-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IX4CUOEXGtktB/ZC9MbQ7HezGyoaYT6E1bNp6xmFLMU7exJio3ZpVcp/pkDQlyMz 6KxcpsCP7URdv19XAMRjsQ== 0000950150-98-000570.txt : 19980414 0000950150-98-000570.hdr.sgml : 19980414 ACCESSION NUMBER: 0000950150-98-000570 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980228 FILED AS OF DATE: 19980413 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: HASKEL INTERNATIONAL INC CENTRAL INDEX KEY: 0000918022 STANDARD INDUSTRIAL CLASSIFICATION: MISC INDUSTRIAL & COMMERCIAL MACHINERY & EQUIPMENT [3590] IRS NUMBER: 954107640 STATE OF INCORPORATION: CA FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-25068 FILM NUMBER: 98592295 BUSINESS ADDRESS: STREET 1: 100 EAST GRAHAM PL CITY: BURBANK STATE: CA ZIP: 91502 BUSINESS PHONE: 8188434000 MAIL ADDRESS: STREET 1: 100 EAST GRAHAM PLACE CITY: BURBANK STATE: CA ZIP: 91502 10-Q 1 FORM 10-Q FOR THE PERIOD ENDED 2/28/1998 1 United States 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 Period Ended FEBRUARY 28, 1998 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 -25068 . HASKEL INTERNATIONAL, INC. (Exact name of registrant as specified in its charter) CALIFORNIA 95-4107640 (State or other jurisdiction (IRS Employer incorporation or organization) Identification No.) 100 EAST GRAHAM PLACE BURBANK, CALIFORNIA 91502 (Address of principal executive offices) (Zip Code) (818) 843 - 4000 (Registrant's telephone number, including area code) NOT APPLICABLE (Former name, address and former fiscal year, if changed since last report) Indicated by check mark whether the registrant (1) has filed all reports required to be filed by Section 13, or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X]. No [ ]. Applicable Only to Issuers Involved in Bankruptcy Proceedings During the Preceeding Five Years Indicated by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by the court. Yes [ ]. No [ ]. Applicable Only to Corporate Issuers Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date. AS OF APRIL 6, 1998 THE REGISTRANT HAD 4,759,205 SHARES OF CLASS A COMMON STOCK, AND 40,000 SHARES OF CLASS B COMMON STOCK OUTSTANDING. 2 INDEX HASKEL INTERNATIONAL, INC.
PAGE ---- PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Consolidated balance sheets - May 31, 1997 and February 28, 1998.......................... 3 Consolidated statements of operations - Three months ended February 28, 1997 and 1998; Nine months ended February 28, 1997 and 1998.......................................... 5 Consolidated statements of cash flows - Nine months ended February 28, 1997 and 1998...... 6 Notes to consolidated financial statements - February 28, 1998............................ 7 Item 2. Management's discussion and analysis of financial condition and results of operations............................................................................ 10 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K..................................................... 13
2 3 HASKEL INTERNATIONAL, INC. CONSOLIDATED BALANCE SHEETS (Unaudited)
May 31, February 28, 1997 1998 ----------- ----------- ASSETS CURRENT ASSETS: Cash and cash equivalents $ 8,490,000 $ 7,998,000 Accounts receivable, net 11,751,000 11,799,000 Inventories 10,335,000 11,062,000 Prepaid expenses and other current assets 942,000 597,000 Deferred income taxes 1,419,000 1,415,000 ----------- ----------- TOTAL CURRENT ASSETS 32,937,000 32,871,000 PROPERTY, PLANT & EQUIPMENT, Net 5,376,000 5,354,000 GOODWILL, Net 698,000 941,000 DEFERRED INCOME TAXES 2,156,000 2,131,000 OTHER ASSETS 65,000 229,000 ----------- ----------- TOTAL $41,232,000 $41,526,000 =========== ===========
See notes to consolidated financial statements. 3 4 HASKEL INTERNATIONAL, INC. CONSOLIDATED BALANCE SHEETS (Continued) (Unaudited)
May 31, February 28, 1997 1998 ------------ ------------ LIABILITIES & SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Current portion of long-term debt $ 978,000 $ 997,000 Accounts payable 4,070,000 3,476,000 Dividends payable 335,000 334,000 Accrued liabilities 3,249,000 1,909,000 Income taxes payable 210,000 787,000 ------------ ------------ TOTAL CURRENT LIABILITIES 8,842,000 7,503,000 LONG-TERM DEBT 1,401,000 666,000 OTHER ACCRUED LIABILITIES 2,322,000 2,308,000 COMMITMENTS & CONTINGENCIES SHAREHOLDERS' EQUITY: Preferred Stock: 2,000,000 shares authorized; none issued and outstanding Common Stock: Class A, without par value; 20,000,000 shares authorized; 4,748,230 and 4,736,205 issued and outstanding at May 31, 1997 and February 28, 1998, respectively 13,855,000 13,792,000 Class B, without par value; 40,000 shares authorized, issued and outstanding at May 31, 1997 and February 28, 1998 19,000 19,000 Retained Earnings 14,733,000 17,330,000 Cumulative foreign currency translation adjustment 60,000 (92,000) ------------ ------------ TOTAL SHAREHOLDERS' EQUITY 28,667,000 31,049,000 ------------ ------------ TOTAL $ 41,232,000 $ 41,526,000 ============ ============
