[DESCRIPTION] CONTROL CHIEF HOLDINGS, INC. FORM 10-KSB 6-30-95
U.S. Securities and Exchange Commission
Washington, D. C. 20549
Form 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 1995
Commission File Number 0-15910
Control Chief Holdings, Inc.
(Name of small business issuer in its charter)
New York 16-0955704
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
P.O. Box 141, 200 Williams Street, Bradford, Pennsylvania 16701
Telephone 814-368-4132
(Address, including zip code, and telephone number, including area
code, of Registrant's principal executive office)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Name of each exchange
Title of each class: on which registered:
Common Stock - $.50 par value The Nasdaq Small-Cap
Market
Check whether the issuer (1) filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act during the past
12 months, and (2) has been subject to such filing requirements for
the past 90 days. Yes [X] No [ ]
Check if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will
be contained by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB [X].
Issuer's revenues for the fiscal year ended June 30, 1995 were
$9,003,036.
At August 31, 1995, the aggregate market value of voting common stock
held by non-affiliates of the registrant computed at the last trade
price of such stock of $3.06 was $1,085,284. As of August 31, 1995,
the issuer had outstanding 811,553 shares of Common Stock, $.50 par
value.
Documents incorporated by reference
Portions of the registrant's Proxy Statement for the Annual Meeting
of Shareholders to be held November 17, 1995 are incorporated by
reference into Part III of this Form 10-KSB.
CONTROL CHIEF HOLDINGS, INC.
INDEX TO ANNUAL REPORT ON FORM 10-KSB
For the Year Ended June 30, 1995
Part I
Item 1 Description of Business
Item 2 Description of Property
Item 3 Legal Proceedings
Item 4 Submission of Matters to a vote of
Security Holders
Part II
Item 5 Market for Common Equity and Related
Stockholder Matters
Item 6 Management's Discussion and Analysis of
Financial Condition and Results of Operations
Item 7 Financial Statements
Item 8 Changes In and Disagreements with Accountants
on Accounting and Financial Disclosure
Part III
Item 9 Directors, Executive Officers, Promoters and
Control Persons; Compliance with Section 16(a)
of the Exchange Act
Item 10 Executive Compensation
Item 11 Security Ownership of Certain Beneficial Owners
and Management
Item 12 Certain Relationships and Related Transactions
Item 13 Exhibits and Reports on Form 8-K
Signatures<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS
General Development of Business-
Control Chief Holdings, Inc. ("the Company") was incorporated in New
York on June 12, 1968. The Company is a holding company and sole
shareholder of Control Chief Corporation, Control Chief (UK) Limited,
and Bradford Classics Woodworking, Inc. In the past, the Company was
a designer and producer of monitoring devices for the automated
welding industry. On February 1, 1991, pursuant to an Asset Purchase
Agreement, the Company sold to SPC Technologies, Inc. the operating
assets used in the business of designing, manufacturing and selling
weld monitoring devices. At the annual meeting of the shareholders
held November 20, 1992, a proposal to change the Company's name from
Digimetrics, Inc. to Control Chief Holdings, Inc. was approved. At
the same meeting, the shareholders approved a four into one reverse
stock split. On February 10, 1992 a fire at the Randolph, New York
site of Bradford Classics Woodworking, Inc. (Bradford Classics)
destroyed the manufacturing facilities. The Company elected to
discontinue the wood turning operations of the subsidiary. On
September 15, 1993, Bradford Classics accepted delivery of equipment
amounting to approximately $375,000 to be used in the start-up of a
new wood processing operation. The equipment acquired consisted of
various automated and manual machines utilized in the surfacing,
sizing, molding and handling of hardwood dimension lumber. The
operation conducts business under the name Tuna Valley Wood Products
(Tuna Valley). On October 20, 1992 the Company acquired the
remaining 50% of the outstanding voting shares of IRT Holdings,
Limited of Canterbury, Kent, England. IRT Holdings became at that
time a wholly owned foreign subsidiary of the Company. On November
18, 1994, the Board of Directors of the Company approved the name
change of IRT Holdings to Control Chief (UK) Limited. Through March
31, 1995, Control Chief (UK) Limited was a holding company and sole
shareholder of Infra-Red Technology Limited ("Infratech") and Vella
Willson Limited ("V-W") both located in Canterbury, Kent, England.
Effective April 1, 1995, Infratech and V-W were merged into Control
Chief (UK) Limited, and continue to operate as separate divisions.
The Financial Statements found in Part II, Item 7, present the
results of operations for Control Chief Corporation, the Company's
remote control subsidiary, Tuna Valley and Control Chief (UK).
Control Chief Corporation ("Control Chief"), is a Pennsylvania
corporation which designs, engineers and produces remote control
devices for material handling equipment and other industrial
applications. Effective March 1, 1995, Control Chief acquired the
net operating assets of NTR Technologies, Inc. for $100,000. NTR
Technologies expertise is in radio frequency and it operates as a
division of Control Chief. Control Chief (UK), is a foreign
affiliate which designs, engineers and produces remote control
devices for substantially the same markets as Control Chief, and also
produces, to its customers' designs, power transformers. Tuna Valley
is a Pennsylvania corporation which is an automated dimension mill
located in Bradford, Pennsylvania and services the needs of customers
for hardwood dimensioned blanks.
PRINCIPAL PRODUCTS AND SERVICES AND METHODS OF DISTRIBUTION
Electronic Components and Devices-
Control Chief designs, engineers and manufactures remote control
devices for material handling equipment and other industrial
applications. These controls use either radio or infrared waves as
communications media to transmit control data from portable units to
receivers mounted on various types of apparatus. Control Chief was
among the first in its industry to apply infrared technologies to
industrial remote control applications. All models of products are
microprocessor based systems. Remote controls provide the customer a
cost effective means to achieve greater operational safety and
flexibility. These devices are utilized world-wide in concert with
various material handling equipment, industrial machines, process
equipment and mobile apparatus. Control Chief markets its products
through a network of independent manufacturer's representatives
located throughout the United States, Canada, Central and South
America in key geographical centers. Additionally, products are sold
through direct efforts, distributors, private labeling agreements and
licensees. Control Chief (UK) Limited markets its products primarily
through direct efforts in the United Kingdom and Europe. In
addition, Control Chief (UK) Limited manufactures to specific
customer designs specialized transformers incorporated into
electronic devices which are primarily utilized in the civil,
commercial and military aviation field. These manufacturing services
are marketed primarily through direct efforts in the United States
and United Kingdom.
Dimensioned Wood Blanks-
Tuna Valley produces from lumber dimensioned hardwood blanks which
are incorporated into various wood products in the furniture
industry. All dimensions are to customer specification. Tuna
Valley's manufacturing services are marketed through direct efforts
to customers located primarily in New York and Pennsylvania.
PRODUCT DEVELOPMENT
Electronic Components and Devices-
The Company continues to enhance current product designs and develop
new designs within its established product lines. In order to remain
competitive in the market, the Company does not announce to the
general public continuing research and development programs.
Research and development programs are established to keep its
products current with the state of the art. New product designs and
product line expansion is anticipated for the future and currently
being developed. These programs have not been released to the public
and if prematurely released would potentially reduce the anticipated
return on its research investment. Research and development
expenditures for the Company's remote control applications totalled
$222,400 and $207,718 for the fiscal years ended June 30, 1995 and
1994, respectively. Since the Company manufactures its power
transformers to specific customer designs, it does not perform
research and development programs in that area.
Dimensioned Wood Blanks-
Tuna Valley manufactures to specific customer designs and does not
perform research and development programs.
COMPETITION
The Company believes that the key competitive factors in each of the
Company's markets are product features and functions, quality, price,
ease of use, reliability, quality of technical support and customer
service features and functions. The Company believes that it
competes favorably with respect to these factors.
Electronic Components and Devices-
The Company experiences competition for its remote controls from
several suppliers of similar products. Some of these suppliers are
substantially larger and have larger professional staffs and greater
financial and technical resources. Throughout the world there are
numerous remote control manufacturers. Several of the largest
manufactures in the world are located in Germany and France. The
Company believes that it is among the three largest suppliers of
remote control devices in the domestic market.
Control Chief Corporation and Control Chief (UK) Limited compete
principally on the basis of technology and quality. Control Chief
Corporation is unique in that it was the first U.S. company to
develop an infrared system to be used for industrial short range
remote control and incorporate it as a standard product along side
its extensive radio technology products. Microprocessors have been
incorporated into all products. The incorporation of these "mini-
computers" into the devices has greatly reduced the size as well as
the cost of the devices while increasing their reliability. Control
Chief Corporation and Control Chief (UK) Limited were among the first
to successfully market devices including that technology. The
Company believes that by its use of radio and infrared technologies
it better serves the needs and requirements of the industrial market.
Management believes that none of its competitors provide a more
diverse product line.
Currently, worldwide competition is extremely price conscious with
many companies entering and exiting the market. While significant
market shares have not fluctuated with the traditional suppliers to
the market, new entrants have depressed prices. Management believes
its products are competitively priced taking into consideration the
Company's reputation as a long time, high quality manufacturer of
reliable, durable state of the art devices.
Control Chief (UK) Limited primarily markets its transformer
manufacturing capability to a small niche of customers primarily
concerned with reliability. The products produced are labor
intensive by design and require specialized skills which do not
ordinarily exist with volume transformer manufacturers. The Company's
transformer products compete based on cost, quality and delivery, on
an order by order basis.
Dimensioned Wood Blanks-
Tuna Valley has completed its second year of operation and has
evolved into a high quality producer of hardwood blanks manufactured
to customer specifications. There are a large number of competitors
in this market and at this time Tuna Valley is considered small by
comparison. The market is extremely price competitive. Tuna Valley
competes as a high quality, quick delivery manufacturer. The
majority of sales are produced through direct efforts. A small
portion of sales are received through brokers.
RAW MATERIAL
Electronic Components and Devices-
The principal raw materials used in the manufacturer of remote
control devices and transformers are electronic components produced
by various manufacturers. No particular manufacturer accounts for a
substantial portion of the electronic components. All components
used are readily available in the current market and it is not
anticipated that there will be any significant shortages in the
foreseeable future.
Dimensioned Wood Blanks-
The principal raw materials used in the manufacturing services
provided by Tuna Valley are hardwoods such as, red oak, cherry and
hard maple. All species are currently available in the local region.
Future availability is dependent on a number of factors. Weather,
insect infestations, changes in access to government lands, etc.
historically affect the price and availability of hardwoods.
Management is unable to predict the conditions which predicate the
sufficient supply of raw material in the future. Tuna Valley
acquires its hardwood needs in the open market and as such will be
dependent on this market in the future.
MAJOR CUSTOMERS
Electronic Components and Devices-
Control Chief Corporation and Control Chief (UK) Limited are not
dependent for remote control sales on a single customer or group of
customers, the loss of which would have a material adverse effect
upon this product of the Company. Control Chief (UK) Limited has
sales of its transformers to one significant customer, GEC Avionics,
which makes up approximately 45.1% of its sales. The loss of this
customer would have a detrimental effect on its ability to continue
to sell this particular product, but would not represent a
significant loss overall to the Company.
Dimensioned Wood Blanks-
Tuna Valley was dependent on two customers for 50.5% and 61.1% of its
sales for fiscal years ended June 30, 1995 and 1994, respectively.
It is anticipated that the two customers will continue to be key
customers of Tuna Valley in the future.
PATENTS, TRADEMARKS AND LICENSES
Electronic Components and Devices-
Control Chief Corporation and Control Chief (UK) Limited do not at
the present time hold patents on its current line of products. The
trademarks, "Control Chief", "Infratech", "Crane Chief" and "Raymote"
are registered for their lines of remote products in the U.S. and
Europe. Control Chief Corporation enters into exclusive marketing
and sales agreements for designated territories in the normal course
of business. These agreements typically arrange for exclusive sales
and marketing rights to specific geographical areas as well as
private labeling, marketing assistance, manufacturing rights and
software licensing.
Dimensioned Wood Blanks-
Tuna Valley does not hold patents at this time nor does it maintain
any trademarks or licenses.
GOVERNMENTAL APPROVAL OF PRINCIPAL PRODUCTS OR SERVICES
Electronic Components and Devices-
Control Chief Corporation manufactures products which transmit data
via radio waves. As a result, its products must be approved by the
Federal Communications Commission (FCC). Currently, all products
offered for sale have been approved by the FCC and are monitored for
any changes in regulations which would require re-certification.
Dimensioned Wood Blanks-
Tuna Valley does not produce products which require governmental
approval.
RESEARCH AND DEVELOPMENT
Electronic Components and Devices-
Company sponsored research and development expenditures for Control
Chief Corporation for the fiscal years ending June 30, 1995 and 1994
were $222,400 and $207,718, respectively.
ENVIRONMENTAL COMPLIANCE
The Company utilizes a consultant to evaluate, maintain, manage and
report on issues of compliance with Federal, State and local
provisions which have been enacted or adopted regulating the
discharge of materials into the environment. The cost of this
service on an ongoing basis is not material.
EMPLOYEES
As of August 31, 1995 approximately 123 individuals were employed by
the Company world-wide. The Company considers its relations with its
employees to be satisfactory.
ITEM 2. DESCRIPTION OF PROPERTY
Location Function Square Feet Ownership
14 Egbert Lane Manufacturing 10,000 Owned
Lewis Run, PA
200 Williams Street Manufacturing,
Bradford, PA Corporate Offices 20,000 Leased
455 William Pitt Way Manufacturing
Pittsburgh, PA 1,697 Leased
20 Russell Blvd. Manufacturing
Bradford, PA 26,227 Leased
Winsheap Industrial Manufacturing
Estates
Canterbury, Kent, England 6,000 Leased
(1) None of the above properties are encumbered in connection with
the collateralization of the Company's indebtedness.
(2) The Company's office and manufacturing space is adequate for its
existing requirements and its projected business needs.
ITEM 3. LEGAL PROCEEDINGS
NONE.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of the security holders
during the fourth quarter of the fiscal year ended June 30, 1995.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's common stock trades on The Nasdaq Small-Cap Market
under the Symbol DIGM. The symbol DIGM relates to the Company's
former name "Digimetrics, Inc."
The following is the range of trade information for the quarterly
periods ending September 30, 1993 through June 30, 1995. The trade
prices are actual historical sales information as supplied by Nasdaq
and represents "real-time" sales and price information for securities
traded in The Nasdaq Small-Cap Market.
<TABLE>
<CAPTION>
High Low
Trade Trade
For the Quarter Ended Price Price
<S> <C> <C>
06/30/95 3.12 2.50
03/31/95 2.87 2.00
12/31/94 3.00 2.75
09/30/94 2.87 2.75
06/30/94 3.38 2.94
03/31/94 3.38 3.00
12/31/93 3.75 2.88
09/30/93 4.13 3.38
</TABLE>
As of August 31, 1995, the Company's records indicated that there
were approximately 1,000 registered holders of the 811,553 shares of
common stock that were outstanding as of that date.
<TABLE>
<CAPTION>
Dividends Paid
<S> <C>
September 25, 1992 $.04 per share
September 24, 1993 $.07 per share
September 26, 1994 $.07 per share
September 25, 1995 $.07 per share
</TABLE>
It is the intent of the Company to pay an annual dividend to the
extent that sufficient funds are available and the Company's business
objectives and lenders permit such payment. The terms of Control
Chief Corporation's line of credit prohibit the payment of dividends
without the express written consent from the lender.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Overview
The fiscal year 1995 can best be described with one word, "Change".
Change in product design, change in market emphasis, change in
divisional structure by way of an acquisition, and last but not
least, change in management. The fiscal year 1995 saw Tuna Valley
change from a start up company to a contributing part of the
corporate structure. Control Chief (UK) experienced an increase in
sales and net profit. Management attributes this in part to an
improvement in an improvement in the business climate of the United
Kingdom. Change in products and product design also highlighted the
year for Control Chief.
Management remains committed to continue the positive effects change
has brought to the Company. As with any change there comes
uncertainty, however management is cautiously optimistic that if the
current business climates and the strong backlogs shown at all the
divisions remain constant, the positive changes seen in 1995 will
continue into the next fiscal year.
Selected Financial Information
The following table summarizes certain selected financial information
with respect to the Company, and is qualified in its entirety by
reference to the Consolidated Financial Statements of the Company and
the Notes thereto. Additionally, this table has been restated as the
result of discontinued operations and a previous four into one
reverse stock split. Refer to the Notes to Consolidated Financial
Statements for further information.
<TABLE>
Financial Highlights
<CAPTION>
Financial (in thousands, except current ratio and share data)
Years ended
June 30, 1995 1994 1993 1992 1991
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net sales $8,963 $7,220 $6,128 $4,577 $4,998
Earnings (loss)
from continuing
operations 139 73 298 (180) 299
Working capital 1,832 1,933 1,596 1,175 1,450
Total assets 5,309 4,461 3,418 3,015 3,338
Long-term debt 823 987 351 229 328
Capital
expenditures 178 605 74 266 332
Current ratio 1.80 2.38 2.53 2.30 2.55
Per Common Share
Years ended
June 30, 1995 1994 1993 1992 1991
------ ------ ------ ------ ------
Earnings (loss)
from continuing
operations $.171 $.090 $.368 ($.222) $.368
Earnings (loss)
from discontinued
operations .000 .000 .021 (.012) (.136)
------ ------ ------ ------ ------
Net earnings (loss) $.171 $.090 $.389 ($.234) $.232
====== ====== ====== ====== ======
</TABLE>
RESULTS OF OPERATIONS
Year ended June 30, 1995 compared to year ended June 30, 1994
Net sales of $8,963,163 for the year ended June 30, 1995, increased
24.1% from the comparable 1994 period of $7,220,473. The dimensioned
wood blanks segment, Tuna Valley Wood Products, accounted for
$1,247,406 of the Company's overall increase or 71.6%. The
electronic components and devices segment, Control Chief Corporation
and Control Chief (UK) Limited, accounted for the remaining $495,303
or 28.4%. Tuna Valley's significant increase in net sales is
reflective of the fact that its sales have continued to steadily
increase since its start-up approximately two years ago. The
increase in the Company's net sales for its electronic components and
devices segment reflects a continued general improvement in the U.K.
economy. The Company does not experience a significant fluctuation
of business attributable to seasonal buying habits of its customers.
Cost of products sold increased by $1,406,333 or 33.3%. The
dimensioned wood blanks segment incurred increased costs of products
sold of $1,088,210 or 77.4% of the overall Company increase. The
increase in this segment's cost of products sold corresponds to its
increase in net sales and is reflective of significantly higher
component costs than electronic manufacturing. The electronic
components and devices segment incurred an increase of $348,123 or
22.6% of the Company's increase. The increase is reflective of the
increase in net sales for this segment and of historical trends.
Selling, general and administrative costs increased by $297,360 or
11.7%. This increase reflects the Company's continued investment in
areas of marketing, sales staffing and travel in the U.S. and U.K.
Research and development costs increased by $14,682 or 7.1%. The
increase is consistent with the Company's continued commitment to
staying abreast of technological changes, enhancement of current
products and development of new product lines in the electronic
components and devices segment.
Interest expense increased by $47,832 or 54.9%. This increase
relates to the refinancing of short-term debt into a long-term note
by Control Chief Corporation and an increase in short-term borrowing
to finance overall increases in receivables, inventories and other
assets. The Company was also subject to increased fluctuations in
Integra Bank's commercial base rate of interest that occurred during
the year.
Net earnings increased by $65,945 or 90.6%. The provision for income
taxes at June 30, 1995 on pretax income of $179,264 was $40,555 or
22.6% of pretax income. This compares to a provision for income tax
at June 30, 1994 of $109,386 on pretax income of $182,150 or 60.1%.
The decrease in the provision for income taxes of pretax income over
the previous fiscal year, while pretax earnings for the year ended
June 30, 1995 only decreased $2,886 or 1.6%, is attributed to the
increase in the pretax income of the Company's foreign operations and
an overall decrease in pretax income of the Company's domestic
operations. The pretax income earned by Control Chief (UK) Limited
increases profitability for financial reporting purposes but is not
reflected when calculating the provision for income taxes. The
foreign subsidiary has considerable operating losses to offset its
current and future taxable income.
Year ended June 30, 1994 compared to year ended June 30, 1993
Net sales for the period increased from the previous year by
$1,092,217 or 17.8%. The dimensioned wood blanks segment, Tuna
Valley, accounted for $741,902 of the increase or 67.9%. The
electronic components and devices segment, Control Chief Corporation
and Control Chief (UK) Limited, accounted for the remaining $350,315
or 32.1%. Tuna Valley was a startup venture during the year ended
June 30, 1994. The increase in net sales for the electronic
components and devices reflects a general improvement in the U.S. and
U.K. economies. The electronic components and devices segment
increased its sales staff to accommodate increased activity and
develop new market penetration strategies. The Company does not
experience a significant fluctuation of business attributable to
seasonal buying habits of its customers.
