<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
-- EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
OR
-- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-3905
TRANSMATION, INC.
(Exact name of registrant as specified in its charter)
OHIO 16-0874418
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10 Vantage Point Drive, Rochester, NY 14624
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 716-352-7777
Former name, former address and former fiscal year, if changed since last report
Indicate by check mark (x) whether the registrant, (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes x No
---- ----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Number of Shares Outstanding Date
- ----- ---------------------------- ----
Common 2,418,440 October 18, 1995
TOTAL PAGES - 30
<PAGE>
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
TRANSMATION
CONSOLIDATED BALANCE SHEET
ASSETS
<S> <C> <C>
Sept. 30, March 31,
1995 1995
-------- ------
Current Assets:
Cash $ 294,548 $ 607,763
Accounts Receivable, less allowance for
doubtful accounts of $528,200 at 9/30/95
and $473,000 at 3/31/95 4,958,207 5,524,244
Inventories 6,508,471 6,747,036
Prepaid Expenses and Deferred Charges 1,263,689 1,270,833
Deferred Tax Assets 130,741 132,026
----------- ----------
Current Assets 13,155,656 14,281,902
----------- -----------
Properties, at cost, less accumulated
depreciation and amortization 1,577,801 1,500,498
Deferred Charges 145,106 146,161
Deferred Income Taxes 153,109 154,926
Other Assets 218,497 209,920
----------- -----------
$15,250,169 $16,293,407
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable $ 2,079,378 $ 3,655,934
Accrued Payrolls, Commissions and Other
Liabilities 941,014 1,187,992
Income Taxes Payable 264,949 2,610
----------- -----------
Current Liabilities 3,285,341 4,846,536
----------- -----------
Long-Term Debt 4,039,800 4,064,426
Deferred Compensation 737,417 780,880
----------- -----------
8,062,558 9,691,842
----------- -----------
Stockholders' Equity
Common Stock, par value $.50 per share -
Authorized - 8,000,000 shares
issued outstanding - 2,418,440 shares at 9/30/95 and
2,380,640 at 3/31/95 1,209,220 1,190,320
Capital in Excess of Par Value 993,546 849,829
Accumulated Translation Adjustment (77,493) (109,513)
Retained Earnings 5,062,338 4,670,929
----------- -----------
7,187,611 6,601,565
----------- -----------
$15,250,169 $16,293,407
=========== ===========
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
</TABLE>
<PAGE>
<TABLE>
TRANSMATION, INC.
CONSOLIDATED STATEMENT OF INCOME (LOSS)
UNAUDITED
Three Months Ended Six Months Ended
------------------------------- ----------------------------------
<S> <C> <C> <C> <C>
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1995 1994 1995 1994
--------------------------------- ----------------------------------
Net Sales $ 9,100,252 $ 8,478,390 $ 18,666,749 $ 16,955,729
------------ ------------ ------------ ------------
Costs and Expenses:
Cost of Product Sold 5,726,831 5,314,932 11,760,795 10,747,671
Selling & Admin. Expenses 2,682,226 2,740,339 5,483,910 5,737,290
Research & Develop. Costs 261,187 285,961 529,112 650,351
Interest Expense 106,899 106,811 218,998 187,187
----------- ------------ ------------ ------------
8,777,143 8,448,043 17,992,815 17,322,499
----------- ------------ ------------ ------------
Income(Loss) Before Taxes 323,109 30,347 673,934 (366,770)
Provision for Income Taxes
State and Federal 134,525 13,000 282,525 13,000
----------- ------------ ----------- ------------
Net Income(Loss) 188,584 17,347 391,409 (379,770)
Retained Earnings at
Beginning of Period 4,873,754 3,892,027 4,670,929 4,289,144
----------- ------------ ------------ ------------
Retained Earnings at
End of Period $ 5,062,338 $ 3,909,374 $ 5,062,338 $ 3,909,374
============ ============
Net Income(Loss) Per Share $ .07 $ .01 $ .15 ($ .16)
=============================== =================================
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
</TABLE>
<PAGE>
<TABLE>
TRANSMATION, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
UNAUDITED
Three Months Ended Six Months Ended
------------------------------------ -------------------------------
<S> <C> <C> <C> <C>
July 1, 1995 July 1, 1994 April 1, 1995 April 1, 1994
to to to to
Sept. 30, 1995 Sept. 30, 1994 Sept. 30, 1995 Sept. 30, 1994
----------------------------------- ------------------------------
Cash Flows from Operating Activities:
Net Income(Loss) $ 188,584 $ 17,437 $ 391,409 ($ 379,770)
Items Not Requiring (Providing) Cash
Included in Income
Depreciation and Amortization 108,024 109,017 207,748 203,383
Increase in Cash Surrender Value of
Insurance Policies (8,577) (8,716) (8,577) (8,716)
Provision for Losses on Accounts Receivable 26,700 35,600 55,200 9,900
Decrease(Increase) in Accounts Receivable (186,472) 182,292 510,837 967,841
Decrease(Increase) in Inventories 240,355 39,442 238,565 (281,319)
Decrease(Increase) in Prepaid Expenses and
Deferred Charges 130,825 293,913 8,199 872,885
(Decrease)Increase in Accounts Payable (660,501) (417,374) (1,576,556) (580,585)
(Decrease)Increase in Accrued Payrolls,
Commissions and Other Liabilities (73,410) (155,682) (246,978) (449,103)
Increase(Decrease) in Income Taxes Payable 162,560 1,893 262,339 (1,470)
(Decrease)Increase in Deferred and Prepaid
Income Taxes 2,787 3,367 3,102 1,586
Deferred Compensation (22,327) (43,463)
----------------------------------- ------------------------------
Net Cash Provided (Used) by Operating Activities (91,452) 101,189 (198,175) 354,632
----------------------------------- ------------------------------
Cash Flows (Used in) Investing Activities:
Purchases of Properties (191,969) (113,336) (285,051) (268,630)
----------------------------------- ------------------------------
Net Cash (Used in) Investing Activities (191,969) (113,336) (285,051) (268,630)
----------------------------------- ------------------------------
Cash Flows from Financing Activities:
Exercise of Stock Options and Warrants 74,250 2,250 162,617 2,250
Increase(Decrease) in Long-Term Debt 119,100 31,926 (24,626) 31,926
----------------------------------- ------------------------------
Net Cash Provided by Financing Activities 193,350 34,176 137,991 34,176
----------------------------------- ------------------------------
Effect of Exchange Rate Changes on Cash 26,383 23,568 32,020 16,148
----------------------------------- ------------------------------
Net Increase(Decrease) in Cash (63,688) 45,597 (313,215) 136,326
Cash at Beginning of Period 358,236 275,535 607,763 184,806
----------------------------------- ------------------------------
Cash at End of Period $ 294,548 $ 321,132 $ 294,548 $ 321,132
=================================== =============================
Cash Paid for Interest and Income Taxes
are as follows:
Interest Paid $ 104,634 $ 130,284 $ 210,591 $ 206,149
Taxes Paid $ 35,922 NONE $ 167,865 NONE
SEE NOTES TO FINANCIAL STATEMENTS
</TABLE>
<PAGE>
<TABLE>
TRANSMATION, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
<S> <C> <C> <C> <C>
Number of Shares
of $.50 Par Value Common Stock Capital
Common Stock Issued and in Excess Retained
Outstanding Outstanding of Par Value Earnings
----------------------- ------------------------ ------------------- -------------------
Balance, March 31, 1993 2,374,040 $1,187,020 $834,679 $4,875,378
Issuance of Stock 200 100 350
Net Loss (586,234)
----------------------- ------------------------ ------------------- -------------------
Balance, March 31, 1994 2,374,240 1,187,120 835,029 4,289,144
Issuance of Stock 6,400 3,200 14,800
Net Income 381,785
----------------------- ------------------------ ------------------- -------------------
Balance, March 31, 1995 2,380,640 1,190,320 849,829 4,670,929
Issuance of Stock 37,800 18,900 143,717
Net Income 391,409
----------------------- ------------------------ ------------------- -------------------
Balance, September 30, 1995 2,418,440 $1,209,220 $993,546 $5,062,338
======================= ======================== =================== ===================
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
</TABLE>
<PAGE>
Note 1 - Revolving Credit Agreement
Borrowings under a secured revolving credit agreement with a bank which extends
through July 31, 1998 total $4,039,800 at September 30, 1995.
