<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 33-77728
PENDA CORPORATION
(Exact name of registrant as specified in its charter)
FLORIDA 65-0463658
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization
2344 WEST WISCONSIN STREET, PORTAGE, WISCONSIN 53901-0449
(Address of principal executive offices) (Zip Code)
(608) 742-5301
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or 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
--- ---
At March 31,1999, the Registrant had 1,016,624.2679 shares of $0.01 par value
common stock outstanding.
<PAGE> 2
This Quarterly Report on Form 10-Q contains forward-looking statements
within the meaning of that term in Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Additional written or oral
forward-looking statements may be made by the Company from time to time, in
filings with the Securities Exchange Commission or otherwise. Statements
contained herein that are not historical facts are forward-looking statements
made pursuant to the safe harbor provisions referenced above.
Forward-looking statements may include, but are not limited to,
projections of revenues, income or losses, capital expenditures, plans for
future operations, financing needs or plans, compliance with financial covenants
in loan agreements, plans for liquidation or sale of assets or businesses, plans
relating to products or services of the Company, assessments of materiality,
predictions of future events, the ability to obtain additional financing, the
Company's ability to meet obligations as they become due, the impact of pending
and possible litigation, as well as assumptions relating to the foregoing. In
addition, when used in this discussion, the words "anticipates," "believes,"
"estimates," "expects," "intends," "plans" and similar expressions are intended
to identify forward-looking statements. Forward-looking statements are
inherently subject to risks and uncertainties, including, but not limited to,
the impact of leverage, dependence on major customers, reliance on sales of new
trucks, fluctuating demand for passenger cars and light trucks, ability to
develop complementary products, risks in product and technology development,
fluctuating resin prices, competition, litigation, labor disputes, capital
requirements, and other risk factors detailed in the Company's Securities and
Exchange Commission filings, some of which cannot be predicted or quantified
based on current expectations.
Consequently, future events and actual results could differ materially
from those set forth in, contemplated by, or underlying the forward-looking
statements. Statements in this Quarterly Report, particularly "Part 1 Item 2
Management's Discussion and Analysis of Financial Condition and Results of
Operations", and "Part 2, Item 1 Legal Proceedings" describe factors, among
others, that could contribute to or cause such differences.
Readers are cautioned not to place undue reliance on any
forward-looking statements contained herein, which speak only as of the date
hereof. The Company undertakes no obligation to publicly release the result of
any revisions to these forward-looking statements that may be made to reflect
events or circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PENDA CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, 1999 DECEMBER 31,
(UNAUDITED) 1998
-------------- ---------------
ASSETS (in thousands)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 4,790 $ 6,337
Accounts receivable, net 13,855 10,667
Inventories, net 5,980 5,701
Deferred income taxes 833 833
Other 1,202 844
-------------- ---------------
Total current assets 26,660 24,382
Property, plant and equipment
Land and improvements 734 744
Buildings and improvements 7,559 7,388
Machinery and equipment 22,781 21,278
Furniture and fixtures 601 600
Construction in progress 941 1,817
-------------- ---------------
32,616 31,827
Less accumulated depreciation 12,803 11,885
-------------- ---------------
Net property, plant and equipment 19,813 19,942
Goodwill and other intangible assets, net 94,123 94,836
-------------- ---------------
Total assets $ 140,596 $ 139,160
============== ===============
</TABLE>
3
<PAGE> 4
PENDA CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, 1999 DECEMBER 31,
(UNAUDITED) 1998
-------------- ---------------
(in thousands)
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
Current liabilities:
Accounts payable $ 4,060 $ 3,612
Accrued interest 702 2,841
Employee compensation 1,394 1,174
Current maturities of long-term debt 576 651
Other accrued liabilities 2,938 2,388
-------------- ---------------
Total current liabilities 9,670 10,666
Long-term debt, less current portion 79,271 78,700
Deferred income taxes 9,865 9,547
-------------- ---------------
Total liabilities 98,806 98,913
Shareholders' equity:
Common stock 10 10
Additional paid-in capital 24,990 24,990
Retained earnings 16,790 15,247
-------------- ---------------
Total shareholders' equity 41,790 40,247
-------------- ---------------
Total liabilities and shareholders' equity $ 140,596 $ 139,160
============== ===============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
4
<PAGE> 5
PENDA CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
----------------------------
(UNAUDITED)
--------------------------------------
1999 1998
--------------- --------------
(in thousands, except for per share data)
<S> <C> <C>
Net sales $ 22,435 $ 18,391
Cost of sales 13,040 12,166
--------------- --------------
Gross profit 9,395 6,225
Selling expenses 2,539 1,295
General and administrative expenses 1,396 1,132
Amortization 891 774
--------------- --------------
Operating income 4,569 3,024
Interest expense 2,036 2,247
Other expense, net 196 111
--------------- --------------
Income before income taxes 2,337 666
Provision for income taxes 794 185
--------------- --------------
Net income $ 1,543 $ 481
=============== ==============
Earnings per share of common stock
Basic $ 1.52 $ 0.47
=============== ==============
Diluted $ 1.52 $ 0.47
=============== ==============
Weighted average common shares outstanding
Basic 1,017 1,017
=============== ==============
Diluted 1,017 1,017
=============== ==============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
5
<PAGE> 6
PENDA CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
(UNAUDITED)
----------------------------------
1999 1998
------------- ------------
(in thousands)
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 1,543 $ 481
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 918 795
Amortization 713 774
Deferred income taxes 318 171
Changes in assets and liabilities, net of
effects from purchase of business
assets:
Accounts receivable (3,188) (1,643)
Inventories (279) 324
Accounts payable 448 (883)
Accrued interest (2,139) (2,459)
Other 411 (375)
------------- ------------
Net cash used in operating activities (1,255) (2,815)
------------- ------------
INVESTING ACTIVITIES:
Capital expenditures (789) (304)
------------- ------------
Net cash used in investing activities (789) (304)
------------- ------------
FINANCING ACTIVITIES:
Proceeds from sale/leaseback 361 --
Payments on capital leases 136 (56)
------------- ------------
Net cash (used in) provided by financing activities 497 (56)
------------- ------------
Net decrease in cash and cash equivalents (1,547) (3,175)
Cash and cash equivalents at beginning of period: 6,336 4,460
------------- ------------
Cash and cash equivalents at end of period: $ 4,790 $ 1,285
============= ============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
6
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
Penda Corporation (the "Company" or "Penda") is one of the world's
largest manufacturers and suppliers of pickup truck accessories serving original
equipment manufacturers ("OEMs") and the automotive aftermarket (the
"aftermarket"). The Company manufacturers thermoformed high-density polyethylene
plastic pickup truck bedliners that are designed to both enhance the vehicle's
appearance and help protect truck beds from damage, thereby extending the useful
life and increasing the resale value of the pickup truck. The Company also
manufactures fiberglass accessory products for pickup trucks, vans, and Class 8
trucks that are sold by truck dealers, specialty automotive stores, other
retailers, and OEMs. Other truck accessories including bed mats, tailgate
liners, cargo tie-downs, toolboxes, and cargo liners designed for sport utility
vehicles and other light trucks are also distributed through the Company's OEM
and aftermarket distribution systems.