Cost of products sold increased by $939,172 or 28.6%. The
dimensioned wood blanks segment incurred costs of $710,405 or 75.6%
of this increase. The component cost of this segment is
significantly higher than electronics manufacturing and generates a
much lower gross profit rate. The electronic components and devices
segment incurred an increase of $228,767. The increase is reflective
of historical trends.
Selling, general and administrative costs increased by $290,082 or
12.9%. The Company increased the size of its sales staff in the U.S.
and U.K. and placed a direct salesman in the field in a region where
it was determined that a qualified manufacturers representative was
not available.
Research and development costs decreased by $5,374 or 2.5%. The
Company expects to invest funds annually of $200,000 or greater in
the future to stay abreast of changes in technology and improve and
expand its product lines in the electronic components and devices
segment.
Interest expense was higher by $44,400 or 103.7% due to an overall
increase in debt of $945,366. The increase relates primarily to the
start up of Tuna Valley and the refinancing of short-term debt into a
long-term note by Control Chief Corporation.
Income taxes for the fiscal year amounted to $109,386 or 60.1% of
earnings from continuing operations before income taxes. In
comparison, income taxes for the fiscal year ended June 30, 1993
amounted to $122,427 or 29.1%. The significant increase in the
effective tax rate arises from the use of tax credits and other tax
preference items in fiscal 1993 that were not available to the
Company in 1994. The loss incurred by the foreign operations reduces
profitability for financial statement purposes but is not reflected
when calculating taxable income.
Working capital increased by $337,094 or 21.1%. This increase arises
generally from increases in trade receivables, inventories and
prepayments offset by increases in short-term debt, current
maturities of long-term debt, trade payables and decreases in accrued
items.
In general, increases noted in the components of current assets and
current liabilities are directly reflective of the inclusion in 1994
of Tuna Valley. Property, plant and equipment at cost increased by a
net amount of $579,844 of which Tuna Valley acquired machinery and
equipment amounting to approximately $479,421. The remainder was
acquired by Control Chief.
Effective June 30, 1994, the Company amended and restated its
promissory note agreement with SPC Technologies, Inc. ("SPC"), a
related party through a common director, Patrick G. Shields. The
Company had previously entered into an agreement with SPC in
February, 1991 when it sold the net operating assets of its weld
monitoring business segment (formerly Digimetrics, Inc.) for the sum
of $200,000. Since the sale, SPC has had no significant sales, has
incurred operating losses, and has been unsuccessful in obtaining
equity or other financing.
The Company, in a thorough examination, determined that insufficient
collateral existed with SPC under the terms of its note agreement in
order to adequately secure its position, and therefore, took measures
to amend and restate the promissory note agreement in order to
provide for adequate security.
At June 30, 1994, the Company reduced the principal balance due from
SPC under its note receivable by $51,364 and reduced its other
receivable due from SPC by $15,585. After this reduction the balance
owed by SPC was $100,000. As a result of these reductions, taxes
currently payable by the Company were reduced by $34,311.
In return for the reductions, the Company obtained a first security
interest in substantially all of the assets of SPC, and a second
position on the stock of the Company held by Patrick G. Shields. The
book value of the assets of SPC at June 30, 1994 totalled $178,177
and the remaining equity value of the stock in the Company owned by
Patrick G. Shields as of that date was $57,413. Additionally, in
exchange for the cancellation of Mr. Shields personal guarantee under
the note, he paid the sum of $9,000.
The restructured note bears interest at the rate of 10% and is
payable in monthly installments of $957. A balloon payment of
$86,996 is due August 1, 2001.
LIQUIDITY AND CAPITAL RESOURCES
The Company and its Subsidiaries currently fund their needs for
liquidity and capital resources through cash from operations, short-
term and long-term borrowings.
Control Chief Corporation has a $750,000 line of credit with Integra
Bank("Integra"), which expires on October 31, 1995. Amounts
outstanding under the line of credit bear interest at the bank's
prime rate, variable, and are payable on demand. As of June 30,
1995, the rate of interest on the line of credit was 9%. In
connection therewith, Control Chief Corporation has granted Integra a
general security interest in its assets, excluding real property, and
has agreed, without obtaining prior consent of the bank, not to incur
annual capital expenditures and/or acquisitions greater than annual
depreciation expense. Additionally, the Company must comply with
certain loan covenants, such as the maintenance of a debt/worth ratio
of 1.50 to 1.00 or less, maintenance of a debt service coverage ratio
not less than 1.00, and other miscellaneous items. As of June 30,
1995, a total of $520,000 was outstanding under Control Chief
Corporation's line of credit.
In addition to the line of credit, Control Chief Corporation has a
term loan with Integra in the original principal amount of $900,000
that was incurred for the purpose of consolidating pre-existing
short-term and long-term debt. Amounts outstanding under this loan
bear interest at the bank's prime rate, variable, plus 1/2% and are
repayable in 60 consecutive monthly installments of principal plus
interest. As of June 30, 1995, a total of $693,122 was outstanding
under this term loan at an interest rate of 9.50%. In connection
therewith, the Control Chief Corporation has granted Integra a
general security interest in its assets, excluding real property, and
has agreed not to distribute dividends unless approval is obtained
from the bank. The Company is also required to maintain a debt
service coverage ratio in excess of 1.0 and has agreed not to incur
additional investment in or indebtedness with its foreign subsidiary,
Control Chief (UK) Limited, without the consent of Integra Bank.
At June 30, 1995, Control Chief Corporation also had outstanding
$70,684 of debt that is being repaid through March, 1997 at 8%
interest. This seller financed debt arises from the purchase of the
net operating assets of NTR Technologies, Inc., effective March 1,
1995. In addition, $7,556 of debt is being repaid through March,
1996 at 6% interest. This debt was assumed in connection with the
purchase of the net assets of NTR Technologies, Inc.
Tuna Valley has a term loan with Integra Bank in the original
principal amount of $300,000 that was used for purchasing equipment
for the start-up of its operations. Amounts outstanding under this
loan bear interest at the bank's prime rate, variable, plus 3/4% and
is being repaid in 60 consecutive monthly installments of principal
plus interest. At June 30, 1995, $236,532 was outstanding under this
term loan at an interest rate of 9.75%. In connection therewith,
Tuna Valley has granted Integra a general security interest in all of
its assets.
In addition, Tuna Valley has a term loan with the City of Bradford,
Pennsylvania in the original principal amount of $100,000 that was
used for purchasing equipment. Amounts outstanding under this loan
bear interest at 3% and are payable in 84 consecutive monthly
installments of principal plus interest. At June 30, 1995, $77,019
was outstanding under this term loan. In connection therewith, Tuna
Valley has granted the City of Bradford a general security interest
in all of its assets.
The Company currently does not have a material commitment for any
further capital expenditures and believes its current working capital
is sufficient for its operations.
ITEM 7. FINANCIAL STATEMENTS
Contents of Financial Statements
Report of Independent Certified Public Accountants
Financial Statements
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Changes in
Stockholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Report of Independent Certified Public Accountants
Board of Directors and Stockholders
Control Chief Holdings, Inc.
We have audited the accompanying consolidated balance sheets of
Control Chief Holdings, Inc. and Subsidiaries as of June 30, 1995 and
1994, and the related consolidated statements of operations,
stockholders' equity, and cash flows for the years then ended. These
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. These 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 consolidated financial position
of Control Chief Holdings, Inc. and Subsidiaries as of June 30, 1995
and 1994, and the consolidated results of their operations and their
consolidated cash flows for the years then ended in conformity with
generally accepted accounting principles.
/S/Diefenbach Delio Kearney & DeDionisio
Diefenbach Delio Kearney & DeDionisio
Certified Public Accountants
Erie, Pennsylvania
August 15, 1995
<TABLE>
<CAPTION>
CONTROL CHIEF HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30,
1995 1994
--------- ---------
<S> <C> <C>
ASSETS
Current Assets
Cash $157,786 $106,572
Receivables
Trade, less allowance for doubtful
accounts of $41,340 and $38,370 1,603,883 1,253,830
Other 8,903 15,916
Inventories
Raw material and subassemblies 1,641,566 1,429,214
Work in process 433,661 309,153
Finished products 39,888 50,153
Prepaid income taxes 105,119 62,245
Other prepaid items 58,706 58,787
Deferred income taxes 71,505 47,915
--------- ---------
4,121,017 3,333,785
--------- ---------
Property, Plant and Equipment, at cost
Land and improvements 19,874 19,874
Building and improvements 245,777 231,087
Machinery and other equipment 1,978,463 1,870,742
--------- ---------
Total cost 2,244,114 2,121,703
Less accumulated depreciation 1,330,159 1,194,154
--------- ---------
Undepreciated cost 913,955 927,549
--------- ---------
Other Assets
Note receivable-SPC Technologies, Inc. 99,651 100,000
Goodwill, less accumulated amortization
of $68,341 and $41,588 154,599 81,027
Cash surrender value of officers'
life insurance, less policy
loans of $55,457 and $53,563 19,771 18,509
--------- ---------
274,021 199,536
--------- ---------
$5,308,993 $4,460,870
========= =========
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
<TABLE>
CONTROL CHIEF HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - CONTINUED
<CAPTION>
June 30,
1995 1994
--------- ---------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Short-term debt $520,000 $275,000
Current maturities of long-term debt 275,813 223,694
Accounts payable
Trade 990,773 480,103
Other 15,567 15,069
Accrued items
Salaries, wages, commissions and
related payroll taxes 415,439 309,534
Income taxes 507 39,109
Other 70,465 58,545
--------- ---------
Total current liabilities 2,288,564 1,401,054
--------- ---------
Other Liabilities
Long-term debt, less current maturities 822,621 987,435
Deferred income taxes 74,075 41,721
--------- ---------
Total other liabilities 896,696 1,029,156
--------- ---------
Stockholders' Equity
Common stock, authorized 5,000,000
shares of $.50 par value; issued
and outstanding 811,553 shares 405,776 405,776
Capital in excess of par value 1,223,701 1,223,701
Retained earnings 463,036 381,136
Foreign currency translation adjustment 31,220 20,047
--------- ---------
Total stockholders' equity 2,123,733 2,030,660
--------- ---------
$5,308,993 $4,460,870
========= =========
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
<TABLE>
CONTROL CHIEF HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS
<CAPTION>
Year ended June 30,
1995 1994
--------- ---------
<S> <C> <C>
Revenues
Net sales $8,963,182 $7,220,472
Other income, net 39,854 19,243
--------- ---------
Total revenues 9,003,036 7,239,715
--------- ---------
Costs and expenses
Cost of products sold 5,630,520 4,224,187
Selling, general and administrative 2,835,815 2,538,455
Research and development 222,400 207,718
Interest expense 135,037 87,205
--------- ---------
Total costs and expenses 8,823,772 7,057,565
--------- ---------
Earnings from operations before
income taxes 179,264 182,150
Provision for income taxes 40,555 109,386
--------- ---------
Net earnings 138,709 72,764
Retained earnings at beginning of year 381,136 365,111
Cash dividends paid (56,809) (56,739)
--------- ---------
Retained earnings at end of year $463,036 $381,136
========= =========
Net earnings per common share $0.171 $0.090
====== ======
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
<TABLE>
CONTROL CHIEF HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Year ended June 30,
1995 1994
--------- ---------
<S> <C> <C>
Cash flows from operating activities
Net earnings $138,709 $72,764
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 214,932 190,221
Deferred income taxes 8,764 (1,889)
(Gain) loss on sale of property,
plant and equipment 3,644 1,738
Restructuring of note receivable - 51,363
Change in assets and liabilities:
(Increase) decrease in receivables (336,047) (190,551)
(Increase) decrease in inventories (320,168) (469,681)
(Increase) decrease in prepaid
items and other assets (63,594) (96,072)
Increase (decrease) in accounts
payable and accruals 584,662 45,640
--------- ---------
Net cash provided by (used in)
operating activities 230,902 (396,467)
--------- ---------
Cash flows from investing activities
Proceeds from sale of property,
plant and equipment 3,000 15,000
Receipts of principal on note receivable 349 5,128
Purchase of property, plant and equipment (178,129) (605,100)
--------- ---------
Net cash provided by (used in)
investing activities (174,780) (584,972)
--------- ---------
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
<TABLE>
CONTROL CHIEF HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
<CAPTION>
Year ended June 30,
1995 1994
--------- ---------
<S> <C> <C>
Cash flows from financing activities
Net borrowings (repayments) of
short-term debt 245,000 175,000
Proceeds from long-term borrowings - 1,300,000
Repayments of long-term debt (193,033) (529,634)
Cash dividends paid (56,809) (56,739)
Exercise of stock options - 3,063
Purchase of fractional common shares - (58)
--------- ---------
Net cash provided by (used in)
financing activities (4,842) 891,632
--------- ---------
Effect of exchange rate changes on cash (68) 10,213
--------- ---------
Net increase (decrease) in cash 51,212 (79,594)
Cash at beginning of year 106,572 186,166
--------- ---------
Cash at end of year $157,784 $106,572
========= =========
Cash paid during the year for:
Interest $126,900 $79,171
Income taxes 113,267 265,719
Noncash investing and financing activities:
Acquisition of net operating assets of
NTR Technologies, Inc. $80,000 $ -
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
[FN]
CONTROL CHIEF HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1995 and 1994
1. Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of Control
Chief Holdings, Inc. and its wholly-owned subsidiaries, Control Chief
Corporation, Bradford Classics Woodworking, Inc., and Control Chief
(UK) Limited (the "Company"). All significant intercompany accounts
are eliminated upon consolidation.
Revenues Recognition and Concentration of Credit Risk
In general, the Company recognizes revenues on product sales when
items are shipped. Long-term contracts are not entered into by the
Company. The Company grants credit to its customers, most of whom
are in the manufacturing industry and are located throughout the
United States and the United Kingdom. Periodic credit evaluations of
customers are performed, and generally the Company does not require
advance payments or collateral. Credit losses to customers have not
been material.
Cash Equivalents
For purposes of the statement of cash flows, the Company considers
all highly liquid money market instruments with a maturity of three
months or less to be cash equivalents.
Warranties
The Company's products are generally under warranty against defects
in material and workmanship, the duration of which varies. Actual
experience has indicated that costs under warranty expense have not
been significant and are therefore charged against earnings in the
year incurred.
Inventories
Inventories are valued at the lower of cost, average cost (first-in,
first-out) or market.
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciation is
computed over the estimated lives of the assets using the straight-
line method. Expenditures for maintenance and repairs are charged
against earnings in the year incurred; major replacements, renewals
and betterments are capitalized and depreciated over their estimated
useful lives. The cost and accumulated depreciation of assets sold
or retired are removed from the respective accounts and any gain or
loss is reflected in earnings.
Intangible Assets
Goodwill is amortized on a straight-line basis over five and fifteen
years.
Income Taxes
The Company uses the asset/liability method in accounting for income
taxes. As a result, deferred tax assets and liabilities are recorded
for temporary differences between the tax basis of assets and
liabilities and their reported amounts in the financial statements.
Foreign Currency Translation
The assets and liabilities of the foreign subsidiary, Control Chief
(UK) Limited, are translated in U.S. dollars at current exchange
rates. Revenue and expense accounts of these operations are
translated at average using the end of month exchange rates
prevailing during the year. These translation adjustments are
accumulated in a separate component of stockholders' equity.
Earnings Per Common Share
Earnings per common share is computed based on the weighted average
number of shares common stock outstanding during the year. The
weighted average number of shares was 811,553 in 1995 and 811,247 in
1994. Although the Company has issued dilutive common stock
equivalents in the form of stock options, the dilutive effect of
these securities in the aggregate is less than three percent of
earnings per common share.
2. Business Changes
Effective March 1, 1995, the Company acquired the net operating
assets of NTR Technologies, Inc. for $100,000, of which, $20,000 was
paid at the closing and the remaining $80,000 is being paid over two
years at 8% interest. The acquisition has been accounted for by the
purchase method of accounting, and accordingly, the purchase price
has been allocated to the assets acquired and the liabilities assumed
based on the estimated fair values at the date of acquisition. The
excess of the purchase price over the estimated fair values of the
net assets acquired has been recorded as goodwill, which is being
amortized over fifteen years. The operating results of this
acquisition, which is a division of Control Chief Corporation, are
included in the Company's consolidated results of operations from the
date of acquisition.
On November 18, 1994 the Company approved an amendment to the
Company's foreign subsidiary's charter to change the subsidiary's
name from IRT Holdings Limited to Control Chief (UK) Limited. In
addition, effective April 1, 1995, the Company's foreign subsidiary
merged its affiliates, Infra-Red Technology Limited and Vella Willson
Limited, into its operations.
3. Short-Term Debt
At June 30, 1995 and 1994, short-term debt consisted of borrowing
under a line of credit with a bank, secured by substantially all of
the assets of the Company, excluding real estate, with a floating
interest rate at prime (9% at June 30, 1995 and 7.25% at June 30,
1994). The line of credit agreement requires the Company to maintain
certain minimum financial ratios and, among other things, to obtain
approval from the bank before the Company permits any additional
encumbrances on its assets, guarantees or incurs any additional
indebtedness, declares or pays dividends, and incurs annual capital
expenditures and/or acquisitions in excess of its annual depreciation
expense. At June 30, 1995, the Company was in compliance with all of
the covenants.
During 1995 and 1994, the line of credit reached month-end maximums
of $520,000 and $500,000, respectively. Weighted average borrowings
amounted to $365,611 in 1995 and $232,836 in 1994, with average
interest rates of 8.9% in 1995 and 6.4% in 1994 being calculated by
dividing the interest expense during the year for such borrowings by
the weighted average short-term borrowings. At June 30, 1995 and
1994, the Company had additional borrowings available under the line
of credit of $230,000 and $225,000, respectively. The line of credit
agreement is subject to renewal on October 31, 1995.
4. Long-Term Debt
Long-term debt at June 30, 1995 and 1994 consists of the following:
1995 1994
--------- ---------
Prime plus 1/2% term loan, amortized over
five years, due January, 1999, payable
in monthly installments of $17,610
including interest $693,122 $836,129
Prime plus 3/4% term loan, amortized over
five years, due February, 1999, payable
in monthly installments of $6,083,
including interest 236,532 283,507
3% term loan, amortized over five years,
due September, 2000, payable in monthly
installments of $1,323, including interest 77,019 90,365
8% term loan, amortized over two years,
due March, 1997, payable in monthly
installments of $3,618, including interest 70,684 -
Other liabilities 21,077 1,128
--------- ---------
1,098,434 1,211,129
Less current maturities 275,813 224,209
--------- ---------
$822,621 $986,920
========= =========
The aggregate maturities of long-term debt during each of the five
years ending June 30, 2000, are $275,813, $272,042, $260,383,
$270,745 and $15,503. The above indebtedness is secured by
substantially all of the assets of the Company, excluding real
estate. The term loan agreement in the amount of $693,122 at June
30, 1995 requires the Company to maintain a debt service coverage
ratio in excess of 1.0 and, among other things, to obtain approval
from the bank before the Company permits any additional encumbrances
on its assets, guarantees or incurs any additional indebtedness, and
declares or pays dividends. At June 30, 1995, The Company was in
compliance with all of the covenants.
5. Income Taxes
For the years ended June 30, 1995 and 1994, pretax income (loss) was
$77,252 and $273,394 for the Company's U.S. operations and $102,012
and ($91,244) for the Company's foreign operations.
For the years ended June 30, 1995 and 1994, the provision for taxes
consists of the following:
1995 1994
--------- ---------
Currently payable
Federal $12,242 $67,859
State 19,549 43,416
Deferred (credit) 8,764 (1,889)
--------- ---------
$40,555 $109,386
========= =========
The difference between the provision for income taxes and the amounts
computed by applying the U.S. federal income tax rate in effect for
the years ended June 30, 1995 and 1994 consists of the following:
1995 1994
--------- ---------
Statutory federal income tax $60,950 $61,931
(Income) loss of foreign subsidiary (34,684) 31,023
Statutory federal surtax exemption (7,787) (7,643)
State income taxes 19,549 43,416
Other items 2,527 (19,341)
-------- ---------
$40,555 $109,386
======== =========
At June 30, 1995 and 1994 the net deferred tax asset (liability)
component consists of the following:
1995 1994
-------- --------
Allowance for doubtful accounts $16,757 $16,222
Compensated absences 28,521 31,693
Termination benefits 26,227 -
Depreciation (74,075) (41,721)
-------- --------
($2,570) $6,194
======== ========
Current Asset $71,505 $47,915
Noncurrent Liability (74,075) (41,721)
-------- --------
($2,570) $6,194
======== ========
At June 30, 1995, the Company's foreign subsidiary has approximately
$191,000 of tax net operating loss carryforwards available to be
carried forward indefinitely.
6. Employee Savings Plan
The Company has an employee savings plan which permits participants
to make contributions by salary reduction pursuant to section 401(k)
of the Internal Revenue Code. The Company has adopted a
discretionary match that is limited to 6% of compensation and may, at
its discretion, make additional contributions to the plan. In
connection with the discretionary match, the Company's contribution
to the plan was $16,980 in 1995 and $12,996 in 1994. There were no
additional discretionary contributions to the plan for 1995 and 1994.
