<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended AUGUST 31, 1994
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________________ to _________________
Commission File Number 0-10023
SUDBURY, INC.
-------------------------------------------------------
(Exact name of Registrant as specified in its Charter)
DELAWARE 34-1546292
- - ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
30100 CHAGRIN BOULEVARD, SUITE 203
CLEVELAND, OHIO 44124
- - ------------------------------------------------------------------------------
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code: (216) 464-7026
--------------
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 ______
-----
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. YES X NO ___ __
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date: COMMON SHARES,
$0.01 PAR VALUE, AS OF SEPTEMBER 30, 1994: 10,042,771
<PAGE> 2
<TABLE>
INDEX
-----
SUDBURY, INC. AND SUBSIDIARIES
PAGE
------
<CAPTION>
PART I - FINANCIAL INFORMATION
<S> <C> <C>
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
as of August 31, 1994 and May 31, 1994 3 - 4
Condensed Consolidated Statements of
Operations for the three-month periods
ended August 31, 1994 and August 31,
1993 5
Condensed Consolidated Statements of
Cash Flows for the three-month periods
ended August 31, 1994 and August 31,
1993 6
Notes to Condensed Consolidated
Financial Statements 7 - 8
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 9 - 10
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 6. Exhibits and Reports on Form 8-K 11
</TABLE>
-2-
<PAGE> 3
<TABLE>
PART I, ITEM 1 - FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS
SUDBURY, INC. AND SUBSIDIARIES
ASSETS
<CAPTION>
AUGUST 31, MAY 31,
1994 1994
(UNAUDITED) (AUDITED)
-------------- ------------
(Dollars in thousands)
CURRENT ASSETS
<S> <C> <C>
Cash $ 1,839 $ 1,885
Accounts receivable, net of allowance 38,458 39,272
Inventories 20,923 18,592
Prepaid expenses and other 2,850 2,380
-------- --------
TOTAL CURRENT ASSETS 64,070 62,129
PROPERTY, PLANT AND EQUIPMENT
Land and land improvements 2,234 2,191
Buildings 17,175 17,163
Machinery and equipment 40,512 38,534
-------- --------
59,921 57,888
Less accumulated depreciation 13,185 11,450
-------- --------
NET PROPERTY, PLANT AND EQUIPMENT 46,736 46,438
OTHER ASSETS
Notes receivable 408 408
Net assets of businesses held for sale 2,000 2,000
Intangible pension asset 1,359 1,359
Other assets 950 1,866
-------- --------
TOTAL OTHER ASSETS 4,717 5,633
-------- --------
$115,523 $114,200
======== ========
<FN>
See notes to condensed consolidated financial statements.
</TABLE>
-3-
<PAGE> 4
<TABLE>
PART I, ITEM 1 - FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS - (CONTINUED)
SUDBURY, INC. AND SUBSIDIARIES
LIABILITIES AND STOCKHOLDERS' EQUITY
<CAPTION>
AUGUST 31, MAY 31,
1994 1994
(UNAUDITED) (AUDITED)
----------- ---------
(Dollars in thousands)
<S> <C> <C>
CURRENT LIABILITIES
Trade accounts payable $ 20,395 $ 18,504
Accrued compensation and employee benefits 7,575 10,000
Other accrued expenses 12,705 11,658
Current maturities of long-term debt 2,304 2,300
-------- --------
TOTAL CURRENT LIABILITIES 42,979 42,462
LONG-TERM DEBT 27,632 29,961
OTHER LONG-TERM LIABILITIES 12,824 12,367
STOCKHOLDERS' EQUITY
Common Stock - par value $0.01 per
share; authorized 20,000,000 shares;
10,305,059 (10,233,932 at May 31,
1994) shares issuable and
deemed outstanding 103 102
Additional paid-in capital 20,682 20,224
Retained earnings 11,857 9,638
Minimum pension liability adjustment - net (554) (554)
-------- --------
TOTAL STOCKHOLDERS' EQUITY 32,088 29,410
-------- --------
$115,523 $114,200
======== ========
<FN>
See notes to condensed consolidated financial statements.
</TABLE>
-4-
<PAGE> 5
<TABLE>
PART I, ITEM 1 - FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
SUDBURY, INC. AND SUBSIDIARIES
<CAPTION>
THREE MONTHS ENDED
-----------------------------------
AUGUST 31, AUGUST 31,
1994 1993
(UNAUDITED) (UNAUDITED)
----------- -----------
(Dollars in thousands, except per share amounts)
<S> <C> <C>
Net sales:
Ongoing operations $ 67,720 $ 54,444
Businesses held for sale - 315
-------- --------
Total 67,720 54,759
Costs and expenses:
Costs of products sold:
Ongoing operations 57,245 47,201
Businesses held for sale - 151
-------- --------
Total 57,245 47,352
Selling and administrative expenses:
Ongoing operations 6,167 5,433
Businesses held for sale - 164
-------- --------
Total 6,167 5,597
OPERATING INCOME 4,308 1,810
Interest expense - net (800) (961)
Other (expense) income (7) 276
-------- --------
Income before income taxes 3,501 1,125
Income tax expense (1,282) (43)
-------- --------
NET INCOME $ 2,219 $ 1,082
======== ========
Net income per share:
Primary $ .18 $ .09
======== ========
Fully diluted $ .18 $ .09
======== ========
Common shares and common share equivalents:
Primary 12,563 12,073
====== ======
Fully diluted 12,563 12,073
====== ======
<FN>
See notes to condensed consolidated financial statements.
</TABLE>
-5-
<PAGE> 6
<TABLE>
PART I, ITEM 1 - FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SUDBURY, INC. AND SUBSIDIARIES
<CAPTION>
THREE MONTHS ENDED
---------------------------
AUGUST 31, AUGUST 31,
1994 1993
(UNAUDITED) (UNAUDITED)
----------- -----------
(Dollars in thousands)
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 2,219 $ 1,082
Items included not affecting cash:
Depreciation and amortization:
Ongoing operations 2,107 2,021
Businesses held for sale - 47
Deferred taxes and other 1,311 121
Changes in operating assets and liabilities:
Ongoing operations (1,474) 130
Businesses held for sale - (28)
--------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 4,163 3,373
INVESTING ACTIVITIES:
Purchases of property, plant and equipment (2,080) (1,814)
Proceeds from collection of notes receivable - 2,000
Proceeds from sale of businesses - 666
Contingent payments to former owners
of acquired businesses - (188)
Proceeds from sale of property, plant,
equipment and other - net 28 127
-------- --------
NET CASH (USED IN) PROVIDED BY INVESTING
ACTIVITIES (2,052) 791
FINANCING ACTIVITIES:
Borrowings, refinancings and repayments:
Short and long-term borrowings 69,541 58,658
Reductions of debt (71,978) (66,515)
Common stock issued 280 1
-------- --------
NET CASH USED IN FINANCING ACTIVITIES (2,157) (7,856)
-------- --------
DECREASE IN CASH (46) (3,692)
Cash at beginning of period 1,885 5,284
-------- --------
CASH AT END OF PERIOD $ 1,839 $ 1,592
======== ========
<FN>
See notes to condensed consolidated financial statements.
</TABLE>
-6-
<PAGE> 7
PART I, ITEM 1 - FINANCIAL STATEMENTS
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SUDBURY, INC. AND SUBSIDIARIES
NOTE A -- BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for
a fair presentation have been included. Operating results for the three-month
period ended August 31, 1994 are not necessarily indicative of the results that
may be expected for the fiscal year ending May 31, 1995. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Company's annual report on Form 10-K for the year ended
May 31, 1994.
<TABLE>
NOTE B -- INVENTORIES
The components of inventories are summarized as follows (in thousands):
<CAPTION>
August 31, May 31,
1994 1994
--------- -------
<S> <C> <C>
Raw materials and supplies $ 8,592 $ 8,315
Work in process 8,282 6,995
Finished products 4,543 3,664
------- -------
Total at FIFO 21,417 18,974
Less excess of FIFO cost over LIFO values 494 382
------- -------
$20,923 $18,592
======= =======
</TABLE>
NOTE C -- CONTINGENCIES
The Company is party to a number of lawsuits and claims arising out of
the conduct of its business, including those relating to commercial
transactions, product liability and environmental, safety and health matters.
All operating locations acquired by the Company since 1984 operate in a
variety of locations and industries where environmental situations could exist
based on current or past operations. Certain operating and non-operating
subsidiaries of the Company have been named as potentially responsible parties
("PRPs") liable for cleanup of known environmental conditions. For known
situations, the Company, with the assistance of environmental engineers and
consultants, has accrued amounts to cover estimated future environmental
expenditures. The Company has initiated corrective action and/or preventative
environmental projects to ensure the safe and lawful operation of its
facilities. It is possible, however, that future environmental expenditures
may be more or less than accrued amounts, or there could exist unknown
environmental situations at existing or previously owned businesses for which
the future cost is not known or accrued at August 31, 1994.