Maximum funds available under this credit agreement total $7,000,000. The
interest rate the bank's prime lending rate.
The revolving credit agreement contains, among other provisions, restrictions on
the annual amount of capital expenditures, restrictions on the annual amount of
expenditures made for the purpose of printing and distributing catalogs and
requirements for minimum amounts of tangible net worth.
Additionally, the company has pledged its personal property and fixtures,
including inventory and equipment, and its accounts receivable as collateral
security for the loan. Further, the company has agreed to pay to the lender an
amount equal to 1/4% of the unused portion of the total credit available. The
fee is payable quarterly. Total commitment fees paid on any unused lines of
credit under revolving credit agreements were immaterial in 1995 and 1994.
The company is in compliance with provisions of its loan agreement at September
30, 1995.
Note 2 - Inventories
The major classifications of inventory are as follows:
<TABLE>
<S> <C> <C>
Sept. 30, 1995 March 31, 1995
-------------- --------------
Raw Materials and Purchased Parts $1,844,324 $1,510,425
Work in Process 878,277 767,522
Finished Products 3,785,870 4,469,089
---------- ----------
$6,508,471 $6,747,036
========== ==========
</TABLE>
Note 3 - Stockholders' Equity
In August 1993, an incentive Stock Option plan was adopted; this plan was
amended in August 1995. Options are available to be granted to employees under
the 1993 Plan at prices not less than fair market value at the date of grant and
are exercisable in annual installments beginning at the date of grant and
expiring up to ten years later. A plan adopted in August 1981 has now expired;
however, certain options remain exercisable under that plan.
<PAGE>
The following table summarizes the transactions under the plans during 1995,
1994, and 1993:
<TABLE>
<S> <C> <C> <C>
Option Price
Shares Per Share Aggregate
------ ------------ ---------
Options Outstanding - 3/31/93 88,500 $2.25 $199,125
------ ----- --------
Options Granted During the Year 10,000 4.00 40,000
Options Cancelled During the Year (1,000) 2.25 (2,250)
Options Exercised During the Year (200) 2.25 (450)
Balance, 3/31/94 97,300 2.25-4.00 236,425
Options Granted During the Year 164,600 4.25 699,550
Options Exercised During the Year (5,200) 2.25 (11,700)
Options Cancelled During the Year (12,100) 2.25 (27,225)
-------- ----- --------
Balance, 3/31/95 244,600 2.25-4.25 897,050
Options Exercised During the Year (13,400) 2.25 (30,150)
Options Cancelled During the Year (2,000) 2.25-6.25 (8,500)
Options Granted During the Year 187,400 4.25-6.25 951,250
------- --------- -------
Balance, 9/30/95 416,600 $2.25-6.25 $1,809,650
======= ========== ==========
</TABLE>
59,600 shares are eligible to be exercised under the 1981 and 1993 plans. The
market value of these shares at the date they first became eligible for exercise
ranged from $2.00 to $6.50 per share and aggregated $224,750.
On August 21, 1984, shareholders approved the Directors' Warrant Plan. On August
16, 1995, this plan was amended by shareholders. The Plan provides that warrants
may be granted thereunder to non-employee directors of Transmation to purchase
in the aggregate not more than 100,000 shares of the company's Common Stock. The
purchase price for shares issued under the Directors' Warrant Plan shall be
equal to the fair market value of the stock on the date of the grant of the
warrant. A summary of activity under the 1984 Directors' Warrant Plan is as
follows:
<TABLE>
<S> <C> <C> <C>
Warrant
Shares Price Aggregate
------ ------- ---------
Balance - 3/31/94 32,500 $3.00-3.875 $110,625
------ ----------- --------
Balance - 3/31/95 32,500 3.00-3.875 110,625
------ ---------- --------
Exercised During the Year (14,500) 3.00-3.875 (54,875)
Granted During the Year 14,000 6.500 91,000
Cancelled During the Year (2,000) 3.875 (7,750)
------- ----- -------
Balance - 9/30/95 $30,000 $3.00-6.50 $139,000
======= ========== ========
</TABLE>
On March 11, 1993, the Board of Directors granted the President of the Company's
Instrument Division a non-qualified stock option contract for the purchase of
25,000 shares of the company's common stock at $3.00 per share, the fair market
value at the date of the grant. These shares are exercisable in equal annual
installments beginning at the date of the grant and expiring five years later.
On August 15, 1995, the Board of Directors granted the President of the
Company's Transcat division a non-qualified stock option contract for the
purchase of 30,000 shares of the Company's common stock at $6.25 per share, the
fair market value at the date of the grant. These shares are exercisable in
equal installments beginning at the date of the grant and expiring five years
later.
<PAGE>
Note 4 - Net Income (Loss) Per Share
The net income per share amounts in 1995 and 1994 were computed by dividing the
net income by the average number of shares actually outstanding plus common
equivalent shares resulting from the assumed conversion of the dilutive stock
options and warrants. The net loss per share amount in 1994 was computed by
dividing the net loss by the number of shares actually outstanding. Common and
common equivalent shares averaged 2,524,377 in 1995 and 2,375,240 in 1994.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Sales increases result primarily from increased product, service and repair
sales within the Company's Transcat division. Shipments from the Company's
domestic Instrument division and through its Far East subsidiaries are not
presently achieving planned levels and efforts are underway to correct this
situation.
