<PAGE>
F O R M 1 0 - K
S E C U R I T I E S A N D E X C H A N G E C O M M I S S I O N
Washington, D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended July 31, 1995
or
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _______________ to _______________
Commission File Number: 0-15240
L O W R A N C E E L E C T R O N I C S, I N C.
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 44-0624411
- ------------------------ --------------------------------------
(State of incorporation) (I.R.S. Employer Identification No.)
12000 East Skelly Drive
Tulsa, Oklahoma 74128
--------------------------------------- ------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (918) 437-6881
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock, par
value $.10 per share
--------------------
(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 (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 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 for any amendment to
this Form 10-K. [X]
Aggregate Market Value of the Voting Stock Held By
Non-Affiliates on October 23, 1995, $4,201,108
Number of Shares of Common Stock
Outstanding on October 23, 1995- 3,352,458
DOCUMENT INCORPORATED BY REFERENCE
Proxy Statement for Annual Meeting of Stockholders to be held
December 12, 1995 - Part III
<PAGE>
FORM 10-K
Annual Report for Fiscal Year Ended July 31, 1995
LOWRANCE ELECTRONICS, INC.
<TABLE>
<CAPTION>
Page
----
Table of Contents
-----------------
PART I
<S> <C>
Item 1. Business.................................................. 1
Item 2. Properties................................................ 11
Item 3. Legal Proceedings......................................... 12
Item 4. Submission of Matters to a Vote of Security Holders....... 12
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters....................................... 13
Item 6. Selected Financial Data................................... 14
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations....................... 15
Item 8. Financial Statements and Supplementary Data............... 22
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure....................... 22
PART III
Item 10. Directors and Executive Officers of the Registrant........ 23
Item 11. Executive Compensation.................................... 23
Item 12. Security Ownership of Certain Beneficial Owners
and Management............................................ 23
Item 13. Certain Relationships and Related Transactions............ 23
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K....................................... 24
and F-1 to F-15
Signatures.......................................................... 28
</TABLE>
<PAGE>
LOWRANCE ELECTRONICS, INC.
Annual Report
For the Year Ended July 31, 1995
PART I
Item 1. Business
- ------- --------
General
- -------
The Company designs, manufactures, and markets sonars (also known as depth
sounders) and accessories for use in recreational and commercial boating. The
Company's sonars are principally used by sports fishermen for detecting the
presence of fish and by sports fishermen and boaters as navigational and safety
devices for determining bottom depth in lakes, rivers, and coastal waters. The
Company also designs, manufactures, and markets Loran-C and Global Positioning
System (GPS) navigational modules that may be attached to and used with certain
of the Company's liquid crystal display (LCD) sonars or with stand-alone
displays to provide a variety of navigational information. The sonars,
navigational modules, and the stand-alone navigation displays are marketed under
the Company's three trade names, "Lowrance" "Eagle", and "SeaView", primarily
through wholesalers, original equipment manufacturers (OEMs), mail-order
catalogs, mass merchandisers, and other retail outlets in all fifty states and
to a lesser and limited extent in forty-one foreign countries.
In fiscal 1994, the Company began production and marketing of a portable,
hand-held GPS receiver, which can be used in a variety of marine and non-marine
applications, such as hunting, hiking, and backpacking, and production of a
stand-alone mapping/navigational system, which provides the user with full
mapping capabilities utilizing a built-in mapping database and offering an
option which makes the unit compatible with the most popular mapping cartridges
available to boaters. These products are distributed under the trade names
"Eagle" and "Lowrance", respectively, through channels similar to the Company's
sonar products.
The Company was formed in 1957, incorporated in 1958, and re-organized as a
Delaware corporation in 1986. As used herein, the term "Company" refers to
Lowrance Electronics, Inc., (including its subsidiaries) and its predecessors,
unless the context indicates otherwise.
The Company's principal executive offices are located at 12000 East Skelly
Drive, Tulsa, Oklahoma, 74128, and its telephone number is (918) 437-6881.
Products
- --------
The Company's products consist of sonars and related equipment, such as
water temperature gauges, and Loran-C and Global Positioning System (GPS)
navigational products.
Sonars
------
Each sonar consists of a transmitter, receiver, display, and
transducer. The transmitter, receiver, and display are normally combined in
one housing connected by a cable to the transducer. The housing containing
the transmitter, receiver, and display is normally mounted where it may be
viewed by the boat operator, and the transducer is mounted under or in the
hull of a boat. The transmitter takes electrical energy and sends it
through the cable to the transducer, which converts the electrical energy
to sound pulses. These sound pulses travel through
-1-
<PAGE>
the water until they hit the bottom or an object such as fish or a
shipwreck and then bounce back as an echo. The transducer converts the
echoes back to electrical impulses which are sent to the receiver. The
receiver processes the impulses and transmits the information to the
display for use by the boater.
The Company's sonars are either waterproof or weatherproof and are
designed to withstand the harsh environments and shocks encountered by
sport boats. Sport boats, unlike offshore commercial boats, are usually
open and subject to shock, rain, salt spray, and temperature extremes that
constantly test the durability of the sonar. The Company's sonars are also
designed for the needs of sport fishermen who, unlike their commercial
counterparts, are sometimes more interested in the size, depth, and
location of individual fish, depth of the thermocline, and underwater
structures, rather than the location of large schools of fish. The
Company's sonars are designed for and used by both fresh and saltwater
sports fishermen and boaters. The Company's sonars feature a variety of
transducers manufactured by the Company in different sizes and shapes to
fit all types of boats and with different frequencies and angles for both
deep and shallow water use. The Company's sonars are distinguished by the
type of display--liquid crystal graph displays (LCDs) and non-liquid
crystal graph displays (non-LCDs).
Liquid Crystal Graph Display (LCD) Sonars. The Company's LCD products
-----------------------------------------
are easier to use, provide more advanced capabilities, and incorporate
advanced signal processing, which allows automatic operation of LCD
sonars in a way that sets the controls for best performance whether at
trolling or high speeds. The Company markets twenty-one LCD sonar
models. All of the models utilize advanced computer technology and are
keyboard controlled. The Company's LCD models graphically display the
depth of the water, bottom contour, fish, and other underwater objects
on a LCD and digitally display the water depth. Twelve models can also
digitally display the surface temperature of the water, boat speed,
and distance traveled. LCD sonars are easier to read and interpret
than the Company's flasher sonars and generally are less expensive to
buy and operate than the Company's paper graph sonars. Because LCD
sonars have no moving parts, they are more durable than other sonars.
The more advanced models usually retail from $350 to $550. The other
LCD models, with fewer features, usually retail from $99 to $300. The
Company's various LCD models range in maximum depth capabilities from
350 feet to 2,500 feet.
Non-Liquid Crystal Graph Display (Non-LCD) Sonars. The Company's non-
-------------------------------------------------
LCD sonars include paper graph displays, flasher displays, and digital
displays. Paper graphs display similar information to liquid crystal
graphs but utilize electro-sensitive paper to provide a permanent
record. Flasher models were the first type of sonar products designed
and manufactured by the Company. The display consists of a neon bulb
affixed to a spinning disk. The bulb lights when it receives a sonar
signal, flashing next to the appropriate depth mark on a calibrated
circular dial. Digital sonars are marketed and used solely to
determine water depth which is digitally depicted on a LCD. The non-
LCD sonars have varying depth capabilities ranging from 60 feet for
flashers to 1,300 feet for paper graphs and range in retail price from
$140 to $700, respectively.
-2-
<PAGE>
Accessories
-----------
The Company also has a line of accessories consisting of water
temperature gauges, cables, portable power packs, and various mounting
brackets, which are used primarily in conjunction with the Company's sonars
and GPS products.
Loran-C
--------
The Company's Loran-C navigation modules receive low-frequency radio
signals which are transmitted at precise intervals by a chain of land-based
stations. The navigation modules use the radio signals to display
navigational information, such as present position, current bearing, and
distance to destination, and course plotting on an LCD sonar or stand-alone
Loran-C display. The modules usually retail from $225 to $300, and the
stand-alone Loran-C displays (module included) usually retail from $350 to
$400.
Global Positioning System (GPS).
-------------------------------
The GPS, unlike its Loran-C counterpart, offers worldwide navigational
information for users via a constellation of twenty-one satellites plus
three spares. The system offers precise global navigation for land, sea,
and air applications providing constant updates of an individual's or
object's position in latitude, longitude, and altitude. Additionally, GPS
measures speed and direction of travel. Similar to the Loran-C optional
equipment, the Company's GPS navigational modules may be attached to and
used with three of the Company's LCD sonars. The combination sonar/GPS
models (module included) usually retail from $850 to $1,200, and the stand-
alone, gimbal-mounted GPS displays (module included) usually retail from
$400 to $1,200.
The Company's Global Map 2000 product utilizes input from either a GPS
or Loran module to display the user's position on a pictorial background
map in addition to providing the navigational information and course
plotter available in all Lowrance and Eagle GPS products. Further, the
user, at their option, can purchase mapping cartridges which contain over
7,000 highly detailed nautical charts. The Global Map 1000, the predecessor
to the Global Map 2000, began shipping in fiscal 1994. The Global Map 2000
began shipping in the first quarter fiscal 1996 and retails for
approximately $1,000 including the GPS module and cartridge reader. This
unit will also be sonar capable with the purchase of a sonar access module.
In addition to the Company's gimbal-mounted GPS products, it began
shipping a portable, hand-held GPS navigation receiver during fiscal 1994.
This product is battery-powered and features a high resolution LCD screen
with full graphics capabilities which will display navigational information
and course plotting. For fiscal 1996, the Company will begin shipping a
second hand-held GPS product, the GlobalMap Sport, with capabilities
similar to that of the Global Map 2000. These products can be used in both
marine and non-marine applications and retail from approximately $399 to
$699.
-3-
<PAGE>
Product Sales
- -------------
The following table sets forth the percentage of total sales of LCD and
non-LCD sonars and accessories, including stand-alone Loran-C and GPS
navigational products, sold by the Company in the past three fiscal years.
<TABLE>
<CAPTION>
Percent of Total Product Sales
------------------------------
1993 1994 1995
-------- -------- --------
<S> <C> <C> <C>
Type of Sonar Displays -
Liquid Crystal Graph (LCDs), including
combination navigation units 80.0% 69.1% 68.9%
Non-Liquid Crystal Graphs (non-LCDs) 5.5 5.1 4.6
GPS, including stand-alone units
and modules 4.6 13.8 16.3
Accessories, including stand-alone
Loran-C units and modules 9.9 12.0 10.2
----- ----- -----
Total 100.0% 100.0% 100.0%
===== ===== =====
</TABLE>
Distribution
- ------------
The Company markets its products under three trade names, "Lowrance",
"Eagle", and "SeaView". Sales of Eagle products, as a percent of total sales
were approximately 66% in 1993, 63% in 1994, and 58% in 1995.
The Lowrance line, with its selection of eighteen interchangeable
transducers and its more complicated keyboard, is intended for the more
sophisticated user. The wide choice of transducers available with the Lowrance
sonars allows for greater installation and operating flexibility through
selection of a transducer of the appropriate size, shape, and frequency to meet
the boater's specific needs. As a result of recent developments in transducer
design, the Company packages its Lowrance sonar models with a high-performance
transducer suitable for use on nearly all types of boat hulls. Lowrance
customers can exchange this transducer for credit toward one which better meets
their specialized requirement for installation or operation. Generally, the
boater will require special assistance with the installation and operation of a
Lowrance sonar. To this end, the Company sells its Lowrance line primarily to
boat manufacturers, wholesalers, and retailers that the Company believes have
basic knowledge of the installation, use, and service of the Lowrance line and
can pass on such knowledge to customers. Wholesalers and retailers purchasing
products in the Lowrance line are parties to agreements with the Company
providing for non-exclusive authorized dealerships and distributorships for a
term of one year. As of July 31, 1995, the Company had approximately one
thousand seven hundred fifty wholesalers and retailers that were parties to such
agreements. A sonar installation subsidy is offered to authorized dealers that
sell and install Lowrance products as a means of sharing the costs of the
installation. The Company believes that, over the past three years, the Lowrance
line has been sold primarily through dealers having the requisite level of
knowledge to sell, install, and properly instruct the fisherman and boat owner
as to the product's use. Terms of payment for products in the Lowrance line vary
based on the time of the season with the longest dating terms of 120 days being
offered for shipments during the first quarter of the fiscal year.
The Eagle line is sold primarily to mass merchandisers, mail-order catalog
companies, retail sporting goods stores, and wholesalers that usually do not
provide technical assistance to the consumer regarding the installation and
operation of sonars. Recognizing that special assistance will not be available
as to the selection of an appropriate transducer or the operation of an Eagle
sonar, the Company prepackages each Eagle sonar with a universal
-4-
<PAGE>
transducer designed to work adequately on most boats and has simplified the
sonar's operating requirements. The Eagle sonars do not have all of the
installation and operating flexibility of the Lowrance sonars but are less
expensive to the consumer. Terms of payment for products in the Eagle line are
generally thirty days. However, dating terms similar to those for the Lowrance
line are also offered.
Beginning in fiscal 1995, the Company began marketing a third brand of
sonar and GPS navigational products, "SeaView". These products are marketed
through select coastal dealers and sales of SeaView products were not a material
contributor to fiscal 1995 sales.
The Company's products are sold to fishermen and boat owners in all fifty
states and forty-one countries internationally. The Company's international
sales totaled $15,000,000 in fiscal 1993, $17,000,000 in fiscal 1994, and
$21,000,000 in fiscal 1995, representing approximately , 19%, 21%, and 23% of
total net sales in each respective fiscal year. See Note 9 to the consolidated
financial statements. The two largest international markets for the Company's
products are Canada and Australia, where the Company maintains its own
distribution warehouses for sales and distribution of its products. Sales in
neither of these two countries represented 10% or more of the Company's total
annual sales for the latest three fiscal years.
LEI Extras, Inc., a wholly-owned subsidiary, allows consumers to purchase
by mail-order extended warranties for their sonar units and accessories that
otherwise would be difficult to obtain. Because LEI Extras, Inc., is not
intended to directly compete with retail outlets that carry the Company's
products, the Company does not expect revenues from its mail-order operations to
be significant.
Sales to Wal-Mart Stores, Inc., accounted for 14% of the Company's net
sales in each of fiscal years 1993, 1994, and 1995. The top ten customers,
including Wal-Mart Stores, Inc., accounted for approximately 40%, 37%, and 35%,
in 1993, 1994 and 1995, respectively, of the Company's net sales.
Inventories and Backlog
- -----------------------
The Company normally manufactures its products in anticipation of, and not
in response to, customer orders and fills orders within a short period of time
after receipt. Thus, the Company must maintain significant inventories of
finished goods to permit it to fill orders promptly after receipt. The Company's
receipt of orders generally peaks upon the introduction of a new product and
during the peak sales months of January, February, March, and April. See "Item
7. Management's Discussion and Analysis of Financial Condition and Results of
Operations".
As of October 23, 1995, the Company's backlog of orders exceeded $10.7
million, including orders for new products which represented 39% of the backlog.
Backlog is not necessarily comparable from year to year because of the
significant impact on backlog resulting from the timing and pent-up demand for
the introduction of the Company's new products each year. While the Company
believes that the present backlog of orders is firm, the orders for its products
are subject to cancellation without further obligation by the customer at any
time prior to shipment.
Advertising and Promotion
- -------------------------
To support the sales of its products to wholesalers, mass merchandisers,
mail-order catalog companies, and others, the Company actively promotes and
advertises its products to fishermen and boat owners. The highly-technical
nature of the Company's products makes education of the user an important
-5-
<PAGE>
aspect of the Company's promotional activities. Through educating and
familiarizing the user with the practical benefits and use of sonar, the Company
endeavors to create demand for its products.
To satisfy this need, the Company utilizes a sales force of twenty-three
full-time employees to promote its products worldwide. The sales force replaces
the more traditional manufacturer's representative who may represent more than
one brand or product. The sales personnel employed by the Company have the
knowledge and time necessary to educate wholesalers, dealers, fishermen, and
boat owners on sonar products and demonstrate the practical benefits of sonar.
The sales personnel train wholesalers and dealers to sell the Company's
products, give demonstrations at tackle and boat shows, and participate in store
promotions, seminars, and talks.
To supplement the sales force, the Company has a part-time independent
sales group known as the "pro-staff". The pro-staff consists of approximately
two hundred and fifty fishing professionals, tournament fishermen, and serious
amateur fishermen trained and equipped by the Company to promote the Company's
products at fishing tournaments, store promotions, club talks, seminars, and
tackle and boat shows.
The Company also advertises its products in newspapers and magazines and on
television. In addition, the Company has a video department which produces and
distributes video catalogs and buyer guides, specific instructional tapes, and
sonar educational materials. Within such advertising expenditures are separate
advertising programs designed specifically for the Lowrance line and the Eagle
line.
Public relations activities include a variety of press releases covering
new products and feature stories highlighting use of sonar and navigational
products; press trips, where products are demonstrated to members of the outdoor
media; distribution of product photos and other technical support for writers
and broadcasters.
In addition to advertising expenses and public relations activities, the
Company incurs promotional expenses which include sponsorship of fishing
tournaments, store promotions, and contributions to environmental groups. In
fiscal 1992, the Company became an official sponsor of the Bass Angler's
Sportsman Society's (B.A.S.S.) professional tournament trail, replacing
Techsonic Industries, Inc.; The Company continues to be the official sponsor of
B.A.S.S. which is the nation's largest sportsman's organization with more than
550,000 active members. In addition to conducting the country's largest and
best-known tournament trail, B.A.S.S. publishes four major national magazines
and has more than 2,200 affiliated clubs through which the Company can
strategically market its sonar and navigational products. Dealer and
distributor support includes the availability of point-of-purchase displays,
posters, videos, and product simulators to assist in displaying the Company's
products.
-6-
<PAGE>
Competition
- -----------
Sonar and Sonar/GPS Combination Units-
- -------------------------------------
The Company encounters intense competition for its products from a number
of domestic and foreign manufacturers. More than 300 brands of sonars have been
offered to the consumer since the Company's formation in 1957. Presently, there
are more than twenty-five competitors worldwide. Historically, the sonar market,
as it relates to sonars marketed primarily to sports fishermen and recreational
boat owners, has been dominated by the Company and Techsonic Industries, Inc.
According to independent marketing research commissioned by the Company and
issued in June 1992, the Company together with this competitor have, over the
past several years, accounted for approximately 70% to 80% of sonar sales within
this market segment in the United States. In this 1992 study, the Company's
total market share (Eagle and Lowrance brands combined) was found to be higher
than that of Techsonic. The Company continues to believe that the study results
reflect current market conditions.
Competition in the sports fishing and boating market for the Company's
products is based upon a number of factors, including quality, technological
development, performance, service, and price. The primary basis for competition
is technological innovation and price. In order to maintain its competitive
position, the Company must continually enhance and improve its products and
anticipate rapid, major technological innovations and changes within the
industry.
Hand-held GPS Units -
- ---------------------
The hand-held GPS market has expanded rapidly in the past twelve months.
Target markets for these products include but are not limited to hunting,
hiking, avionics and sport fishing. The market for hand-held GPS products is
growing rapidly and is expected to surpass the size of the market for sonar
products within the next year. The Company believes that it has captured less
than 10% of this market to date.
Two competing GPS companies currently dominate this market and the Company
believes these two competitors combined control in excess of 70% of the hand-
held GPS market. The primary reason for their success is that both companies are
successfully marketing products retail priced at under $250. It is the Company's
belief that these low-cost products are being produced outside of the United
States to take advantage of lower labor costs. Both companies offer a range of
higher priced products with more features including products specifically aimed
at the avionics market. These companies presently do not compete with the
Company in the manufacture or sale of sonar products.
Currently, the Company offers one Eagle and one Lowrance hand-held product,
both of which retail for approximately $399. The Company has introduced the
Lowrance GlobalMap Sport which should begin shipping in fiscal 1996. This hand-
held product combines the features found in its existing hand-held products with
mapping capabilities similar to its permanent mount Global Map 1000 and 2000 and
will retail for under $700. There are currently no other products on the market
with these features at or below this price point.
-7-
<PAGE>
The Company has attempted to differentiate its products through quality,
technological development, performance, price, and service. The Company believes
its products offer a competitive advantage due to quality, technological
advancement, and the wide range of features. This advantage results from the
Company's long history of product innovation, such as Advanced Signal Processing
(ASP), fully waterproof sonar/Loran-C and sonar/GPS combination units, Grayline,
interchangeable high-performance transducers and dual-frequency capability, and
innovative features such as optional Broadview sonars, split screen
sonar/navigational displays, mapping capabilities and programmable "windows".
The Company has been an industry leader in offering advanced performance
products at strategically acceptable price points. Further, the Company believes
that its service programs, designed to rapidly respond to the customers' needs,
along with the extended warranty programs covering both the Eagle and Lowrance
lines, are the most comprehensive services available to the customer in the
industry.
Product Research and Development
- --------------------------------
The Company's operations and competitive position are dependent to a large
extent upon its ability to anticipate and react to the technological innovations
inherent in its industry. The Company has been engaged in the development of
sonars and the refinement of its existing sonar models since its formation in
1957. See "Patents and Trademarks" below. In 1957, the Company invented and
marketed a portable sonar capable of locating individual fish and their depths.
Among other significant sonar advancements, the Company developed and patented
an effective interface suppression system and interchangeable high speed
transducers which permit operation of sonar at boat speeds of up to 70 miles per
hour. The Company also introduced in 1979 a computer-controlled sonar with
microprocessor chip and software allowing high speed boating with accurate depth
readings and no false signals. In 1987, the Company introduced the industry's
first high resolution and "Supertwist" high visibility liquid crystal displays.
In 1989, the Company introduced the first fully waterproof sonar/navigation
combination units featuring Loran-C circuitry and software contained solely in
the antenna coupler module. Advanced Signal Processing (ASP), a breakthrough in
automatic sonar control developed in 1990, constantly evaluates the effect of
varying water conditions, boat speeds, and interference sources, adjusting the
sonar's many settings for optimum performance. Based on the Company's belief
that the military's GPS would be the preferred method of navigation in the
future, if it became affordable, the Company introduced six marine GPS products
in 1992 with most at breakthrough price points. The SupraPro ID, a new sonar
model for 1994 which retails for under $100, provided users with four times the
resolution of its nearest competitive model. Another new 1994 model, the Global
Map 1000, represented the first fully waterproof mapping unit with a built-in
mapping database and the capability of using highly-popular detailed mapping
cartridges. The AccuNav Sport hand-held GPS product, which retails for under
$400, revolutionized the GPS market in 1994 by offering users all the highly-
detailed chart plotting features previously available only on larger and more
costly gimbal-mounted GPS products at less than half the price. In 1995, the
Company introduced its latest generation of "3D" sonar products, the ULTRA III
3D and the X-70A 3D which provide expansive underwater coverage and innovative
"3D" images of bottom contours in addition to traditional detailed "2D" views.
Six new 1995 products offered the Company's new "Broadview" technology. By
purchasing a "Broadview" accessory transducer (which can be installed on the
transom or on a trolling motor), users can expand their sonar coverage to search
out -- left or right -- to detect fish and cover down and outward from the boat.
For 1996, the Company is introducing six new sonar products and three new GPS
products, two with mapping capabilities. The GlobalMap Sport will incorporate
the advanced mapping capabilities of the GlobalMap 2000 into a hand-held GPS
product.
-8-
<PAGE>
Research and development expenditures of the Company were $2,693,000 in
fiscal 1993, $2,574,000 in fiscal 1994, and $2,868,000 in fiscal 1995. The
Company plans additional development of its LCD sonars to increase performance
and versatility and is conducting research and development into other marine
electronic equipment utilizing technology with which it is familiar. Also, the
Company intends to develop additional GPS products for use in marine and non-
marine applications.
To augment its continued investment in product research and development,
the Company has invested in several new manufacturing and design technologies:
Surface Mount Technology (SMT) production equipment, Computer Aided Design (CAD)
systems, Application Specific Integrated Circuits (ASICS), Tape Automated
Bonding (TAB), Tab-On-Glass (TOG), and Liquid Crystal Display (LCD) assembly.
These advanced technologies, which were essential to the development of the
Company's new marine products, have allowed the Company to reduce its material
and manufacturing costs and to provide even greater product performance.
Manufacturing and Suppliers
- ---------------------------
Through fiscal 1993, the Company manufactured substantially all of its
products at its plant in Tulsa, Oklahoma. In fiscal 1994, the Company began
manufacturing most of its high volume transducer and cable assemblies in Mexico,
with the finished assemblies shipped to Tulsa for final inspection, packaging,
and shipping. Currently, the Company is manufacturing all of its transducers,
connectors and cable assemblies in Ensenada, Mexico at the Company's 25,000
square foot leased manufacturing facility. The manufacturing process primarily
involves the assembly of component parts purchased from suppliers. Quality
control and functional testing, including component testing, sub-assembly
testing, and final testing of finished products, are an integral part of the
Company's manufacturing process. The Company's current manufacturing facilities
are sufficient to allow for some increases in production. However, it will need
to make significant investments in fixed assets in order to greatly increase its
production capacity and to produce its products for 1996. Accordingly, the
Company expects its fiscal 1996 capital expenditures to exceed historical
levels.