7. Common Stock Options
In August, 1994 the Company adopted the Control Chief Holdings, Inc.
1994 Stock Option Plan which provides for granting to officers, key
employees, consultants and other persons of the Company options to
purchase up to 40,000 shares of the Company's Common Stock. In
addition to the options available under the 1994 Plan, the Company
has options remaining for exercise under its 1984 Plan to purchase
5,000 shares of the Company's Common Stock. The option price is not
less than the market price for the Company's stock on the date of the
grant. The options become exercisable at varying dates and expire no
later than ten years from the date of grant.
A summary of the stock option data for the years ended June 30, 1995
and 1994 is as follows:
Number
of shares ------Option price----
under option Per share Aggregate
------------ --------- ---------
Outstanding-June 30, 1993 14,000 $2.16-3.28 $33,320
Granted during the year - -
Exercised during the year (1,000) 2.16 (2,160)
-------- --------- ---------
Outstanding-June 30, 1994 13,000 2.16-3.28 31,160
Granted during the year 1,200 3.19 3,828
Exercised during the year - - -
Cancellations (8,000) 2.16-3.28 (20,360)
--------- --------- ---------
Outstanding-June 30, 1995 6,200 $2.16-3.19 $14,628
========= ========= =========
Exercisable-June 30, 1995 6,200 $2.16-3.19 $14,628
========= ========= =========
At June 30, 1995, options to purchase 38,800 shares of Common Stock
were available for grant.
8. Operating Leases
The Company has entered into several operating lease agreements,
primarily relating to real estate, transportation and office
equipment. These leases are noncancelable and expire at various
dates through July, 2002. Leases that expire generally are expected
to be renewed or replaced by other leases. Future minimum rental
payments for the succeeding five years under all operating leases are
as follows:
Year ended June 30,
-----------------------
1996 $165,726
1997 146,068
1998 130,812
1999 117,158
2000 80,000
Total rent expense under all operating leases amounted to $163,001 in
1995 and $146,717 in 1994.
9. Related Party Transactions
The Company leases its corporate headquarter facility located in
Bradford, Pennsylvania from a principal stockholder and Director.
This lease agreement expires July, 2002 and is renewable at the then
fair rental value for a five year period. In addition to the annual
rental, the Company is responsible for the real estate taxes,
insurance and other occupancy expenses applicable to the leased
premises. Rent expense under this operating lease was $80,00 for
1995 and 1994. The minimum rental commitment under this agreement is
included with the Company's other operating leases as described in
Note 8 of the financial statements.
The Company also receives certain legal and insurance services from
enterprises which are related to the Company because of common
Directors or Officers of the Company. The total services provided by
these related parties was $229,877 in 1995 and $232,639 in 1994.
At June 30, 1995 and 1994, SPC Technologies, Inc., a related party
through a common Director, owed the Company $99,651 and $100,000,
respectively, under a 10% interest bearing note. The note is secured
by the assets of SPC Technologies, Inc., as well as a second position
in the stock of the Company that is owned by the common Director.
The note is being repaid in monthly installments of $957 with a
balloon payment of $86,996 due August 1, 2001.
10. Business Segments
The Company operates as a manufacturer of electronic components and
devices for use in material handling equipment and other industrial
applications. These operations are in the United States and the
United Kingdom.
The Company also has a wood products business. Its primary activity
is custom wood dimensioning, the majority of which is sold to
manufacturers in the furniture industry.
Total revenue by business segment and geographic area includes net
sales. Business segment operating profit is net sales less operating
costs and certain corporate administrative expenses allocated to the
segments. Corporate amounts include gains and losses from the sales
of assets, investment and other income net of other expense,
unallocated administrative expenses, and interest expense. Corporate
assets consists principally of cash and cash equivalents, prepaid
items and other assets.
Information about the Company's business segments for the year ended
June 30, 1995 is as follows:
Electronic Components
and Devices
----------------------------- Custom
United United Elimin- Wood
June 30, 1995 States Kingdom ations Products Total
- - ------------- --------- --------- -------- --------- --------
Revenues from
unaffiliated
customers $6,077,116 $896,758 $ - $1,989,308 $8,963,182
Transfers between
geographic areas 23,070 - ($23,070) - -
--------- --------- -------- --------- ---------
Total net sales $6,100,186 $896,758 ($23,070)$1,989,308 $8,963,182
========= ========= ======== ========= =========
Operating profit $131,947 $106,160 $ - $92,019 $330,126
======== ======== ======== ========
Corporate expenses, net 150,862
--------
Earnings before income taxes $179,264
========
Identifiable assets
Business segment $2,871,075 $515,457 ($23,550) $1,269,972 $4,632,954
Corporate assets 676,039
---------
Total assets $5,308,993
=========
Capital
expenditures $86,846 $35,642 $ - $55,641 $178,129
========
Depreciation and
amortization $119,582 $20,256 $ - $50,571 $190,409
Corporate depreciation
and amortization 24,523
--------
$214,932
========
During the year ended June 30, 1995, the Company's electronics
operation in the United States had export sales totalling $683,597.
In addition, during 1995, the Company's wood products operations had
sales with its two largest customers in the amounts of $591,468 and
$413,071.
Information about the Company's business segments for the year ended
June 30, 1994 is as follows:
Electronic Components
and Devices
----------------------------- Custom
United United Elimin- Wood
June 30, 1994 States Kingdom ations Products Total
- - ------------- --------- --------- --------- --------- ---------
Revenues from
unaffiliated
customers $5,854,877 $623,693 $ - $741,902 $7,220,472
Transfers between
geographic areas 15,973 8,103 (24,076) - -
--------- --------- --------- --------- ---------
Total net sales $5,870,850 $631,796 ($24,076) $741,902 $7,220,472
========= ========= ========= ========= =========
Operating
profit (loss) $351,048 ($83,864) $ - $8,396 $275,580
========= ========= ========= =========
Corporate expenses, net 93,430
---------
Earnings before income taxes $182,150
=========
Identifiable assets
Business segment $2,728,517 $335,557 ($3,149) $908,974 $3,969,899
Corporate assets 490,971
---------
Total assets $4,460,870
=========
Capital
expenditures $124,153 $1,526 $ - $479,421 $605,100
=========
Depreciation and
amortization $115,548 $16,927 $ - $33,223 $165,698
Corporate depreciation
and amortization
24,523
---------
$190,221
=========
During the year ended June 30, 1994, the Company's electronics
operation in the United States had export sales totalling $639,149.
In addition, during 1994, the Company's wood products operations had
sales with its two largest customers in the amounts of $250,830 and
$202,263.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
NONE.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Information required by Item 9 is incorporated by reference from the
Company's proxy statement to be issued in connection with its 1995
Annual Meeting of Shareholders and to be filed with the Commission
not later than 120 days after the end of fiscal year 1995.
ITEM 10. EXECUTIVE COMPENSATION
Information required by Item 10 is incorporated by reference from the
Company's proxy statement to be issued in connection with its 1995
Annual Meeting of Shareholders and to be filed with the Commission
not later than 120 days after the end of fiscal year 1995.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Information required by Item 11 is incorporated by reference from the
Company's proxy statement to be issued in connection with its 1995
Annual Meeting of Shareholders and to be filed with the Commission
not later than 120 days after the end of fiscal year 1995.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information required by Item 12 is incorporated by reference from the
Company's proxy statement to be issued in connection with its 1995
Annual Meeting of Shareholders and to be filed with the Commission
not later than 120 days after the end of fiscal year 1995.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The following Exhibits are filed herewith or incorporated by
reference herein. (For incorporation references, see Exhibit Index
attached hereto.)
Exhibit
3-1 Certificate of Incorporation of Digimetrics, Inc.
3-2 By-laws of Digimetrics, Inc.
3-3 Certificate of Amendment of the Certificate of
Incorporation of Digimetrics, Inc.
4-1 Specimen of Common Stock Certificate.
10-1 Digimetics/Control Chief Amended and Restated Profit-
Sharing Plan Adoption Agreement and Plan Document.
10-2 Term Loan Note and Security Agreement between Control
Chief Corporation and Integra Bank/North.
10-3 Term Loan Note and Security Agreement between Bradford
Classics Woodworking, Inc. and the City of Bradford.
10-4 Term Loan Note and Security Agreement between Bradford
Classics Woodworking, Inc. and Integra Bank/North.
10-5 Asset Purchase Agreement between Digimetrics, Inc. and
SPC Technologies, Inc.
10-6 Agreement for Purchase and Sale between C. Lawrence
Shields and Dorothy V. Shields for the real estate
located at 200 Williams Street, Bradford, PA.
10-7 Lease Agreement dated July 15, 1992 between C.
Lawrence Shields and Dorothy V. Shields for the real
estate located at 200 Williams Street, Bradford, PA.
10-8 Lease Agreement dated August 10, 1993 between the City
of Bradford, Office of Economic and Community
Development and Bradford Classics Woodworking, Inc.
for the real estate located at 20 Russell Boulevard,
Bradford, PA.
10-9 1994 Stock Option Plan.
10-10 SPC Technologies, Inc. Amended and Restated Promissory
Note, Security Agreement and Pledge Agreement.
10-11 Asset Purchase Agreement between Control Chief
Corporation, NTR Technologies, Inc., Edward C.
Nichols, Anthony Rudzki, William R. Nichols, Robert W.
Thomas, Jr., and Christine B. Mulzet.
10-12 Revolving Credit Note and Security Agreement between
Control Chief Corporation and Integra Bank/North.
21-1 Subsidiaries of the Registrant.
23-1 Consent of Independent Auditors.
27-1 Financial Data Schedule.
(b) Reports on Form 8-K.
A Current Report on Form 8-K, dated June 5, 1995, was filed by
the Registrant pertaining to the resignation of Joseph F. Lamendola,
a director of Control Chief Holdings, Inc. and the president and
chief executive officer of Control Chief Corporation.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Control Chief Holdings, Inc.
(Registrant)
Date: September 28, 1995 By:/S/Douglas S. Bell
Douglas S. Bell
Chairman of the Board,
Chief Executive Officer and
President
In accordance with the Exchange Act, this report has been signed
below by the following persons on behalf of the registrant in the
capacities and on the dates indicated.
Signature Title Date
/S/Douglas S. Bell Chief Executive Officer September 28, 1995
Douglas S. Bell and Director
/S/Stephen J. Pachla Chief Financial Officer September 28, 1995
Stephen J. Pachla
/S/Christopher G. Hauser Director September 28, 1995
Christopher G. Hauser
/S/Arvid R. Nelson Director September 28, 1995
Arvid R. Nelson
/S/C. Lawrence Shields Director September 28, 1995
C. Lawrence Shields
/S/Jon T. Wray Director September 28, 1995
Jon T. Wray
INDEX OF EXHIBITS
No. Exhibit Location
3-1 Certificate of Incorporation Incorporated by reference
of Digimetrics, Inc. from Digimetrics, Inc.'s
Registration Statement on
Form 10 File No. 0-15919
("Form 10")
3-2 By-laws of Digimetrics, Inc. Incorporated by reference
from Digimetrics, Inc.'s
Form 10
3-3 Certificate of Amendment of Incorporated by reference
the Certificate of Incorporation from Form 10-KSB for the
of Digimetrics, Inc. fiscal year ended June 30,
1993 as Exhibit 3-3
4-1 Specimen of Common Stock Incorporated by reference
Certificate from Digimetrics, Inc.'s
Form 10
10-1 Digimetrics/Control Chief Incorporated by reference
Amended and Restated Profit- from Form 10-KSB for the
Sharing Plan Adoption Agreement fiscal year ended June 30,
and Plan Document 1994 as Exhibit 10-2
10-2 Term Loan Note and Security Incorporated by reference
Agreement between Control Chief from Form 10-QSB for the
Corporation and Integra Bank quarter ended December 31,
1993 as Exhibit 10-1
10-3 Term Loan Note and Security Incorporated by reference
Agreement between Bradford from Form 10-KSB for the
Classics Woodworking, Inc. fiscal year ended June 30,
and the City of Bradford, PA 1993 as Exhibit 10-5
10-4 Term Loan Note and Security Incorporated by reference
Agreement between Bradford from Form 10-KSB for the
Classics Woodworking, Inc. fiscal year ended June 30,
and Integra Bank 1993 as Exhibit 10-6
10-5 Asset Purchase Agreement Incorporated by reference
between Digimetrics, Inc. from Form 8-K filed on
and SPC Technologies, Inc. February 8, 1991 as Exhibit
2-1
10-6 Agreement for Purchase and Incorporated by reference
Sale between C. Lawrence from Form 8-K filed on
Shields and Dorothy V. Shields July 27, 1992 as Exhibit
for the real estate at 200 2-1
Williams Street, Bradford, PA
10-7 Lease Agreement dated July 15, Incorporated by reference
1992 between C. Lawrence Shields from Form 8-K filed on
and Dorothy V. Shields for the July 27, 1992 as Exhibit
real estate at 200 Williams 2-2
Street, Bradford, PA
10-8 Lease Agreement dated August 10, Incorporated by reference
1993 between the City of Bradford, from Form 10-KSB for the
Office of Economic and Community fiscal year ended June 30,
Development and Bradford Classics 1993 as Exhibit 10-10
Woodworking, Inc. for the real
estate at 20 Russell Boulevard,
Bradford, PA
10-9 1994 Stock Option Plan Incorporated by reference
from 1994 Proxy, Exhibit A
10-10 SPC Technologies, Inc. Amended Incorporated by reference
and Restated Promissory Note, from Form 10-KSB for the
Security Agreement and Pledge fiscal year ended June 30,
Agreement 1994 as Exhibit 10-12
10-11 Asset Purchase Agreement between Filed herewith
Control Chief Corporation, NTR
Nichols, Anthony Rudzki, William
R. Nichols, Robert W. Thomas, Jr.,
and Christine B. Mulzet
10-12 Revolving Credit Note and Security Filed herewith
Agreement between Control Chief
Corporation and Integra Bank/North
21-1 Subsidiaries of the Registrant Filed herewith
23-1 Consent of Independent Auditors Filed herewith
27-1 Financial Data Schedule Filed herewith
ASSETS PURCHASE AGREEMENT
THIS AGREEMENT, dated as of March 1, 1995, is by and
among Control Chief Corporation, a Pennsylvania corporation with
its principal offices at 200 Williams Street, Bradford,
Pennsylvania 16701 ("Buyer"), and NTR Technologies, Inc., a
Pennsylvania corporation with its principal office at 455 William
Pitt Way, Pittsburgh, Pennsylvania 15238 ("Seller"), Edward C.
Nichols, an individual residing at 152 Big Horn Drive,
Pittsburgh, Pennsylvania 15239 who has at times done business as
"Nichols RF", Anthony Rudzki, an individual residing at 220 18th
Street, Pittsburgh, Pennsylvania 15215, William R. Nichols, an
individual residing at 833 Blue Ridge Road, Pittsburgh,
Pennsylvania 15239, Robert W. Thomas, Jr., an individual
residing at 158 Scott Ridge Road, Harmony, Pennsylvania 16037,
and Christine B. Mulzet, an individual residing at 158 Scott
Ridge Road, Harmony, Pennsylvania 16037. The individual parties
hereto are referred to individually as an "Individual" and
collectively as the "Individuals", and Seller and the Individuals
are referred to collectively as "Seller's Group".
WHEREAS, Seller desires to sell and Buyer desires to
purchase, upon the terms and conditions more fully set forth
below, all assets and properties of Seller, including, but not
limited to, all cash, accounts receivable, inventory, equipment,
contracts, product rights, intellectual property rights, business
records and goodwill; and
WHEREAS, certain of the Individuals desire to sell and
Buyer desires to purchase certain equipment owned by such
Individuals and used in the business of Seller; and
WHEREAS, in connection with the purchase of the assets
of Seller and the Individuals, Buyer has agreed to assume certain
liabilities of Seller and Edward C. Nichols; and
WHEREAS, in connection with the transactions
contemplated by this Agreement, the Buyer and each of Edward C.
Nichols and Anthony Rudzki desire to enter into employment
agreements;
NOW, THEREFORE, in consideration of the covenants,
agreements, representations and warranties contained herein, the
parties hereto agree as follows:
SECTION 1. PURCHASE OF ASSETS
1.1 Purchased Assets. Seller hereby agrees to sell,
convey, transfer and deliver to Buyer all of Seller's right,
title and interest in and to all of Seller's assets, tangible or
intangible, real or personal, including but not limited to the
assets set forth on Schedule 1.1(a) hereto (the "Assets"). Each
of the Individuals hereby agrees to sell, convey, transfer and
deliver to Buyer all of such person's respective right, title and
interest in and to the assets set forth on Schedule 1.1(b) hereto
which are identified as being owned by each respective Individual
(the "Individual Assets"). The Assets and the Individual Assets
are referred to herein collectively as the "Purchased Assets".
1.2 Purchase Price. The purchase price for the Assets
is One Hundred Thousand Dollars ($100,000) which shall be paid by
Buyer as follows: Twenty Thousand Dollars ($20,000) shall be
paid by the delivery of Buyer's company check in such amount to
Seller on the Closing Date as defined herein, and Eighty Thousand
Dollars ($80,000) shall be paid with interest at the rate of 8%
in twenty-four equal monthly installments of $3,618.18 commencing
on April 1, 1995 and continuing on the 1st day of each month
thereafter until March 1, 1997. The purchase price for the
Individual Assets shall be Eight Thousand Four Hundred Twenty-
Five Dollars ($8,425), which amount shall be paid to the
appropriate Individuals as set forth on Schedule 1.1(b) hereto by
the delivery of Buyer's company checks on the Closing Date.
1.3 Assumption of Liabilities. On the Closing Date,
Buyer shall assume the liabilities of Seller and Edward C.
Nichols set forth on Schedule 1.3 attached hereto (the "Assumed
Liabilities"). Buyer does not assume any other obligations or
liabilities of Seller or the Individuals, contingent or
otherwise, specifically including but not limited to any
obligations or liabilities relating to injuries or damage caused
by products manufactured or sold by Seller, sales, payroll,
income or other taxes or any obligations owed to Seller's
employees, customers or vendors.
1.4 Closing. The closing shall occur on the date this
Agreement is executed by all the parties hereto (the "Effective
Date") or on such date thereafter as is agreed by the parties
hereto; provided, however, the closing shall occur no later than
thirty (30) days following the Effective Date. The date on which
the closing actually occurs is referred to herein as the Closing
Date.
(a) On the Closing Date: (1) Seller shall deliver to
Buyer a duly executed Bill of Sale for the Assets and the
appropriate Individuals shall deliver duly executed Bills of Sale
to Buyer for the Individual Assets, each in the form attached
hereto as Exhibit A, (2) Seller and Buyer shall each execute an
Assignment and Assumption Agreement in substantially the form
attached hereto as Exhibit B, (3) Seller and Buyer shall each
execute a Lease Assignment and Assumption Agreement in
substantially the form attached hereto as Exhibit C, (4) Buyer
and will enter into employment agreements in substantially the
form of the Employment Agreement attached hereto as Exhibit D
with each of Edward C. Nichols and Anthony Rudzki, at an annual
salary of $57,500 and $50,000, respectively, (5) Seller shall
deliver to Buyer an unaudited balance sheet of Seller's financial
position as of the Closing Date (the "Closing Date Balance
Sheet"), (6) if the Closing Date occurs after the Effective Date,
each member of the Seller's Group shall deliver to Buyer, and
Buyer shall deliver to the Seller's Group, certificates stating
that as of the date thereof each of the representations and
warranties of such party is true and correct in all material
respects and that such party has complied with all of its
obligations under this Agreement to be performed on or before
such date, (7) Seller shall deliver to Buyer the Consents, as
hereinafter defined, and (8) Buyer shall pay to the appropriate
members of the Seller's Group the amounts set forth in Section
1.2 hereof and in Section 4.3 hereof, if any.
(b) The obligations of Buyer to perform its
obligations under Section 1.4(a) hereof shall be subject to:
each member of the Seller's Group being willing and able to
perform its obligations under Section 1.4(a), the representations
and warranties of each member of the Seller's Group being true
and correct in all material respects as of the Closing Date, the
performance by each member of the Seller's Group of all of its
obligations under this Agreement to be performed on or before the
Closing Date, and the delivery to Buyer of certified copies of
resolutions, in a form acceptable to Buyer, of the incorporators,
directors and/or shareholders of Seller authorizing the
transactions contemplated by this Agreement.
(c) The obligations of the members of the Seller's
Group to perform their obligations under Section 1.4(a) hereof
shall be subject to: Buyer being willing and able to perform its
obligations under Section 1.4(a), the representations and
warranties of Buyer being true and correct in all material
respects as of the Closing Date, and the performance by Buyer of
all of its obligations under this Agreement to be performed on or
before the Closing Date.
SECTION 2. SELLER'S REPRESENTATIONS AND
WARRANTIES
Each member of the Seller's Group hereby jointly and
severally represents and warrants to Buyer that:
2.1 Corporate Authority. Seller is a corporation duly
organized and validly existing under the laws of the State of
Pennsylvania and has full power and authority to enter into and
to perform its obligations under this Agreement. It is not
required to qualify to do business in any other jurisdiction.