Financial Condition
The Company's primary sources of liquidity and capital are funds provided
through its borrowing agreement with a bank, its profitability and through
management of its balance sheet.
At September 30, 1995, trade accounts receivable had been reduced more than
$566,000 compared to the balance which existed at March 31, 1995, and
inventories at September 30, 1995 had been reduced by more than $238,000
compared to amounts which existed at March 31, 1995. These reductions, combined
with a reduction of cash balances enabled the Company to reduce its balance of
Trade Accounts Payable by more than $1,567,000 as of September 30, 1995 when
compared to the balance which existed at March 31, 1995.
The Company signed an amendment to its existing revolving credit facility during
the quarter which increases the total amount available under the credit to
$7,000,000, reduces the rate charged on amounts outstanding to the bank's prime
lending rate, and extends the expiration date of the agreement through July 31,
1998.
Results of Operations
Comparison of July 1, 1995 - September 30, 1995
to
July 1, 1994 - September 30, 1994
Sales increased approximately 7% in 1995 compared to 1994. This increase is the
result of gains achieved in the Company's Transcat division and in its domestic
Instrument division.
Cost of products sold increased by approximately 8% in 1995 compared to 1994. A
somewhat less favorable sales mix compared to fiscal 1994 caused cost of
products sold to increase slightly more than sales in the period.
Sales and administrative expenses totaled 29.5% of sales in 1995 compared to
32.3% of sales in 1994. This improvement resulted primarily from lower catalog
mailing costs in 1995 compared to 1994.
Research and development spending was 9% lower in 1995 than in 1994. Research
spending has been reduced during the past year bringing Company spending in line
with industry norms.
Comparison of April 1, 1995 - September 30, 1995
to
April 1, 1994 - September 30, 1994
Sales increased 10% in the six month period ended September 30, 1995 compared to
the same period one year ago. This increase is primarily the result of gains
achieved in the Company's Transcat division.
Cost of products sold increased by approximately 9% in fiscal 1995 compared to
the same period in 1994. This increase is approximately equal to the increase in
sales that was achieved.
<PAGE>
Sales and administrative expenses totaled 29.4% of sales in the six month period
ended September 30, 1995 compared to 33.8% of sales in the same 1994 period.
Lower catalog costs in 1995 are the primary reason for the reduction in sales
and administrative expenses.
Research and development costs totaled 2.8% of sales in 1995 versus 3.8% of
sales in 1994. Research spending has been reduced to a level in line with
industry norms in 1995.
PART II
OTHER INFORMATION
Item 2. Changes in Securities
On September 8, 1995, Transmation amended its revolving credit
agreement with a bank. That amendment is filed as Exhibit 4(c) to this
filing.
Item 4. Submission of Matters to a Vote of Security Holders
On August 15, 1995, Mr. Gerald R. Katz, Mr. Robert G. Klimasewski and
Mr. Philip P. Schulp were elected to serve 3-year terms as Directors
of Transmation, Inc. Price Waterhouse was elected to serve as auditors
for fiscal 1996; the Transmation, Inc. 1993 Stock Option Plan was
amended and restated; the Transmation, Inc. Employees' Stock Purchase
Plan was ratified; the Transmation, Inc. Amended and Restated
Directors' Warrant Plan was ratified; and the Transmation, Inc.
Directors' Stock Plan was ratified.
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.
TRANSMATION, INC.
Date November 13, 1995 /s/ Robert G. Klimasewski
------------------------ Robert G. Klimasewski, President
Date November 13, 1995 /s/ John A. Misiaszek
------------------------ John A. Misiaszek
Vice President, Finance
<PAGE>
INDEX TO EXHIBITS
(2) Plan of acquisition, reorganization, arrangement, liquidation or
succession
Not applicable.
(3) (a) Articles of Incorporation
Articles of Incorporation, as amended, are incorporated
herein by reference to Exhibit 4(a) to the Registrant's
Registration Statement on Form S-8 (Registration No.
33-61665) as filed on August 8, 1995.
(b) By-laws
Code of Regulations, as amended, are incorporated herein by
reference to Exhibit 3 to the Registrant's Annual Report on
Form 10-K for the fiscal year ended March 31, 1988.
(4) Instruments defining the rights of security holders, including
indentures
(a) The documents listed under Item (3) of this Index are
incorporated herein by reference.
(b) Revolving Credit Agreement between the Registrant and
Manufacturers and Traders Trust Company is incorporated
herein by reference to Exhibit 1 to the Registrant's Form
10-Q for the quarter ended September 30, 1994.
*(c) Agreement and Amendment No. 1 to an Existing Revolving
Credit Facility Agreement between the Registrant and
Manufacturers and Traders Trust Company dated September 8,
1995, together with a brief identification of the contents
of all omitted exhibits thereto, is included herein as
Exhibit 4(c) at pages 14 through 22 of this Report. Upon
written request, the Registrant will provide to security
holders copies of any of the referenced omitted exhibits.
(10) Material Contracts
(a) The documents listed under Item (4) of this Index are
incorporated herein by reference.
(b) Compensation agreements between the Registrant and William
J. Berk are incorporated herein by reference to Exhibit 10
to the Registrant's Form 10-K for the fiscal year ended
March 31, 1984, and Exhibit 10(b) to the Registrant's Form
10-K for the fiscal year ended March 31, 1991.
(c) Non-Statutory Stock Option Agreement dated March 11, 1993
between the Registrant and Thomas R. Crumlish is
incorporated herein by reference to Exhibit 10 to the
Registrant's Form 10-K for the fiscal year ended March 31,
1993.
(d) Transmation, Inc. Directors' Stock Plan is incorporated
herein by reference to Exhibit 10(i) to the Registrant's
Form 10-K for the fiscal year ended March 31, 1995.
(e) Employment Agreement dated as of April 1, 1995 between the
Registrant and Robert G.
<PAGE>
Klimasewski is incorporated herein by reference to Exhibit
10(ii) to the Registrant's Form 10-K for the fiscal year
ended March 31, 1995.
(f) Transmation, Inc. Amended and Restated Directors' Warrant
Plan is incorporated herein by reference to Exhibit 99(b) to
the Registrant's Registration Statement on Form S-8
(Registration No. 33-61665) as filed on August 8, 1995.
(g) Transmation, Inc. Amended and Restated 1993 Stock Option
Plan is incorporated herein by reference to Exhibit 99(c) to
the Registrant's Registration Statement on Form S-8
(Registration No. 33-61665) as filed on August 8, 1995.