Certain component parts of the Company's products are technologically
advanced and/or specifically designed for the Company's use, and thus are
presently available only through single-source suppliers, some of which are
located in foreign countries. Certain other component parts are available from a
number of suppliers, but the Company largely relies on single-source suppliers
for these parts. Purchasing from a single source in these instances allows the
Company to have more consistent quality in the component parts and to receive
quantity discounts and permits the Company to establish long-standing
relationships with its suppliers. The Company believes long-standing
relationships lead to better performance by the Company's suppliers by
shortening delivery time, improving quality, and fostering a better
understanding of and adaptation to the nature of the Company's needs and the
suppliers' capabilities.
With respect to plastic component parts, such as housings for sonars, the
Company, because of the expense, generally maintains only one mold for each
plastic part. Although typically the Company owns each mold and could move it to
another supplier, the Company is limited to one supplier at a time.
The Company has never experienced a substantial interruption in product
shipment resulting in the loss of any material amount of sales due to
unavailability of or delay in receiving component parts. However, if for any
reason (such as a protracted strike, war, fire, explosion, or wind damage
affecting production at the supplier's manufacturing plant or import
restrictions or a
-9-
<PAGE>
damaged or destroyed mold or a supplier being unable to obtain certain raw
materials necessary to produce component parts), certain critical component
parts were to become unavailable or the shipment of such parts were to be
substantially delayed, such unavailability or delay could materially and
adversely affect the Company's ability to produce its products on a timely basis
until an alternative source of supply or a replacement mold could be made
available. This could adversely affect the Company's results of operations. The
use of alternate components may, in some cases, require the Company to redesign
other components or its sub-assemblies and the Company could experience
manufacturing delays. The extent of the impact upon the Company's sales and
earnings would depend upon the products affected and the time of year of the
interruption.
To protect against interruptions and loss of sales, the Company maintains a
limited amount of safety inventory of component parts and some insurance
coverage against loss of supply. The Company limits the amount of safety stock
to avoid the cost of carrying raw material inventory and problems associated
with obsolescence. To further protect against interruptions, the Company is
selective of its suppliers, and with limited exceptions, relies upon those who
are substantial in size, financial strength, background, and experience.
Product Warranty and Support Services
- -------------------------------------
Substantially all of the Company's products are sold with a full one-year
warranty. The Company offers the consumer the right to extend the warranty for
an additional two years on sonar products by purchasing an extended warranty
package. Warranty expenses have averaged approximately 2.0% of sales during the
last three fiscal years. The Company emphasizes service after the sale in
connection with its products by providing a prepaid, pre-addressed shipping
label packed with each unit for use by the consumer located in the United States
electing to return the unit to the Company for warranty or non-warranty repairs.
The Company guarantees a three-day in-house turnaround on units sent in for
repair. Warranty and non-warranty repairs are available from the Company's plant
in Tulsa, Oklahoma, and from sixteen "depo" centers throughout the United States
and from dealers and distributors in forty-one foreign countries.
Patents and Trademarks
- ----------------------
Since 1970, the Company has obtained thirty-four patents expiring at
various dates from 1987 through 2009. Since 1970, ten design patents have also
been issued. See "Product Research and Development" above. All of the Company's
patents have been assigned to secure the Company's accounts receivable and
inventory line of credit financing. The Company does not expect that the
expiration of patents will have an adverse impact on the Company's operations.
Notwithstanding the number of patents it has obtained, the Company believes
that its technical and proprietary expertise and continuation of technological
advances are more important factors to the protection of its ongoing proprietary
interests and markets than its patents. However, the Company will under certain
limited circumstances continue to file patent applications to insure its
products remain protected from attack from competitors.
The Company has registered twenty-three trademarks with the United States
Patent Office including the trademark, "Lowrance" and the trademark "Eagle",
with an accompanying logo and has additional trademark applications filed.
-10-
<PAGE>
Employees
- ---------
As of July 31, 1995, the Company employed 791 persons on a full-time basis
of whom approximately 586 were involved in manufacturing and materials. Of the
586 full time employees involved in manufacturing and materials, 439 employees
are located in the Company's headquarters in Tulsa, Oklahoma and 147 are located
in the Company's leased manufacturing facility in Ensenada, Mexico. The
remaining 205 employees were engaged in research and development, sales and
marketing, and administration. During the year, the Company utilizes temporary
workers to allow it to adjust its workforce as its production needs change. At
July 31, 1995, approximately 100 of such workers were engaged by the Company
which are included in the above amounts. Additionally, the Company retains, on a
part-time basis, over 250 independent contractors, the "pro-staff", that assist
in promoting its products.
The Company has never experienced a work stoppage, and none of its
employees are represented by a union. Management considers its employee
relations to be excellent.
Item 2. Properties
- ------- ----------
The Company maintains its offices and manufacturing and warehouse
facilities at 12000 East Skelly Drive, Tulsa, Oklahoma, 74128. The Company's
Tulsa facilities are located on approximately 23 acres of land and consist
primarily of a masonry building containing approximately 116,000 square feet of
floor space, of which 47,000 square feet are used for manufacturing operations,
24,000 square feet for warehousing, and 45,000 square feet for office and
laboratory space.
The Company, through its Mexican subsidiary, leases a manufacturing
facility in Ensenada, Mexico. The facility has approximately 25,000 square feet,
and the Company uses this facility to manufacture most of its high volume
transducer and cable assemblies.
The Company also leases a 79,000 square foot facility for warehousing and
shipping in Tulsa, Oklahoma and 2,500 square feet and 3,500 square feet of
warehousing, shipping and office space in Australia and Canada, respectively.
The Company believes that its facilities and equipment are well suited to
its needs and are properly maintained. While the Company's current manufacturing
facilities are sufficient to allow for some increases in production, it will
however, need to make significant investments in fixed assets to greatly
increase its production capacity and to produce its new products for 1996.
Accordingly, the Company expects its fiscal 1996 capital expenditures to exceed
historical levels. The facilities and equipment are believed to be operating in
substantial compliance with all current regulations. All the facilities and
equipment are, in the opinion of the Company, adequately insured.
-11-
<PAGE>
Item 3. Legal Proceedings
- ------- -----------------
None presently. However, the Company incorporates by reference disclosures on
three Form 10Q's in Item 1, Part II, filed with the Commission on March 15,
1994, June 15, 1994 and December 15, 1994, as well as in Item 3 of Part I of the
Company's Form 10K filed on October 31, 1994, and Item 5 of the Company's Form
8K filed with the Commission on January 11, 1995 which disclosed the filing of
the lawsuit on November 12, 1993, alleging patent infringement against the
Company in the United States District Court for the District of Idaho in a case
styled as Computrol, Inc., an Idaho corporation, Plaintiff v. Lowrance
------------------------------------------------------------
Electronics, Inc., a Delaware corporation d/b/a Eagle Electronics, Inc.,
- ------------------------------------------------------------------------
Defendant, Case No. 93-0439 S HLR (the "Lawsuit") and the settlement of the
- ---------
Lawsuit on January 10, 1995. The Company entered into a Settlement Agreement
with Computrol, Inc. ("Computrol") on January 10, 1995, whereby the Company paid
four settlement payments to Computrol aggregating $1,000,000. Settlement
payments were made on January 10, 1995, March 15, 1995, and June 30, 1995. The
Company received a full and complete release from Computrol, with each party to
pay its own costs and attorneys' fees. The Company also entered into a License
Agreement as part of the Settlement Agreement on January 10, 1995, whereby for a
one-time license fee of $100,000 paid by the Company, the Company is free to use
Computrol's '912 Patent in connection with any new side-scanning product the
Company might introduce in the future or the Company's ScanPac, which the
Company elected to voluntarily cease manufacturing as an accessory on October
31, 1994. As a result of the foregoing settlement, all litigation between the
Company and Computrol was terminated.
Item 4. Submission of Matters to a Vote of Security Holders
- ------- ---------------------------------------------------
None.
-12-
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
- ------- ---------------------------------------------------------------------
As of October 23, 1995, the Company had more than 400 holders of record of
its Common Stock. The Company has not paid cash dividends for over twenty years.
The Company's inventory and accounts receivable line of credit agreement
prohibits the payment of dividends without prior written consent of the lender.
The Company anticipates that for the foreseeable future its earnings will be
retained for use in its business and no cash dividends will be paid on the
Common Stock. Declaration of dividends in the future will remain within the
discretion of the Company's Board of Directors and will depend upon the
Company's growth, profitability, financial condition, and other relevant
factors.
The Company's Common Stock is traded in the over-the-counter market and is
listed with the NASDAQ National Market System under the NASDAQ symbol of "LEIX".
The table below reflects the high and low trade prices for each of the Company's
fiscal quarters for the latest two fiscal years. The trade prices reflect inter-
dealer prices, without retail mark up, mark down, or commission and do not
necessarily represent actual transactions.
<TABLE>
<CAPTION>
1994 1995
----------------- -----------------
High Low High Low
$ $ $ $
----------------- -----------------
<S> <C> <C> <C> <C>
1st Quarter 6 1/2 3 1/2 5 3/4 3 1/4
2nd Quarter 11 1/2 6 6 1/4 3 3/4
3rd Quarter 9 1/2 6 1/4 7 5 1/4
4th Quarter 7 1/2 4 3/4 7 1/4 5
</TABLE>
-13-
<PAGE>
Item 6. Selected Financial Data
- ------- -----------------------
The selected financial information shown below has been extracted from the
consolidated financial statements included elsewhere in this report and from
other financial information of the Company not appearing herein. The balance
sheet information is presented as of the end of the fiscal years shown. The
information set forth below should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the consolidated financial statements and related notes included elsewhere
herein.
<TABLE>
<CAPTION>
Years Ended July 31,
---------------------------------------
1991 1992 1993 1994 1995
-------- -------- -------- -------- --------
(in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
Operating Data:
Net sales $ 53,586 $ 68,373 $ 79,634 $ 81,250 $ 91,116
Gross profit $ 16,397 $ 24,965 $ 28,182 $ 25,330 31,069
Income (loss) before
income taxes and
extraordinary credit $( 2,722) $ 2,697 $ 4,423 $ (1,663) 2,061
Extraordinary credit $ - $ 863 $ - $ - -
Net income (loss) $( 2,442) $ 2,501 $ 3,000 $ (672) 1,422
Per Share Data:
Weighted average number
of shares outstanding 3,416 3,416 3,403 3,350 3,352
Income (loss) before
extraordinary credit $ (.72) $ .48 $ .88 $ (.20) .42
Extraordinary credit - .25 - - -
-------- ------- ------- ------- -------
Net income (loss) $ (.72) $ .73 $ .88 $ (.20) $ .42
Balance Sheet Data:
Working capital $ 9,861 $ 8,122 $ 11,090 $ 12,872 $ 14,777
Total assets $ 22,406 $ 24,391 $ 28,376 $ 35,028 $ 40,228
Long term debt, less
current maturities $ 9,018 $ 3,452 $ 5,269 $ 9,379 $ 9,975
Stockholders' equity $ 7,535 $ 10,036 $ 12,630 $ 11,991 $ 13,452
</TABLE>
-14-
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and
- ------- ---------------------------------------------------------------
Results of Operations
---------------------
General
- -------
The following table sets forth for the periods indicated the relative
percentages that certain items of income and expense bear to net sales:
<TABLE>
<CAPTION>
Years Ended July 31,
------------------------------
1993 1994 1995
-------- -------- --------
(percent of net sales)
<S> <C> <C> <C>
Net sales 100.0% 100.0% 100.0%
Cost of sales 64.6 68.8 65.9
----- ----- -----
Gross profit 35.4 31.2 34.1
Operating expenses:
Selling and administrative 23.9 27.0 24.2
Research and development 3.4 3.2 3.2
Unusual Item - - 1.2
----- ----- -----
Operating income 8.1 1.0 5.5
Interest expense (1.1) (1.5) (1.7)
Other, net (1.4) (1.5) (1.5)
----- ----- -----
Income (loss) before income
taxes 5.6 (2.0) 2.3
Provision (benefit) for
income taxes 1.8 (1.2) .7
----- ----- -----
Net income (loss) 3.8 (.8) 1.6
===== ===== =====
</TABLE>
Demand for the Company's products is seasonal with approximately 35% to 40%
of its sales and a majority of its net income usually occurring in the third
quarter (February, March, and April). During this period, the Company's
customers purchase the Company's products so that the products will be available
to sport fishermen and recreational boat owners for the peak fishing and boating
season. Generally, with the exception of the third quarter, quarterly results
are dependent on the timing and acceptance of new product introductions,
advertising, and product availability, and as such, the Company does not
experience any consistent quarterly trends for those three quarters.
-15-
<PAGE>
The following table sets forth the quarterly results for the past three
fiscal years:
<TABLE>
<CAPTION>
Years Ended July 31 Sales Net Income (Loss)
- -------------------------- ------------------- --------------------
(dollars in thousands)
<S> <C> <C> <C> <C>
1993
----
First Quarter (Aug.-Oct.) $ 11,188 14.0% $ (743) (24.7)%
Second Quarter (Nov.-Jan.) 19,042 23.9 (20) (.7)
Third Quarter (Feb.-Apr.) 31,067 39.0 2,859 95.3
Fourth Quarter (May-July) 18,337 23.1 904 30.1
------- ----- ------- -----
Total for Year $ 79,634 100.0% $ 3,000 100.0%
======= ===== ======= =====
1994
----
First Quarter (Aug.-Oct.) $ 12,176 15.0% $ (1,076) (159.1)%
Second Quarter (Nov.-Jan.) 18,583 22.9 (88) (13.1)
Third Quarter (Feb.-Apr.) 31,614 38.9 966 143.8
Fourth Quarter (May-July) 18,877 23.2 (474) (71.6)
------- ----- ------- -----
Total for Year $ 81,250 100.0% $ (672) (100.0)%
======= ===== ======= =====
1995
----
First Quarter (Aug.-Oct.) $ 14,215 15.6% $ (1,203) (84.6)%
Second Quarter (Nov.-Jan.) 25,417 27.9 445 31.3
Third Quarter (Feb.-Apr.) 32,151 35.3 2,181 153.3
Fourth Quarter (May-July) 19,333 21.2 (1) 0.0
------- ----- ------- -----
Total for Year $ 91,116 100.0% $ 1,422 100.0%
======= ===== ======= =====
</TABLE>
Demand for the Company's products is also subject to the rapidly changing
technological environment of consumer electronics. If the Company fails to
anticipate technological innovations advanced by its competitors and introduces
technologically competitive products, demand for the Company's products will
diminish. In each of the past three fiscal years, new product sales have
accounted for 25% to 50% of total sales.
Sales of the Company's products are affected by adverse changes in economic
conditions, increased oil prices or adverse weather conditions. The Company
believes that the lower-priced and easier to use LCD sonar products available in
recent years have attracted an increasing number of less serious fishermen to
the marketplace who are more likely to reduce their purchase of sonar products
during adverse economic conditions and /or prolonged adverse weather conditions.
Accordingly, the Company's future sales could be adversely affected by a
reduction in consumer spending or by a decline in recreational boating and sport
fishing, resulting from significant increases in oil prices.
The Company's production of its products is scheduled on the basis of sales
forecasts rather than actual orders. Products are designed and manufactured and
parts are ordered in advance of the peak sales period so that products can be
shipped within days of receipt of customers' orders. The Company's profitability
is largely dependent upon its ability to accurately forecast and plan for market
demand for its products in advance of the peak selling season and to meet the
demand of the peak sales months with technologically acceptable products at
acceptable prices.
-16-
<PAGE>
The Company begins planning for sales during each fiscal year in February
or March of the preceding year. The planning includes the preparation of an
annual sales forecast for the upcoming fiscal year. The forecast is reviewed by
the Company at least monthly, and if necessary, the forecast is revised. The
forecast of products must allow time for ordering raw materials and parts, which
may take as long as five months for delivery following the Company's order, and
for manufacturing so that the Company has a build-up of finished goods inventory
sufficient to meet demand prior to the peak sales months. Failure by the Company
to accurately forecast market trends, introduction of technological
advancements, or the demand for particular models can result in a build-up of
raw material and finished goods inventory that is obsolete or must be liquidated
at reduced prices. The build-up of raw material and finished goods inventory in
anticipation of orders during the peak selling season, the cash outlays required
to purchase tooling to manufacture new products, together with extended payment
terms of up to 120 days offered by the Company, results in a significant
increase in working capital requirements from a low in June through August to a
high in September through December.
The Company uses a Material Requirements Planning system to control
inventory by eliminating stock piling and by utilizing a continuous flow method
of manufacturing. Under the continuous flow method of manufacturing, parts and
supplies are ordered and scheduled for purchase and delivery only at such time
as they are expected to be needed in the manufacturing process. The Material
Requirements Planning also results in a reduction of the Company's safety stock
and a shorter manufacturing cycle.
The following discussion and analysis relate to factors that have affected
the financial condition and operating results of the Company for fiscal years
1993 through 1995. Reference should also be made to the Consolidated Financial
Statements and the notes thereto included elsewhere herein.
Results of Operations
- ---------------------
Net Sales
---------
Net sales for fiscal 1995 increased 12% over fiscal 1994. Unit sales,
which include sonar units, combination sonar/navigation units, and stand-
alone navigation units, increased 6% and the average price per unit
increased 6%.
When comparing fiscal 1995 to 1994, unit sales increased primarily due
to: 1) an increase in sales of substantially all of the Company's Lowrance
sonar and sonar/navigation combination units which are sold primarily
through boat and motor dealers, 2) higher sales of units to OEM's and 3)
increased sales of the Company's GPS products. Increased sales of Lowrance
models and increased sales to OEM's can be attributed to continued strong
demand for new boats in the United States. The increased sales of Lowrance
products were offset by a decrease in certain of the Company's Eagle
products. The decline in Eagle units results from competitive factors and
an unusually cool and wet spring and early summer in a large number of the
Company's markets. The Company feels that Eagle product sales are more
susceptible to the effects of adverse weather during the peak selling
season.
-17-
<PAGE>
The 1995 average selling price increased 6% when compared to 1994 due
primarily to the increased sales of Lowrance products, which generally
carry higher prices and the corresponding decrease in Eagle sales which
generally carry lower prices. Also, increased sales of GPS products
contributed to the increase in the average selling price between years.
Net sales for fiscal 1994 increased 2% over fiscal 1993. Unit sales,
which include sonar units, combination sonar/navigation models, and stand-
alone navigation units, increased 7%, and the average price per unit
decreased by 3.4%.
When comparing fiscal 1994 to 1993, unit sales increased due to: (1)
an increase in sales of the highest priced (over $350 retail) Lowrance
products which are sold at retail primarily through boat and motor dealers;
(2) higher sales of units to OEM's, and (3) sales of a new hand-held GPS
product. Increased sales of the highest priced Lowrance models and
increased sales to OEM's can be attributed to increasing demand for new
boats in the United States.
The 1994 average selling price per unit decreased 3.4% when compared
to 1993 due primarily to price reductions made on several models in
response to competitive market factors.
Gross Profit
------------
The gross profit margin increased to 34.1% in fiscal 1995 from 31.2%
in 1994 due primarily to: 1) the shift in mix of units sold to the Lowrance
units which generally carry higher prices and corresponding higher margins
and, 2) the Company's 1995 product offering, which began shipping in volume
in the second quarter of 1995, generally carried higher overall margins
than the 1994 product offering. This margin differential was enhanced by
volume increases and increased manufacturing efficiencies.
The gross profit margin decreased to 31.2% in fiscal 1994 from 35.4%
in 1993 due primarily to the 3.4% decline in the average selling price per
unit as discussed above without a corresponding cost decrease.
Operating Expenses
------------------
Operating expenses, comprised of selling, administration and research
and development expenses, as a percent of net sales, decreased from 30.2%
in fiscal 1994 to 28.6% in 1995. Total costs increased $1,523,000. The
major factors contributing to this increase were 1) the $1,100,000 unusual
item related to the settlement Agreement and License Agreement with
Computrol reached on January 10, 1995, 2) other variable selling expenses,
such as freight-out and products returns cost, were up approximately
$800,000 due to increased volumes, and 3) research and development
expenditures were up $294,000 due to the Company's continuing efforts to
develop new products. Expense reductions in sales and marketing partially
offset the effects of the above increases.
-18-
<PAGE>
Operating expenses, as a percent of net sales, increased from 27.3% in
fiscal 1993 to 30.2% in 1994. Total costs increased $2.8 million. The major
factors contributing to this increase in cost were: (1) increased
marketing, advertising, and promotional expenses incurred to promote the
Company's new GPS products, to expand international distribution networks,
and in response to competitive pressures in the marketplace ($2,340,000 -
29.6% increase) and (2) increased freight out and shipping costs resulting
from higher unit sales and expanding foreign markets ($404,000 - 33%).
Interest Expense
----------------
Interest expense in fiscal 1995 increased by $317,000 from 1994 due to
an increase in the Company's effective interest rate as the prime rate, to
which most of the Company's borrowings are tied, was increased several
times.
Interest expense in fiscal 1994 increased when compared to fiscal 1993
due to higher average borrowings on the Company's revolving line of credit
($3.6 million). The higher borrowings resulted from higher inventory levels
and the net loss incurred in fiscal 1994. The effective interest rate in
1994 was approximately the same as the effective rate in fiscal 1993.
Income Taxes
------------
Effective August 1, 1993, the Company changed its method of accounting
for income taxes to adopt Statement No. 109 of the Financial Accounting
Standards Board which requires an asset and liability approach to financial
accounting and reporting for income taxes. The cumulative effect of the
change in accounting principle was determined to be immaterial at that
date.
The effective tax rate for fiscal 1993, 1994, and 1995 was 32.2%,
(59.6)%, and 31%, respectively. For Fiscal 1995, the effective tax rate is
less than the statutory federal tax rate of 34% due primarily to the
research and development credit offset by state income tax provisions. The
effective rate for fiscal 1994 was positively impacted due to the
realization of tax benefits from the research and development credit, the
recognition of foreign tax loss carryforwards, and state income tax
credits. For fiscal 1993, the tax provision is less than the statutory
Federal tax rate of 34% due primarily to the tax benefit from the research
and development credit.
Income/(Loss)
-------------
Net income (loss), as a percentage of net sales, was 1.6% in fiscal
1995, (.8%) in fiscal 1994, and 3.8% in fiscal 1993. The higher percentages
in 1995 and 1993 were primarily the result of higher gross margin
percentages during both of those years combined with increased operating
expenses as a percentage of net sales in fiscal 1994. As noted under
"Results of Operations", the margin declines in 1994 were the result of
price reductions and certain of the operating expense increases in 1994
were made in response to competitive market conditions. Management believes
that these actions were essential in order to ensure the long-term
viability of the Company, and for the most part, achieved the desired
results.
-19-
<PAGE>
Liquidity and Capital Resources
- -------------------------------
The Company's working capital needs increase in the fall and winter
months as the Company manufactures and stockpiles its products for the peak
sales months of January, February, March, and April. Also, the days
outstanding in the Company's accounts receivable increase in the off-season
due to favorable purchase terms offered to customers in order to stimulate
sales during these slow periods.
The Company's primary sources of liquidity are cash flow from
operations, an accounts receivable and inventory line of credit, and lease
financing. The line of credit allows the Company to borrow up to 85% of its
qualifying accounts receivable, 30% of qualifying raw materials inventory,
and 60% of qualifying finished goods inventory. Borrowings for inventory,
however, are limited to $10,000,000. A yearly lease line of credit is
usually established to finance the acquisition of qualifying equipment and
certain other assets.
Traditionally, the Company's near-term liquidity is at its lowest
during the period September through December due to limits on borrowings
against inventories, cash outlays required to purchase tooling to
manufacture new products, and extended payment terms offered to customers
to stimulate sales during the seasonally slow period. As previously
described, it is during this period that the Company begins to manufacture
and build-up inventory levels in anticipation of product demands for the
peak sales months. By the end of the second quarter with the historical
increase in sales, the Company's sources of liquidity begin to improve.
For the foreseeable future, these sources discussed above should
satisfy the Company's financing needs. At July 31, 1995, there were
approximately $2.5 million of additional borrowings available under the
Company's revolving line of credit. This additional availability was
depleted in early August 1995. As is consistent with prior years,
management expects to be at maximum borrowing limits through the first two
quarters of fiscal 1996. Because the line of credit will be at its maximum
levels during this period, the Company must delay payments to vendors
during these months. Delays in payments to vendors were and continue to be
more severe than normal for 1995 and early 1996 primarily as the result of
increased inventory levels discussed below. Management does not anticipate
any significant long-term negative effects, as most vendors have supplied
the Company for several years and realize that seasonality plays a
significant role in the timing of payments from the Company.
