SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
Quarterly Report under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For Quarter ended: June 30, 1998 Commission File Number: 0-19589
------------- -------
ARGUSS HOLDINGS, INC.
--------------------------------------------------------
(Exact name of Registrant as specified in its Charter)
Delaware 02-0413153
---------------------------- -------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
One Church Street, Suite 302,
Rockville, Maryland 20850
---------------------------------------- -----------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number,
including Area Code: 301-315-0027
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by section 13 or 15 of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes: X No:
----- -----
As of July 21,1998, there were 10,488,979 shares of Common Stock, $ .01 par
value per share, outstanding.
<PAGE>
ARGUSS HOLDINGS, INC.
INDEX
Part I - Financial Statements:
Item 1 - Financial Statements
Consolidated Balance Sheets (Unaudited)
June 30, 1998 and December 31, 1997 3
Consolidated Statements of Operations (Unaudited)
Three Months and Six Months Ended June 30, 1998
and June 30, 1997 4
Consolidated Statements of Cash Flows (Unaudited)
Six Months Ended June 30, 1998 and June 30, 1997 5
Notes to Consolidated Financial Statements
(Unaudited) 7
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
Part II - Other Information
Items 1 through 6 15
Signatures 16
Exhibits 17
2
<PAGE>
ARGUSS HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, December 31,
1998 1997
-------- ------------
Assets
Current assets:
Cash $ 1,601,000 $ 1,215,000
Restricted cash from customer advances 8,647,000 --
Accounts receivable trade, including
retainage of $2,643,000 and $1,884,000,
respectively 28,235,000 13,656,000
Unbilled receivables for materials 6,280,000 274,000
Inventories 4,468,000 4,344,000
Other assets, current 1,395,000 1,898,000
------------ -----------
Total current assets 50,626,000 21,387,000
Property, plant and equipment, net 23,194,000 13,274,000
Goodwill, net 50,441,000 24,374,000
------------ -----------
$124,261,000 $59,035,000
============ ===========
Liabilities and Stockholders' Equity
Current liabilities:
Current portion long-term debt $ 5,904,000 $ 1,632,000
Short-term borrowings 10,073,000 4,294,000
Accounts payable 11,086,000 4,141,000
Customer advances 10,500,000 --
Accrued expenses and other liabilities 6,806,000 4,212,000
------------ -----------
Total current liabilities 44,369,000 14,279,000
------------ -----------
Long-term debt, excluding current portion 20,570,000 6,995,000
Deferred income taxes 1,549,000 791,000
------------ -----------
Total liabilities 66,488,000 22,065,000
------------ -----------
Stockholders' equity:
Common stock $.01 par value 105,000 85,000
Additional paid-in capital 56,833,000 36,443,000
Retained earnings 835,000 442,000
------------ -----------
Total stockholders' equity 57,773,000 36,970,000
------------ -----------
$124,261,000 $59,035,000
============ ===========
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
ARGUSS HOLDINGS, INC.
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
-------------------------- -------------------------
June 30, June 30, June 30, June 30,
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales $35,163,000 $12,682,000 $59,402,000 $21,658,000
Cost of sales, excluding depreciation 25,814,000 8,251,000 44,604,000 14,765,000
----------- ----------- ----------- -----------
Gross profit, excluding depreciation 9,349,000 4,431,000 14,798,000 6,893,000
Expenses:
Selling, general and administrative 3,903,000 2,063,000 7,358,000 3,569,000
Depreciation 1,471,000 240,000 2,795,000 448,000
Goodwill amortization 651,000 197,000 1,305,000 393,000
Engineering and development 297,000 313,000 543,000 573,000
----------- ----------- ----------- -----------
Income from operations 3,027,000 1,618,000 2,797,000 1,910,000
Interest expense, net 649,000 91,000 1,272,000 146,000
----------- ----------- ----------- -----------
Income before income taxes 2,378,000 1,527,000 1,525,000 1,764,000
Income tax expense 1,212,000 753,000 1,132,000 372,000
----------- ----------- ----------- -----------
Net income $ 1,166,000 $ 774,000 $ 393,000 $ 1,392,000
=========== =========== =========== ===========
Income per share - basic $ .11 $ .11 $ .04 $ .19
=========== =========== =========== ===========
Weighted average number
of shares - basic 10,421,000 7,278,000 10,388,000 7,274,000
=========== =========== =========== ===========
Income per share - diluted $ .11 $ .10 $ .04 $ .18
=========== =========== =========== ===========
Weighted average number of shares
Outstanding - diluted 11,103,000 7,595,000 11,041,000 7,558,000
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE>
ARGUSS HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
Six Months Ended
--------------------------
June 30, June 30,
1998 1997
------------- -----------
Cash flows from operating activities:
Net income $ 393,000 $ 1,392,000
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation 2,801,000 448,000
Goodwill amortization 1,306,000 393,000
Non cash stock compensation 1,101,000 72,000
Deferred income taxes 99,000 --
Changes in assets and liabilities:
Accounts receivable (8,869,000) (688,000)
Unbilled receivables for materials (6,006,000) --
Inventories (124,000) (553,000)
Other current assets 878,000 (598,000)
Accounts payable 5,900,000 979,000
Accrued expenses and other liabilities (295,000) (894,000)
----------- -----------
Net cash (used in) provided by operating
activities (2,816,000) 551,000
----------- -----------
Cash flows from investing activities:
Net additions to property, plant and
equipment (7,323,000) (1,981,000)
Purchase of cable construction companies (13,799,000) (8,879,000)
----------- -----------
Net cash used in investing activities (21,122,000) (10,860,000)
Cash flows from financing activities:
Advances on TCI contracts, net 8,647,000 --
Proceeds from lines of credit 26,188,000 2,211,000
Repayments of financing debt (2,577,000) (665,000)
Issuance of common stock 713,000 --
----------- -----------
Net cash provided by financing activities 32,971,000 1,546,000
----------- -----------
Net increase (decrease) in cash and
restricted cash 9,033,000 (8,763,000)
----------- -----------
Cash at beginning of period 1,215,000 10,318,000
----------- -----------
Cash and restricted cash at end of period $10,248,000 $ 1,555,000
=========== ===========
5
<PAGE>
ARGUSS HOLDINGS, INC.
CONSOLIDATED
STATEMENTS OF CASH FLOW (continued)
(Unaudited)
Six Months Ended
--------------------------
June 30, June 30,
1998 1997
------------- -----------
Supplemental disclosures of cash paid for:
Interest $ 1,437,000 $ 121,000
Corporate income taxes 138,000 190,000
Supplemental disclosure of
investing and financing activities:
Fair value of assets acquired:
Accounts receivable $ 5,710,000 $ 4,404,000
Inventory -- 290,000
Other current assets 375,000 74,000
Property and equipment 5,398,000 3,676,000
----------- -----------
Total non cash assets 11,483,000 8,444,000
----------- -----------
Liabilities (3,620,000) (4,843,000)
Long-term debt (1,888,000) (2,111,000)
----------- -----------
Net non cash assets acquired 5,975,000 1,490,000
Cash acquired 1,725,000 15,000
----------- -----------
Fair value of net assets acquired 7,700,000 1,505,000
Excess of costs over fair value
of net assets acquired 27,373,000 15,700,000
----------- -----------
Purchase price $35,073,000 $17,205,000
=========== ===========
Common stock issued $21,274,000 $ 8,642,000
Cash paid 15,524,000 8,578,000
Cash acquired (1,725,000) (15,000)
----------- -----------
Purchase price $35,073,000 $17,205,000
=========== ===========
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
ARGUSS HOLDINGS, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Unaudited)
A) Organization
------------
Prior to May 1997, Arguss Holdings, Inc. (the "Company") operated as a single
entity under the name Conceptronic, Inc. On May 9, 1997, the shareholders of the
Company approved a plan providing for the internal restructuring of the Company
whereby the Company became a holding company and its operating assets were held
by wholly owned operating subsidiaries. Accordingly, on May 9, 1997, the Company
transferred substantially all of its Conceptronic, Inc. operating assets to a
newly formed, wholly owned subsidiary of the Company, and the Company changed
its name to "Arguss Holdings, Inc." The subsidiary then adopted the name
"Conceptronic, Inc." ("Conceptronic"). The Company's other wholly owned
operating subsidiary is White Mountain Cable Construction Corp. ("WMC").
The Company conducts its operations through its wholly owned subsidiaries, WMC
and Conceptronic. WMC is engaged in the construction, reconstruction,
maintenance, repair and expansion of communications systems, cable television
and data systems, including providing aerial and underground construction and
splicing of both fiber optic and coaxial cable to major telecommunications
customers. WMC operates through its divisions - White Mountain, Can-Am, TCS,
Rite and Schenck. Conceptronic manufactures and sells highly advanced,
computer-controlled equipment used in the SMT circuit assembly industry.
B) Basis for Presentation
----------------------
As permitted by the rules of the Securities and Exchange Commission (the
"Commission") applicable to quarterly reports on Form 10-QSB, these notes are
condensed and do not contain all disclosures required by generally accepted
accounting principles. Reference should be made to the financial statements and
related notes included in the Company's Annual Report on Form 10-KSB for the
year ended December 31, 1997, filed with the Commission on March 24, 1998.
In the opinion of the Company, the accompanying unaudited financial statements
contain all adjustments considered necessary to present fairly the financial
position of the Company as of June 30, 1998 and the results of operations and
cash flows for the periods presented. The Company prepares its interim financial
information using the same accounting principles as it does for its annual
financial statements.
The Company's cable construction operations are expected to have seasonally
weaker results in the first and fourth quarters of the year, and may produce
stronger results in the second and third quarters. This seasonality is primarily
due to the effect of winter weather on outside plant activities in the northern
areas served by WMC, as well as reduced daylight hours and customer budgetary
constraints. Certain customers tend to complete budgeted capital expenditures
before the end of the year, and postpone additional expenditures until the
subsequent fiscal period.
Research and development expenses, a component of engineering and development
expenses, incurred and expensed were $386,000 and $276,000, respectively, for
the quarters ended June 30, 1998 and 1997.
In June 1997, the Financial Accounting Standards Board ("FASB") issued Statement
No. 130, "Reporting Comprehensive Income". This Statement establishes standards
for reporting and display of comprehensive income and its components (revenues,
expenses, gains and losses) in a full set of general-purpose financial
statements. This Statement requires that an enterprise (a) classify items of
other comprehensive income by their nature in a financial statement and (b)
display the accumulated balance of other comprehensive income separately from
retained earnings and additional paid in capital in the equity section of a
statement of financial position. The impact of this statement on the Company's
financial statements is not significant because the company has no elements of
comprehensive income at this time.
In June 1997, the FASB issued Statement No. 131, "Disclosures about Segments and
Related Information". This Statement establishes standards for the way that
public business enterprises report information about operating segments
7
<PAGE>
in annual financial statements and requires that those enterprises report
selected information about operating segments in interim financial reports
issued to shareholders. It also establishes standards for related disclosures.
In February 1998, the Financial Accounting Standards Board issued SFAS No. 132,
"Employers' Disclosure about Pensions and Other Post-retirement Benefits," which
revises employers' disclosures about pension and other post-retirement benefit
plans. It does not change the measurement or recognition of those plans. The
statement is effective for fiscal years beginning after December 15, 1997. The
adoption of this statement has no impact on the consolidated financial
statements.
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." The statement
requires companies to recognize all derivatives as either assets or liabilities,
with the instruments measured at fair value. The accounting for changes in fair
value, gains or losses, depends on the intended use of the derivative and its
resulting designation. The statement is effective for all fiscal quarters of
fiscal years beginning after June 15, 1999. The Company will adopt SFAS No. 133
by January 1, 2000. Adoption of SFAS No. 133 is not expected to have a material
impact on the consolidated financial statements.
Certain amounts in the 1997 financial statements have been reclassified for
comparability with the 1998 presentation.
(C) Earnings per Share
------------------
Basic income per common share are computed by dividing income available to
common stockholders by the weighted average number of common shares outstanding
for the period. Diluted income per common share reflects the maximum dilution
that would have resulted from the exercise of stock options and warrants.
Diluted income per common share is computed by dividing net income by the
weighted average number of common shares and all dilutive securities.
<TABLE>
<CAPTION>
For the Six Months Ended
June 30, 1998 June 30, 1997
------------- -------------
Income Net Income Net
per Share Shares Income per Share Shares Income
--------- ------ ------ --------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
Basic $ .04 10,388,000 $393,000 $ .19 7,274,000 $1,392,000
Effect of stock options
and warrants -- 653,000 -- (.01) 284,000 --
------ ---------- -------- ------- --------- ----------
Diluted $ .04 11,041,000 $393,000 $ .18 7,558,000 $1,392,000
====== ========== ======== ======= ========= ==========
</TABLE>
<TABLE>
<CAPTION>
For the Three Months Ended
June 30, 1998 June 30, 1997
------------- -------------
Income Net Net Income Net
per Share Shares Income per Share Shares Income
--------- ------ ------ --------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
Basic $ .11 10,421,000 $1,166,000 $ .11 7,278,000 $774,000
Effect of stock options
and warrants -- 682,000 -- (.01) 317,000 --
------ ---------- ---------- ------- --------- --------
Diluted $ .11 11,103,000 $1,166,000 $ .10 7,595,000 $774,000
====== ========== ========== ======= ========= ========
</TABLE>
D) Accounts Receivable
-------------------
The retainage included in accounts receivable which represents amounts withheld
by contract with respect to WMC accounts receivable was $2,643,000 at June 30,
1998. The Company expects to collect substantially all such retainage
8
<PAGE>
within one year. Further, costs incurred in excess of billings included in
accounts receivable is expected to be billed and collected currently.
E) Acquisitions
------------
In the first quarter of 1998, the Company acquired Can-Am Construction, Inc.
("Can-Am") and Schenck Communications, Inc. ("Schenck") which provide aerial and
underground construction and splicing services for both fiber optic and coaxial
cable to major telecommunications customers.
The purchase price was approximately $35 million and consisted of 1,809,000
shares of common stock of the Company and approximately $15 million in cash. The
Company has classified as goodwill approximately $27.4 million which represents
the cost in excess of the fair value of the net assets acquired. Goodwill is
being amortized using the straight-line method over 20 years. The Schenck
purchase agreement contains provision for additional payments by the Company to
Schenck shareholders to be satisfied by the issuance of the Company's common
stock and cash, if certain adjusted EBITDA thresholds are met for the year
ending December 31, 1998. There is no cap for such provisional payments.
One-half of the additional payment to Schenck shareholders will be satisfied by
the issuance of shares of common stock valued at $9.75 per share. The second
half of the payment will be in cash. Any additional payments earned under the
terms of the agreement will be recorded as an increase in goodwill.
F) Enterprise Segment Information
------------------------------
The Company's operations have been classified into two business segments for the
six months and three months ended June 30, 1998, Communications and
Manufacturing, respectively. Summary financial information for the two segments
is as follows:
<TABLE>
<CAPTION>
June 30, 1998
-------------
Three Months Ended Six Months Ended
------------------ ----------------
Manufacturing Communications Manufacturing Communications
------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
Net sales $ 4,728,000 $ 30,435,000 $ 9,777,000 $ 49,625,000
Cost of sales, excluding
depreciation 3,078,000 22,736,000 6,517,000 38,087,000
----------- ------------ ----------- ------------
Gross profit, excluding
depreciation 1,650,000 7,699,000 3,260,000 11,538,000
Operating expenses,
excluding depreciation 1,549,000 1,958,000 3,030,000 3,768,000
Goodwill amortization -- 651,000 -- 1,305,000
Non cash stock compensation -- 678,000 -- 1,064,000
Depreciation expense 54,000 1,417,000 109,000 2,686,000
----------- ------------ ----------- ------------
Net interest and other income 46,000 615,000 92,000 1,197,000
----------- ------------ ----------- ------------
Pretax income $ 1,000 $ 2,380,000 $ 29,000 $ 1,518,000
=========== ============ =========== ============
Capital expenditures $ 42,000 $ 2,692,000 $ 66,000 $ 7,420,000
=========== ============ =========== ============
Property, plant and equipment, net $ 1,333,000 $ 21,827,000 $ 1,333,000 $ 21,827,000
=========== ============ =========== ============
Total assets $10,370,000 $113,153,000 $10,370,000 $113,153,000
=========== ============ =========== ============
Total liabilities $ 5,047,000 $ 59,591,000 $ 5,047,000 $ 59,591,000
=========== ============ =========== ============
</TABLE>
(1) Segment information does not reconcile to consolidated net income before
tax due to net unallocated corporate expense of $22,000 which is the net of
$15,000 in interest income and $37,000 in stock option expense for the six
months ended June 30, 1998. For the three months ended June 30, 1998, the
net corporate difference was $3,000 which is a net of $9,000 in interest
income and $12,000 in stock option expense.
9
<PAGE>
(2) Excludes inter-company payables of $1,204,000 for manufacturing and
$1,453,000 for communications segments, respectively at June 30, 1998.
G) Long-Term Debt
--------------
On January 2, 1998, the Company expanded its credit facilities with NationsBank,
NA. In connection with its acquisition of Can-Am and Schenck, the Company
entered into an aggregate of $15,016,000 in new acquisition financing
facilities. The facilities have a five-year amortization rate for repayment of
the principal and include a balloon payment of approximately $2 million of the
acquisitions financing facilities in March 31, 1999, based on 50% of net cash
flow - less debt service - and an additional payment of nearly $1 million in
December 31, 1999 with the remaining principal amount of the facilities being
repaid in equal monthly payments through December 31, 2002. The acquisition
financing bears an interest rate of LIBOR, plus 275 basis points.
During the six months ended June 30, 1998, the Company expanded both its WMC
revolving credit facility from $4 million to $15 million, and equipment
financing facility from $3.5 million to $13 million, generally under the same
interest rates and covenants as the original lines of credit.
