UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-K
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE
ACT OF 1934 (FEE REQUIRED)
For the Fiscal Year Ended Commission File No.
September 30, 1994 1-6442-1
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
ORANGE-CO, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 59-0918547
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
2020 U.S. Highway 17 South
P.O. Box 2158
Bartow, Florida 33830 (813) 533-0551
(Address of principal executive offices) (Registrant's telephone no.)
Securities registered pursuant to Section 12(b) of the Act: Common Stock,
$.50 par value
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or 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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
[]
Aggregate market value of the common stock held by non-affiliates of
Registrant at December 2, 1994 (based on the closing price on
December 2, 1994): $25,218,634.
Number of shares outstanding of common stock, $.50 par value, as of
December 2, 1994: 10,298,475 shares
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents are incorporated by reference in Part III
of this Annual Report on Form 10-K: Proxy Statement for the 1995 Annual
Meeting of Stockholders - Items 10, 11, 12 and 13.
ORANGE-CO, INC.
INDEX TO ANNUAL REPORT
ON FORM 10-K
PAGE NO.
Part I
Item 1 - Business........................................... 3
Item 2 - Properties......................................... 12
Item 3 - Legal Proceedings.................................. 13
Item 4 - Submission of Matters to a Vote of Security
Holders........................................... 13
Part II
Item 5 - Market for the Registrant's Common Stock and
Related Shareholder Matters....................... 13
Item 6 - Selected Financial Data............................ 14
Item 7 - Management's Discussion and Analysis of
Financial Condition and Results of Operation...... 16
Item 8 - Financial Statements and Supplementary Data........ 26
Item 9 - Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure............ 53
Part III
Item 10 - Directors and Executive Officers of the
Registrant........................................ 53
Item 11 - Executive Compensation ............................ 53
Item 12 - Security Ownership of Certain Beneficial Owners
Management........................................ 53
Item 13 - Certain Relationships and Related
Transactions...................................... 53
Part IV
Item 14 - Exhibits, Financial Statement Schedules and
Reports on Form 8-K............................... 54
-2-
<PAGE>
Item 1. BUSINESS
OVERVIEW
Orange-co, Inc. and subsidiaries (the "Company") is an integrated
citrus company primarily engaged in growing and processing citrus products
as well as packaging and marketing these products and other beverages.
As of November 30, 1994, the Company owned and managed approximately 15,720
acres of Florida citrus groves and the fruit harvested therefrom. The
production from these groves is principally used in the Company's citrus
processing operations in Bartow, Florida (the "Bartow Plant"). This
processing facility has concentrate, blending, pasteurized single strength
juice, by-product, packaging and storage operations providing the
versatility to make many citrus and related beverage products for
sale in a variety of markets. The Company also packages and sells
non-citrus beverages to complement the citrus related products
supplied to its customers in the food service business.
Additionally, the Company offers a line of formulated citrus and non-
citrus beverage bases for reconstitution by industrial and retail
packers. The Company entered the formulated beverage base business
in August 1993 with the purchase of the stock of International
Fruit, Inc.
Its citrus processing plant in Reynosa, Mexico, OrancoMex S.A.
de C.V., which was purchased in 1989, although currently non-
operational, had produced citrus juice, principally chilled orange
juice, frozen concentrated orange juice and grapefruit juice. In
addition, the Reynosa plant in fiscal 1991 and 1992 produced and
packaged fruit salad from sectioned citrus fruit. The facility is
idle due to the unreliability of an economic supply of citrus fruit
in Mexico as a result of the December 1989 freeze. The Company is
currently exploring opportunities to sell this facility or otherwise
recover this asset.
The Company also had engaged in the sale of petroleum products
at the wholesale and retail level operating through its subsidiary,
Frank Carroll Oil Company. The Company had been negotiating to sell
this subsidiary during fiscal 1993 and 1994. A sale of all of the capital
stock of Frank Carroll Oil Company was completed effective September 30,
1994. The Petroleum Division, consisting only of Frank Carroll Oil
Company, has been reported as a discontinued operation since the
second quarter of fiscal 1993. (See Note 8 of the Notes to the
Consolidated Financial Statements "Discontinued Operations".)
