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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES ACT OF 1934 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED MARCH 2, 1996 COMMISSION FILE NUMBER 0-12182
CALIFORNIA AMPLIFIER, INC.
(Exact name of Registrant as specified in its Charter)
DELAWARE 95-3647070
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
460 CALLE SAN PABLO, CAMARILLO, CALIFORNIA 93012
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (805) 987-9000
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of each class Name of each exchange
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None None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
$.01 PAR VALUE COMMON STOCK
(Title of Class)
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, and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. /X/
The aggregate market value of the voting stock of the Registrant held by
non-affiliates of the Registrant as of May 24, 1996 was approximately $430.0
million.
There were 11,564,384 shares of the Registrant's Common Stock outstanding
as of May 24, 1996.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's definitive Proxy Statement for the Annual
Meeting of Stockholders to be held on July 19, 1996 is incorporated by reference
into Part III, Items 10, 11, 12 and 13 of this Form 10-K. This Proxy Statement
will be filed within 120 days after the end of the fiscal year covered by this
report.
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PART I
ITEM 1. BUSINESS
THE COMPANY
California Amplifier, Inc. (the "Company") was incorporated in 1981. Since
its inception, the Company has been involved in the design, manufacture and
marketing of microwave components and subsystems for defense, commercial and
consumer applications. In 1989, the Company discontinued its involvement in
defense related products and began to focus its resources on consumer and
commercial applications for products used in conjunction with the delivery of
multichannel television. The Company currently operates in two product
segments: Wireless Cable and Satellite Television products.
WIRELESS CABLE TELEVISION
Wireless Cable television uses well established technologies in many ways
similar to coaxial cable multichannel television transmission. The key
difference is that Wireless Cable does not have cable connecting the
headend/transmission site to each home but uses a microwave frequency band to
transmit programming to subscribers. A wireless system is composed of a
headend/transmission site, a transmission tower, and at each subscriber's home,
a reception antenna, downconverter and a decoder or set-top converter.
The headend equipment receives programming from satellites and other
programming sources such as local UHF television stations and sends them to a
transmission tower for transmission to subscribers via microwave signals. The
signal can generally be received by subscribers within a 25-35 mile radius of
the transmission tower depending on the transmitter power; however, the
subscriber must have a direct line-of-sight or "view" between the tower and the
receive antenna. Typically, 65%-80% of the homes within the service area will
be able to receive the wireless signal, with the remainder shadowed from the
transmitter. The percentage of line-of-sight homes is affected by the tower
elevation, local topography and antenna height.
The history of Wireless Cable in the United States and traditional hardwire
cable are intertwined. Wireless Cable was initially used to provide educational
or premium video programming in cities where cable was not available. In 1974,
the Federal Communications Commission (FCC) authorized the use of spectrum in
the 2150-2162 MHz frequency range for transmission of two video signals in the
50 largest markets. In 1983, the 2500-2686 MHz frequency range was reallocated
and commercial Wireless Cable was given eight of the 31 resulting channels. At
the same time, however, various FCC regulations made it very difficult to
aggregate channels with the 2500-2686 MHz bandwidth, thereby limiting the number
of channels Wireless Cable operators were able to offer. In addition, because
subscriber numbers were low at most Wireless Cable operations, program networks,
often owned by cable operators, charged higher programming fees to Wireless
operators or simply refused to provide programming. These factors, accompanied
by the fact that most Wireless Cable operators had limited capital, made it
difficult for Wireless Cable to be a viable delivery alternative to hardwire
cable
In the late 1980's and early 1990's, as public dissatisfaction with cable's
monopoly status grew, the FCC and Congress gave further attention to ways in
which they could foster competition. In 1990 and 1991, the FCC made a series of
rulings which made it easier for the Wireless Cable operators to consolidate
channel frequency licenses, thereby increasing the channel capacity to 33
channels. In addition, the Cable Television Consumer Protection and Competition
Act of 1992 was passed into law on October 5, 1992. Industry experts believe
this legislation was the single biggest boost for the Wireless Cable industry.
It essentially requires that programmers must make their service available to
all at fair and reasonable prices, and that cable operators cannot price its
services differently in various areas of the system. This prevents larger cable
companies from pricing differently in regional areas where Wireless Cable is
attracting customers.
In February 1996, Congress passed the 1996 Telecommunications Act which the
Company expects also should significantly benefit the Wireless Cable industry
generally. One key provision of the legislation was in removing cross-ownership
restrictions for telecommunications companies, allowing them to directly compete
in the video distribution market, and vice versa for cable companies to provide
voice and data communication services. This legislative development allows the
telecommunications companies, such as Bell Atlantic, NYNEX, and Pacific
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Telesis, to use Wireless Cable technology as a deployment tool in delivering
digital video programming to selected major markets.
Additionally, Section 303 of the 1996 Telecommunications Act has authorized
the FCC to issue a Notice of Proposed Rule Making (NPRM), calling for the
preemption of state, local, and non-governmental restrictions (such as
homeowners associations) on DBS satellite antennas, and Wireless Cable antennas
under one meter in diameter, except in reasonable cases involving public safety
or historical heritage. This provision is intended to foster full and fair
competition among different types of video programming services. If enacted,
the NPRM would expand the marketability of Wireless Cable service to households
which were subject to zoning codes, covenants, and homeowners association
restrictions. No assurances can be made, however, as to whether the FCC will
issue such a rule.
In the United States there are over 100 million television households of
which approximately 60% receive its programming from cable companies. Currently
there are approximately 200 Wireless Cable operations in the United States,
serving approximately 900,000 subscribers, with line of sight access to
approximately 30 million television households. Industry analysts estimate that
a fully-financed wireless system could reach penetration levels of 12%-25% of
line-of-sight homes. These penetration levels could be accomplished because of
various factors: additional capital availability to finance growth, inherent
cost advantages of Wireless Cable when compared to cable, the adoption of
digital compression which would eliminate constraints with respect to channel
capacity. In recent years Wireless Cable operators have been very successful in
raising capital to expand and consolidate systems. This is evidenced by capital
infusions from public equity markets and, most recently, by larger business
entities, such as Bell Atlantic, NYNEX, and Pacific Telesis, entering into
strategic investment alliances with Wireless Cable operators. These entities
have formed a programming and equipment consortium, TeleTV, which has announced
its intention to deploy digital Wireless Cable systems in certain geographical
areas of the United States in late 1996 or early 1997. This has focused
significant interest on Wireless Cable and the possibilities of future growth
for this industry. Going forward, the key issues for Wireless Cable to be
successful in the United States will be the ability of Wireless Cable operators
throughout the United States to deliver comparable video services to a broad
base of consumers at competitive rates.
Internationally, the Wireless Cable industry has experienced significant
growth in response to increasing worldwide demand for multichannel television
and the increased availability of a variety of programming such as HBO, CNN,
MTV, ESPN and Disney. The Company believes that Wireless Cable technology, in
many instances, is better suited than traditional cable in providing
multichannel television to the consumer, especially in less developed countries
and in areas that are not densely populated. The lack of a need for a cable
network allows Wireless Cable operators to commence broadcasting more quickly
and with less of an initial investment than for traditional cable, and to
quickly expand throughout a service area. To date, Wireless Cable systems have
been launched throughout Latin America, including major systems in Mexico,
Venezuela, Brazil, Argentina, Uruguay and Chile, as well as other countries such
as Qatar, Thailand, Malaysia, Nigeria, Australia, Czech Republic and Ireland.
Similar launches in these countries, and other geographical areas, are expected
to continue as programming is made available to these areas. Because the
international markets are not dominated by a single method of delivery, as cable
is in the United States, the potential for Wireless Cable as a programming
delivery method internationally, is significant.
SATELLITE TELEVISION
Satellite dishes are used for the reception of video, audio and data
transmitted from orbiting satellites. The Company's products are used both in
commercial satellite dish applications and home satellite dishes. The Company's
Satellite Television product sales, however, are primarily generated from sales
of downconverters, amplifiers and integrated feedhorns and amplifiers used in
home satellite dish applications.
The satellite dish is a parabolic reflector antenna. Microwaves are
transmitted from orbiting satellites toward the earth's surface. The dish
reflects the microwaves back to a focal point where a feedhorn collects the
microwaves transferring the frequencies into a amplifier/downconverter. The
microwave amplifier literally amplifies the microwave signal millions of times
for further processing. The downconverter changes the frequency into an
intermediate frequency so that the receiver and television can process the
signal and create a picture.
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The home satellite industry has undergone substantial changes over the past
several years. During the early 1980's, home satellite systems in the United
States were capable of receiving a wide variety of television broadcast signals,
including those delivered to pay television and cable television operators,
without charge since the transmission signals were not scrambled. In 1986,
certain broadcasters began to scramble their signal, and today virtually all
premium programmers in the U.S. scramble their programming. To view scrambled
programs, the viewer is required to purchase a decoder and pay a periodic fee to
the programmer or program reseller.
Initially, scrambling caused a significant decline in the number of ongoing
home satellite dish installations in the United States. However, during the
past few years the U.S. consumer dish market has begun to regain momentum
because of lower cost equipment and the availability of a variety of
programming. According to Satellite Broadcasting and Communications Association
statistics, approximately 300,000, 550,000, and 375,000 C-Band "backyard"
satellite systems, excluding the Ku-DBS small dish systems discussed below, were
shipped in the United States in 1995, 1994, and 1993, respectively, with a
current installed base of over 4.0 million households.
In 1994, the Direct Broadcast System (DBS) was introduced in the United
States. The DBS system uses high powered satellites and digital Ku-Band to
transmit programming to subscribers. As a result of the satellite transmission
power and the Ku frequency, the satellite dish requirement is only about
eighteen inches in diameter. This compares to C-Band dishes, which make up the
majority of the current installations in the United States, that range from five
to twelve feet in diameter. The Ku-DBS system has been very well accepted since
its introduction and installations total almost 2.0 million television
households. A small dish with the capability of receiving a significant number
of channels, primarily because the DBS satellite transmits digital signals at
high power levels, offers a consumer an alternative to the big, C-Band backyard
dish. As a result, C-Band installations since the DBS launch have been
negatively affected. This trend is likely to continue in the United States even
though a movable C-Band dish offers a consumer a much broader variety of
programming from a number of different satellites.
The international market for Satellite Television has taken place primarily
in Europe, the Middle East, Asia and Latin America where cable penetration is
substantially less than in the United States. The Company believes the
international market for Satellite Television, which has an installed base of
over 20 million dishes, will continue to grow in response to increased worldwide
demand for television spurred, in part, by an increase in the availability and
variety of programming. Certain United States cable television networks such as
CNN, MTV and ESPN have expanded their programming coverage internationally. The
availability of highly desirable programming such as HBO, CNN, MTV, ESPN and
Disney has led to the growth of the various methods of multichannel television
delivery in the many international markets. As previously stated, both C-Band
and Ku-Band dishes will be used by consumers depending upon how the programmers
choose to transmit such signals. Both Ku-Band and C-Band satellite launches are
scheduled over the next several years.
Because DBS, Ku-Band products are becoming a more significant market, the
Company is focusing some of its research and development resources on the
development of Ku-DBS products to sustain its position in the Satellite
Television market.
INVESTMENT IN MICRO PULSE, INC.
In January 1993, the Company purchased a 50% ownership interest in Micro
Pulse, Inc. ("Micro Pulse") for $100,000 in cash and a $400,000 convertible note
payable. In April 1995, the note was converted into 100,000 shares of the
Company's common stock. Micro Pulse designs, manufactures and markets antennas
and amplifiers used principally in global positioning systems ("GPS"). Such
products are used in surveying applications, vehicle tracking and marine and
airborne navigation. See Note 1 and Note 4 of Notes to Consolidated Financial
Statements.
PRODUCTS
The Company designs a broad line of amplifiers, downconverters, antennas
and integrated products used in the reception, conversion and amplification of
microwave signals used in conjunction with the reception of audio, video and
data transmitted from satellites or earth-based transmitters using microwave
signals. Products serve both the Wireless Cable (S-Band) industry and the
Satellite Television industry (C-Band and Ku-Band). In
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addition, the Company has recently introduced a broadband scrambling system
called MultiCipher-Registered Trademark-, to be used by Wireless Cable operators
to protect its signals from unauthorized viewing. Because MultiCipher is a
broadband scrambling system, it decodes all channels transmitted simultaneously.
This allows a "whole-house" solution for the Wireless Cable operator and
eliminates the requirement of installing a conventional set-top box on each
television in the subscribers home. The Company most recently has introduced
MultiCipher Plus-TM-, a broadband, whole-house scrambling system with the
additional feature of tiering. Tiering allows the operator to offer premium or
pay per view programming to individual subscribers, a feature MultiCipher basic
did not have. In addition, the Company's MultiCipher decoder units will be
available in outdoor units as well as indoor units.
During fiscal years 1996, 1995 and 1994, Wireless Cable products
contributed 70.0%, 45.9% and 32.8% of the Company's sales, respectively, and
Satellite Television products contributed 29.3%, 53.4% and 66.9% of the
Company's sales. For certain information regarding the Company's sales by
product line and geographical areas, see Note 11 of Notes to Consolidated
Financial Statements.
MANUFACTURING
The Company manufactures its products exclusively in its Camarillo,
California, USA, facility. Manufacturing operations consist principally of
assembling, microwave tuning and testing of electronic components built from
fabricated parts, printed circuit boards and electronic devices. The Company is
currently evaluating other manufacturing operations in other countries.
Electronic devices, components and raw materials used in the Company's
products are generally obtained from a number of suppliers, although certain
materials are obtained from a limited number of sources. Some devices or
components are standard items while others are manufactured to the Company's
specifications by its suppliers. The Company attempts to operate without
substantial levels of raw materials by depending on certain key suppliers to
provide material on a "just-in-time" basis. The Company believes that most raw
materials are available from alternative suppliers. However, any significant
interruption in the delivery of such items could have an adverse effect on the
Company's operations.
ISO 9001 INTERNATIONAL CERTIFICATION
In August 1995, the Company became registered to ISO 9001, the
international standard for conformance to quality excellence in meeting market
needs in all areas including product design, manufacturing, quality assurance
and marketing. The registration assessment was performed by Underwriter's
Laboratory, Inc., according to the ISO 9001:1994 International Standard.
Continuous assessments to maintain certification will be performed semi-annually
by Underwriter's Laboratory, Inc.
RESEARCH AND DEVELOPMENT
Both the Wireless Cable and Satellite Television markets are characterized
by technological change, new product introductions and evolving industry
standards resulting from ongoing research and development. During the last
three years, the Company has focused its research and development resources on
three primary areas: broadening it Wireless Cable reception product line,
development of the MultiCipher "whole-house" broadband scrambling system, and
the development of a Ku-DBS product line. In addition, resources were allocated
to reducing product costs and improving performance by product redesign efforts.
Research and development costs have increased significantly over the past three
fiscal years consistent with this strategy.
Research and development expenses were $4,376,000, $3,155,000 and
$2,045,000 for fiscal years 1996, 1995 and 1994, respectively.
SALES AND MARKETING
The Company's sales and marketing functions are located in: Camarillo,
California, U.S.A.; Paris, France; Sao Paulo, Brazil; and Bangkok, Thailand.
The Company sells its Wireless Cable products directly to Wireless Cable
operators, but will occasionally utilize a distributor for certain geographical
regions. The Company sells its Satellite Television products through satellite
equipment distributors, but, from time to time, sells certain products to
manufacturers for incorporation into complete satellite dish systems.
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The Company may, from time to time, add additional employees as market
conditions warrant, in market areas that require additional sales and customer
support not adequately served by a major distributor or reseller. See also Note
11 of Notes to Consolidated Financial Statements for major customer and
geographical sales information.
COMPETITION
The markets in which the Company participates are highly competitive. In
addition, if the markets for the Company's products continue to grow, the
Company anticipates increased competition from new companies entering such
markets, some of whom may have financial and technical resources substantially
greater than those of the Company. Furthermore, because some of the Company's
products may not be proprietary, they may be duplicated by low-cost producers,
resulting in price and margin pressures.
The Company believes that competition in its markets is based primarily on
price, performance, reputation, product reliability and technical support. In
the Wireless Cable market, the Company has supplier relationships with major
Wireless Cable operators in various regions of the world, and believes that its
pricing, accompanied by product performance, low field failure rate, and its
technical support, are currently competitive advantages to the Company. In the
Satellite Television market, where the Company has participated for over fifteen
years, its reputation for performance and quality allows the Company a
competitive advantage if pricing of its products is comparable to its
competitors.
The Company's continued success in these markets, however, will depend upon
its ability to continue to design and manufacture quality products at
competitive prices.
BACKLOG
The Company's products are sold to customers that do not usually enter into
long-term purchase agreements, and as a result, the Company's backlog at any
date is not significant. As the Company's sales shift from Satellite Television
products to Wireless Cable products, however, the Company is emphasizing long-
term arrangements with Wireless Operators to increase backlog and sales
visibility. Because of customer order modifications, cancellations, or awaiting
wire transfers or letters of credit from international customers, the Company's
backlog as of any particular date, may not be indicative of sales for any future
period.
PATENTS, TRADEMARKS AND LICENSES
The Company's timely application of its technology and its design,
development and marketing capabilities have been of substantially greater
importance to its business than patents or licenses.
The Company currently has seven patents ranging from design features for
downconverter and antenna products, to its MultiCipher broadband scrambling
system. Those that relate to its downconverter products do not give the Company
any significant advantage since other manufacturers using different design
approaches can offer similar microwave products in the marketplace. The Company
does believe, however, that certain Wireless Cable antenna patented designs, and
the broadband scrambling patent for MultiCipher are significant and may result
in a competitive advantage for the Company. The Company currently has four
other patents pending.
California Amplifier-Registered Trademark- and MultiCipher are federally
registered trademarks of the Company. The Company has also filed for trademark
protection for its MultiCipher Plus product line.
EMPLOYEES
At March 2, 1996, the Company had 441 employees. None of the Company's
employees are represented by a labor union.
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ITEM 2. PROPERTIES
The Company's corporate headquarters and manufacturing facility is located
in Camarillo, California (approximately 60 miles north of Los Angeles) and
consists of approximately 64,000 square feet located on approximately four acres
of land. The facility is leased under a lease agreement which expires in 2004.
In addition, the Company leases approximately 11,000 square feet of space
across from its existing facility which is used for storage. The Company also
leases offices in Paris, France; Sao Paulo, Brazil; and Bangkok, Thailand. See
also Note 10 to Consolidated Financial Statements.
ITEM 3. LEGAL PROCEEDINGS
The Company is currently not a defendant in any legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the three months ended March 2, 1996, no matters were submitted to a
vote of the Company's security holders.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY
HOLDER MATTERS
The Company's Common Stock is traded on the Nasdaq National Market ("NNM")
under the trading symbol "CAMP." The following table sets forth for each fiscal
period indicated the high and low closing sale prices for the Company's Common
Stock, as reported by the NNM:
HIGH LOW
FISCAL YEAR ENDED MARCH 2, 1996:
1st Quarter 5-3/8 3-1/8
2nd Quarter 7-1/2 4-3/4
3rd Quarter 12-1/2 7-3/16
4th Quarter 24-3/16 12-1/8
FISCAL YEAR ENDED MARCH 4, 1995:
1st Quarter 3-1/2 1-9/16
2nd Quarter 2-5/8 1-5/8
3rd Quarter 3-1/2 2-1/8
4th Quarter 3-9/16 2-13/16
On March 22, 1996, the Company effected a two-for-one stock split. All
per share amounts contained herein have been retroactively adjusted to
reflect the stock split.
At May 24, 1996 the number of stockholders of record of the Company's
Common Stock was 305. The number of stockholders of record does not include
the number of persons having beneficial ownership held in "street name" which
are estimated to approximate 7,500.
The Company has never paid a cash dividend and has no current plans to pay
cash dividends on its Common Stock.
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ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth certain selected financial data which has
been derived from the audited financial statements of the Company for each of
the respective years. The selected financial data should be read in conjunction
with the consolidated financial statements and related notes thereto and
Management's Discussion and Analysis of Financial Condition and Results of
Operations contained herein.
