<PAGE> 1
FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from
COMMISSION FILE NUMBER: 0-12113
CONNECTIVITY TECHNOLOGIES INC.
(Exact name of small business issuer as specified in its charter)
Delaware 94-2691724
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
667 Madison Avenue, New York, New York 10021
(Address of principal executive offices)
(212) 644-8880
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No
State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date: 5,565,074 shares of Common Stock, par
value. $.04 per share, outstanding as of October 31, 1997.
Transitional small business disclosure Format (check one):
Yes No X
<PAGE> 2
CONNECTIVITY TECHNOLOGIES INC.
INDEX
<TABLE>
<CAPTION>
Page No.
PART I - FINANCIAL INFORMATION
<S> <C>
Item 1. Condensed Consolidated Balance Sheet (Unaudited)
as of September 30, 1997 . . . . . . . . . . . . . . . . . . . 3
Condensed Consolidated Income Statement (Unaudited)
for the Three and Nine Months Ended
September 30, 1997 and 1996 . . . . . . . . . . . . . . . . . . 4
Condensed Consolidated Statements of Cash Flows
(Unaudited) for the Nine Months
Ended September 30, 1997 and 1996 . . . . . . . . . . . . . . 5
Notes to Condensed Consolidated Financial
Statements (Unaudited) . . . . . . . . . . . . . . . . . . . . 6
Pro Forma Condensed Consolidated Income
Statement (Unaudited) for the Three and Nine
Months Ended September 30, 1997 and 1996 . . . . . . . . . . . 9
Notes to Pro Forma Condensed Consolidated
Income Statements(Unaudited) . . . . . . . . . . . . . . . . . 10
Item 2. Management's Discussion and Analysis or Plan
of Operation . . . . . . . . . . . . . . . . . . . . . . . . 11
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . 16
</TABLE>
2
<PAGE> 3
CONNECTIVITY TECHNOLOGIES INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
ASSETS
<S> <C>
CURRENT ASSETS
Cash and cash equivalents $ 210,884
United States Treasury Bills 492,077
Accounts receivable, less allowance of $85,375 9,913,048
Inventories 7,096,938
Investments 3,194,996
Prepaid expenses and other assets 560,203
------------
Total current assets 21,468,146
Property, plant and equipment 6,928,458
Deferred tax asset 8,560,501
Deposits and other assets 288,111
Goodwill and intangible assets, net of accumulated
amortization 7,511,787
------------
Total assets $ 44,757,003
============
LIABILITIES
CURRENT LIABILITIES
Current portion of long term debt $ 750,000
Trade accounts payable 4,642,257
Accrued compensation and commissions 341,955
Accrued liabilities 6,029,994
------------
Total current liabilities 11,764,206
Long term debt 17,400,000
------------
Total liabilities 29,164,206
-------------
Minority interest 465,374
STOCKHOLDERS' EQUITY
Preferred stock - par value $.01 per share;
authorized 10,000,000 shares, none issued
Series B Common Stock - par value $.04 per share;
authorized 750,000 shares, none issued
Common Stock - par value $.04; authorized 20,000,000
shares, outstanding 5,565,074 shares, net of 206,601
shares held in treasury 222,613
Additional paid-in capital 109,336,792
Accumulated deficit (95,220,678)
Unrealized gain on marketable security, net of tax 788,696
------------
Total stockholders' equity 15,127,423
------------
Total liabilities and stockholders' equity $ 44,757,003
============
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements
3
<PAGE> 4
CONNECTIVITY TECHNOLOGIES INC.
CONDENSED CONSOLIDATED INCOME STATEMENT
(UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30 NINE MONTHS ENDED SEPTEMBER 30
1997 1996 1997 1996
-------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales $ 12,418,175 $ 11,296,377 $ 36,154,078 $ 14,650,861
Cost of goods sold 9,953,673 8,834,806 28,785,844 11,275,062
-------------- ------------ ------------ ------------
Gross profit 2,464,502 2,461,571 7,368,234 3,375,799
Selling, general and administrative expenses 2,027,556 1,597,455 6,067,222 2,961,806
-------------- ------------ ------------ ------------
Operating income 436,946 864,116 1,301,012 413,993
Other income (expense):
Interest income 14,058 34,121 30,418 311,147
Interest expense (377,558) (453,509) (1,371,709) (581,595)
Other (1,228) 59,477 (2,479) 58,477
-------------- ------------ ------------ ------------
Net income (loss) from continuing operations before
income taxes and minority interest 72,218 504,205 (42,758) 202,022
Provision for income taxes 81,803 229,117 107,254 158,558
-------------- ------------ ------------ ------------
Net income (loss) from continuing operations before
minority interest (9,585) 275,088 (150,012) 43,464
Minority interest in subsidiary (12,888) (50,583) (45,819) (61,639)
-------------- ------------ ------------ ------------
Net income (loss) from continuing operations (22,473) 224,505 (195,831) (18,175)
Discontinued operations:
Income from discontinued operations, net
of income taxes and minority interest 141,495 174,639 209,175
Gain on sale of discontinued operation, net of income taxes
and minority interest 1,197,323 1,197,323
-------------- ------------ ------------ ------------
Net income $ 1,174,850 $ 366,000 $ 1,176,131 $ 191,000
-------------- ------------ ------------ ------------
Earnings (loss) per share (primary and fully diluted)
Continuing operations $ (0.00) $ 0.04 $ (0.03) $ (0.00)
Discontinued operations $ 0.00 $ 0.02 $ 0.03 $ 0.03
Gain on sale of discontinued operations $ 0.21 $ 0.00 $ 0.21 $ 0.00
-------------- ------------ ------------ ------------
Net earnings per share $ 0.21 $ 0.06 $ 0.21 $ 0.03
-------------- ------------ ------------ ------------
Weighted Average Number of Common
Shares and Common Share Equivalents:
Primary 5,674,080 6,042,402 5,736,633 5,926,154
Fully Diluted 5,674,080 6,067,866 5,736,633 6,016,252
</TABLE>
See Accompanying Notes to Condensed Consolidated Income Statement
4
<PAGE> 5
CONNECTIVITY TECHNOLOGIES INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,176,131 $ 191,000
Discontinued operations (4,559,428) (2,716,702)
Adjustments to reconcile net income to net
cash from (used in) operating activities:
Depreciation and amortization 1,249,441 558,000
Minority interest 311,595 116,000
Unrealized gain on marketable securities 788,696
Deferred taxes (2,260,332) 125,000
Income from discontinued operations (174,639)
Income on disposal of discontinued operations (1,197,323)
Non-cash adjustment to income from discontinued operations (496,347)
Changes in operating assets and liabilities:
Decrease (increase) in:
Accounts receivable (2,423,726) 1,745,680
Inventories (2,139,755) (308,851)
Investments (3,194,996)
Prepaid and other current assets 23,832 94,273
Deposits and other assets (568,730) (9,877)
Increase (decrease) in:
Accounts payable 355,446 873,485
Accrued liabilities 4,912,419 (760,475)
------------- ------------
Net cash used in operations (8,197,716) (92,467)
------------- ------------
Cash flows from investing activities:
Proceeds from disposal of discontinued operations 29,000,000
Purchases of United States Treasury Bills (1,283,345)
Purchases of property, plant, and equipment, net (1,611,796) (897,000)
Capital expenditures of discontinued operations (224,253)
Sales of United States Treasury Bills 1,779,164 9,368,000
Purchase of 85% of the common stock of CPI
net of cash acquired of $756,000 (7,234,000)
------------- ------------
Net cash provided by investing activities 27,659,770 1,237,000
------------- ------------
Cash flows from financing activities:
Repayment of debt (31,550,000) (1,650,000)
Exercise of stock options and warrants 605,000
Proceeds from notes payable 12,150,000
Payment of financing costs (37,138)
Increase in shareholder receivable (18,470)
------------ ------------
Net cash used for financing activities (19,455,608) (1,045,000)
------------ ------------
Net increase in cash 6,446 99,533
Cash and cash equivalents, beginning of period 204,438 176,000
------------ ------------
Cash and cash equivalents, end of period $ 210,884 $ 275,533
-============ ============
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements
5
<PAGE> 6
CONNECTIVITY TECHNOLOGIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1 - Condensed Consolidated Financial Statements:
The Condensed Consolidated Financial Statements reflect Energy
Electric Cable ("EEC") as a discontinued operation. See also Note 3 -
Discontinued Operations.
The Condensed Consolidated Financial Statements included herein
have been prepared by Connectivity Technologies Inc. ("CTI" or "the Company")
without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes the disclosures which are made are
adequate to make the information presented not misleading. Further, the
Condensed Consolidated Financial Statements have been prepared in accordance
with generally accepted accounting principles for interim financial information,
the instructions to Form 10-QSB and Regulation S-B (including Item 310(b)
thereof) and reflect, in the opinion of management, all adjustments necessary to
present fairly the financial position and results of operations as of and for
the periods indicated.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
It is suggested that these Condensed Consolidated Financial
Statements be read in conjunction with the Consolidated Financial Statements and
the Notes thereto for the year ended December 31, 1996, included in CTI's Annual
Report on Form 10-KSB to the Securities and Exchange Commission.
Note 2 - Nature of Operations and Basis of Presentation:
The Company's 1997 financial statements include the accounts of
CTI and operations of its of 85% owned subsidiary, Connectivity Products
Incorporated ("CPI") . The 1996 condensed consolidated statement of operations
includes the results of operations of CPI subsequent to May 31, 1996, when it
was acquired by CTI. All significant intercompany accounts and transactions
have been eliminated in consolidation. Certain prior period amounts have been
reclassified to conform to current period presentation.
6
<PAGE> 7
The primary business of the Company is the manufacture of wire and
cable products. The two major markets served by the Company are industrial
(commercial and residential security, factory automation, traffic and transit
signal control and audio systems) and communications (networking, voice and
data).
Note 3 - Discontinued Operations
On July 11, 1997, Anicom, Inc. ("Anicom") acquired for $27,000,000 in
cash and $2,000,000 of its common stock certain assets of and assumed certain
liabilities of the Company's EEC Division (representing the Distribution
Industry Segment). The purchase price is subject to adjustment based on the net
assets of the EEC division as of June 30, 1997. EEC's 1996 and 1997 operating
results are separately reported on the statements of operations. The Company
recognized a gain related to the sale of approximately $1,200,000 (net of
taxes of $5,600,000, a portion of which is sheltered by the Company's net
operating loss carryforwards, non-deductible goodwill of $6,200,000, and
minority interest of $230,000). See also "Management's Discussion and Analysis
or Plan of Operation".
Note 4 - Debt
In connection with the sale of EEC on July 11, 1997, CPI refinanced
its bank borrowings with an amended facility totaling $30,000,000 comprised of a
$12,000,000 revolving credit facility, a $12,000,000 term loan and a $6,000,000
line of credit ("Bank Borrowings"). All outstanding borrowings were retired on
July 11, 1997 with the proceeds from the sale of EEC and $12,000,000 of new
borrowings under the amended term loan. Interest on the Bank Borrowings is
payable at various intervals and accrues at the applicable LIBOR rate plus 2.75
percent. CPI may elect to have all or a portion of the Bank Borrowings accrue
interest at the lender's base rate plus 1 percent. Under certain conditions, the
1 percent add on will be reduced to zero and the 2.75 percent add on will be
reduced to 1.75 percent. In addition, CPI must pay a fee equal to .5 percent (to
be reduced to .375 percent in future years under certain conditions) of the
average unused balance under the revolving credit agreement. The Bank Borrowings
are collateralized by essentially all of the assets of CPI and are guaranteed by
CTI to the extent of its holdings of CPI stock.
The revolving credit facility matures on May 31, 2002. Amounts
advanced under this facility are based upon percentages of eligible accounts
receivable and inventory. The line of credit is to be used for qualified capital
expenditures and acquisitions. Advances under the line of credit mature on May
31, 1998, at which time (subject to certain conditions) advances may be
converted to a term loan.
7
<PAGE> 8
The term loan, as amended, matures as follows:
<TABLE>
<S> <C>
1997 $ 300,000
1998 900,000
1999 2,400,000
2000 3,000,000
2001 3,000,000
Thereafter 2,400,000
-----------
$12,000,000
===========
</TABLE>
The agreements governing the Bank Borrowings, as amended as of July
11, 1997, contain various financial covenants related, among other things, to
maintenance of minimum consolidated net worth, maintenance of a maximum ratio of
senior debt (and overall debt) to EBITDA (as defined) and maintenance of minimum
interest and fixed charges (as defined) coverage ratios.
Note 5 - Earnings Per Share
Statement of Financial Accounting Standards No. 128, "Earnings per
Share," was issued in March 1997. The statement is effective for fiscal years
ending after December 15, 1997. This statement addresses the calculation of
earnings per share. Under the new statement, there are two types of earnings per
share--basic and diluted. Basic earnings per share is calculated by dividing
income available to common stockholders by the weighted average number of common
shares outstanding. Diluted earnings per share is calculated by dividing income
available to common stockholders by the weighted average number of common shares
outstanding and common share equivalents.
Earnings per share calculated under the new statement are as follows:
<TABLE>
<CAPTION>
Three months ended Nine months ended
Sept 30 Sept 30
------------------------ --------------------------
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Basic earnings (loss) per share
Continuing operations $ 0.00 $ 0.04 ($ 0.04) $ (0.00)
Discontinued operations 0.00 0.03 0.03 0.04
Gain on sale of discontinued
operations 0.22 0.00 0.22 0.00
--------- -------- -------- --------
Net $ 0.22 $ 0.07 $ 0.21 $ 0.04
-======== ======== ======== ========
Diluted earnings (loss) per share
Continuing operations $ 0.00 $ 0.04 ($ 0.03) $ (0.00)
Discontinued operations 0.00 0.02 0.03 0.03
Gain on sale of discontinued
operations 0.21 0.00 0.21 0.00
--------- -------- -------- --------
Net $ 0.21 $ 0.06 $ 0.21 $ 0.03
-======== ======== ======== ========
</TABLE>
8
<PAGE> 9
CONNECTIVITY TECHNOLOGIES INC.
PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT
(UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPT 30 NINE MONTHS ENDED SEPT 30
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales $ 12,418,175 $ 11,296,377 $ 36,154,078 $ 32,707,837
Cost of goods sold 9,953,673 8,834,806 28,785,844 25,251,962
------------ ------------ ------------ ------------
Gross profit 2,464,502 2,461,571 7,368,234 7,455,875
Selling, general and administrative expenses 2,027,556 1,597,455 6,067,222 5,622,134
------------ ------------ ------------ ------------
Operating income 436,946 864,116 1,301,012 1,833,741
Other income (expense):
Interest income 14,058 34,121 30,418 71,149
Interest expense (377,558) (453,509) (1,371,709) (1,273,210)
Other (1,228) 59,477 (2,479) 58,474
------------ ------------ ------------ ------------
Income (loss) from continuing operations before
income taxes and minority interest 72,218 504,205 (42,758) 690,154
Provision for income taxes 81,803 229,117 107,254 310,269
------------ ------------ ------------ ------------
Income (loss) from continuing operations before
minority interest (9,585) 275,088 (150,012) 379,885
Minority interest in subsidiary (12,888) (50,583) (45,819) (153,133)
------------ ------------ ------------ ------------
Income (loss) from continuing operations (22,473) 224,505 (195,831) 226,752
Discontinued operations:
Income from discontinued operations, net
of income taxes and minority interest 141,495 174,639 254,248
Gain on sale of discontinued operations, net
of income taxes and minority interest 1,197,323 1,197,323
------------ ------------ ------------ ------------
Net income $ 1,174,850 $ 366,000 $ 1,176,131 $ 481,000
------------ ------------ ------------ ------------
Earnings (loss) per share (primary and fully diluted)
Continuing operations $ (0.00) $ 0.04 $ (0.03) $ 0.04
Discontinued operations $ 0.00 $ 0.02 $ 0.03 $ 0.04
Gain on sale of discontinued operations $ 0.21 $ 0.00 $ 0.21 $ 0.00
------------ ------------ ------------ ------------
Net earnings per share $ 0.21 $ 0.06 $ 0.21 $ 0.08
============ ============ ============ ====-------=
Weighted Average Number of Common
Shares and Common Share Equivalents:
Primary 5,674,080 6,042,402 5,736,633 5,926,154
Fully Diluted 5,674,080 6,067,866 5,736,633 6,016,252
</TABLE>
See Notes to Pro Forma Condensed Consolidated Income Statement
9
<PAGE> 10
CONNECTIVITY TECHNOLOGIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENTS (UNAUDITED)
PRO FORMA FINANCIAL STATEMENTS
The unaudited pro forma consolidated statements of operations for the
three-month and nine-month periods ended September 30, 1997 and 1996 give effect
to the acquisition ("Acquisition") of 85% of the capital stock of Connectivity
Products Incorporated ("CPI") by Connectivity Technologies Inc. ("CTI") as if
the acquisition occurred January 1, 1996, (actual date of occurrence is May 31,
1996) and the concurrent redemption by CPI of 1,274 shares of its common stock.
The Acquisition has been accounted for as a purchase.
The pro forma financial statements reflect Energy Electric Cable ("EEC") as a
discontinued operation. See also "Note 3 - Discontinued Operations" included
with the Notes to the Condensed Consolidated Financial Statements.
The pro forma information is based on unaudited financial statements after
giving effect to adjustments related to the allocation of the purchase price.
The unaudited pro forma consolidated income statements include all adjustments,
consisting of normal recurring accruals, which CTI considers necessary for a
fair presentation of the results of operations.
The unaudited pro forma consolidated income statements may not be indicative of
the results that actually would have been achieved if the acquisition had
occurred on the date assumed and do not project CTI's results of operations at
any future period then ended.
10
<PAGE> 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
SEPTEMBER 30, 1997
The primary business of Connectivity Technologies Inc. (the "Company", "CTI", or
the "Registrant") is the manufacture of wire and cable products. The two major
markets served by the Company are industrial (commercial and residential
security, factory automation, traffic and transit signal control and audio
systems) and communications (networking, voice and data). Prior to selling the
Company's Energy Electric Cable distribution division ("EEC"), the Company was
also engaged in distribution. See "Sale of Energy Electric Cable".
Before acquiring 85% of the common stock of Connectivity Products Incorporated
("CPI") as of May 31, 1996, the Company's principal activity consisted of
seeking and evaluating candidates for acquisition. The Company now focuses its
acquisition activity on companies in the wire and cable business according to
established strategic and financial criteria. The Company's goals are to grow
(i) internally through capacity expansions and product line extensions and (ii)
externally through complementary acquisitions.
SALE OF ENERGY ELECTRIC CABLE
On July 11, 1997, the Company's subsidiary, CPI, entered into an Asset Purchase
Agreement ("Asset Purchase Agreement") with Anicom, Inc. ("Anicom") and Reel
Acquisition Corp., a wholly-owned subsidiary of Anicom (the "Purchaser"),
pursuant to which the Purchaser acquired the business and substantially all of
the assets of EEC. In connection with the sale, the Purchaser assumed most of
EEC's liabilities other than borrowings, taxes, and certain other liabilities.
Pursuant to the Agreement, CPI received $29,000,000 subject to adjustment,
including $27,000,000 in cash and $2,000,000 consisting of 190,476 shares of
Anicom's stock, plus the liabilities assumed by the Purchaser. The gain on the
sale has been reported as a gain on disposal of a discontinued operation.
RESTATEMENT OF FINANCIAL STATEMENTS
CTI's financial statements have been restated to classify EEC as a discontinued
operation. The regular financial statements separately report on continuing
operations comprised of the manufacture of wire and cable products.
COMPARISON OF HISTORICAL RESULTS
The Company's financial statements include the continuing operations of CPI,
excluding EEC, since June 1, 1996. Most significant changes in CTI's results of
operations are a result of the CPI acquisition. To enable a clearer
understanding of the combined operations, pro forma consolidated financial
statements covering continuing operations of CTI are included with this
Quarterly Report on Form 10-QSB for the three months and nine months ended
September
11
<PAGE> 12
30, 1997, compared to the like periods of 1996. These statements are
prepared as if CTI had acquired CPI as of January 1, 1996, the beginning of the
periods reported on. A discussion of the pro forma results is also included in
a separate section in this Management's Discussion and Analysis or Plan of
Operation.
Sales were $12,418,000 for the third quarter of 1997 and $36,154,000 for the
nine months ended September 30, 1997 compared to $11,296,000 for the
three-month and $14,651,000 for the nine-month comparable periods of 1996.
Management believes that the third quarter sales increase is attributable to
the divestiture of the EEC division, as CPI is no longer perceived as a
competitor in the distribution marketplace. Year to date sales were due to CPI
continuing operations from date of acquisition.
Cost of goods sold were $9,954,000 for the third quarter of 1997 and $28,786,000
for the nine months ended September 30, 1997 compared to $8,835,000 for the
three-month and $11,275,000 for the nine-month comparable periods of 1996. Cost
of goods sold were due to CPI continuing operations from date of acquisition.
Selling, general and administrative expenses were $2,028,000 for the third
quarter of 1997 and $6,067,000 for the nine months ended September 30, 1997,
compared to $1,597,000 for the third quarter of 1996 and $2,962,000 for the nine
months ended September 30, 1996. The increases are primarily due to CPI
operations from date of acquisition.
Interest income was $14,000 for the third quarter of 1997 and $30,000 for the
nine months ended September 30, 1997. This compares to $34,000 for the third
quarter of 1996 and $311,000 for the nine months ended September 30, 1996. The
comparative decreases were primarily due to a decrease in the amount of Treasury
Bills held by the Company.
Interest expense was $378,000 for the third quarter of 1997 and $1,372,000 for
the nine months ended September 30, 1997. This compares to $454,000 for the
third quarter of 1996 and $582,000 for the nine months ended September 30, 1996.
The increases relate to CPI interest expense from date of acquisition.
Income tax expense is provided on taxable operating results at statutory tax
rates, approximately 45%. Non-deductible goodwill amortization, which does not
reduce cash flow from operations, caused the difference between statutory rates
and the Company's effective tax rate for the periods presented.
COMPARISON OF PRO FORMA RESULTS
Pro forma income statements included with this Form 10-QSB are prepared as if
the continuing operations of the companies (excluding EEC) had been combined
since January 1, 1996.
Sales for the three months ended September 30, 1997, increased 9.9% to
$12,418,000 from $11,296,000 for the comparable year earlier period. For the
nine months ended September 30, 1997, sales increased 10.5% to $36,154,000
versus $32,708,000 for the nine months ended September 30, 1996. In 1997 periods
compared to 1996, sales of both wire and cable products
12
<PAGE> 13
increased. Cable product sales increases accounted for most of the sales
increase. Although wire manufacturing dollar volumes increased, unit volumes
were up more than sales due to continuing lower copper prices during the first
three quarters of 1997 compared to the first three quarters of 1996.
Cost of goods sold for the three months ended September 30, 1997, was 80.1% of
sales or $9,954,000 versus 78.2% or $8,835,000 for the comparable prior year
period. Cost of goods sold was 79.6% or $28,786,000 for the nine months ended
September 30, 1997 versus 77.2% or $25,252,000 for the nine months ended
September 30, 1996. The higher cost of sales in the third quarter 1997 and nine
months ended September 30, 1997, was primarily due to slower demand in some
products, product mix and transition to new products. Lower copper prices in
1997 also had a negative effect on gross margins.
Selling and administrative expenses were 16.3% of sales or $2,028,000 for the
three months ended September 30, 1997, compared to 14.1% of sales or $1,597,000
for the year earlier period. For the nine months ended September 30, 1997,
selling and administrative expenses were 16.8% of sales or $6,067,000 versus
17.2% or $5,622,000 for the nine months ended September 30, 1996. Costs in 1997
benefited from economies realized due to higher sales volume but were partially
offset by additional salaries and expenses for added infrastructure at the
Energy Electric Assembly division. Also, base salaries of stockholders
operating the business were lower in 1997 compared to 1996 as described in
Note 2 of "Notes to Pro Forma Condensed Consolidated Income Statement".
Interest income for the three months ended September 30, 1997 was $14,000
compared to $34,000 for the third quarter of 1996. For the nine months ended
September 30, 1997, interest income amounted to $30,000 versus $71,000 for the
comparable 1996 period. Differences in earnings were primarily due to average
investment balances.
Interest expense for the third quarter of 1997 was $378,000 versus $454,000 for
the third quarter of 1996. For the nine months ended September 30, 1997,
interest expense was $1,372,000 versus $1,273,000 the same 1996 period.
Differences were primarily due to working capital requirements and expenses
related to the sale of the discontinued operation.
Income tax expense is provided on taxable operating results at statutory tax
rates, approximately 45%. Non-deductible good will amortization, which does not
reduce cash flow from operations, caused the difference between statutory rates
and the Company's effective tax rate for the periods presented.
FINANCIAL CONDITION AND LIQUIDITY
The Company's principal sources of cash are results of operations and existing
credit arrangements. On July 11, 1997, CPI received cash proceeds from the sale
of EEC. See "Sale of Energy Electric Cable". The cash position remained stable,
as cash and cash equivalents totaled $211,000 at September 30, 1997 compared to
$276,000 at September 30, 1996.
