/are hereby authorized to borrow
from time to time on account of this Corporation from said Bank
upon such terms as said officers shall deem desirable, and to
make and deliver notes, secured or unsecured, drafts,
acceptances, agreements or obligations of this Corporation
therefor and as security for any and all obligations of this
Corporation to said Bank, now or hereafter existing, to pledge or
assign and deliver upon such terms as said officers may deem
desirable, stocks, bonds, bills receivable, accounts,
merchandise, bills of lading, warehouse receipts, mortgages,
insurance policies, certificates, negotiable paper, and any other
property held by or belonging to the Corporation with full
authority to endorse, assign and guarantee the same on behalf of
the Corporation; to discount any bills receivable or any paper
held or owned by the Corporation, with full power to endorse the
same in the name of the Corporation; and to execute and deliver
all instruments required by the Bank in connection with any of
the foregoing; and
FURTHER RESOLVED, that the Secretary or Assistant Secretary
of this Corporation shall certify to said Bank the names of the
persons who are at present the duly elected, and qualified
officers of the Corporation and shall from time to time
hereafter, as changes in the personnel of said officers are made,
immediately certify such changes to the Bank, and said Bank shall
be fully protected in relying on such certifications of the
Secretary or Assistant Secretary and shall be indemnified and
saved harmless from any claims, demands, expenses, loss or damage
resulting from, or growing out of, honoring the signature of any
officer so certified, or refusing to honor any signature not so
certified; and
FURTHER RESOLVED, that the foregoing resolutions shall
remain in full force and effect until written notice of their
amendment or recision shall have been received by said Bank, and
that receipt of such notice shall not effect any action taken by
the Bank prior thereto; and
FURTHER RESOLVED, that the Secretary or Assistant Secretary
be, and hereby is, authorized and directed to certify these
resolutions to said Bank, and that the provisions thereof are in
conformity with the Charter and the By-Laws of this Corporation.
I FURTHER CERTIFY that the following are the names and
official signatures of the present officers and authorized agents
of this corporation.
NAME OFFICER SIGNATURE
_______________ PRESIDENT
_______________ VICE PRESIDENT
_______________ VICE PRESIDENT
_______________ TREASURER
_______________ SECRETARY /s/ Sandra J. Caughey
_______________ ASS'T SECRETARY
_______________ ASS'T TREASURER
IN WITNESS WHEREOF, I have hereunto subscribed my name and
affixed the Seal for the Corporation this 3RD day of FEBRUARY,
1997.
(Corporate seal) /s/ Sandra J. Caughey
SECRETARY OF SAID CORPORATION
I ALSO HEREBY CERTIFY TO THE BANK THE FOREGOING.
/s/ James R. Zicarelli
PRESIDENT OF SAID CORPORATION
Note: In case the certifying officer is authorized to act,
either individually or jointly with another officer,
this certificate must also be signed by a second
officer, preferably one not so authorized.
MARK OWNER OF COLLATERAL COMMERCIAL
TWAIN SECURITY
BANKS ROTHERWOOD CORPORATION AGREEMENT
625 ADAMS ST.
KANSAS CITY, KS 66105-1402
Telephone Number
MARK TWAIN KANSAS CITY BANK
6333 LONG
SHAWNEE, KS 66216
(Lender)
BORROWER LOCATION OF COLLATERAL
ROTHERWOOD CORPORATION 3800 WEST 80TH STREET, #1400
625 ADAMS ST. BLOOMINGTON, MN 55431
KANSAS CITY, KS 66105-1402
Telephone Number
1. SECURITY INTEREST. For good and valuable
consideration, Owner of Collateral ("Owner") grants to Lender
identified above a continuing security interest in the Collateral
described below to secure the obligations described in this
Agreement.
2. OBLIGATIONS. The Collateral shall secure the payment
and performance of all of Borrower's and Owner's present and
future, joint and/or several, direct and indirect, absolute and
contingent, express and implied, indebtedness, (including costs
of collection, legal expenses and attorneys' fees, to the extent
permitted by applicable law, incurred by Lender upon the
occurrence of a default under this Agreement, in collecting or
enforcing payment of such indebtedness, or preserving, protecting
or realizing on the Collateral herein), liabilities, obligations
and covenants (cumulatively "Obligations") to Lender including
(without limitation) those arising under or pursuant to:
a. this Agreement and the following promissory notes
and agreements:
INTEREST PRINCIPAL AMOUNT/ FUNDING/ MATURITY CUSTOMER LOAN
RATE CREDIT LIMIT AGREEMENT DATE DATE NUMBER NUMBER
VARIABLE $3,750,000.00 08/27/96 08/27/97 1619572504 54080
b. all other present or future, Obligations of
Borrower or Owner to Lender (whether incurred for
the same or different purposes than the
foregoing);
c. all amendments, modifications, replacements or
substitutions to any of the foregoing; and
d. applicable law.
3. COLLATERAL. The Collateral shall consist of all of the
following-described property and Owner's rights, title and
interest in such property whether now owned or hereafter acquired
by Owner and wheresoever located:
[X] All accounts and contract rights including, but
not limited to, any accounts and contract rights
described on Schedule A attached hereto and
incorporated herein by this reference;
[X] All chattel paper including, but not limited to,
any chattel paper described on Schedule A attached
hereto and incorporated herein by this reference;
[X] All documents including, but not limited to, any
documents described on Schedule A attached hereto
and incorporated herein by this reference;
[X] All equipment, including, but not limited to, any
equipment described on Schedule A attached hereto
and incorporated herein by this reference;
[ ] All fixtures, including, but not limited to, any
fixtures located or to be located on the real
property described on Schedule B attached hereto
and incorporated herein by this reference;
[X] All general intangibles including, but not limited
to, any general intangibles described on Schedule
A attached hereto and incorporated herein by this
reference;
[X] All instruments including, but not limited to, any
instruments described on Schedule A attached
hereto and incorporated herein by this reference;
[X] All inventory including, but not limited to, any
inventory described on Schedule A attached hereto
and incorporated herein by this reference;
[ ] All minerals or the like located on or related to
the real property described on Schedule B attached
hereto and incorporated herein by this reference;
[ ] All standing timber located on the real property
described on Schedule B attached hereto and
incorporated herein by this reference;
[ ] Other:
All monies, instruments, and savings, checking or other deposit
accounts that are now or in the future in Lender's custody or
control (excluding IRA, Keogh, trust accounts, and deposits
subject to tax penalties if so assigned);
All accessions, accessories, additions, amendments, attachments,
modifications, replacements and substitutions to any of the
above;
All proceeds and products of any of the above;
All policies of insurance pertaining to any of the above as well
as any proceeds and unearned premiums pertaining to such
policies; and
All books and records pertaining to any of the above.
4. OWNER'S TAXPAYER IDENTIFICATION. Owner's social
security number or federal taxpayer identification number is: ________.
5. RESIDENCY/LEGAL STATUS. Owner is a resident of the
state of: n/a. Owner is a: Corporation ; duly
organized, validly existing and in good standing under the laws
of the state of: MINNESOTA .
6. REPRESENTATIONS, WARRANTIES AND COVENANTS: Owner
represents, warrants and covenants to Lender that:
a. Owner is and shall remain the sole owner of the
Collateral;
b. Neither Owner nor, to the best of Owner's
knowledge, any other party has used, generated,
released, discharged, stored, or disposed of any
hazardous waste, toxic substance, or related
material (cumulatively "Hazardous Materials") or
transported any Hazardous Materials. Owner shall
not commit or permit such actions to be taken in
the future. The term "Hazardous Materials" shall
mean any substance, material, or waste which is or
becomes regulated by any governmental authority
including, but not limited to, (i) petroleum; (ii)
asbestos; (iii) polychlorinated biphenyls; (iv)
those substances, materials or wastes designated
as a "hazardous substance" pursuant to Section 311
of the Clean Water Act or listed pursuant to
Section 307 of the Clean Water Act or any
amendments or replacements to these statutes; (v)
those substances, materials or wastes defined as a
"hazardous waste" pursuant to Section 1004 of the
Resource Conservation and Recovery Act or any
amendments or replacements to that statute; or
(vi) those substances, materials or wastes defined
as a "hazardous substance" pursuant to Section 101
of the Comprehensive Environmental Response,
Compensation and Liability Act, or any amendments
or replacements to that statute;
<PAGE>
c. Owner's chief executive office, chief place of
business, office where its business records are
located, or residence is the address identified
above. Owner's other executive offices, places of
business, locations of its business records, or
domiciles are described on Schedule C attached
hereto and incorporated herein by this reference.
Owner shall immediately advise Lender in writing
of any change in or addition to the foregoing
addresses;
d. Owner shall not become a party to any
restructuring of its form of business or
participate in any consolidation, merger,
liquidation or dissolution without providing
Lender with thirty (30) or more days' prior
written notice of such change;
e. Owner shall notify Lender of the nature of any
intended change of Owner's name, or the use of any
trade name, and the effective date of such change;
f. The Collateral is and shall at all times remain
free of all tax and other liens, security
interests, encumbrances and claims of any kind
except for those belonging to Lender and those
described on Schedule D attached hereto and
incorporated herein by this reference. Without
waiving the event of default as a result thereof,
Owner shall take any action and execute any
document needed to discharge the foregoing liens,
security interests, encumbrances and claims;
g. Owner shall defend the Collateral against all
claims and demands of all persons at any time
claiming any interest therein;
h. All of the goods, fixtures, minerals or the like,
and standing timber constituting the Collateral is
and shall be located at Owner's executive offices,
places of business, residence and domiciles
specifically described in this Agreement. Owner
shall not change the location of any Collateral
without the prior written consent of Lender;
i. Owner shall provide Lender with possession of all
chattel paper and instruments constituting the
Collateral, and Owner shall promptly mark all
chattel paper, instruments, and documents
constituting the Collateral to show that the same
are subject to Lender's security interest;
j. All of Owner's accounts or contract rights;
chattel paper; documents; general intangibles;
instruments; and federal, state, county, and
municipal government and other permits and
licenses; trusts, liens, contracts, leases, and
agreements constituting the Collateral are and
shall be valid, genuine and legally enforceable
obligations and rights belonging to Owner against
one or more third parties and not subject to any
claim, defense, set-off or counterclaim of any
kind;
k. Owner shall not amend, modify, replace, or
substitute any account or contract right; chattel
paper; document; general intangible; or instrument
constituting the Collateral without the prior
written consent of Lender;
l. Owner has the right and is duly authorized to
enter into and perform its obligations under this
Agreement. Owner's execution and performance of
these obligations do not and shall not conflict
with the provisions of any statute, regulation,
ordinance, rule of law, contract or other
agreement which may now or hereafter be binding on
Owner;
m. No action or proceeding is pending against Owner
which might result in any material or adverse
change in its business operations or financial
condition or materially affect the Collateral;
n. Owner has not violated and shall not violate any
applicable federal, state, county or municipal
statute, regulation or ordinance (including but
not limited to those governing Hazardous
Materials) which may materially and adversely
affect its business operations or financial
condition or the Collateral;
o. Owner shall, upon Lender's request, deposit all
proceeds of the Collateral into an account or
accounts maintained by Owner or Lender at Lender's
institution; and
p. This Agreement and the obligations described in
this Agreement are executed and incurred for
business and not consumer purposes.
7. SALE OF COLLATERAL. Owner shall not assign, convey,
lease, sell or transfer any of the Collateral to any third party
without the prior written consent of Lender except for sales of
inventory to buyers in the ordinary course of business.
8. FINANCING STATEMENTS AND OTHER DOCUMENTS. Owner shall
take all actions and execute all documents required by Lender to
attach, perfect and maintain Lender's security interest in the
Collateral and establish and maintain Lender's right to receive
the payment of the proceeds of the Collateral including, but not
limited to, executing any financing statements, fixture filings,
continuation statements, notices of security interest and other
documents required by the Uniform Commercial Code and other
applicable law. Owner shall pay the costs of filing such
documents in all offices wherever filing or recording is deemed
by Lender to be necessary or desirable. Lender shall be entitled
to perfect its security interest in the Collateral by filing
carbon, photographic or other reproductions of the aforementioned
documents with any authority required by the Uniform Commercial
Code or other applicable law. Lender may execute and file any
financing statements, as well as extensions, renewals and
amendments of financing statements in such form as Lender may
require to perfect and maintain perfection of any security
interest granted in this Agreement.