CONSOLIDATED STATEMENTS OF INCOME DATA:
(in thousands, except per share data)
FISCAL YEARS ENDED
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MAR 2, MAR 4, FEB 26, FEB 27, FEB 29,
1996 1995 1994 1993 1992
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Sales $61,590 $45,656 $40,664 $35,785 $20,634
Income before taxes 7,638 3,770 2,279 4,204 1,901
Net income 4,958 2,451 1,556 3,050 1,581
Net income per share .41 .22 .14 .30 .16
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CONSOLIDATED BALANCE SHEET DATA:
(in thousands)
AS OF EACH FISCAL YEAR END
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1996 1995 1994 1993 1992
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Total assets $32,573 $22,087 $19,599 $16,037 $9,064
Working capital 15,743 8,552 6,093 2,472 1,696
Long-term debt 767 782 773 400 134
Stockholders' equity 22,924 14,899 12,163 7,288 3,664
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, the percentage of
sales represented by items included in the Company's Consolidated Statements of
Income:
FISCAL YEAR ENDED
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MARCH 2, MARCH 4, FEBRUARY 26,
1996 1995 1994
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Sales:
Wireless Cable 70.0% 45.9% 32.8%
Satellite Television 29.3 53.4 66.9
Other .7 .7 .3
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Total sales 100.0 100.0 100.0
Gross profit 34.0 31.2 29.1
Research and development 7.1 6.9 5.0
Selling 8.1 8.1 8.9
General and administrative 6.6 7.9 8.6
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Income from operations 12.2 8.3 6.6
Interest and other, net - - (1.0)
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Income before provision for
income taxes 12.2 8.3 5.6
Provision for income taxes 4.3 2.9 1.8
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Net income 7.9% 5.4% 3.8%
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FISCAL YEARS 1996 AND 1995
Sales increased by $15.9 million, or 34.8%, from $45.7 million in fiscal
year 1995 to $61.6 million in fiscal year 1996. The fiscal year 1996 sales
increase is primarily a result of increases in Wireless Cable sales offset by
decreases in Satellite Television sales. Sales of Wireless Cable products
increased $22.2 million, or 105.8%, from $21.0 million to $43.2 million, while
sales of Satellite Television products decreased $6.3 million, or 25.9%, from
$24.4 million to $18.1 million. Total domestic sales decreased $3.4 million, or
16.6%, from $20.6 million to $17.2 million, and foreign sales increased $19.3,
or 77%, from $25.1 million to $44.4 million.
The increase in Wireless Cable sales resulted from strong international
demand for the Company's Wireless Cable reception products, and the introduction
of the Company's broadband scrambling system, MultiCipher. Wireless Cable sales
in the United States remained relatively flat with the sales of the prior year.
This is a result of ordering patterns by domestic operators as they more closely
monitor inventory levels to growth projections, increased competition, and the
decision by some operators to limit their growth plans awaiting the availability
of digital equipment.
The decrease in Satellite Television product sales resulted from continued
pressure domestically on C-Band satellite dish sales as the market shifts to the
Ku-DBS alternative, and increased competition in Latin America for C-Band
products. The Company has recently introduced a Ku-Band, DBS type downconverter
and feedhorn. The Company believes this product, if accepted in the
marketplace, should help offset some of the softness in the C-Band product line.
Gross profits increased by $6.7 million, or 47.3%, from $14.2 million to
$21.0 million. Gross margins increased from 31.2% to 34%. The increase in
gross profit resulted from increased sales volumes of Wireless
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Cable products, and an increase in gross margins over the prior year. In a
focused effort to increase gross margins, the Company has emphasized the
following: a sales shift from Satellite Television products to Wireless Cable
products, lower cost designs, new product introductions and manufacturing
process improvement and cost reduction programs.
Research and development expenses increased by $1.2 million, from $3.2
million to $4.4 million. As a percentage of sales, research and development
increased from 6.9% to 7.1%. The increases result from additional resources,
primarily personnel and equipment, to focus on the design and development of: a
broader line of Wireless Cable reception products, the MultiCipher "whole-house"
scrambling system, and Ku-DBS products for Satellite Television.
Selling expenses increased by $1.3 million, from $3.7 million to $5.0
million, but as a percentage of sales remained constant at 8.1%. Selling
expenses increased due to increased sales to foreign markets, and the Company's
focus on expanding its sales and marketing presence in these markets.
General and administrative expenses increased by $494,000, from $3.6
million to $4.1 million, but decreased as a percentage of sales, from 7.9% to
6.6%. The increase in expenses resulted primarily from increased personnel in
administration and information services, and increased incentive bonuses based
upon fiscal year 1996 operating performance.
Income from operations increased by $3.7 million, or 98.6%, from $3.8
million to $7.5 million. The principal reasons for the increase were increased
sales and increased gross margins, offset by increases in operating expenses.
The $100,000 loss attributable to non-consolidated subsidiary relates to
the Company's 50% equity investment in Micro Pulse. The Company recognized
$125,000 in income which represented 50% of Micro Pulse's fiscal year 1996 net
income of $250,000, offset by $225,000 in amortization expense relating to the
Company's initial investment in excess of 50% of Micro Pulse's net equity.
The provision for income taxes increased by $1.4 million, from $1.3 million
to $2.7 million. Income taxes as a percentage of income before taxes was 35% in
fiscal years 1996 and 1995. The 35% rate is a result of taxes based upon a
statutory rate offset by benefits relating to its foreign sales corporation and
research and development tax credits.
Net income increased $2.5 million, or 102%, from $2.5 million to $5.0
million.
FISCAL YEARS 1995 AND 1994
Sales increased by $5.0 million, or 12.3%, from $40.7 million in fiscal
year 1994 to $45.7 million in fiscal year 1995. The fiscal year 1995 sales
increase was primarily a result of increases in Wireless Cable sales offset by
decreases in Satellite Television sales. Sales of Wireless Cable products
increased $7.7 million, or 57.1%, from $13.3 million to $21.0 million, while
sales of Satellite Television products decreased $2.8 million, or 10.3%, from
$27.2 million to $24.4 million. Total domestic sales increased $4.6 million, or
28.9%, from $16.0 million to $20.6 million, and foreign sales increased
$400,000, or 1.6%, from $24.7 million to $25.1 million.
The increase in Wireless Cable sales was a result of market growth in both
the domestic and foreign markets, and the Company's successful penetration into
these markets with a broader line of Wireless Cable products. The decrease in
Satellite Television sales was a result of various factors: the Company's
decision to offer its products in markets where customer requirements place an
emphasis on performance and quality; softness in the Middle East markets; and
the introduction of the Direct Broadcast Satellite (DBS) in the United States.
Gross profits increased by $2.4 million, or 20.3%, from $11.8 million to
$14.2 million. Gross margins increased from 29.1% to 31.2%. The increase in
gross profit resulted from increased sales volumes and an increase in gross
margins over the prior year.
11
<PAGE>
Research and development expenses increased by $1.2 million, from $2.0
million to $3.2 million. As a percentage of sales, research and development
increased from 5.0% to 6.9%. The increases resulted primarily from personnel
additions, salary increases and increased depreciation expense on equipment
additions.
Selling expenses increased by $88,000, from $3.6 million to $3.7 million,
but decreased as a percentage of sales, from 8.9% to 8.1%. Selling expenses
remained relatively the same, in terms of dollars, from year-to-year primarily
as a result of economies of scale achieved on sales increases to existing
customers and additional customer concentration in certain geographical areas.
General and administrative expenses increased by $90,000, from $3.5 million
to $3.6 million, but decreased as a percentage of sales, from 8.6% to 7.9%. The
dollar increase resulted primarily from increased incentive bonus awards based
upon fiscal year 1995 operating performance, and additions to the allowance for
doubtful accounts.
Income from operations increased by $1.1 million, from $2.7 million to $3.8
million. The principal reasons for the increase were increased sales and
increased gross margins offset by significant increases in operating expenses.
The $50,000 loss attributable to non-consolidated subsidiary relates to the
Company's 50% equity investment in Micro Pulse. The Company recognized $50,000
in income which represented 50% of Micro Pulse's fiscal year 1995 net income of
$100,000, offset by $100,000 in amortization expense relating to the Company's
initial investment in excess of 50% of Micro Pulse's net equity.
The provision for income taxes increased by $596,000, from $723,000 to $1.3
million. Income taxes as a percentage of income before taxes was 35% in fiscal
year 1995, compared to 31.7% in fiscal year 1994 when the Company utilized its
remaining State of California loss carryforwards. The 35% rate is a result of
taxes based upon a statutory rate offset by benefits relating to its foreign
sales corporation and research and development tax credits.
Net income increased $895,000, or 57.5%, from $1.6 million to $2.5 million.
LIQUIDITY AND CAPITAL RESOURCES
As of March 2, 1996 the Company had cash on hand of $11.6 million and
working capital of $15.7 million. In addition, the Company has a $5.0 million
working capital facility with California United Bank, a $2.0 million capital
equipment facility with NationsBank and California Amplifier s.a.r.l., its
foreign subsidiary, has an informal arrangement with a French Bank to borrow up
to $600,000. As of March 2, 1996, no amounts were outstanding under any of
these arrangements, except for approximately $1.8 million in term debt due to
NationsBank, borrowed under prior capital equipment agreements. The $5.0
million credit facility with California United Bank expires on August 1, 1996,
however, the Company has verbal assurances from the Bank that the agreement will
be renewed for an additional year at similar or more favorable terms. The
equipment facility with NationsBank expires in December 1996, at which time the
Company will decide whether to renew such arrangement.
The Company believes that cash flow from operations, together with the
funds available under its credit facilities, are sufficient to support
operations and capital equipment requirements over the next twelve months.
The Company believes that inflation has not had a material effect on its
operations.
12
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and related financial information required to be
filed hereunder are indexed on page 17 of this report and are incorporated
herein by reference.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company are as follows:
NAME AGE POSITION
---------------------- --- ----------------------------------------------
Ira Coron 67 Chairman, Chief Executive Officer and Director
David R. Nichols 37 Executive Vice President, Operations and
Director
Kris Kelkar 32 Senior Vice President, Sales and Marketing
Michael R. Ferron 41 Vice President, Finance, Chief Financial
Officer and Corporate Secretary
Arthur H. Hausman (1) 72 Director
William E. McKenna (1) 76 Director
- ------------
(1) Member of Compensation Committee and Audit Committee.
Ira Coron was elected Chairman and Chief Executive Officer in March 1994.
From 1989 to 1994 he was an independent management consultant to several
companies and venture capital firms. He retired from TRW, Inc., after serving
in numerous senior management positions from June 1967 to July 1989 among which
was Vice President and General Manager of TRW's Electronic Components Group. He
also serves on the Board of Directors of the Wireless Cable Association and Made
2 Manage Systems, Inc.
David R. Nichols, a co-founder of the Company, has been President and Chief
Operating Officer since March 1989. In March 1995, Mr. Nichols' title was
changed to Executive Vice President, Operations, to more accurately reflect his
responsibilities.
Kris Kelkar was appointed Senior Vice President of Sales and Marketing in
April 1995. Since 1988 he held various positions with General Instrument
Corporation, more recently he held the position of Vice President of
International Marketing for General Instrument's Communications Division.
Michael R. Ferron was appointed Vice President, Finance and Chief Financial
Officer in October 1990 and Corporate Secretary in March 1991. Prior to October
1990, Mr. Ferron was employed by the accounting firms of Deloitte & Touche and
Arthur Young & Company, respectively.
Arthur H. Hausman has been a director of the Company since 1987. Mr.
Hausman is Chairman Emeritus of the Board of Ampex Corporation. He served as
Chairman of the Board of Directors and Chief Executive Officer of
13
<PAGE>
Ampex, having been with Ampex for 27 years until his retirement in 1988. He
currently serves as a director of Drexler Technology Corporation, California
Microwave, Inc., and director emeritus of TCI, Inc. He was appointed by
President Reagan to the President's Export Council, to the Council's Executive
Committee and to the Chairmanship of the Export Administration Subordinate
Committee of the Council for the period 1985 to 1989.
William E. McKenna has been a director of the Company since October 1983.
Mr. McKenna has been general partner of MCK Investment Company (a private
investment company) since December 1977. He is also a director of LDB
Corporation, Calprop Corporation, Drexler Technology Corporation, Midlantic
Corporation, Midlantic National Bank, Safeguard Health Enterprises, Inc., WMS
Industries, Inc. and Williams Hospitality Group, Inc.
Officers are appointed by and serve at the discretion of the Board of
Directors. Each director holds office until the next annual meeting of
stockholders or until his successor has been duly elected and qualified. Each
non-employee director receives an annual stock option grant to purchase 8,000
shares at the fair-market-value at time of grant which vest over a one-year
period, a monthly fee of $1,250, and reimbursement of out-of-pocket expenses in
attending the Company's Board of Directors meetings. There are no family
relationships among any directors or executive officers of the Company.
The Company has a Compensation Committee which reviews and makes
recommendations to the Board of Directors with respect to the compensation of
the Company's officers and to administer the Company's Key Employee Stock Option
Plans. The Company also has an Audit Committee which reviews the scope of audit
procedures employed by the Company's independent auditors, reviews the audit
reports rendered by the Company's independent auditors and approves the audit
fee charged by the independent auditors. The Audit Committee reports to the
Board of Directors with respect to such matters and recommends the selection of
independent auditors.
ITEM 11. EXECUTIVE COMPENSATION
Incorporated by reference from the information under the captions
"Executive Compensation" in the Company's definitive proxy statement for the
Annual Meeting of Stockholders to be held on July 19, 1996.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Incorporated by reference from the information under the caption "Stock
Ownership" in the Company's definitive proxy statement for the Annual Meeting of
Stockholders to be held on July 19, 1996.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Incorporated by reference from the information contained under the caption
"Certain Relationships and Related Transactions" in the Company's definitive
proxy statement for the Annual Meeting of Stockholders to be held on July 19,
1996.
14
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) FINANCIAL STATEMENTS. Reference is made to the Index to Consolidated
Financial Statements on page 17 of this report.
(b) FORM 8-K. The Company made no filings on Form 8-K during the three months
ended March 2, 1996.
(c) EXHIBITS. Reference is made to the Index to Exhibits on pages 32-34 of
this report.
15
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Act
of 1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
CALIFORNIA AMPLIFIER, INC.
By: /s/ Ira Coron
Chairman of the Board and
Chief Executive Officer
Dated: May 29, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant in the capacities and on the dates indicated.
CAPACITIES
SIGNATURES IN WHICH SERVED DATES
---------- --------------- -----
/s/ Ira Coron Chairman, Chief Executive May 29, 1996
Officer and Director (Principal
Executive Officer)
/s/ David R. Nichols Executive Vice President, Operations May 29, 1996
and Director
/s/ Arthur H. Hausman Director May 29, 1996
/s/ William E. McKenna Director May 29, 1996
/s/ Michael R. Ferron Vice President, Finance May 29, 1996
and Chief Financial Officer
(Principal Accounting Officer)
16
<PAGE>
CALIFORNIA AMPLIFIER, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
Page
----
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS . . . . . . . . . . . . . . . 18
FINANCIAL STATEMENTS:
Consolidated Balance Sheets. . . . . . . . . . . . . . . . . . . . . . 19
Consolidated Statements of Income. . . . . . . . . . . . . . . . . . . 20
Consolidated Statements of Stockholders' Equity. . . . . . . . . . . . 21
Consolidated Statements of Cash Flows. . . . . . . . . . . . . . . . . 22
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . 23-31
17
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
California Amplifier, Inc.:
We have audited the accompanying consolidated balance sheets of California
Amplifier, Inc. (a Delaware corporation) and subsidiaries as of March 2, 1996,
and March 4, 1995, and the related consolidated statements of income,
stockholders' equity and cash flows for each of the three years in the period
ended March 2, 1996. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of California Amplifier, Inc.
and subsidiaries as of March 2, 1996 and March 4, 1995, and the results of their
operations and their cash flows for each of the three years in the period ended
March 2, 1996 in conformity with generally accepted accounting principles.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Los Angeles, California
April 22, 1996
18
<PAGE>
CALIFORNIA AMPLIFIER, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PAR VALUE)
<TABLE>
<CAPTION>
MARCH 2, MARCH 4,
1996 1995
- ---------------------------------------------------------------------------------------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $11,637 $ 1,654
Accounts receivable 4,645 6,039
Inventories 6,744 6,029
Deferred tax asset 1,200 800
Prepaid expenses and other current assets 399 436
- ---------------------------------------------------------------------------------------
Total current assets 24,625 14,958
Property and equipment -- at cost, net of
accumulated depreciation and amortization 6,160 5,457
Investment in non-consolidated subsidiary 852 977
Note receivable 225 250
Other assets 711 445
- ---------------------------------------------------------------------------------------
$32,573 $22,087
- ---------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,230 $ 2,475
Accrued liabilities 4,659 2,940
Current portion of long-term debt 993 991
- ---------------------------------------------------------------------------------------
Total current liabilities 8,882 6,406
Long-term debt 767 782
Commitments
Stockholders' equity:
Preferred stock, 3,000 shares authorized;
no shares outstanding --- ---
Common stock, $.01 par value; 15,000 shares authorized;
11,519 shares outstanding in March 1996 and
10,816 in March 1995 115 108
Additional paid-in capital 13,274 10,214
Retained earnings 9,535 4,577
- ---------------------------------------------------------------------------------------
Total stockhodlers' equity 22,924 14,899
- ---------------------------------------------------------------------------------------
$32,573 $22,087
- ---------------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
19
<PAGE>
CALIFORNIA AMPLIFIER, INC.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT NET INCOME PER SHARE)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
- ---------------------------------------------------------------------------------------------
MARCH 2, MARCH 4, FEBRUARY 26,
1996 1995 1994
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales $ 61,590 $ 45,656 $ 40,664
Cost of sales 40,637 31,432 28,838
- ---------------------------------------------------------------------------------------------
Gross profit 20,953 14,224 11,826
Research and development 4,376 3,155 2,045
Selling 5,003 3,712 3,624
General and administrative 4,077 3,583 3,493
- ---------------------------------------------------------------------------------------------
Income from operations 7,497 3,774 2,664
Interest and other income 460 247 94
Interest expense (219) (201) (228)
Loss attributable to non-consolidated subsidiary (100) (50) (251)
- ---------------------------------------------------------------------------------------------
Income before provision for
income taxes 7,638 3,770 2,279
Provision for income taxes 2,680 1,319 723
- ---------------------------------------------------------------------------------------------
Net income $ 4,958 $ 2,451 $ 1,556
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
Net income per share $ .41 $ .22 $ .14
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
Weighted average shares outstanding 12,182 11,182 11,114
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
20
<PAGE>
CALIFORNIA AMPLIFIER, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL RETAINED
---------------- PAID-IN EARNINGS
SHARES AMOUNT CAPITAL (DEFICIT) TOTAL
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balances at February 27, 1993 9,482 $ 95 $6,623 $570 $7,288
Public sale of common stock, net
of offering costs of $450 1,800 18 6,192 --- 6,210
Retirement of shares (910) (9) (3,177) --- (3,186)
Exercise of stock options 204 2 293 --- 295
Net income --- --- --- 1,556 1,556
- ------------------------------------------------------------------------------------------
Balances at February 26, 1994 10,576 106 9,931 2,126 12,163
Exercise of stock options 240 2 283 --- 285
Net income --- --- --- 2,451 2,451
- ------------------------------------------------------------------------------------------
Balances at March 4, 1995 10,816 108 10,214 4,577 14,899
Exercise of stock options 603 6 2,661 --- 2,667
Conversion of debt 100 1 399 --- 400
Net income --- --- --- 4,958 4,958
- ------------------------------------------------------------------------------------------
Balances at March 2, 1996 11,519 $115 $13,274 $9,535 $22,924
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
21
<PAGE>
CALIFORNIA AMPLIFIER, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
- ---------------------------------------------------------------------------------------------
MARCH 2, MARCH 4, FEBRUARY 26,
1996 1995 1994
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $4,958 $2,451 $1,556
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 2,693 2,363 1,425
Loss on sale of property and equipment 12 19 3
Loss attributable to
non-consolidated subsidiary 100 50 251
(Increase) decrease in:
Accounts receivable 1,394 (773) (634)
Inventories (715) (389) (1,226)
Deferred tax asset (400) (200) ---
Prepaid expenses and other assets (229) 284 (278)
Increase (decrease) in:
Accounts payable 755 (1,329) (755)
Accrued liabilities 1,719 972 (322)
- ---------------------------------------------------------------------------------------------
Net Cash Provided by operating activities 10,287 3,448 20
- ---------------------------------------------------------------------------------------------
Cash flows from investing activities:
Purchases of property and equipment (3,408) (3,005) (2,759)
Proceeds from note receivable 25 105 ---
Payments from (advances to)
non-consolidated subsidiary 25 (27) (450)
- ---------------------------------------------------------------------------------------------
Net cash used in investing activities (3,358) (2,927) (3,209)
- ---------------------------------------------------------------------------------------------
Cash flows from financing activities:
Repayments under line of credit arrangements --- (666) (834)
Debt borrowings 1,304 1,273 620
Debt repayments (917) (498) (22)
Issuances of common stock, net of retirements 2,667 285 3,319
- ---------------------------------------------------------------------------------------------
Net cash provided by financing activities 3,054 394 3,083
- ---------------------------------------------------------------------------------------------
Net increase (decrease) in cash and
cash equivalents 9,983 915 (106)
Cash and cash equivalents
at beginning of year 1,654 739 845
- ---------------------------------------------------------------------------------------------
Cash and cash equivalents
at end of year $11,637 $ 1,654 $ 739
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
22
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL
California Amplifier, Inc. (the "Company") designs, manufactures and markets a
broad line of microwave amplifiers, downconverters, antennas, integrated
microwave reception products, and a broadband scrambling system used in
conjunction with the delivery of multichannel television.