There are no outstanding agreements, assignments, licenses or
encumbrances inconsistent with the provisions of this Agreement
or which may prevent or hinder Seller from consummating the
transactions contemplated by this Agreement.
2.2 Assets Transferred. True copies of all written
leases and other agreements constituting Purchased Assets have
been delivered to Buyer. None of the foregoing leases or
agreements is in default by any party thereto and all of the
foregoing are valid, binding and enforceable in accordance with
the terms thereof. The tangible Purchased Assets are in good
working condition and comply with all applicable laws and
regulations. The inventory identified on the Closing Balance
Sheet is in good and saleable condition in the ordinary course of
Seller's business.
2.3 Title. Seller and the Individuals have good and
transferable title to the Assets and the Individual Assets,
respectively, and the Purchased Assets are free and clear of any
security interest, lien or encumbrance, license, obligation or
liability except that the equipment leased pursuant to the
Hewlett Packard Lease described in Schedule 1.3 is subject to
such lease.
2.4 Trademarks, Trade Names, Etc. Seller owns all
intellectual property rights which relate to the Purchased Assets
or which are necessary to operate its business in the manner in
which it is currently being conducted. Seller has not received
any notice with respect to any alleged infringement or unlawful
or improper use of any intellectual property owned or alleged to
be owned by others. Seller has not at any time transferred or
encumbered, in whole or in part, any interest in any intellectual
property. No person or entity who is not a party to this
Agreement has any interest in any such intellectual property.
2.5 No Conflicts. Neither the execution and delivery
of this Agreement nor the consummation of the transactions
contemplated hereby will: (a) conflict with the charter
documents or by-laws of Seller; (b) violate any order, writ,
injunction or decree applicable to any member of the Seller's
Group; (c) violate any provisions of laws, rules or regulations
to which any member of the Seller's Group is subject;
(d) violate, conflict with or result in any breach of or default
under any mortgage, indenture, contract, agreement, license,
permit, instrument or trust to which any member of the Seller's
Group is a party or by which their properties are bound; or
(e) result in the creation or imposition of any lien, claim,
charge, restriction, security interest or encumbrance of any kind
whatsoever upon, or give to any person other than Buyer any
interest or right in or with respect to, any of the Purchased
Assets.
2.6 Litigation. There is no suit, action, litigation,
investigation, claim, complaint, grievance or proceeding,
including appeals and applications for review, in progress,
pending or, to the best of the knowledge, information and belief
of any member of the Seller's Group, threatened, against or
relating to any member of the Seller's Group, or affecting any of
their properties or business, before any court, governmental
department, commission, board, bureau, agency or instrumentality,
domestic or foreign, or arbitration panel which, if determined
adversely to the member of the Seller's Group, might materially
and adversely affect the properties, business, future prospects
or financial condition of Seller or the Individual Assets; and,
there is not presently outstanding against any member of the
Seller's Group any judgment, decree, injunction, rule or order of
any court, governmental department, commission, agency,
instrumentality or arbitrator.
2.7 Corporate Action of Seller. All corporate actions
required to be taken by Seller to approve the transactions
contemplated by this Agreement and to authorize the execution and
delivery of this Agreement, including the approval of the Board
of Directors and shareholders of Seller, have been properly
taken. This Agreement has been duly and validly executed and
delivered by each member of the Seller's Group and constitutes a
valid and legally binding obligation of each member of the
Seller's Group, enforceable against each of them in accordance
with the terms hereof, subject, however to limitations with
respect to enforcement imposed by laws in connection with
bankruptcy or similar proceedings, and to the extent that
equitable remedies such as specific performance and injunctions
are in the discretion of the court from which they are sought.
2.8 Brokers. There is no broker or finder or other
person who would have any valid claim against Seller for a
commission or brokerage in connection with this Agreement or the
transactions contemplated hereby.
2.9 Third Party Consents. No consents from any third
parties are required in connection with the transfer of the
Purchased Assets to Buyer as contemplated in this Agreement,
except the consents of the other parties to the leases described
in Section 4.5 hereof.
2.10 Financial Statements. Attached hereto as Schedule
2.10 is an unaudited balance sheet of Seller's financial position
as at January 21, 1995 (the "January Balance Sheet"). The
Closing Balance Sheet and the January Balance Sheet fairly
present the financial position of Seller at the times set forth
therein, in each case in accordance with generally accepted
accounting principles applied on a consistent basis except for
the absence of footnote disclosure. Seller has no other
liabilities or obligations other than those set forth in the
Closing Balance Sheet. The accounts receivable shown in the
Closing Balance Sheet arose from bona fide sales of products to
customers of Sellers, and the same are valid and binding
obligations of those customers, enforceable in accordance with
the terms thereof, subject to no offsets, counterclaims, defenses
or recoupment.
2.11 Conduct of Business. Since January 21, 1995
Seller has operated its business in the ordinary course
consistent with its past practices. Except for one distribution
of earnings to shareholders for the period ending December 31,
1994, since January 21, 1995 Seller has (a) made no dividends,
distributions, transfers or other payments to any shareholder,
director or employee other than salary payments at the same rate
as those being paid prior to January 21, 1995, or (b) made no
payments to any other person except for payments on account,
services rendered or property purchased, all in the ordinary
course of Seller's business.
2.12 Taxes. All federal, state and other tax returns,
reports and declarations have been timely filed by Seller and the
same are complete and accurate and disclose all taxes and other
sums required to be paid for the periods covered. All taxes,
including estimated taxes, assessments, penalties and interest
required to be paid by or on behalf of Seller have been paid, and
all taxes, assessments, penalties and interest required to be
withheld and collected by Seller have been withheld and collected
and have been and will be paid to the appropriate governmental
bodies. Buyer shall have no liability as a result of the
transactions contemplated by this Agreement with respect to or
arising from any and all taxes, levies and other assessments
which Seller or any member of the Seller's Group is or was
required by law to pay, to withhold, or to collect and pay over
to the proper governmental authorities.
2.13 Compliance with Laws. Seller has complied with
all applicable laws, rules and regulations of all governmental
and other bodies, including without limitation, those relating to
pollution of the environment and the protection, safety, working
conditions and remuneration of employees.
2.14 Employment Matters. Seller has no contractual
relationship with its employees and Seller is not subject to any
collective bargaining agreement. Seller has no employee or
director fringe benefit plans or contracts.
2.15 Miscellaneous. No representation or warranty of
Seller herein contains any untrue statement of a material fact
necessary in order to make the statement not misleading.
SECTION 3. BUYER'S REPRESENTATIONS AND WARRANTIES
Buyer represents and warrants to each member of the
Seller's Group that:
3.1 Corporate Authority. Buyer is a corporation duly
organized, validly existing and in good standing under the laws
of the State of Pennsylvania and has full power and authority to
enter into and to perform its obligations under this Agreement.
3.2 No Conflicts. Neither the execution and delivery
of this Agreement, nor the consummation of the transactions
contemplated hereby (a) conflict with the articles of
incorporation or by-laws of Buyer; (b) violate any order, writ,
injunction or decree applicable to Buyer; (c) violate any
provisions of laws, rules or regulations to which Buyer is
subject; or (d) violate, conflict with or result in any breach of
or default under any mortgage, indenture, contract, agreement,
license, permit, instrument or trust to which Buyer is a party or
by which Buyer is bound.
3.3 Corporate Action of Buyer. All corporate actions
required to be taken by Buyer to approve the transactions
contemplated by this Agreement and to authorize the execution and
delivery of this Agreement have been properly taken. This
Agreement has been duly and validly executed and delivered by
Buyer and constitutes a valid and legally binding obligation of
Buyer, enforceable against it in accordance with the terms
hereof, subject however to limitations with respect to
enforcement imposed by laws in connection with bankruptcy, or
similar proceedings and to the extent that equitable remedies
such as specific performance and injunctions are in the
discretion of the court from which they are sought.
3.4 Brokers. There is no broker or finder or other
person who would have any valid claim against Buyer for a
commission or brokerage in connection with this Agreement or the
transactions contemplated hereby.
SECTION 4. COVENANTS OF THE PARTIES
4.1 Marketing of Apache 1200. Buyer agrees that it
will not sell or market the "Apache 1200" product for use in
underground mining OEM applications for a period of two years
from the Closing Date without the prior written consent of
Structured Mining Systems, Inc. This provision shall not prevent
Buyer from servicing or providing ancillary products to any
customer of Seller or from selling or marketing the "Apache 1200"
for use in any other application.
4.2 Discontinuance of Business. On the Closing Date
Seller shall immediately discontinue conducting any business
other than the winding up of its affairs, and it shall dissolve
within ninety (90) days of the Closing Date. Immediately
following the Closing Date, Seller shall discharge any
obligations and liabilities not assumed by Buyer, or, to the
extent the same cannot be discharged at that time because of the
terms thereof, as soon as the terms of such obligations permit
discharge.
4.3 Hewlett Packard Lease. In the event that any
member of the Seller's Group shall prepay the obligations of
Edward C. Nichols arising after the Closing Date under the
Hewlett Packard lease identified on Schedule 1.3 and satisfy all
the obligations thereunder so that the Assets subject to such
lease are conveyed to Buyer free of any lien of such lease, Buyer
shall pay such member the amount of the prepayment on the Closing
Date by company check.
4.4 Payments to Structured Mining Systems, Inc. Buyer
hereby agrees to pay to Structured Mining Systems, Inc. the
amount of $860.67 on the first day of each month for twelve (12)
months commencing on April 1, 1995 and continuing until March 1,
1996. Seller will satisfy any additional indebtedness that it
owes to Structured Mining Systems, Inc.
4.5 Consents. Prior to the Closing Date, Seller shall
obtain the consents required under the Real Estate Lease and the
Hewlett Packard Lease identified in Schedule 1.3. Seller shall
use its best efforts to obtain the consent of the landlord under
the Real Estate Lease on the form of "Consent of Landlord" which
is attached to the Lease Assignment and Assumption Agreement
attached hereto as Exhibit C.
4.6 Sales and Transfer Taxes. All sales, use or
transfer taxes due as a result of the consummation of the
transactions contemplated by this Agreement, if any, shall be
paid by the member of the Seller's group who receives the
consideration giving rise to such tax. The appropriate member of
the Seller's Group shall file all necessary returns in connection
with such taxes.
4.7 Bulk Sales and Sales Tax Indemnification. Each
member of the Seller's Group agrees to jointly and severally
indemnify Buyer for any liabilities or obligations incurred by
Buyer as a result of a failure to comply with all applicable
provisions of the Pennsylvania Bulk Sales Law and the
Pennsylvania Tax Law; provided, however, that no Individual shall
be obligated to indemnify Buyer for more than the amount received
by such Individual in connection with the transactions
contemplated by this Agreement (whether directly or as a
distribution in any form from Seller).
4.8 Transfer of Intellectual Property Rights. Each
individual hereby assigns to Buyer all of his or her rights and
interests in and to all intellectual property rights relating to
the Assets or the business of Seller being transferred to Buyer
pursuant to this Agreement.
[4.9 Employment of William R. Nichols. Upon the
delivery of proof satisfactory to Buyer that the offer of
employment by Buyer to William R. Nichols will not conflict with
or constitute a violation of any contract or agreement with
Westinghouse Electric Corporation or the United States of America
through the U.S. Department of Energy, Buyer agrees to offer
employment to William R. Nichols under substantially the terms
and conditions set forth in the form of Employment Agreement
attached hereto as Exhibit D at an annual salary of $57,500.]
SECTION 5. SURVIVAL AND INDEMNIFICATION
5.1 Nature and Survival of Representations and
Warranties. All statements, representations, warranties,
covenants and agreements contained herein, or in any certificate
or other document delivered by or on behalf of a party pursuant
to or in connection with the transactions contemplated by this
Agreement, shall be deemed to be made by such party hereunder.
All representations, warranties, covenants and agreements of the
parties hereto contained herein, or made by the parties
hereunder, shall survive the closing, the execution and delivery
hereunder of any bills of sale, instruments of conveyance,
assignments or other instruments of transfer of title to any of
the Assets and the payment of the consideration therefor, and
shall continue in full force and effect for a period of three
years after the date hereof. If no claim in writing shall, prior
to the expiration of such three year period, have been made
hereunder against a party hereto with respect to any inaccuracy
in or breach of any representation, warranty, covenant or
agreement made herein by such party, such party shall have no
further liability hereunder with respect to such representation,
warranty, covenant or agreement.
5.2 Indemnification.
Each member of the Seller's Group, jointly and
severally, agrees to defend, indemnify and hold Buyer harmless,
and Buyer agrees that it will defend, indemnify and hold each
member of the Seller's Group harmless, in each case from and
against all claims, losses, costs, liabilities and expenses
(including reasonable attorney's fees) ("Loss") arising out of
any breach of any representation, warranty, agreement or covenant
made by the indemnifying party herein or in any certificate or
other document furnished pursuant hereto by the indemnifying
party; provided, however, that no Individual shall be obligated
to indemnify Buyer for more than the amount received by such
Individual in connection with the transactions contemplated by
this Agreement (whether directly or as a distribution in any form
from Seller). Seller shall have the right to off-set any amount
to which it is entitled under this Section against any amount
payable by it pursuant to Section 1.2 hereof.
SECTION 6. MISCELLANEOUS
6.1 Notices. Any and all notices to be delivered in
connection herewith shall be in writing and shall be deemed given
if delivered personally or by facsimile transmission, telexed or
sent by mail or courier service to the other party at the address
set forth above or such other address as any party may furnish by
notice to the others as provided.
6.2 Expenses. Each party shall bear its own expenses
(including, without limitation, legal and accounting fees and
expenses) incurred in connection with this Agreement and the
transactions contemplated herein, whether or not such
transactions are consummated.
6.3 Validity. If any part of this Agreement shall be
found to be invalid or unenforceable, that part shall be deemed
to be severable and the remaining portions of this Agreement
shall remain in full force and effect.
6.4 Assignability. This Agreement shall not be
assignable in whole or in part by any party without the prior
written consent of the other parties hereto.
6.5 Applicable Law. This Agreement and the rights and
obligations of the parties hereunder shall be construed and
interpreted in accordance with the laws of Pennsylvania without
reference to Pennsylvania's choice of law rules.
6.6 Entire Agreement. This Agreement constitutes the
entire agreement of the parties hereto with respect to the
matters contained herein, and no modification, amendment or
waiver of any of the provisions of this Agreement shall be
effective unless in writing and signed by the parties hereto.
6.7 Effect of Waiver. The waiver by any party of a
breach of, or compliance with, any provision of this Agreement
shall not operate as or be construed as a waiver of any
subsequent or other breach thereof.
6.8 Successors and Assigns. This Agreement shall
extend to and be binding upon the parties hereto and their
respective successors and assigns.
6.9 Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the
same instrument.
6.10 Section Headings. The section headings contained
in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this
Agreement.
6.11 Further Assurances. The parties hereto shall
provide such further documents or instruments required by any
other party hereto as may be reasonably necessary or desirable to
effect the purpose of this Agreement and carry out its
provisions, whether before or after the date hereof.
6.12 Consent to Jurisdiction. All members of the
Seller's Group and Buyer agree that any litigation in connection
with this Agreement or the transactions contemplated hereby shall
be commenced and conducted by any of them only in Pennsylvania in
the County of Allegheny, or in the U.S. District Court whose
jurisdiction includes such county, which courts shall have
exclusive jurisdiction thereof. All members of Seller's Group
and Buyer submit to the venue of such courts and agree that
service of process upon them shall be valid if delivered to the
applicable address specified herein.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly
executed this Agreement as of the day and year first above
written.
CONTROL CHIEF CORPORATION
By: /S/Douglas S. Bell
Name: Douglas S. Bell
Title: V. President
NTR TECHNOLOGIES, INC.
By: /S/Edward C. Nichols
Name: Edward C. Nichols
Title: President
/S/Edward C. Nichols
/S/Anthony Rudzki
/S/William R. Nichols
/S/Robert W. Thomas, Jr.
/S/Christine B. Mulzet
SCHEDULE 1.1(a)
ASSETS
1. All cash of Seller as of the Closing Date, including deposits.
2. All accounts receivable and prepaid expenses except the
following accounts receivable:
Invoice Invoice Customer Open
Customer Date Number Order # Balance
RSM, Inc. 11/14/94 1015 0125LED $110.00
RSM, Inc. 11/14/94 1014 0119VTX $40.00
RSM, Inc. 1/4/95 1027 0133VTX $550.00
RSM, Inc. 1/6/95 1028 0133VTX $550.00
RSM, Inc. 1/11/95 1034 0133VTX $550.00
RSM, Inc. 1/26/95 1033 0133VTX $5,170.00
RSM, Inc. 1/27/95 1035 0133VTX $309.50
$7,279.50
TRW 1/9/95 1036 03557EC $1,050.00
$8,329.50
3. All inventory, including raw materials and supplies, work in
process and finished goods.
4. All equipment, furniture, fixtures, computers, machinery and
other tangible personal property, including but not limited
to those items listed on Exhibit A hereto.
5. All contracts, including but not limited to (a) all
outstanding purchase orders and commitments issued or made
by customers to Seller as of the Closing Date, (b) all
outstanding purchase orders or commitments made by Seller as
of the Closing Date, (c) the Lease Agreement dated as of
January 1, 1995 between Seller and The University of
Pittsburgh of the Commonwealth System of Higher Education
(the "Real Estate Lease"), and (d) all other contracts to
which Seller is a party.
6. All rights relating to products currently or previously
manufactured and sold by Seller, and all rights relating to
products being developed by Seller.
7. All trademarks, trade names, trade secrets, copyrights,
know-how, designs, formulations, formulae, processes,
drawings, software and other intellectual property of any
kind.
8. All product catalogs, product literature, manuals,
advertising materials, promotional materials, customer
lists, supplier lists and other business records other than
tax and payroll records.
9. All goodwill relating to any of the foregoing.
<PAGE>
SCHEDULE 1.1(b)
INDIVIDUAL ASSETS
Items Owned by Edward C. Nichols
All of Edward C. Nichols (and Nichols RF) rights under and
interest in the Lease Agreement dated March 17, 1994 between
Edward C. Nichols (as Nichols RF) and Hewlett Packard.
Item # Description Serial # Age Value
1 IBM 486 SX Unknown 7 Months $1,000
2 TEK 7L12 Analyzer B202937 New $2,995
3 TEK Trace AMP B257093 New $0
4 TEK Time Base B189690 New $1,195
5 HP54601A OSC 3227A05609 1 Year Leased
6 Office Desk N/A 2 Years $50
7 Epson Printer 0F00177086 1 Year $100
8 Frequency Counter N/A 1 Year $250
9 Bird Power Meter N/A 4 Years $375
10 Bird Tuning Element N/A 1 Year $100
11 50 OHM RF Load N/A 1 Year $50
12 Tuning Tools N/A New $25
13 12V Power Supply N/A 2 Years $75
Total Purchase Price for Edward C. Nichols $6,215
Items Owned by Anthony Rudzki
Item # Description Serial # Age Value
1 Toshiba PC 11447296 New $1,600
2 Epson Printer 1EU0110262 8 Months $250
3 File Cabinet N/A 1 Year $75
4 Book shelves (Qty = 3) N/A 2 Years $60
5 Solder Station N/A 3 Years $25
6 B&W Television N/A New $50
7 5.25 in. Disk Drive N/A 2 Years $75
8 85 Meg Hard Drive WT223649179 1 Year $75
Total Purchase Price for Anthony Rudzki $2,210
<PAGE>
SCHEDULE 1.3
ASSUMED LIABILITIES
1. The Accounts Payable of Seller as of the Closing Date, as
set forth on the Closing Date Balance Sheet.
2. The obligations of Seller under the Lease Agreement dated as
of January 1, 1995 between Seller and The University of
Pittsburgh of the Commonwealth System of Higher Education
(the " Real Estate Lease") accruing from and after the
Closing Date.
3. The obligations of Edward C. Nichols (as Nichols RF) under
the Lease Agreement dated March 17, 1994 between Edward C.
Nichols (as Nichols RF) and Hewlett Packard (the "Hewlett
Packard Lease") accruing from and after the Closing Date.
4. The obligations of Seller under all outstanding purchase
orders and commitments issued or made by customers to Seller
as of the Closing Date and all outstanding purchase orders
or commitments made by Seller as of the Closing Date, but
only to the extent such purchase orders or commitments were
entered into in the ordinary course of business of Seller.