In fiscal 1995, net cash provided by operating and financing
activities was used to finance capital additions (not financed by leases)
of $1.3 million. Cash flows provided by financing activities for fiscal
1994 were used to finance capital additions (not financed by leases) of $2
million and to provide funds consumed in operating activities of $1.2
million. Cash flows from operating activities for fiscal 1993 of $4.1
million were used primarily to finance capital additions (not financed by
leases) of $2.2 million and to reduce outstanding borrowings by $1.9
million.
-20-
<PAGE>
Working Capital
---------------
The Company's working capital ratio was 2.0 at July 31, 1994 and 1.9
at July 31, 1995.
Inventory levels at July 31, 1995 are up $5.1 million or 40% from July
31, 1994. The increase in inventory levels can be attributed to 1) an
unexpected softening of sales at retail which occurred in the late
spring/early summer months of fiscal 1995. Sales levels to this point in
1995 were significantly ahead of 1994 levels. With long lead times on
certain raw material parts, it proved difficult to delay shipments of
materials from vendors on short notice. It is believed that the softening
of sales resulted from adverse weather conditions and hints of a general
economic slow-down. 2) A worldwide shortage of certain key raw material
parts developed during 1995. The Company purchases common parts used in the
computer and cellular phone industries. The Company was forced to continue
receiving certain "allocated" materials after the sales levels fell off or
run the risk of not being able to secure parts in the future. 3) Overall
sales levels have increased and distribution channels have changed
necessitating the general need to carry higher inventory levels and 4) The
Company has "level-loaded" production from its Mexican manufacturing
facility which causes higher inventory levels at year-end.
The Company does not expect substantial realization problems with this
inventory. Management expects lower inventory levels in fiscal 1996
compared to fiscal 1995.
Long-Term Debt and Revolving Credit Agreement
---------------------------------------------
During October, 1995 the Company's $26.5 million accounts receivable
and inventory line of credit and its associated $3.5 million term loan were
amended. Significant provisions of the amendment include: 1) The due date
was extended to December 1998 from December 1996; 2)The interest rate for
the revolver was reduced from prime plus 1.00% to prime plus .75%; and 3)
The term loan was funded to its original $3.5 million amount with monthly
principal payments of $23,167 plus interest at prime plus 1.5%. Additional
principal payments of $500,000 will be due on May 31, 1996 and May 31, 1997
with the remaining principal due in December 1998. In addition to the
financing described above, the Company has arranged a $2.5 million lease
line to finance its qualifying capital additions during fiscal 1996.
Capital Expenditures
--------------------
Capital expenditures were $3,191,000, $4,221,000, and $2,461,000 for
the years ended July 31, 1993, 1994, and 1995, respectively. Of the fiscal
1995 total, approximately $1.5 million is related to tooling, molds, dies,
and equipment to design and manufacture the Company's products.
-21-
<PAGE>
Effects of Inflation
- --------------------
A significant portion of the Company's cost and expenses consist of
materials, supplies, salaries, and wages that are impacted by inflation. Due to
the intense market pressures on prices, the Company does not believe that it
will be able to pass on inflationary increases in its selling prices.
Accordingly, the Company concentrates on changes in design, manufacturing
process, material scheduling, and sourcing to help contain costs. The Company
does not expect that the effects of inflation will have a significant impact on
its profitability in the near future. Additionally, a significant portion of the
Company's raw material items are sourced overseas. Significant devaluation of
the dollar relative to these currencies would not be able to be passed on in the
form of price increases to consumers.
Outlook
- -------
The Company anticipates continued profitability in fiscal 1996, primarily
as the result of continuing strong economic and market conditions, market
acceptance of the Company's 1996 product offering which includes nine new
models, and steps taken to improve gross margins and reduce operating expenses.
However, because of the dynamic environment in which the Company operates, one
or more key factors which are discussed in "Part I, Item 1. Business" could have
an adverse effect on results for the upcoming year.
Item 8. Financial Statements and Supplementary Data
- ------- -------------------------------------------
The consolidated financial statements and supplementary data are indexed in
Item 14 hereof.
Item 9. Changes in and Disagreements with Accountants on Accounting and
- ------- ---------------------------------------------------------------
Financial Disclosures
---------------------
None.
-22-
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant
- -------- --------------------------------------------------
Incorporated by reference to the Company's Proxy Statement to be filed
with the Securities and Exchange Commission in connection with the Company's
1995 annual meeting.
Item 11. Executive Compensation
- -------- ----------------------
Incorporated by reference to the Company's Proxy Statement to be filed
with the Securities and Exchange Commission in connection with the Company's
1995 annual meeting.
Item 12. Security Ownership of Certain Beneficial Owners and Management
- -------- --------------------------------------------------------------
Incorporated by reference to the Company's Proxy Statement to be filed
with the Securities and Exchange Commission in connection with the Company's
1995 annual meeting.
Item 13. Certain Relationships and Related Transactions
- -------- ----------------------------------------------
Incorporated by reference to the Company's Proxy Statement to be filed
with the Securities and Exchange Commission in connection with the Company's
1995 annual meeting.
-23-
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
- ------- ----------------------------------------------------------------
(a) Financial Statements, Schedules, and Exhibits:
---------------------------------------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Consolidated Financial Statements and Schedules:
Index to Consolidated Financial Statements F-1
Report of Independent Public Accountants F-2
Consolidated Balance Sheets - July 31, 1994 and 1995 F-3
Consolidated Statements of Income (Loss) for the Years
Ended July 31, 1993, 1994, and 1995 F-4
Consolidated Statements of Stockholders' Equity for the
Years Ended July 31, 1993, 1994, and 1995 F-5
Consolidated Statements of Cash Flows for the Years
Ended July 31, 1993, 1994, and 1995 F-6
Notes to Consolidated Financial Statements
for the Years Ended July 31, 1993, 1994, and 1995 F-7
Schedules for the Years Ended July 31, 1993, 1994, and 1995
II - Valuation and Qualifying Accounts F-15
</TABLE>
Other schedules are omitted because of the absence of conditions
under which they are required or because the required information is
included in the consolidated financial statements or notes thereto.
2. Exhibits:
3.1 Certificate of Incorporation of Lowrance Electronics,
Inc., previously filed as Exhibit 3.1 to the Company's
Registration Statement on Form S-1 (SEC File No. 33-9464),
which is incorporated herein by reference thereto.
3.2 By-Laws of Lowrance Electronics, Inc., previously filed
as Exhibit 3.2 to the Company's Registration Statement on
Form S-1 (SEC File No. 33-9464), which is incorporated
herein by reference thereto.
-24-
<PAGE>
4.1 Shareholders' Agreement dated December 22, 1978, by and
between Darrell J. Lowrance, James L. Knight, and Ben V.
Schneider previously filed as Exhibit 4.3 to the Company's
Registration Statement on Form S-1 (SEC File No. 33-9464),
which is incorporated by reference thereto.
4.2 First Amendment to Shareholders' Agreement dated October 7,
1986 by and between Darrell J. Lowrance, James L. Knight,
and Ben V. Schneider previously filed as Exhibit 4.4 to the
Company's Registration Statement on Form S-1 (SEC File No.
33-9464), which is incorporated by reference thereto.
4.3 Agreement between Stockholders dated October 7, 1986, by and
between the Company and Darrell J. Lowrance, James L.
Knight, and Ben V. Schneider previously filed as Exhibit 4.5
to the Company's Registration Statement on Form S-1 (SEC
File No. 33-9464), which is incorporated herein by reference
thereto.
10.1 1986 Incentive Stock Option Plan of the Company previously
filed as Exhibit 10.1 to the Company's Registration
Statement on Form S-1 (SEC File No. 33-9464), which is
incorporated herein by reference thereto.
10.2 Lowrance Retirement Plan and Trust previously filed as
Exhibit 10.2 to the Company's Registration Statement on Form
S-1 (SEC File No. 33-9464), which is incorporated herein by
reference thereto.
10.3 Form of Distributor Agreements previously filed as Exhibit
10.4 to the Company's Registration Statement on Form S-1
(SEC File No. 33-9464), which is incorporated herein by
reference thereto.
10.4 Form of Service Center Agreement previously filed as Exhibit
10.5 to the Company's Registration Statement on Form S-1
(SEC File No. 33-9464), which is incorporated herein by
reference thereto.
10.5 Credit Agreement dated April 27, 1989, by and between the
Company and Norwest Business Credit, Inc., previously filed
as Exhibit 10.8 to the Company's 1989 Annual Report on Form
10-K, which is incorporated herein by reference thereto.
10.6 Promissory note dated April 27, 1989, by the Company in
favor of Norwest Leasing, Inc., previously filed as Exhibit
10.7 to the Company's 1989 Annual Report on Form 10-K, which
is incorporated herein by reference thereto.
-25-
<PAGE>
10.7 1989 Stock Option Plan of the Company previously filed as
Appendix A to the Company's Proxy Statement for its Annual
Meeting of Stockholders held on December 12, 1989, which is
incorporated herein by reference thereto.
10.8 First, Second, and Third Amendments to Credit Agreement
dated April 27, 1989, by and between the Company and Norwest
Business Credit, Inc., previously filed as Exhibit 10.8 to
the Company's 1990 Annual Report on Form 10-K, which is
incorporated herein by reference thereto.
10.9 Fourth and Fifth Amendments to Credit Agreement dated April
27, 1989, by and between the Company and Norwest Business
Credit, Inc., previously filed as Exhibit 10.9 to the
Company's 1992 Annual Report on Form 10-K, which is
incorporated herein by reference thereto.
10.10 Sixth Amendment to Credit Agreement dated March 17, 1993, by
and between the Company and Norwest Business Credit, Inc.,
which is incorporated herein by reference thereto.
10.11 Seventh Amendment to Credit Agreement dated October 21,
1993, by and between the Company and Norwest Business
Credit, Inc., previously filed as Exhibit 10.11 to the
Company's 1993 Annual Report on Form 10-K, which is
incorporated herein by reference thereto.
10.12 Eighth Amendment to Credit Agreement dated September 29,
1993, by and between the Company and Norwest Business
Credit, Inc., previously filed as Exhibit 10.12 to the
Company's 1993 Annual Report on Form 10-K, which is
incorporated herein by reference thereto.
10.13 Loan and Security Agreement dated December 15, 1993, by the
Company in favor of Barclays Business Credit, Inc., filed
herewith.
10.14 Amended and Restated Secured Promissory Note dated October
16, 1995, by and between the Company and Shawmut Capital
Corporation (formally Barclays Business Credit, Inc.), filed
herewith.
10.15 Amended and Restated Revolving Credit Notes dated October
16, 1995, by and between the Company and Shawmut Capital
Corporation (formally Barclays Business Credit, Inc.), filed
herewith.
10.16 First Amendment to Loan and Security Agreement dated October
16, 1995, by and between the Company and Shawmut Capital
Corporation (formally Barclays Business Credit, Inc.), filed
herewith.
10.17 Amended and Restated Stock Pledge Agreement dated October
16, 1995, by and between the Company and Shawmut Capital
Corporation (formally Barclays Business Credit, Inc.), filed
herewith.
10.18 Unconditional Guaranty dated October 16, 1995, by and
between Sea Electronics, Inc. and Shawmut Capital
Corporation, filed herewith.
-26-
<PAGE>
10.19 First Amendment to Mortgage, Security Agreement, Financing
Statement and Assignment of Rents dated October 16, 1995,
by and between the Company and Shawmut Capital Corporation
(formally Barclays Business Credit, Inc.), filed herewith.
22.1 Subsidiaries of the Company previously filed as Exhibit
22.1 to the Company's 1993 Annual Report on Form 10-K,
which is incorporated herein by reference thereto.
22.12 Subsidiaries of the Company, filed herewith.
(b) Reports on Form 8-K:
-------------------
No reports on Form 8-K were filed for the three months ended July 31,
1995.
-27-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
LOWRANCE ELECTRONICS, INC.
DATE: October 27, 1995 BY:/s/ Darrell J. Lowrance
------------------------- ---------------------------------
Darrell J. Lowrance,
President and
Chief Executive Office9
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated and on the dates indicated:
/s/ Darrell J. Lowrance
- ------------------------
Darrell J. Lowrance President, Chief Executive October 27, 1995
Officer, and Director
(Principal Executive Officer)
/s/ Mark C. Wilmoth
- ------------------------
Mark C. Wilmoth Vice President of Finance and October 27, 1995
Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
/s/ Alpo F. Crane
- ------------------------
Alpo F. Crane Director October 27, 1995
/s/ Willard P. Britton
- ------------------------
Willard P. Britton Director October 27, 1995
/s/ Peter F. Foley, III
- ------------------------
Peter F. Foley, III Director October 27, 1995
/s/ Ronald G. Weber
- ------------------------
Ronald G. Weber Senior Vice President of October 27, 1995
Engineering and Director
/s/ Robert F. Biolchini
- ------------------------
Robert F. Biolchini Secretary and Director October 27, 1995
-28-
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
- ---------------------------------------------------------------------
<S> <C>
Report of Independent Public Accountants F-2
Consolidated Balance Sheets - July 31, 1994 and 1995 F-3
Consolidated Statements of Income (Loss) for the Years
Ended July 31, 1993, 1994, and 1995 F-4
Consolidated Statements of Stockholders' Equity for the
Years Ended July 31, 1993, 1994, and 1995 F-5
Consolidated Statements of Cash Flows for the Years Ended
July 31, 1993, 1994, and 1995 F-6
Notes to Consolidated Financial Statements for the Years Ended
July 31, 1993, 1994, and 1995 F-7
</TABLE>
Supplemental Schedule
---------------------
Schedule II - Valuation and Qualifying Accounts
for the Years Ended July 31, 1993, 1994, and 1995 F-15
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of Lowrance Electronics, Inc.:
We have audited the accompanying consolidated balance sheets of LOWRANCE
ELECTRONICS, INC., (a Delaware corporation) and subsidiaries as of July 31, 1994
and 1995, and the related consolidated statements of income (loss),
stockholders' equity, and cash flows for each of the three years in the period
ended July 31, 1995. These consolidated financial statements and the schedule
referred to below are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements and schedule 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 Lowrance Electronics, Inc., and
subsidiaries as of July 31, 1994 and 1995, and the results of their operations
and their cash flows for each of the three years in the period ended July 31,
1995, in conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule listed in the
index to financial statements is presented for purposes of complying with the
Securities and Exchange Commission's rules and is not a required part of the
basic financial statements. This information has been subjected to the auditing
procedures applied in our audits of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Tulsa, Oklahoma
September 29, 1995
F-2
<PAGE>
LOWRANCE ELECTRONICS, INC.
-------------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
ASSETS
------
<TABLE>
<CAPTION>
JULY 31,
------------------
1994 1995
----- ------
(in thousands)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalent $ 976 $ 643
Trade accounts receivable, net of reserves
of $483,000 in 1994 and $480,000 in 1995 9,158 10,665
Inventories (Note 2) 12,878 17,976
Prepaid income taxes 1,351 1,326
Prepaid expenses 708 479
Income tax refund receivable 1,066 -
------- -------
Total current assets 26,137 31,089
PROPERTY, PLANT, AND EQUIPMENT, net (Note 2) 8,744 8,691
OTHER ASSETS 147 448
------- -------
$35,028 $40,228
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Current maturities of long-term debt $ 2,857 $ 3,499
Accounts payable 5,670 7,494
Accrued liabilities:
Compensation and benefits 2,203 2,418
Product costs 1,503 1,656
Other 1,032 1,245
------- -------
Total current liabilities 13,265 16,312
------- -------
DEFERRED INCOME TAXES 393 489
------- -------
LONG-TERM DEBT, less current maturities
(Note 3) 9,379 9,975
------- -------
STOCKHOLDERS' EQUITY, per accompanying
statements (Note 5):
Preferred stock, 300,000 shares authorized,
none issued - -
Common stock, $.10 par value, 10,000,000
shares authorized, 3,352,458 shares issued 335 335
Paid-in capital 5,600 5,600
Retained earnings 6,239 7,661
Foreign currency translation adjustment (183) (144)
------- -------
Total stockholders' equity 11,991 13,452
------- -------
$ 35,028 $ 40,228
======= ======
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
F-3
<PAGE>
LOWRANCE ELECTRONICS, INC.
--------------------------
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
----------------------------------------
<TABLE>
<CAPTION>
FOR THE YEARS ENDED JULY 31,
-------------------------------------------
1993 1994 1995
-------- --------- ---------
(in thousands, except per share amounts)
<S> <C> <C> <C>
NET SALES $ 79,634 $ 81,250 $ 91,116
COST OF SALES 51,452 55,920 60,047
------- ------- -------
Gross profit 28,182 25,330 31,069
------- ------- -------
OPERATING EXPENSES:
Selling and administrative 19,056 21,966 22,095
Research and development 2,693 2,574 2,868
Unusual Item (Note 12) - - 1,100
------- ------- -------
Total operating expenses 21,749 24,540 26,063
------- ------- -------
Operating income 6,433 790 5,006
------- ------- -------
OTHER EXPENSES:
Interest 896 1,264 1,581
Other 1,114 1,189 1,364
------- ------- -------
Total other expenses 2,010 2,453 2,945
------- ------- -------
INCOME (LOSS) BEFORE INCOME TAXES 4,423 (1,663) 2,061
------- ------- -------
PROVISION (BENEFIT) FOR INCOME
TAXES (Note 7) 1,423 (991) 639
------- ------- -------
NET INCOME (LOSS) $ 3,000 $ (672) $ 1,422
======= ======= =======
NET INCOME (LOSS) PER COMMON SHARE (Note 5) $ .88 $ (.20) $ .42
======= ======= =======
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING (Note 5) 3,403 3,350 3,352
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-4
<PAGE>
LOWRANCE ELECTRONICS, INC.
--------------------------
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
----------------------------------------------
FOR THE YEARS ENDED JULY 31, 1993, 1994, AND 1995
-------------------------------------------------
(NOTE 5)
--------
<TABLE>
<CAPTION>
Foreign
Currency
Common Stock Paid-In Retained Translation
----------------
Shares Amount Capital Earnings Adjustment
------- ------- -------- --------- ------------
(in thousands)
<S> <C> <C> <C> <C> <C>
Balance -
July 31, 1992 3,416 $ 342 $ 5,783 $ 3,911 $ -
Net income - - - 3,000 -
Repurchase and
retirement of stock (69) (7) (194) - -
Foreign currency
translation adjustment - - - - (205)
----- ----- ----- ----- ------
Balance -
July 31, 1993 3,347 335 5,589 6,911 (205)
Net loss - - - (672) -
Exercised options 5 - 11 - -
Foreign currency
translation adjustment - - - - 22
----- ----- ----- ----- ------
Balance -
July 31, 1994 3,352 335 5,600 6,239 (183)
Net Income - - - 1,422 -
Foreign Currency
translation adjustment - - - - 39
Balance - ----- ----- ----- ----- ------
July 31, 1995 3,352 $ 335 $ 5,600 $ 7,661 $ (144)
===== ===== ====== ====== ======
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-5
<PAGE>
<TABLE>
<CAPTION>
LOWRANCE ELECTRONICS, INC.
--------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(Note 8)
FOR THE YEARS ENDED JULY 31,
----------------------------------------
1993 1994 1995
---------- ---------- ----------
(in thousands)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 3,000 $ (672) 1,422
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating
activities:
Depreciation 1,692 2,212 2,480
Gain on sale of fixed assets (16) (1) (8)
Change in operating assets and liabilities:
Increase in trade accounts
receivable (263) (861) (1,507)
Increase in inventories (1,949) (1,808) (5,098)
Decrease (increase) in
income tax refunds receivable 120 (1,066) 1,066
(Increase)Decrease in prepaid expenses
and prepaid income taxes (314) (559) 254
Decrease (increase) in other assets 4 80 (301)
Increase in accounts payable and
accrued liabilities 994 1,857 2,405
Increase (decrease) in other liabilities 839 (365) 135
------- ------- -------
Net cash provided by (used in)
operating activities 4,107 (1,183) 848
------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (2,179) (2,018) (1,346)
Proceeds from sale of property, plant
and equipment 16 1 8
------- ------- -------
Net cash used in investing activities (2,163) (2,017) (1,338)
------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under lines of credit 73,871 81,918 91,257
Borrowings under term loan - 3,500 -
Repayments of borrowings under lines of
credit (74,443) (78,188) (89,477)
Principal payments on term loans and
capital lease obligations (1,088) (3,600) (1,623)
Repurchase of common stock (200) - -
Additional common stock issued - 11 -
------- ------- -------
Net cash provided by (used in)
financing activities (1,860) 3,641 157
------- ------- -------
Net increase(decrease)in cash and
cash equivalent 84 441 (333)
CASH AND CASH EQUIVALENT - beginning of year 451 535 976
------- ------- -------
CASH AND CASH EQUIVALENT - end of year $ 535 $ 976 $ 643
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-6
<PAGE>
LOWRANCE ELECTRONICS, INC.
--------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
FOR THE YEARS ENDED JULY 31, 1993, 1994, AND 1995
------------------------------------------------
(1) BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business -
--------
Lowrance Electronics, Inc., and subsidiaries (the Company) design,
manufacture, and market sonars (also known as depth-sounders and fish-
finders) and other marine electronic products and accessories for use in
recreational and commercial boating. The Company's sonars are principally
used by sports fishermen for detecting the presence of fish and by sports
fishermen and boaters as navigational and safety devices for determining
bottom depth in lakes, rivers, and coastal waters. The Company's Loran-C
and Global Positioning System (GPS) navigational modules are used in
conjunction with certain of its sonar units or with stand-alone displays to
provide navigational information.
Principles of Consolidation -
---------------------------
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries. All material intercompany transactions
and accounts have been eliminated in consolidation.
Property and Depreciation -
-------------------------
Property, plant, and equipment is stated at cost. For financial reporting
purposes, depreciation is provided on a straight-line basis over the
estimated service lives of the respective classes of property. The building
is being depreciated using an estimated useful life of thirty years, while
the estimated lives for other assets range from two to fifteen years. Fully
depreciated property and equipment with a cost of approximately $10 million
is still in use.
When properties are retired, or otherwise disposed of, the cost and related
accumulated depreciation are removed from the accounts, and the resulting
gain or loss is credited or charged to operations.
Maintenance, repairs, and renewals, including replacement of minor items of
physical properties, are charged to income; major additions and betterments
to physical properties are capitalized.
Research and Development Costs -
------------------------------
Costs associated with the development of new products and changes to exist-
ing products are charged to expense as incurred and include an allocation
of indirect costs.
Foreign Currency Translations -
-----------------------------
Foreign currency transactions and financial statements are translated in
accordance with Statement of Financial Accounting Standards ("SFAS") No.
52. Assets and liabilities are translated to U.S. dollars at the current
exchange rate. Income and expense accounts are translated using the
weighted average exchange rate for the period. Adjustments arising from
translation of foreign financial statements are reflected in the cumulative
translation adjustment in the equity section of the consolidated balance
sheet. Transaction gains and losses are included in net income (loss).
Accrued Product Costs -
---------------------
Product Warranties - The majority of the Company's sales are made under a
one-year product warranty. A provision is made at the time of sale for the
estimated future warranty costs.
F-7
<PAGE>
Dealer Premium Coupons - The Company offers a sonar installation subsidy
to qualified boat and motor dealers of its Lowrance product line. At the
time of shipment, the Company provides for the estimated cost of this
program.
Returns and Refurbishments - Estimated costs related to refurbishment of
returned goods are accounted for by providing a reserve based on the
Company's historical experience. These reserves are analyzed and adjusted
quarterly. Returns are recorded as a reduction of net sales at the time
of receipt of the goods.
Cash and Cash Equivalent -
------------------------
For purposes of the Consolidated Statements of Cash Flows, the Company
considers only certificates of deposit with a maturity of three months or
less to be cash equivalents.