Further, on January 2, 1998, the Company consummated a term loan to refinance
existing equipment financing facilities at Can-Am and Schenck. The proceeds of
this line were $2,400,000, are payable over 48 months, and bear an interest rate
at LIBOR, plus 165 basis points.
To hedge the variable term loan interest rate risk for $10 million in notional
amount of the acquisitions financing facilities, $3,700,000 in notional amount
of equipment financing and $2,400,000 in notional amount of the refinancing term
loan, during the six months ended June 30, 1998, the Company entered into
various interest rate swaps pursuant to which it pays fixed interest rates and
receives variable interest rates on the same notional amount. During the six
months ended June 30, 1998, the Company payment under the three new interest
rate swaps aggregated $21,000. The Company had no receipts pursuant to the new
interest rate swaps.
H) Litigation
----------
On December 13, 1991, the Company was served with a complaint from Vitronics
Corporation ("Vitronics"), one of the Company's competitors, alleging patent
infringement involving its reflow soldering ovens. Vitronics sought an
injunction, together with unspecified damages and costs. The claim was filed in
the United States Federal District Court, District of New Hampshire.
In August 1995, the U.S. District Court issued a directed verdict of
non-infringement in the Company's favor regarding method patent #4,654,502.
Additionally, a decision was reached on the apparatus patent #4,833,301 by a
jury which found non-infringement on all past and current Conceptronic ovens.
Vitronics appealed the directed verdict on patent #4,654,502 and the United
States Court of Appeals for the First Circuit ("Court of Appeals") subsequently
reversed and remanded the case for further proceeding. In October 1997, the
Court of Appeals administratively dismissed the case.
In related actions, in April 1997, the United States Patent Office ("PTO")
rejected certain claims of Vitronics' patent #4,654,502 as being unpatentable.
This decision by the PTO, if upheld on appeal, should terminate the pending
lawsuit. In December 1996, the Company named Vitronics and its Chairman and CEO,
James Manfield in a lawsuit, filed in Superior Court of the State of New
Hampshire, citing malicious prosecution and abuse of process. The suit claims
that Vitronics, when it initiated the 1991 patent infringement case against
Conceptronic, knew or should have known that the suit was without merit and that
claim 1 of U.S. Patent #4,883,301 was invalid, unenforceable and, as a
consequence, the patent was not infringed. In November 1997, Dover Industries
purchased Vitronics and succeeded in their interest.
In the opinion of counsel, the ultimate outcome of this litigation cannot
presently be determined. Management of the Company believes that Vitronics'
claim is without merit and that the Company will ultimately prevail.
Accordingly, no provision has been made in the accompanying financial statements
for any potential liability that might result.
I) Subsequent Event
----------------
As of July 31, 1998, the Company had signed a letter of intent to purchase
Underground Specialties, Inc. The consummation of the proposed transaction is
contingent upon the completion of due diligence analysis, the signing of a
definitive purchase and sale agreement, approval of both companies' boards of
directors and other conditions.
10
<PAGE>
ARGUSS HOLDINGS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Prior to May 1997, Arguss Holdings, Inc. (the "Company") operated as a single
entity under the name Conceptronic, Inc. On May 9, 1997, the shareholders of the
Company approved a plan providing for the internal restructuring of the Company
whereby the Company became a holding company and its operating assets were held
by wholly owned operating subsidiaries. Accordingly, on May 9, 1997, the Company
transferred substantially all of its Conceptronic, Inc. operating assets to a
newly formed, wholly owned subsidiary of the Company, and the Company changed
its name to "Arguss Holdings, Inc." The subsidiary then adopted the name
"Conceptronic, Inc." ("Conceptronic"). The Company's other wholly owned
operating subsidiary is White Mountain Cable Construction Corp. ("WMC"). WMC
operates through its divisions - White Mountain, Can-Am, Rite, TCS and Schenck.
The Company conducts its operations through its wholly owned subsidiaries, WMC
and Conceptronic. WMC is engaged in the construction, reconstruction,
maintenance, repair and expansion of communications systems, cable television
and data systems, including providing aerial and underground construction and
splicing of both fiber optic and coaxial cable to major communications
customers. Conceptronic manufactures and sells highly advanced,
computer-controlled equipment used in the SMT circuit assembly industry.
THREE MONTHS ENDED JUNE 30, 1998 COMPARED TO THREE MONTHS ENDED JUNE 30, 1997
The Company had net income of approximately $1,166,000 for the three months
ended June 30, 1998, compared to net income of $774,000 for the three months
ended June 30, 1997. During the three months ended June 30, 1998 improvement in
earnings was due primarily to the profitable results of WMC whose pretax income
was $2,380,000, compared to $1,426,000 in the comparable period in 1997. The
increase in pretax income is due primarily to the strong quarterly performance
of the TCS and Schenck divisions which had strong performances in their
respective construction projects in Denver and the Pacific Northwest. TCS and
Schenck are included in results only in 1998.
Net sales for the three months ended June 30, 1998 increased $22,481,000 or
nearly three-fold to approximately $35,163,000 from approximately $12,682,000
for the three months ended June 30, 1997 due primarily to the acquisition of
TCS, Schenck, Can-Am and Rite (collectively "Acquisitions") which had combined
sales of $19,129,000. Conceptronic's sales were $400,000 below the levels
achieved for the three months ended June 30, 1997 due primarily to the
industry-wide softening of activity in the SMT circuit assembly equipment
industry. The Company expects a softening in activity in the SMT circuit
assembly equipment industry during the third quarter which may have a negative
impact on Conceptronic's operating results.
Consolidated gross profit margin, excluding depreciation, was 27% of sales for
the three months ended June 30, 1998 compared to 35% for the comparable period
in 1997. WMC's gross profit margin was 25% for the three months ended June 30,
1998, compared to 35% for the three months ended June 30, 1997. The decline in
margins is due to the White Mountain division's transition costs incurred in
commencing projects in Dallas, Texas and Charlotte, North Carolina, which should
generate improved margins beginning in the third quarter. Further, the TCS
division's mix of business has historical profit margins in the low to mid
twenty percent range which is typically less than the gross profit margin levels
of the White Mountain division's mix of business. Conceptronic's gross profit
margin was 35% for the three months ended June 30, 1998 which is relatively
consistent with the 34% gross profit margin achieved for the comparable period
in 1997.
Selling, general and administrative expenses for the three months ended June 30,
1998 were $3,903,000 compared to $2,063,000 for the comparable period one year
ago. The increase was largely due to the Acquisitions which accounted for
$1,757,000 in expenses of which $678,000 was non cash stock option expense.
Depreciation expense was $1,471,000 for the three months ended June 30, 1998
compared to $240,000 for the three months ended June 30, 1997 due primarily to
WMC, which had $1,417,000 of depreciation expense due to new equipment
acquisitions to perform large construction projects. WMC has expended
approximately $14 million for new
11
<PAGE>
capital assets in 1998 and 1997 which are amortized over sixty months.
Acquisitions had depreciation expense of $924,000 for the three months ended
June 30, 1998.
Goodwill amortization increased to $651,000 for the three months ended June 30,
1998 from $197,000 for the three months ended June 30, 1997 due to the
Acquisitions.
Net interest expense for the three months ended June 30, 1998 was $649,000
compared to $91,000 for the comparable period one year ago. The WMC net interest
expense for the second quarter of 1998 was $603,000. The increase in amounts
outstanding under bank credit facilities with respect to purchase financing of
the Acquisitions, equipment acquisition lines and the revolving line of credit
resulted in increased aggregate net interest expense. See Liquidity and Capital
Resources for a discussion of the Company's debt facilities.
Income tax expense increased from $753,000 to $1,212,000 due primarily to the
profitable operations of WMC.
SIX MONTHS ENDED JUNE 30, 1998, COMPARED TO SIX MONTHS ENDED JUNE 30, 1997
The Company had a consolidated net income of approximately $393,000 for the six
months ended June 30, 1998, compared to net income of $1,392,000 for the six
months ended June 30, 1997. The decrease in net income for the six months in
1998 when compared to 1997 is primarily due to the impact of severe winter
weather on cable construction operations, primarily in the northeastern United
States, and due to the fact that WMC has been focusing its resources to commence
several significant, regional, multiple-year contracts with major
telecommunications companies. During the six months ended June 30, 1998, WMC
incurred transition costs to relocate crews and equipment and set up operations
in several new locations. Improved consolidated net sales, as well as operating
cost efficiencies, were attained during the second quarter as these contracts
reached their revenue potential. (See discussion of gross profit below.) In the
third quarter, the Company expects to continue to realize increasing
profitability from maturing regional contracts, but will also continue to incur
transition costs during the start-up phases of certain large West Coast
contracts.
For Conceptronic, the pre-tax income for the six months ended June 30, 1998 was
$29,000, a $367,000 increase in income from the same period in 1997 due
primarily to an increase of net sales of $1,048,000. For WMC, pretax income for
the six months ended June 30, 1998 was $1,518,000, compared to $2,102,000 for
the comparable period in 1997. WMC's pretax net income for the six months ended
June 30, 1998 was significantly effected by goodwill amortization of $1,305,000
and non cash stock expense of $1,064,000 due primarily to stock options granted
below market value to rank and file employees of the Acquisitions. In contrast,
for the six months ended June 30, 1997, goodwill amortization was $393,000 and
non cash stock option expense was approximately $84,000.
Consolidated net sales for the six months ended June 30, 1998 were approximately
$59,402,000, compared to approximately $21,658,000 for the comparable period in
1997, an increase of nearly three-fold due primarily to the Acquisitions, which
accounted for $31,530,000 of the increase. Operations of WMC owned for at least
one year had a net sales increase of $5,602,000 or 30% for the six months ended
June 30, 1998. For Conceptronic, net sales for the six months ended June 30,
1998 were $9,777,000, a 12%, or $1,048,000 increase over the comparable period
in 1997. For all WMC operations, net sales for the six months ended June 30,
1998 were $49,625,000.
Consolidated gross profit margin, excluding depreciation, was 25% of sales for
the six months ended June 30, 1998 compared to 32% for the six months ended June
30, 1997. The decrease in margins is attributed to WMC which was in the start-up
phase for several large regional cable construction contracts. The impact of
adverse weather conditions, in comparison to mild 1997 weather conditions,
reduced WMC's gross profit margins. With respect to TCS which is commencing
significant, multiple-year projects in Orlando, Florida and Denver, Colorado,
TCS experienced reduced gross profit margins from historical percentages due to
the costs associated with starting the large projects. The reduced margins from
the communications segment were offset in part by improved margins at
Conceptronic, which increased from 32% in the six months ended June 30, 1997 to
33% in the comparable period in 1998, due primarily to a favorable mix of
margins on equipment sold.
Consolidated selling, general and administrative expenses for the six months
ended June 30, 1998 were $7,358,000, compared to $3,569,000 for the comparable
period in 1997. The increase was largely due to the Acquisitions, which had
$3,350,000 in selling, general and administrative expenses for the six months
ended June 30, 1998.
Depreciation expense increased to $2,795,000 for the six months ended June 30,
1998, compared to $448,000 for the six months ended June 30, 1997 due primarily
to WMC which made fixed asset acquisitions of $6,967,000 during calendar
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year 1997, and $7,486,000 during the six months ended June 30, 1998. The capital
assets are amortized over sixty months. Further, the Acquisitions had $1,760,000
in depreciation for the six months ended June 30, 1998. Goodwill amortization
increased to $1,305,000 from $393,000 in the comparable period one year ago due
to the Acquisitions.
Net interest expense for the six months ended June 30, 1998 was $1,272,000,
compared to $146,000 for the comparable period in 1997. The WMC net interest
expense increased to $1,197,000 for the six months ended June 30, 1998, compared
to $109,000 in the comparable period in 1997, due to the Acquisitions whose
purchases were partially financed through bank financing and due to equipment
financing lines for the above expanded capital assets acquisition program. (See
discussion of expanded bank credit facilities in Liquidity and Capital
Resources.)
Income tax expense increased to $1,132,000 for the six months ended June 30,
1998 from $372,000 in the comparable period one year ago. The six months ended
June 30, 1997 reflect the reversal of valuation allowances primarily recorded
against deferred tax assets.
LIQUIDITY AND CAPITAL RESOURCES
On January 2, 1998, the Company acquired Can-Am and Schenck which provide aerial
and underground construction and splicing services for both fiber optic and
coaxial cable to major telecommunications customers.
The purchase price was approximately $35 million and consisted of 1,809,000
shares of common stock of the Company and approximately $15 million in cash. The
Company has classified as goodwill approximately $27.4 million which represents
the cost in excess of the fair value of the net assets of WMC which was
accounted for as a purchase transaction. Goodwill is being amortized using the
straight-line method over 20 years. The Schenck purchase agreement contains
provision for additional payments by the Company to Schenck shareholders to be
satisfied by the issuance of the Company's common stock and cash, if certain
adjusted EBITDA thresholds are met for the year ending December 31, 1998.
One-half of the additional payment to Schenck shareholders will be satisfied by
the issuance of shares of common stock valued at $9.75 per share. The second
half of the payment will be in cash. Any additional payments earned under the
terms of the agreement will be recorded as an increase in goodwill.
Consolidated net cash used by operations for the six months ended June 30, 1998
was $2,816,000, compared to net cash provided by operations of $551,000 in the
six months ended June 30, 1997. The change in cash flow from operations is due
to lower net income from cable construction operations in 1998 and the greater
sales volume of construction activity which caused an increase in WMC
receivables. Net cash used for investing activities in the comparable period in
1998 was $21,122,000, compared to $10,860,000 in the second quarter of 1997. The
increase in investing activities was primarily due to the Acquisitions, which
required $13,799,000 in cash, as well as significant expenditures for capital
assets for new cable construction contracts which used $7,323,000 in cash. Net
cash flows provided by financing activities was $32,971,000 for the six months
ended June 30, 1998, compared to $1,546,000 for the same period in 1997 which
reflects advances from TCI for contract funding and bank financing used to
purchase the Acquisitions, as well as to expand the capital asset base for new
contracts in 1998.
The Acquisitions significantly impacted various balance sheet accounts during
1998. Accounts receivable increased $14,579,000, primarily due to the
consolidation of the Acquisitions' receivables, as well as due to new large
projects in their initial stages of billing. Accounts payable increased by
$2,305,000 due to the Acquisitions and costs of new contracts. Long-term debt
increased $17,847,000 due primarily to the use of $15,016,000 in bank
acquisition financing to acquire Can-Am and Schenck. Unbilled receivables for
materials which increased by $6,006,000, relate to cable system component
equipment acquired in connection with TCI turn key contracts in Dallas and
Denver.
On January 2, 1998, the Company expanded its credit facilities with NationsBank,
NA. In connection with its acquisition of Can-Am and Schenck, the Company
entered into an aggregate of $15,016,000 in new acquisition financing
facilities. The facilities have a five-year amortization rate for repayment of
the principal of the acquisition financing facility and include a balloon
payment of approximately $2 million of the facilities in March 31, 1999, based
on 50% of net cash flow - less debt service - and an additional payment of
nearly $1 million in December 31, 1999 with the remaining principal amount of
the facilities being repaid in equal monthly payments through December 31, 2002.
The acquisition financing bears an interest rate of LIBOR, plus 275 basis
points.
During the six months ended June 30, 1998, the Company expanded both its WMC
revolving credit facility from $4 million to $15 million, and equipment
financing facility from $3.5 million to $13 million under the same interest
rates and covenants as the original lines of credit.
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Further, the Company consummated a term loan to refinance existing equipment
financing facilities at Can-Am and Schenck. The proceeds of this line were
$2,400,000, are payable over 48 months, and bear an interest rate at LIBOR, plus
165 basis points.
To hedge the variable term loan interest rate risk for $10 million in notional
amount of the acquisitions financing facilities and the $2,400,000 in notional
amount of the refinancing term loan, the Company has entered into various
interest rate swaps pursuant to which it pays fixed interest rates and receives
variable interest rates on the same notional amount. During the six months ended
June 30, 1998, the Company's payment under the three new interest rate swaps
aggregated $21,000. The Company had no receipts pursuant to the interest rate
swaps.
The Company had $15,000,000 in revolving lines of credit with commercial banks
of which $8,060,000 was drawn down as of June 30, 1998 to fund increased
inventories, capital equipment purchases and working capital.
The Company continues to actively pursue acquisitions in the telecommunications
construction and other industries. Subject to due diligence and other
considerations, the Company's commercial credit facilities for equipment
financing, revolving lines of credit and acquisition financing facilities may be
expanded. In the event that one or more satisfactory acquisition candidates are
located, the Company may seek to expand its existing credit facilities or issue
additional equity or subordinated debt.
The Company believes it has sufficient cash flow from operations, cash on hand
and availability under its credit line to meet its liquidity needs.
The Company's cable construction operations are expected to have seasonally
weaker results in the first and fourth quarters of the year, and may produce
stronger results in the second and third quarters. This seasonality is primarily
due to the effect of winter weather on outside plant activities in the northern
areas served by WMC, as well as reduced daylight hours and customer budgetary
constraints. Certain customers tend to complete budgeted capital expenditures
before the end of the year, and postpone additional expenditures until the
subsequent fiscal period.
YEAR 2000 DATE CONVERSION
The Year 2000 problem is the result of computer programs being written with two
digits, instead of four digits to define the applicable year. The Company's
management initiated a company-wide program to prepare the Company's computer
systems for the Year 2000. A comprehensive review of the Company's computer
systems and software has been conducted to identify the systems and software
that could be affected by this issue. A plan to resolve this issue is currently
being developed and implemented. The Company presently believes that with
modifications to existing systems and software, and converting to new systems
and software as part of the Company's effort to streamline its operations, the
Year 2000 problem as it applies to the Company's own systems and software should
not pose a significant operational problem to the Company. The financial impact
to the Company of systems' upgrades to become Year 2000-compliant is not
believed to be significant. The Company plans to review the impact of the Year
2000 problem on its customers and suppliers. There can be no guarantee that the
systems of other companies on which the Company's systems rely will be converted
on a timely basis or that a failure to convert by another company, or a
conversion that is incompatible with the Company's systems, would not have a
material adverse effect on the Company.
