<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For Quarter Ended September 28, 1996
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 33-97056
CALMAR INC.
(exact name of registrant as specified in its charter)
Delaware 95-3833709
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
333 South Turnbull Canyon Road
City of Industry, California 91745
(Address of principal executive offices)
Registrant's telephone number, including area code: (818) 330-3161
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for a shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES [X] NO [_]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
3,097,031 shares of Common Stock, par value $.01 per share, as of November 12,
1996.
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Page 1 of 15 Pages
Exhibit Index Appears at Page: 15
<PAGE>
CALMAR INC. AND SUBSIDIARIES
Index to Form 10-Q
For The Three-Month and Nine-Month Periods Ended September 28, 1996
and September 30, 1995
<TABLE>
<CAPTION>
Pages
-----
<S> <C>
PART I - FINANCIAL INFORMATION:
- --------------------------------
Item 1 - Financial Statements
--------------------
Condensed Consolidated Balance Sheets at
September 28, 1996 (Unaudited) and December 31, 1995........................ 3
Condensed Consolidated Statements of Operations
for the Three-Month and Nine-Month Periods Ended
September 28, 1996 and September 30, 1995 (Unaudited)....................... 4
Condensed Consolidated Statements of Cash Flows
for the Three-Month and Nine-Month Periods Ended
September 28, 1996 and September 30, 1995 (Unaudited)....................... 5
Notes to Condensed Consolidated Financial Statements........................ 6-7
Item 2 - Management's Discussion and Analysis of
---------------------------------------
Financial Condition and Results of Operations...................... 8-12
---------------------------------------------
PART II - OTHER INFORMATION:
- ----------------------------
Item 1 - Legal Proceedings.................................................. 13
-----------------
Item 6 - Exhibits and Reports on Form 8-K................................... 13
--------------------------------
</TABLE>
2
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
--------------------
CALMAR INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Dollars in Thousands)
<TABLE>
<CAPTION>
September 28, December 31,
1996 1995
(Unaudited)
------------- ------------
<S> <C> <C>
Assets
------
Current assets:
Cash and cash equivalents $ 4,179 $ 9,037
Accounts receivable, less allowance for doubtful
accounts of $1,485 in 1996 and $1,401 in 1995 38,704 34,694
Inventories 17,944 17,421
Income taxes receivable 301 486
Prepaid expenses 1,607 2,460
--------- ---------
Total current assets 62,735 64,098
Property and equipment, net 103,605 111,076
Cost in excess of net assets acquired, less accumulated
amortization of $25,522 in 1996 and $23,007 in 1995 94,487 97,002
Other intangible assets, less accumulated amortization of
$12,357 in 1996 and $13,231 in 1995 6,676 7,752
Other assets, net 9,260 9,857
--------- ---------
$ 276,763 $ 289,785
========= =========
Liabilities and Stockholders' Deficiency
----------------------------------------
Current Liabilities:
Short-term borrowings $ - $ 390
Current installments of long-term debt 5,050 7,278
Accounts payable 17,268 17,887
Accrued liabilities 20,451 19,675
--------- ---------
Total current liabilities 42,769 45,230
Long-term debt 230,505 235,785
Deferred income taxes 12,505 13,430
Other liabilities 19,126 18,959
--------- ---------
Total liabilities 304,905 313,404
--------- ---------
Stockholders' deficiency:
Preferred stock, par value $.01 per share; liquidation
preference aggregating $54,250 for all outstanding
preferred stock:
Series A Preferred Stock, liquidation preference $100
per share; authorized 450,000 shares; issued and
outstanding 442,500 shares 4 4
Series B Preferred Stock, liquidation preference $10
per share; authorized 1,000,000 shares; issued and
outstanding 1,000,000 shares 10 10
Common stock, par value $.01 per share. Authorized
8,500,000 shares; issued and outstanding 3,097,031
shares 31 31
Additional paid-in capital 77,986 77,986
Accumulated deficit (102,427) (99,386)
Accumulated translation adjustment (3,196) (1,725)
Notes receivable from officers for purchase of common stock (550) (539)
--------- ---------
Total stockholders' deficiency (28,142) (23,619)
--------- ---------
$ 276,763 $ 289,785
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
CALMAR INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
(Dollars in Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
THREE-MONTH NINE-MONTH
PERIODS ENDED PERIODS ENDED
------------------------------- --------------------------
Sept. 28, Sept. 30, Sept. 28, Sept. 30,
1996 1995 1996 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net sales $55,236 $ 53,211 $165,263 $174,097
Cost of sales 41,099 40,988 123,038 130,262
------- -------- -------- --------
Gross profit 14,137 12,223 42,225 43,835
Selling, general and administrative expenses 9,116 8,744 27,300 27,413
------- -------- -------- --------
Operating income 5,021 3,479 14,925 16,422
Other income 159 411 1,028 1,021
Interest expense (6,062) (7,053) (18,503) (21,059)
------- -------- -------- --------
Loss before income tax provision (882) (3,163) (2,550) (3,616)
Income tax provision 204 304 491 1,374
------- -------- -------- --------
Loss before extraordinary item (1,086) (3,467) (3,041) (4,990)
Extraordinary item--loss on early extinguishment
of debt, net of income taxes - (9,529) - (9,529)
------- -------- -------- --------
Net loss $(1,086) $(12,996) $ (3,041) $(14,519)
======= ======== ======== ========
Loss per share of common stock:
Loss before extraordinary item $ (1.64) $ (2.25) $ (4.71) $ (4.84)
Extraordinary item - (3.10) - (3.08)
------- -------- -------- --------
Net loss per share of common stock $ (1.64) $ (5.35) $ (4.71) $ (7.92)
======= ======== ======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
CALMAR INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(Dollars in Thousands)
<TABLE>
<CAPTION>
THREE-MONTH NINE-MONTH
PERIODS ENDED PERIODS ENDED
------------------------- ------------------------
Sept. 28, Sept. 30, Sept. 28, Sept. 30,
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss $(1,086) $(12,996) $ (3,041 ) $ (14,519)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Extraordinary item -- loss on early extinguishment of debt - 9,529 - 9,529
Depreciation and amortization 5,772 6,237 17,841 18,836
Amortization of discount on notes payable 12 112 93 324
Additions to notes receivable from officers (3) (7) (11) (11)
Gain on sale of property and equipment (3) (3) (7) (31)
Deferred income tax benefit (199) (328) (794) (689)
Changes in assets and liabilities:
Accounts receivable (683) 4,389 (4,806) (3,041)
Inventories (1,344) 1,237 (980) (766)
Income taxes receivable (62) 2 162 413
Prepaid expenses 562 (461) 780 622
Accounts payable 3,259 (2,965) (55) (4,447)
Accrued liabilities (3,227) (5,408) 1,087 (3,249)
Other liabilities 51 191 524 943
------- -------- -------- ---------
Net cash provided by operating activities 3,049 (471) 10,793 3,914
------- -------- -------- ---------
Cash flows from investing activities:
Purchases of property and equipment (2,398) (2,568) (7,086) (7,257)
Proceeds from sales of equipment 7 (14) 14 93
Increase in other intangible assets (3) 1 (67) (2)
Increase in other assets (45) (139) (125) (499)
------- -------- -------- ---------
Net cash used in investing activities (2,439) (2,720) (7,264) (7,665)
------- -------- -------- ---------
Cash flows from financing activities:
Repayments of short-term borrowings - 781 (376) (82)
Net change in revolver - (8,419) - -
Proceeds from issuance of senior debt - 225,000 - 225,000
Redemption of senior debt - (194,847) - (194,847)
Payment of deferred financing fees - (7,399) - (7,399)
Payment of call premiums for redemption of senior debt - (5,697) - (5,697)
Proceeds from issuance of long-term debt - 248 - 2,995
Principal payments on long-term debt (912) (2,077) (7,887) (11,159)
Proceeds from issuance of common stock - 1 - 1
Repurchase of common stock - (25) - (25)
------- -------- -------- ---------
Net cash provided by (used) in financing activities (912) 7,566 (8,263) 8,787
------- -------- -------- ---------
Effect of exchange rate changes on cash and cash
equivalents 28 252 (124) 990
------- -------- -------- ---------
Net increase (decrease) in cash and cash equivalents (274) 4,627 (4,858) 6,026
Cash and cash equivalents, beginning of period 4,453 4,037 9,037 2,638
------- -------- -------- ---------
Cash and cash equivalents, end of period $ 4,179 $ 8,664 $ 4,179 $ 8,664
======= ======== ======== =========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Income taxes $ 655 $ 826 $ 1,528 $ 2,251
======= ======== ======== =========
Interest $ 9,363 $ 12,146 $ 21,649 $ 25,820
======= ======== ======== =========
Equipment acquired in exchange for long-term debt $ - $ - $ 741 $ 2,213
======= ======== ======== =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
CALMAR INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
For The Three-Month and Nine-Month Periods
Ended September 28, 1996 and September 30, 1995
(1) Condensed Consolidated Financial Statements
- --- -------------------------------------------
The accompanying unaudited condensed consolidated financial statements do
not include all information and footnotes necessary for a fair presentation
of consolidated financial position, results of operations, and cash
flows, in conformity with generally accepted accounting principles, and
should be read in conjunction with the Calmar Inc. and Subsidiaries (the
"Company") Consolidated Financial Statements for the year ended December
31, 1995. However, the information furnished does reflect all adjustments
(consisting only of a normal and recurring nature) which are, in the
opinion of management, necessary for a fair presentation of the results for
the interim periods presented, but are not necessary indicative of the
results of operations and cash flows for a full fiscal year.