See notes to consolidated financial statements. 4 5 HASKEL INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended Nine Months Ended ---------------------------- ---------------------------- February 28, February 28, February 28, February 28, 1997 1998 1997 1998 ------------ ------------ ------------ ------------ SALES $ 12,401,000 $ 14,175,000 $ 37,626,000 $ 39,025,000 COST OF SALES 6,670,000 8,086,000 20,373,000 20,838,000 ------------ ------------ ------------ ------------ GROSS PROFIT 5,731,000 6,089,000 17,253,000 18,187,000 EXPENSES: Selling 1,938,000 1,927,000 5,877,000 6,063,000 General and administrative 1,842,000 1,961,000 4,928,000 5,625,000 Engineering design, research and development 292,000 309,000 777,000 936,000 ------------ ------------ ------------ ------------ Total 4,072,000 4,197,000 11,582,000 12,624,000 ------------ ------------ ------------ ------------ OPERATING INCOME 1,659,000 1,892,000 5,671,000 5,563,000 OTHER INCOME 104,000 73,000 202,000 204,000 ------------ ------------ ------------ ------------ INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 1,763,000 1,965,000 5,873,000 5,767,000 PROVISION FOR INCOME TAXES 727,000 776,000 2,294,000 2,233,000 ------------ ------------ ------------ ------------ INCOME FROM CONTINUING OPERATIONS 1,036,000 1,189,000 3,579,000 3,534,000 DISCONTINUED OPERATIONS: Loss from operations, less applicable income taxes (529,000) Gain (loss) on disposal of segment (5,406,000) 346,000 ------------ ------------ ------------ ------------ NET INCOME (LOSS) $ 1,036,000 $ 1,189,000 $ (2,356,000) $ 3,880,000 ============ ============ ============ ============
See notes to consolidated financial statements. 5 6 HASKEL INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ended ----------------------------- February 28, February 28, 1997 1998 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net cash provided by continuing operations $ 3,220,000 $ 2,479,000 Net cash used in discontinued operations (334,000) (348,000) ----------- ----------- Net cash provided by operating activities 2,886,000 2,131,000 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (1,255,000) (1,167,000) Proceeds from sale of property 71,000 279,000 Purchase of subsidiary (net of cash acquired) (1,172,000) (13,000) ----------- ----------- Net cash used in investing activities (2,356,000) (901,000) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Principal payments on long-term debt (767,000) (750,000) Proceeds from issuance of common stock 22,000 188,000 Dividends declared (994,000) (1,001,000) ----------- ----------- Net cash used in financing activities (1,739,000) (1,563,000) ----------- ----------- EFFECT OF EXCHANGE RATE ON CASH AND CASH EQUIVALENTS 107,000 (159,000) ----------- ----------- NET DECREASE IN CASH AND CASH EQUIVALENTS (1,102,000) (492,000) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 8,239,000 8,490,000 ----------- ----------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 7,137,000 $ 7,998,000 =========== =========== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for: Interest - Continuing operations $ 23,000 $ 111,000 =========== =========== Discontinued operations $ 132,000 $ 8,000 =========== =========== Income taxes $ 1,720,000 $ 1,750,000 =========== =========== SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING ACTIVITIES - In September 1997, the Company sold its electronic products business in exchange for 35,000 shares of the Company's stock (valued at $534,000) and a note receivable in the amount of $159,000. On June 3, 1996, the Company's foreign subsidiary, Haskel Energy Systems, Limited ("HESL"), acquired all of the outstanding stock of Hydraulic Mobile Equipment Limited ("HME") for $851,000 ($814,000 in cash and $37,000 in acquisition costs) plus liabilities. Fair value of assets acquired $ 1,067,000 Cash paid (851,000) ----------- Liabilities assumed $ 216,000 ===========
See notes to consolidated financial statements. 6 7 PART I. FINANCIAL INFORMATION HASKEL INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE A - BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (which comprise only normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the period ended February 28, 1998 are not necessarily indicative of the results that may be expected for the year ending May 30, 1998. For further information, refer to the consolidated financial statements and notes thereto for the year ended May 31, 1997. NOTE B - INVENTORIES Inventories consist of the following:
May 31, February 28, 1997 1998 ----------- ----------- Raw Materials $ 3,029,000 $ 3,203,000 Work in Process 1,697,000 2,398,000 Finished Products 5,609,000 5,461,000 ----------- ----------- $10,335,000 $11,062,000 =========== ===========
NOTE C - CHANGE IN ACCOUNTING PERIODS Effective June 1, 1997, the Company changed its accounting period for financial statement purposes from a calendar year to a 52/53 week fiscal year. Beginning with fiscal year 1998, the Company's fiscal year will end on the Saturday closest to May 31. Interim fiscal quarters end on the Saturday closest to the calendar end of August, November and February of each year. This change will not have a significant impact on the consolidated financial results or financial position of the Company. NOTE D - ACQUISITIONS In November 1997, the Company's foreign subsidiary, Haskel Energy Systems, Ltd., acquired all of the outstanding stock of Palpro Limited in exchange for $30,000 plus liabilities. In connection with the acquisition, the Company recorded goodwill of approximately $280,000, which is being amortized over 15 years. 7 8 PART I. FINANCIAL INFORMATION HASKEL INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) NOTE E - EARNINGS PER SHARE The Company has adopted Statement of Financial Accounting Standards ("SFAS") No. 128, Earnings Per Share, which replaces the presentation of "primary" earnings per share with "basic" earnings per share and the presentation of "fully diluted" earnings per share with "diluted" earnings per share. All previously reported earnings per share amounts have been restated based on the provisions of the new standard. Basic earnings per share are based upon the weighted average number of common shares outstanding. Diluted earnings per share amounts are based upon the weighted average number of common and common equivalent shares for each period presented. Common equivalent shares include stock options assuming conversion under the treasury stock method.
