<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM 10-Q
------------------
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended June 30, 1994
COMMISSION FILE NO. 1-4474
--------------------------
OAK INDUSTRIES INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 36-1569000
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification Number)
BAY COLONY CORPORATE CENTER
1000 WINTER STREET
WALTHAM, MASSACHUSETTS 02154
(Address of principal executive offices)
(617) 890-0400
(Registrant's telephone number)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes /X/ No / /
Indicate number of shares outstanding of each of the issuer's classes of
Common Stock, as of the latest practicable date.
As of June 30, 1994, the Company had outstanding 17,266,355 shares of Common
Stock, $0.01 par value per share.
=============================================================================
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM I. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
ASSETS
<TABLE>
<CAPTION>
June 30, 1994 December 31, 1993
(Unaudited)
--------------------- ---------------------
<S> <C> <C> <C> <C>
Current Assets:
Cash and cash equivalents....................... $ 33,304 $ 27,367
Receivables, less reserves...................... 37,007 27,753
Inventories:
Raw materials................................. $ 9,916 $ 8,736
Work in process............................... 15,713 15,419
Finished goods................................ 8,721 34,350 7,170 31,325
-------- ---------
Other current assets............................ 9,960 10,013
-------- --------
Total current assets......................... 114,621 96,458
Plant & Equipment, at cost........................ 98,813 91,373
Less - Accumulated depreciation................... (60,925) 37,888 (57,944) 33,429
-------- ---------
Deferred Income Taxes............................. 22,400 22,400
Goodwill and Other Intangible Assets, less
accumulated amortization of $6,984 and $5,839... 77,750 70,999
Other Assets...................................... 14,989 14,441
-------- --------
Total Assets................................. $267,648 $237,727
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt............... $ 8,920 $ 1,546
Accounts payable................................ 11,600 8,567
Accrued liabilities............................. 19,749 16,770
-------- --------
Total current liabilities.................... 40,269 26,883
Other Liabilities................................. 5,985 7,535
Long-term Debt.................................... 56,909 61,549
Minority Interest................................. 19,474 14,841
Stockholders' Equity:
Common stock.................................... $ 173 $ 172
Additional paid-in capital...................... 281,015 280,467
Accumulated deficit............................. (134,172) (151,850)
Other........................................... (2,005) 145,011 (1,870) 126,919
--------- -------- --------- --------
Total Liabilities and Stockholders' Equity... $267,648 $237,727
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
CONSOLIDATED STATEMENT OF OPERATIONS
(Dollars in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months For the Six Months
Ended June 30, Ended June 30,
---------------------- ----------------------
1994 1993 1994 1993
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales............................................ $ 65,681 $ 58,223 $127,466 $117,446
Costs, expenses and other income (expense):
Cost of sales...................................... (40,672) (38,431) (79,892) (78,523)
Selling, general and administrative expenses....... (10,989) (9,841) (21,503) (19,948)
Interest expense................................... (1,745) (1,912) (3,481) (3,956)
Interest income.................................... 280 178 502 348
Equity in net income of affiliated companies....... 542 477 1,035 829
Other income (expense)............................. (272) (524) (595) (922)
-------- -------- -------- --------
Total costs, expenses and other income (expense). (52,856) (50,053) (103,934) (102,172)
-------- -------- -------- --------
Income from continuing operations before income
taxes and minority interest......................... 12,825 8,170 23,532 15,274
Income taxes....................................... (92) (662) (1,221) (1,220)
Minority interest in net income of subsidiaries.... (2,447) (1,943) (4,633) (3,474)
-------- -------- -------- --------
Net income........................................... $ 10,286 $ 5,565 $ 17,676 $ 10,580
======== ======== ======== ========
Income per common share:
Primary............................................ $ .56 $ .31 $ .97 $ .59
======== ======== ======== ========
Fully diluted...................................... $ .56 $ .30 $ .97 $ .58
======== ======== ======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------
1994 1993
-------- --------
<S> <C> <C>
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS FROM:
OPERATING ACTIVITIES:
Income from continuing operations........................... $ 17,678 $ 10,580
Adjustments to reconcile income from continuing operations
to net cash provided by continuing operations:
Depreciation and amortization........................... 5,204 5,237
Change in minority interest............................. 4,633 3,474
Change in assets and liabilities, net of effects
from acquisition of businesses........................ (5,595) (5,288)
Other................................................... (2,019) (804)
-------- --------
Net cash provided by continuing operations.................... 19,901 13,199
-------- --------
INVESTING ACTIVITIES:
Capital expenditures........................................ (3,024) (3,894)
Acquisition of businesseses................................. (8,309) (1,594)
Other....................................................... 253 145
-------- --------
Net cash used in investing activities......................... (11,080) (5,343)
-------- --------
FINANCING ACTIVITIES:
Principal repayments on long-term borrowings................ (3,153) (15,148)
Reduction in cash restricted for letter of credit........... -- 6,000
Other....................................................... 188 331
-------- --------
Net cash used in financing activities......................... (2,965) (8,817)
-------- --------
Effect of exchange rate changes............................... 81 (236)
-------- --------
CASH AND CASH EQUIVALENTS:
Net change during the period................................ 5,937 (1,197)
Balance, beginning of period................................ 27,367 18,937
-------- --------
Balance, end of period...................................... $ 33,304 $ 17,740
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
OAK INDUSTRIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. The condensed consolidated financial statements have been prepared by Oak
Industries Inc. (the "Company"), without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information
and footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed
or omitted pursuant to such rules and regulations. The Company believes that
the disclosures made in this report are adequate to make the information
presented not misleading. It is suggested that these condensed financial
statements be read in conjunction with the financial statements and the notes
thereto included in the Company's latest annual report on Form 10-K. In the
opinion of the Company, all adjustments, consisting only of normal recurring
adjustments, necessary to present fairly the financial position of Oak
Industries Inc. and subsidiaries as of June 30, 1994 and December 31, 1993,
the results of their operations for the three and six month periods ended June
30, 1994 and 1993 and cash flows for the six month periods ending June 30,
1994 and 1993, have been included. The results of operations for such interim
periods are not necessarily indicative of the results for the full year.
2. Earnings per common share are based on the weighted average number of
shares of common stock and common stock equivalents outstanding as follows:
<TABLE>
<CAPTION>
For the Three Months For the Six Months
Ended June 31, Ended June 30,
------------------------ ------------------------
1994 1993 1994 1993
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Primary 18,315,604 18,120,030 18,289,291 18,033,650
Fully diluted 18,316,858 18,300,733 18,312,974 18,295,991
</TABLE>
3. Interest paid on debt for the three months ended June 30, 1994 and 1993
was $1,669,000 and $1,714,000 respectively, and for the six months ended June
30, 1994 and 1993 was $2,745,000 and $3,393,000, respectively. Income taxes
paid during the three months ended June 30, 1994 and 1993 were $605,000 and
$1,288,000, respectively, and during the six months ended June 30, 1994 and
1993 were $740,000 and $2,173,000, respectively.
4. On June 10, 1994, the Company's subsidiary, Gilbert Engineering Co., Inc.
("Gilbert"), acquired all of the outstanding common stock of Cabel-Con A/S
("Cabel-Con"), a Danish manufacturer of connectors for the worldwide cable
television markets, for $9,250,000. Cabel-Con had cash of $941,000 at the
time of the acquisition. The acquisition was financed by borrowing on
Gilbert's revolving credit facility. Concurrent with the acquisition, Gilbert
paid off $2,625,250 of Cabel-Con's bank borrowings. The acquisition was
accounted for as a purchase and, accordingly, operating results of this
business subsequent to the date of acquisition were included in the Company's
consolidated statement of operations. Substantially all of the goodwill
resulting from this acquisition is being amortized over 40 years.