9. INQUIRIES AND NOTIFICATION TO THIRD PARTIES. Owner
hereby authorizes Lender to contact any third party and make any
inquiry pertaining to Owner's financial condition or the
Collateral. In addition, Lender is authorized to provide oral or
written notice of its security interest in the Collateral to any
third party.
10. COLLECTION OF INDEBTEDNESS FROM THIRD PARTIES. Lender
shall be entitled to notify, and upon the request of Lender,
Owner shall notify any account debtor or other third party
(including, but not limited to, insurance companies) to pay any
indebtedness or obligation owing to Owner and constituting the
Collateral (cumulatively "indebtedness") to Lender whether or not
a default exists under this Agreement. Owner shall diligently
collect the indebtedness owing to Owner from its account debtors
and other third parties until the giving of such notification.
In the event that Owner possesses or receives possession of any
instruments or other remittances with respect to the indebtedness
following the giving of such notification or if the instruments
or other remittances constitute the prepayment of any
indebtedness or the payment of any insurance proceeds, Owner
shall hold such instruments and other remittances in trust for
Lender apart from its other property, endorse the instruments and
other remittances to Lender, and immediately provide Lender with
possession of the instruments and other remittances. Lender
shall be entitled, but not required, to collect (by legal
proceedings or otherwise), extend the time for payment,
compromise, exchange or release any obligor or collateral upon,
or otherwise settle any of the indebtedness whether or not an
event of default exists under this Agreement. Lender shall not
be liable to Owner for any action, error, mistake, omission or
delay pertaining to the actions described in this paragraph or
any damages resulting therefrom.
11. POWER OF ATTORNEY. Owner hereby appoints Lender as its
attorney-in-fact to endorse Owner's name on all instruments and
other remittances payable to Owner with respect to the
indebtedness or other documents pertaining to Lender's actions in
connection with the indebtedness. In addition, Lender shall be
entitled, but not required, to perform any action or execute any
document required to be taken or executed by Owner under this
Agreement. Lender's performance of such action or execution of
such documents shall not relieve Owner from any obligation or
cure any default under this Agreement. The powers of attorney
described in this paragraph are coupled with an interest and are
irrevocable.
12. USE AND MAINTENANCE OF COLLATERAL. Owner shall use the
Collateral solely in the ordinary course of its business, for the
usual purposes intended by the manufacturer (if applicable), with
due care, and in compliance with the laws, ordinances,
regulations, requirements and rules of all federal, state, county
and municipal authorities including environmental laws and
regulations and insurance policies. Owner shall not make any
alterations, additions or improvements to the Collateral without
the prior written consent of Lender. Without limiting the
foregoing, all alterations, additions and improvements made to
the Collateral shall be subject to the security interest
belonging to Lender, shall not be removed without the prior
written consent of Lender, and shall be made at Owner's sole
expense. Owner shall take all actions and make any repairs or
replacements needed to maintain the Collateral in good condition
and working order.
13. LOSS OR DAMAGE. Owner shall bear the entire risk of
any loss, theft, destruction or damage (cumulatively "Loss or
Damage") to all or any part of the Collateral. In the event of
any Loss or Damage, Owner will either restore the Collateral to
its previous condition, replace the Collateral with similar
property acceptable to Lender in its sole discretion, or pay or
cause to be paid to Lender the decrease in the fair market value
of the affected Collateral.
14. INSURANCE. The Collateral will be kept insured for its
full value against all hazards including loss or damage caused by
fire, collision, theft or other casualty. If the Collateral
consists of a motor vehicle, Owner will obtain comprehensive and
collision coverage in amounts at least equal to the actual cash
value of the vehicle with deductibles not to exceed $ n/a .
Owner may obtain insurance on the Collateral from such companies
as are acceptable to Lender in its sole discretion. The
insurance policies shall require the insurance company to provide
Lender with at least thirty (30) days' written notice before such
policies are altered or cancelled in any manner. The insurance
policies shall name Lender as a loss payee and provide that no
act or omission of Owner or any other person shall affect the
right of Lender to be paid the insurance proceeds pertaining to
the loss or damage of the Collateral. In the event Owner fails
to acquire or maintain insurance, Lender (after providing notice
as may be required by law) may in its discretion procure
appropriate insurance coverage upon the Collateral and charge the
insurance cost as an advance of principal under the promissory
note. Owner shall furnish Lender with evidence of insurance
indicating the required coverage. Lender may act as attorney-
in-fact for Owner in making and settling claims under insurance
policies, cancelling any policy or endorsing Owner's name on any
draft or negotiable instrument drawn by any insurer.
15. INDEMNIFICATION. Lender shall not assume or be
responsible for the performance of any of Owner's obligations
with respect to the Collateral under any circumstances. Owner
shall immediately provide Lender with written notice of and
indemnify and hold Lender and its shareholders, directors,
officers, employees and agents harmless from all claims, damages,
liabilities (including attorneys' fees and legal expenses to the
extent permitted by applicable law), causes of action, actions,
suits and other legal proceedings (cumulatively "Claims")
pertaining to its business operations or the Collateral
including, but not limited to, those arising from Lender's
performance of Owner's obligations with respect to the
Collateral. Owner, upon the request of Lender, shall hire legal
counsel to defend Lender from such Claims, and pay the attorneys'
fees, legal expenses and other costs to the extent permitted by
applicable law, incurred in connection therewith. In the
alternative, Lender shall be entitled to employ its own legal
counsel to defend such Claims at Owner's cost.
16. TAXES AND ASSESSMENTS. Owner shall execute and file
all tax returns and pay all taxes, licenses, fees and assessments
relating to its business operations and the Collateral
(including, but not limited to, income taxes, personal property
taxes, withholding taxes, sales taxes, use taxes, excise taxes
and workers' compensation premiums) in a timely manner.
17. INSPECTION OF COLLATERAL AND BOOKS AND RECORDS. Owner
shall allow Lender or its agents to examine, inspect and make
abstracts and copies of the Collateral and Owner's books and
records pertaining to Owner's business operations and financial
condition or the Collateral during normal business hours. Owner
shall provide any assistance required by Lender for these
purposes. All of the signatures and information pertaining to
the Collateral or contained in the books and records shall be
genuine, true, accurate and complete in all respects. Owner shall
note the existence of Lender's security interest in its books and
records pertaining to the Collateral.
<PAGE>
18. DEFAULT. Owner shall be in default under this
Agreement in the event that Owner, Borrower or any guarantor:
(a) fails to make any payment under this Agreement or
any other indebtedness to Lender when due;
(b) fails to perform any obligation or breaches any
warranty or covenant to Lender contained in this
Agreement or any other present or future, written
or oral, agreement regarding this or any other
indebtedness to Lender;
(c) provides or causes any false or misleading
signature or representation to be provided to
Lender;
(d) allows the Collateral to be destroyed, lost or
stolen, damaged in any material respect, or
subjected to seizure or confiscation;
(e) seeks to revoke, terminate or otherwise limit its
liability under any continuing guaranty;
(f) permits the entry or service of any garnishment,
judgment, tax levy, attachment or lien against
Owner, any guarantor, or any of their property;
(g) dies, becomes legally incompetent, is dissolved or
terminated, ceases to operate its business,
becomes insolvent, makes an assignment for the
benefit of creditors, or becomes the subject of
any bankruptcy, insolvency or debtor
rehabilitation proceeding;
(h) allows the Collateral to be used by anyone to
transport or store goods, the possession,
transportation, or use of which, is illegal; or
(i) causes Lender to deem itself insecure for any
reason.
19. RIGHTS OF LENDER ON DEFAULT. If there is a default
under this Agreement, Lender shall be entitled to exercise one or
more of the following remedies without notice or demand (except
as required by law):
(a) to declare the Obligations immediately due and
payable in full;
(b) to collect the outstanding Obligations with or
without resorting to judicial process;
(c) to change Owner's mailing address, open Owner's
mail, and retain any instruments or other
remittances constituting the Collateral contained
therein;
(d) to take possession of any Collateral in any manner
permitted by law;
(e) to apply for and obtain, without notice and upon
ex parte application, the appointment of a
receiver for the Collateral without regard to
Owner's financial condition or solvency, the
adequacy of the Collateral to secure the payment
or performance of the obligations, or the
existence of any waste to the Collateral;
(f) to require Owner to deliver and make available to
Lender any Collateral at a place reasonably
convenient to Owner and Lender;
(g) to sell, lease or otherwise dispose of any
Collateral and collect any deficiency balance with
or without resorting to legal process (if notice
to Borrower of the intended disposition of the
Collateral is required by law, five (5) days
notice shall constitute reasonable notification);
(h) to set-off Owner's obligations against any amounts
due to Owner including, but not limited to,
monies, instruments, and deposit accounts
maintained with Lender; and
(i) to exercise all other rights available to Lender
under any other written agreement or applicable
law.
Lender's rights are cumulative and may be exercised together,
separately, and in any order. If notice to Owner of intended
disposition of Collateral is required by law, five (5) days'
notice shall constitute reasonable notification. In the event
that Lender institutes an action to recover any Collateral or
seeks recovery of any Collateral by way of a prejudgment remedy
in an action against Owner, Owner waives the posting of any bond
which might otherwise be required. Lender's remedies under this
paragraph are in addition to those available at common law, such
as setoff.
20. WAIVER OF JURY TRIAL. LENDER AND OWNER HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT EITHER
MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION BASED
ON, OR ARISING OUT OF, UNDER OR IN CONJUNCTION WITH THE
PROMISSORY NOTE, THIS AGREEMENT AND ANY OTHER AGREEMENT
CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH OR THEREWITH,
OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF EITHER PARTY. THIS PROVISION IS
A MATERIAL INDUCEMENT FOR LENDER MAKING THE LOAN EVIDENCED BY THE
PROMISSORY NOTE.
21. APPLICATION OF PAYMENTS. Whether or not a default has
occurred under this Agreement, all payments made by or on behalf
of Owner and all credits due to Owner from the disposition of the
Collateral or otherwise may be applied against the amounts paid
by Lender (including attorneys' fees and legal expenses to the
extent permitted by applicable law) in connection with the
exercise of its rights or remedies described in this Agreement
and any interest thereon and then to the payment of the remaining
Obligations in whatever order Lender chooses.
22. REIMBURSEMENT OF AMOUNTS EXPENDED BY LENDER. Owner
shall reimburse Lender for all amounts (including attorneys' fees
and legal expenses) expended by Lender in the performance of any
action required to be taken by Owner or the exercise of any right
or remedy belonging to Lender under this Agreement, together with
interest thereon at the lower of the highest rate described in
any promissory note or credit agreement executed by Borrower or
Owner or the highest rate allowed by law from the date of payment
until the date of reimbursement. These sums shall be included in
the definition of Obligations, shall be secured by the Collateral
identified in this Agreement and shall be payable upon demand.
23. ASSIGNMENT. Owner shall not be entitled to assign any
of its rights, remedies or obligations described in this
Agreement without the prior written consent of Lender. Consent
may be withheld by Lender in its sole discretion. Lender shall
be entitled to assign some or all of its rights and remedies
described in this Agreement without notice to or the prior
consent of Owner in any manner.
24. MODIFICATION AND WAIVER. The modification or waiver of
any of Owner's Obligations or Lender's rights under this
Agreement must be contained in a writing signed by Lender.
Lender may perform any of Owner's Obligations or delay or fail to
exercise any of its rights without causing a waiver of those
Obligations or rights. A waiver on one occasion shall not
constitute a waiver on any other occasion. Owner's Obligations
under this Agreement shall not be affected if Lender amends,
compromises, exchanges, fails to exercise, impairs or releases
any of the obligations belonging to any Owner or third party or
any of its rights against any Owner, third party or collateral.
25. SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and inure to the benefit of Owner and Lender and
their respective successors, assigns, trustees, receivers,
administrators, personal representatives, legatees, and devisees.
26. NOTICES. Any notice or other communication to be
provided under this Agreement shall be in writing and sent to the
parties at the addresses described in this Agreement or such
other address as the parties may designate in writing from time
to time.
27. SEVERABILITY. If any provision of this Agreement
violates the law or is unenforceable, the rest of the Agreement
shall remain valid.
28. APPLICABLE LAW. This Agreement shall be governed by
the laws of the state identified in Lender's address. Owner
consents to the jurisdiction and venue of any court located in
the state indicated in Lender's address in the event of any legal
proceeding under this Agreement.
29. COLLECTION COSTS. If Lender hires an attorney to
assist in collecting any amount due or enforcing any right or
remedy under this Agreement, Owner agrees to pay Lender's
attorneys' fees to the extent permitted by applicable law, and
collection costs (subject to any restrictions imposed by law).