-7-
<PAGE> 8
PART I, ITEM 1 - FINANCIAL STATEMENTS
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SUDBURY, INC. AND SUBSIDIARIES
NOTE C -- CONTINGENCIES - CONTINUED
While the ultimate result of the above contingencies cannot be
predicted with certainty, management does not expect these matters to have a
material adverse effect on the consolidated financial position or results of
operations of the Company.
Under the terms of the January 1992 employment agreement with Jacques
R. Sardas, Chairman, President and Chief Executive Officer of the Company, if
Mr. Sardas' employment is terminated for cause, or due to Mr. Sardas' death,
disability or voluntary resignation before the end of his employment agreement
in January 1996, the Company is obligated to pay to Mr. Sardas, in cancellation
of his 1,764,706 stock options which are currently exercisable at $.01 per
share, the appraised value of the shares underlying the options, less the
exercise price thereof. In addition, the Company would also be obligated to
pay to Mr. Sardas a cash bonus, which is based on 5% of the net fair value of
the Company in excess of $35 million. Based on the closing price of the
Company's Common Stock on August 31, 1994, the obligation for the options and
bonus would total approximately $13.6 million in the aggregate. The Company is
the beneficiary of a key-may life insurance policy on Mr. Sardas' life in the
amount of $14 million. The proceeds of this policy would be used to fulfill
the Company's obligation in the event of Mr. Sardas' death.
-8-
<PAGE> 9
PART I, ITEM 2, MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
SUDBURY, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS - THREE MONTHS ENDED AUGUST 31, 1994 COMPARED TO THREE
MONTHS ENDED AUGUST 31, 1993
SALES. The Company's net sales from ongoing operations for the first
quarter of fiscal 1995 increased by 24% to $67.7 million from $54.4 million in
the prior year's quarter. The Company experienced sales growth in all of its
businesses, with the largest sales dollar increases coming from Wagner Castings
Company ("Wagner") and Industrial Powder Coatings, Inc. ("IPC"), which sell
predominantly to the automotive industry. As a result of the strong increase
in automotive industry demands for the quarter, the Company was able to
increase sales of existing products by $8.8 million. In addition, sales
increased by $4.5 million from net new business.
GROSS PROFIT. Gross profit from ongoing operations as a percentage of
net sales was 15.5% in the first quarter of fiscal 1995 compared to 13.3% in
the prior year quarter. The increase in margin rate came from higher sales
volumes and a $.5 million favorable difference in scrap steel prices at Wagner.
In the first quarter of fiscal 1994, Wagner's margins were negatively impacted
by $.2 million due to significant price increases in scrap steel which is the
principal raw material used at Wagner. By contrast, in the current period
Wagner recognized a $.3 million benefit from a decrease in the price of scrap
steel which occurred in the first two months of the quarter. The price of
scrap steel subsequently rose in August 1994, therefore, Wagner is not
currently benefiting from scrap steel price differential.
SELLING AND ADMINISTRATIVE EXPENSES. Selling and administrative
expenses from ongoing operations as a percentage of net sales decreased from
10% in the prior year quarter to 9.1% for the current quarter principally due
to higher sales. In terms of dollars, expenses increased by $.7 million due
principally to: (1) a contractual bonus accrual for Jacques R. Sardas,
Chairman, President and Chief Executive Officer of the Company, (2) an increase
in sales commissions as a result of higher revenues, and (3) higher operating
costs at Wagner's Havana, Illinois plant which was in its start-up phase in the
prior year.
INTEREST EXPENSE. Interest expense decreased by $.2 million due to
reductions in debt as a result of the Company's cash flow from profitability.
Partially offsetting this reduction was an increase in the Company's interest
rate on the bank indebtedness due to increases in the prime rate.
OTHER. Other income decreased by $.3 million as the Company received
miscellaneous proceeds from asset sales which were recorded as income in the
prior year's quarter which were non-recurring.
-9-
<PAGE> 10
PART I, ITEM 2, MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
SUDBURY, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS - THREE MONTHS ENDED AUGUST 31, 1994 COMPARED TO THREE
MONTHS ENDED AUGUST 31, 1993 - continued
INCOME TAX EXPENSE. Income tax expense in the current period of $1.3
million (an effective tax rate of 36.6%) represented a significant increase
over the prior year's expense of $43,000 (an effective rate of 3.8%). The
expense in the current period arose from the utilization of net operating loss
carryforwards that were established as deferred tax assets under Statement of
Financial Accounting Standards No. 109.
AUTOMOTIVE AND LIGHT TRUCK MARKETS. As approximately 60% of the
Company's sales are dependent on the automotive and light truck markets in the
United States and Europe, related profits will be dependent on sales of
vehicles in these markets in the coming year.
LIQUIDITY AND CAPITAL RESOURCES
The Company's financial position continued to improve during the first
quarter of fiscal 1995 as operating activities provided cash of $4.2 million
compared to $3.4 million in the first quarter of fiscal 1994. This improvement
came principally from higher profitability.
Long-term debt (including current maturities) at August 31, 1994 was
$30.0 million, a decrease of $2.3 million from May 31, 1994. Long-term debt
represents 48% of long-term debt plus stockholders' equity at August 31, 1994
compared to 52% at May 31, 1994. At August 31, 1994 the Company had the
ability to borrow an additional $21.8 million under its revolving credit
facility.
Capital expenditures were $2.1 million in fiscal 1995 compared with
$1.8 million in the prior year quarter. The increase in capital expenditures
was mainly due to the purchase of equipment to be used in IPC's new powder
coating facility in Riverport, Kentucky.
The Company believes that funds available under its current bank
facility and funds generated from operations will be sufficient to satisfy its
anticipated operating needs and capital improvements for the remainder of
fiscal 1995.
-10-
<PAGE> 11
PART II OTHER INFORMATION
Item 1. - LEGAL PROCEEDINGS
Certain litigation was described in the Company's annual report on Form
10-K for the year ended May 31, 1994. There have been no material developments
in the described cases for the fiscal quarter ended August 31, 1994.
Item 6. - EXHIBITS AND REPORTS ON FORM 8-K
The Company did not file any reports on Form 8-K during the three
months ended August 31, 1994.
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL PAGE NUMBER
- - ------- ----------------------
<S> <C>
(4)(a) Fifth Amendment to Loan and Security
Agreement dated September 12, 1994
among the financial institutions named
therein and BA Business Credit, Inc.,
as Agent, and Sudbury, as the Parent,
and Cast-Matic Corporation, Frisby Mfg.
Co., Industrial Powder Coatings, Inc.,
Iowa Mold Tooling Co., Inc., South Coast
Terminals, Inc. and Wagner Castings Company.
(4)(b) Sixth Amendment to Loan and Security
Agreement dated September 12, 1994 among
the financial institutions named therein
and BA Business Credit, Inc., as Agent,
and Sudbury, as the Parent, and Cast-Matic
Corporation, Frisby Mfg. Co., Industrial
Powder Coatings, Inc., Iowa Mold Tooling
Co., Inc., South Coast Terminals, Inc.
and Wagner Castings Company.
(11) Statement re: Computation of Per Share Earnings
(27) Financial Data Schedule
</TABLE>
-11-
<PAGE> 12
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SUDBURY, INC.
(Registrant)
By: /s/ Jacques R. Sardas
------------------------------------
Jacques R. Sardas
Chairman of the Board
and Chief Executive Officer
By: /s/ Mark E. Brody
------------------------------------
Mark E. Brody
Vice President of Finance and Controller
(Chief Accounting Officer)
Date: October 11, 1994
-12-
<PAGE> 1
BankAmerica Exhibit 4(a)
Business Credit, Inc.
September 12, 1994
Mr. Mark Brody
Sudbury, Inc.
30100 Chagrin Blvd.
Suite 203
Cleveland, Ohio 44124
Re: Amendment No. 5 to Loan and Security Agreement
Dear Mr. Brody:
Reference is hereby made to that certain Loan and Security
Agreement (the "Agreement") dated as of May 28, 1993, as amended
from time to time, and executed by and among Sudbury, Inc. (the
"Parent"), Cast-Matic Corporation, Frisby Mfg. Co., Industrial
Powder Coatings, Inc. ("IPC"), Iowa Mold Tooling Co., Inc., South
Coast Terminals, Inc., and Wagner Castings Company (collectively,
the "Borrower") and BankAmerica Business Credit, Inc., formerly
known as BA Business Credit, Inc. (the "Agent" and a "Lender"),
National City Bank, and Star Bank, National Association
(collectively, the "Lenders"). Certain capitalized terms used
herein shall have the same meanings attributed to them in the
Agreement.