FORWARD LOOKING STATEMENTS
Statements made in the quarterly report that are not historical or current facts
are "forward-looking statements" made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. Investors are cautioned
that actual results may differ substantially from such forward-looking
statements. Forward looking statements may be subject to certain risks and
uncertainties, including - but not limited to - continued acceptance of the
Company's products and services in the marketplace, uncertainties surrounding
new acquisitions, floating rate debt, risks of the construction industry,
including weather and an inability to plan and schedule activity levels, doing
business overseas and risks inherent in concentration of business in certain
customers. All of these risks are detailed from time to time in the Company's
filings with the Securities and Exchange Commission. Accordingly, the actual
results of the Company could differ materially from such forward-looking
statements.
14
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ARGUSS HOLDINGS, INC.
PART II
Other Information
Items 1,2, 3, 4 and 5: Not Applicable.
Item 6: Exhibits and Reports on form 8-K
10(y) Sixth Amendment to Financing and Security Agreement, dated June 26, 1998,
by and among Arguss Holdings, Inc., White Mountain Cable Construction Corp.,
Conceptronic, Inc. and NationsBank, NA.
(a) 11a Statement Regarding Computation of Per Share Earnings
27 Financial Data Schedule
(b) Reports on Form 8-K
None.
15
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Arguss Holdings, Inc.
August 5, 1998 By: /s/ Rainer H. Bosselmann
-----------------------------------------
Rainer H. Bosselmann
Chief Executive Officer
August 5, 1998 By: /s/ Arthur F. Trudel
-----------------------------------------
Arthur F. Trudel
Principal Financial Officer and Principal
Accounting Officer
16
SIXTH AMENDMENT TO FINANCING AND SECURITY AGREEMENT
THIS SIXTH AMENDMENT TO FINANCING AND SECURITY AGREEMENT (this
"Agreement") is made as of the 26th day of June, 1998 by and among ARGUSS
HOLDINGS, INC., a Delaware corporation ("Arguss"), WHITE MOUNTAIN CABLE
CONSTRUCTION CORP., a Delaware corporation ("White Mountain"), CONCEPTRONIC,
INC., a Delaware corporation ("Conceptronic"; together with Arguss and White
Mountain, the "Borrowers" and each a "Borrower") and NATIONSBANK, N.A., a
national banking association, its successors and assigns (the "Lender").
RECITALS
A. _______ The Lender has made certain loans available to the
Borrowers, which Loans are governed by that certain Financing and Security
Agreement by and among the Borrowers and the Lender dated September 11, 1997,
which Financing and Security Agreement has been amended by (i) that certain
First Amendment to Financing and Security Agreement dated October 6, 1997, by
and among the Borrowers and the Lender, (ii) by that certain Second Amendment to
Financing and Security Agreement dated as of January 2, 1998 by and among the
Borrowers and the Lender, (iii) by that certain Third Amendment to Financing and
Security Agreement dated as of May __, 1998 by and among the Borrowers and the
Lender, (iv) by that certain Fourth Amendment to Financing and Security
Agreement dated as of May __, 1998 by and among the Borrowers and the Lender and
(v) by that certain Fifth Amendment to Financing and Security Agreement dated as
of May 31, 1998
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by and among the Borrower and the Lender (the Financing and Security Agreement,
as amended from time to time is hereinafter called, the "Financing Agreement").
B. _______ All capitalized terms used herein and not otherwise defined
shall have the meanings given to such terms in the Financing Agreement.
C. _______ The Borrowers have requested that the Lender (i) increase
the maximum principal amount of the Facility 3 Loan, (ii) extend the maturity of
the Facility 4, and (iii) make a line of credit for term loans ("Facility 8
Loan") to the White Mountain Borrowers to be asked to finance capital
expenditures in the maximum principal amount of Seven Million Dollars
($7,000,000) and the Lender has agreed, on the condition, among others, that
this Agreement be executed and delivered by the Borrowers.
NOW, THEREFORE, in consideration of the premises, the mutual agreements
herein contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrowers and the Lender
hereby agree as follows:
1. _______ RECITALS. The parties hereto acknowledge and agree that the
above Recitals are true and correct in all respect and that the same are
incorporated herein and made a part hereof by reference.
2. _______ DEFINED TERMS. From and after the effective date hereof, the
definitions of "Eligible Receivable", "Eligible Receivables", "Facility 4 Loan
Borrowing Base", "Loan", "Loans", "Note" and "Notes" set forth in Section 1.01
of the Financing Agreement are hereby amended and restated in their entirety as
follows:
"Eligible Receivable" means an Eligible Conceptronic
Receivable or Eligible White Mountain Receivable, as the case may be,
and "Eligible Receivables" mean collectively, the Eligible Conceptronic
Receivables and the Eligible White Mountain Receivables.
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<PAGE>
"Facility 4 Loan Borrowing Base" means the sum of (a) eighty
percent (80%) of the book value of Eligible Conceptronic Receivables
(the "Conceptronic Receivable Borrowing Base") and (b) thirty five
percent (35%) of the book value of Eligible Inventory, which shall not
exceed at any time the Conceptronic Receivable Borrowing Base.
"Loan" means a Facility 1 Loan, a Facility 2 Loan, any
Facility 2 Term Loan, a Facility 3 Loan, a Facility 4 Loan, a Facility
5 Loan, a Facility 6 Loan, a Facility 7 Loan, a Facility 8 Loan, or any
Facility 8 Term Loan, as the case may be, and "Loans" mean the Facility
1 Loan, the Facility 2 Loan, each Facility 2 Term Loan, the Facility 3
Loan, the Facility 4 Loan, the Facility 5 Loan, the Facility 6 Loan,
the Facility 7 Loan, the Facility 8 Loan and any Facility 8 Term Loan.
"Note" means the Facility 1 Note, the Facility 2 Note, each
Facility 2 Term Note, the Facility 3 Note, the Facility 4 Note, the
Facility 5 Note, the Facility 6 Note, the Facility 7 Note, the Facility
8 Note or each Facility 8 Term Note, as the case may be, and "Notes"
mean collectively the Facility 1 Note, the Facility 2 Note, each
Facility 2 Term Note, the Facility 3 Note, the Facility 4 Note, the
Facility 5 Note, the Facility 6 Note, the Facility 7 Note, the Facility
8 Note, each Facility 8 Term Note, and any other promissory note which
may from time to time evidence the Obligations.
From and after the effective date hereof, the following definitions are added to
the Financing Agreement:
"Eligible Conceptronic Receivable" and "Eligible Conceptronic
Receivables" mean, at any time of determination thereof, each of
Conceptronic's Accounts which conform and continue to conform to the
following criteria to the satisfaction of the Lender (the "Conceptronic
Eligibility Standards"): (a) the Account arose from a bona fide
outright sale or lease of goods by Conceptronic, or from services
performed by Conceptronic and (i) such goods have been delivered to the
appropriate Account Debtors or their respective designees, Conceptronic
has in its possession shipping and delivery receipts evidencing such
shipment and delivery, no return, rejection or repossession has
occurred, and such goods have been finally accepted by the Account
Debtor, or (ii) such services have been satisfactorily completed and
the billings are permissible under the specific Account; (b) the
Account is based upon an enforceable order or contract, written or
oral, for goods delivered or for services performed, and the same were
shipped, held, or performed in accordance with such order or contract;
(c) the title of Conceptronic to the Account and, except as to the
Account Debtor and any creditor which finances the Account Debtor's
purchase of such goods, to any goods is absolute and is not subject to
any prior assignment, claim, Lien, or security interest, except
Permitted Liens and Liens created by the Account Debtors in connection
with their interests in the goods, and Conceptronic otherwise has the
full and unqualified right and power to assign and grant a security
interest in it to the Lender as security and collateral for the payment
of the Obligations; (d) the amount shown on the books of Conceptronic
and on
3
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any invoice, certificate, schedule or statement delivered to the Lender
is owing to Conceptronic and no partial payment has been received
unless reflected with that delivery; (e) the Account is not subject to
any claim of reduction, counterclaim, set off, recoupment, or other
defense in law or equity, or any claim for credits, allowances, or
adjustments by the Account Debtor because of returned, inferior, or
damaged goods or unsatisfactory services, or for any other reason; (f)
the Account Debtor has not returned or refused to retain, or otherwise
notified Conceptronic of any dispute concerning, or claimed
nonconformity of, any of the goods or services from the sale of which
the Account arose; (g) the Account is not outstanding more than ninety
(90) days from the date of the invoice therefor; (h) the Account is not
owing by any Account Debtor for which the Lender has deemed fifty
percent (50%) or more of such Account Debtor's other Accounts (or any
portion thereof) due to Conceptronic to be non-Eligible Receivables;
(i) the Account does not arise out of a contract with, or order from,
an Account Debtor that, by its terms, forbids or makes void or
unenforceable the assignment by Conceptronic to the Lender of the
Account arising with respect thereto; (j) the Account Debtor is not a
Subsidiary or other Affiliate of Conceptronic; (k) the Account Debtor
is not a Governmental Authority or agency, domestic or foreign; (l) the
Account, is from a foreign Account Debtor from either a division of a
multinational corporation approved by the Lender or from an overseas
manufacturers representative; (m) Conceptronic is not indebted in any
manner to the Account Debtor, with the exception of customary credits,
adjustments and/or discounts given to an Account Debtor by Conceptronic
in the ordinary course of its business, (n) no part of the Account
represents an advance billing payment or a retainage which is payable
beyond ninety (90) days, and (o) the Lender in the exercise of its sole
and absolute discretion has not deemed the Account ineligible because
of uncertainty as to the creditworthiness of the Account Debtor or
because the Lender otherwise considers the collateral value thereof to
the Lender to be impaired or its ability to realize such value to be
insecure. In the event of any dispute, under the foregoing criteria, as
to whether an Account is, or has ceased to be, an Eligible Conceptronic
Receivable, the decision of the Lender in the exercise of its sole and
absolute discretion shall control.
"Eligible White Mountain Receivable" and "Eligible White
Mountain Receivables" mean, at any time of determination thereof, each
of the White Mountain Borrowers' Accounts which conform and continue to
conform to the following criteria to the satisfaction of the Lender
(the "White Mountain Eligibility Standards"): (a) the Account arose
from a bona fide outright sale or lease of goods by either of the White
Mountain Borrowers, or from services performed by either of the White
Mountain Borrowers, and (i) such goods have been delivered to the
appropriate Account Debtors or their respective designees, the White
Mountain Borrowers have in their possession shipping and delivery
receipts evidencing such shipment and delivery, no return, rejection or
repossession has occurred, and such goods have been finally accepted by
the Account Debtor, or (ii) such services have been satisfactorily
completed and the billings are permissible under the specific Account;
(b) the Account is based upon an enforceable order or contract, written
or oral, for goods delivered or for services performed, and the same
were shipped, held, or performed in accordance with such order or
contract; (c) the title of the White Mountain Borrowers to the Account
and,
4
<PAGE>
except as to the Account Debtor and any creditor which finances the
Account Debtor's purchase of such goods, to any goods is absolute and
is not subject to any prior assignment, claim, Lien, or security
interest, except Permitted Liens and Liens created by the Account
Debtors in connection with their interests in the goods, and the White
Mountain Borrowers otherwise have the full and unqualified right and
power to assign and grant a security interest in it to the Lender as
security and collateral for the payment of the Obligations; (d) the
amount shown on the books of the White Mountain Borrowers and on any
invoice, certifi cate, schedule or statement delivered to the Lender is
owing to the White Mountain Borrowers and no partial payment has been
received unless reflected with that delivery; (e) the Account is not
subject to any claim of reduction, counterclaim, set off, recoupment,
or other defense in law or equity, or any claim for credits,
allowances, or adjustments by the Account Debtor because of returned,
inferior, or damaged goods or unsatisfactory services, or for any other
reason; (f) the Account Debtor has not returned or refused to retain,
or otherwise notified the White Mountain Borrowers of any dispute
concerning, or claimed nonconformity of, any of the goods or services
from the sale of which the Account arose; (g) the Account is not
outstanding more than ninety (90) days from the date of the invoice
therefor; (h) the Account is not owing by any Account Debtor for which
the Lender has deemed fifty percent (50%) or more of such Account
Debtor's other Accounts (or any portion thereof) due to the White
Mountain Borrowers to be non-Eligible Receivables; (i) the Account does
not arise out of a contract with, or order from, an Account Debtor
that, by its terms, forbids or makes void or unenforceable the
assignment by the White Mountain Borrowers to the Lender of the Account
arising with respect thereto; (j) the Account Debtor is not a
Subsidiary or other Affiliate of the White Mountain Borrowers; (k) the
Account Debtor is not a Governmental Authority or agency, domestic or
foreign; (l) the Account, is from a foreign Account Debtor from either
a division of a multinational corporation approved by the Lender or
from an overseas manufacturers representative; (m) the White Mountain
Borrowers are not indebted in any manner to the Account Debtor, with
the exception of customary credits, adjustments and/or discounts given
to an Account Debtor by the White Mountain Borrowers in the ordinary
course of their business, (n) no part of the Account represents an
advance billing payment or a retainage which is payable beyond ninety
(90) days, and (o) the Lender in the exercise of its sole and absolute
discretion has not deemed the Account ineligible because of uncertainty
as to the creditworthiness of the Account Debtor or because the Lender
otherwise considers the collateral value thereof to the Lender to be
impaired or its ability to realize such value to be insecure. In the
event of any dispute, under the foregoing criteria, as to whether an
Account is, or has ceased to be, an Eligible White Mountain Receivable,
the decision of the Lender in the exercise of its sole and absolute
discretion shall control.
"Facility 3 Borrowing Base" means eighty percent (80%) of the
book value of Eligible White Mountain Receivables.
Except as modified hereby Section 1.01 shall remain unchanged.
5
<PAGE>
3. _______ FACILITY 3 LOAN. From and after the effective date hereof,
Section 2.03 of the Financing Agreement is amended and restated in its entirety
as follows:
SECTION 2.03 THE FACILITY 3 LOAN. (a) The Lender agrees to
lend to the White Mountain Borrowers on a revolving basis from time to
time the maximum principal amount (the "Facility 3 Loan") of Fifteen
Million and No/100 Dollars ($15,000,000.00) or the Facility 3 Borrowing
Base (the "Facility 3 Loan Committed Amount").
(b) ______ If at any time the outstanding principal balance of
the Facility 3 Loan exceeds the limitations provided in subsection (a)
above, the White Mountain Borrowers jointly and severally promise to
pay to the order of the Lender, on demand, the amount of the excess.
(c) ______ The joint and several obligation of the White
Mountain Borrowers to repay the advances under the Facility 3 Loan
shall be evidenced by the White Mountain Borrowers' Facility 3 Note
dated September 11, 1997, as increased, amended and restated in its
entirety by that certain Amended and Restated Revolving Promissory Note
dated October 6, 1997 from the White Mountain Borrowers in favor of the
Lender, as further increased, amended and restated in its entirety by
that certain Second Amended and Restated Revolving Promissory Note
dated January 2, 1998 from the White Mountain Borrowers in favor of the
Lender, as further amended and restated in its entirety by that certain
Third Amended and Restated Revolving Promissory Note dated May___, 1998
from the White Mountain Borrowers in favor of the Lender in the maximum
principal amount of Eight Million and No/100 Dollars ($8,000,000.00),
and as further increased, amended and restated in its entirety by that
certain Fourth Amendment and Restated Revolving Promissory Note dated
as of June 26, 1998 from the White Mountain Borrowers in favor of the
Lender in the maximum principal amount of Fifteen Million Dollars
($15,000,000) (the "Facility 3 Note") payable to the Lender in the form
attached hereto as EXHIBIT A-4. The Facility 3 Note shall bear interest
and shall be repaid by the White Mountain Borrowers in the manner and
at the times set forth in the Facility 3 Note.
(d) ______ The White Mountain Borrowers may prepay the
principal sum outstanding on the Facility 3 Loan only in accordance
with the terms of the Facility 3 Note. Sums borrowed and repaid may be
readvanced under the terms and conditions of this Agreement.
(e) ______ The proceeds of the Facility 3 Loan shall be used
by the White Mountain Borrowers for the purposes set forth in Recital A
above, and, unless prior written consent of the Lender is obtained, for
no other purpose.
(f) ______ The White Mountain Borrowers shall furnish to the
Lender such schedules, certificates, lists, records, reports,
information and documents as required by the Lender from time to time
so that the Lender may, in its discretion, determine the Facility 3
Loan Borrowing Base.
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4. _______ FACILITY 4 LOAN. From and after the effective date hereof,
Section 2.04(c) of the Financing Agreement is amended and restated in its
entirety as follows:
(c) The joint and several obligation of the Conceptronic
Borrowers to repay the advances under the Facility 4 Loan shall be
evidenced by the Conceptronic Borrowers' Facility 4 Revolving
Promissory Note dated September 11, 1997, as amended and restated in
its entirety by that certain Amended and Restated Revolving Promissory
Note dated as of May 31, 1998 from the Conceptronic Borrowers in favor
of the Lender, and as further amended and restated in its entirety by
that certain Second Amended and Restated Revolving Promissory Note
dated as of June 26, 1998 from the Conceptronic Borrowers in favor of
the Lender (the "Facility 4 Note") in the form attached hereto as
EXHIBIT A-5. The Facility 4 Note shall bear interest and shall be
repaid by the Conceptronic Borrowers in the manner and at the times set
forth in the Facility 4 Note.