(2) Loss Per Share of Common Stock
- --- ------------------------------
The calculations of loss per share of common stock are as follows (dollars
in thousands, except per share data):
<TABLE>
<CAPTION>
THREE-MONTH NINE-MONTH
PERIODS ENDED PERIODS ENDED
---------------------------------------------------------
SEPT. 28, SEPT. 30, SEPT. 28, SEPT. 30,
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Loss before extraordinary item $ (1,086) $ (3,467) $ (3,041) $ (4,990)
Undeclared dividends on preferred stock (3,991) (3,445) (11,546) (9,966)
---------- ---------- ---------- ----------
Loss attributable to common stockholders
before extraordinary item (5,077) (6,912) (14,587) (14,956)
Extraordinary item - (9,529) - (9,529)
---------- ---------- ---------- ----------
Loss attributable to common stockholders $ (5,077) $ (16,441) $ (14,587) $ (24,485)
========== ========== ========== ==========
Weighted average common shares
outstanding 3,097,031 3,074,531 3,097,031 3,091,198
========== ========== ========== ==========
Loss per share of common stock:
Loss before extraordinary item $ (1.64) $ (2.25) $ (4.71) $ (4.84)
Extraordinary item - (3.10) - (3.08)
---------- ---------- ---------- ----------
Net loss per share of common stock $ (1.64) $ (5.35) $ (4.71) $ (7.92)
========== ========== ========== ==========
</TABLE>
Loss per share of common stock does not include the effect of common share
equivalents (stock options and warrants) because their inclusion would be
anti-dilutive. Cumulative dividends aggregating $56.1 million have
accumulated on the Company's outstanding Series A and Series B Preferred
Stock through September 28, 1996.
(3) Inventories
- --- -----------
Inventories are stated at the lower of cost or market using the first-in,
first-out (FIFO) method and consist of the following (dollars in
thousands):
<TABLE>
<CAPTION>
SEPT. 28, DEC. 31,
1996 1995
------- -------
<S> <C> <C>
Raw material $ 4,605 $ 4,817
Work in process 8,629 8,843
Finished goods 4,710 3,761
------- -------
$17,944 $17,421
======= =======
</TABLE>
6
<PAGE>
(4) Income Taxes
- --- ------------
The Company is currently under audit by the Internal Revenue Service (IRS)
for the years ended December 31, 1987 through 1991. It is expected that the
IRS will complete its examination during the fourth quarter of fiscal 1996.
As the Company has not yet received the Revenue Agent's report, the amount
of any potential liability for taxes, interest and penalties is not yet
determinable. However, based upon preliminary Notices of Proposed
Adjustments and discussions with the IRS, the Company anticipates that a
Revenue Agent's report could be issued which would propose adjustments
relating to deductions taken in connection with the purchase of a
controlling interest in the Company by FS Equity Partners II, L.P. in 1988.
With respect to these possible adjustments, the Company believes that its
positions set forth in its tax returns are correct and it will vigorously
contest any such adjustments if so proposed.
(5) Subsequent Event
- --- ----------------
In October 1996, the Company amended its Senior Secured Credit Facility.
The amendment replaced its current lender under the revolving facility
within the Senior Secured Credit Facility, reduced the maximum borrowings
permitted under the revolving facility from $20.0 million to $12.0 million,
revised certain financial covenants pursuant to the Senior Secured Credit
Facility and provided some technical revisions to the agreement.
In connection with obtaining the amendment and significantly modifying the
Senior Secured Credit Facility, the Company incurred fees (to lenders and
advisors) of approximately $0.8 million. These amounts will be recorded as
debt issue costs and will be amortized over the remaining terms of the
respective components of the Senior Secured Credit Facility.
The Company expects to incur an extraordinary loss on the early
extinguishment of the original Senior Secured Credit Facility in the
fourth quarter of fiscal 1996. The extraordinary loss is expected to
aggregate $0.5 million.
7
<PAGE>
Item 2 - Management's Discussion and Analysis of
---------------------------------------
Financial Condition and Results of Operations
---------------------------------------------
CALMAR INC. AND SUBSIDIARIES
For The Three-Month and Nine-Month Periods
Ended September 28, 1996 and September 30, 1995
GENERAL
The following discussion and analysis provides information which management
believes is relevant to an assessment and understanding of the Company's
consolidated results of operations and financial condition. The discussion
should be read in conjunction with the consolidated financial statements and
notes thereto which were included in the December 31, 1995 Form 10-K.
The following table sets forth selected results of operations as percentages of
net sales for the periods indicated:
<TABLE>
<CAPTION>
THREE-MONTH NINE-MONTH
PERIODS ENDED PERIODS ENDED
---------------------- ----------------------
SEPT. 28, SEPT. 30, SEPT. 28, SEPT. 30,
1996 1995 1996 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Sprayers 60.8% 57.1% 59.4% 57.3%
Dispensers 29.5 32.0 30.8 31.7
Other Products 9.7 10.9 9.8 11.0
----- ----- ----- -----
Net Sales 100.0% 100.0% 100.0% 100.0%
===== ===== ===== =====
Gross Profit 25.6% 23.0% 25.6% 25.2%
Selling, General & Admin. Expenses 16.5% 16.5% 16.6% 15.8%
----- ----- ----- -----
Operating Income 9.1% 6.5% 9.0% 9.4%
===== ===== ===== =====
</TABLE>
RESULTS OF OPERATIONS
Comparison of the Three-Month Period Ended September 28, 1996 to the Three-Month
Period Ended September 30, 1995
Net sales for the three-month period ended September 28, 1996, were $55.2
million, an increase of $2.0 million or 3.8% above the comparable 1995 period.