5. The obligations of Seller for accrued wages and payroll
taxes, but only those accruing in the ordinary course of
business of Seller at the rates in effect prior to January
21, 1995.<PAGE>
SCHEDULE 2.10
NTR TECHNOLIGIES
Balance Sheet
As of January 21, 1995
Jan 21,'95
ASSETS
Current Assets
Checking/Savings
CHECKING 1,346.20
Total Checking/Savings 1,346.20
Accounts Receivable
Receivables 11,190.00
Total Accounts Receivable 11,190.00
Other Current Assets
INVENTORY 8,017.67
Total Other Current Assets 8,017.67
Total Current Assets 20,553.87
TOTAL ASSETS 20,553.87
LIABILITIES & EQUITY
Liabilities
Current Liabilities
Accounts Payable
Payables 2,571.19
Total Accounts Payable 2,571.19
Total Current Liabilities 2,571.19
Long Term Liabilities
LOAN/SMS 10,000.00
Total Long Term Liabilities 10,000.00
Total Liabilities 12,571.19
Equity
BILL INVESTMENT -100.01
BOB INVESTMENT -266.66
CAPITAL STOCK 1,000.00
CHRIS INVESTMENT -100.01
ED INVESTMENT 358.68
Retained Earnings 6,747.62
Net Income 3,184.72
TONY INVESTMENT -2,841.66
Total Equity 7,982.68
TOTAL LIABILITIES & EQUITY 20,553.87
EXHIBIT A
BILL OF SALE
KNOW ALL MEN BY THESE PRESENTS, that ______________________
________________ ("Seller"), for good and valuable consideration
paid to Seller by Control Chief Corporation, a Pennsylvania
corporation with its principal offices at 200 Williams Street,
Bradford, Pennsylvania 16701 ("Buyer"), the receipt of which is
hereby acknowledged, does hereby assign, transfer and convey to
Buyer, its successors and assigns, all of Seller's right, title
and interest in and to the assets described on Schedule 1 hereto.
This Bill of Sale is further documentation of the
assignments, transfers and conveyances contemplated by the Assets
Purchase Agreement dated _______________, 1995 among Seller,
Buyer and affiliates of Seller (the "Assets Purchase Agreement"),
and is subject to all of the terms, provisions and conditions
thereof. To the extent of any conflict between the terms of the
Assets Purchase Agreement and this Bill of Sale, the Assets
Purchase Agreement shall be controlling.
From time to time after the date hereof, Seller shall
execute such further documents of transfer, conveyance and
assignment with regard to the Purchased Assets, as Buyer or
Seller deem necessary or desirable in order to document and
confirm the transfer and assignment of the Purchased Assets
conveyed hereunder.
IN WITNESS WHEREOF, Seller has executed this Bill of Sale
this ____ day of ______________, 1995.
_______________________________
[Seller]<PAGE>
SCHEDULE 1 TO NTR TECHNOLOGIES, INC. BILL OF SALE
All of Seller's assets, tangible or intangible, real or personal,
including but not limited to:
1. All cash of Seller as of the Closing Date, including
deposits.
2. All accounts receivable and prepaid expenses except the
following accounts receivable:
Invoice Invoice Customer Open
Customer Date Number Order # Balance
RSM, Inc. 11/14/94 1015 0125LED $110.00
RSM, Inc. 11/14/94 1014 0119VTX $40.00
RSM, Inc. 1/4/95 1027 0133VTX $550.00
RSM, Inc. 1/6/95 1028 0133VTX $550.00
RSM, Inc. 1/11/95 1034 0133VTX $550.00
RSM, Inc. 1/26/95 1033 0133VTX $5,170.00
RSM, Inc. 1/27/95 1035 0133VTX $309.50
$7,279.50
TRW 1/9/95 1036 03557EC $1,050.00
$8,329.50
3. All inventory, including raw materials and supplies, work in
process and finished goods.
4. All equipment, furniture, fixtures, computers, machinery and
other tangible personal property, including but not limited
to those items listed on Exhibit A hereto.
5. All contracts, including but not limited to (a) all
outstanding purchase orders and commitments issued or made
by customers to Seller as of the Closing Date, (b) all
outstanding purchase orders or commitments made by Buyer as
of the Closing Date, (c) the Lease Agreement dated as of
January 1, 1995 between Seller and The University of
Pittsburgh of the Commonwealth System of Higher Education
(the " Real Estate Lease"), and (d) all other contracts to
which Seller is a party.
6. All rights relating to products currently or previously
manufactured and sold by Seller, and all rights relating to
products being developed by Seller.
7. All trademarks, trade names, trade secrets, copyrights,
know-how, designs, formulations, formulae, processes,
drawings, software and other intellectual property of any
kind.
8. All product catalogs, product literature, manuals,
advertising materials, promotional materials, customer
lists, supplier lists and other business records other than
tax and payroll records.
9. All goodwill relating to any of the foregoing.<PAGE>
SCHEDULE 1 TO EDWARD C. NICHOLS BILL OF SALE
Description Serial #
IBM 486 SX Unknown
TEK 7L12 Analyzer B202937
TEK Trace AMP B257093
TEK Time Base B189690
HP54601A OSC 3227A05609
Office Desk N/A
Epson Printer 0F00177086
Frequency Counter N/A
Bird Power Meter N/A
Bird Tuning Element N/A
50 OHM RF Load N/A
Tuning Tools N/A
12V Power Supply N/A<PAGE>
SCHEDULE 1 TO ANTHONY RUDZKI BILL OF SALE
Description Serial #
Toshiba PC 11447296
Epson Printer 1EU0110262
File Cabinet N/A
Book shelves (Qty = 3) N/A
Solder Station N/A
B&W Television N/A
5.25 in. Disk Drive N/A
85 Meg Hard Drive WT223649179<PAGE>
EXHIBIT B
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS AGREEMENT is made as of the ___ day of ___________,
1995 by and between Control Chief Corporation, a Pennsylvania
corporation with its principal office at 200 Williams Street,
Bradford, Pennsylvania 16701 ("Buyer"), and
________________________________________ ("Seller") pursuant to
the terms of an Assets Purchase Agreement dated _______________,
1995 among Seller, Buyer and affiliates of Seller (the "Assets
Purchase Agreement").
1. Seller hereby assigns, transfers and conveys to
Buyer all of Seller's right, title and interest in, to and
arising under or relating to the agreements described on Schedule
1 hereto (the "Assigned Contracts").
2. Buyer hereby accepts Seller's assignment set forth
in paragraph 1 above and hereby assumes and agrees to pay,
perform and discharge all of Seller's obligations and liabilities
described on Schedule 2 hereto.
3. Seller shall, from time to time, from and after
the date hereof, upon request of Buyer or at the option of
Seller, execute such further documents of transfer, conveyance
and assignment with regard to the Assigned Contracts as Buyer or
Seller deem necessary or desirable to carry out the transactions
contemplated by this Agreement.
4. This Agreement shall be binding upon and shall
inure to the benefit of
Seller and Buyer and their respective successors and assigns.
5. Other than as is expressly set forth in the Assets
Purchase Agreement, Buyer is not assuming and shall not be liable
for or bound by any liabilities of Seller.
6. This Agreement is made, executed and delivered
pursuant to the Assets Purchase Agreement, and is subject to all
the terms, provisions and conditions thereof. To the extent of
any conflict between the terms of the Assets Purchase Agreement
and this Agreement, the Assets Purchase Agreement shall be
controlling.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this
Assignment and Assumption Agreement as of the day and year first
written above.
CONTROL CHIEF CORPORATION
By: ___________________________
Name:___________________________
Title:___________________________
_________________________________
Seller<PAGE>
SCHEDULE 1 TO ASSIGNMENT AND ASSUMPTION AGREEMENT
FOR NTR TECHNOLOGIES, INC.
All contracts of Seller, including but not limited to (a) all
outstanding purchase orders and commitments issued or made by
customers to Seller as of the Closing Date except the purchase
orders relating to the excluded accounts receivable described on
Schedule 1.1(a) to the Assets Purchase Agreement, (b) all
outstanding purchase orders or commitments made by Seller as of
the Closing Date, and (c) all other contracts to which Seller is
a party.
SCHEDULE 2 TO ASSIGNMENT AND ASSUMPTION AGREEMENT
FOR NTR TECHNOLOGIES, INC.
1. The Accounts Payable of Seller as of the Closing Date, as
set forth on the Closing Date Balance Sheet.
2. The obligations of Seller under all outstanding purchase
orders and commitments issued or made by customers to Seller
as of the Closing Date, except the purchase orders relating
to the excluded accounts receivable described on Schedule
1.1(a) to the Assets Purchase Agreement, and all outstanding
purchase orders or commitments made by Seller as of the
Closing Date, but only to the extent such purchase orders or
commitments were entered into in the ordinary course of
business of Seller.
3. The obligations of Seller for accrued wages and payroll
taxes, but only those accruing in the ordinary course of
business of Seller at the rates in effect prior to January
21, 1995.<PAGE>
SCHEDULE 1 TO ASSIGNMENT AND ASSUMPTION AGREEMENT
FOR EDWARD C. NICHOLS
The Lease Agreement dated March 17, 1994 between Edward C.
Nichols (as Nichols RF) and Hewlett Packard (the "Hewlett Packard
Lease").
SCHEDULE 2 TO ASSIGNMENT AND ASSUMPTION AGREEMENT
FOR EDWARD C. NICHOLS
The obligations of Edward C. Nichols (as Nichols RF) under the
Hewlett Packard Lease accruing from and after the Closing Date.
<PAGE>
EXHIBIT C
ASSIGNMENT AND ASSUMPTION OF LEASE
THIS AGREEMENT is made as of the ___ day of
____________, 1995 by and between Control Chief Corporation, a
Pennsylvania corporation with its principal office at 200
Williams Street, Bradford, Pennsylvania 16701 ("Buyer"), and NTR
Technologies, Inc., a Pennsylvania corporation with its principal
office at 455 William Pitt Way, Pittsburgh, Pennsylvania 15238
("Seller") pursuant to the terms of an Assets Purchase Agreement
dated _______________, 1995 among Seller, Buyer and affiliates of
Seller (the "Assets Purchase Agreement").
1. Seller hereby assigns, transfers and conveys to
Buyer all of Seller's right, title and interest in, to and
arising under or relating to the Lease Agreement dated as of
January 1, 1995, between Seller and The University of Pittsburgh
of the Commonwealth System of Higher Education (the "Lease").
2. Buyer hereby accepts Seller's assignment set forth
in paragraph 1 above and hereby assumes and agrees to pay,
perform and discharge all of Seller's obligations and liabilities
arising under the Lease on and after the date hereof.
3. Seller shall, from time to time, from and after
the date hereof, upon request of Buyer or at the option of
Seller, execute such further documents of transfer, conveyance
and assignment with regard to the Lease as Buyer or Seller deem
necessary or desirable to carry out the transactions contemplated
by this Agreement.
4. This Agreement shall be binding upon and shall
inure to the benefit of
Seller and Buyer and their respective successors and assigns.
5. Other than as is expressly set forth in the Assets
Purchase Agreement, Buyer is not assuming and shall not be liable
for or bound by any liabilities of Seller.
6. This Agreement is made, executed and delivered
pursuant to the Assets Purchase Agreement, and is subject to all
the terms, provisions and conditions thereof. To the extent of
any conflict between the terms of the Assets Purchase Agreement
and this Agreement, the Assets Purchase Agreement shall be
controlling.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this
Assignment and Assumption of Lease as of the day and year first
written above.
CONTROL CHIEF CORPORATION
Witness: By: ___________________________
____________________________ Name:___________________________
Title:___________________________
NTR TECHNOLOGIES, INC.
Witness: By: ___________________________
____________________________ Name:___________________________
Title:___________________________<PAGE>
CONSENT OF LANDLORD
The undersigned, the Landlord who is a party to the
Lease as defined in the foregoing Assignment and Assumption of
Lease, hereby (1) confirms that the Lease is in full force and
effect in accordance with its terms and that all amounts to be
paid and obligations to be performed by the tenant under the
Lease through the date hereof have been paid and performed in
accordance with the terms of the Lease, (2) consents to the
foregoing Assignment and Assumption of the Lease and agrees to
look solely to Buyer for performance of the obligations of tenant
under the Lease, and (3) releases Seller from all future
obligations under the Lease.
In witness whereof, the undersigned has executed this
Consent of Landlord this ____ day of __________, 1995.
The University of Pittsburgh of
the Commonwealth System of Higher
Education
Witness:
____________________________ By:_______________________________
__________________________________
Name
__________________________________
Title
EXHIBIT D
EMPLOYMENT AGREEMENT
This Agreement is made this _____ day of _____________, 1995 by
and between CONTROL CHIEF CORPORATION, a Pennsylvania corporation ("Company)
and _________________ ("Employee').
In consideration of the mutual covenants contained in this
Agreement and the purchase by the Company of the assets of NTR Technologies,
Inc, and certain assets of Employee pursuant to the terms of an Asset
Purchase Agreement dated of even date herewith between the Company, NTR
Technologies, Inc., Employee and other affiliates of NTR Technologies, Inc.
(the "Assets Purchase Agreement"), the parties hereto herby agree as follows:
1. Employment. The Company hereby employs the Empoyee as a
_____________________________. Employee hereby accepts such employment and
agrees to report to the management of the Company, to perform any and all
duties prescribed by the management and to abide by the terms and conditions
of this Agreement and the policies of the Company. Employee shall perform
his duties faithfully and to the best of his ability and shall devote his
full time and best efforts to his services to the Company, subject to
reasonable vacations in accordance with Company policy; provided,
however, that such vacation will not unduly interfere with the performance
of his duties herunder.
2. Term of Employment. The term of employment under this
Agreement shall commence on the date set forth above and may be terminated
by either party at any time, with two weeks notice.
3. Compensation. For all services to be rendered by Employee
in any capacity to the Company, the Company shall pay Employee a salary
at the rate of $__________ per annum. The salary shall be payable in
equal installments, in accordance with the general policy of the Company,
subject to such deductions and withholdings as may be required by law
or agreed to by Employee.
4. Benefits. In addition to salary, Employee shall be
entitled to participate in Company's standard non-contributory health
insurance and group term life insurance plans and will be eligible to
participate in the Company 401K plan, subject to the terms of the applicable
plans as the same may be amended from time to time.
5. Expenses. To the extent consistent with Company policy
and upon presentation of vouchers in accordance with the Company's
customary procedures, the Company will reimburse Employee for all
reasonable, ordinary and necessary business expenses (as the Company
reasonably determines to be proper) incurred by him during the term of
this Agreement and in the performance of his duties hereunder.
6. Owernship of Ideas and Confidentiality
(a) Employee shall promptly disclose to the Company
discoveries, designs, inprovements, innovations and inventions
(collectively referred to herein as "inventions"), whether patentable or
not, either relating to the existing or contemplated business, products,
plans, processes, or procedures of the Company, or suggested by or
resulting from Employee's work at the Company, or resulting wholly or in
part from the use of the Company's time, material, facilities or ideas,
which Employee made or conceived or may make or conceive, whether or not
during working hours, alone or with others, at the time during the term
of this Agreement or within one year thereafter, and Employee agrees
that all such inventions shall be the exclusive property of the Company.
(b) Employee hereby assigns to the Company all his
rights and interests in and to such inventions and all patents which may
be obtained on them, in this and all foreign countries. At the Company's
expense, but without charge to it, Employee agrees to execute,
acknowledge and deliver to the Company any specific assignments to any
such inventions or other relevant documents and to take any such
further action as may be considered necessary by the Company at any
time to obtain or defend letters patent in any and all countries or to
obtain documents relating to registration, ownership or transfer of
copyrights, or to vest title in such inventions in the Company or its
assigns or to obtain for the Company any other legal protection for
such inventions.
(c) In consideration of Employee's assignments to
the Company pursuant to this Section 6, the Company will make incentive
payments to Employee pursuant to the Incentive Compensation Arrangement
attached hereto as Exhibit A.
7. Nondisclosure Agreement. Employee shall not, either
during the term of this Agreement or at any time thereafter, disclose
or authorize anyone else to disclose or use or make known for his or
another's benefit any confidential information, knowledge, or data of
the Company, whether or not patentable or copyrightable, in any way
acquired during employment by the Company or assigned to the Company
pursuant to this Agreement. Confidential information, knowledge or
data of the Company shall, for purposes of this Agreement, include
but not be limited to matters not readily avaiable to the public which
are:
(a) of a technical nature such as but not limited to
methods, know-how, compositions, drawings, blueprints, processes,
discoveries, machines, inventions, computer programs and similar items;
(b) of a business nature such as but not limited to
information about sales or lists of customers, prices, costs, purchasing,
profits, markets or product strengths and weaknesses; or
(c) pertaining to future developments such as but not
limited to research and development, or future marketing or
merchandising plans or ideas.
8. Covenant Not To Compete. Employee agrees that so long
as he receives compensation from the Company under Section 3 of this
Agreement and for a period of eighteen (18) months thereafter, he shall
not, directly or indirectly, whether as principal, agent, consultant,
employee, partner or in any other capacity, engage in or assist another
to engage in any work or activity in any way connected with the
development, manufacture or sale of any product or service which in any
way competes any with product or service of the Company, or any successor or
assign of the Company, where Employee participated in the development,
modification or sale of, or research relating to, such product or
service (whether such participation occurred at the Company or at NTR
Technologies, Inc.). If Employee in any way breach his obligations
specified in this section, as determined by the remedies available to
it, to terminate the further payment of any amounts or benefits due
under Sections 3 and 4 above. Employee agrees that any breach or
threatened breached of any of the provisions of this Section or Section
7 cannot be remedied soley by the recovery of damages, and the Company
shall be entitled to an injunction against such breach or threatened
breach without posting any bond or other security. Nothing herein,
however, shall be construed as prohibiting the Company from pursuing,
in conjuntion with an injunction or otherwise, any other remedies
available at law or in equity for any such breach or threatened breach,
including the recovery of damages. If any provision hereof is found
to be unreasonably broad, it shall nevertheless be enforceable to the
extent reasonably necessary for the protection of the Company, and
shall be deemed to have been amended to include any restrictions,
limitations or provisions necessary to make it enforceable.
9. Termination of Employment.
(a) In any of the following events:
(i) Employee shall voluntarily leave his employment
with the Company prior to the expiration of this Agreement
under Section 2; or
(ii) Employee shall die or be prevented from
performing his duties under this Agreement because of
disability or illness for a continuous period of one
hundred eighty (180) days; or
(iii) Employee's employment is terminated by the
Company for cause prior to the expiration of this
Agreement under Section 2;
then Employee shall not be entitled to further compensation under
Section 3 or benefits under Section 4, except as is otherwise required
by applicable law.
(b) If, at any time, the Company terminates
Employee's employment for other than cause, Employee shall be entitled
to the compensation and benefits provided for under Sections 3 and 4 to
the expiration date set forth in Section 2, subject, however, to the
fullfillment of his obligations under Sections 7 and 8.
10. Transferability. The rights and benefits of the
Company under this Agreement shall be transferable and all covenants
and agreements hereunder shall inure to the benefit of and be enforceable
by or against its successors and assigns. The rights and benefits of
Employee under this Agreement shall not be transferable.
11. Waiver. Any waiver of a breach of any of the terms
of this Agreement shall not operate as a waiver of any other breach
of such terms or any other terms, nor shall failure to enforce any
term hereof operate as a waiver of any such term or any other term.
12. Severability. If any term of this Agreement or the
application thereof is held invalid or unenforceable, the invalidity
or unenforceability shall not affect any other terms of this Agreement
which can be given effect without the invalid or unenforceable term.
13. Survival. The provisions of Sections 7 and 8 of this
Agreement shall survive any termination of Employee's employment
hereunder and the expiration of this Agreement under Section 2.
14. Entire Agreement. This Agreement contains the entire
agreement between the parties with respect to the subject matter
hereof. This Agreement may not be amended or changed except by a
writing signed by both parties.
15. Governing Law. This Agreement shall be governed and
enforced in accordance with the law of the State of Pennsylvania,
without regard to its rules regarding conflict of laws.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date set forth above.
CONTROL CHIEF CORPORATION
By:______________________
Its:_____________________
_________________________
Employee
EXHIBIT A
INCENTIVE COMPENSATION ARRANGEMENT
The Company shall establish an incentive pool which will be
credited with 3.0% of Net Sales (as hereinafter defined) received by
the Company during the two-year period starting on the date of this
Agreement which are derived from products currently being manufactured
and sold by NTR Technologies, Inc. In addition, 3.0% of Net Sales
received by the Company with respect to each new product designed
exclusively by Edward C. Nichols and Anthony Rudzki, or any one or
more of them (the "Group"), will be credited to the incentive pool for
a period of two years from the first date such product is offered for
sale to the Company's customers or potential customers, which date
shall be determined by the Company.
The Company may make additional contributions to the
Incentive Pool, to be determined by the Company on a case-by-case
basis in its reasonable discretion, if it determines that the Group
is instrumental in the development of substantial modifications or
design changes to existing products of the Company.
For purposes of this Agreement, "Net Sales" shall mean the
invoice price to customes of products covered by this Agreement, net
of sales commissions, returns, allowances, taxes and freight. Net
sales shall be credited to the incentive pool within fifteen (15)
days after payment is received from the customer, and, if partial
payments are received, the amount contributed to the incentive pool
will be determined based on the amount of such partial payment.