Three Months Ended Nine Months Ended -------------------------------- ------------------------------- February 28, February 28, February 28, February 28, 1997 1998 1997 1998 ------------- ------------ ------------- ----------- BASIC AND DILUTED EARNINGS Income from continuing operations $ 1,036,000 $ 1,189,000 $ 3,579,000 $ 3,534,000 Loss from discontinued operations (529,000) Income (loss) from disposal of segment (5,406,000) 346,000 ------------- ------------ ------------- ----------- Net income (loss) $ 1,036,000 $ 1,189,000 $ (2,356,000) $ 3,880,000 ============= ============ ============= =========== COMPUTATION OF BASIC AND DILUTED SHARES Basic EPS Common Shareholders 4,732,230 4,734,277 4,732,003 4,737,817 Effect of Dilutive Securities Dilutive options 113,276 245,781 88,282 298,577 ------------- ------------ ------------- ----------- Diluted EPS Common shareholders plus assumed conversion of dilutive securities 4,845,506 4,980,058 4,820,285 5,036,394 ============= ============ ============= =========== EARNINGS PER SHARE Basic EPS Income from continuing operations $ 0.22 $ 0.25 $ 0.76 $ 0.74 Loss from discontinued operations (0.11) Income (loss) from disposal of segment (1.14) 0.07 ------------- ------------ ------------- ----------- Net income (loss) $ 0.22 $ 0.25 $ (0.49) $ 0.81 ============= ============ ============= =========== Diluted EPS Income from continuing operations $ 0.21 $ 0.24 $ 0.74 $ 0.70 Loss from discontinued operations (0.11) Income (loss) from disposal of segment (1.12) 0.07 ------------- ------------ ------------- ----------- Net income (loss) $ 0.21 $ 0.24 $ (0.49) $ 0.77 ============= ============ ============= ===========
8 9 PART I. FINANCIAL INFORMATION HASKEL INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) NOTE F - DISCONTINUED OPERATIONS In fiscal year 1997, the Company decided to sell its electronic products distribution business. Accordingly, the electronic products business has been treated as a discontinued segment, and the financial results segregate the effect of these operations. The operating loss from this discontinued segment reflected in the accompanying consolidated statements of operations for the nine months ended February 28, 1997, are net of the related income tax benefit of $220,000. The operating results for the discontinued operations for the three and nine months ended February 28, 1998 approximated amounts estimated and reserved for in the loss on disposal of the segment recorded in fiscal year 1997. In September 1997, the Company sold the electronic products business in exchange for 35,000 shares of the Company's stock (valued at $534,000) and a note receivable in the amount of $159,000. The Company recognized a gain on the sale of $346,000. NOTE G - SUBSEQUENT EVENT Effective March 1, 1998, the Company acquired all of the operating assets of M.D.C. Australasia Pty. Ltd. and Hydraulics & Air Engineering, Pty. Ltd. for approximately $632,000 in cash plus liabilities. The businesses are located in Brisbane, Australia. 9 10 HASKEL INTERNATIONAL, INC. PART I. FINANCIAL INFORMATION ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Report may contain forward-looking statements that involve risks and uncertainties. The Company's actual results and timing of certain events could differ materially from those discussed in any forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, the integration of acquired operations, management of growth and other factors. RESULTS OF CONTINUING OPERATIONS Sales for the third quarter ended February 28, 1998 increased $1,774,000, or 14.3%, to $14,175,000, as compared with sales of $12,401,000 for the same period in the prior year. For the first nine months of fiscal year 1998, sales were $39,025,000, or $1,399,000 (3.7%) higher than the same period in fiscal year 1997. Sales for the nine months ended February 28, 1997 included approximately $1,200,000 in large system deliveries to the automotive industry which were not repeated in fiscal year 1998. Sales for the three and nine months ended February 28, 1998 included approximately $2,200,000 in sales from a long-term system contract acquired with the Palpro business in November 1997. Accounting principles appropriate to accounting for long-term contracts, including the recognition of revenue under the percentage of completion method, have been adopted in connection with long-term contracts acquired or purchased. Additionally, in the beginning of fiscal year 1998 the Company discontinued distribution of third-party products in the Western United States resulting in a decrease in sales of approximately $1,000,000 and $2,400,000 for the three and nine months ended February 28, 1998, respectively, as compared to the same periods in the prior year. In contrast to these decreases, sales of the Company's core manufactured products increased approximately 5.5% and 8.2% for the three and nine months ended February 28, 1998, respectively, as compared to the same periods in the prior year. Gross profit for the third quarter ended February 28, 1998 increased $358,000 to $6,089,000, or 43.0 % of sales, as compared with gross profit of $5,731,000, or 46.2% of sales, for the same period in fiscal year 1997. Gross profit for the first nine months of fiscal year 1998 was $18,187,000 (46.6% of sales) as compared to $17,253,000 (45.9% of sales) for the comparable period in fiscal year 1997. The gross profit as a percentage of sales for the three months ended February 28, 1998 decreased compared to the prior year principally as a result of a lower-margin associated with the long-term system sales recognized during the quarter. This long-term contract, which is expected to be substantially complete by fiscal year end 1998, was acquired in November 1997 with the acquisition of the Palpro business, and is not expected to be representative of the on-going systems and product margins from this acquisition beyond the current contract. The gross profit as a percentage of sales for the nine months ended February 28, 1998 increased compared to the prior year principally as a result of the elimination of lower-margin third-party product sales, through increased production of its manufactured products, lowering its overhead costs as a percentage of sales, resulting in higher gross margin rates. 10 11 HASKEL INTERNATIONAL, INC. PART I. FINANCIAL INFORMATION ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) Selling, general and administrative, and engineering ("operating") expenses were $4,197,000 or 29.6% of sales for the third quarter of fiscal year 1998 as compared to $4,072,000 or 32.8% of sales for the comparable period in fiscal year 1997. For the first nine months of fiscal year 1998, operating expenses were $12,624,000 or 32.3% of sales as compared to $12,258,000 or 32.6% of sales for the prior year, before legal reimbursements. General and administrative expenses for the first nine months of fiscal year 1997 include reimbursements of $676,000 from the Company's insurance carriers representing the recovery of legal expenses relating to environmental matters. Operating expenses for the three and nine months ended February 28, 1998 included approximately $372,000 and $911,000, respectively, attributable to activities of new businesses acquired and started. Income from continuing operations for the third quarter ended February 28, 1998 increased $153,000 or 14.8% to $1,189,000 (8.4% of sales) as compared with $1,036,000 (8.4% of sales) for the comparable prior period. For the nine months ended February 28, 1998, income from continuing operations increased $355,000 or 11.2% to $3,534,000 (9.1% of sales) as compared to $3,179,000 (8.4% of sales) for the same period in fiscal year 1997 before