The Company also has a 50% ownership interest in Micro Pulse, Inc. ("Micro
Pulse"), a company that designs, manufactures and markets antennas and
amplifiers used principally in global positioning systems. Such products are
used in surveying applications, vehicle tracking, and marine and airborne
navigation (see Note 4).
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries, California Amplifier s.a.r.l., the Company's
subsidiary in France, and Cal Amp FSC, Inc., a foreign sales corporation
established for tax purposes. All significant intercompany transactions have
been eliminated.
The Company's 50% ownership interest in Micro Pulse is accounted for using the
equity method.
FISCAL YEAR
The Company reports results on the basis of a 52/53 week accounting calendar
ending on the last Saturday of February or the first Saturday of March.
STOCK SPLIT
On February 16, 1996, the Board of Directors approved a two-for-one stock split
distributed in the form of a stock dividend on March 22, 1996. All per share
amounts have been retroactively adjusted to reflect this stock split.
REVENUE RECOGNITION
Revenue on product sales is recognized at the time of shipment.
USE OF ESTIMATES
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.
ALLOWANCE FOR DOUBTFUL ACCOUNTS
The Company has established a reserve for potential write-offs relating to
noncollectibility of accounts receivable. As of March 2, 1996, and March 4,
1995, the allowance for doubtful accounts was $1,217,000 and $756,000,
respectively. Amounts charged to expense were $473,000, $601,000 and $58,000 in
fiscal years 1996, 1995 and 1994, respectively. Amounts charged to the
allowance account for bad debt write-offs were $12,000, $153,000 and $169,000 in
fiscal years 1996, 1995 and 1994, respectively.
23
<PAGE>
WARRANTY
The Company warrants its products against defects over periods ranging from one
to five years. An accrual for estimated future costs relating to products
returned under warranty is recorded as an expense when products are shipped.
Warranty expense was $969,000, $578,000 and $395,000 in fiscal years 1996, 1995,
and 1994, respectively. Amounts charged to accrued warranty for the actual
costs of maintaining the Company's warranty program were $469,000, $578,000 and
$495,000, in fiscal years 1996, 1995 and 1994, respectively.
INVENTORIES
Inventories include costs of materials, labor and manufacturing overhead and are
stated at the lower of cost (first-in, first-out) or market, and consist of the
following (in 000's):
March 2, March 4,
1996 1995
- -----------------------------------------------------
Raw materials $2,480 $2,087
Work in process 562 346
Finished goods 3,702 3,596
- -----------------------------------------------------
$6,744 $6,029
- -----------------------------------------------------
PROPERTY AND EQUIPMENT
Property and equipment is stated at cost and consists of the following (in
000's):
March 2, March 4,
1996 1995
- -----------------------------------------------------
Machinery and equipment $ 7,516 $ 5,317
Furniture and computers 3,731 3,226
Tooling 2,620 2,393
Leasehold improvements 580 475
- -----------------------------------------------------
14,447 11,411
Less accumulated depreciation
and amortization (8,287) (5,954)
- -----------------------------------------------------
$ 6,160 $ 5,457
- -----------------------------------------------------
The Company follows the policy of capitalizing expenditures which materially
increase asset lives, and charging ordinary maintenance and repairs to
operations, as incurred. Amounts expensed as maintenance and repairs were
approximately $375,000, $143,000 and $227,000 for fiscal years 1996, 1995 and
1994, respectively.
When assets are sold or disposed of, the cost and related depreciation are
removed from the accounts and any resulting gain or loss is included in income.
Depreciation and amortization is based upon the estimated useful lives of the
related assets using the straight-line method. Useful lives range from two to
five years.
24
<PAGE>
STATEMENTS OF CASH FLOWS
The Company considers all liquid investments with an original maturity of less
than three months to be cash equivalents.
The Company paid interest of $219,000, $196,000 and $173,000 in fiscal years
1996, 1995 and 1994, respectively. The Company paid income taxes of $1,103,000,
$780,000 and $339,000 in fiscal years 1996, 1995 and 1994, respectively.
Non-cash transactions excluded from the consolidated statements of cash flows
are as follows:
In fiscal year 1996, the Company exchanged $400,000 of debt into 100,000 shares
of its common stock as part of a convertible debt arrangement (see Notes 4 and
7).
NET INCOME PER SHARE
Net income per share is based upon the weighted average number of shares
outstanding during each of the respective years, including the dilutive effects
of stock options and warrants using the treasury stock method. The number of
shares used in the computation of net income per share for fiscal years 1996,
1995 and 1994 were increased by 996,000, 466,000 and 764,000 shares,
respectively, for the dilutive effects of stock options and warrants. Primary
earnings per share were not materially different from fully diluted earnings per
share.
NEW AUTHORITATIVE PRONOUNCEMENTS
In March 1995, the Financial Accounting Standards Board (FASB) issued SFAS No.
121, "Accounting for the Impairment of Long-lived Assets and Long-Lived Assets
to be Disposed Of" (SFAS 121), which requires impairment losses to be recorded
on long-lived assets used in operations when indications of impairment are
present and the undiscounted cash flows estimated to be generated by those
assets are less than the assets' carrying amount. The Company adopted SFAS 121
in fiscal 1996, the adoption of which had no impact on the Company's financial
position or results of operations.
In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation" (SFAS 123). SFAS 123 encourages, but does not require, a fair
value based method of accounting for employee stock options or similar equity
instruments. It also allows an entity to elect to continue to measure
compensation cost under Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees (APB 25), but requires pro forma disclosure of net
income and earning per share as if the fair value based method had been applied.
The Company will be required to adopt this standard effective in fiscal 1997.
While the Company is still evaluating SFAS 123, it currently expects to elect to
measure compensation cost under APB 25 and comply with the pro forma disclosure
requirements of SFAS 123 only. If the Company makes this election, SFAS 123
will have no impact on the Company's financial position or results of
operations.
RECLASSIFICATIONS
Certain reclassifications have been made to prior years' amounts to conform to
the current year presentation.
3. NOTE RECEIVABLE
In conjunction with the sale and leaseback of the Company's corporate and
manufacturing facility in fiscal 1989, the Company received a promissory note
from the buyer of the facility for $355,000. The note bears interest at 10%,
payable quarterly. In conjunction with an extension of the lease in February
1995 (see Note 10), the Company received a principal reduction payment on this
note of $105,000. In addition, annual principal reduction payments of $25,000
will be received beginning February 1996 and each year thereafter until the note
receivable is reduced to $100,000. The balance of the note will be paid in
February 2004, at the expiration of the lease term.
25
<PAGE>
4.INVESTMENT IN NON-CONSOLIDATED SUBSIDIARY
In January 1993, the Company purchased a 50% ownership interest in Micro Pulse
for $500,000. Under the terms of the agreement, the Company paid $100,000 in
cash to the principal stockholders of Micro Pulse and issued a $400,000
convertible subordinated note bearing interest at 8% due in January 1996. In
April 1995, the holders of the note chose to convert the note, and received
100,000 shares of the Company's common stock.
The investment in Micro Pulse is accounted for using the equity method of
accounting. The investment is increased (reduced) by a credit (charge) to
income for 50% of the Micro Pulse income (loss). In addition, the portion of
the investment that exceeds 50% of Micro Pulse's net equity is being amortized
over ten years. For financial statement presentation purposes, the Company
considers all amounts advanced to Micro Pulse as part of its investment. A
summary of the activity in the investment for fiscal years 1996, 1995 and 1994
is as follows (in 000's):
1996 1995 1994
- --------------------------------------------------------------------------------
Beginning balance $ 977 $1,000 $ 801
Net advances (payments) to/from Micro Pulse (25) 27 450
Amortization of investment in
excess of 50% of Micro Pulse net equity (225) (100) (151)
50% of Micro Pulse income (loss) 125 50 (100)
- --------------------------------------------------------------------------------
Ending balance $ 852 $ 977 $ 1,000
- --------------------------------------------------------------------------------
Summary information relating to the results of operations and the financial
condition of Micro Pulse for fiscal years 1996, 1995 and 1994 is as follows (in
000's):
1996 1995 1994
- --------------------------------------------------------------------------------
Sales $3,500 $2,400 $1,000
Net income (loss) 250 100 (200)
Total assets 1,100 600 405
Net deficit (145) (395) (495)
- --------------------------------------------------------------------------------
The Company recognized sales to Micro Pulse of $377,000 in fiscal year 1996 and
$302,000 in fiscal year 1995. The Company recognized interest income of $75,000
in fiscal year 1996 and $78,000 in fiscal year 1995 relating to the receivable
due from Micro Pulse. The Company recognized interest expense of $5,000 in
fiscal year 1996 and $33,000 in fiscal year 1995, relating to the $400,000 note
payable prior to its conversion in April 1995.
5. ACCRUED LIABILITIES
Accrued liabilities consist of the following (in 000's):
March 2, March 4,
1996 1995
- -----------------------------------------------------
Payroll and related expenses $1,547 $1,134
Warranty 1,100 600
Income taxes 987 733
Other accrued liabilities 1,025 473
- -----------------------------------------------------
$4,659 $2,940
- -----------------------------------------------------
26
<PAGE>
6. SHORT-TERM BORROWINGS
The Company has a $5.0 million working capital credit facility with a bank.
Borrowings outstanding bear interest at the bank's prime rate (8.25% at March 2,
1996) and are secured by substantially all of the Company's assets, excluding
the assets secured by other debt arrangements. The credit facility expires on
August 1, 1996. At March 2, 1996, no amounts were outstanding under this credit
facility, and $5.0 million was available for borrowing.
The Company's foreign subsidiary has a $600,000 borrowing facility with a French
bank. The borrowings are unsecured and bear interest at rates ranging from 6%
to 8%. At March 2, 1996, no amounts were outstanding under the credit
arrangement, and $600,000 was available for borrowing. The facility can be
withdrawn by the bank at any time.
Selected information regarding short-term borrowings for fiscal years 1996, 1995
and 1994 is as follows (in 000's, except percentages):
1996 1995 1994
- --------------------------------------------------------------------------------
Average amount outstanding - $ 339 $1,658
Maximum amount outstanding - $ 800 $2,450
Weighted average interest rate during the period - 7.75% 6.75%
- --------------------------------------------------------------------------------
7. LONG-TERM DEBT
Long-term debt consists of the following (in 000's):
March 2, March 4,
1996 1995
- --------------------------------------------------------------------------------
Note payable to a bank, secured by equipment,
bearing interest at rates ranging from 6.76% to 7.92%
payable monthly through June 1998 $1,760 $1,373
Note payable to the principal stockholders of Micro Pulse
bearing interest at 8% converted to equity in
April 1995 --- 400
Less portion due within one year (993) (991)
- --------------------------------------------------------------------------------
$767 $782
- --------------------------------------------------------------------------------
Annual maturities on long-term debt as of March 2, 1996, are as follows (in
000's):
1997 $ 993
1998 626
1999 141
- --------------------------------------------------------------------------------
$1,760
- --------------------------------------------------------------------------------
The Company has a $2.0 million equipment arrangement with a bank. No amounts
have been borrowed against this arrangement since its issuance in December 1995.
The facility expires in December 1996.
27
<PAGE>
8. INCOME TAXES
The Company accounts for income taxes in accordance with the provisions of the
Financial Accounting Standards Board Statement No. 109 "Accounting for Income
Taxes" (SFAS No. 109). Under SFAS No. 109, deferred income tax assets or
liabilities are computed based on the temporary difference between the financial
statement and income tax bases of assets and liabilities using the enacted
marginal income tax rate in effect for the year in which the differences are
expected to reverse. Deferred income tax expenses or credits are based on
changes in the deferred income tax assets or liabilities from period to period.
The provision for income taxes for fiscal years 1996, 1995 and 1994 are as
follows (in 000's):
1996 1995 1994
- --------------------------------------------------------------------------------
Current - Federal $2,512 $1,211 $484
- State 443 214 100
- Foreign 125 94 139
Deferred - Federal (340) (170) ---
- State (60) (30) ---
- --------------------------------------------------------------------------------
$2,680 $1,319 $723
- --------------------------------------------------------------------------------
Differences between the provision for income taxes and income taxes computed
using the statutory federal income tax rate for fiscal years 1996, 1995 and 1994
are as follows (in 000's):
1996 1995 1994
- --------------------------------------------------------------------------------
Income tax at statutory federal rate (34%) $2,597 $1,282 $610
State income taxes (9.3%), net of federal
income tax effect 458 226 188
Foreign taxes 125 94 139
Utilization of net operating loss carryforwards --- --- (58)
Research and development credit (102) (418) (210)
AMT credit (83) --- ---
Other, net (315) 135 54
- --------------------------------------------------------------------------------
$2,680 $1,319 $723
- --------------------------------------------------------------------------------
The components of the net deferred income tax asset are as follows (in 000's):
March 2, March 4,
1996 1995
- --------------------------------------------------------------------------------
Depreciation $(280) $(271)
Warranties 430 240
Inventory valuation 325 200
Allowance for doubtful accounts 420 300
Other, net 305 331
- --------------------------------------------------------------------------------
$1,200 $800
- --------------------------------------------------------------------------------
28
<PAGE>
9.COMMON STOCK
CAMP ACQUISITION CORP.
On February 4, 1993, the Company signed an agreement with Charles Ergen, the
sole stockholder of CAMP Acquisition Corp., the holder of 910,170 shares of the
Company's common stock. Under the terms of the option agreement, the Company
advanced to Mr. Ergen non-refundable deposits aggregating $300,000 for the right
to purchase CAMP Acquisition Corp. for $3,185,595 until May 31, 1993. The
option payments were non-refundable but would reduce the $3,185,595 purchase
price if the option was exercised. In April 1993, with part of the proceeds
from the sale of 1,800,000 shares of common stock, the Company purchased CAMP
Acquisition Corp. and retired the 910,170 shares of California Amplifier, Inc.
stock it owned.
SALE OF COMMON STOCK
In April 1993, the Company sold 1,800,000 shares of its common stock in a public
offering at $4.00 per share, generating net proceeds of approximately $6.2
million. In conjunction with this stock offering, the Company granted the
underwriter warrants to purchase 100,000 shares at $4.80 per share, or 120% of
the offering price. The warrants are outstanding at March 2, 1996 and expire in
April 1998.
STOCK OPTION PLANS
The Company currently has one option plan: The 1989 Key Employee Stock Option
Plan ("1989 Plan"). Under the 1989 Plan, incentive and nonqualified stock
options can be granted at prices not less than 100% of the fair market value at
the date of grant. Option grants are exercisable at the discretion of the
Compensation Committee, but usually over a four year vesting period.
Option information for each of the three fiscal years in the period ended March
2, 1996 is as follows (in 000's except dollar amounts):
1996 1995 1994
- --------------------------------------------------------------------------------
Options outstanding at beginning of year: 1,464 1,298 1,022
Granted 562 458 478
Canceled (109) (52) ---
Exercised (603) (240) (202)
- --------------------------------------------------------------------------------
Options outstanding at end of year: 1,314 1,464 1,298
- --------------------------------------------------------------------------------
As of March 2, 1996, the following relates to options outstanding:
Exercisable options 340,155
Option exercise prices $0.69 to $14.94
Average exercise price of all outstanding options $4.83
Options available for future grant 299,400
- --------------------------------------------------------------------------------
29
<PAGE>
10.COMMITMENTS
The Company leases its corporate and manufacturing facility as part of an
operating lease through February 2004. The Company pays annual rents of
$462,000 through July 2001, at which time the annual rent will increase to
$480,000 until February 2004 when the lease expires. The lease agreement also
requires the Company to pay all property taxes and any insurance premiums
associated with the coverage of the facility.
The Company also leases a storage facility in Camarillo, California, U.S.A. and
offices in Paris, France; Sao Paulo, Brazil; and Bangkok, Thailand, under
certain lease arrangements. In addition, the Company leases equipment used in
the manufacturing operation.
The following table represents the future minimum rent payments required under
all operating leases with terms in excess of one year as of March 2, 1996 (in
000's):
Fiscal Year:
1997 $ 680
1998 496
1999 462
2000 462
Thereafter 1,914
- --------------------------------------------------------------------------------
$4,014
- --------------------------------------------------------------------------------
Rent expense for fiscal years 1996, 1995 and 1994 was $1,200,000, $1,186,000 and
$1,114,000 respectively.
11. MAJOR CUSTOMERS AND FOREIGN SALES INFORMATION
The Company operates in a single business segment: the design, manufacture and
sale of microwave components and subsystems. In fiscal year 1996, one customer
accounted for 13% of the Company's sales. In fiscal years 1995 and 1994, no
customer accounted for more than 10% of the Company's sales.
Sales information by product line, by domestic and foreign sales, and by
geographical area are as follows (unaudited in 000's):
1996 1995 1994
- --------------------------------------------------------------------------------
Wireless Cable $43,155 $20,965 $13,343
Satellite Television 18,058 24,389 27,213
Other 377 302 108
- --------------------------------------------------------------------------------
$61,590 $45,656 $40,664
- --------------------------------------------------------------------------------
Domestic $17,136 $20,565 $15,956
Foreign 44,454 25,091 24,708
- --------------------------------------------------------------------------------
$61,590 $45,656 $40,664
- --------------------------------------------------------------------------------
U.S. & Canada $18,113 $20,822 $16,161
Latin America 9,673 13,544 12,171
Europe 10,871 2,064 4,910
Middle East 245 2,331 3,913
Africa 3,085 4,546 2,141
Asia 17,343 2,223 1,259
Australia 2,260 126 109
- --------------------------------------------------------------------------------
$61,590 $45,656 $40,664
- --------------------------------------------------------------------------------
30
<PAGE>
12. QUARTERLY FINANCIAL INFORMATION
The following summarizes certain quarterly unaudited statements of income
data for each of the quarters in fiscal years 1996 and 1995 (in 000's, except
percentages and per share data):
- -------------------------------------------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter Fiscal 1996
- -------------------------------------------------------------------------
Sales $12,665 $14,505 $16,314 $18,106 $61,590
Gross profits 4,204 4,876 5,562 6,311 20,953
Gross margins 33.2% 33.6% 34.1% 34.9% 34.0%
Net income 852 1,071 1,357 1,678 4,958
Income per share .07 .09 .11 .14 .41
- -------------------------------------------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter Fiscal 1995
- -------------------------------------------------------------------------
Sales $11,184 $11,321 $11,661 $11,490 $45,656
Gross profits 3,230 3,397 3,787 3,810 14,224
Gross margins 28.9% 30.0% 32.5% 33.2% 31.2%
Net income 406 550 714 781 2,451
Income per share .04 .05 .06 .07 .22
- -------------------------------------------------------------------------
31
<PAGE>
INDEX TO EXHIBITS
3.1 Certificate of Incorporation of the Registrant, as amended, filed as
Exhibit 3.1 to the Registrant's Registration Statement on Form S-1 (33-
59702) and by this reference is incorporated herein and made a part
hereof.
3.2 Bylaws of the Registrant, as amended, filed as Exhibit 3.2 to the
Registrant's Form 8-K dated February 27, 1992 and by this reference is
incorporated herein and made a part hereof.
10.1 1984 Key Employee Stock Option Plan filed as Exhibit 10.1 to the
Registrant's Registration Statement on Form S-1 (2-87042) and by this
reference is incorporated herein and made a part hereof.
10.2 Form of Incentive Stock Option Agreement filed as Exhibit 10.2 to the
Registrant's Registration Statement on Form S-1 (2-87042) and by this
reference is incorporated herein and made a part hereof.
10.3 Form of Nonqualified Stock Option Agreement filed as Exhibit 10.3 to the
Registrant's Registration Statement on Form S-1 (2-87042) and by this
reference is incorporated herein and made a part hereof.
10.4 1989 Key Employee Stock Option Plan filed as Exhibit 4.4 to the
Registrant's Registration Statement on Form S-8 (33-31427) and by this
reference is incorporated herein and made a part hereof.