The Agent, the Lenders, and the Borrower desire to modify the
arrangement previously made with respect to Havana Advances and the
Agreement is amended as follows:
1. Section 2.2(g) of the Agreement is hereby deleted in its
entirety and replaced to read as follows:
"(g) Upon receipt of a Revolving Loan, Wagner
will immediately fund the amount of such
Revolving Loan to Havana ("Havana Advance")
which exceeds Wagner's Individual Borrower
Revolving Loan Availability calculated without
giving effect to (i) Wagner's loans
outstanding to Havana and (ii) Havana
Availability. Wagner shall denote in
accordance with the Notice of Borrowing what
portion of its advance request is a Havana
Advance. Any advance requested by Wagner for
<PAGE> 2
Mr. Mark Brody
Amendment No. 5 to Loan and Security Agreement
September 12, 1994
Page 2
use in the business and operations of Wagner
shall not be attributable to Havana
Availability. Havana shall execute a master
revolving credit note ("Revolving Note") in
favor of Wagner and each advance by Wagner to
Havana and each expense item paid by Wagner
for and on behalf of Havana ("Havana
Intercompany Advance") and each principal
repayment from Havana to Wagner shall be duly
recorded on the grid attached to the Revolving
Note. An "expense item" herein means any
third party expense not related in any way to
the operations of the business of Wagner with
such expense items to be set forth in detail,
acceptable to the Agent, and delivered to the
Agent on the first day of each month
hereafter. A copy of the grid shall be
furnished by Wagner to the Agent on the first
day of each month hereafter. The Revolving
Note shall be payable on demand and be in form
and substance acceptable to the Agent and the
Lenders. None of the Lenders shall be deemed
to have made Revolving Loans directly to
Havana."
2. In connection therewith, Havana shall execute a replacement
note ("Replacement Revolving Note") in form and substance
acceptable to the Agent and the Lenders which shall be
substituted for and supersede the Revolving Note, a copy of
which is attached hereto as Exhibit A.
Except as modified herein, the Agreement remains in full force and
effect and is hereby ratified and affirmed. Please indicate your
acceptance of this Amendment No. 5 to the Agreement by executing in
the places provided below and this Amendment No. 5 shall be deemed
effective as of the date first written above.
Respectfully yours,
BANKAMERICA BUSINESS CREDIT, INC.,
as Agent and Lender
By: /s/ Gregory R. Eck
-----------------------------
Its: Vice President
----------------------------
<PAGE> 3
Mr. Mark Brody
Amendment No. 5 to Loan and Security Agreement
September 12, 1994
Page 3
NATIONAL CITY BANK,
as Lender
By: /s/ Diane I. Rooney
---------------------------
Its: Vice President
--------------------------
STAR BANK, NATIONAL ASSOCIATION,
as Lender
By: /s/ Suzanne E. Geiger
----------------------------
Its: Vice President
---------------------------
ACCEPTED AND AGREED:
SUDBURY, INC.
By: /s/ Mark E. Brody
-----------------------------
Its: Vice President
----------------------------
By: /s/ Jacques R. Sardas
-----------------------------
Its: Chairman / CEO
----------------------------
CAST-MATIC CORPORATION
By: /s/ Mark E. Brody
-----------------------------
Its: Vice President
----------------------------
By: /s/ Jacques R. Sardas
----------------------------
Its: Chairman / CEO
----------------------------
<PAGE> 4
Mr. Mark Brody
Amendment No. 5 to Loan and Security Agreement
September 12, 1994
Page 4
FRISBY P.M.C. INCORPORATED
By: /s/ Mark E. Brody
----------------------------
Its: Vice President
---------------------------
By: /s/ Jacques R. Sardas
----------------------------
Its: Chairman / CEO
---------------------------
INDUSTRIAL POWDER COATINGS, INC.
By: /s/ Mark E. Brody
----------------------------
Its: Vice President
---------------------------
By: /s/ Jacques R. Sardas
----------------------------
Its: Chairman / CEO
---------------------------
IOWA MOLD TOOLING CO., INC.
By: /s/ Mark E. Brody
----------------------------
Its: Vice President
---------------------------
By: /s/ Jacques R. Sardas
----------------------------
Its: Chairman / CEO
---------------------------
<PAGE> 5
Mr. Mark Brody
Amendment No. 5 to Loan and Security Agreement
September 12, 1994
Page 5
SOUTH COAST TERMINALS, INC.
By: /s/ Mark E. Brody
------------------------------
Its: Vice President
----------------------------
By: /s/ Jacques R. Sardas
------------------------------
Its: Chairman / CEO
-----------------------------
WAGNER CASTINGS COMPANY
By: /s/ Mark E. Brody
------------------------------
Its: Vice President
-----------------------------
By: /s/ Jacques R. Sardas
------------------------------
Its: Chairman / CEO
-----------------------------
ACKNOWLEDGED AND CONSENTED TO:
WAGNER HAVANA, INC.
By: /s/ Mark E. Brody
------------------------------
Its: Vice President
-----------------------------
By: /s/ Jacques R. Sardas
------------------------------
Its: Chairman / CEO
-----------------------------
<PAGE> 6
EXHIBIT "A"
-----------
REPLACEMENT WAGNER HAVANA, INC. REVOLVING CREDIT NOTE
-----------------------------------------------------
$7,500,000 September , 1994
------
FOR VALUE RECEIVED, the undersigned Wagner Havana, Inc., a Delaware
corporation ("Havana"), hereby absolutely and unconditionally
promises to pay to the order of Wagner Castings Company ("Wagner")
at Wagner's head office at 825 N. Lowber Street, Decatur, Illinois
62521 or at such other location as Wagner may designate:
(a) the principal amount of Seven Million Five Hundred
Thousand Dollars ($7,500,000) or, if less, the aggregate
unpaid principal amount of Havana Advances and Havana
Intercompany Advances by Wagner to Havana pursuant to
Section 2.2(g) of the Loan and Security Agreement dated
as of May 28, 1993 (as amended and in effect from time to
time, the "Agreement") among Sudbury, Inc., Cast-Matic
Corporation, Frisby Mfg. Co., Industrial Powder Coatings,
Inc., Iowa Mold Tooling Co., Inc., South Coast Terminals,
Inc., Wagner Castings Company, and BankAmerica Business
Credit, Inc. (the "Agent"), National City Bank, and Star
Bank, National Association and
(b) interest on the principal balance hereof on the first day
of each month hereafter and at maturity (whether by
acceleration, upon prepayment or otherwise) at a
fluctuating per annum rate equal to the Revolving Loan
Margin plus the Reference Rate, subject to the terms of
SUBSECTION 3.1(d) of the Agreement. Such Interest Rate
shall be adjusted simultaneously with any change in the
Reference Rate. Interest charges shall be computed on
the basis of a year of 360 days and actual days elapsed
and shall be payable monthly in arrears on the first day
of each calendar month hereafter, and as otherwise
provided herein.
This Note evidences borrowings under and has been issued by Havana
in accordance with the terms of the Agreement. Wagner, the Agent,
and any holder hereof are entitled to the benefits of the Agreement
and the other Loan Documents and may enforce the agreements of
Havana contained therein, and any holder may exercise the
respective remedies provided for thereby or otherwise available in
respect thereof, all in accordance with the respective terms
thereof. All capitalized terms used in this Note and not otherwise
defined herein shall have the same meanings herein as in the
Agreement.
<PAGE> 7
Havana irrevocably authorizes Wagner to make or cause to be made,
at or about the time of any Havana Advance or Havana Intercompany
Advance or at the time of receipt of any payment of this Note, an
appropriate notation on the grid attached to the Note, or the
continuation of such grid, or any other similar record, including
computer records reflecting the making of such Havana Advance or
Havana Intercompany Advance (as the case may be) or the receipt of
such payment. A copy of the grid will be furnished on a monthly
basis to the Agent. The outstanding amount of the Havana Advance
set forth on the grid attached to this Note, or the continuation of
such grid, or any other similar record, including computer records
maintained by Wagner or the Agent with respect to any Havana
Advance shall be PRIMA FACIE evidence of the principal amount
thereof owing and unpaid to Wagner, but the failure to record or
any error in so recording any such amount on any such grid,
continuation, or other record shall not limit or otherwise affect
the obligation of Havana hereunder or under the Agreement to make
payments of principal of and interest on this Note when due.