5. _______ FACILITY 8 LOAN. From and after the effective date hereof,
the following Section is added immediately after Section 2.04.3 of the Financing
Agreement, as Section 2.04.4 of the Financing Agreement:
SECTION 2.04.4 ____________ THE FACILITY 8 LOAN. (a) The
Lender agrees to lend to the White Mountain Borrowers on a revolving
basis from time to time the maximum principal amount of Seven Million
and No/100 Dollars ($7,000,000.00) (the "Facility 8 Loan"). The joint
and several obligation of the White Mountain Borrowers to repay the
advances under the Facility 8 Loan shall be evidenced by the White
Mountain Borrowers' Facility 8 Note of even date herewith (the
"Facility 8 Note") payable to the Lender in the form attached hereto as
EXHIBIT A-9. Advances under the Facility 8 Loan shall be converted to
one or more term loans (the "Facility 8 Term Loans" and each a
"Facility 8 Term Loan") at the times and in such amounts as required
pursuant to the terms of this Agreement. At the time of each conversion
of principal outstanding under the Facility 8 Loan to a Facility 8 Term
Loan (each such date being called a "Conversion Date"), the White
Mountain Borrowers shall execute and deliver to the Lender a Facility 8
Term Note (each a "Facility 8 Term Note" and collectively, the
"Facility 8 Term Notes") payable to the Lender in the form attached
hereto as EXHIBIT A-10. The White Mountain Borrowers agree that the
outstanding principal amount under the Facility 8 Note shall be
converted into one (1) or more fully amortizing term loans on the
earlier of (i) the date on which the outstanding balance thereof
exceeds Two Million Dollars ($2,000,000), or (ii) the date which is six
(6) months from the date of the execution and delivery of the Facility
8 Note or the immediately preceding Conversion Date. The Facility 8
Note and each Facility 8 Term Note shall bear interest and shall be
repaid by the White Mountain Borrowers in the manner and at the times
set forth in the Facility 8 Note and each Facility 8 Term Note, as the
case may be.
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(b) ______ The White Mountain Borrowers may prepay the
principal sum outstanding on the Facility 8 Loan only in accordance
with the terms of the Facility 8 Note and each Facility 8 Term Note.
Sums borrowed and repaid may be readvanced under the Facility 8 Note,
subject to the terms and conditions of this Agreement.
(c) ______ The proceeds of the Facility 8 Loan shall be used
by the White Mountain Borrowers for the purposes of purchasing
equipment, and, unless prior written consent of the Lender is obtained,
for no other purpose.
6. _______ COMPLIANCE WITH ELIGIBILITY STANDARDS. From and after the
effective date hereof, Section 5.02 of the Financing Agreement is amended and
restated in its entirety as follows:
SECTION 5.02 COMPLIANCE WITH ELIGIBILITY STANDARDS. Unless the
Lender is advised by the Borrowers in writing to the contrary, each
Account and each lease described in any schedule, certificate, record
and data furnished to the Lender for purposes of calculating the
Facility 3 Borrowing Base and/or the Facility 4 Borrowing Base will at
all times meet and comply with the eligibility requirements set forth
in this Agreement.
7. FINANCIAL REPORTING. From and after the effective date hereof, the
following provision is added to Section 7.01 of the Financing Agreement,
immediately after subsection (g) as Section 7.01(h):
(h) White Mountain Borrowing Base Reports. As soon as
available but in no event more than forty-five (45) days after the end
of each calendar month, the White Mountain Borrowers shall deliver to
the Lender a fully completed certificate signed by a principal
financial officer of each of the White Mountain Borrowers (each a
"White Mountain Borrowing Base Certificate" and collectively, the
"White Mountain Borrowing Base Certificates") as of such date in the
form of EXHIBIT F attached hereto. Each White Mountain Borrowing Base
Certificate shall be effective only as accepted by the Lender (and with
such revisions, if any, as the Lender may require as a condition to
such acceptance), such acceptance to be presumed unless the Lender
otherwise notifies the White Mountain Borrowers within five (5) Banking
Days after receipt of such White Mountain Borrowing Base Certificate.
8. _______ FUNDED SENIOR DEBT TO EBIDTA. From and after the effective
date hereof, Section 7.02(b) of the Financing Agreement is amended and restated
in its entirety as follows:
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(b) FUNDED SENIOR DEBT TO EBIDTA. Maintain, tested as of the
last day of each of Arguss' fiscal months for the twelve (12) month
period ending on that date, a ratio of Funded Senior Debt to EBIDTA of
not greater than 2.5 to 1.0.
9. _______ FEES. In consideration of the Lender's agreement to make the
Facility 8 Loan and increase the Facility 3 Loan pursuant to this Agreement, the
Borrowers shall pay the Lender on the date hereof the following fees (the
"Additional Fees"):
(a) A fee in the amount of one half of one percent (1/2%) of
the Facility 8 Loan; and
(b) ______ A fee in the amount of one quarter of one percent
(1/4%) of the increase in amount of the Facility 3 Loan. The Additional Fees are
considered earned when paid and are not refundable.
10. ______ REPLACEMENT NOTES. EXHIBIT A-4 and EXHIBIT A-5 to the
Financing Agreement is being replaced in its entirety with EXHIBIT A-4 and
EXHIBIT A-5 attached hereto. The White Mountain Borrowers shall execute and
deliver to the Lender on the date hereof their Fourth Amended and Restated
Revolving Promissory Note in the form of EXHIBIT A-4 attached hereto and
incorporated herein by reference (the "Replacement Facility 3 Note") in
substitution for and not satisfaction of, the issued and outstanding Facility 3
Note. The Replacement Facility 3 Note shall be the "Facility 3 Note" for all
purposes of the Financing Documents. The Note being substituted pursuant to this
Agreement shall be marked "Replaced" and returned to the White Mountain
Borrowers promptly after the execution and delivery of the Replacement Facility
3 Note to the Lender. The Conceptronic Borrowers shall execute and deliver to
the Lender on the date hereof their Second Amended and Restated Revolving
Promissory Note in the form of EXHIBIT A-5 attached hereto and incorporated
herein by reference (the "Replacement Facility 4 Note") in
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substitution for and not satisfaction of, the issued and outstanding Facility 4
Note. The Replacement Facility 4 Note shall be the "Facility 4 Note" for all
purposes of the Financing Documents. The Note being substituted pursuant to this
Agreement shall be marked "Replaced" and returned to the Conceptronic Borrowers
promptly after the execution and delivery of the Replacement Facility 4 Note to
the Lender.
11. YEAR 2000 COMPLIANCE. The Borrowers each represent and warrant to
the Lender that:
(a) Each Borrower has (i) begun analyzing the operations of
such Borrower and its subsidiaries and affiliates that could be adversely
affected by failure to become Year 2000 compliant (that is, that computer
applications, imbedded microchips and other systems will be able to perform
date-sensitive functions prior to and after December 31, 1999) and; (ii)
developed a plan for becoming Year 2000 compliant in a timely manner, the
implementation of which is on schedule in all material respects. Each Borrower
reasonably believes that it will become Year 2000 compliant for its operations
and those of its subsidiaries and affiliates on a timely basis except to the
extent that a failure to do so could not reasonably be expected to have a
material adverse effect upon the financial condition of such Borrower.
(b) ______ Each Borrower reasonably believes any suppliers and
vendors that are material to the operations of any Borrower or its subsidiaries
and affiliates will be Year 2000 compliant for their own computer applications
except to the extent that a failure to do so could not reasonably be expected to
have a material adverse effect upon the financial condition of any Borrower.
(c) ______ Each Borrower will promptly notify the Lender in
the event any Borrower determines that any computer application which is
material to the operations of any Borrower, its
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subsidiaries or any of its material vendors or suppliers will not be fully Year
2000 compliant on a timely basis, except to the extent that such failure could
not reasonably be expected to have a material adverse effect upon the financial
condition of any Borrower.
12. ______ CONDITIONS PRECEDENT. This Agreement shall become effective
on the date the Lender receives the following document, which shall be
satisfactory in form and substance to the Lender:
(a) The Replacement Facility 3 Note issued and delivered by
the White Mountain Borrowers;
(b) ______ The Replacement Facility 4 Note issued and
delivered by the Conceptronic Borrowers;
(c) ______ The Facility 8 Note issued and delivered by the
White Mountain Borrowers; (d) Such other information, instruments, opinions,
documents, certificates and reports as the Lender may deem necessary.
13. ______ EVENTS OF DEFAULT. In addition to the Events of Default
enumerated in the Notes, the Financing Agreement and/or any of the other
Financing Documents, the occurrence of any of the following events shall
constitute an event of default and shall entitle the Lender to exercise all
rights and remedies provided in the Notes and the Financing Agreement, as well
as all other rights and remedies provided to the Lender under the terms of any
of the other Financing Documents as a result of the occurrence of the same:
(a) Any Borrower shall fail to comply with the terms of any
covenant or agreement contained herein; or
(b) ______ Any information contained in any financial
statement, schedule, report or any other document heretofore or hereafter
delivered by any Borrower or any other party or parties to
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the Lender in connection with the Loans proves at any time to be not in all
respects true and accurate, or any of the Borrowers, or any such other party or
parties shall have failed to state any material fact or any fact necessary to
make such information not misleading, or any representation or warranty
contained herein, in any of the Financing Documents, or in any other document,
certificate or opinion heretofore or hereafter delivered to the Lender in
connection with the Loans, proves at any time to be incorrect or misleading in
any material respect.
14. ______ COUNTERPARTS. This Agreement may be executed in any number
of duplicate originals or counterparts, each of which duplicate original or
counterpart shall be deemed to be an original and all taken together shall
constitute one and the same instrument.
15. ______ FINANCING DOCUMENTS; GOVERNING LAW; ETC. This Agreement is
one of the Financing Documents defined in the Financing Agreement and shall be
governed and construed in accordance with the laws of the State of Maryland. The
headings and captions in this Agreement are for the convenience of the parties
only and are not a part of this Agreement.
16. ______ ACKNOWLEDGMENTS. The Borrowers hereby confirm to the Lender
the enforceability and validity of each of the Financing Documents. In addition,
the Borrowers hereby agree to the execution and delivery of this Agreement and
the terms and provisions, covenants or agreements contained in this Agreement
shall not in any manner release, impair, lessen, modify, waive or otherwise
limit the liability and obligations of the Borrowers under the terms of any of
the Financing Documents, except as otherwise specifically set forth in this
Agreement. The Borrowers issue, remake, ratify and confirm the representations,
warranties and covenants contained in the Financing Documents. Nothing in this
Agreement shall be deemed to waive any defaults existing under any of the
Financing Documents as of the date hereof.
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17. ______ MODIFICATIONS. This Agreement may not be supplemented,
changed, waived, discharged, terminated, modified or amended, except by written
instrument executed by the parties.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered under seal by the duly authorized representatives as of
the date and year first written above.
WITNESS/ATTEST: ARGUSS HOLDINGS, INC.
__________________________ By:_____________________________(SEAL)
Arthur F. Trudel
Chief Financial Officer
WITNESS/ATTEST: WHITE MOUNTAIN CABLE
CONSTRUCTION CORP.
__________________________ By:_____________________________(SEAL)
Arthur F. Trudel
Vice President
WITNESS/ATTEST: CONCEPTRONIC, INC.
__________________________ By:_____________________________(SEAL)
Arthur F. Trudel
Vice President
WITNESS: NATIONSBANK, N.A.
__________________________ By:_____________________________(SEAL)
Maria Manos
Vice President
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EXHIBIT A-5
SECOND AMENDED AND RESTATED
REVOLVING PROMISSORY NOTE
$1,500,000.00 Rockville, Maryland
June 26, 1998
FOR VALUE RECEIVED, ARGUSS HOLDINGS, INC., a corporation organized
under the laws of the State of Delaware and CONCEPTRONIC, INC., a corporation
organized under the laws of the State of Delaware (collectively, the "Borrowers"
and each a "Borrower"), jointly and severally, promise to pay to the order of
NATIONSBANK, N.A., a national banking association, its successors and assigns
(the "Lender"), the principal sum of ONE MILLION FIVE HUNDRED THOUSAND AND
NO/100 DOLLARS ($1,500,000.00) (the "Principal Sum"), or so much thereof as has
been or may be advanced or readvanced to or for the account of the Borrowers
pursuant to the terms and conditions of the Financing Agreement (as hereinafter
defined), together with interest thereon at the rate or rates hereinafter
provided, in accordance with the following:
1. _______ INTEREST. Commencing as of the date hereof and continuing
until repayment in full of all sums due hereunder, the unpaid Principal Sum
shall bear interest at the fluctuating prime rate of interest established and
declared by the Lender from time to time (the "Prime Rate"). The Prime Rate does
not necessarily represent the lowest rate of interest charged by the Lender to
borrowers. The rate of interest charged under this Note shall change immediately
and contemporaneously with any change in the Prime Rate. All interest payable
under the terms of this Note shall be calculated on the basis of a 360-day year
and the actual number of days elapsed.
2. _______ PAYMENTS AND MATURITY. The unpaid Principal Sum, together
with interest thereon at the rate or rates provided above, shall be due and
payable as follows:
(a) Interest only on the unpaid Principal Sum shall be due and
payable monthly,
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commencing June 30, 1998, and on the last day of each month thereafter to
maturity; and (b) Unless sooner paid, the unpaid Principal Sum, together with
all accrued and unpaid interest thereon shall be due and payable in full on May
31, 1999.
The fact that the balance hereunder may be reduced to zero from time to
time pursuant to the Financing Agreement will not affect the continuing validity
of this Note or the Financing Agreement, and the balance may be increased to the
Principal Sum after any such reduction to zero.
3. _______ DEFAULT INTEREST. Upon the occurrence and during the
continuance of an Event of Default (as hereinafter defined), the unpaid
Principal Sum shall bear interest thereafter at a rate two percent (2%) per
annum in excess of the then current rate or rates of interest hereunder until
such Event of Default is cured.
4. _______ LATE CHARGES. If the Borrowers shall fail to make any
payment under the terms of this Note within fifteen (15) days after the date
such payment is due, the Borrowers shall pay to the Lender on demand a late
charge equal to five percent (5%) of such payment.
5. _______ APPLICATION AND PLACE OF PAYMENTS. All payments, made on
account of this Note shall be applied first to the payment of any late charge
then due hereunder, second to the payment of accrued and unpaid interest then
due hereunder, and the remainder, if any, shall be applied to the unpaid
Principal Sum. All payments on account of this Note shall be paid in lawful
money of the United States of America in immediately available funds during
regular business hours of the Lender at its principal office in Bethesda,
Maryland or at such other times and places as the Lender may at any time and
from time to time designate in writing to the Borrowers. The Lender is
authorized to deduct any payment (including payments of principal and/or
interest as above provided) from the Borrowers' Account Number ______________ on
or after the date the payment is due; provided,
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however, that such authorization shall not be deemed to relieve the Borrowers
from their joint and several obligation to make such payment when it is due.
6. _______ FINANCING AGREEMENT AND OTHER FINANCING DOCUMENTS. This Note
is the "Facility 4 Note" described in a Financing and Security Agreement dated
as of September 11, 1997 by and among the Borrowers, Mountain Cable Construction
Corp. ("Mountain Cable") and the Lender (as amended, modified, restated,
substituted, extended and renewed at any time and from time to time, the
"Financing Agreement"). ____ This Note amends and restates in its entirety that
certain Amended and Restated Revolving Promissory Note effective as of May 31,
1998 from the Borrowers in favor of the Lender, in the maximum principal amount
of One Million Five Hundred Thousand and No/100 Dollars ($1,500,000.00) (the
"Restated Note"). It is expressly agreed that the indebtedness evidenced by the
Restated Note has not been extinguished or discharged by this Note. The
indebtedness evidenced by this Note is included within the meaning of the term
"Obligations" as defined in the Financing Agreement. The term "Financing
Documents" as used in this Note shall mean collectively this Note, the Facility
1 Note, the Facility 2 Note, the Facility 2 Term Notes, the Facility 3 Note, the
Facility 5 Note, the Facility 6 Note, the Facility 7, the Facility 8 Note, the
Facility 8 Term Notes, the Financing Agreement and any other instrument,
agreement, or document previously, simultaneously, or hereafter executed and
delivered by the Borrowers, Mountain Cable and/or any other person, singularly
or jointly with any other person, evidencing, securing, guaranteeing, or in
connection with the Principal Sum, this Note, the Facility 1 Note, the Facility
2 Note, the Facility 2 Term Notes, the Facility 3 Note, the Facility 5 Note, the
Facility 6 Note, the Facility 7 Note, the Facility 8 Note, the Facility 8 Term
Notes, and/or the Financing Agreement. All capitalized terms used herein and not
otherwise defined shall have the meanings given to such terms
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in the Financing Agreement.
7. SECURITY. This Note is secured as provided in the Financing
Agreement.
8. EVENTS OF DEFAULT. The occurrence of any one or more of the
following events shall constitute an event of default (individually, an "Event
of Default" and collectively, the "Events of Default") under the terms of this
Note:
(a) ______ The failure of the Borrowers to pay to the Lender
when due any after all applicable grace periods, if any and all amounts payable
by the Borrowers to the Lender under the terms of this Note; or
(b) ______ The occurrence of an event of default (as defined
therein) under the terms and conditions of any of the other Financing Documents.
9. _______ REMEDIES. Upon the occurrence of an Event of Default, at the
option of the Lender, all amounts payable by the Borrowers to the Lender under
the terms of this Note shall immediately become due and payable by the Borrowers
to the Lender without notice to the Borrowers or any other person, and the
Lender shall have all of the rights, powers, and remedies available under the
terms of this Note, any of the other Financing Documents and all applicable
laws. The Borrowers and all endorsers, guarantors, and other parties who may now
or in the future be primarily or secondarily liable for the payment of the
indebtedness evidenced by this Note hereby severally waive presentment, protest
and demand, notice of protest, notice of demand and of dishonor and non-payment
of this Note and expressly agree that this Note or any payment hereunder may be
extended from time to time without in any way affecting the liability of the
Borrowers, guarantors and endorsers.