13
<PAGE> 14
The Company's capital spending during the nine months ended September 30, 1997
was $1,611,796 compared with $897,000 a year ago. This increase was principally
attributable to the purchase of manufacturing equipment to increase capacity and
improve manufacturing efficiencies.
Simultaneously with the closing of the sale under the Asset Purchase Agreement
(the "Closing"), CPI refinanced its senior credit facility with BankBoston and
NBD Bank to decrease the amount available for borrowing thereunder from
$43,740,000 to $30,000,000. Immediately prior to the Closing, CPI had
approximately $36,000,000 outstanding under the credit facility, which amount
was reduced by $24,000,000 of the cash proceeds. Substantially all of the
remaining cash proceeds were temporarily invested in commercial paper.
The credit facility ("Senior Debt Agreement"), as amended July 11, 1997,
consists of a revolver, a line of credit and a term loan. CPI's Senior Debt
Agreement provides for borrowings up to $30,000,000 subject to a borrowing base
limitation. After completion of the sale on July 11, 1997, $12,000,000 was
outstanding against these facilities which is secured by CPI's assets as well as
CPI stock owned by CTI. Effective July 11, 1997, the term loan was further
amended as described in the notes to the restated condensed consolidated income
statement.
The Company believes that funds generated from operations along with existing
credit arrangements will be sufficient to support the short-term and long-term
liquidity requirements for operations. The Company operates in a commodity
based industry. Therefore, worldwide fluctuations in copper price may affect
financial results. Acquisitions are intended to be financed from operating cash
flows, existing credit arrangements and possibly by additional equity which may
be raised for acquisitions.
INCOME TAX MATTERS
The Company has approximately $85,000,000 of U.S. net operating loss
carryforwards ("NOLs") as of September 30, 1997 available to offset future U.S.
taxable income generated by the Company and its subsidiaries with which it files
a federal consolidated return (the "Consolidated Group"). See Note 3 to Notes to
Condensed Consolidated Financial Statements with reference to certain tax
consequences of the sale of EEC.
The future benefits of the NOL and tax credit carryforwards are dependent on
their continued availability as well as the availability of future taxable
income. The Deferred Tax Asset (net of a valuation allowance) included in the
Company's Consolidated Financial Statements has been computed on the assumption
that CTI will continue to file a consolidated tax return that includes CPI.
Management previously announced plans for an initial public offering ("IPO") of
CPI's common stock which has now been canceled. If an IPO is accomplished for
CPI in the future, it could result in CTI no longer being able to include CPI in
its consolidated tax return and CPI's earnings would not be sheltered by the
NOL.
Section 382 of the Internal Revenue Code (the "Code") contains certain
limitations on the ability of a corporation to utilize its net operating losses
in any one year if there has been a change of
14
<PAGE> 15
ownership of more than 50% within a three-year period (an "ownership change"),
counting for purposes of measuring the ownership change generally only the value
of stock owned by a shareholder or certain groups of shareholders holding 5% or
more of the Company's stock. The Company does not believe that there has been an
ownership change in the past three years. However, future events, including
events beyond the control of the Company such as the acquisition in the open
market of shares of the Company's Common Stock by a current or new 5%
shareholder who was unaware of the possible negative consequences of such
acquisition, could result in an ownership change. If an ownership change were to
occur, the Company's ability to use its NOLs to reduce the future taxable income
of the Company (and the corporations with which it files a consolidated federal
income tax return) could be severely curtailed and it is possible that a federal
income tax liability may be incurred that would otherwise have been avoidable
had the NOLs been fully available.
15
<PAGE> 16
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit No. Description of Document
*10.1 Supply Agreement between Connectivity Products Incorporated and
Anicom, Inc., dated as of July 11, 1997.
10.2 Sixth Amendment to Amended and Restated Revolving Credit and Term
Loan Agreement, dated as of July 11, 1997, by and among Connectivity
Products Incorporated, NBD Bank, ("NBD Bank") and BankBoston N.A.
("BankBoston", f/k/a The First National Bank of Boston).
10.3 Seventh Amendment to Amended and Restated Revolving Credit and Term
Loan Agreement, dated as of July 25, 1997, by and among Connectivity
Products Incorporated, NBD Bank, and BankBoston.
10.4 Stock Pledge Agreement dated as of July 11, 1997, between
Connectivity Products Incorporated and NBD Bank.
10.5 Second Amended and Restated Term Loan A Note dated as of July 11,
1997, in the principal amount of $6,000,000 payable by Connectivity
Products Incorporated to NBD Bank.
10.6 Second Amended and Restated Term Loan A Note dated as of July 11,
1997, in the principal amount of $6,000,000 payable by Connectivity
Products Incorporated to BankBoston.
10.7 Second Amended and Restated Line of Credit Note dated as of July 11,
1997, in the principal amount of $3,000,000 payable by Connectivity
Products Incorporated to NBD Bank.
10.8 Second Amended and Restated Line of Credit Note dated as of July 11,
1997, in the principal amount of $3,000,000 payable by Connectivity
Products Incorporated to BankBoston.
- ----------------------------
* Certain portions of this Exhibit have been omitted pursuant to a
request by the Registrant for confidential treatment
16
<PAGE> 17
10.9 Second Amended and Restated Revolving Credit Note dated as of July
11, 1997, in the principal amount of $6,000,000 payable by
Connectivity Products Incorporated to NBD Bank.
10.10 Second Amended and Restated Revolving Credit Note dated as of July
11, 1997, in the principal amount of $6,000,000 payable by
Connectivity Products Incorporated to BankBoston.
10.11 Assignment and Acceptance dated as of July 11, 1997, by and among
NBD Bank, BankBoston and Connectivity Products Incorporated
concerning NBD Bank.
10.12 Assignment and Acceptance dated as of July 11, 1997, by and among
NBD Bank, BankBoston and Connectivity Products Incorporated
concerning BankBoston.
10.13 Eighth Amendment to Amended and Restated Revolving Credit and Term
Loan Agreement, dated as of June 30, 1997, by and among Connectivity
Products Incorporated, NBD Bank and BankBoston.
10.14 Severance Agreement by and among Connectivity Products Incorporated,
Connectivity Technologies Inc. and Duane A. Gawron dated as of
August 29, 1997.
11 Computation of Earnings Per Share
27 Financial Data Schedule
(b) Reports on Form 8-K
On July 24, 1997, the Registrant filed a Current Report on Form 8-K in
connection with the sale on July 11, 1997 of the assets and business of the
Energy Electric Cable division of the Registrant's Connectivity Products
Incorporated subsidiary to Reel Acquisition Corp., a subsidiary of Anicom, Inc.
The Current Report on Form 8-K contained pro forma financial statements which
showed the effect of the disposition of the assets of the Energy Electric Cable
division.
17
<PAGE> 18
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the Registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CONNECTIVITY TECHNOLOGIES INC.
Date: November 13, 1997 By: /s/ James M. Hopkins
-------------------------------------
James M. Hopkins
President and Chief Executive Officer (as a
duly authorized officer of the Registrant)
By: /s/ Michael J. George
-------------------------------------
Michael J. George
Senior Vice President, Chief Financial
Officer and Secretary (as the principal
accounting officer of the Registrant)
18
<PAGE> 19
EXHIBIT INDEX
Exhibit No. Description of Document
*10.1 Supply Agreement between Connectivity Products Incorporated and
Anicom, Inc., dated as of July 11, 1997.
10.2 Sixth Amendment to Amended and Restated Revolving Credit and Term
Loan Agreement, dated as of July 11, 1997, by and among Connectivity
Products Incorporated, NBD Bank, ("NBD Bank") and BankBoston N.A.
("BankBoston", f/k/a The First National Bank of Boston).
10.3 Seventh Amendment to Amended and Restated Revolving Credit and Term
Loan Agreement, dated as of July 25, 1997, by and among Connectivity
Products Incorporated, NBD Bank, and BankBoston.
10.4 Stock Pledge Agreement dated as of July 11, 1997, between
Connectivity Products Incorporated and NBD Bank.
10.5 Second Amended and Restated Term Loan A Note dated as of July 11,
1997, in the principal amount of $6,000,000 payable by Connectivity
Products Incorporated to NBD Bank.
10.6 Second Amended and Restated Term Loan A Note dated as of July 11,
1997, in the principal amount of $6,000,000 payable by Connectivity
Products Incorporated to BankBoston.
10.7 Second Amended and Restated Line of Credit Note dated as of July 11,
1997, in the principal amount of $3,000,000 payable by Connectivity
Products Incorporated to NBD Bank.
10.8 Second Amended and Restated Line of Credit Note dated as of July 11,
1997, in the principal amount of $3,000,000 payable by Connectivity
Products Incorporated to BankBoston.
- ----------------------------
* Certain portions of this Exhibit have been omitted pursuant to a
request by the Registrant for confidential treatment.
<PAGE> 20
EXHIBIT INDEX (Continued)
Exhibit No. Description of Document
10.9 Second Amended and Restated Revolving Credit Note dated as of July
11, 1997, in the principal amount of $6,000,000 payable by
Connectivity Products Incorporated to NBD Bank.
10.10 Second Amended and Restated Revolving Credit Note dated as of July
11, 1997, in the principal amount of $6,000,000 payable by
Connectivity Products Incorporated to BankBoston.
10.11 Assignment and Acceptance dated as of July 11, 1997, by and among
NBD Bank, BankBoston and Connectivity Products Incorporated
concerning NBD Bank.
10.12 Assignment and Acceptance dated as of July 11, 1997, by and among
NBD Bank, BankBoston and Connectivity Products Incorporated
concerning BankBoston.
10.13 Eighth Amendment to Amended and Restated Revolving Credit and Term
Loan Agreement, dated as of June 30, 1997, by and among Connectivity
Products Incorporated, NBD Bank and BankBoston.
10.14 Severance Agreement by and among Connectivity Products Incorporated,
Connectivity Technologies Inc. and Duane A. Gawron dated as of
August 29, 1997.
11 Computation of Earnings Per Share
27 Financial Data Schedule
<PAGE> 1
SUPPLY AGREEMENT
THIS SUPPLY AGREEMENT (this "Agreement") is made as of July 11,
1997, by and between Connectivity Products Incorporated, a Delaware corporation
with an office at 680 Mechanic Street, Suite 1201, Leominster, Massachusetts
01453 ("Seller"), and Anicom, Inc., a Delaware corporation with an office at
6133 N. River Road, Suite 1000, Rosemont, Illinois 60018 ("Anicom, Inc." and,
together with Anicom's subsidiaries, "Parent").
BACKGROUND
A. The parties hereto are executing this Agreement in connection
with the closing of an Asset Purchase Agreement between Parent and Seller, dated
as of July 11, 1997, pursuant to which Parent is purchasing substantially all of
the assets of the Energy Electric Cable Division of Seller (the "Business").
B. Parent is engaged in the business of distributing wire and cable
products.
C. Energy Electric Cable, a division of Seller ("Seller Division"
and, together with Seller, "Supplier"), is engaged in the business of
manufacturing and supplying wire and cable products.
D. Distributor and Supplier acknowledge the importance of having
both a reliable supply and a reliable demand for wire and cable products and,
accordingly, the parties are desirous of entering into an agreement whereby
Supplier will manufacture and supply to Distributor and Distributor shall
purchase such products on the terms and conditions set forth herein.
E. Accordingly, in consideration of the foregoing and the mutual
covenants and undertakings contained herein, the parties hereby agree as
follows:
1. DEFINITIONS.
1.1 "Acknowledged Delivery Date" has the meaning given such term in
Section 5.3 hereof.
1.2 "Annual Fee Settlement" has the meaning given such term in
Section 5.4 hereof.
- --------------
*Certain information has been redacted from this Agreement. The omitted
material has been filed with the Securities and Exchange Commission in a
separate filing pursuant to a request for confidential treatment.
<PAGE> 2
1.3 "Annual Order Amount" means the dollar amount that Distributor
shall purchase from Supplier of the Products during each Annual Period, which
amounts are set forth in Schedule A hereto, as may be adjusted as set forth
herein.
1.4 "Annual Period" means each of the twelve month periods ending
July 11, 1998, 1999, 2000, 2001 and 2002.
1.5 "Base Period" has the meaning given such term in Section 3.1
hereof.
1.6 "Change of Control" has the meaning given such term in Section
11.2 hereof.
1.7 "Claim" has the meaning given such term in Section 14.1 hereof.
1.8 "Excess Order Amount" has the meaning given such term in Section
3.2 hereof.
1.9 "Information" has the meaning given such term in Section 10.1
hereof.
1.10 "Low Voltage Products" means sound, security, IMSA cable
products, fire alarms, plenum and non-plenum.
1.11 "Other Products" means coaxial cable, specialty FEP products,
control and instrumentation cable, and such other industrial products as
manufactured by Supplier other than Low Voltage Products.
1.12 "Minimum Order Amount" means the minimum dollar amount of
Products that Distributor must purchase from Supplier in a given Annual Period,
which amount shall be equal to ninety percent (90%) of the Annual Order Amount
for such Annual Period.
1.13 "Order" has the meaning given such term in Section 4.1 hereof.
1.14 "Payment Due Date" has the meaning given such term in Section
5.2 hereof.
1.15 "Products" means, collectively, the Low Voltage Products and
Other Products.
1.16 "Purchase Price" has the meaning given such term in Section 4.2
hereof.
1.17 "Qualified Vendor" means those vendors that supply the full
range of products supplied by Supplier, is of comparable or greater size to
Supplier, sells comparable or greater quantities of Products as Supplier and
sells products of comparable quality as Supplier's products.
-2-
<PAGE> 3
1.18 "Term" has the meaning given such term in Section 2.2 hereof.
2. AGREEMENT AND TERM.
2.1 During the term of this Agreement, Supplier will sell to
Distributor and Distributor shall purchase from Supplier the Products in
accordance with the terms and conditions set forth in this Agreement. Supplier
agrees to fill Distributor's orders for the Products in accordance with the
terms of this Agreement.
2.2 The term of this Agreement shall be five (5) years, commencing
on the date hereof, unless earlier terminated pursuant to Section 11 (the
"Term"). Any renewal or extension of this Agreement may only be effected by a
written agreement of the parties hereto. Neither party shall be obligated to
renew or extend the duration of this Agreement upon the expiration of the Term.
3. QUANTITIES.
3.1 During each Annual Period, Distributor agrees to purchase from
Supplier the Annual Order Amount of Products, as set forth on Schedule A hereto
under the caption "Annual Order Amount"; provided, that the sole remedy for
Distributor's failure to purchase such amounts shall be as set forth in Section
3.3 below. For purposes of this Agreement, Products are deemed to be purchased
in an Annual Period if the earlier of the following dates fall within such
Annual Period: (i) the Acknowledged Delivery Date or (ii) the date on which the
Products are shipped. As an inducement to Distributor's agreement to the
foregoing, Supplier represents and warrants that the Division purchased at least
$13 million in Low Voltage Products from Supplier during the twelve months prior
to the date of this Agreement (the "Base Period") based upon prices comparable
to those prices at which Distributor currently purchases comparable products
(the "Division Purchases"); provided, however, that the parties acknowledge that
the Division Purchases including amounts attributable to sales by Signal Sales
Corp. which have been annualized based on results realized since its acquisition
by Supplier. If this representation is not true, each of the Annual Order
Amounts will be adjusted by multiplying them by a fraction equal to the actual
dollar amount of purchases of Low Voltage Products by the Division from Supplier
during the Base Period, valued at prices comparable to those currently paid by
Distributor for comparable products, divided by $13 million.
3.2 Notwithstanding anything to the contrary herein, to the extent
that Distributor purchases from Supplier in any given Annual Period an amount
exceeding the Annual Order Amount (the "Excess Order Amount"), Distributor shall
be entitled to a corresponding dollar for dollar reduction in the next Annual
Period's Annual Order Amount, such reduction to be applied against the product
category in which the Excess Order Amount occurs.
3.3 In the event that Distributor fails to purchase the Minimum
Order Amount in any given Annual Period, as Distributor's sole obligation, and
Supplier's sole remedy, for Distributor's failure to purchase any amount
required pursuant to Section 3.1 or
-3-
<PAGE> 4
3.3 of this Agreement, Distributor shall pay to Supplier a fee equal to [*].
3.4 For purposes of this Agreement, in determining whether
Distributor has met the Minimum Order Amount, in addition to Products purchased
in an Annual Period, Distributor shall be credited for all Orders placed by
Distributor pursuant to Section 4.1 during the corresponding Annual Period, but
for which Products ordered were (i) rejected by Distributor pursuant to Section
6 below, or (ii) not purchased by Distributor because the Purchase Price for
such Products ordered by Distributor is more than five percent (5%) higher than
the current written price quote of two separate Qualified Vendors for a
substantially identical product in the same quantity as the amount ordered from
Supplier and Supplier fails to lower such Purchase Price in accordance with
Section 4.3. If Distributor is credited for an Order pursuant to clause (i) of
the first sentence of this paragraph in a given Annual Period and such rejected
Product is delivered in the next Annual Period, Distributor shall not receive
credit for such Product in the next Annual Period. Other than as set forth in
clauses (i) and (ii) of the first sentence of this paragraph, in determining
whether Distributor has met the Minimum Order Amount, Distributor shall not be
credited for any Orders placed by Distributor within the applicable Annual
Period which are not paid by Distributor on or before the corresponding Payment
Due Date.
3.5 To the extent that any Orders are placed by any subsidiaries of
Parent pursuant to this Agreement, Parent hereby guarantees payment by such
subsidiary in accordance with the terms of this Agreement and agrees that it
will sign such other documentation as may be reasonably requested by Supplier in
order to further evidence such guarantee of payment. In reliance on the
foregoing, the parties agree that any Orders placed by any subsidiary of Parent
shall be included as Orders placed by Distributor for purposes of this
Agreement. Notwithstanding the foregoing, in the event that any of the companies
set forth on Schedule B to this Agreement shall become subsidiaries of, or
acquired by, Distributor (in each case, an "Acquired Company"), and such
Acquired Company is then subject to a supply agreement with Supplier that is not
terminable at will and is not binding on the successor in the case of a change
of control of the Acquired Company, then the Annual Order Amount for each period
following such acquisition or change of control shall be increased by an amount
(an "Acquisition Increase") equal to 50% of the dollar amount of Products
purchased by the Acquired Company during the twelve months prior to the
acquisition or change of control; provided that any such Acquisition Increase
shall take effect 90 days after the effective date of the acquisition or change
of control and the Annual Order Amount shall be increased for the Annual Period
in which the acquisition or change of control occurs by an amount equal to the
Acquisition Increase multiplied by a fraction equal to the number of days
remaining in such Annual Period following the 90th day after the acquisition or
change of control divided by 365.
- --------
*Information Redacted. Omitted material has been filed with the Commission
in a separate filing pursuant to a request for confidential treatment.
-4-
<PAGE> 5
4. ORDERS; PRICE.
4.1 Distributor may place orders for the Products with Supplier by
electronic transmission, by written memorandum, by use of a written purchase
order, or by such other method as mutually agreed to between the parties
(collectively referred to herein as "Order" or "Orders"). Notwithstanding the
foregoing, Distributor will not place orders by electronic transmission if
Supplier has not set up a system to receive such orders; provided, however, that
Supplier shall use its commercially reasonable efforts to set up such a system
as soon as practicable and in any event, no later than the beginning of the
second Annual Period. Supplier shall accept Orders in writing or by initiation
of performance. Distributor and Supplier shall agree upon a delivery location, a
delivery date, and any other details required in order to procure the products
requested by Distributor. Except as otherwise agreed upon by the parties,
Distributor may cancel an Order or any portion thereof without charge or penalty
by giving notice to Supplier of such cancellation, which notice shall be given
at least five (5) business days prior to the date on which the Products
requested in such Order are packaged in the ordinary course of business;
provided, however, that Distributor may not cancel an Order for any Products
which consist of cable manufactured to customized specifications provided by
Distributor or are otherwise not marketable by Supplier to other persons at
comparable prices. Such cancelled Orders shall not be deemed Orders under this
Agreement. Supplier agrees that, from time to time and upon Distributor's
request, Supplier will delay or hold shipments to Distributor until Distributor
notifies Supplier to commence shipment, provided that Supplier will not be
obligated to delay or hold shipments for more than 30 days without its prior
consent, which consent Supplier agrees not to unreasonably withhold.
4.2 The purchase price paid by Distributor for any Product (the
"Purchase Price") will be agreed upon by Supplier and Distributor; provided,
however, if Supplier generally increases its prices, Supplier will give
Distributor ninety (90) days advance written notice thereof; unless the price
increase is attributable to a cost increase for copper, in which case such price
increase will be determined in accordance with ten cent increments, or
"windows", based on the Camden copper base. For example, if the Camden copper
base increased by nine cents over the present price, no increase would be
applicable; however, if the Camden copper base then increased by an additional
cent so that it increased by ten cents or more, the price would be increased to
reflect the full Camden copper base increase. On reasonable request by
Distributor, Supplier agrees to provide Distributor with documentation
substantiating any such price increase. The failure of the parties to agree upon
a Purchase Price in accordance with this Section 4.2 shall not reduce or
eliminate Distributor's obligation to purchase Products hereunder or pay the fee
provided for in Section 3.3 hereof except to the extent otherwise provided in
this Agreement.
4.3 Notwithstanding anything to the contrary herein, in the event
that Distributor receives a written price quote from at least two Qualified
Vendors to supply a product that is the functional equivalent of a Product for a
price that is at least five percent (5%) less than Supplier's then-current price
quote for that Product, Distributor shall notify Supplier of such lower price.
If Supplier has failed, within thirty (30) days from the date of the notice, to
notify Distributor that it has lowered its prices for the Products ordered such
that the Purchase Price in question is less than or equal to the price quoted by
such Qualified
-5-
<PAGE> 6
Vendors, Distributor may order such product in such quantities at the lower
price from such Qualified Vendors, and Distributor shall be credited for such
orders in determining the Minimum Order Amount pursuant to Section 3.4.
4.4 Within seventy-five (75) days after the end of each Annual
Period, Supplier agrees to pay Distributor an amount (the "Annual Payment")
based on payments timely made to Supplier on Orders shipped during such Annual
Period (the "Payment Amount"), determined as follows:
<TABLE>
<CAPTION>
==========================================================
* Payment Amount Incremental %
----------------------------------------------------------
<S> <C> <C>
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
==========================================================
</TABLE>
The percentages are applicable for the corresponding range of
Payment Amount. For example, [*].
In determining the Annual Payment for a given Annual Period, the
Payment Amount shall also include amounts which have not been paid to Supplier
if such amounts arise from Orders shipped during the applicable Annual Period
and paid after such Annual Period but on or before the Payment Due Date for such
Orders.
5. INVOICE; PAYMENT; SHIPMENT AND DELIVERY.
5.1 Supplier shall invoice Distributor for Products on or after said
Products are shipped. A "correct" invoice shall contain (i) Supplier's name and
invoice date, (ii) a reference to the specific Order number and (iii)
description, price, and quantity of the products actually delivered. A correct
invoice must be submitted to the appropriate invoice address listed on the
Order.
5.2 Payment for the Products purchased hereunder shall be due in
full net [* ] from the later of the date of invoice or delivery (or, if
Distributor has requested that Supplier delay or hold a shipment pursuant to
Section 4.1, payment shall be due in full net [* ] from the later of the date of
invoice and the date of Distributor's request to delay or hold such shipment);
provided, however, that Distributor shall not be in default of its payment
obligations hereunder if Distributor, from time to time
- ------------------
*Information Redacted. Omitted material has been filed with the Commission
in a separate filing pursuant to a request for confidential treatment.
-6-
<PAGE> 7
due to unforeseen circumstances, remits such payment to Supplier no later than
[* ] after the scheduled due date (after giving effect to any such grace
periods, the "Payment Due Date"). Notwithstanding anything to the contrary
contained herein, in no event shall Supplier be required to ship Products to
Distributor at any time that Distributor has a past due balance (i.e., amounts
not paid by the Payment Due Date), provided, however, that such unpaid amounts
are not due to a bona fide dispute. The failure of Supplier to sell or ship
Products pursuant to the immediately preceding sentence shall not constitute a
breach of this Agreement and shall in no way reduce Distributor's liability for
failure to purchase Products pursuant to Section 3.3 hereof. Products shall be
shipped via surface freight F.O.B. destination, which destination shall be
within the continental United States. Charges for transportation of the
Products, including, but not limited to, those for packing, insuring and freight
shipping charges, shall be paid in accordance with Supplier's standard terms and
conditions of sale. Without limiting the generality of the foregoing, Supplier
shall pay for all transportation charges for Orders having a weight greater than
2,500 pounds.