The amount in the incentive pool at the end of each quarter
shall be paid to the Group on the next regular pay date subject to
withholding as described in Section 3 of the Agreement. Such payments
shall initially be allocated ____% to Edward C. Nichols and ____% to
Anthony Rudzki. The Group can modify these allocations at any time
by providing the Company with new instructions signed by each member
of the Group. The Company shall continue to make payments in
accordance with the instructions most recently delivered to it until
new instructions meeting the requirements of this paragraph are
received.
In the event of the termination of any member of the
Group's employment with the Company for any reason or the addition of
any new member to the Group upon the written consent of all members
then in the Group and the Company (each, a "Change"), the percentage
or amount of Net Sales then being contributed to the incentive pool
for each product shall be adjusted so that it is equal to the percentage
or amount being contributed prior to such Change multiplied by the
number of members in the Group after the Change and then divided by
the number of the members in the Group prior to the Change. Unless
otherwise agreed, such new percentage or amount shall apply to all
new products or modifications which become subject to this Agreement.
No payments from the incentive pool will be paid to a
member whose employment has terminated for any reason, and, unless
the Company is otherwise directed, the payments from the incentive
pool will be allocated between the remaining members of the Group in
proportion to the payments being made to each of them immediately
prior to the termination.
<PAGE>
LOAN AGREEMENT
(REVOLVING CREDIT LOANS)
THIS LOAN AGREEMENT dated May 24, 1995, by and between Control
Chief Holdings, Inc. and Control Chief Corporation ("Borrowers"),
Pennsylvania corporations, with a principal place of business at
P O Box 141, Bradford, Pennsylvania 16701 and INTEGRA BANK/NORTH
("Bank"), a Pennsylvania banking institution, with an office at 71 Main
Street, P.O. Box 355, Bradford, PA 16701.
WITNESSETH:
WHEREAS, Borrower has requested Bank to make to Borrower a
loan or loans as provided herein, and Bank is willing to make such loan
or loans to Borrower subject to the terms and conditions hereof.
NOW THEREFORE, Borrower and Bank, in consideration of their
mutual covenants contained in this Loan Agreement and intending to be
legally bound hereby, agree as follows:
1. Revolving Credit Loans. Subject to the terms and
conditions hereof, relying upon the representations and warranties
herein set forth, and subject to the condition that no event of default
as defined herein has occurred and is continuing hereunder, at any time
and from time to time during the period commencing on the date of this
Loan Agreement to and including the Maturity Date (as defined in the
note dated as of the date hereof and delivered simultaneously herewith),
Bank will make revolving credit loans ("Loan(s)") to Borrower up to but
not in excess of the aggregate amount of $750,000.00 at any one time
outstanding ("Commitment Amount"). Within such limits of time and
amount, Borrower may prepay, repay and reborrow hereunder. The
obligation to repay the Loan(s) made pursuant hereto shall be evidenced
by a single revolving credit note of Borrower payable to the order of
Bank, dated as of the date hereof and delivered simultaneously herewith
("Note"). The Note shall bear interest as provided therein.
2. Representations and Warranties. Borrower hereby makes
the following representations and warranties to Bank which shall be, to
the extent applicable to Borrower, true and correct on the date hereof
and shall continue to be true and correct at the time of the making of
any of the Loan(s) and until all Loan(s) are paid in full:
(a) Organization. If Borrower is a corporation or
partnership, Borrower is duly organized, validly existing, and in good
standing under the laws of the jurisdiction in which Borrower is
incorporated or was formed; Borrower has the power and authority to own
its properties and assets and to carry on its businesses as now being
conducted and, in the case of a corporate or partnership Borrower, is
qualified to do business in every jurisdiction in which it is required
to qualify to do business or in which the failure to be qualified could
result in a material adverse change in the operation or financial
condition of Borrower. If Borrower is an individual, Borrower is at
least eighteen years of age and is under no legal disability or
incapacity.
(b) Power and Authority; No Conflict. The execution,
delivery and performance hereof and of all other documents executed in
connection herewith are within Borrower's powers, have been duly
authorized, constitute legal, valid and binding obligations of Borrower
enforceable in accordance with their terms, are not in contravention of
any law, regulation, writ, injunction, decree of any court or
governmental instrumentality or of any agreement or instrument to which
Borrower is a party or by which Borrower is bound or, in the case of a
Borrower which is a corporation or partnership, is not in contravention
of its documents of formation or organization.
(c) Authorization and Consents. No authorization,
consent, approval, license or exemption of, and no registration,
qualification, designation, declaration or filing with, any court or
governmental department, commission, board, bureau, agency, or
instrumentality, domestic or foreign, is necessary to the valid
execution and delivery of this Loan Agreement, the Note or any other
documents evidencing or relating to the Loan(s).
(d) Compliance with Laws. Borrower has complied with all
applicable laws, including but not limited to all provisions of the
Employees' Retirement Income Security Act of 1974, as amended or
supplemented from time to time, and all laws relating to workers'
safety, protection of the environment, and human health, such that
Borrower has neither been nor will be subject to any fines, penalties,
injunctive relief or similar criminal liabilities which could adversely
affect the business operations or financial condition of Borrower or the
ability of Borrower to perform Borrower's obligations under this Loan
Agreement or any document delivered in connection herewith or given in
support hereof.
(e) Financial Statements and Conditions. All financial
statements heretofore furnished Bank are correct and complete and fairly
present the financial condition and results of the operations of the
business of Borrower as of the date and for the period specified and
have been prepared in accordance with generally accepted accounting
principles consistently applied; since the date of the last balance
sheet of Borrower furnished to Bank, there has been no materially
adverse change in the business, assets, liabilities, contingent or
otherwise, or financial condition of Borrower.
(f) Taxes. Except as set forth on Schedule 2(f) to this
Loan Agreement if said schedule is attached, all federal, state, local
and other tax returns required to have been filed with respect to
Borrower have been filed or extensions granted and payment or adequate
provision has been made for the payment of all taxes, fees, assessments
and other governmental charges which have or may become due pursuant to
said returns or to assessments received; or, to the extent that such
taxes, fees, assessments and other charges are being contested in good
faith by appropriate proceedings diligently conducted, adequate reserves
or other appropriate provisions, if any, as shall be required by GAAP
shall have been made.
(g) Litigation and Environmental Responsibility. Except
as set forth on Schedule 2(g) to this Loan Agreement if said schedule is
attached, (i) there is no action, suit, or proceeding at law or in
equity or by or before any governmental instrumentality or other agency
now pending or, to the knowledge of Borrower, threatened by or against
or affecting Borrower or any of its properties or rights of Borrower
which, if adversely determined, could impair the right of Borrower to
carry on its business substantially as now conducted or could result in
a judgment against Borrower in an amount which is equal to or greater
than 10% of the Commitment Amount or $50,000, whichever is lower, and
(ii) Borrower has not received any notice of and is not aware of any
condition to the effect that Borrower is or may be, either directly,
indirectly, singly or together with others, a party actually or
potentially responsible for remediation of any environmental condition
or for civil or criminal penalties resulting from an alleged violation
of any law pertaining to protection of human health or safety or the
environment.
(h) Other Environmental Matters. Borrower does not own
or operate nor has Borrower owned or operated any property where
Hazardous Materials (as defined below) have been used, generated,
stored, or disposed of in a manner inconsistent with applicable
environmental laws, nor to the best of Borrower's knowledge after due
inquiry have there been any Hazardous Materials disposed of by any
previous owner of the property or any other third party on any property
owned or operated by Borrower. The term "Hazardous Materials" includes
hazardous waste, hazardous substances, toxic substances and all related
materials, including but not limited to all materials and substances
regulated by The Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, The Resource Conservation and
Recovery Act of 1976, The Superfund Amendments and Reauthorization Act
of 1986, The Clear Water Act, The Clean Air Act, The Toxic Substance
Control Act, and/or any other applicable federal, state or local
environmental law, statute, rule, regulation or ordinance.
(i) Misrepresentation. Neither this Loan Agreement nor
any other document, statement, financial statement, or certificate
furnished to Bank by or on behalf of Borrower in connection herewith
contains an untrue statement of a material fact with respect to the
financial condition or properties of Borrower or omits to state a
material fact necessary to make the statements contained therein not
misleading or, insofar as Borrower can now foresee, which may in the
future materially adversely affect the financial condition or properties
of Borrower.
(j) Additional Representations and Warranties. In
addition to the representations and warranties set forth above, Borrower
hereby makes to Bank the representations and warranties set forth on
Schedule 2(j) to this Loan Agreement if said schedule is attached, all
of which shall be true and correct on the date hereof and shall continue
to be true and correct at the time of the making of any of the Loan(s)
and until all Loan(s) are paid in full.
3. Affirmative Covenants. Until the Note and all other
liabilities whether now or hereafter existing of Borrower to Bank are
paid in full, Borrower will:
(a) Preservation of Existence, Etc.; Use of Proceeds.
Continue Borrower's aforesaid business under Borrower's present form of
organization and not engage in any other business without the written
consent of Bank; and use the proceeds of the Loan(s) only in connection
with the said business and for working capital purposes; if Borrower is
a corporation or partnership, Borrower will remain in good standing
under the laws of the state of its organization or formation and
qualified to do business in each jurisdiction in which failure to be so
qualified could result in a material adverse change to the financial
condition of Borrower;
(b) Payment of Liabilities, Including Taxes, Etc. Pay
all liabilities to which Borrower is subject or which are asserted
against Borrower when due except taxes which shall be paid prior to the
date or dates penalties attach and except liabilities being contested in
good faith by appropriate proceedings diligently conducted, provided
adequate reserves as required by generally accepted accounting
principles are maintained therefor;
(c) Compliance with Laws. Comply with all applicable
laws, including but not limited to all provisions of the Employees'
Retirement Income Security Act of 1974, as amended or supplemented from
time to time, and all laws relating to workers' safety, protection of
the environment, and human health, in all cases applicable to it;
(d) Properties. Maintain and keep all Borrower's
tangible property in good repair, working order and condition, and make
or cause to be made all necessary or appropriate repairs, renewals,
replacements, substitutions, additions, betterments and improvements
thereto so that the efficiency of all such property shall at all times
be properly preserved and maintained, and preserve and protect
Borrower's intangible property including but not limited to patents,
franchises, licenses, permits, trademarks, trade names and copyrights
used or useful in the conduct of its business;
(e) Maintenance of Insurance. Maintain adequate fire,
including so-called extended coverage, public liability and other
insurance, including insurance on the lives of key employees, as Bank
may require, in such forms, in such amounts, and written by such
companies as shall be satisfactory to Bank and deliver to it the
policies concerned naming Bank as additional insured and loss-payee
under such policies;
(f) Maintenance of Records; Reporting Requirements;
Visitation Rights. Maintain and keep correct books of record and
account in accordance with generally accepted accounting principles
consistently applied; and furnish to Bank within 120 days after the
close of each Borrower's fiscal year a balance sheet of each Borrower as
of the close of such year and related statements of income and cash flow
of each Borrower for such year, audited, by an independent certified
public accountant acceptable to Bank; and furnish to Bank within 30 days
of the close of each month a balance sheet of each Borrower and related
statements of income and cash flow for each Borrower for such period,
certified by the chief financial officer of each Borrower that he is
familiar with the books and records of each Borrower and that the same
are true and correct to the best of his knowledge and belief, and at any
time or from time to time, such other data, financial or otherwise, with
respect to Borrower or any guarantor of the Loan(s) as Bank may
reasonably request; and at all reasonable times permit a representative
of Bank to inspect Borrower's business properties and examine and make
extracts from Borrower's books and records;
(g) Maintenance of Executive Management. Maintain
executive management of Borrower satisfactory to Bank;
(h) Litigation and Environmental Responsibility. Within
10 days of Borrower's knowledge thereof, give notice in writing to Bank
of (i) the occurrence of any material litigation, arbitration or
governmental proceeding affecting Borrower, and of any governmental
investigation or labor dispute pending or, to the knowledge of Borrower,
threatened which could reasonably be expected to interfere with the
normal operations of the business of Borrower or could result in a
judgment against Borrower in an amount which is equal to or greater than
10% of the Commitment Amount or $50,000, whichever is lower, and
(ii) receipt by Borrower of any and all notices to the effect that
Borrower is or may be directly, indirectly, singly or together with
others a party actually or potentially responsible for remediation of
any environmental condition or for civil or criminal penalties resulting
from an alleged violation of any law pertaining to protection of human
health or safety or the environment;
(i) Notice of Event of Default. Within 10 days of
Borrower's knowledge thereof, give notice in writing to Bank of the
occurrence of any event of default and of any condition, event, act or
omission which, with the giving of notice or the lapse of time or both,
would constitute an event of default hereunder or under the Note, or
under any agreement or document securing, evidencing or relating to the
Note;
(j) Reimbursement for Expenses. Pay or reimburse Bank on
demand for all reasonable out-of-pocket expenses (including reasonable
legal fees) of every nature which (i) Bank may incur in connection with
this Loan Agreement and the making of the Loan(s) hereunder, and (ii)
arising out of or in connection with any action or proceeding (including
any action or proceeding arising in or related to any insolvency,
bankruptcy or reorganization involving or affecting Borrower) taken to
protect, enforce, determine, or assert any right or remedy under this
Loan Agreement, the Note, or any mortgage, security agreement, or other
document or instrument given in support hereof, including the collateral
covered thereby;
(k) Additional Compensation in Certain Circumstances. If
any law, guideline or interpretation of law subjects Bank to any tax or
changes the basis of taxation with respect to this Loan Agreement, the
Note, the Loan(s), or payments by Borrower in respect thereof, or
imposes, modifies or deems applicable any reserve, special deposit, or
similar requirement against credits or commitments to extend credit
extended by Bank, or imposes, modifies or deems applicable any capital
adequacy or similar requirement against credits or commitments to extend
credit by Bank, and the result of any of the foregoing is to increase
the cost to, or reduce the income receivable by, or impose expense
(including loss of margin) on, Bank with respect to this Loan Agreement,
the Note, or the making, maintenance or funding of any part of the
Loan(s) by an amount which Bank in its sole discretion deems to be
material, Bank may from time to time notify Borrower of the amount
determined in good faith to be necessary to compensate Bank for such
increase in cost, reduction of income or additional expense, and such
amount shall be due and payable by Borrower to Bank within 10 days after
notice; and
(l) Additional Affirmative Covenants. If Schedule 3(l)
is attached to this Loan Agreement, comply with the terms and conditions
of the covenants set forth on said schedule.
4. Negative Covenants. Until the Note and all other
liabilities whether now or hereafter existing of Borrower to Bank are
paid in full, Borrower will not:
(a) Indebtedness. Create, assume, or suffer to remain
outstanding any obligation for money borrowed other than to Bank except
(i) indebtedness subordinated to each and every obligation whether now
or hereafter existing to Bank pursuant to a subordination agreement or
agreements satisfactory to Bank, and (ii) indebtedness identified on
Schedule 4(a) if said schedule is attached to this Loan Agreement;
(b) Liens. Mortgage, pledge or otherwise encumber any of
Borrower's property, real or personal, now owned or hereafter acquired,
or permit any lien or security interest to exist thereon except liens
(i) for taxes not delinquent or being contested in good faith, (ii) of
mechanics or materialmen with respect to obligations not overdue or
being contested in good faith, (iii) resulting from deposits to secure
payments of workers' compensation or other social security obligations
or to secure the performance of bids or contracts in the ordinary course
of business, (iv) in favor of Bank, or (v) for the purposes identified
on Schedule 4(b) if said schedule is attached to this Loan Agreement;
(c) Loans or Advances; Guaranty of Obligation of Others.
Make any loans or advances to others, or endorse, guarantee or become
surety for the obligations of any person, firm or corporation, except
that Borrower may endorse checks or other instruments for deposit or
collection in the ordinary course of business;
(d) Leases. Make or enter into any agreement to rent or
lease real or personal property of any other person in an amount in
excess of $ N/A ;
(e) Capital Expenditures. Spend in any 12-month period,
for fixed assets used in or applicable to Borrower's business, an amount
not to exceed the annual depreciation expense;
(f) Sale and Lease-Back. Sell, convey, assign, or
otherwise transfer or dispose of any property, real or personal, whether
now owned or hereafter acquired, with a view directly or indirectly to
the leasing back of the same or of any similar property;
(g) Investments. Purchase, invest in, or otherwise
acquire any interest in or any equity or debt security of any person
except (i) debt securities issued by the United States Government or by
an agency or instrumentality thereof, (ii) negotiable certificates of
deposit issued by any bank organized under the laws of the United States
of America or any bank organized under the laws of any State thereof
whose deposits are insured by the Federal Deposit Insurance Corporation,
(iii) commercial paper issued by any corporation whose commercial paper
is rated not less than Prime-1 by Moody's or A-1 by Standard and Poor's,
and (iv) those interests in and equity or debt securities of those
persons set forth on Schedule 4(g) to this Loan Agreement if said
schedule is attached;
(h) Capital Distributions; Acquisition of Own Shares;
Other Distributions and Compensation. (i) If Borrower is a
corporation, declare or pay any dividends, or make any other
distributions on its capital stock, or redeem, purchase or otherwise
acquire any shares of its capital stock, or, if Borrower is a
partnership, make any distributions on any capital account of a partner,
or (ii) permit, make or authorize any payment directly or indirectly to
any director, executive officer, partner, shareholder or individual
owner of Borrower other than IRS Form W-2 compensation which is paid in
the same manner and up to the same amount as paid in the fiscal year
immediately preceding the date hereof payable to any such person plus an
annual increase not to exceed% per year;
(i) Transactions Outside the Ordinary Course of Business.
Sell, transfer or assign any of Borrower's assets, including but not
limited to any accounts receivable, or acquire any assets, except in the
ordinary course of business, or, if a corporation or partnership, enter
into any merger or consolidation with any other entity, or alter or
amend Borrower's Articles of Incorporation or Partnership Agreement, as
the case may be;
(j) Transactions with Affiliate. Enter into any
transactions, including, without limitation, the purchase, sale,
leasing, or exchange of property, real or personal, with or render any
service to any person, firm or corporation affiliated with Borrower,
other than as set forth on Schedule 4(j) to this Loan Agreement if said
schedule is attached;
(k) Modifications of Other Agreements. Amend or modify
any existing agreement with any person, firm or corporation in any
manner materially adverse to Borrower; or
(l) Additional Negative Covenants. If Schedule 4(l) is
attached to this Loan Agreement, violate any of the terms and conditions
of the covenants set forth on said schedule.
5. Events of Default and Consequences Thereof. Borrower
shall be in default under this Loan Agreement upon the happening of any
of the following events of default:
(a) a default in the payment when due or performance of
any obligation, covenant or liability contained or referred to herein,
or in the Note or any security agreement or real estate mortgage
securing the same, or in any other document executed in connection with
or given in support of the Loan(s);
(b) any warranty, representation or statement made or
furnished to Bank by or on behalf of Borrower proves to have been false
or misleading in any material respect when made or furnished;
(c) any letter of credit pledged as collateral for the
Loan(s) is not renewed or extended 30 days prior to expiration or
termination thereof;
(d) the occurrence of any event which constitutes a
default under or results in the acceleration of indebtedness of Borrower
to any person (including Bank) under any note, indenture, agreement or
undertaking;
(e) if Borrower is a corporation or partnership, any
material change in the ownership of the outstanding capital stock or
partnership interests of Borrower, as the case may be, as the same
existed on the date hereof;
(f) any change in the condition, financial or otherwise,
of Borrower which, in the reasonable opinion of Bank, has or could have
a material adverse effect on Borrower, on the assets of Borrower, or on
the validity or enforceability of this Loan Agreement, the Note, or any
other document executed in connection with or given in support of the
Loan(s);
(g) the death, incarceration or adjudication of legal
incompetence of any person who is a Borrower or any person liable to
Bank for any of the obligations of Borrower;
(h) a judgment is entered against Borrower or any person
liable to Bank for any of the obligations of Borrower, or any of
Borrower's assets are attached in a legal proceeding; or
(i) the dissolution, termination of existence,
insolvency, business failure, appointment of a receiver of any part of
the property of, assignment for the benefit of creditors by, or the
commencement of proceedings under any bankruptcy or insolvency laws by
or against, Borrower or any person liable to Bank for any of the
obligations of Borrower.
Upon the occurrence of any of the events of default mentioned
in clauses (a) through (g) hereof and at any time thereafter, Bank may
declare all liabilities and obligations of Borrower to Bank, including
those evidenced by the Note, immediately due and payable, and the same
shall thereupon become immediately due and payable without any further
action on the part of Bank, and upon the occurrence of any event of
default mentioned in clauses (h) or (i) hereof, all liabilities and
obligations of Borrower to Bank, including those evidenced by the Note,
shall immediately become due and payable without any action upon the
part of Bank.