(2) BALANCE SHEET DETAIL
Inventories -
-----------
Inventories are priced at the lower of cost (first-in, first-out) or
market and consist of the following:
<TABLE>
<CAPTION>
1994 1995
------- -------
(in thousands)
<S> <C> <C>
Raw materials $ 6,636 $ 7,670
Work-in-process 4,010 4,764
Finished goods 2,680 6,332
Excess, obsolete, and realization reserves (448) (790)
------ ------
Total inventories $12,878 $17,976
====== ======
<CAPTION>
Property, Plant, and Equipment - 1994 1995
-------------------------------- ------- -------
(in thousands)
<S> <C> <C>
Land $ 557 $ 557
Building and improvements 3,331 3,420
Machinery and equipment 16,906 17,546
Office furniture and fixtures 4,217 4,592
------ ------
25,011 26,115
Less - accumulated depreciation 16,267 17,424
------ ------
Net property, plant, and equipment $ 8,744 $ 8,691
====== ======
</TABLE>
F-8
<PAGE>
The property, plant, and equipment accounts include the following amounts
for leased property under capitalized leases:
<TABLE>
<CAPTION>
1994 1995
------- -------
(in thousands)
<S> <C> <C>
Building and improvements $ 82 $ -
Machinery and equipment 6,378 5,383
Office furniture and fixtures 982 1,629
----- -----
7,442 7,012
Less - accumulated depreciation 4,351 3,750
----- -----
Net property, plant, and equipment
under capitalized leases $3,091 $3,262
===== =====
</TABLE>
(3) LONG-TERM DEBT AND REVOLVING CREDIT LINE
Long-term debt and the revolving credit line are summarized below:
<TABLE>
<CAPTION>
1994 1995
------- -------
(in thousands)
<S> <C> <C>
Revolving credit line $5,913 $ 7,693
Term loan, payable in monthly
installments of $23,167 with
interest at prime plus 1.5%, with
the final payment due December 1998 2,815 2,037
Capitalized equipment lease
obligations, payable in monthly
installments of approximately
$130,000, including interest at
rates from 7% to 13%, with final
payments ranging from August 1995
through November 2000 3,474 3,744
Other 34 0
------ ------
12,236 13,474
Less - current maturities 2,857 3,499
------ ------
Total long-term debt $ 9,379 $ 9,975
====== ======
</TABLE>
Future maturities of the above debt obligations at July 31, 1995, are
$3,499,000, $1,220,000, $1,076,000, $7,568,000, and $111,000 for the years
ending July 31, 1996 through 2000, respectively.
On December 15, 1993, the Company secured a $30 million financing package
which was utilized to pay off and replace its then existing $20 million
facility. Payments of $11.3 million and $1.8 million were made to the
previous primary lender as payment in full settlement of the then
outstanding obligations for the revolving credit line and the term loan,
respectively. The financing consists of a $3.5 million term loan together
with a $26.5 million revolving credit line. The term loan is payable in
monthly installments of $23,167 plus interest at 1.5% over prime (currently
8.75%). Additionally, principal payments for the term loan of $500,000 were
paid on May 31, 1994 and May 31, 1995. The revolving credit line provides
for borrowings up to $26.5 million based on varying percentages of
qualifying categories of receivables and
F-9
<PAGE>
inventories. Borrowings against inventories are limited to $10 million in
total.
During October, 1995 the Company's $26.5 million accounts receivable
and inventory line of credit and its associated $3.5 million term loan were
amended. Significant provisions of the amendment include: 1) The due date
was extended to December 1998 from December 1996; 2)The interest rate for
the revolver was reduced from prime plus 1.00% to prime plus .75%; and 3)
The term loan was funded to its original $3.5 million amount with monthly
principal payments of $23,167 plus interest at prime plus 1.5%. Additional
principal payments of $500,000 will be due on May 31, 1996 and May 31, 1997
with the remaining principal due in December 1998. In addition to the
financing described above, the Company has arranged a $2.5 million lease
line to finance its qualifying capital additions during fiscal 1996.
Current maturities for the revolving credit line are estimated based on
future results and collateral limitations. The terms of the foregoing
agreement include a commitment fee based on the unused portion of the bank
credit line in lieu of compensating balances.
The agreement requires, among other things, that the Company maintain a
minimum tangible net worth and limits the ratio of total liabilities to
tangible net worth. Additionally, the agreement limits capital expenditures
and capital leases. Violation of any of these provisions would constitute
an event of default which, if not cured, would empower the lender to
declare all amounts immediately payable.
The Company's indebtedness is collateralized by substantially all of the
Company's assets.
Average short-term borrowings under the revolving credit line and related
interest rates shown in the following table are weighted by using the
average month-end principal balances.
<TABLE>
<CAPTION>
Years Ended July 31,
---------------------------------
1993 1994 1995
---------- ---------- ---------
(in thousands)
<S> <C> <C> <C>
Highest amount borrowed $ 11,205 $ 14,824 $ 14,422
Average amount borrowed $ 6,152 $ 9,796 9,552
Weighted average interest rate 8.2% 8.3% 9.8%
</TABLE>
(4) CAPITAL LEASES
Certain equipment is leased under agreements that are structured as capital
leases. Accordingly, such equipment has been recorded as an asset, and the
discounted value of the remaining lease obligations has been recorded as a
liability in the accompanying Consolidated Balance Sheets (See Note 3).
F-10
<PAGE>
The following is a schedule by years of future minimum lease payments under
capital leases, together with the present value of the net minimum lease
payments as of July 31, 1995, (in thousands):
<TABLE>
<CAPTION>
<S> <C>
Years ending July 31:
1996 $ 1,430
1997 1,138
1998 881
1999 734
2000 320
Later years 24
------
Total minimum lease payments 4,527
Less amounts representing interest 783
------
Present value of net minimum lease payments $ 3,744
======
Current portion of obligations under
capital leases $ 1,165
Long-term portion of obligations under
capital leases $ 2,579
</TABLE>
(5) STOCKHOLDERS' EQUITY AND RELATED ITEMS
The Company's 1986 and 1989 Stock Option Plans provide for a maximum of
400,000 common shares to be issued under these Plans. Options and stock
appreciation rights granted cannot have terms greater than ten years. The
Plans provide for non-qualified stock options to be granted at an option
price of not less than 100% of the fair market value of the Company's
Common Stock at the date of grant.
Following is a summary of outstanding and exercisable options under the
Plans as of July 31 for the respective years set forth below:
<TABLE>
<CAPTION>
1993 1994 1995
-------- ------- -------
<S> <C> <C> <C>
Total outstanding 130,000 92,500 92,500
Average option price $ 3.02 $ 2.92 $ 2.92
</TABLE>
No options were exercised in 1993 or 1995. In 1994, options on 5,000
shares were exercised and options on 32,500 shares expired.
Earnings per share were computed using the weighted average number of
common shares, including common share equivalents outstanding during each
year. Stock options were not considered in the calculation of earnings per
share since they are immaterial. Earnings per share assuming full dilution
would be the same as primary earnings per share.
(6) RETIREMENT PLANS
Substantially all Company employees participate in the Lowrance Savings
Plans which requires the Company to contribute 3% of the participants'
qualified earnings to the Plans. Also, each participant may make
contributions of qualified earnings into the Plans which will be matched by
the Company at 100% for the first $10 per pay period and 50%
F-11
<PAGE>
thereafter, not to exceed 3% of compensation. Contributions made by the
Company to the Plans for the years ended July 31, 1993, 1994, and 1995 were
$501,000, $547,000, and $596,000, respectively.
(7) INCOME TAXES
The provision (benefit) for income taxes consists of the following:
<TABLE>
<CAPTION>
Years Ended July 31,
-----------------------------
1993 1994 1995
---------- ---------- -----
(in thousands)
<S> <C> <C> <C>
Current $1,820 $(1,066) $ 505
Deferred (prepaid) (397) 75 134
------ ------- -----
Total $1,423 $ (991) $ 639
====== ======= =====
</TABLE>
The provision (benefit) for income taxes differs from the amount calculated
by multiplying income (loss) before provision (benefit) for income taxes by
the statutory Federal income tax rate due to the following:
<TABLE>
<CAPTION>
Years Ended July 31,
-------------------------------
1993 1994 1995
--------- ----------- -------
<S> <C> <C> <C>
Statutory rate 34.0 % (34.0)% 34.0 %
State income taxes - (10.1) 3.8
Research & development credits (1.8) (7.2) (6.0)
Realized loss of
foreign subsidiary (.5) (9.7) -
Other .5 1.4 (.8)
---- ------ -----
Effective rate 32.2 % (59.6)% 31.0 %
==== ====== =====
</TABLE>
Effective August 1, 1993, the Company changed its method of accounting for
income taxes to adopt Statement No. 109 of the Financial Accounting
Standards Board which requires an asset and liability approach to financial
accounting and reporting for income taxes. The cumulative effect of the
change in accounting principle was determined to be immaterial at that
date. The difference between the financial statement and tax bases of
assets and liabilities is determined and deferred tax assets or liabilities
are computed for those differences that have future tax consequences. The
Company determined that no valuation allowance is necessary as of July 31,
1995.
F-12
<PAGE>
The tax effect of temporary differences giving rise to the Company's
consolidated deferred income taxes at July 31 are as follows:
<TABLE>
<CAPTION>
1994 1995
------ ------
<S> <C> <C>
Deferred tax assets -
Reserves for product costs $ 480 $ 560
Reserves for compensation and benefits 469 410
State tax credit carryforwards 168 198
Accounts receivable reserves 167 112
Other accruals 46 46
Other 21 -
----- -----
$1,351 $1,326
===== =====
Deferred tax liabilities -
Depreciation $ 393 $ 489
===== =====
</TABLE>
(8) CONSOLIDATED STATEMENTS OF CASH FLOWS
During 1993, 1994, and 1995, the Company acquired approximately $1,013,000,
$2,191,000, and $1,081,000 respectively, in equipment under capital lease
obligations. These transactions were accounted for as non-cash investing
and financing activities, and therefore, are not included in the
Consolidated Statements of Cash Flows. Interest of approximately $903,000,
$1,264,000, and $1,581,000 was paid during 1993, 1994, and 1995,
respectively. Income tax payments for 1993, 1994, and 1995 were $1,239,000,
$378,000, and $475,000 respectively. An income tax refund of $1,066,000 was
received in 1995.
(9) SALES BY GEOGRAPHIC REGION
The Company markets its products internationally through foreign
distributors, except in Canada and Australia where it has established its
own distribution operation. The following table presents a summary of
domestic, export, and foreign sales:
<TABLE>
<CAPTION>
1993 1994 1995
-------- -------- --------
(in thousands)
<S> <C> <C> <C>
Net sales:
Domestic $ 64,656 $ 63,789 $ 69,846
Export sales 6,892 6,329 8,779
Foreign sales 8,086 11,132 12,491
------- ------- -------
Total $ 79,634 $ 81,250 $ 91,116
======= ======= =======
</TABLE>
(10) SALES TO A MAJOR CUSTOMER
During 1993, 1994, and 1995, one customer accounted for approximately 14%
of consolidated net sales in each year. No other customer accounted for 10%
or more of consolidated net sales in 1993, 1994, and 1995.
F-13
<PAGE>
(11) CONCENTRATIONS OF CREDIT RISK
The Company extends credit to various companies in the marine and non-
marine markets in the normal course of business. Within these markets,
certain concentrations of credit risk exist. These concentrations of credit
risk may be similarly affected by changes in economic or other conditions
and may, accordingly, impact the Company's overall credit risk. However,
management believes that receivables are well diversified, thereby reducing
the potential credit risk and that allowances for doubtful accounts are
adequate to absorb estimated losses at July 31, 1995.
At July 31, 1994, and 1995 trade receivables related to these group
concentrations were:
<TABLE>
<CAPTION>
1994 1995
----- -----
<S> <C> <C>
Marine 61% 55%
Non-Marine 39% 45%
</TABLE>
(12) UNUSUAL ITEM
On January 10, 1995, the Company entered into a Settlement Agreement with
Computrol, Inc., resolving a patent infringement lawsuit filed against the
Company in November 1993. This legal proceeding was previously disclosed
by the Company on its Form 10-Q in Item 1 of Part II filed with the
Securities and Exchange Commission on March 15, 1994, June 15, 1994,
December 15, 1994, March 17, 1995, June 14, 1995, and the Company's 8-K, in
Item 5, filed on January 11, 1995, as well as in Item 3 of Part I of the
Company's Form 10-K filed on October 29, 1994.
The Settlement Agreement called for four payments beginning January 10,
1995, and ending June 30, 1995, totaling $1,000,000 in exchange for a
mutual release and settlement of the lawsuit. All required payments were
made by the Company in fiscal 1995.
The Company also entered into a License Agreement with Computrol, Inc., and
paid a one-time license fee of $100,000. The License Agreement allows the
Company to use the Computrol patent on any new products or the existing
product which was the subject of the lawsuit.
At this time, the Company has no current products that utilize the
technologies covered by this License Agreement and has no immediate plans
to produce and market such products. Accordingly, the $100,000 license fee
along with the $1 million settlement amount has been expensed in full
fiscal 1995.
F-14
<PAGE>
LOWRANCE ELECTRONICS, INC.
-------------------------
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
-----------------------------------------------
FOR THE YEARS ENDED JULY 31, 1993, 1994, AND 1995
-------------------------------------------------
(in thousands)
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- ---------------------------- ---------- --------------- --------------- ----------
Net (write-offs)
Balance at recoveries Balance at
beginning Charged to charged against end of
Classification of period expense reserve period
- ---------------------------- ---------- --------------- --------------- ----------
<S> <C> <C> <C> <C>
Reserve for Doubtful
- --------------------
Accounts and Sales Returns
--------------------------
Year Ended July 31, 1993 $727 $ 24 $ (18) $733
Year Ended July 31, 1994 $733 $(103) $(147) $483
Year Ended July 31, 1995 $483 $ 58 $ (61) $480
Excess, Obsolete, and
- ---------------------
Realizability Reserves
----------------------
Year Ended July 31, 1993 $327 $ 300 $(228) $399
Year Ended July 31, 1994 $399 $ 375 $(326) $448
Year Ended July 31, 1995 $448 $ 465 $(123) $790
</TABLE>
F-15
<PAGE>
EXHIBIT 10.14
AMENDED AND RESTATED
SECURED PROMISSORY NOTE
$3,500,000 October 16, 1995
FOR VALUE RECEIVED, the undersigned (together, "Borrower") hereby jointly
--------
and severally promise to pay to the order of Shawmut Capital Corporation,
successor in interest by assignment to Barclays Business Credit, Inc.
("Lender"), in such coin or currency of the United States which shall be legal
------
tender in payment of all debts and dues, public and private, at the time of
payment, the principal sum of THREE MILLION FIVE HUNDRED THOUSAND AND NO/100
DOLLARS ($3,500,000), together with interest from and after the date hereof at
the annual rate set forth below.
This Secured Promissory Note (this "Note") is the Term Note referred to in,
----
and is issued pursuant to, that certain Loan and Security Agreement between
Borrower and Lender dated as of December 15, 1993 (as amended from time to time,
the "Loan Agreement"), and is entitled to all of the benefits and security of
--------------
the Loan Agreement. All of the terms, covenants and conditions of the Loan
Agreement and all other instruments evidencing or securing the indebtedness
hereunder (including, without limitation, the "Security Documents" as defined in
------------------
the Loan Agreement) are hereby made a part of this Note and are deemed
incorporated herein in full. All capitalized terms used herein, unless
otherwise specifically defined in this Note, shall have the meanings ascribed to
them in the Loan Agreement.
Subject to Sections 3.1(C) and 3.1(D) of the Loan Agreement, the principal
balance of this Note shall bear interest at the rate per annum for the Term Loan
stated in Section 3.1(A) of the Loan Agreement, except that upon and after the
occurrence and during the continuance of an Event of Default, the principal
balance of this Note and, to the extent permitted by applicable law, past-due
interest, shall bear interest at the Default Rate. Interest on this Note shall
be calculated in the manner provided in the Loan Agreement.
The principal amount and accrued interest of this Note shall be due and
payable on the dates and in the manner hereinafter set forth:
(a) interest shall be due and payable monthly, in arrears, on the
first day of each month, commencing on the first day of the first month
after the date of this Note, and continuing until such time as the full
principal balance, together with all other amounts owing hereunder, shall
have been paid in full;
(b) principal shall be due and payable as follows:
(i) on the first day of each month, commencing on the first day
of the first month after the date of this Note, in monthly installments of
$23,167.00 each;
(ii) on May 31, 1996 and May 31, 1997, in installments of
$500,000.00 each; and
1
<PAGE>
(iii) with all remaining principal being due and payable in full
on the last day of the Original Term (or the last day of the Renewal Term
if the Loan Agreement is extended as provided in Section 3.2 thereof), or
on any earlier termination of the Loan Agreement by Borrower pursuant to
Section 3.3 thereof.
This Note shall be subject to mandatory prepayment in accordance with the
provisions of Section 2.2(C) of the Loan Agreement. Borrower may prepay this
Note in whole or in part at any time without premium or penalty, unless
otherwise specified in the Loan Agreement. All partial prepayments, whether
mandatory or voluntary, shall be applied to installments of principal in the
inverse order of their maturities.
Upon and after the occurrence of an Event of Default, Lender shall have all
of the rights and remedies set forth in Section 11 of the Loan Agreement,
----------
including the right to declare the then outstanding principal balance hereof and
all accrued interest hereon to be and the same shall thereupon become,
immediately due and payable without notice to or demand upon Borrower, all of
which Borrower hereby expressly waives.
If this Note is collected by or through an attorney at law, then Borrower
shall be obligated to pay, in addition the principal balance and accrued
interest hereof, reasonable attorney's fees and court costs, in addition to any
other charges for which Borrower is responsible under the Loan Agreement and
other Loan Documents.
Time is of the essence of this Note. To the fullest extent permitted by
applicable law, Borrower, for itself and its legal representatives, successors
and assigns, expressly waives, presentment, demand, protest, notice of dishonor,
notice of non-payment, notice of maturity, notice of protest, presentment for
the purpose of accelerating maturity, diligence in collection, and the benefit
of any exemption or insolvency laws.
Wherever possible each provision of this Note shall be interpreted in such
a manner as to be effective and valid under applicable law, but if any provision
of this Note shall be prohibited or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or remaining provisions of this
Note. No delay or failure on the part of Lender in the exercise of any right or
remedy hereunder shall operate as a waiver thereof, nor as an acquiescence in
any default, nor shall any single or partial exercise by Lender of any right or
remedy preclude any other right or remedy. Lender, at its option, may enforce
its rights against any collateral securing this Note without enforcing its
rights against Borrower, any guarantor of the indebtedness evidenced hereby or
any other property or indebtedness due or to become due to Borrower. Borrower
agrees that, without releasing or impairing Borrower's liability hereunder,
Lender may at any time release, surrender, substitute or exchange any collateral
securing this Note and may at any time release any party primarily or
secondarily liable for the indebtedness evidenced by this Note.
2
<PAGE>
Regardless of any provision contained in this Note or any of the other Loan
Documents, in no contingency or event whatsoever shall the aggregate of all
amounts that are contracted for, charged or received by Lender pursuant to the
terms of this Note or any of the other Loan Documents and that are deemed
interest under applicable law exceed the highest rate permissible under any
applicable law. No agreements, conditions, provisions or stipulations contained
in this Note or any of the other Loan Documents or the exercise by Lender of the
right to accelerate the payment or the maturity of all or any portion of the
Obligations, or the prepayment by Borrower of any of the Obligations or the
occurrence of any contingency whatsoever, shall entitle Lender to charge or
receive in any event, interest or any charges, amounts, premiums or fees deemed
interest by applicable law (such interest, charges, amounts, premiums and fees
referred to herein collectively as "Interest") in excess of the Maximum Rate and
--------
in no event shall Borrower be obligated to pay Interest exceeding such Maximum
Rate, and all agreements, conditions or stipulations, if any, which may in any
event or contingency whatsoever operate to bind, obligate or compel Borrower to
pay Interest exceeding the Maximum Rate shall be without binding force or
effect, at law or in equity, to the extent only of the excess of Interest over
such Maximum Rate. If any Interest is charged or received in excess of the
Maximum Rate ("Excess"), Borrower acknowledges and stipulates that any such
------
charge or receipt shall be the result of an accident and bona fide error, and
such Excess, to the extent received, shall be applied first to reduce the
principal Obligations and the balance, if any, returned to Borrower, it being
the intent of the parties hereto not to enter into a usurious or otherwise
illegal relationship. The right to accelerate the maturity of any of the
Obligations does not include the right to accelerate any interest that has not
otherwise accrued on the date of such acceleration, and Lender does not intend
to collect any unearned interest in the event of any such acceleration.
Borrower recognizes that, with fluctuations in the rates of interest set forth
in the Agreement and this Note and the Maximum Rate, such an unintentional
result could inadvertently occur. All monies paid to Lender hereunder or under
any of the other Loan Documents, whether at maturity or by prepayment, shall be
subject to any rebate of unearned interest as and to the extent required by
applicable law. By the execution of this Note, Borrower covenants that (i) the
credit or return of any Excess shall constitute the acceptance by Borrower of
such Excess, and (ii) Borrower shall not seek or pursue any other remedy, legal
or equitable, against Lender, based in whole or in part upon contracting for,
charging or receiving any Interest in excess of the Maximum Rate. For the
purpose of determining whether or not any Excess has been contracted for,
charged or received by Lender, all interest at any time contracted for, charged
or received from Borrower in connection with any of the Loan Documents shall, to
the extent permitted by applicable law, be amortized, prorated, allocated and
spread among all Loans throughout the full term of the Obligations. Borrower
and Lender shall, to the maximum extent permitted under applicable law, (i)
characterize any non-principal payment as an expense, fee or premium rather than
as Interest and (ii) exclude voluntary prepayments and the effects thereof. The
provisions of this paragraph shall be deemed to be incorporated into every Loan
Document. All such Loan Documents and communications relating to any Interest
owed by Borrower and all figures set forth therein shall, for the sole purpose
of computing the extent of Obligations, be automatically recomputed by Borrower,
and by any court considering the same, to give effect to the adjustments or
credits required by this paragraph. If, in any month, the effective rate of
interest hereunder, would have exceeded the Maximum Rate, then the effective
interest rate for that month shall be the Maximum Rate, and, if in future months
the effective interest rate would be otherwise be less than the Maximum Rate,
3
<PAGE>
then the effective interest rate shall remain at the Maximum Rate until such
time as the amount of interest paid hereunder equal the amount of interest which
would have been paid if the same had not been limited by the Maximum Rate.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF TEXAS.
This Note is given in increase, amendment, modification, renewal and
extension, but not in extinguishment or novation, of that certain Secured
Promissory Note dated December 15, 1993 in the original principal amount of
$3,500,000, executed by Borrower and payable to the order of Lender.
IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed and
delivered in Dallas, Texas on the date first above written.
LOWRANCE ELECTRONICS, INC.
By: /s/ Darrell J. Lowrance
----------------------------------
Darrell J. Lowrance, President
LEI EXTRAS, INC.
By: /s/ Steven L. Schneider
----------------------------------
Steven L. Schneider, President
LOWRANCE CONTRACTS, INC.
By: /s/ Terry R. Nimmo
----------------------------------
Terry R. Nimmo, Vice President
4
<PAGE>
The Common Seal of
LOWRANCE AUSTRALIA PTY LIMITED
was affixed in accordance with
its Articles of Association
in the presence of:
By: /s/ Darrel J. Lowrance
----------------------------------
Darrell J. Lowrance, Director
[SEAL]
By: /s/ Steven L. Schneider
----------------------------------
Steven L. Schneider, Director
SEA ELECTRONICS, INC.
By: /s/ Steven L. Schneider
----------------------------------
Steven L. Schneider, President
5
<PAGE>
EXHIBIT 10.15
AMENDED AND RESTATED REVOLVING CREDIT NOTE
$13,250,000 Dallas, Texas October 16, 1995
FOR VALUE RECEIVED, the undersigned (together, "Borrower"), hereby jointly
--------
and severally promise to pay to the order of SHAWMUT CAPITAL CORPORATION a
Connecticut corporation, successor by assignment to Barclays Business Credit,
Inc. ("Lender"), on or before December 31, 1998, the lesser of (i) THIRTEEN
------
MILLION TWO HUNDRED AND FIFTY THOUSAND AND NO/100 DOLLARS ($13,250,000) or (ii)
fifty percent (50%) of the unpaid principal amount of all advances made by
Lender to Borrower as "Revolving Credit Loans" under the Loan Agreement referred
to below.
Borrower also promises to pay interest on the unpaid principal amount of
this Note at the rates and at the times which shall be determined in accordance
with the provisions of the Loan and Security Agreement dated as of December 15,
1993, by and among Borrower and Lender (said agreement, as it may be amended,
restated, supplemented or otherwise modified from time to time, being herein
called the "Loan Agreement"). Capitalized terms used herein without definition
--------------
shall have the meanings set forth in the Loan Agreement.
This Note is a "Revolving Credit Note" issued pursuant to Section 2.1 of,
and is entitled to the benefits of, and subject to the provisions of, the Loan
Agreement to which reference is hereby made for a more complete statement of the
terms and conditions under which Revolving Credit Loans evidenced hereby are
made and are to be repaid.
All payments of principal and interest due in respect of this Note shall be
made without deduction, defense, set off or counterclaim, in lawful money of the
United States of America, and in same day funds and delivered to Lender by wire
transfer to Lender's account, ABA No. 0710-0028-8, Account No. 183-8549, at
Harris Trust and Savings Bank (Chicago, Illinois), Reference: Shawmut Capital
Corporation-Dallas, re: Lowrance Electronics, Inc. or at such other place as
shall be designated by notice for such purpose in accordance with the terms of
the Loan Agreement.