5.3 Supplier will use all commercially reasonable efforts to deliver
the Products to Distributor by a delivery date mutually agreed upon by the
parties, which date shall take into account any concentration of Orders in a
particular time period and Supplier's capacity to fill such Orders (the
"Acknowledged Delivery Date"). In the event that Supplier fails to deliver to
Distributor at least [* ] of the Products ordered during an Annual Period within
[* ] after the Acknowledged Delivery Date, Supplier will pay to Distributor a
fee equal to [*]. Without limiting Distributor's other rights to cancel an
Order, in the event that Supplier fails to deliver such Products within [* ]
after the Acknowledged Delivery Date, Distributor shall have the option to
cancel such Orders, and Distributor shall be credited for such Orders as part of
the Annual Order Amount for the applicable product category but such amounts
shall not be considered in the determination of the Payment Amount.
5.4 On or before the 75th day following each Annual Period, Supplier
will prepare or cause to be prepared and delivered to Distributor a calculation
of any fees due and owing pursuant to either Section 3.3 or Section 5.3 of this
Agreement (the "Annual Fee Settlement"). If Distributor disagrees with the
Annual Fee Settlement, Distributor shall notify Supplier in writing of such
disagreement within 30 days after the date on which Distributor received the
Annual Fee Settlement, which written notice shall specify the nature of the
dispute and shall provide in reasonable detail the facts upon which such dispute
is based. Thereafter Supplier and Distributor shall attempt in good faith to
resolve such disagreement with respect to the Annual Fee Settlement. If Supplier
and Distributor are unable to resolve any disagreement regarding an Annual Fee
Settlement within 20 days after Supplier's receipt of such notice of
disagreement, Supplier and Distributor shall submit such disagreement to
arbitration in accordance with Section 14 below.
- ------------------
*Information Redacted. Omitted material has been filed with the Commission
in a separate filing pursuant to a request for confidential treatment.
-7-
<PAGE> 8
6. INSPECTION AND ACCEPTANCE.
All Products purchased from Supplier are subject to inspection and
approval by Distributor, notwithstanding the receipt of payment therefor. If any
Product is rejected, such Product will be held subject to Supplier's direction
and expense. Products may be rejected only for (i) failure to conform to
Supplier's specifications, which specifications have been provided to
Distributor, or the IMSA Code, or (ii) Supplier has otherwise materially
breached any warranty set forth in Section 7. Upon Supplier's receipt of
rejected Products, and upon the parties' mutual agreement: (i) Supplier shall
promptly send replacement Products to Distributor, at no additional cost to
Distributor (other than the Purchase Price) or (ii) to the extent payment has
been made, Supplier shall promptly credit Distributor for the full Purchase
Price of any rejected Products.
7. REPRESENTATIONS, WARRANTIES AND INDEMNIFICATION.
Supplier warrants to Distributor that the Products sold hereunder
and delivered by Supplier do not infringe any patent rights of third parties
when used for their intended purpose and Supplier shall hold Distributor
harmless from any such claims; provided Supplier is given prompt notice of any
such claim and the full right to defend any action in connection therewith; and
provided further, however, that no such warranty is extended if and to the
extent that any Products are made in accordance with specifications or designs
supplied by Distributor. Supplier represents and warrants that the foregoing
warranty is Supplier's standard warranty and that Supplier has not given more
favorable warranty terms to any other party. In the event that Supplier offers
more favorable warranty terms for comparable products to any other party during
the Term of this Agreement, Supplier shall offer such warranty to Distributor
with respect to such Products hereunder.
8. LIMITED LIABILITY.
THE WARRANTIES SET FORTH IN SECTION 7 ABOVE ARE IN LIEU OF ALL OTHER
WARRANTIES, WHETHER EXPRESSED OR IMPLIED, INCLUDING WITHOUT LIMITATION, ANY
IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, IN NO EVENT SHALL
EITHER PARTY BE LIABLE FOR SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL
DAMAGES, WHETHER IN CONTRACT, TORT, NEGLIGENCE, STRICT LIABILITY OR OTHERWISE,
INCLUDING BUT NOT LIMITED TO LOSS OF PROFITS OR REVENUE.
9. COVENANTS OF SELLER.
Seller hereby covenants that upon the commencement of the second
Annual Period, it shall have, or shall cause Seller Division to have, made
available to Distributor for purchase hereunder coaxial cable, specialty FEP
products, control and instrumentation cable.
-8-
<PAGE> 9
10. CONFIDENTIAL INFORMATION.
10.1 To the extent that any confidential information, which might
include but is not limited to business plans, forecasts, capacity, pricing,
inventory levels, etc., which is marked or labeled as confidential information
(collectively, the "Information"), is disclosed in furtherance of this Agreement
or any Order issued hereunder, such Information shall be so disclosed pursuant
to the minimum terms and conditions listed below; provided, however, the minimum
terms and conditions listed below shall in no way relieve the parties from any
obligations or modify such obligations previously agreed to in other agreements.
10.2 Both parties agree that the party receiving Information will
maintain such Information in confidence for a period of three years from the
date of disclosure of such Information.
10.3 Each party shall protect the other party's Information to the
same extent that it protects its own confidential and proprietary information
and shall take all reasonable precautions to prevent unauthorized disclosure to
third parties.
10.4 The parties acknowledge that the unauthorized disclosure of
such Information will cause irreparable harm. Accordingly, the parties agree
that the injured party shall have the right to seek immediate injunctive relief
enjoining such unauthorized disclosure.
10.5 The provisions of this Section 10 shall not apply to
information (i) known to the receiving party at the time of receipt from the
other party, (ii) generally known or available or becomes known or available to
the public through no act or failure to act by the receiving party, (iii)
furnished to third parties by the disclosing party without restriction on
disclosure, (iv) furnished to the receiving party by a third party as a matter
of right and without restriction on disclosure, (v) furnished as required by
court order or similar governmental authority or by the imminent likelihood
thereof or by applicable law or by order of an arbitrator or (vi) is
independently developed without use or reliance on the Information and can be so
proven by written records.
10.6 Immediately upon termination of this Agreement or at the
request of the other party, each of the parties shall promptly return all
materials in its possession containing Information of the other party,
regardless of who prepared the materials.
11. TERMINATION.
11.1 This Agreement may be terminated at the discretion of either
party hereto upon the occurrence of any one of the following defaults by the
other party by delivery to the defaulting party of written notice of such
termination specifying the effective date of such termination therein, which
date of termination shall in no event be less than 60 days after the date of
notice:
(a) Failure by any party hereto to pay an amount due hereunder when
due, provided, however, that such failure shall not give rise to termination
hereunder if (i) such
-9-
<PAGE> 10
party shall have remitted such amount past due within thirty (30) days of the
actual or deemed receipt of notice of failure to pay; or (ii) such failure is
due to a bona fide dispute, provided payment is made within 15 days after
resolution of the dispute requiring payment; or
(b) Material breach by any party hereto of any material
representation, warranty, covenant, condition or agreement hereunder and such
breach shall have continued, if applicable, for thirty (30) days after the
actual or deemed receipt of notice to cure the same.
11.2 This Agreement may be terminated by either party (the
"Terminating Party") upon a Change of Control of the other party (the "Acquired
Party") which is entered into without the prior consent of the Terminating
Party; provided that Distributor agrees that it will not withhold such consent
unless it reasonably believes that the surviving entity following the Change of
Control will not be able to consistently deliver to Distributor the quality of
Product and responsiveness and service that Supplier provided to Distributor
prior to such Change of Control, and provided further that Supplier agrees that
it will not withhold such consent unless it reasonably believes that the
surviving entity following the Change of Control poses a greater credit risk to
Supplier than Distributor. For purposes of this Agreement, "Change of Control"
means any event or series of events by which (i) any person or group (as defined
in Rule 13d-1 of the Securities Exchange Act of 1934, as amended) obtains a
majority (by voting or otherwise) of the securities ordinarily having the right
to vote in the election of directors of the Acquired Party or any parent
corporation thereof; (ii) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all, or substantially all,
of the assets of any of the Acquired Party, any parent corporation thereof or,
in the case of Seller, the Seller Division; (iii) the merger or consolidation of
the Acquired Party or any parent corporation thereof with or into another
corporation or the merger of another corporation with and into the Acquired
Party or any parent corporation thereof, as the case may be, with the effect
that immediately after such transaction any beneficial owner shall have become
the beneficial owner of such securities of the surviving corporation of such
merger or consolidation representing a majority of the combined voting power of
the outstanding securities of the surviving corporation ordinarily having the
right to vote in the election of directors; or (iv) the adoption of a plan
leading to the liquidation or dissolution of either the Acquired Party or any
parent corporation thereof.
12. FORCE MAJEURE.
Neither party shall be liable for any failure to perform any
obligation hereunder, except for the payment of money, resulting from acts of
God, fire, flood, tornado, drought, explosion or other casualty, strikes or
other labor problems, interruptions or shortage of transport facilities,
inability to obtain raw materials or component parts, war, riot, embargo,
national emergency, legal restrictions or any other causes beyond its reasonable
control, but due diligence shall be used in attempting to eliminate such
cause(s) and, upon such elimination the parties shall immediately resume
performance in accordance with the terms of this Agreement.
-10-
<PAGE> 11
13. SURVIVAL.
All obligations of the parties incurred under Sections 7, 8, and 10
shall survive upon the termination or expiration of this Agreement.
14. ARBITRATION.
14.1 In the event that any controversy or claim ("Claim") shall
arise under or related to this Agreement, the parties agree to settle such Claim
by binding arbitration pursuant to the Commercial Arbitration Rules of the
American Arbitration Association (the "AAA Rules") as in effect on the date
hereof. In all events, however, the arbitration provisions in this Section 15
shall govern over any conflicting rules which may now or hereafter be contained
in the AAA Rules. Any judgment upon the award rendered by the arbitrator may be
entered in any court having jurisdiction over the subject matter thereof. The
arbitrator shall (i) not be bound by the rules of evidence or civil procedure
but rather may consider such writings or oral presentations as a reasonable
businessperson would use in the conduct of the day-to-day conduct of affairs,
and may require the parties to submit some or all of their presentation orally
or in written form as the arbitrator may deem appropriate and (ii) have the
authority to grant any equitable and legal remedies that would be available in
any judicial proceeding instituted to resolve a contested claim. As soon as an
arbitrator has been agreed upon, a hearing date shall be set as soon thereafter
as determined by the arbitrator. Written submittals shall be presented and
exchanged by both parties as determined by the AAA Rules, including reports
prepared by experts upon whom either party intends to rely. At such time the
parties will also exchange copies of all documentary evidence upon which they
will rely at the arbitration hearing and a list of witnesses whom they intend to
call to testify at the hearing. Each party shall also make its respective
experts available for deposition by the other party prior to the hearing date.
The arbitrator shall make his award as promptly as practicable after conclusion
of the hearing.
14.2 Any such arbitration will be conducted before a single
arbitrator who will be compensated for his or her services at a rate to be
determined by the parties or by the American Arbitration Association, but based
upon reasonable hourly or daily consulting rates for the arbitrator in the event
the parties are not able to agree upon his or her rate of compensation.
14.3 The American Arbitration Association, in accordance with the
AAA Rules, will have the authority to select an arbitrator from a list of
arbitrators who are partners in a nationally recognized firm of independent
certified public accountants from the management advisory services department
(or comparable department or group) of such firm or are partners in a major law
firm acceptable to Distributor and Supplier; provided, however, that (i) such
firm cannot be the firm of certified public accountants then auditing the books
and records of either party or providing management or advisory services for
either party.
14.4 Distributor and Supplier each shall pay 50% of the initial
compensation to be paid to the arbitrator in any such arbitration and 50% of the
costs of transcripts and other normal and regular expenses of the arbitration
proceedings.
-11-
<PAGE> 12
14.5 For any Claim submitted to arbitration, the burden of proof
will be as it would be if the claim were litigated in a judicial proceeding.
14.6 Upon the conclusion of any arbitration proceedings hereunder,
the arbitrator will render findings of fact and conclusions of law and a written
opinion setting forth the basis and reasons for any decision reached and will
deliver such documents to each party to this Agreement along with a signed copy
of the award.
14.7 The arbitrator chosen in accordance with these provisions will
not have the power to alter, amend or otherwise affect the terms of these
arbitration provisions or the provisions of this Agreement.
14.8 Except as specifically otherwise provided in this Agreement,
arbitration will be the sole and exclusive remedy of the parties for any Claim
arising out of this Agreement.
15. MEDIA RELEASES.
Neither party will issue any press release relating to this
Agreement unless such disclosure is required by applicable law or the rules or
regulations of any securities exchange or NASDAQ; provided, however, that
Supplier agrees that it, or any of its affiliates, shall not make any such
disclosure with NASDAQ (or such other securities exchange or trading market
where the securities of Supplier or any of its affiliates are traded) without
using its best efforts to first obtain Distributor's consent thereto, and
Distributor agrees that it will promptly respond to Supplier with respect to
such disclosure and will not unreasonably withhold consent hereunder.
16. MISCELLANEOUS.
16.1 Notices. All notices and demands of any kind which either party
may be required or desire to serve upon the other under the terms of this
Agreement shall be in writing, and shall be served either by (i) personal
delivery, (ii) overnight courier, or (iii) telecopy or facsimile, in each case
at the addresses set forth below or at such other addresses as may be designated
by the parties in writing or, if applicable, to the telecopy or facsimile number
set forth below. If by personal delivery or overnight courier, service shall be
deemed complete upon such delivery. If by telecopy or facsimile, service shall
be deemed complete at the end of the day upon which the telecopy or facsimile is
transmitted, provided a copy of the notice or demand is also sent by regular
mail.
If to Distributor, to:
Anicom, Inc.
6133 N. River Road
Suite 1000
Rosemont, Illinois 60018
Attention: Carl E. Putnam
Facsimile: (847) 518-8777
-12-
<PAGE> 13
with a copy to:
Katten Muchin & Zavis
525 W. Monroe Street
Suite 1600
Chicago, Illinois 60661
Attention: Jeffrey R. Patt, Esq.
Facsimile: (312) 902-1061
If to Supplier, to:
Connectivity Products Incorporated
680 Mechanic Street
Suite 1201
Leominster, Massachusetts 01453
Attention: James S. Harrington
Facsimile: (508) 840-3724
with a copy to:
Zimet, Haines, Friedman & Kaplan
460 Park Avenue
9th Floor
New York, New York 10022
Attention: Herbert M. Friedman, Esq.
Facsimile: (212) 223-1151
16.2 Entire Agreement. This Agreement is the entire agreement
between the parties hereto with respect to the Products, there being no prior
written or oral promises or representations not incorporated herein.
16.3 Applicable Law. This Agreement shall be governed by the law of
the State of Michigan, applicable to contracts made and to be performed in that
state, exclusive of any conflicts of law principles.
16.4 Amendments. No amendment or modification of the terms of this
Agreement shall be binding on either party unless reduced to writing and signed
by an authorized representative of the party to be bound.
16.5 Assignment. This Agreement shall not be assigned by either
party; provided, that Distributor may assign this Agreement in connection with
any sale of all or substantially all of its assets; and provided further that
Supplier may assign this Agreement in connection with any sale of all or
substantially all of its assets, subject to the terms and conditions set forth
in Section 11.2 above.
-13-
<PAGE> 14
16.6 Relationship of Parties. The relationship between Distributor
and Supplier hereunder is that of vendor and vendee. Each party shall be
considered an independent contractor, and neither party shall have any right or
authority to assume or create any express or implied obligation on behalf of the
other, except as otherwise provided herein.
16.7 Severability. In the event that any of the provisions of this
Agreement or the application of any such provisions to the parties hereto with
respect to their obligations hereunder shall be held by a court or other
tribunal of competent jurisdiction to be unlawful or unenforceable, the
remaining provisions of this Agreement shall remain in full force and effect.
16.8 Counterparts. This Agreement may be executed in counterparts,
each of which together shall be deemed an original, but all of which together
shall constitute one and the same instrument.
-14-
<PAGE> 15
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
CONNECTIVITY PRODUCTS INCORPORATED ANICOM, INC.
By: /s/ James S. Harrington By: /s/ Carl Putanam
---------------------------- -----------------------------
Its: President and CEO Its: President
-15-
<PAGE> 16
SCHEDULE A
Purchase Amounts
<TABLE>
<CAPTION>
Year Product Target Amount Annual Order Amount
- ---- ------- ------------- -------------------
<S> <C> <C> <C>
1 Low Voltage Products $[* ] $[* ]
2 Low Voltage Products $[* ] $[* ]
Other Products $[* ]
3 Low Voltage Products $[* ] $[* ]
Other Products $[* ]
4 Low Voltage Products $[* ] $[* ]
Other Products $[* ]
5 Low Voltage Products $[* ] $[* ]
Other Products $[* ]
TOTAL AMOUNT $[* ]
</TABLE>
- ------------------
* Information Redacted. Omitted material has been filed with the
Commission in a separate filing pursuant to a request for confidential
treatment.
-16-
<PAGE> 17
SCHEDULE B
Certain Customers
[*
]
- ------------------
* Information Redacted. Omitted material has been filed with the
Commission in a separate filing pursuant to a request for confidential
treatment.
-17-
<PAGE> 1
CONNECTIVITY PRODUCTS INCORPORATED
SIXTH AMENDMENT
TO
AMENDED AND RESTATED
REVOLVING CREDIT AND TERM LOAN AGREEMENT
This SIXTH AMENDMENT (this "Amendment"), dated as of July 11, 1997, is
among CONNECTIVITY PRODUCTS INCORPORATED, a Delaware corporation (the
"Borrower"), NBD BANK as Administrative Agent (the "Administrative Agent"),
BANKBOSTON, N.A., f/k/a THE FIRST NATIONAL BANK OF BOSTON as Documentation Agent
(the "Documentation Agent", and together with the Administrative Agent, the
"Co-Agents") for the lending institutions (the "Banks") listed on Schedule 1 to
the Credit Agreement (as hereinafter defined) and the Banks.
WHEREAS, the Borrower, the Banks and the Co-Agents are parties to that
certain Amended and Restated Revolving Credit and Term Loan Agreement, dated as
of May 31, 1996 (as amended by the First Amendment to Amended and Restated
Revolving Credit and Term Loan Agreement, dated as of August 26, 1996, the
Second Amendment to Amended and Restated Revolving Credit and Term Loan
Agreement, dated as of September 30, 1996, the [First Amendment of Certain
Security Documents and Subordination Agreement and] Third Amendment to Amended
and Restated Revolving Credit and Term Loan Agreement, dated as of February 24,
1997, the Fourth Amendment to Amended and Restated Revolving Credit and Term
Loan Agreement, dated as of March 31, 1997, and the Fifth Amendment to Amended
and Restated Revolving Credit and Term Loan Agreement, dated as of June 27, 1997
the "Credit Agreement"), pursuant to which the Banks, upon certain terms and
conditions, have made loans to and may issue letters of credit for the benefit
of the Borrower; and
WHEREAS, the Borrower had requested that the Banks agree, and the Banks
have agreed, on the terms and subject to the conditions set forth herein, to
make certain changes to the Credit Agreement;
NOW, THEREFORE, the parties hereto hereby agree as follows:
SECTION 1. DEFINED TERMS. Capitalized terms which are used herein without
definition and which are defined in the Credit Agreement shall have the same
meanings herein as in the Credit Agreement.
SECTION 2. AMENDMENT OF CREDIT AGREEMENT. The Credit Agreement is hereby
amended as follows:
(a) Section 1.1 of the Credit Agreement is amended as follows:
(i) the definition of Applicable Margin is amended by deleting the
table contained in such definition and restating it in its entirety
as follows:
<PAGE> 2
- 2 -
<TABLE>
<CAPTION>
=================================================================================
Base Rate LIBOR Rate Commitment
Coverage Ratio Loans Loans Fee
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than 4.00 and 1.00% 2.75% .500%
Greater than 3.00:1.00
- ---------------------------------------------------------------------------------
Less than 3.00 and 0.50% 2.25% .500%
Greater than 2.00:1.00
- ---------------------------------------------------------------------------------
Less than 2.00:1.00 0.00% 1.75% .375%
- ---------------------------------------------------------------------------------
</TABLE>
(ii) the definition of Conversion Date is amended by deleting the
date "May 31, 1998" and substituting the date "May 31, 1999"
therefor.
(iii) the definition of Term Loan A is amended deleting the amount
"$18,600,000" and substituting the amount "$12,000,000" therefor.
(iv) the definition of Security Documents is amended by adding the
text "the Borrower Stock Pledge Agreement," immediately after the
term "Stock Pledge Agreement," contained in such definition.
(b) Section 1.1 of the Credit Agreement is further amended by adding the
following new definition in the appropriate alphabetical order:
Borrower Stock Pledge Agreement. The Stock Pledge Agreement, dated as of
July 11, 1997, between the Borrower and the Administrative Agent and in
form and substance satisfactory to the Banks and the Co-Agents.
(c) Section 4.4.1 of the Credit Agreement is amended by deleting such
Section 4.4.1 and restating it in its entirety as follows:
4.4.1. TERM LOAN A. The Borrower promises to pay to the Administrative
Agent for the account of the Banks the principal amount of the Term Loan A
in twenty (20) consecutive quarterly installments, payable on the last
Business Day of each calendar year quarter ending within any period set
forth below in the amount set forth opposite such period, commencing on
September 30, 1997 with a final payment on the Term Loan A Maturity Date
in an amount equal to the unpaid balance of the Term Loan A.
<PAGE> 3
- 3 -
<TABLE>
<CAPTION>
=================================================================================
Percentage of
Amount of Total Original Principal
Period Annual/Quarter Installment Amount of Term Loan A
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
<S> <C> <C>
07/01/97 - 06/30/98 $600,000($150,000/qtr.) 5%
- ---------------------------------------------------------------------------------
07/01/98 - 12/31/98 $600,000($300,000/qtr.) 5%
- ---------------------------------------------------------------------------------
01/01/99 - 12/31/99 $2,400,000($600,000/qtr.) 20%
- ---------------------------------------------------------------------------------
01/01/00 - 12/31/00 $3,000,000($750,000/qtr.) 25%
- ---------------------------------------------------------------------------------
01/01/01 - 12/31/01 $3,000,000($750,000/qtr.) 25%
- ---------------------------------------------------------------------------------
01/01/02 - 03/31/02 $1,800,000($1,800,000/qtr.) 15%
04/01/02 - 05/31/02 $600,000 5%
- ---------------------------------------------------------------------------------
</TABLE>
(d) Section 4.4.2 of the Credit Agreement is amended by (i) deleting the
number "sixteen (16)" and substituting the number "thirteen (13)" therefor
and (ii) deleting the date "September 30, 1998" and substituting the date
"June 30, 1999" therefor.
(e) Section 4.5 of the Credit Agreement is amended by deleting the date
"June 30, 1997" and substituting the date "December 31, 1998" therefor.
(f) Section 10.2 of the Credit Agreement is amended by (i) deleting the
word "and" at the end of clause (h), (ii) deleting the period at the end
of clause (i) and substituting a semicolon and the word "and" therefor and
(iii) adding the following new clause (j):
(j) during the "Term" pursuant to and as defined in the Stock Escrow
Agreement, dated as of July 11, 1997, among Anicom, Inc. ("Anicom"),
Reel Acquisition Corp. ("Acquisition Corp.") and Harris Trust and
Savings Bank, as Escrow Agent thereunder, liens in favor of Anicom
on the common stock of Anicom issued to and owned by the Borrower.
(g) Sections 11.1 through 11.5 and Section 11.7 of the Credit Agreement
are amended as follows: -
(i) Section 11.1 is amended by deleting such Section 11.1 and
restating it in its entirety as follows:
11.1. CONSOLIDATED NET WORTH. The Borrower will not permit
Consolidated Net Worth commencing with the fiscal quarter ended
September 30, 1997 to be less than $5,000,000, plus 75% of
Consolidated Net Income on a cumulative basis as at each fiscal
quarter end as set forth in the Compliance Certificate delivered
pursuant to Section 9.4(c).
(ii) Section 11.2 is amended by deleting such Section 11.2 and
restating it in its entirety as follows:
<PAGE> 4
- 4 -
11.2. SENIOR FUNDED DEBT TO EBITDA. The Borrower will not, as at the
end of any Reference Period ending during any period described in
the table set forth below, permit the ratio of Senior Funded Debt to
Consolidated EBITDA to exceed the ratio set forth opposite such
period in such table:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
09/30/97-12/31/98 4.00:1.00
01/01/99-12/31/99 3.25:1.00
Thereafter 2.50:1.00
</TABLE>
(iii) Section 11.3 is amended by deleting such Section 11.3 and
restating it in its entirety as follows:
11.3. TOTAL FUNDED DEBT TO EBITDA. The Borrower will not, as at the
end of any Reference Period ending during any period described in
the table set forth below, permit the ratio of Total Funded Debt to
Consolidated EBITDA to exceed the ratio set forth opposite such
period in such table:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
09/30/97-12/31/98 5.25:1.00
01/01/99-12/31/99 4.25:1.00
Thereafter 3.50:1.00
</TABLE>
(iv) Section 11.4 is amended by deleting the ratio "2.50:1.00" and
substituting the ratio "2.00:1.00" therefor.