Sprayer sales increased $3.1 million or 10.3% from the comparable period in
1995. The increase in trigger sprayer and fine mist sprayer sales resulted
primarily from strong demand by certain Asian-Pacific licensees, as well as
improved demand from several domestic based customers. Fine mist sprayer sales
in Europe increased due to improved demand and customer new product launches.
Dispenser sales decreased $0.7 million or 4.3%. Demand for large dispensers in
North America has declined primarily due to some switching by certain customers
to lower priced alternatives. Such decrease was partially offset by regular
dispenser sales which increased due to customer product introductions in North
America and a newly developed dispenser in Europe. Net sales were negatively
impacted by changes in foreign exchange rates of $0.8 million.
Gross profit for the three-month period ended September 28, 1996, increased $1.9
million or 15.7% from the comparable 1995 period. As a percentage of sales,
gross profit increased from 23.0% to 25.6%. The increase
8
<PAGE>
in gross profit is primarily attributable to strong sales volume growth
(particularly in trigger sprayers and regular dispensers) and the resulting
improved absorption of fixed manufacturing costs. Another contributing factor is
enhanced automation of certain assembly operations offset, in part, by lower
average selling prices.
Selling, general and administrative expenses were $9.1 million or 16.5% of net
sales for the three-month period ended September 28, 1996 as compared to $8.7
million or 16.5% of sales for the comparable 1995 period. The increase in
selling, general and administrative expenses for such period results from higher
legal expenses and bad debt expenses offset by lower selling expenses, lower
amortization including a fully amortized license agreement.
Operating income for the three-month period ended September 28, 1996, increased
to $5.0 million or 9.1% of net sales, as compared to $3.5 million or 6.5% of net
sales, from the comparable 1995 period. The increase was the result of higher
sales volume and the resulting increased gross profit offset, in part, by the
increased selling, general and administrative expenses.
Interest expense for the three-month period ended September 28, 1996, decreased
to $6.1 million as compared to $7.1 million for the comparable 1995 period. The
decrease was due to lower interest rates resulting from the refinancing of the
majority of long-term debt in 1995 and lower debt outstanding. As no income tax
benefit was recorded against the U.S. losses due to uncertainty of its ultimate
realization, the income tax provisions for the three-month periods ended in 1996
and 1995 were primarily related to income from the Company's European
operations.
The loss before extraordinary item for the three-month period ended September
28, 1996, decreased to $1.1 million as compared to $3.5 million for the
comparable 1995 period. The decrease in loss before extraordinary item is due
primarily to higher operating income and lower interest expense.
During 1995, the extraordinary loss from early extinguishment of debt, net of
income taxes, resulted from the recognition of call premiums of redeemed notes,
certain fees and a write-off of the unamortized portion of related deferred
financing costs in connection with a certain refinancing transaction.
Comparison of the Nine-Month Period Ended September 28, 1996 to the Nine-Month
Period Ended September 30, 1995
Net sales for the nine-month period ended September 28, 1996, were $165.3
million, a decrease of $8.8 million or 5.1% from the comparable 1995 period.
Sprayer sales decreased $1.6 million or 1.6% from the comparable period in 1995.
Fine mist sprayer sales decreased in North America due primarily to lower sales
in the food applications segment and lower sales to a South American licensee,
while European demand for fragrance applications has been stalled by customer
related delays in new product introductions (which started to roll out in the
third quarter). Sales of regular sprayers declined due to the effects of non-
recurring product promotions during 1995 and lower demand. Trigger sprayer sales
increased in North America due to a large customer's improved market share
within the chemical and cleaning segment and incremental business from new
customers. Dispenser sales decreased $4.5 million or 8.2% from the comparable
period in 1995 due to the effects of non-recurring product promotions in North
America, the switch by certain customers toward lower priced alternatives, and
the timing of orders by one large customer. Net sales were negatively impacted
by changes in foreign exchange rates of $1.8 million.
Gross profit for the nine-month period ended September 28, 1996, decreased $1.6
million or 3.7% from the comparable 1995 period. As a percentage of sales,
gross profit increased from 25.2% to 25.6%. The decrease in gross profit is
attributable to lower net sales, increased outsourcing of molding requirements
and an unfavorable change of product mix in Europe. The slight improvement in
gross profit as a percentage of sales is due to lower unit costs attributable to
higher sales volume.
9
<PAGE>
Selling, general and administrative expenses were $27.3 million or 16.6% of net
sales for the nine-month period ended September 28, 1996 as compared to $27.4
million or 15.8% of sales for the comparable 1995 period. For the nine-months
ended 1996, lower selling expenses and lower amortization were offset, in part,
by higher compensation, bad debt expenses and certain legal expenses. The
increase in selling, general and administrative expense, as a percentage of
sales, reflects lower sales levels.
Operating income for the nine-month period ended September 28, 1996, decreased
to $14.9 million, or 9.0% of net sales, as compared to $16.4 million or 9.4% of
net sales, from the comparable 1995 period. The decrease resulted from the
reduction in gross profit, discussed above.
Interest expense for the nine-month period ended September 28, 1996, decreased
to $18.5 million as compared to $21.1 million for the comparable 1995 period.
The decrease reflects the benefit of lower interest rates resulting from the
refinancing of the majority of long-term debt in 1995. As no income tax benefit
was recorded against the U.S. losses due to uncertainty of its ultimate
realization, the income tax provisions for the nine-month periods ended in 1996
and 1995 were primarily related to income from the Company's European
operations. The decrease in the tax provision in 1996 reflects lower earnings
of nearly all European subsidiaries.
The loss before extraordinary item for the nine-month period ended September 28,
1996 decreased to $3.0 million as compared to $5.0 million for the comparable
1995 period. The decrease in loss before extraordinary item is principally
attributable to the decreases in interest expense and income tax provision
during 1996.
See the three-month period comparison for explanation of the extraordinary loss.
LIQUIDITY AND CAPITAL RESOURCES
The Company funds its cash needs through cash flow from operations, existing
cash balances, equipment financing and the revolving facility under the Senior
Secured Credit Facility. The Company's primary source of cash continues to be
its cash flow from operations. The net cash provided by operating activities
increased $6.9 million for the nine-month period ended September 28, 1996, from
the comparable 1995 period. The cash provided by the changes in accounts
payable and accrued liabilities were partially offset by the change in cash used
for accounts receivable. Working capital, at September 28, 1996, was $20.0
million compared to $18.9 million at December 31, 1995. The increase in working
capital is primarily attributed to an increase in accounts receivable and
decrease in current installments of long-term debt, offset by lower cash. The
Company has entered into certain interest rate cap agreements to reduce the risk
of significant fluctuations in interest rates on interest payments for the term
loan portion of the Senior Secured Credit Facility.
The net cash used in investing activities for the nine-month period ended
September 28, 1996, continued at nearly the same level as that used during the
corresponding 1995 period. For the nine-month period ended September 28, 1996,
capital expenditures were $7.8 million. The Company plans to fund new equipment
purchases through equipment financing and leasing, existing cash balances and
cash flow from operations. As of September 28, 1996, a certain European
subsidiary has entered into several non-cancelable commitments which currently
total $4.0 million for capital expenditures to increase its manufacturing
capacity. The related construction and cash outlays commenced during September
1996. In addition, such subsidiary has entered into a sale and lease-back
agreement for the construction of an adjacent manufacturing facility which, upon
completion, is expected to result in operating lease commitments totaling
approximately $4.0 million extended over a term of fourteen years.
The net cash provided by financing activities decreased $17.1 million for the
nine-month period ended September 28, 1996, due to the refinancing in 1995.