These financial statements have been prepared by the Company pursuant
to the rules and regulations of the Securities and Exchange Commission (the
"SEC") and, in the opinion of the Company, include all adjustments (all of which
are normal and recurring in nature) necessary to present fairly the financial
position, results of operations and cash flows of the Company for the interim
periods presented. These financial statements include the accounts of the
Company's wholly-owned subsidiaries, and all significant intercompany
transactions have been eliminated. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to such
rules and regulations. These unaudited consolidated financial statements should
be read in conjunction with the annual consolidated financial statements and
notes thereto contained in the Company's Annual Report on Form 10-K for the year
ended December 31, 1998 as filed with the SEC.
2. INVENTORIES
Inventories consist of the following (in thousands):
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
------------ ------------
<S> <C> <C>
Finished goods $ 2,898 $ 3,031
Work in process 822 680
Raw materials and supplies 2,563 2,245
Less allowance for inventory obsolescence (303) (255)
------------ ------------
$ 5,980 $ 5,701
============ ============
</TABLE>
7
<PAGE> 8
3. COMPREHENSIVE INCOME
The components of comprehensive income, net of related tax, are as
follows:
<TABLE>
<CAPTION>
Three months ended March 31,
1999 1998
------------- ------------
<S> <C> <C>
Net Income $ 1,543 $ 481
Foreign currency translation adjustments - (17)
------------- ------------
Comprehensive income $ 1,543 $ 464
============= ============
</TABLE>
4. CONTINGENCIES
See Item 1 of Part II.
8
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with
Management's Discussion and Analysis of Financial Condition and Results of
Operations included as Item 7 of Part II of the Company's Annual Report on Form
10-K for the year ended December 31, 1998.
RESULTS OF OPERATIONS
Comparison of Quarters Ended March 31, 1999 and 1998
NET SALES: Net sales increased $4.0 million, or 22.0%, from $18.4
million in the first quarter of 1998 to $22.4 million in the first quarter of
1999. This increase is due to improved aftermarket sales and increased sales
activity with General Motors.
COST OF GOODS SOLD AND GROSS PROFIT: Cost of sales increased $0.9
million, or 7.2% from $12.1 million in the first quarter of 1998 to $13.0
million in the first quarter of 1999. This increase is due to higher volume,
offset by favorable cost reductions. Gross profit increased $3.2 million, or
50.9% from $6.2 million in the first quarter of 1998 to $9.4 million in the
first quarter of 1999. Gross profit margins increased from 33.8% in the first
quarter of 1998 to 41.9% in the first quarter of 1999. This improvement was a
direct result of the Company's continued cost reduction efforts and lower resin
pricing.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES: Selling, general and
administrative expenses increased $1.5 million, or 62.1% from $2.4 million in
the first quarter of 1998 to $3.9 million in the first quarter of 1999. As a
percentage of sales, selling, general and administrative expenses increased from
13.2% in the first quarter of 1998 to 17.5% in the first quarter of 1999. The
increased expense was due to the timing of spring promotions and the higher
percentage of sales is a direct result of these programs.
OPERATING INCOME: As a result, operating income increased $1.5 million
or 51.1% from $3.1 million in the first quarter of 1998 to $4.6 million in the
first quarter of 1999.
INTEREST EXPENSE: Interest expense decreased $0.2 million or 9.4% from
$2.2 million in the first quarter of 1998 to $2.0 million in the first quarter
of 1999 due to senior note repurchases in 1998.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary capital requirements for its operations are
working capital (principally inventory and accounts receivable) and capital
expenditures. In addition, the Company has annual note payments of $400,000 and
semi-annual interest (only) payments due on its unsecured 10.75% Senior Notes
due in 2004 ("Notes") and, if used, quarterly payments due on its revolving
Credit Facility. The Company's working capital availability per the borrowing
base report at March 31, 1999 was $12.5 million compared to $14.3 million at
December 31, 1998.
The Company's consolidated debt-to-equity ratio declined to 1.91:1 at
March 31, 1999 from 1.97:1 at December 31, 1998. At March 31, 1999, the Company
had approximately $79.8 million of outstanding debt, including $76.8 million of
senior notes payable, $1.2 million in various notes payable and $1.8 million in
capital lease obligations. As of March 31, 1999, the Company had no outstanding
borrowings and $12.5 million of borrowing ability available under the Credit
Facility.
Management believes that funds generated from operations and funds
available under the Credit Facility will be sufficient to satisfy the Company's
debt service obligations, working capital requirements and commitments for
capital expenditures through at least 1999, but that any significant
acquisitions by the Company would generally require additional financing. There
can be no assurance that such acquisition financing will be available to the
Company on satisfactory terms.
9
<PAGE> 10
YEAR 2000 COMPLIANCE
The inability of computers, software and other equipment utilizing
microprocessors to recognize and properly process data fields containing a
two-digit year after 1999 is commonly referred to as the Year 2000 problem.
The Year 2000 problem is rooted in the way dates are recorded and computed in
most applications, operating systems, hardware, and embedded chips. If not
corrected, this problem may cause systems to fail or produce erroneous results
on or before the year 2000.
As in the case with most other companies using computers in their
operations, the Company is in the process of addressing the Year 2000 problem.
The Company has used internal and external resources to reprogram or replace
and test its information systems for Year 2000 compliance. The Company
considers the following areas as critical in addressing the Year 2000 problem:
1.) Business Systems, 2.) Manufacturing and Warehousing, 3.) Technical
Infrastructure, and 4.) Service Provider Interfaces. The Year 2000 program
has been organized into five phases: (i) Year 2000 Planning, (ii) Inventories,
(iii) Risk Evaluation, (iv) Remediation, and (v) Acceptance Testing. The
Company has completed the first three phases of work required to achieve Year
2000 compliance. The Company is 100% complete in the first three phases and 90%
compliant in the final two phases, remediation and acceptance testing, and
expects to be 100% compliant by the end of the second quarter 1999.