(h) Transmation, Inc. Employees' Stock Purchase Plan is
incorporated herein by reference to Exhibit 99(e) to the
Registrant's Registration Statement on Form S-8
(Registration No. 33-61665) as filed on August 8, 1995.
*(i) Amendment No. 1 to Transmation, Inc. Directors' Stock Plan
is included herein as Exhibit 10(i) at page 23 of this
Report.
*(j) Non-Statutory Stock Option Agreement dated August 15, 1995
between Transmation, Inc. and Eric W. McInroy is included
herein as Exhibit 10(j) at pages 24 through 28 of this
Report.
(11) Statement re computation of per share earnings
Not applicable.
(15) Letter re unaudited interim financial information
Not applicable.
(18) Letter re change in accounting principles
Not applicable.
(19) Report furnished to security holders
Not applicable.
(22) Published report regarding matters submitted to vote of security
holders
Not applicable.
(23) Consents of experts and counsel
Not applicable.
(24) Power of attorney
Not applicable.
<PAGE>
*(27) Financial Data Schedule
The Financial Data Schedule is included herein as Exhibit 27 at pages
29 through 30 of this Report.
(99) Additional Exhibits
Not applicable.
* Exhibit filed with this Report
<PAGE>
EXHIBIT 4(c)
AGREEMENT AND AMENDMENT NO. 1
TO AN EXISTING REVOLVING
CREDIT FACILITY AGREEMENT
THIS AGREEMENT AND AMENDMENT NO. 1 TO AN EXISTING REVOLVING CREDIT FACILITY
AGREEMENT is made September 8, 1995, by and between MANUFACTURERS AND TRADERS
TRUST COMPANY ("Bank"), a domestic corporation with an office and principal
place of business located at One M&T Plaza, Buffalo, New York 14240, and
TRANSMATION, INC. ("Borrower"), an Ohio corporation authorized to do business in
New York State, with an office and principal place of business located at 977
Mt. Read Blvd., Rochester, New York 14606.
R E C I T A L S
---------------
A. On or about September 13, 1994, Bank and Borrower entered into a Revolving
Credit Facility Agreement.
B. In connection with its execution of the Revolving Credit Facility
Agreement, Borrower and other Entities also executed and delivered to Bank
various Documents.
C. Bank and Borrower desire to make certain changes to the Revolving Credit
Facility Agreement, which changes are set forth below.
NOW, THEREFORE, in consideration of the promises set forth below, and/or in
consideration of any prior extension of credit by Bank to Borrower and/or in
consideration of Bank entering into the Agreement, Bank and Borrower hereby
agree as follows:
1. This Agreement and Amendment No. 1 to an Existing Revolving Credit Facility
Agreement is referred to below as the "Amendment". Except as otherwise specified
in this Amendment, capitalized terms used in this Amendment and in the Documents
executed in connection with this Amendment, have the definition given to them in
the September 13, 1994 Revolving Credit Facility Agreement between Bank and
Borrower, as amended by this Amendment and as hereafter amended from time to
time ("Agreement").
2. Effective as the date this Amendment is executed by Bank and Borrower
("Amendment Date"), Sections 1.17, 1.19 and 1.22, are deleted and replaced with
the following.
"1.17 The term "Maximum Credit" shall mean $7,000,000.00. At any time that
Bank in its sole discretion notifies Borrower in writing that it is
re-instituting a formula-based Revolver, then from the date of Bank's notice
to Borrower, the term "Maximum Credit" shall mean the lesser of $7,000,000.00
or the then current Borrowing Base.
1.19 The term "Note" shall mean the $7,000,000.00 Grid Note executed by
Borrower on the
<PAGE>
Amendment Date pursuant to Section 2 of the Agreement, as extended,
supplemented, modified, amended or replaced from time to time. The term "Prior
Note" shall mean the $6,250,000.00 Grid Note executed by Borrower on the
Closing Date, which is being replaced on the Amendment Date by the Note.
1.22 The term "Revolver Expiration Date" shall mean August 1, 1998."
3. Effective as of the Amendment Date, the following are added as Sections
1.27 and 1.28 of the Agreement.
"1.27 The term "Amendment" shall mean an Agreement and Amendment No. 1 to an
Existing Revolving Credit Facility Agreement entered into by Bank and Borrower
on the Amendment Date.
1.28 The term "Amendment Date" shall mean the date the Amendment is executed
by Bank and Borrower."
4. Effective as of the Amendment Date, Section 2.1 of the Agreement is deleted
and replaced with the following:
"2.1 $7,000,000.00 Revolver
2.1.1 Effective as of the Amendment Date, Bank hereby establishes for
Borrower a Revolver, the unpaid principal balance of which shall not at
any time exceed the Maximum Credit. This Revolver replaces and
supersedes the $6,250,000.00 Revolver previously provided to Borrower
by Bank under Section 2 of this Agreement. Within such limit, Borrower
may borrow, repay and reborrow, for working capital purposes only, on
and after the Amendment Date through the Revolver Expiration Date,
provided that the following conditions are met at the time of each
borrowing request:
2.1.1.1 Borrower is not in default under this Agreement, and
no condition exists, which, with notice, lapse of time or both, would
constitute a default under this Agreement.
2.1.1.2 All representations and warranties contained in
Section 4 of this Agreement and elsewhere in the Agreement and/or in
any Document are true and correct as of the date of the requested
borrowing.
2.1.2 Unless sooner accelerated, all loans made under this Revolver
shall be repayable on the Revolver Expiration Date, pursuant to the
terms of Borrower's Note, which shall be in the form of Exhibit A to
the Amendment, with blanks appropriately completed.
2.1.3 Each borrowing under this Revolver shall be processed by debiting
this Revolver and crediting Borrower's checking account with Bank for
the amount of the borrowing or otherwise making the loan proceeds
available to Borrower. The loan shall be deemed made immediately upon
the crediting of the loan proceeds to Borrower's checking account with
Bank or by Bank otherwise making the loan proceeds available to
Borrower. Each loan, together with the unpaid principal balance of all
previous loans made under this Revolver,
<PAGE>
shall be deemed automatically refinanced and consolidated into one
loan, which shall be payable to Bank as indicated in the Note.
2.1.4 So long as Bank receives notice of a proposed borrowing by 1:00
p.m. on a Business Day, and the conditions precedent set forth in
Sections 2.1.1.1 through 2.1.1.3 are satisfied, Bank will make advances
duly authorized and permitted under this Revolver available to Borrower
by crediting Borrower's checking account maintained at Bank's main
office on that date. If Bank receives notice of a proposed borrowing
after 1:00 p.m. on a Business Day, it will endeavor to make the advance
available on that date, but if Bank is unable to do so, Bank will make
the advance to Borrower by crediting Borrower's checking account
maintained at Bank's office no later than 10:00 a.m. of the next
Business Day.