No agreements, conditions, provisions or stipulations contained in this
Note or any other Loan Documents or any other instrument, document or agreement
between Borrower and Lender, or default of Borrower, or the exercise by Lender
of the right to accelerate the payment of the maturity of principal and
interest, or to exercise any option whatsoever contained in any Loan Documents
or any other agreement between Borrower and Lender, or the arising of any
contingency whatsoever, shall entitle Lender to contract for, charge or receive,
in any event, interest exceeding the Maximum Legal Rate. In no event shall
Borrower be obligated to pay interest exceeding such Maximum Legal Rate and all
agreements, conditions or stipulations, if any, which may in any event or
contingency whatsoever operate to bind, obligate or compel Borrower to pay a
rate of interest exceeding the Maximum Legal Rate, shall be without binding
force or effect, at law or in equity, to the extent only of the excess of
interest over such
1
<PAGE>
Maximum Legal Rate. In the event any interest is contracted for, charged or
received in excess of the Maximum Legal Rate ("Excess"), Borrower acknowledges
------
and stipulates that any such contract, charge or receipt shall be the result of
an accident and bona fide error, and that any Excess received by Lender shall
---- ----
be applied, first, to reduce the principal then unpaid hereunder; second, to
reduce the other Obligations; and third, returned to Borrower, it being the
intention of the parties hereto not to enter at any time into a usurious or
otherwise illegal relationship. Borrower recognizes that, with fluctuations in
the Base Rate and the Maximum Legal Rate, such a result could inadvertently
occur. By the execution of this Note, Borrower covenants that (i) the credit or
return of any Excess shall constitute the acceptance by Borrower of such Excess,
and (ii) Borrower shall not seek or pursue any other remedy, legal or equitable,
against Lender, based in whole or in part upon contracting for, charging or
receiving of any interest in excess of the maximum authorized by applicable law.
For the purpose of determining whether or not any Excess has been contracted
for, charged or received by Lender, all interest at any time contracted for,
charged or received by Lender in connection with this Agreement shall be
amortized, prorated, allocated and spread in equal parts during the entire term
of this Note.
Lender and any subsequent holder of this Note agrees that before disposing
of this Note or any part hereof it will make a notation hereon of all principal
payments previously made hereunder and of the date to which interest hereon has
been paid; provided, however, that the failure to make a notation of any payment
-------- -------
made on this Note shall not limit or otherwise affect the obligation of Borrower
with respect to payments of principal or interest on this Note.
This Note is subject to voluntary prepayment by Borrower as provided in the
Loan Agreement.
Upon the occurrence of an Event of Default, the unpaid balance of the
principal amount of this Note may become, or may be declared to be, due and
payable in the manner, upon the conditions and with the effect provided in the
Loan Agreement.
The terms of this Note are subject to amendment only in the manner provided
in the Loan Agreement.
Borrower promises to pay pursuant to Section 12.4 of the Loan Agreement all
costs and expenses, including reasonable attorneys' fees, incurred in the
collection and enforcement of the Note. Borrower and endorsers of this Note
hereby consent to renewals and extensions of time at or after the maturity
hereof, without notice, and hereby waive diligence, presentment, protest, demand
and notice of every kind, including, without limitation, notices of default,
intent to accelerate and acceleration (except such notices as may be required
under the Loan Agreement).
Wherever possible each provision of this Note shall be interpreted in such
a manner as to be effective and valid under applicable law, but if any provision
of this Note shall be prohibited or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or remaining provisions of this
Note. No delay or failure on the part of Lender in the exercise of any right or
remedy hereunder shall operate as a waiver thereof, nor as an acquiescence under
any default, nor
2
<PAGE>
shall any single or partial exercise by Lender of any right or remedy preclude
any other rights or remedy. Lender, at its option, may enforce its rights
against any collateral securing this Note without enforcing its rights against
Borrower, any guarantor of the indebtedness evidenced hereby or any other
property or indebtedness due or to become due to Borrower. Borrower agrees that,
without releasing or impairing Borrower's liability hereunder, Lender may at any
time release, surrender, substitute or exchange any collateral securing this
Note and may at any time release any party primarily or secondarily liable for
the indebtedness evidenced by this Note.
TIME IS OF THE ESSENCE WITH RESPECT TO ALL OF BORROWER'S OBLIGATIONS AND
AGREEMENTS UNDER THIS NOTE.
THE LOAN AGREEMENT AND THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.
This Note is given in renewal, modification and extension, but not in
extinguishment or novation, of that certain Secured Promissory Note dated
December 15, 1993 in the original principal amount of $13,250,000, executed by
Lowrance Electronics, Inc., LEI Extras, Inc., Lowrance Contracts, Inc. and
Lowrance Australia Pty Limited.
IN WITNESS WHEREOF, Borrower has caused this Note to be executed and
delivered by its duly authorized officer, as of the day and year first written
above.
LOWRANCE ELECTRONICS, INC.
By: /s/ Darrell J. Lowrance
----------------------------------
Darrell J. Lowrance, President
LEI EXTRAS, INC.
By: /s/ Steven L. Schneider
----------------------------------
Steven L. Schneider, President
LOWRANCE CONTRACTS, INC.
By: /s/ Terry R. Nimmo
----------------------------------
Terry R. Nimmo, Vice President
3
<PAGE>
The Common Seal of
LOWRANCE AUSTRALIA PTY LIMITED
was affixed in accordance with
its Articles of Association
in the presence of:
By: /s/ Darrell J. Lowrance
----------------------------------
Darrell J. Lowrance, Director
[SEAL]
By: /s/ Steven L. Schneider
----------------------------------
Steven L. Schneider, Director
SEA ELECTRONICS, INC.
By: /s/ Steven L. Schneider
----------------------------------
Steven L. Schneider, President
4
<PAGE>
AMENDED AND RESTATED REVOLVING CREDIT NOTE
$13,250,000 Dallas, Texas October 16, 1995
FOR VALUE RECEIVED, the undersigned (together, "Borrower"), hereby jointly
--------
and severally promise to pay to the order of SHAWMUT CAPITAL CORPORATION a
Connecticut corporation, successor by assignment to Barclays Business Credit,
Inc. ("Lender"), on or before December 31, 1998, the lesser of (i) THIRTEEN
------
MILLION TWO HUNDRED AND FIFTY THOUSAND AND NO/100 DOLLARS ($13,250,000) or (ii)
fifty percent (50%) of the unpaid principal amount of all advances made by
Lender to Borrower as "Revolving Credit Loans" under the Loan Agreement referred
to below.
Borrower also promises to pay interest on the unpaid principal amount of
this Note at the rates and at the times which shall be determined in accordance
with the provisions of the Loan and Security Agreement dated as of December 15,
1993, by and among Borrower and Lender (said agreement, as it may be amended,
restated, supplemented or otherwise modified from time to time, being herein
called the "Loan Agreement"). Capitalized terms used herein without definition
--------------
shall have the meanings set forth in the Loan Agreement.
This Note is a "Revolving Credit Note" issued pursuant to Section 2.1 of,
and is entitled to the benefits of, and subject to the provisions of, the Loan
Agreement to which reference is hereby made for a more complete statement of the
terms and conditions under which Revolving Credit Loans evidenced hereby are
made and are to be repaid.
All payments of principal and interest due in respect of this Note shall be
made without deduction, defense, set off or counterclaim, in lawful money of the
United States of America, and in same day funds and delivered to Lender by wire
transfer to Lender's account, ABA No. 0710-0028-8, Account No. 183-8549, at
Harris Trust and Savings Bank (Chicago, Illinois), Reference: Shawmut Capital
Corporation-Dallas, re: Lowrance Electronics, Inc. or at such other place as
shall be designated by notice for such purpose in accordance with the terms of
the Loan Agreement.
No agreements, conditions, provisions or stipulations contained in this
Note or any other Loan Documents or any other instrument, document or agreement
between Borrower and Lender, or default of Borrower, or the exercise by Lender
of the right to accelerate the payment of the maturity of principal and
interest, or to exercise any option whatsoever contained in any Loan Documents
or any other agreement between Borrower and Lender, or the arising of any
contingency whatsoever, shall entitle Lender to contract for, charge or receive,
in any event, interest exceeding the Maximum Legal Rate. In no event shall
Borrower be obligated to pay interest exceeding such Maximum Legal Rate and all
agreements, conditions or stipulations, if any, which may in any event or
contingency whatsoever operate to bind, obligate or compel Borrower to pay a
rate of interest exceeding the Maximum Legal Rate, shall be without binding
force or effect, at law or in equity, to the extent only of the excess of
interest over such
1
<PAGE>
Maximum Legal Rate. In the event any interest is contracted for, charged or
received in excess of the Maximum Legal Rate ("Excess"), Borrower acknowledges
------
and stipulates that any such contract, charge or receipt shall be the result of
an accident and bona fide error, and that any Excess received by Lender shall
---- ----
be applied, first, to reduce the principal then unpaid hereunder; second, to
reduce the other Obligations; and third, returned to Borrower, it being the
intention of the parties hereto not to enter at any time into a usurious or
otherwise illegal relationship. Borrower recognizes that, with fluctuations in
the Base Rate and the Maximum Legal Rate, such a result could inadvertently
occur. By the execution of this Note, Borrower covenants that (i) the credit or
return of any Excess shall constitute the acceptance by Borrower of such Excess,
and (ii) Borrower shall not seek or pursue any other remedy, legal or equitable,
against Lender, based in whole or in part upon contracting for, charging or
receiving of any interest in excess of the maximum authorized by applicable law.
For the purpose of determining whether or not any Excess has been contracted
for, charged or received by Lender, all interest at any time contracted for,
charged or received by Lender in connection with this Agreement shall be
amortized, prorated, allocated and spread in equal parts during the entire term
of this Note.
Lender and any subsequent holder of this Note agrees that before disposing
of this Note or any part hereof it will make a notation hereon of all principal
payments previously made hereunder and of the date to which interest hereon has
been paid; provided, however, that the failure to make a notation of any payment
-------- -------
made on this Note shall not limit or otherwise affect the obligation of Borrower
with respect to payments of principal or interest on this Note.
This Note is subject to voluntary prepayment by Borrower as provided in the
Loan Agreement.
Upon the occurrence of an Event of Default, the unpaid balance of the
principal amount of this Note may become, or may be declared to be, due and
payable in the manner, upon the conditions and with the effect provided in the
Loan Agreement.
The terms of this Note are subject to amendment only in the manner provided
in the Loan Agreement.
Borrower promises to pay pursuant to Section 12.4 of the Loan Agreement all
costs and expenses, including reasonable attorneys' fees, incurred in the
collection and enforcement of the Note. Borrower and endorsers of this Note
hereby consent to renewals and extensions of time at or after the maturity
hereof, without notice, and hereby waive diligence, presentment, protest, demand
and notice of every kind, including, without limitation, notices of default,
intent to accelerate and acceleration (except such notices as may be required
under the Loan Agreement).
Wherever possible each provision of this Note shall be interpreted in such
a manner as to be effective and valid under applicable law, but if any provision
of this Note shall be prohibited or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or remaining provisions of this
Note. No delay or failure on the part of Lender in the exercise of any right or
remedy hereunder shall operate as a waiver thereof, nor as an acquiescence under
any default, nor
2
<PAGE>
shall any single or partial exercise by Lender of any right or remedy preclude
any other rights or remedy. Lender, at its option, may enforce its rights
against any collateral securing this Note without enforcing its rights against
Borrower, any guarantor of the indebtedness evidenced hereby or any other
property or indebtedness due or to become due to Borrower. Borrower agrees that,
without releasing or impairing Borrower's liability hereunder, Lender may at any
time release, surrender, substitute or exchange any collateral securing this
Note and may at any time release any party primarily or secondarily liable for
the indebtedness evidenced by this Note.
TIME IS OF THE ESSENCE WITH RESPECT TO ALL OF BORROWER'S OBLIGATIONS AND
AGREEMENTS UNDER THIS NOTE.
THE LOAN AGREEMENT AND THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.
This Note is given in renewal, modification and extension, but not in
extinguishment or novation, of that certain Secured Promissory Note dated
December 15, 1993 in the original principal amount of $13,250,000, executed by
Lowrance Electronics, Inc., LEI Extras, Inc., Lowrance Contracts, Inc. and
Lowrance Australia Pty Limited.
IN WITNESS WHEREOF, Borrower has caused this Note to be executed and
delivered by its duly authorized officer, as of the day and year first written
above.
LOWRANCE ELECTRONICS, INC.
By: /s/ Darrell J. Lowrance
----------------------------------
Darrell J. Lowrance, President
LEI EXTRAS, INC.
By: /s/ Steven L. Schneider
----------------------------------
Steven L. Schneider, President
LOWRANCE CONTRACTS, INC.
By: /s/ Terry R. Nimmo
----------------------------------
Terry R. Nimmo, Vice President
3
<PAGE>
The Common Seal of
LOWRANCE AUSTRALIA PTY LIMITED
was affixed in accordance with
its Articles of Association
in the presence of:
By: /s/ Darrell J. Lowrance
----------------------------------
Darrell J. Lowrance, Director
[SEAL]
By: /s/ Steven L. Schneider
----------------------------------
Steven L. Schneider, Director
SEA ELECTRONICS, INC.
By: /s/ Steven L. Schneider
----------------------------------
Steven L. Schneider, President
4
<PAGE>
EXHIBIT 10.16
FIRST AMENDMENT TO
LOAN AND SECURITY AGREEMENT
---------------------------
THIS FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT ("this Amendment") is
--------------
made and entered into as of the 16th day of October, 1995, by and among SHAWMUT
CAPITAL CORPORATION, a Connecticut corporation, successor by assignment to
Barclays Business Credit, Inc. ("Lender"), LOWRANCE ELECTRONICS, INC., a
------
Delaware corporation ("Lowrance"), LEI EXTRAS, INC., a Delaware corporation
--------
("LEI"), LOWRANCE AUSTRALIA PTY LIMITED, a New South Wales, Australia
---
corporation ("Lowrance Australia") (ACN 050 050 612), LOWRANCE CONTRACTS, INC.,
------------------
a Delaware corporation ("Lowrance Contracts") and SEA ELECTRONICS, INC., an
------------------
Oklahoma corporation ("Sea Electronics") (Lowrance, LEI, Lowrance Australia and
---------------
Lowrance Contracts are herein individually and collectively called "Original
--------
Borrower"; Original Borrower and Sea Electronics are herein individually and
- --------
collectively called "Borrower").
--------
RECITALS
A. Original Borrower and Lender have entered into that certain Loan and
Security Agreement, dated December 15, 1993 (the "Loan Agreement").
--------------
B. Original Borrower and Lender desire to amend the Loan Agreement and
the Other Agreements as hereinafter set forth in order to, among other things,
include Sea Electronics as a borrower thereunder.
NOW, THEREFORE, in consideration of the premises herein contained and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties, intending to be legally bound, agree as follows:
ARTICLE I
Definitions
-----------
1.01 Capitalized terms used in this Amendment are defined in the Loan
Agreement, as amended hereby, unless otherwise stated.
ARTICLE II
Amendments
----------
2.01 Amendment to Section 1.1; Amendment of Certain Definitions. Effective
as of the date hereof, the definitions of "Bank", "Base Rate", "Deed of Covenant
---- --------- ----------------
to Pay", "Domestic Borrowers", "Loans", "Notes", "Other Agreements", "Revolving
- ------ ------------------ ----- ----- ---------------- ---------
Credit Note", "Stock Pledge Agreement" and "Term Note" contained in Section 1.1
- ----------- ---------------------- --------- -----------
of the Loan Agreement are hereby deleted in their entirety, and the following
shall be substituted therefor:
"Bank - Shawmut Bank Connecticut, N.A."
----
1
<PAGE>
"Base Rate - the rate of interest generally announced or quoted by
---------
Bank from time to time as its base rate for commercial loans, whether or
not such rate is the lowest rate charged by Bank to its most preferred
borrowers; and if such base rate for commercial loans is discontinued by
Bank as a standard, a comparable reference rate designated by Bank as a
substitute therefor shall be the Base Rate."
"Deed of Covenant to Pay - the Deed of Covenant to Pay executed by the
-----------------------
Domestic Borrowers (other than Sea Electronics) on or about the Closing Date.
"Domestic Borrowers - collectively, Lowrance, LEI, Lowrance Contracts
------------------
and Sea Electronics."
"Loans - all loans and advances made by Lender pursuant to this
-----
Agreement, including, without limitation, all Revolving Credit Loans, the
Term Loan, the Equipment Loans, each payment made pursuant to a guaranty of
a foreign currency purchase contract, and each payment made pursuant to a
Letter of Credit."
"Notes - the Term Note, the Equipment Notes and the Revolving Credit
-----
Notes."
"Other Agreements - any and all agreements, instruments and documents
----------------
(other than this Agreement and the Security Documents), heretofore, now or
hereafter executed by Borrower and delivered to Lender in respect to the
transactions contemplated by this Agreement, including, without limitation,
the Term Note, the Equipment Notes, the Revolving Credit Notes and the Deed
of Covenant to Pay."
"Revolving Credit Notes - collectively, the Amended and Restated
----------------------
Revolving Credit Notes to be executed on or about the date of the First
Amendment Agreement by Borrower in favor of Lender, each in the principal
amount of $13,250,000 to evidence the Revolving Credit Loans, which shall
be in the form of Exhibit A-2 attached hereto."
-----------
"Stock Pledge Agreement - the Amended and Restated Stock Pledge
----------------------
Agreement to be executed by Lowrance on or about the date of the First
Amendment Agreement in favor of Lender by which Lowrance shall grant to
Lender a first priority security interest in all of the issued and
outstanding shares of capital stock of LEI, Lowrance Contracts, Sea
Electronics, Lowrance Electronics Deutschland GmbH and Electronica Lowrance
De Mexico S.A. De C.V. owned by Lowrance as security for the obligations of
Lowrance under this Agreement.
"Term Note - the Amended and Restated Secured Term Note to be executed
---------
by Borrower in favor of Lender on or about the date of the First Amendment
Agreement to evidence the Term Loan, which shall be in the form of Exhibit
-------
A-1 attached hereto."
---
2
<PAGE>
2.02. Amendment to Section 1.1; Addition of Certain Definitions.
Effective as of the date hereof, Section 1.1 of the Loan Agreement is hereby
-----------
amended by adding the following definitions thereto in alphabetical order:
"Equipment Loan - the Loans to be made by Lender to Borrower pursuant to
--------------
Section 2.2(B) of this Agreement."
--------------
"Equipment Note - each Equipment Promissory Note to be executed by Borrower
--------------
in favor of Lender as provided in Section 2.2(B) of the Agreement, which
--------------
shall be in the form of Exhibit A-3 to this Agreement."
-----------
"First Amendment Agreement - the First Amendment to Loan and Security
-------------------------
Agreement, dated as of October 16, 1995, by and between Lender and
Borrower."
"Rate Reduction Event - Borrower's Consolidated Tangible Net Worth, at July
--------------------
31, 1996, shall be equal to or in excess of $14,215,000 as reflected in the
financial statements required to be delivered by Borrower to Lender in
accordance with Section 9.1(J)(i) of this Agreement."
-----------------
"Sea Electronics - Sea Electronics, Inc., an Oklahoma corporation."
---------------
"Termination Amount - at any date means the sum of (a) the amount of the
------------------
Term Loans and Equipment Loans then outstanding, plus (b) the face amount
of all Credit Enhancements then outstanding, plus (c) the Revolving Credit
Commitment at such date."
2.03 Amendment to Section 1.5. Effective as of the date hereof, Section
-------
1.5 of the Loan Agreement is hereby deleted in its entirety, and the following
- ---
shall be substituted therefor:
"1.5 Borrower. All references to "Borrower" herein shall refer to and
--------
include each of Lowrance, LEI, Lowrance Australia, Lowrance Contracts and
Sea Electronics. Except as otherwise provided herein, all representations
contained herein shall be deemed individually made by each "Borrower" and
each of the covenants, agreements, and obligations set forth herein shall
be deemed to be the joint and separate covenants, agreements, and
obligations of the Borrowers. For purposes of Section 11.1 of this
------------
Agreement, references to the "Borrower" shall be deemed to mean and include
each of Lowrance, LEI, Lowrance Australia, Lowrance Contracts and Sea
Electronics or all of them. Any notice, request, consent, report or other
information or agreement delivered to Lender by any Borrower shall be
deemed to be ratified by, consented to, and also delivered by the other
Borrowers. Lowrance, LEI, Lowrance Australia, Lowrance Contracts and Sea
Electronics, each recognize and agree that each covenant and agreement of
"Borrower" or "Borrowers" in this Agreement and in the Other Agreements
shall create a joint and several obligation of such entities, which may be
enforced against such entities jointly, or each entity separately. Without
limiting the terms of this Agreement, and the Other Agreements, the
security interests granted under this
3
<PAGE>
Agreement and the Security Documents in properties, assets and collateral
of the "Domestic Borrowers" shall include and extend to the properties,
interests, assets, and collateral of such entities, and any of them.
Similarly, the term "Obligations" shall include, without limitation, all or
any of them, to Lender, whether such obligations, limitations, and
indebtedness shall be joint, several, joint and several, or individual."
2.04 Addition to Section 1.6. Effective as of the date hereof, the Loan
Agreement is hereby amended to include a new Section 1.6, which shall read in
-----------
its entirety as follows:
"1.6 Sea Electronics. Notwithstanding any other provision of this
---------------
Agreement, the Revolving Credit Notes or the Term Note to the contrary, it
is hereby agreed that Sea Electronics is not assuming payment of the unpaid
balance of the Obligations arising under the Revolving Credit Notes and the
Term Note which was incurred by Lowrance, LEI, Lowrance Australia and/or
Lowrance Contracts pursuant to Loan Documents prior to the date of the
First Amendment Agreement (collectively, the "Lowrance Obligations").
--------------------
However, the parties hereto agree and acknowledge that the preceding
sentence shall not (i) limit any contingent liability of Sea Electronics
for payment of any of the Lowrance Obligations which arises pursuant to
that certain Unconditional Guaranty dated as of the date of the First
Amendment Agreement executed by Sea Electronics for the benefit of Lender
(as amended, the "Sea Electronics Guaranty"), or (ii) limit the liens in
------------------------
favor of Lender granted by Sea Electronics against the assets of Sea
Electronics as a result of Sea Electronics becoming an additional named
"Borrower", which liens shall secure payment of all of Sea Electronics'
--------
Obligations to Lender whether arising in connection with this Agreement,
the Sea Electronics Guaranty or otherwise, whether currently existing or
hereafter arising. Solely for purposes of determining on or after the date
hereof which outstanding Obligations constitute Lowrance Obligations, all
payments received by Lender on account of the Obligations shall be deemed
to be applied first in payment of the Lowrance Obligations which arose
under the Revolving Credit Notes, then to the other Lowrance Obligations
until such time as the Lowrance Obligations shall have been reduced to
zero, and thereafter to the other Obligations as hereinafter set forth."
2.05 Amendment to Section 2.1(B)(i). Effective as of the date hereof,
Section 2.1(B)(i) is hereby deleted in its entirety, and the following shall be
- -----------------
substituted therefor:
"(i) the aggregate outstanding amount of all Revolving Loans advanced
against Eligible Accounts and Eligible Inventory of LEI, Lowrance Contract
and Sea Electronics shall not exceed $500,000 at any time;".
2.06 Amendment to Section 2.1(B)(v). Effective as of the date hereof,
Section 2.1(B)(v) of the Loan Agreement is hereby amended by deleting therefrom
- -----------------
the reference to the dollar amount "$1,000,000" and substituting in lieu
thereof the dollar amount "$3,000,000".
2.07 Amendment to Section 2.2. Effective as of the date hereof, Section
-------
2.2 of the Loan Agreement is hereby deleted in its entirety, and the following
- ---
shall be substituted therefor:
4
<PAGE>
"2.2 Term Loan and Equipment Loans.
-----------------------------
(A) Term Loan. Borrower hereby represents and warrants that on
---------
December 15, 1993, Lender made a term loan to Borrower in the principal
amount of $3,500,000 (the "Existing Term Loan"), which Existing Term Loan
------------------
is repayable in accordance with the terms of that certain secured
promissory note dated December 15, 1993, executed by Borrower and payable
to the order of Lender. Borrower further represents and warrants that as
of the date of the First Amendment Agreement, the aggregate unpaid
principal balance of Existing Term Loan is $1,990,326, and such amount is
unconditionally owed by Borrower to Lender without offset, defense or
counterclaim of any kind, nature or description whatsoever. Subject to the
terms and conditions of the First Amendment Agreement, Borrower and Lender
hereby agree that (i) on the date of the First Amendment Agreement, Lender
shall make an additional term loan to Borrower in the amount of $1,509,674,
the proceeds of which shall be used by Borrower solely to finance its
seasonal working capital needs, and (ii) such additional term loan and the
Existing Term Loan shall be combined into a single term loan of $3,500,000
(the "Term Loan"), which shall be repayable in accordance with the terms of
---------
the Term Note and shall be secured by the Collateral.