10.4.1 Amendment No. 1 to the 1989 Key Employee Stock Option Plan filed as
Exhibit 4.7 to the Registrant's Registration Statement on Form S-8
(33-36944) and by this reference is incorporated herein and made a part
hereof.
10.4.2 Amendment No. 2 to the 1989 Key Employee Stock Option Plan filed as
Exhibit 4.8 to the Registrant's Registration Statement on Form S-8
(33-72704) and by this reference is incorporated herein and made a part
hereof.
10.4.3 Amendment No. 3 to the 1989 Key Employee Stock Option Plan filed as
Exhibit 4.10 to the Registrant's Registration Statement on Form S-8
(33-60879) and by this reference is incorporated herein and made a part
hereof.
10.5 Form of Incentive Stock Option Agreement filed as Exhibit 4.6 to the
Registrant's Registration Statement on Form S-8 (33-31427) and by this
reference is incorporated herein and made a part hereof.
10.6 Form of Nonqualified Stock Option Agreement filed as Exhibit 4.6 to the
Registrant's Registration Statement on Form S-8 (33-31427) and by this
reference is incorporated herein and made a part hereof.
10.7 Form of Option Agreement for Non-Employee Directors filed as Exhibit 4.9
to the Registrant's Registration Statement on Form S-8 (33-36944) and by
this reference is incorporated herein and made a part hereof.
10.8 Letter Agreements regarding sale of the building dated July 18, 1988,
filed as an exhibit to Form 8-K, dated February 27, 1989, filed as an
exhibit to the Registrant's Annual Report on Form 10-K for the fiscal
year ended February 28, 1989 and by this reference is incorporated
herein and made a part hereof.
32
<PAGE>
10.9 Building Lease and Rider on building between the Registrant and Calle
San Pablo Property Co. dated January 31, 1989, filed as an exhibit to
the Registrant's Annual Report on Form 10-K for the fiscal year ended
February 28, 1989 and by this reference is incorporated herein and made
a part hereof.
10.9.1 Amendment of Lease on building between the Registrant and Calle San
Pablo Property Co. dated February 9, 1995, filed as an exhibit to this
Annual Report on Form 10-K for the fiscal year ended March 4, 1995.
10.10 Form of Indemnity Agreement filed as an exhibit to the Registrant's
Annual Report on Form 10-K for the fiscal year ended February 29, 1988
and by this reference is incorporated herein and made a part hereof.
10.11 Stockholder Rights Plan filed as an exhibit to the Registrant's Form 8-K
dated September 5, 1991 and by this reference is incorporated herein and
made a part hereof.
10.12 Distribution Agreement between Registrant and Pan Asian Systems, Ltd.,
dated July 3, 1992 filed as Exhibit 10.17 to the Company's Registration
Statement on Form S-1 (33-59702) and by this reference is incorporated
herein and made a part hereof.
10.13 Stock Purchase Agreement dated December 31, 1992 by and among
Registrant, Peter J. Connolly, Steven G. Ow and Toni Ow, and The Peter
J. Connolly Charitable Remainder Unitrust dated June 15, 1992 filed as
Exhibit 10.20 to the Company's Registration Statement on Form S-1
(33-59702) and by this reference is incorporated herein and made a part
hereof.
10.14 8% Convertible Subordinated Note dated January 20, 1993 by Registrant
payable to The Peter J. Connolly Charitable Remainder Unitrust dated
June 15, 1992 filed as Exhibit 10.21 to the Registrant's Registration
Statement on Form S-1 (33-59702) and by this reference is incorporated
herein and made a part hereof.
10.15 8% Convertible Subordinated Note dated January 20, 1993 by Registrant
payable to Steven G. Ow and Toni Ow dated June 15, 1992 filed as Exhibit
10.22 to the Registrant's Registration Statement on Form S-1 (33-59702)
and by this reference is incorporated herein and made a part hereof.
10.16 Promissory Note dated January 20, 1993 by Micro Pulse Incorporated,
payable to Registrant filed as Exhibit 10.23 to the Registrant's
Registration statement on Form S-1 (33-59702) and by this reference is
incorporated herein and made a part hereof.
10.17 Option Agreement entered into as of February 4, 1993 by and among CAMP
Acquisition Corp., Mr. Charles W. Ergen and the Registrant filed as
Exhibit 10.24 to the Registrant's Registration Statement on Form S-1
(33-59702) and by this reference is incorporated herein and made a part
hereof.
10.18 Promissory Note Agreement between Registrant and California United Bank
dated April 5, 1993, filed as Exhibit 10.18 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended February 27, 1993 and by
this reference is incorporated herein and made part hereof.
33
<PAGE>
10.19 Change in Terms Agreement between Registrant and California United Bank,
dated July 22, 1994, and filed as an exhibit to this Annual Report on
Form 10-K for the fiscal year ended March 4, 1995.
10.20 First Amendment to Business Loan Agreement between Registrant and
California United Bank, dated July 22, 1994, filed as an exhibit to this
Annual Report on Form 10-K for the fiscal year ended March 4, 1995.
10.21 Second Amendment to Business Loan Agreement between Registrant and
California United Bank, dated September 13, 1994, filed as an exhibit to
this Annual Report on Form 10-K for the fiscal year ended March 4, 1995.
*10.22 Business Loan Agreement between Registrant and California United Bank,
dated July 26, 1995.
*10.23 Promissory Note between Registrant and California United Bank dated July
26, 1995.
*10.24 Commercial Security Agreement between Registrant and California United
Bank dated July 26, 1995.
*10.25 First Amendment to Business Loan Agreement between Registrant and
California United Bank, dated July 26, 1995.
*27 Financial Data Schedule
___________________
*Filed herewith
34
<PAGE>
EXHIBIT 10.22
BUSINESS LOAN AGREEMENT
BORROWER: CALIFORNIA AMPLIFIER, INC.
460 CALLE SAN PABLO
CAMARILLO, CA 93012
LENDER: CALIFORNIA UNITED BANK, N. A.
ENCINO
16030 VENTURA BLVD.
ENCINO, CA 91436
================================================================================
THIS BUSINESS LOAN AGREEMENT BETWEEN CALIFORNIA AMPLIFIER, INC. ("BORROWER")
AND CALIFORNIA UNITED BANK, N. A. ("LENDER") IS MADE AND EXECUTED ON THE
FOLLOWING TERMS AND CONDITIONS. BORROWER HAS RECEIVED PRIOR COMMERCIAL LOANS
FROM LENDER OR HAS APPLIED TO LENDER FOR A COMMERCIAL LOAN OR LOANS AND OTHER
FINANCIAL ACCOMMODATIONS, INCLUDING THOSE WHICH MAY BE DESCRIBED ON ANY
EXHIBIT OR SCHEDULE ATTACHED TO THIS AGREEMENT. ALL SUCH LOANS AND FINANCIAL
ACCOMMODATIONS, TOGETHER WITH ALL FUTURE LOANS AND FINANCIAL ACCOMMODATIONS
FROM LENDER TO BORROWER, ARE REFERRED TO IN THIS AGREEMENT INDIVIDUALLY AS
THE "LOAN" AND COLLECTIVELY AS THE "LOANS." BORROWER UNDERSTANDS AND AGREES
THAT: (A) IN GRANTING, RENEWING, OR EXTENDING ANY LOAN, LENDER IS RELYING
UPON BORROWER'S REPRESENTATIONS, WARRANTIES, AND AGREEMENTS, AS SET FORTH IN
THIS AGREEMENT; (B) THE GRANTING, RENEWING, OR EXTENDING OF ANY LOAN BY
LENDER AT ALL TIMES SHALL BE SUBJECT TO LENDER'S SOLE JUDGMENT AND
DISCRETION; AND (C) ALL SUCH LOANS SHALL BE AND SHALL REMAIN SUBJECT TO THE
FOLLOWING TERMS AND CONDITIONS OF THIS AGREEMENT.
TERM. This Agreement shall be effective as of JULY 26, 1995, and shall
continue thereafter until all Indebtedness of Borrower to Lender has been
performed in full and the parties terminate this Agreement in writing.
DEFINITIONS. The following words shall have the following meanings when used
in this Agreement. Terms not otherwise defined in this Agreement shall have
the meanings attributed to such terms in the Uniform Commercial Code. All
references to dollar amounts shall mean amounts in lawful money of the United
States of America.
AGREEMENT. The word "Agreement" means this Business Loan Agreement, as this
Business Loan Agreement may be amended or modified from time to time,
together with all exhibits and schedules attached to this Business Loan
Agreement from time to time.
BORROWER. The word "Borrower" means California Amplifier, Inc.. The word
"Borrower" also includes, as applicable, all subsidiaries and affiliates of
Borrower as provided below in the paragraph titled "Subsidiaries and
Affiliates."
CERCLA. The word "CERCLA" means the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended.
COLLATERAL. The word "Collateral" means and includes without limitation all
property and assets granted as collateral security for a Loan, whether real
or personal property, whether granted directly or indirectly, whether granted
now or in the future, and whether granted in the form of a security interest,
mortgage, deed of trust, assignment, pledge, chattel mortgage, chattel trust,
factor's lien, equipment trust, conditional sale, trust receipt, lien,
charge, lien or title retention contract, lease or consignment intended as a
security device, or any other security or lien interest whatsoever, whether
created by law, contract, or otherwise.
ERISA. The word "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
EVENT OF DEFAULT. The words "Event of Default" mean and include without
limitation any of the Events of Default set forth below in the section titled
"EVENTS OF DEFAULT."
GRANTOR. The word "Grantor" means and includes without limitation each and
all of the persons or entities granting a Security Interest in any Collateral
for the Indebtedness, including without limitation all Borrowers granting
such a Security Interest.
GUARANTOR. The word "Guarantor" means and includes without limitation each
and all of the guarantors, sureties, and accommodation parties in connection
with any Indebtedness.
INDEBTEDNESS. The word "Indebtedness" means and includes without limitation
all Loans, together with all other obligations, debts and liabilities of
Borrower to Lender, or any one or more of them, as well as all claims by
Lender against Borrower, or any one or more of them; whether now or hereafter
existing, voluntary or involuntary, due or not due, absolute or contingent,
liquidated or unliquidated; whether Borrower may be liable individually or
jointly with others; whether Borrower may be obligated as a guarantor,
surety, or otherwise; whether recovery upon such Indebtedness may be or
hereafter may become barred by any statute of limitations; and whether such
Indebtedness may be or hereafter may become otherwise unenforceable.
LENDER. The word "Lender" means California United Bank, N. A., its
successors and assigns.
LOAN. The word "Loan" or "Loans" means and includes without limitation any
and all commercial loans and financial accommodations from Lender to
Borrower, whether now or hereafter existing, and however evidenced, including
without limitation those loans and financial accommodations described herein
or described on any exhibit or schedule attached to this Agreement from time
to time.
NOTE. The word "Note" means and includes without limitation Borrower's
promissory note or notes, if any, evidencing Borrower's Loan obligations in
favor of Lender, as well as any substitute, replacement or refinancing note
or notes therefor.
PERMITTED LIENS. The words "Permitted Liens" mean: (a) liens and security
interests securing Indebtedness owed by Borrower to Lender; (b) liens for
taxes, assessments, or similar charges either not yet due or being contested
in good faith; (c) liens of materialmen, mechanics, warehousemen, or
carriers, or other like liens arising in the ordinary course of business and
securing obligations which are not yet delinquent; (d) purchase money liens
or purchase money security interests upon or in any property acquired or held
by Borrower in the ordinary course of business to secure indebtedness
outstanding on the date of this Agreement or permitted to be incurred under
the paragraph of this Agreement titled "Indebtedness and Liens"; (e) liens
and security interests which, as of the date of this Agreement, have been
disclosed to and approved by the Lender in writing; and (f) those liens and
security interests which in the aggregate constitute an immaterial and
insignificant monetary amount with respect to the net value of Borrower's
assets.
RELATED DOCUMENTS. The words "Related Documents" mean and include without
limitation all promissory notes, credit agreements, loan agreements,
environmental agreements, guaranties, security agreements, mortgages, deeds
of trust, and all other instruments, agreements and documents, whether now or
hereafter existing, executed in connection with the Indebtedness.
SECURITY AGREEMENT. The words "Security Agreement" mean and include without
limitation any agreements, promises, covenants, arrangements, understandings
or other agreements, whether created by law, contract, or otherwise,
evidencing, governing, representing, or creating a Security Interest.
SECURITY INTEREST. The words "Security Interest" mean and include without
limitation any type of collateral security, whether in the form of a lien,
charge, mortgage, deed of trust, assignment, pledge, chattel mortgage,
chattel trust, factor's lien, equipment trust, conditional sale, trust
receipt, lien or title retention contract, lease or consignment intended as a
security device, or any other security or lien interest whatsoever, whether
created by law, contract, or otherwise.
SARA. The word "SARA" means the Superfund Amendments and Reauthorization Act
of 1986 as now or hereafter amended.
<PAGE>
07-26-1995 BUSINESS LOAN AGREEMENT PAGE 2
LOAN NO 4707 (CONTINUED)
================================================================================
CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make the
initial Loan Advance and each subsequent Loan Advance under this Agreement
shall be subject to the fulfillment to Lender's satisfaction of all of the
conditions set forth in this Agreement and in the Related Documents.
LOAN DOCUMENTS. Borrower shall provide to Lender in form satisfactory to
Lender the following documents for the Loan: (a) the Note, (b) Security
Agreements granting to Lender security interests in the Collateral, (c)
Financing Statements perfecting Lender's Security Interests; (d) evidence of
insurance as required below; and (e) any other documents required under this
Agreement or by Lender or its counsel.
BORROWER'S AUTHORIZATION. Borrower shall have provided in form and substance
satisfactory to Lender properly certified resolutions, duly authorizing the
execution and delivery of this Agreement, the Note and the Related Documents,
and such other authorizations and other documents and instruments as Lender
or its counsel, in their sole discretion, may require.
PAYMENT OF FEES AND EXPENSES. Borrower shall have paid to Lender all fees,
charges, and other expenses which are then due and payable as specified in
this Agreement or any Related Document.
REPRESENTATIONS AND WARRANTIES. The representations and warranties set forth
in this Agreement, in the Related Documents, and in any document or
certificate delivered to Lender under this Agreement are true and correct.
NO EVENT OF DEFAULT. There shall not exist at the time of any advance a
condition which would constitute an Event of Default under this Agreement.
REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender,
as of the date of this Agreement, as of the date of each disbursement of Loan
proceeds, as of the date of any renewal, extension or modification of any
Loan, and at all times any Indebtedness exists:
ORGANIZATION. Borrower is a corporation which is duly organized, validly
existing, and in good standing under the laws of the State of California and
is validly existing and in good standing in all states in which Borrower is
doing business. Borrower has the full power and authority to own its
properties and to transact the businesses in which it is presently engaged or
presently proposes to engage. Borrower also is duly qualified as a foreign
corporation and is in good standing in all states in which the failure to so
qualify would have a material adverse effect on its businesses or financial
condition.
AUTHORIZATION. The execution, delivery, and performance of this Agreement
and all Related Documents by Borrower, to the extent to be executed,
delivered or performed by Borrower, have been duly authorized by all
necessary action by Borrower; do not require the consent or approval of any
other person, regulatory authority or governmental body; and do not conflict
with, result in a violation of, or constitute a default under (a) any
provision of its articles of incorporation or organization, or bylaws, or any
agreement or other instrument binding upon Borrower or (b) any law,
governmental regulation, court decree, or order applicable to Borrower.
FINANCIAL INFORMATION. Each financial statement, and tax returns of Borrower
supplied to Lender truly and completely disclosed Borrower's financial
condition as of the date of the statement, and there has been no material
adverse change in Borrower's financial condition subsequent to the date of
the most recent financial statement supplied to Lender. Borrower has no
material contingent obligations except as disclosed in such financial
statements. Said financial statements shall (including the disclosure of all
liabilities as hereinabove mentioned) have been prepared in accordance with
generally accepted accounting principles ("GAAP"), consistently applied
(provided, however, that tax returns may be prepared using a basis of
accounting other than GAAP).
LEGAL EFFECT. This Agreement constitutes, and any instrument or agreement
required hereunder to be given by Borrower when delivered will constitute,
legal, valid and binding obligations of Borrower enforceable against Borrower
in accordance with their respective terms.
PROPERTIES. Except as contemplated by this Agreement or as previously
disclosed in Borrower's financial statements or in writing to Lender and as
accepted by Lender, and except for property tax liens for taxes not presently
due and payable, Borrower owns and has good title to all of Borrower's
properties free and clear of all Security Interests, and has not executed any
security documents or financing statements relating to such properties. All
of Borrower's properties are titled in Borrower's legal name, and Borrower
has not used, or filed a financing statement under, any other name for at
least the last five (5) years.
HAZARDOUS SUBSTANCES. The terms "hazardous waste," "hazardous substance,"
"disposal," "release," and "threatened release," as used in this Agreement,
shall have the same meanings as set forth in the "CERCLA," "SARA," the
Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the
Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq.,
Chapters 6.5 through 7.7 of Division 20 of the California Health and Safety
Code, Section 25100, et seq., or other applicable state or Federal laws,
rules, or regulations adopted pursuant to any of the foregoing. Except as
disclosed to and acknowledged by Lender in writing, Borrower represents and
warrants that: (a) During the period of Borrower's ownership of the
properties, there has been no use, generation, manufacture, storage,
treatment, disposal, release or threatened release of any hazardous waste or
substance by any person on, under, about or from any of the properties. (b)
Borrower has no knowledge of, or reason to believe that there has been (i)
any use, generation, manufacture, storage, treatment, disposal, release, or
threatened release of any hazardous waste or substance on, under, about or
from the properties by any prior owners or occupants of any of the
properties, or (ii) any actual or threatened litigation or claims of any
kind by any person relating to such matters. (c) Neither Borrower nor any
tenant, contractor, agent or other authorized user of any of the properties
shall use, generate, manufacture, store, treat, dispose of, or release any
hazardous waste or substance on, under, about or from any of the properties;
and any such activity shall be conducted in compliance with all applicable
federal, state, and local laws, regulations, and ordinances, including
without limitation those laws, regulations and ordinances described above.
Borrower authorizes Lender and its agents to enter upon the properties to
make such inspections and tests as Lender may deem appropriate to determine
compliance of the properties with this section of the Agreement. Any
inspections or tests made by Lender shall be at Borrower's expense and for
Lender's purposes only and shall not be construed to create any
responsibility or liability on the part of Lender to Borrower or to any other
person. The representations and warranties contained herein are based on
Borrower's due diligence in investigating the properties for hazardous waste
and hazardous substances. Borrower hereby (a) releases and waives any
future claims against Lender for indemnity or contribution in the event
Borrower becomes liable for cleanup or other costs under any such laws, and
(b) agrees to indemnify and hold harmless Lender against any and all claims,
losses, liabilities, damages, penalties, and expenses which Lender may
directly or indirectly sustain or suffer resulting from a breach of this
section of the Agreement or as a consequence of any use, generation,
manufacture, storage, disposal, release or threatened release occurring prior
to Borrower's ownership or interest in the properties, whether or not the
same was or should have been known to Borrower. The provisions of this
section of the Agreement, including the obligation to indemnify, shall
survive the payment of the Indebtedness and the termination or expiration of
this Agreement and shall not be affected by Lender's acquisition of any
interest in any of the properties, whether by foreclosure or otherwise.
LITIGATION AND CLAIMS. No litigation, claim, investigation, administrative
proceeding or similar action (including those for unpaid taxes) against
Borrower is pending or threatened, and no other event has occurred which may
materially adversely affect Borrower's financial condition or properties,
other than litigation, claims, or other events, if any, that have been
disclosed to and acknowledged by Lender in writing.
TAXES. To the best of Borrower's knowledge, all tax returns and reports of
Borrower that are or were required to be filed, have been filed, and all
taxes, assessments and other governmental charges have been paid in full,
except those presently being or to be contested by Borrower in good faith in
the ordinary course of business and for which adequate reserves have been
provided.
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07-26-1995 BUSINESS LOAN AGREEMENT PAGE 3
LOAN NO 4707 (CONTINUED)
================================================================================
LIEN PRIORITY. Unless otherwise previously disclosed to Lender in writing,
Borrower has not entered into or granted any Security Agreements, or
permitted the filing or attachment of any Security Interests on or affecting
any of the Collateral directly or indirectly securing repayment of Borrower's
Loan and Note, that would be prior or that may in any way be superior to
Lender's Security Interests and rights in and to such Collateral.