Until such time as the Lender is not committed to extend further credit
to the Borrowers and
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all Obligations of the Borrowers to the Lender have been indefeasibly paid in
full in cash, and subject to and not in limitation of the provisions set forth
in the next following paragraph below, no Borrower shall have any right of
subrogation (whether contractual, arising under the Bankruptcy Code or
otherwise), reimbursement or contribution from any Borrower or any guarantor,
nor any right of recourse to its security for any of the debts and obligations
of any Borrower which are the subject of this Note. Except as otherwise
expressly permitted by the Financing Agreement, any and all present and future
debts and obligations of any Borrower to any other Borrower are hereby
subordinated to the full payment and performance of all present and future debts
and obligations to the Lender under this Note and the Financing Agreement and
the Financing Documents, provided, however, notwithstanding anything set forth
in this Note to the contrary, prior to the occurrence of a payment Default, the
Borrowers shall be permitted to make payments on account of any of such present
and future debts and obligations from time to time in accordance with the terms
thereof.
Each Borrower further agrees that, if any payment made by any Borrower
or any other person is applied to this Note and is at any time annulled, set
aside, rescinded, invalidated, declared to be fraudulent or preferential or
otherwise required to be refunded or repaid, or the proceeds of any property
hereafter securing this Note is required to be returned by the Lender to any
Borrower, its estate, trustee, receiver or any other party, including, without
limitation, such Borrower, under any bankruptcy law, state or federal law,
common law or equitable cause, then, to the extent of such payment or repayment,
such Borrower's liability hereunder (and any lien, security interest or other
collateral securing such liability) shall be and remain in full force and
effect, as fully as if such payment had never been made, or, if prior thereto
any such lien, security interest or other collateral hereafter securing such
Borrower's liability hereunder shall have been released or terminated by
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virtue of such cancellation or surrender, this Note (and such lien, security
interest or other collateral) shall be reinstated in full force and effect, and
such prior cancellation or surrender shall not diminish, release, discharge,
impair or otherwise affect the obligations of such Borrower in respect of the
amount of such payment (or any lien, security interest or other collateral
securing such obligation).
The JOINT AND SEVERAL obligations of each Borrower under this Note
shall be absolute, irrevocable and unconditional and shall remain in full force
and effect until the outstanding principal of and interest on this Note and all
other Obligations or amounts due hereunder and under the Financing Agreement and
the Financing Documents shall have been indefeasibly paid in full in cash in
accordance with the terms thereof and this Note shall have been canceled.
10. ______ EXPENSES. The Borrowers, jointly and severally, promise to
pay to the Lender on demand by the Lender all costs and expenses incurred by the
Lender in connection with the collection and enforcement of this Note,
including, without limitation, reasonable attorneys' fees and expenses and all
court costs.
11. ______ NOTICES. Any notice, request, or demand to or upon the
Borrowers or the Lender shall be deemed to have been properly given or made when
delivered in accordance with Section 11.01 of the Financing Agreement.
12. ______ MISCELLANEOUS. Each right, power, and remedy of the Lender
as provided for in this Note or any of the other Financing Documents, or now or
hereafter existing under any applicable law or otherwise shall be cumulative and
concurrent and shall be in addition to every other right, power, or remedy
provided for in this Note or any of the other Financing Documents or now or
hereafter existing under any applicable law, and the exercise or beginning of
the exercise by the Lender of any one or more of such rights, powers, or
remedies shall not preclude the simultaneous or later exercise
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by the Lender of any or all such other rights, powers, or remedies. No failure
or delay by the Lender to insist upon the strict performance of any term,
condition, covenant, or agreement of this Note or any of the other Financing
Documents, or to exercise any right, power, or remedy consequent upon a breach
thereof, shall constitute a waiver of any such term, condition, covenant, or
agreement or of any such breach, or preclude the Lender from exercising any such
right, power, or remedy at a later time or times. By accepting payment after the
due date of any amount payable under the terms of this Note, the Lender shall
not be deemed to waive the right either to require prompt payment when due of
all other amounts payable under the terms of this Note or to declare an Event of
Default for the failure to effect such prompt payment of any such other amount.
No course of dealing or conduct shall be effective to amend, modify, waive,
release, or change any provisions of this Note.
13. ______ PARTIAL INVALIDITY. In the event any provision of this Note
(or any part of any provision) is held by a court of competent jurisdiction to
be invalid, illegal, or unenforceable in any respect, such invalidity,
illegality, or unenforceability shall not affect any other provision (or
remaining part of the affected provision) of this Note; but this Note shall be
construed as if such invalid, illegal, or unenforceable provision (or part
thereof) had not been contained in this Note, but only to the extent it is
invalid, illegal, or unenforceable.
14. ______ CAPTIONS. The captions herein set forth are for convenience
only and shall not be deemed to define, limit, or describe the scope or intent
of this Note.
15. ______ APPLICABLE LAW. Each of the Borrowers acknowledges and
agrees that this Note shall be governed by the laws of the State of Maryland
even though for the convenience and at the request of the Borrowers, this Note
may be executed elsewhere.
16. ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG
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THE PARTIES HERETO INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF THIS NOTE
OR ANY RELATED INSTRUMENTS, AGREEMENTS OR DOCUMENTS, INCLUDING ANY CLAIM BASED
ON OR ARISING FROM AN ALLEGED TORT, SHALL BE DETERMINED BY BINDING ARBITRATION
IN ACCORDANCE WITH THE FEDERAL ARBITRATION ACT (OR IF NOT APPLICABLE, THE
APPLICABLE STATE LAW), THE RULES OF PRACTICE AND PROCEDURE FOR ARBITRATION OF
COMMERCIAL DISPUTES OF ENDISPUTE, INC., D/B/A J.A.M.S./ENDISPUTE ("J.A.M.S.")
AND THE "SPECIAL RULES" SET FORTH BELOW. IN THE EVENT OF AN INCONSISTENCY, THE
SPECIAL RULES SHALL CONTROL. JUDGMENT UPON ANY ARBITRATION AWARD MAY BE ENTERED
IN ANY COURT HAVING JURISDICTION. ANY PARTY TO THIS INSTRUMENT, AGREEMENT OR
DOCUMENT MAY BRING ANY ACTION, INCLUDING A SUMMARY OR EXPEDITED PROCEEDING, TO
COMPEL ARBITRATION OF ANY CONTROVERSY OR CLAIM TO WHICH THIS INSTRUMENT,
AGREEMENT OR DOCUMENT RELATES IN ANY COURT HAVING JURISDICTION OVER SUCH ACTION.
(A) SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN
MONTGOMERY COUNTY, MARYLAND AND ADMINISTERED BY J.A.M.S. WHO WILL APPOINT AN
ARBITRATOR. IF J.A.M.S. IS UNABLE OR LEGALLY PRECLUDED FROM ADMINISTERING THE
ARBITRATION, THEN THE AMERICAN ARBITRATION ASSOCIATION WILL SERVE. ALL
ARBITRATION HEARINGS WILL BE COMMENCED WITHIN NINETY (90) DAYS OF THE DEMAND FOR
ARBITRATION; FURTHER, THE ARBITRATOR SHALL ONLY, UPON A SHOWING OF CAUSE, BE
PERMITTED TO EXTEND THE COMMENCING OF SUCH HEARING FOR AN ADDITIONAL SIXTY (60)
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DAYS.
(B) ______ RESERVATION OF RIGHTS. NOTHING IN THIS INSTRUMENT,
NOTE SHALL BE DEEMED TO: (I) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE
STATUTES OF LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS NOTE; OR (II)
BE A WAIVER BY THE LENDER OF THE PROTECTION AFFORDED TO IT BY 12 U.S.C. ss.91 OR
ANY SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III) LIMIT THE RIGHT OF THE BANK:
(A) TO EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED TO) SETOFF, OR (B)
TO FORECLOSE AGAINST ANY REAL OR PERSONAL PROPERTY COLLATERAL, OR (C) TO OBTAIN
FROM A COURT PROVI SIONAL OR ANCILLARY REMEDIES SUCH AS (BUT NOT LIMITED TO)
INJUNCTIVE RELIEF, WRIT OF POSSESSION OR THE APPOINTMENT OF A RECEIVER. THE
LENDER MAY EXERCISE SUCH SELF HELP RIGHTS, FORECLOSE UPON SUCH PROPERTY, OR
OBTAIN SUCH PROVISIONAL OR ANCILLARY REMEDIES BEFORE, DURING OR AFTER THE
PENDENCY OF ANY ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS NOTE. NEITHER
THE EXERCISE OF SELF HELP REMEDIES NOR THE INSTITUTION OR MAINTENANCE OF ANY
ACTION FOR FORECLOSURE OR FOR PROVISIONAL OR ANCILLARY REMEDIES SHALL CONSTITUTE
A WAIVER OF THE RIGHT OF ANY PARTY, INCLUDING THE CLAIMANT IN SUCH ACTION, TO
ARBITRATE THE MERITS OF THE CONTROVERSY OR CLAIM OCCASIONING RESORT TO SUCH
REMEDIES.
17. ______ CONSENT TO JURISDICTION. Each of the Borrowers irrevocably
submits to the jurisdiction of any state or federal court sitting in the State
of Maryland over any suit, action, or proceeding arising out of or relating to
this Note. Each of the Borrowers irrevocably waives, to the
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fullest extent permitted by law, any objection that it may now or hereafter have
to the laying of venue of any such suit, action, or proceeding brought in any
such court and any claim that any such suit, action, or proceeding brought in
any such court has been brought in an inconvenient forum. Final judgment in any
such suit, action, or proceeding brought in any such court shall be conclusive
and binding upon the Borrowers and may be enforced in any court in which the
Borrowers are subject to jurisdiction by a suit upon such judgment provided that
service of process is effected upon the Borrowers as provided in this Note or as
otherwise permitted by applicable law.
18. ______ WAIVER OF TRIAL BY JURY. EACH OF THE BORROWERS HEREBY WAIVES
TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO WHICH THE BORROWERS, OR EITHER OF
THEM, AND THE LENDER MAY BE PARTIES, ARISING OUT OF OR IN ANY WAY PERTAINING TO
(A) THIS NOTE OR (B) THE FINANCING DOCUMENTS. IT IS AGREED AND UNDERSTOOD THAT
THIS WAIVER CONSTITUTES A WAIVER OF TRIAL BY JURY OF ALL CLAIMS AGAINST ALL
PARTIES TO SUCH ACTIONS OR PROCEEDINGS, INCLUDING CLAIMS AGAINST PARTIES WHO ARE
NOT PARTIES TO THIS NOTE.
THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY MADE BY THE
BORROWERS, AND THE BORROWERS HEREBY REPRESENT THAT NO REPRESENTATIONS OF FACT OR
OPINION HAVE BEEN MADE BY ANY INDIVIDUAL TO INDUCE THIS WAIVER OF TRIAL BY JURY
OR TO IN ANY WAY MODIFY OR NULLIFY ITS EFFECT. THE BORROWERS FURTHER REPRESENT
THAT THEY HAVE BEEN REPRESENTED IN THE SIGNING OF THIS NOTE AND IN THE MAKING OF
THIS WAIVER BY INDEPENDENT LEGAL COUNSEL, SELECTED
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OF ITS OWN FREE WILL, AND THAT IT HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER
WITH COUNSEL.
IN WITNESS WHEREOF, the Borrowers have caused this Note to be executed
under seal by their duly authorized officers as of the date first written above.
WITNESS/ATTEST: ARGUSS HOLDINGS, INC.
______________________________ By:__________________________(SEAL)
Arthur F. Trudel
Chief Financial Officer
WITNESS/ATTEST: CONCEPTRONIC, INC.
______________________________ By:__________________________(SEAL)
Arthur F. Trudel
Vice President
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EXHIBIT A-4
FOURTH AMENDED AND RESTATED
REVOLVING PROMISSORY NOTE
(Facility 3)
$15,000,000.00 Rockville, Maryland
June 26, 1998
FOR VALUE RECEIVED, ARGUSS HOLDINGS, INC. a corporation organized under
the laws of the State of Delaware ("Arguss") and WHITE MOUNTAIN CABLE
CONSTRUCTION CORP., a corporation organized under the laws of the State of
Delaware ("White Mountain"; collectively, the "Borrowers" and each a
"Borrower"), jointly and severally, promise to pay to the order of NATIONSBANK,
N.A., a national banking association, its successors and assigns (the "Lender"),
the principal sum of FIFTEEN MILLION AND NO/100 DOLLARS ($15,000,000.00) (the
"Principal Sum"), or so much thereof as has been or may be advanced and
readvanced to or for the account of the Borrowers pursuant to the terms and
conditions of the Financing Agreement (as hereinafter defined), together with
interest thereon at the rate or rates hereinafter provided, in accordance with
the following:
1. _______ INTEREST. Commencing as of the date hereof and continuing
until repayment in full of all sums due hereunder, all amounts outstanding
hereunder shall bear interest at the LIBOR Rate (as hereinafter defined), plus
one hundred and sixty five basis points (1.65%) rounded upwards to the nearest
basis point. For purposes hereof, the "LIBOR Rate" shall mean a fluctuating rate
equal to the daily London Interbank Offered Rate for thirty (30) day U.S. Dollar
deposits as quoted by the Lender as of 11:00 A.M. (Washington, D.C., time),
which rate shall be adjusted for any Federal Reserve Board reserve requirements
imposed upon the Lender from time to time (the "LIBOR Rate"). The interest rate
on all sums accruing interest at the LIBOR Rate under this Note shall
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change on the first day of each month, based on the LIBOR Rate as in effect on
the last day of the
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immediately preceding month. All interest payable under the terms of this Note
shall be calculated on the basis of a 360-day year and the actual number of days
elapsed.
2. _______ PAYMENTS AND MATURITY. The unpaid Principal Sum, together
with interest thereon at the rate or rates provided above, shall be due and
payable as follows:
(a) ______ Interest only on the unpaid Principal Sum shall be
due and payable monthly, commencing June 30, 1998, and on the last day of each
month thereafter to maturity; and
(b) ______ Unless sooner paid, the unpaid Principal Sum,
together with all accrued and unpaid interest thereon shall be due and payable
in full on May 31, 1999.
The fact that the balance hereunder may be reduced to zero from time to
time pursuant to the Financing Agreement will not affect the continuing validity
of this Note or the Financing Agreement, and the balance may be increased to the
Principal Sum after any such reduction to zero.
3. _______ DEFAULT INTEREST. Upon the occurrence of an Event of Default
(as hereinafter defined), the unpaid Principal Sum shall bear interest
thereafter at a rate two percent (2%) per annum in excess of the then current
rate or rates of interest hereunder until such Event of Default is cured.
4. _______ LATE CHARGES. If the Borrowers shall fail to make any
payment under the terms of this Note within fifteen (15) days after the date
such payment is due, the Borrowers shall pay to the Lender on demand a late
charge equal to five percent (5%) of such payment.
5. _______ APPLICATION AND PLACE OF PAYMENTS. All payments, made on
account of this Note shall be applied first to the payment of any late charge
then due hereunder, second to the payment of accrued and unpaid interest then
due hereunder, and the remainder, if any, shall be applied to the unpaid
Principal Sum. All payments on account of this Note shall be paid in lawful
money of the United States of America in immediately available funds during
regular business hours of the Lender
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at its principal office in Bethesda, Maryland or at such other times and places
as the Lender may at any time and from time to time designate in writing to the
Borrowers. The Lender is authorized to deduct any payment (including payments of
principal and/or interest as above provided) from the Borrowers' Account Number
3916344857 on or after the date the payment is due; provided, however, that such
authorization shall not be deemed to relieve the Borrowers from their joint and
several obligation to make such payment when it is due.
6. ________ PREPAYMENT. The Borrowers may prepay the Principal Sum in
whole or in part, at any time or from time to time, without premium or penalty.
Any prepayment, in whole or in part, will not affect the Borrowers' joint and
several obligation to continue making payment in connection with any swap
agreement (as defined in 11 U.S.C. 101), which will remain in full force and
effect notwithstanding that prepayment.
7. _______ FINANCING AGREEMENT AND OTHER FINANCING DOCUMENTS. This Note
is the "Facility 3 Note" described in a Financing and Security Agreement dated
September 11, 1997 by and among Arguss, White Mountain, Conceptronic, Inc.
("Conceptronic") and the Lender (the Financing and Security Agreement, as
amended, modified, restated, substituted, extended and renewed at any time and
from time to time, is hereinafter called the "Financing Agreement"). The
indebtedness evidenced by this Note is included within the meaning of the term
"Obligations" as defined in the Financing Agreement. This Note increases, amends
and restates in its entirety that certain Third Amended and Restated Revolving
Promissory Note effective as of May 31, 1998 from the Borrowers in favor of the
Lender, in the maximum principal amount of Eight Million and No/100 Dollars
($8,000,000.00) (the "Original Note"). ____ It is expressly agreed that the
indebtedness evidenced by the Original Note
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has not been extinguished or discharged by this Note. The term "Financing
Documents" as used in this Note shall mean collectively this Note, the Facility
1 Note, the Facility 2 Note, the Facility 2 Term Notes, the Facility 4 Note, the
Facility 5 Note, the Facility 6 Note, the Facility 7 Note, the Facility 8 Note,
the Facility 8 Term Notes, the Financing Agreement and any other instrument,
agreement, or document previously, simultaneously, or hereafter executed and
delivered by the Borrowers, Conceptronic and/or any other person, singularly or
jointly with any other person, evidencing, securing, guaranteeing, or in
connection with the Principal Sum, this Note, the Facility 1 Note, the Facility
2 Note, the Facility 2 Term Notes, the Facility 4 Note, the Facility 5 Note, the
Facility 6 Note, the Facility 7 Note, the Facility 8 Note, the Facility 8 Term
Notes, and/or the Financing Agreement. All capitalized terms used herein and not
otherwise defined shall have the meanings given to such terms in the Financing
Agreement.
8. SECURITY. This Note is secured as provided in the Financing
Agreement.