5. Effective June 10, 1994, the credit agreement between Gilbert and General
Electric Capital Corporation was amended. Interest rates on all borrowings
were reduced by 0.25% per annum, and if Gilbert meets certain performance
criteria during 1994, the rates will be reduced by an additional 0.25% per
annum effective January 1, 1995. Additionally, the amount of borrowings
available under the revolving credit facility of $18,250,000 will now be
reduced by $2,062,500 per quarter for the first three quarters of 1997 with
the facility expiring on December 23, 1997.
6. As a result of a new state income tax law enacted during the second
quarter of 1994, the Company's income tax liability has been reduced and a
benefit of $900,000 recorded on the income taxes line in the Consolidated
Statement of Operations.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
This report has been prepared pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information normally included in
annual reports has been condensed or omitted pursuant to such rules and
regulations. It is suggested that this report be read in conjunction with the
Company's latest annual report on Form 10-K, a copy of which may be obtained
by writing to Oak Industries Inc., Bay Colony Corporate Center, 1000 Winter
Street, Waltham, MA 02154.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash increased by $5.9 million during the six month period to
$33.3 million at June 30, 1994. Operations generated $19.9 million of cash
during the six months ended June 30, 1994 compared to $13.2 million for the
same period in the prior year. The Company used $11.1 million in investing
activities, including $3.0 million for capital equipment, and $8.3 million of
net cash to acquire Cabel-Con A/S, a Danish manufacturer of connectors for the
worldwide cable television markets. Cash of $3.2 million was used to repay
long-term borrowings.
Effective June 10, 1994, the credit agreement between Gilbert and General
Electric Capital Corporation was amended. Interest rates on all borrowings
were reduced by 0.25% per annum, and if Gilbert meets certain performance
criteria during 1994, the rates will be reduced by an additional 0.25% per
annum effective January 1, 1995. Additionally, the amount of borrowings
available under the revolving credit facility of $18.25 million will now be
reduced by approximately $2.1 million per quarter for the first three quarters
of 1997 with the facility expiring on December 23, 1997.
At June 30, 1994, the Company had cash and unused lines of credit totaling
$70.9 million of which $11.3 million was available only to Gilbert and $59.6
million was available to the Company for general corporate purposes including
acquisitions. The Company believes its current financial resources are
sufficient to meet its continuing operating requirements, service its long-
term debt, and provide for future growth.
Although the Company operates internally with several businesses
functioning as profit centers, these businesses are also managed as a group.
That is, if a given business is performing strongly, corporate management may
use this opportunity to invest additional funds in product development and
marketing in another business. Certain agreements applicable to Gilbert limit
Gilbert's ability to make distributions or advances to the Company.
RESULTS OF OPERATIONS
The Company's operations are conducted in two industry segments, the
Components Segment and the Other Segment. The Company's Components Segment
manufactures connectors for CATV systems and other precision applications,
frequency control devices, controls for gas and electric appliances,
electromechanical switches and other products which generally have the common
function of controlling or regulating the flow of energy. The Other Segment
is composed of the Company's railway maintenance equipment and emergency
lighting divisions.
Second Quarter Results
Consolidated sales for the second quarter of 1994 were $65.7 million, a
$7.5 million increase, or 12.8 percent, from 1993. Components Segment sales
increased $7.5 million, or 14.3 percent, and Other Segment sales were the same
as the second quarter of 1993 (see discussion under "Segment Data").
Consolidated net income for the three months ending June 30, 1994 was $10.3
million compared to $5.6 million for the second quarter of 1993. Included in
1994 net income was a nonrecurring gain of $0.9 million resulting from a state
income tax law change. Exclusive of this nonrecurring gain, income increased
$3.8 million.
This $3.8 million increase in profitability arises from a $4.2 million
increase in segment operating profitability (see discussion under "Segment
Data"). Income tax expense, exclusive of the nonrecurring gain, increased
$0.3 million due to higher foreign and state taxes, reflecting higher earnings
levels.
<TABLE>
<CAPTION>
Segment Data ($ millions) Sales Operating Income
-------------- ----------------
1994 1993 1994 1993
----- ----- ----- -----
<S> <C> <C> <C> <C>
Components.............. $60.1 $52.6 $14.2 $10.0
Other................... 5.6 5.6 0.8 0.8
</TABLE>
Components Segment sales increased $7.5 million, or 14.3 percent, compared
to the second quarter of 1993. Sales of communications products increased $5.0
million, or 16.3 percent, due primarily to strong sales of connector products.
Sales of controls products increased $2.5 million, or 11.5 percent, due
primarily to strong sales of appliance controls. Components Segment's order
backlog was $50.9 million at quarter-end, up $6.3 million from the previous
year.
Operating income for the Components Segment increased $4.2 million, or 41.3
percent, from the second quarter of 1993 due primarily to additional profits
resulting from the sales increase discussed above and an increase in sales of
higher margin products.
Other Segment sales were the same as the second quarter of 1993. Operating
income also remained unchanged. Order backlog for the segment was $0.4
million at June 30, 1994, unchanged from June 30, 1993.
Consolidated gross profit increased as a percentage of sales in the second
quarter of 1994 to 38.1 percent from 34.0 percent in the comparable 1993
period due to higher sales volumes of higher margin products and productivity
enhancements.
Six Months Results
Consolidated sales for the first six months of 1994 were $127.5 million, a
$10.0 million increase, or 8.5 percent, from 1993. Components Segment sales
increased $8.8 million, or 8.3 percent, and Other Segment sales increased $1.2
million, or 11.3 percent (see discussion under "Segment Data").
Net income during the first half of 1994 was $17.7 million compared to
$10.6 million in the same period of 1993. Included in 1994 net income was a
nonrecurring gain of $0.9 million resulting from a state income tax law
change. Exclusive of this nonrecurring gain, income increased $6.2 million.
The $6.2 million improvement in profitability for the first six months of
1994 results primarily from a $7.6 million increase in segment operating
profitability (see discussion under "Segment Data"). Income tax expense,
exclusive of the nonrecurring gain, increased $0.9 million due to higher
foreign and state taxes, reflecting higher earnings levels.
<TABLE>
<CAPTION>
Segment Data ($ millions) Sales Operating Income
-------------- ----------------
1994 1993 1994 1993
----- ----- ----- -----
<S> <C> <C> <C> <C>
Components.............. $115.5 $106.6 $26.9 $19.7
Other................... 12.0 10.8 1.6 1.2
</TABLE>
Sales of the Components Segment increased $8.8 million, or 8.3 percent,
compared to the first six months of 1994. Sales of communications products
increased $7.1 million, or 11.6 percent, due primarily to strong sales of
connector products. Sales of controls products increased $1.7 million, or 3.8
percent, due primarily to higher sales of appliance controls and electro-
mechanical products.
Components Segment operating income increased $7.2 million, or 36.7
percent, from the first half of 1993 due primarily to additional profits
resulting from the sales increase discussed above and an increase in sales of
higher margin products.
Other Segment sales increased $1.2 million, or 11.3 percent, compared to
the first half of 1993 due to increased volume from the Company's railway
maintenance equipment division. Operating income was $0.4 million higher than
last year due to additional profits from higher sales and higher gross margins
resulting from various cost reduction programs.
Consolidated gross profit increased as a percentage of sales for the first
six months of 1994 to 37.3 percent from 33.1 percent in the comparable 1993
period due to higher sales volumes of higher margin products and productivity
enhancements.
PART II. OTHER INFORMATION
ITEM I. LEGAL PROCEEDINGS
Reference is made to the Company's Annual Report on Form 10-K for the year
ended December 31, 1993 and to the Company's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1994.