BINDING EFFECT. This Agreement, the Note, all Security Agreements directly
or indirectly securing repayment of Borrower's Loan and Note and all of the
Related Documents are binding upon Borrower as well as upon Borrower's
successors, representatives and assigns, and are legally enforceable in
accordance with their respective terms.
COMMERCIAL PURPOSES. Borrower intends to use the Loan proceeds solely for
business or commercial related purposes.
EMPLOYEE BENEFIT PLANS. Each employee benefit plan as to which Borrower may
have any liability complies in all material respects with all applicable
requirements of law and regulations, and (i) no Reportable Event nor
Prohibited Transaction (as defined in ERISA) has occurred with respect to any
such plan, (ii) Borrower has not withdrawn from any such plan or initiated
steps to do so, (iii) no steps have been taken to terminate any such plan,
and (iv) there are no unfunded liabilities other than those previously
disclosed to Lender in writing.
LOCATION OF BORROWER'S OFFICES AND RECORDS. Borrower's place of business, or
Borrower's Chief executive office, if Borrower has more than one place of
business, is located at 460 Calle San Pablo, Camarillo, CA 93012. Unless
Borrower has designated otherwise in writing this location is also the office
or offices where Borrower keeps its records concerning the Collateral.
INFORMATION. All information heretofore or contemporaneously herewith
furnished by Borrower to Lender for the purposes of or in connection with
this Agreement or any transaction contemplated hereby is, and all information
hereafter furnished by or on behalf of Borrower to Lender will be, true and
accurate in every material respect on the date as of which such information
is dated or certified; and none of such information is or will be incomplete
by omitting to state any material fact necessary to make such information not
misleading.
SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Borrower understands and agrees
that Lender, without independent investigation, is relying upon the above
representations and warranties in extending Loan Advances to Borrower.
Borrower further agrees that the foregoing representations and warranties
shall be continuing in nature and shall remain in full force and effect until
such time as Borrower's Indebtedness shall be paid in full, or until this
Agreement shall be terminated in the manner provided above, whichever is the
last to occur.
AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, while
this Agreement is in effect, Borrower will:
LITIGATION. Promptly inform Lender in writing of (a) all material adverse
changes in Borrower's financial condition, and (b) all existing and all
threatened litigation, claims, investigations, administrative proceedings or
similar actions affecting Borrower or any Guarantor which could materially
affect the financial condition of Borrower or the financial condition of any
Guarantor.
FINANCIAL RECORDS. Maintain its books and records in accordance with
generally accepted accounting principles, applied on a consistent basis, and
permit Lender to examine and audit Borrower's books and records at all
reasonable times.
ADDITIONAL INFORMATION. Furnish such additional information and statements,
lists of assets and liabilities, agings of receivables and payables,
inventory schedules, budgets, forecasts, tax returns, and other reports with
respect to Borrower's financial condition and business operations as Lender
may request from time to time.
INSURANCE. Maintain fire and other risk insurance, public liability
insurance, and such other insurance as Lender may require with respect to
Borrower's properties and operations, in form, amounts, coverages and with
insurance companies reasonably acceptable to Lender. Borrower, upon request
of Lender, will deliver to Lender from time to time the policies or
certificates of insurance in form satisfactory to Lender, including
stipulations that coverages will not be cancelled or diminished without at
least ten (10) days' prior written notice to Lender. Each insurance policy
also shall include an endorsement providing that coverage in favor of Lender
will not be impaired in any way by any act, omission or default of Borrower
or any other person. In connection with all policies covering assets in
which Lender holds or is offered a security interest for the Loans, Borrower
will provide Lender with such loss payable or other endorsements as Lender
may require.
INSURANCE REPORTS. Furnish to Lender, upon request of Lender, reports on
each existing insurance policy showing such information as Lender may
reasonably request, including without limitation the following: (a) the name
of the insurer; (b) the risks insured; (c) the amount of the policy; (d)
the properties insured; (e) the then current property values on the basis of
which insurance has been obtained, and the manner of determining those
values; and (f) the expiration date of the policy. In addition, upon request
of Lender (however not more often than annually), Borrower will have an
independent appraiser satisfactory to Lender determine, as applicable, the
actual cash value or replacement cost of any Collateral. The cost of such
appraisal shall be paid by Borrower.
OTHER AGREEMENTS. Comply with all terms and conditions of all other
agreements, whether now or hereafter existing, between Borrower and any other
party and notify Lender immediately in writing of any default in connection
with any other such agreements.
LOAN PROCEEDS. Use all Loan proceeds solely for Borrower's business
operations, unless specifically consented to the contrary by Lender in
writing.
TAXES, CHARGES AND LIENS. Pay and discharge when due all of its indebtedness
and obligations, including without limitation all assessments, taxes,
governmental charges, levies and liens, of every kind and nature, imposed
upon Borrower or its properties, income, or profits, prior to the date on
which penalties would attach, and all lawful claims that, if unpaid, might
become a lien or charge upon any of Borrower's properties, income, or
profits. Provided however, Borrower will not be required to pay and
discharge any such assessment, tax, charge, levy, lien or claim so long as
(a) the legality of the same shall be contested in good faith by appropriate
proceedings, and (b) Borrower shall have established on its books adequate
reserves with respect to such contested assessment, tax, charge, levy, lien,
or claim in accordance with generally accepted accounting practices.
Borrower, upon demand of Lender, will furnish to Lender evidence of payment
of the assessments, taxes, charges, levies, liens and claims and will
authorize the appropriate governmental official to deliver to Lender at any
time a written statement of any assessments, taxes, charges, levies, liens
and claims against Borrower's properties, income, or profits.
PERFORMANCE. Perform and comply with all terms, conditions, and provisions
set forth in this Agreement and in the Related Documents in a timely manner,
and promptly notify Lender if Borrower learns of the occurrence of any event
which constitutes an Event of Default under this Agreement or under any of
the Related Documents.
OPERATIONS. Maintain executive and management personnel with substantially
the same qualifications and experience as the present executive and
management personnel; provide written notice to Lender of any change in
executive and management personnel; conduct its business affairs in a
reasonable and prudent manner and in compliance with all applicable federal,
state and municipal laws, ordinances, rules and regulations respecting its
properties, charters, businesses and operations, including without
limitation, compliance with the Americans With Disabilities Act and with all
minimum funding standards and other requirements of ERISA and other laws
applicable to Borrower's employee benefit plans.
INSPECTION. Permit employees or agents of Lender at any reasonable time to
inspect any and all Collateral for the Loan or Loans and Borrower's other
properties and to examine or audit Borrower's books, accounts, and records
and to make copies and memoranda of Borrower's books, accounts, and records.
If Borrower now or at any time hereafter maintains any records (including
without limitation computer generated records and computer software programs
for the generation of such records) in the possession of a third party,
Borrower, upon request of Lender, shall
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07-26-1995 BUSINESS LOAN AGREEMENT PAGE 4
LOAN NO 4707 (CONTINUED)
================================================================================
notify such party to permit Lender free access to such records at all
reasonable times and to provide Lender with copies of any records it may
request, all at Borrower's expense.
ENVIRONMENTAL COMPLIANCE AND REPORTS. Borrower shall comply in all respects
with all environmental protection federal, state and local laws, statutes,
regulations and ordinances; not cause or permit to exist, as a result of an
intentional or unintentional action or omission on its part or on the part of
any third party, on property owned and/or occupied by Borrower, any
environmental activity where damage may result to the environment, unless
such environmental activity is pursuant to and in compliance with the
conditions of a permit issued by the appropriate federal, state or local
governmental authorities; shall furnish to Lender promptly and in any event
within thirty (30) days after receipt thereof a copy of any notice, summons,
lien, citation, directive, letter or other communication from any
governmental agency or instrumentality concerning any intentional or
unintentional action or omission on Borrower's part in connection with any
environmental activity whether or not there is damage to the environment
and/or other natural resources.
ADDITIONAL ASSURANCES. Make, execute and deliver to Lender such promissory
notes, mortgages, deeds of trust, security agreements, financing statements,
instruments, documents and other agreements as Lender or its attorneys may
reasonably request to evidence and secure the Loans and to perfect all
Security Interests.
RECOVERY OF ADDITIONAL COSTS. If the imposition of or any change in any law,
rule, regulation or guideline, or the interpretation or application of any
thereof by any court or administrative or governmental authority (including
any request or policy not having the force of law) shall impose, modify or
make applicable any taxes (except U.S. federal, state or local income or
franchise taxes imposed on Lender), reserve requirements, capital adequacy
requirements or other obligations which would (a) increase the cost to
Lender for extending or maintaining the credit facilities to which this
Agreement relates, (b) reduce the amounts payable to Lender under this
Agreement or the Related Documents, or (c) reduce the rate of return on
Lender's capital as a consequence of Lender's obligations with respect to the
credit facilities to which this Agreement relates, then Borrower agrees to
pay Lender such additional amounts as will compensate Lender therefor, within
five (5) days after Lender's written demand for such payment, which demand
shall be accompanied by an explanation of such imposition or charge and a
calculation in reasonable detail of the additional amounts payable by
Borrower, which explanation and calculations shall be conclusive in the
absence of manifest error.
NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while
this Agreement is in effect, Borrower shall not, without the prior written
consent of Lender:
INDEBTEDNESS AND LIENS. (a) Except for trade debt incurred in the normal
course of business and indebtedness to Lender contemplated by this Agreement,
create, incur or assume indebtedness for borrowed money, including capital
leases, (b) except as allowed as a Permitted Lien, sell, transfer, mortgage,
assign, pledge, lease, grant a security interest in, or encumber any of
Borrower's assets, or (c) sell with recourse any of Borrower's accounts,
except to Lender.
CONTINUITY OF OPERATIONS. (a) Engage in any business activities
substantially different than those in which Borrower is presently engaged,
(b) cease operations, liquidate, merge, transfer, acquire or consolidate with
any other entity, change ownership, change its name, dissolve or transfer or
sell Collateral out of the ordinary course of business, (c) pay any dividends
on Borrower's stock (other than dividends payable in its stock), provided,
however that notwithstanding the foregoing, but only so long as no Event of
Default has occurred and is continuing or would result from the payment of
dividends, if Borrower is a "Subchapter S Corporation" (as defined in the
Internal Revenue Code of 1986, as amended), Borrower may pay cash dividends
on its stock to its shareholders from time to time in amounts necessary to
enable the shareholders to pay income taxes and make estimated income tax
payments to satisfy their liabilities under federal and state law which arise
solely from their status as Shareholders of a Subchapter S Corporation
because of their ownership of shares of stock of Borrower, or (d) purchase or
retire any of Borrower's outstanding shares or alter or amend Borrower's
capital structure.
LOANS, ACQUISITIONS AND GUARANTIES. (a) Loan, invest in or advance money or
assets, (b) purchase, create or acquire any interest in any other enterprise
or entity, or (c) incur any obligation as surety or guarantor other than in
the ordinary course of business.
CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to
Borrower, whether under this Agreement or under any other agreement, Lender
shall have no obligation to make Loan Advances or to disburse Loan proceeds
if: (a) Borrower or any Guarantor is in default under the terms of this
Agreement or any of the Related Documents or any other agreement that
Borrower or any Guarantor has with Lender; (b) Borrower or any Guarantor
becomes insolvent, files a petition in bankruptcy or similar proceedings, or
is adjudged a bankrupt; (c) there occurs a material adverse change in
Borrower's financial condition, in the financial condition of any Guarantor,
or in the value of any Collateral securing any Loan; (d) any Guarantor
seeks, claims or otherwise attempts to limit, modify or revoke such
Guarantor's guaranty of the Loan or any other loan with Lender; or (e)
Lender in good faith deems itself insecure, even though no Event of Default
shall have occurred.
FINANCIAL REPORTING REQUIREMENTS. Borrower agrees to provide to Lender all
of the following, in form and detail satisfactory to Lender:
(a) not later than 90 days after and as of the end of each fiscal year,
certified financial statements and 10K's of Borrower, audited by certified
public accountants acceptable to Lender, to include a balance sheet, income
statement, statement of cash flows and appropriate footnotes;
(b) not later than 45 days after and as of the end of each fiscal quarter,
10Q's and financial statement of Borrower, prepared by Borrower, to include a
balance sheet, income statement, and appropriate schedules and footnotes;
(c) not later than 20 days after the close of each quarter, agings of
Borrower's accounts receivable and accounts payable, in such form and detail
as Lender may require;
(d) not later than 20 days after the close of each quarter, inventory
listing of Borrower, in such form and detail as Lender may require;
(e) annual business plan and projections prepared by Borrower.
All financial statements of Borrower to be delivered by Borrower to Lender
will be complete and correct and present fairly the financial condition of
Borrower as of the date thereof; will disclose all liabilities of Borrower
that are required to be reflected or reserved under genarally accepted
accounting principles, whether liquidated or unliquidated, fixed or
contingent; and will have been prepared in accordance with generally accepted
accounting principles consistently applied. All tax returns submitted to
Lender by Borrower will be true and correct to the best knowledge of
Borrower. Borrower hereby agrees that each time a financial statement or tax
return is submitted by it to Lender, Borrower shall be deemed to have been
represented and warranted to Lender that such financial statement or tax
return compiles with all the requirements set forth above.
FINANCIAL COVENANTS AND RATIOS. Borrower shall maintain its financial
condition as follows, calculated using generally accepted accounting
principles consistently applied and used consistently with prior practices:
(a) EFFECTIVE TANGIBLE NET WORTH. (defined as total assets excluding all
intangible assets, i.e, goodwill, trademarks, patents, copyrights,
organizational expenses, but including investments in affiliate companies,
Micro Pulse, Inc. and Cal Amp Communications S.A.R.L. less total debt) not
less than $15,000,000.00.
<PAGE>
07-26-1995 BUSINESS LOAN AGREEMENT PAGE 5
LOAN NO 4707 (CONTINUED)
================================================================================
(b) RATIO OF TOTAL DEBT TO EFFECTIVE TANGIBLE NET WORTH. (defined as
current liabilities and non-current liabilities less subordinated debt
divided by Effective Tangible Net Worth) not at any time greater than 1.00 to
1.00.
(c) CURRENT RATIO. (defined as current assets divided by current
liabilities) not at any time less than 1.25 to 1.00.
(d) DEBT SERVICE COVERAGE RATIO. (defined as the aggregate of net income
after taxes plus depreciation and other non-cash expenses and interest
expense, less gain of sale of assets, dividends, distributions, withdrawals
and treasury stock purchases divided by the aggregate of current portion of
long-term debt plus interest expense) not at any time less than 4.80 to 1.00.
(e) Borrower shall not have two consecutive quarterly losses.
(f) CAPITAL EXPENDITURES. Borrower will not, without prior written consent
of Lender, make any new investment in fixed assets in any fiscal year in
excess of aggregate of $3,000,000.00.
RIGHT OF SETOFF. Borrower grants to Lender a contractual possessory security
interest in, and hereby assigns, conveys, delivers, pledges, and transfers to
Lender all Borrower's right, title and interest in and to, Borrower's
accounts with Lender (whether checking, savings, or some other account),
including without limitation all accounts held jointly with someone else and
all accounts Borrower may open in the future, excluding however all IRA and
Keogh accounts, and all trust accounts for which the grant of a security
interest would be prohibited by law. Borrower authorizes Lender, to the
extent permitted by applicable law, to charge or setoff all sums owing on the
Indebtedness against any and all such accounts.
EVENTS OF DEFAULT. Each of the following shall constitute an Event of
Default under this Agreement:
DEFAULT ON INDEBTEDNESS. Failure of Borrower to make any payment when due on
the Loans.
OTHER DEFAULTS. Failure of Borrower or any Grantor to comply with or to
perform when due any other term, obligation, covenant or condition contained
in this Agreement or in any of the Related Documents, or failure of Borrower
to comply with or to perform any other term, obligation, covenant or
condition contained in any other agreement between Lender and Borrower.
DEFAULT IN FAVOR OF THIRD PARTIES. Should Borrower or any Grantor default
under any loan, extension of credit, security agreement, purchase or sales
agreement, or any other agreement, in favor of any other creditor or person
that may materially affect any of Borrower's property or Borrower's or any
Grantor's ability to repay the Loans or perform their respective obligations
under this Agreement or any of the Related Documents.
FALSE STATEMENTS. Any warranty, representation or statement made or
furnished to Lender by or on behalf of Borrower or any Grantor under this
Agreement or the Related Documents is false or misleading in any material
respect at the time made or furnished, or becomes false or misleading at any
time thereafter.
DEFECTIVE COLLATERALIZATION. This Agreement or any of the Related Documents
ceases to be in full force and effect (including failure of any Security
Agreement to create a valid and perfected Security Interest) at any time and
for any reason.
INSOLVENCY. The dissolution or termination of Borrower's existence as a
going business, the insolvency of Borrower, the appointment of a receiver for
any part of Borrower's property, any assignment for the benefit of creditors,
any type of creditor workout, or the commencement of any proceeding under any
bankruptcy or insolvency laws by or against Borrower.
CREDITOR OR FORFEITURE PROCEEDINGS. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Borrower, any creditor
of any Grantor against any collateral securing the Indebtedness, or by any
governmental agency. This includes a garnishment, attachment, or levy on or
of any of Borrower's deposit accounts with Lender.
EVENTS AFFECTING GUARANTOR. Any of the preceding events occurs with respect
to any Guarantor of any of the Indebtedness or any Guarantor dies or becomes
incompetent, or revokes or disputes the validity of, or liability under, any
Guaranty of the Indebtedness.
CHANGE IN OWNERSHIP. Any change in ownership of twenty-five percent (25%) or
more of the common stock of Borrower.
ADVERSE CHANGE. A material adverse change occurs in Borrower's financial
condition, or Lender believes the prospect of payment or performance of the
Indebtedness is impaired.
INSECURITY. Lender, in good faith, deems itself insecure.
EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except
where otherwise provided in this Agreement or the Related Documents, all
commitments and obligations of Lender under this Agreement or the Related
Documents or any other agreement immediately will terminate (including any
obligation to make Loan Advances or disbursements), and, at Lender's option,
all Indebtedness immediately will become due and payable, all without notice
of any kind to Borrower, except that in the case of an Event of Default of
the type described in the "Insolvency" subsection above, such acceleration
shall be automatic and not optional. In addition, Lender shall have all the
rights and remedies provided in the Related Documents or available at law, in
equity, or otherwise. Except as may be prohibited by applicable law, all of
Lender's rights and remedies shall be cumulative and may be exercised
singularly or concurrently. Election by Lender to pursue any remedy shall
not exclude pursuit of any other remedy, and an election to make expenditures
or to take action to perform an obligation of Borrower or of any Grantor
shall not affect Lender's right to declare a default and to exercise its
rights and remedies.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part
of this Agreement:
AMENDMENTS. This Agreement, together with any Related Documents, constitutes
the entire understanding and agreement of the parties as to the matters set
forth in this Agreement. No alteration of or amendment to this Agreement
shall be effective unless given in writing and signed by the party or parties
sought to be charged or bound by the alteration or amendment.
APPLICABLE LAW. THIS AGREEMENT HAS BEEN DELIVERED TO LENDER AND ACCEPTED BY
LENDER IN THE STATE OF CALIFORNIA. IF THERE IS A LAWSUIT, BORROWER AGREES
UPON LENDER'S REQUEST TO SUBMIT TO THE JURISDICTION OF THE COURTS OF LOS
ANGELES COUNTY, THE STATE OF CALIFORNIA SUBJECT TO THE PROVISIONS ON
ARBITRATION, THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF CALIFORNIA.
ARBITRATION. LENDER AND BORROWER AGREE THAT ALL DISPUTES, CLAIMS AND
CONTROVERSIES BETWEEN THEM, WHETHER INDIVIDUAL, JOINT, OR CLASS IN NATURE,
ARISING FROM THIS AGREEMENT OR OTHERWISE, INCLUDING WITHOUT LIMITATION
CONTRACT AND TORT DISPUTES, SHALL BE ARBITRATED PURSUANT TO THE RULES OF THE
AMERICAN ARBITRATION ASSOCIATION, UPON REQUEST OF EITHER PARTY. No act to
take or dispose of any Collateral shall constitute a waiver of this
arbitration agreement or be prohibited by this arbitration agreement. This
includes, without limitation, obtaining injunctive relief or a temporary
restraining order; invoking a power of sale under any deed of trust or
mortgage; obtaining a writ of attachment or imposition of a receiver; or
exercising any rights relating to personal property, including taking or
disposing of such property with or without judicial process pursuant to
Article 9 of the Uniform Commercial Code. Any disputes, claims, or
controversies concerning the lawfulness or reasonableness of any act, or
exercise of any right, concerning any Collateral, including any claim to
rescind, reform, or otherwise modify any agreement relating to the
Collateral, shall also be arbitrated, provided however that no arbitrator
shall have the right or the power to enjoin or restrain any act of any party.