The revolving facility permitted borrowing of up to the lesser of $20.0 million
or the maximum amount permitted
10
<PAGE>
under an eligible borrowing base test and contains a $5.0 million sub-limit for
letters of credit. At September 28, 1996, the borrowing base test permitted
the Company to borrow up to $19.2 million. At such date, the Company had no
borrowings outstanding and letters of credit of $0.8 million, leaving $18.4
million available for borrowing. In October 1996, the Company amended its
Senior Secured Credit Facility. The amendment replaced its current lender under
the revolving facility within the Senior Secured Credit Facility, reduced the
maximum borrowings permitted under the revolving facility from $20.0 million to
$12.0 million, revised certain financial covenants pursuant to the Senior
Secured Credit Facility and provided some technical revisions to the agreement.
In connection with obtaining the amendment and significantly modifying the
Senior Secured Credit Facility, the Company incurred fees (to lenders and
advisors) of approximately $0.8 million. These amounts will be recorded as debt
issue costs and will be amortized over the remaining terms of the respective
components of the Senior Secured Credit Facility.
The Company expects to incur an extraordinary loss on the early extinguishment
of the original Senior Secured Credit Facility in the fourth quarter of fiscal
1996. The extraordinary loss is expected to aggregate $0.5 million. At the
date of the amendment, the Company had no borrowings outstanding and letters of
credit of $0.8 million, leaving $11.2 million available for borrowing.
The indenture which governs the terms of the Senior Subordinated Notes (the
"Indenture") and the Senior Secured Credit Facility contain significant
financial and operating covenants. The Indenture and Senior Secured Credit
Facility both contain certain covenants that, among other things, limit the
ability of the Company and its subsidiaries to incur debt, create liens securing
subordinated debt, sell or transfer assets, make restricted payments (dividends,
redemptions, investments, and unscheduled payments on subordinated debt) and
engage in certain transactions with affiliates and certain mergers. The Senior
Secured Credit Facility contain certain financial covenants, including, but not
limited to, covenants related to a minimum interest coverage ratio, a minimum
consolidated EBITDA, a maximum leverage ratio, a minimum current ratio and
limitations on capital expenditures. The Senior Secured Credit Facility and
Indenture also contain customary events of default, including certain changes of
control of the Company. As of September 28, 1996, the Company was in compliance
with all covenants contained in such debt instruments.
The terms of the Indenture allow for additional indebtedness, including Senior
Debt (as defined in the Indenture) and secured indebtedness. The incurrence of
additional indebtedness is limited by certain conditions, including compliance
with a Consolidated Cash Flow Ratio (as defined in the Indenture), calculated on
a pro forma basis to reflect such additional indebtedness, of 2.0 to 1.0. At
September 28, 1996, the Consolidated Cash Flow Ratio was 1.8 to 1.0. In addition
and notwithstanding the foregoing, the Indenture permits the Company, and in
certain cases its subsidiaries, to incur certain specified additional
indebtedness without regard to compliance with the Consolidated Cash Flow Ratio
referred to above. The terms of the Senior Secured Credit Facility permits the
Company, and in certain cases its subsidiaries, to incur additional indebtedness
only under certain circumstances.
The Company has a substantial amount of indebtedness. The degree to which the
Company is leveraged could have important consequences to investors, including
the following: (i) the Company's ability to obtain additional financing in the
future for refinancing indebtedness, working capital, capital expenditures,
acquisitions or general corporate purposes may be impaired, (ii) a substantial
portion of the Company's consolidated cash flow from operations must be used for
the payment of interest and principal on its indebtedness, (iii) the Company may
be more highly leveraged than its competitors, which may place it at a
competitive disadvantage, (iv) the Indenture and the Senior Secured Credit
Facility contain restrictive financial and operating covenants, (v) the
borrowings under the Senior Secured Credit Facility have floating rates of
interest, which cause the Company to be vulnerable to increases in interest
rates, and (vi) the Company's substantial degree of leverage could make it more
vulnerable to a downturn in general economic conditions.
Cumulative dividends aggregating $56.1 million have accumulated on the Company's
outstanding Series A
11
<PAGE>
and Series B Preferred Stock through September 28, 1996.
The Company had unused credit facilities available to its European subsidiaries
of $7.2 million at September 28, 1996.
The Company believes that cash flow from operations, existing cash balances and
the financial resources available to it, including the revolving facility under
the Senior Secured Credit facility and equipment financing and leasing, will be
sufficient to meet its debt service, working capital and capital investment
needs through the term of the revolving facility.
The Company is currently under audit by the Internal Revenue Service (IRS) for
the years ended December 31, 1987 through 1991. It is expected that the IRS will
complete its examination during the fourth quarter of fiscal 1996. As the
Company has not yet received the Revenue Agent's report, the amount of any
potential liability for taxes, interest and penalties is not yet determinable.
However, based upon preliminary Notices of Proposed Adjustments and discussions
with the IRS, the Company anticipates that a Revenue Agent's report could be
issued which would propose adjustments relating to deductions taken in
connection with the purchase of a controlling interest in the Company by FS
Equity Partners II, L.P. in 1988. With respect to these possible adjustments,
the Company believes that its positions set forth in its tax returns are correct
and it will vigorously contest any such adjustments if so proposed.
12
<PAGE>
PART II - OTHER INFORMATION
---------------------------
Item 1 - Legal Proceedings
-----------------
See note 4 to the Condensed Consolidated Financial
Statements and "Management's Discussion and Analysis
of Financial Condition and Results of Operations -
Liquidity and Capital Resources" for a discussion of
the pending tax audit of the Company.
Item 6 - Exhibits and Reports on Form 8-K.
--------------------------------
(a) Exhibit 10.1 - Calmar Inc. First Amendment to
Credit Agreement
Exhibit 27.1 - Financial Data Schedule
(b) No reports on Form 8-K were filed during the
three-month period ended
September 28, 1996.
13
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized on this 12th day of November, 1996.
CALMAR INC.
By: /s/ C. Richard Huebner
-----------------------------
C. Richard Huebner, in his
dual capacity as a duly
authorized Officer of the
Registrant, Executive Vice
President, and as Registrant's
Principal Financial Officer.
14
<PAGE>
CALMAR INC. AND SUBSIDIARIES
Exhibit Index
<TABLE>
<CAPTION>
Exhibit Page
Number Description Number
- ------- ----------- ------
<S> <C> <C>
10.1 Calmar Inc. First Amendment to Credit Agreement 16-36
27.1 Financial Data Schedule 37
</TABLE>
15
<PAGE>
EXECUTION
CALMAR INC.
FIRST AMENDMENT
TO CREDIT AGREEMENT
This FIRST AMENDMENT TO CREDIT AGREEMENT (this "AMENDMENT") is dated as
of October 4, 1996 and entered by and among Calmar Inc., a Delaware corporation
("COMPANY"), the financial institutions listed on the signature pages hereof
("LENDERS"), Mellon Bank, N.A. ("MELLON"), and Banque Indosuez
("INDOSUEZ"), and is made with reference to that certain Credit Agreement
dated as of August 18, 1995 (the "CREDIT AGREEMENT"), by and among Company,
Pearl Street L.P., Bankers Trust Company, the financial institutions listed on
the signature pages thereto, Goldman, Sachs & Co. as syndication agent, Bankers
Trust Company, as administrative agent (Bankers Trust Company resigned as
administrative agent effective on the close of business on August 18, 1995, and
Mellon Bank, N.A. became the successor administrative agent), and Mellon Bank,
N.A. as documentation and collateral agent. Capitalized terms used herein
without definition shall have the same meanings herein as set forth in the
Credit Agreement.