Havana has the right to prepay the whole or part of the principal
of this Note at any time without premium or penalty.
If any one or more events of default shall occur in the Havana
Security Agreement executed between Wagner and Havana as of May 28,
1993, the entire unpaid principal amount of this Note and all of
the unpaid interest accrued thereon may become or be declared due
and payable.
No delay or omission on the part of Wagner, the Agent, or any
holder hereof in exercising any right hereunder shall operate as a
waiver of such right or of any other rights of Wagner, the Agent,
or such holder, nor shall any delay, omission, or waiver on any one
occasion be deemed a bar or waiver of the same or any other right
on any further occasion.
Havana waives presentment, demand, notice, protest, and all other
demands and notices in connection with the delivery, acceptance,
performance, default, or enforcement of this Note, assent to any
extension or postponement of the time of payment, or any other
indulgence to any substitution, exchange, or release of collateral,
and to the addition or release of any other party or person
primarily or secondarily liable.
This Note and the obligations of Havana hereunder shall for all
purposes be governed by and construed in accordance with the law of
the State of Illinois (excluding the laws applicable to conflicts
or choice of law). Havana agrees that any suit for the enforcement
of this Note may be brought in the courts of the State of Illinois
or any federal court sitting therein and the consent to the
nonexclusive jurisdiction of such court and the service of process
in any such suit being made upon Havana by mail at 825 N. Lowber
Street, Decatur, Illinois 62521. Havana hereby waives any
<PAGE> 8
objection that it may now or hereafter have to the venue of any
such suit or any such court or that such suit is brought in any
inconvenient court.
Havana hereby acknowledges and agrees that this Note shall be
assigned, transferred, and pledged by Wagner to the Agent for the
ratable benefit of the Lenders in order to secure the Obligations
of Wagner under the Agreement.
Havana further hereby represents and warrants to Wagner and its
assignees and transferees hereunder that Havana is familiar with
and has an understanding of the terms, conditions, and provisions
of the Agreement.
None of the terms and provisions of this Note may be amended,
modified, or changed in any respect without the prior written
consent of the Agent.
IN WITNESS WHEREOF, Havana has caused this Note to be signed in its
corporate name and its corporate seal to be impressed hereon by its
duly authorized officer as of the day and year first above written.
[Corporate Seal] WAGNER HAVANA, INC.
By:
-------------------------
Its:
------------------------
<PAGE> 9
<TABLE>
WAGNER HAVANA, INC. GRID
<CAPTION>
Amount Amount of Amount of Balance
Beginning of Havana Principal of
Loan Havana Intercompany Paid or Principal Notation
Date Balance Advance Advances Prepaid Unpaid Made By
<S> <C> <C> <C> <C> <C> <C>
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</TABLE>
<PAGE> 1
BankAmerica Exhibit 4(b)
Business Credit, Inc.
September 12, 1994
Mr. Mark Brody
Sudbury, Inc.
30100 Chagrin Blvd.
Suite 203
Cleveland, Ohio 44124
Re: Amendment No. 6 to Loan and Security Agreement
Dear Mr. Brody:
Reference is hereby made to that certain Loan and Security
Agreement (the "Agreement") dated as of May 28, 1993, as amended
from time to time, and executed by and among Sudbury, Inc. (the
"Parent"), Cast-Matic Corporation, Frisby Mfg. Co., Industrial
Powder Coatings, Inc., Iowa Mold Tooling Co., Inc., South Coast
Terminals, Inc., and Wagner Castings Company (collectively, either
the "Borrower" or "Borrowers") and BankAmerica Business Credit,
Inc., formerly known as BA Business Credit, Inc. (the "Agent" and
a "Lender"), National City Bank, and Star Bank, National
Association (collectively, the "Lenders"). Certain capitalized
terms used herein shall have the same meanings attributed to them
in the Agreement.
1. In May 1994 Frisby Mfg. Co., an Illinois corporation changed
its name to Frisby P.M.C. Incorporated, an Illinois
corporation but all references to such company shall continue
to be Frisby in the Agreement. Frisby shall agree to execute
the necessary documents provided by the Agent to further
effectuate this name change.
2. In Section 1.1 of the Agreement new definitions are hereby
added alphabetically to read as follows:
"`CONSOLIDATED NET AVAILABILITY TEST' means
when average Aggregate Revolving Loans
Availability is at least thirty percent (30%)
of the Revolving Loan Facility limitation
measured on a five (5) day trailing basis."
<PAGE> 2
Mr. Mark Brody
Amendment No. 6 to Loan and Security Agreement
September 12, 1994
Page 2
"`INDIVIDUAL NET AVAILABILITY TEST' means when
average Individual Borrower Revolving Loans
Availability is at least thirty percent (30%)
of a Borrower's Individual Borrower Revolving
Loan Facility limitation measured on a five
(5) day trailing basis."
3. With respect to audits performed by Agent's internal auditors
for the Parent and the Borrowers, these audits will be
conducted semi-annually rather than quarterly (except for IMT
for which audits will continue to be performed on a quarterly
basis or on a more frequent basis as the Agent so determines)
and the $300 rate charged per day per auditor will be waived
but not the out-of-pocket costs and expenses associated with
each auditor. In addition, (a) audits will be limited to a
fixed asset review for each Borrower with a Term and/or Cap Ex
Loan but no Individual Borrower Revolving Loan Facility and
(b) audits will not be conducted for a Borrower that has no
Individual Borrower Revolving Loan Facility. In the event of
the occurrence of an Event of Default then the $300 rate per
day per auditor will be reinstituted for all of the Borrowers
together with a more frequent audit cycle as determined by the
Agent. Further, a more frequent audit schedule may be invoked
by the Agent for a specific Borrower if that specific Borrower
fails to comply with its Individual Net Availability Test.
4. The financial covenants set forth in Section 9.28 (CURRENT
RATIO) and Section 9.30 (ADJUSTED TANGIBLE NET WORTH) will no
longer be a requirement under this Agreement. The financial
covenants set forth in Section 9.23(a), 9.23(b) (for IMT
only), Section 9.24, Section 9.27(a), Section 9.27(f), Section
9.29(a), Section 9.29(f) and Section 9.31 will be the only
financial covenants tested. In the event of a failure to
maintain the Individual Net Availability Test or Consolidated
Net Availability Test there will be a reversion to the
financial covenant structure for either any specific Borrower
or all of the Borrowers, as the case may be.
5. If an Individual Borrower Revolving Loan Facility is
terminated then the requirements under Section 6.9 of the
Agreement for collection of Accounts shall no longer apply;
provided, however, the specific Borrower shall enter into a
springing lock box agreement in form and substance acceptable
to Agent. In the event there is either (a) the occurrence of
an Event of Default or (b) the failure to maintain the
<PAGE> 3
Mr. Mark Brody
Amendment No. 6 to Loan and Security Agreement
September 12, 1994
Page 3
Consolidated Net Availability Test then the requirements for
cash dominion set forth in Section 6.9 will again be
implemented for all Borrowers.
6. Except for IMT, the collateral reporting required under
Section 6.7(a) and Section 6.7(b) of the Agreement shall be on
a weekly basis rather than a daily basis. In the event of a
failure to maintain the Individual Net Availability Test or
Consolidated Net Availability Test there will be a reversion
to the daily reporting requirements of Section 6.7(a) and
Section 6.7(b) for either all of the Borrowers or for any
specific Borrower, as the case may be.
7. The following new definitions are hereby added, in
alphabetical order, to Section 1.1 of the Agreement:
"`BASE LIBO RATE' means, for any Interest
Period, an interest rate per annum equal to
the average (rounded upward to the nearest
whole multiple of one-sixteenth of one percent
(0.0625%) per annum, if such average is not
such a multiple) of the rate per annum at
which deposits in Dollars are offered by the
principal office of Bank of America in London,
England to prime banks in the London interbank
market at 11:00 a.m. (London time) two (2)
Business Days before the first day of such
Interest Period in an amount substantially
equal to the LIBO Rate Loans requested for
such Interest Period and for a period equal to
such Interest Period.
`EUROCURRENCY LIABILITIES' has the meaning
assigned to that term in Regulation D of the
Board of Governors of the Federal Reserve
System as in effect from time to time.
`INTEREST PERIOD' means, with respect to each
LIBO Rate Loan, the interest period applicable
to such LIBO Rate Loan as determined pursuant
to Section 3.7(b).
`LIBOR INTEREST PAYMENT DATE' means, with
respect to a LIBO Rate Loan, the last day of
each month during an Interest Period, such
payments to be payable monthly in arrears.