<PAGE>
07-26-1995 BUSINESS LOAN AGREEMENT PAGE 6
LOAN NO 4707 (CONTINUED)
================================================================================
Lender and Borrower agree that in the event of an action for judicial
foreclosure pursuant to California Code of Civil Procedure Section 726, or
any similar provision in any other state, the commencement of such an action
will not constitute a waiver of the right to arbitrate and the court shall
refer to arbitration as much of such action, including counterclaims, as
lawfully may be referred to arbitration. Judgment upon any award rendered by
any arbitrator may be entered in any court having jurisdiction. Nothing in
this Agreement shall preclude any party from seeking equitable relief from a
court of competent jurisdiction. The statute of limitations, estoppel,
waiver, laches, and similar doctrines which would otherwise be applicable in
an action brought by a party shall be applicable in any arbitration
proceeding, and the commencement of an arbitration proceeding shall be deemed
the commencement of an action for these purposes. The Federal Arbitration
Act shall apply to the construction, interpretation, and enforcement of this
arbitration provision.
CAPTION HEADINGS. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the provisions of
this Agreement.
MULTIPLE PARTIES; CORPORATE AUTHORITY. All obligations of Borrower under
this Agreement shall be joint and several, and all references to Borrower
shall mean each and every Borrower. This means that each of the Borrowers
signing below is responsible for ALL obligations in this Agreement.
CONSENT TO LOAN PARTICIPATION. Borrower agrees and consents to Lender's sale
or transfer, whether now or later, of one or more participation interests in
the Loans to one or more purchasers, whether related or unrelated to Lender.
Lender may provide, without any limitation whatsoever, to any one or more
purchasers, or potential purchasers, any information or knowledge Lender may
have about Borrower or about any other matter relating to the Loan, and
Borrower hereby waives any rights to privacy it may have with respect to such
matters. Borrower additionally waives any and all notices of sale of
participation interests, as well as all notices of any repurchase of such
participation interests. Borrower also agrees that the purchasers of any
such participation interests will be considered as the absolute owners of
such interests in the Loans and will have all the rights granted under the
participation agreement or agreements governing the sale of such
participation interests. Borrower further waives all rights of offset or
counterclaim that it may have now or later against Lender or against any
purchaser of such a participation interest and unconditionally agrees that
either Lender or such purchaser may enforce Borrower's obligation under the
Loans irrespective of the failure or insolvency of any holder of any interest
in the Loans. Borrower further agrees that the purchaser of any such
participation interests may enforce its interests irrespective of any
personal claims or defenses that Borrower may have against Lender.
COSTS AND EXPENSES. Borrower agrees to pay upon demand all of Lender's
expenses, including without limitation attorneys' fees, incurred in
connection with the preparation, execution, enforcement, modification and
collection of this Agreement or in connection with the Loans made pursuant to
this Agreement. Lender may pay someone else to help collect the Loans and to
enforce this Agreement, and Borrower will pay that amount. This includes,
subject to any limits under applicable law, Lender's attorneys' fees and
Lender's legal expenses, whether or not there is a lawsuit, including
attorneys' fees for bankruptcy proceedings (including efforts to modify or
vacate any automatic stay or injunction), appeals, and any anticipated
post-judgment collection services. Borrower also will pay any court costs,
in addition to all other sums provided by law.
NOTICES. All notices required to be given under this Agreement shall be
given in writing, may be sent by telefacsimilie, and shall be effective when
actually delivered or when deposited with a nationally recognized overnight
courier or deposited in the United States mail, first class, postage prepaid,
addressed to the party to whom the notice is to be given at the address shown
above. Any party may change its address for notices under this Agreement by
giving formal written notice to the other parties, specifying that the
purpose of the notice is to change the party's address. To the extent
permitted by applicable law, if there is more than one Borrower, notice to
any Borrower will constitute notice to all Borrowers. For notice purposes,
Borrower will keep Lender informed at all times of Borrower's current
address(es).
SEVERABILITY. If a court of competent jurisdiction finds any provision of
this Agreement to be invalid or unenforceable as to any person or
circumstance, such finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances. If feasible, any
such offending provision shall be deemed to be modified to be within the
limits of enforceability or validity; however, if the offending provision
cannot be so modified, it shall be stricken and all other provisions of this
Agreement in all other respects shall remain valid and enforceable.
SUBSIDIARIES AND AFFILIATES OF BORROWER. To the extent the context of any
provisions of this Agreement makes it appropriate, including without
limitation any representation, warranty or covenant, the word "Borrower" as
used herein shall include all subsidiaries and affiliates of Borrower.
Notwithstanding the foregoing however, under no circumstances shall this
Agreement be construed to require Lender to make any Loan or other financial
accommodation to any subsidiary or affiliate of Borrower.
SUCCESSORS AND ASSIGNS. All covenants and agreements contained by or on
behalf of Borrower shall bind its successors and assigns and shall inure to
the benefit of Lender, its successors and assigns. Borrower shall not,
however, have the right to assign its rights under this Agreement or any
interest therein, without the prior written consent of Lender.
SURVIVAL. All warranties, representations, and covenants made by Borrower in
this Agreement or in any certificate or other instrument delivered by
Borrower to Lender under this Agreement shall be considered to have been
relied upon by Lender and will survive the making of the Loan and delivery to
Lender of the Related Documents, regardless of any investigation made by
Lender or on Lender's behalf.
TIME IS OF THE ESSENCE. Time is of the essence in the performance of this
Agreement.
WAIVER. Lender shall not be deemed to have waived any rights under this
Agreement unless such waiver is given in writing and signed by Lender. No
delay or omission on the part of Lender in exercising any right shall operate
as a waiver of such right or any other right. A waiver by Lender of a
provision of this Agreement shall not prejudice or constitute a waiver of
Lender's right otherwise to demand strict compliance with that provision or
any other provision of this Agreement. No prior waiver by Lender, nor any
course of dealing between Lender and Borrower, or between Lender and any
Grantor, shall constitute a waiver of any of Lender's rights or of any
obligations of Borrower or of any Grantor as to any future transactions.
Whenever the consent of Lender is required under this Agreement, the granting
of such consent by Lender in any instance shall not constitute continuing
consent in subsequent instances where such consent is required, and in all
cases such consent may be granted or withheld in the sole discretion of
Lender.
<PAGE>
07-26-1995 BUSINESS LOAN AGREEMENT PAGE 7
LOAN NO 4707 (CONTINUED)
================================================================================
BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN
AGREEMENT, AND BORROWER AGREES TO ITS TERMS. THIS AGREEMENT IS DATED AS OF
JULY 26, 1995.
BORROWER:
CALIFORNIA AMPLIFIER, INC.|
X_______________________________________________________________________________
AUTHORIZED OFFICER
LENDER:
CALIFORNIA UNITED BANK, N. A.
BY:_____________________________________________________________________________
AUTHORIZED OFFICER
================================================================================
LASER PRO, Reg. U.S. Pat. & T.M. Off., Ver. 3.21 (c) 1995 CFI ProServices, Inc.
All rights reserved. [CA-C40 CAAMP.LN C8.OVL]
<PAGE>
EXHIBIT 10.23
PROMISSORY NOTE
BORROWER: CALIFORNIA AMPLIFIER, INC.
460 CALLE SAN PABLO
CAMARILLO, CA 93012
LENDER: CALIFORNIA UNITED BANK, N. A.
ENCINO
16030 VENTURA BLVD.
ENCINO, CA 91436
================================================================================
PRINCIPAL AMOUNT: $5,000,000.00 INITIAL RATE: 8.750%
DATE OF NOTE: JULY 26, 1995
PROMISE TO PAY. CALIFORNIA AMPLIFIER, INC. ("BORROWER") PROMISES TO PAY TO
CALIFORNIA UNITED BANK, N. A. ("LENDER"), OR ORDER, IN LAWFUL MONEY OF THE
UNITED STATES OF AMERICA, THE PRINCIPAL AMOUNT OF FIVE MILLION & 00/100
DOLLARS ($5,000,000.00) OR SO MUCH AS MAY BE OUTSTANDING, TOGETHER WITH
INTEREST ON THE UNPAID OUTSTANDING PRINCIPAL BALANCE OF EACH ADVANCE.
INTEREST SHALL BE CALCULATED FROM THE DATE OF EACH ADVANCE UNTIL REPAYMENT OF
EACH ADVANCE.
PAYMENT. BORROWER WILL PAY THIS LOAN ON DEMAND, OR IF NO DEMAND IS MADE, IN
ONE PAYMENT OF ALL OUTSTANDING PRINCIPAL PLUS ALL ACCRUED UNPAID INTEREST ON
AUGUST 1, 1996. IN ADDITION, BORROWER WILL PAY REGULAR MONTHLY PAYMENTS OF
ACCRUED UNPAID INTEREST BEGINNING SEPTEMBER 1, 1995, AND ALL SUBSEQUENT
INTEREST PAYMENTS ARE DUE ON THE SAME DAY OF EACH MONTH AFTER THAT. Interest
on this Note is computed on a 365/360 simple interest basis; that is, by
applying the ratio of the annual interest rate over a year of 360 days,
multiplied by the outstanding principal balance, multiplied by the actual
number of days the principal balance is outstanding. Borrower will pay
Lender at Lender's address shown above or at such other place as Lender may
designate in writing. Unless otherwise agreed or required by applicable law,
payments will be applied first to any unpaid collection costs and any late
charges, then to any unpaid interest, and any remaining amount to principal.
The receipt of any wire transfer of funds, check or other item of payment by
the bank shall be immediately applied to conditionally reduce Borrower's
obligations, but shall not be considered a payment on account unless such
wire transfer is of immediately available federal funds and is made to the
appropriate deposit account of Bank or unless and until such check or other
item of payment is honored when presented for payment.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to change
from time to time based on changes in an index which is the highest rate
published on a daily basis as the "Prime Rate" in the "Money Rates" Section
of the Western Edition of the Wall Street Journal (the "Index"). If no rate
is published for a day, California United Bank, N.A. reserves the right to
determine the established rate which shall not be unreasonable. Lender will
tell Borrower the current Index rate upon Borrower's request. Borrower
understands that Lender may make loans based on other rates as well. The
interest rate change will not occur more often than each day. THE INDEX
CURRENTLY IS 8.250% PER ANNUM. THE INTEREST RATE TO BE APPLIED TO THE UNPAID
PRINCIPAL BALANCE OF THIS NOTE WILL BE AT A RATE OF 0.500 PERCENTAGE POINTS
OVER THE INDEX, RESULTING IN AN INITIAL RATE OF 9.250% PER ANNUM. NOTICE:
Under no circumstances will the interest rate on this Note be more than the
maximum rate allowed by applicable law.
PREPAYMENT; MINIMUM INTEREST CHARGE. Borrower agrees that all loan fees and
other prepaid finance charges are earned fully as of the date of the loan and
will not be subject to refund upon early payment (whether voluntary or as a
result of default), except as otherwise required by law. In any event, even
upon full prepayment of this Note, Borrower understands that Lender is
entitled to a MINIMUM INTEREST CHARGE OF $250.00. Other than Borrower's
obligation to pay any minimum interest charge, Borrower may pay without
penalty all or a portion of the amount owed earlier than it is due. Early
payments will not, unless agreed to by Lender in writing, relieve Borrower of
Borrower's obligation to continue to make payments of accrued unpaid
interest. Rather, they will reduce the principal balance due.
LATE CHARGE. If a payment is 10 DAYS OR MORE LATE, Borrower will be charged
5.000% OF THE UNPAID PORTION OF THE REGULARLY SCHEDULED PAYMENT.
DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment when due. (b) Borrower breaks any promise
Borrower has made to Lender, or Borrower fails to comply with or to perform
when due any other term, obligation, covenant, or condition contained in this
Note or any agreement related to this Note, or in any other agreement or loan
Borrower has with Lender. (c) Borrower defaults under any loan, extension of
credit, security agreement, purchase or sales agreement, or any other
agreement, in favor of any other creditor or person that may materially
affect any of Borrower's property or Borrower's ability to repay this Note or
perform Borrower's obligations under this Note or any of the Related
Documents. (d) Any representation or statement made or furnished to Lender
by Borrower or on Borrower's behalf is false or misleading in any material
respect either now or at the time made or furnished. (e) Borrower becomes
insolvent, a receiver is appointed for any part of Borrower's property,
Borrower makes an assignment for the benefit of creditors, or any proceeding
is commenced either by Borrower or against Borrower under any bankruptcy or
insolvency laws. (f) Any creditor tries to take any of Borrower's property
on or in which Lender has a lien or security interest. This includes a
garnishment of any of Borrower's accounts with Lender. (g) Any guarantor
dies or any of the other events described in this default section occurs with
respect to any guarantor of this Note. (h) A material adverse change occurs
in Borrower's financial condition, or Lender believes the prospect of payment
or performance of the Indebtedness is impaired. (i) Lender in good faith
deems itself insecure.
LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid
principal balance on this Note and all accrued unpaid interest immediately
due, without notice, and then Borrower will pay that amount. Upon Borrower's
failure to pay all amounts declared due pursuant to this section, including
failure to pay upon final maturity, Lender, at its option, may also, if
permitted under applicable law, do one or both of the following: (a)
increase the variable interest rate on this Note to 5.500 percentage points
over the Index, and (b) add any unpaid accrued interest to principal and such
sum will bear interest therefrom until paid at the rate provided in this Note
(including any increased rate). Lender may hire or pay someone else to help
collect this Note if Borrower does not pay. Borrower also will pay Lender
that amount. This includes, subject to any limits under applicable law,
Lender's attorneys' fees and Lender's legal expenses whether or not there is
a lawsuit, including attorneys' fees and legal expenses for bankruptcy
proceedings (including efforts to modify or vacate any automatic stay or
injunction), appeals, and any anticipated post-judgment collection services.
Borrower also will pay any court costs, in addition to all other sums
provided by law. THIS NOTE HAS BEEN DELIVERED TO LENDER AND ACCEPTED BY
LENDER IN THE STATE OF CALIFORNIA. IF THERE IS A LAWSUIT, BORROWER AGREES
UPON LENDER'S REQUEST TO SUBMIT TO THE JURISDICTION OF THE COURTS OF LOS
ANGELES COUNTY, THE STATE OF CALIFORNIA SUBJECT TO THE PROVISIONS ON
ARBITRATION, THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF CALIFORNIA.
RIGHT OF SETOFF. Borrower grants to Lender a contractual possessory security
interest in, and hereby assigns, conveys, delivers, pledges, and transfers to
Lender all Borrower's right, title and interest in and to, Borrower's
accounts with Lender (whether checking, savings, or some other account),
including without limitation all accounts held jointly with someone else and
all accounts Borrower may open in the future, excluding however all IRA and
Keogh accounts, and all trust accounts for which the grant of a security
interest would be prohibited by law. Borrower authorizes Lender, to the
extent permitted by applicable law, to charge or setoff all sums owing on
this Note against any and all such accounts.
LINE OF CREDIT. This Note evidences a revolving line of credit. Advances
under this Note may be requested orally by Borrower or by an authorized
person. Lender may, but need not, require that all oral requests be
confirmed in writing. All communications, instructions, or directions by
telephone or otherwise to Lender are to be directed to Lender's office shown
above. The following party or parties are authorized to request advances
under the line of credit until Lender receives from Borrower at Lender's
address shown above written notice of revocation of their authority: IRA
CORON, CHAIRMAN OF THE BOARD; MICHAEL FERRON, VICE PRESIDENT, FINANCE; AND
GLENDA BLUM, CONTROLLER. Borrower agrees to be liable for all sums either:
(a) advanced in accordance with the instructions of an authorized person or
(b) credited to any of Borrower's accounts with Lender. The unpaid principal
balance
<PAGE>
07-26-1995 PROMISSORY NOTE PAGE 2
LOAN NO 4707 (CONTINUED)
================================================================================
owing on this Note at any time may be evidenced by endorsements on this Note
or by Lender's internal records, including daily computer print-outs. Lender
will have no obligation to advance funds under this Note if: (a) Borrower or
any guarantor is in default under the terms of this Note or any agreement
that Borrower or any guarantor has with Lender, including any agreement made
in connection with the signing of this Note; (b) Borrower or any guarantor
ceases doing business or is insolvent; (c) any guarantor seeks, claims or
otherwise attempts to limit, modify or revoke such guarantor's guarantee of
this Note or any other loan with Lender; (d) Borrower has applied funds
provided pursuant to this Note for purposes other than those authorized by
Lender; or (e) Lender in good faith deems itself insecure under this Note or
any other agreement between Lender and Borrower.
ARBITRATION. LENDER AND BORROWER AGREE THAT ALL DISPUTES, CLAIMS AND
CONTROVERSIES BETWEEN THEM, WHETHER INDIVIDUAL, JOINT, OR CLASS IN NATURE,
ARISING FROM THIS NOTE OR OTHERWISE, INCLUDING WITHOUT LIMITATION CONTRACT
AND TORT DISPUTES, SHALL BE ARBITRATED PURSUANT TO THE RULES OF THE AMERICAN
ARBITRATION ASSOCIATION, UPON REQUEST OF EITHER PARTY. No act to take or
dispose of any collateral securing this Note shall constitute a waiver of
this arbitration agreement or be prohibited by this arbitration agreement.
This includes, without limitation, obtaining injunctive relief or a temporary
restraining order; invoking a power of sale under any deed of trust or
mortgage; obtaining a writ of attachment or imposition of a receiver; or
exercising any rights relating to personal property, including taking or
disposing of such property with or without judicial process pursuant to
Article 9 of the Uniform Commercial Code. Any disputes, claims, or
controversies concerning the lawfulness or reasonableness of any act, or
exercise of any right, concerning any collateral securing this Note,
including any claim to rescind, reform, or otherwise modify any agreement
relating to the collateral securing this Note, shall also be arbitrated,
provided however that no arbitrator shall have the right or the power to
enjoin or restrain any act of any party. Lender and Borrower agree that in
the event of an action for judicial foreclosure pursuant to California Code
of Civil Procedure Section 726, or any similar provision in any other state,
the commencement of such an action will not constitute a waiver of the right
to arbitrate and the court shall refer to arbitration as much of such action,
including counterclaims, as lawfully may be referred to arbitration.
Judgment upon any award rendered by any arbitrator may be entered in any
court having jurisdiction. Nothing in this Note shall preclude any party
from seeking equitable relief from a court of competent jurisdiction. The
statute of limitations, estoppel, waiver, laches, and similar doctrines which
would otherwise be applicable in an action brought by a party shall be
applicable in any arbitration proceeding, and the commencement of an
arbitration proceeding shall be deemed the commencement of an action for
these purposes. The Federal Arbitration Act shall apply to the construction,
interpretation, and enforcement of this arbitration provision.
COLLATERAL. This Loan is secured by all Borrower's assets as evidenced by
that certain Commercial Security Agreement dated July 26, 1995 executed by
Grantor in favor of Lender.
BUSINESS LOAN AGREEMENT. Reference is hereby made to that certain Business
Loan Agreement dated July 26, 1995, for additional terms and conditions.
BORROWER'S ACKNOWLEDGEMENT. Borrower hereby acknowledges that this is an
increased renewal of Note Number 4707 as evidenced by that certian Promissory
Note date April 5, 1993 in the original principal amount of $4,000,000.00, as
amended by that certain Change in Terms Agreement dated July 22, 1994.
ADDITIONAL MATTERS. Lender reserves the right to sell, assign, transfer,
negotiate or grant participations in all or any part of, or any interest in
Lender's rights and benefits hereunder. In connection therewith, Lender may
disclose all documents and information which Lender now or hereafter may have
relating to Borrower.
GENERAL PROVISIONS. This Note is payable on demand. The inclusion of
specific default provisions or rights of Lender shall not preclude Lender's
right to declare payment of this Note on its demand. Lender may delay or
forgo enforcing any of its rights or remedies under this Note without losing
them. Borrower and any other person who signs, guarantees or endorses this
Note, to the extent allowed by law, waive any applicable statute of
limitations, presentment, demand for payment, protest and notice of dishonor.
Upon any change in the terms of this Note, and unless otherwise expressly
stated in writing, no party who signs this Note, whether as maker, guarantor,
accommodation maker or endorser, shall be released from liability. All such
parties agree that Lender may renew or extend (repeatedly and for any length
of time) this loan, or release any party or guarantor or collateral; or
impair, fail to realize upon or perfect Lender's security interest in the
collateral; and take any other action deemed necessary by Lender without the
consent of or notice to anyone. All such parties also agree that Lender may
modify this loan without the consent of or notice to anyone other than the
party with whom the modification is made.