30. MISCELLANEOUS. This Agreement is executed for
commercial purposes. Owner shall supply information regarding
Owner's business operations and financial condition or the
Collateral in the form and manner requested by Lender. All
information furnished by Owner to Lender shall be true, accurate
and complete in all respects. Owner and Lender agree that time
is of the essence. Owner waives presentment, demand for payment,
notice of dishonor and protest except as required by law. All
references to Owner in this Agreement shall include all parties
signing below except Lender. If there is more than one Owner,
their obligations shall be joint and several. This Agreement
shall remain in full force and effect until Lender provides Owner
with written notice of termination. This Agreement and any
related documents represent the complete and integrated
understanding between Owner and Lender pertaining to the terms
and conditions of those documents.
31. ADDITIONAL TERMS:
THE UNDERSIGNED AGREE THAT THE CONSENT TO JURISDICTION
AND VENUE HEREIN SHALL NOT PROHIBIT OR LIMIT LENDER
FROM BRINGING ANY ACTION OR PROCEEDING HEREUNDER IN ANY
JURISDICTION OR VENUE THAT IS OTHERWISE PROPER.
Owner acknowledges that Owner has read, understands, and agrees
to the terms and conditions of this Agreement.
Dated: AUGUST 27, 1996
OWNER: ROTHERWOOD CORPORATION OWNER:
BY: /s/ Sandra J. Caughey BY:
SANDRA J. CAUGHEY
TITLE: SECRETARY TITLE:
OWNER: OWNER:
BY: BY:
TITLE: TITLE:
LENDER: MARK TWAIN KANSAS CITY BANK
BY:
TITLE:
<PAGE>
SCHEDULE A
SCHEDULE B
SCHEDULE C
SCHEDULE D
NONE
COMMERCIAL/AGRICULTURAL
REVOLVING OR DRAW NOTE-
VARIABLE RATE
MARK TWAIN BANKS BORROWER
MARK TWAIN KANSAS CITY BANK ROTHERWOOD CORPORATION
6333 LONG 625 ADAMS ST.
SHAWNEE, KS 66216 KANSAS CITY, KS 66105-1402
(Lender) Telephone Number: ____________
Officer Interest Principal Amount Funding Maturity Customer Loan
Initials Rate Credit Limit Date Date Number Number
MJ VARIABLE $3,750,000.00 08/27/96 08/27/97 1619572504 54080
PROMISE TO PAY
For value received, Borrower promises to pay to the order of
Lender indicated above the principal amount of THREE MILLION
SEVEN HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS ($3,750,000.00)
or, if less, the aggregate unpaid principal amount of all loans
or advances made by the Lender to the Borrower, plus interest on
the unpaid principal balance at the rate and in the manner
described below. All amounts received by Lender shall be applied
first to expenses, then to accrued interest, then to principal,
and then to late payment charges or in any other order, as
determined by Lender, and as permitted by law.
INTEREST RATE: This Note has a variable rate feature. Interest
on the Note may change from time to time if the Index Rate
identified below changes. Interest shall be computed on the
basis of 360 days per year. Interest on this Note shall be
calculated at the variable rate of MINUS 125/1000 percent
(-0.125%) per annum under the Index Rate. The initial Index Rate
is currently EIGHT AND 250/1000 percent (8.250%) per annum. The
initial interest rate on this Note shall be EIGHT AND 125/1000
percent (8.125%) per annum. Any change in the interest rate
resulting from a change in the Index Rate will be effective on:
THE DATE OF SUCH CHANGE.
INDEX RATE: The Index Rate for this Note shall be:
MARK TWAIN BASE RATE, WHICH LENDER MAY INCREASE OR DECREASE AT
ANY TIME AT LENDER'S DISCRETION, IS PUBLICLY AVAILABLE, AND WHICH
MAY NOT NECESSARILY REFLECT THE RATE LENDER CHARGES TO ITS OTHER
CUSTOMERS, WHICH MAY BE LOWER.
MINIMUM/MAXIMUM RATE: The minimum interest rate on this Note
shall be n/a percent (n/a%) per annum. The maximum interest
rate on this Note shall not exceed n/a percent (n/a%) per
annum or the maximum interest rate Lender is permitted to charge
by law, whichever is less.
POST-MATURITY RATE: In the event of a default under this Note,
the Lender may, in its sole discretion, declare all sums due
under this Note immediately due and payable. After maturity
(whether by reason of acceleration or otherwise), the principal
balance due under this Note shall bear interest at the lesser of:
MARK TWAIN BASE RATE PLUS 2.675, or the maximum interest rate
Lender is permitted to charge by law.
PAYMENT SCHEDULE: Borrower shall pay the principal and interest
according to the following schedule:
ON DEMAND, BUT IF NO DEMAND IS MADE THEN INTEREST SHALL BE
PAYABLE MONTHLY BEGINNING SEPTEMBER 27, 1996 AND CONTINUING ON
THE SAME DAY OF EACH MONTH THEREAFTER. A FINAL PAYMENT OF THE
UNPAID PRINCIPAL BALANCE PLUS ACCRUED INTEREST IS DUE AND PAYABLE
ON AUGUST 27, 1997.
All payments will be made to Lender at its address described
above and in lawful currency of the United States of America.
RENEWAL: If checked, [ ] this Note is a renewal of loan
number __________________.
SECURITY: To secure the payment and performance of obligations
incurred under this Note, Borrower grants Lender a security
interest in, and pledges and assigns to Lender all of Borrower's
rights, title, and interest, in all monies, instruments, savings,
checking and other deposit accounts of Borrower's, (excluding
IRA, Keogh and trust accounts and deposits subject to tax
penalties if so assigned) that are now or in the future in
Lender's custody or control. [X] If checked, the obligations
under this Note are also secured by a lien and/or security
interest in the property described in the documents executed in
connection with this Note as well as any other property
designated as security for this Note now or in the future. THIS
NOTE IS SECURED BY COMMERCIAL SECURITY AGREEMENTS DATED AUGUST
27, 1996.
PREPAYMENT: This Note may be prepaid in part or in full on or
before its maturity date. If this Note contains more than one
installment, all prepayments will be credited as determined by
Lender and as permitted by law. If this Note is prepaid in full,
there will be: [X] No minimum finance charge or prepayment
penalty. [ ] A minimum finance charge of $___________. [ ] A
prepayment penalty of _________% of the principal prepaid.
LATE PAYMENT CHARGE: If a payment is more than 10 days late,
Borrower will be charged a late payment charge of $10.00 or
10.000% of the payment amount, whichever is [X] greater [ ]
less, as permitted by law.
REVOLVING OR DRAW FEATURE: [X] This Note possesses a revolving
feature. Borrower shall be entitled to borrow up to the full
principal amount of the Note from time to time during the term of
this Note. [ ] This Note possesses a draw feature. Borrower
shall be entitled to make one or more draws under this Note. The
aggregate amount of such draws shall not exceed the full
principal amount of this Note.
Lender shall maintain a written ledger of the amounts loaned to
and repaid by Borrower under this Note. The aggregate unpaid
principal amount shown on such ledger shall be rebuttable
presumptive evidence of the principal amount owing and unpaid on
this Note. The Lender's failure to record the date and amount of
any loan or advance on such ledger shall not limit or otherwise
affect the obligations of the Borrower under this Note to repay
the principal amount of the loans or advances together with all
interest accruing thereon. Lender shall not be obligated to
provide Borrower with a copy of the ledger on a periodic basis,
however, Borrower shall be entitled to inspect or obtain a copy
of the ledger during Lender's business hours.
CONDITIONS FOR ADVANCES: If there is no default under this Note,
Borrower shall be entitled to borrow monies under this Note
(subject to the limitations described above) under the following
conditions:
AS STATED IN THE LOAN AGREEMENT DATED AUGUST 27, 1996.
BORROWER ACKNOWLEDGES THAT BORROWER HAS READ, UNDERSTANDS, AND
AGREES TO THE TERMS AND CONDITIONS OF THIS NOTE INCLUDING THE
PROVISIONS ON THE REVERSE SIDE. BORROWER ACKNOWLEDGES RECEIPT OF
AN EXACT COPY OF THIS NOTE.
NOTE DATE: AUGUST 27, 1996
BORROWER: ROTHERWOOD CORPORATION
BORROWER:
BY: /s/ Sandra J. Caughey BY:
TITLE: SECRETARY TITLE:
BORROWER: BORROWER:
BY: BY:
TITLE: TITLE:
<PAGE>
TERMS AND CONDITIONS
1. DEFAULT: Borrower will be in default under this Note in the
event that Borrower or any guarantor:
(a) fails to make any payment on this Note or any other
indebtedness to Lender when due;
(b) fails to perform any obligation or breaches any
warranty or covenant to Lender contained in this Note
or any other present or future, written agreement
regarding this or any indebtedness of Borrower to
Lender;
(c) provides or causes any false or misleading signature or
representation to be provided to Lender;
(d) allows the collateral securing this Note (if any) to be
lost, stolen, destroyed, damaged in any material
respect, or subjected to seizure or confiscation;
(e) permits the entry or service of any garnishment,
judgment, tax levy, attachment or lien against
Borrower, any guarantor, or any of their property;
(f) dies, becomes legally incompetent, is dissolved or
terminated, ceases to operate its business, becomes
insolvent, makes an assignment for the benefit of
creditors, or becomes the subject of any bankruptcy,
insolvency or debtor rehabilitation proceeding; or
(g) causes Lender to deem itself insecure for any reason,
or Lender, for any reason, in good faith deems itself
insecure.
2. RIGHTS OF LENDER ON DEFAULT: If there is a default under
this Note, Lender will be entitled to exercise one or more of the
following remedies without notice or demand (except as required
by law):
(a) To declare the principal amount plus accrued interest
under this Note and all other present and future
obligations of Borrower immediately due and payable in
full;
(b) to collect the outstanding obligations of Borrower with
or without resorting to judicial process;
(c) to take possession of any collateral in any manner
permitted by law;
(d) to require Borrower to deliver and make available to
Lender any collateral at a place reasonably convenient
to Borrower and Lender:
(e) to sell, lease or otherwise dispose of any collateral
and collect any deficiency balance with or without
resorting to legal process;
(f) to set-off Borrower's obligations against any amounts
due to Borrower including, but not limited to monies,
instruments, and deposit accounts maintained with
Lender; and
(g) to exercise all other rights available to Lender under
any other written agreement or applicable law.
Lender's rights are cumulative and may be exercised together,
separately, and in any order. Lender's remedies under this
paragraph are in addition to those available at common law, such
as the right of setoff.
3. DEMAND FEATURE: If this Note contains a demand feature,
then notwithstanding anything to the contrary contained in this
Note, Lender's rights with respect to the events of default
identified above shall not be limited, restricted, impaired or
otherwise adversely affected by the demand feature of this Note.
Lender's right to demand payment, at any time, and from time to
time, shall be in Lender's sole and absolute discretion, whether
or not any default has occurred.
4. FINANCIAL INFORMATION: Borrower will provide Lender with
current financial statements including but not limited to balance
sheets and profit and loss statements and other information upon
request.
5. MODIFICATION AND WAIVER: The modification or waiver of any
of Borrower's obligations or Lender's rights under this Note must
be contained in a writing signed by Lender. Lender may perform
any of Borrower's obligations or delay or fail to exercise any of
its rights without causing a waiver of those obligations or
rights. A waiver on one occasion will not constitute a waiver on
any other occasion. Borrower's obligations under this Note shall
not be affected if Lender amends, compromises, exchanges, fails
to exercise, impairs or releases any of the obligations belonging
to any co-borrower or guarantor or any of its rights against any
co-borrower, guarantor or collateral.
6. SEVERABILITY AND INTEREST LIMITATION: If any provision of
this Note violates the law or is unenforceable, the rest of the
Note will remain valid. Notwithstanding anything contained in
this Note to the contrary, in no event shall interest accrue
under this Note, before or after maturity, at a rate in excess of
the highest rate permitted by applicable law, and if interest
(including any charge or fee held to be interest by a court of
competent jurisdiction) in excess thereof be paid, any excess
shall constitute a payment of, and be applied to, the principal
balance hereof, and if the principal balance has been fully paid,
then such interest shall be repaid to the Borrower.
7. ASSIGNMENT: Borrower will not be entitled to assign any of
its rights, remedies or obligations described in this Note
without the prior written consent of Lender which may be withheld
by Lender in its sole discretion. Lender will be entitled to
assign some or all of its rights and remedies described in this
Note without notice to or the prior consent of Borrower in any
manner.