During the period from fiscal 1990 through fiscal 1992 the
Company sold part of its assets including its fresh fruit packing
facility at Lake Hamilton, Florida and various citrus groves
totaling approximately 3,333 acres. The proceeds from these sales
of approximately $39,247,000 were principally used to reduce the
Company's debt. All of the tax gain realized from these asset sales
was sheltered by the Company's tax net operating loss
carryforward. There remained approximately $11,042,000 of the tax
loss carryforward at September 30, 1994.
The Company is no longer actively marketing any significant
portion of its citrus acreage. Certain undeveloped and non-citrus
acres may be sold if the opportunity arises. The Company from time
to time is also involved in certain land trades intended to increase
the productivity of the Company's citrus land.
The Company's processed juice production has typically varied
from season to season depending on the size of the Florida crop, the
Company's crop and other conditions in the industry. The Florida
citrus industry experiences fluctuations, which can be wide ranging,
in the size of the citrus crop harvested from season to season
causing fluctuations in citrus juice prices and therefore presenting
significant variations in industry economic conditions and
opportunities. The Company's fruit production from its groves has
fluctuated in a manner similar to the Florida citrus industry. It is
anticipated that the continuing rehabilitation of the Company's
Joshua Grove located in DeSoto County, Florida will provide
-3-
relatively more fruit from the Company's groves in the coming years
as these efforts take effect. Additionally, the Company's juice
production is not expected to fluctuate as much as a result of the
expansion of its fruit purchase and participation programs. As the
Company enters the 1994-95 season, the United States Department of
Agriculture (USDA) has announced an anticipated Florida crop of
approximately 196,000,000 boxes of oranges. It is uncertain what
the effect of this crop will be on the Company's results for the
1994-95 fiscal year.
In May 1992, Stoneridge Resources, Inc. ("Stoneridge"), which
then owned approximately 52% of the Company's outstanding common
shares, sold those shares to Ben Hill Griffin, Inc. and an
affiliate. Ben Hill Griffin, Inc. is a privately owned agribusiness
corporation located in Frostproof, Florida.
SALES BY PRODUCT LINE
The following table sets forth the Company's sales by product
line (in thousands).
<TABLE>
<CAPTION>
Years Ended September 30,
<S> <C> <C> <C>
1994 1993 1992
Beverage Division $72,637 $68,092 $70,286
Grove Management Division 4,119 3,846 9,604
------- ------- -------
Sales from Continuing Operations 76,756 71,938 79,890
------- ------- -------
Discontinued Petroleum Division 12,986 15,591 12,847
------- ------- -------
Total Sales $89,742 $87,529 $92,737
======= ======= =======
</TABLE>
BEVERAGE DIVISION
The Company produces bulk frozen concentrated orange juice
("FCOJ") and frozen concentrated grapefruit juice ("FCGJ")
(collectively, "concentrate"), fresh squeezed orange and grapefruit
juice, reconstituted juices and several citrus by-products at its
Bartow Plant. The production of concentrate principally involves
extracting the juice from the fruit, evaporating most of the water
from the juice and then refrigerating the juice concentrate at the
proper storage temperature. The Bartow Plant's current production
capacity is estimated to be approximately 9,500,000 boxes of fruit
annually. During the 1989-90 season, production was sharply
curtailed because of the December 1989 freeze to approximately
4,476,000 boxes processed. The 1990-91 and 1991-92 Company produced and
managed crops provided approximately 3,720,000 and 3,204,000 boxes
respectively. The reduction of boxes processed in a higher grove production
year such as fiscal 1991 in part represents the reduction in volume resulting
from the sale of certain of the Company's groves and in part the
decision by the Company during that period to process fruit obtained
primarily from its owned and managed groves. The reduction in boxes
processed during fiscal 1991 from Company owned and managed groves
was partially offset by the Company processing citrus (primarily
oranges) into concentrate for certain customers under contract.