ITEM 2. CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
On May 3, 1994, the Company held its Annual Meeting of Stockholders (the
"Meeting") at which each of William S. Antle III, Daniel W. Derbes, Roderick
M. Hills, George W. Leisz, Gilbert E. Matthews, Christopher H.B. Mills, Elliot
L. Richardson and The Rt. Hon. Lord Stevens of Ludgate were re-elected as
directors for an additional term to expire at the Company's next Annual
Meeting of Stockholders. Each of the directors was re-elected with the
following votes: Mr. Antle, 14,544,384 votes cast for and 93,997 votes
withholding authority; Mr. Derbes, 14,546,894 votes cast for and 91,487 votes
withholding authority; Mr. Hills, 14,545,624 votes cast for and 92,757 votes
withholding authority; Mr. Leisz, 14,539,045 votes cast for and 99,336 votes
withholding authority; Mr. Matthews, 14,548,484 votes cast for and 89,897
votes withholding authority; Mr. Mills, 14,363,531 votes cast for and 274,850
votes withholding authority; Mr. Richardson, 14,531,540 votes cast for and
106,841 votes withholding authority; and Lord Stevens, 14,539,632 votes cast
for and 98,749 votes withholding authority.
The Company's stockholders also ratified the appointment of Price
Waterhouse as the Company's independent public accountants for the Company's
fiscal year 1994, with 14,526,164 votes cast for such ratification, 41,022
votes cast against such ratification, and 71,195 votes abstaining from such
ratification.
There were no broker non-votes with respect to any of the above matters.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit Index:
(10)-(a) Amendment No. 4 and Waiver to the Credit Agreement dated
as of August 31, 1993 by and among Connector Holding
Company, Gilbert Engineering Co., Inc. and General Electric
Capital Corporation as agent for certain lenders.
(10)-(b) Amendment No. 5 to Credit Agreement dated as of June 10,
1994 by and among Connector Holding Company, Gilbert
Engineering Co., Inc. and General Electric Capital
Corporation as agent for certain lenders.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the second quarter ended
June 30, 1994.
<PAGE>
OAK INDUSTRIES INC.
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
OAK INDUSTRIES INC.
Date: August 2, 1994 /S/ WILLIAM C. WEAVER
William C. Weaver
Senior Vice President and
Chief Financial Officer
<PAGE>
10-Q EXHIBIT (10)-(a)
AMENDMENT NO. 4 AND WAIVER TO THE CREDIT AGREEMENT
Gilbert Engineering Co., Inc.
5310 W. Camelback Road
Glendale, Arizona 85301
Dated as of: August 31, 1993
General Electric Capital Corporation,
as Agent
292 Long Ridge Road
Stamford, Connecticut 06927
and
Each of the Lenders party
to the Credit Agreement
referred to below
Gentlemen:
Reference is hereby made to (i) the Credit Agreement dated as of December
23, 1992 (as heretofore and as may hereafter be amended, modified or
supplemented from time to time in accordance with its terms, the "Credit
Agreement") by and among Connector Holding Company (the "Parent"), Gilbert
Engineering Co., Inc. (the "Company"), the lenders named therein (the
"Lenders") and General Electric Capital Corporation, as agent (the "Agent");
and (ii) the Tri-Party Lockbox Agreement dated as of December 23, 1992 (as may
hereafter be amended, modified or supplemented from time to time in accordance
with its terms, the "Lockbox Agreement") by and among the Company, the Agent
for the lenders now or hereafter parties to the Credit Agreement (as
hereinafter defined) and Citibank (Arizona) ("Bank"). Capitalized terms used
herein but not otherwise defined herein shall have the meanings ascribed to
such terms as set forth in the Credit Agreement.
Section 8.22(a) of the Credit Agreement provides, inter alia, that on
each Business Day other than a Business Day during a Company Cash Control
Period, each Collecting Bank shall transfer to the Payment Account all amounts
collected in good funds on such Business Day in each Blocked Account
maintained by such Collecting Bank. The Lockbox Account is listed in Schedule
11.19 of the Credit Agreement as one such Blocked Account. Section 5(b) of
the Lockbox Agreement provides that (i) during any Suspension Period, all
collected funds, as determined by Bank under applicable regulations, in the
Lockbox Account at the end of each business day shall be transferred by Bank
to an account of Company at Bank that shall be designated by Company and the
Agent as the account to which such collected funds shall be remitted and (ii)
the Agent and Company shall cause such account to be subject to a blocked
account agreement in form and substance satisfactory to Agent.
Notwithstanding the provisions of the Credit Agreement, the Company
desires a Suspension Period (as defined in the Lockbox Agreement) to take
effect as of August 31, 1993, whereupon all amounts in the Lockbox Account
shall be transferred on each Business Day to a newly established blocked
account (the "New Blocked Account") designated by the parties, and that such
Suspension Period continue until Bank receives notice from the Agent that such
Suspension Period has terminated.
We hereby request that you, and by your signature below you hereby agree
to, waive the provisions of the Credit Agreement solely to the extent
necessary to declare a Suspension Period effective as of August 31, 1993,
whereupon all amounts in the Lockbox Account shall be transferred on each
Business Day to the New Blocked Account; provided, that such Suspension Period
shall terminate on the day, if any, that Bank receives written notice from the
Agent that such Suspension Period has terminated.
Furthermore, for good and valuable consideration, the receipt of which is
hereby acknowledged, the parties agree that Schedule 11.19 of the Credit
Agreement is hereby amended to include the New Blocked Account as a Blocked
Account by deleting such Schedule in its entirety and substituting in its
place the Schedule 11.19 attached hereto.
The waivers and agreements contained herein shall not be effective unless
and until the Agent shall have received counterparts hereof duly executed by
the Agent, the Lenders and the Company.
The Credit Agreement is hereby ratified and confirmed in all respects and
as expressly waived and amended hereby, all of the representations,
warranties, terms, covenants and conditions of the Credit Agreement shall
remain unamended, unwaived and in effect in accordance with its terms. The
amendments and waivers set forth herein and shall not be deemed to be
amendments or consents to, or waivers or modifications of, any term or
provision of any Loan Document or any other document or instrument referred to
herein or therein or of any transaction or further or future action on the
part of any of the Credit Parties requiring the consent of the Agent, except
to the extent specifically provided for herein. Nothing herein shall be
deemed to constitute the declaration of a Company Cash Control Period.
This amendment and waiver may be executed in counterparts, each of which
shall be an original, and all of which, taken together, shall constitute a
single instrument.
This amendment and waiver shall be governed by, and construed in
accordance with, the laws of the State of New York.
GENERAL ELECTRIC CAPITAL
CORPORATION, Individually and as Agent
By: /S/ DOUGLAS M. HITCHNER
Name: Douglas M. Hitchner
Title: Region Operations Manager
HELLER FINANCIAL, INC.
By: /S/ CHARLES F. BALDINI
Name: Charles F. Baldini
Title: Vice President
ACCEPTED AND AGREED:
GILBERT ENGINEERING CO., INC.
By: /S/ BRUCE GULLEKSON
Name: Bruce Gullekson
Title: Chief Financial Officer
CONNECTOR HOLDING COMPANY
By: /S/ MICHAEL F. GOSS
Name: Michael F. Goss
Title: President
<PAGE>
10-Q EXHIBIT (10)-(b)
AMENDMENT NO. 5 TO CREDIT AGREEMENT
Dated as of: June 10, 1994
AMENDMENT NO. 5 TO CREDIT AGREEMENT dated as of June 10, 1994 (the
"Amendment Agreement") among CONNECTOR HOLDING COMPANY ("Parent"), GILBERT
ENGINEERING CO., INC. (the "Company"), the lenders named herein and signatory
hereto (the "Lenders") and GENERAL ELECTRIC CAPITAL CORPORATION, as agent (the
"Agent") for the Lenders.