8. NOTICE: Any notice or other communication to be provided to
Borrower or Lender under this Note shall be in writing and sent
to the parties at the addresses described in this Note or such
other address as the parties may designate in writing from time
to time.
9. APPLICABLE LAW: This Note shall be governed by the laws of
the state indicated in Lender's address. Borrower consents to
the jurisdiction and venue of any court located in the state
indicated in Lender's address in the event of any legal
proceeding under this Note.
10. COLLECTION COSTS: If Lender hires an attorney to assist in
collecting any amount due or enforcing any right or remedy under
this Note, Borrower agrees to pay Lender's attorney's fees, to
the extent permitted by applicable law, and collection costs.
11. MISCELLANEOUS: This Note is being executed for commercial
purposes. Borrower and Lender agree that time is of the essence.
Borrower waives presentment, demand for payment, notice of
dishonor and protest. Borrower hereby waives any right to trial
by jury in any civil action arising out of, or based upon, this
Note or the collateral securing this Note. If Lender obtains a
judgment for any amount due under this Note, interest will accrue
on the judgment at the judgment rate of interest permitted by
law. All references to Borrower in this Note shall include all
of the parties signing this Note. If there is more than one
Borrower, their obligations will be joint and several.
Information concerning the Note may be reported to credit
reporting agencies and will be made available when requested by
proper legal process. This Note and any related documents
represent the complete and integrated understanding between
Borrower and Lender pertaining to the terms and conditions of
those documents.
12. ADDITIONAL TERMS:
BORROWER AGREES THAT LENDER, AT ITS OPTION, MAY EXTEND OR
RENEW THIS NOTE $15 IS CHARGED FOR NON MARK TWAIN CHECKS
RETURNED FOR INSUFFICIENT FUNDS. THE UNDERSIGNED AGREE THAT
THE CONSENT TO JURISDICTION AND VENUE HEREIN SHALL NOT
PROHIBIT OR LIMIT LENDER FROM BRINGING ANY ACTION OR
PROCEEDING HEREUNDER IN ANY JURISDICTION OR VENUE THAT IS
OTHERWISE PROPER.
PURPOSE: FINANCE WORKING CAPITAL NEEDS OF OPERATING SUBSIDIARIES
LOAN AGREEMENT
Name and Address of Borrower:
Rotherwood Corporation Legal Status of Borrower: corporation
625 Adams St. Jurisdiction of Borrower: Minnesota
Kansas City, KS 66105-1402
Name and address of Guarantors:
Cramer, Inc. Legal Status of Guarantor: corporation
625 Adams St. Jurisdiction of Guarantor: Kansas
Kansas City, KS 66105-1402
The American Companies, Legal Status of Guarantor: corporation
Inc. Jurisdiction of Guarantor: Kansas
625 Adams St.
Kansas City, KS 66105-1402
Sagebrush Technology, Legal Status of Guarantor: corporation
Inc. Jurisdiction of Guarantor: Minnesota
12221 M. Woodlake Dr.
Burnsville, MN 55337
Pacer Corporation Legal Status of Guarantor: corporation
35 South 6th Street Jurisdiction of Guarantor: South Dakota
Custer, SD 57730
American Bindery-Dobbs, Legal Status of Guarantor: corporation
Inc. Jurisdiction of Guarantor: Virginia
4803 Chandler Road
Muskogee, OK
Dollar Amount and Type of Facility: $3,750,000.00 Revolving
Line of Credit
(See attached Facility Description Rider for details)
This Agreement, entered into this 27th day of August, 1996, by
and between the above named Borrower (hereinafter called
"Borrower"), Cramer Inc., The American Companies, Inc., Sagebrush
Technology, Inc., Pacer Corporation (hereinafter sometimes called
the "Borrowing Base Guarantors"), American Bindery-Dobbs, Inc.
(American Bindery-Dobbs, Inc. and the Borrowing Base Guarantors
herein sometimes referred to collectively as the "Guarantors")
and Mark Twain Kansas City Bank, 6333 Long, Shawnee, Kansas 66216
(hereinafter called "Bank"). Borrower is desirous of borrowing
from Bank the amount specified in the attached Facility
Description Rider and the Bank is willing to lend to Borrower
such specified amount in accordance with certain terms,
warranties, covenants, and agreements as specified herein.
ARTICLE I
SECTION 1.1. Payments and Computations. The Borrower shall
make each payment hereunder and under the Note (further described
in the Facility Description Rider attached and hereinafter
referred to as the "Note") not later than 12:00 noon (Kansas
City, Kansas time) on the day when due in lawful money of the
United States of America to the Bank at its address referred to
above. All computations of interest under the Note shall be made
by the Bank on the basis of a year of 360 days for the actual
number of days (including the first day but excluding the last
day) elapsed.
SECTION 1.2. Payment on Non-Business Days. Whenever any
payment to be made hereunder or under the Note shall be stated to
be due on a Saturday, Sunday or a public or bank holiday or the
equivalent for banks generally under the laws of the State of
Missouri (any other day being a "Business Day"), such payment may
be made on the next succeeding Business Day, and such extension
of time shall in such case be included in the computation of
payment of interest.
SECTION 1.3. Conditions Precedent to Advances. If the Facility
provides for future advances, then the obligation of the Bank to
make any advance to the Borrower shall be subject to the
conditions precedent that on the date of such advance (i) the
representations and warranties contained in Section 2.1 remain
correct on and as of such date as though made on and as of such
date, (ii) no event has occurred and is continuing, or would
result from such advance, which constitutes an Event of Default
(as defined in Section 4.1 hereof) or would constitute an Event
of Default but for the requirement that notice be given or time
elapse or both, and (iii) the Bank shall have received such
approvals, opinions and documents as the Bank may reasonably
request.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
SECTION 2.1. Representations and Warranties of the Borrower.
The Borrower represents and warrants as follows:
(a) The Borrower's legal status is correctly set forth at
the beginning of this Loan Agreement, and the Borrower has been
duly formed and is validly existing and in good standing under
the laws of the state of its organization as set forth above.
(b) The execution, delivery and performance by the Borrower
of this Agreement, the Note and any other documents or agreements
executed in connection herewith are within the Borrower's
corporate or partnership powers (as the case may be), have been
duly authorized by all necessary action on the part of its
officers, directors, shareholders or partners, and do not
contravene (i) the Borrower's organizational documents (Articles
of Incorporation, by-laws or partnership agreement) or (ii) any
law or any contractual restriction binding on or affecting the
Borrower.
(c) No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or
regulatory body is required for the due execution, delivery and
performance by the Borrower of this Agreement or the Note.
(d) This Agreement is, and the Note when delivered
hereunder will be, legal, valid and binding obligations of the
Borrower enforceable against the Borrower in accordance with
their respective terms.
(e) The balance sheets of the Borrower and the related
statements of income and retained earnings, copies of which have
been furnished to the Bank, fairly present the financial
condition of the Borrower as of the date of such reports and the
results of the operations of the Borrower as of such date, all in
accordance with generally accepted accounting principles
consistently applied throughout the periods involved, and since
such date there has been no material adverse change in such
condition or operations.
(f) There is no pending or threatened action or proceeding
affecting the Borrower before any court, governmental agency or
arbitrator, which may materially adversely affect the financial
condition or operations of the Borrower.
ARTICLE III
COVENANTS OF THE BORROWER
SECTION 3.1. Standard Covenants. So long as the Note shall
remain unpaid or, in the case of a facility providing for future
advances, the Bank shall have any commitment to make advances to
the Borrower hereunder, the Borrower will, unless the Bank shall
otherwise consent in writing:
(a) Compliance with Laws. Comply in all material respects
with all applicable laws, rules, regulations and orders, such
compliance to include, without limitation, paying before the same
become delinquent all taxes, assessments and governmental charges
imposed upon it or upon its property except to the extent
contested in good faith.
(b) Maintenance of Insurance. Maintain insurance with
responsible and reputable insurance companies or associations in
such amounts and covering such risks as is usually carried by
companies engaged in similar businesses and owning similar
properties in the same general area in which the Borrower
operates.
(c) Maintenance of Existence. Maintain its corporate or
partnership existence, as the case may be, in the jurisdiction of
its organization.
(d) Reporting Requirements. Furnish to the Bank:
(i) As soon as available and in any event within 45
days after the end of each quarter balance sheets of
the Borrower as of the end of each quarter and
statements of income and retained earnings of the
Borrower of for the period commencing at the end of the
previous fiscal year and ending with the end of each
quarter certified by the chief financial officer of the
Borrower;
(ii) As soon as available and in any event within 90
days after the end of each fiscal year of the Borrower,
a copy of the balance sheets, financial statement and
retained earnings of the Borrower certified in a manner
acceptable to the Bank by an independent Public
Accounting Firm satisfactory to the Bank;
(iii) Other ___________________________________________
______________________________________________________;
and, such other information respecting the condition or
operations, financial or otherwise, of the Borrower as the Bank
may from time to time reasonably request.
(e) Negative Pledge. Not create or suffer to exist any
lien, security interest or other charge or encumbrance, or any
other type of preferential arrangement, upon or with respect to
any of its properties, whether now owned or hereafter acquired;
or assign any right to receive income.
(f) Change in Nature of Business. Not make any material
change in the nature of its business as carried on at the date
hereof.
SECTION 3.2. Special Covenants and/or Agreements.
X See attached facility description and/or special
covenant rider which is/are incorporated herein by
reference.
<PAGE>
ARTICLE IV
EVENTS OF DEFAULT
SECTION 4.1. Events of Default. If any of the following events
("Events of Default") shall occur and be continuing:
(a) The Borrower shall fail to pay any installment of
principal or interest on the Note when due; or
(b) Any representation or warranty made by the Borrower in
connection with this Agreement shall prove to have been incorrect
in any material respect when made; or
(c) The Borrower shall fail to perform or observe any other
term, covenant or agreement contained in this Agreement or in any
other document relative to this Agreement on its part to be
performed or observed; or
(d) The Borrower shall fail to pay any Debt ["Debt" means
(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, otherwise to assure a creditor against loss
in respect of, indebtedness or obligations of others of the kinds
referred to in clause (i) or (ii) above, (iv) liabilities in
respect of unfunded vested benefits under employee retirement
plans covered by Title IV of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and (v) withdrawal
liability asserted by the sponsor of any multi-employer plan (as
defined in ERISA)], but excluding Debt evidenced by the Note of
the Borrower, or any interest or premium thereon, when due
(whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) and such failure shall
continue after the applicable grace period, if any, specified in
the agreement or instrument relating to such Debt; or
(e) The Borrower shall generally not pay its Debts as such
Debts become due, or shall admit in writing its inability to pay
its Debts generally, or shall make a general assignment for the
benefit of creditors; or any proceeding shall be instituted by or
against the Borrower seeking to adjudicate it a bankrupt or
insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it
or its Debt under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, trustee, or
other similar official for it or for any substantial part of its
property; or
(f) A final judgment or order for the payment of money in
excess of $10,000.00 shall be rendered against the Borrower and
either (i) enforcement proceedings shall have been commenced by
any creditor upon such judgment or order or (ii) there shall be
any period of 10 consecutive days during which a stay of
enforcement of such judgement or order, by reason of a pending
appeal or otherwise, shall not be in effect; or
(g) The Borrower shall be in default under any other
agreement between the Borrower and the Bank; or
(h) Any provision of any guaranty, security agreement,
pledge agreement, deed of trust or other document that secures
the Note shall for any reason cease to be valid and binding on
the guarantor, pledgor or grantor (as the case may be), or the
guarantor, pledgor or grantor shall so state in writing; or
(i) Any pledge agreement, security agreement, deed of trust
or other document that secures the Note shall for any reason,
except to the extent permitted by the terms thereof, cease to
create a valid and perfected security interest in any of the
collateral or real estate purported to be encumbered thereby; or
(j) The Bank shall determine that the prospects for
repayment of the Note have been adversely affected or the Bank
otherwise deems itself insecure; then, and in any such event, the
Bank may (i) in the case of a facility providing for future
advances, declare any obligation to make additional advances to
the Borrower to be terminated, whereupon the same shall forthwith
terminate, and (iii) in all cases, declare the Note, all interest
thereon and all other amounts payable under this Agreement to be
forthwith due and payable, whereupon the Note, all such interest
and all such amounts shall become and be forthwith due and
payable, without presentment, demand, protest, or further notice
of any kind, all of which are hereby expressly waived by the
Borrower. IF THE NOTE IS STATED TO BE PAYABLE ON DEMAND, THEN
THIS ENUMERATION OF EVENTS OF DEFAULT AND THE REMEDIES SHALL NOT
BE CONSTRUED TO ALTER THE DEMAND NATURE OF THE NOTE.