(v) Section 11.5 is amended by deleting such Section 11.5 and
restating it in its entirety as follows:
11.5. FIXED CHARGE COVERAGE RATIO. The Borrower will not, as at the
end of any Reference Period ending on September 30, 1997 and
thereafter, permit the ratio of (i) the sum of (A) Consolidated
EBITDA, plus (B) Rental Obligations with respect to all operating
leases for equipment of the Borrower and its Subsidiaries made
during such period, minus (C) Non-Discretionary Capital Expenditures
made during such period to (ii) the sum of (A) Consolidated Total
Expense for such period, plus (B) all mandatory scheduled payments
of Term Loan A and Term Loan B, plus (C) Rental Obligations with
respect to all operating leases of the Borrower and its Subsidiaries
made during such period, plus all cash taxes and dividends paid
during such period, to be less than 1.3:1.00.
For the purposes of this Section 11.5, Consolidated EBITDA shall be
calculated by (i) annualizing Consolidated EBITDA determined at the
end of the nine month period ending September 30, 1997, (ii)
including the gain realized with respect to the inventory of the
<PAGE> 5
- 5 -
EEC division of the Borrower from the sale of such division to
Acquisition Corp. and (iii) excluding from such calculation any
other extraordinary non-recurring items of gain with respect to such
sale. For each Reference Period thereafter, the gain described in
clause (ii) above shall be included in the calculation of
Consolidated EBITDA.
(vi) Section 11.7 is amended by deleting such Section 11.7 in its
entirety.
(g) Schedule 1 to the Credit Agreement is amended by deleting such
Schedule and substituting Schedule 1 attached hereto therefor.
SECTION 3. AMENDMENT FEE. The Borrower shall pay to the Co-Agents on the
effective date of this Amendment an amendment fee in the amount of $25,000
for the pro rata accounts of the Co-Agents.
SECTION 4. CONDITIONS TO EFFECTIVENESS. The effectiveness of this
Amendment shall be subject to receipt by the Administrative Agent of the
following:
(a) This Amendment executed by each of the Borrower, the Banks and
the Co-Agents.
(b) An executed Assignment and Acceptance between each of BKB and
Fleet Bank, N.A. and NBD and Fleet Bank, N.A., substantially in the form
of Exhibit H to the Credit Agreement and evidence of consummation of the
transactions contemplated by each such Assignment and Acceptance.
(c) Amended and restated Notes reflecting the appropriate amounts
after giving effect to each Assignment and Acceptance described in clause
(b) above and this Amendment.
(d) Repayment by the Borrower to the Banks of any amounts required
to be paid pursuant to the terms of the Credit Agreement after giving
effect to this Amendment.
(e) The Borrower Stock Pledge Agreement executed by the Borrower in
form and substance satisfactory to the Banks, evidence of delivery of the
stock certificates to the Escrow Agent under and as defined in the Stock
Escrow Agreement, dated as of July 11, 1997, among Anicom, Acquisition
Corp., the Borrower and Harris Trust and Savings Bank, as Escrow Agent
(the "Escrow Anent"), and stock powers executed in blank by the Borrower.
(f) The Registration Rights Agreement, dated as of July 11, 1997 and
executed by each of Anicom and the Borrower, a copy of the Escrow
Agreement and a copy of the Asset Purchase Agreement, dated July 11, 1997
among Anicom, Acquisition Corp., and the Borrower, each in form and
substance satisfactory to the Banks (collectively, the "Sale Documents").
(g) Corporate resolutions of the Borrower with respect to the
transactions contemplated by this Amendment and the Sale Documents.
<PAGE> 6
- 6 -
(h) The opinion of counsel to the Borrower with respect to this
Amendment and the other documents evidencing the rights of the Banks
and/or the obligations of the Borrower to the Banks upon giving effect to
the sale of the EEC division of the Borrower contemplated by 10.5.2 of the
Credit Agreement.
(i) The amendment fee pursuant to Section 3 of this Amendment.
SECTION 5. AFFIRMATION AND ACKNOWLEDGMENT OF THE BORROWER. The Borrower
hereby ratifies and confirms all of its Obligations to the Banks and the
Co-Agents, including, without limitation the Loans, and the Borrower hereby
affirms its absolute and unconditional promise to pay to the Banks the Loans and
all other amounts due under the Credit Agreement as amended hereby.
SECTION 6. REPRESENTATIONS AND WARRANTIES. The Borrower hereby represents
and warrants to the Co-Agents and the Banks as follows:
(a) Representation and Warranties in the Credit Agreement. The
representations and warranties of the Borrower contained in the Credit
Agreement were true and correct in all material respects as of the date
when made and continue to be true and correct in all material respects on
the date hereof, except to the extent of changes resulting from
transactions or events contemplated by the Credit Agreement and the other
Loan Documents and changes occurring in the ordinary course of business
that singly or in the aggregate are not materially adverse to the
Borrower, or to the extent that such representations and warranties relate
expressly to an earlier date.
(b) Authority, Etc. The execution and delivery by the Borrower of
this Amendment and the performance by the Borrower of all of its
agreements and obligations under the Credit Agreement as amended hereby
are within the corporate authority of the Borrower and have been duly
authorized by all necessary corporate action on the part of the Borrower.
(c) Enforceability of Obligations. This Amendment and the Credit
Agreement as amended hereby constitute the legal, valid and binding
obligations of the Borrower, enforceable against the Borrower in
accordance with their terms, except as enforceability is limited by
bankruptcy, insolvency, reorganization, moratorium or other laws relating
to or affecting generally the enforcement of, creditors' rights and except
to the extent that availability of the remedy of specific performance or
injunctive relief is subject to the discretion of the court before which
any proceeding therefor may be brought.
(d) No Default. No Default or Event of Default has occurred and is
continuing, and no Default or Event of Default will exist after execution
and delivery of this Amendment.
SECTION 7. NO OTHER AMENDMENTS OR WAIVERS. Except as expressly provided in
this Amendment, all of the terms and conditions of the Credit Agreement and the
other Loan Documents remain in full force and effect.
<PAGE> 7
- 7 -
SECTION 8. EXPENSES. Pursuant to Section 17 of the Credit Agreement, all
costs and expenses incurred or sustained by the Co-Agents in connection with
this Amendment, including the fees and disbursements of legal counsel for the
Co-Agents in producing, reproducing and negotiating the Amendment, will be for
the account of the Borrower whether or not the transactions contemplated by this
Amendment are consummated.
SECTION 9. EXECUTION IN COUNTERPARTS. This Amendment may be executed in
any number of counterparts, each of which shall be deemed an original, but which
together shall constitute one instrument.
SECTION 10. MISCELLANEOUS. THIS AMENDMENT SHALL BE DEEMED TO BE A CONTRACT
UNDER THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS AND SHALL FOR ALL PURPOSES
BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE COMMONWEALTH OF
MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). The
captions in this Amendment are for convenience of reference only and shall not
define or limit the provisions hereof.
[REMAINDER OF PAGE IS LEFT INTENTIONALLY BLANK]
<PAGE> 8
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as a
document under seal as of the date first above written.
CONNECTIVITY PRODUCTS INCORPORATED
By:/s/ Gregory C. Kowert
----------------------------------------
Gregory C. Kowert, Senior Vice President
NBD BANK, individually and as
Administrative Agent
By: /s/ Erik W. Bakker
----------------------------------------
Erik W. Bakker, Vice President
BANKBOSTON, N.A.
F/K/A THE FIRST NATIONAL BANK
OF BOSTON, individually
and as Documentation Agent
By: /s/ G. Christopher Miller
----------------------------------------
G. Christopher Miller, Vice President
<PAGE> 1
CONNECTIVITY PRODUCTS INCORPORATED
SEVENTH AMENDMENT
TO
AMENDED AND RESTATED
REVOLVING CREDIT AND TERM LOAN AGREEMENT
This SEVENTH AMENDMENT (this "Amendment"), dated as of July 25, 1997, is
among CONNECTIVITY PRODUCTS INCORPORATED, a Delaware corporation (the
"Borrower"), NBD BANK as Administrative Agent (the "Administrative Agent"),
BANKBOSTON, N.A., F/K/A THE FIRST NATIONAL BANK OF BOSTON as Documentation Agent
(the "Documentation Agent", and together with the Administrative Agent, the
"Co-Agents") for the lending institutions (the "Banks") listed on Schedule 1 to
the Credit Agreement (as hereinafter defined) and the Banks.
WHEREAS, the Borrower, the Banks and the Co-Agents are parties to that
certain Amended and Restated Revolving Credit and Term Loan Agreement, dated as
of May 31, 1996 (as amended by the First Amendment to Amended and Restated
Revolving Credit and Term Loan Agreement, dated as of August 26, 1996, the
Second Amendment to Amended and Restated Revolving Credit and Term Loan
Agreement, dated as of September 30, 1996, the [First Amendment of Certain
Security Documents and Subordination Agreement and] Third Amendment to Amended
and Restated Revolving Credit and Term Loan Agreement, dated as of February 24,
1997, the Fourth Amendment to Amended and Restated Revolving Credit and Term
Loan Agreement, dated as of March 31, 1997, and the Fifth Amendment to Amended
and Restated Revolving Credit and Term Loan Agreement, and the Sixth Amendment
to Amended and Restated Revolving Credit and Term Loan Agreement, dated as of
June 11, 1997, the "Credit Agreement"), pursuant to which the Banks, upon
certain terms and conditions, have made loans to and may issue letters of credit
for the benefit of the Borrower; and
WHEREAS, the Borrower had requested that the Banks agree, and the Banks
have agreed, on the terms and subject to the conditions set forth herein, to
make certain changes to the Credit Agreement;
NOW, THEREFORE, the parties hereto hereby agree as follows:
SECTION 1. DEFINED TERMS. Capitalized terms which are used herein without
definition and which are defined in the Credit Agreement shall have the same
meanings herein as in the Credit Agreement.
SECTION 2. AMENDMENT OF CREDIT AGREEMENT. Section 4.6 of the Credit
Agreement is amended by adding at the end of such Section 4.6 the following new
paragraph:
Notwithstanding the foregoing, the Borrower shall be permitted (i) on a
single date (the "Prepayment Date") during the period commencing on July
28, 1997 and ending on September 30, 1997, to prepay the principal amount
of the Term Loan A Notes by up to $3,000,000 in cash (the "Prepayment
Amount"), provided that all interest accrued to the Prepayment Date on
such Prepayment Amount is paid on such Prepayment Date and (ii) during the
period commencing on the Prepayment Date and ending on December 15, 1997,
to reborrow up to the Prepayment Amount less the amount of the scheduled
quarterly installment due on September 30, 1997 pursuant to Section 4.4.1.
In the event that any portion of the Term Loan A being prepaid is a LIBOR
<PAGE> 2
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Rate Loan and the Prepayment Date is other than the last day of the
Interest Period applicable thereto, the provisions of Section 6.10(iii)
shall apply to such LIBOR Rate Loan.
SECTION 3. CONDITIONS TO EFFECTIVENESS. The effectiveness of this
Amendment shall be subject to receipt by the Administrative Agent of this
Amendment executed by each of the Borrower, the Banks and the Co-Agents.
SECTION 4. AFFIRMATION AND ACKNOWLEDGMENT OF THE BORROWER. The Borrower
hereby ratifies and confirms all of its Obligations to the Banks and the
Co-Agents, including, without limitation the Loans, and the Borrower hereby
affirms its absolute and unconditional promise to pay to the Banks the Loans and
all other amounts due under the Credit Agreement as amended hereby.
SECTION 5. REPRESENTATIONS AND WARRANTIES. The Borrower hereby represents
and warrants to the Co-Agents and the Banks as follows:
(a) Representation and Warranties in the Credit Agreement. The
representations and warranties of the Borrower contained in the Credit
Agreement were true and correct in all material respects as of the date
when made and continue to be true and correct in all material respects on
the date hereof, except to the extent of changes resulting from
transactions or events contemplated by the Credit Agreement and the other
Loan Documents and changes occurring in the ordinary course of business
that singly or in the aggregate are not materially adverse to the
Borrower, or to the extent that such representations and warranties relate
expressly to an earlier date.
(b) Authority, Etc. The execution and delivery by the Borrower of
this Amendment and the performance by the Borrower of all of its
agreements and obligations under the Credit Agreement as amended hereby
are within the corporate authority of the Borrower and have been duly
authorized by all necessary corporate action on the part of the Borrower.
(c) Enforceability of Obligations. This Amendment and the Credit
Agreement as amended hereby constitute the legal, valid and binding
obligations of the Borrower, enforceable against the Borrower in
accordance with their terms, except as enforceability is limited by
bankruptcy, insolvency, reorganization, moratorium or other laws relating
to or affecting generally the enforcement of, creditors' rights and except
to the extent that availability of the remedy of specific performance or
injunctive relief is subject to the discretion of the court before which
any proceeding therefor may be brought.
(d) No Default. No Default or Event of Default has occurred and is
continuing, and no Default or Event of Default will exist after execution
and delivery of this Amendment.
SECTION 6. NO OTHER AMENDMENTS OR WAIVERS. Except as expressly provided in
this Amendment, all of the terms and conditions of the Credit Agreement and the
other Loan Documents remain in full force and effect.
<PAGE> 3
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SECTION 7. EXPENSES. Pursuant to Section 17 of the Credit Agreement, all
costs and expenses incurred or sustained by the Co-Agents in connection with
this Amendment, including the fees and disbursements of legal counsel for the
Co-Agents in producing, reproducing and negotiating the Amendment, will be for
the account of the Borrower whether or not the transactions contemplated by this
Amendment are consummated.
SECTION 8. EXECUTION IN COUNTERPARTS. This Amendment may be executed in
any number of counterparts, each of which shall be deemed an original, but which
together shall constitute one instrument.
SECTION 9. MISCELLANEOUS. THIS AMENDMENT SHALL BE DEEMED TO BE A CONTRACT
UNDER THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS AND SHALL FOR ALL PURPOSES
BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE COMMONWEALTH OF
MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). The
captions in this Amendment are for convenience of reference only and shall not
define or limit the provisions hereof.
[REMAINDER OF PAGE IS LEFT INTENTIONALLY BLANK]
<PAGE> 4
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as a
document under seal as of the date first above written.
CONNECTIVITY PRODUCTS INCORPORATED
By: /s/ Gregory C. Kowert
----------------------------------------
Gregory C. Kowert, Senior Vice President
NBD BANK, individually and as
Administrative Agent
By: /s/ Erik W. Bakker
----------------------------------------
Erik W. Bakker, Vice President
BANKBOSTON, N.A.
F/K/A THE FIRST NATIONAL BANK
OF BOSTON, individually
and as Documentation Agent
By: /s/ G. Christopher Miller
----------------------------------------
G. Christopher Miller, Vice President
<PAGE> 1
BORROWER STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT is entered into as of July 11, 1997, between
(i) Connectivity Products Incorporated, a Delaware corporation (the "Pledgor")
and (ii) NBD BANK, a national banking association organized under the laws of
the United States, as administrative agent (in such capacity, the "Agent") for
the Banks (as defined below).
RECITALS
A. Pursuant to the Amended and Restated Revolving Credit and Term Loan
Agreement, dated as of May 31, 1996 (as amended and in effect from time to time,
the "Credit Agreement"), among the Pledgor, the financial institutions listed on
Schedule 1 thereto (collectively, the "Banks"), and the Agent and BankBoston,
N.A., formerly known as The First National Bank of Boston, as co-agents for the
Banks (together, the "Co-Agents"), the Banks have agreed to make Loans and
extend other financial accommodations to the Pledgor.
B. The Pledgor proposes to sell its EEC division to Reel Acquisition Corp.
("Acquisition Corp.") (the "Sale"), a portion of the purchase price for which
shall be paid to the Pledgor in common stock of Anicom, Inc. ("Anicom"), a
Delaware corporation and sole stockholder of Acquisition Corp. as more
particularly set forth in the Asset Purchase Agreement of even date herewith
(the "Purchase Agreement") among the Pledgor, Anicom and Acquisition Corp.
C. It is a condition precedent to the making of further Loans and the
extension of other financial accommodations to the Pledgor that the Pledgor
execute and deliver to the Agent a stock pledge agreement substantially in the
form hereof.
Accordingly, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Terms. The following terms, when used in this
Agreement, including the introductory paragraph and Recitals hereto, shall,
unless the context otherwise requires, have the following meanings:
"Agent" is defined in the introductory paragraph hereto.
"Agreement" means this Stock Pledge Agreement.
<PAGE> 2
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"Banks" is defined in Paragraph A of the Recitals hereto.
"Common Stock" means the common stock of Anicom, Inc., par value $ 0.001
per share.
"Credit Agreement" is defined in Paragraph A of the Recitals hereto.
"Distributions" means all stock dividends, liquidating dividends, shares
of stock resulting from stock splits, combinations, reclassifications, warrants
or options, non-cash dividends and other dividends or distributions (whether
similar or dissimilar to the foregoing) on or with respect to any Pledged Stock,
but shall not mean Dividends.
"Dividends" means cash dividends and cash distributions with respect to
any Pledged Collateral.
"Escrow Agent" means Harris Trust and Savings Bank, as escrow agent under
the Escrow Agreement.
"Escrow Agreement" means the Stock Escrow Agreement, dated as of July 11,
1997, among the Pledgor, Acquisition Corp. and the Escrow Agent.
"Escrow Period" means the "Term" as defined in the Escrow Agreement.
"Freely Transferable Pledged Stock" means, as of any date of
determination, Pledged Stock with respect to which all representations made in
Article III hereof applicable thereto would continue to be true and correct if
repeated on such date, and which, as of such date, (i) is pledged to the Agent
in compliance with this Agreement and in which the Agent has a perfected first
priority security interest, securing all the Obligations, (ii) is not subject to
any liens or encumbrances other than Permitted Liens. (iii) is not subject to
any restrictions on assignment, pledge, encumbrance or transfer "instrument"
(iv) is traded on the Nasdaq National Market, and (v) could be sold by the Agent
pursuant to this Agreement (A) under the exemption from the registration
requirements of the Securities Act afforded by Rule 144 promulgated by the
Securities and Exchange Commission or (B) under a registration statement filed
under and in compliance with the Securities Act which has been declared or
ordered effective by such Commission.
"Initial Pledged Stock" means those shares of Common Stock legally and
beneficially owned by the Pledgor, more fully described on Attachment 1 hereto.
<PAGE> 3
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"Instrument" means any contract, agreement, indenture or other document or
writing (whether by formal agreement, letter or otherwise) under which any
obligation is evidenced, assumed or undertaken, or any right to any lien or
security interest is granted or perfected.
"Permitted Dividends" means Dividends which at the time of payment or
distribution thereof are not prohibited by the terms of the Loan Agreement.
"Pledged Collateral" is defined in Section 2.1.
"Pledged Stock" means the Initial Pledged Stock and all other shares of
Common Stock which is pledged by the Pledgor pursuant to this Agreement.
"Pledgor" is defined in the introductory paragraph hereto.
"Registration Rights Agreement" means the Registration Rights Agreement,
dated as of July 11, 1997, between the Pledgor and Anicom.
"Securities Act" means the Securities Act of 1933, as amended.
"U.C.C." means the Uniform Commercial Code as in effect in the
Commonwealth of Massachusetts.
SECTION 1.2. Credit Agreement Definitions. Unless otherwise defined herein
or the context otherwise requires, terms used in this Agreement that are defined
in the Credit Agreement shall have the meanings given to such terms in the
Credit Agreement.
SECTION 1.3. U.C.C. Definitions. Unless otherwise defined herein or the
context otherwise requires, terms for which meanings are provided in the U.C.C.
are used in this Agreement with such meanings.
SECTION 1.4. General Provisions Relating to Definitions. Terms for which
meanings are defined in this Agreement shall apply equally to the singular and
plural forms of the term defined. Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms. The term
"including" means including, without limiting the generality of any description
preceding such term. Each reference herein to any Person shall include a
reference to such Person's successors and assigns. References to any Instrument
defined in this Agreement refer to such Instrument as originally executed or, if
subsequently varied, replaced or supplemented from time to time, as so varied,
replaced or supplemented and in effect at the relevant time of reference
thereto.
<PAGE> 4
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ARTICLE II
PLEDGE
SECTION 2.1. Grant of Security Interest and Pledge. The Pledgor hereby
pledges, assigns, charges and mortgages to the Agent, for the benefit of the
Banks and the Co-Agents, and hereby grants to the Agent, for the benefit of the
Banks and the Co- Agents, a continuing pledge and security interest in and to,
all of the Pledgor's right, title and interest in, to and under the following
property (the "Pledged Collateral"):
(a) the Initial Pledged Stock;
(b) all other Pledged Stock;
(c) all Dividends and Distributions; and
(d) all products and proceeds of any of the foregoing.
SECTION 2.2. Security for Obligations. This Agreement (and the Pledged
Collateral) secures the prompt payment in full and performance when due of all
of the Obligations. In addition, all advances, charges, costs and expenses,
including reasonable attorney's fees, incurred or paid by the Agent or any Bank
in exercising any right, power or remedy conferred by this Agreement, or in the
enforcement hereof, shall, to the extent lawful, become a part of the
Obligations secured hereby.
SECTION 2.3. Pledgor Remains Liable. Anything herein to the contrary
notwithstanding:
(a) the Pledgor shall remain liable under all Instruments included
in the Pledged Collateral to the extent set forth therein to perform all
of its duties and obligations thereunder to the same extent as if this
Agreement had not been executed;
(b) the exercise by the Agent of any rights hereunder shall not
release the Pledgor from any of its duties or obligations under any
Instruments included in the Pledged Collateral; and
(c) the Agent shall not have any obligation or liability under any
Instruments included in the Pledged Collateral by reason of this
Agreement, nor shall the Agent be obligated to perform any of the
obligations or duties of the Pledgor thereunder or to take any action to
collect or enforce any claim for payment assigned thereunder.
<PAGE> 5
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SECTION 2.4. Pledge and Delivery of Pledged Collateral. All certificates
or instruments representing or evidencing any Pledged Collateral to be delivered
on the date hereof or hereafter shall be:
(a) during the Escrow Period, delivered to the Escrow Agent and held
on behalf of the Agent pursuant hereto;
(b) from and after the expiration date of the Escrow Period,
delivered to the Agent pursuant hereto;
(c) in suitable form for transfer by delivery; and
(d) accompanied by all necessary instruments of transfer or
assignment (including undated stock powers executed in blank) and in form
and substance satisfactory to the Agent.
The Pledgor shall deliver all certificates or instruments representing or
evidencing the Initial Pledged Stock to the Escrow Agent on or prior to the date
hereof for the duration of the Escrow Period and from and after the expiration
date of the Escrow Period, the Agent. From and after the date hereof, the
Pledgor shall, immediately upon its receipt thereof, deliver or cause to be
delivered to the Agent in pledge hereunder any and all additional shares of
Common Stock and all other Pledged Collateral (other than Permitted Dividends
paid while no Event of Default is continuing), issued, distributed or sold to,
or purchased or otherwise acquired or received by, such Pledgor. Subject to the
terms of the Escrow Agreement, the Pledgor shall take all other action from time
to time requested by the Agent to grant to the Agent, during the Escrow Period a
[perfected ]security interest and from and after the expiration of the Escrow
Period a first priority, perfected security interest, in all of the Pledged
Collateral. The Agent shall have the right at any time to exchange certificates
or instruments representing or evidencing any Pledged Stock for certificates or
instruments of smaller or larger denominations.
SECTION 2.5. Security Interest Absolute. All rights and security interests
of the Agent granted hereunder, and all obligations of the Pledgor hereunder,
shall be absolute and unconditional, irrespective of, and shall not be impaired
or affected by
(a) any lack of validity or enforceability of the Credit Agreement
or any other Loan Document or any Instrument relating to any thereof or to
any of the Obligations;
(b) any change in the corporate existence, structure or ownership of
the Pledgor, or any bankruptcy or insolvency proceeding affecting the
Pledgor or any property of the Pledgor or any resulting release or
discharge of any Obligation;
<PAGE> 6
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(c) the failure of any Bank or the Co-Agents
(i) to assert any claim or demand or to enforce any right or
remedy against the Pledgor or any other Person under the provisions
of the Credit Agreement or any other Loan Document to which it is a
party or any other Instrument relating to any thereof or under any
applicable law, or
(ii) to exercise any right or remedy against any Collateral;
(d) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations or any other amendment to,
rescission, waiver or other modification of, or any consent to any
departure from, the Credit Agreement or any other Loan Document or any
other Instrument relating to any thereof;
(e) any increase, reduction, limitation, impairment or termination
of the Obligations for any reason, including any claim of waiver, release,
surrender, alteration or compromise, and any defense or set-off,
counterclaim, recoupment or termination whatsoever by reason of the
invalidity, illegality, ungenuineness, irregularity, compromise, or
unenforceability of, or any other event or occurrence affecting, any of
the Obligations (and the Pledgor hereby waives any right to or claim of
any such defense or set-off, counterclaim, recoupment or termination);
(f) any sale, exchange, release, surrender or non-perfection of any
of the Pledged Collateral or any other Collateral, or any release of or
amendment or waiver of or consent to departure from, any guaranty held by
the Agent or any Bank securing or guaranteeing all or any of the
Obligations;
(g) any defense, set-off or counterclaim which may at any time be
available to or be asserted by the Pledgor or against any Bank or
Co-Agent; or
(h) any other circumstances which might otherwise constitute a
suretyship or other defense available to, or a legal or equitable
discharge of, the Pledgor.