2.1.5 The unpaid principal balance of the Note shall at all times prior
to acceleration, accrue interest, computed on the basis of a 360 day
year for the actual number of days elapsed, at the floating rate of
Bank's Prime Rate per annum. If any payment due under the Note is not
made within five days of the date when due, Borrower shall pay a late
charge equal to the greater of 5% of the delinquent amount or $50.00,
or Bank's then current late charge. In the event Bank accelerates
payment of the Note, interest shall accrue on the unpaid principal
balance of the Note at the floating rate of Bank's Prime Rate plus 5.0%
per annum, computed on the basis of a 360 day year for the actual
number of days elapsed, until the Note is paid in full. In the event
there is a change in Bank's Prime Rate, the change in the accruing
interest rate on the Note shall be effective on the day when the change
in Bank's Prime Rate is made by Bank, without notice to Borrower.
Payments of accrued interest on the Note shall be due on the first
Business Day of each month, commencing October 2, 1995, and when Bank
has accelerated payment of the Note, and on the Revolver Expiration
Date, and when the Note is paid in full.
2.1.6. In the event that the unpaid principal balance of the of the
Note at any time exceeds the Maximum Credit for any reason, including
but not limited to a change in the Borrowing Base and/or a decrease in
the value of Eligible Accounts Receivable and/or Eligible Inventory,
then Borrower shall, without notice, demand or protest, pay to Bank
within ten days of the date the unpaid principal balance of the Note
exceeds the Maximum Credit, a sum sufficient to reduce the principal
balance of the Note to an amount equal to or less than the Maximum
Credit. Any unpaid principal balance of the Note which is in excess of
the Maximum Credit shall, until such excess is paid in full, or until
Bank accelerates payment of the Note, accrue interest at the floating
rate of Bank's Prime Rate plus 3% per annum, calculated on the basis of
a 360 day year for the actual number of days elapsed.
2.1.7 Bank is authorized to act on the telephone requests for borrowing
and/or prepayment, of any person identifying himself as an Authorized
Person and Borrower will be bound by such instructions. Borrower hereby
indemnifies and holds Bank harmless from any liability (including
Bank's reasonable attorneys' fees), which may arise as a result of
Bank's good faith reliance on telephone requests for borrowing and/or
prepayment from any person identifying himself as an Authorized Person.
2.1.8 Borrower shall pay to Bank a commitment fee equal to 1/4 of 1%
per annum (calculated on the basis of a 360 day year), on the daily
average of the difference between
<PAGE>
$7,000,000.00 (subject to permanent reduction, as specified in Section
2.1.9 below), and the aggregate principal amount outstanding under the
Revolver. This commitment fee shall be payable in arrears and
calculated by Bank as of the first Business Day of each October
(commencing October 2, 1995), January, April and July, and on the
Revolver Expiration Date and when payment of the Note is accelerated.
The commitment fees shall be due and payable by Borrower within ten
days of the date that Bank bills Borrower for the commitment fee.
2.1.9 On five Business Days written notice to Bank, Borrower may elect
to reduce the number "$7,000,000.00" in the definition of Maximum
Credit to a lesser amount selected by Borrower. Upon such election, the
reduction shall be permanent and irrevocable, and if the then unpaid
principal balance of the Note exceeds the revised Maximum Credit,
Borrower shall immediately pay to Bank a sum sufficient to reduce the
unpaid principal balance of the Note to the new Maximum Credit."
5. Borrower represents and warrants to Bank that as of the Amendment Date, all
representations and warranties contained in Exhibit "4" to the Agreement are
true and accurate. Borrower further represents and warrants to Bank that as of
the Amendment Date, neither Borrower nor any Subsidiary has violated any of the
covenants contained in Exhibit "4" to the Agreement, or in any elsewhere in the
Agreement, or in any Document. Borrower acknowledges to Bank that Borrower and
each of its Subsidiaries has a continuing obligation to comply with all of the
covenants contained in Exhibit "4" of the Agreement, and all covenants contained
elsewhere in the Agreement and all covenants contained in Documents. Borrower
acknowledges to Bank on behalf of itself and on behalf of each of its
Subsidiaries that all representations and warranties contained in Exhibit "4" to
the Agreement and elsewhere in the Agreement and in Documents are deemed to be
made on a continuing basis from the Closing Date through the Termination Date,
and Borrower agrees to give Bank prompt written notice at any time that any
representation or warranty contained in Exhibit "4" or elsewhere in the
Agreement or in any Document becomes untrue.
6. Effective on the Amendment Date, Section 5 of the Agreement is deleted and
replaced with the following:
"SECTION 5
Financial Covenants
Borrower covenants and agrees that from the Amendment Date through the
Termination Date, Borrower will at all times comply with the financial covenants
contained in Exhibit "B" to the Amendment.
End of Section 5"
7. Borrower represents and warrants to Bank that, as of the Amendment Date,
Borrower is not in default under Section 6 of the Agreement, and no condition
exists which with notice, lapse of time or both, would constitute a default
under Section 6 of the Agreement.
<PAGE>
8. Borrower represents and warrants to Bank that as of August 31, 1995, there
was due Bank on the $6,250,000.00 Grid Note executed by Borrower on the Closing
Date ("Prior Note"), the sum of $4,317,00.00 in principal, plus accrued interest
("Prior Note"). Borrower further acknowledges to Bank that the Prior Note
constitutes Borrower's valid and binding obligation, enforceable by Bank
according to its terms, and that as of the Amendment Date, there were no offsets
against or defenses to Borrower's liability to Bank under the prior note.
9. Except as set forth above, all terms and conditions of the Agreement,
as amended by the Amendment, and the Documents remain the same.
10. Borrower acknowledges and represents and warrants to Bank that the
Agreement, as modified by this Amendment, and all Documents executed by Borrower
at any time, including but not limited to the Note, Security Agreement, Mortgage
and Negative Pledge Agreement, are and constitute valid and binding obligations
of Borrower, enforceable against Borrower by Bank according to their respective
terms, and that as of the Amendment Date, there were no offsets against or
defenses to Borrower's liability to Bank thereunder.
11. Borrower represents and warrants to Bank and acknowledges to Bank that the
following Exhibits attached to the Agreement remain accurate in all respects:
Exhibit "1.2", Exhibit "1.11", Exhibit "1.20", Exhibit "3.1", Exhibit "3.5.1",
Exhibit "3.6.1", and Exhibit "3.8".