The plan developed to address vendor and customer issues includes
system integration, testing and communication strategies. The Company has
initiated formal communications with critical vendors and customers to
determine the extent to which the Company may be vulnerable to a failure by
any of these third parties to remediate their own Year 2000 Issues. The Company
is currently testing electronic data transmissions to and from its major vendors
and customers to ensure Year 2000 compliance. The Company does not at present
anticipate any material business disruptions due to the Year 2000 problem that
would be associated with the Company's systems, products or services. The
Company believes the most significant risks associated with the Year 2000
problem are external to its operations. In addition to vendors and customers,
the Company also relies upon governmental agencies, utility companies,
telecommunication service companies and other service providers outside the
Company's control. There can be no assurance that the Company's vendors or
customers, governmental agencies or other third parties will not suffer a
Year 2000 business disruption that could have a material adverse effect on the
Company's results of operations or financial position.
COST TO ADDRESS THE YEAR 2000 ISSUE: The Company has incurred costs
of approximately $200,000 which have been expensed, and expects to incur
additional costs of $50,000, which the combined total represents about 25% of
the management information systems department's annual budget. The Company does
not expect expenditures relating to the Year 2000 Issue to be material or to
have significant impact on the Company's financial position.
RISKS PRESENTED BY YEAR 2000 ISSUES: The Company presently
believes that with planned upgrades and implementation of new software, the Year
2000 Issue will not pose significant operational problems for its computer
systems. Minor risks have been identified in the ares of telephone/PBX systems,
personal computer data collection systems, and LAN based personal computer
operating and application systems. However, if any third parties who provide
goods or services essential to the Company's business activities fail to address
appropriately their Year 2000 issues, such failure could have a material adverse
effect on the Company's results of operations or financial position.
CONTINGENCY PLANS: The Company's Year 2000 plan includes the
development of contingency plans in the event that the Company has not completed
all of its remediation plans in timely manner or any third parties who provide
goods or services essential to the Company's business activities have failed to
appropriately address their Year 2000 issues. Presently, the Company is
developing contingency plans, which would provide a reasonable period of time to
bridge support from alternative suppliers, cover banking issues, payroll
processing, and purchased raw material.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to market risks, which include changes in U.S.
interest rates and commodity prices. The Company does not engage in financial
transactions for trading or speculative purposes.
INTEREST RATE RISK. The interest payable on the Company's Credit
Facility is affected by changes in market interest rates. As of March 31,1999,
the Company had no outstanding debt under the Credit Facility. Based on
borrowings through March 31, 1999, a 10% increase or decrease in the average
cost of the Company's Credit Facility debt would not be material. In
addition, the Company has fixed income investments consisting of cash
equivalents and short-term investments in marketable debt securities, which are
also affected by changes in market interest rates. The Company does not use
derivative financial instruments in its investment portfolio.
COMMODITY PRICES. The Company is exposed to fluctuation in market
prices for plastic and electricity related to its manufacturing operations. The
Company manages its exposure to changes in those prices primarily through the
terms of its supply and procurement contracts. This exposure is material to the
Company.
10
<PAGE> 11
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, the Company is subject to legal proceedings and
other claims arising in the ordinary course of its business. The Company
maintains insurance coverage against claims in an amount which it believes to be
adequate. The Company believes that it is not presently a party to any such
ordinary course litigation the outcome of which would have a material adverse
effect on its financial condition or results of operations. Set forth below is
an update of material developments in certain non-ordinary course litigation
more fully described in the Company's Annual Report on Form 10-K for the year
ended December 31, 1998, incorporated herein by reference.
CLASS ACTION LAWSUITS
The Company, along with various other manufacturers of pickup truck
bedliners, is a defendant in certain class action lawsuits. The plaintiffs in
these lawsuits allege that the bedliners manufactured by the defendants are
defective and unreasonably dangerous because they allegedly prevent the
discharge of static electricity which can accumulate on or in portable fuel
containers, thereby creating the potential for fire or explosion. Settlement
discussions are continuing in connection with this lawsuit. In the event that
settlement discussions terminate, the Company intends to vigorously defend these
lawsuits.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Not Applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
Not Applicable
ITEM 5. OTHER INFORMATION
Not Applicable
ITEM 6. EXHIBITS
(a) Exhibits - See below
Exhibit Description
10.1 Amendment to Lease Schedule #9001 between Firstar Leasing Services
Corporation and Penda Corporation dated March 26, 1999
10.2 Lease Schedule #48500-02 between Firstar Leasing Services Corporation
and Penda Corporation dated April 5, 1999
10.3 Amendment No. 2 to The Amended and Restated Credit Agreement between
Banque Nationale de Paris and Penda Corporation dated March 31, 1999
27.1 Financial Data Schedule (for SEC use only)
11
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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.
PENDA CORPORATION
Date: April 19, 1999 By: /s/ Jack L. Thompson
----------------------------------------
Jack L. Thompson
President and Chief Executive Officer
(Principal Executive Officer)
Date: April 19, 1999 By: /s/ Leo. E. Waner
----------------------------------------
Leo E. Waner
Vice President - Chief Financial Officer
(Principal Financial and Accounting Officer)
12
<PAGE> 1
EXHIBIT 10.1
AMENDMENT TO LEASE SCHEDULE #9001
This AMENDMENT TO LEASE SCHEDULE #9100 ("Amendment") is made
as of March 26, 1999, by and between PENDA CORPORATION, ("Lessee") and FIRSTAR
LEASING SERVICES CORPORATION, ("Lessor").
WITNESSETH:
WHEREAS, Lessee and Lessor have entered into that certain
Master Lease Agreement dated December 26, 1995 (the "Lease") and that Lease
Schedule #9100, dated December 26. 1995 (the "Schedule") attached thereto as
Exhibit A, for the leasing of certain equipment described more fully therein
(the "Equipment'); and
WHEREAS, Lessee has requested that Lessor amend the Schedule
in order to extend the remaining lease term and to amend the Purchase/Renewal
Option under the Schedule; and
NOW, THEREFORE, in consideration of the mutual undertakings
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby mutually acknowledged, the parties agree as
follows:
1. Amendments to the Schedule:
a. Section C, Term of the Schedule is hereby amended and
restated as follows:
"TERM: The term of this Schedule commences on
December 26, 1995, ("Base Lease Commencement Date") and expires on December 26,
2003 ("Initial Term"). Unless sooner terminated as set forth in the MLA and at
Lessor's option, this Schedule shall be automatically renewed in its entirety on
a monthly basis ("Renewal Term") unless Lessee gives Lessor written notice of
nonrenewal sixty (60) days prior to the expiration of the Initial Term of this
Schedule (and of any Renewal Term).
b. Section D, Base Rent of the Schedule is hereby
amended and restated as follows:
"BASE RENT: As rent for the Equipment described
in this Schedule, Lessee shall pay Lessor the sum of $28,776.02 ("Base Rent")
per month in arrears from the Base Lease Commencement Date through February 26,
1999, followed thereafter by a monthly payment of $18,140.90 in arrears
beginning March 26, 1999 and continuing on the same day of each and every month
through December 26, 2003 (plus applicable sales/use tax). All Base Rent
payments shall be due on the same day of each and every month during the Initial
Term of this Schedule (and any Renewal Term)."
c. The Stipulated Loss Value of the Schedule is hereby
amended, restated and attached hereto as Exhibit B.
d. Rider #1A, Purchase/Renewal Option (Fixed) attached
to the Schedule is amended, restated and attached hereto as Exhibit C.