WHEREAS, Parent, the Company, the Lenders and the Agent are parties to a
Credit Agreement dated as of December 23, 1992 (as heretofore and hereafter
amended, modified or supplemented from time to time in accordance with its
terms, the "Credit Agreement");
WHEREAS, the Company intends to create Gilbert Engineering (Denmark) ApS,
a Danish corporation and wholly-owned subsidiary of the Company ("Gilbert
Engineering Denmark");
WHEREAS, Gilbert Engineering Denmark intends to purchase certain issued
and outstanding shares of capital stock of Cabel-Con A/S, a Denmark
corporation ("Cabel-Con A/S") pursuant to the terms of a Stock Purchase
Agreement, dated as of June 10, 1994, among the Company, Gilbert Engineering
Denmark, Cabel-Con A/S, Ingolf Jacobsen, Jonna Jacobsen, Dan Jacobsen, Kim
Jacobsen and Vibeke Jacobsen; and
WHEREAS, subject to the terms and conditions hereof, contemporaneously
with the purchase of the capital stock of Cabel-Con A/S referred to above, the
parties hereto desire to amend certain provisions of the Credit Agreement.
NOW THEREFORE, for good and valuable consideration, the receipt of which
is hereby acknowledged, and subject to the fulfillment of the conditions set
forth below, the parties hereto agree as follows:
1. Unless otherwise specifically defined herein, all capitalized terms
used herein shall have the respective meanings ascribed to such terms in the
Credit Agreement.
2. Upon the Effective Date (as defined herein), the Credit Agreement
shall be amended as follows:
(a) Schedule 4.4(a)(ii), Schedule 8.3, Schedule 9.2, Schedule 9.3,
Schedule 11.1, Schedule 11.5, Schedule 11.13, Schedule 11.19 and Schedule
11.24 of the Credit Agreement are hereby deleted and replaced with the
Schedule 4.4(a)(ii), Schedule 8.3, Schedule 9.2, Schedule 9.3, Schedule 11.1,
Schedule 11.5, Schedule 11.13, Schedule 11.19 and Schedule 11.24 attached
hereto, as applicable.
(b) Section 1 of the Credit Agreement is hereby amended by (i) deleting
the defined terms "Additional Borrowing Base," "Additional Revolving Credit
Facility Commitment," "Base Rate," "Credit Parties" and "Effective Date"
appearing therein and (ii) inserting the following defined terms in the
appropriate alphabetical order:
"Additional Borrowing Base" shall mean, at any time, an amount equal to
$8,250,000 less the aggregate sum of all Borrowing Base Reductions made on or
after the Effective Date.
"Additional Revolving Credit Facility Commitment" shall mean, at any
time, the commitment of the Lenders to make, subject to the terms of this
Agreement, Revolving Advances in excess of the Basic Revolving Credit Facility
Commitment but in no event shall the Additional Revolving Credit Facility
Commitment exceed $8,250,000 less the aggregate sum of all Additional
Revolving Credit Facility Commitment Reductions made on or after the Effective
Date.
"Availability" shall mean, at any time, the Borrowing Limit at such time
minus the sum at such time of (i) the then outstanding principal amount of the
Revolving Loans plus (ii) the then outstanding amount of all Letter of Credit
Obligations.
"Base Rate" shall mean a fluctuating interest rate per annum as shall be
in effect from time to time, which rate per annum shall at all times be equal
to one and one-quarter percentage points (1.25%) above the Index Rate;
provided, however, that subject to the terms and conditions set forth below,
if EBITA of Parent and its Subsidiaries on a consolidated basis for the Fiscal
Year ending on or about December 31, 1994 ("Fiscal Year 1994") shall equal or
exceed $30,000,000 (as demonstrated in the audited consolidated financial
statements of Parent for Fiscal Year 1994 required to be delivered to the
Agent and the Lenders pursuant to Section 8.1(b) hereof), the Base Rate shall
be permanently reduced to a rate per annum equal to one percentage point
(1.00%) above the Index Rate. On or after January 1, 1995, Parent shall be
entitled to deliver to the Agent and the Lenders a certificate duly executed
by a Designated Officer of Parent as to Parent's best estimate of EBITA of
Parent and its Subsidiaries on a consolidated basis for Fiscal Year 1994,
which certificate shall include reasonably detailed calculations justifying
such estimate. Notwithstanding anything to the contrary contained herein, in
the event that (i) Parent delivers such a certificate prior to the earlier to
occur of (x) the date that the audited consolidated financial statements of
Parent for Fiscal Year 1994 are delivered to the Agent and the Lenders
pursuant to Section 8.1(b) hereof and (y) the latest date specified in Section
8.1(b) hereof for delivery of such financial statements and (ii) such
certificate contains Parent's best estimate that EBITA of Parent and its
Subsidiaries on a consolidated basis for Fiscal Year 1994 equalled or exceeded
$30,000,000, then, such reduction in the interest rate referred to above shall
take effect on the first Business Day of the next week immediately following
the receipt by the Agent and each Lender of such certificate, but only so long
as no Default or Event of Default shall have occurred and be continuing on
such Business Day (it being understood that if a Default or Event of Default
exists on such Business Day, such reduction shall take effect on the first
Business Day of the first week thereafter when no Default or Event of Default
shall have occurred and be existing); provided, however, that in the event
that the annual audited consolidated financial statements of Parent for Fiscal
Year 1994 required to be delivered to the Agent and the Lenders pursuant to
Section 8.1(b) hereof are not delivered within the time period specified in
such Section 8.1(b) or if such financial statements demonstrate that EBITA of
Parent and its Subsidiaries on a consolidated basis for Fiscal Year 1994 was
less than $30,000,000, then, in any such case, the Base Rate shall be
permanently increased (retroactively from the date of any prior reduction in
such interest rate pursuant hereto) to a rate per annum equal to one and one-
quarter percentage points (1.25%) above the Index Rate.
"Cabel-Con Acquisition" shall mean the purchase by Gilbert Engineering
Denmark of all the outstanding capital stock of Cabel-Con A/S and such other
related transactions contemplated by the Cabel-Con Acquisition Documents.
"Cabel-Con Acquisition Documents" shall mean the Cabel-Con Stock Purchase
Agreement and such other documents executed and delivered in connection
therewith (including, without limitation, the Danish Intercompany Note), in
each case as in effect on the Effective Date, as amended, modified or
supplemented from time to time in accordance with the terms thereof and the
limitations set forth in Section 9.12 hereof.
"Cabel-Con A/S" shall mean Cabel-Con A/S, a Danish corporation.
"Cabel-Con UK" shall mean Cabel-Con UK, a U.K. corporation and wholly-
owned subsidiary of Cabel-Con A/S.
"Cabel-Con USA" shall mean Cabel-Con Inc., USA, an Arizona corporation
and wholly-owned subsidiary of Cabel-Con A/S.
"Cabel-Con Stock Purchase Agreement" shall mean the Stock Purchase
Agreement, dated as of June 10, 1994, as amended, modified or supplemented
from time to time in accordance with its terms and the terms of this
Agreement, among the Company, Gilbert Engineering Denmark, Cabel-Con A/S,
Ingolf Jacobsen, Jonna Jacobsen, Dan Jacobsen, Kim Jacobsen and Vibeke
Jacobsen.
"Credit Parties" shall mean and include the Company, each Guarantor and
Cabel-Con USA.