RECITALS
WHEREAS, Mellon desires to resign as Administrative Agent, Collateral
Agent, Documentation Agent, Swing Line Lender and Issuing Lender;
WHEREAS, Company and Lenders desire to (i) provide for Indosuez to succeed
Mellon as Administrative Agent, Collateral Agent, Documentation Agent, Swing
Line Lender and Issuing Lender, (ii) provide for Mellon's Assignment to Indosuez
of its Revolving Loan Commitment, (iii) provide for the cancellation of any
outstanding Letters of Credit issued by Mellon pursuant to the Credit Agreement,
and the issuance of Letters of Credit by Indosuez in substitution therefor and
(iv) amend the Credit Agreement to decrease the Revolving Loan Commitments by
$8,000,000 to $12,000,000, amend certain negative covenants including the
financial covenants and make certain other amendments thereto as set forth
below;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:
<PAGE>
AMENDMENTS TO THE CREDIT AGREEMENT
1.1 AMENDMENTS TO SECTION 1: DEFINITIONS.
------------------------------------
A. Subsection 1.1 of the Credit Agreement is hereby amended by adding
thereto the following definition, which shall be inserted in proper alphabetical
order:
"COMPANY PREFERRED STOCK" means the Series A Preferred Stock and
Series B Preferred Stock of Company and any other class of preferred stock
which may be issued by Company from time to time with the consent of
Requisite Lenders.
B. Subsection 1.1 of the Credit Agreement is hereby further amended by
deleting the definitions of "Consolidated Current Liabilities", "Issuing
Lender" and "Permitted Joint Venture" in their entirety and substituting the
following therefor:
"CONSOLIDATED CURRENT LIABILITIES" means, as at any date of
determination, the total liabilities of Company and its Subsidiaries on a
consolidated basis which may properly be classified as current liabilities
in conformity with GAAP, including any Revolving Loans outstanding which
would be classified as current liabilities in conformity with GAAP and
excluding (i) any accrued but unpaid Transaction Costs and (ii) the current
portion of any Indebtedness for borrowed money which by its terms matures
more than one year from, or is directly renewable or extendable at the
option of Company to a date more than one year from, the date of creation
thereof.
"ISSUING LENDER" means Banque Indosuez.
"PERMITTED JOINT VENTURES" means a Subsidiary engaged in substantially
the same line of business as Company and its Subsidiaries on the date
hereof in which (i) at least 51% of the outstanding equity interests are
owned by Company or a Wholly Owned Subsidiary of Company, (ii) any equity
interests not owned by Company or a Wholly Owned Subsidiary of Company
(other than Regulatory Shares) are beneficially owned by non-Affiliates of
Company and (iii) Company or a Wholly Owned Subsidiary, as a general
partner or otherwise, controls the management, operations and policies."
1.2 AMENDMENT TO SECTION 2: AMOUNTS AND TERMS OF COMMITMENTS AND LOANS.
------------------------------------------------------------------
Subsection 2.1A(iii) of the Credit Agreement is hereby amended by deleting
the reference to "$20,000,000" contained therein and substituting
"$12,000,000" therefor.
2
<PAGE>
1.3 AMENDMENTS TO SECTION 7: COMPANY'S NEGATIVE COVENANTS.
------------------------------------------------------
A. INVESTMENTS. Subsection 7.3(vi) of the Credit Agreement is hereby
amended by deleting it in its entirety and substituting the following therefor:
"(vi) Company may make and own Investments consisting of
notes received from employees of Company and its Subsidiaries (a) in
connection with, and in an amount not to exceed the purchase price of,
their purchase of Company Common Stock or Company Preferred Stock, provided
such notes are secured by the Company Common Stock or Company Preferred
Stock being purchased with the proceeds thereof and (b) to the extent
approved by the Board of Directors, for any reasonable purpose to all
employees not to exceed $150,000 in aggregate amount outstanding at any
time."
B. RESTRICTED JUNIOR PAYMENTS. Subsection 7.5 shall be amended by deleting
in its entirety and substituting the following therefor:
"Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, declare, order, pay, make or set apart any sum for
any Restricted Junior Payment; provided that Company may (i) make regularly
--------
scheduled payments of principal and interest in respect of the Unsecured
Subordinated Notes in accordance with the terms of, and only to the extent
required by, and subject to the subordination provisions contained in the
Unsecured Subordinated Note Indenture, as the Unsecured Subordinated Note
Indenture may be amended from time to time to the extent permitted under
subsection 7.15, (ii) make, so long as no Potential Event of Default or
Event of Default shall have occurred and be continuing, payments to
purchase Company Common Stock, Company Preferred Stock or options, warrants
or rights to purchase or acquire Company Common Stock or Company Preferred
Stock (and payments of accrued and unpaid dividends in connection with any
such purchase of Company Preferred Stock) to officers or employees or
former officers or employees (or their trusts, estates or estate
beneficiaries) upon death, disability, retirement or termination of
employment from Company or its Subsidiaries not to exceed $1,000,000 during
each fiscal year, plus the amount of any Cash proceeds received by Company
----
from the sale of Company Common Stock or Company Preferred Stock to
officers or employees of Company or its Subsidiaries within such fiscal
year, provided that in no event shall the aggregate of all such payments
--------
made after the Closing Date exceed $5,000,000 plus the amount of any Cash
----
proceeds received by Company from the sale of Company Common Stock or
Company Preferred Stock to officers or employees of Company or its
Subsidiaries after the Closing Date; and (iii) issue shares of Company
Common Stock or Company Preferred Stock (and warrants to purchase Company
Common Stock or Company Preferred Stock) in exchange for all of the
outstanding shares of the Series A Preferred Stock and Series B Preferred
Stock of Company and all accrued dividends thereon."
3
<PAGE>
C. MINIMUM INTEREST COVERAGE RATIO. Subsection 7.6a of the Credit
Agreement is hereby amended by deleting the table set forth therein in its
entirety and substituting the following therefor:
<TABLE>
<CAPTION>
MINIMUM INTEREST
DATE COVERAGE RATIO
<S> <C>
September 30, 1996 1.80 : 1.00
December 31, 1996 1.70 : 1.00
March 31, 1997 1.70 : 1.00
June 30, 1997 1.70 : 1.00
September 30, 1997 1.75 : 1.00
December 31, 1997 1.75 : 1.00
March 31, 1998 1.75 : 1.00
June 30, 1998 1.75 : 1.00
September 30, 1998 1.80 : 1.00
December 31, 1998 1.85 : 1.00
March 31, 1999 1.85 : 1.00
June 30, 1999 1.90 : 1.00
September 30, 1999 1.95 : 1.00
December 31, 1999 2.05 : 1.00
March 31, 2000 2.05 : 1.00
June 30, 2000 2.05 : 1.00
September 30, 2000 2.10 : 1.00
December 31, 2000 2.15 : 1.00
March 31, 2001 2.15 : 1.00
June 30, 2001 2.20 : 1.00
September 30, 2001 2.25 : 1.00
December 31, 2001 2.35 : 1.00
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
MINIMUM INTEREST
DATE COVERAGE RATIO
<S> <C>
March 31, 2002 2.35 : 1.00
June 30, 2002 2.40 : 1.00
September 30, 2002 2.45 : 1.00
December 31, 2002 2.55 : 1.00
March 31, 2003 2.55 : 1.00
June 30, 2003 2.60 : 1.00
September 30, 2003 2.70 : 1.00
December 31, 2003 2.80 : 1.00
March 31, 2004 2.80 : 1.00
</TABLE>
5
<PAGE>
D. MAXIMUM LEVERAGE RATIO. Subsection 7.6B of the Credit Agreement is hereby
amended by deleting the table set forth therein in its entirety and substituting
the following therefor:
<TABLE>
<CAPTION>
MINIMUM
DATE LEVERAGE RATIO
<S> <C>
September 30, 1996 5.35 : 1.00
December 31, 1996 5.50 : 1.00
March 31, 1997 5.50 : 1.00
June 30, 1997 5.45 : 1.00
September 30, 1997 5.40 : 1.00
December 31, 1997 5.35 : 1.00
March 31, 1998 5.35 : 1.00
June 30, 1998 5.30 : 1.00
September 30, 1998 5.25 : 1.00
December 31, 1998 5.15 : 1.00
March 31, 1999 5.10 : 1.00
June 30, 1999 5.00 : 1.00
September 30, 1999 4.80 : 1.00
December 31, 1999 4.65 : 1.00
March 31, 2000 4.65 : 1.00
June 30, 2000 4.60 : 1.00
September 30, 2000 4.55 : 1.00
December 31, 2000 4.45 : 1.00
March 31, 2001 4.40 : 1.00
June 30, 2001 4.30 : 1.00
September 30, 2001 4.20 : 1.00
December 31, 2001 4.10 : 1.00
March 31, 2002 4.10 : 1.00
June 30, 2002 4.05 : 1.00
September 30, 2002 3.95 : 1.00
December 31, 2002 3.85 : 1.00
March 31, 2003 3.80 : 1.00
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
MINIMUM
DATE LEVERAGE RATIO
<S> <C>
June 30, 2003 3.70 : 1.00
September 30, 2003 3.60 : 1.00
December 31, 2003 3.40 : 1.00
March 31, 2004 3.40 : 1.00
</TABLE>
E. MINIMUM CONSOLIDATED EBITDA. Subsection 7.6c of the credit agreement is
hereby amended by deleting the table set forth therein in its entirety and
substituting the following therefor:
<TABLE>
<CAPTION>
MINIMUM
CONSOLIDATED
YEAR EBITDA
<S> <C>
1996 $43,500,000
1997 $45,500,000
1998 $47,000,000
</TABLE>
1.4 SUBSTITUTION OF SCHEDULES.
-------------------------
Schedule 2.1 to the Credit Agreement is hereby amended by deleting it in
------------
its entirety and substituting therefor a new Schedule 2.1 in the form of Annex A
------------ -------
to this Amendment.
2.
SUBSTITUTION OF INDOSUEZ AS ADMINISTRATIVE AGENT
AND COLLATERAL AGENT; ASSIGNMENT OF REVOLVING LOAN
COMMITMENTS; SUBSTITUTION OF LETTERS OF CREDIT
2.1 SUBSTITUTION OF INDOSUEZ AS LENDER AND AGENT.
--------------------------------------------
Mellon hereby resigns as Administrative Agent, Documentation Agent,
Collateral Agent and Swing Line Lender, and Requisite Lenders hereby appoint
Indosuez (and Indosuez hereby accepts such appointment) as Administrative Agent,
Documentation Agent, Collateral Agent and Swing Line Lender. The requirement for
30 days' prior notice of resignation by Mellon as Administrative Agent and
Collateral Agent is hereby waived by all parties hereto.
7
<PAGE>
2.2 ASSIGNMENT OF REVOLVING LOAN COMMITMENT.
---------------------------------------
Mellon and Indosuez shall on or before the First Amendment Effective Date
enter into an Assignment Agreement, substantially in the form of Exhibit X to
---------
the Credit Agreement, pursuant to which Mellon shall assign to Indosuez Mellon's
Revolving Loan Commitment (such Assignment Agreement referred to herein as the
"MELLON/INDOSUEZ ASSIGNMENT AGREEMENT").
2.3 OUTSTANDING LETTERS OF CREDIT.
-----------------------------
On the First Amendment Effective Date, Indosuez shall become Issuing Lender
under the Credit Agreement. On the First Amendment Effective Date, Company
shall deliver to Indosuez a Notice of Issuance of Letter of Credit requesting
Indosuez, as Issuing Lender, to issue Letters of Credit to replace any
outstanding Letters of Credit issued by Mellon. All outstanding Letters of
Credit issued by Mellon shall be returned to Mellon for cancellation on the
First Amendment Effective Date or as soon thereafter as practicable. If
required by Mellon, Indosuez shall issue a Letter of Credit under the Credit
Agreement to Mellon to support Mellon's obligations under any outstanding
Letters of Credit issued by Mellon which are not returned for cancellation on
the First Amendment Effective Date.
3.
CONDITIONS TO EFFECTIVENESS
Notwithstanding anything to the contrary herein, this Amendment shall
become effective only upon the satisfaction of all of the following conditions
precedent (the date of satisfaction of such conditions being referred to herein
as the "FIRST AMENDMENT EFFECTIVE DATE"):
A. On or before the First Amendment Effective Date, Company shall deliver
to Lenders (or to Indosuez, as Agent for Lenders with sufficient originally
executed copies, where appropriate, for each Lender and its counsel) the
following, each, unless otherwise noted, dated the First Amendment Effective
Date:
(1) Certified copies of its Certificate of Incorporation, together
with a good standing certificate from the Secretary of State of the State of
Delaware, each dated a recent date prior to the First Amendment Effective Date;
(2) Copies of its Bylaws, certified as of the First Amendment
Effective Date by its corporate secretary or an assistant secretary;
(3) Resolutions of its Board of Directors approving and authorizing
the execution, delivery, and performance of this Amendment, the New Notes (as
such term is defined below) and the Mortgage Amendments (as such term is defined
below), certified as of the First Amendment Effective Date by its corporate
secretary or an assistant secretary as being in full force and effect without
modification or amendment;
8
<PAGE>
(4) Signature and incumbency certificates of its officers executing
this Amendment, the New Notes and the Mortgage Amendments;
(5) Executed copies of this Amendment, the New Notes and the Mortgage
Amendments; and
(6) (i) a new Revolving Note payable to Indosuez, substantially in the
form of Exhibit V to the Credit Agreement, in the principal amount of Indosuez's
---------
Revolving Loan Commitment, and (ii) a new Swing Line Note (such new Revolving
Note and such new Swing Line Note being the "NEW NOTES") payable to Indosuez,
substantially in the form of Exhibit VI to the Credit Agreement, in the
----------
principal amount of the Swing Line Loan Commitment, in each case with
appropriate insertions and executed by Company.
B. Company shall have (i) prepaid any outstanding Swing Line Loans
made by Mellon in its capacity as Swing Line Lender and (ii) made any prepayment
of the Revolving Loans necessary so that the Total Utilization of Revolving Loan
Commitments does not exceed the Revolving Loan Commitments under the Credit
Agreement as amended by this Amendment (the "AMENDED AGREEMENT").
C. Indosuez shall have received from Company, for distribution to
each Lender holding AXELs that has executed and delivered this Amendment on or
prior to October 22, 1996, an amendment fee in an amount equal to 0.25% of the
AXEL Exposure of such Lender.
D. Mellon shall have delivered to Indosuez all items of Collateral
described in Annex B hereto.
-------
E. Indosuez, as successor Collateral Agent, shall have received duly
executed (and acknowledged) amendments (collectively, the "MORTGAGE
AMENDMENTS") to all Mortgages, in each case in form and substance satisfactory
to Indosuez and its counsel and reflecting the assignment of the interest of
Mellon as Collateral Agent and mortgagee to Indosuez.
F. Indosuez, as successor Collateral Agent, shall have received duly
executed UCC-3 assignment statements relating to all UCC-1 financing statements
filed in connection with the Collateral Documents, in each case reflecting the
assignment of the interest of Mellon as Collateral Agent to Indosuez.