(B) Equipment Loans - Lender agrees that it will, from time to time
---------------
during the term hereof so long as no Default or Event of Default exists,
make Loans to Borrower to finance Borrower's purchase of Equipment for use
in Borrower's business; provided, however, that no Equipment Loan may
-------- -------
exceed 100% of the actual cost (exclusive of taxes, transportation and
shipping charges and installation, make-ready fees or expenses) of such
Equipment. All such Equipment Loans shall be in such amounts as may be
mutually agreed upon, but in no event to be less than $100,000.00 each, or
to exceed in the aggregate during the term hereof $750,000.00. The
Equipment Loans shall be secured by the Collateral, and shall bear interest
at the rate specified in Section 3.1(A) hereof. Prior to funding of an
--------------
Equipment Loan, Borrower will execute and deliver to Lender an Equipment
Note to evidence the applicable Equipment Loan. Each Equipment Loan will
be repayable in monthly principal installments calculated on an five-year
amortization, beginning the month after the funding of such Equipment Loan.
Each Equipment Loan will mature simultaneously with the termination of the
Revolving Credit Loans. Accrued interest on each Equipment Loan will be
payable monthly, beginning the month after the funding of such Equipment
Loan.
(C) Mandatory Prepayments. If Borrower sells any of its Equipment or
---------------------
real Property, the proceeds of which exceed $25,000 in the aggregate during
any fiscal year of Borrower, or if any of the Collateral is taken by
condemnation, Borrower shall pay to Lender, unless otherwise agreed by
Lender, as and when received by Borrower and as a mandatory prepayment of
the Term Loan (or, at Lender's option, such of the other Obligations as
Lender may elect), a sum equal to the proceeds received by Borrower from
such sale or condemnation or at Borrower's option, Borrower may use the
proceeds from
5
<PAGE>
Equipment sales to acquire replacement Equipment in accordance with Section
-------
7.4 of this Agreement."
---
2.08 Amendment to Section 3.1(A). Effective as of the date hereof, Section
-------
3.1(A) of the Loan Agreement is hereby amended by deleting the first sentence
- ------
thereof in its entirety and substituting the following two sentences in lieu
thereof:
"Outstanding principal on the Loans shall bear interest, calculated
daily, at the following rates per annum (individually called, as
applicable, an "Applicable Annual Rate"): (i) the Term Loan shall bear
----------------------
interest at a fluctuating rate per annum equal to 1.50% above the Base
Rate, (ii) the Equipment Loans shall bear interest at a fluctuating rate
per annum equal to 1.50% above the Base Rate and (iii) the Revolving Credit
Loans shall bear interest (a) prior to the occurrence of the Rate Reduction
Event, at a fluctuating rate per annum equal to 0.75% above the Base Rate
and (b) after the occurrence of the Rate Reduction Event (if applicable),
at a fluctuating rate per annum equal to 0.50% above the Base Rate. Each
Applicable Annual Rate shall be increased or decreased, as the case may be,
by an amount equal to any increase or decrease in the Base Rate, with such
adjustments to be effective as of the opening of business on the day that
any such change in the Base Rate becomes effective."
2.09 Amendment to Section 3.1(J)(i)(b). Effective as of the date hereof,
Section 3.1(J)(i)(b) of the Loan Agreement is hereby amended by deleting
- --------------------
therefrom the reference to the percentage "3.00%" and substituting in lieu
thereof the percentage "2.50%."
2.10 Amendment to Section 3.2. Effective as of the date hereof, Section
-------
3.2 of the Loan Agreement is hereby deleted in its entirety, and the following
- ---
shall be substituted therefor:
"3.2. Term of Agreement. Subject to Lender's right to cease making
-----------------
Loans to Borrower at any time upon or after the occurrence of a Default or
Event of Default, (a) this Agreement shall be in effect, through and
including December 31, 1998 (the "Original Term"), and (b) unless
-------------
terminated by either party upon at least 180 days notice to the other party
prior to the end of the Original Term, this Agreement shall automatically
renew for an additional one year period, through and including December 31,
1999 (the "Renewal Term"). Notwithstanding anything herein to the
------------
contrary, Lender may terminate this Agreement without notice upon or after
the occurrence of an Event of Default."
2.11 Amendment to Section 3.3(A). Effective as of the date hereof, Section
-------
3.3(A) of the Loan Agreement is hereby deleted in its entirety, and the
- ------
following shall be substituted therefor:
"(A) Borrower may terminate Lender's agreement to make Equipment
Loans and the Term Loan at any time, without premium or penalty. Further,
Borrower may prepay the Equipment Loans and the Term Loan at any time
during the term of this Agreement, in whole or in part, without premium or
penalty, but any portions so prepaid
6
<PAGE>
may not be reborrowed. However, if Borrower chooses to terminate the
Revolving Credit Commitment and this Agreement in its entirety, Borrower
shall give Lender at least 30 days prior written notice thereof, and, on
the designated termination date, all of the Obligations shall become due
and payable in immediately available funds. At the effective date of any
such termination of the Revolving Credit Commitment and this Agreement,
Borrower shall pay to Lender (in addition to the then outstanding
principal, accrued interest and other charges owing under the terms of this
Agreement and any of the other Loan Documents), as liquidated damages for
the loss of the bargain and not as a penalty, an amount equal to (i) 1.0%
of the Termination Amount if such termination occurs during the period from
October 16, 1995 through December 31, 1996; and (ii) 0.67% of the
Termination Amount if such termination occurs during the period from
January 1, 1997 through December 31, 1997. If termination occurs after
December 31, 1997, no termination charge shall be payable."
2.12 Amendment to Section 9.3(A). Effective as of the date hereof, Section
-------
9.3(A) of the Loan Agreement is hereby amended by deleting therefrom the
- ------
reference to the dollar amount "$9,500,000" and substituting in lieu thereof the
dollar amount "$10,300,000."
2.13 Amendments to Other Loan Documents. Effective as of the date hereof,
all references in the Loan Documents to "Barclays Business Credit, Inc." shall
be deemed references to "Shawmut Capital Corporation" and all references therein
to "Barclays" shall be deemed references to "Shawmut".
2.14 Exhibit A-1 - Form of Term Note. Effective as of the date hereof, all
references in the Loan Agreement to Exhibit A-1, which is the form of the Term
-----------
Note, shall be deemed references to the Exhibit A-1 which is attached hereto as
-----------
Annex A.
- -------
2.15 Exhibit A-2 - Form of Revolving Credit Notes. Effective as of the
date hereof, all references in the Loan Agreement to Exhibit A-2, which is the
-----------
form of Revolving Credit Note, shall be deemed references to the Exhibit A-2
-----------
which is attached hereto as Annex B.
-------
2.16 Exhibit A-3 - Form of Equipment Note. Effective as of the date
hereof, a new Exhibit A-3 is hereby added to the Loan Agreement, which Exhibit
----------- -------
A-3 shall be the form of the Equipment Note and shall be in the form of Annex C
- --- -------
attached hereto.
2.17 Exhibit B - Borrower's Business Locations. Effective as of the date
hereof, all references in the Loan Agreement to Exhibit B, which is entitled
---------
"Borrower's Business Locations", shall be deemed references to the Exhibit B
---------
which is attached hereto as Annex D.
-------
2.18 Exhibit D - Jurisdiction of Organization and Qualification. Effective
as of the date hereof, all references in the Loan Agreement to Exhibit D, which
---------
is entitled "Jurisdiction of Organization and Qualification", shall be deemed
references to the Exhibit D which is attached hereto as Annex E.
--------- -------
7
<PAGE>
2.19 Exhibit E - Corporate Names. Effective as of the date hereof, all
references in the Loan Agreement to Exhibit E, which is entitled "Corporate
---------
Names", shall be deemed references to the Exhibit E which is attached hereto as
---------
Annex F.
- -------
2.20 Exhibit F - Patents, Trademarks, Copyrights, and Licenses. Effective
as of the date hereof, all references in the Loan Agreement to Exhibit F, which
---------
is entitled "Patents, Trademarks, Copyrights, and Licenses", shall be deemed
references to the Exhibit F which is attached hereto as Annex G.
--------- -------
2.21 Exhibit G - Capital Structure. Effective as of the date hereof, all
references in the Loan Agreement to Exhibit G, which is entitled "Capital
---------
Structure", shall be deemed references to the Exhibit G which is attached hereto
---------
as Annex H.
-------
2.22 Exhibit I - Litigation. Effective as of the date hereof, all
references in the Loan Agreement to Exhibit F, which is entitled "Litigation",
---------
shall be deemed references to the Exhibit G which is attached hereto as Annex I.
--------- -------
2.23 Exhibit J - Property Owned or Leased by Borrower. Effective as of the
date hereof, all references in the Loan Agreement to Exhibit J, which is
---------
entitled "Property Owned or Leased by Borrower", shall be deemed references to
the Exhibit J which is attached hereto as Annex J.
--------- -------
2.24 Exhibit L - Taxing Authorities. Effective as of the date hereof, all
references in the Loan Agreement to Exhibit L, which is entitled "Taxing
---------
Authorities", shall be deemed references to the Exhibit L which is attached
---------
hereto as Annex K
-------
2.25 Exhibit O - Capitalized Leases. Effective as of the date hereof, all
references in the Loan Agreement to Exhibit O, which is entitled "Capitalized
---------
Leases", shall be deemed references to the Exhibit O which is attached hereto as
---------
Annex L.
- -------
2.26 Exhibit P - Operating Leases. Effective as of the date hereof, all
references in the Loan Agreement to Exhibit P, which is entitled "Operating
---------
Leases", shall be deemed references to the Exhibit P which is attached hereto as
---------
Annex M.
- -------
2.27 Exhibit S - Permitted Liens. Effective as of the date hereof, all
references in the Loan Agreement to Exhibit S, which is entitled "Permitted
---------
Liens", shall be deemed references to the Exhibit S which is attached hereto as
---------
Annex N.
- -------
8
<PAGE>
ARTICLE III
Conditions Precedent
--------------------
3.01 Conditions to Effectiveness. The effectiveness of this Amendment is
subject to the satisfaction of the following conditions precedent, unless
specifically waived in writing by Lender:
(a) Lender shall have received (i) this Amendment, duly executed by
Borrower, (ii) the Term Note, in the form of Annex A attached hereto, duly
-------
executed by Borrower, (iii) two (2) Revolving Credit Notes, in the form of Annex
-----
B attached hereto, duly executed by Borrower, (iv) a good standing certificate
- -
for each Borrower, issued within 15 days of the date of this Amendment by the
Secretary of State or appropriate official of the jurisdiction of its
incorporation, (v) a closing certificate signed by the Chief Executive Officer
and Chief Financial Officer of Borrower, dated as of the date of this Amendment,
stating that (A) the representations and warranties set forth in Section 8 of
---------
the Loan Agreement are true and correct as of such date, (B) Borrower is on such
date in compliance with all the terms and provisions set forth in the Loan
Agreement, as amended by this Amendment, and (C) on such date no Default or
Event of Default has occurred or is continuing, except for such Defaults or
Events of Default as have been specifically disclosed in writing by Borrower to
Lender, (vi) written instructions from Borrower directing the application of
proceeds of the Loans to be funded by Lender on the date of this Amendment,
(vii) a company general certificate in the form of Annex O attached hereto
-------
(hereinafter referred to as the "Company General Certificate") certified by the
---------------------------
Secretary or Assistant Secretary of each Borrower acknowledging (A) that such
Borrower's Board of Directors has met and has adopted, approved, consented to
and ratified resolutions which authorize the execution, delivery and performance
by such Borrower of this Amendment and all other Loan Documents to which such
Borrower is or is to be a party, and (B) the names of the officers of such
Borrower authorized to sign this Amendment and each of the other Loan Documents
to which such Borrower is or is to be a party hereunder including the
certificates contemplated herein) together with specimen signatures of such
officers, (viii) the Guaranty in the form of Annex P, attached hereto, duly
-------
executed by Sea Electronics, (ix) the Stock Pledge Agreement in the form of
Annex Q attached hereto, duly executed by Sea Electronics, along with the
- -------
original stock certificates related to such pledge and all applicable stock
powers related thereto, and (x) such additional documents, instruments and
information as Lender or its legal counsel may request;
(b) The representations and warranties contained herein, in the Loan
Agreement and in the Other Agreements, as each is amended hereby, shall be true
and correct as of the date hereof, as if made on the date hereof;
(c) No Default or Event of Default shall have occurred and be
continuing, unless such Default or Event of Default has been specifically
disclosed in writing by Borrower to Lender; and
9
<PAGE>
(d) All corporate proceedings taken in connection with the
transactions contemplated by this Amendment and all documents, instruments and
other legal matters incident thereto shall be satisfactory to Lender and its
legal counsel.
ARTICLE IV
No Waiver
---------
Except as specifically provided in this Amendment, nothing contained in
this Amendment shall be construed as a waiver by Lender of any covenant or
provision of the Loan Agreement, the Other Agreements, this Amendment, or of any
other contract or instrument between Borrower and Lender, and the failure of
Lender at any time or times hereafter to require strict performance by Borrower
of any provision thereof shall not waive, affect or diminish any right of Lender
to thereafter demand strict compliance therewith. Lender hereby reserves all
rights granted under the Loan Agreement, the Other Agreements, this Amendment
and any other contract or instrument between Borrower and Lender.
ARTICLE V
Ratifications, Representations and Warranties
---------------------------------------------
5.01 Ratifications. The terms and provisions set forth in this Amendment
shall modify and supersede all inconsistent terms and provisions set forth in
the Loan Agreement and the Other Agreements, and, except as expressly modified
and superseded by this Amendment, the terms and provisions of the Loan Agreement
and the Other Agreements are ratified and confirmed and shall continue in full
force and effect. Borrower and Lender agree that the Loan Agreement and the
Other Agreements, as amended hereby, shall continue to be legal, valid, binding
and enforceable in accordance with their respective terms.
5.02 Representations and Warranties. Borrower hereby represents and
warrants to Lender that (a) the execution, delivery and performance of this
Amendment and any and all Other Agreements executed and/or delivered in
connection herewith have been authorized by all requisite corporate action on
the part of Borrower and will not violate the Certificate/Articles of
Incorporation or Bylaws of Borrower; (b) the representations and warranties
contained in the Loan Agreement, as amended hereby, and any Other Agreement are
true and correct on and as of the date hereof and on and as of the date of
execution hereof as though made on and as of each such date; (c) no Default or
Event of Default under the Loan Agreement, as amended hereby, has occurred and
is continuing; and (d) Borrower is in full compliance with all covenants and
agreements contained in the Loan Agreement and the Other Agreements, as amended
hereby.
ARTICLE VI
Miscellaneous Provisions
------------------------
6.01 Survival of Representations and Warranties. All representations and
warranties made in the Loan Agreement or any Other Agreement, including, without
limitation, any document furnished in connection with this Amendment, shall
survive the execution and delivery
10
<PAGE>
of this Amendment and the Other Agreements, and no investigation by Lender or
any closing shall affect the representations and warranties or the right of
Lender to rely upon them.
6.02 Reference to Loan Agreement. Each of the Loan Agreement and the Other
Agreements, and any and all other agreements, documents or instruments now or
hereafter executed and delivered pursuant to the terms hereof or pursuant to the
terms of the Loan Agreement, as amended hereby, are hereby amended so that any
reference in the Loan Agreement and such Other Agreements to the Loan Agreement
shall mean a reference to the Loan Agreement as amended hereby.
6.03 Expenses of Lender. As provided in the Loan Agreement, Borrower
agrees to pay on demand all costs and expenses incurred by Lender in connection
with the preparation, negotiation and execution of this Amendment and the Other
Agreements executed pursuant hereto and any and all amendments, modifications,
and supplements thereto, including, without limitation, the costs and fees of
Lender's legal counsel, and all costs and expenses incurred by Lender in
connection with the enforcement or preservation of any rights under the Loan
Agreement, as amended hereby, or any Other Agreements, including, without,
limitation, the costs and fees of Lender's legal counsel.
6.04 Severability. Any provision of this Amendment held by a court of
competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
6.05 Successors and Assigns. This Amendment is binding upon and shall
inure to the benefit of Lender and Borrower and their respective successors and
assigns, except that Borrower may not assign or transfer any of its rights or
obligations hereunder without the prior written consent of Lender.
6.06 Counterparts. This Amendment may be executed in one or more
counterparts, each of which when so executed shall be deemed to be an original,
but all of which when taken together shall constitute one and the same
instrument.
6.07 Effect of Waiver. No consent or waiver, express or implied, by Lender
to or for any breach of or deviation from any covenant or condition by Borrower
shall be deemed a consent to or waiver of any other breach of the same or any
other covenant, condition or duty.
6.08 Headings. The headings, captions, and arrangements used in this
Amendment are for convenience only and shall not affect the interpretation of
this Amendment.
6.09 Applicable Law. THIS AMENDMENT AND ALL OTHER AGREEMENTS EXECUTED
PURSUANT HERETO SHALL BE DEEMED TO HAVE BEEN MADE AND TO BE PERFORMABLE IN AND
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TEXAS.
11
<PAGE>
6.10 Final Agreement. THE LOAN AGREEMENT AND THE OTHER AGREEMENTS, EACH AS
AMENDED HEREBY, REPRESENT THE ENTIRE EXPRESSION OF THE PARTIES WITH RESPECT TO
THE SUBJECT MATTER HEREOF ON THE DATE THIS AMENDMENT IS EXECUTED. THE LOAN
AGREEMENT AND THE OTHER AGREEMENTS, AS AMENDED HEREBY, MAY NOT BE CONTRADICTED
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. NO
MODIFICATION, RESCISSION, WAIVER, RELEASE OR AMENDMENT OF ANY PROVISION OF THIS
AMENDMENT SHALL BE MADE, EXCEPT BY A WRITTEN AGREEMENT SIGNED BY BORROWER AND
LENDER.
6.11 Release. BORROWER HEREBY ACKNOWLEDGES THAT IT HAS NO DEFENSE,
COUNTERCLAIM, OFFSET, CROSS-COMPLAINT, CLAIM OR DEMAND OF ANY KIND OR NATURE
WHATSOEVER THAT CAN BE ASSERTED TO REDUCE OR ELIMINATE ALL OR ANY PART OF ITS
LIABILITY TO REPAY THE "OBLIGATIONS" OR TO SEEK AFFIRMATIVE RELIEF OR DAMAGES OF
ANY KIND OR NATURE FROM LENDER. BORROWER HEREBY VOLUNTARILY AND KNOWINGLY
RELEASES AND FOREVER DISCHARGES LENDER, ITS PREDECESSORS, OFFICERS, DIRECTORS,
AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS, FROM ALL POSSIBLE CLAIMS, DEMANDS,
ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES, AND LIABILITIES WHATSOEVER,
KNOWN OR UNKNOWN, ANTICIPATED OR UNANTICIPATED, SUSPECTED OR UNSUSPECTED, FIXED,
CONTINGENT, OR CONDITIONAL, AT LAW OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART
ON OR BEFORE THE DATE THIS AMENDMENT IS EXECUTED, WHICH THE BORROWER MAY NOW OR
HEREAFTER HAVE AGAINST LENDER, ITS PREDECESSORS, OFFICERS, DIRECTORS, AGENTS,
EMPLOYEES, SUCCESSORS AND ASSIGNS, IF ANY, AND IRRESPECTIVE OF WHETHER ANY SUCH
CLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAW OR REGULATIONS, OR
OTHERWISE, AND ARISING FROM ANY "LOANS", INCLUDING, WITHOUT LIMITATION, ANY
CONTRACTING FOR, CHARGING, TAKING, RESERVING, COLLECTING OR RECEIVING INTEREST
IN EXCESS OF THE HIGHEST LAWFUL RATE APPLICABLE, THE EXERCISE OF ANY RIGHTS AND
REMEDIES UNDER THE LOAN AGREEMENT OR OTHER AGREEMENTS, AND NEGOTIATION FOR AND
EXECUTION OF THIS AMENDMENT.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
12
<PAGE>
IN WITNESS WHEREOF, this Amendment has been executed and is effective as of
the date first above-written.
"LENDER"
SHAWMUT CAPITAL CORPORATION
By: /s/ Hance VanBeber
------------------------------------
Hance VanBeber, Vice President
"BORROWER"
LOWRANCE ELECTRONICS, INC.
By: /s/ Darrell J. Lowrance
------------------------------------
Darrell J. Lowrance, President
LEI EXTRAS, INC.
By: /s/ Steven L. Schneider
------------------------------------
Steven L. Schneider, President
13
<PAGE>
The Common Seal of
LOWRANCE AUSTRALIA PTY LIMITED
was affixed in accordance with
its Articles of Association
in the presence of:
By: /s/ Darrell J. Lowrance
------------------------------------
Darrell J. Lowrance, Director
[SEAL]
By: /s/ Steven L. Schneider
------------------------------------
Steven L. Schneider, Director
LOWRANCE CONTRACTS, INC.
By: /s/ Terry R. Nimmo
------------------------------------
Terry R. Nimmo, Vice President
SEA ELECTRONICS, INC.
By: /s/ Steven L. Schneider
------------------------------------
Steven L. Schneider, President
14
<PAGE>
EXHIBIT 10.17
AMENDED AND RESTATED STOCK PLEDGE AGREEMENT
-------------------------------------------
THIS AMENDED AND RESTATED STOCK PLEDGE AGREEMENT (this "Agreement") is
---------
entered into as of the 16th day of October, 1995, between LOWRANCE ELECTRONICS,
INC., a Delaware corporation ("Pledgor"), and SHAWMUT CAPITAL CORPORATION., a
-------
Connecticut corporation, successor by assignment to Barclays Business Credit,
Inc. ("Pledgee"). All capitalized terms used but not otherwise defined herein
-------
shall have the meanings ascribed to them in that certain Loan and Security
Agreement, dated December 15, 1993, by and among Pledgee, Pledgor, LEI Extras,
Inc., a Delaware corporation ("LEI"), Lowrance Australia Pty Limited, a New
---
South Wales Australian corporation ("Lowrance Australia") and Lowrance
------------------
Contracts, Inc., a Delaware corporation ("Lowrance Contracts") (Pledgor, LEI,
------------------
Lowrance Australia and Lowrance Contracts are together referred to herein as
"Original Borrower") (the "Original Loan Agreement"), as amended by that certain
----------------- -----------------------
First Amendment to Loan and Security Agreement dated the date hereof by and
among Pledgee, Original Borrower and Sea Electronics, Inc. ("Sea Electronics")
---------------
(Original Borrower and Sea Electronics are together referred to herein as
"Borrower") (the "First Amendment") (the Original Loan Agreement, as amended by
-------- ---------------
the First Amendment, and as otherwise amended, modified or extended from time to
time, the "Loan Agreement").
--------------
1. For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, and as collateral security for and to secure the
prompt payment and performance by Pledgor in full of the Secured Obligations (as
defined below), Pledgor hereby assigns to Pledgee and grants a continuing
security interest to Pledgee in any and all shares of capital stock (including,
without limitation, all shares of common stock identified on Schedule I attached
----------
hereto) of each of LEI, Lowrance Contracts, Sea Electronics, Lowrance
Electronics Deutschland GmbH and Electronica Lowrance De Mexico S.A. De C.V.
(collectively, the "Subsidiaries") whether now owned or hereafter acquired by
------------
Pledgor, together with all proceeds, products and increases thereof and
substitutions and replacements therefor (collectively, the "Collateral").
----------
As used in this Agreement, "Secured Obligations" shall mean any and all (a)
-------------------
Obligations of Borrower to Pledgee, and (b) extensions, renewals, modifications,
increases and replacements of the foregoing. The term "Secured Obligations"
shall include, without limitation, all unpaid accrued interest thereon and all
costs and expenses payable as hereinafter provided; (i) whether now existing or
hereafter incurred; (ii) whether direct, indirect, primary, absolute, secondary,
contingent, secured, unsecured, matured or unmatured; (iii) whether such
indebtedness is from time to time reduced and thereafter increased, or entirely
extinguished and thereafter reincurred; (iv) whether such indebtedness was
originally contracted with Pledgee or with another or others; (v) whether or not
such indebtedness is evidenced by a negotiable or nonnegotiable instrument or
any other writing; and (vi) whether such indebtedness is contracted by Borrower,
individually or jointly or severally with another or others; provided, however,
-------- -------
that notwithstanding any other provision of this Agreement, the Secured
Obligations shall not include any obligations of
1
<PAGE>
Pledgor, LEI or Lowrance Contracts arising under that certain Deed of Covenant
to Pay dated the date hereof, by and among Pledgee, Pledgor, LEI and Lowrance
Contracts.