12. Bank's obligation to enter into this Amendment is contingent upon the
execution of this Amendment by Borrower, and the performance by Borrower of all
terms and conditions specified in this Amendment, and upon the following
additional terms and conditions.
a. Borrower shall deliver to Bank a Certificate executed by its
Secretary, containing the duly adopted resolutions of its directors, consenting
to the adoption of resolutions authorizing among other things, the execution by
Borrower of this Amendment, and all Documents to be executed by Borrower in
connection therewith. The Certificate shall be in the form of Exhibit "C", with
blanks appropriate completed.
b. On the Amendment Date, Borrower shall direct its attorneys (Harter,
Secrest & Emery or such other attorneys as are acceptable to Bank), to provide,
and such attorneys shall provide to Bank and its attorneys an opinion letter
which shall contain such opinions as shall be satisfactory to Bank and its
attorneys.
c. After the Amendment Date, Borrower shall pay to Bank in full all
accrued interest due under the Prior Note when billed by Bank, and all
borrowings under the Prior Note shall be replaced with borrowings under the
Note.
d. There shall be no materially adverse change in the business, assets
or condition (financial or otherwise), of Borrower and/or of any Guarantor, as
disclosed to Bank in any matter.
e. Within thirty days of the Amendment Date, all Guarantors shall
execute and deliver to Bank an Agreement and Acknowledgement pursuant to which
they acknowledge to Bank that all Documents executed by them in connection with
the Agreement, including but not limited to their respective Guaranties, remain
in full force and effect ("Acknowledgement"). The form of
<PAGE>
the Acknowledgements shall be satisfactory to Bank and its attorneys.
f. Borrower and Guarantors shall execute and deliver to Bank such
additional writings and agreements which Bank deems necessary in order to
protect and perfect Bank's interests created under the Agreement, as amended by
this Amendment and under the Documents.
g. All legal details in connection with this Amendment and the
Documents executed in connection therewith, shall have met with the approval of
Bank and Woods, Oviatt, Gilman, Sturman & Clarke, counsel for Bank.
Bank, at is sole option, may extend past the Amendment Date, the time
in which Borrower and/or any Guarantor and/or any other Entity is required to
provide any of the Documents required to be delivered under this Amendment. The
extension may be written or oral, expressed or implied, such as where Bank
executes this Amendment on the Amendment Date without one or more of the
Documents required under this Amendment having been provided. Such extension
shall not operate as a waiver of the requirement that such Documents be
provided, and Borrowers and/or Guarantors and/or any other Entities failure to
provide such Documents to Bank after the Amendment Date, shall at Bank's option,
constitute a default under Section 6.1.4 of the Agreement. The requirement that
Borrower and/or any Guarantor and/or any other Entity deliver to Bank any
Documents called for under this Amendment may only be waived in a writing signed
by Bank.
13. On the Amendment Date, Borrower shall pay all of Bank's attorneys' fees
and disbursements incurred and to be incurred in connection with the
preparation, negotiation and execution of this Amendment, the Documents executed
in connection with this Amendment, and all related matters.
14. This Amendment is governed by New York law, and may not be amended or
terminated orally. Any litigation involving this Amendment and/or the Agreement
and/or any of the Documents shall at Bank's sole option, be triable only in a
court located in Monroe County, New York. BORROWER WAIVES THE RIGHT TO A JURY
TRIAL IN ANY LITIGATION OF ANY NATURE OR KIND IN WHICH BORROWER AND BANK ARE
PARTIES. No other Entity is a third party beneficiary of this jury trial waiver.
Borrower also waives the right to require Bank to post an undertaking in any
action commenced by Bank against Borrower, or in any action in which Bank and
Borrower are both parties, including but not limited to an action under Article
71 of the CPLR.
<PAGE>
IN WITNESS WHEREOF, Bank and Borrower have executed this Amendment on the date
first written above.
MANUFACTURERS AND TRADERS
TRUST COMPANY
By: /s/ J. Theodore Smith
---------------------------
J. Theodore Smith
Assistant Vice President
TRANSMATION, INC.
By: /s/ Robert G. Klimasewski
---------------------------
Robert G. Klimasewski
President
STATE OF NEW YORK )
COUNTY OF MONROE )ss:
On this 8th day of September, 1995, before me personally came J. Theodore
Smith, to me known, who, being by me duly sworn, did depose and say that he is
an Assistant Vice President of MANUFACTURERS AND TRADERS TRUST COMPANY, the
corporation described in and which executed the above instrument; and that he
signed his name thereto by order of the board of directors of said corporation.
/s/ Gary F. Amendola
---------------------------
Notary Public
STATE OF NEW YORK )
COUNTY OF MONROE )ss:
On this 8th day of September, 1995, before me personally came Robert G.
Klimasewski, to me known, who, being by me duly sworn, did depose and say that
he is an Assistant Vice President of TRANSMATION, INC., the corporation
described in and which executed the above instrument; and that he signed his
name thereto by order of the board of directors of said corporation.
/s/ Gary F. Amendola
---------------------------
Notary Public
<PAGE>
EXHIBIT A: Grid Note with Rider [omitted]
<PAGE>
EXHIBIT B
Section 5 - Schedule of Financial Covenants
1. On the Amendment Date, Borrower shall have and maintain at all times
through March 30, 1996, a Tangible Net Worth of $6,602,000.00 or higher.
2. On March 31, 1996, Borrower shall have and maintain at all times
through March 30, 1997, a Tangible Net Worth of $7,200,000.00 or higher.
3. On March 31, 1997, Borrower shall have and maintain at all times
through March 30, 1998, a Tangible Net Worth of $8,000,000.00 or higher.
4. On March 31, 1998, Borrower shall have and maintain at all times
through March 30, 1999, a Tangible Net Worth of $9,000,000.00 or higher.
5. On March 31, 1999, Borrower shall have and maintain at all times
through the Termination Date, a Tangible Net Worth of $10,000,000.00 or higher
6. Borrower shall not make, directly or indirectly, in any fiscal year,
Capital Expenditures (which term shall include obligations under capital leases
as determined by GAAP), in excess of the amounts indicated for the fiscal years
indicated below.
a. Fiscal year ending 3/31/96 $750,000.00
b. Fiscal year ending 3/31/97 $600,000.00
c. Fiscal year ending 3/31/98 $650,000.00
d. Fiscal year ending 3/31/99 $700,000.00
7. During each fiscal year indicated below, Borrower's cash Catalog
Expenditures shall not exceed the amounts indicated.
a. Fiscal year ending 3/31/96 $1,750,000.00
b. Fiscal year ending 3/31/97 $2,000,000.00
c. Fiscal year ending 3/31/98 $2,250,000.00
d. Fiscal year ending 3/31/99 $2,500,000.00
<PAGE>
EXHIBIT 10(i)
AMENDMENT NO. 1
to the
TRANSMATION, INC.