6. Set-off. In addition to all other rights and remedies
available to Bank, Bank shall have a continuing lien on, is hereby
granted a security interest in, and has a right of set-off against, all
property of Borrower and the proceeds thereof held or received by or for
Bank or any Bank Affiliate for any purpose, whether or not for the
express purpose of serving as collateral security for the Loan(s). As
used in this Loan Agreement, the term "Bank Affiliate" includes any
individual, partnership, or corporation acting as nominee or agent for
Bank, and any corporation or bank which is directly or indirectly owned
or controlled by, or under common control with, Bank. Borrower
acknowledges that any moneys held by Bank Affiliates are being held by
such Bank Affiliates as agent for Bank for purposes of perfecting the
security interest set forth above.
7. Accounting Terms. All accounting terms used herein have
the meaning generally ascribed to them by accountants under the rules of
generally accepted accounting principles.
8. Headings. The headings used in this Loan Agreement are
for reference purposes only and shall not be deemed a part of this Loan
Agreement.
9. Binding Nature. "Borrower" refers individually and
collectively to all signers of this Loan Agreement, including, in the
case of any partnership, all general partners of such partnership
individually and collectively, whether or not such partners sign below.
Each of the signers shall be jointly and severally bound by the terms
hereof, and, with respect to any partnership executing this Loan
Agreement, each general partner shall be bound hereby both in such
general partner's individual and partnership capacities. The pronoun
"it" shall, in the case of individual Borrower(s), be deemed to mean
"he," "she," "them," or "they," as appropriate.
10. Successors and Assigns. This Loan Agreement shall be
binding upon Borrower and the heirs, personal representatives,
successors and assigns of Borrower and shall inure to the benefit of
Bank, its successors and assigns.
11. Entire Agreement; Amendments. This Loan Agreement
constitutes the entire contract between Bank and Borrower and supersedes
all prior communications, oral and written, as well as all
contemporaneous oral communications between the parties with respect
hereto. No amendment to or modification of this Loan Agreement shall be
effective unless set forth in writing and signed by each of the parties
to this agreement.
12. Severability. If any one or more of the provisions of
this Loan Agreement should for any reason be invalid, illegal or
unenforceable in any respect, the validity, legality, or enforceability
of the remaining provisions contained herein shall not in any way be
affected or impaired thereby, and such invalid, illegal or unenforceable
provision shall be deemed modified to the extent necessary to render it
valid while most nearly preserving its original intent.
13. Waiver; Survival of Agreement. No waiver hereunder or
with respect to the Note or other documents delivered in connection
herewith shall be effective unless in writing. No delay in exercising
any right shall operate as a waiver thereof. A waiver on any one
occasion shall not be a waiver of any right or remedy on any future
occasion. This Loan Agreement shall survive execution of the Note and
any other documents executed in connection with the Loan(s) and will
terminate when all liabilities whether now or hereafter existing of
Borrower to Bank have been paid in full.
14. Notices. All notices and other communications given or
made upon any party hereto in connection with this Loan Agreement, the
Note, or any other document executed in connection herewith or therewith
shall be in writing and either hand-delivered or mailed first-class or
first-class express mail, in all cases with charges prepaid, to Borrower
and Bank at the addresses set forth on the first page of this Loan
Agreement or at such other address as shall be designated in the latest
written notice given by such party in accordance with the provisions of
this section. Notices may also be given by telecopy, telefax or telex
at such number as shall be designated in the last written notice given
by Bank or Borrower in accordance with this provision.
15. Counterparts. This Loan Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an original
but all of which together shall constitute one and the same instrument.
16. Arbitration. BORROWER AND BANK AGREE THAT ANY ACTION,
DISPUTE, PROCEEDING, CLAIM, OR CONTROVERSY BETWEEN BORROWER AND BANK,
WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE ("DISPUTE" OR
"DISPUTES"), SHALL, AT BANK'S ELECTION, WHICH ELECTION MAY BE MADE AT
ANY TIME PRIOR TO THE COMMENCEMENT OF A JUDICIAL PROCEEDING BY BANK, OR
IN THE EVENT OF A JUDICIAL PROCEEDING INSTITUTED BY BORROWER AT ANY TIME
PRIOR TO THE LAST DAY TO ANSWER AND/OR RESPOND TO A SUMMONS AND/OR
COMPLAINT MADE BY BORROWER, BE RESOLVED BY ARBITRATION IN ACCORDANCE
WITH THE PROVISIONS OF THIS PARAGRAPH AND SHALL, AT THE ELECTION OF
BANK, INCLUDE ALL DISPUTES ARISING OUT OF OR IN CONNECTION WITH (i) THIS
LOAN AGREEMENT OR ANY RELATED AGREEMENTS OR INSTRUMENTS; (ii) ALL PAST,
PRESENT, AND FUTURE AGREEMENTS INVOLVING BORROWER AND BANK; (iii) ANY
TRANSACTION RELATED TO THIS LOAN AGREEMENT AND ALL PAST AND FUTURE
TRANSACTIONS INVOLVING BORROWER AND BANK; AND (iv) ANY ASPECT OF THE
PAST, PRESENT, OR FUTURE RELATIONSHIP OF BORROWER AND BANK. BORROWER
AND BANK INTEND TO ARBITRATE, RATHER THAN LITIGATE, THEIR DIFFERENCES IN
ACCORDANCE WITH THE PROCEDURE SET FORTH ABOVE AND TO BE LEGALLY BOUND BY
THE ARBITRATION DECISION.
17. Governing Law. This Loan Agreement, the Note, and any
other documents delivered in connection herewith and the rights and
obligations of the parties hereto and thereto shall for all purposes be
governed by and construed and enforced in accordance with the
substantive law of the Commonwealth of Pennsylvania without giving
effect to conflict of laws principles, except that perfection and the
effect of perfection of the Bank's security interest in collateral shall
be governed by the laws of the jurisdiction in which the security
interest is required to be perfected.
IN WITNESS WHEREOF, the parties hereto, intending to be
legally bound, have executed this Loan Agreement on the day and year
first above written with the intention that this Loan Agreement shall
constitute a sealed instrument.
ATTEST: Control Chief Holdings, Inc.
/S/Christopher G. Hauser By/S/Douglas S. Bell
Christopher G. Hauser Name: Douglas S. Bell
Secretary Title: President
(Seal)
By/S/Joseph F. Lamendola
Name: Joseph F. Lamendola
Title: Vice President
ATTEST: Control Chief Corporation
/S/Linda L. Comes By/S/Joseph F. Lamendola
Linda L. Comes Name: Joseph F. Lamendola
Secretary Title: President
(Seal)
By/S/Douglas S. Bell
Name: Douglas S. Bell
Title: Vice President
INTEGRA BANK/NORTH
By______________________________
N. James Sekel
Vice President Commercial Lending
Attachment(s): Schedule 3(l): Additional Affirmative Covenants
Schedule 4(l): Additional Negative Covenants
Schedule 4(l)
Additional
Negative
Covenants
This Schedule 4(l) relates to that certain Loan
Agreement dated as of May 24, 1995 by and between Control Chief Holdings,
Inc. and Control Chief Corporation and INTEGRA BANK/NORTH.
Additional investment. No additional investment in or
indebtedness with subsidiaries without the written consent of the
bank is permitted.
ATTEST: Control Chief Holdings, Inc.
/S/Christopher G. Hauser /S/Douglas S. Bell
Christopher G. Hauser Name: Douglas S. Bell
Secretary Title: President
(Seal) /S/Joseph F. Lamendola
Name: Joseph F. Lamendola
Title: Vice President
ATTEST: Control Chief Corporation
/S/Linda L. Comes /S/Joseph F. Lamendola
Linda L. Comes Name: Joseph F. Lamendola
Secretary Title: President
(Seal) /S/Douglas S. Bell
Name: Douglas S. Bell
Title: Vice President
<PAGE>
Schedule 3(l)
Additional
Affirmative
Covenants
This Schedule 3(l) relates to that certain Loan Agreement
dated as of May 24, 1995 by and between Control Chief Holdings, Inc.
and Control Chief Corporation and INTEGRA BANK/NORTH.
Debt to worth ratio. Debt to worth ratio will not exceed 1.5:1
Debt service coverage ratio. Debt service coverage ratio will
not exceed 1.0
ATTEST: Control Chief Holdings, Inc.
/S/Christopher G. Hauser /S/Douglas S. Bell
Christopher G. Hauser Name:Douglas S. Bell
Secretary Title:President
(Seal) /S/Joseph F. Lamendola
Name: Joseph F. Lamendola
Title: Vice President
ATTEST: Control Chief Corporation
/S/Linda L. Comes /S/Joseph F. Lamendola
Linda L. Comes Name: Joseph F. Lamendola
Secretary Title: President
(Seal) /S/Douglas S. Bell
Name: Douglas S. Bell
Title: Vice President
REVOLVING CREDIT NOTE
$750,000.00 Bradford, Pennsylvania
May 24, 1995
FOR VALUE RECEIVED and intending to be legally bound hereby,
undersigned Control Chief Holdings, Inc. and Control Chief Corporation
("Makers"), Pennsylvania corporations, having a principal office at P O Box
141, Bradford, Pennsylvania 16701, promises to pay to the order of INTEGRA
BANK/NORTH ("Bank") on October 31, 1995 ("Maturity Date") in immediately
available funds at the Bradford office of Bank at 71 Main Street, P.O. Box
355, Bradford, PA 16701 or at such other location as the holder hereof may
from time to time designate, the lesser of (i) the principal sum of seven
hundred fifty thousand and 00/100 Dollars ($750,000.00), or (ii) the
aggregate unpaid principal amount of all loans made by Bank to Maker pursuant
to Section 1 of the loan agreement dated May 24, 1995, between Bank and Maker
("Loan Agreement"), together with interest from the date hereof on the unpaid
principal balance hereof
at a rate per annum (computed on the basis of a year of 360 days and
actual days elapsed) which shall at all times be one half of one percent
(0.5%) above the Prime Rate, as hereinafter defined, such interest rate to
change automatically from time to time effective as of the effective date of
each change in the Prime Rate, payable on the last day of each calendar month
after the date hereof. "Prime Rate" as that term is used herein means the
interest rate per annum announced from time to time by Bank at its principal
office in Titusville, Pennsylvania as its then prime rate, which may not be
the lowest rate of interest charged by Bank to other borrowers. If any
amount of principal due under this Note or otherwise is not paid by Maker
when due, whether at a stated payment date, at the stated maturity of this
Note, by acceleration, on demand, or otherwise, such amount shall bear
interest until paid at a rate per annum which is four percent (4%) above the
rate of interest applicable to this Note immediately prior to maturity. If
any payment due under this Note (whether at the stated payment date, at the
stated maturity date, by acceleration, on demand, or otherwise) is more than
fifteen (15) days late, Maker shall pay Bank a late charge equal to five
percent (5%) of such late payment. The foregoing late payment fees and
default rate of interest shall be immediately due and payable without demand
or notice by Bank.
The aforesaid interest rates shall continue to apply whether or not judgment
shall have been entered on this Note.
If any payment of the principal of or interest on this Note
shall become due and payable on a Saturday, a Sunday, or any other day on
which Bank is not open for business, such payment shall be made on the next
succeeding business day, and such extension of time shall in such case be
included in computing interest in connection with such payment.
Notwithstanding any provision of this Note to the contrary, it
is the intent of Maker and Bank that Bank shall not at any time be entitled
to receive, collect or apply, and Maker and Bank shall not be deemed to have
contracted for, as interest on the principal indebtedness evidenced hereby,
any amount in excess of the maximum rate of interest permitted to be charged
by applicable law, and in the event Bank ever receives, collects or applies
as interest any such excess, such excess shall be deemed partial payment of
the principal indebtedness evidenced hereby, and if such principal shall be
paid in full, any such excess shall forthwith be paid to Maker. In the event
that, but for this paragraph, the rate of interest applicable to this Note
would at any time exceed the maximum lawful rate, then this Note and all
interest hereon shall thereupon be immediately due and payable.
All revolving credit loans made by Bank to Maker pursuant to the
Loan Agreement and all payments and prepayments on account of the principal
and interest thereof shall be noted by Bank in its records; provided,
however, that the failure of Bank to make any such notation shall not limit
or otherwise affect the obligations of Maker hereunder.
This Note is the Note referred to in and issued pursuant to the
Loan Agreement. The Loan Agreement contains among other things provisions
for the acceleration of the stated maturity of this Note upon the happening
of certain events recited therein and also for prepayments on account of the
principal hereof prior to maturity.
This Note is secured by the
collateral identified in that certain Security Agreement executed by Control
Chief Holdings, Inc. and Control Chief Corporation in favor of Bank dated May
24, 1995.
Maker hereby waives presentment, demand, protest or notice of
any kind in connection with this Note.
This Note shall bind Maker and the heirs, personal
representatives, successors and assigns of Maker, and the benefits hereof
shall inure to the benefit of Bank and its successors and assigns. All
references herein to "Maker" shall be deemed to apply to Maker and to the
heirs, personal representatives, successors and assigns of Maker, and all
references herein to "Bank" shall be deemed to apply to Bank and its
successors and assigns.
MAKER DOES HEREBY EMPOWER THE PROTHONOTARY OR ANY ATTORNEY OF
ANY COURT OF RECORD WITHIN THE COMMONWEALTH OF PENNSYLVANIA TO APPEAR FOR
MAKER AND, WITH OR WITHOUT ONE OR MORE COMPLAINTS FILED, CONFESS JUDGMENT OR
JUDGMENTS AGAINST MAKER IN ANY COURT OF RECORD WITHIN THE COMMONWEALTH OF
PENNSYLVANIA AT ANY TIME AFTER THE DATE OF THIS NOTE AND WHETHER OR NOT THIS
NOTE IS THEN DUE OR IN DEFAULT, IN FAVOR OF BANK, ITS SUCCESSORS AND ASSIGNS,
FOR THE UNPAID PRINCIPAL BALANCE OF THIS NOTE AND ALL INTEREST ACCRUED
HEREON, TOGETHER WITH COSTS OF SUIT AND AN ATTORNEY'S COMMISSION OF 10%, BUT
IN NO EVENT LESS THAN $500.00, FOR COLLECTION OF SUCH SUMS, AND MAKER HEREBY
FOREVER WAIVES AND RELEASES ANY AND ALL ERRORS IN SAID PROCEEDINGS AND WAIVES
STAY OF EXECUTION AND STAY, CONTINUANCE OR ADJOURNMENT OF SALE ON EXECUTION.
THE AUTHORITY AND POWER TO APPEAR FOR AND ENTER JUDGMENT AGAINST MAKER SHALL
NOT BE EXHAUSTED BY ONE OR MORE EXERCISES THEREOF AND MAY BE EXERCISED FROM
TIME TO TIME AND AS OFTEN AS BANK OR ITS SUCCESSORS AND ASSIGNS SHALL DEEM
NECESSARY OR DESIRABLE.
IN WITNESS WHEREOF, Maker, intending to be legally bound, has
executed this Note on the day and year first above written with the intention
that this Note shall constitute a sealed instrument.
ATTEST: Control Chief Holdings, Inc.
/S/Christopher G. Hauser By/S/Douglas S. Bell
Christopher G. Hauser Name: Douglas S. Bell
Secretary Title: President
By/S/Joseph F. Lamendola
(Seal) Name: Joseph F. Lamendola
Title: Vice President
ATTEST: Control Chief Corporation
/S/Linda L. Comes By/S/Joseph F. Lamendola
Linda L. Comes Name:Joseph F. Lamendola
Secretary Title:President
By/S/Douglas S. Bell
(Seal) Name: Douglas S. Bell
Title: Vice President
"Business Loans," for purposes of the Act, shall mean
extensions of credit where the funds are to be utilized in a business
enterprise and where (1) the borrower(s) exercises actual control over the
managerial decisions of the enterprise in which the funds are to be
utilized, and (2) the borrower(s) signs an affidavit under penalty of
perjury setting forth the intended use of proceeds.
AFFIDAVIT OF BUSINESS LOAN
COMMONWEALTH OF PENNSYLVANIA )
) SS:
COUNTY OF McKean )
Douglas S. Bell and Joseph F. Lamendola, being duly sworn
according to law, deposes and says that he (she) (they) is (are) the
Vice President and President respectively, of Control Chief Holdings,
Inc. ("Business"), that he (she) (they) exercise actual control over the
managerial decisions of the Business and is authorized to make this
affidavit on its behalf, and that the loan or extension of credit from
INTEGRA BANK/NORTH evidenced by an instrument dated May 24, 1995 is to be
used solely in connection with the Business and for the business purpose of
working capital.
We hereby verify that the facts contained herein are true
and correct to the best of our knowledge, information and belief. We
understand that false statements herein are made subject to the penalties
of perjury under 18 Pa. C.S.A. Section 4904.
ATTEST: Control Chief Holdings, Inc.
/S/Christopher G. Hauser By/S/Douglas S. Bell
Christopher G. Hauser Name: Douglas S. Bell
Secretary Title: President
(SEAL)
By/S/Joseph F. Lamendola
Name: Joseph F. Lamendola
Title: Vice President
Sworn to and subscribed before me this 1st
day of June, 1995.
By/S/Grace D. Murtcko
Notary Public
My Commission Expires:August 3, 1998
(To be executed by each person executing the Note.)
CERTIFICATE OF CORPORATE AUTHORIZATION
TO BORROW FROM BANK
I, Linda L. Comes, hereby certify that I am the Secretary of
Control Chief Corporation ("Corporation"), a Pennsylvania corporation, and
that the resolutions set forth below were adopted by the Board of Directors
of the Corporation in accordance with the bylaws of the Corporation on May
24, 1995. Such resolutions have been, or will promptly be, entered into
the minute book of the Corporation and (i) have not been amended, modified,
or rescinded and remain in full force and effect on the date hereof, and
(ii) are not in contravention of or in conflict with the bylaws, articles
of incorporation, or charter of the Corporation.
RESOLVED that this Corporation borrow such money and
obtain such credit from INTEGRA BANK/NORTH ("Bank"), from time to
time or at any time hereafter, for such periods, including
amendments, modifications, extensions and renewals, upon such
terms, and with such security as the President, Vice President,
Secretary or Treasurer of this Corporation, or their successors
in office, or any two (2) of them may deem advisable; and that
said officer(s) is (are) hereby authorized and empowered on
behalf of this Corporation and in its name to make, execute and
deliver any and all instruments necessary or desired by Bank to
effect the same, including, without limiting the generality of
the foregoing, notes, drafts, acceptances, assignments or other
evidences of indebtedness, all in such form as may be requested
by Bank and containing one or more warrants of attorney to
confess judgment against the Corporation if required by Bank, and
as security for any such borrowing or credit to mortgage, pledge
and assign, convey or transfer by way of mortgage, pledge,
security agreement, or otherwise, real property, stocks, bonds,
notes, debentures, bills of lading, warehouse receipts, accounts
receivable, amounts due or to become due on open accounts or
contracts, insurance policies, inventory, machinery, equipment,
chattel paper, or any other property, tangible or intangible, of
this Corporation, and to execute any and all instruments
necessary or desired by Bank to effect the same or incidental
thereto, including, without limiting the generality of the
foregoing, security agreements, financing statements,
assignments, transfers, conveyances, mortgages of real and/or
personal property, trust receipts, factors lien contracts or
agreements, powers of attorney, and any other instruments, and
also to execute or have executed guaranties in connection
therewith and to discount bills receivable and negotiable
instruments, with power to endorse the same in the name of this
Corporation, and generally to execute any instrument or do any
other act required, necessary or deemed advisable in connection
with such credit borrowing or security; and that all past acts of
officer(s) of this Corporation in borrowing or obtaining credit
from Bank and in executing instruments and giving security on
behalf of this Corporation are hereby ratified and confirmed.
RESOLVED FURTHER that Bank be and hereby is authorized
and directed, without limitation or inquiry, irrespective of the
circumstances, to honor and carry out all orders, directions or
instructions of said officers as to the disposition of all
amounts borrowed or credit obtained on behalf of this Corporation
hereunder, and Bank shall be under no obligation or liability for
the use or disposition of any amounts borrowed or credit
obtained, even though used for the benefit of or deposited to the
credit of any of said officers.
RESOLVED FURTHER that the Secretary and/or any Assistant
Secretary is (are) authorized to certify to Bank the person(s)
now holding said office(s) and any changes hereafter in the
person(s) holding said office(s), together with specimen(s) of
the signature(s) of such present and future officer(s), and this
Corporation shall fully protect, indemnify, and save harmless
Bank from any claim, loss, cost, damage, or expense arising out
of its acting on such certification.
Undersigned further certifies that the following were duly
elected to and now hold the offices of the Corporation set opposite their
respective signatures.
(PLEASE SUPPLY GENUINE SIGNATURES BELOW.)
Title Typed Name
Signature
Chairman Douglas S. Bell /S/Douglas S. Bell
President Joseph F. Lamendola /S/Joseph F. Lamendola
Vice President Douglas S. Bell /S/Douglas S. Bell
Vice President Robert E. Crofford /S/Robert E. Crofford
Secretary Linda L. Comes /S/Linda L. Comes
Treasurer Joseph F. Lamendola /S/Joseph F. Lamendola
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
the official seal of the Corporation this 24th day of May, 1995.