During the 1991-92 season the Company increased this activity.
During fiscal 1993 the Company expanded its program to obtain fruit
to process in its juice processing plant from non-Company sources
and processed a total of approximately 8,149,000 boxes of citrus
fruit. During the 1993-94 processing season the Company processed
approximately 9,296,000 boxes of citrus fruit from Company and non-
Company sources. It is anticipated, conditions permitting, that the
Company will continue
-4-
to process fruit from non-Company sources in addition to its own fruit.
The Company also purchases processedconcentrate for blending and resale.
Additionally, the Company recently expanded its bulk concentrate storage
capacity by approximately 3.8 million gallons providing a total storage
capacity of approximately 7.5 million gallons of frozen concentrated juices.
The Company packages a substantial portion of the processed
concentrate in various containers and dispensers for sale to major
food service companies for ultimate distribution to restaurants,
hotels, hospitals and other food service customers. The remainder
of the orange concentrate is sold in bulk tankers and drums to
dairies, brokers and other distributors, as well as the futures
market. Additionally, a portion of the fruit is processed into single strength
not from concentrate ("NFC") juice products. The Company may from time to time,
depending upon conditions then existing in the citrus industry, decide to
vary its sales mix.
Most recently, within the food service market, the Company has
emphasized the development of a full line of beverage products, to
supplement its traditional emphasis on orange juice. The
Company's product line now includes several types of juices,
including orange and grapefruit, and non-citrus beverages such as
grape, apple, cranberry, fruit punch and lemonade, a variety of 10%
to 50% juice base drinks, isotonic beverages and liquid concentrated
tea.
In August 1993 the Company expanded its drink base products to
include a line of citrus and non-citrus formulated frozen
concentrated drink bases to be reconstituted by industrial and
retail packers. This expansion took place through the purchase of
all of the outstanding stock of International Fruit, Inc., an
established producer and marketer of these products.
As previously mentioned, the Company's plant in Reynosa, Mexico,
OrancoMex S.A. de C.V., which had produced bulk FCOJ and FCGJ and
fruit salad, is idle due to the unreliability of an economic supply
of citrus fruit as a result of the 1989 freeze. The Company is
currently exploring opportunities to sell this facility or to
otherwise recover this asset.
The following table sets forth the equivalent concentrate and
fresh squeezed gallons produced at the Company's plants during each
of the last five seasons. The number of gallons shown is based on a
concentrate factor of 65 degree brix, a measure of the percent of
sugar in the fruit.
<TABLE>
<CAPTION>
Bartow Bartow Reynosa Reynosa
Plant: Plant: Plant: Plant:
Processed Processed Processed Other
Orange Grapefruit Orange Citrus
Season Juice Juice Juice Juices Total
<S> <C> <C> <C> <C> <C>
1989-90 2,949,320 46,263 590,832 - 3,586,415
1990-91 3,252,776 22,846 29,905 27,055 3,332,582
1991-92 4,405,788 29,884 - - 4,435,672
1992-93 6,779,429 479,954 - - 7,259,383
1993-94 7,138,798 968,449 - - 8,107,247
</TABLE>
The sales price for bulk concentrate sold by the Company is
determined by market prices which in the past have been subject
to fluctuations. Such fluctuations are expected to continue. The
Company has, from time to time, used the frozen concentrate orange
juice futures market to hedge fruit, FCOJ inventory, purchase and
sales commitments.
The Bartow Plant also produce several citrus by-products.
One process extracts d'limonene oil (a chemical additive for
products such as paint thinner, cleansers and cosmetics) from orange
peel and processes the remaining peel and
-5-
pulp for sale as cattle feed. A secondary extraction process is also
performed by which juice is extracted from the fruit pulp remaining from the
concentrate operation. This product is used in the production of an
orange pulp wash concentrate (an ingredient of beverages consisting
of less than 10% natural juices) and is sold in bulk to various
customers. The Bartow Plant also produces a by-product known as
pulpcells, which is sold to manufacturers for use as a filler and
flavor ingredient in citrus juice products.