<PAGE> 4
Mr. Mark Brody
Amendment No. 6 to Loan and Security Agreement
September 12, 1994
Page 4
`LIBOR INTEREST RATE DETERMINATION DATE' means
each date of calculating the LIBO Rate for
purposes of determining the interest rate with
respect to an Interest Period. The LIBOR
Interest Rate Determination Date for any LIBO
Rate Loan shall be the second Business Day
prior to the first day of the related Interest
Period for such LIBO Rate Loan.
`LIBO RATE' means, for any Interest Period, a
per annum interest rate equal to the sum of
(a) the Base LIBO Rate for such Interest
Period, PLUS (b) the remainder obtained by
subtracting (i) the Base LIBO Rate for such
Interest Period from (ii) the rate obtained by
dividing such Base LIBO Rate by the percentage
equal to one hundred percent (100%) MINUS the
LIBOR Reserve Percentage for such Interest
Period.
`LIBO RATE LOANS' means, collectively the
LIBOR Revolving Loans and the LIBOR Term
Loans.
`LIBO RATE TAXES' has the meaning specified in
Section 3.7(i).
`LIBOR RESERVE PERCENTAGE' means, for any
Interest Period, the reserve percentage
applicable during such Interest Period (or if
more than one such percentage shall be so
applicable, the daily average of such
percentages for those days in such Interest
Period during which any such percentage shall
be so applicable) under regulations issued
from time to time by the Board of Governors of
the Federal Reserve System (or any successor)
for determining the maximum reserve
requirement (including, without limitation,
any emergency, supplemental or other marginal
reserve requirement) for Bank of America with
respect to liabilities or assets consisting of
or including Eurocurrency Liabilities having a
term equal to such Interest Period.
<PAGE> 5
Mr. Mark Brody
Amendment No. 6 to Loan and Security Agreement
September 12, 1994
Page 5
`LIBOR REVOLVING LOAN' means a Revolving Loan
during any period in which it bears interest
at the rate provided in Section 3.1(a), as
such amount may be adjusted.
`LIBOR TERM LOAN' means any portion of a Term
Loan during any period in which it bears
interest at the rate provided in Section
3.1(b)(iii), as such amount may be adjusted.
`NOTICE OF CONVERSION/CONTINUATION' has the
meaning specified in Section 3.6(b).
`REFERENCE RATE LOANS' means Revolving Loans,
Term Loans, or Cap Ex Loans made by the Agent
at the Reference Rate.
`REVOLVER LIBOR MARGIN' has the meaning
specified in Section 3.1(a).
`TERM LIBOR MARGIN' has the meaning specified
in Section 3.1(b)(iii).
`TOTAL INVENTORY SUBLIMIT' means $8,000,000
subject to reduction from time to time under
the Revolving Loan Facility."
8. In Section 1.1 of the Agreement in the definition "ELIGIBLE
ACCOUNTS" clauses (u) and (v) therein are hereby deleted and
replaced to read as follows:
"(u) owed by Metzeler Gimetall of Germany or
Ford of Germany to any Borrower to the extent
that (i) all such Accounts owed by Metzeler
Gimetall of Germany or Ford of Germany exceed
at any given time the aggregate amount of
$3,000,000, (ii) any such Account owed by
Metzeler of Germany contains payment terms of
more than ninety (90) days after the invoice
date or (iii) any such Account owed by Ford of
Germany is more than sixty (60) days have
elapsed since the date of the original
invoice;
(v) Intentionally Omitted; or,"
<PAGE> 6
Mr. Mark Brody
Amendment No. 6 to Loan and Security Agreement
September 12, 1994
Page 6
9. In Section 1.1 of the Agreement, the definition "REVOLVING
LOAN FACILITY" is hereby deleted in its entirety and replaced
to read as follows:
"`REVOLVING LOAN FACILITY' means a total
revolving line of credit in a maximum
principal amount of $33,800,000, reducing at
the option of the Borrowers to an amount not
less than $20,000,000. A reduction in the
Revolving Loan Facility may occur only once
during any Fiscal Year upon ten (10) Business
Days notice to the Agent and will result in
the following:
a. Pro-rata reduction in the Total Inventory
Sublimit,
b. Reduction of Individual Revolving Loan
Facility Limitations so long as the sum of
each of the Borrower's Individual Revolving
Loan Facility Limitation does not exceed
1.04 times the Revolving Loan Facility
after giving effect to the contemplated
reduction.
c. Pro-rata reduction of Individual Borrower
Revolving Loans Inventory Advance Sublimits
in conjunction with b. above so long as the
sum of each Borrower's Individual Borrowers
Revolving Loans Inventory Sublimits does
not exceed 1.09 times the Total Inventory
Sublimit after giving effect to the
reduction in item a. above."
10. In Section 1.1 of the Agreement the definition "REVOLVING LOAN
MARGIN" is hereby deleted and replaced to read as follows:
"REVOLVING LOAN MARGIN" means one and one-
quarter percent (1.25%) per annum, PROVIDED,
HOWEVER, that upon receipt by the Agent of the
Financial Statement(s) described in Subsection
7.2(a) for the Fiscal Year ended May 31, 1995
and the certificate described in Subsection
7.2(c) relating thereto and if the Parent's
Adjusted Earnings After Taxes exceed
<PAGE> 7
Mr. Mark Brody
Amendment No. 6 to Loan and Security Agreement
September 12, 1994
Page 7
$1,500,000 for such Fiscal Year, the Revolving
Loan Margin then in effect shall be reduced by
one-quarter percent (0.25%) per annum on the
first day of the first month following Agent's
receipt of such statements and certificate.
The reductions of the Revolving Loan Margin
described above and the ensuing reduction in
the interest payable on the Revolving Loans do
not apply to interest due and payable on the
Term Loans or the Cap Ex Loans. This interest
rate reduction is also applicable in the case
of Revolving Loans that bear interest under
the Revolver LIBOR Margin but shall not take
effect until after receipt of the Fiscal Year
1995 audited Financial Statements and
compliance with the terms herein."
11. In Section 1.1 of the definition of "TOTAL REVOLVING LOAN
FACILITY" is hereby deleted in its entirety and replaced to
read as follows:
"`TOTAL REVOLVING LOAN FACILITY' means, as of
any date, the lesser at such point in time of:
(a) the amount of the Revolving Loan Facility;
or (b) the sum of the Individual Borrower
Revolving Loan Facility with respect to each
Borrower but advances against Eligible
Inventory cannot exceed the Total Inventory
Sublimit."
12. In Section 3.1(a) of the Agreement, the following language is
hereby added:
"If the Revolving Loans are LIBOR Revolving
Loans then the Loans shall bear interest at a
per annum rate equal to three and one-quarter
percent (3.25%) for all Revolving Loans (the
"Revolver LIBOR Margin") plus the LIBO Rate
determined for the applicable Interest Period
payable on the LIBOR Interest Payment Date,
subject to the terms of Subsection 3.1(d).
Subject to the provisions of Section 3.2, any
of the Loans may be converted into, or
continued as, Reference Rate Loans or LIBO
Rate Loans in the manner provided in Section
3.6."
<PAGE> 8
Mr. Mark Brody
Amendment No. 6 to Loan and Security Agreement
September 12, 1994
Page 8
13. In Section 3.1(b)(i) of the Agreement the percentage "one and
three quarters percent (1.75%) per annum" is hereby deleted
and replaced with the percentage "one and one-half percent
(1.5%) per annum".
14. A new Subsection 3.1(b)(iii) is hereby added to the Agreement
to read as follows:
"(iii) If the Term Loans are LIBOR Term
Loans, then interest charges shall be at a
rate per annum equal to three and one-half
percent (3.5%) for all Term Loans (the "TERM
LIBOR MARGIN") plus the LIBO Rate determined
for the applicable Interest Period, payable on
the LIBOR Interest Payment Date subject to the
terms of Subsection 3.1(d). Subject to the
provisions of Section 3.2, any of the Loans
may be converted into, or continued as,
Reference Rate Loans or LIBO Rate Loans in the
manner provided in Section 3.6."