G. Indosuez shall have received all documents or instruments (duly
executed where appropriate) necessary or advisable, in the opinion of Indosuez
and its counsel, to maintain perfected security interests in favor of Indosuez,
as successor Collateral Agent, in the Collateral under the Company Trademark
Security Agreement and the Company Patent Security Agreement, together
9
<PAGE>
with any cover sheets for filing such documents or instruments with the United
States Patent and Trademark Office.
H. Indosuez shall have received all documents or instruments (duly
executed where appropriate), and Company and Mellon shall have taken all
actions, necessary or advisable, in the opinion of Indosuez and its counsel, to
maintain perfected security interests in favor of Indosuez, as successor
Collateral Agent, in all of the Collateral pledged under the Company Pledge
Agreement.
I. Indosuez shall have received certificates from Company's insurance
broker or other evidence satisfactory to it that Indosuez, as successor
Collateral Agent, has been named as loss payee, to the extent required under
subsection 6.4 of the Credit Agreement, under such policies of insurance as are
required to be maintained pursuant to such subsection.
J. Company and Mellon shall have taken such other actions and
delivered to Indosuez such other documents as Indosuez may reasonably request
(i) to maintain Collateral Agent's perfected security interests, and the
priority thereof, in all of the Collateral in favor of Indosuez as successor
Collateral Agent and (ii) to evidence Mellon's resignation as, and Indosuez's
appointment as, Administrative Agent, Documentation Agent, Collateral Agent and
Swing Line Lender, and all such documents shall be in form and substance
satisfactory to Indosuez and its counsel.
K. The "Settlement Date" under the Mellon/Indosuez Assignment
Agreement shall have occurred.
L. On or before the First Amendment Effective Date, all corporate and
other proceedings taken or to be taken in connection with the transactions
contemplated hereby and all documents incidental thereto not previously found
acceptable by Mellon or Indosuez, acting on behalf of Lenders, and their
respective counsel shall be satisfactory in form and substance to Indosuez and
such counsel, and Indosuez and such counsel shall have received all such
counterpart originals or certified copies of such documents as Indosuez may
reasonably request.
4.
COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Amendment and to amend the
Credit Agreement in the manner provided herein, Company represents and warrants
to each Lender that the following statements are true, correct and complete:
A. CORPORATE POWER AND AUTHORITY. Company has all requisite corporate
power and authority to enter into this Amendment, to carry out the transactions
contemplated by, and perform its obligations under, the Amended Agreement and
the Amended Mortgages, and to perform its obligations under the New Notes.
10
<PAGE>
B. AUTHORIZATION OF AGREEMENTS. The execution and delivery of this
Amendment and the Mortgage Amendments, the performance of the Amended Agreement
and the Amended Mortgages, and the issuance, delivery and payment of the New
Notes have been duly authorized by all necessary corporate action on the part of
Company.
C. NO CONFLICT. The execution and delivery by Company of this
Amendment, the New Notes and the Mortgage Amendments and the performance by
Company of the Amended Agreement, the New Notes and the Amended Mortgages do not
and will not (i) violate any provision of any law or any governmental rule or
regulation applicable to Company or any of its Subsidiaries, the Certificate or
Articles of Incorporation or Bylaws of Company or any of its Subsidiaries or any
order, judgment or decree of any court or other agency or government binding on
Company or any of its Subsidiaries, (ii) conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any
Contractual Obligation of Company or any of its Subsidiaries, (iii) result in or
require the creation or imposition of any Lien upon any of the properties or
assets of Company or any of its Subsidiaries (other than Liens created under any
of the Loan Documents in favor of Collateral Agent on behalf of Lenders), or
(iv) require any approval of stockholders or any approval or consent of any
Person under any Contractual Obligation of Company or any of its Subsidiaries.
D. GOVERNMENTAL CONSENTS. The execution and delivery by Company of
this Amendment and the Mortgage Amendments, the performance by Company of the
Amended Agreement and the Amended Mortgages, and the issuance, delivery and
payment of the New Notes do not and will not require any registration with,
consent or approval of or notice to, or other action to, with or by, any
federal, state or other governmental authority or regulatory body.
E. BINDING OBLIGATION. This Amendment and the Amended Agreement and
the Amended Mortgages and the New Notes have been duly executed and delivered by
Company and are, when executed and delivered, will be, the legally valid and
binding obligations of Company enforceable against Company in accordance with
their respective terms, except as may be limited by bankruptcy, insolvency
reorganization, moratorium or similar laws relating to or limiting creditors'
rights generally or by equitable principles relating to enforceability.
F. INCORPORATION OF REPRESENTATIONS AND WARRANTIES FROM CREDIT
AGREEMENT. The representations and warranties contained in Section 5 of the
Credit Agreement are and will be true, correct and complete in all material
respects on and as of the First Amendment Effective Date to the same extent as
though made on and as of that date, except to the extent such representations
and warranties specifically relate to an earlier date, in which case they were
true, correct and complete in all material respects on and as of such earlier
date.
G. ABSENCE OF DEFAULT. No event has occurred and is continuing or will
result from the consummation of the transactions contemplated by this Amendment
that would constitute an Event of Default or a Potential Event of Default.
11
<PAGE>
5.
MISCELLANEOUS
A. REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT AND THE OTHER LOAN
DOCUMENTS.
(i) On and after the First Amendment Effective Date, each
reference in the Credit Agreement to "this Agreement", "hereunder"
"hereof", "herein" or words of like import referring to the Credit
Agreement, and each reference in the other Loan Documents to the "Credit
Agreement", "thereunder", "thereof" or words or like import referring to
the Credit Agreement shall mean and be a reference to the Amended Agreement.
(ii) Except as specifically amended by this Amendment, the Credit
Agreement and the other Loan Documents shall remain in full force and effect and
are hereby ratified and confirmed.
(iii) The execution, delivery and performance of this Amendment shall
not, except as expressly provided herein, constitute a waiver of any provision
of, or operate as a waiver of any right, power or remedy of Agent or any Lender
under, the Credit Agreement or any of the other Loan Documents.
B. FEES AND EXPENSES. Company acknowledges that all costs, fees and
expenses as described in subsection 10.2 of the Credit Agreement incurred by
Agents and their respective counsel with respect to this Amendment and the
documents and transactions contemplated hereby shall be for the account of
Company.
C. HEADINGS. Section and subsection headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose or be given any substantive effect.
D. APPLICABLE LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING
WITHOUT LIMITATION SECTIONS 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE
OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
12
<PAGE>
E. COUNTERPARTS; EFFECTIVENESS. This Amendment may be executed in any
number of counterpart and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed an original, but
all such counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document. This Amendment shall become effective upon the execution of
a counterpart hereof by Company, Mellon, Indosuez and Requisite Lenders and
receipt by Company and Indosuez of written or telephonic notification of such
execution and authorization of delivery thereof.
[Remainder of page intentionally left blank]
13
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
CALMAR INC.