The Company operates a cold storage facility at Bartow, Florida,
which is certified by the United States Customs Service for duty
deferred customs storage and by the New York Cotton Exchange as a
delivery point for FCOJ futures contracts. As previously mentioned
the Company recently expanded this facility by 3.8 million gallons
of capacity in February 1994.
THE GROVES
As of November 30, 1994, the Company owns approximately 12,696
acres of citrus groves and also manages approximately 3,024 acres of
citrus groves (collectively, the "Groves"). The Groves constitute
approximately 1.8% of Florida's total grove acreage which is
reported to be 853,742 acres.
As previously mentioned, the Company sold 3,333 acres of citrus
groves between August 1990 and November 1991. As of November 30,
1994 the Company is not marketing any significant acreage of citrus
groves. The Company may sell certain non-citrus grove acreage.
The following table lists the locations of the Groves by county
and the approximate number of acres of groves owned and managed by
the Company in Florida as of the year ended September 30, 1994.
<TABLE>
<CAPTION>
Location Groves Groves
Owned Managed
<S> <C> <C>
Polk County 204 -
DeSoto County 11,610 2,749
Charlotte County 882 275
______ _____
Totals 12,696 3,024
====== =====
</TABLE>
The following table reflects the production from groves owned
and managed by the Company for each of the past five seasons. The
Company's harvesting and processing activities generally begin in
October of each year and continue through the following May or June.
This period of production is referred to herein as a "season".
-6-
<TABLE>
<CAPTION>
Average
Production
Managed Total Per
Season Owned Groves Groves Production Acre (1)
(in Acres) (in boxes)
<S> <C> <C> <C> <C>
1989-90 16,020 (3) 3,175 (2) 4,390,000 229
1990-91 11,125 3,274 (2) 4,625,000 321
1991-92 11,129 2,494 3,903,000 287
1992-93 11,583 2,544 4,160,000 294
1993-94 11,523 2,695 3,542,218 249
</TABLE>
<F1>
(1)Calculated by dividing total production by total number of
productive grove acres owned and managed as of September 30,
1991, 1992, 1993 and 1994 and August 31, 1990.
<F2>
(2)Excludes approximately 2,590 and 577 managed acres for 1989-90
and 1990-91 respectively, on which the Company did not maintain
participation contracts.
<F3>
(3)Includes 2,760 acres that were sold following the harvest of
the 1989-90 season production. The Company harvested
approximately 338,000 boxes from these 2,760 acres during the
1989-90 season.
In the past, damaging frosts or freezes have occurred throughout
Florida. Freezes can adversely affect the productivity of groves for
those years in which they occur and for several years thereafter. A
frost in February 1989 damaged the bloom in groves within the citrus
industry, including certain of the Company's groves, and a
state-wide freeze occurred in late December 1989. The Company
experienced tree loss from the December 1989 freeze principally in
its northern-most properties known as the Polk County Groves. Only
about 6% of the Company's acreage was located in this area. As of
September 30, 1994 only approximately 1.6% of the Company's acreage
is located in Polk County.
The following table lists the actual Florida crop of round
oranges over the past five seasons expressed in the number of ninety
pound boxes.
<TABLE>
<CAPTION>
SEASON NINETY POUND BOXES
<S> <C>
1989-90 110,200,000
1990-91 151,600,000
1991-92 139,800,000
1992-93 186,500,000
1993-94 174,200,000
</TABLE>
As previously mentioned, as the Company enters the 1994-95 season
the USDA has announced an anticipated Florida orange crop of
approximately 196,000,000 boxes.
In addition to productive grove acreage, as of November 30, 1994,
the Company owns approximately 7,083 acres of land, much of it in
the vicinity of the groves, of which approximately 3,121 acres are
prepared for citrus planting, approximately 2,487 acres are suitable
for cultivation and 1,475 acres are used as water retention areas,
roadways and similar ancillary uses or are unusable.