DIRECTORS' STOCK PLAN
Effective August 15, 1995
WHEREAS, Transmation, Inc., an Ohio corporation (the "Company"), has
established the Transmation, Inc. Directors' Stock Plan, effective January 17,
1995 (the "Plan"); and
WHEREAS, deeming it appropriate and advisable so to do, the Board of
Directors of the Company has authorized, approved and adopted the amendment to
the Plan set forth herein;
NOW, THEREFORE, the Plan is hereby amended, effective August 15, 1995,
as follows:
1. Section 3(b) of the Plan is hereby amended to provide in its
entirety as follows:
"(b) Awards for Board Meetings Attended. Each Participating
Director shall receive an Award of 200 Shares for each regular or
special meeting of the Board, up to a maximum of six Board meetings per
fiscal year of the Company, attended by such Participating Director;
provided, however, that if, on the date of any such Award, 200 Shares
has an aggregate market value in excess of $1,500, then such Award shall
instead be in the amount of the largest number of whole Shares that has
an aggregate market value not exceeding $1,500. Such Awards shall be
made on the date of each such Board meeting, with share certificates
representing such Awards to be issued as soon as practicable after the
last day of each fiscal quarter of the Company, commenc- ing with the
quarter ending March 31, 1995."
2. Except as amended hereby, the Plan shall remain in full force and
effect in accordance with its terms.
This Amendment No. 1 to the Transmation, Inc. Directors' Stock Plan was
authorized, ap- proved and adopted by the Board of Directors of the Company on
August 15, 1995.
/s/ John A. Misiaszek
------------------------------
John A. Misiaszek, Secretary
<PAGE>
EXHIBIT 10(j)
NON-STATUTORY STOCK OPTION AGREEMENT
THIS NON-STATUTORY STOCK OPTION AGREEMENT is made as of August 15, 1995
by and between TRANSMATION, INC., an Ohio corporation (the "Company"), and ERIC
W. McINROY (the "Optionee").
The parties agree as follows:
1. Grant of Option. The Company hereby grants to the Optionee an option
(the "Option") to purchase an aggregate of 30,000 Shares under the terms and
conditions hereof. As used in this Agreement, the term "Shares" shall mean
shares of the Company's common stock, par value $.50 per share (the "Common
Stock"), or other securities resulting from an adjustment under Section 9.
2. Term. The Option shall become exercisable and terminate in accordance
with the schedule set forth in Section 5(a); provided, however, that the Option
shall lapse and terminate on the earliest of the following dates:
(a) the date that is one year after the date of the Optionee's
death, provided that the Optionee's death occurs (i) while he is an
employee of the Company or of any subsidiary of the Company (a
"Subsidiary") or (ii) within three months after termination of such
employment;
(b) the date that is one year after the date that the Optionee's
employment by the Company or a Subsidiary is terminated because of his
permanent and total disability;
(c) the date that is three months after the date on which the
Optionee's employment by the Company or a Subsidiary terminates for any
other reason; or
(d) August 14, 2000.
Upon such termination of the Option, the Optionee's rights under this Agreement,
including the right to exercise the Option, shall thereupon terminate. In the
event of any exercise of the Option after the Optionee's death or other
termination of employment, as permitted by this Section 2, the Option shall be
exercisable only to the extent that it was exercisable under the terms hereof on
the date of death or such other termination, and subject to all of the
conditions on exercise imposed hereby.
3. Non-Transferability, Etc.
(a) The Option is not transferable other than by will or the laws
of descent and distribution. Except as provided by Section 3(b), the Option
shall be exercisable only during the Optionee's lifetime, and only by him.
(b) In the event that the Optionee shall die (i) while he is an
employee of the
<PAGE>
Company or a Subsidiary, or within three months after termination of such
employment, and (ii) prior to the complete exercise of the Option, then the
Option may be exercised, within the applicable term provided by Section 2, by
the Optionee's estate or by such person(s) to whom the Optionee's rights
hereunder shall have passed under his will or the laws of descent and distribu-
tion. In such event, as used herein the term "Optionee" shall mean the
Optionee's estate or such person(s).
4. Price. The price of each Share purchased upon exercise of the
Option shall be $6.25 (that being the last transaction price of the Common Stock
on August 15, 1995 quoted by The Nasdaq Stock Market).
5. Schedule and Method of Exercise.
(a) Subject to the provisions of Section 2, the Option shall be
exercisable as follows:
(i) as to 6,000 Shares beginning on August 15, 1995 and
terminating on August 14, 2000; (ii) as to an
additional 6,000 Shares beginning on August 15,
1996 and terminating on August 14, 2000;
(iii) as to an additional 6,000 Shares beginning on
August 15, 1997 and terminating on August 14,
2000;
(iv) as to an additional 6,000 Shares beginning on
August 15, 1998 and terminating on August 14,
2000; and
(v) as to an additional 6,000 Shares beginning on
August 15, 1999 and terminating on August 14,
2000.
(b) The Option, to the extent exercisable under Section 5(a), may
be exercised in whole or in part, provided that the Option may not be exercised
for less than one Share in any single exercise transaction.
(c) The Option shall be exercised by written notice given by the
Optionee to the Company specifying the number of Shares that the Optionee elects
to purchase and the purchase price being paid, accompanied by full payment of
such purchase price. Upon each exercise, the Option price shall be payable by
one or any combination of the following methods, as determined by the Optionee
and specified in his notice of exercise: (i) in cash, or (ii) by delivery of
Shares already owned by the Optionee. Any Shares that are so delivered to pay
the Option price shall be valued at their fair market value on the date of such
Option exercise. Upon determining that compliance with this Agreement has
occurred, including compliance with such reasonable requirements as the
Company may impose pursuant to Section 10, the Company shall issue
certificate(s) for the Shares purchased.
6. No ISO Treatment. The Option is not an "incentive stock option"
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended.
<PAGE>
7. No Rights of Shareholder. No person, estate or other entity shall
have the rights of a shareholder of the Company with respect to any of the
Shares subject to the Option until a certificate for such Shares has been
delivered to the Optionee.
8. Rights of the Company. This Agreement does not affect the Company's
right to take any corporate action whatsoever, including without limitation its
right to recapitalize, reorganize or make other changes in its capital structure
or business, merge or consolidate, issue bonds, notes, Shares or other
securities, including preferred stock, or options therefor, dissolve or
liquidate, or sell or transfer any part of its assets or business.