2. Pledgor represents and warrants that (i) Pledgor holds absolute
ownership of the Collateral, free and clear of all liens and encumbrances; (ii)
there are no restrictions upon the transfer of any of the Collateral, other than
as may appear and may be referenced on the face of the certificates or arising
under applicable state or federal securities laws; (iii) Pledgor owns (a) 100%
of the issued and outstanding capital stock of LEI, (b) 100% of the issued and
outstanding capital stock of Lowrance Contracts, (c) 100% of the issued and
outstanding capital stock of Sea Electronics, (d) 99.8% of the issued and
outstanding capital stock of Electronica Lowrance De Mexico S.A. De C.V., and
(e) 100% of the issued and outstanding capital stock of Lowrance Electronics
Deutschland GmbH; (iv) there are no existing obligations to issue capital stock
or securities convertible into capital stock of any Subsidiary and in no event
will Pledgor permit any such stock or securities to be issued prior to payment
in full of the Secured Obligations; and (v) there are no existing securities or
obligations of any Subsidiary the amount of which obligation is based, in whole
or in part, on the value of any Subsidiary's capital stock or any increase
thereof, nor will Pledgor permit any such securities or obligations to exist
prior to payment in full of the Secured Obligations.
3. With respect to the Collateral and all proceeds, products and
increases thereof and substitutions therefor, Pledgor hereby appoints Pledgee
its attorney-in-fact, to arrange for the transfer of the Collateral on the books
of the Subsidiaries to the name of Pledgee subsequent to the occurrence and
during the continuance of any Event of Default (as hereinafter defined)
hereunder. However, Pledgee shall be under no obligation to do so.
4. During the term of this Agreement, provided no Event of Default has
occurred and then exists hereunder, Pledgor shall have the right, where
applicable, to vote the Collateral on all corporate questions, and Pledgee
shall, if necessary, execute due and timely proxies in favor of Pledgor for this
purpose.
5. Upon the occurrence of any Event of Default and during the continuance
thereof, Pledgee may exercise all of the rights and privileges in connection
with the Collateral to which a transferee may be entitled as the record holder
thereof, together with the rights and privileges otherwise granted hereunder.
Pledgee shall be under no obligation to exercise any of such rights or
privileges.
6. If, with the consent of Pledgee, Pledgor shall substitute or exchange
other securities in place of those herein mentioned, all of the rights and
privileges of Pledgee and all of the obligations of Pledgor with respect to the
securities originally pledged or held as Collateral hereunder shall be forthwith
applicable to such substituted or exchanged securities.
7. Pledgee shall be authorized at all times to collect all dividends,
interest payments, and other amounts (including amounts received or receivable
upon redemption or repurchase) that may be, or become, due on any of the
Collateral; provided, however, that Pledgee shall deliver to Pledgor, in the
-------- -------
form received, all such dividends, payments and amounts which
2
<PAGE>
Pledgee receives prior to the occurrence and during the continuance of an Event
of Default. If Pledgor receives any such dividends, payments or amounts after
the occurrence and during the continuance of an Event of Default, it shall
immediately endorse and deliver the same to Pledgee in the form received. All
such amounts which Pledgee receives and retains in accordance with the terms of
this Paragraph 7 shall be applied to reduce the principal amount outstanding on
the Secured Obligations in inverse order of maturity. Pledgee is, furthermore,
authorized to give receipts in the name of Pledgor for any amounts so received.
Pledgee shall be under no obligation to collect any such amounts.
8. In the event that, during the term of this Agreement, subscription
warrants or any other rights or options shall be issued in connection with the
Collateral, such warrants, rights, or options shall be immediately assigned, if
necessary, by Pledgor to Pledgee. If any such warrants, rights or options are
exercised by Pledgor, all new securities so acquired by Pledgor shall be
immediately assigned to Pledgee, shall become part of the Collateral and shall
be endorsed to, delivered to and held by Pledgee under the terms of this
Agreement in the same manner as the securities originally pledged.
9. In the event that, during the term of this Agreement, any share,
dividend, reclassification, readjustment or other change is declared or made in
the capital structure of Borrower, all new, substituted and additional shares,
or other securities, issued by reason of any such change shall become part of
the Collateral and shall be endorsed to, delivered to and held by Pledgee under
the terms of this Agreement in the same manner as the securities originally
pledged.
10. Pledgor authorizes Pledgee, without notice or demand, and without
affecting the liability of Pledgor hereunder, from time to time to:
(A) hold security in addition to and other than the Collateral for
the payment of the Secured Obligations or any part thereof, and exchange,
enforce, waive and release any Collateral or any part thereof, or any other such
security, or part thereof;
(B) release any of the endorsers or guarantors of the Secured
Obligations secured hereunder or any part thereof, or any other person
whomsoever liable for or on account of such Secured Obligations;
(C) on the transfer of all or any part of the Secured Obligations
secured hereunder, Pledgee may assign all or any part of Pledgee's security
interest in the Collateral and shall be fully discharged thereafter from all
liability and responsibility with respect to the Collateral so transferred,
provided that in no event shall Pledgee be liable for any act or omission or
negligent act or negligent omission with respect to the Collateral, other than
acts or omissions constituting gross negligence, willful misconduct or tortious
breach of contract. The transferee of the Collateral shall be vested with the
rights, powers and remedies of Pledgee hereunder, and with respect to any
Collateral not so transferred, Pledgee shall retain all rights, powers and
remedies hereby given; and
3
<PAGE>
(D) Pledgor hereby waives any right to require Pledgee to proceed
against Pledgor, any other Borrower or any other person whomsoever, to proceed
against or exhaust any collateral or any other security held by Pledgee, or to
pursue any other remedy available to Pledgee. Pledgor further waives any
defense arising by reason of any liability or other defense of Pledgor or of any
other person. Pledgor shall have no right to require Pledgee to marshal
collateral.
11. It shall not be necessary for Pledgee to inquire into the powers of
Pledgor or the officers, directors or agents acting or purporting to act on
behalf of Pledgor, and any obligations made or created in reliance on the
professed exercise of such powers shall be secured hereunder.
12. To the extent permitted by applicable law and in the Loan Agreement,
Pledgee shall be under no duty or obligation whatsoever to make or give any
presentments, demands for performance, notices of non-performance, protests,
notices of protest, or notices of dishonor in connection with the Secured
Obligations.
13. The occurrence of any of the following events shall at the option of
Pledgee constitute an event of default (an "Event of Default") under this
----------------
Agreement:
(A) the occurrence of an event of default under the Loan Agreement or
a default under the Other Agreements (as defined in the Loan Agreement); or
(B) default or nonperformance of any term or condition of this
Agreement, which default or nonperformance remains unremedied for a period of
five (5) days after Pledgor receives notice thereof from Pledgee.
14. Upon the occurrence and during the continuance of any Event of
Default, the Secured Obligations shall, at the option of Pledgee, become
immediately due and payable, and Pledgee shall have all the rights and remedies
provided in the Uniform Commercial Code as enacted in the State of Texas at the
date of this Agreement and, in this connection, the Pledgee may, upon ten (10)
days' notice to the Pledgor sent to the persons identified in and in the same
manner as provided in the Loan Agreement, without liability for any diminution
in value or price which may have occurred, sell all or any part of the
Collateral in such manner and for such price as Pledgee may determine. At any
public sale Pledgee shall be free to purchase all or any part of the Collateral.
Pledgee shall receive the proceeds of any such sale or sales, and, after
deducting therefrom any and all reasonable costs and expenses incurred in
connection with the sale thereof, apply the net proceeds toward the payment of
the Secured Obligations secured hereunder, including interest, reasonable
attorneys' fees, and all other reasonable costs and expenses incurred by Pledgee
hereunder and under any other agreement between Pledgor and Pledgee. If such
proceeds be more than sufficient to pay the same, then in case of a surplus,
such surplus shall be accounted for and paid over to Pledgor or as directed by a
court of competent jurisdiction, provided Pledgor be not then indebted to
Pledgee otherwise under this Agreement or any Other Agreement or for any cause
whatsoever.
4
<PAGE>
15. Upon indefeasible repayment in full in cash of the Secured
Obligations, Pledgee will promptly, at Pledgor's expense, deliver all of the
Collateral to Pledgor along with all instruments of assignment executed in
connection therewith, and execute and deliver to Pledgor such documents as
Pledgor shall reasonably request to evidence Pledgee's release of its security
interest hereunder.
16. THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF
THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE LOCAL LAW OF THE STATE OF
TEXAS EXCLUDING ANY CONFLICTS OF LAW RULE OR PRINCIPLE THAT MIGHT OTHERWISE
REFER CONSTRUCTION OR INTERPRETATION OF THIS AGREEMENT TO THE SUBSTANTIVE LAW OF
ANOTHER JURISDICTION.
17. This Agreement is given in renewal, amendment, restatement and
modification, and not in extinguishment or novation of, that certain Stock
Pledge Agreement dated December 15, 1993 by and between Pledgor and Pledgee.
IN WITNESS WHEREOF, Pledgor and Pledgee have executed this Agreement as of the
date first above written.
PLEDGOR:
-------
LOWRANCE ELECTRONICS, INC.
By: /s/ Darrell J. Lowrance
------------------------------
Darrell J. Lowrance, President
PLEDGEE:
-------
SHAWMUT CAPITAL CORPORATION
By: /s/ Hance VanBeber
------------------------------
Hance VanBeber, Vice President
5
<PAGE>
SCHEDULE I
----------
A. Stock Ownership:
---------------
<TABLE>
<CAPTION>
Issuer Type of Shares No. of Shares
------ -------------- -------------
<S> <C> <C> <C>
1. LEI common shares 5,000
2. Lowrance Contracts common shares 5,000
3. Electronics Lowrance
DeMexico S.A. De C.V. common shares 499
4. Sea Electronics common shares 5,000
</TABLE>
B. Limited Liability Company Ownership:
-----------------------------------
1. Pledgor filed a Liste Des Gesellschafter (a Registration Certificate) with
the Commercial Register for DM 60,000 on July 16, 1993 in Pinneberg,
Germany, and Pledgor is the only present Quotaholder of Lowrance
Electronics Deutschland GmbH, a limited liability company under German law,
of which Pledgor owns a 100% interest
6
<PAGE>
EXHIBIT 10.18
UNCONDITIONAL GUARANTY
----------------------
FOR VALUE RECEIVED, SEA ELECTRONICS, INC., an Oklahoma corporation
("Guarantor"), guarantees unconditionally the full and prompt payment to SHAWMUT
---------
CAPITAL CORPORATION, a Connecticut corporation ("Lender"), at Lender's office in
------
Dallas County, Texas, upon demand, of the following obligations and indebtedness
of LOWRANCE ELECTRONICS, INC., a Delaware corporation ("Lowrance"), LEI EXTRAS,
--------
INC., a Delaware corporation ("LEI"), LOWRANCE AUSTRALIA PTY LIMITED, a New
---
South Wales, Australia corporation ("Lowrance Australia") (ACN 050 050 612), and
------------------
LOWRANCE CONTRACTS, INC., a Delaware corporation ("Lowrance Contracts")
------------------
(individually and collectively referred to herein as "Borrower"):
--------
Any and all indebtedness and obligations, whether direct or indirect,
absolute or contingent, primary or secondary, joint or several, and all
renewals, modifications and extensions thereof for which Borrower, is now, or
hereafter may become liable or indebted to Lender, whether by lapse of time,
acceleration of maturity, on account of (i) the Obligations, as defined in that
certain Loan and Security Agreement, dated December 15, 1993, between Borrower
and Lender (as successor by assignment to Barclays Business Credit, Inc.) as
amended by the First Amendment to Loan and Security Agreement, dated as of
October 16, 1995 among Lender, Guarantor and Borrower (as amended, the "Loan
----
Agreement"), outstanding prior to the date hereof; (ii) any document executed in
- ---------
connection with or as security for payment of such Obligations or any renewal,
extension, or modification thereof; and (iii) all costs, attorneys' fees, and
other expenses incurred by Lender by reason of any default by Borrower under any
of the foregoing (all of the foregoing are hereinafter referred to as the
"Obligations"). The Obligations referred to in clause (i) above shall be
-----------
determined in accordance with Section 1.6 of the Loan Agreement.
-----------
At the time Guarantor pays any sum which may become due Lender under the
terms of this Unconditional Guaranty (this "Guaranty"), written notice of such
--------
payment shall be delivered to Lender by Guarantor, and in the absence of such
notice, any sum received by Lender on account of any of the Obligations shall be
conclusively deemed paid by Borrower. All sums paid Lender by Guarantor may be
applied by Lender at its discretion upon any of the Obligations. To further
secure payment of the Obligations, Guarantor grants to Lender, in addition to
all other contractual, legal, and equitable rights of Lender, the right to
offset against any account, certificate of deposit, or other funds of Guarantor
in the possession of or under the control of Lender.
Guarantor hereby waives notice of acceptance of this Guaranty and all
other notices in connection herewith or in connection with the Obligations,
including, without limitation, notice of intent to accelerate and notice of
acceleration, and waives diligence, presentment, demand, protest, and suit on
the part of Lender in the collection of any of the Obligations, and agrees that
Lender shall not be required to first endeavor to collect any of the Obligations
from Borrower, or any other party liable for payment of the Obligations
(hereinafter referred to as an "Obligated Party"), before requiring Guarantor to
---------------
pay the full amount of the Obligations. Without impairing
1
<PAGE>
the rights of Lender against Guarantor, Borrower or any other Obligated Party,
suit may be brought and maintained against Guarantor at the election of Lender
with or without joinder of Borrower, or any other Obligated Party, any right to
any such joinder being hereby waived by Guarantor.
Guarantor acknowledges and represents to Lender that it is receiving
direct and indirect financial and other benefits as a result of this Guaranty;
represents to Lender that after giving effect to this Guaranty and the
contingent obligations evidenced hereby it is, and will be, solvent;
acknowledges that its liability hereunder shall be cumulative and in addition to
any other liability or obligation to Lender, whether the same is incurred
through the execution of a note, a similar guaranty, through endorsement, or
otherwise; and acknowledges that neither Lender nor any officer, employee,
agent, attorney or other representative of Lender has made any representation,
warranty or statement to Guarantor to induce it to execute this Guaranty.
Guarantor hereby agrees that, except as hereinafter provided, its
obligations under this Guaranty shall be continuing, absolute and unconditional,
irrespective of (i) the validity or enforceability of the Obligations or of any
promissory note or other document evidencing all or any part of the Obligations,
(ii) the absence of any attempt to collect the Obligations from Borrower or any
other Obligated Party or other action to enforce the same, (iii) the waiver or
consent by Lender with respect to any provision of any instrument evidencing the
Obligations, or any part thereof, or any other agreement now or hereafter
executed by Borrower and delivered to Lender, (iv) failure by Lender to take any
steps to perfect and maintain its security interest in, or to preserve its
rights to, any security or collateral for the Obligations, (v) the surrender,
release, exchange, or alteration by Lender of any security or collateral for the
Obligations, (vi) Lender's election, in any proceeding instituted under Chapter
11 of Title 11 of the United States Code (11 U.S.C. (S)101 et seq.) (as amended,
the "Bankruptcy Code"), of the application of Section 1111(b)(2) of the
---------------
Bankruptcy Code, (vii) any borrowing or grant of a security interest by
Borrower, as debtor-in-possession, under Section 364 of the Bankruptcy Code,
(viii) the disallowance of all or any portion of Lender's claim(s) for repayment
of the Obligations under Section 502 of the Bankruptcy Code, or (ix) any other
circumstance which might otherwise constitute a legal or equitable discharge or
defense of a guarantor.
No release, waiver, or discharge of Borrower or any other Obligated Party
from liability for payment of any of the Obligations, nor any renewal,
supplementation, modification, rearrangement or acceleration of any of the
Obligations, nor any amendment of any document evidencing any of the
Obligations, either express or implied, shall relieve Guarantor from liability
for payment of the full amount of the Obligations; and Guarantor will
immediately pay all Obligations to Lender or other person entitled thereto,
regardless of any defense, right of set-off or counterclaim which Borrower or
any other Obligated Party may have or assert, and regardless of whether Lender
or any other party shall have taken any steps to enforce any rights against
Borrower, any other Obligated Party, or any other party to collect such sum, and
regardless of any other condition or contingency, including, without limitation,
any neglect, delay or omission of Lender. Lender is hereby authorized, without
notice or demand and without affecting the liability of Guarantor, to, from time
to time: (i) accept partial payments on the Obligations; (ii) take and hold
security or collateral for the payment of this Guaranty or any other
2
<PAGE>
guarantees of the Obligations, and exchange, enforce, waive and release any such
security or collateral; and (iii) apply such security or collateral therefor in
any manner, without affecting or impairing the obligations of Guarantor
hereunder.
Notwithstanding anything to the contrary contained herein, Guarantor
shall not have any right, claim or action, now or hereafter, against Borrower or
any other Obligated Party arising out of or in connection with this Guaranty or
any other document evidencing or securing the Obligations, including, without
limitation, any right or claim of subrogation, contribution, reimbursement,
exoneration, or indemnity, all such rights and claims being hereby expressly and
absolutely waived.
Guarantor is familiar with, and has independently reviewed the financial
condition of, Borrower and hereby assumes responsibility for keeping itself
informed of the financial condition of Borrower, and any and all endorsers or
other guarantors of any instrument or document evidencing all or any part of the
Obligations and of all other circumstances bearing upon the risk of nonpayment
of the Obligations or any part thereof that diligent inquiry would reveal.
Guarantor hereby agrees that Lender shall have no duty to advise Guarantor of
information known to Lender regarding such condition or any such circumstances.
Guarantor is not relying on the financial condition of Borrower or the value of
any collateral for the Obligations as an inducement to enter into this Guaranty.
If Lender, in its sole discretion, undertakes at any time or from time to time
to provide any such information to Guarantor, Lender shall be under no
obligation (i) to undertake any investigation not a part of its regular business
routine, (ii) to disclose any information which, pursuant to accepted or
reasonable commercial finance practices, Lender wishes to maintain confidential,
or (iii) to make any other or future disclosures of such information or any
other information to Guarantor.
Guarantor consents and agrees that Lender shall be under no obligation to
marshall any assets in favor of Guarantor or against or in payment of any or all
of the Obligations. Guarantor further agrees that, to the extent that Borrower
makes a payment or payments to Lender, or Lender receives any proceeds of
collateral, which payment or payments or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside and/or
required to be repaid to Borrower, any of its estate, trustee, receiver or any
other party, including, without limitation, Guarantor, under any bankruptcy law,
state or federal law, common law or equitable cause, then to the extent of such
payment or repayment, the Obligations or part thereof which has been paid,
reduced or satisfied by such amount shall be reinstated and continued in full
force and effect as of the date such initial payment, reduction or satisfaction
occurred.
Lender may, without notice to Guarantor or any other party, assign its
rights hereunder to any holder of the Obligations, in whole or in part, and upon
any such assignment all the terms and provisions of this Guaranty shall inure to
the benefit of such assignee, to the extent so assigned.
Lender is relying and is entitled to rely upon each and all of the
provisions of this Guaranty; and, accordingly, if any provision of this Guaranty
should be held to be invalid or ineffective, then all other provisions shall
continue in full force and effect notwithstanding.
3
<PAGE>
Any and all notices, requests and demands to or upon Guarantor to be
effective shall be in writing and shall be deemed to have been validly served,
given or delivered as follows: (a) if sent by certified or registered mail
return receipt requested, three business days after deposit in the mail, postage
prepaid, or, if earlier, when delivered against receipt; or (b) in the case of
telegraphic notice, when delivered to the telegraph company; or (c) in the case
of telex notice, when sent, answerback received; or (d) if sent by any other
method, upon actual delivery; in each case addressed to the address set forth
opposite Guarantor's signature below or at such other address as Guarantor shall
hereafter notify Lender.
It is the intention of Borrower, Guarantor and Lender to conform strictly
to applicable usury laws. Accordingly, no agreements, conditions, provisions or
stipulations contained in this Guaranty or any other instrument, document or
agreement between Guarantor or Borrower and Lender or default of Guarantor or
Borrower, or the exercise by Lender of the right to accelerate the payment of
the maturity of principal and interest, or to exercise any option whatsoever
contained in this Guaranty or any other agreement between Guarantor or Borrower
and Lender, or the arising of any contingency whatsoever, shall entitle Lender
to collect, in any event, interest exceeding the maximum rate of interest
permitted by applicable state or federal law in effect from time to time
hereafter (the "Maximum Legal Rate") and in no event shall Guarantor be
------------------
obligated to pay interest exceeding such Maximum Legal Rate and all agreements,
conditions or stipulations, if any, which may in any event or contingency
whatsoever operate to bind, obligate or compel Guarantor to pay a rate of
interest exceeding the Maximum Legal Rate, shall be without binding force or
effect, at law or in equity, to the extent only of the excess of interest over
such Maximum Legal Rate. In the event any interest is charged in excess of the
Maximum Legal Rate ("Excess"), Guarantor acknowledges and stipulates that any
------
such charge shall be the result of an accident and bona fide error, and such
Excess shall be, first, applied to reduce the principal then unpaid hereunder;
second, applied to reduce the Obligations; and third, returned to Guarantor, it
being the intention of the parties hereto not to enter at any time into a
usurious or otherwise illegal relationship. Guarantor recognizes that, with
fluctuations in the applicable rate on the Obligations and the Maximum Legal
Rate, such an unintentional result could inadvertently occur. By the execution
of this Guaranty, Guarantor covenants that the credit or return of any Excess
shall constitute the acceptance by Guarantor of such Excess.
If any sum due Lender by Guarantor hereunder is placed in the hands of an
attorney for collection, or is collected through probate, bankruptcy, or other
court proceeding, then Guarantor promises to pay Lender all costs, attorneys'
fees, and other expenses incurred by Lender pursuant to such collection efforts.
Notwithstanding any other provision of this Guaranty, the Guarantor's
liability hereunder shall be limited to the lesser of the following amounts
minus, in either case, $1.00:
a. the lowest amount which would render this Guaranty a fraudulent
transfer under Section 548 of the Bankruptcy Code; or
4
<PAGE>
b. if this Guaranty is subject to the Uniform Fraudulent Transfer Act
(the "UFTA") or the Uniform Fraudulent Conveyance Act (the "UFCA") or any
---- ----
similar or analogous statute or rule of law, then the lowest amount which
would render this Guaranty a fraudulent transfer or fraudulent conveyance
under the UFTA, the UFCA, or any such similar or analogous statute or
rule of law.
The amount of the limitation imposed upon the Guarantor's liability under the
terms of the preceding sentence shall be subject to redetermination as of each
date a "transfer" is deemed to have been made on account of this Guaranty under
applicable law. The Guarantor acknowledges that information concerning the
Guarantor's financial condition is under the control of the Guarantor and is
more readily available to the Guarantor than to Lender, and for that reason the
Guarantor agrees that should the Guarantor claim that the amount of its
liability under this Guaranty is less than the full amount of the Obligations
because of the provisions of this paragraph, then the burden of proving the
facts which would result in such limitation shall be upon the Guarantor.
This Guaranty shall be terminated at such time as the Obligations are
satisfied in full.
THIS GUARANTY HAS BEEN NEGOTIATED AND SHALL BE DEEMED TO HAVE BEEN MADE
IN THE STATE OF TEXAS. THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF TEXAS AND NOT THE LAWS OF
CONFLICTS OF THE STATE OF TEXAS. AS PART OF THE CONSIDERATION FOR NEW VALUE AND
BENEFIT THIS DAY RECEIVED BY GUARANTOR, GUARANTOR HEREBY CONSENTS TO THE
JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN DALLAS COUNTY OF THE
STATE OF TEXAS AND WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND
CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY CERTIFIED OR REGISTERED
MAIL DIRECTED TO GUARANTOR AT THE ADDRESS STATED HEREIN AND SERVICE SO MADE
SHALL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT THEREOF. GUARANTOR WAIVES
ANY OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION INSTITUTED AGAINST IT AS
PROVIDED HEREIN AND AGREES NOT TO ASSERT ANY DEFENSE BASED ON LACK OF
JURISDICTION OR VENUE.
EXCEPT AS OTHERWISE PROVIDED FOR IN THIS GUARANTY, GUARANTOR WAIVES THE
RIGHT TO TRIAL BY JURY (WHICH LENDER HEREBY ALSO WAIVES) IN ANY ACTION, SUIT,
PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO THIS
GUARANTY OR THE OBLIGATIONS.
THIS WRITTEN GUARANTY, TOGETHER WITH ALL OTHER INSTRUMENTS, AGREEMENTS
----------------------------------------------------------------------
AND CERTIFICATES EXECUTED BY THE PARTIES IN CONNECTION WITH THE OBLIGATIONS OR
- ------------------------------------------------------------------------------
WITH REFERENCE HERETO OR THERETO, REPRESENT THE FINAL AGREEMENT BETWEEN THE
- ---------------------------------------------------------------------------
5
<PAGE>
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
- -----------------------------------------------------------------------------
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
- ----------------------------------------------------------------------
AGREEMENTS BETWEEN THE PARTIES.
- ------------------------------
Executed and delivered as of October 16, 1995
SEA ELECTRONICS, INC.
By: /s/ Steven L. Schneider
----------------------------------
Steven L. Schneider, President
Address:
-------
12000 E. Skelly Drive
Tulsa, Oklahoma 74128
6
<PAGE>
EXHIBIT 10.19
WHEN RECORDED, RETURN TO:
Hughes & Luce, L.L.P.
1717 Main Street, Suite 2800
Dallas, Texas 75201
Attn: Larry A. Makel, Esq.