15. A new Section 3.6 is hereby added to the Agreement to read as
follows:
"3.6 CONVERSION OR CONTINUATION. (a) Subject
to the provisions of Section 3.7, a Borrower
shall have the option (i) to convert (1) all
or any part of the outstanding Term Loans or
(2) all or any part of the outstanding
Revolving Loans, in a minimum amount of
$1,000,000 and integral multiples of $500,000
in excess of that amount (i.e., $1,500,000,
$2,000,000, $2,500,000, etc.), from Reference
Rate Term Loans or Revolving Loans to LIBOR
Term Loans or LIBOR Revolving Loans, as the
case may be; (ii) to convert (1) all or any
part of the outstanding Term Loans or (2) all
or any part of the outstanding Revolving Loans
from LIBO Rate Loans to Reference Rate Loans
on the expiration of the Interest Period
applicable thereto; (iii) upon the expiration
of any Interest Period applicable to any
outstanding LIBOR Term Loans or any
outstanding LIBOR Revolving Loan, to continue
(1) all or any part of such LIBOR Term Loans
or (2) all or any portion of such LIBOR
<PAGE> 9
Mr. Mark Brody
Amendment No. 6 to Loan and Security Agreement
September 12, 1994
Page 9
Revolving Loan equal to $1,000,000 and integral multiples of
$500,000 in excess of that amount (i.e., $1,500,000, $2,000,000,
$2,500,000, etc.) as a LIBOR Term Loan or LIBOR Revolving Loan, as
applicable; PROVIDED, HOWEVER, that no outstanding Loans may be
converted into, or continued under the foregoing clause (iii) as,
LIBO Rate Loans when any Default or Event of Default has occurred and
is continuing.
(b) Whenever the Borrower elects to convert or continue Loans
under this Section 3.6, the Borrower shall deliver to the Agent a
written notice substantially in the form of that attached hereto as
Exhibit A (a "Notice of Conversion/Continuation"), signed by an
authorized officer of the Borrower (i) no later than 11:00 a.m.
(Chicago time) two (2) Business Days in advance of the requested
conversion date, in the case of a conversion into Reference Rate
Loans, and (ii) no later than 11:00 a.m. (Chicago time) three (3)
Business Days in advance of the requested conversion/continuation
date, in the case of a conversion into, or continuation of, LIBO Rate
Loans. The Notice of Conversion/Continuation shall specify (i) the
conversion/continuation date (which shall be a Business Day), (ii)
the amount and type of the Loans to be converted/continued, (iii) the
nature of the requested conversion/continuation, and (iv) in the case
of a conversion into, or continuation of, LIBO Rate Loans, the
requested Interest Period. In the event that the Borrower should
fail to provide a Notice of Conversion/Continuation with respect to
any LIBO Rate Loans as provided above, such Loans shall, on the last
day of the Interest Period with respect to such Loans, convert to
Reference Rate Loans.
(c) Any officer of the Borrower authorized to request Revolving
Loans on behalf of the Borrower shall also be authorized to request a
conversion/continuation on behalf of the
<PAGE> 10
Mr. Mark Brody
Amendment No. 6 to Loan and Security Agreement
September 12, 1994
Page 10
Borrower. The Agent shall be entitled to rely
on such officers' authority until the Agent is
notified to the contrary in writing. The
Agent shall incur no liability to the Borrower
in acting upon any notice referred to in this
Section 3.6 which notice the Agent believes in
good faith to have been given by an officer
authorized to make such requests on behalf of
the Borrower, or for otherwise acting in good
faith under this Section 3.6 and, upon such
conversion/continuation in good faith by the
Agent in accordance with this Agreement, the
Borrower shall have effected the
conversion/continuation of the applicable
Loans hereunder.
(d) Any notice of Conversion/Continuation for
conversion to, or continuation of, Loans made
pursuant to this Section 3.6 shall be
irrevocable and the Borrower shall be bound to
convert or continue in accordance therewith."
16. A new Section 3.7 is hereby added to the Agreement to read as
follows:
"3.7 SPECIAL PROVISIONS GOVERNING LIBO RATE
LOANS. Notwithstanding any other provisions
to the contrary contained in this Agreement,
the following provisions shall govern with-
respect to LIBO Rate Loans as to the matters
covered:
(a) AMOUNT OF LIBO RATE LOANS. Each
continuation of or conversion to LIBOR Term
Loans, and each election of, continuation of,
or conversion to a LIBOR Revolving Loan, shall
be in a minimum amount of $1,000,000 and in
integral multiples of $500,000 in excess of
that amount (i.e., $1,500,000, $2,000,000,
$2,500,000, etc.).
(b) DETERMINATION OF INTEREST PERIOD. By
giving notice as set forth in Section 3.6(b),
the Borrower shall have the option, subject to
the other provisions of this Section 3.7, to
specify whether the Interest Period for such
<PAGE> 11
Mr. Mark Brody
Amendment No. 6 to Loan and Security Agreement
September 12, 1994
Page 11
LIBO Rate Loan shall be a one (1), two (2), or
three (3) month period. The determination of
Interest Periods shall be subject to the
following provisions:
(i) In the case of immediately
successive Interest Periods, each
successive Interest Period shall
commence on the day on which the next
preceding Interest Period expires (in
order that either such (1) successive
Interest Period, or (2) shall at all times be
in effect, without overlap).
(ii) If any Interest Period would
otherwise expire on a day which is not
a Business Day, the Interest Period
shall be extended to expire on the next
succeeding Business Day; PROVIDED,
HOWEVER, that if the next succeeding
Business Day occurs in the following
calendar month, then such Interest
Period shall expire on the immediately
preceding Business Day.
(iii) The Borrower may not select an
Interest Period for any LIBO Rate Loan
which Interest Period expires later
than the Termination Date.
(iv) The Borrower may not select an
Interest Period with respect to any
portion of the Term Loans which extends
beyond an installment payment date for
the Term Loans unless, after giving
effect to such election, the portion of
the Term Loans not subject to Interest
Periods ending after such installment
payment date is equal to or greater
than the principal due on such
installment payment date.
(v) There shall be no more than one
(1) Interest Period in effect at any
<PAGE> 12
Mr. Mark Brody
Amendment No. 6 to Loan and Security Agreement
September 12, 1994
Page 12
one time for each of the Revolving
Loans and Term Loans.
(c) DETERMINATION OF INTEREST RATE. As soon
as practicable after 11:00 a.m. (Chicago time)
on the LIBOR Interest Rate Determination Date,
the Agent shall determine (which determination
shall, absent manifest error, be presumptively
correct) the Interest Rate for the LIBO Rate
Loans for which an Interest Rate is then being
determined and shall promptly give notice
thereof (in writing or by telephone confirmed
in writing) to the Borrower.
(d) SUBSTITUTED RATE OF BORROWING. In the
event that on any LIBOR Interest Rate
Determination Date the Agent shall have
determined (which determination shall be
presumptively correct and binding upon all
parties) that:
(i) by reason of any changes arising
after the date of this Agreement
affecting the London interbank market
or affecting the position of the Agent
in such market, adequate and fair means
do not exist for ascertaining the
applicable interest rates by reference
to which the LIBO Rate then being
determined is to be fixed; or
(ii) by reason of (1) any change after
the date of this Agreement in any
applicable law or governmental rule,
regulation or order (or any
interpretation thereof and including
the introduction of any new law or
governmental rule, regulation, or
order) or (2) any other circumstances
affecting the Agent or the London
interbank market or the position of the
Agent in such market such as, for
example, but not limited to, official
reserve requirements required by
Regulation D of the Board of Governors
<PAGE> 13
Mr. Mark Brody
Amendment No. 6 to Loan and Security Agreement
September 12, 1994
Page 13
of the Federal Reserve system to the
extent not given effect in the LIBO
Rate), the LIBO Rate shall not
represent the effective pricing to the
Agent for Dollar deposits of comparable
amount for the relevant period;
then, and in any such event, the right of the
Borrower to request application of the LIBO
Rate to some or all of the Loans shall be
suspended until the Agent shall notify the
Borrower that the circumstances causing such
suspension no longer exist, and such Loans
shall be Reference Rate Loans.
(e) ILLEGALITY. In the event that on any
date the Agent shall have reasonably
determined (which determination shall be final
and conclusive and binding upon all parties)
that the making of, conversion into, or the
continuation of, the Agent's LIBO Rate Loans
has become unlawful by compliance by the Agent
in good faith with any law, governmental rule,
regulation or order (whether or not having the
force of law and whether or not failure to
comply therewith would be unlawful), then, and
in any such event, the Agent shall promptly
give notice (by telephone confirmed in
writing) to the Borrower of such
determination. In such case and except as
provided in Section 3.7(f), the obligation of
the Agent to make or maintain any LIBO Rate
Loans during any such period shall be
terminated at the earlier of the termination
of the Interest Period then in effect or when
required by law, and the Borrower shall, no
later than the earlier of the termination of
the Interest Period in effect at the time any
such determination pursuant to this Section
3.7(e) is made, or when required by law, repay
the LIBO Rate Loans, together with all
interest accrued thereon.