2. Status of Lease . Lessee hereby certifies that (i)
no event has occurred and is continuing that would constitute an Event of
Default under the Lease, and (ii) the representations and warranties contained
in the Lease and the Schedule are true, correct and complete in all material
respects as if made on the date hereof.
13
<PAGE> 2
3. Effect of Amendment. On and after the date hereof, each
reference in the Schedule to "this Schedule", "hereunder", "hereof", "herein" or
words of like import referring to the Schedule shall mean and be a reference to
the Schedule as amended by this Amendment.
4. Lease and Original Schedule. Except as specifically amended
by this Amendment and any and all other amendments, the original Schedule and
the Lease shall remain in full force and effect and are hereby ratified and
confirmed.
5. Applicable Law. This Amendment shall be construed and
interpreted in accordance with the laws of the State of Minnesota.
6. Effective Date. The terms of the original Schedule and all
amendments thereto shall be effective with respect to the Equipment, as of the
Lease Commencement Date.
IN WITNESS WHEREOF, the parties have executed this Amendment
by their duly authorized officers, as of the date set forth above.
LESSEE: PENDA CORPORATION
By: /s/Samuel Mostkoff
Title: Vice President
LESSOR: FIRSTAR LEASING SERVICES CORPORATION
By: /s/Thomas D. Russett
Title: VP/Ops. Mgr.
14
<PAGE> 3
EXHIBIT C
RIDER #1A
TO LEASE SCHEDULE #9001
LEASE RENEWAL OR PURCHASE OPTION (FIXED)
(1) PURCHASE OPTION:
On the last date of the Initial Term of the Schedule, Lessee
may purchase for cash all (and only all) of the Equipment under the
Schedule for a price equal to 30% of the Original Equipment Cost upon
thirty (30) day prior written notice to Lessor.
(2) RESALE OPTION:
If Lessee elects not to purchase the Equipment pursuant to
subsection (1) above, Lessee has the option to sell the Equipment on
terms approved by Lessor in writing, unless Lessor, at Lessor's sole
discretion, elects to sell the Equipment. In no event shall Lessee sell
the Equipment for less than 30 percent of Original Equipment Cost
(exclusive of any sales tax and expenses of sale) without Lessor's
prior written consent, and in any event, Lessee shall only sell the
Equipment upon ten (10) business days prior written notice to Lessor.
The Net Sale Proceeds (as defined below) shall be promptly paid to
Lessor; provided that (1) if the Net Sale Proceeds exceed 30% of
Original Equipment Cost, such excess shall be paid to Lessee (after
satisfaction of Lessee's obligations relating to the Schedule); and (2)
if the Net Sale Proceeds are less than 30% of Original Equipment Cost,
Lessee shall immediately pay to Lessor in good funds the difference
thereof up to a maximum of 11% of Original Equipment Cost.
(3) Lessee's ability to renew the Schedule and exercise the First
Purchase Option described above are conditioned upon no event of
default having occurred under the MLA prior to Lessee's payment of the
amount necessary to renew the Schedule or to purchase the Equipment
described therein.
ACCEPTED BY INITIALING:
Lessor: /s/KJH Lessee: /s/LEW
15
<PAGE> 4
EQUIPMENT CONDITION ADDENDUM
FOR ROTARY THERMOFORMER MACHINES
All Rotary Thermoformer Machines, ("Equipment") included under Lease
Schedule No.'s 48500-02 and 48500-03 to a Master Lease Agreement dated December
26, 1995 (herein "Lease") shall meet the following minimum condition
requirements in the event the Equipment is returned pursuant to Section 11 of
the above referenced Lease.
1. The Equipment shall be in such mechanical condition that upon
redelivery the Equipment can immediately be reassembled and placed into
service by an operator without the need for any modifications,
mechanical repairs, replacement parts or replacement components, in the
opinion of the Lessor, except to the extent this would constitute an
infringement of any of Lessee's patents or would result in diverging
any of Lessee's trade secrets or confidential and proprietary
processing know-how. The Equipment will be completed as originally
invoiced to Lessor. Any modifications by Lessee will improve the
capabilities of the Equipment with regard to productivity and will not
adversely affect the Equipment's commercial value, in the opinion of
the Lessor. All approved additions, modifications or changes will
become the property of Lessor, except to the extent this would
constitute an infringement of any of Lessee's patents or would result
in diverging any of Lessee's trade secrets or confidential and
proprietary processing know-how.
2. The Equipment, including all attachments and ancillary systems, will be
in compliance with all applicable federal, state, and local statutes,
laws, ordinances, or rules and regulations at the location where it was
operating, in the opinion of Lessor.
3. At any time during the term of the Lease, Lessee will make the
Equipment available for mechanical inspection by the OEM, or other
qualified maintenance providers, at Lessor's expense, provided such
inspectors sign a Confidentiality Agreement, if so requested by Lessee.
Lessee will remove the Equipment from operation for an adequate period
of time, in the opinion of Lessor, for the purposes of completing each
of these inspections. Inspections will be scheduled so as to not
unreasonably interfere with the operations of Lessee's business. Any
items not found to be in compliance with the OEM's maintenance
standards will be brought into compliance by Lessee within fifteen (15)
days of the inspection, to the satisfaction of Lessor.
4. If the Equipment is taken out of operation for more than ninety (90)
days, measures prescribed by the OEM will be taken to place the
Equipment in long term storage. During the storage period Lessee will
follow the recommendation of the OEM relative to maintenance of the
Equipment.
5. At least fifteen (15) days, but not more than thirty (30) days prior to
redelivery of the Equipment, Lessor at Lessee's expense will have a
qualified service technician, acceptable to Lessor, submit a written
report of the Equipment's mechanical condition based upon a
comprehensive inspection of the Equipment, provided, however, that such
technician signs a Confidentiality Agreement, if so requested by
Lessee. Lessee will remove the Equipment from operation for an adequate
period of time, in the opinion of Lessor, for the purpose of completing
the inspection. This report shall state in detail the mechanical
condition of the Equipment and each of its components. Any items not
found to be in compliance with the OEM's maintenance standards will be
brought into compliance by Lessee prior to return of the Equipment.