the reimbursements of legal costs. Included in income from continuing operations for the nine months ended February 28, 1997, was approximately $400,000 (net of taxes) relating to the insurance reimbursements discussed above. The increased income from continuing operations is a result of the improvement in gross margins as well as lower operating expenses. DISCONTINUED OPERATIONS In fiscal year 1997, the Company decided to sell its electronic products distribution business. Accordingly, the electronic products business has been treated as a discontinued segment, and the financial results segregate the effect of these operations. The loss from discontinued operations for the nine months ended February 28, 1997 was $529,000, which includes $240,000 in restructuring costs incurred in the first quarter of fiscal year 1997. The operating results for the discontinued operations for the three and nine months ended February 28, 1998 were previously provided for in the Company's reserve for loss on disposal of the segment in fiscal year 1997. In September 1997, the Company sold the electronic products business and recognized a gain on the sale of $346,000. 11 12 HASKEL INTERNATIONAL, INC. PART I. FINANCIAL INFORMATION ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) LIQUIDITY AND SOURCES OF CAPITAL For the nine months ended February 28, 1998, net cash provided by operating activities included $2,479,000 from continuing operations as compared to $3,220,000 for the same period in the prior year. The decrease in cash provided by operating activities was principally due to the reduction of accrued liabilities in the first quarter of fiscal year 1998. Net cash of $348,000 was used in discontinued operations in the first nine months of fiscal year 1998 as compared to $334,000 in the prior year. During the nine months ended February 28, 1998, cash used for investing activities consisted mainly of capital expenditures. During the nine months ended February 28, 1997, cash used in investing activities consisted primarily of capital expenditures and cash used to purchase a new subsidiary. Cash used in financing activities for the nine months ended February 28, 1998 and 1997 consists principally of payments on long-term debt and dividends paid to shareholders. To insure the availability of funds to meet its various needs, the Company has a comprehensive credit facility with its bank. The credit facility includes a $5,000,000 revolving line of credit; a $10,000,000 acquisition line of credit available for use in making acquisitions or capital expenditures; and a $1,370,000 term loan. At February 28, 1998, the Company had no outstanding balances under the revolving credit or acquisition lines. As of February 28, 1998, the balance of the term debt was $1,370,000, which bears interest at the LIBOR rate plus 1-1/2 % (7.4063% at February 28, 1998.) As of February 28, 1998, the Company had $7,998,000 in cash and cash equivalents, and working capital of $25,368,000, with a ratio of current assets to current liabilities of approximately 4.4 : 1. This compares with cash and cash equivalents of $8,490,000, and working capital of $24,095,000, with a ratio of current assets to current liabilities of 3.7 : 1 as of May 31, 1997. The Company believes it has adequate resources to achieve its operating goals for at least the next 12 month period. 12 13 HASKEL INTERNATIONAL, INC. PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits (numbered in accordance with Item 601 of Regulation S-K): 10.30 Amended and Restated Loan Agreement dated February 13, 1998 between the Company and Union Bank of California, N.A. 27 Financial Data Schedule (b) No reports on Form 8-K were filed during the fiscal quarter covered by this report on Form 10-Q. 13 14 HASKEL INTERNATIONAL, INC. 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. HASKEL INTERNATIONAL, INC. (REGISTRANT) DATE 4-13-98 /S/ R. MALCOLM GREAVES ---------------------- ---------------------------------------- R. Malcolm Greaves President & Chief Executive Officer DATE 4-13-98 /S/ LONNIE D. SCHNELL ---------------------- ---------------------------------------- Lonnie D. Schnell Chief Financial Officer 14 EX-10.30 2 AMENDED AND RESTATED LOAN AGREEMENT 1 [UNION BANK OF CALIFORNIA LOGO] AMENDED AND RESTATED LOAN AGREEMENT THIS AMENDED AND RESTATED LOAN AGREEMENT ("Agreement") is made and entered into as of February 13, 1998 by and between HASKEL INTERNATIONAL, INC., a California corporation ("Borrower") and UNION BANK OF CALIFORNIA, N.A. ("Bank"). This Agreement amends and restates in its entirety that certain loan agreement dated February 21, 1995 between Bank and Borrower, as amended. SECTION 1. THE LOAN 1.1.1 THE REVOLVING LOAN. Bank will loan to Borrower an amount not to exceed Five Million Dollars ($5,000,000) outstanding in the aggregate at any one time (the "Revolving Loan"). Borrower may borrow, repay and reborrow all or part of the Revolving Loan in accordance with the terms of the Revolving Note; provided, however, that for at least thirty (30) consecutive days during each twelve (12)-month period, the principal amount outstanding under the Revolving Loan must be zero (0). All borrowings of the Revolving Loan must be made before December 15, 2000 at which time all unpaid principal and interest of the Revolving Loan shall be due and payable. The Revolving Loan shall be evidenced by a promissory note (the "Revolving Note") on the standard form used by Bank for commercial loans. Bank shall enter each amount borrowed and repaid in Bank's records and such entries shall be deemed to be the amount of the Revolving Loan outstanding. Omission of Bank to make any such entries shall not discharge Borrower of its obligation to repay in full with interest all amounts borrowed. 1.1.1.1 THE COMMERCIAL L/C SUBLIMIT. As a sublimit to the Revolving Loan, Bank shall issue, for the account of Borrower, one or more irrevocable commercial letters of credit (individually, a "Commercial L/C" and collectively, the "Commercial L/Cs") and calling for drafts at sight or usance up to 90 days covering the importation or purchase of inventory used in the normal course of business. The aggregate amount available to be drawn under all outstanding Commercial L/Cs and the aggregate amount of unpaid reimbursement obligations under drawn Commercial L/Cs shall not exceed One Million Two Hundred Fifty Thousand Dollars ($1,250,000) and shall reduce, dollar for dollar, the maximum amount available under the Revolving Loan. All such Commercial L/Cs shall be drawn on such terms and conditions as are acceptable to Bank and shall be governed by the terms of (and Borrower agrees to execute) Bank's standard form for commercial L/C applications and reimbursement agreement and shall not have an expiration date more than 90 days from its date of issuance. No Commercial L/C shall expire more than 90 days after the maturity date of the Revolving Loan. 1.1.1.2 THE STANDBY L/C SUBLIMIT. As a sublimit to the Revolving Loan, Bank shall issue, for the account of Borrower, one or more irrevocable, standby letters of credit (individually, a "Standby L/C" and collectively, the "Standby L/Cs"). All such Standby L/Cs shall be drawn on such terms and conditions as are acceptable to Bank. The aggregate amount available to be drawn under all outstanding Standby L/Cs and the aggregate amount of unpaid reimbursement obligations under drawn Standby L/Cs shall not exceed One - 1 - 2 Million Two Hundred Fifty Thousand Dollars ($1,250,000) and shall reduce, dollar for dollar, the maximum amount available under the Revolving Loan. No Standby L/C shall have an expiry date more than 12 months from its date of issuance unless approved by Bank and each Standby