(f) OPTIONS OF THE BORROWER. In lieu of
prepaying the LIBO Rate Loans as required by
<PAGE> 14
Mr. Mark Brody
Amendment No. 6 to Loan and Security Agreement
September 12, 1994
Page 14
Section 3.7(e), the Borrower may exercise
either of the following options:
(i) Upon written notice to the Agent,
the Borrower may release Agent from its
obligation to make or maintain Loans as
LIBO Rate Loans and in such event, the
Borrower shall, at the end of the then
current Interest Period (or at such
earlier time as prepayment is otherwise
required), convert all of the LIBO Rate
Loans into Reference Rate Loans in the
manner contemplated by Section 3.6, but
without satisfying the advance notice
requirements therein; or
(ii) The Borrower may, by giving
notice to the Agent, require the Agent
to continue to maintain its outstanding
Reference Rate Loans then the subject
of a Notice of Conversion/Continuation
as Reference Rate Loans, but without
satisfying the advance notice
requirements set forth in such Section
3.6.
(g) COMPENSATION. In addition to such
amounts as are required to be paid by the
Borrower pursuant to the other Sections of
this Article 3, the Borrower agrees to
compensate the Agent for all losses, expenses
and liabilities, including, without
limitation, any loss or expense incurred by
reason of the liquidation or reemployment of
deposits or other funds acquired by the Agent
to fund or maintain the Agent's LIBO Rate
Loans to the Borrower, which the Agent may
sustain (i) if for any reason a funding of any
LIBO Rate Loans does not occur on a date
specified thereof in a Notice of Borrowing or
Notice of Conversion/Continuation, or a
successive Interest Period does not commence
after notice therefor is given pursuant to
Section 3.6, (ii) if any voluntary or
mandatory prepayment of any LIBO Rate Loans
<PAGE> 15
Amendment No. 6 to Loan and Security Agreement
September 12, 1994
Page 15
occurs for any reason on a date which is not
the last scheduled day of an Interest Period,
(iii) as a consequence of any required
conversion of LIBO Rate Loans to Reference
Rate Loans as a result of any of the events
indicated in Section 3.7(e) or (iv) as a
consequence of any other failure by the
Borrower to repay LIBO Rate Loans when
required by the terms of this Agreement.
(h) QUOTATION OF LIBO RATE. Anything herein
to the contrary notwithstanding, if on any
LIBOR Interest Rate Determination Date no LIBO
Rate is available by reason of the failure of
BofA to provide offered quotations to prime
banks in accordance with the definition of
"Base LIBO Rate", the Agent shall give the
Borrower prompt notice thereof and (i) any
LIBO Rate Loan requested to be made at the
LIBO Rate to be determined on any such LIBOR
Interest Rate Determination Date shall be made
as a Reference Rate Loan, and (ii) any notice
given by the Borrower to convert any Loans
into or to continue any Loans as LIBO Rate
Loans at the LIBO Rate to be determined on any
such LIBOR Interest Rate Determination Date
shall be ineffective.
(i) LIBO RATE TAXES. The Borrower agrees
that it will pay, prior to the date on which
penalties attach thereto, all present and
future income, stamp and other taxes, levies,
or costs and charge whatsoever imposed,
assessed, levied or collected on or from the
Agent on or in respect of the Borrower's Loans
from the Agent solely as a result of the
interest rate being determined by reference to
the LIBO Rate and/or the provisions of this
Agreement relating to the LIBO Rate and/or the
recording, registration, notarization or other
formalization of any of the foregoing and/or
any payment of principal, interest or other
amounts made on or in respect of the Loans
from the Agent when the interest rate is
determined by reference to the LIBO Rate (all
<PAGE> 16
Mr. Mark Brody
Amendment No. 6 to Loan and Security Agreement
September 12, 1994
Page 16
such taxes, levies, costs and charges being
herein collectively called "LIBO Rate Taxes")
PROVIDED, HOWEVER, that LIBO Rate Taxes shall
not include taxes imposed on or measured by
the overall net income of the Agent by the
United States of America or any political
subdivision or taxing authority thereof or
therein, or taxes on or measured by the
overall net income by any foreign branch or
subsidiary of the Agent by any foreign country
or subdivision thereof in which that branch or
subsidiary is doing business. The Borrower
agrees that it shall also pay such additional
amounts as equal increases in taxes payable by
the Agent which increases are attributable to
payments made by the Borrower described in
this sentence and in the immediately preceding
sentence of this Section 3.7(i). Promptly
after the date on which payment of any such
LIBO Rate Tax is due pursuant to applicable
law, the Borrower will, at the request of
Agent, furnish to the Agent evidence, in form
and substance satisfactory to the Agent, that
the Borrower has met its obligation under this
Section 3.7(i). In addition, the Borrower
will indemnify the Agent against, and
reimburse Agent on demand for, any LIBO Rate
Taxes for which the Agent is liable by reason
of the making or maintenance of any LIBO Rate
Loans hereunder, as determined by the Agent in
its discretion exercised in good faith and
pursuant to standards of commercial
reasonableness. The Agent shall provide the
Borrower with appropriate receipts for any
payments or reimbursements made by the
Borrower pursuant to this Section 3.3(i).
(j) BOOKING OF LIBO RATE LOANS. The Agent
may make, carry or transfer LIBO Rate Loans
at, to, or for the account of, any of its
branch offices or the office of any of its
Affiliates.
(k) INCREASED COSTS. If, due to either (i)
the introduction of or any change (other than
<PAGE> 17
Mr. Mark Brody
Amendment No. 6 to Loan and Security Agreement
September 12, 1994
Page 17
any change by way of imposition or increase of
reserve requirements included in the LIBOR
Reserve Percentage) in or in the
interpretation of any law or regulation or
(ii) the compliance with any guideline or
request from any central bank or other Public
Authority (whether or not having the force of
law), there shall be any increase in the cost
to the Agent of agreeing to make or making,
funding, or maintaining LIBO Rate Loans, then
the Borrower agrees that it shall, from time
to time, upon demand by the Agent, pay to the
Agent additional amounts sufficient to
compensate the Agent for such increased cost.
A certificate as to the amount of such
increased cost, submitted to the Borrower by
the Agent, shall be rebuttably presumptive
evidence of the correctness of such amount.
(l) LIBOR RATE LOANS AFTER EVENT OF DEFAULT.
Unless the Agent shall otherwise agree, after
the occurrence of and during the continuance
of any Event of Default, the Borrower may not
borrow Revolving Loans as LIBO Rate Loans or
elect to have any Loans continued as, or
converted to, LIBO Rate Loans after the
expiration of any Interest Period then in
effect for such Loans."
17. In Section 4.2 of the Agreement and notwithstanding the option
of the Borrowers to voluntarily reduce the Revolving Loan
Facility, any calculation of the early termination fee shall
be based on a Revolving Loan Facility in the amount of
$33,800,000.
18. In Section 4.6(d) of the Agreement the following language is
hereby added to read as follows:
"Unless so directed by the Borrower, the
Lender shall not apply any such payments which
it received to any LIBOR Revolving Loan or
LIBOR Term Loan, except (i) on the expiration
date of the Interest Period applicable to any
such LIBO Rate Loans, or (ii) in the event,
and only to the extent, that there are no
outstanding Reference Rate Loans."
<PAGE> 18
Mr. Mark Brody
Amendment No. 6 to Loan and Security Agreement
September 12, 1994
Page 18
19. Notwithstanding Section 9.9 of the Agreement, the Agent, on
behalf of the Lenders, shall permit both the Parent and
Western Capital Corporation ("Western"), a subsidiary of the
Parent but not a Borrower under the Total Facility, to each
form a new subsidiary in order to either merge certain
existing shell Subsidiaries or transfer their assets into new
subsidiaries created by the Parent or Western, as the case may
be. The existing shell Subsidiaries which may be merged into
a to-be-created Ohio subsidiary of the Parent includes Sud
Corp. I (fka American Metal Products, Corp.); Sud Corp. II
(fka Kriterion Plastics Corporation); AIL Liquidating Company
(fka Accurate Industries of Louisiana, Inc.); Richmond Gear,
Inc. (fka Arro Manufacturing, Inc.); Marine City Gear, Inc.
(fka Baker Manufacturing, Inc.); E-W Mold & Tool Co., Inc.;
Winamac, Inc. (fka Galbreath Incorporated); Schoolcraft
Precision, Inc. (fka Maro, Inc.); Reef-Baker Corporation and
Sud Gear, Inc. (fka Reef Gear Mfg., Inc.). In addition, the
assets of the Metalcote division of Western may be merged into
a to-be-created Minnesota subsidiary of Western. Exhibit 8.5
to the Agreement shall be amended to reflect these new
Subsidiaries.