By: /s/ C.R. Huebner
--------------------------------------
Name: C.R. Huebner
Title: Executive Vice President & CFO
MELLON BANK, N.A.,
as a Lender and as Administrative Agent,
Collateral Agent, Documentation Agent, Swing
Line Lender and Issuing Lender
By: /s/ John H. Gibney
--------------------------------------
Name: John H. Gibney
Title: Vice President
BANQUE INDOSUEZ,
as a Lender and as successor Administrative
Agent, Collateral Agent, Documentation Agent,
Swing Line Lender and Issuing Lender
By: /s/ Patricia Frankel
--------------------------------------
Name:
Title:
By: /s/ Haynes R. Chidsey
--------------------------------------
Name: Haynes R. Chidsey
Title:
Notice Address:
Banque Indosuez
New York Branch
1211 Avenue of the Americas
New York, New York 10036-8701
Attention: Haynes Chidsey
14
<PAGE>
CHL HIGH YIELD LOAN PORTFOLIO,
A Unit of Chemical Bank,
as a Lender
By: /s/ James P. Ferguson
---------------------------------
Name: James P. Ferguson
Title: Managing Director
INDOSUEZ CAPITAL FUNDING II,
LIMITED, as a Lender
BY: INDOSUEZ CAPITAL
LUXEMBOURG,
as Collateral Manager
By: /s/ Francoise Berthelot
---------------------------------
Name: Francoise Berthelot
Title: Authorized Signatory
MASSACHUSETTS MUTUAL LIFE INSURANCE
COMPANY, as a Lender
By: /s/ Richard Morrison
---------------------------------
Name: Richard Morrison
Title: Managing Director
MASSMUTUAL CORPORATE VALUE
PARTNERS LIMITED, as a Lender
By: /s/ Richard Morrison
---------------------------------
Name: Richard Morrison
Title: Managing Director
15
<PAGE>
MERRILL LYNCH PRIME RATE PORTFOLIO, as a
Lender
BY: MERRILL LYNCH
ASSET MANAGEMENT, L.P.,
as Investment Advisor
By: /s/ Anthony R. Clemente
--------------------------------
Name: Anthony R. Clemente
Title: Authorized Signatory
MERRILL LYNCH SENIOR FLOATING RATE FUND,
INC., as a Lender
By: /s/ Anthony R. Clemente
--------------------------------
Name: Anthony R. Clemente
Title: Authorized Signatory
PILGRIM AMERICA PRIME RATE TRUST,
as a Lender
By: /s/ Thomas C. Hunt
-------------------------------
Name: Thomas C. Hunt
Title: Portfolio Analyst
PRIME INCOME TRUST,
as a Lender
By: /s/ Rafael Scolari
-------------------------------
Name: Rafael Scolari
Title:
PROTECTIVE LIFE INSURANCE COMPANY,
as a Lender
By: /s/ Mark K. Okada CFA
------------------------------
Name: Mark K. Okada CFA
Title: Executive Vice President
16
<PAGE>
SENIOR DEBT PORTFOLIO,
as a Lender
BY: BOSTON RESEARCH, MANAGEMENT AND
RESEARCH, as Investment Advisor
By: /s/ Barbara Campbell
------------------------------
Name: Barbara Campbell
Title: Assistant Treasurer
VAN KAMPEN AMERICAN CAPITAL PRIME
RATE INCOME TRUST,
as a Lender
By: /s/ Jeffrey W. Maillet
-----------------------------
Name: Jeffrey W. Maillet
Title: Sr. Vice President &
Director
17
<PAGE>
ANNEX A
SCHEDULE 2.1
--------------
<TABLE>
<CAPTION>
PRO RATA SHARE OF
NAME OF LENDER AXELs SERIES A AXELs SERIES A
- -------------- -------------- -----------------
<S> <C> <C>
CHL High Yield Loan
Portfolio $ 8,485,714.10 14.28571398%
Indosuez Capital Funding II,
Limited $ 4,808,571.56 8.09523832%
Massachusetts Mutual Life
Insurance Company $ 3,959,604.00 6.66600000%
Massmutual Corporate Value
Partners Limited $ 1,980,396.00 3.33400000%
Merrill Lynch Prime Rate
Portfolio $ 5,374,286.19 9.04761985%
Merrill Lynch Senior Floating
Rate Fund, Inc. $10,465,713.72 17.61904666%
Pilgrim America Prime Rate
Trust $ 2,828,571.58 4.76190501%
Prime Income Trust $ 5,940,000.00 10.00000000%
Protective Life Insurance
Company $ 2,545,714.41 4.28571450%
Senior Debt Portfolio $ 5,940,000.00 10.00000000%
Van Kampen American Capital
Prime Rate Income Trust $ 7,071,428.44 11.90476168%
<CAPTION>
PRO RATA SHARE OF
NAME OF LENDER AXELs SERIES B AXELs SERIES B
- -------------- -------------- ---------------
<S> <C> <C>
CHL High Yield Loan
Portfolio $ 6,364,285.58 14.28571398%
Indosuez Capital Funding II,
Limited $ 3,606,428.42 8.09523778%
Massachusetts Mutual Life
</TABLE>
18
<PAGE>
<TABLE>
<S> <C> <C>
Insurance Company $ 2,969,703.00 6.66600000%
</TABLE>
19
<PAGE>
<TABLE>
<S> <C> <C>
Massmutual Corporate Value
Partners Limited $1,485,297.00 3.33400000%
Merrill Lynch Prime Rate
Portfolio $4,030,714.14 9.04761872%
Merrill Lynch Senior Floating
Rate Fund, Inc. $7,849,286.28 17.61904888%
Pilgrim America Prime Rate
Trust $2,121,428.43 4.76190445%
Prime Income Trust $4,455,000.00 10.00000000%
Protective Life Insurance
Company $1,909,285.58 4.28571398%
Senior Debt Portfolio $4,455,000.00 10.00000000%
Van Kampen American Capital
Prime Rate Income Trust $5,303,571.57 11.90476222%
</TABLE>
<TABLE>
<CAPTION>
PRO RATA SHARE OF
NAME OF LENDER REVOLVING LOAN COMMITMENT REVOLVING LOAN COMMITMENTS
- -------------- ------------------------- --------------------------
<S> <C> <C>
Banque Indosuez $12,000,000 100%
</TABLE>
20
<PAGE>
ANNEX B
STOCK CERTIFICATES
------------------
<TABLE>
<CAPTION>
NUMBER
STOCK OF SHARES
CLASS OF CERTIFICATE PAR OR VALUE
STOCK ISSUER STOCK NUMBERS VALUE OF CAPITAL
------------ -------- ----------- ----- ----------
<S> <C> <C> <C> <C>
Calmar Plastics Limited Common 17 None 33,000
Calmar-Albert (U.K.) Limited Common 9 (Pounds)1.00 6,600
</TABLE>
INTERCOMPANY NOTES
------------------
<TABLE>
<CAPTION>
DEBT ISSUER AMOUNT OF INDEBTEDNESS
- ----------- ----------------------
<S> <C>
Calmar-Albert (U.K.) Limited up to $25,000,000
Calmar-Albert Italia S.R.L. up to $25,000,000
Calmar-Albert France S.A.R.L. up to $25,000,000
Calmar-Albert GmbH up to $25,000,000
Calmar-Albert Belgium S.A. up to $25,000,000
Monturas S.A. up to $25,000,000
Calmar Plastics Limited up to $25,000,000
Calmar International Inc. up to $25,000,000
</TABLE>
21
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-28-1996
<CASH> 4,179
<SECURITIES> 0
<RECEIVABLES> 40,189
<ALLOWANCES> 1,485
<INVENTORY> 17,944
<CURRENT-ASSETS> 62,735
<PP&E> 228,971
<DEPRECIATION> 125,366
<TOTAL-ASSETS> 276,763
<CURRENT-LIABILITIES> 42,769
<BONDS> 120,000
0
14
<COMMON> 31
<OTHER-SE> (28,187)
<TOTAL-LIABILITY-AND-EQUITY> 276,763
<SALES> 165,263
<TOTAL-REVENUES> 165,263
<CGS> 123,038
<TOTAL-COSTS> 150,338
<OTHER-EXPENSES> (1,028)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 18,503
<INCOME-PRETAX> (2,550)
<INCOME-TAX> 491
<INCOME-CONTINUING> (3,041)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,041)
<EPS-PRIMARY> (4.71)
<EPS-DILUTED> (4.71)
</TABLE>