L/C shall be governed by the terms of (and Borrower agrees to execute) Bank's standard form for standby L/C applications and reimbursement agreements. No L/C shall expire more than 90 days after the maturity date of the Revolving Loan. 1.1.2 THE MULTIPLE DISBURSEMENT LOAN; TERM OUT LOANS. Bank will loan to Borrower an amount not to exceed Ten Million Dollars ($10,000,000) outstanding in the aggregate at any one time (the "Multiple Disbursement Loan"). Borrower may borrow all or part of the Multiple Disbursement Loan in amounts of not less than Two Hundred Fifty Thousand Dollars ($250,000) in accordance with the terms of a promissory note evidencing such Multiple Disbursement Loan (the "Multiple Disbursement Note"). The amount available to be borrowed under the Multiple Disbursement Note shall automatically and without notice to Borrower be reduced by the amount of any disbursement of the Multiple Disbursement Loan evidenced thereby. On each of December 15, 1998 and December 15, 1999, the entire amount of principal and accrued interest then outstanding under the Multiple Disbursement Note shall be converted into a single term out loan as described below (each, a "Term Out Loan"). On December 15, 2000, all remaining principal and accrued interest then remaining outstanding under the Multiple Disbursement Loan shall be converted into an additional Term Out Loan. Each Term Out Loan shall bear interest at the rates set forth in, and be payable in accordance with the terms of, a promissory note evidencing such Term Out Loan (each, a "Term Out Note"). Each Term Out Note shall provide for payments of interest only for the first twelve (12) months, and the principal amount thereof shall thereafter amortize in equal consecutive principal installments over an additional period of forty-eight (48) months. In the event of a prepayment of principal and payment of any resulting fees, any prepaid amounts shall be applied to the scheduled principal payments in the reverse order of their maturity. Bank shall enter the balances of the Multiple Disbursement Loan and Term Out Loan from time to time outstanding in Bank's records, and such entries shall be deemed to be the amount of such Loan from time to time outstanding. Omission of Bank to make any such entries shall not discharge Borrower of its obligation to repay in full with interest all amounts borrowed pursuant to such Loan. 1.1.3 TERM LOAN. Bank previously made a certain term loan ("Term Loan") to Borrower, which matures on November 15, 1999. The current outstanding principal amount of the Term Loan is One Million Three Hundred Sixty-Nine Thousand Five Hundred Sixty-Five and 25/100 Dollars ($1,369,565.25). The Term Loan shall be evidenced by a promissory note ("Term Note") on the standard form used by Bank for commercial loans. In the event of a prepayment of principal and any resulting fees, any prepaid amounts shall be applied to the scheduled principal payments in the reverse order of their maturity. 1.2 TERMINOLOGY. As used herein, the word "Loan" shall mean, collectively, all the credit facilities described above. As used herein, the word "Note" shall mean, collectively, all the promissory notes described above. - 2 - 3 As used herein, the words "Loan Documents" shall mean all documents executed in collection with this Agreement. 1.3 PURPOSE OF LOAN. The proceeds of the Revolving Loan shall be used for general working capital purposes and the proceeds of the Multiple Disbursement Loan shall be used to finance capital expenditures and acquisitions. 1.4 INTEREST. The unpaid principal balance of the Loan shall bear interest at the rate or rates provided in the Note and selected by Borrower. The Loan may be prepaid in full or in part only in accordance with the terms of the Note and any such prepayment shall be subject to the prepayment fee provided for therein. 1.5 UNUSED COMMITMENT FEE. On the last calendar day of the third month following the execution of this Agreement and on the last calendar day of each three-month period thereafter until the maturity date of the Multiple Disbursement Loan or the earlier termination of the Multiple Disbursement Loan, Borrower shall pay to Bank a fee of one-eighth percent (1/8%) per year on the average unused portion of the Multiple Disbursement Loan for the preceding quarter computed on the basis of actual days elapsed of a year of 360 days. 1.6 BALANCES. Borrower shall maintain its major domestic depository accounts with Bank until the Note and all sums payable pursuant to this Agreement have been paid in full. 1.7 DISBURSEMENT. Upon execution hereof, Bank shall disburse the proceeds of the Loan as provided in Bank's standard form Authorizations executed by Borrower. 1.8 SECURITY. Prior to any disbursement of the Loan, Borrower shall pledge and grant to Bank a first priority perfected security interest in 50,000 shares of deferred ordinary stock of Borrower's subsidiary, Haskel Energy Systems, Ltd. 1.9 CONTROLLING DOCUMENT. In the event of any inconsistency between the terms of this Agreement and the Note or any of the other Loan Documents, the terms of the Note or other Loan Documents will prevail over the terms of this Agreement, except as provided in Section 6.3 of this Agreement. SECTION 2. CONDITIONS PRECEDENT Bank shall not be obligated to disburse all or any portion of the proceeds of the Loan unless at or prior to the time for the making of such disbursement, the following conditions have been fulfilled to Bank's satisfaction: 2.1 COMPLIANCE. Borrower shall have performed and complied with all terms and conditions required by this Agreement to be performed or complied with by it prior to or at the date of the making of such disbursement and shall have executed and delivered to Bank the Note and other documents deemed necessary by Bank. 2.2 BORROWING RESOLUTION. Borrower shall have provided Bank with certified copies of resolutions duly adopted by the Board of Directors of Borrower, authorizing this Agreement and the Loan Documents. Such resolutions shall also designate the persons who - 3 - 4 are authorized to act on Borrower's behalf in connection with this Agreement and to do the things required of Borrower pursuant to this Agreement. 2.3 CONTINUING COMPLIANCE. At the time any disbursement is to be made, there shall not exist any event, condition or act which constitutes an event of default under Section 6 hereof or any event, condition or act which with notice, lapse of time or both would constitute such event of default; nor shall there be any such event, condition, or act immediately after the disbursement were it to be made. SECTION 3. REPRESENTATIONS AND WARRANTIES Borrower represents and warrants that: 3.1 BUSINESS ACTIVITY. The principal business of Borrower is the manufacture and distribution of pneumatically-driven, high-pressure liquid pumps, gas boosters, and related products. 3.2 AFFILIATES AND SUBSIDIARIES. Borrower's affiliates and subsidiaries (those entities in which Borrower has either a controlling interest or at least a 25% ownership interest) are Haskel Energy Systems, Ltd., Haskel-Hogan Systems and Service, and Haskel Asia Pte. 3.3 AUTHORITY TO BORROW. The execution, delivery and performance of this Agreement, the Note and all other agreements and instruments required by Bank in connection with the Loan are not in contravention of any of the terms of any indenture, agreement or undertaking to which Borrower is a party or by which it or any of its property is bound or affected. 