Such OEM standards are typically found in Care and Maintenance Manuals,
Operating Manuals, Service Bulletins, and any other OEM publications
relative to care and maintenance of the Equipment. Revisions to these
manuals or other information subsequently published by the OEM relative
to the operation, care and maintenance of the Equipment will become a
standard to be complied with at redelivery.
16
<PAGE> 5
6. Lessee, prior to redelivery and upon request of the Lessor and at
Lessee's expense, will disassemble, prepare for shipment and load the
Equipment, under the supervision of Lessor, or a party designated by
Lessor (such as a representative from the OEM), so that it may be
transported in a manner consistent with the OEM's guidelines, industry
standards, or the Lessor's guidelines.
7. The Equipment will be clean and free of all foreign material, to the
satisfaction of Lessor, prior to shipment.
8. Upon redelivery of the Equipment, Lessee will return to Lessor all
operator's manuals, maintenance manuals, drawings and any other
publications issued with the Equipment by the OEM. These will include
revisions to these documents published by the OEM during the term of
the Lease.
9. During the term of the Lease, a record of maintenance performed on the
Equipment will be maintained by Lessee. Upon request during the Lease
term, Lessee will allow Lessor to examine the records. Upon redelivery
of the Equipment, Lessee will provide a legible copy of the maintenance
records to Lessor.
10. If Lessee does not elect to purchase the Equipment or renew the lease
at the lease termination date, Lessee will store and maintain the
Equipment, at Lessee's expense, for up to twelve (12) months after the
termination date at a location and under conditions suitable to Lessor.
Subsequent to any period of storage up to and including twelve (12)
months, Lessee will, at Lessor's request, ship the Equipment, at
Lessee's expense, to a location designated by Lessor.
11. Lessee will advise Lessor in writing of their decision to return the
equipment a minimum of 180 days prior to Lease termination. Subsequent
to that notification Lessee will make the fully operational equipment
available for examination by prospective buyers secured by Lessor.
Lessee covenants and agrees that the Equipment will meet the above stated
condition standards upon return of the Equipment pursuant to Section 11 of the
Lease. If the Equipment does not meet such stated condition standards at that
time, as determined by Lessor, Lessee agrees to pay to Lessor in cash on demand,
the estimated fair market value costs of bringing the Equipment up to the agreed
upon condition standards.
Date: March 26, 1999 LESSEE: PENDA CORPORATION
Attest/
Witness By: /s/Samuel Mostkoff
-----------------
Title: Vice President
LESSOR: FIRSTAR LEASING SERVICES CORPORATION
By: /s/Thomas D. Russett
Title: VP/Ops. Mgr.
17
<PAGE> 1
EXHIBIT 10.2
LEASE SCHEDULE #48500-02
TO MASTER LEASE AGREEMENT (MLA)
BY AND BETWEEN FIRSTAR LEASING SERVICES CORPORATION ("LESSEE")
AND THE UNDERSIGNED LESSEE ("LESSEE")
A. LEASE TYPE: NONTAX OPERATING LEASE
B. EQUIPMENT LEASED: Lessee unconditionally accepts all of the Equipment in
the attached description.
C. TOTAL EQUIPMENT COST: $554,900.00.
D. TERM: The term of this Schedule commences on April 5, 1999, ("
Commencement Date") and expires on April 5, 2004 ("Initial Term"). Unless
sooner terminated as set forth in the MLA and at Lessor's option, this
Schedule shall be renewable as provided in Section G below in its
entirety.
E. BASE RENT: As rent for the Equipment described in this Schedule, Lessee
shall pay Lessor the sum of $8,267.07 ("Rent") per month in advance from
the Commencement Date. The first Rent payment shall be due on April 5,
1999, and the remaining Rent payments shall be due on the same day of
every month thereafter during the Initial Term of this Schedule (and any
Renewal Term).
F. LOCATION: The Equipment shall be located at 2344 W. Wisconsin Street,
Portage, Wisconsin, in the County of Columbia, and shall not be removed
therefrom without the prior written consent of Lessor. In the case of
Equipment constituting motor vehicles, the Equipment shall be titled and
domiciled in the State of Wisconsin, and shall not be retitled or
domiciled in any other State without the written consent of Lessor.
G. LEASE PURCHASE, RENEWAL AND RESALE PROVISIONS.
(1) First Purchase Option
On the last date of the Initial Term of the Schedule, Lessee may
purchase for cash all (and only all) of the Equipment then covered by
the Schedule for a price equal to 40% percent of Original Equipment
Cost (as defined below) upon thirty (30) days prior written notice to
Lessor.
(2) First Resale Option
If Lessee elects not to purchase the Equipment pursuant to subsection
(a) above, Lessee has the option to sell the Equipment on terms
approved by Lessor in writing, unless Lessor, at Lessor's sole
discretion, elects to sell the Equipment. In no event shall Lessee
sell the Equipment for less than 40% percent of Original Equipment
Cost (exclusive of any sales tax and expenses of sale) without
Lessor's prior written consent, and in any event, Lessee shall only
sell the Equipment upon ten (10) business days prior written notice
to Lessor. The Net Sale Proceeds (as defined below) shall be promptly
paid to Lessor; provided that (1) if the Net Sale Proceeds exceed 40
percent of Original Equipment Cost, such excess shall be paid to
Lessee (after satisfaction of Lessee's obligations relating to the
Schedule); and (2) if the Net Sale Proceeds are less than 40 percent
of Original Equipment Cost, Lessee shall immediately pay to Lessor in
good funds the difference thereof up to a maximum of 12.3 percent of
Original Equipment Cost.
18
<PAGE> 2
(3) RENEWAL
If Lessee does not elect to exercise the purchase or sale options
described in subsections (a) or (b) above, then the Schedule will be
automatically renewed for a period of twelve (12) months ("First
Renewal Term") at a rental payment equal to the Fair Market Value
Rental Value of Original Equipment Cost payable monthly in advance.
In all other respects, the Schedule shall remain unchanged and in
full force and effect.
(4) ADDITIONAL TERMS AND CONDITIONS
(a) As used in this Section G: "Original Equipment Cost" shall mean
the amount paid for the Equipment by Lessor, including any
sales taxes, installation costs, delivery charges and any other
costs or expenses paid by Lessor to acquire the Equipment and
provide same to Lessee under the MLA (which for the purposes of
this Schedule is $554,900.00), and "Net Sale Proceeds" shall
mean the gross amount received from the disposition of the
Equipment (excluding any sales taxes paid), less all costs paid
by Lessor or Lessee to deinstall, store, deliver, reinstall,
test and recertify the Equipment, as well as any appraisal or
remarketing fees and expenses paid by Lessor to a third party
as to the Equipment, plus any attorneys' fees incurred by
Lessor.