9. EVENTS OF DEFAULT. The occurrence of any one or more of the
following events shall constitute an event of default (individually, an "Event
of Default" and collectively, the "Events of Default") under the terms of this
Note: (a) ______ The failure of the Borrowers to pay to the Lender when due,
after all applicable grace periods, if any, and all amounts payable by the
Borrowers to the Lender under the terms of this Note; or (b) ______ The
occurrence of an event of default (as defined therein) under the terms and
conditions of any of the other Financing Documents. 10. REMEDIES. Upon the
occurrence of an Event of Default, at the option of the Lender, all amounts
payable by the Borrowers to the Lender under the terms of this Note shall
immediately
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become due and payable by the Borrowers to the Lender without notice to the
Borrowers or any other person, and the Lender shall have all of the rights,
powers, and remedies available under the terms of this Note, any of the other
Financing Documents and all applicable laws. The Borrowers and all endorsers,
guarantors, and other parties who may now or in the future be primarily or
secondarily liable for the payment of the indebtedness evidenced by this Note
hereby severally waive presentment, protest and demand, notice of protest,
notice of demand and of dishonor and non-payment of this Note and expressly
agree that this Note or any payment hereunder may be extended from time to time
without in any way affecting the liability of the Borrowers, guarantors and
endorsers.
Until such time as the Lender is not committed to extend further
credit to the Borrowers and all Obligations of the Borrowers to the Lender have
been indefeasibly paid in full in cash, and subject to and not in limitation of
the provisions set forth in the next following paragraph below, none of the
Borrowers shall have any right of subrogation (whether contractual, arising
under the Bankruptcy Code or otherwise), reimbursement or contribution from any
of the Borrowers or any guarantor, nor any right of recourse to its security for
any of the debts and obligations of any of the Borrowers which are the subject
of this Note. Except as otherwise expressly permitted by the Financing
Agreement, any and all present and future debts and obligations of any of the
Borrowers to either of the Borrowers are hereby subordinated to the full payment
and performance of all present and future debts and obligations to the Lender
under this Note and the Financing Agreement and the Financing Documents,
provided, however, notwithstanding anything set forth in this Note to the
contrary, prior to the occurrence of a payment Default, the Borrowers shall be
permitted to make
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payments on account of any of such present and future debts and obligations from
time to time in accordance with the terms thereof.
Each of the Borrowers further agree that, if any payment made by either
of the Borrowers or any other person is applied to this Note and is at any time
annulled, set aside, rescinded, invalidated, declared to be fraudulent or
preferential or otherwise required to be refunded or repaid, or the proceeds of
any property hereafter securing this Note is required to be returned by the
Lender to either of the Borrowers, its estate, trustee, receiver or any other
party, including, without limitation, such Borrower, under any bankruptcy law,
state or federal law, common law or equitable cause, then, to the extent of such
payment or repayment, such Borrower's liability hereunder (and any lien,
security interest or other collateral securing such liability) shall be and
remain in full force and effect, as fully as if such payment had never been
made, or, if prior thereto any such lien, security interest or other collateral
hereafter securing such Borrower's liability hereunder shall have been released
or terminated by virtue of such cancellation or surrender, this Note (and such
lien, security interest or other collateral) shall be reinstated in full force
and effect, and such prior cancellation or surrender shall not diminish,
release, discharge, impair or otherwise affect the obligations of such Borrower
in respect of the amount of such payment (or any lien, security interest or
other collateral securing such obligation).
The JOINT AND SEVERAL obligations of each of the Borrowers under this
Note shall be absolute, irrevocable and unconditional and shall remain in full
force and effect until the outstanding principal of and interest on this Note
and all other Obligations or amounts due hereunder and under the Financing
Agreement and the Financing Documents shall have been indefeasibly paid in full
in cash in accordance with the terms thereof and this Note shall have been
canceled.
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11. ______ EXPENSES. The Borrowers, jointly and severally, promise to
pay to the Lender on demand by the Lender all costs and expenses incurred by the
Lender in connection with the collection and enforcement of this Note,
including, without limitation, reasonable attorneys' fees and expenses and all
court costs.
12. ______ NOTICES. Any notice, request, or demand to or upon the
Borrowers or the Lender shall be deemed to have been properly given or made when
delivered in accordance with Section 11.01 of the Financing Agreement.
13. ______ MISCELLANEOUS. Each right, power, and remedy of the Lender
as provided for in this Note or any of the other Financing Documents, or now or
hereafter existing under any applicable law or otherwise shall be cumulative and
concurrent and shall be in addition to every other right, power, or remedy
provided for in this Note or any of the other Financing Documents or now or
hereafter existing under any applicable law, and the exercise or beginning of
the exercise by the Lender of any one or more of such rights, powers, or
remedies shall not preclude the simultaneous or later exercise by the Lender of
any or all such other rights, powers, or remedies. No failure or delay by the
Lender to insist upon the strict performance of any term, condition, covenant,
or agreement of this Note or any of the other Financing Documents, or to
exercise any right, power, or remedy consequent upon a breach thereof, shall
constitute a waiver of any such term, condition, covenant, or agreement or of
any such breach, or preclude the Lender from exercising any such right, power,
or remedy at a later time or times. By accepting payment after the due date of
any amount payable under the terms of this Note, the Lender shall not be deemed
to waive the right either to require prompt payment when due of all other
amounts payable under the terms of this Note or to declare an Event of Default
for
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the failure to effect such prompt payment of any such other amount. No course of
dealing or conduct shall be effective to amend, modify, waive, release, or
change any provisions of this Note.
14. ______ PARTIAL INVALIDITY. In the event any provision of this Note
(or any part of any provision) is held by a court of competent jurisdiction to
be invalid, illegal, or unenforceable in any respect, such invalidity,
illegality, or unenforceability shall not affect any other provision (or
remaining part of the affected provision) of this Note; but this Note shall be
construed as if such invalid, illegal, or unenforceable provision (or part
thereof) had not been contained in this Note, but only to the extent it is
invalid, illegal, or unenforceable.
15. ______ CAPTIONS. The captions herein set forth are for convenience
only and shall not be deemed to define, limit, or describe the scope or intent
of this Note.
16. ______ APPLICABLE LAW. Each of the Borrowers acknowledges and
agrees that this Note shall be governed by the laws of the State of Maryland,
even though for the convenience and at the request of the Borrowers, this Note
may be executed elsewhere.
17. _______ ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE
PARTIES HERETO INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF THIS NOTE OR
ANY RELATED INSTRUMENTS, AGREEMENTS OR DOCUMENTS, INCLUDING ANY CLAIM BASED ON
OR ARISING FROM AN ALLEGED TORT, SHALL BE DETERMINED BY BINDING ARBITRATION IN
ACCORDANCE WITH THE FEDERAL ARBITRATION ACT (OR IF NOT APPLICABLE, THE
APPLICABLE STATE LAW), THE RULES OF PRACTICE AND PROCEDURE FOR ARBITRATION OF
COMMERCIAL DISPUTES OF ENDISPUTE, INC., D/B/A J.A.M.S./ENDISPUTE ("J.A.M.S.")
AND THE "SPECIAL RULES" SET FORTH BELOW. IN THE EVENT OF AN INCONSISTENCY, THE
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<PAGE>
SPECIAL RULES SHALL CONTROL. JUDGMENT UPON ANY ARBITRATION AWARD MAY BE ENTERED
IN ANY COURT HAVING JURISDICTION. ANY PARTY TO THIS INSTRUMENT, AGREEMENT OR
DOCUMENT MAY BRING ANY ACTION, INCLUDING A SUMMARY OR EXPEDITED PROCEEDING, TO
COMPEL ARBITRATION OF ANY CONTROVERSY OR CLAIM TO WHICH THIS INSTRUMENT,
AGREEMENT OR DOCUMENT RELATES IN ANY COURT HAVING JURISDICTION OVER SUCH ACTION.
(A) ______ SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED
IN MONTGOMERY COUNTY, MARYLAND AND ADMINISTERED BY J.A.M.S. WHO WILL APPOINT AN
ARBITRATOR. IF J.A.M.S. IS UNABLE OR LEGALLY PRECLUDED FROM ADMINISTERING THE
ARBITRATION, THEN THE AMERICAN ARBITRATION ASSOCIATION WILL SERVE. ALL
ARBITRATION HEARINGS WILL BE COMMENCED WITHIN NINETY (90) DAYS OF THE DEMAND FOR
ARBITRATION; FURTHER, THE ARBITRATOR SHALL ONLY, UPON A SHOWING OF CAUSE, BE
PERMITTED TO EXTEND THE COMMENCING OF SUCH HEARING FOR AN ADDITIONAL SIXTY (60)
DAYS.
(B) ______ RESERVATION OF RIGHTS. NOTHING IN THIS INSTRUMENT,
NOTE SHALL BE DEEMED TO: (I) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE
STATUTES OF LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS NOTE; OR (II)
BE A WAIVER BY THE LENDER OF THE PROTECTION AFFORDED TO IT BY 12 U.S.C. ss.91 OR
ANY SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III) LIMIT THE RIGHT OF THE LENDER:
(A) TO EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED TO) SETOFF, OR (B)
TO FORECLOSE AGAINST ANY REAL OR
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PERSONAL PROPERTY COLLATERAL, OR (C) TO OBTAIN FROM A COURT PROVI SIONAL OR
ANCILLARY REMEDIES SUCH AS (BUT NOT LIMITED TO) INJUNCTIVE RELIEF, WRIT OF
POSSESSION OR THE APPOINTMENT OF A RECEIVER. THE LENDER MAY EXERCISE SUCH SELF
HELP RIGHTS, FORECLOSE UPON SUCH PROPERTY, OR OBTAIN SUCH PROVISIONAL OR
ANCILLARY REMEDIES BEFORE, DURING OR AFTER THE PENDENCY OF ANY ARBITRATION
PROCEEDING BROUGHT PURSUANT TO THIS NOTE. NEITHER THE EXERCISE OF SELF HELP
REMEDIES NOR THE INSTITUTION OR MAINTENANCE OF ANY ACTION FOR FORECLOSURE OR FOR
PROVISIONAL OR ANCILLARY REMEDIES SHALL CONSTITUTE A WAIVER OF THE RIGHT OF ANY
PARTY, INCLUDING THE CLAIMANT IN SUCH ACTION, TO ARBITRATE THE MERITS OF THE
CONTROVERSY OR CLAIM OCCASIONING RESORT TO SUCH REMEDIES.
18. ______ CONSENT TO JURISDICTION. Each of the Borrowers irrevocably
submits to the jurisdiction of any state or federal court sitting in the State
of Maryland over any suit, action, or proceeding arising out of or relating to
this Note. Each of the Borrowers irrevocably waives, to the fullest extent
permitted by law, any objection that it may now or hereafter have to the laying
of venue of any such suit, action, or proceeding brought in any such court and
any claim that any such suit, action, or proceeding brought in any such court
has been brought in an inconvenient forum. Final judgment in any such suit,
action, or proceeding brought in any such court shall be conclusive and binding
upon the Borrowers and may be enforced in any court in which the Borrowers are
subject to jurisdiction by a suit upon such judgment provided that service of
process is effected upon the Borrowers as provided in this Note or as otherwise
permitted by applicable law.
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19. ______ WAIVER OF TRIAL BY JURY. EACH OF THE BORROWERS HEREBY WAIVES
TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO WHICH THE BORROWERS, OR EITHER OF
THEM, AND THE LENDER MAY BE PARTIES, ARISING OUT OF OR IN ANY WAY PERTAINING TO
(A) THIS NOTE OR (B) THE FINANCING DOCUMENTS. IT IS AGREED AND UNDERSTOOD THAT
THIS WAIVER CONSTITUTES A WAIVER OF TRIAL BY JURY OF ALL CLAIMS AGAINST ALL
PARTIES TO SUCH ACTIONS OR PROCEEDINGS, INCLUDING CLAIMS AGAINST PARTIES WHO ARE
NOT PARTIES TO THIS NOTE.
THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY MADE BY THE
BORROWERS, AND THE BORROWERS HEREBY REPRESENT THAT NO REPRESENTATIONS OF FACT OR
OPINION HAVE BEEN MADE BY ANY INDIVIDUAL TO INDUCE THIS WAIVER OF TRIAL BY JURY
OR TO IN ANY WAY MODIFY OR NULLIFY ITS EFFECT. THE BORROWERS FURTHER REPRESENT
THAT THEY HAVE BEEN REPRESENTED IN THE SIGNING OF THIS NOTE AND IN THE MAKING OF
THIS WAIVER BY INDEPENDENT LEGAL COUNSEL, SELECTED OF THEIR OWN FREE WILL, AND
THAT THEY HAVE HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL.
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IN WITNESS WHEREOF, the Borrowers have caused this Note to be executed
under seal by their duly authorized officers as of the date first written above.
WITNESS/ATTEST: ARGUSS HOLDINGS, INC.
______________________________ By:______________________________(SEAL)
Arthur F. Trudel
Chief Financial Officer
WITNESS/ATTEST: WHITE MOUNTAIN CONSTRUCTION
CABLE CORP.
______________________________ By:______________________________(SEAL)
Arthur F. Trudel
Vice President
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REVOLVING PROMISSORY NOTE
(Facility 8)
$7,000,000.00 Rockville, Maryland
June 26, 1998
FOR VALUE RECEIVED, ARGUSS HOLDINGS, INC. a corporation organized under
the laws of the State of Delaware and WHITE MOUNTAIN CABLE CONSTRUCTION CORP., a
corporation organized under the laws of the State of Delaware (collectively, the
"Borrowers" and each a "Borrower"), jointly and severally, promise to pay to the
order of NATIONSBANK, N.A., a national banking association, its successors and
assigns (the "Lender"), the principal sum of SEVEN MILLION AND NO/100 DOLLARS
($7,000,000.00) (the "Principal Sum"), or so much thereof as has been or may be
advanced and readvanced to or for the account of the Borrowers pursuant to the
terms and conditions of the Financing Agreement (as hereinafter defined),
together with interest thereon at the rate or rates hereinafter provided, in
accordance with the following:
1. _______ INTEREST. Commencing as of the date hereof and continuing
until repayment in full of all sums due hereunder, all amounts outstanding
hereunder shall bear interest at the LIBOR Rate (as hereinafter defined), plus
one hundred and sixty five basis points (1.65%) rounded upward to the nearest
basis point. For purposes hereof, the "LIBOR Rate" shall mean a fluctuating rate
equal to the daily London Interbank Offered Rate for thirty (30) days U.S.
Dollar deposits as quoted by the Lender as of 11:00 A.M. (Washington, D.C.,
time), which rate shall be adjusted for any Federal Reserve Board reserve
requirements imposed upon the Lender from time to time (the "LIBOR Rate"). The
interest rate on all sums accruing interest at the LIBOR Rate under this Note
shall change on the first day of each month, based on the LIBOR Rate as of the
last day of the immediately preceding month.
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2. _______ PAYMENTS AND MATURITY. The unpaid Principal Sum, together
with interest thereon at the rate or rates provided above, shall be payable as
follows:
(a) _____ Interest on the unpaid Principal Sum shall be due
and payable monthly, commencing July 31, 1998, and on the last day of each month
thereafter to maturity; and
(b) ______ Unless sooner paid, the unpaid Principal Sum,
together with interest accrued and unpaid thereon, shall be due and payable in
full on May 31, 1999.
The fact that the balance hereunder may be reduced to zero from time
to time pursuant to the Financing Agreement will not affect the continuing
validity of this Note or the Financing Agreement, and the balance may be
increased to the Principal Sum after any such reduction to zero.
3. ________ CONVERSION PERIOD. Advances under this Note shall from time
to time be converted to one or more term loans pursuant to Section 2.0_ (a) of
the Financing Agreement. Amounts converted to term loans and outstanding under
such term loans shall reduce the maximum principal amount available under this
Note by an equivalent amount.
4. _______ DEFAULT INTEREST. Upon the occurrence of an Event of Default
(as hereinafter defined), the unpaid Principal Sum shall bear interest
thereafter at a rate two percent (2%) per annum in excess of the then highest
current rate or rates of interest hereunder until such Event of Default is
cured.
5. _______ LATE CHARGES. If the Borrowers shall fail to make any
payment under the terms of this Note within fifteen (15) days after the date
such payment is due, the Borrowers shall pay to the Lender on demand a late
charge equal to five percent (5%) of such payment.
6. _______ APPLICATION AND PLACE OF PAYMENTS. All payments, made on
account of this Note shall be applied first to the payment of any late charge
then due hereunder, second to the payment
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of accrued and unpaid interest then due hereunder, and the remainder, if any,
shall be applied to the unpaid Principal Sum, with application first made to all
principal installments then due hereunder, next to the outstanding principal
balance due and owing at maturity and thereafter to the principal payments due
in the inverse order of maturities. Notwithstanding any provision contained
herein to the contrary, any portion of a permitted partial prepayment applied to
the unpaid Principal Sum shall be applied first to the outstanding principal
balance due and owing at maturity and thereafter to the principal payments due
in the inverse order of maturities. All payments on account of this Note shall
be paid in lawful money of the United States of America in immediately available
funds during regular business hours of the Lender at its principal office in
Bethesda, Maryland or at such other times and places as the Lender may at any
time and from time to time designate in writing to the Borrowers. The Lender is
authorized to deduct any payment (including payments of principal and/or
interest as above provided) from the Borrowers' Account Number 003918973721 on
or after the date the payment is due; provided, however, that such authorization
shall not be deemed to relieve the Borrowers from their joint and several
obligation to make such payment when it is due.