20. In Section 9.24 of the Agreement the "Permitted Rentals" for
Fiscal Year 1995 and Fiscal Year 1996 are hereby deleted and
replaced as follows:
"1995 $4,275,000
1996 $4,775,000"
21. In Section 9.26(a) of the Agreement a new clause (vii) is
hereby added to read as follows:
"(vii) notwithstanding the foregoing, in the
event that South Coast or Cast-Matic repay in
full all of their outstanding Revolving Loans,
both Borrowers may make intercompany advances
to any other Borrower without being subject to
the restrictions set forth in Section
9.26(a)(ii), Section 9.26(a)(iii) and Section
9.26(a)(iv); provided however, (1) any such
intercompany advances must be made from South
Coast's or Cast-Matic's operating cash flow
and must be repaid in full prior to either
South Coast or Cast-Matic receiving Revolving
Loans in excess of $500,000 for either
Borrower and (2) South Coast and Cast-Matic
<PAGE> 19
Mr. Mark Brody
Amendment No. 6 to Loan and Security Agreement
September 12, 1994
Page 19
shall be in compliance with Section 9.31 while
any intercompany advance is outstanding. For
purposes hereof, "operating cash flow" shall
mean net income PLUS non-cash charges LESS the
sum of (1) Capital Expenditures and (2)
principal payments measured from the period
commencing June 1, 1994."
Except as modified herein, the Agreement remains in full force and
effect and is hereby ratified and affirmed. Please indicate your
acceptance of this Amendment No. 6 to the Agreement by executing in
the places provided below and this Amendment No. 6 shall be deemed
effective as of the date first written above.
Respectfully yours,
BANKAMERICA BUSINESS CREDIT, INC.,
as Agent and Lender
By: /s/ Gregory R. Eck
-------------------------------
Its: Vice President
------------------------------
NATIONAL CITY BANK,
as Lender
By: /s/ Diane I. Rooney
------------------------------
Its: Vice President
------------------------------
STAR BANK, NATIONAL ASSOCIATION,
as Lender
By: /s/ Suzanne E. Geiger
------------------------------
Its: Vice President
------------------------------
<PAGE> 20
Mr. Mark brody
Amendment No. 6 to Loan and security Agreement
September 12, 1994
Page 20
ACCEPTED AND AGREED:
SUDBURY, INC.
By: /s/ Mark E. Brody
----------------------------
Its: Vice President
----------------------------
By: /s/ Jacques R. Sardas
----------------------------
Its: Chairman / CEO
----------------------------
CAST-MATIC CORPORATION
By: /s/ Mark E. Brody
----------------------------
Its: Vice President
----------------------------
By: /s/ Jacques R. Sardas
----------------------------
Its: Chairman / CEO
----------------------------
FRISBY P.M.C. INCORPORATED
By: /s/ Mark E. Brody
----------------------------
Its: Vice President
----------------------------
By: /s/ Jacques R. Sardas
----------------------------
Its: Chairman / CEO
----------------------------
<PAGE> 21
Mr. Mark Brody
Amendment No. 6 to Loan and Security Agreement
September 12, 1994
Page 21
INDUSTRIAL POWDER COATINGS, INC.
By: /s/ Mark E. Brody
----------------------------
Its: Vice President
----------------------------
By: /s/ Jacques R. Sardas
----------------------------
Its: Chairman / CEO
----------------------------
IOWA MOLD TOOLING CO., INC.
By: /s/ Mark E. Brody
----------------------------
Its: Vice President
----------------------------
By: /s/ Jacques R. Sardas
----------------------------
Its: Chairman / CEO
----------------------------
SOUTH COAST TERMINALS, INC.
By: /s/ Mark E. Brody
----------------------------
Its: Vice President
----------------------------
By: /s/ Jacques R. Sardas
----------------------------
Its: Chairman / CEO
----------------------------
<PAGE> 22
Mr. Mark Brody
Amendment No. 6 to Loan and Security Agreement
September 12, 1994
Page 22
WAGNER CASTINGS COMPANY
By: /s/ Mark E. Brody
------------------------------
Its: Vice President
-----------------------------
By: /s/ Jacques R. Sardas
-----------------------------
Its: Chairman / CEO
-----------------------------
ACKNOWLEDGED:
WAGNER HAVANA, INC.
By: /s/ Mark E. Brody
-----------------------------
Its: Vice President
-----------------------------
By: /s/ Jacques R. Sardas
-----------------------------
Its: Chairman / CEO
-----------------------------
<PAGE> 23
EXHIBIT "A"
NOTICE OF CONVERSION/CONTINUATION
, 199
- - -------------------- --
BankAmerica Business Credit, Inc.
55 West Monroe Street
Suite 3600
Chicago, Illinois 60603
Ladies and Gentlemen:
Reference is hereby made to that certain Loan and Security
Agreement dated as of May 28, 1993 (as the same may be amended,
restated, supplemented or otherwise modified from time to time, the
"Loan Agreement", the terms defined therein being used herein as
therein defined) between Sudbury, Inc. (the "Parent"), Cast-Matic
Corporation, Frisby Mfg. Co., Industrial Powder Coatings, Inc.
("IPC"), Iowa Mold Tooling Co., Inc., South Coast Terminals, Inc.,
and Wagner Castings Company (collectively, either the "Borrower, or
"Borrowers") and Bank America Business Credit, Inc., formerly known
as BA Business Credit, Inc. (the "Agent" and a "Lender"), National
City Bank, and Star Bank, National Association. The Borrower
hereby gives the Agent notice, pursuant to Section 3.6(b) of the
Loan Agreement, that the Borrower elects to convert or to continue
Loans, and sets forth below the information relating to such
conversion or continuation as required by such Section 3.6(b):
(i) the requested conversion or continuation date is
, 199 , a Business Day; ----
----------------------- -
(ii) the amount of the Loans to be converted/continued is $
, and the type of the Loans to be
-----------------------
converted/continued is ;
---------------------------------------
[and]
(iii) the nature of the requested conversion/continuation is
[; and][.]
-----------------------------------------------------
(iv) the requested Interest Period of such LIBO Rate Loans
is [one/two/three month[s].
The Borrower hereby certifies that on the date hereon, no Default
or Event of Default has occurred and is continuing, and on the date
of the requested conversion/continuation, no Default or Event of
Default shall have occurred and be continuing unless the Borrower
shall have notified the Agent thereof.
Very truly yours,
- - ---------------------------------
By:
- - ---------------------------------
Its:
- - ---------------------------------
<PAGE> 1
<TABLE>
EXHIBIT 11 - STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
SUDBURY, INC. AND SUBSIDIARIES
<CAPTION>
THREE MONTHS ENDED
------------------------------------
August 31, August 31,
1994 1993
--------- -----------
<S> <C> <C>
(Amounts in thousands, except per share data)
PRIMARY
Average shares outstanding 10,276 10,000
Net effect of dilutive stock
options and other common
stock equivalents - based
on the treasury stock
method using average
market price 2,287 2,073
------- ------
TOTAL 12,563 12,073
======= ======
Net income $ 2,219 $ 1,082
======= =======
Per share amount $ .18 $ .09
======= =======
FULLY DILUTED
Average shares outstanding 10,276 10,000
Net effect of dilutive stock
options and other common
stock equivalents - based
on the treasury stock
method using the quarter end
market price if higher than
average market price 2,287 2,073
------- -------
TOTAL 12,563 12,073
======= =======
Net income $ 2,219 $ 1,082
======= =======
Per share amount $ .18 $ .09
======= =======
</TABLE>
-13-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> QTR-1
<FISCAL-YEAR-END> MAY-31-1995
<PERIOD-START> JUN-01-1994
<PERIOD-END> AUG-31-1994
<CASH> 1,839
<SECURITIES> 0
<RECEIVABLES> 38,458
<ALLOWANCES> 0
<INVENTORY> 20,923
<CURRENT-ASSETS> 64,070
<PP&E> 59,921
<DEPRECIATION> 13,185
<TOTAL-ASSETS> 115,523
<CURRENT-LIABILITIES> 42,979
<BONDS> 27,632
<COMMON> 103
0
0
<OTHER-SE> 31,985
<TOTAL-LIABILITY-AND-EQUITY> 115,523
<SALES> 67,720
<TOTAL-REVENUES> 67,720
<CGS> 57,245
<TOTAL-COSTS> 6,167
<OTHER-EXPENSES> 7
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 800
<INCOME-PRETAX> 3,501
<INCOME-TAX> 1,282
<INCOME-CONTINUING> 2,219
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,219
<EPS-PRIMARY> .18
<EPS-DILUTED> .18
</TABLE>