ARTICLE V
MISCELLANEOUS
SECTION 5.1. Amendments and Waivers. No amendment or waiver of
any provision of this Agreement or the Note, nor consent to any
departure by the Borrower therefrom, shall in any event be
effective unless the same shall be in writing and signed by the
Bank and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which
given.
SECTION 5.2. Notices. All notices and other communications
provided for hereunder shall be in writing (including telegraphic
communication, and mailed or telegraphed or delivered, if to the
Borrower, at its address on the cover page hereof; and if to the
Bank, at its address on the cover page hereof, Attention
President; or, as to each party, at such other address as shall
be designated by such party in a written notice to the other
party. All such notices and communications shall, when mailed or
telegraphed, be effective when deposited in the mails or
delivered to the telegraph company, respectively, addressed as
aforesaid, except that notices to the Bank pursuant to the
provisions of Article I shall not be effective until received by
the Bank.
SECTION 5.3. Remedies. No failure on the part of the Bank to
exercise, and no delay in exercising, any right hereunder or
under the Note shall operate as a waiver thereof; nor shall any
single or partial exercise of any right hereunder or under the
Note preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
SECTION 5.4. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with
generally accepted accounting principles consistently applied.
SECTION 5.5. Subsidiaries. If the Borrower has any
subsidiaries, then the Borrower (i) represents that each of the
representations and warranties in Article II hereof is true and
correct with respect to each of its subsidiaries, and (ii)
covenants and agrees to cause each of its subsidiaries to comply
with all of the covenants in Article III hereof.
SECTION 5.6. Costs, Expenses and Taxes. The Borrower agrees to
pay on demand all costs and expenses in connection with
preparation, execution, delivery and administration of this
Agreement, the Note and the other documents to be delivered
hereunder, including, without limitation, the reasonable fees and
out-of-pocket expenses of counsel for the Bank with respect
thereto and with respect to advising the Bank as to its rights
and responsibilities under this Agreement, and all costs and
expenses, if any (including counsel fees and expenses), in
connection with the enforcement of this Agreement, the Note and
the other documents to be delivered hereunder.
SECTION 5.7. Right of Set-off. Upon the occurrence and during
the continuance of any Event of Default the Bank is hereby
authorized at any time and from time to time, to the fullest
extent permitted by law, without notice to the Borrower (any such
notice being expressly waived by the Borrower), to set off and
apply any and all deposits (general or special, time, demand, or
Certificate of Deposit, provisional or final) at any time held
and other indebtedness at any time owing by the Bank to or for
the credit or the account of the Borrower against any and all of
the obligations of the Borrower now or hereafter existing under
this Agreement and the Note, irrespective of whether or not the
Bank shall have made any demand under this Agreement or the Note
and although such obligations may be unmatured. The Bank agrees
promptly to notify the Borrower after any such set-off and
application, provided that the failure to give such notice shall
not affect the validity of such set-off and application. The
rights of the Bank under this Section are in addition to other
rights and remedies (including, without limitation, other rights
of set-off) which the Bank may have.
SECTION 5.8. Lien on Deposits and Other Property Held by Bank.
As security for the due payment and performance of all
obligations of the Borrower under this Agreement and the Note and
any other obligations of the Borrower to the Bank, whether now
existing or hereafter arising, the Borrower hereby grants to the
Bank a lien on and security interest in any and all deposits
(general or special, time, demand, or Certificate of Deposit,
provisional or final) or other sums at any time credited by or
due from the Bank to the Borrower, and any and all monies,
securities and other property of the Borrower, and the proceeds
thereof, now or hereafter held or received by or in transit to
the Bank from or for the Borrower, whether for safekeeping,
custody, pledge, transmission, collection or otherwise, and any
such deposits, sums, monies, securities and other property may,
when an Event of Default has occurred and is continuing, be set
off, appropriated and applied by the Bank against any and all
obligations, whether now existing or hereafter arising, of the
Borrower to the Bank under this Agreement or the Note or
otherwise.
SECTION 5.9. Participations. The Borrower hereby acknowledges
that the Bank may from time to time sell all or part of this loan
to other participants. The Borrower authorizes the Bank to
disclose information about the Borrower to such participants, and
hereby grants to any participants all rights and remedies granted
to the Bank under Section 5.7 and 5.8 hereof.
SECTION 5.10. Binding Effect; Governing Law. This Agreement
shall be binding upon and inure to the benefit of the Borrower
and the Bank and their respective successors and assigns, except
that the Borrower shall not have the right to assign its rights
hereunder or any interest herein without the prior written
consent of the Bank. This Agreement and the Note shall be
governed by, and construed in accordance with, the laws of the
State of Kansas, and Borrower agrees that any consent to
jurisdiction and venue in this Agreement or in any of the other
loan documents given in conjunction herewith shall not prohibit
or in any way limit Bank from bringing any action or proceeding
in any jurisdiction or venue that is otherwise proper in the
event of any legal proceeding under any such loan documents.
SECTION 5.11. Other Terms. If there is a rider or riders
attached to this Loan Agreement, then the terms contained therein
shall be deemed to be incorporated herein by reference, and any
such terms shall govern over any inconsistent term herein.
SECTION 5.12. Renewal, etc. of Note. If the Note is renewed,
extended, modified or amended in any respect after the date
hereof, or if another note is given in replacement or
substitution of the Note, then each successive renewal,
extension, modification, amendment, replacement or substitution
shall be deemed to incorporate the terms of this Agreement, and
any Rider hereto, except to the extent that the Borrower and the
Bank otherwise agree in writing.
<PAGE>
THIS AGREEMENT IS THE FINAL EXPRESSION OF THE CREDIT AGREEMENT
BETWEEN BORROWER AND LENDER, AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR OR CONTEMPORANEOUS ORAL AGREEMENTS OR PRIOR
WRITTEN AGREEMENTS BETWEEN BORROWER AND LENDER. IF THERE ARE ANY
ADDITIONAL TERMS OR ORAL AGREEMENTS, THEY ARE REDUCED TO WRITING
AS FOLLOWS: NONE
BORROWER HEREBY AFFIRMS THAT NO UNWRITTEN ORAL AGREEMENTS BETWEEN
BORROWER AND LENDER.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their duly authorized representatives, as of
the date first above written.
MARK TWAIN KANSAS CITY BANK ROTHERWOOD CORPORATION
(Name of Borrower)
By: Title: By: /s/ Sandra J. Caughey
Sandra J. Caughey, Secretary
CRAMER INC.
(Name of Guarantor)
By: /s/ Gary Rubin
Gary Rubin, Secretary
THE AMERICAN COMPANIES, INC.
(Name of Guarantor)
By: /s/ Dana Bram
Dana Bram, Secretary
SAGEBRUSH TECHNOLOGY, INC.
(Name of Guarantor)
By: /s/ Dana Bram
Dana Bram, Secretary
PACER CORPORATION
(Name of Guarantor)
By: /s/ George D. Kruse
George D. Kruse, President
AMERICAN BINDERY-DOBBS, INC.
(Name of Guarantor)
By: /s/ James R. Zicarelli
James R. Zicarelli, President
REVISED FACILITY DESCRIPTION RIDER
LOAN AGREEMENT DATED AUGUST 27, 1996 (the "LOAN AGREEMENT")
REVOLVING CREDIT WITH BORROWING BASE
The Bank agrees, on the terms and conditions herein set forth, to
make revolving credit advances to Borrower from time to time from
August 27, 1996 to and including August 27, 1997 in an aggregate
amount not to exceed at any one time outstanding the lesser of
(i) $3,750,000.00 or (ii) the sum of:
80% of Borrowing Base Guarantors' "Eligible Accounts" (as
hereinafter defined)
50% of Borrowing Base Guarantors' "Eligible Inventory" (as
hereinafter defined)
50% of Borrowing Base Guarantors' "Eligible Equipment" (as
hereinafter defined)
"Eligible Accounts" are those accounts (as defined in Article 9
of the Uniform Commercial Code) arising from the sale of goods or
services in the ordinary course of Borrowing Base Guarantors'
business and which the Bank, in the exercise of its credit
judgment, deems to be eligible for inclusion in the borrowing
base hereunder. Such accounts must be subject to the Bank's
perfected security interest, and must be subject to no other
lien, encumbrance or security interest to which the Bank has not
consented in writing. Such accounts must be evidenced by an
invoice or other documentary evidence satisfactory to the Bank.
Without limiting the generality of the foregoing, in no event
shall an account be an "Eligible Account" if any of the following
are applicable thereto:
a. it arises out of a sale to any person or entity who is
controlled by, under common control with or otherwise affiliated
with or related to the Borrower or any of the Guarantors; or
b. it remains unpaid more than 90 days after the original
invoice date; or
c. the account debtor is a supplier or creditor of the
Borrower or any of the Guarantors, or has disputed liability on
any account owing to the Borrower or any of the Guarantors, or
the account is otherwise subject to a right of setoff or
recoupment; or
d. the account debtor is located outside of the
continental United States, unless the account is secured by a
letter of credit, bank guaranty or other collateral acceptable to
the Bank; or
e. the sale from which the account arises is made on a
bill-and-hold, sale on approval, guaranteed return, consignment
or any other return or repurchase basis; or
f. the account debtor is the United States of America or
any state or other governmental unit, or any agency, department
or instrumentality or any of them; or
g. the goods giving rise to the account have not been
shipped and delivered to and accepted by the account debtor, or
the services giving rise to the account have not been rendered
and accepted by the account debtor; or the account does not
otherwise represent a final sale; or
h. the accounts of any single account debtor exceed a
credit limit to be determined by the Bank from time to time, to
the extent such account exceeds such credit limit; or
i. the Bank determines in its sole judgment, that the
collection of the account is uncertain or that the account may
not be paid by reason of the account debtor's inability or
unwillingness to pay; or
j. the accounts of a single account debtor for which 10%
or more of all of the accounts of that debtor are more than 90
days past due based on original invoice date.
<PAGE>
Eligible Accounts shall be valued at the full face amount
thereof, less any available discounts and any amounts charged for
shipping or taxes.
"Eligible Inventory" consists of the Borrowing Base Guarantors'
inventory (as defined in Article 9 of the Uniform Commercial
Code) of finished goods and raw materials (but not work-in-process)
owned by the Borrowing Base Guarantors' and used in the
ordinary course of the Borrowing Base Guarantors' business, and
which is, in the Bank's sole judgement;
a. in good and saleable condition, and not obsolete or
unmerchantable;
b. located in the continental United States in facilities
owned by the Borrowing Base Guarantors' (or if located in
facilities leased by the Borrowing Base Guarantors', the landlord
thereof shall have entered into a waiver agreement satisfactory
to the Bank) and which is not in transit;
c. not subject to any licensing, patent, trademark,
royalty, copyright or other rights that would prevent the Bank
from selling such inventory without interference by or payment
over to any third party;
d. not packaging materials or office supplies to be used
by the Borrowing Base Guarantors';
e. conforms to all applicable standards promulgated by any
governmental authority having regulatory authority over such
goods or the use or sale thereof;
f. subject to the Bank's perfected security interest and
subject to no other lien, encumbrance or security interest to
which the Bank has not consented in writing; and
g. otherwise acceptable to the Bank.
Eligible Inventory shall be valued at the lower of cost or
market, on a first-in, first-out basis.
"Eligible Equipment" means equipment (as defined in the Uniform
Commercial Code) which:
a. is owned by the Borrowing Base Guarantors' free and
clear of all liens, encumbrances, and rights of others except the
security interest in favor of the Bank;
b. is located in the jurisdiction of which Bank has
perfected a security interest;
c. the Bank reasonably determines is not obsolete,
unsalable, damaged, or unfit for further processing; and
d. is otherwise reasonably acceptable to Bank.
At such intervals as the Bank may request, but in any event
not less often than monthly, Borrower agrees to deliver to the
Bank a certificate in the form of Exhibit A hereto, for each of
the Borrowing Base Guarantors, stating as of the date of such
certificate the amount of the Borrowing Base Guarantors' total
accounts, total inventory, total equipment, Eligible Accounts,
Eligible Inventory and Eligible Equipment and a summary borrowing
base certificate in the form of Exhibit B hereto. If at any time
the Bank determines or the certificates show that the outstanding
principal amount of all advances exceeds the Bank's maximum
commitment to the Borrower set forth in the first paragraph
hereof, you agree immediately to pay to the Bank an amount
sufficient to reduce the outstanding amount to or under the
Bank's maximum commitment.