(b) Lessee shall pay all taxes, fees, costs, expenses and other
charges of any kind incurred by Lessor pertaining to the
purchase or resale of the Equipment. Any sale of the Equipment
shall be on an "AS IS" AND "WHERE IS" BASIS WITH NO WARRANTIES
(EXPRESS OR IMPLIED) AS TO ANY MATTER WHATSOEVER (INCLUDING
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE), EXCEPT
THAT NO SECURITY INTEREST, LIEN OR ENCUMBRANCE AGAINST SUCH
EQUIPMENT HAS BEEN CREATED BY OR THROUGH LESSOR.
(c) Lessee's ability to renew the Schedule and exercise the
purchase option described above are conditioned upon no event
of default having occurred under the MLA prior to Lessee's
payment of the amount necessary to renew the Schedule or to
purchase the Equipment described therein.
(d) For purposes of federal and state income taxation, Lessee shall
be deemed the "owner" of the Equipment and entitled to any tax
benefits associated therewith.
H. INSURANCE/STIPULATED LOSS VALUE: Lessor will provide Lessee with its
insurance requirements regarding the Equipment separately. The Stipulated
Loss Values during the Initial Term (and any Renewal Term) of this
Schedule for each unit of Equipment lost, stolen, destroyed or damaged
beyond repair ("Stipulated Loss Values") are set forth in Attachment A
hereto.
I. INCORPORATION BY REFERENCE/ORAL MODIFICATIONS: The Master Lease Agreement
(MLA) executed by Lessee is incorporated herein in its entirety, and
Lessee hereby reaffirms all of the representations and warranties
contained in said MLA. This Schedule constitutes a separate and
independent lease of property from any other Lease Schedule. If any
provisions of this Schedule conflict with any provisions of the MLA, the
provisions of this Schedule shall prevail. The parties agree this
Schedule constitutes a security agreement under Article 9 of the Uniform
Commercial Code, and Lessee grants to Lessor a security interest in the
Equipment. Lessee agrees that the MLA and this Schedule may only be
modified, rescinded or terminated upon the prior written consent of
Lessor and Lessee.
19
<PAGE> 3
LESSEE: PENDA CORPORATION
By:/s/Leo E. Waner
VP &CFO
(PRINT OR TYPE NAME AND TITLE)
Accepted at St. Louis Park, Minnesota, this 5th day of April, 1999.
LESSOR: FIRSTAR LEASING SERVICES
CORPORATION
By:/s/Thomas D. Russett VP/Ops. Mgr.
Title
20
<PAGE> 1
EXHIBIT 10.3
AMENDMENT NO. 2 TO THE
AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of March 31, 1999
AMENDMENT NO. 2 TO THE AMENDED AND RESTATED CREDIT AGREEMENT
among Penda Corporation, a Florida corporation (the "Borrower"), the Lenders and
Banque Nationale de Paris, as Agent (the "Agent") for the Lenders.
PRELIMINARY STATEMENTS:
(1) The Borrower, the Lenders and the Agent have entered into
an Amended and Restated Credit Agreement dated as of July 14, 1995 (as amended,
supplemented or otherwise modified through the date hereof, the "Credit
Agreement"). Capitalized terms not otherwise defined in this Amendment have the
same meanings as specified in the Credit Agreement.
(2) The Borrower and the Required Lenders have agreed to amend
the Credit Agreement as hereinafter set forth.
SECTION 1. Amendments to Credit Agreement. The Credit
Agreement is, effective as of the date hereof and subject to the satisfaction of
the conditions precedent set forth in Section 4, hereby amended as follows:
(a) In Section 1.01, the definition of "Applicable Margin" prior
to the phrase "provided, however, that beginning on June 30, 1996" is amended
in full to read as follows:
"'Applicable Margin' means 1.00% per annum for Base Rate
Advances and 2.50% per annum for Eurodollar Rate Advances;"
(b) In Section 1.01, the definition of "Borrowing Base
Availability" is amended in full to read as follows:
"'Borrowing Base Availability' means, from time to time, the
sum of the Loan Values of all Eligible Collateral."
(c) In Section 1.01, the definition of "Eurodollar Rate" is
amended in full to read as follows:
"'Eurodollar Rate' means, for any Interest Period for all
Eurodollar Rate Advances comprising part of the same Working Capital
Borrowing, an interest rate per annum equal to the rate per annum
obtained by dividing (a) the average of the respective rates per annum
(rounded upward to the next whole multiple of 1/16th of 1%) posted by
each of the principal London offices of banks posting rates as
displayed on the Dow Jones Markets screen, page 3750 or such other page
as may replace such page on such service for the purpose of displaying
the London interbank offered rate of major banks for deposits in U.S.
Dollars, at approximately 11:00 A.M. (London time) two Business Days
before the first day of such Interest Period for deposits in an amount
substantially equal to BNP's Eurodollar Rate Advance comprising part of
such Working Capital Borrowing to be outstanding during such Interest
Period (or, if BNP shall not have such a Eurodollar Rate Advance,
$1,000,000) and for a period equal to such Interest Period by (b) a
percentage equal to 100% minus the Eurodollar Rate Reserve Percentage
for such Interest Period."
(d) In Section 1.01, the definition of "Federal Funds Rate" is
amended in full to read as follows:
"'Federal Funds Rate' means, for any period, a fluctuating
interest rate per annum equal for each day during such period (i) to
the rate published by the Dow Jones Markets service on page five of its
daily report as the "ASK" rate as of 10:00 A.M. (New York City time)
for such day (or, if such day is not a
21
<PAGE> 2
Business Day, for the immediately preceding Business Day) or (ii) if
the Dow Jones Markets service shall cease to publish or otherwise shall
not publish such rates for any day that is a Business Day, to the
weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds
brokers, as published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day that is a
Business Day, the average of the quotations for such day for such
transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it."
(e) In Section 1.01, the definition of "Loan Documents" is
amended by adding at the end thereof the following words:
", in each case as amended, modified or supplemented from time
to time."
(f) In Section 1.01, the definition of "Termination Date" is
amended by deleting the words "March 31, 1999" and inserting in lieu thereof
the words "March 31, 2002".
(g) Section 2.04(b)(y) is amended in full to read as follows:
"(y) Notwithstanding the foregoing, the Working Capital
Facility shall be permanently reduced to the amount set forth in
Schedule I as amended by Section 1(n) to this Amendment."