3.4 FINANCIAL STATEMENTS. The audited consolidated financial statements of Borrower, including both a balance sheet at May 31, 1997, together with supporting schedules, and an income statement for the twelve (12) months ended May 31, 1997, have heretofore been furnished to Bank, and are true and complete and fairly represent the financial condition of Borrower during the period covered thereby. Since May 31, 1997, there has been no material adverse change in the financial condition or operations of Borrower. 3.5 TITLE. Except for assets which may have been disposed of in the ordinary course of business, Borrower has good and marketable title to all of the property reflected in its financial statements delivered to Bank and to all property acquired by Borrower since the date of said financial statements, free and clear of all liens, encumbrances, security interests and adverse claims except those specifically referred to in said financial statements. 3.6 LITIGATION. Except as described in the audited consolidated financial statement of Borrower for the fiscal year ended May 31, 1997, there is no litigation or proceeding pending or threatened against Borrower or any of its property which is reasonably likely to affect the financial condition, property or business of Borrower in a materially adverse manner or result in liability in excess of Borrower's insurance coverage. 3.7 DEFAULT. Borrower is not now in default in the payment of any of its material obligations, and there exists no event, condition or act which constitutes an Event of - 4 - 5 Default under Section 6 hereof and no condition, event or act which with notice or lapse of time, or both, would constitute an Event of Default. 3.8 ORGANIZATION. Borrower is duly organized and existing under the laws of the state of its organization, and has the power and authority to carry on the business in which it is engaged and/or proposes to engage. 3.9 POWER. Borrower has the power and authority to enter into this Agreement and to execute and deliver the Note and all of the other Loan Documents. 3.10 AUTHORIZATION. This Agreement and all things required by this Agreement have been duly authorized by all requisite action of Borrower. 3.11 QUALIFICATION. Borrower is duly qualified and in good standing in any jurisdiction where such qualification is required. 3.12 COMPLIANCE WITH LAWS. Borrower is not in violation with respect to any applicable laws, rules, ordinances or regulations which materially affect the operations or financial condition of Borrower. 3.13 ERISA. Any defined benefit pension plans as defined in the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), of Borrower meet, as of the date hereof, the minimum funding standards of Section 302 of ERISA, and no Reportable Event or Prohibited Transaction as defined in ERISA has occurred with respect to any such plan. 3.14 REGULATION U. No action has been taken or is currently planned by Borrower, or any agent acting on its behalf, which would cause this Agreement or the Note to violate Regulation U or any other regulation of the Board of Governors of the Federal Reserve System or to violate the Securities and Exchange Act of 1934, in each case as in effect now or as the same may hereafter be in effect. Borrower is not engaged in the business of extending credit for the purpose of purchasing or carrying margin stock as one of its important activities and none of the proceeds of the Loan will be used directly or indirectly for such purpose. 3.15 CONTINUING REPRESENTATIONS. These representations shall be considered to have been made again at and as of the date of each disbursement of the Loan and shall be true and correct as of such date or dates. SECTION 4. AFFIRMATIVE COVENANTS Until the Note and all sums payable pursuant to this Agreement or any other of the Loan Documents have been paid in full, unless Bank waives compliance in writing, Borrower agrees that: 4.1 USE OF PROCEEDS. Borrower will use the proceeds of the Loan only as provided in subsection 1.3 above. 4.2 PAYMENT OF OBLIGATIONS. Borrower will pay and discharge promptly all taxes, assessments and other governmental charges and claims levied or imposed upon it or its - 5 - 6 property, or any part thereof, provided, however, that Borrower shall have the right in good faith to contest any such taxes, assessments, charges or claims and, pending the outcome of such contest, to delay or refuse payment thereof provided that adequately funded reserves are established by it to pay and discharge any such taxes, assessments, charges and claims. 4.3 MAINTENANCE OF EXISTENCE. Borrower will maintain and preserve its existence and assets and all rights, franchises, licenses and other authority necessary for the conduct of its business and will maintain and preserve its property, equipment and facilities in good order, condition and repair. Bank may, at reasonable times, visit and inspect any of the properties of Borrower. 4.4 RECORDS. Borrower will keep and maintain full and accurate accounts and records of its operations according to generally accepted accounting principles and will permit Bank to have access thereto, to make examination and photocopies thereof, and to make audits during regular business hours. Costs for such audits shall be paid by Borrower. 4.5 INFORMATION FURNISHED. Borrower will furnish to Bank: (a) Within sixty (60) days after the close of each fiscal quarter, except for the final quarter of each fiscal year, its Form 10Q, its unaudited consolidated and consolidating balance sheet as of the close of such fiscal quarter, its unaudited consolidated and consolidating income and expense statement with supportive schedules and statement of retained earnings for that fiscal quarter, prepared in accordance with generally accepted accounting principles; (b) Within one hundred twenty (120) days after the close of each fiscal year, its Form 10K, a copy of its consolidated and consolidating statement of financial condition including at least its balance sheet as of the close of such fiscal year, its consolidated and consolidating income and expense statement and retained earnings statement for such fiscal year, examined and prepared on an audited basis by independent certified public accountants selected by Borrower and reasonably satisfactory to Bank, in accordance with generally accepted accounting principles applied on a basis consistent with that of the previous year; (c) Such other financial statements and information as Bank may reasonably request from time to time; (d) In connection with each financial statement provided hereunder, a statement executed by chief financial officer of Borrower in form acceptable to Bank, certifying that no Event of Default has occurred and no event exists which with notice or the lapse of time, or both, would result in an Event of Default hereunder and certifying compliance with all covenants under this Agreement; (e) In connection with each fiscal year-end statement required hereunder, any management letter of Borrower's certified public accountants; (f) Prompt written notice to Bank of all events of default under any of the terms or provisions of this Agreement or of any other agreement, contract, document or instrument entered, or to be entered into with Bank; and of any litigation which, if decided - 6 - 7 adversely to Borrower, would have a material adverse effect on Borrower's financial condition; and of any other matter which has resulted in, or is likely to result in, a material adverse change in its financial condition or operations; (g) Prior written notice to Bank of any changes in Borrower's officers and other senior management; Borrower's name; and location of Borrower's assets, principal place of business or chief executive office. 4.6 WORKING CAPITAL. Borrower will at all times maintain a working capital equal to at least Fifteen Million Dollars ($15,000,000). "Working Capital" for the purpose of this subsection shall mean the excess of current assets over current liabilities of Borrower, as such terms are defined by generally accepted accounting principles. 