SECTION 2.6. Attorney-in-Fact. The Pledgor hereby irrevocably appoints the
Agent, and any officer or agent thereof, the Pledgor's attorney-in-fact, with
full authority in the place and stead of the Pledgor and in the name of the
Pledgor or otherwise, from time to time in the Agent's reasonable discretion
whenever an Event of Default is continuing, with respect to those actions
specified in clauses (a), (b), (c) and (e) below, and in the Agent's reasonable
discretion at any time, with respect to those actions specified in clause (d)
below, to take any and all action and to execute any Instrument or other
assurance which the Agent may deem reasonably
<PAGE> 7
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necessary or advisable to accomplish the purposes of this Agreement subject to
the rights of Anicom set forth in the Escrow Agreement, including:
(a) to ask, demand, collect, sue for, recover, compromise, receive
and give acquittance and receipts for moneys due and to become due under
or in respect of any of the Pledged Collateral of the Pledgor;
(b) to receive, endorse and collect any drafts or other Instruments
in connection with clause (a);
(c) to execute and do all such assurances, acts and things which the
Pledgor is required to do under the covenants and provisions of this
Agreement;
(d) to take any and all actions as the Agent may reasonably
determine to be necessary or advisable for the purpose of maintaining,
preserving or protecting the security constituted by this Agreement or any
of the rights, remedies, powers or privileges of the Agent under this
Agreement; and
(e) generally, in the name of the Pledgor or in the name of the
Agent, to exercise all or any of the powers, authorities and discretions
conferred on or reserved to the Agent pursuant to this Agreement.
To the extent permitted by applicable law, the Pledgor hereby ratifies and
confirms, and hereby agrees to ratify and confirm, whatever the Agent shall do
or purport to do in the exercise of the power of attorney granted to the Agent
pursuant to this Section 2.6, which power of attorney, being given for security,
is irrevocable.
SECTION 2.7. Agent Has No Duty. The powers conferred on the Agent
hereunder are solely to protect its interest (on behalf of the Banks and the
Co-Agents) in the Pledged Collateral and shall not impose any duty on it to
exercise any such powers. Except for duties imposed by the U.C.C. upon secured
creditors (unless otherwise modified hereby), the Agent shall have no duty as to
any Pledged Collateral or responsibility for taking any necessary steps to
preserve rights against prior parties or any other rights pertaining to any
Pledged Collateral.
SECTION 2.8. Continuing Security Interest; Transfer of Obligations. This
Agreement has created and shall create a continuing security interest in the
Pledged Collateral and shall:
(a) remain in full force and effect until payment in full of all the
Obligations in accordance with the Loan Documents;
<PAGE> 8
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(b) be binding upon the Pledgor and its successors and assigns
(provided that the Pledgor may not assign any of its obligations hereunder
without the prior written consent of the Agent); and
(c) inure to the benefit of the Banks and the Co-Agents and their
successors and assigns.
Without limiting the generality of the foregoing clause (c), any Bank or
Co-Agent may assign or otherwise transfer (in whole or in part) any Loan or
other Obligation held by it to any other Person or entity in accordance with the
terms of the Credit Agreement, and such other Person or entity shall thereupon
become vested with all the benefits in respect thereof granted in this Agreement
or otherwise. Upon the payment in full in cash of all the Obligations in
accordance with the Loan Documents, the security interest granted hereby shall
terminate and all rights to the Pledged Collateral shall revert to the Pledgor.
SECTION 2.9. Release and Termination of Security Interest. Upon any
termination or release by the Agent of security interests granted hereunder by
the Pledgor, the Agent will, at the sole expense of the Pledgor, promptly
execute and deliver to the Pledgor all such Instruments and other assurances as
the Pledgor shall reasonably request to evidence such termination or release,
including properly completed UCC-3 termination statements, and will duly assign,
transfer and deliver to the Pledgor the Pledged Collateral in the possession of
the Agent.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Pledgor represents and warrants to the Agent, for the benefit of the
Banks and the Co-Agents as set forth in this Article.
SECTION 3.1. Ownership, No Liens, Capitalization, etc.
(a) The Pledgor is the sole legal and beneficial owner of, and has
good and marketable title to (and has full right and authority to pledge
and assign) all Pledged Collateral purported to be pledged by the Pledgor
to the Agent hereunder (including all Pledged Collateral indicated on
Attachment 1 hereto as being owned by the Pledgor), free and clear of all
liens or other encumbrances, except for the interest granted during the
Escrow Period by the Pledgor to Acquisition Corp. described in the Escrow
Agreement, and the security interest created by this Agreement in favor of
the Co-Agents and the Banks.
<PAGE> 9
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(b) The description of the authorized, issued and outstanding shares
of Common Stock set forth on Attachment 1 hereto based upon the
representations and warranties of Anicom made in the Purchase Agreement,
is true, correct and complete.
(c) There are no outstanding agreements, options, warrants or other
similar rights or obligations which require or could require the Pledgor
to issue, sell, transfer, pledge or otherwise dispose of any Pledged
Collateral other than the Escrow Agreement and the Purchase Agreement.
(d) Other than the Registration Rights Agreement and the Escrow
Agreement, no Pledged Collateral is subject to any Instrument.
SECTION 3.2. Valid Security Interest. The execution and delivery of this
Agreement, and the delivery of Pledged Stock to or on behalf of the Agent, is
effective to create, in favor of the Agent for the benefit of the Banks and the
Co-Agents, a valid, perfected, first-priority security interest in such Pledged
Stock, except as otherwise provided in the Escrow Agreement and no filing,
action or other approval is or will be necessary to perfect, protect or enforce
such security interest.
SECTION 3.3. Pledged Equity. All of the Pledged Stock has been duly
authorized and validly issued and is fully paid and non-assessable. All the
Pledged Stock upon the expiration date of the Escrow Agreement shall be Freely
Transferable Pledged Stock.
SECTION 3.4. Authorization, Approval, etc. No authorization, approval or
other action by any Person has been or will be required either:
(a) for the pledge by the Pledgor of any Pledged Collateral required
to be pledged under the terms of this Agreement, for the execution,
delivery or performance of this Agreement by the Pledgor, or for the
validity or enforceability of any such pledge or this Agreement;
(b) for the exercise by the Agent of the voting rights (except
during the Escrow Period, which shall be subject to the terms of the
Escrow Agreement) or other rights provided for in this Agreement; or
(c) except as may be required in connection with any disposition of
Pledged Collateral by applicable laws affecting the offering and sale of
securities generally, for the exercise by the Agent of any remedies in
respect of the Pledged Collateral pursuant to this Agreement.
<PAGE> 10
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SECTION 3.5. Purchase Agreement. The copy of the Purchase Agreement
heretofore delivered to the Agent is a true, correct and complete copy thereof,
and has not been amended, modified or supplemented in any respect, except for
any such amendments, modifications or supplements as are attached to the copy
thereof delivered to the Agent.
SECTION 3.6. No Conflict. The execution, delivery and performance of this
Agreement by the Pledgor will not conflict with, result in any violation of, or
constitute any default under any Instrument or other agreement to which it is a
party.
SECTION 3.7. Validity, etc.. This Agreement has been duly executed and
delivered by the Pledgor and is in full force and effect, and the agreements and
obligations of the Pledgor contained in this Agreement constitute the legal,
valid and binding obligations of the Pledgor, enforceable against the Pledgor in
accordance with their terms. The enforceability of this Agreement against the
Pledgor shall be subject to bankruptcy, insolvency, reorganization, moratorium
or similar laws at the time in effect affecting the enforceability of the rights
of creditors generally.
ARTICLE IV
COVENANTS
SECTION 4.1. Certain Affirmative Covenants of the Pledgor. The Pledgor
covenants and agrees with the Agent, for the benefit of each of the Co-Agents
and the Banks, and warrants that, until all the Obligations have been paid in
full in cash in accordance with the Loan Documents, the Pledgor will:
SECTION 4.1.1. Further Assurances Generally. Defend the right and title
herein granted unto the Agent in and to the Pledged Collateral (and all right,
title and interest represented or evidenced by the Pledged Collateral) against
the claims and demands of any other Person; promptly execute and deliver all
further Instruments and other assurances, and take, or cause to be taken, all
further action, at the expense of the Pledgor, that may be reasonably necessary
or desirable, or that the Agent may reasonably request, in order to perfect or
protect any security interest purported to be granted under this Agreement or to
enable the Agent to exercise or enforce its rights and remedies hereunder with
respect to any Pledged Collateral; and furnish to the Agent all such financing
statements, certificates, legal opinions and other documents, and obtain all
such approvals or consents as the Agent may reasonably request in order to give
full effect to this Agreement and to maintain, preserve, safeguard and continue
at all times all or any of the rights, remedies, powers and privileges of the
Agent under this Agreement; and cause Anicom to issue substitute stock
certificates for any stock certificates
<PAGE> 11
- 11 -
issued by Anicom and delivered to the Agent hereunder in any share denomination
that the Agent may request.
SECTION 4.1.2. Stock Powers, Instruments etc. From time to time upon the
request of the Agent, (a) promptly deliver to the Agent such stock powers,
instructions to register pledge, Instruments and similar documents, satisfactory
in form and substance to the Agent, with respect to the Pledged Collateral as
the Agent may request, and (b) during the continuance of any Event of Default,
promptly transfer any Collateral into the name of the Agent or any nominee
designated by the Agent.
SECTION 4.1.3. Continuous Pledge. Subject to Section 2.9 hereof, keep
pledged to the Agent pursuant hereto all Pledged Collateral.
SECTION 4.1.4. Voting Rights; Dividends, etc.:
(a) If no Event of Default is continuing, be entitled to (i)
exercise, in its reasonable judgment, but in a manner that would not
impair the Pledged Collateral and that would not be inconsistent with the
terms of this Agreement, the Credit Agreement or any other Loan Document,
the voting power and all other incidental rights of ownership with respect
to all Pledged Stock, and (ii) receive and retain all Dividends payable or
distributable to the Pledgor.
(b) If an Event of Default is continuing, deliver to the Agent:
(i) promptly upon receipt thereof by the Pledgor (properly
endorsed where required hereby or requested by the Agent), all
Dividends, which shall be distributed and applied in accordance with
Section 5.2, and all Distributions, which shall be held by the Agent
in pledge subject to the terms of this Agreement; and
(ii) promptly upon request of the Agent, such proxies and
other documents as may be necessary to allow the Agent to exercise
voting power with respect to any Pledged Collateral.
SECTION 4.2. No Other Liens. The Pledgor agrees with the Agent, for the
benefit of Banks and the Co-Agents, and warrants that, until all the Obligations
are paid in full in accordance with the Loan Documents, the Pledgor will not
enter into any stockholders agreement with respect to any Pledged Collateral or
sell, assign, transfer, pledge, hypothecate or otherwise encumber or permit to
exist any liens or other encumbrances on any of the Pledged Collateral (except
in favor of Anicom pursuant to the Escrow Agreement and the Agent pursuant to
the terms hereof or as otherwise permitted by the Credit Agreement).
<PAGE> 12
- 12 -
SECTION 4.3. No Modification of Registration Rights Agreement, Purchase
Agreement and Escrow Agreement The Pledgor agrees that the Pledgor:
(a) will not consent to any modifications of or amendment or
supplement to the Registration Rights Agreement, the Purchase Agreement or
the Escrow Agreement or waive any rights or benefits under any such
Instrument without the prior written consent of the Banks, if such
amendment, modification or supplement or waiver could adversely affect
rights or interests of the Co-Agents or the Banks;
(b) will use all reasonable efforts to cause Anicom to (i) satisfy
all the conditions of paragraph (c)(i) of Rule 144 promulgated by the
Securities and Exchange Commission with respect to public information, and
(ii) continue to be eligible for listing, and be listed, on the Nasdaq
National Market.
ARTICLE V
REMEDIES
SECTION 5.1. Actions upon Event of Default under the Loan Agreement.
(a) Subject to the terms of the Escrow Agreement during the Escrow
Period, if any Event of Default is continuing, the Agent may exercise in
respect of the Pledged Collateral, (i) in addition to all other rights and
remedies provided for herein or otherwise available to it, all rights and
remedies of a Bank upon default under the U.C.C. (whether or not the
U.C.C. applies to the affected Pledged Collateral) or other applicable law
and (ii) without notice except as specified below, sell the Pledged
Collateral or any part thereof in one or more parcels at public or private
sales, at any one of the Agent's offices or elsewhere, for cash or credit
or for future delivery, and upon such other terms as the Agent may deem
commercially reasonable. The Pledgor agrees that, to the extent notice of
sale shall be required by applicable law, at least five (5) Business Days'
notice to the Pledgor of the time and place of any public sale or the time
after which any private sale is to be made shall constitute reasonable
notification. The Agent shall not be obligated to make any sale of Pledged
Collateral regardless of notice of sale having been given. The Agent may
adjourn any public or private sale from time to time by announcement at
the time and place fixed therefor, and such sale may, without further
notice, be made at the time and place to which it was so adjourned.
Without limitation of the above but subject to the Escrow Agreement during
the Escrow Period, the Agent may, whenever any Event of Default is
continuing, without prior notice to the Pledgor, take all or any of the
following actions:
<PAGE> 13
- 13 -
(A) take in the name of the Agent or in the name of the
Pledgor, such action as the Agent may determine to be necessary or
advisable to protect or enforce any of the rights, powers,
privileges or remedies of the Pledgor under the Registration Rights
Agreement,
(B) transfer all or any part of the Pledged Collateral into
the name of the Agent or its nominee;
(C) vote any or all of the Pledged Collateral (whether or not
the same shall have been transferred into its name or the name of
its nominee or nominees) for any lawful purpose (including in
connection with any bankruptcy or insolvency proceeding), give all
consents, waivers and ratifications in respect of the Pledged
Collateral, and otherwise act with respect thereto as though it were
the outright owner thereof;
(D) enforce collection of any of the Pledged Collateral by
suit or otherwise, and surrender, release or exchange all or any
part thereof, or compromise or extend or renew for any period
(whether or not longer than the original period) any obligations of
any nature of any party with respect thereto;
(E) endorse any checks, drafts or other writings in the
Pledgor's name to allow collection of the Pledged Collateral;
(F) take control of any products or proceeds of the Pledged
Collateral;
(G) execute (in the name, place and stead of the Pledgor)
endorsements, assignments, stock powers and other instruments of
conveyance or transfer with respect to all or any of the Pledged
Collateral; and
(H) generally, do all such other acts and things as may be
considered incidental or conducive to any of the matters or powers
mentioned in the foregoing provisions of this paragraph (a) and
which the Agent may or can do lawfully and to use the name of the
Pledgor for such purposes and in any proceedings arising therefrom.
(b) The Pledgor recognizes that the Agent may be unable to effect a
public sale of the Pledged Stock by reason of certain prohibitions
contained in the Securities Act, and other applicable laws, but may be
compelled to resort to one or more private sales thereof to a restricted
group of purchasers. The Pledgor agrees that any such private sales may be
at prices and upon other terms less favorable to the seller than if
<PAGE> 14
- 14 -
sold at public sales and that such private sales shall not by reason
thereof be deemed not to have been made in a commercially reasonable
manner.
(c) The Agent may buy any part or all of the Pledged Collateral at
any public sale and if any part or all of the Pledged Collateral is of a
type customarily sold in a recognized market, or is of the type which is
the subject of widely distributed price standard price quotations, the
Agent may buy at private sale, and may make payments thereof by any means.
SECTION 5.2. Application of Proceeds. All cash proceeds received by the
Agent in respect of any sale of, collection from, or other realization upon, all
or any part of the Pledged Collateral shall be distributed by the Agent in the
following order:
(a) first, to the Co-Agents, on account of the payment of, or the
reimbursement of the Co-Agents for, all costs and expenses incurred or
sustained by the Co-Agents that are required by the terms of this
Agreement, the Credit Agreement or any other Loan Document to be paid or
reimbursed by the Pledgor; and
(b) second, to the Banks, pro rata, for application to the payment
of all other Obligations (i) if no Event of Default is continuing, in such
order as shall be required by the terms of the Credit Agreement and (ii)
if an Event of Default is continuing, in such order as the Co-Agents shall
determine in their sole discretion.
Any surplus of such cash proceeds held by the Agent and remaining after payment
in full of all the Obligations in accordance with the Loan Documents shall be
paid over to the Pledgor or to whomsoever may be lawfully entitled to receive
such surplus and who shall have notified the Agent of such entitlement in
accordance with applicable law. The Pledgor shall remain liable for any
deficiency.
SECTION 5.3. Indemnity and Expenses. The Pledgor hereby indemnifies and
holds harmless each Co-Agent and each Bank, and the shareholders, officers,
directors, employees, agents, Subsidiaries and Affiliates of each such Person,
from and against any and all claims, losses and liabilities arising out of or
resulting from this Agreement (including the enforcement thereof), except for
any portion of such claims, losses or liabilities which a court of competent
jurisdiction has found, in a final, nonappealable order, resulted by reason of
such Person's gross negligence or wilful misconduct. Upon demand, the Pledgor
will pay to the Agent the amount of any and all expenses, including the
reasonable fees and disbursements of its counsel and of any experts, which the
Agent may incur in connection with:
(a) the administration of this Agreement or any Instrument relating
hereto;
<PAGE> 15
- 15 -
(b) the custody, preservation, use or operation of, or the sale of,
collection from, or other realization upon, any of the Pledged Collateral;
(c) the exercise or enforcement of any of the rights of the Agent
hereunder;
(d) the failure by the Pledgor to perform or observe any of the
provisions hereof; or
(e) the advancing of any funds in connection with actions taken
pursuant to Section 6.3 hereof.
SECTION 5.4. No Waiver; Remedies Cumulative. No delay, act or omission on
the part of the Agent of any of its rights hereunder shall be deemed a waiver of
any rights hereunder unless also contained in a writing signed by the Agent, nor
shall any single or partial exercise of, or any failure to exercise, any right,
power or privilege preclude any other or further or initial exercise thereof or
of any other right, power or privilege. The rights and remedies provided herein
are cumulative, and not exclusive of rights and remedies which may be granted or
provided by applicable law.
SECTION 5.5. Marshalling. Neither the Agent nor any Bank shall be required
to marshal any present or future collateral security (including this Agreement
and the Pledged Collateral) for, or other assurances of payment of, the
Obligations or any of them or to resort to such collateral security or other
assurances of payment in any particular order, and all of the rights of the
Agent hereunder and the Co-Agents or any Bank in respect of such collateral
security and other assurances of payment shall be cumulative and in addition to
all other rights, however existing or arising. To the extent that it lawfully
may, the Pledgor hereby agrees that it will not invoke any applicable law
relating to the marshalling of collateral or assurances of payment which might
cause delay in or impede the enforcement of the Agent's rights under this
Agreement or under any other Instrument creating or evidencing any of the
Obligations or under which any of the Obligations is outstanding or by which any
of the Obligations is secured or payment thereof is otherwise assured, and, to
the extent that they lawfully may, the Pledgor hereby irrevocably waives the
benefits of all such laws.
ARTICLE VI
MISCELLANEOUS PROVISIONS
SECTION 6.1. Collateral Document, etc. This Agreement is a Loan Document
executed pursuant to the Credit Agreement and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions thereof.
<PAGE> 16
- 16 -
SECTION 6.2. Amendments, etc. No amendment to any provision of this
Agreement shall in any event be effective unless the same shall be in writing
and signed by the Agent and the Pledgor. No waiver of any provision of this
Agreement nor consent to any departure by the Pledgor herefrom shall in any
event be effective unless the same shall be in writing and signed by the Agent,
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which it is given.
SECTION 6.3. Protection of Collateral. The Agent may from time to time, at
its option, perform any act which the Pledgor agrees hereunder to perform and
which the Pledgor shall fail to perform after being requested in writing to so
perform and the Agent may from time to time take any other action which the
Agent reasonably deems necessary for the maintenance, preservation or protection
of any of the Pledged Collateral or of the security interest therein.
SECTION 6.4. Addresses for Notices. All notices and other communications
provided for hereunder shall be in writing or by facsimile transmission and, if
to the Pledgor or the Agent, addressed or delivered to it at the address set
forth therefor in to the Credit Agreement, or as to any party at such other
address as shall be designated by such party in a written notice to the other
parties complying as to delivery with the terms of this Section. Any such
notices and other communications, if mailed and properly addressed with postage
prepaid or transmitted by facsimile transmission, shall be deemed given when
received.
SECTION 6.5. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 6.6. CONSENT TO JURISDICTION. THE PLEDGOR BY ITS EXECUTION HEREOF
(A) HEREBY IRREVOCABLY SUBMITS TO THE NON- EXCLUSIVE JURISDICTION OF THE STATE
COURTS OF THE COMMONWEALTH OF MASSACHUSETTS AND TO THE NON-EXCLUSIVE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF
MASSACHUSETTS FOR THE PURPOSE OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING
OUT OF OR BASED UPON THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE SUBJECT
MATTER HEREOF OR THEREOF, AND (B) HEREBY WAIVES TO THE EXTENT NOT PROHIBITED BY
APPLICABLE LAW, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE OR
OTHERWISE, IN ANY SUCH PROCEEDING, ANY CLAIM THAT IT IS NOT SUBJECT PERSONALLY
TO THE JURISDICTION OF THE ABOVE-NAMED COURTS, THAT ITS PROPERTY IS EXEMPT OR
IMMUNE FROM ATTACHMENT OR EXECUTION, THAT ANY SUCH PROCEEDING BROUGHT IN ONE OF
THE ABOVE-NAMED COURTS IS IMPROPER,
<PAGE> 17
- 17 -
OR THAT THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR THE SUBJECT MATTER HEREOF
OR THEREOF MAY NOT BE ENFORCED IN OR BY SUCH COURT. THE PLEDGOR HEREBY CONSENTS
TO SERVICE OF PROCESS IN ANY SUCH PROCEEDING IN ANY MANNER PERMITTED BY CHAPTER
223A OF THE GENERAL LAWS OF THE COMMONWEALTH OF MASSACHUSETTS, AND AGREES THAT
SERVICE OF PROCESS BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, AT
ITS ADDRESS SPECIFIED IN OR PURSUANT TO SECTION 6.4 IS REASONABLY CALCULATED TO
GIVE ACTUAL NOTICE.
SECTION 6.7. GOVERNING LAW. THIS AGREEMENT HAS BEEN EXECUTED
AND DELIVERED IN THE COMMONWEALTH OF MASSACHUSETTS AND SHALL IN ALL RESPECTS BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS OF SUCH STATE
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY WITHIN SUCH STATE.
SECTION 6.8. Counterparts. This Agreement may be executed by the parties
hereto in several counterparts, each of which shall be deemed to be an original
and all of which shall constitute together but one and the same agreement.
SECTION 6.9. WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY
APPLICABLE LAW WHICH CANNOT BE WAIVED, THE PLEDGOR HEREBY WAIVES, AND COVENANTS
THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY
RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT OR THE SUBJECT MATTER HEREOF OR THEREOF OR ANY OBLIGATION OR
IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE
PLEDGOR IN CONNECTION WITH ANY OF THE ABOVE, IN EACH CASE WHETHER NOW EXISTING
OR HEREAFTER ARISING AND WHETHER IN CONTRACT OR TORT OR OTHERWISE. THE PLEDGOR
ACKNOWLEDGES THAT THE PROVISIONS OF THIS SECTION 6.9 CONSTITUTE A MATERIAL
INDUCEMENT UPON WHICH THE AGENT IS RELYING AND WILL RELY IN ENTERING INTO THIS
AGREEMENT. THE AGENT OR THE PLEDGOR MAY FILE AN ORIGINAL COUNTERPART OR A COPY
OF THIS SECTION 6.9 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
AGENT AND THE PLEDGOR TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
<PAGE> 18
- 18 -
IN WITNESS WHEREOF, the parties hereto have executed or have caused this
Agreement to be executed by their respective officers thereunto duly authorized
as of the day and year first above written.