"Danish Intercompany Note" shall mean the demand promissory note dated
June 10, 1994 by Gilbert Engineering Denmark to the order of the Company in
the principal amount of $12,134,067.59 together with any replacement or
substitution thereof and any amendment or modification thereof, in each case
as permitted by the terms hereof.
"EBITA" shall mean, for Parent and its Subsidiaries on a consolidated
basis for any period, EBITDA of Parent and its Subsidiaries on a consolidated
basis for such period minus the amount of all depreciation of Parent and its
Subsidiaries on a consolidated basis for such period.
"Effective Date" shall have the meaning set forth in the Fifth Amendment
Agreement.
"Fifth Amendment Agreement" shall mean Amendment No. 5 to Credit
Agreement, dated as of June 10, 1994, among Parent, the Company, the Lenders
and the Agent.
"Fiscal Year 1994" shall have the meaning set forth in the definition of
"Base Rate" contained in Section 1.1 hereof.
"Gilbert Engineering Denmark" shall mean Gilbert Engineering (Denmark)
ApS, a Danish corporation.
"Revolving Credit Facility Commitment" shall mean, at any time, an amount
equal to the sum of (i) the Basic Revolving Credit Facility Commitment at such
time plus (ii) the Additional Revolving Credit Facility Commitment at such
time, but in no event shall the Revolving Credit Facility Commitment exceed
$18,250,000 at any time.
(c) The first sentence of the definition of "Fixed Charge Coverage
Ratio" contained in Section 1 of the Credit Agreement is hereby amended by
adding the following phrase immediately prior to the period ending such
sentence:
"plus (iv) without duplication of any amounts contained in subclause
(ii) of this clause (b), all scheduled reductions during such period of the
Additional Revolving Credit Facility Commitment pursuant to Section 2.7A
hereof"
(d) The definition of "Proceeds" contained in Section 1 of the Credit
Agreement is hereby moved to the appropriate alphabetical order immediately
following the defined term "Prepayment Limit" contained therein.
(e) Section 2.4(e) of the Credit Agreement is hereby amended by deleting
the phrase "Effective Date" appearing therein and substituting in its place
the phrase "effectiveness of the Third Amendment Agreement".
(f) The first sentence of Section 2.7 of the Credit Agreement is hereby
amended and restated in its entirety to read as follows:
"The Revolving Credit Facility Commitment shall terminate on the
Maturity Date."
(g) Section 2.7A of the Credit Agreement is hereby amended and restated
in its entirety to read as follows::
"2.7A MANDATORY REDUCTION OF ADDITIONAL REVOLVING CREDIT FACILITY
COMMITMENT. (a) In addition to any permanent reductions of the Additional
Revolving Credit Facility Commitment pursuant to Section 3.1(i) hereof, the
Additional Revolving Credit Facility Commitment shall be permanently reduced
on the last day of each March, June, September and December in each year,
commencing on March 31, 1997, as follows:
<TABLE>
<CAPTION>
Amount of Additional
Revolving Credit Facility
Quarterly Reduction Dates Commitment Reduction
------------------------- -------------------------
<S> <C>
March 31, 1997 $2,062,500
June 30, 1997 $2,062,500
September 30, 1997 $2,062,500
Maturity Date $2,062,500
</TABLE>
(b) In addition to the mandatory Additional Revolving Credit Facility
Commitment Reductions set forth in (a) above and Section 3.1 hereof, the
Company shall have the right upon not less than three (3) Business Days prior
Written Notice to the Agent from time to time to reduce ratably (as among the
Lenders) in part, the amount of the Additional Revolving Credit Facility
Commitment; provided, however, that each such voluntary reduction shall be in
an amount of at least $1,000,000 or in an integral multiple of $1,000,000 in
excess thereof and immediately after giving effect to each such voluntary
reduction, the Availability shall equal or exceed $4,000,000; provided,
further, that to the extent the Company voluntarily reduces the Additional
Revolving Credit Facility Commitment at any time, such voluntary reduction
shall be credited against any remaining mandatory reductions scheduled to be
made pursuant to (a) above (such credit to be applied ratably to the remaining
amount of mandatory reductions scheduled to be made pursuant to (a) above).
(c) In the event that following the reduction of the Additional
Revolving Credit Facility Commitment as provided for in (a) or (b) above, the
aggregate unpaid amount of the Revolving Loan at any time, when added to the
aggregate amount of Letter of Credit Obligations at such time, exceeds the
Borrowing Limit as in effect at such time (after giving effect to such
reduction of the Additional Revolving Credit Facility Commitment), the Company
shall repay the Revolving Loan in the amount of such excess together with any
fees, premiums, costs and charges required to be paid by the Company pursuant
to Section 2.14 hereof and accrued interest on the amount so repaid to the
date of such repayment. No other payment in respect of the Revolving Loan of
any kind shall relieve the Company from its obligations to make payments under
this Section 2.7A(c). Each reduction of the Additional Revolving Credit
Facility Commitment contemplated pursuant to (a) and (b) above shall be
permanent and shall apply to each Lender pro rata."
(h) Section 2.8(a) of the Credit Agreement is hereby amended and
restated to read in its entirety as follows:
"(a) Interest on Eurodollar Advances. Except as provided in
Section 2.8(d) hereof, the Company shall pay interest on the unpaid principal
amount of each Eurodollar Advance made to it hereunder which is outstanding
from time to time, on each Interest Payment Date with respect to such
Eurodollar Advance, at the date of conversion of such Eurodollar Advance (or
portion thereof) to a Base Rate Advance and at maturity of such Eurodollar
Advance at an interest rate per annum equal during the Interest Period for
such Eurodollar Advance to the Adjusted Eurodollar Rate for the Interest
Period in effect for such Eurodollar Advance plus two and three-quarter
percentage points (2.75%) and after maturity of such Eurodollar Advance
(whether by acceleration or otherwise) upon demand; provided, however, that
subject to the terms and conditions set forth below, if EBITA of Parent and
its Subsidiaries on a consolidated basis for the Fiscal Year 1994 shall equal
or exceed $30,000,000 (as demonstrated in the audited consolidated financial
statements of Parent for Fiscal Year 1994 required to be delivered to the
Agent and the Lenders pursuant to Section 8.1(b) hereof), the interest rate
payable on Eurodollar Advances shall be permanently reduced to a rate per
annum equal to the applicable Adjusted Eurodollar Rate plus two and one-half
percentage points (2.50%). On or after January 1, 1995, Parent shall be
entitled to deliver to the Agent and the Lenders a certificate duly executed
by a Designated Officer of Parent as to Parent's best estimate of EBITA of
Parent and its Subsidiaries on a consolidated basis for Fiscal Year 1994,
which certificate shall include reasonably detailed calculations justifying
such estimate. Notwithstanding anything to the contrary contained herein, in
the event that (i) Parent delivers such a certificate prior to the earlier to
occur of (x) the date that the audited consolidated financial statements of
Parent for Fiscal Year 1994 are delivered to the Agent and the Lenders
pursuant to Section 8.1(b) hereof and (y) the latest date specified in Section
8.1(b) hereof for delivery of such financial statements and (ii) such
certificate contains Parent's best estimate that EBITA of Parent and its
Subsidiaries on a consolidated basis for Fiscal Year 1994 equalled or exceeded
$30,000,000, then, such reduction in the interest rate referred to above shall
take effect on the first Business Day of the next week immediately following
the receipt by the Agent and each Lender of such certificate, but only so long
as no Default or Event of Default shall have occurred and be continuing on
such Business Day (it being understood that if a Default or Event of Default
exists on such Business Day, such reduction shall take effect on the first
Business Day of the first week thereafter when no Default or Event of Default
shall have occurred and be existing); provided, however, that in the event
that the annual audited consolidated financial statements of Parent for Fiscal
Year 1994 required to be delivered to the Agent and the Lenders pursuant to
Section 8.1(b) hereof are not delivered within the time period specified in
such Section 8.1(b) or if such financial statements demonstrate that EBITA of
Parent and its Subsidiaries on a consolidated basis for Fiscal Year 1994 was
less than $30,000,000, then, in any such case, the interest rate payable on
Eurodollar Advances shall be permanently increased (retroactively from the
date of any prior reduction in such interest rate pursuant hereto) to a rate
per annum equal to two and three-quarter percentage points (2.75%) above the
Adjusted Eurodollar Rate. Interest not paid when due shall be payable on
demand."