4.7 TANGIBLE NET WORTH. Until May 31, 1998, Borrower will at all times maintain Tangible Net Worth of not less than Twenty Five Million Dollars ($25,000,000). Thereafter, Borrower will at all times maintain a minimum Tangible Net Worth that increases from said amount as of the end of Borrower's fiscal year by one hundred percent (100%) of Borrower's net profit after taxes. "Tangible Net Worth" shall mean net worth increased by indebtedness of Borrower subordinated to Bank and decreased by patents, licenses, trademarks, trade names, goodwill and other similar intangible assets, organizational expenses, and monies due from affiliates (including officers, shareholders and directors). 4.8 DEBT TO TANGIBLE NET WORTH. Borrower will at all times maintain a ratio of total liabilities to Tangible Net Worth of not greater than 1.25:1.0. 4.9 EBITDA TO DEBT SERVICE RATIO. Borrower will maintain a ratio of EBITDA to Debt Service of not less than 1.25:1.0. "EBITDA" shall mean earnings before interest, taxes, depreciation, amortization, other non-cash charges, plus cash in excess of Two Million Dollars ($2,000,000). "Debt Service" shall mean the sum of (i) that principal portion of term obligations including capitalized lease obligations coming due during twelve (12) months after the date of calculation; and (ii) for the twelve months preceding calculation, (a) interest expense, (b) taxes, (c) non-financed capital expenditures, (d) dividends, and (e) the aggregate amount, expressed in dollars, of all purchases, redemptions, retirements and other acquisitions of shares of the capital stock of Borrower. Compliance with this subsection shall be measured as of the end of each fiscal quarter on a rolling four-quarter basis. 4.10. INSURANCE. Borrower will keep all of its insurable property, real, personal or mixed, insured by good and responsible companies against fire and such other risks as are customarily insured against by companies conducting similar business with respect to like properties. Borrower will maintain adequate worker's compensation insurance and adequate insurance against liability for damages to persons and property. 4.11 ADDITIONAL REQUIREMENTS. Borrower will promptly, upon demand by Bank, take such further action and execute all such additional documents and instruments in connection with this Agreement as Bank in its reasonable discretion deems necessary, and promptly supply Bank with such other information concerning its affairs as Bank may request from time to time. - 7 - 8 4.12 LITIGATION AND ATTORNEYS' FEES. Borrower will pay promptly to Bank upon demand, reasonable attorneys' fees (including but not limited to the reasonable estimate of the allocated costs and expenses of in-house legal counsel and legal staff) and all costs and other expenses paid or incurred by Bank in collecting, modifying or compromising the Loan or in enforcing its rights or remedies created by, connected with or provided for in this Agreement or any of the Loan Documents whether or not an arbitration, judicial action or other proceeding is commenced. If such proceeding is commenced, only the prevailing party shall be entitled to attorneys' fees and court costs. 4.13 BANK EXPENSES. Borrower will pay or reimburse Bank for all costs, expenses and fees incurred by Bank in preparing and documenting this Agreement and the Loan, and all amendments and modifications thereof, including but not limited to all filing and recording fees, and costs of appraisals. 4.14 REPORTS UNDER PENSION PLANS. Borrower will furnish to Bank, as soon as possible and in any event within 15 days after Borrower knows or has reason to know that any event or condition with respect to any defined benefit pension plans of Borrower described in Section 3 above has occurred, a statement of an authorized officer of Borrower describing such event or condition and the action, if any, which Borrower proposes to take with respect thereto. SECTION 5. NEGATIVE COVENANTS Until the Note and all other sums payable pursuant to this Agreement or any other of the Loan Documents have been paid in full, unless Bank waives compliance in writing, Borrower agrees that: 5.1 ENCUMBRANCES AND LIENS. Borrower will not create, assume or suffer to exist any mortgage, pledge, security interest, encumbrance, or lien other than for taxes not delinquent and for taxes and other items being contested in good faith) on property of any kind, whether real, personal or mixed, now owned or hereafter acquired, or upon the income or profits thereof, except to Bank and except for minor encumbrances and easements on real property which do not affect its market value, and except for existing liens on Borrower's personal property and future purchase money security interests encumbering only the personal property purchased. 5.2 BORROWINGS. Borrower will not sell, discount or otherwise transfer any account receivable or any note, draft or other evidence of indebtedness, except to Bank or except to a financial institution at face value for deposit or collection purposes only and without any fee other than fees normally charged by the financial institution for deposit or collection services. Borrower will not borrow any money, become contingently liable to borrow money, nor enter any agreement to directly or indirectly obtain borrowed money, except pursuant to agreements made with Bank. 5.3 SALES OF ASSETS, LIQUIDATION OR MERGER. Borrower will neither liquidate nor dissolve nor enter into any consolidation, merger, partnership or other combination, nor convey, nor sell, nor lease all or the greater part of its assets or business, nor purchase or lease all or the greater part of the assets or business of another; provided, however, so long as no Event of Default then exists or would then exist after giving effect thereto, Borrower may acquire, merge or consolidate with another corporation if (a) Borrower is the surviving corporation, (b) Borrower's assets will not be subject to any lien or encumbrance following the effective date - 8 - 9 of such combination, and (c) consideration paid by Borrower in connection with such combination (whether paid in cash, by the incurrence of indebtedness or otherwise) does not exceed Ten Million Dollars ($10,000,000) in any fiscal year. 5.4 LOANS, ADVANCES AND GUARANTIES. Borrower will not, except in the ordinary course of business as currently conducted, make any loans or advances, become a guarantor or surety, pledge its credit or properties in any manner or extend credit except that Borrower may guarantee the unsecured indebtedness of Haskel Energy Systems Ltd.; provided however that the amount of such guaranty shall not exceed Two Million Dollars ($2,000,000). 5.5 INVESTMENTS. Borrower will not purchase the debt or equity of another person or entity except for investment grade instruments maturing within one year of purchase. 5.6 PAYMENTS OF DIVIDENDS. Borrower will not declare or pay any dividends, other than a dividend payable in its own common stock, or authorize or make any other distribution with respect to any of its stock now or hereafter outstanding except from subsidiaries to Borrower, if an Event of Default has occurred and is then continuing. 5.7 RETIREMENT OF STOCK. Borrower will not acquire or retire any share of its capital stock for value in excess of 50,000 shares per fiscal year without prior Bank approval. 5.8 PARENT AND SUBSIDIARY PROPERTY. Borrower will not transfer any property to its parent or any affiliate of its parent, except for value received in the normal course of business as business would be conducted with an unrelated or unaffiliated entity. In no event shall management fees or fees for services be paid by Borrower to any such direct or indirect affiliate without Bank's prior written approval. 