NBD BANK, As Agent
By:/s/ Erik W. Bakker
----------------------------------
Erik W. Bakker, Vice President
CONNECTIVITY PRODUCTS
INCORPORATED
By:/s/ James S. Harrington
----------------------------------
Name: James S. Harrington
Title: President
<PAGE> 19
- 19 -
ATTACHMENT 1
(to the Stock Pledge Agreement)
PLEDGED STOCK:
<TABLE>
<CAPTION>
========================================================================================
ISSUED
AND
AUTHORIZED OUTSTANDING PLEDGED CERTIFICATE
PLEDGOR ISSUER SHARES SHARES SHARES NUMBER
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
--
- ----------------------------------------------------------------------------------------
Connectivity Products 60,000,000 15,811,105 190,476
Incorporation Anicom common common common
1,000,000 27,000 Series
preferred A
Convertible
Preferred
- ----------------------------------------------------------------------------------------
</TABLE>
<PAGE> 20
SCHEDULE 1
Commitments, Commitment Percentages
<TABLE>
<CAPTION>
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Revolving
Revolving Credit Line of Credit Term Loan A Term Loan B
Credit Commitment Line of Credit Commitment Term Loan A Commitment Commitment
Bank Commitment Percentage Commitment Percentage Commitment Percentage Percentage
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BankBoston, N.A. f/k/a $6,000,000 50% $3,000,000 50% $6,000,000 50% 50%
The First National Bank
of Boston
Domestic Lending Office
One Federal Street
Boston, MA 02110
LIBOR Lending Office
Same as Above
- ------------------------------------------------------------------------------------------------------------------------------------
NBD Bank $6,000,000 50% $3,000,000 50% $6,000,000 50% 50%
Domestic Lending Office
Michigan Banking
Division
611 Woodward Avenue
Detroit, Michigan 48226
LIBOR Lending Office
Same as above
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 1
SECOND AMENDED AND RESTATED TERM LOAN A NOTE
$6,000,000 July 11, 1997
FOR VALUE RECEIVED, the undersigned CONNECTIVITY PRODUCTS INCORPORATED,
a Delaware corporation (the "Borrower"), hereby promises to pay to the order of
NBD Bank, a Michigan banking corporation (the "Bank") at the Bank's head office
at 611 Woodward Avenue, Detroit, Michigan 01608:
(a) prior to or on May 31, 2002 the principal amount of SIX
MILLION AND NO/100 DOLLARS ($6,000,000) or, if less, the aggregate
unpaid principal amount of the Term Loan A advanced by the Bank to the
Borrower pursuant to the Amended and Restated Revolving Credit and Term
Loan Agreement, dated as of May 31, 1996 (as amended and in effect from
time to time, the "Credit Agreement"), among the Borrower, the Bank and
other parties thereto;
(b) the principal outstanding hereunder from time to time at
the times provided in the Credit Agreement; and
(c) interest on the principal balance hereof from time to time
outstanding from the Closing Date under the Credit Agreement through
and including the maturity date hereof at the times and at the rate
provided in the Credit Agreement.
This Second Amended and Restated Term Loan A Note ("this Note") is an
amendment and restatement of the Amended and Restated Term Loan A Note, dated as
of August 27, 1996 (the Restated Note") which is an amendment and restatement of
the Term Loan A Note, dated as of May 31, 1996, in each case issued by the
Borrower to the Bank. This Note is issued in substitution for, and not in
payment of, the Restated Note.
This Note is one of the Term Loan A Notes issued pursuant to
Section 4.3.1 of the Credit Agreement and evidences borrowings under, and has
been issued by the Borrower in accordance with the terms of, the Credit
Agreement. The Bank and any holder hereof is entitled to the benefits of the
Credit Agreement, the Security Documents and the other Loan Documents, and may
enforce the agreements of the Borrower contained therein, and any holder hereof
may exercise the respective remedies provided for thereby or otherwise available
in respect thereof, all in accordance with the respective terms thereof. All
capitalized terms used in this Note and not otherwise defined herein shall have
the same meanings herein as in the Credit Agreement.
The Borrower irrevocably authorizes the Bank to make or cause to be
made, at or about the time of the Drawdown Date of the Term Loan A or at the
time of receipt of any payment of principal of this Note, an appropriate
notation on the grid attached to this Note, or the
<PAGE> 2
- 2 -
continuation of such grid, or any other similar record, including computer
records, reflecting the making of such Term Loan A or (as the case may be) the
receipt of such payment. The outstanding amount of the Term Loan A set forth on
the grid attached to this Note, or the continuation of such grid, or any other
similar record, including computer records, maintained by the Bank with respect
to the Term Loan A shall be prima facie evidence of the principal amount thereof
owing and unpaid to the Bank, but the failure to record, or any error in so
recording, any such amount on any such grid, continuation or other record shall
not limit or otherwise affect the obligation of the Borrower hereunder or under
the Credit Agreement to make payments of principal of and interest on this Note
when due.
The Borrower has the right in certain circumstances and the obligation
under certain other circumstances to prepay the whole or part of the principal
of this Note on the terms and conditions specified in the Credit Agreement.
If any one or more of the Events of Default shall occur, the entire
unpaid principal amount of this Note and all of the unpaid interest accrued
thereon may become or be declared due and payable in the manner and with the
effect provided in the Credit Agreement.
No delay or omission on the part of the Bank or any holder hereof in
exercising any right hereunder shall operate as a waiver of such right or of any
other rights of the Bank or such holder, nor shall any delay, omission or waiver
on any one occasion be deemed a bar or waiver of the same or any other right on
any further occasion.
The Borrower and every endorser and guarantor of this Note or the
obligation represented hereby waives presentment, demand, notice, protest and
all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note, and assents to any extension
or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of collateral and to the addition or release
of any other party or person primarily or secondarily liable.
THIS NOTE AND THE OBLIGATIONS OF THE BORROWER HEREUNDER SHALL FOR ALL
PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE
COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR
CHOICE OF LAW). THE BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS
NOTE MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY
FEDERAL COURT SITTING THEREIN AND THE CONSENT TO THE NONEXCLUSIVE JURISDICTION
OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE
BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN SECTION 21 OF THE CREDIT AGREEMENT.
THE BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR
<PAGE> 3
- 3 -
HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT
IS BROUGHT IN AN INCONVENIENT COURT.
This Note shall be deemed to take effect as a sealed instrument under
the laws of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the undersigned has caused this Note to be signed
in its corporate name and its corporate seal to be impressed thereon by its duly
authorized officer as of the day and year first above written.
[Corporate Seal]
CONNECTIVITY PRODUCTS
INCORPORATED
By: /s/ James S. Harrington
------------------------------
Name: James S. Harrington
Title: President
<PAGE> 4
- 4 -
<TABLE>
<CAPTION>
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Amount Amount of Balance of
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of Term Loan Principal Paid Principal Notation
- ----------------------------------------------------------------------------------------------------------------------
Date A or Prepaid Unpaid Made By:
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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</TABLE>
<PAGE> 1
SECOND AMENDED AND RESTATED TERM LOAN A NOTE
$6,000,000 July 11, 1997
FOR VALUE RECEIVED, the undersigned CONNECTIVITY PRODUCTS INCORPORATED,
a Delaware corporation (the "Borrower"), hereby promises to pay to the order of
BankBoston, N.A., f/k/a The First National Bank of Boston, a national banking
association (the "Bank") at the Bank's head office at 100 Federal Street,
Boston, Massachusetts 02110:
(a) prior to or on May 31, 2002 the principal amount of
SIX MILLION AND NO/100 DOLLARS ($6,000,000) or, if less, the
aggregate unpaid principal amount of the Term Loan A advanced by
the Bank to the Borrower pursuant to the Amended and Restated
Revolving Credit and Term Loan Agreement, dated as of May 31, 1996
(as amended and in effect from time to time, the "Credit
Agreement"), among the Borrower, the Bank and other parties
thereto;
(b) the principal outstanding hereunder from time to time
at the times provided in the Credit Agreement; and
(c) interest on the principal balance hereof from time to
time outstanding from the Closing Date under the Credit Agreement
through and including the maturity date hereof at the times and at
the rate provided in the Credit Agreement.
This Second Amended and Restated Term Loan A Note ("this Note") is an
amendment and restatement of the Amended and Restated Term Loan A Note, dated as
of August 27, 1996 (the "Restated Note"), which is an amendment and restatement
of the Term Loan A Note, dated as of May 31, 1996, in each case issued by the
Borrower to the Bank. This Note is issued in substitution for, and not in
payment of, the Restated Note.
This Note is one of the Term Loan A Notes issued pursuant to Section 4.3.1
of the Credit Agreement and evidences borrowings under, and has been issued by
the Borrower in accordance with the terms of, the Credit Agreement. The Bank and
any holder hereof is entitled to the benefits of the Credit Agreement, the
Security Documents and the other Loan Documents, and may enforce the agreements
of the Borrower contained therein, and any holder hereof may exercise the
respective remedies provided for thereby or otherwise available in respect
thereof, all in accordance with the respective terms thereof. All capitalized
terms used in this Note and not otherwise defined herein shall have the same
meanings herein as in the Credit Agreement.
The Borrower irrevocably authorizes the Bank to make or cause to be made,
at or about the time of the Drawdown Date of the Term Loan A or at the time of
receipt of any payment of principal of this Note, an appropriate notation on the
grid attached to this Note, or the
<PAGE> 2
- 2 -
continuation of such grid, or any other similar record, including computer
records, reflecting the making of such Term Loan A or (as the case may be) the
receipt of such payment. The outstanding amount of the Term Loan A set forth on
the grid attached to this Note, or the continuation of such grid, or any other
similar record, including computer records, maintained by the Bank with respect
to the Term Loan A shall be prima facie evidence of the principal amount thereof
owing and unpaid to the Bank, but the failure to record, or any error in so
recording, any such amount on any such grid, continuation or other record shall
not limit or otherwise affect the obligation of the Borrower hereunder or under
the Credit Agreement to make payments of principal of and interest on this Note
when due.
The Borrower has the right in certain circumstances and the obligation
under certain other circumstances to prepay the whole or part of the principal
of this Note on the terms and conditions specified in the Credit Agreement.
If any one or more of the Events of Default shall occur, the entire unpaid
principal amount of this Note and all of the unpaid interest accrued thereon may
become or be declared due and payable in the manner and with the effect provided
in the Credit Agreement.
No delay or omission on the part of the Bank or any holder hereof in
exercising any right hereunder shall operate as a waiver of such right or of any
other rights of the Bank or such holder, nor shall any delay, omission or waiver
on any one occasion be deemed a bar or waiver of the same or any other right on
any further occasion.
The Borrower and every endorser and guarantor of this Note or the
obligation represented hereby waives presentment, demand, notice, protest and
all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note, and assents to any extension
or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of collateral and to the addition or release
of any other party or person primarily or secondarily liable.
THIS NOTE AND THE OBLIGATIONS OF THE BORROWER HEREUNDER SHALL FOR ALL
PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE
COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR
CHOICE OF LAW). THE BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS
NOTE MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY
FEDERAL COURT SITTING THEREIN AND THE CONSENT TO THE NONEXCLUSIVE JURISDICTION
OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE
BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN SECTION 21 OF THE CREDIT AGREEMENT.
THE BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR
<PAGE> 3
- 3 -
HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT
IS BROUGHT IN AN INCONVENIENT COURT.
This Note shall be deemed to take effect as a sealed instrument under the
laws of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the undersigned has caused this Note to be signed in
its corporate name and its corporate seal to be impressed thereon by its duly
authorized officer as of the day and year first above written.
[Corporate Seal]
CONNECTIVITY PRODUCTS
INCORPORATED
By: /s/ James S. Harrington
---------------------------
Name: James S. Harrington
Title: President
<PAGE> 4
- 4 -
<TABLE>
<CAPTION>
======================================================================================================================
Amount Amount of Balance of
- ----------------------------------------------------------------------------------------------------------------------
of Term Loan Principal Paid Principal Notation
- ----------------------------------------------------------------------------------------------------------------------
Date A or Prepaid Unpaid Made By:
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 1
SECOND AMENDED AND RESTATED LINE OF CREDIT NOTE
$3,000,000 July 11, 1997
FOR VALUE RECEIVED, the undersigned CONNECTIVITY PRODUCTS INCORPORATED,
a Delaware corporation (the "Borrower"), hereby promises to pay to the order of
NBD Bank, a Michigan banking corporation (the "Bank") at the Bank's head office
at 611 Woodward Avenue, Detroit, Michigan 01608:
(a) prior to or on May 31, 1998 the principal amount of
THREE MILLION AND NO/100 DOLLARS ($3,000,000) or, if less, the
aggregate unpaid principal amount of the Line of Credit Loans
advanced by the Bank to the Borrower pursuant to the Amended and
Restated Revolving Credit and Term Loan Agreement, dated as of May
31, 1996 (as amended and in effect from time to time, the "Credit
Agreement"), among the Borrower, the Bank and other parties
thereto;
(b) the principal outstanding hereunder from time to time
at the times provided in the Credit Agreement; and
(c) interest on the principal balance hereof from time to
time outstanding from the Closing Date under the Credit Agreement
through and including the maturity date hereof at the times and at
the rate provided in the Credit Agreement.
This Second Amended and Restated Line of Credit Note ("this Note") is an
amendment and restatement of the Amended and Restated Line of Credit Note, dated
as of August 27, 1996 (the "Restated Note"), which is an amendment and
restatement of the Line of Credit Note, dated as of May 31, 1996, in each case
issued by the Borrower to the Bank. This Note is issued in substitution for, and
not in payment of, the Restated Note.
This Note is one of the Line of Credit Notes issued pursuant to
Section 2.4.2 of the Credit Agreement and evidences borrowings under, and has
been issued by the Borrower in accordance with the terms of, the Credit
Agreement. The Bank and any holder hereof is entitled to the benefits of the
Credit Agreement, the Security Documents and the other Loan Documents, and may
enforce the agreements of the Borrower contained therein, and any holder hereof
may exercise the respective remedies provided for thereby or otherwise available
in respect thereof, all in accordance with the respective terms thereof. All
capitalized terms used in this Note and not otherwise defined herein shall have
the same meanings herein as in the Credit Agreement.
The Borrower irrevocably authorizes the Bank to make or cause to be made,
at or about the time of the Drawdown Date of any Line of Credit Loan or at the
time of receipt of any payment of principal of this Note, an appropriate
notation on the grid attached to this Note, or the continuation of such grid, or
any other similar record, including computer records, reflecting the making of
such Line of Credit Loan or (as the case may be) the receipt of such payment.
<PAGE> 2
- 2 -
The outstanding amount of the Line of Credit Loans set forth on the grid
attached to this Note, or the continuation of such grid, or any other similar
record, including computer records, maintained by the Bank with respect to any
Line of Credit Loans shall be prima facie evidence of the principal amount
thereof owing and unpaid to the Bank, but the failure to record, or any error in
so recording, any such amount on any such grid, continuation or other record
shall not limit or otherwise affect the obligation of the Borrower hereunder or
under the Credit Agreement to make payments of principal of and interest on this
Note when due.
The Borrower has the right in certain circumstances and the obligation
under certain other circumstances to prepay the whole or part of the principal
of this Note on the terms and conditions specified in the Credit Agreement.
If any one or more of the Events of Default shall occur, the entire unpaid
principal amount of this Note and all of the unpaid interest accrued thereon may
become or be declared due and payable in the manner and with the effect provided
in the Credit Agreement.
No delay or omission on the part of the Bank or any holder hereof in
exercising any right hereunder shall operate as a waiver of such right or of any
other rights of the Bank or such holder, nor shall any delay, omission or waiver
on any one occasion be deemed a bar or waiver of the same or any other right on
any further occasion.
The Borrower and every endorser and guarantor of this Note or the
obligation represented hereby waives presentment, demand, notice, protest and
all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note, and assents to any extension
or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of collateral and to the addition or release
of any other party or person primarily or secondarily liable.
THIS NOTE AND THE OBLIGATIONS OF THE BORROWER HEREUNDER SHALL FOR ALL
PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE
COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR
CHOICE OF LAW). THE BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS
NOTE MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY
FEDERAL COURT SITTING THEREIN AND THE CONSENT TO THE NONEXCLUSIVE JURISDICTION
OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE
BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN SECTION 21 OF THE CREDIT AGREEMENT.
THE BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO
THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN
INCONVENIENT COURT.
<PAGE> 3
- 3 -
This Note shall be deemed to take effect as a sealed instrument under the
laws of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the undersigned has caused this Note to be signed in
its corporate name and its corporate seal to be impressed thereon by its duly
authorized officer as of the day and year first above written.
[Corporate Seal]
CONNECTIVITY PRODUCTS
INCORPORATED
By: /s/ James S. Harrington
------------------------
Name:
Title:
<PAGE> 4
- 4 -
<TABLE>
<CAPTION>
======================================================================================================================
Amount Amount of Balance of
- ----------------------------------------------------------------------------------------------------------------------
of Line of Principal Paid Principal Notation
- ----------------------------------------------------------------------------------------------------------------------
Date Credit Loan or Prepaid Unpaid Made By:
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 1
SECOND AMENDED AND RESTATED LINE OF CREDIT NOTE
$3,000,000 July 11, 1997
FOR VALUE RECEIVED, the undersigned CONNECTIVITY PRODUCTS
INCORPORATED, a Delaware corporation (the "Borrower"), hereby promises to pay to
the order of BankBoston, N.A. f/k/a The First National Bank of Boston, a
national banking association (the "Bank") at the Bank's head office at 100
Federal Street, Boston, Massachusetts 02110:
(a) prior to or on May 31, 1998 the principal amount of THREE
MILLION AND NO/100 DOLLARS ($3,000,000) or, if less, the aggregate
unpaid principal amount of the Line of Credit Loans advanced by the
Bank to the Borrower pursuant to the Amended and Restated Revolving
Credit and Term Loan Agreement, dated as of May 31, 1996 (as amended
and in effect from time to time, the "Credit Agreement"), among the
Borrower, the Bank and other parties thereto;
(b) the principal outstanding hereunder from time to time at
the times provided in the Credit Agreement; and
(c) interest on the principal balance hereof from time to time
outstanding from the Closing Date under the Credit Agreement through
and including the maturity date hereof at the times and at the rate
provided in the Credit Agreement.
This Second Amended and Restated Line of Credit Note ("this Note") is
an amendment and restatement of the Amended and Restated Line of Credit Note,
dated as of August 27, 1996 (the "Restated Note") which is an amendment and
restatement of the Line of Credit Note, dated as of May 31, 1996, in each case
issued by the Borrower to the Bank. This Note is issued in substitution for, and
not in payment of, the Restated Note.
This Note is one of the Line of Credit Notes issued pursuant to
Section 2.4.2 of the Credit Agreement and evidences borrowings under, and has
been issued by the Borrower in accordance with the terms of, the Credit
Agreement. The Bank and any holder hereof is entitled to the benefits of the
Credit Agreement, the Security Documents and the other Loan Documents, and may
enforce the agreements of the Borrower contained therein, and any holder hereof
may exercise the respective remedies provided for thereby or otherwise available
in respect thereof, all in accordance with the respective terms thereof. All
capitalized terms used in this Note and not otherwise defined herein shall have
the same meanings herein as in the Credit Agreement.
The Borrower irrevocably authorizes the Bank to make or cause to be
made, at or about the time of the Drawdown Date of any Line of Credit Loan or at
the time of receipt of any
<PAGE> 2
- 2 -
payment of principal of this Note, an appropriate notation on the grid attached
to this Note, or the continuation of such grid, or any other similar record,
including computer records, reflecting the making of such Line of Credit Loan or
(as the case may be) the receipt of such payment. The outstanding amount of the
Line of Credit Loans set forth on the grid attached to this Note, or the
continuation of such grid, or any other similar record, including computer
records, maintained by the Bank with respect to any Line of Credit Loans shall
be prima facie evidence of the principal amount thereof owing and unpaid to the
Bank, but the failure to record, or any error in so recording, any such amount
on any such grid, continuation or other record shall not limit or otherwise
affect the obligation of the Borrower hereunder or under the Credit Agreement to
make payments of principal of and interest on this Note when due.
The Borrower has the right in certain circumstances and the obligation
under certain other circumstances to prepay the whole or part of the principal
of this Note on the terms and conditions specified in the Credit Agreement.
If any one or more of the Events of Default shall occur, the entire
unpaid principal amount of this Note and all of the unpaid interest accrued
thereon may become or be declared due and payable in the manner and with the
effect provided in the Credit Agreement.
No delay or omission on the part of the Bank or any holder hereof in
exercising any right hereunder shall operate as a waiver of such right or of any
other rights of the Bank or such holder, nor shall any delay, omission or waiver
on any one occasion be deemed a bar or waiver of the same or any other right on
any further occasion.
The Borrower and every endorser and guarantor of this Note or the
obligation represented hereby waives presentment, demand, notice, protest and
all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note, and assents to any extension
or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of collateral and to the addition or release
of any other party or person primarily or secondarily liable.
THIS NOTE AND THE OBLIGATIONS OF THE BORROWER HEREUNDER SHALL FOR ALL
PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE
COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR
CHOICE OF LAW). THE BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS
NOTE MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY
FEDERAL COURT SITTING THEREIN AND THE CONSENT TO THE NONEXCLUSIVE JURISDICTION
OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE
BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN SECTION 21 OF THE CREDIT AGREEMENT.
<PAGE> 3
- 3 -
THE BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO
THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN
INCONVENIENT COURT.
This Note shall be deemed to take effect as a sealed instrument under
the laws of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the undersigned has caused this Note to be signed
in its corporate name and its corporate seal to be impressed thereon by its duly
authorized officer as of the day and year first above written.
[Corporate Seal]
CONNECTIVITY PRODUCTS
INCORPORATED
By: /s/ James S. Harrington
--------------------------
Name: James S. Harrington
Title: President
<PAGE> 4
- 4 -
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Amount of Amount of Balance of
Revolving Principal Paid Principal Notation
Date Credit Loan or Prepaid Unpaid Made By:
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 1
SECOND AMENDED AND RESTATED REVOLVING CREDIT NOTE
$6,000,000 July 11, 1997
FOR VALUE RECEIVED, the undersigned CONNECTIVITY PRODUCTS
INCORPORATED, a Delaware corporation (the "Borrower"), hereby promises to pay to
the order of NBD Bank, a Michigan banking corporation (the "Bank") at the Bank's
head office at 611 Woodward Avenue, Detroit, Michigan 01608:
(a) prior to or on May 31, 2002 the principal amount of
SIX MILLION AND NO/100 DOLLARS ($6,000,000) or, if less, the
aggregate unpaid principal amount of the Revolving Credit Loans
advanced by the Bank to the Borrower pursuant to the Amended and
Restated Revolving Credit and Term Loan Agreement, dated as of May
31, 1996 (as amended and in effect from time to time, the "Credit
Agreement"), among the Borrower, the Bank and other parties
thereto;
(b) the principal outstanding hereunder from time to time
at the times provided in the Credit Agreement; and
(c) interest on the principal balance hereof from time to
time outstanding from the Closing Date under the Credit Agreement
through and including the maturity date hereof at the times and at
the rate provided in the Credit Agreement.
This Second Amended and Restated Revolving Credit Note ("this Note") is an
amendment and restatement of the Amended and Restated Revolving Credit Note,
dated as of August 27, 1996 (the "Restated Note"), which is an amendment and
restatement of the Revolving Credit Note, dated as of May 31, 1996, in each case
issued by the Borrower to the Bank. This Note is issued in substitution for, and
not in payment of, the Restated Note.
This Note is one of the Revolving Credit Notes issued pursuant to
Section 2.4.1 of the Credit Agreement and evidences borrowings under, and has
been issued by the Borrower in accordance with the terms of, the Credit
Agreement. The Bank and any holder hereof is entitled to the benefits of the
Credit Agreement, the Security Documents and the other Loan Documents, and may
enforce the agreements of the Borrower contained therein, and any holder hereof
may exercise the respective remedies provided for thereby or otherwise available
in respect thereof, all in accordance with the respective terms thereof. All
capitalized terms used in this Note and not otherwise defined herein shall have
the same meanings herein as in the Credit Agreement.
The Borrower irrevocably authorizes the Bank to make or cause to be made,
at or about the time of the Drawdown Date of any Revolving Credit Loan or at the
time of receipt of any payment of principal of this Note, an appropriate
notation on the grid attached to this Note, or the continuation of such grid, or
any other similar record, including computer records, reflecting the making of
such Revolving Credit Loan or (as the case may be) the receipt of such payment.
<PAGE> 2
- 2 -
The outstanding amount of the Revolving Credit Loans set forth on the grid
attached to this Note, or the continuation of such grid, or any other similar
record, including computer records, maintained by the Bank with respect to any
Revolving Credit Loans shall be prima facie evidence of the principal amount
thereof owing and unpaid to the Bank, but the failure to record, or any error in
so recording, any such amount on any such grid, continuation or other record
shall not limit or otherwise affect the obligation of the Borrower hereunder or
under the Credit Agreement to make payments of principal of and interest on this
Note when due.
The Borrower has the right in certain circumstances and the obligation
under certain other circumstances to prepay the whole or part of the principal
of this Note on the terms and conditions specified in the Credit Agreement.
If any one or more of the Events of Default shall occur, the entire unpaid
principal amount of this Note and all of the unpaid interest accrued thereon may
become or be declared due and payable in the manner and with the effect provided
in the Credit Agreement.