(h) Section 2.13(d)(i) is amended by deleting the figure "3%" and
inserting in lieu thereof the figure "2.5%".
(i) A new Section 4.01(dd) is inserted as follows:
"Each Loan Party has reviewed the areas within its business
and operations which could be adversely affected by, and has developed
or is in the process of developing a program to address on a timely
basis, "Year 2000 Issues" (i.e., the risk that computer applications
used by such Loan Party may be unable to recognize or perform properly
date sensitive functions involving certain dates prior to, and any date
after, December 31, 1999) and, based on such review, such Loan Party
reasonably believes that the "Year 2000 Issues" (and the cost of
remedying the same) will not have a Material Adverse Effect."
(j) Section 5.03(g) is amended in full to read as follows:
"ERISA Events and ERISA Reports. (i) Promptly and in any event
within 10 days after any Loan Party or any ERISA Affiliate knows or has
reason to know that any ERISA Event has occurred, a statement of the
chief financial officer of the Borrower describing such ERISA Event and
the action, if any, that such Loan Party or such ERISA Affiliate has
taken and proposes to take with respect thereto and (ii) on the date
any records, documents or other information must be furnished to the
PBGC with respect to any Plan pursuant to Section 4010 of ERISA, a copy
of such records, documents and information."
(k) Section 5.04(a) is amended in full to read as follows:
"Minimum Net Worth. Maintain on a Consolidated basis for
itself and its Subsidiaries a Net Worth at all times during each Fiscal
Year set forth below the amount set forth below for such periods set
forth below:
22
<PAGE> 3
<TABLE>
<CAPTION>
Fiscal Year
Ending On or About Amount
------------------ ------
<S> <C>
December 31, 1999 $34,000,000
December 31, 2000 $36,000,000
December 31, 2001 $38,000,000"
</TABLE>
(l) Section 5.04(d) is amended in full to read as follows:
"Capital Expenditures. Not make, or permit any of its
Subsidiaries (other than Tri-Glas) to make, any Capital Expenditures
that would cause the aggregate of all Capital Expenditures made by the
Borrower and its Subsidiaries (other than Tri-Glas) on a Consolidated
basis in any Fiscal Year to exceed the amount set forth below for such
Fiscal Year set forth below:
<TABLE>
<CAPTION>
Fiscal Year
Ending In Amount
--------- ------
<S> <C>
December 1999 $3,000,000
December 2000 $3,000,000
</TABLE>
provided, further, that Tri-Glas may make Capital Expenditures in the
following amounts for the following Fiscal Years:
<TABLE>
<CAPTION>
Fiscal Year
Ending In Amount
--------- ------
<S> <C>
December 1999 $500,000
December 2000 $500,000"
</TABLE>
(m) A new Section 8.04(e) is inserted as follows:
"Without prejudice to the survival of any other
agreement of any Loan Party hereunder or under any other Loan
Document, the agreements and obligations of the Borrower
contained in Section 2.08 and this Section 8.04 shall survive
the payment in full of principal, interest and all other
amounts payable hereunder and under any of the other Loan
Documents."
(n) Schedule I to the Credit Agreement is amended in full to read
as set forth in Schedule 1(n) to this Amendment Agreement.
(o) The first full paragraph of Exhibit A is amended by deleting
the words "March 31, 1999" and inserting in lieu thereof the words
"March 31, 2002".
SECTION 2. Conditions of Effectiveness. This Amendment shall
become effective on and as of the first date (the "Effective Date") on which the
following conditions precedent have been satisfied:
(a) There shall have occurred no Material Adverse Change since
December 31, 1998.
(b) All governmental and third party consents and approvals
necessary in connection with the transactions contemplated hereby shall
have been obtained (without the imposition of any conditions that are
not acceptable to the Lenders) and shall remain in effect, and no law
or regulation shall be applicable in the reasonable judgment of the
Lenders that restrains, prevents or imposes materially adverse
conditions upon the transactions contemplated hereby.
(c) The Borrower shall have paid all costs and expenses
required under Section 5 hereof.
23
<PAGE> 4
(d) On the Effective Date, the following statements
shall be true and the Agent shall have received a certificate signed
by a duly authorized officer of the Borrower, dated the Effective Date,
stating that:
(i) the representations and warranties contained
in Section 4.01 of the Credit Agreement are correct on and as
of the Effective Date; and
(ii) no Default exists under the Credit Agreement.
(e) The Agent shall have received on or before the Effective
Date, in form and substance satisfactory to the Agent and (except for
the Replacement Notes, as hereinafter defined) in sufficient copies for
each Lender Party:
(i) counterparts of this Amendment executed by the
Borrower and all the Lenders or, as to any of the Lenders,
advice satisfactory to the Agent that such Lender has executed
this Amendment and the consent attached hereto executed by
Tri-Glas;
(ii) a replacement Note or Notes, as appropriate, in
substantially the form of Exhibit A to the Credit Agreement
(as amended pursuant to Section 1(n) of this Amendment) (the
"Replacement Notes") issued to the order of the Lenders;
(iii) a certified copy of the resolution of the Board
of Directors of the Borrower approving this Amendment and the
Replacement Notes and all documents evidencing other necessary
corporate action and governmental approvals, if any, with
respect to this Amendment and the Replacement Notes;
(iv) a certified copy of the resolution of the Board
of Directors of Tri-Glas approving the consent attached
hereto, and all documents evidencing other necessary corporate
action and governmental approvals, if any, with respect to the
consent;
(v) a certificate of the Secretary of each of the
Borrower and Tri-Glas certifying the names and true signatures
of the officers of such Persons authorized to sign, (1) in the
case of the Borrower, this Amendment and the Replacement Notes
and (2) in the case if Tri-Glas, the consent attached hereto.
(vi) A favorable opinion of Greenberg, Traurig,
Hoffman, Lipoff, Rosen & Quental, P.A., counsel for the
Borrower and Tri-Glas, as to the due execution, validity and
enforceability of this Amendment, the Loan Documents (as
amended by this Amendment), the Replacement Notes and the
consent attached hereto and as to such other matters as any
Lender through the Agent may reasonably request.
(f) The Agent shall have received the fees referred to
in the separate letter agreement dated March 25, 1999 between the
Borrower and the Agent.
SECTION 3. Representations and Warranties of the Borrower.(a)
The Borrower represents and warrants as follows:
(i) Each of the Borrower and Tri-Glas is a corporation
duly organized, validly existing and in good standing under the laws of
the jurisdiction of its organization.