The Bank's representatives shall have the right to audit the
Borrowing Base Guarantors books and records and to inspect the
Borrowing Base Guarantors inventory and equipment from time to
time, the costs of such audits and inspections to be borne by
Borrower. As soon as possible after learning that any account,
inventory or equipment has ceased to be an Eligible Account,
Eligible Inventory or Eligible Equipment, Borrower agrees to
notify the Bank and, if necessary, pay to the Bank the amount
necessary to reduce the total amount outstanding hereunder to the
limits of the commitment set forth in the first paragraph hereof.
Borrower hereby authorizes the Bank to contact the Borrowing Base
Guarantors account debtors from time to time to verify the
accounts.
Upon written notice to Borrower of its intention to do so,
the Bank may establish a lock-box special deposit account for the
collection of the accounts, and may notify the Borrowing Base
Guarantors account debtors that payments on the accounts are to
be made to such lock box or special deposit account. Borrower
hereby appoints the bank its attorney-in-fact to endorse the
Borrowing Base Guarantors names on any notes, <PAGE> checks, drafts,
acceptances or other instruments that may come into the Bank's
possession, and otherwise to effect collection of the accounts.
The Bank may establish a reasonable clearance period for any
instruments received by it in payment of the accounts.
Borrower will repay, and pay interest on, the aggregate
unpaid principal amount of all advances hereunder in accordance
with your promissory note dated August 27, 1996 (the "Note")
evidencing the indebtedness resulting from such advances.
So long as the Note remains unpaid or the Bank shall have
any commitment to advance funds to Borrower hereunder, Borrower
agrees that it will comply with the terms of the Loan Agreement.
If any term of the Loan Agreement is inconsistent with the terms
set forth herein or with the terms of the Note, then the terms
hereof or of the Note, as the case may be, shall govern.
Within the limits of this commitment, Borrower may borrow,
prepay and reborrow.
BORROWER: ROTHERWOOD CORPORATION
BY: /s/ James Zicarelli
JAMES ZICARELLI, PRESIDENT
GUARANTOR: CRAMER INC.
BY: /s/ Gary Rubin
GARY RUBIN, SECRETARY
GUARANTOR: THE AMERICAN COMPANIES, INC.
BY: /s/ Dana D. Bram
DANA BRAM, SECRETARY
GUARANTOR: SAGEBRUSH TECHNOLOGY, INC.
BY: /s/ Dana D. Bram
DANA BRAM, SECRETARY
GUARANTOR: PACER CORPORATION
BY: /s/ Gary Rubin
GARY RUBIN, SECRETARY
GUARANTOR: AMERICAN BINDERY-DOBBS, INC.
BY: /s/ James R. Zicarelli
JAMES R. ZICARELLI, PRESIDENT
MARK TWAIN KANSAS CITY BANK
By: __________________________
Title: ________________________
CONTINUING CONTRACT OF GUARANTY
WHEREAS ROTHERWOOD CORPORATION, hereinafter referred
to as Debtor, has applied for credit and/or is presently indebted
or obligated to MARK TWAIN KANSAS CITY BANK hereinafter
referred to as Bank, and
WHEREAS to induce Bank to extend credit to Debtor
and/or to presently refrain from making demand on Debtor and to
otherwise pursue Bank's legal remedies against Debtor, the
undersigned, hereinafter referred to as Guarantor, has agreed to
guaranty the credit of Debtor pursuant to and in strict
accordance with the terms and conditions hereinafter set forth.
NOW, therefore, in consideration of the sum of $1.00 to
Guarantor paid by Bank, the extension of credit to Debtor by Bank
and/or Bank's presently refraining from making demand on Debtor
and otherwise pursuing Bank's legal remedies against Debtor and
other good and valuable considerations, receipt of which is
hereby acknowledged, it is agreed as follows:
1. Guarantor does hereby for himself, his heirs, executors,
administrators, successors and assigns, unconditionally guaranty
on a continuing basis to Bank, its successors and assigns, the
prompt, faithful and full payment, when due, of any and all
loans, advances, indebtedness and obligations of any kind or
nature now or hereafter owing by Debtor to Bank, evidenced by
promissory note, or notes, negotiable or non-negotiable, drafts,
acceptances, commercial paper, letters of credit, leases,
contracts, or any other written instruments together with any and
all renewals, extensions and modifications thereof hereinafter
collectively referred to as Liabilities or, in the singular,
Liability, and whether Liabilities are unsecured or secured by
collateral pledge or in any manner.
2. Guarantor shall, upon demand, when due or matured in
accordance with the provisions of any instrument or document
executed by Debtor in connection with Liabilities, pay to Bank,
its successors and assigns, the amount of any Liability,
irrespective of the validity, regularity or enforceability of any
instrument or writing evidencing such Liability or of the
Liability itself, said payment to be made upon the maturity of
such Liability or at any earlier time by reason of Bank's power
of acceleration and if the Liability is secured, said payment
shall be made irrespective of the validity, regularity or
enforceability of any instrument or writing evidencing such
security or of the security itself and it shall not be necessary
for Bank to resort to such security before enforcing Guarantor's
liability hereunder. Demand may be made upon Guarantor for the
enforcement of the guaranty without the necessity of action at
any time by Bank against Debtor. Any action taken by Bank
against Debtor, including foreclosure of any security held by
Bank, shall in no event be considered a waiver of any rights
against Guarantor under this guaranty and Bank shall, at its sole
discretion, have the right at any time to discontinue any action
or proceedings against Debtor and require full payment by
Guarantor of Liabilities together with attorney's fees, cost of
the proceedings and court costs. Any recovery by Bank against
Debtor, whether by settlement, execution or foreclosure of
collateral, shall be credited against Guarantor's liability
hereunder, it being however agreed that a compromise and
settlement of any Liability shall, in no sense, compromise or
settle Guarantor's liability hereunder, but Guarantor shall
continue to be liable for any difference between the full amount
of Liabilities and the net proceeds of any amounts realized by
Bank from Debtor.
3. Guarantor does hereby waive presentment of any instrument,
demand for payment, protest and notice of non-payment and
Guarantor waives all rights arising out of any statute now
existing or hereafter enacted with respect to suretyship and
which may otherwise require Bank at any time to take legal action
against Debtor. Guarantor does hereby waive notice of the
acceptance of this guaranty and notice of any Liability
contracted or incurred by Debtor.
4. Bank may, without notice to Guarantor, renew, extend, modify
or otherwise change the time for payment of, or otherwise change
the terms (including the rate of interest) of any loan or
indebtedness of Debtor forming part of Liabilities and may from
time to time at its own discretion, without notice to Guarantor,
release, substitute, diminish or exchange any security or
securities, property or chose in action held by it as collateral
in connection with any Liability without in any way affecting
Guarantor's obligation hereunder.
5. Guarantor does further guarantee the liability of Debtor to
Bank in any capacity arising out of (1) the sale, negotiation or
discount with or without recourse, transfer or assignment by
Debtor to Bank of accounts receivable, commercial paper, notes,
whether negotiable or non-negotiable, leases, contracts or any
instrument, (2) any obligation or liability of Debtor to Bank
arising out of Debtor's guaranty of or liability for the
indebtedness, liability or obligations of others, (3) overdrafts
and (4) in general, in connection with any and all indebtedness,
obligations and liabilities of Debtor to Bank, not herein
otherwise described, irrespective of the kind and nature thereof
or whether in existence upon the date of these presents or at any
time hereafter all of which liabilities of Debtor to Bank shall
also be Liabilities, or, in the singular, Liability as
hereinbefore or hereinafter set forth.
6. This guaranty shall continue in full force and be binding
upon Guarantor and Bank may continue to act in reliance hereon
until the actual receipt by an officer of Bank of written notice
from Guarantor not to give further accommodation hereunder.
However, notwithstanding receipt of such notice by Bank, this
guaranty shall so continue in full force and effect with respect
to any loans or advances Bank has committed or is otherwise
obligated to make to or for the account of Debtor arising out of
a commitment or obligation existing at the time of receipt of
such notice of termination. Furthermore, Bank may renew, extend
or otherwise modify any loan or indebtedness of Debtor forming
part of Liabilities after receipt of such notice of termination
without affecting the obligations of Guarantor hereunder (except
to the extent that the principal amount of any indebtedness is
increased, but in such an instance the obligations of Guarantor
hereunder shall remain in full force and effect except for the
increase amount of the Liabilities).
7. Guarantor does hereby give and grant unto Bank, as security
for Guarantor's liability and obligations hereunder, a lien, with
full right of setoff, upon any deposit or other account of
Guarantor with Bank and all securities and property of any kind
and of whatsoever nature belonging to Guarantor or in which
Guarantor has any right, title or interest and which, for any
purpose, have come into the possession, custody or control of
Bank.
8. The word Guarantor, as used herein, shall designate one or
more Guarantors. In the event that more than one Guarantor is a
party to these presents, the liability of each Guarantor shall be
joint and several, each Guarantor to be fully liable hereunder
irrespective of the death, incapacity or other disqualification
of the other Guarantor or Guarantors and Bank may proceed against
one or less than all of the Guarantors, such proceeding not being
deemed an election, and Bank may, at any time thereafter in the
event full payment has not been realized, proceed against the
other Guarantor or Guarantors. Bank may release any Guarantor
hereon or any other surety of Debtor without affecting the
liability hereunder of any Guarantor not released by Bank.
9. Guarantor will not exercise any rights which Guarantor may
acquire by way of subrogation under this guaranty, by any payment
made hereunder or otherwise, until all of the Liabilities shall
have been paid in full and Bank shall be under no duty to extend
credit to or for the benefit of Debtor. If any amount shall be
paid to Guarantor on account of such subrogation rights at any
time when all of the Liabilities shall not have been paid in
full, such amount(s) shall be held in trust for the sole benefit
of Bank and shall forthwith be paid to Bank to be applied to the
Liabilities, whether matured or unmatured, in accordance with the
terms of any documents, instruments or agreements given by Debtor
to the Bank evidencing or relating to the Liabilities.
10. This guaranty shall continue to be effective or be
reinstated, as the case may be, if (i) at any time any payment of
any of the Liabilities is rescinded or must otherwise be returned
by the Bank upon the insolvency, bankruptcy or reorganization of
the Debtor or otherwise, all as though such payment had not been
made, or (ii) this guaranty is released or the liability of
Guarantor hereunder is reduced in consideration of a payment of
money or transfer of property or grant of a security interest by
the Guarantor or any other person or entity and such payment,
transfer or grant is rescinded or must otherwise be returned by
the Bank upon the insolvency, bankruptcy or reorganization of
such person or entity or otherwise, all as though such payment,
transfer or grant had not been made.
11. If any provision of this guaranty or the application thereof
in any jurisdiction and/or to any person, entity or circumstance
shall be invalid or unenforceable to any extent, the remainder of
this guaranty and the application of such provisions in such
jurisdiction and/or to other persons, entities or circumstances
shall not be affected thereby and shall be enforced to the
greatest extent permitted by law in any other jurisdiction and/or
to any other persons, entities or circumstances. This Continuing
contract of guaranty is a KANSAS contract and shall be
governed by and construed according to the laws of the State of
KANSAS .
12. If Bank presently holds one or more guaranties from
Guarantor or hereafter receives additional guaranties from
Guarantor, the rights of Bank under all guaranties shall be
cumulative. This guaranty shall not affect or invalidate any
such other guaranties. The liability of the Guarantor will be
the aggregate liability of Guarantor under the terms of this
guaranty and any other unterminated guaranties.
13. The liability of Guarantor in all cases shall extend to and
shall also include all reasonable costs of collection, including
but not limited to, court costs, attorneys' fees and collection
agency fees, except to the extent prohibited by Kansas Statute.
IN WITNESS THEREOF, this instrument has been duly executed by the
undersigned this 27TH day of AUGUST, 1996.