No delay or omission on the part of the Bank or any holder hereof in
exercising any right hereunder shall operate as a waiver of such right or of any
other rights of the Bank or such holder, nor shall any delay, omission or waiver
on any one occasion be deemed a bar or waiver of the same or any other right on
any further occasion.
The Borrower and every endorser and guarantor of this Note or the
obligation represented hereby waives presentment, demand, notice, protest and
all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note, and assents to any extension
or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of collateral and to the addition or release
of any other party or person primarily or secondarily liable.
THIS NOTE AND THE OBLIGATIONS OF THE BORROWER HEREUNDER SHALL FOR ALL
PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE
COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR
CHOICE OF LAW). THE BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS
NOTE MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY
FEDERAL COURT SITTING THEREIN AND THE CONSENT TO THE NONEXCLUSIVE JURISDICTION
OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE
BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN SECTION 21 OF THE CREDIT AGREEMENT.
THE BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO
THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN
INCONVENIENT COURT.
<PAGE> 3
- 3 -
This Note shall be deemed to take effect as a sealed instrument under the
laws of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the undersigned has caused this Note to be signed in
its corporate name and its corporate seal to be impressed thereon by its duly
authorized officer as of the day and year first above written.
[Corporate Seal]
CONNECTIVITY PRODUCTS
INCORPORATED
By: /s/ James S. Harrington
-------------------------
Name: James S. Harrington
Title: President
<PAGE> 4
- 4 -
<TABLE>
<CAPTION>
======================================================================================================================
Amount of Amount of Balance of
- ----------------------------------------------------------------------------------------------------------------------
Revolving Principal Paid Principal Notation
- ----------------------------------------------------------------------------------------------------------------------
Date Credit Loan or Prepaid Unpaid Made By:
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 1
SECOND AMENDED AND RESTATED REVOLVING CREDIT NOTE
$6,000,000 July 11, 1997
FOR VALUE RECEIVED, the undersigned CONNECTIVITY PRODUCTS
INCORPORATED, a Delaware corporation (the "Borrower"), hereby promises to pay to
the order of BankBoston, N.A., f/k/a The First National Bank of Boston, a
national banking association (the "Bank") at the Bank's head office at 100
Federal Street, Boston, Massachusetts 02110:
(a) prior to or on May 31, 2002 the principal amount of SIX
MILLION AND NO/100 DOLLARS ($6,000,000) or, if less, the aggregate
unpaid principal amount of the Revolving Credit Loans advanced by the
Bank to the Borrower pursuant to the Amended and Restated Revolving
Credit and Term Loan Agreement, dated as of May 31, 1996 (as amended
and in effect from time to time, the "Credit Agreement"), among the
Borrower, the Bank and other parties thereto;
(b) the principal outstanding hereunder from time to time at
the times provided in the Credit Agreement; and
(c) interest on the principal balance hereof from time to time
outstanding from the Closing Date under the Credit Agreement through
and including the maturity date hereof at the times and at the rate
provided in the Credit Agreement.
This Second Amended and Restated Revolving Credit Note ("this Note")
is an amendment and restatement of the Amended and Restated Revolving Credit
Note, dated as of August 27, 1996 (the "Restated Note"), which is an amendment
and restatement of the Revolving Credit Note, dated as of May 31, 1996, in each
case issued by the Borrower to the Bank. This Note is issued in substitution
for, and not in payment of, the Restated Note.
This Note is one of the Revolving Credit Notes issued pursuant to
Section 2.4.1 of the Credit Agreement and evidences borrowings under, and has
been issued by the Borrower in accordance with the terms of, the Credit
Agreement. The Bank and any holder hereof is entitled to the benefits of the
Credit Agreement, the Security Documents and the other Loan Documents, and may
enforce the agreements of the Borrower contained therein, and any holder hereof
may exercise the respective remedies provided for thereby or otherwise available
in respect thereof, all in accordance with the respective terms thereof. All
capitalized terms used in this Note and not otherwise defined herein shall have
the same meanings herein as in the Credit Agreement.
The Borrower irrevocably authorizes the Bank to make or cause to be
made, at or about the time of the Drawdown Date of any Revolving Credit Loan or
at the time of receipt of any payment of principal of this Note, an appropriate
notation on the grid attached to this Note, or
<PAGE> 2
- 2 -
the continuation of such grid, or any other similar record, including computer
records, reflecting the making of such Revolving Credit Loan or (as the case may
be) the receipt of such payment. The outstanding amount of the Revolving Credit
Loans set forth on the grid attached to this Note, or the continuation of such
grid, or any other similar record, including computer records, maintained by the
Bank with respect to any Revolving Credit Loans shall be prima facie evidence of
the principal amount thereof owing and unpaid to the Bank, but the failure to
record, or any error in so recording, any such amount on any such grid,
continuation or other record shall not limit or otherwise affect the obligation
of the Borrower hereunder or under the Credit Agreement to make payments of
principal of and interest on this Note when due.
The Borrower has the right in certain circumstances and the obligation
under certain other circumstances to prepay the whole or part of the principal
of this Note on the terms and conditions specified in the Credit Agreement.
If any one or more of the Events of Default shall occur, the entire
unpaid principal amount of this Note and all of the unpaid interest accrued
thereon may become or be declared due and payable in the manner and with the
effect provided in the Credit Agreement.
No delay or omission on the part of the Bank or any holder hereof in
exercising any right hereunder shall operate as a waiver of such right or of any
other rights of the Bank or such holder, nor shall any delay, omission or waiver
on any one occasion be deemed a bar or waiver of the same or any other right on
any further occasion.
The Borrower and every endorser and guarantor of this Note or the
obligation represented hereby waives presentment, demand, notice, protest and
all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note, and assents to any extension
or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of collateral and to the addition or release
of any other party or person primarily or secondarily liable.
THIS NOTE AND THE OBLIGATIONS OF THE BORROWER HEREUNDER SHALL FOR ALL
PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE
COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR
CHOICE OF LAW). THE BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS
NOTE MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY
FEDERAL COURT SITTING THEREIN AND THE CONSENT TO THE NONEXCLUSIVE JURISDICTION
OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE
BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN SECTION 21 OF THE CREDIT AGREEMENT.
THE BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR
<PAGE> 3
- 3 -
HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT
IS BROUGHT IN AN INCONVENIENT COURT.
This Note shall be deemed to take effect as a sealed instrument under
the laws of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the undersigned has caused this Note to be signed
in its corporate name and its corporate seal to be impressed thereon by its duly
authorized officer as of the day and year first above written.
[Corporate Seal]
CONNECTIVITY PRODUCTS
INCORPORATED
By: /s/ James S. Harrington
-------------------------
Name: James S. Harrington
Title: President
<PAGE> 4
- 4 -
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Amount of Amount of Balance of
Revolving Principal Paid Principal Notation
Date Credit Loan or Prepaid Unpaid Made By:
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 1
ASSIGNMENT AND ACCEPTANCE
Dated as of July 11, 1997
Reference is made to the Amended and Restated Revolving Credit
and Term Loan Agreement, dated as of May 31, 1996 (as from time to time amended
and in effect, the "Credit Agreement"), by and among CONNECTIVITY PRODUCTS
INCORPORATED, a Delaware Corporation (the "Borrower"), the banking institutions
referred to therein as Banks (collectively, the "Banks"), and NBD BANK and
BANKBOSTON, N.A., f/k/a The First National Bank of Boston as co-agents (in such
capacity, the "Co-Agents") for the Banks. Capitalized terms used herein and not
otherwise defined shall have the meanings assigned to such terms in the Credit
Agreement.
FLEET BANK, N.A. (the "Assignor") and NBD BANK (the
"Assignee") hereby agree as follows:
Assignment.
Subject to the terms and conditions of this Assignment and
Acceptance, the Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes without recourse to the Assignor, a
$5,248,000.00 interest in and to the rights, benefits, indemnities and
obligations of the Assignor under the Credit Agreement equal to 12% in respect
of the Total Commitment and the Term Loan immediately prior to the Effective
Date (as hereinafter defined).
Assignor's Representations.
The Assignor (i) represents and warrants that (A) it is
legally authorized to enter into this Assignment and Acceptance, (B) as of the
date hereof, its Revolving Credit Commitment is $4,800,000, its Revolving Credit
Commitment Percentage is 24%, the aggregate outstanding principal balance of its
Revolving Credit Loans equals $4,442,000, the aggregate amount of its Letter of
Credit Participations equals $-0-, its Line of Credit Commitment is $1,680,000,
its Line of Credit Commitment Percentage is 24%, the aggregate outstanding
principal balance of its Line of Credit Loans equals $144,000, and the aggregate
outstanding balance of its Term Loan equals $4,017,600 (in each case after
giving effect to the assignment contemplated hereby but without giving effect to
any contemplated assignments which have not yet become effective), and (C)
immediately after giving effect to all assignments which have not yet become
effective, the Assignor's Commitment Percentage will be sufficient to give
effect to this Assignment and Acceptance, (ii) makes no representation or
warranty, express or implied, and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Credit Agreement or any of the other Loan Documents or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
<PAGE> 2
- 2 -
Agreement, the other Loan Documents or any other instrument or document
furnished pursuant thereto or the attachment, perfection or priority of any
security interest or mortgage, other than that it is the legal and beneficial
owner of the interest being assigned by it hereunder free and clear of any claim
or encumbrance; and (iii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or any of
its Subsidiaries or any other Person primarily or secondarily liable in respect
of any of the Obligations, or the performance or observance by the Borrower or
any of its Subsidiaries or any other Person primarily or secondarily liable in
respect of any of the Obligations of any of its obligations under the Credit
Agreement or any of the other Loan Documents or any other instrument or document
delivered or executed pursuant thereto.
Assignee's Representations.
The Assignee (i) represents and warrants that (A) it is duly
and legally authorized to enter into this Assignment and Acceptance, (B) the
execution, delivery and performance of this Assignment and Acceptance do not
conflict with any provision of law or of the charter or by-laws of the Assignee,
or of any agreement binding on the Assignee, (C) all acts, conditions and things
required to be done and performed and to have occurred prior to the execution,
delivery and performance of this Assignment and Acceptance, and to render the
same the legal, valid and binding obligation of the Assignee, enforceable
against it in accordance with its terms, have been done and performed and have
occurred in due and strict compliance with all applicable laws; (ii) confirms
that it has received a copy of the Credit Agreement, together with copies of the
most recent financial statements delivered pursuant to Sections 8.4 and 9.4
thereof and such other documents and information as it has deemed appropriate to
make its own credit analysis and decision to enter into this Assignment and
Acceptance; (iii) agrees that it will, independently and without reliance upon
the Assignor, the Agent or any other Bank and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Credit Agreement; (iv)
represents and warrants that it is an Eligible Assignee; (v) appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under the Credit Agreement and the other Loan Documents as are
delegated to the Agent by the terms thereof, together with such powers as are
reasonably incidental thereto; (vi) agrees that it will perform in accordance
with their terms all the obligations which by the terms of the Credit Agreement
are required to be performed by it as a Bank; and (vii) acknowledges that it has
made arrangements with the Assignor satisfactory to the Assignee with respect to
its pro rata share of Letter of Credit Fees in respect of outstanding Letters of
Credit.
Effective Date.
The effective date for this Assignment and Acceptance shall be
July 11, 1997 (the "Effective Date"). Following the execution of this Assignment
and Acceptance and the consent
<PAGE> 3
- 3 -
of the Borrower hereto having been obtained, each party hereto shall deliver its
duly executed counterpart hereof to the Agent for acceptance by the Agent and
recording in the Register by the Agent.
Rights Under Credit Agreement.
Upon such acceptance and recording, from and after the
Effective Date, (i) the Assignee shall be a party to the Credit Agreement and,
to the extent provided in this Assignment and Acceptance, have the rights and
obligations of a Bank thereunder, and (ii) the Assignor shall, with respect to
that portion of its interest under the Credit Agreement assigned hereunder,
relinquish its rights and be released from its obligations under the Credit
Agreement; provided, however, that the Assignor shall retain its rights to be
indemnified pursuant to Section 18 of the Credit Agreement with respect to any
claims or actions arising prior to the Effective Date.
Payments.
Upon such acceptance of this Assignment and Acceptance by the
Agent and such recording, from and after the Effective Date, the Agent shall
make all payments in respect of the rights and interests assigned hereby
(including payments of principal, interest, fees and other amounts) to the
Assignee. The Assignor and the Assignee shall make any appropriate adjustments
in payments for periods prior to the Effective Date by the Agent or with respect
to the making of this assignment directly between themselves.
Governing Law.
THIS ASSIGNMENT AND ACCEPTANCE IS INTENDED TO TAKE EFFECT AS A
SEALED INSTRUMENT TO BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE COMMONWEALTH OF MASSACHUSETTS (WITHOUT REFERENCE TO CONFLICT OF LAWS).
Counterparts.
This Assignment and Acceptance may be executed in any number
of counterparts which shall together constitute but one and the same agreement.
<PAGE> 4
- 4 -
IN WITNESS WHEREOF, intending to be legally bound, each of the
undersigned has caused this Assignment and Acceptance to be executed on its
behalf by its officer thereunto duly authorized, as of the date first above
written.
FLEET BANK, N.A.
By: /s/ Mark A. Siegel
--------------------------------
Title: Assistant Vice President
NBD BANK
By: /s/ Erik W. Bakker
--------------------------------
Erik W. Bakker, Vice President
CONSENTED TO:
CONNECTIVITY PRODUCTS
INCORPORATED
By: /s/ James S. Harrington
----------------------------
Title: President
NBD BANK, as Agent
By: /s/ Erik W. Bakker
----------------------------
Erik W. Bakker, Vice President
<PAGE> 5
SCHEDULE 1
Commitments, Commitment Percentages
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Revolving
Revolving Credit Line of Credit Term Loan A Term Loan B
Credit Commitment Line of Credit Commitment Term Loan A Commitment Commitment
Bank Commitment Percentage Commitment Percentage Commitment Percentage Percentage
---- ---------- ---------- ---------- ---------- ---------- ---------- ----------
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BankBoston, N.A. f/k/a $6,000,000 50% $3,000,000 50% $6,000,000 50% 50%
The First National Bank
of Boston
Domestic Lending Office
One Federal Street
Boston, MA 02110
LIBOR Lending Office
Same as Above
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
NBD Bank $6,000,000 50% $3,000,000 50% $6,000,000 50% 50%
Domestic Lending Office
Michigan Banking
Division
611 Woodward Avenue
Detroit, Michigan 48226
LIBOR Lending Office
Same as above
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 1
ASSIGNMENT AND ACCEPTANCE
Dated as of July 11, 1997
Reference is made to the Amended and Restated Revolving Credit and Term
Loan Agreement, dated as of May 31, 1996 (as from time to time amended and in
effect, the "Credit Agreement"), by and among CONNECTIVITY PRODUCTS
INCORPORATED, a Delaware Corporation (the "Borrower"), the banking institutions
referred to therein as Banks (collectively, the "Banks"), and NBD BANK and
BANKBOSTON, N.A. f/k/a the First National Bank of Boston, as co-agents (in such
capacity, the "Co-Agents") for the Banks. Capitalized terms used herein and not
otherwise defined shall have the meanings assigned to such terms in the Credit
Agreement.
FLEET BANK, N.A. (the "Assignor") and BANKBOSTON, N.A., f/k/a The First
National Bank of Boston (the "Assignee") hereby agree as follows:
ASSIGNMENT.
Subject to the terms and conditions of this Assignment and Acceptance,
the Assignor hereby sells and assigns to the Assignee, and the Assignee hereby
purchases and assumes without recourse to the Assignor, a $5,248,000.00 interest
in and to the rights, benefits, indemnities and obligations of the Assignor
under the Credit Agreement equal to 12% in respect of the Total Commitment and
the Term Loan immediately prior to the Effective Date (as hereinafter defined).
ASSIGNOR'S REPRESENTATIONS.
The Assignor (i) represents and warrants that (A) it is legally
authorized to enter into this Assignment and Acceptance, (B) as of the date
hereof, its Revolving Credit Commitment is $4,800,000, its Revolving Credit
Commitment Percentage is 24%, the aggregate outstanding principal balance of its
Revolving Credit Loans equals $4,442,000, the aggregate amount of its Letter of
Credit Participations equals $-0-, its Line of Credit Commitment is $1,680,000,
its Line of Credit Commitment Percentage is 24%, the aggregate outstanding
principal balance of its Line of Credit Loans equals $144,000, and the aggregate
outstanding balance of its Term Loan equals $4,017,600 (in each case after
giving effect to the assignment contemplated hereby but without giving effect to
any contemplated assignments which have not yet become effective), and (C)
immediately after giving effect to all assignments which have not yet become
effective, the Assignor's Commitment Percentage will be sufficient to give
effect to this Assignment and Acceptance, (ii) makes no representation or
warranty, express or implied, and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Credit Agreement or any of the other Loan Documents or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement, the other Loan Documents or any other instrument or document
furnished pursuant thereto or the attachment, perfection or priority of any
security interest or mortgage, other than that it is the
<PAGE> 2
- 2 -
legal and beneficial owner of the interest being assigned by it hereunder free
and clear of any claim or encumbrance; and (iii) makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of the Borrower or any of its Subsidiaries or any other Person primarily or
secondarily liable in respect of any of the Obligations, or the performance or
observance by the Borrower or any of its Subsidiaries or any other Person
primarily or secondarily liable in respect of any of the Obligations of any of
its obligations under the Credit Agreement or any of the other Loan Documents or
any other instrument or document delivered or executed pursuant thereto.
ASSIGNEE'S REPRESENTATIONS.
The Assignee (i) represents and warrants that (A) it is duly and
legally authorized to enter into this Assignment and Acceptance, (B) the
execution, delivery and performance of this Assignment and Acceptance do not
conflict with any provision of law or of the charter or by-laws of the Assignee,
or of any agreement binding on the Assignee, (C) all acts, conditions and things
required to be done and performed and to have occurred prior to the execution,
delivery and performance of this Assignment and Acceptance, and to render the
same the legal, valid and binding obligation of the Assignee, enforceable
against it in accordance with its terms, have been done and performed and have
occurred in due and strict compliance with all applicable laws; (ii) confirms
that it has received a copy of the Credit Agreement, together with copies of the
most recent financial statements delivered pursuant to Sections 8.4 and 9.4
thereof and such other documents and information as it has deemed appropriate to
make its own credit analysis and decision to enter into this Assignment and
Acceptance; (iii) agrees that it will, independently and without reliance upon
the Assignor, the Agent or any other Bank and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Credit Agreement; (iv)
represents and warrants that it is an Eligible Assignee; (v) appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under the Credit Agreement and the other Loan Documents as are
delegated to the Agent by the terms thereof, together with such powers as are
reasonably incidental thereto; (vi) agrees that it will perform in accordance
with their terms all the obligations which by the terms of the Credit Agreement
are required to be performed by it as a Bank; and (vii) acknowledges that it has
made arrangements with the Assignor satisfactory to the Assignee with respect to
its pro rata share of Letter of Credit Fees in respect of outstanding Letters of
Credit.
EFFECTIVE DATE.
The effective date for this Assignment and Acceptance shall be July 11,
1997 (the "Effective Date"). Following the execution of this Assignment and
Acceptance and the consent of the Borrower hereto having been obtained, each
party hereto shall deliver its duly executed counterpart hereof to the Agent for
acceptance by the Agent and recording in the Register by the Agent.
<PAGE> 3
- 3 -
RIGHTS UNDER CREDIT AGREEMENT.
Upon such acceptance and recording, from and after the Effective Date,
(i) the Assignee shall be a party to the Credit Agreement and, to the extent
provided in this Assignment and Acceptance, have the rights and obligations of a
Bank thereunder, and (ii) the Assignor shall, with respect to that portion of
its interest under the Credit Agreement assigned hereunder, relinquish its
rights and be released from its obligations under the Credit Agreement;
provided, however, that the Assignor shall retain its rights to be indemnified
pursuant to Section 18 of the Credit Agreement with respect to any claims or
actions arising prior to the Effective Date.
PAYMENTS.
Upon such acceptance of this Assignment and Acceptance by the Agent and
such recording, from and after the Effective Date, the Agent shall make all
payments in respect of the rights and interests assigned hereby (including
payments of principal, interest, fees and other amounts) to the Assignee. The
Assignor and the Assignee shall make any appropriate adjustments in payments for
periods prior to the Effective Date by the Agent or with respect to the making
of this assignment directly between themselves.
GOVERNING LAW.
THIS ASSIGNMENT AND ACCEPTANCE IS INTENDED TO TAKE EFFECT AS A SEALED
INSTRUMENT TO BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
COMMONWEALTH OF MASSACHUSETTS (WITHOUT REFERENCE TO CONFLICT OF LAWS).
COUNTERPARTS.
This Assignment and Acceptance may be executed in any number of
counterparts which shall together constitute but one and the same agreement.
IN WITNESS WHEREOF, intending to be legally bound, each of the
undersigned has caused this Assignment and Acceptance to be executed on its
behalf by its officer thereunto duly authorized, as of the date first above
written.
<PAGE> 4
- 4 -
FLEET BANK, N.A.
By: /s/ Mark A. Siegel
-------------------------------------
Title: Assistant Vice President
BANKBOSTON, N.A., f/k/a The First
National Bank of Boston
By: /s/ G. Christopher Miller
-------------------------------------
G. Christopher Miller, Vice President
CONSENTED TO:
CONNECTIVITY
PRODUCTS
INCORPORATED
By: /s/ James S. Harrington
------------------------
Title: President
NBD BANK, as Agent
By: /s/ Erik W. Bakker
-------------------------
Erik W. Bakker, Vice
President
<PAGE> 5
SCHEDULE 1
Commitments, Commitment Percentages
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Revolving
Revolving Credit Line of Credit Term Loan A Term Loan B
Credit Commitment Line of Credit Commitment Term Loan A Commitment Commitment
Bank Commitment Percentage Commitment Percentage Commitment Percentage Percentage
---- ---------- ---------- ---------- ---------- ---------- ---------- ----------
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BankBoston, N.A. f/k/a $6,000,000 50% $3,000,000 50% $6,000,000 50% 50%
The First National Bank
of Boston
Domestic Lending Office
One Federal Street
Boston, MA 02110
LIBOR Lending Office
Same as Above
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
NBD Bank $6,000,000 50% $3,000,000 50% $6,000,000 50% 50%
Domestic Lending Office
Michigan Banking
Division
611 Woodward Avenue
Detroit, Michigan 48226
LIBOR Lending Office
Same as above
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 1
EXHIBIT 10.13
CONNECTIVITY PRODUCTS INCORPORATED
EIGHTH AMENDMENT
TO
AMENDED AND RESTATED
REVOLVING CREDIT AND TERM LOAN AGREEMENT
This EIGHTH AMENDMENT (this "Amendment"), dated as of June 30,
1997, is among CONNECTIVITY PRODUCTS INCORPORATED, a Delaware corporation (the
"Borrower"), NBD BANK as Administrative Agent (the "Administrative Agent"),
BANKBOSTON, N.A., F/K/A THE FIRST NATIONAL BANK OF BOSTON as Documentation Agent
(the "Documentation Agent", and together with the Administrative Agent, the
"Co-Agents") for the lending institutions (the "Banks") listed on Schedule 1 to
the Credit Agreement (as hereinafter defined) and the Banks.
WHEREAS, the Borrower, the Banks and the Co-Agents are parties to
that certain Amended and Restated Revolving Credit and Term Loan Agreement,
dated as of May 31, 1996 (as amended by the First Amendment to Amended and
Restated Revolving Credit and Term Loan Agreement, dated as of August 26, 1996,
the Second Amendment to Amended and Restated Revolving Credit and Term Loan
Agreement, dated as of September 30, 1996, the [First Amendment of Certain
Security Documents and Subordination Agreement and] Third Amendment to Amended
and Restated Revolving Credit and Term Loan Agreement, dated as of February 24,
1997, the Fourth Amendment to Amended and Restated Revolving Credit and Term
Loan Agreement, dated as of March 31, 1997, and the Fifth Amendment to Amended
and Restated Revolving Credit and Term Loan Agreement, the Sixth Amendment to
Amended and Restated Revolving Credit and Term Loan Agreement, dated as of June
11, 1997, and the Seventh Amendment to Amended and Restated Revolving Credit and
Term Loan Agreement, dated as of July 25, 1997, the "Credit Agreement"),
pursuant to which the Banks, upon certain terms and conditions, have made loans
to and may issue letters of credit for the benefit of the Borrower; and
WHEREAS, the Borrower had requested that the Banks agree, and the
Banks have agreed, on the terms and subject to the conditions set forth herein,
to make certain changes to the Credit Agreement;
NOW, THEREFORE, the parties hereto hereby agree as follows:
SECTION 1. DEFINED TERMS. Capitalized terms which are used herein
without definition and which are defined in the Credit Agreement shall have the
same meanings herein as in the Credit Agreement.