The Company's plan calls for, among other actions, the
rehabilitation of its citrus acreage thereby increasing
productivity, cash flow and market values. During fiscal 1991 the
Company completed the rehabilitation of 320 acres of citrus groves.
During fiscal 1992 the Company accelerated its rehabilitation
project at its Joshua Grove in DeSoto County, Florida, with the
planting of approximately 202,000 new trees. The rehabilitation
continued with the planting of approximately 112,000 trees and the
installation of an irrigation system covering
-7-
an additional 1,360 acres which was completed during fiscal 1993 and the
planting of approximately 103,000 trees and the installation of an irrigation
system covering an additional 1,670 acres during fiscal 1994.
Further plans call for expenditures during fiscal 1995 to irrigate
and rehabilitate an additional 1,142 acres and plant approximately
90,000 trees.
During the 1993-94 season, substantially all of the fruit
harvested from the Groves was used in the Company's processing
plant. Most of the 1994-95 crop from the Groves is expected to be
used in the Company's processing plant.
GROVE MANAGEMENT
In addition to caring for its own groves, the Company provides
grove care, harvesting and marketing services for groves owned by
others. The Company's grove care services include periodic
application of fertilizers, herbicides and pesticides, monitoring
for diseases and pests, liaison with local water control
districts as to irrigation and drainage requirements and monitoring
rainfall and temperature information. In addition to performing
these services as part of a standard-care contract, the Company also
performs other custom-care services, including trimming, topping,
application of soil conditioners, reshaping of beds and replacement
of damaged or dead trees on an "as needed" basis. As of November
30, 1994 the Company managed 2,468 acres on a standard care basis
and 556 acres on a custom care basis. The Company has experienced
reductions in its caretaking operations for other grove owners
during the last five years due to the sale of certain of its own
groves in close proximity to these customers. The Company does not
anticipate further significant reductions in fiscal 1995.
Grove care contracts generally provide for services at the
Company's cost plus a negotiated fee, usually expressed as a
percentage of cost. Grove care charges are payable monthly. The
Company's grove care contracts are generally short-term in nature or
terminable upon short notice.
The Company enters into marketing contracts with certain growers
("participation contracts"), whereby the Company purchases the fruit
for a price determined by the proceeds ultimately received by the
Company for the products sold from that season's fruit. The Company
deducts from the price to be paid certain production and overhead
costs, industry assessments and a marketing fee. These contracts are
generally renewable annually and are terminable upon short notice.
The Company's remaining fruit purchases are made under annual
contracts that provide for purchase based upon market prices
prevailing at the time of the agreement or are made on a "spot"
basis.
PETROLEUM PRODUCTS AND RELATED BUSINESSES
The Company was engaged in the wholesale and retail sale of
petroleum products through a subsidiary, Frank Carroll Oil Company
("Carroll Oil"). Carroll Oil's principal business is selling Texaco
petroleum products to service stations and other customers in
southwestern Florida. In addition, Carroll Oil purchases fuels from
independent oil companies to supply non-retail customers and service
stations that do not advertise Texaco products. Carroll Oil also
owns and operates a bulk fuel and oil distribution facility and two
retail service station-convenience stores near Fort Myers, Florida.
During fiscal 1993 the Company began negotiating the sale of
Carroll Oil, and accordingly this subsidiary is reported
retroactively as a discontinued operation. (See Consolidated
Statement of Operations, and Note 8 to the Notes to the Consolidated
Financial Statements "Discontinued Operations".) The Company
completed the sale of 100% of Carroll Oil stock effective September
30, 1994 for total proceeds of approximately $966,000 in cash and notes
and accordingly is no longer engaged in the sale and distribution of
petroleum products.
-8-
In June 1991, the Company sold all of the assets of its wholly
owned subsidiary, Morrison Pump and Equipment Service Company and
accordingly is no longer engaged in the business of selling,
installing and servicing petroleum pumps, tanks and related
equipment.