CRAMER
By: /s/ Gary Rubin
WITNESS Gary Rubin, secretary
Federal IS #
MARK OWNER OF COLLATERAL COMMERCIAL
TWAIN SECURITY
BANKS CRAMER INC. AGREEMENT
625 ADAMS STREET
KANSAS CITY, KS 66105
Telephone Number
MARK TWAIN KANSAS CITY BANK
6333 LONG
SHAWNEE, KS 66216
(Lender)
BORROWER LOCATION OF COLLATERAL
ROTHERWOOD CORPORATION 625 ADAMS STREET
625 ADAMS ST. KANSAS CITY, KS 66105
KANSAS CITY, KS 66105-1402
Telephone Number
1. SECURITY INTEREST. For good and valuable
consideration, Owner of Collateral ("Owner") grants to Lender
identified above a continuing security interest in the Collateral
described below to secure the obligations described in this
Agreement.
2. OBLIGATIONS. The Collateral shall secure the payment
and performance of all of Borrower's and Owner's present and
future, joint and/or several, direct and indirect, absolute and
contingent, express and implied, indebtedness, (including costs
of collection, legal expenses and attorneys' fees, to the extent
permitted by applicable law, incurred by Lender upon the
occurrence of a default under this Agreement, in collecting or
enforcing payment of such indebtedness, or preserving, protecting
or realizing on the Collateral herein), liabilities, obligations
and covenants (cumulatively "Obligations") to Lender including
(without limitation) those arising under or pursuant to:
a. this Agreement and the following promissory notes
and agreements:
INTEREST PRINCIPAL AMOUNT/ FUNDING/ MATURITY CUSTOMER LOAN
RATE CREDIT LIMIT AGREEMENT DATE DATE NUMBER NUMBER
VARIABLE $3,750,000.00 08/27/96 08/27/97 1619572504 54080
CONTINUING CONTRACT OF GUARANTY DATED AUGUST 27, 1996.
b. all other present or future, Obligations of
Borrower or Owner to Lender (whether incurred for
the same or different purposes than the
foregoing);
c. all amendments, modifications, replacements or
substitutions to any of the foregoing; and
d. applicable law.
3. COLLATERAL. The Collateral shall consist of all of the
following-described property and Owner's rights, title and
interest in such property whether now owned or hereafter acquired
by Owner and wheresoever located:
[X] All accounts and contract rights including, but
not limited to, any accounts and contract rights
described on Schedule A attached hereto and
incorporated herein by this reference;
[X] All chattel paper including, but not limited to,
any chattel paper described on Schedule A attached
hereto and incorporated herein by this reference;
[X] All documents including, but not limited to, any
documents described on Schedule A attached hereto
and incorporated herein by this reference;
[X] All equipment, including, but not limited to, any
equipment described on Schedule A attached hereto
and incorporated herein by this reference;
[ ] All fixtures, including, but not limited to, any
fixtures located or to be located on the real
property described on Schedule B attached hereto
and incorporated herein by this reference;
[X] All general intangibles including, but not limited
to, any general intangibles described on Schedule
A attached hereto and incorporated herein by this
reference;
[X] All instruments including, but not limited to, any
instruments described on Schedule A attached
hereto and incorporated herein by this reference;
[X] All inventory including, but not limited to, any
inventory described on Schedule A attached hereto
and incorporated herein by this reference;
[ ] All minerals or the like located on or related to
the real property described on Schedule B attached
hereto and incorporated herein by this reference;
[ ] All standing timber located on the real property
described on Schedule B attached hereto and
incorporated herein by this reference;
[ ] Other:
All monies, instruments, and savings, checking or other deposit
accounts that are now or in the future in Lender's custody or
control (excluding IRA, Keogh, trust accounts, and deposits
subject to tax penalties if so assigned);
All accessions, accessories, additions, amendments, attachments,
modifications, replacements and substitutions to any of the
above;
All proceeds and products of any of the above;
All policies of insurance pertaining to any of the above as well
as any proceeds and unearned premiums pertaining to such
policies; and
All books and records pertaining to any of the above.
4. OWNER'S TAXPAYER IDENTIFICATION. Owner's social
security number or federal taxpayer identification number is:
______.
5. RESIDENCY/LEGAL STATUS. Owner is a resident of the
state of: n/a. Owner is a: Corporation ; duly
organized, validly existing and in good standing under the laws
of the state of: KANSAS .
6. REPRESENTATIONS, WARRANTIES AND COVENANTS: Owner
represents, warrants and covenants to Lender that:
(a) Owner is and shall remain the sole owner of the
Collateral;
(b) Neither Owner nor, to the best of Owner's
knowledge, any other party has used, generated,
released, discharged, stored, or disposed of any
hazardous waste, toxic substance, or related
material (cumulatively "Hazardous Materials") or
transported any Hazardous Materials. Owner shall
not commit or permit such actions to be taken in
the future. The term "Hazardous Materials" shall
mean any substance, material, or waste which is or
becomes regulated by any governmental authority
including, but not limited to, (i) petroleum; (ii)
asbestos; (iii) polychlorinated biphenyls; (iv)
those substances, materials or wastes designated
as a "hazardous substance" pursuant to Section 311
of the Clean Water Act or listed pursuant to
Section 307 of the Clean Water Act or any
amendments or replacements to these statutes; (v)
those substances, materials or wastes defined as a
"hazardous waste" pursuant to Section 1004 of the
Resource Conservation and Recovery Act or any
amendments or replacements to that statute; or
(vi) those substances, materials or wastes defined
as a "hazardous substance" pursuant to Section 101
of the Comprehensive Environmental Response,
Compensation and Liability Act, or any amendments
or replacements to that statute;
<PAGE>
(c) Owner's chief executive office, chief place of
business, office where its business records are
located, or residence is the address identified
above. Owner's other executive offices, places of
business, locations of its business records, or
domiciles are described on Schedule C attached
hereto and incorporated herein by this reference.
Owner shall immediately advise Lender in writing
of any change in or addition to the foregoing
addresses;
(d) Owner shall not become a party to any
restructuring of its form of business or
participate in any consolidation, merger,
liquidation or dissolution without providing
Lender with thirty (30) or more days' prior
written notice of such change;
(e) Owner shall notify Lender of the nature of any
intended change of Owner's name, or the use of any
trade name, and the effective date of such change;
(f) The Collateral is and shall at all times remain
free of all tax and other liens, security
interests, encumbrances and claims of any kind
except for those belonging to Lender and those
described on Schedule D attached hereto and
incorporated herein by this reference. Without
waiving the event of default as a result thereof,
Owner shall take any action and execute any
document needed to discharge the foregoing liens,
security interests, encumbrances and claims;
(g) Owner shall defend the Collateral against all
claims and demands of all persons at any time
claiming any interest therein;
(h) All of the goods, fixtures, minerals or the like,
and standing timber constituting the Collateral is
and shall be located at Owner's executive offices,
places of business, residence and domiciles
specifically described in this Agreement. Owner
shall not change the location of any Collateral
without the prior written consent of Lender;
(i) Owner shall provide Lender with possession of all
chattel paper and instruments constituting the
Collateral, and Owner shall promptly mark all
chattel paper, instruments, and documents
constituting the Collateral to show that the same
are subject to Lender's security interest;
(j) All of Owner's accounts or contract rights;
chattel paper; documents; general intangibles;
instruments; and federal, state, county, and
municipal government and other permits and
licenses; trusts, liens, contracts, leases, and
agreements constituting the Collateral are and
shall be valid, genuine and legally enforceable
obligations and rights belonging to Owner against
one or more third parties and not subject to any
claim, defense, set-off or counterclaim of any
kind;
(k) Owner shall not amend, modify, replace, or
substitute any account or contract right; chattel
paper; document; general intangible; or instrument
constituting the Collateral without the prior
written consent of Lender;
(l) Owner has the right and is duly authorized to
enter into and perform its obligations under this
Agreement. Owner's execution and performance of
these obligations do not and shall not conflict
with the provisions of any statute, regulation,
ordinance, rule of law, contract or other
agreement which may now or hereafter be binding on
Owner;
(m) No action or proceeding is pending against Owner
which might result in any material or adverse
change in its business operations or financial
condition or materially affect the Collateral;
(n) Owner has not violated and shall not violate any
applicable federal, state, county or municipal
statute, regulation or ordinance (including but
not limited to those governing Hazardous
Materials) which may materially and adversely
affect its business operations or financial
condition or the Collateral;
(o) Owner shall, upon Lender's request, deposit all
proceeds of the Collateral into an account or
accounts maintained by Owner or Lender at Lender's
institution; and
(p) This Agreement and the obligations described in
this Agreement are executed and incurred for
business and not consumer purposes.
7. SALE OF COLLATERAL. Owner shall not assign, convey,
lease, sell or transfer any of the Collateral to any third party
without the prior written consent of Lender except for sales of
inventory to buyers in the ordinary course of business.
8. FINANCING STATEMENTS AND OTHER DOCUMENTS. Owner shall
take all actions and execute all documents required by Lender to
attach, perfect and maintain Lender's security interest in the
Collateral and establish and maintain Lender's right to receive
the payment of the proceeds of the Collateral including, but not
limited to, executing any financing statements, fixture filings,
continuation statements, notices of security interest and other
documents required by the Uniform Commercial Code and other
applicable law. Owner shall pay the costs of filing such
documents in all offices wherever filing or recording is deemed
by Lender to be necessary or desirable. Lender shall be entitled
to perfect its security interest in the Collateral by filing
carbon, photographic or other reproductions of the aforementioned
documents with any authority required by the Uniform Commercial
Code or other applicable law. Lender may execute and file any
financing statements, as well as extensions, renewals and
amendments of financing statements in such form as Lender may
require to perfect and maintain perfection of any security
interest granted in this Agreement.
9. INQUIRIES AND NOTIFICATION TO THIRD PARTIES. Owner
hereby authorizes Lender to contact any third party and make any
inquiry pertaining to Owner's financial condition or the
Collateral. In addition, Lender is authorized to provide oral or
written notice of its security interest in the Collateral to any
third party.
10. COLLECTION OF INDEBTEDNESS FROM THIRD PARTIES. Lender
shall be entitled to notify, and upon the request of Lender,
Owner shall notify any account debtor or other third party
(including, but not limited to, insurance companies) to pay any
indebtedness or obligation owing to Owner and constituting the
Collateral (cumulatively "indebtedness") to Lender whether or not
a default exists under this Agreement. Owner shall diligently
collect the indebtedness owing to Owner from its account debtors
and other third parties until the giving of such notification.
In the event that Owner possesses or receives possession of any
instruments or other remittances with respect to the indebtedness
following the giving of such notification or if the instruments
or other remittances constitute the prepayment of any
indebtedness or the payment of any insurance proceeds, Owner
shall hold such instruments and other remittances in trust for
Lender apart from its other property, endorse the instruments and
other remittances to Lender, and immediately provide Lender with
possession of the instruments and other remittances. Lender
shall be entitled, but not required, to collect (by legal
proceedings or otherwise), extend the time for payment,
compromise, exchange or release any obligor or collateral upon,
or otherwise settle any of the indebtedness whether or not an
event of default exists under this Agreement. Lender shall not
be liable to Owner for any action, error, mistake, omission or
delay pertaining to the actions described in this paragraph or
any damages resulting therefrom.
11. POWER OF ATTORNEY. Owner hereby appoints Lender as its
attorney-in-fact to endorse Owner's name on all instruments and
other remittances payable to Owner with respect to the
indebtedness or other documents pertaining to Lender's actions in
connection with the indebtedness. In addition, Lender shall be
entitled, but not required, to perform any action or execute any
document required to be taken or executed by Owner under this
Agreement. Lender's performance of such action or execution of
such documents shall not relieve Owner from any obligation or
cure any default under this Agreement. The powers of attorney
described in this paragraph are coupled with an interest and are
irrevocable.
12. USE AND MAINTENANCE OF COLLATERAL. Owner shall use the
Collateral solely in the ordinary course of its business, for the
usual purposes intended by the manufacturer (if applicable), with
due care, and in compliance with the laws, ordinances,
regulations, requirements and rules of all federal, state, county
and municipal authorities including environmental laws and
regulations and insurance policies. Owner shall not make any
alterations, additions or improvements to the Collateral without
the prior written consent of Lender. Without limiting the
foregoing, all alterations, additions and improvements made to
the Collateral shall be subject to the security interest
belonging to Lender, shall not be removed without the prior
written consent of Lender, and shall be made at Owner's sole
expense. Owner shall take all actions and make any repairs or
replacements needed to maintain the Collateral in good condition
and working order.
13. LOSS OR DAMAGE. Owner shall bear the entire risk of
any loss, theft, destruction or damage (cumulatively "Loss or
Damage") to all or any part of the Collateral. In the event of
any Loss or Damage, Owner will either restore the Collateral to
its previous condition, replace the Collateral with similar
property acceptable to Lender in its sole discretion, or pay or
cause to be paid to Lender the decrease in the fair market value
of the affected Collateral.