SECTION 2. AMENDMENT OF CREDIT AGREEMENT. The Credit Agreement is
hereby amended as follows:
(a) Section 11.2 of the Credit Agreement is amended by deleting
such Section 11.2 and restating it in its entirety as follows:
11.2. SENIOR FUNDED DEBT TO EBITDA. The Borrower will not, as at
the end of any Reference Period ending during any period described
in the table set forth below, permit the ratio of Senior Funded
Debt to Consolidated EBITDA to exceed the ratio set forth opposite
such period in such table:
<PAGE> 2
- 2 -
Period Ratio
------ -----
04/01/97 - 06/30/97 4.40:1.00
07/01/97 - 12/31/98 4.00:1.00
01/01/99 - 12/31/99 3.25:1.00
Thereafter 2.50:1.00
(b) Section 11.4 of the Credit Agreement is amended by deleting
the ratio "2.50:1.00" and substituting the ratio "2.00:1.00"
therefor.
SECTION 3. AMENDMENT FEE. The Borrower shall pay to the
Administrative Agent on the effective date of this Amendment an amendment fee in
the amount of $5,000 for the pro rata accounts of the
Banks.
SECTION 4. COMPLIANCE CERTIFICATE. In addition to the requirements
of Section 9.4(c) of the Credit Agreement, in conjunction with any Loan Request
for a Line of Credit Loan made during the period beginning on August 12, 1997
and ending on September 30, 1997, the Borrower shall deliver to each of the
Banks a Compliance Certificate for the fiscal period ending on the last day of
the month immediately preceding the date of each such Loan Request.
SECTION 5. CONDITIONS TO EFFECTIVENESS. The effectiveness of this
Amendment shall be subject to receipt by the Administrative Agent of this
Amendment executed by each of the Borrower, the Banks and the Co-Agents and the
amendment fee pursuant to Section 3 of this Amendment.
SECTION 6. AFFIRMATION AND ACKNOWLEDGMENT OF THE BORROWER. The
Borrower hereby ratifies and confirms all of its Obligations to the Banks and
the Co-Agents, including, without limitation the Loans, and the Borrower hereby
affirms its absolute and unconditional promise to pay to the Banks the Loans and
all other amounts due under the Credit Agreement as amended hereby.
SECTION 7. REPRESENTATIONS AND WARRANTIES. The Borrower hereby
represents and warrants to the Co-Agents and the Banks as follows:
(a) Representation and Warranties in the Credit
Agreement. The representations and warranties of the Borrower
contained in the Credit Agreement were true and correct in all
material respects as of the date when made and continue to be true
and correct in all material respects on the date hereof, except to
the extent of changes resulting from transactions or events
contemplated by the Credit Agreement and the other Loan Documents
and changes occurring in the ordinary course of business that
singly or in the aggregate are not materially adverse to the
Borrower, or to the extent that such representations and
warranties relate expressly to an earlier date.
(b) Authority, Etc. The execution and delivery by the
Borrower of this Amendment and the performance by the Borrower of
all of its agreements and obligations under the Credit Agreement
as amended hereby are within the corporate authority of the
Borrower and have been duly authorized by all necessary corporate
action on the part of the Borrower.
<PAGE> 3
- 3 -
(c) Enforceability of Obligations. This Amendment
and the Credit Agreement as amended hereby constitute the legal,
valid and binding obligations of the Borrower, enforceable
against the Borrower in accordance with their terms, except as
enforceability is limited by bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting
generally the enforcement of, creditors' rights and except to the
extent that availability of the remedy of specific performance or
injunctive relief is subject to the discretion of the court
before which any proceeding therefor may be brought.
(d) No Default. No Default or Event of Default has
occurred and is continuing, and no Default or Event of Default
will exist after execution and delivery of this Amendment.
SECTION 8. NO OTHER AMENDMENTS OR WAIVERS. Except as expressly
provided in this Amendment, all of the terms and conditions of the Credit
Agreement and the other Loan Documents remain in full force and effect.
SECTION 9. EXPENSES. Pursuant to Section 17 of the Credit
Agreement, all costs and expenses incurred or sustained by the Co-Agents in
connection with this Amendment, including the fees and disbursements of legal
counsel for the Co-Agents in producing, reproducing and negotiating the
Amendment, will be for the account of the Borrower whether or not the
transactions contemplated by this Amendment are consummated.
SECTION 10. EXECUTION IN COUNTERPARTS. This Amendment may be
executed in any number of counterparts, each of which shall be deemed an
original, but which together shall constitute one instrument.
SECTION 11. MISCELLANEOUS. THIS AMENDMENT SHALL BE DEEMED TO BE A
CONTRACT UNDER THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS AND SHALL FOR ALL
PURPOSES BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR
CHOICE OF LAW). The captions in this Amendment are for convenience of reference
only and shall not define or limit the provisions hereof.
[REMAINDER OF PAGE IS LEFT INTENTIONALLY BLANK]
<PAGE> 4
- 4 -
IN WITNESS WHEREOF, the parties hereto have executed this Eighth
Amendment as a document under seal as of the date first above written.
CONNECTIVITY PRODUCTS INCORPORATED
By:/s/ Gregory C. Kowert
-----------------------------------------
Gregory C. Kowert, Senior Vice President
NBD BANK, individually and as
Administrative Agent
By: /s/ Erik W. Bakker
-----------------------------------------
Erik W. Bakker, Vice President
BANKBOSTON, N.A.
f/k/a THE FIRST NATIONAL BANK
OF BOSTON, individually
and as Documentation Agent
By: /s/ G. Christopher Miller
-----------------------------------------
G. Christopher Miller, Vice President
<PAGE> 1
EXHIBIT 10.14
SEVERANCE AGREEMENT
THIS AGREEMENT made and entered into as of the 29th day of August,
1997 (the "Effective Date") by and among CONNECTIVITY PRODUCTS INCORPORATED, a
Delaware corporation, (hereinafter referred to as "CPI"), CONNECTIVITY
TECHNOLOGIES INC. (hereinafter referred to as "CTI") and DUANE A. GAWRON
(hereinafter referred to as "Mr. Gawron").
WHEREAS, Mr. Gawron and CPI entered into an employment agreement
dated as of May 17, 1996 (the "Employment Agreement");
WHEREAS, Mr. Gawron serves as an officer and director of CPI and
of CTI, the owner of 85% of CPI's common stock;
WHEREAS, CPI and Mr. Gawron desire to terminate the Employment
Agreement and Mr. Gawron's employment thereunder on the Effective Date and CPI
and CTI desire to terminate Mr. Gawron's service as a director and officer of
CPI and CTI on the Effective Date;
WHEREAS, CPI and CTI desire to provide Mr. Gawron with certain
severance benefits in connection with the termination of the Employment
Agreement and his service as a director and officer of CPI and CTI; and
WHEREAS, Mr. Gawron desires to accept such benefits under the
terms and conditions contained herein.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein, the parties hereto agree as follows:
1. TERMINATION OF EMPLOYMENT AGREEMENT. CPI and Mr. Gawron hereby
agree that all of their respective rights and obligations under the Employment
Agreement are terminated as of the Effective Date.
2. RESIGNATION AS DIRECTOR AND OFFICER. Mr. Gawron hereby agrees
to resign as a Director and officer of CPI and CTI as of the Effective Date.
3. SEVERANCE BENEFITS. CPI agrees to provide Mr. Gawron with the
following severance benefits:
(a) Mr. Gawron shall be paid the sum of three hundred fifty
thousand dollars ($350,000.00), in a lump sum payment within seven (7) days of
the termination of the waiting periods set forth in Section 11 hereof. All other
compensation
<PAGE> 2
shall cease as of the Effective Date, and Mr. Gawron shall thereafter not be
entitled to the payment of any bonus (in respect of his employment under the
Employment Agreement or otherwise), car allowance or any other compensation,
reimbursement or benefits whatsoever.
(b) On the Effective Date, CPI shall cease to pay premiums to
CPI's insurance carrier for medical and dental insurance for the benefit of Mr.
Gawron and his dependents. Mr. Gawron shall have the option of continuing
medical and dental coverage under COBRA at his sole expense.
(c) Pursuant to the Stock Option Agreements dated March 8,
1996 (the "March Option Agreement") and July 26, 1996 (the "July Option
Agreement"), CTI granted to Mr. Gawron options, effectively non-incentive stock
options, to purchase an aggregate of up to 86,043 shares (as adjusted for CTI's
December 1996 reverse stock split) of CTI's common stock. Sections 4 (a) of the
March Option Agreement and the July Option Agreement, respectively, are hereby
deleted in their entirety and replaced to read as follows:
"4 (a) Except as otherwise provided in the Plan and this Option
Agreement, the Option may be exercised from time to time from
July 8, 1999 (unless sooner exercisable in accordance with
Section 4(f) below) until August 18, 2002 (the "Option Period")
as to all or any lesser amount of the Option. In the event of
the death of the Grantee, this Option may be exercised by the
person or persons entitled to do so under the Grantee's will (a
"legatee"), or, if the Grantee shall fail to make a
testamentary disposition of this Option, or shall die
intestate, by the Grantee's legal representative (a "legal
representative").
Concurrent with the execution of this Severance Agreement, Mr. Gawron shall
deliver to CTI the March Option Agreement and CTI shall deliver a replacement
for the March Option Agreement as well as the July Option Agreement.
4. CONFIDENTIALITY AND NON-COMPETITION. Mr. Gawron hereby
acknowledges and agrees that the continued effectiveness of the confidentiality
and non-competition provisions set forth in the Employment Agreement is of
significance to CPI. Accordingly, Mr. Gawron and CPI hereby agree that, although
all rights and obligations of Mr. Gawron and CPI under the Employment Agreement
are terminated by this Severance Agreement, the confidentiality and
non-competition provisions of the Employment Agreement are amended and restated
in their entirety to remain in
- 2 -
<PAGE> 3
full force and effect as a part of this Severance Agreement as follows:
(a) Mr. Gawron acknowledges that in and as a result of his
employment by CPI and its affiliates he made use of, acquired, and/or added to
confidential information of a special and unique nature and value relating to
such matters as CPI's patents, copyrights, proprietary information, trade
secrets, systems, procedures, manuals, confidential reports, pricing structures,
compensation structures, marketing strategies, and lists and identities of
customers, as well as the nature and type of services rendered by CPI, the
products, the equipment, and methods used and preferred by CPI's customers, and
the prices and fees paid by them (all of which are deemed for all purposes
confidential and proprietary information). Mr. Gawron hereby agrees that it is
reasonable and necessary for the protection of CPI, that Mr. Gawron agree, and
as a material inducement to CPI to enter into this Severance Agreement and to
pay to Mr. Gawron the severance benefits stated herein, Mr. Gawron hereby
covenants and agrees, that he will not (nor will any member of his immediate
family that resides with him), directly or indirectly, except (x) with the prior
written consent of CPI, which consent may be granted or withheld at its sole
discretion, or (y) if Mr. Gawron becomes an employee or consultant to Anicom,
Inc. or any of its affiliates:
(i) during the Noncompetition Period (as hereinafter
defined), become an officer, director, stockholder, partner,
associate, employee, owner, agent, creditor, independent
contractor, co-venturer, consultant or otherwise, or have a
financial interest in or be associated with any other person,
corporation, firm or business that is then a customer of or
supplier to CPI or was a customer or supplier to CPI during the
two years prior to the Effective Date or that is engaged in the
wire and cable product manufacturing, distributing or
assembling businesses anywhere in the United States or in any
business directly or indirectly competitive with that of CPI or
its affiliates, as then constituted, or himself engage in such
business; provided, however, that nothing herein shall be
construed to prohibit Mr. Gawron from owning not more than 5%
of any class of securities (provided that Mr. Gawron and the
other "Seller" parties to the Stock Redemption Agreement, dated
as of May 31, 1996, by and among CPI's stockholders as of that
date, CPI and CTI, do not own, in the aggregate, in excess of
10% of any such class of securities) issued by an entity which
is subject to the reporting requirements of the Securities
Exchange Act of 1934; or
- 3 -
<PAGE> 4
(ii) during the Nonsolicitation Period (as hereinafter
defined), solicit, cause or authorize, directly or indirectly,
to be solicited for or on behalf of Mr. Gawron or third
parties, from parties who are customers of CPI, CTI, CTI's
affiliates that are directly or indirectly controlled by CTI
("CTI's Downstream Affiliates") during the Nonsolicitation
Period or that were customers of CPI during the two years prior
to the date of this Severance Agreement, any business similar
to the business transacted by or with such customer by CPI or
its affiliates; or
(iii) during the Nonsolicitation Period, accept or cause
or authorize, directly or indirectly, to be accepted for or on
behalf of Mr. Gawron or for third parties, any such business
from any customers of the CPI, CTI or CTI's Downstream
Affiliates that are customers during the Nonsolicitation Period
or were customers during the two years prior to the date of
this Severance Agreement; or
(iv) from and after the date hereof, use, publish,
disseminate or otherwise disclose, directly or indirectly, any
information heretofore or hereafter acquired, developed or used
by CPI, CTI, any of CTI's Downstream Affiliates, relating to
the present or former business of CPI, or the present or former
operations, employees or customers of CPI, which constitutes
proprietary or confidential information of CPI, CTI or CTI's
Downstream Affiliates ("Confidential Information"), including
without limitation any Confidential Information contained in
any customer lists, mailing lists and sources thereof,
statistical data and compilations, trademarks, patents,
inventions, formulae, methods, processes, agreements,
contracts, manuals or any other documents, but excluding any
information to the extent expressly set forth in the press
releases or in publicly available documents filed with the
Securities and Exchange Commission by CPI or CTI; provided,
however, that this clause (iv) shall not be applicable to the
extent that Mr. Gawron is required to testify in a judicial or
regulatory proceeding pursuant to the order of a judge or
administrative law judge after Mr. Gawron requests that the
confidentiality of such Confidential Information be preserved;
and provided further, that this clause (iv) shall not prohibit
Mr. Gawron from disclosing Confidential Information to his
accounting and legal advisors to the extent such advisors have
agreed to preserve the confidentiality of such Confidential
Information; or
- 4 -
<PAGE> 5
(v) during the Nonsolicitation Period,
(A) solicit, entice, persuade or induce, directly
or indirectly, any employee (or person who within the
preceding 90 days was an employee) of CPI or its
affiliates or any other person who is under contract with
or rendering services to the CPI or its affiliates, to
terminate his or her employment by, or contractual
relationship with, CPI or such affiliate or to refrain
from extending or renewing the same (upon the same or new
terms) or to refrain from rendering services to or for
CPI or such affiliate or to become employed by or to
enter into contractual relations with any person or
entity other than CPI or such affiliate or to enter into
a relationship with a competitor of CPI or its
affiliates, or
(B) authorize or assist in the taking of any such
actions by any person other than CPI or its affiliates.
(b) All lists, records files, and documents of any type
whatsoever (including but not limited to computer disks, cards (including, but
not limited to, business cards, address cards and "rolodex" cards), magnetic
tapes, or film), relating to the business of CPI or the business of any of the
licensees or customers of CPI, which Mr. Gawron has prepared, used, or come into
contact with, shall be and remain solely and exclusively the proprietary
property of CPI and shall be delivered to CPI on the Effective Date, and Mr.
Gawron shall retain no excerpts, notes, photographs, photocopies, reproductions,
samples, prototype models or copies thereof. As used in this Paragraph 4,
"licensees" and "customers" shall include, in addition to those present
licensees and customers of CPI, those prospective licensees or customers which
CPI shall have solicited for the transaction of business or conducted business
during the two years prior to the Effective Date.
(c) For purposes of this Agreement, the term "Noncompetition
Period" shall mean the period commencing on the Effective Date and ending on May
17, 1999. For purposes of this Severance Agreement, the term "Nonsolicitation
Period" shall mean the period commencing on the Effective Date and ending on May
17, 2001.
(d) The invalidity or non-enforceability of this Section 4 in
any respect shall not affect the validity or enforceability of any other portion
of this Section 4. In the event that any provision of this Section 4 shall be
held invalid or unenforceable by a court of competent jurisdiction by reason
- 5 -
<PAGE> 6
of the geographic or business scope or the duration thereof, such invalidity or
unenforceability shall attach only to the scope or duration of such provision
and shall not affect or render invalid or unenforceable any other provision of
this Section 4, and, to the fullest extent permitted by law, this Section 4
shall be construed as if the geographic or business scope or the duration of
such provision had been more narrowly drafted so as not to be invalid or
unenforceable.
(e) Mr. Gawron acknowledges that CPI would suffer irreparable
harm if Mr. Gawron were to breach the provisions of this Section 4 and that the
remedy for CPI at law for any such breach is and will be insufficient and
inadequate and that in the event of such breach (or a threatened breach) of the
provisions of this Section 4, CPI shall be entitled to equitable relief,
including by way of temporary and permanent injunction, in addition to any
remedies that CPI may have at law.
5. RELEASE. Mr. Gawron, for him and for his affiliates,
successors and assigns, does hereby fully and completely RELEASE, ACQUIT and
FOREVER DISCHARGE CPI and CTI, and their respective affiliates, subsidiaries or
other related entities as well as their shareholders, officers, directors,
employees or agents, from any and all claims, debts, demands, actions, causes of
action, suits, sums of money, contracts, agreements, judgements and liabilities,
including attorney's fees, whatsoever, both in law and in equity ("claims") of
any kind and any character that he ever had, might now or hereafter have, or
could have had, whether in contract, tort or otherwise, including specifically
any claims of discrimination that he may claim in connection with the Employment
Agreement, his employment or the termination thereof. This includes but is not
limited to, claims arising under the federal, state or local laws prohibiting
discrimination on the basis of one's sex, race, age, disability, national
origin, color or religion, or other reason forbidden by federal, state or local
laws or claims growing out of any legal restrictions on CPI's right to terminate
its employees. This also specifically includes the waiver of any rights or
claims arising under the Age Discrimination in Employment Act of 1967 (29 U.S.C.
621 et seq.). It is also understood that the execution of this Agreement shall
be construed as a release and covenant not to sue, that Mr. Gawron will not sue
CPI or CTI or any subsidiary, affiliate, officer, director, employee or
committee thereof, or file any claims of any sort with any administrative agency
for anything arising out of his employment or the Employment Agreement and the
terms of this Agreement supersede any and all other agreements relating to his
employment whether written or oral.
- 6 -
<PAGE> 7
6. ADVICE OF COUNSEL. CPI and CTI encourage Mr. Gawron to
carefully review the terms of this Severance Agreement and, if he wishes, to
seek advise and counsel from an attorney before signing this Severance
Agreement.
7. NOTICES. Any notices or other communications required or
permitted to be sent hereunder shall be in writing and shall be duly given if
personally delivered or sent postage pre-paid by certified or registered mail,
return receipt requested, or sent by electronic transmission and confirmed by
mail within two business days of such transmission, as follows:
(a) If to Mr. Gawron:
Mr. Duane A. Gawron
5265 Isleworth CC Drive
Windermere, Florida 34786
(b) If to CPI or CTI:
Connectivity Products Incorporated
680 Mechanic Street
Suite 1201
Leominster, Massachusetts 01453
Attention:
James S. Harrington,
Chief Executive Officer
With a copy to:
Zimet, Haines, Friedman & Kaplan
460 Park Avenue
New York, New York 10022
Attention:
Herbert M. Friedman, Esq.
Either party may change his or its address for the sending of notice to such
party by written notice to the other party sent in accordance with the
provisions hereof.
8. ENTIRE AGREEMENT; AMENDMENT. This Severance Agreement
contains the entire agreement and understanding between the parties hereto in
respect of the subject matter hereof and supersedes, cancels and annuls any
prior or contemporaneous written or oral agreement, understandings, commitments
and practices between them respecting the subject matter hereof. The subject
matter hereof and, in particular, the provisions of Section 5 of this Agreement,
shall not be deemed to include the Redemption Note and the Contingent Note,
dated May 31, 1996,
- 7 -
<PAGE> 8
payable by CPI to Mr.Gawron or the Stockholders' Agreement dated May 17, 1996 to
which Mr. Gawron, certain other stockholders of CPI and CPI are parties which
remain in full force and effect. This Severance Agreement may not be altered or
amended except by a writing, duly executed by the party against whom such
alteration or amendment is sought to be enforced.
9. GOVERNING LAW. This Severance Agreement shall be governed
by and construed in accordance with the laws of the State of Florida with
respect to agreements made and to be performed wholly therein.
10. ASSIGNMENT. This Agreement is personal and non-assignable
by Mr. Gawron. It shall inure to the benefit of, and be the valid and binding
obligation of, any corporation or other entity with which CPI shall merge or
consolidate or to which CPI shall lease or sell all or substantially all of its
assets and may be assigned by CTI to any affiliate of CTI or to any corporation
or entity with which such affiliate shall merge or consolidate or which shall
lease or acquire all or substantially all of the assets of such affiliate.
11. PERIOD TO REVIEW AND REVOKE. After Mr. Gawron has had the
chance to review this Agreement and to consult with his attorney, if he wishes,
he should sign the Agreement and the Acknowledgement, attached hereto as Exhibit
B, and return them to CPI within 22 days.
After Mr. Gawron has executed and delivered this Agreement, he
shall have seven (7) days following the date of execution during which time he
may revoke this Agreement, provided, however, that, if he elects to return an
executed copy of the document to CPI before the expiration of 22 days from the
date hereof, he may revoke this Agreement at any time before the later to occur
of seven (7) days following the date of execution or 22 days after the date
hereof. If CPI does not receive a written revocation from Mr. Gawron, or his
attorney, prior to the expiration of the period in which he may revoke this
Agreement, this Agreement will become effective on the date after the expiration
of the applicable revocation period.
- 8 -
<PAGE> 9
IN WITNESS WHEREOF, each of the parties hereto has executed
this Agreement as of the day and year first above written.
/s/ Duane A. Gawron 8/29/97
---------------------------------------------
Duane A. Gawron
CONNECTIVITY PRODUCTS INCORPORATED
By: /s/ James S. Harrington
------------------------------------------
Title: Chief Executive Officer
CONNECTIVITY TECHNOLOGIES INC.
By: /s/ James S. Harrington
------------------------------------------
Title: Chief Executive Officer
- 9 -
<PAGE> 10
EXHIBIT A
I acknowledge that I have been given the opportunity to
consider this Severance Agreement for at least twenty-one (21) days, that I have
been advised to discuss this agreement with an attorney of my choice, that I
have carefully read and fully understand and agree to all of the provisions of
this agreement and that I am voluntarily entering into this Severance Agreement.
Finally, I also understand that I have seven (7) days after I
sign this Severance Agreement (or twenty-two days after the date hereof, if
later) to change my mind and that I may revoke this Severance Agreement by
providing written notice of revocation to you prior to the expiration of the
applicable period.
8/29/97 /s/ Duane A. Gawron
- ----------------------- --------------------------------
Date of Execution Duane A. Gawron
- 10 -
<PAGE> 1
EXHIBIT 11 - COMPUTATION OF EARNINGS PER SHARE
Earnings per common share were computed as follows:
<TABLE>
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED
--------------------------------------- ----------------------------------------
SEPTEMBER 30, 1997 SEPTEMBER 30, 1996 SEPTEMBER 30, 1997 SEPTEMBER 30, 1996
<S> <C> <C> <C> <C>
Net income applicable to common
shares: $1,176,131 $ 191,000 $1,174,850 $ 366,000
========== ========== ========== ==========
Weighted average number of common
shares and of common share equivalents:
Weighted average common shares 5,565,074 5,508,057 5,565,074 5,565,325
Common share equivalents pursuant
to APB 15 171,559 508,196 109,006 502,541
---------- ---------- ---------- ----------
Total primary weighted average number
of common shares and common share
equivalents 5,736,633 6,016,252 5,674,080 6,067,866
Additional shares for full dilution
pursuant to APB 15 -- --
---------- ---------- ---------- ----------
Total fully diluted average number of
common shares and common share
equivalents 5,736,633 6,016,252 5,674,080 6,067,866
========== ========== ========== ==========
Net income per share:
Primary $ 0.21 $ 0.03 $ 0.21 $ 0.06
========== ========== ========== ==========
Fully diluted $ 0.21 $ 0.03 $ 0.21 $ 0.06
========== ========== ========== ==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 210,884
<SECURITIES> 3,687,073
<RECEIVABLES> 9,913,048
<ALLOWANCES> 0
<INVENTORY> 7,096,938
<CURRENT-ASSETS> 21,468,146
<PP&E> 6,928,458
<DEPRECIATION> 0
<TOTAL-ASSETS> 44,757,003
<CURRENT-LIABILITIES> 11,764,206
<BONDS> 0
0
0
<COMMON> 222,613
<OTHER-SE> 14,904,810
<TOTAL-LIABILITY-AND-EQUITY> 44,757,003
<SALES> 12,418,175
<TOTAL-REVENUES> 0
<CGS> 9,953,673
<TOTAL-COSTS> 11,982,457
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 377,558
<INCOME-PRETAX> 72,218
<INCOME-TAX> 81,803
<INCOME-CONTINUING> (22,473)
<DISCONTINUED> 1,197,323
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,174,850
<EPS-PRIMARY> .21
<EPS-DILUTED> .21
</TABLE>