INTEGRATION; AMENDMENT. This Note and the other written documents and
instruments between Borrower and Lender set forth in full the terms of
agreement between the parties and are intended as the full, complete and
exclusive agreement governing the relationship between the parties. This
Note supersedes all prior discussions, promises, representations, warranties,
agreements and understandings between the parties. This Note may not be
modified or amended, nor may any rights hereunder be waived, except in a
writing signed by the party against whom enforcement of the modification,
amendment or waiver is sought. No course of dealing between the parties, no
usage of trade, and no parol or extrinsic evidence of any nature shall be
used or be relevant to supplement, explain or modify any term or provision of
this Note or any supplement or amendment hereto. There are no oral agreements
or understandings between Borrower and Lender regarding any extension of the
maturity of this Note or making any modifications to this Note, or regarding
any other matter.
MUTUAL WAIVER OF RIGHT TO JURY TRIAL. Lender and Borrower each hereby waive
the right to trial by jury in any action or proceeding based upon, arising
out of, or in any way relating to: (i) this Note; or (ii) any other present
or future instrument or agreement between Lender and Borrower; or (iii) any
conduct, acts or omissions of Lender or Borrower or any of their directors,
officers, employees, agents, attorneys or any other persons affiliated with
Lender or Borrower; in each of the foregoing cases, whether sounding in
contract or tort or otherwise.
<PAGE>
07-26-1995 PROMISSORY NOTE PAGE 3
LOAN NO 4707 (CONTINUED)
================================================================================
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS
OF THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER
AGREES TO THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETED COPY
OF THE NOTE.
BORROWER:
CALIFORNIA AMPLIFIER, INC.|
X_______________________________________
AUTHORIZED OFFICER
LENDER:
CALIFORNIA UNITED BANK, N. A.
BY:_____________________________________
AUTHORIZED OFFICER
================================================================================
Variable Rate. Line of Credit.
LASER PRO, Reg. U.S. Pat. & T.M. Off., Ver. 3.21 (c) 1995 CFI ProServices,
Inc. All rights reserved. [CA-D20 CAAMP.LN C8.OVL]
<PAGE>
EXHIBIT 10.24
COMMERCIAL SECURITY AGREEMENT
BORROWER: CALIFORNIA AMPLIFIER, INC.
460 CALLE SAN PABLO
CAMARILLO, CA 93012
LENDER: CALIFORNIA UNITED BANK, N. A.
ENCINO
16030 VENTURA BLVD.
ENCINO, CA 91436
================================================================================
THIS COMMERCIAL SECURITY AGREEMENT IS ENTERED INTO BETWEEN CALIFORNIA
AMPLIFIER, INC. (REFERRED TO BELOW AS "GRANTOR"); AND CALIFORNIA UNITED BANK,
N. A. (REFERRED TO BELOW AS "LENDER"). FOR VALUABLE CONSIDERATION, GRANTOR
GRANTS TO LENDER A SECURITY INTEREST IN THE COLLATERAL TO SECURE THE
INDEBTEDNESS AND AGREES THAT LENDER SHALL HAVE THE RIGHTS STATED IN THIS
AGREEMENT WITH RESPECT TO THE COLLATERAL, IN ADDITION TO ALL OTHER RIGHTS
WHICH LENDER MAY HAVE BY LAW.
DEFINITIONS. The following words shall have the following meanings when used
in this Agreement. Terms not otherwise defined in this Agreement shall have
the meanings attributed to such terms in the Uniform Commercial Code. All
references to dollar amounts shall mean amounts in lawful money of the United
States of America.
AGREEMENT. The word "Agreement" means this Commercial Security Agreement, as
this Commercial Security Agreement may be amended or modified from time to
time, together with all exhibits and schedules attached to this Commercial
Security Agreement from time to time.
COLLATERAL. The word "Collateral" means the following described property of
Grantor, whether now owned or hereafter acquired, whether now existing or
hereafter arising, and wherever located:
ALL INVENTORY, RAW MATERIAL, WORK-IN-PROCESS, FINISHED GOODS HELD FOR SALE
OR LEASE, GOODS UNDER LEASE OR CONSIGNMENT HELD BY OTHERS AND MATERIALS
USED OR CONSUMED IN DEBTOR'S BUSINESS, NOW OWNED OR HEREAFTER ACQUIRED,
AND ALL ACCOUNTS, CONTRACT RIGHTS, CHATTEL PAPER, INSTRUMENTS, GENERAL
INTANGIBLES, AND RIGHTS TO PAYMENT OF EVERY KIND NOW EXISTING OR HEREAFTER
ARISING, TOGETHER WITH ALL REPOSSESSIONS AND RETURNS THEREUNDER. ALL
EQUIPMENT NOW OWNED OR HEREAFTER ACQUIRED, TOGETHER WITH ALL PROCEEDS
THEREOF. ALL PROCEEDS AND PRODUCTS OF THE FOREGOING, INCLUDING BUT NOT
LIMITED TO MONEY, DEPOSIT ACCOUNTS, GOODS, EQUIPMENT, INSURANCE PROCEEDS
AND OTHER TANGIBLE OR INTANGIBLE PROPERTY RECEIVED UPON THE SALE OR
DISPOSITION OF THE FOREGOING. ALL PRESENT AND FUTURE BOOKS AND RECORDS
RELATING TO THE FOREGOING.
In addition, the word "Collateral" includes all the following, whether now
owned or hereafter acquired, whether now existing or hereafter arising, and
wherever located:
(a) All attachments, accessions, accessories, tools, parts, supplies,
increases, and additions to and all replacements of and substitutions for
any property described above.
(b) All products and produce of any of the property described in this
Collateral section.
(c) All accounts, general intangibles, instruments, rents, monies,
payments, and all other rights, arising out of a sale, lease, or other
disposition of any of the property described in this Collateral section.
(d) All proceeds (including insurance proceeds) from the sale,
destruction, loss, or other disposition of any of the property described
in this Collateral section.
(e) All records and data relating to any of the property described in
this Collateral section, whether in the form of a writing, photograph,
microfilm, microfiche, or electronic media, together with all of Grantor's
right, title, and interest in and to all computer software required to
utilize, create, maintain, and process any such records or data on
electronic media.
EVENT OF DEFAULT. The words "Event of Default" mean and include without
limitation any of the Events of Default set forth below in the section titled
"Events of Default."
GRANTOR. The word "Grantor" means California Amplifier, Inc., its successors
and assigns
GUARANTOR. The word "Guarantor" means and includes without limitation each
and all of the guarantors, sureties, and accommodation parties in connection
with the Indebtedness.
INDEBTEDNESS. The word "Indebtedness" means the indebtedness evidenced by
the Note, including all principal and interest, together with all other
indebtedness and costs and expenses for which Grantor is responsible under
this Agreement or under any of the Related Documents. In addition, the word
"Indebtedness" includes all other obligations, debts and liabilities, plus
interest thereon, of Grantor, or any one or more of them, to Lender, as well
as all claims by Lender against Grantor, or any one or more of them, whether
existing now or later; whether they are voluntary or involuntary, due or not
due, direct or indirect, absolute or contingent, liquidated or unliquidated;
whether Grantor may be liable individually or jointly with others; whether
Grantor may be obligated as guarantor, surety, accommodation party or
otherwise; whether recovery upon such indebtedness may be or hereafter may
become barred by any statute of limitations; and whether such indebtedness
may be or hereafter may become otherwise unenforceable.
LENDER. The word "Lender" means California United Bank, N. A., its
successors and assigns.
NOTE. The word "Note" means the Borrower's promissory notes or credit
agreements, if any, evidencing Borrower's loan obligations, together with all
renewals of, extensions of, modifications of, refinancings of, consolidations
of and substitutions for the notes or credit agreements.
RELATED DOCUMENTS. The words "Related Documents" mean and include without
limitation all promissory notes, credit agreements, loan agreements,
environmental agreements, guaranties, security agreements, mortgages, deeds
of trust, and all other instruments, agreements and documents, whether now or
hereafter existing, executed in connection with the Indebtedness.
RIGHT OF SETOFF. Grantor hereby grants Lender a contractual possessory
security interest in and hereby assigns, conveys, delivers, pledges, and
transfers all of Grantor's right, title and interest in and to Grantor's
accounts with Lender (whether checking, savings, or some other account),
including all accounts held jointly with someone else and all accounts
Grantor may open in the future, excluding, however, all IRA and Keogh
accounts, and all trust accounts for which the grant of a security interest
would be prohibited by law. Grantor authorizes Lender, to the extent
permitted by applicable law, to charge or setoff all Indebtedness against any
and all such accounts.
OBLIGATIONS OF GRANTOR. Grantor warrants and covenants to Lender as follows:
PERFECTION OF SECURITY INTEREST. Grantor agrees to execute such financing
statements and to take whatever other actions are requested by Lender to
perfect and continue Lender's security interest in the Collateral. Upon
request of Lender, Grantor will deliver to Lender any and all of the
documents evidencing or constituting the Collateral, and Grantor will note
Lender's interest upon any and all chattel paper if not delivered to Lender
for possession by Lender. Grantor hereby appoints Lender as its irrevocable
attorney-in-fact for the purpose of executing any
<PAGE>
07-26-1995 COMMERCIAL SECURITY AGREEMENT PAGE 2
LOAN NO 4707 (CONTINUED)
================================================================================
documents necessary to perfect or to continue the security interest granted
in this Agreement. Lender may at any time, and without further authorization
from Grantor, file a carbon, photographic or other reproduction of any
financing statement or of this Agreement for use as a financing statement.
Grantor will reimburse Lender for all expenses for the perfection and the
continuation of the perfection of Lender's security interest in the
Collateral. Grantor promptly will notify Lender before any change in
Grantor's name including any change to the assumed business names of Grantor.
THIS IS A CONTINUING SECURITY AGREEMENT AND WILL CONTINUE IN EFFECT EVEN
THOUGH ALL OR ANY PART OF THE INDEBTEDNESS IS PAID IN FULL AND EVEN THOUGH
FOR A PERIOD OF TIME GRANTOR MAY NOT BE INDEBTED TO LENDER.
NO VIOLATION. The execution and delivery of this Agreement will not violate
any law or agreement governing Grantor or to which Grantor is a party, and
its certificate or articles of incorporation and bylaws do not prohibit any
term or condition of this Agreement.
ENFORCEABILITY OF COLLATERAL. To the extent the Collateral consists of
accounts, chattel paper, or general intangibles, the Collateral is
enforceable in accordance with its terms, is genuine, and complies with
applicable laws concerning form, content and manner of preparation and
execution, and all persons appearing to be obligated on the Collateral have
authority and capacity to contract and are in fact obligated as they appear
to be on the Collateral.
LOCATION OF THE COLLATERAL. Grantor, upon request of Lender, will deliver to
Lender in form satisfactory to Lender a schedule of real properties and
Collateral locations relating to Grantor's operations, including without
limitation the following: (a) all real property owned or being purchased by
Grantor; (b) all real property being rented or leased by Grantor; (c) all
storage facilities owned, rented, leased, or being used by Grantor; and (d)
all other properties where Collateral is or may be located. Except in the
ordinary course of its business, Grantor shall not remove the Collateral from
its existing locations without the prior written consent of Lender.
REMOVAL OF COLLATERAL. Grantor shall keep the Collateral (or to the extent
the Collateral consists of intangible property such as accounts, the records
concerning the Collateral) at Grantor's address shown above, or at such other
locations as are acceptable to Lender. Except in the ordinary course of its
business, including the sales of inventory, Grantor shall not remove the
Collateral from its existing locations without the prior written consent of
Lender. To the extent that the Collateral consists of vehicles, or other
titled property, Grantor shall not take or permit any action which would
require application for certificates of title for the vehicles outside the
State of California, without the prior written consent of Lender.
TRANSACTIONS INVOLVING COLLATERAL. Except for inventory sold or accounts
collected in the ordinary course of Grantor's business, Grantor shall not
sell, offer to sell, or otherwise transfer or dispose of the Collateral.
While Grantor is not in default under this Agreement, Grantor may sell
inventory, but only in the ordinary course of its business and only to buyers
who qualify as a buyer in the ordinary course of business. A sale in the
ordinary course of Grantor's business does not include a transfer in partial
or total satisfaction of a debt or any bulk sale. Grantor shall not pledge,
mortgage, encumber or otherwise permit the Collateral to be subject to any
lien, security interest, encumbrance, or charge, other than the security
interest provided for in this Agreement, without the prior written consent of
Lender. This includes security interests even if junior in right to the
security interests granted under this Agreement. Unless waived by Lender,
all proceeds from any disposition of the Collateral (for whatever reason)
shall be held in trust for Lender and shall not be commingled with any other
funds; provided however, this requirement shall not constitute consent by
Lender to any sale or other disposition. Upon receipt, Grantor shall
immediately deliver any such proceeds to Lender.
TITLE. Grantor represents and warrants to Lender that it holds good and
marketable title to the Collateral, free and clear of all liens and
encumbrances except for the lien of this Agreement. No financing statement
covering any of the Collateral is on file in any public office other than
those which reflect the security interest created by this Agreement or to
which Lender has specifically consented. Grantor shall defend Lender's
rights in the Collateral against the claims and demands of all other persons.
COLLATERAL SCHEDULES AND LOCATIONS. Insofar as the Collateral consists of
inventory, Grantor shall deliver to Lender, as often as Lender shall require,
such lists, descriptions, and designations of such Collateral as Lender may
require to identify the nature, extent, and location of such Collateral.
Such information shall be submitted for Grantor and each of its subsidiaries
or related companies.
MAINTENANCE AND INSPECTION OF COLLATERAL. Grantor shall maintain all
tangible Collateral in good condition and repair. Grantor will not commit or
permit damage to or destruction of the Collateral or any part of the
Collateral. Lender and its designated representatives and agents shall have
the right at all reasonable times to examine, inspect, and audit the
Collateral wherever located. Grantor shall immediately notify Lender of all
cases involving the return, rejection, repossession, loss or damage of or to
any Collateral; of any request for credit or adjustment or of any other
dispute arising with respect to the Collateral; and generally of all
happenings and events affecting the Collateral or the value or the amount of
the Collateral.
TAXES, ASSESSMENTS AND LIENS. Grantor will pay when due all taxes,
assessments and liens upon the Collateral, its use or operation, upon this
Agreement, upon any promissory note or notes evidencing the Indebtedness, or
upon any of the other Related Documents. Grantor may withhold any such
payment or may elect to contest any lien if Grantor is in good faith
conducting an appropriate proceeding to contest the obligation to pay and so
long as Lender's interest in the Collateral is not jeopardized in Lender's
sole opinion. If the Collateral is subjected to a lien which is not
discharged within fifteen (15) days, Grantor shall deposit with Lender cash,
a sufficient corporate surety bond or other security satisfactory to Lender
in an amount adequate to provide for the discharge of the lien plus any
interest, costs, attorneys' fees or other charges that could accrue as a
result of foreclosure or sale of the Collateral. In any contest Grantor
shall defend itself and Lender and shall satisfy any final adverse judgment
before enforcement against the Collateral. Grantor shall name Lender as an
additional obligee under any surety bond furnished in the contest
proceedings.
COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. Grantor shall comply promptly
with all laws, ordinances, rules and regulations of all governmental
authorities, now or hereafter in effect, applicable to the ownership,
production, disposition, or use of the Collateral. Grantor may contest in
good faith any such law, ordinance or regulation and withhold compliance
during any proceeding, including appropriate appeals, so long as Lender's
interest in the Collateral, in Lender's opinion, is not jeopardized.
HAZARDOUS SUBSTANCES. Grantor represents and warrants that the Collateral
never has been, and never will be so long as this Agreement remains a lien on
the Collateral, used for the generation, manufacture, storage,
transportation, treatment, disposal, release or threatened release of any
hazardous waste or substance, as those terms are defined in the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended,
42 U.S.C. Section 9601, et seq. ("CERCLA"), the Superfund Amendments and
Reauthorization Act of 1986, Pub. L. No. 99-499 ("SARA"), the Hazardous
Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., Chapters 6.5
through 7.7 of Division 20 of the California Health and Safety Code, Section
25100, et seq., or other applicable state or Federal laws, rules, or
regulations adopted pursuant to any of the foregoing. The terms "hazardous
waste" and "hazardous substance" shall also include, without limitation,
petroleum and petroleum by-products or any fraction thereof and asbestos.
The representations and warranties contained herein are based on Grantor's
due diligence in investigating the Collateral for hazardous wastes and
substances. Grantor hereby (a) releases and waives any future claims against
Lender for indemnity or contribution in the event Grantor becomes liable for
cleanup or other costs under any such laws, and (b) agrees to indemnify and
hold harmless Lender against any and all claims and losses resulting from a
breach of this provision of this Agreement. This obligation to indemnify
shall survive the payment of the Indebtedness and the satisfaction of this
Agreement.
MAINTENANCE OF CASUALTY INSURANCE. Grantor shall procure and maintain all
risks insurance, including without limitation fire, theft and liability
coverage together with such other insurance as Lender may require with
respect to the Collateral, in form, amounts, coverages and basis
<PAGE>
07-26-1995 COMMERCIAL SECURITY AGREEMENT PAGE 3
LOAN NO 4707 (CONTINUED)
================================================================================
reasonably acceptable to Lender and issued by a company or companies
reasonably acceptable to Lender. Grantor, upon request of Lender, will
deliver to Lender from time to time the policies or certificates of insurance
in form satisfactory to Lender, including stipulations that coverages will
not be cancelled or diminished without at least ten (10) days' prior written
notice to Lender and not including any disclaimer of the insurer's liability
for failure to give such a notice. Each insurance policy also shall include
an endorsement providing that coverage in favor of Lender will not be
impaired in any way by any act, omission or default of Grantor or any other
person. In connection with all policies covering assets in which Lender holds
or is offered a security interest, Grantor will provide Lender with such loss
payable or other endorsements as Lender may require. If Grantor at any time
fails to obtain or maintain any insurance as required under this Agreement,
Lender may (but shall not be obligated to) obtain such insurance as Lender
deems appropriate, including if it so chooses "single interest insurance,"
which will cover only Lender's interest in the Collateral.
APPLICATION OF INSURANCE PROCEEDS. Grantor shall promptly notify Lender of
any loss or damage to the Collateral. Lender may make proof of loss if
Grantor fails to do so within fifteen (15) days of the casualty. All
proceeds of any insurance on the Collateral, including accrued proceeds
thereon, shall be held by Lender as part of the Collateral. If Lender
consents to repair or replacement of the damaged or destroyed Collateral,
Lender shall, upon satisfactory proof of expenditure, pay or reimburse
Grantor from the proceeds for the reasonable cost of repair or restoration.
If Lender does not consent to repair or replacement of the Collateral, Lender
shall retain a sufficient amount of the proceeds to pay all of the
Indebtedness, and shall pay the balance to Grantor. Any proceeds which have
not been disbursed within six (6) months after their receipt and which
Grantor has not committed to the repair or restoration of the Collateral
shall be used to prepay the Indebtedness.
INSURANCE RESERVES. Lender may require Grantor to maintain with Lender
reserves for payment of insurance premiums, which reserves shall be created
by monthly payments from Grantor of a sum estimated by Lender to be
sufficient to produce, at least fifteen (15) days before the premium due
date, amounts at least equal to the insurance premiums to be paid. If
fifteen (15) days before payment is due, the reserve funds are insufficient,
Grantor shall upon demand pay any deficiency to Lender. The reserve funds
shall be held by Lender as a general deposit and shall constitute a
non-interest-bearing account which Lender may satisfy by payment of the
insurance premiums required to be paid by Grantor as they become due. Lender
does not hold the reserve funds in trust for Grantor, and Lender is not the
agent of Grantor for payment of the insurance premiums required to be paid by
Grantor. The responsibility for the payment of premiums shall remain
Grantor's sole responsibility.
INSURANCE REPORTS. Grantor, upon request of Lender, shall furnish to Lender
reports on each existing policy of insurance showing such information as
Lender may reasonably request including the following: (a) the name of the
insurer; (b) the risks insured; (c) the amount of the policy; (d) the
property insured; (e) the then current value on the basis of which insurance
has been obtained and the manner of determining that value; and (f) the
expiration date of the policy. In addition, Grantor shall upon request by
Lender (however not more often than annually) have an independent appraiser
satisfactory to Lender determine, as applicable, the cash value or
replacement cost of the Collateral.