9. Adjustment Provisions. In the event that (a) in connection with a
merger or consolidation of the Company or a sale by the Company of all or a part
of its assets, the outstanding Shares are exchanged for a different number or
class of shares of stock or other securities of the Company, or for shares of
the stock or other securities of any other entity; or (b) new, different or
additional Shares or other securities of the Company or of another entity are
received by the holders of Shares, whether by way of recapitalization or
otherwise; or (c) any dividend in the form of stock is made to the holders of
Shares, or any stock split or reverse split pertaining to Shares is effected;
then appropriate adjustment shall be made to (i) the number and kind of Shares
or other securities that may be issued upon exercise of the Option; and (ii) the
Option price per Share to be paid upon exercise of the Option. Under no
circumstance shall the Optionee be entitled to an adjustment hereunder to
reflect dilution resulting from the issuance or acquisition of Shares or other
securities by the Company, except as expressly provided in the preceding
sentence, regardless of whether such Shares or other securities are issued for
less than the exercise price of the Option.
10. Taxes; Securities Laws Matters.
(a) The exercise of the Option shall be conditioned upon the
Optionee making arrangements satisfactory to the Company for the payment to the
Company of the amount of all taxes required by any governmental authority to be
withheld and paid over by the Company to the governmental authority on account
of the exercise. The payment of such withholding taxes to the Company may be
made by either or a combination of the following methods: (i) in cash, or (ii)
by the Company withholding such taxes from any other compensation owed to the
Optionee by the Company or a Subsidiary.
(b) As a precondition to the Company's execution of this
Agreement and the issuance of the Option hereunder, the Optionee represents to
the Company that the Option is being, and (unless a Registration Statement with
respect thereto shall then be effective under the Securities Act of 1933, as
amended (the "Act")) any Shares acquired by him upon exercise of the Option
shall be, acquired by him solely for investment and not with a view to, or for
sale in connection with, any distribution thereof, nor with any present
intention of selling, transferring or disposing of the same.
(c) The Optionee acknowledges and agrees that the Option may not
be offered for sale, sold, pledged, hypothecated or otherwise transferred or
disposed of in any manner inconsistent with this Agreement. The Optionee
agrees and consents that any Shares acquired upon exercise of the Option may not
be offered for sale, sold or otherwise transferred or disposed of
<PAGE>
unless (i) a registration statement with respect thereto shall then be effective
under the Act, and the Optionee shall have provided proof satisfactory to
counsel for the Company that he has complied with all applicable state
securities laws, or (ii) the Company shall have received an opinion of counsel
in form and substance satisfactory to counsel for the Company that the proposed
offer for sale, sale or transfer of the Shares is exempt from the registration
requirements of the Act and may otherwise be effected in compliance with any
other applicable law, including all applicable state securities laws. The
Optionee agrees that unless a Registration Statement with respect thereto shall
then be effective under the Act, a legend to this effect may be placed on each
certificate, and that a stop transfer order may be placed against his account,
relating to such Shares. In addition, each such certificate shall bear such
additional legends and statements as the Company deems advisable to assure
compliance with all Federal and state laws and regulations, including securities
laws and regulations.
(d) The Optionee confirms that the Company is relying upon his
representations contained in this Section 10 in connection with the issuance to
him of the Option and the Shares underlying the Option. In consideration of the
issuance to the Optionee of the Option and the Shares upon any exercise of the
Option, the Optionee hereby indemnifies and holds harmless the Company, and the
officers, directors, employees and agents thereof, from and against any and all
liability, losses, damages, expenses and attorneys' fees which they may
hereafter incur, suffer or be required to pay by reason of the falsity of, or
his failure to comply with, any representation or agreement contained in this
Section 10.
11. Tenure. The Optionee's right, if any, to continue to serve the
Company or a Subsidiary as an officer, employee or otherwise will not be
enlarged or otherwise affected by this Agreement. This Agreement does not
restrict the right of the Company or any Subsidiary to terminate the Optionee's
employment at any time.
12. Choice of Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York applicable to agreements
made and to be performed entirely within such State.
13. Notices. All notices and other communications required or permitted
under this Agreement shall be written, and shall be either delivered personally
or sent by registered or certified first-class mail, postage prepaid and return
receipt requested, or by telex or telecopier, addressed as follows: if to the
Company, to the Company's principal office, Attention: Corporate Secretary; and
if to Optionee or his successor, to the address last furnished by such person to
the Company. Each such notice and other communication delivered personally shall
be deemed to have been given when delivered. Each such notice and other
communication delivered by mail shall be deemed to have been given when it is
deposited in the United States mail in the manner specified herein, and each
such notice and other communication delivered by telex or telecopier shall be
deemed to have been given when it is so transmitted and the appropriate
answerback is received. A party may change its address for the purpose hereof by
giving notice in accordance with the provisions of this Section 13.
14. In General. This Agreement is the final, complete and exclusive
expression of the understanding between the parties and supersedes any prior or
contemporaneous agreement or representation, oral or written, between them.
Modification of this Agreement or waiver of a
<PAGE>
provision hereof must be written and signed by the party to be bound. In the
event that any provision of this Agreement shall be held to be illegal or
unenforceable, such provision shall be severed from this Agreement and the
entire Agreement shall not fail on account thereof, but shall otherwise remain
in full force and effect. As used herein, the term "Section" shall mean the
appropriate section of this Agreement.
IN WITNESS WHEREOF, the Optionee and the Company have executed this
Agreement as of the date first above written.
TRANSMATION, INC.
By:/s/ Robert G. Klimasewski
---------------------------------
Robert G. Klimasewski, President
/s/ Eric W. McInroy
--------------------------------
ERIC W. McINROY
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements included within the Company's September 30, 1995, Form 10-Q
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000099302
<NAME> TRANSMATION, INC.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> SEP-30-1995
<CASH> 294,548
<SECURITIES> 0
<RECEIVABLES> 5,486,407
<ALLOWANCES> 528,200
<INVENTORY> 6,508,471
<CURRENT-ASSETS> 13,155,656
<PP&E> 5,222,201
<DEPRECIATION> 3,644,400
<TOTAL-ASSETS> 15,250,169
<CURRENT-LIABILITIES> 3,285,341
<BONDS> 4,039,800
<COMMON> 1,209,220
0
0
<OTHER-SE> 5,978,391
<TOTAL-LIABILITY-AND-EQUITY> 15,250,169
<SALES> 16,676,054
<TOTAL-REVENUES> 18,666,749
<CGS> 10,842,656
<TOTAL-COSTS> 11,760,795
<OTHER-EXPENSES> 5,957,822
<LOSS-PROVISION> 55,200
<INTEREST-EXPENSE> 218,998
<INCOME-PRETAX> 673,934
<INCOME-TAX> 282,525
<INCOME-CONTINUING> 391,409
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 391,409
<EPS-PRIMARY> .15
<EPS-DILUTED> .15
</TABLE>