(i) Section 2.14(c) of the Credit Agreement is hereby amended by adding
the phrase "the Cabel-Con Acquisition," immediately after the word
"Acquisition," appearing in the sixteenth line thereof.
(j) Section 3.1(a)(1) of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:
"(a) (1) The Company shall, until payment in full of Term Loan A
and subject to earlier prepayment and payment as hereinafter provided, make
installment payments in respect of the principal of Term Loan A to the Agent
for the benefit of the Lenders on the dates and in the amounts set forth
below:
<TABLE>
<CAPTION>
Payment Date Installment Amount
------------ ------------------
<S> <C>
March 31, 1995 $3,598,481.53
June 30, 1995 $3,598,481.53
September 30, 1995 $3,598,481.53
December 31, 1995 $3,598,481.53
March 31, 1996 $4,094,823.81
June 30, 1996 $4,094,823.81
September 30, 1996 $4,094,823.81
December 31, 1996 $4,094,823.81
March 31, 1997 $3,226,224.82
June 30, 1997 $3,226,224.81
September 30, 1997 $3,226,224.81
</TABLE>
provided, however, that the last such installment shall be in the amount
necessary to repay in full the unpaid principal amount of Term Loan A."
(k) Clause THIRD of Section 3.1(b) of the Credit Agreement is hereby
amended and restated in its entirety to read as follows:
"THIRD, to the outstanding principal balance of the Revolving Loan
first to the outstanding principal amount of Revolving Advances in excess of
the amount of the Basic Revolving Credit Facility Commitment (in permanent
reduction of the Additional Revolving Credit Facility Commitment) and then to
the remaining outstanding principal amount of Revolving Advances (not in
reduction of the Basic Revolving Credit Facility Commitment), until the
Revolving Loan has been paid in full; provided, however, that to the extent
the Additional Revolving Credit Facility Commitment is reduced pursuant to the
terms of this Section 3.1(b), the amount of any such reduction shall be
credited against any mandatory reductions of the Additional Revolving Credit
Facility Commitment scheduled to be made pursuant to Section 2.7A hereof (such
credit to be applied ratably to the remaining amount of mandatory reductions
of the Additional Revolving Credit Facility Commitment scheduled to be made
pursuant to Section 2.7A hereof);"
(l) Section 3.1 of the Credit Agreement is hereby amended by adding the
following subsection (i) at the end of such section:
"(i) In the event that any prepayment of principal of the Revolving
Loan is required to be made pursuant to Section 3.1 or 3.2 hereof, the
Additional Revolving Credit Facility Commitment shall be immediately and
permanently reduced by an amount equal to the amount of such required
prepayment.
(m) Section 7 of the Credit Agreement is hereby amended by adding the
following subsection (c) at the end of such section:
"(c) Notwithstanding anything to the contrary set forth in
paragraph (b) above, proceeds of Revolving Advances not exceeding
$12,134,067.59 shall be applied by the Company on the Effective Date to an
advance to Gilbert Engineering Denmark which shall be evidenced by the Danish
Intercompany Note, and the proceeds of such advance shall be applied by
Gilbert Engineering Denmark on the Effective Date to (i) cash consideration
payable to the Stockholders (as defined in the Cabel-Con Stock Purchase
Agreement), (ii) cash fees and expenses relating to the Cabel-Con Acquisition
and (iii) refinance certain existing indebtedness of Cabel-Con A/S."
(n) Section 8.1(d) of the Credit Agreement is hereby amended by adding
the phrase "; provided, however, that any such projections referred to in this
clause (x) shall only be on a consolidated basis for the Parent and its
Subsidiaries" immediately after the phrase "Maturity Date" appearing in the
fifth to last line thereof.
(o) The first sentence of Section 8.1(k) of the Credit Agreement is
hereby amended and restated in its entirety to read as follows:
"Within three days of the date of any request therefor made by the
Agent (x) on or after the twelfth day of any fiscal month or (y) prior to the
twelfth day of any fiscal month, a certificate from the Company dated the last
day of the month just ended in the case of a request under clause (x) above or
dated the last day of the next preceding month just ended in the case of a
request under clause (y) above, in each case substantially in the form of
Exhibit 8.1(k) hereto, each such certificate to be signed by the Designated
Officer of the Company (each such certificate, a "Borrowing Base
Certificate")."
(p) The following paragraph is hereby added to the Credit Agreement as
Section 8.24 thereof:
"Section 8.24 ADDITIONAL SECURITY INTERESTS. The Company shall, or
shall cause its appropriate Subsidiary to, execute and deliver to the Agent
such documents, agreements, instruments and financing statements as the Agent
shall reasonably request in order to grant to the Agent for the benefit of the
Agent and the Lenders a valid, perfected and enforceable first priority lien
on all the assets of Cabel-Con USA (including, without limitation, any assets
of Cabel-Con USA acquired by the Company pursuant to any acquisition or
merger) in the event that:
(a) EBITA of Parent and its Subsidiaries on a consolidated basis for
Fiscal Year 1994 is less than $40,000,000 as demonstrated in the audited
consolidated financial statements of Parent for Fiscal Year 1994 required to
be delivered to the Agent and the Lenders pursuant to Section 8.1(b) hereof
(or as estimated on any certificate referred to in the definition of "Base
Rate" contained herein or in Section 2.8(a) hereof that is delivered prior to
the delivery of such financial statements);
(b) Parent fails to deliver its audited financial statements for
Fiscal Year 1994 to the Agent and the Lenders within the time period specified
in Section 8.1(b) hereof; or
(c) the Company shall acquire all or substantially all of the assets
or capital stock of Cabel-Con USA or Cable-Con USA shall merge with and into
the Company.
In addition to the foregoing, promptly following the occurrence of any event
described in clause (a), (b) or (c) above, the Company shall enter into
lockbox and/or cash management arrangements with the Agent and such other
financial institutions that are acceptable to the Agent with respect to the
receivables and other cash of Cabel-Con USA, such arrangements to be
substantially similar to the lockbox and/or cash management arrangements of
the Company as in existence at such time or otherwise in form and substance
satisfactory to the Agent."
(q) Section 9.1 of the Credit Agreement is hereby amended by (i)
deleting the dollar amount "$1,250,000" contained therein and substituting in
its place the dollar amount "$2,500,000" and (ii) adding the following
sentence at the end of such section:
"The Cabel-Con Acquisition shall not constitute a Capital
Expenditure for purposes of the limitations contained in this Section 9.1."