7. _______ FINANCING AGREEMENT AND OTHER FINANCING DOCUMENTS. This Note
is the "Facility 8 Note" described in a Sixth Amendment to Financing and
Security Agreement of even date herewith by and among the Borrowers,
Conceptronic, Inc. ("Conceptronic") and the Lender, which Sixth Amendment to
Financing and Security Agreement amends that certain Financing and Security
Agreement dated as of September 11, 1997 by and among the Borrowers,
Conceptronic and the Lender (the Financing and Security Agreement, as amended,
modified, restated, substituted, extended and renewed at any time and from time
to time, the "Financing Agreement"). The indebtedness evidenced by this Note is
included within the meaning of the term "Obligations" as
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defined in the Financing Agreement. The term "Financing Documents" as used in
this Note shall mean collectively this Note, the Facility 1 Note, the Facility 2
Note, the Facility 2 Term Notes, the Facility 3 Note, the Facility 4 Note, the
Facility 5 Note, the Facility 6 Note, the Facility 7 Note and the Facility 8
Term Notes, the Financing Agreement and any other instrument, agreement, or
document previously, simultaneously, or hereafter executed and delivered by the
Borrowers, Conceptronic and/or any other person, singularly or jointly with any
other person, evidencing, securing, guaranteeing, or in connection with the
Principal Sum, this Note, the Facility 1 Note, the Facility 2 Term Notes, the
Facility 3 Note, the Facility 4 Note, the Facility 5 Note, the Facility 6 Note,
the Facility 7 Note and the Facility 8 Term Notes and/or the Financing
Agreement. All capitalized terms used herein and not otherwise defined shall
have the meanings given to such terms in the Financing Agreement.
8. _______ PREPAYMENT. ________ During any Conversion Period, the
Borrowers may prepay the Principal Sum in whole or in part, at any time or from
time to time, without premium or penalty. Any prepayment made not within any
Conversion Period, in whole or in part, will not affect the Borrowers' joint and
several obligation to continue making payment in connection with any swap
agreement (as defined in 11 U.S.C. 101), which will remain in full force and
effect notwithstanding that prepayment.
9. SECURITY. This Note is secured as provided in the Financing
Agreement.
10. EVENTS OF DEFAULT. The occurrence of any one or more of the
following events shall constitute an event of default (individually, an "Event
of Default" and collectively, the "Events of Default") under the terms of this
Note:
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(a) ______ The failure of the Borrowers to pay to the Lender
when due, after all applicable grace periods, if any, any and all amounts
payable by the Borrowers to the Lender under the terms of this Note; or
(b) ______ The occurrence of an event of default (as defined
therein) under the terms and conditions of any of the other Financing Documents.
11. ______ REMEDIES. Upon the occurrence of an Event of Default, at the
option of the Lender, all amounts payable by the Borrowers to the Lender under
the terms of this Note shall immediately become due and payable by the Borrowers
to the Lender without notice to the Borrowers or any other person, and the
Lender shall have all of the rights, powers, and remedies available under the
terms of this Note, any of the other Financing Documents and all applicable
laws. The Borrowers and all endorsers, guarantors, and other parties who may now
or in the future be primarily or secondarily liable for the payment of the
indebtedness evidenced by this Note hereby severally waive presentment, protest
and demand, notice of protest, notice of demand and of dishonor and non-payment
of this Note and expressly agree that this Note or any payment hereunder may be
extended from time to time without in any way affecting the liability of the
Borrowers, guarantors and endorsers.
Until such time as the Lender is not committed to extend further
credit to the Borrowers and all Obligations of the Borrowers to the Lender have
been indefeasibly paid in full in cash, and subject to and not in limitation of
the provisions set forth in the next following paragraph below, the Borrowers
shall not have any right of subrogation (whether contractual, arising under the
Bankruptcy Code or otherwise), reimbursement or contribution from any of the
Borrowers or any guarantor, nor any right of recourse to its security for any of
the debts and obligations of any of the Borrowers
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which are the subject of this Note. Except as otherwise expressly permitted by
the Financing Agreement, any and all present and future debts and obligations of
any of the Borrowers to either of the Borrowers are hereby subordinated to the
full payment and performance of all present and future debts and obligations to
the Lender under this Note and the Financing Agreement and the Financing
Documents, provided, however, notwithstanding anything set forth in this Note to
the contrary, prior to the occurrence of a payment Default, the Borrowers shall
be permitted to make payments on account of any of such present and future debts
and obligations from time to time in accordance with the terms thereof.
Each of the Borrowers further agree that, if any payment made by either
of the Borrowers or any other person is applied to this Note and is at any time
annulled, set aside, rescinded, invalidated, declared to be fraudulent or
preferential or otherwise required to be refunded or repaid, or the proceeds of
any property hereafter securing this Note is required to be returned by the
Lender to either of the Borrowers, its estate, trustee, receiver or any other
party, including, without limitation, such Borrower, under any bankruptcy law,
state or federal law, common law or equitable cause, then, to the extent of such
payment or repayment, such Borrower's liability hereunder (and any lien,
security interest or other collateral securing such liability) shall be and
remain in full force and effect, as fully as if such payment had never been
made, or, if prior thereto any such lien, security interest or other collateral
hereafter securing such Borrower's liability hereunder shall have been released
or terminated by virtue of such cancellation or surrender, this Note (and such
lien, security interest or other collateral) shall be reinstated in full force
and effect, and such prior cancellation or surrender shall not diminish,
release, discharge, impair or otherwise affect the
6
<PAGE>
obligations of such Borrower in respect of the amount of such payment (or any
lien, security interest or other collateral securing such obligation).
The JOINT AND SEVERAL obligations of each Borrower under this Note
shall be absolute, irrevocable and unconditional and shall remain in full force
and effect until the outstanding principal of and interest on this Note and all
other Obligations or amounts due hereunder and under the Financing Agreement and
the Financing Documents shall have been indefeasibly paid in full in cash in
accordance with the terms thereof and this Note shall have been canceled.
12. ______ EXPENSES. The Borrowers, jointly and severally, promise to
pay to the Lender on demand by the Lender all costs and expenses incurred by the
Lender in connection with the collection and enforcement of this Note,
including, without limitation, reasonable attorneys' fees and expenses and all
court costs.
13. ______ NOTICES. Any notice, request, or demand to or upon the
Borrowers or the Lender shall be deemed to have been properly given or made when
delivered in accordance with Section 11.01 of the Financing Agreement.
14. ______ MISCELLANEOUS. Each right, power, and remedy of the Lender
as provided for in this Note or any of the other Financing Documents, or now or
hereafter existing under any applicable law or otherwise shall be cumulative and
concurrent and shall be in addition to every other right, power, or remedy
provided for in this Note or any of the other Financing Documents or now or
hereafter existing under any applicable law, and the exercise or beginning of
the exercise by the Lender of any one or more of such rights, powers, or
remedies shall not preclude the simultaneous or later exercise by the Lender of
any or all such other rights, powers, or remedies. No failure or delay by the
Lender to insist upon the strict performance of any term, condition, covenant,
or agreement of this Note or
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any of the other Financing Documents, or to exercise any right, power, or remedy
consequent upon a breach thereof, shall constitute a waiver of any such term,
condition, covenant, or agreement or of any such breach, or preclude the Lender
from exercising any such right, power, or remedy at a later time or times. By
accepting payment after the due date of any amount payable under the terms of
this Note, the Lender shall not be deemed to waive the right either to require
prompt payment when due of all other amounts payable under the terms of this
Note or to declare an Event of Default for the failure to effect such prompt
payment of any such other amount. No course of dealing or conduct shall be
effective to amend, modify, waive, release, or change any provisions of this
Note.
15. ______ PARTIAL INVALIDITY. In the event any provision of this Note
(or any part of any provision) is held by a court of competent jurisdiction to
be invalid, illegal, or unenforceable in any respect, such invalidity,
illegality, or unenforceability shall not affect any other provision (or
remaining part of the affected provision) of this Note; but this Note shall be
construed as if such invalid, illegal, or unenforceable provision (or part
thereof) had not been contained in this Note, but only to the extent it is
invalid, illegal, or unenforceable.
16. ______ CAPTIONS. The captions herein set forth are for convenience
only and shall not be deemed to define, limit, or describe the scope or intent
of this Note.
17. ______ APPLICABLE LAW. Each of the Borrowers acknowledges and
agrees that this Note shall be governed by the laws of the State of Maryland,
even though for the convenience and at the request of the Borrowers, this Note
may be executed elsewhere.
18. ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES
HERETO INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF THIS NOTE OR ANY
RELATED INSTRUMENTS, AGREEMENTS OR DOCUMENTS,
8
<PAGE>
INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT, SHALL BE
DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH THE FEDERAL ARBITRATION ACT
(OR IF NOT APPLICABLE, THE APPLICABLE STATE LAW), THE RULES OF PRACTICE AND
PROCEDURE FOR ARBITRATION OF COMMERCIAL DISPUTES OF ENDISPUTE, INC., D/B/A
J.A.M.S./ENDISPUTE ("J.A.M.S.") AND THE "SPECIAL RULES" SET FORTH BELOW. IN THE
EVENT OF AN INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL. JUDGMENT UPON ANY
ARBITRATION AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. ANY PARTY TO
THIS INSTRUMENT, AGREEMENT OR DOCUMENT MAY BRING ANY ACTION, INCLUDING A SUMMARY
OR EXPEDITED PROCEEDING, TO COMPEL ARBITRATION OF ANY CONTROVERSY OR CLAIM TO
WHICH THIS INSTRUMENT, AGREEMENT OR DOCUMENT RELATES IN ANY COURT HAVING
JURISDICTION OVER SUCH ACTION.
(A) ______ SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED
IN MONTGOMERY COUNTY, MARYLAND AND ADMINISTERED BY J.A.M.S. WHO WILL APPOINT AN
ARBITRATOR. IF J.A.M.S. IS UNABLE OR LEGALLY PRECLUDED FROM ADMINISTERING THE
ARBITRATION, THEN THE AMERICAN ARBITRATION ASSOCIATION WILL SERVE. ALL
ARBITRATION HEARINGS WILL BE COMMENCED WITHIN NINETY (90) DAYS OF THE DEMAND FOR
ARBITRATION; FURTHER, THE ARBITRATOR SHALL ONLY, UPON A SHOWING OF CAUSE, BE
PERMITTED TO EXTEND THE COMMENCING OF SUCH HEARING FOR AN ADDITIONAL SIXTY (60)
DAYS.
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(B) ______ RESERVATION OF RIGHTS. NOTHING IN THIS INSTRUMENT,
NOTE SHALL BE DEEMED TO: (I) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE
STATUTES OF LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS NOTE; OR (II)
BE A WAIVER BY THE LENDER OF THE PROTECTION AFFORDED TO IT BY 12 U.S.C. ss.91 OR
ANY SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III) LIMIT THE RIGHT OF THE LENDER:
(A) TO EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED TO) SETOFF, OR (B)
TO FORECLOSE AGAINST ANY REAL OR PERSONAL PROPERTY COLLATERAL, OR (C) TO OBTAIN
FROM A COURT PROVI SIONAL OR ANCILLARY REMEDIES SUCH AS (BUT NOT LIMITED TO)
INJUNCTIVE RELIEF, WRIT OF POSSESSION OR THE APPOINTMENT OF A RECEIVER. THE
LENDER MAY EXERCISE SUCH SELF HELP RIGHTS, FORECLOSE UPON SUCH PROPERTY, OR
OBTAIN SUCH PROVISIONAL OR ANCILLARY REMEDIES BEFORE, DURING OR AFTER THE
PENDENCY OF ANY ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS NOTE. NEITHER
THE EXERCISE OF SELF HELP REMEDIES NOR THE INSTITUTION OR MAINTENANCE OF ANY
ACTION FOR FORECLOSURE OR FOR PROVISIONAL OR ANCILLARY REMEDIES SHALL CONSTITUTE
A WAIVER OF THE RIGHT OF ANY PARTY, INCLUDING THE CLAIMANT IN SUCH ACTION, TO
ARBITRATE THE MERITS OF THE CONTROVERSY OR CLAIM OCCASIONING RESORT TO SUCH
REMEDIES.
19. ______ CONSENT TO JURISDICTION. Each of the Borrowers irrevocably
submits to the jurisdiction of any state or federal court sitting in the State
of Maryland over any suit, action, or proceeding arising out of or relating to
this Note. Each of the Borrowers irrevocably waives, to the fullest extent
permitted by law, any objection that it may now or hereafter have to the laying
of
10
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venue of any such suit, action, or proceeding brought in any such court and any
claim that any such suit, action, or proceeding brought in any such court has
been brought in an inconvenient forum. Final judgment in any such suit, action,
or proceeding brought in any such court shall be conclusive and binding upon the
Borrowers and may be enforced in any court in which the Borrowers are subject to
jurisdiction by a suit upon such judgment provided that service of process is
effected upon the Borrowers as provided in this Note or as otherwise permitted
by applicable law.
20. ______ WAIVER OF TRIAL BY JURY. EACH OF THE BORROWERS HEREBY WAIVES
TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO WHICH THE BORROWERS, OR EITHER OF
THEM, AND THE LENDER MAY BE PARTIES, ARISING OUT OF OR IN ANY WAY PERTAINING TO
(A) THIS NOTE OR (B) THE FINANCING DOCUMENTS. IT IS AGREED AND UNDERSTOOD THAT
THIS WAIVER CONSTITUTES A WAIVER OF TRIAL BY JURY OF ALL CLAIMS AGAINST ALL
PARTIES TO SUCH ACTIONS OR PROCEEDINGS, INCLUDING CLAIMS AGAINST PARTIES WHO ARE
NOT PARTIES TO THIS NOTE.
THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY MADE BY THE
BORROWERS, AND THE BORROWERS HEREBY REPRESENT THAT NO REPRESENTATIONS OF FACT OR
OPINION HAVE BEEN MADE BY ANY INDIVIDUAL TO INDUCE THIS WAIVER OF TRIAL BY JURY
OR TO IN ANY WAY MODIFY OR NULLIFY ITS EFFECT. THE BORROWERS FURTHER REPRESENT
THAT THEY HAVE BEEN REPRESENTED IN THE SIGNING OF THIS NOTE AND IN THE MAKING OF
THIS WAIVER BY INDEPENDENT LEGAL COUNSEL, SELECTED
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<PAGE>
OF THEIR OWN FREE WILL, AND THAT THEY HAVE HAD THE OPPORTUNITY TO DISCUSS THIS
WAIVER WITH COUNSEL.
IN WITNESS WHEREOF, the Borrowers have caused this Note to be executed
under seal by their duly authorized officers as of the date first written above.
WITNESS/ATTEST: ARGUSS HOLDINGS, INC.
______________________________ By:______________________________(SEAL)
Arthur F. Trudel
Chief Financial Officer
WITNESS/ATTEST: WHITE MOUNTAIN CONSTRUCTION
CABLE CORP.
______________________________ By:______________________________(SEAL)
Arthur F. Trudel
Vice President
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EXHIBIT A-10
TERM PROMISSORY NOTE
(FACILITY 8)
$_________________ Rockville, Maryland
____________, 199__
FOR VALUE RECEIVED, ARGUSS HOLDINGS, INC., a corporation organized
under the laws of the State of Delaware and WHITE MOUNTAIN CABLE CONSTRUCTION
CORP., a corporation organized under the laws of the State of Delaware
(collectively, the "Borrowers" and each a "Borrower"), jointly and severally,
promise to pay to the order of NATIONSBANK, N.A., a national banking
association, its successors and assigns (the "Lender"), the principal sum of
__________________________________________________________________ AND DOLLARS
($________________) (the "Principal Sum"), together with interest thereon at the
rate or rates hereinafter provided, in accordance with the following:
1. _______ INTEREST. Commencing as of the date hereof and continuing
until repayment in full of all sums due hereunder, all amounts outstanding
hereunder shall bear interest at the LIBOR Rate (as hereinafter defined), plus
one hundred and sixty five basis points (1.65%) rounded upward to the nearest
basis point. For purposes hereof, the "LIBOR Rate" shall mean a fluctuating rate
equal to the daily London Interbank Offered Rate for thirty (30) days U.S.
Dollar deposits as quoted by the Lender as of 11:00 A.M. (Washington, D.C.,
time), which rate shall be adjusted for any Federal Reserve Board reserve
requirements imposed upon the Lender from time to time (the "LIBOR Rate"). The
interest rate on all sums accruing interest at the LIBOR Rate under this Note
shall change on the first day of each month, based on the LIBOR Rate as of the
last day of
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the immediately preceding month. All interest payable under the terms of this
Note shall be calculated on the basis of a 360-day year and the actual number of
days elapsed.
2. _______ PAYMENTS AND MATURITY. The unpaid Principal Sum, together
with interest thereon at the rate or rates provided above, shall be payable as
follows:
(a) _______ The unpaid Principal Sum shall be due and payable
in monthly installments of principal in the amount of $___________________ each,
plus accrued and unpaid interest, commencing ___________________, and on the
last day of each month thereafter to maturity;
(b) ______ Unless sooner paid, the unpaid Principal Sum,
together with interest accrued and unpaid thereon, shall be due and payable in
full on __________ ____, 200_.
3. _______ DEFAULT INTEREST. Upon the occurrence of an Event of Default
(as hereinafter defined), the unpaid Principal Sum shall bear interest
thereafter at a rate two percent (2%) per annum in excess of the then current
rate or rates of interest hereunder until such Event of Default is cured.
4. _______ LATE CHARGES. If the Borrowers shall fail to make any
payment under the terms of this Note within fifteen (15) days after the date
such payment is due, the Borrowers shall pay to the Lender on demand a late
charge equal to five percent (5%) of such payment.
5. _______ APPLICATION AND PLACE OF PAYMENTS. All payments, made on
account of this Note shall be applied first to the payment of any late charge
then due hereunder, second to the payment of accrued and unpaid interest then
due hereunder, and the remainder, if any, shall be applied to the unpaid
Principal Sum, with application first made to all principal installments then
due hereunder, next to the outstanding principal balance due and owing at
maturity and thereafter to the principal payments due in the inverse order of
maturities. Notwithstanding any provision contained herein to the contrary, any
portion of a permitted partial prepayment applied to the unpaid Principal Sum
2
<PAGE>
shall be applied first to the outstanding principal balance due and owing at
maturity and thereafter to the principal payments due in the inverse order of
maturities. All payments on account of this Note shall be paid in lawful money
of the United States of America in immediately available funds during regular
business hours of the Lender at its principal office in Bethesda, Maryland or at
such other times and places as the Lender may at any time and from time to time
designate in writing to the Borrowers. The Lender is authorized to deduct any
payment (including payments of principal and/or interest as above provided) from
the Borrowers' Account Number 003918973721 on or after the date the payment is
due; provided, however, that such authorization shall not be deemed to relieve
the Borrowers from their joint and several obligation to make such payment when
it is due.