(ii) The execution, delivery and performance by the
Borrower of this Amendment and the Replacement Notes, and by Tri-Glas
of the consent attached hereto and the consummation of the transactions
contemplated hereby, is within its corporate powers, has been duly
authorized by all necessary
24
<PAGE> 5
corporate action and does not contravene (1) its charter or by-laws; or
(2) any law or any contractual restriction binding on or affecting it.
(iii) No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body
or any other third party is required for the due execution, delivery,
recordation, filing or performance by the Borrower of this Amendment or
the Replacement Notes and by Tri-Glas of the consent attached hereto.
(iv) This Amendment has been, and each of the Replacement
Notes when delivered will have been, duly executed and delivered by the
Borrower. This Amendment is, and each of the Replacement Notes when
delivered will be, the legal, valid and binding obligations of the
Borrower, enforceable against the Borrower in accordance with their
respective terms.
(v) The consent attached hereto has been duly executed and
delivered by Tri-Glas. The consent attached hereto is the legal, valid
and binding obligations of Tri-Glas, enforceable against Tri-Glas in
accordance with its terms.
(vi) As at the date of this Amendment, none of the
Subsidiaries of the Borrower, other than Tri-Glas, has assets with a
fair market value in excess of $50,000.
(b) The Borrower hereby repeats the representations and warranties
contained in each Loan Document as if made on the date of this Amendment, other
than any such representations or warranties that, by their terms, refer to a
specific date other than the date of this Amendment, in which case as of such
specific date.
SECTION 4. Reference to and Effect on the Loan Documents. (a)
On and after the effectiveness of this Amendment, each reference in the Credit
Agreement to "this Agreement", "hereunder", "hereof" or words of like import
referring to the Credit Agreement, and each reference in the Replacement Notes
and each of the other Loan Documents to "the Credit Agreement", "thereunder",
"thereof" or words of like import referring to the Credit Agreement, shall mean
and be a reference to the Credit Agreement, as amended by this Amendment.
(b) The Credit Agreement and each of the other Loan Documents, as
specifically amended by this Amendment, are and shall continue to be in full
force and effect and are hereby in all respects ratified and confirmed. Without
limiting the generality of the foregoing, the Collateral Documents and all of
the Collateral described therein do and shall continue to secure the payment of
all Obligations of the Loan Parties under the Loan Documents, in each case as
amended by this Amendment.
(c) The execution, delivery and effectiveness of this Amendment shall
not, except as expressly provided herein, operate as a waiver of any right,
power or remedy of any Lender or the Agent under any of the Loan Documents, nor
constitute a waiver of any provision of any of the Loan Documents.
SECTION 5. Costs, Expenses. The Borrower agrees to pay on
demand all costs and expenses of the Agent in connection with the preparation,
execution, delivery and administration, modification and amendment of this
Amendment and the other instruments and documents to be delivered hereunder
(including, without limitation, the reasonable fees and expenses of counsel for
the Agent) in accordance with the terms of Section 8.04 of the Credit Agreement.
SECTION 6. Execution in Counterparts. This Amendment may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute but one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Amendment by telecopier shall be effective as delivery of a manually executed
counterpart of this Amendment.
SECTION 7. Governing Law. This Amendment shall be governed
by, and construed in accordance with, the laws of the State of New York.
25
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
PENDA CORPORATION
By s/s Samuel Mostkoff
Title: Vice President
BANQUE NATIONAL DE PARIS,
as Agent and as Lender
By /s/ Richard Cushing
Title :Director
By /s/ Paul P. Barnes
Title: Assistant Vice President
FIRSTAR BANK MILWAUKEE, N.A.
By /s/ Randy D. Olver
Title: Vice President
26
<PAGE> 7
SCHEDULE 1(N)
SCHEDULE I
COMMITMENTS AND APPLICABLE LENDING OFFICES
<TABLE>
<CAPTION>
Working Letter Domestic
Capital of Credit Lending
Name of Bank Commitment Commitment Office
- ------------ ---------- ---------- ------
<S> <C> <C> <C>
Banque Nationale $9,000,000 $500,000 Credit Matters
de Paris, New 499 Park Avenue
York Branch New York, NY 10022
Tel: (212) 415-9712
Fax: (212) 418-8269
Attention:
Richard Cushing
Operations
499 Park Avenue
New York, NY 10022
Tel: (212) 415-9655
Fax: (212) 418-8269
Attention:
Julia Requena
Payments
499 Park Avenue
New York, NY 10022
ABA No.: 026007689
Account No.: 19225300157
Reference: PENDA
Firstar Bank
Milwaukee, N.A. $3,500,000 Credit Matters
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Tel: (414) 765-5324
Fax: (414) 765-5062
Attention:
Randy Olver
</TABLE>
27
<PAGE> 8
CONSENT
Dated as of March 31, 1999
The undersigned, Tri-Glas Corporation, an Alabama corporation, as
Guarantor under the Subsidiaries Guaranty dated July 15, 1995 (the "Guaranty")
in favor of the Agent, for its benefit and the benefit of the Lenders Parties
party to the Credit Agreement referred to in the foregoing Amendment, hereby
consents to such Amendment and hereby confirms and agrees that (a)
notwithstanding the effectiveness of such Amendment, the Guaranty is, and shall
continue to be, in full force and effect and is hereby ratified and confirmed in
all respects, except that, on and after the effectiveness of such Amendment,
each reference in the Guaranty to the "Credit Agreement", "thereunder",
"thereof" or words of like import shall mean and be a reference to the Credit
Agreement, as amended by such Amendment, and (b) the Collateral Documents to
which such Grantor is a party and all of the Collateral described therein do,
and shall continue to, secure the payment of all of the Secured Obligations (in
each case, as defined therein).
TRI-GLAS CORPORATION
By /s/ Samuel Mostkoff
Title: Vice President
28
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 4,790
<SECURITIES> 0
<RECEIVABLES> 14,170
<ALLOWANCES> (315)
<INVENTORY> 5,980
<CURRENT-ASSETS> 26,660
<PP&E> 32,616
<DEPRECIATION> (12,803)
<TOTAL-ASSETS> 140,596
<CURRENT-LIABILITIES> 9,670
<BONDS> 79,271
0
0
<COMMON> 10
<OTHER-SE> 41,780
<TOTAL-LIABILITY-AND-EQUITY> 140,596
<SALES> 22,435
<TOTAL-REVENUES> 22,435
<CGS> 13,040
<TOTAL-COSTS> 13,040
<OTHER-EXPENSES> 5,022
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,036
<INCOME-PRETAX> 2,337
<INCOME-TAX> 794
<INCOME-CONTINUING> 1,543
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,543
<EPS-PRIMARY> 1.52
<EPS-DILUTED> 1.52
</TABLE>