(r) Section 9.3(f) of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:
"(f) Indebtedness of Cabel-Con A/S to Gilbert Engineering Denmark
as evidenced by that certain demand promissory note dated June 10, 1994 by
Cabel-Con A/S to the order of Gilbert Engineering Denmark in the original
principal amount of $2,684,067.59;"
(s) Section 9.3(h) of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:
"(h) Indebtedness for Borrowed Money of Foreign Subsidiaries owing
to non-Affiliates of Parent not exceeding at any one time in aggregate
principal amount outstanding the sum of (i) the principal amount of such
Indebtedness for Borrowed Money of Foreign Subsidiaries outstanding as of the
Closing Date, (ii) Indebtedness for Borrowed Money of Gilbert Engineering
Denmark and its Subsidiaries owing to non-Affiliates of Parent outstanding as
the Effective Date and (iii) $400,000;"
(t) Section 9.3(k) of the Credit Agreement is hereby amended in its
entirety to read as follows:
"(k) Indebtedness evidenced by the Intercompany Notes and the
Danish Intercompany Note."
(u) Section 9.4(e) of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:
"(e) Investments in the stock of (i) any Subsidiary existing on the
Closing Date, (ii) Gilbert Engineering Denmark, Cabel Con A/S, Cabel-Con USA
and Cabel-Con UK or (iii) any other Subsidiary created with the prior written
consent of the Majority Lenders, but for each of the foregoing, not any
additional investments therein other than Investments not exceeding $500,000
in the aggregate and increases in Investments solely by reason of increases in
the retained earnings of such Subsidiary, and in addition to the foregoing, up
to $600,000 of Investments in the stock of Gilbert Engineering Denmark or any
Subsidiary thereof for the purpose of financing operating reorganizations or
consolidations of any such Person;"
(v) Section 9.4(i) of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:
"(i) Indebtedness evidenced by the Intercompany Notes, the Danish
Intercompany Note and that certain demand promissory note dated June 10, 1994
by Cabel-Con A/S to the order of Gilbert Engineering Denmark in the original
principal amount of $2,684,067.59."
(w) Section 9.5 of the Credit Agreement is hereby amended by (i)
deleting the word "and" appearing in the last line of subsection (e) thereof,
(ii) deleting the period "." appearing in the last line of subsection (f)
thereof and (iii) adding thereto the following subsections (g), (h) and (i)
immediately at the end of such section:
"(g) any acquisition by the Company of all or substantially all of
the assets or capital stock of Cabel-Con USA or the merger of Cabel-Con USA
with and into the Company with the Company being the surviving entity;
provided, that the sole consideration, if any, for such acquisition or merger
shall be an offset against and deduction from the principal amount of the
Danish Intercompany Note;
(h) any acquisition by Gilbert Engineering Denmark of all or
substantially all of the assets of Cabel-Con A/S or the merger of Cabel-Con
A/S with and into Gilbert Engineering Denmark with Gilbert Engineering Denmark
being the surviving entity; and
(i) the acquisition by Gilbert Engineering Denmark of the issued
and outstanding shares of capital stock of Cabel-Con A/S pursuant to the terms
of the Cabel-Con Acquisition Documents."
(x) Section 9.12(a) of the Credit Agreement is hereby amended by adding
the phrase "or any Cabel-Con Acquisition Document" immediately after the word
"Document" appearing in the second to last line thereof.
(y) Section 10.1(e) of the Credit Agreement is hereby amended by adding
the phrase "or the Cabel-Con Acquisition" immediately after the word
"Acquisition" appearing in the second to last line thereof.
(z) Section 11.2 of the Credit Agreement is hereby amended and restated
in its entirety to read as follows:
"Section 11.2 POWER AND AUTHORITY. Each of the Credit Parties has
the corporate power and authority to execute, deliver and perform the terms
and provisions of this Agreement and the other Loan Documents, the Acquisition
Documents and the Cabel-Con Acquisition Documents to which it is a party and
all instruments and documents delivered by it pursuant thereto and hereto and
each of the Credit Parties has duly taken or caused to be duly taken all
necessary corporate action (including, without limitation, the obtaining of
any consent of stockholders or partners required by law or its certificate of
incorporation, by-laws or partnership agreement), to authorize the execution,
delivery and performance of this Agreement and each other Loan Document and
each Acquisition Document and each Cabel-Con Acquisition Document, in each
case, to which it is a party, and the instruments and documents delivered by
it pursuant thereto and hereto. Each of this Agreement, the other Loan
Documents, the Acquisition Documents, the Cabel-Con Acquisition Documents and
each of the other instruments and documents executed and delivered by any of
the Credit Parties pursuant hereto and thereto to which it is a party
constitutes a legal, valid and binding obligation of such Person, and is
enforceable in accordance with its terms, except as the enforceability thereof
may be limited by bankruptcy, insolvency, moratorium and other similar laws
affecting the enforcement of creditors' rights generally and by general equity
principles."
(aa) Section 11.3 of the Credit Agreement is hereby amended by adding
the phrase ", the Cabel-Con Acquisition Documents" immediately after the
phrase "Acquisition Documents" appearing in the sixth line thereof.
(bb) Section 11.4 of the Credit Agreement is hereby amended by adding
the phrase ", the Cabel-Con Acquisition Documents" immediately after the
phrase "Acquisition Documents" appearing in the sixth line thereof.
(cc) Section 11.9 of the Credit Agreement is hereby amended by adding
the phrase ", the Cabel-Con Acquisition Documents" immediately after the
phrase "Acquisition Documents" appearing in the sixth line thereof.
(dd) The last sentence of Section 11.12 of the Credit Agreement is
hereby amended and restated in its entirety to read as follows:
"None of the transactions contemplated by this Agreement, the other
Loan Documents or any of the Acquisition Documents or Cabel-Con Acquisition
Documents shall violate the Investment Company Act of 1940, as amended."
(ee) Section 11.17 of the Credit Agreement is hereby amended by adding
the following sentence immediately at the end of such section:
"Both before and after giving effect to the Cabel-Con Acquisition
and the making of the Revolving Advances to finance the Cabel-Con Acquisition,
the Company is Solvent."
(ff) Section 11.23 of the Credit Agreement is hereby amended by adding
the phrase "or the Cabel-Con Acquisition" immediately after the word
"Acquisition" appearing in the fifth and the last line thereof.
(gg) Section 12.13(h) of the Credit Agreement is hereby amended by
adding the phrase ", the Cabel-Con Acquisition" immediately after the phrase
"Acquisition" appearing in the eighth line thereof.
4. Each of Parent and the Company represents and warrants as follows
(which representations and warranties shall survive the execution and delivery
of this Amendment Agreement) as of the date hereof that:
(a) Each of Parent and the Company has taken all necessary action to
authorize the execution, delivery and performance of this Amendment Agreement,
the Danish Pledge Agreement (as hereinafter defined), the Danish Note Pledge
Agreement (as hereinafter defined) and each other agreement, instrument or
document executed in connection herewith or therewith to which such Person is
a party (the "Amendment Documents").
(b) Each of the Amendment Documents has been duly executed and delivered
and constitutes the valid and legally binding obligation of Parent and/or the
Company, as the case may be, enforceable in accordance with their respective
terms, subject to applicable bankruptcy, reorganization, insolvency,
moratorium and similar laws affecting creditors' rights generally.
(c) No consent or approval of any person, firm, corporation or entity,
and no consent, license, approval or authorization of any governmental
authority is or will be required in connection with the execution, delivery,
performance, validity or enforcement of the Amendment Documents.
(d) After giving effect to this Amendment Agreement and the other
Amendment Documents, each of the Company and Parent is in compliance with all
of the various covenants and agreements set forth in the Credit Agreement,
each of the other Loan Documents, the Junior Subordinated Loan Documents and
the Parent Subordinated Loan Documents.
(e) No event has occurred and is continuing which constitutes or would
constitute, with the giving of notice or lapse of time or both, an Event of
Default under the Credit Agreement or any of the other Loan Documents, or,
assuming the effectiveness of this Amendment Agreement, under the Credit
Agreement as amended by this Amendment Agreement.