(SEAL)
/S/Linda L. Comes
Linda L. Comes, Secretary
CERTIFICATION
I hereby certify that I am a director of the Corporation, that
the foregoing is a correct copy of resolutions passed as therein set forth,
and that the same are now in full force.
/S/Douglas S. Bell
[To be signed by a director other than the Secretary]
"Business Loans," for purposes of the Act, shall mean
extensions of credit where the funds are to be utilized in a business
enterprise and where (1) the borrower(s) exercises actual control over the
managerial decisions of the enterprise in which the funds are to be
utilized, and (2) the borrower(s) signs an affidavit under penalty of
perjury setting forth the intended use of proceeds.
AFFIDAVIT OF BUSINESS LOAN
COMMONWEALTH OF PENNSYLVANIA )
) SS:
COUNTY OF McKean )
Douglas S. Bell and Joseph F. Lamendola, being duly
sworn according to law, deposes and says that he (she) (they) is (are) the
Vice President and President respectively, of Control Chief
Corporation ("Business"), that he (she) (they) exercise actual control over
the managerial decisions of the Business and is authorized to make this
affidavit on its behalf, and that the loan or extension of credit from
INTEGRA BANK/NORTH evidenced by an instrument dated May 24, 1995 is to be
used solely in connection with the Business and for the business purpose of
working capital.
We hereby verify that the facts contained herein are true and
correct to the best of our knowledge, information and belief. We
understand that false statements herein are made subject to the penalties
of perjury under 18 Pa. C.S.A. Section 4904.
ATTEST: Control Chief Corporation
/S/Linda S. Comes By/S/Douglas S. Bell
Linda L. Comes Name: Douglas S. Bell
Secretary Title: Vice President
(SEAL)
By/S/Joseph F. Lamendola
Name:Joseph F. Lamendola
Title:President
Sworn to and subscribed before me this 1st day
of June, 1995.
/S/Grace D. Murtcko
Notary Public
My Commission Expires: August 3, 1998
(To be executed by each person executing the Note.)
EXHIBIT A
UCC-1 FINANCING STATEMENT
Debtor: Control Chief Holdings, Inc.
Control Chief Corporation
Secured Party: INTEGRA BANK/NORTH
THIS FINANCING STATEMENT COVERS THE FOLLOWING TYPES OF PROPERTY:
All of the Debtor's:
(1) accounts, general intangibles, contract rights, chattel paper,
documents, instruments, letters of credit, and advices of credit (each of the
foregoing as defined in the Uniform Commercial Code) now in existence and
those that shall hereafter arise, and all guarantees and security therefor;
(2) inventory and equipment (each of the foregoing as defined in
the Uniform Commercial Code) which it now owns and that which it hereafter
acquires, whether subsequently acquired by way of substitution, replacement,
return, repossession or otherwise;
(3) fixtures (as defined in the Uniform Commercial Code) and each
and every item of personal property, which it now owns and that which it
hereafter acquires, whether subsequently acquired by way of substitution,
replacement, return, repossession or otherwise;
(4) ledger receipts, books, records and documents concerning any
of the items specified in (1), (2) and (3) above, including all computer
records, programs, storage media and computer software used or required in
connection with generating, processing and storing such records or otherwise
used or acquired in connection with documenting information concerning the
items of collateral set forth in Subsections (1), (2) and (3) above, both
that which the Debtor now owns and that which it acquires hereafter;
(5) the proceeds of the items of collateral listed in Subsection
(1) through (4) above, and with respect to said items, all products thereof
and all additions and accessions to, replacements of, insurance proceeds of
and documents covering such items; all property received wholly or partly in
trade or exchange for such items, and all rents, revenues, issues, profits
and proceeds arising from the sale, lease, license, encumbrance, collection
or any other temporary or permanent disposition of such items or any interest
therein, whether or not they constitute "proceeds" as defined in the Uniform
Commercial Code.
<PAGE>
SECURITY AGREEMENT
FOR VALUE RECEIVED, undersigned, Control Chief Holdings, Inc.
and Control Chief Corporation ("Debtors"), Pennsylvania corporations,
hereby assigns and pledges to INTEGRA BANK/NORTH ("Secured Party"), a
Pennsylvania banking institution, its successors and assigns, and grants to
it, its successors and assigns, a security interest prior to all other
liens in:
(a) the following described property (capitalized terms used
herein have the meaning given to them by the Pennsylvania Uniform
Commercial Code):
(i) all General Intangibles of Debtor,
both General Intangibles now in existence and
those that shall hereafter arise;
(ii) all Accounts of Debtor, including
both Accounts now in existence and those that
shall hereafter arise;
(iii) all Inventory of Debtor, including
Inventory which Debtor now owns and that which
Debtor shall hereafter acquire;
(iv) all Chattel Paper of Debtor,
including both Chattel Paper which Debtor now
owns and that which Debtor shall hereafter
acquire;
(v) all Equipment of Debtor, including
Equipment which Debtor now owns and that which
Debtor shall hereafter acquire;
(vi) all Goods of Debtor which become
Fixtures, including Goods which Debtor now owns
and those which Debtor shall hereafter acquire;
(vii) all that collateral granted in and described in
the Security
Agreement dated January 7, 1994 between Integra Bank/North
and
Control Chief Corporation and Control Chief Holdings, Inc.
(b) all property received wholly or partly in trade or
exchange for property mentioned in clause (a) above, and all rents,
revenues, issues, profits and proceeds arising from the sale, lease,
license, encumbrance, collection, or any other temporary or permanent
disposition of such property or any interest therein, whether or not they
constitute Proceeds as defined in the Pennsylvania Uniform Commercial Code;
and
(c) all ledger receipts, books, records, and documents
concerning any of the items specified in clauses (a) and (b) above,
including all computer records, programs, storage media, and computer
software used or required in connection with generating, processing, and
storing such records or otherwise used or acquired in connection with
documenting information concerning the items of collateral set forth in
clauses (a) and (b) above, both that which Debtor now owns and that which
Debtor acquires hereafter;
all of the aforesaid property in which Secured Party is granted a security
interest hereunder being hereinafter called the "Collateral."
This Security Agreement and the Collateral secure the payment
of the principal of and interest on each and every loan of Secured Party to
Debtor and each and every other liability of Debtor to Secured Party,
including each and every loan and other liability now in existence, those
incurred or arising contemporaneously herewith, and those that shall
hereafter be incurred or arise (collectively, "Secured Debt").
Debtor hereby covenants and agrees with Secured Party as
follows:
1. Debtor shall maintain in good condition and repair and
shall protect and preserve the Collateral and, if any part thereof is
Inventory, Equipment, Goods which have become Fixtures, or Farm Products,
shall insure such part against all risks to which such part may be exposed,
including, without limitation, fire, flood, theft and collision, in such
amounts as Secured Party may require, and any loss shall be payable to
Secured Party as its interest may appear. Debtor warrants that Debtor has
and will continue to have good and marketable title to the Collateral, free
and clear of all liens, encumbrances and security interests, except that
created hereby and other security interests of Secured Party therein, and
agrees to preserve such unencumbered title and Secured Party's security
interest in the Collateral and to defend it against all parties. Risk of
loss of, damage to, or destruction of the Collateral shall be the
responsibility of Debtor, although Secured Party shall exercise reasonable
care in the custody and preservation of the Collateral in its possession.
Secured Party shall be deemed to have exercised such reasonable care if it
takes such action for that purpose as Debtor shall reasonably request in
writing, but no omission to do any act not requested by Debtor shall be
deemed a failure to exercise reasonable care, and no omission to comply
with any request of Debtor shall of itself be deemed a failure to exercise
reasonable care. Debtor shall execute and deliver to Secured Party any
financing statements, continuation statements, assignments, or other
instruments, or take any other action deemed necessary by Secured Party to
perfect or continue the perfection of its security interest in the
Collateral. Secured Party is hereby irrevocably appointed an attorney-in-
fact of Debtor to do all acts and things which Secured Party may deem
necessary or advisable to perfect and continue perfected its security
interest in the Collateral. Debtor shall maintain Debtor's chief executive
office and all of Debtor's other offices, plants and places of business in
the State of Pennsylvania. Debtor shall keep all Debtor's Inventory,
Equipment, Chattel Paper, Goods which have become Fixtures, Farm Products,
and other property, except that in possession of Secured Party, and books
and records in such offices, plants and places of business. The address of
the chief executive office of Debtor is listed below Debtor's signature
hereto, as are the addresses of any other offices, plants and places of
business maintained by Debtor, each such office, plant and place of
business being located in the county set opposite such address. Debtor
shall give written notice to Secured Party at least thirty (30) days in
advance of any changes in such addresses, the establishment of any
additional office, plant or place of business, and any proposed change in
Debtor's name.
2. If the Collateral or any part thereof is or shall be a
motor vehicle for which a certificate of title may or must be issued under
the laws of the state in which such motor vehicle is registered, Debtor
shall deliver to Secured Party, promptly after such certificate of title is
issued to Debtor, the said certificate of title appropriately executed by
Debtor, so that Secured Party may cause the statement of Secured Party's
security interest to be noted as a lien or encumbrance on the said
certificate of title by the appropriate authorities responsible for motor
vehicle registration.
3. At any time and from time to time, whether any of the
Secured Debt shall be then due and payable, Secured Party, at its option
and at the expense of Debtor, may (1) transfer into its own name, or into
the name of its nominee, all or any part of the Collateral, thereafter
receiving all dividends, income or other distributions upon the Collateral;
(2) notify the obligor on any of the Collateral, whether Accounts or
otherwise, to make payment thereon directly to Secured Party, whether or
not Debtor was theretofore making collections thereon; (3) inspect the
books and records of Debtor and make extracts therefrom; (4) take control
of and manage all or any of the Collateral; (5) apply to the payment of any
of the Secured Debt, whether or not the same shall be then due and payable,
any moneys, including cash dividends and income from any Collateral, now or
hereafter in the hands of Secured Party, on deposit or otherwise, belonging
to Debtor, as Secured Party in its sole discretion shall determine; (6) do
anything which Debtor is required but fails to do hereunder, and in
particular Secured Party may, if Debtor fails to do so, (a) insure or take
any reasonable steps to protect the Collateral, (b) pay all taxes, levies,
expenses and costs arising with respect to the Collateral, or (c) pay any
premiums payable on any policy of insurance required to be obtained or
maintained hereunder, and add any amounts paid under this Section 3 to the
principal amount of the Secured Debt; (7) direct any insurer to make
payment of any insurance proceeds, including any returned or unearned
premiums, directly to Secured Party, and apply such moneys to any of the
Secured Debt in such order or fashion as Secured Party may elect; (8)
inspect the Collateral at any reasonable time; (9) pay any amounts Secured
Party elects to pay or advance hereunder on account of insurance, taxes or
other costs, fees or charges arising in connection with the Collateral,
either directly to the payee(s) of such cost, fee or charge, directly to
Debtor, or to such payee(s) and Debtor jointly. Notwithstanding the rights
of Secured Party set forth under this Section 3, no obligation to perform
any of the foregoing actions or to exercise any of the foregoing rights
shall be required by Secured Party, and Secured Party's failure to so act
or to so exercise shall not result in any liability on the part of Secured
Party.
4. This Security Agreement has been entered into under and
pursuant to the Pennsylvania Uniform Commercial Code, except that
perfection and the effect of perfection of Secured Party's security
interest in collateral in another jurisdiction will be governed by the
Uniform Commercial Code ("UCC") of such other jurisdiction, and Secured
Party has all the rights and remedies of a secured party under the Uniform
Commercial Code of the applicable jurisdiction. If any one or more of the
provisions hereof should for any reason be invalid, illegal or
unenforceable in any respect, the remaining provisions contained herein
shall not in any way be affected or impaired thereby, and such invalid,
illegal, or unenforceable provision shall be deemed modified to the extent
necessary to render it valid while most nearly preserving its original
intent.
5. Any delay or omission by Secured Party to exercise any
rights or powers arising from any default or any partial exercise thereof
shall not impair any such rights or powers, nor shall the same be construed
to be a waiver thereof or any acquiescence therein, nor shall any action or
non-action by Secured Party in the event of any default alter or impair the
rights of Secured Party in respect of any subsequent default, or impair or
affect any rights or powers resulting therefrom. This Security Agreement
shall remain in full force and effect until such time as all Secured Debt
has been paid in full.
6. (a) In case of any default hereunder with respect to any
of the Secured Debt or in case any of the Secured Debt matures, whether by
declaration, acceleration or otherwise, and remains unpaid, then Secured
Party shall have the full power and authority to proceed to exercise any
one or more of the rights accorded to it by the UCC of the applicable
jurisdiction or otherwise accorded to it by law, including the right to
require Debtor to assemble any of the Collateral and make it available to
Secured Party at a place designated by Secured Party and reasonably
convenient to both parties. The proceeds of any collection, sale or other
disposition of the Collateral or any part thereof shall, after Secured
Party has made all deductions of reasonable expenses, including but not
limited to reasonable attorneys' fees and other expenses incurred in
connection with repossession, collection, sale, or disposition of the
Collateral or in connection with the enforcement of Secured Party's rights
with respect to the Collateral in any insolvency, bankruptcy or
reorganization proceedings, be applied against any of the Secured Debt,
whether or not all the same shall be then due and payable, in such manner
as Secured Party shall in its sole discretion determine.
(b) If any notification of intended sale of any of the
Collateral is required by law, such notification shall be deemed reasonable
if mailed at least ten (10) days before such sale, postage prepaid, (i)
addressed to Debtor at the address set forth immediately below Debtor's
signature(s) hereto, and (ii) to any other secured party from whom Secured
Party has received (prior to notification of Debtor or Debtor's
renunciation of his rights after default) written notice of a claim of an
interest in the Collateral.
7. Upon any negotiation, sale or assignment of any of the
Secured Debt by Secured Party, Secured Party may deliver or assign the
Collateral hereunder or any part thereof to the transferee or purchaser,
who thereupon shall have and may exercise all powers, rights and options in
respect of such Collateral and otherwise hereby given to Secured Party, and
the person who thus negotiates, sells or assigns any of such liabilities of
Debtor secured hereby shall thereafter be forever relieved and fully
discharged from any liability or accountability in respect to such
Collateral. Debtor agrees to pay all costs and expenses, including
attorneys' fees, incurred by Bank in selling or disposing of the
Collateral, which Collateral may be sold or disposed of by Bank through
Bank's securities brokerage affiliate.
8. All notices, statements, requests, and demands given to
or made upon Debtor by Secured Party shall be given or made to Debtor at
the address of Debtor's chief executive office set forth below Debtor's
signature hereto.
9. The provisions of this Security Agreement shall be
binding upon Debtor, and the heirs, personal representatives, successors
and assigns of Debtor.
IN WITNESS WHEREOF, Debtor, intending to be legally bound, has
executed this Security Agreement on the 24th day of May, 1995 with the
intention that this agreement shall constitute a sealed instrument.
ATTEST: Control Chief Holdings, Inc.
/S/Christopher G. Hauser By/S/Douglas S. Bell
Christopher G. Hauser Name:Douglas S. Bell
Secretary Title: President
(Seal)
By/S/Joseph F. Lamendola
Name:Joseph F. Lamendola
Title:Vice President
ATTEST: Control Chief Corporation
/S/Linda L. Comes By/S/Joseph F. Lamendola
Linda L. Comes Name:Joseph F. Lamendola
Secretary Title:President
(Seal)
By/S/Douglas S. Bell
Name:Douglas S. Bell
Title:Vice President
Address of chief executive office, including county where located: 14
Egbert Lane, Lewis Run, McKean County, Pennsylvania 16738
<PAGE>
CERTIFICATE OF CORPORATE AUTHORIZATION
TO BORROW FROM BANK
I, Christopher G. Hauser, hereby certify that I am the
Secretary of Control Chief Holdings, Inc. ("Corporation"), a Pennsylvania
corporation, and that the resolutions set forth below were adopted by the
Board of Directors of the Corporation in accordance with the bylaws of the
Corporation on May 24, 1995. Such resolutions have been, or will promptly
be, entered into the minute book of the Corporation and (i) have not been
amended, modified, or rescinded and remain in full force and effect on the
date hereof, and (ii) are not in contravention of or in conflict with the
bylaws, articles of incorporation, or charter of the Corporation.
RESOLVED that this Corporation borrow such money and
obtain such credit from INTEGRA BANK/NORTH ("Bank"), from time to
time or at any time hereafter, for such periods, including
amendments, modifications, extensions and renewals, upon such
terms, and with such security as the President, Vice President,
Secretary or Treasurer of this Corporation, or their successors
in office, or any two (2) of them may deem advisable; and that
said officer(s) is (are) hereby authorized and empowered on
behalf of this Corporation and in its name to make, execute and
deliver any and all instruments necessary or desired by Bank to
effect the same, including, without limiting the generality of
the foregoing, notes, drafts, acceptances, assignments or other
evidences of indebtedness, all in such form as may be requested
by Bank and containing one or more warrants of attorney to
confess judgment against the Corporation if required by Bank, and
as security for any such borrowing or credit to mortgage, pledge
and assign, convey or transfer by way of mortgage, pledge,
security agreement, or otherwise, real property, stocks, bonds,
notes, debentures, bills of lading, warehouse receipts, accounts
receivable, amounts due or to become due on open accounts or
contracts, insurance policies, inventory, machinery, equipment,
chattel paper, or any other property, tangible or intangible, of
this Corporation, and to execute any and all instruments
necessary or desired by Bank to effect the same or incidental
thereto, including, without limiting the generality of the
foregoing, security agreements, financing statements,
assignments, transfers, conveyances, mortgages of real and/or
personal property, trust receipts, factors lien contracts or
agreements, powers of attorney, and any other instruments, and
also to execute or have executed guaranties in connection
therewith and to discount bills receivable and negotiable
instruments, with power to endorse the same in the name of this
Corporation, and generally to execute any instrument or do any
other act required, necessary or deemed advisable in connection
with such credit borrowing or security; and that all past acts of
officer(s) of this Corporation in borrowing or obtaining credit
from Bank and in executing instruments and giving security on
behalf of this Corporation are hereby ratified and confirmed.
RESOLVED FURTHER that Bank be and hereby is authorized
and directed, without limitation or inquiry, irrespective of the
circumstances, to honor and carry out all orders, directions or
instructions of said officers as to the disposition of all
amounts borrowed or credit obtained on behalf of this Corporation
hereunder, and Bank shall be under no obligation or liability for
the use or disposition of any amounts borrowed or credit
obtained, even though used for the benefit of or deposited to the
credit of any of said officers.<PAGE>
RESOLVED FURTHER that the Secretary and/or any Assistant
Secretary is (are) authorized to certify to Bank the person(s)
now holding said office(s) and any changes hereafter in the
person(s) holding said office(s), together with specimen(s) of
the signature(s) of such present and future officer(s), and this
Corporation shall fully protect, indemnify, and save harmless
Bank from any claim, loss, cost, damage, or expense arising out
of its acting on such certification.
Undersigned further certifies that the following were duly
elected to and now hold the offices of the Corporation set opposite their
respective signatures.
(PLEASE SUPPLY GENUINE SIGNATURES BELOW.)
Title Typed Name
Signature
Chairman Douglas S. Bell /S/Douglas S. Bell
President Douglas S. Bell /S/Douglas S. Bell
Vice President Joseph F. Lamendola /S/Joseph F. Lamendola
Vice President Robert E. Crofford /S/Robert E. Crofford
Secretary Christopher G. Hauser /S/Christopher G. Hauser
Treasurer Stephen J. Pachla /S/Stephen J. Pachla
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
the official seal of the Corporation this 24th day of May, 1995.
/S/Christopher G. Hauser
Christopher G. Hauser, Secretary
CERTIFICATION
I hereby certify that I am a director of the Corporation, that
the foregoing is a correct copy of resolutions passed as therein set forth,
and that the same are now in full force.
/S/Douglas S. Bell
[To be signed by a director other than the Secretary]
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information
extracted from SEC Form 10-KSB and is qualified in its
entirety by reference to such financial statements.
<RESTATED>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> JUL-01-1994
<CASH> 157,786
<SECURITIES> 0
<RECEIVABLES> 1,654,126
<ALLOWANCES> 41,340
<INVENTORY> 2,115,115
<CURRENT-ASSETS> 4,121,017
<PP&E> 2,244,114
<DEPRECIATION> 1,330,159
<TOTAL-ASSETS> 5,308,993
<CURRENT-LIABILITIES> 2,288,564
<BONDS> 0
<COMMON> 405,776
0
0
<OTHER-SE> 1,717,957
<TOTAL-LIABILITY-AND-EQUITY> 5,308,993
<SALES> 8,963,182
<TOTAL-REVENUES> 9,003,036
<CGS> 5,630,520
<TOTAL-COSTS> 5,630,520
<OTHER-EXPENSES> 3,058,215
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 135,037
<INCOME-PRETAX> 179,264
<INCOME-TAX> 40,555
<INCOME-CONTINUING> 138,709
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 138,709
<EPS-PRIMARY> .171
<EPS-DILUTED> .171
</TABLE>