6. _______ FINANCING AGREEMENT AND OTHER FINANCING DOCUMENTS. This Note
is one of the "Facility 8 Term Notes" described in a Sixth Amendment to
Financing and Security Agreement dated June _, 1998 by and among the Borrowers,
Conceptronic, Inc. ("Conceptronic") and the Lender which amends that certain
Financing and Security Agreement dated September 11, 1997 by and among the
Borrower, Conceptronics and the Borrowers (the Financing and Security Agreement
as amended, modified, restated, substituted, extended and renewed at any time
and from time to time, the "Financing Agreement"). The indebtedness evidenced by
this Note is included within the meaning of the term "Obligations" as defined in
the Financing Agreement. The term "Financing Documents" as used in this Note
shall mean collectively this Note, the Facility 1 Note, the Facility 2 Note, the
Facility 3 Note, the Facility 4 Note, the Facility 5 Note, the Facility 6 Note,
the Facility 7 Note, the Facility 8 Note, the Financing Agreement and any other
instrument, agreement, or document previously, simultaneously, or hereafter
executed and delivered by the Borrowers, Conceptronic and/or any other person,
singularly or jointly with any other person, evidencing,
3
<PAGE>
securing, guaranteeing, or in connection with the Principal Sum, this Note, the
Facility 1 Note, the Facility 2 Note, the Facility 3 Note, the Facility 4 Note,
the Facility 5 Note, the Facility 6 Note, the Facility 7 Note, the Facility 8
Note, and/or the Financing Agreement. All capitalized terms used herein and not
otherwise defined shall have the meanings given to such terms in the Financing
Agreement.
7. _______ PREPAYMENT. ________ The Borrowers may prepay the Principal
Sum in whole or in part, at any time or from time to time, without premium or
penalty. Any prepayment, in whole or in part, will not affect the Borrowers'
joint and several obligation to continue making payment in connection with any
swap agreement (as defined in 11 U.S.C. 101), which will remain in full force
and effect notwithstanding that prepayment.
8. SECURITY. This Note is secured as provided in the Financing
Agreement.
9. EVENTS OF DEFAULT. The occurrence of any one or more of the
following events shall constitute an event of default (individually, an "Event
of Default" and collectively, the "Events of Default") under the terms of this
Note:
(a) ______ The failure of the Borrowers to pay to the Lender
when due, after all applicable grace periods, if any, and all amounts payable by
the Borrowers to the Lender under the terms of this Note; or
(b) ______ The occurrence of an event of default (as defined
therein) under the terms and conditions of any of the other Financing Documents.
10. REMEDIES. Upon the occurrence of an Event of Default, at the option
of the Lender, all amounts payable by the Borrowers to the Lender under the
terms of this Note shall immediately become due and payable by the Borrowers to
the Lender without notice to the Borrowers or any
4
<PAGE>
other person, and the Lender shall have all of the rights, powers, and remedies
available under the terms of this Note, any of the other Financing Documents and
all applicable laws. The Borrowers and all endorsers, guarantors, and other
parties who may now or in the future be primarily or secondarily liable for the
payment of the indebtedness evidenced by this Note hereby severally waive
presentment, protest and demand, notice of protest, notice of demand and of
dishonor and non-payment of this Note and expressly agree that this Note or any
payment hereunder may be extended from time to time without in any way affecting
the liability of the Borrowers, guarantors and endorsers.
Until such time as the Lender is not committed to extend further
credit to the Borrowers and all Obligations of the Borrowers to the Lender have
been indefeasibly paid in full in cash, and subject to and not in limitation of
the provisions set forth in the next following paragraph below, the Borrowers
shall not have any right of subrogation (whether contractual, arising under the
Bankruptcy Code or otherwise), reimbursement or contribution from any of the
Borrowers or any guarantor, nor any right of recourse to its security for any of
the debts and obligations of any of the Borrowers which are the subject of this
Note. Except as otherwise expressly permitted by the Financing Agreement, any
and all present and future debts and obligations of any of the Borrowers to
either of the Borrowers are hereby subordinated to the full payment and
performance of all present and future debts and obligations to the Lender under
this Note and the Financing Agreement and the Financing Documents, provided,
however, notwithstanding anything set forth in this Note to the contrary, prior
to the occurrence of a payment Default, the Borrowers shall be permitted to make
payments on account of any of such present and future debts and obligations from
time to time in accordance with the terms thereof.
5
<PAGE>
The Borrowers further agree that, if any payment made by any of the
Borrowers or any other person is applied to this Note and is at any time
annulled, set aside, rescinded, invalidated, declared to be fraudulent or
preferential or otherwise required to be refunded or repaid, or the proceeds of
any property hereafter securing this Note is required to be returned by the
Lender to any of the Borrowers, its estate, trustee, receiver or any other
party, including, without limitation, such Borrower, under any bankruptcy law,
state or federal law, common law or equitable cause, then, to the extent of such
payment or repayment, such Borrower's liability hereunder (and any lien,
security interest or other collateral securing such liability) shall be and
remain in full force and effect, as fully as if such payment had never been
made, or, if prior thereto any such lien, security interest or other collateral
hereafter securing such Borrower's liability hereunder shall have been released
or terminated by virtue of such cancellation or surrender, this Note (and such
lien, security interest or other collateral) shall be reinstated in full force
and effect, and such prior cancellation or surrender shall not diminish,
release, discharge, impair or otherwise affect the obligations of such Borrower
in respect of the amount of such payment (or any lien, security interest or
other collateral securing such obligation).
The JOINT AND SEVERAL obligations of each of the Borrowers under this
Note shall be absolute, irrevocable and unconditional and shall remain in full
force and effect until the outstanding principal of and interest on this Note
and all other Obligations or amounts due hereunder and under the Financing
Agreement and the Financing Documents shall have been indefeasibly paid in full
in cash in accordance with the terms thereof and this Note shall have been
canceled.
11. ______ EXPENSES. The Borrowers, jointly and severally, promise to
pay to the Lender on demand by the Lender all costs and expenses incurred by the
Lender in connection with the
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<PAGE>
collection and enforcement of this Note, including, without limitation,
reasonable attorneys' fees and expenses and all court costs.
12. ______ NOTICES. Any notice, request, or demand to or upon the
Borrowers or the Lender shall be deemed to have been properly given or made when
delivered in accordance with Section 11.01 of the Financing Agreement.
13. ______ MISCELLANEOUS. Each right, power, and remedy of the Lender
as provided for in this Note or any of the other Financing Documents, or now or
hereafter existing under any applicable law or otherwise shall be cumulative and
concurrent and shall be in addition to every other right, power, or remedy
provided for in this Note or any of the other Financing Documents or now or
hereafter existing under any applicable law, and the exercise or beginning of
the exercise by the Lender of any one or more of such rights, powers, or
remedies shall not preclude the simultaneous or later exercise by the Lender of
any or all such other rights, powers, or remedies. No failure or delay by the
Lender to insist upon the strict performance of any term, condition, covenant,
or agreement of this Note or any of the other Financing Documents, or to
exercise any right, power, or remedy consequent upon a breach thereof, shall
constitute a waiver of any such term, condition, covenant, or agreement or of
any such breach, or preclude the Lender from exercising any such right, power,
or remedy at a later time or times. By accepting payment after the due date of
any amount payable under the terms of this Note, the Lender shall not be deemed
to waive the right either to require prompt payment when due of all other
amounts payable under the terms of this Note or to declare an Event of Default
for the failure to effect such prompt payment of any such other amount. No
course of dealing or conduct shall be effective to amend, modify, waive,
release, or change any provisions of this Note.
7
<PAGE>
14. ______ PARTIAL INVALIDITY. In the event any provision of this Note
(or any part of any provision) is held by a court of competent jurisdiction to
be invalid, illegal, or unenforceable in any respect, such invalidity,
illegality, or unenforceability shall not affect any other provision (or
remaining part of the affected provision) of this Note; but this Note shall be
construed as if such invalid, illegal, or unenforceable provision (or part
thereof) had not been contained in this Note, but only to the extent it is
invalid, illegal, or unenforceable.
15. ______ CAPTIONS. The captions herein set forth are for convenience
only and shall not be deemed to define, limit, or describe the scope or intent
of this Note.
16. ______ APPLICABLE LAW. Each of the Borrowers acknowledges and
agrees that this Note shall be governed by the laws of the State of Maryland,
even though for the convenience and at the request of the Borrowers, this Note
may be executed elsewhere.
17. _______ ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE
PARTIES HERETO INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF THIS NOTE OR
ANY RELATED INSTRUMENTS, AGREEMENTS OR DOCUMENTS, INCLUDING ANY CLAIM BASED ON
OR ARISING FROM AN ALLEGED TORT, SHALL BE DETERMINED BY BINDING ARBITRATION IN
ACCORDANCE WITH THE FEDERAL ARBITRATION ACT (OR IF NOT APPLICABLE, THE
APPLICABLE STATE LAW), THE RULES OF PRACTICE AND PROCEDURE FOR ARBITRATION OF
COMMERCIAL DISPUTES OF ENDISPUTE, INC., D/B/A J.A.M.S./ENDISPUTE ("J.A.M.S.")
AND THE "SPECIAL RULES" SET FORTH BELOW. IN THE EVENT OF AN INCONSISTENCY, THE
SPECIAL RULES SHALL CONTROL. JUDGMENT UPON ANY ARBITRATION AWARD MAY BE ENTERED
IN ANY COURT HAVING JURISDICTION. ANY PARTY TO THIS
8
<PAGE>
INSTRUMENT, AGREEMENT OR DOCUMENT MAY BRING ANY ACTION, INCLUDING A SUMMARY OR
EXPEDITED PROCEEDING, TO COMPEL ARBITRATION OF ANY CONTROVERSY OR CLAIM TO WHICH
THIS INSTRUMENT, AGREEMENT OR DOCUMENT RELATES IN ANY COURT HAVING JURISDICTION
OVER SUCH ACTION.
(A) ______ SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED
IN MONTGOMERY COUNTY, MARYLAND AND ADMINISTERED BY J.A.M.S. WHO WILL APPOINT AN
ARBITRATOR. IF J.A.M.S. IS UNABLE OR LEGALLY PRECLUDED FROM ADMINISTERING THE
ARBITRATION, THEN THE AMERICAN ARBITRATION ASSOCIATION WILL SERVE. ALL
ARBITRATION HEARINGS WILL BE COMMENCED WITHIN NINETY (90) DAYS OF THE DEMAND FOR
ARBITRATION; FURTHER, THE ARBITRATOR SHALL ONLY, UPON A SHOWING OF CAUSE, BE
PERMITTED TO EXTEND THE COMMENCING OF SUCH HEARING FOR AN ADDITIONAL SIXTY (60)
DAYS.
(B) ______ RESERVATION OF RIGHTS. NOTHING IN THIS INSTRUMENT,
NOTE SHALL BE DEEMED TO: (I) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE
STATUTES OF LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS NOTE; OR (II)
BE A WAIVER BY THE LENDER OF THE PROTECTION AFFORDED TO IT BY 12 U.S.C. ss.91 OR
ANY SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III) LIMIT THE RIGHT OF THE LENDER:
(A) TO EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED TO) SETOFF, OR (B)
TO FORECLOSE AGAINST ANY REAL OR PERSONAL PROPERTY COLLATERAL, OR (C) TO OBTAIN
FROM A COURT PROVI SIONAL OR ANCILLARY REMEDIES SUCH AS (BUT NOT LIMITED TO)
INJUNCTIVE
9
<PAGE>
RELIEF, WRIT OF POSSESSION OR THE APPOINTMENT OF A RECEIVER. THE LENDER MAY
EXERCISE SUCH SELF HELP RIGHTS, FORECLOSE UPON SUCH PROPERTY, OR OBTAIN SUCH
PROVISIONAL OR ANCILLARY REMEDIES BEFORE, DURING OR AFTER THE PENDENCY OF ANY
ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS NOTE. NEITHER THE EXERCISE OF
SELF HELP REMEDIES NOR THE INSTITUTION OR MAINTENANCE OF ANY ACTION FOR
FORECLOSURE OR FOR PROVISIONAL OR ANCILLARY REMEDIES SHALL CONSTITUTE A WAIVER
OF THE RIGHT OF ANY PARTY, INCLUDING THE CLAIMANT IN SUCH ACTION, TO ARBITRATE
THE MERITS OF THE CONTROVERSY OR CLAIM OCCASIONING RESORT TO SUCH REMEDIES.
18. ______ CONSENT TO JURISDICTION. Each of the Borrowers irrevocably
submits to the jurisdiction of any state or federal court sitting in the State
of Maryland over any suit, action, or proceeding arising out of or relating to
this Note. Each of the Borrowers irrevocably waives, to the fullest extent
permitted by law, any objection that it may now or hereafter have to the laying
of venue of any such suit, action, or proceeding brought in any such court and
any claim that any such suit, action, or proceeding brought in any such court
has been brought in an inconvenient forum. Final judgment in any such suit,
action, or proceeding brought in any such court shall be conclusive and binding
upon the Borrowers and may be enforced in any court in which the Borrowers are
subject to jurisdiction by a suit upon such judgment provided that service of
process is effected upon the Borrowers as provided in this Note or as otherwise
permitted by applicable law.
19. WAIVER OF TRIAL BY JURY. EACH OF THE BORROWERS HEREBY WAIVES TRIAL
BY JURY IN ANY ACTION OR PROCEEDING TO WHICH THE BORROWERS, OR EITHER OF THEM,
AND THE LENDER MAY BE PARTIES,
10
<PAGE>
ARISING OUT OF OR IN ANY WAY PERTAINING TO (A) THIS NOTE OR (B) THE FINANCING
DOCUMENTS. IT IS AGREED AND UNDERSTOOD THAT THIS WAIVER CONSTITUTES A WAIVER OF
TRIAL BY JURY OF ALL CLAIMS AGAINST ALL PARTIES TO SUCH ACTIONS OR PROCEEDINGS,
INCLUDING CLAIMS AGAINST PARTIES WHO ARE NOT PARTIES TO THIS NOTE.
THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY MADE BY THE
BORROWERS, AND THE BORROWERS HEREBY REPRESENT THAT NO REPRESENTATIONS OF FACT OR
OPINION HAVE BEEN MADE BY ANY INDIVIDUAL TO INDUCE THIS WAIVER OF TRIAL BY JURY
OR TO IN ANY WAY MODIFY OR NULLIFY ITS EFFECT. THE BORROWERS FURTHER REPRESENT
THAT THEY HAVE BEEN REPRESENTED IN THE SIGNING OF THIS NOTE AND IN THE MAKING OF
THIS WAIVER BY INDEPENDENT LEGAL COUNSEL, SELECTED OF THEIR OWN FREE WILL, AND
THAT THEY HAVE HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL.
11
<PAGE>
IN WITNESS WHEREOF, the Borrowers have caused this Note to be executed
under seal by their duly authorized officers as of the date first written above.
WITNESS/ATTEST: ARGUSS HOLDINGS, INC.
______________________________ By:______________________________(SEAL)
Arthur F. Trudel
Chief Financial Officer
WITNESS/ATTEST: WHITE MOUNTAIN CONSTRUCTION
CABLE CORP.
______________________________ By:______________________________(SEAL)
Arthur F. Trudel
Vice President
12
EXHIBIT 11 a
ARGUSS HOLDINGS, INC.
STATEMENT REGARDING COMPUTATION
OF PER SHARE EARNINGS
Six Months Ended
June 30, 1998 June 30, 1997
------------- -------------
Net Income $ 393,000 $1,392,000
=========== ==========
Weighted Average Common Shares
Outstanding - Basic 10,388,000 7,274,000
Stock Options and Warrants 653,000 284,000
----------- ----------
Weighted Average Common Shares
Outstanding - Diluted 11,041,000 7,558,000
=========== ==========
Net Income Per Share - Basic $ .04 $ .19
=========== ==========
Net Income Per Share - Diluted $ .04 $ .18
=========== ==========
Three Months Ended
June 30, 1998 June 30, 1997
------------- -------------
Net Income $ 1,166,000 $ 774,000
=========== ==========
Weighted Average Common Shares
Outstanding - Basic 10,421,000 7,278,000
Stock Options and Warrants 682,000 317,000
----------- ----------
Weighted Average Common Shares
Outstanding - Diluted 11,103,000 7,595,000
=========== ==========
Net Income Per Share - Basic $ .11 $ .11
=========== ==========
Net Income Per Share - Diluted $ .11 $ .10
=========== ==========
17
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SECURITIES
AND EXCHANGE COMMISSION FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1998, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. THIS
SCHEDULE HAS BEEN UPDATED TO REFLECT THE ADOPTION OF FINANCIAL ACCOUNTING
STANDARDS BOARD STATEMENT NO. 128, "EARNINGS PER SHARE."
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> $1,601,000
<SECURITIES> 0
<RECEIVABLES> 34,515,000
<ALLOWANCES> 0
<INVENTORY> 4,468,000
<CURRENT-ASSETS> 50,626,000
<PP&E> 28,095,000
<DEPRECIATION> (4,901,000)
<TOTAL-ASSETS> 124,261,000
<CURRENT-LIABILITIES> 44,369,000
<BONDS> 0
0
0
<COMMON> 56,938,000
<OTHER-SE> 835,000
<TOTAL-LIABILITY-AND-EQUITY> 124,261,000
<SALES> 35,163,000
<TOTAL-REVENUES> 35,163,000
<CGS> 25,814,000
<TOTAL-COSTS> 25,814,000
<OTHER-EXPENSES> 6,322,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 649,000
<INCOME-PRETAX> 2,378,000
<INCOME-TAX> 1,212,000
<INCOME-CONTINUING> 1,166,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,166,000
<EPS-PRIMARY> .11
<EPS-DILUTED> .11
</TABLE>