(f) All representations and warranties contained in the Credit
Agreement, as amended by this Amendment Agreement, and each of the other Loan
Documents are true and correct in all material respects as of the date hereof,
except to the extent that any representation or warranty relates to a
specified date, in which case such are true and correct as of the specific
date to which such representations and warranties relate.
5. Notwithstanding any term or provision of this Amendment Agreement to
the contrary, the amendments contained herein shall not become effective until
the date and time on which the Agent and the Lenders shall have determined (as
evidenced by delivery of a counterpart of this Amendment Agreement executed by
the Agent and each Lender) that each of the following conditions precedent
shall have been satisfied (the "Effective Date"):
(a) Counterparts of this Amendment Agreement shall have been duly
executed and delivered on behalf of the Company, Parent and each of the
Lenders.
(b) All required corporate action and proceedings in connection with the
execution and delivery of the Amendment Documents and the Cabel-Con
Acquisition Documents shall have been taken, and each shall be satisfactory in
form and substance to the Agent and the Lenders, and the Agent and the Lenders
shall have received all information and copies of all documents, including
without limitation, records of requisite corporate action and proceedings that
the Agent or any Lender may reasonably request, to be certified by the
appropriate corporate persons or government authorities.
(c) The Cabel-Con Acquisition Documents shall have been duly executed
and delivered by the parties thereto, shall be in full force and effect, shall
be in form and substance acceptable in all respects to the Agent and the
Lenders, and each component of the Cabel-Con Acquisition shall have been
consummated, all conditions precedent thereto having been satisfied or, with
the Agent's and the Lenders' consent, waived; the Cabel-Con Acquisition and
all transactions contemplated hereunder and under the Cabel-Con Acquisition
Documents shall be in compliance with all applicable foreign and domestic laws
and regulations and shall not contravene any term or condition of any charter,
bylaw, debt instrument or other agreement of Parent, the Company or any of the
other parties thereto.
(d) The Agent and the Lenders shall have approved the terms, structure,
effect, fees and expenses and all documentation and corporate proceedings
relating to the Cabel-Con Acquisition and the transactions contemplated under
the Cabel-Con Acquisition Documents.
(e) The Agent and the Lenders shall have received evidence satisfactory
to them in form and substance that contemporaneously with the consummation of
the Cabel-Con Acquisition (i) all Indebtedness of Cabel-Con A/S owing to
Unibank A/S shall have been repaid in full and (ii) all liens securing such
Indebtedness (or any part thereof) shall have been terminated.
(f) The Agent shall have received copies of each of the Cabel-Con
Acquisition Documents certified by a Responsible Officer of the Company.
(g) There shall be no litigation involving Parent, the Company or any
other Person or (relating to the Credit Agreement) any Lender, which in the
judgment of the Agent has a reasonable likelihood of being determined
adversely to any such Person, and if so adversely determined, would have a
materially adverse effect on the business, operations, liabilities, assets,
properties, prospects or condition, financial or otherwise, of Parent and its
Subsidiaries taken as a whole or such Lender, or the ability of the Company or
any Person to perform its obligations under the Loan Documents or consummate
the Cabel-Con Acquisition, and no judgment, order, injunction or other similar
restraint prohibiting the Cabel-Con Acquisition, or any of the other
transactions contemplated under this Amendment Agreement or in connection with
the Cabel-Con Acquisition.
(h) The Company shall duly execute and deliver to the Agent a Pledge
Agreement (the "Danish Pledge Agreement") substantially in the form of Exhibit
A annexed hereto covering to the extent of the Company's interest therein,
sixty-six percent (66%) of the capital stock of Gilbert Engineering Denmark
and all proceeds thereof pursuant to which the Company shall grant to the
Agent for the benefit of the Agent and the Lenders a valid, perfected and
enforceable first priority Lien on the foregoing, together with certificates
representing the capital stock referred to therein (to the extent that
certificates exist or certificates representing stock are customarily issued
by corporations incorporated in the jurisdiction in which Gilbert Engineering
Denmark is incorporated), accompanied by undated stock powers or assignments
thereof executed in blank. To the extent that the Danish Pledge Agreement may
not be appropriate to create a Lien in favor of the Agent on any capital stock
of Gilbert Engineering Denmark as determined by the Agent or that certain
actions as determined by the Agent which are not contemplated by this Section
5(h) or by the Danish Pledge Agreement shall be required to perfect a Lien in
favor of the Agent in the stock of Gilbert Engineering Denmark, the Company
shall as soon as reasonably practical (and if not reasonably practical by the
date of this Amendment Agreement, in any event by not later than 30 days after
the date of this Amendment Agreement), in addition to executing the Danish
Pledge Agreement as provided for herein, execute and deliver to the Agent and
cause to be executed and delivered to the Agent such documents and
instruments, in form and substance satisfactory to the Agent, and shall take
such actions as reasonably requested by the Agent, in each instance, in order
to grant to the Agent for the benefit of the Agent and the Lenders a valid,
perfected and enforceable first priority Lien on the capital stock of Gilbert
Engineering Denmark to be pledged to the Agent as provided in this Section
5(h). The parties hereto hereby agree that the Danish Pledge Agreement and
any other agreement, instrument or other document executed in connection
therewith shall each constitute a "Loan Document" under the Credit Agreement.
(j) The Company shall duly execute and deliver to the Agent a Note
Pledge Agreement (the "Danish Note Pledge Agreement"), substantially in the
form of Exhibit B annexed hereto, covering the Danish Intercompany Note and
all other promissory notes now or hereafter owned by the Company evidencing
Indebtedness owed by Gilbert Engineering Denmark to the Company, and all
proceeds thereof, pursuant to which the Company shall grant to the Agent for
the benefit of the Agent and the Lenders a valid, perfected and enforceable
first priority Lien on all of the foregoing, and shall deliver to the Agent
the original of the Danish Intercompany Note duly endorsed to the order of the
Agent. The parties hereto hereby agree that the Danish Note Pledge Agreement
and any other agreement, instrument or other document executed in connection
therewith shall each constitute a "Loan Document" under the Credit Agreement.
6. The parties hereto hereby agree that on the Effective Date, after
giving effect to any Advances made on the Effective Date, the aggregate unpaid
principal amount of the Revolving Loan is $12,134,067.59 and the aggregate
unpaid principal amount of the Term Loan A is $40,451,895.80, and the Company
is liable to the Lenders for such amounts without defense, offset or
counterclaim of any kind or nature.
7. The term "Agreement", "hereof", "herein" and similar terms as used in
the Credit Agreement, and references in the other Loan Documents to the Credit
Agreement, shall mean and refer to, from and after the Effective Date, the
Credit Agreement as amended by this Amendment Agreement. Except as herein
specifically agreed, the Credit Agreement and the Loan Documents are hereby
ratified and confirmed and shall remain in full force and effect according to
their respective terms.
8. This Amendment Agreement may be executed in counterparts, each of
which shall be an original, and all of which, taken together, shall constitute
a single instrument.
9. This Amendment Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York without giving effect to
the conflicts of laws provisions thereof.
GILBERT ENGINEERING CO., INC.
By: /S/ MICHALE F. GOSS
Name: Michael F. Goss
Title: Vice President
CONNECTOR HOLDING COMPANY
By: /S/ PAUL J. HALAS
Name: Paul J. Halas
Title: Vice President, Treasurer
and Secretary
GENERAL ELECTRIC CAPITAL CORPORATION,
Individually and as Agent
By: /S/ DOUGLAS M. HITCHNER
Name: Douglas M. Hitchner
Title: Department Operations Manager
HELLER FINANCIAL, INC.
By: /S/ KAREN E. RODE
Name: Karen E. Rode
Title: Assistant Vice President