GRANTOR'S RIGHT TO POSSESSION. Until default, Grantor may have possession of
the tangible personal property and beneficial use of all the Collateral and
may use it in any lawful manner not inconsistent with this Agreement or the
Related Documents, provided that Grantor's right to possession and beneficial
use shall not apply to any Collateral where possession of the Collateral by
Lender is required by law to perfect Lender's security interest in such
Collateral. If Lender at any time has possession of any Collateral, whether
before or after an Event of Default, Lender shall be deemed to have exercised
reasonable care in the custody and preservation of the Collateral if Lender
takes such action for that purpose as Grantor shall request or as Lender, in
Lender's sole discretion, shall deem appropriate under the circumstances, but
failure to honor any request by Grantor shall not of itself be deemed to be a
failure to exercise reasonable care. Lender shall not be required to take
any steps necessary to preserve any rights in the Collateral against prior
parties, nor to protect, preserve or maintain any security interest given to
secure the Indebtedness.
EXPENDITURES BY LENDER. If not discharged or paid when due, Lender may (but
shall not be obligated to) discharge or pay any amounts required to be
discharged or paid by Grantor under this Agreement, including without
limitation all taxes, liens, security interests, encumbrances, and other
claims, at any time levied or placed on the Collateral. Lender also may (but
shall not be obligated to) pay all costs for insuring, maintaining and
preserving the Collateral. All such expenditures incurred or paid by Lender
for such purposes will then bear interest at the rate charged under the Note
from the date incurred or paid by Lender to the date of repayment by Grantor.
All such expenses shall become a part of the Indebtedness and, at Lender's
option, will (a) be payable on demand, (b) be added to the balance of the
Note and be apportioned among and be payable with any installment payments to
become due during either (i) the term of any applicable insurance policy or
(ii) the remaining term of the Note, or (c) be treated as a balloon payment
which will be due and payable at the Note's maturity. This Agreement also
will secure payment of these amounts. Such right shall be in addition to all
other rights and remedies to which Lender may be entitled upon the occurrence
of an Event of Default.
EVENTS OF DEFAULT. Each of the following shall constitute an Event of
Default under this Agreement:
DEFAULT ON INDEBTEDNESS. Failure of Grantor to make any payment when due on
the Indebtedness.
OTHER DEFAULTS. Failure of Grantor to comply with or to perform any other
term, obligation, covenant or condition contained in this Agreement or in any
of the Related Documents or in any other agreement between Lender and
Grantor.
DEFAULT IN FAVOR OF THIRD PARTIES. Should Borrower or any Grantor default
under any loan, extension of credit, security agreement, purchase or sales
agreement, or any other agreement, in favor of any other creditor or person
that may materially affect any of Borrower's property or Borrower's or any
Grantor's ability to repay the Loans or perform their respective obligations
under this Agreement or any of the Related Documents.
FALSE STATEMENTS. Any warranty, representation or statement made or
furnished to Lender by or on behalf of Grantor under this Agreement, the Note
or the Related Documents is false or misleading in any material respect,
either now or at the time made or furnished.
DEFECTIVE COLLATERALIZATION. This Agreement or any of the Related Documents
ceases to be in full force and effect (including failure of any collateral
documents to create a valid and perfected security interest or lien) at any
time and for any reason.
INSOLVENCY. The dissolution or termination of Grantor's existence as a going
business, the insolvency of Grantor, the appointment of a receiver for any
part of Grantor's property, any assignment for the benefit of creditors, any
type of creditor workout, or the commencement of any proceeding under any
bankruptcy or insolvency laws by or against Grantor.
CREDITOR OR FORFEITURE PROCEEDINGS. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Grantor or by any
governmental agency against the Collateral or any other collateral securing
the Indebtedness. This includes a garnishment of any of Grantor's deposit
accounts with Lender.
EVENTS AFFECTING GUARANTOR. Any of the preceding events occurs with respect
to any Guarantor of any of the Indebtedness or such Guarantor dies or becomes
incompetent.
ADVERSE CHANGE. A material adverse change occurs in Grantor's financial
condition, or Lender believes the prospect of payment or performance of the
Indebtedness is impaired.
INSECURITY. Lender, in good faith, deems itself insecure.
RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this
Agreement, at any time thereafter, Lender shall have all the rights of a
secured party under the California Uniform Commercial Code. In addition and
without limitation, Lender may exercise any one or more of the
<PAGE>
07-26-1995 COMMERCIAL SECURITY AGREEMENT PAGE 4
LOAN NO 4707 (CONTINUED)
================================================================================
following rights and remedies:
ACCELERATE INDEBTEDNESS. Lender may declare the entire Indebtedness,
including any prepayment penalty which Grantor would be required to pay,
immediately due and payable, without notice.
ASSEMBLE COLLATERAL. Lender may require Grantor to deliver to Lender all
or any portion of the Collateral and any and all certificates of title
and other documents relating to the Collateral. Lender may require
Grantor to assemble the Collateral and make it available to Lender at a
place to be designated by Lender. Lender also shall have full power to
enter upon the property of Grantor to take possession of and remove the
Collateral. If the Collateral contains other goods not covered by this
Agreement at the time of repossession, Grantor agrees Lender may take
such other goods, provided that Lender makes reasonable efforts to return
them to Grantor after repossession.
SELL THE COLLATERAL. Lender shall have full power to sell, lease,
transfer, or otherwise deal with the Collateral or proceeds thereof in
its own name or that of Grantor. Lender may sell the Collateral at
public auction or private sale. Unless the Collateral threatens to
decline speedily in value or is of a type customarily sold on a recognized
market, Lender will give Grantor reasonable notice of the time after which
any private sale or any other intended disposition of the Collateral is to
be made. The requirements of reasonable notice shall be met if such
notice is given at least ten (10) days, or such lesser time as required by
state law, before the time of the sale or disposition. All expenses
relating to the disposition of the Collateral, including without
limitation the expenses of retaking, holding, insuring, preparing for sale
and selling the Collateral, shall become a part of the Indebtedness
secured by this Agreement and shall be payable on demand, with interest at
the Note rate from date of expenditure until repaid.
APPOINT RECEIVER. To the extent permitted by applicable law, Lender shall
have the following rights and remedies regarding the appointment of a
receiver: (a) Lender may have a receiver appointed as a matter of right,
(b) the receiver may be an employee of Lender and may serve without bond,
and (c) all fees of the receiver and his or her attorney shall become part
of the Indebtedness secured by this Agreement and shall be payable on
demand, with interest at the Note rate from date of expenditure until
repaid.
COLLECT REVENUES, APPLY ACCOUNTS. Lender, either itself or through a
receiver, may collect the payments, rents, income, and revenues from the
Collateral. Lender may at any time in its discretion transfer any
Collateral into its own name or that of its nominee and receive the
payments, rents, income, and revenues therefrom and hold the same as
security for the Indebtedness or apply it to payment of the Indebtedness
in such order of preference as Lender may determine. Insofar as the
Collateral consists of accounts, general intangibles, insurance policies,
instruments, chattel paper, choses in action, or similar property, Lender
may demand, collect, receipt for, settle, compromise, adjust, sue for,
foreclose, or realize on the Collateral as Lender may determine, whether
or not Indebtedness or Collateral is then due. For these purposes,
Lender may, on behalf of and in the name of Grantor, receive, open and
dispose of mail addressed to Grantor; change any address to which mail and
payments are to be sent; and endorse notes, checks, drafts, money orders,
documents of title, instruments and items pertaining to payment, shipment,
or storage of any Collateral. To facilitate collection, Lender may notify
account debtors and obligors on any Collateral to make payments directly
to Lender.
OBTAIN DEFICIENCY. If Lender chooses to sell any or all of the
Collateral, Lender may obtain a judgment against Grantor for any
deficiency remaining on the Indebtedness due to Lender after application
of all amounts received from the exercise of the rights provided in this
Agreement. Grantor shall be liable for a deficiency even if the
transaction described in this subsection is a sale of accounts or chattel
paper.
OTHER RIGHTS AND REMEDIES. Lender shall have all the rights and remedies of
a secured creditor under the provisions of the Uniform Commercial Code, as
may be amended from time to time. In addition, Lender shall have and may
exercise any or all other rights and remedies it may have available at law,
in equity, or otherwise.
CUMULATIVE REMEDIES. All of Lender's rights and remedies, whether evidenced
by this Agreement or the Related Documents or by any other writing, shall be
cumulative and may be exercised singularly or concurrently. Election by
Lender to pursue any remedy shall not exclude pursuit of any other remedy,
and an election to make expenditures or to take action to perform an
obligation of Grantor under this Agreement, after Grantor's failure to
perform, shall not affect Lender's right to declare a default and to exercise
its remedies.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part
of this Agreement:
AMENDMENTS. This Agreement, together with any Related Documents, constitutes
the entire understanding and agreement of the parties as to the matters set
forth in this Agreement. No alteration of or amendment to this Agreement
shall be effective unless given in writing and signed by the party or parties
sought to be charged or bound by the alteration or amendment.
APPLICABLE LAW. This Agreement has been delivered to Lender and accepted by
Lender in the State of California. If there is a lawsuit, Grantor agrees
upon Lender's request to submit to the jurisdiction of the courts of Los
Angeles County, State of California. Subject to the provisions on
arbitration, this Agreement shall be governed by and construed in accordance
with the laws of the State of California.
ARBITRATION. LENDER AND GRANTOR AGREE THAT ALL DISPUTES, CLAIMS AND
CONTROVERSIES BETWEEN THEM, WHETHER INDIVIDUAL, JOINT, OR CLASS IN NATURE,
ARISING FROM THIS AGREEMENT OR OTHERWISE, INCLUDING WITHOUT LIMITATION
CONTRACT AND TORT DISPUTES, SHALL BE ARBITRATED PURSUANT TO THE RULES OF THE
AMERICAN ARBITRATION ASSOCIATION, UPON REQUEST OF EITHER PARTY. No act to
take or dispose of any Collateral shall constitute a waiver of this
arbitration agreement or be prohibited by this arbitration agreement. This
includes, without limitation, obtaining injunctive relief or a temporary
restraining order; invoking a power of sale under any deed of trust or
mortgage; obtaining a writ of attachment or imposition of a receiver; or
exercising any rights relating to personal property, including taking or
disposing of such property with or without judicial process pursuant to
Article 9 of the Uniform Commercial Code. Any disputes, claims, or
controversies concerning the lawfulness or reasonableness of any act, or
exercise of any right, concerning any Collateral, including any claim to
rescind, reform, or otherwise modify any agreement relating to the
Collateral, shall also be arbitrated, provided however that no arbitrator
shall have the right or the power to enjoin or restrain any act of any party.
Lender and Grantor agree that in the event of an action for judicial
foreclosure pursuant to California Code of Civil Procedure Section 726, or
any similar provision in any other state, the commencement of such an action
will not constitute a waiver of the right to arbitrate and the court shall
refer to arbitration as much of such action, including counterclaims, as
lawfully may be referred to arbitration. Judgment upon any award rendered by
any arbitrator may be entered in any court having jurisdiction. Nothing in
this Agreement shall preclude any party from seeking equitable relief from a
court of competent jurisdiction. The statute of limitations, estoppel,
waiver, laches, and similar doctrines which would otherwise be applicable in
an action brought by a party shall be applicable in any arbitration
proceeding, and the commencement of an arbitration proceeding shall be deemed
the commencement of an action for these purposes. The Federal Arbitration
Act shall apply to the construction, interpretation, and enforcement of this
arbitration provision.
ATTORNEYS' FEES; EXPENSES. Grantor agrees to pay upon demand all of Lender's
costs and expenses, including attorneys' fees and Lender's legal expenses,
incurred in connection with the enforcement of this Agreement. Lender may
pay someone else to help enforce this Agreement, and Grantor shall pay the
costs and expenses of such enforcement. Costs and expenses include Lender's
attorneys' fees and legal expenses whether or not there is a lawsuit,
including attorneys' fees and legal expenses for bankruptcy proceedings (and
including efforts to modify or vacate any automatic stay or injunction),
appeals, and any anticipated post-judgment collection services. Grantor also
shall pay all court costs and such additional fees as may be directed by the
court.
CAPTION HEADINGS. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the provisions of
this Agreement.
<PAGE>
07-26-1995 COMMERCIAL SECURITY AGREEMENT PAGE 5
LOAN NO 4707 (CONTINUED)
================================================================================
MULTIPLE PARTIES; CORPORATE AUTHORITY. All obligations of Grantor under this
Agreement shall be joint and several, and all references to Grantor shall
mean each and every Grantor. This means that each of the Borrowers signing
below is responsible for ALL obligations in this Agreement.
NOTICES. All notices required to be given under this Agreement shall be
given in writing, may be sent by telefacsimilie, and shall be effective when
actually delivered or when deposited with a nationally recognized overnight
courier or deposited in the United States mail, first class, postage prepaid,
addressed to the party to whom the notice is to be given at the address shown
above. Any party may change its address for notices under this Agreement by
giving formal written notice to the other parties, specifying that the
purpose of the notice is to change the party's address. To the extent
permitted by applicable law, if there is more than one Grantor, notice to any
Grantor will constitute notice to all Grantors. For notice purposes, Grantor
will keep Lender informed at all times of Grantor's current address(es).
POWER OF ATTORNEY. Grantor hereby appoints Lender as its true and lawful
attorney-in-fact, irrevocably, with full power of substitution to do the
following: (a) to demand, collect, receive, receipt for, sue and recover all
sums of money or other property which may now or hereafter become due, owing
or payable from the Collateral; (b) to execute, sign and endorse any and all
claims, instruments, receipts, checks, drafts or warrants issued in payment
for the Collateral; (c) to settle or compromise any and all claims arising
under the Collateral, and, in the place and stead of Grantor, to execute and
deliver its release and settlement for the claim; and (d) to file any claim
or claims or to take any action or institute or take part in any proceedings,
either in its own name or in the name of Grantor, or otherwise, which in the
discretion of Lender may seem to be necessary or advisable. This power is
given as security for the Indebtedness, and the authority hereby conferred is
and shall be irrevocable and shall remain in full force and effect until
renounced by Lender.
PREFERENCE PAYMENTS. Any monies Lender pays because of an asserted
preference claim in Borrower's bankruptcy will become a part of the
Indebtedness and, at Lender's option, shall be payable by Borrower as
provided above in the "EXPENDITURES BY LENDER" paragraph.
SEVERABILITY. If a court of competent jurisdiction finds any provision of
this Agreement to be invalid or unenforceable as to any person or
circumstance, such finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances. If feasible, any
such offending provision shall be deemed to be modified to be within the
limits of enforceability or validity; however, if the offending provision
cannot be so modified, it shall be stricken and all other provisions of this
Agreement in all other respects shall remain valid and enforceable.
SUCCESSOR INTERESTS. Subject to the limitations set forth above on transfer
of the Collateral, this Agreement shall be binding upon and inure to the
benefit of the parties, their successors and assigns.
WAIVER. Lender shall not be deemed to have waived any rights under this
Agreement unless such waiver is given in writing and signed by Lender. No
delay or omission on the part of Lender in exercising any right shall operate
as a waiver of such right or any other right. A waiver by Lender of a
provision of this Agreement shall not prejudice or constitute a waiver of
Lender's right otherwise to demand strict compliance with that provision or
any other provision of this Agreement. No prior waiver by Lender, nor any
course of dealing between Lender and Grantor, shall constitute a waiver of
any of Lender's rights or of any of Grantor's obligations as to any future
transactions. Whenever the consent of Lender is required under this
Agreement, the granting of such consent by Lender in any instance shall not
constitute continuing consent to subsequent instances where such consent is
required and in all cases such consent may be granted or withheld in the sole
discretion of Lender.
WAIVER OF CO-OBLIGOR'S RIGHTS. If more than one person is obligated for the
Indebtedness, Borrower irrevocably waives, disclaims and relinquishs all
claims against such other person which Borrower has or would otherwise have
by virtue of payment of the Indebtedness or any part thereof, specifically
including but not limited to all rights of indemnity, contribution or
exoneration.
GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS COMMERCIAL
SECURITY AGREEMENT, AND GRANTOR AGREES TO ITS TERMS. THIS AGREEMENT IS DATED
JULY 26, 1995.
GRANTOR:
CALIFORNIA AMPLIFIER, INC.|
X_______________________________________
AUTHORIZED OFFICER
LENDER:
CALIFORNIA UNITED BANK, N. A.
BY:_____________________________________
AUTHORIZED OFFICER
================================================================================
LASER PRO, Reg. U.S. Pat. & T.M. Off., Ver. 3.21 (c) 1995 CFI ProServices,
Inc. All rights reserved. [CA-E40 CAAMP.LN C8.OVL]
<PAGE>
EXHIBIT 10.25
FIRST AMENDMENT TO BUSINESS LOAN AGREEMENT
THIS AGREEMENT, dated as of March 11, 1996, is entered into
by and between CALIFORNIA AMPLIFIER, INC., ("Borrower"), and
CALIFORNIA UNITED BANK, N.A., a national banking association
("Lender").
RECITALS:
A. The Borrower and the Lender are parties to a Business Loan
Agreement, dated as of July 26, 1995, (the "Agreement").
B. Borrower and Lender have agreed to amend certain terms and
conditions of the Agreement in certain respects.
AGREEMENT:
Borrower and Lender agree as follows:
1. Each of the terms defined in the Agreement, unless otherwise
defined herein, shall have the same meaning when used herein.
1
<PAGE>
2. The following section is hereby added to the Agreement:
LETTER OF CREDIT SUBLIMIT. As a sublimit under the Line of
Credit, Borrower may obtain commercial and standby letters of credit
(each individually a "Letter of Credit" and collectively the "Letters
of Credit"), in form and substance satisfactory to Lender, in an
aggregate amount not to exceed at any one time $100,000.00. No Letter
of Credit may expire later than sixty (60) days after the maturity date
of the Line of Credit.
For purposes of calculating the amount of advances available
under the Line of Credit, 100% of the face amount of the outstanding
Letters of Credit shall be deemed outstanding advances under the Line of
Credit and therefore subtracted from the amount available under the Line
of Credit. Borrower shall execute Lender's standard form letter of credit
application and agreement, and such other documents as Lender may
reasonable require, in connection with the Letter of Credit.
Borrower shall pay to Lender for each Letter of Credit, fees equal
to Lender's fees as determined by Lender. Borrower agrees and
acknowledges that Lender, may from time to time, without notice to
Borrower, increase such fees, and that Borrower shall be obligated to
pay such increased fees upon receipt of an invoice from Lender relative
thereto.
3. Except as specifically amended above, the Agreement shall remain in
full force and effect and is hereby ratified and confirmed. This
Amendment and the Agreement shall be read together, as one document.
4. Borrower represents and warrants as follows:
(a) Each of the representations and warranties contained in the
Agreement, as amended hereby, is hereby reaffirmed as of the date hereof;
2
<PAGE>
(b) The execution, delivery and performance of this Amendment and
any note required hereunder are within the Borrower's powers, have been
duly authorized by all necessary action, have received all necessary
governmental approvals, if any, and do not contravene any law or any
contractual restriction binding on Borrower; and
(c) No event has occurred and is continuing or would result from
this Amendment that constitutes an Event of Default under the Agreement,
or would constitute an Event of Default but for the requirement that
notice be given or time elapse or both.
WITNESS the due execution hereof as of the date first written above.
CALIFORNIA AMPLIFIER, INC.
BY: /s/ Michael R. Ferron
-----------------------------------
Authorized Officer
CALIFORNIA UNITED BANK, N.A.
BY:
-----------------------------------
Karen Brown, Vice President
3
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> EXHIBIT 27
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND THE CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEAR-ENDED MARCH 2, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-02-1996
<PERIOD-START> MAR-05-1995
<PERIOD-END> MAR-02-1996
<CASH> 11,637
<SECURITIES> 0
<RECEIVABLES> 5,862
<ALLOWANCES> 1,217
<INVENTORY> 6,744
<CURRENT-ASSETS> 24,625
<PP&E> 14,447
<DEPRECIATION> 8,287
<TOTAL-ASSETS> 32,573
<CURRENT-LIABILITIES> 8,882
<BONDS> 0
0
0
<COMMON> 13,389
<OTHER-SE> 9,535<F1>
<TOTAL-LIABILITY-AND-EQUITY> 32,573
<SALES> 61,590
<TOTAL-REVENUES> 61,590
<CGS> 40,637
<TOTAL-COSTS> 13,456
<OTHER-EXPENSES> (360)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 219
<INCOME-PRETAX> 7,638
<INCOME-TAX> 2,680
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,958
<EPS-PRIMARY> .41
<EPS-DILUTED> 0<F2>
<FN>
<F1>RETAINED EARNINGS
<F2>NO FULL DILUTED EPS PRESENTED
</FN>
</TABLE>