5.9 CAPITAL EXPENDITURES. Borrower will not make capital expenditures in excess of Five Million Dollars ($5,000,000) in any fiscal year; and shall only make such expenditures as are necessary for Borrower in the conduct of its ordinary course of business. Each said expenditure shall be needed by Borrower in the ordinary course of its business. Expenditures as used in this subsection shall include the current expense portion of all leases whether or not capitalized and shall also include the current portion of any debt used to finance capital expenditures. SECTION 6. EVENTS OF DEFAULT The occurrence of any of the following events ("Events of Default") shall terminate any obligation on the part of Bank to make or continue the Loan and automatically, unless otherwise provided under the Note, shall make all sums of interest and principal and any other amounts owing under the Loan immediately due and payable, without notice of default, presentment or demand for payment, protest or notice of nonpayment or dishonor, or any other notices or demands: 6.1 Borrower shall default in the due and punctual payment of the principal of or the interest on the Note or any of the other Loan Documents; or 6.2 Except as provided in Section 6.3 below, any default shall occur under the Note; or - 9 - 10 6.3 Borrower shall default in the due performance or observance of any covenant or condition of the Loan Documents; provided, however, that Borrower shall be given a 30-day grace period to cure a violation of (i) any of the financial covenants set forth in Section 4 hereof, and (ii) Subsections 5(j), 5(k), 5(l), and 5(m) of the Note; further provided, however (with respect to each of the foregoing Subsections of the Note), that Borrower shall have set aside adequate reserves as required by GAAP; that any such Events of Default described in such aforementioned Subsections shall not (a) concern a sum of money in excess of $250,000, (b) upset the priority of Bank's own security interest in the Borrower's assets, nor (c) be a cause of or contribute to a default by Borrower under one or more terms of this Agreement; and (solely with respect to Subsection 5(l) of the Note), that the grace period afforded to Obligor shall be co-extensive with the grace period, if any, so afforded pursuant to the instrument or document evidencing such Obligor's obligation concerning the borrowing of money. The grace periods, extended to Borrower pursuant to this Section 6.3 shall commence upon the earlier to occur of (i) the date Borrower first becomes aware (or, with the exercise of reasonable care, should have become aware) of such Event of Default and (ii) the date on which Bank first notifies Borrower of such Event of Default. 6.4 Any guaranty or subordination agreement required hereunder is breached or becomes ineffective, or any Guarantor or subordinating creditor dies, disavows or attempts to revoke or terminate such guaranty or subordination agreement; or 6.5 There is a change in ownership or control of ten percent (10%) or more of the issued and outstanding stock of Borrower or any Guarantor, or (if Borrower is a partnership) there is a change in ownership or control of any general partner's interest. SECTION 7. MISCELLANEOUS PROVISIONS 7.1 ADDITIONAL REMEDIES. The rights, powers and remedies given to Bank hereunder shall be cumulative and not alternative and shall be in addition to all rights, powers and remedies given to Bank by law against Borrower or any other person, including but not limited to Bank's rights of setoff or banker's lien. 7.2 NONWAIVER. Any forbearance or failure or delay by Bank in exercising any right, power or remedy hereunder shall not be deemed a waiver thereof and any single or partial exercise of any right, power or remedy shall not preclude the further exercise thereof. No waiver shall be effective unless it is in writing and signed by an officer of Bank. 7.3 INUREMENT. The benefits of this Agreement shall inure to the successors and assigns of Bank and the permitted successors and assignees of Borrower, and any assignment by Borrower without Bank's consent shall be null and void. 7.4 APPLICABLE LAW. This Agreement and all other agreements and instruments required by Bank in connection therewith shall be governed by and construed according to the laws of the State of California. 7.5 SEVERABILITY. Should any one or more provisions of this Agreement be determined to be illegal or unenforceable, all other provisions nevertheless shall be effective. In the event of any conflict between the provisions of this Agreement and the provisions of any note or reimbursement agreement evidencing any indebtedness hereunder, the provisions of such note or reimbursement agreement shall prevail. - 10 - 11 7.6 INTEGRATION CLAUSE. Except for documents and instruments specifically referenced herein, this Agreement constitutes the entire agreement between Bank and Borrower regarding the Loan and all prior communications verbal or written between Borrower and Bank shall be of no further effect or evidentiary value. 7.7 CONSTRUCTION. The section and subsection headings herein are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. 7.8 AMENDMENTS. This Agreement may be amended only in writing signed by all parties hereto. 7.9 COUNTERPARTS. Borrower and Bank may execute one or more counterparts to this Agreement, each of which shall be deemed an original, but when together shall be one and the same instrument. SECTION 8. SERVICE OF NOTICES 8.1 Any notices or other communications provided for or allowed hereunder shall be effective only when given by one of the following methods and addressed to the respective party at its address given with the signatures at the end of this Agreement and shall be considered to have been validly given: (a) upon delivery, if delivered personally; (b) upon receipt, if mailed, first class postage prepaid, with the United States Postal Service; (c) on the next business day, if sent by overnight courier service of recognized standing; and (d) upon telephoned confirmation of receipt, if telecopied. 8.2 The addresses to which notices or demands are to be given may be changed from time to time by notice delivered as provided above. THIS AGREEMENT is executed on behalf of the parties by duly authorized officers as of the date first above written. UNION BANK OF CALIFORNIA, N.A. HASKEL INTERNATIONAL, INC. By: /s/ CATHERINE ABE By: /s/ R. MALCOLM GREAVES ---------------------------- ------------------------------ Catherine Abe R. Malcolm Greaves Title: Vice President Title: President/CEO Address: 445 S. Figueroa St. By: /s/ LONNIE D. SCHNELL Los Angeles, CA 90071 ------------------------------ Attn: Catherine Abe, VP Lonnie D. Schnell Commercial Portfolio Title: Chief Financial Officer Administration, 10th Fl. Address: 100 E. Graham Place Burbank, CA 91502 Attn: Lonnie D. Schnell, CFO - 11 - EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM HASKEL INTERNATIONAL INC'S CONSOLIDATED BALANCE SHEETS, CONSOLIDATED STATEMENTS OF INCOME AND CONSOLIDATED STATEMENTS OF CASH FLOWS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 9-MOS MAY-30-1998 FEB-28-1998 7,998 0 12,275 476 11,062 32,871 11,647 6,293 41,526 7,503 0 0 0 13,811 (92) 41,526 39,025 39,025 20,838 20,838 12,624 38 112 5,767 2,233 3,534 346 0 0 3,880 .81 .77 Other expenses are comprised of selling, general administrative, engineering design, research and development. For the purposes of this Exhibit, Primary means Basic.
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