14. INSURANCE. The Collateral will be kept insured for its
full value against all hazards including loss or damage caused by
fire, collision, theft or other casualty. If the Collateral
consists of a motor vehicle, Owner will obtain comprehensive and
collision coverage in amounts at least equal to the actual cash
value of the vehicle with deductibles not to exceed $ n/a .
Owner may obtain insurance on the Collateral from such companies
as are acceptable to Lender in its sole discretion. The
insurance policies shall require the insurance company to provide
Lender with at least thirty (30) days' written notice before such
policies are altered or cancelled in any manner. The insurance
policies shall name Lender as a loss payee and provide that no
act or omission of Owner or any other person shall affect the
right of Lender to be paid the insurance proceeds pertaining to
the loss or damage of the Collateral. In the event Owner fails
to acquire or maintain insurance, Lender (after providing notice
as may be required by law) may in its discretion procure
appropriate insurance coverage upon the Collateral and charge the
insurance cost as an advance of principal under the promissory
note. Owner shall furnish Lender with evidence of insurance
indicating the required coverage. Lender may act as attorney-
in-fact for Owner in making and settling claims under insurance
policies, cancelling any policy or endorsing Owner's name on any
draft or negotiable instrument drawn by any insurer.
15. INDEMNIFICATION. Lender shall not assume or be
responsible for the performance of any of Owner's obligations
with respect to the Collateral under any circumstances. Owner
shall immediately provide Lender with written notice of and
indemnify and hold Lender and its shareholders, directors,
officers, employees and agents harmless from all claims, damages,
liabilities (including attorneys' fees and legal expenses to the
extent permitted by applicable law), causes of action, actions,
suits and other legal proceedings (cumulatively "Claims")
pertaining to its business operations or the Collateral
including, but not limited to, those arising from Lender's
performance of Owner's obligations with respect to the
Collateral. Owner, upon the request of Lender, shall hire legal
counsel to defend Lender from such Claims, and pay the attorneys'
fees, legal expenses and other costs to the extent permitted by
applicable law, incurred in connection therewith. In the
alternative, Lender shall be entitled to employ its own legal
counsel to defend such Claims at Owner's cost.
16. TAXES AND ASSESSMENTS. Owner shall execute and file
all tax returns and pay all taxes, licenses, fees and assessments
relating to its business operations and the Collateral
(including, but not limited to, income taxes, personal property
taxes, withholding taxes, sales taxes, use taxes, excise taxes
and workers' compensation premiums) in a timely manner.
17. INSPECTION OF COLLATERAL AND BOOKS AND RECORDS. Owner
shall allow Lender or its agents to examine, inspect and make
abstracts and copies of the Collateral and Owner's books and
records pertaining to Owner's business operations and financial
condition or the Collateral during normal business hours. Owner
shall provide any assistance required by Lender for these
purposes. All of the signatures and information pertaining to
the Collateral or contained in the books and records shall be
genuine, true, accurate and complete in all respects. Owner
shall note the existence of Lender's security interest in its
books and records pertaining to the Collateral.
<PAGE>
18. DEFAULT. Owner shall be in default under this
Agreement in the event that Owner, Borrower or any guarantor:
(a) fails to make any payment under this Agreement or
any other indebtedness to Lender when due;
(b) fails to perform any obligation or breaches any
warranty or covenant to Lender contained in this
Agreement or any other present or future, written
or oral, agreement regarding this or any other
indebtedness to Lender;
(c) provides or causes any false or misleading
signature or representation to be provided to
Lender;
(d) allows the Collateral to be destroyed, lost or
stolen, damaged in any material respect, or
subjected to seizure or confiscation;
(e) seeks to revoke, terminate or otherwise limit its
liability under any continuing guaranty;
(f) permits the entry or service of any garnishment,
judgment, tax levy, attachment or lien against
Owner, any guarantor, or any of their property;
(g) dies, becomes legally incompetent, is dissolved or
terminated, ceases to operate its business,
becomes insolvent, makes an assignment for the
benefit of creditors, or becomes the subject of
any bankruptcy, insolvency or debtor
rehabilitation proceeding;
(h) allows the Collateral to be used by anyone to
transport or store goods, the possession,
transportation, or use of which, is illegal; or
(i) causes Lender to deem itself insecure for any
reason.
19. RIGHTS OF LENDER ON DEFAULT. If there is a default
under this Agreement, Lender shall be entitled to exercise one or
more of the following remedies without notice or demand (except
as required by law):
(a) to declare the Obligations immediately due and
payable in full;
(b) to collect the outstanding Obligations with or
without resorting to judicial process;
(c) to change Owner's mailing address, open Owner's
mail, and retain any instruments or other
remittances constituting the Collateral contained
therein;
(d) to take possession of any Collateral in any manner
permitted by law;
(e) to apply for and obtain, without notice and upon
ex parte application, the appointment of a
receiver for the Collateral without regard to
Owner's financial condition or solvency, the
adequacy of the Collateral to secure the payment
or performance of the obligations, or the
existence of any waste to the Collateral;
(f) to require Owner to deliver and make available to
Lender any Collateral at a place reasonably
convenient to Owner and Lender;
(g) to sell, lease or otherwise dispose of any
Collateral and collect any deficiency balance with
or without resorting to legal process (if notice
to Borrower of the intended disposition of the
Collateral is required by law, five (5) days
notice shall constitute reasonable notification);
(h) to set-off Owner's obligations against any amounts
due to Owner including, but not limited to,
monies, instruments, and deposit accounts
maintained with Lender; and
(i) to exercise all other rights available to Lender
under any other written agreement or applicable
law.
Lender's rights are cumulative and may be exercised together,
separately, and in any order. If notice to Owner of intended
disposition of Collateral is required by law, five (5) days'
notice shall constitute reasonable notification. In the event
that Lender institutes an action to recover any Collateral or
seeks recovery of any Collateral by way of a prejudgment remedy
in an action against Owner, Owner waives the posting of any bond
which might otherwise be required. Lender's remedies under this
paragraph are in addition to those available at common law, such
as setoff.
20. WAIVER OF JURY TRIAL. LENDER AND OWNER HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT EITHER
MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION BASED
ON, OR ARISING OUT OF, UNDER OR IN CONJUNCTION WITH THE
PROMISSORY NOTE, THIS AGREEMENT AND ANY OTHER AGREEMENT
CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH OR THEREWITH,
OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF EITHER PARTY. THIS PROVISION IS
A MATERIAL INDUCEMENT FOR LENDER MAKING THE LOAN EVIDENCED BY THE
PROMISSORY NOTE.
21. APPLICATION OF PAYMENTS. Whether or not a default has
occurred under this Agreement, all payments made by or on behalf
of Owner and all credits due to Owner from the disposition of the
Collateral or otherwise may be applied against the amounts paid
by Lender (including attorneys' fees and legal expenses to the
extent permitted by applicable law) in connection with the
exercise of its rights or remedies described in this Agreement
and any interest thereon and then to the payment of the remaining
Obligations in whatever order Lender chooses.
22. REIMBURSEMENT OF AMOUNTS EXPENDED BY LENDER. Owner
shall reimburse Lender for all amounts (including attorneys' fees
and legal expenses) expended by Lender in the performance of any
action required to be taken by Owner or the exercise of any right
or remedy belonging to Lender under this Agreement, together with
interest thereon at the lower of the highest rate described in
any promissory note or credit agreement executed by Borrower or
Owner or the highest rate allowed by law from the date of payment
until the date of reimbursement. These sums shall be included in
the definition of Obligations, shall be secured by the Collateral
identified in this Agreement and shall be payable upon demand.
23. ASSIGNMENT. Owner shall not be entitled to assign any
of its rights, remedies or obligations described in this
Agreement without the prior written consent of Lender. Consent
may be withheld by Lender in its sole discretion. Lender shall
be entitled to assign some or all of its rights and remedies
described in this Agreement without notice to or the prior
consent of Owner in any manner.
24. MODIFICATION AND WAIVER. The modification or waiver of
any of Owner's Obligations or Lender's rights under this
Agreement must be contained in a writing signed by Lender.
Lender may perform any of Owner's Obligations or delay or fail to
exercise any of its rights without causing a waiver of those
Obligations or rights. A waiver on one occasion shall not
constitute a waiver on any other occasion. Owner's Obligations
under this Agreement shall not be affected if Lender amends,
compromises, exchanges, fails to exercise, impairs or releases
any of the obligations belonging to any Owner or third party or
any of its rights against any Owner, third party or collateral.
25. SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and inure to the benefit of Owner and Lender and
their respective successors, assigns, trustees, receivers,
administrators, personal representatives, legatees, and devisees.
26. NOTICES. Any notice or other communication to be
provided under this Agreement shall be in writing and sent to the
parties at the addresses described in this Agreement or such
other address as the parties may designate in writing from time
to time.
27. SEVERABILITY. If any provision of this Agreement
violates the law or is unenforceable, the rest of the Agreement
shall remain valid.
28. APPLICABLE LAW. This Agreement shall be governed by
the laws of the state identified in Lender's address. Owner
consents to the jurisdiction and venue of any court located in
the state indicated in Lender's address in the event of any legal
proceeding under this Agreement.
29. COLLECTION COSTS. If Lender hires an attorney to
assist in collecting any amount due or enforcing any right or
remedy under this Agreement, Owner agrees to pay Lender's
attorneys' fees to the extent permitted by applicable law, and
collection costs (subject to any restrictions imposed by law).
30. MISCELLANEOUS. This Agreement is executed for
commercial purposes. Owner shall supply information regarding
Owner's business operations and financial condition or the
Collateral in the form and manner requested by Lender. All
information furnished by Owner to Lender shall be true, accurate
and complete in all respects. Owner and Lender agree that time
is of the essence. Owner waives presentment, demand for payment,
notice of dishonor and protest except as required by law. All
references to Owner in this Agreement shall include all parties
signing below except Lender. If there is more than one Owner,
their obligations shall be joint and several. This Agreement
shall remain in full force and effect until Lender provides Owner
with written notice of termination. This Agreement and any
related documents represent the complete and integrated
understanding between Owner and Lender pertaining to the terms
and conditions of those documents.
31. ADDITIONAL TERMS:
THE UNDERSIGNED AGREE THAT THE CONSENT TO JURISDICTION
AND VENUE HEREIN SHALL NOT PROHIBIT OR LIMIT LENDER
FROM BRINGING ANY ACTION OR PROCEEDING HEREUNDER IN ANY
JURISDICTION OR VENUE THAT IS OTHERWISE PROPER.
Owner acknowledges that Owner has read, understands, and agrees
to the terms and conditions of this Agreement.
Dated: AUGUST 27, 1996
OWNER: CRAMER INC. OWNER:
BY: /s/ Gary Rubin BY:
GARY RUBIN
TITLE: SECRETARY TITLE:
OWNER: OWNER:
BY: BY:
TITLE: TITLE:
LENDER: MARK TWAIN KANSAS CITY BANK
BY:
TITLE:
<PAGE>
SCHEDULE A
SCHEDULE B
SCHEDULE C
SCHEDULE D
NONE
Exhibit 23a
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statement (Form S-8 No. 33-77954) pertaining to the 1989
Incentive Stock Option Plan of Cramer, Inc. of our report dated
February 17, 1997 with respect to the financial statements of
Cramer, Inc. included in the Annual Report (Form 10-KSB) for the
year ended December 31, 1996.
/s/ Ernst & Young LLP
Kansas City, Missouri
March 24, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FORM 10-KSB FOR THE YEAR ENDED DECEMBER 31, 1996 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 117
<SECURITIES> 0
<RECEIVABLES> 1,034
<ALLOWANCES> 21
<INVENTORY> 1,286
<CURRENT-ASSETS> 284
<PP&E> 5,319
<DEPRECIATION> 4,661
<TOTAL-ASSETS> 3,643
<CURRENT-LIABILITIES> 2,380
<BONDS> 0
<COMMON> 0
0
3,508
<OTHER-SE> (2,956)
<TOTAL-LIABILITY-AND-EQUITY> 3,643
<SALES> 11,872
<TOTAL-REVENUES> 11,872
<CGS> 8,562
<TOTAL-COSTS> 11,416
<OTHER-EXPENSES> 26
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 105
<INCOME-PRETAX> 325
<INCOME-TAX> 0
<INCOME-CONTINUING> 325
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 325
<EPS-PRIMARY> .08
<EPS-DILUTED> .08
</TABLE>