A POWER OF SALE HAS BEEN GRANTED IN THE MORTGAGE (AS HEREIN DEFINED) RELATED TO
- -------------------------------------------------------------------------------
THIS AMENDMENT (AS HEREIN DEFINED). A POWER OF SALE MAY ALLOW THE TRUSTEE OR
- -----------------------------------------------------------------------------
THE BENEFICIARY TO TAKE THE MORTGAGED PROPERTY AND SELL IT WITHOUT GOING TO
- ---------------------------------------------------------------------------
COURT IN A FORECLOSURE ACTION UPON DEFAULT BY THE GRANTOR UNDER THE MORTGAGE.
- -----------------------------------------------------------------------------
FIRST AMENDMENT TO MORTGAGE, SECURITY AGREEMENT,
------------------------------------------------
FINANCING STATEMENT AND ASSIGNMENT OF RENTS
-------------------------------------------
[OKLAHOMA]
STATE OF OKLAHOMA (S)
(S) KNOW ALL MEN BY THESE PRESENTS:
------------------------------
COUNTY OF TULSA (S)
THIS FIRST AMENDMENT TO MORTGAGE, SECURITY AGREEMENT, FINANCING STATEMENT
AND ASSIGNMENT OF RENTS (this "Amendment") is executed on October ___, 1995, to
---------
be effective as of October 16, 1995, by LOWRANCE ELECTRONICS, INC., a Delaware
corporation ("Grantor"), with its principal place of business at 12000 East
-------
Skelly Drive, Tulsa, Oklahoma 74128 for the benefit of SHAWMUT CAPITAL
CORPORATION, a Connecticut corporation, ("Beneficiary"), successor by assignment
-----------
to Barclays Business Credit, Inc., with offices at 2711 Haskell Avenue, Suite
2100, LB 21, Dallas, Texas 75204.
RECITALS
A. Grantor previously executed that certain Mortgage, Security Agreement,
Financing Statement and Assignment of Rents dated December 15, 1993 and recorded
at Book 5575, Page 1068 of the real property records of Tulsa County, Oklahoma
(as heretofore amended, the "Mortgage"), pursuant to which Grantor granted to
--------
Beneficiary various liens and security interests on, among other things, the
real property described on Exhibit A attached hereto and incorporated herein by
---------
reference, and all attachments, fixtures and other property located thereon or
related thereto (collectively, the "Property"). Such liens secured repayment of
--------
the indebtedness owing from Grantor, Lowrance Contracts, Inc. ("Lowrance
--------
Contracts"), LEI Extras, Inc. ("LEI") and Lowrance Australia Pty Limited
- --------- ---
("Lowrance Australia") (Grantor, Lowrance Contracts, LEI and Lowrance Australia
------------------
are individually and collectively referred to
1
<PAGE>
herein as "Original Borrowers") to Beneficiary, including, but not limited to,
------------------
the indebtedness incurred pursuant to that certain Loan and Security Agreement
dated December 15, 1993, executed by Original Borrowers and Beneficiary (the
"Original Loan Agreement") (the "Secured Indebtedness").
----------------------- --------------------
B. Original Borrowers and Beneficiary desire to (i) amend the Original
Loan Agreement pursuant to the terms and conditions of that certain First
Amendment to Loan and Security Agreement dated as of the date hereof by and
among Original Borrowers, Sea Electronics, Inc. ("Sea Electronics") (Original
---------------
Borrowers and Sea Electronics are individually and collectively referred to
herein as "Borrowers") and Grantor (the "First Amendment") (the Original Loan
--------- ---------------
Agreement, as amended by the First Amendment, and as otherwise amended, modified
and revised from time to time is herein, the "Loan Agreement") (the Loan
--------------
Agreement and all contracts, instruments, documents and agreements related
thereto and/or executed in connection therewith are collectively referred to
herein as the "Loan Documents") to (a) re-advance to Borrower a portion of the
--------------
Term Loan that was previously repaid to Beneficiary and (b) include Sea
Electronics as a borrower under the Loan Agreement, and (ii) preserve, maintain
and carry forward all of the liens and security interests previously granted to
Beneficiary in the Mortgage and the other contracts, instruments, documents and
agreements executed in connection therewith, such that such liens and security
interests will apply to all indebtedness incurred by Grantor under the First
Amendment.
NOW, THEREFORE, in consideration of the premises herein contained and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties, intending to be legally bound, agree as follows:
ARTICLE I
DEFINITIONS
-----------
1.01 Unless otherwise defined herein, capitalized terms shall have the
meaning ascribed to them in the Mortgage.
ARTICLE II
AMENDMENTS
----------
2.01 AMENDMENT TO DEFINITIONS. Section 1.1 of the Mortgage is hereby
-----------
amended by deleting the definitions of "Loan Agreement" and "Term Note"
therefrom and substituting the following definitions therefor, as applicable:
"`Loan Agreement' means the Loan and Security Agreement among Grantor,
--------------
LEI Extras, Inc., Lowrance Contracts, Inc., Lowrance Australia Pty Limited
and Beneficiary dated December 15, 1993, as the same has been amended by
the First Amendment Agreement and as otherwise renewed, extended, amended,
modified and restated from time to time."
2
<PAGE>
"`Term Note' means that certain Amended and Restated Secured
---------
Promissory Note dated as of October 16, 1995, in the original principal
amount of $3,500,000, executed by Borrower and payable to the order of
Beneficiary, any and all renewals, modifications, increases and extensions
of such note, and any and all notes executed in substitution for such
note."
2.02 INCLUSION OF DEFINITIONS. Section 1.1 of the Mortgage is hereby
-----------
amended by inserting the following definitions therein in alphabetical order:
"First Amendment Agreement means that certain First Amendment to Loan and
-------------------------
Security Agreement dated as of October 16, 1995, by and between Beneficiary
and Borrower."
"`Revolving Credit Loans' is defined in the Loan Agreement."
----------------------
ARTICLE III
NO WAIVER
---------
3.01 Except as otherwise specifically provided for in this Amendment,
nothing contained herein shall be construed as a waiver by Beneficiary of any
covenant or provision of the Mortgage, the Loan Agreement, this Amendment, or of
any other contract or instrument between Grantor and Beneficiary, and
Beneficiary's failure at any time or times hereafter to require strict
performance by Grantor of any provision thereof shall not waive, affect or
diminish any right of Beneficiary to thereafter demand strict compliance
therewith. Beneficiary hereby reserves all rights granted under the Loan
Agreement, the other Loan Documents, this Amendment and any other contract or
instrument between Grantor and Beneficiary.
ARTICLE IV
RATIFICATIONS, REPRESENTATIONS AND WARRANTIES
---------------------------------------------
4.01 RATIFICATIONS. The terms and provisions set forth in this Amendment
shall modify and supersede all inconsistent terms and provisions set forth in
the Mortgage, the Loan Agreement and the other Loan Documents, and, except as
expressly modified and superseded by this Amendment, the terms and provisions of
the Mortgage, the Loan Agreement and the other Loan Documents are ratified and
confirmed and shall continue in full force and effect. Grantor and Beneficiary
agree that the Mortgage, as amended hereby, the Loan Agreement and the other
Loan Documents shall continue to be legal, valid, binding and enforceable in
accordance with their respective terms.
4.02 REPRESENTATIONS AND WARRANTIES. Grantor hereby represents and
warrants to Beneficiary that (a) the execution, delivery and performance of this
Amendment and any and all other Loan Documents executed and/or delivered in
connection herewith have been authorized by all requisite corporate action on
the part of Grantor and will not violate the Certificate of Incorporation or
Bylaws of Grantor; (b) the representations and warranties contained in the
Mortgage, as amended hereby, the Loan Agreement and any other Loan Document are
true and
3
<PAGE>
correct on and as of the date hereof and on and as of the date of execution
hereof as though made on and as of each such date; (c) no Default or Event of
Default under the Mortgage, as amended hereby, the Loan Agreement or any other
Loan Document has occurred and is continuing, unless such Default or Event or
Default has been specifically waived in writing by Beneficiary; and (d) Grantor
is in full compliance with all covenants and agreements contained in the
Mortgage, as amended hereby, the Loan Agreement and the other Loan Documents, as
amended hereby.
ARTICLE V
MISCELLANEOUS PROVISIONS
------------------------
5.01 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties made in the Mortgage, the Loan Agreement or any other Loan Document,
including, without limitation, any document furnished in connection with this
Amendment, shall survive the payment in full of the Secured Indebtedness and the
termination of Lender's obligation to make Revolving Credit Loans (as defined in
the Loan Agreement) under the Loan Agreement for a period of four (4) years
beyond the date of such payment in full and termination, and no investigation by
Beneficiary or any closing shall affect the representations and warranties or
the right of Beneficiary to rely upon them.
5.02 REFERENCE TO LOAN AGREEMENT. Each of the Mortgage, the Loan Agreement
and the other Loan Documents, and any and all other agreements, documents or
instruments now or hereafter executed and delivered pursuant to the terms hereof
or pursuant to the terms of the Mortgage, as amended hereby, the Loan Agreement
or any other Loan Document are hereby amended so that any reference in the
Mortgage, the Loan Agreement or the other Loan Documents to the Mortgage shall
mean a reference to the Mortgage as amended hereby.
5.03 EXPENSES OF BENEFICIARY. As provided in the Loan Agreement, Grantor
agrees to pay on demand all costs and expenses incurred by Beneficiary in
connection with the preparation, negotiation and execution of this Amendment and
the other Loan Documents to be executed in connection herewith and any and all
amendments, modifications, and supplements thereto, including, without
limitation, the costs and fees of Beneficiary's legal counsel, and all costs and
expenses incurred by Beneficiary in connection with the enforcement or
preservation of any rights under the Loan Agreement, as amended hereby, or any
other Loan Document, including, without limitation, the costs and fees of
Beneficiary's legal counsel.
5.04 SEVERABILITY. Any provision of this Amendment held by a court of
competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
5.05 SUCCESSORS AND ASSIGNS. This Amendment is binding upon and shall
inure to the benefit of Beneficiary and Grantor and their respective successors
and assigns, except Grantor may not assign or transfer any of its rights or
obligations hereunder without the prior written consent of Beneficiary.
4
<PAGE>
5.06 COUNTERPARTS. This Amendment may be executed in one or more
counterparts, each of which when so executed shall be deemed to be an original,
but all of which when taken together shall constitute one and the same
instrument.
5.07 EFFECT OF WAIVER. No consent or waiver, express or implied, by
Beneficiary to or for any breach of or deviation from any covenant or condition
by Grantor shall be deemed a consent to or waiver of any other breach of the
same or any other covenant, condition or duty.
5.08 HEADINGS. The headings, captions, and arrangements used in this
Amendment are for convenience only and shall not affect the interpretation of
this Amendment.
5.09 GOVERNING LAWS. THE SECURED INDEBTEDNESS HAS BEEN CREATED PURSUANT
TO THE LOAN AGREEMENT WHICH WAS EXECUTED AND DELIVERED IN THE STATE OF TEXAS; IT
BEING THE EXPRESS INTENT AND AGREEMENT OF GRANTOR AND BENEFICIARY THAT THE
SECURED INDEBTEDNESS BE CONSTRUED AND GOVERNED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF TEXAS. NOTWITHSTANDING SUCH INTENTION AND AGREEMENT THAT THE LAWS
OF THE STATE OF TEXAS SHALL GOVERN THE SECURED INDEBTEDNESS, GRANTOR AND THE
BENEFICIARY EXPRESSLY COVENANT AND AGREE THAT THE LAWS OF THE STATE WHERE ANY
PORTION OF THE MORTGAGED PROPERTY IS LOCATED SHALL APPLY TO ENFORCEMENT OF THE
POWER OF SALE AND THE OTHER RIGHTS AND REMEDIES CREATED THE MORTGAGE WHICH ARE
GIVEN AGAINST SUCH PART OF THE MORTGAGED PROPERTY WHICH CONSISTS OF REAL
PROPERTY LOCATED WITHIN SUCH STATE, AND THAT THE UNIFORM COMMERCIAL CODE SHALL
APPLY TO THE RIGHTS AND REMEDIES CREATED THE MORTGAGE WHICH ARE GIVEN AGAINST
SUCH PART OF THE MORTGAGED PROPERTY WHICH CONSISTS OF PERSONAL PROPERTY. THE
SUBSTANTIVE LAWS OF THE STATE OF TEXAS SHALL GOVERN THE VALIDITY, CONSTRUCTION,
ENFORCEMENT, AND INTERPRETATION OF THIS AMENDMENT, AND THE OTHER LOAN DOCUMENTS,
UNLESS OTHERWISE SPECIFIED THEREIN.
5.10 FINAL AGREEMENT. THE MORTGAGE, AS AMENDED HEREBY, THE LOAN AGREEMENT
AND THE OTHER LOAN DOCUMENTS REPRESENT THE ENTIRE EXPRESSION OF THE PARTIES WITH
RESPECT TO THE SUBJECT MATTER HEREOF ON THE DATE THIS AMENDMENT IS EXECUTED.
THE MORTGAGE, AS AMENDED HEREBY, THE LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES. NO MODIFICATION, RESCISSION, WAIVER, RELEASE OR AMENDMENT OF ANY
PROVISION OF THIS AMENDMENT SHALL BE MADE, EXCEPT BY A WRITTEN AGREEMENT SIGNED
BY GRANTOR AND BENEFICIARY.
5
<PAGE>
5.11 RELEASE. GRANTOR HEREBY ACKNOWLEDGES THAT IT HAS NO DEFENSE,
COUNTERCLAIM, OFFSET, CROSS-COMPLAINT, CLAIM OR DEMAND OF ANY KIND OR NATURE
WHATSOEVER THAT CAN BE ASSERTED TO REDUCE OR ELIMINATE ALL OR ANY PART OF ITS
LIABILITY TO REPAY THE "SECURED INDEBTEDNESS" OR TO SEEK AFFIRMATIVE RELIEF OR
DAMAGES OF ANY KIND OR NATURE FROM BENEFICIARY. GRANTOR HEREBY VOLUNTARILY AND
KNOWINGLY RELEASES AND FOREVER DISCHARGES BENEFICIARY, ITS PREDECESSORS, AGENTS,
EMPLOYEES, SUCCESSORS AND ASSIGNS, FROM ALL POSSIBLE CLAIMS, DEMANDS, ACTIONS,
CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES, AND LIABILITIES WHATSOEVER, KNOWN OR
UNKNOWN, ANTICIPATED OR UNANTICIPATED, SUSPECTED OR UNSUSPECTED, FIXED,
CONTINGENT, OR CONDITIONAL, AT LAW OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART
ON OR BEFORE THE DATE THIS AMENDMENT IS EXECUTED, WHICH THE GRANTOR MAY NOW OR
HEREAFTER HAVE AGAINST BENEFICIARY, ITS PREDECESSORS, AGENTS, EMPLOYEES,
SUCCESSORS AND ASSIGNS, IF ANY, AND IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS
ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAW OR REGULATIONS, OR OTHERWISE, AND
ARISING FROM ANY "LOANS", INCLUDING, WITHOUT LIMITATION, ANY CONTRACTING FOR,
CHARGING, TAKING, RESERVING, COLLECTING OR RECEIVING INTEREST IN EXCESS OF THE
HIGHEST LAWFUL RATE APPLICABLE, THE EXERCISE OF ANY RIGHTS AND REMEDIES UNDER
THE LOAN AGREEMENT OR THE OTHER LOAN DOCUMENTS, AND NEGOTIATION FOR AND
EXECUTION OF THIS AMENDMENT.
Executed and effective as of the dates indicated above.
GRANTOR:
LOWRANCE ELECTRONICS, INC.
By: /s/ Darrell J. Lowrance
---------------------------------
Darrell J. Lowrance, President
SHAWMUT CAPITAL CORPORATION
By: /s/ Hance VanBeber
---------------------------------
Hance VanBeber, Vice President
EXHIBIT:
- --------
A - Property Description
6
<PAGE>
THE STATE OF OKLAHOMA (S)
(S)
COUNTY OF TULSA (S)
This instrument was acknowledged before me on October ___, 1995, by Darrell
J. Lowrance, the President of Lowrance Electronics, Inc., a Delaware
corporation, on behalf of said corporation.
/s/ Janice E. Dorsey
---------------------------------
Notary Public in and for said
County and State
JANICE E. DORSEY
---------------------------------
Notary's Printed Name
My Commission Expires:
Sept. 5, 1999
- ----------------------
THE STATE OF TEXAS (S)
-----
(S)
COUNTY OF DALLAS (S)
------
This instrument was acknowledged before me on October 13 , 1995, by Hance
--
VanBeber, Vice President of Shawmut Capital Corporation, a Connecticut
corporation, on behalf of said corporation.
/s/ Celia Wood
---------------------------------
Notary Public in and for said
County and State
CELIA WOOD
---------------------------------
Notary's Printed Name
My Commission Expires:
5/8/97
- ----------------------
7
<PAGE>
EXHIBIT A
---------
PROPERTY DESCRIPTION
(See attached)
A-1
<PAGE>
TRACT 1:
THE WEST HALF (W/2) OF LOT THIRTY-FIVE (35), PLAINVIEW HEIGHTS ADDITION, AN
ADDITION TO THE CITY OF TULSA, TULSA COUNTY, STATE OF OKLAHOMA, ACCORDING TO THE
RECORDED PLAT THEREOF.
TRACT 2:
THE NORTH EIGHTY (80) FEET OF THE EAST HALF (E/2) OF LOT THIRTY-FIVE (35),
PLAINVIEW HEIGHTS ADDITION, AN ADDITION TO THE CITY OF TULSA, TULSA COUNTY,
STATE OF OKLAHOMA, ACCORDING TO THE RECORDED PLAT THEREOF.
TRACT 3:
THE SOUTH EIGHTY AND ONE HALF (80.5) FEET OF THE EAST HALF (E/2) OF LOT
THIRTY-FIVE (35), PLAINVIEW HEIGHTS ADDITION, AN ADDITION TO THE CITY OF TULSA,
TULSA COUNTY, STATE OF OKLAHOMA, ACCORDING TO THE RECORDED PLAT THEREOF.
TRACT 4:
ALL OF LOT THIRTY-SIX (36) AND THE WEST 489.0 FEET OF LOT THIRTY-SEVEN (37),
PLAINVIEW HEIGHTS ADDITION, AN ADDITION TO THE CITY OF TULSA, TULSA COUNTY,
STATE OF OKLAHOMA, ACCORDING TO THE RECORDED PLAT THEREOF.
TRACT 5:
THE EAST ONE HUNDRED FIFTY (150) FEET OF LOT THIRTY-SEVEN (37), PLAINVIEW
HEIGHTS ADDITION, AN ADDITION TO THE CITY OF TULSA, TULSA COUNTY, STATE OF
OKLAHOMA, ACCORDING TO THE RECORDED PLAT THEREOF.
TRACT 6:
THE NORTH SIXTY-FIVE (65) FEET OF THE WEST ONE HUNDRED FIFTY-FIVE (155) FEET OF
THE EAST ONE HUNDRED SIXTY (160) FEET OF LOT THIRTY-EIGHT (38), IN PLAINVIEW
HEIGHTS ADDITION, AN ADDITION TO THE CITY OF TULSA, TULSA COUNTY, STATE OF
OKLAHOMA, ACCORDING TO THE RECORDED PLAT THEREOF.
TRACT 7:
THE WEST 139.5 FEET OF THE EAST 299.5 FEET OF THE SOUTH HALF (S/2) OF LOT
THIRTY-NINE (39) AND THE WEST 139.5 FEET OF THE EAST 299.5 FEET OF THE NORTH
140.5 FEET OF LOT THIRTY-EIGHT (38), IN PLAINVIEW HEIGHTS ADDITION, AN ADDITION
TO THE CITY OF TULSA, TULSA COUNTY, STATE OF OKLAHOMA, ACCORDING TO THE RECORDED
PLAT THEREOF.
TRACT 8:
THE EAST ONE HUNDRED SIXTY (160) FEET OF THE SOUTH HALF (S/2) OF LOT THIRTY-NINE
(39), PLAINVIEW HEIGHTS ADDITION, AN ADDITION TO THE CITY OF TULSA, TULSA
COUNTY, STATE OF OKLAHOMA, ACCORDING TO THE RECORDED PLAT THEREOF.
<PAGE>
TRACT 9:
THE WEST HALF (W/2) OF THE NORTH HALF (N/2) OF LOT THIRTY-NINE (39). PLAINVIEW
HEIGHTS ADDITION, AN ADDITION TO THE CITY OF TULSA, TULSA COUNTY, STATE OF
OKLAHOMA, ACCORDING TO THE RECORDED PLAT THEREOF.
TRACT 10:
LOT THREE (3), BLOCK ONE (1), LESS THE SOUTH FIFTY (50) FEET THEREOF, AND LESS A
STRIP, PIECE OR PARCEL OF LAND LYING IN PART OF LOT 3, BLOCK 1, LOWRANCE SQUARE
ADDITION TO THE CITY OF TULSA IN TULSA COUNTY, OKLAHOMA. SAID PARCEL OF LAND
BEING DESCRIBED BY METES AND BOUNDS AS FOLLOWS: BEGINNING AT A POINT ON THE
PRESENT EASTERLY RIGHT-OF-WAY LINE OF INTERSTATE HIGHWAY NO. 44, A DISTANCE OF
142.42 FEET NORTHEASTERLY OF THE POINT WHERE SAID RIGHT-OF-WAY LINE INTERSECTS
THE SOUTH LINE OF SAID LOT 3, THENCE NORTHEASTERLY ALONG SAID RIGHT-OF-WAY LINE
OF SAID LOT 3 A DISTANCE OF 100.00 FEET, THENCE S 41 DEGREES 30' 16" W A
DISTANCE OF 99.42 FEET TO POINT OF BEGINNING. ALSO: BEGINNING AT A POINT ON THE
PRESENT EASTERLY RIGHT-OF-WAY LINE OF INTERSTATE HIGHWAY NO. 44 AND THE WEST
LINE OF SAID LOT 3, A DISTANCE OF 432.87 FEET EAST OF AND 449.92 FEET NORTH OF
THE SW CORNER OF SAID LOT 3, THENCE NORTHEASTERLY ALONG SAID RIGHT-OF-WAY AND
LOT LINE A DISTANCE OF 15.00 FEET TO A JOG IN SAID RIGHT-OF-WAY AND LOT LINE,
THENCE SOUTHEASTERLY ALONG SAID JOG A DISTANCE OF 40.00 FEET, THENCE S 47
DEGREES 39' 49" W A DISTANCE OF 15.00 FEET, THENCE N 42 DEGREES 20' 11" W A
DISTANCE OF 40.00 FEET TO A POINT OF BEGINNING, CONTAINING IN BOTH PARCELS 0.02
ACRES, MORE OR LESS, LOWRANCE SQUARE, A RESUBDIVISION OF MORGAN SQUARE AND PART
OF THE SE/4 OF THE SW/4 OF SECTION 5, T-19-N, R-14-E, TULSA COUNTY, STATE OF
OKLAHOMA, ACCORDING TO THE RECORDED PLAT NO. 3031.
TRACT 11:
LOT ONE (1), BLOCK ONE (1), ELEVEN TRADE CENTER, AN ADDITION TO THE CITY OF
TULSA, TULSA COUNTY, STATE OF OKLAHOMA, ACCORDING TO THE RECORDED PLAT THEREOF.
<PAGE>
EXHIBIT 22.12
-------------
SUBSIDIARIES OF LOWRANCE ELECTRONICS, INC.
STATE OR JURISDICTION OF
SUBSIDIARY INCORPORATION
---------- -------------
Lowrance Contracts, Inc. Delaware
LEI Extras, Inc. Delaware
Lowrance Australia Pty. Limited New South Wales, Australia
Lowrance Electronics
Deutschland GmbH Germany
Electronica Lowrance
De Mexico S.A. De C.V. Mexico
Sea Electronics, Inc. Oklahoma
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1995
<PERIOD-START> AUG-01-1994
<PERIOD-END> JUL-31-1995
<CASH> 643
<SECURITIES> 0
<RECEIVABLES> 11,145
<ALLOWANCES> 480
<INVENTORY> 17,976
<CURRENT-ASSETS> 31,089
<PP&E> 26,115
<DEPRECIATION> (17,424)
<TOTAL-ASSETS> 40,228
<CURRENT-LIABILITIES> 16,312
<BONDS> 0
<COMMON> 335
0
0
<OTHER-SE> 13,117
<TOTAL-LIABILITY-AND-EQUITY> 40,228
<SALES> 91,116
<TOTAL-REVENUES> 91,116
<CGS> 60,047
<TOTAL-COSTS> 86,110
<OTHER-EXPENSES> 1,364
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,581
<INCOME-PRETAX> 2,061
<INCOME-TAX> 639
<INCOME-CONTINUING> 1,422
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,422
<EPS-PRIMARY> .42
<EPS-DILUTED> .42
</TABLE>