EMPLOYEES
As of November 30, 1994, the Company employed approximately 201
full-time, non-seasonal employees in production-related activities,
including its operations at the Bartow Plant and its grove
management operations. The Company also employs approximately 94
administrative personnel. The number of full-time employees
increases to approximately 470 during the Company's peak period of
operations. Management believes that relations between the Company
and its employees are good.
GENERAL INFORMATION REGARDING CITRUS OPERATIONS
AGRICULTURAL CONDITIONS. The citrus industry is subject to various
factors over which growers and processors have limited or no
control, including weather conditions, disease, pestilence and water
supply. Although the subtropical Florida climate generally favors
cultivation of citrus fruit, no citrus-producing area of Florida is
immune from weather conditions which can damage citrus trees and
fruit. In the past, damaging frosts or freezes have occurred
throughout Florida. A freeze can adversely affect the productivity
of groves for the year in which it occurs and for several years
thereafter by causing tree damage or destruction. Other weather
conditions which could adversely affect the groves and grove
production include, but are not limited to, drought, excessive
moisture, hurricanes, wind and hail. The Company does not maintain
crop or tree insurance.
MARKET PRICE FLUCTUATIONS. Market prices for processed citrus juice
are subject to fluctuations. The variation in the size of the
industry crop as previously mentioned has resulted in large changes
in the price of FCOJ, FCGJ and related products. Market prices are
highly sensitive to crop sizes as well as other factors such as
weather and the competition from foreign crops.
The Company has from time to time used the FCOJ futures market to
hedge fruit and FCOJ inventory to reduce price risk. Under this
program the Company may enter into sales contracts on the FCOJ
futures market in relation to its current and future orange juice
concentrate inventories to offset anticipated fluctuations in
concentrate prices, thereby protecting margins in advance of actual
sale and delivery. Additionally, the Company may enter into
purchase contracts for FCOJ on the futures market to reduce the
price risk and assure an adequate supply on purchased FCOJ needs.
The Company maintains accounts with brokers which have deposit
maintenance requirements that can fluctuate as a result of changes
in the price of FCOJ futures, which can affect liquidity.
GOVERNMENTAL REGULATIONS. Fresh citrus fruit and processed juice
are produced and marketed under strict federal and state regulations
and supervision. The Company has experienced no difficulties in
complying with these regulations.
All property in the State of Florida is subject to the
jurisdiction of water management districts which manage water to
maximize its supply, quality and flood protection. Currently all
necessary water permits have been obtained for the Groves to date.
In the event of a water shortage, the water management districts
have the authority to restrict water usage in the Groves which could
have a material adverse effect upon the groves and their production
of fruit. Certain of the Groves are also located within local water
management districts which are established either by the Florida
Department of Natural Resources or by the landowners themselves.
The water management districts primarily regulate the drainage and
irrigation of the lands within each district and make annual
assessments on the landowners for the costs of related improvements,
maintenance and operations.
-9-
Certain provisions of the Immigration Reform and Control Act of
1986 could limit the availability of seasonal labor necessary to
harvest the Company's crops. The Company has not experienced a
shortage of seasonal labor to date and does not anticipate a
shortage during the 1994-95 season.
The Company is currently designing a new spray field system for
its Bartow facility to meet the requirement of all environmental
agencies. During fiscal 1994 and 1993 the Company spent
approximately $267,000 and $245,000 respectively, on this system
and compliance of other environmental matters of which approximately
$52,000 and $141,000 were capitalized. The Company anticipates the
expenditure of approximately an additional $500,000 during
fiscal 1995 on the new system and other environmental matters.
SEASONALITY AND WORKING CAPITAL. The citrus industry is seasonal,
with the Company harvesting fruit and processing it into juice from
October through June. However, the juice is stored and sold
throughout the year and revenues levels are sometimes affected by
seasonal price movements. In contrast, the value-added food service
business has relatively low seasonal variations.
Inventories of processed juice are accumulated during each season
to enable the Company to cover sales and deliveries through the
beginning of the production cycle in the next season. This cyclical
peaking of processed juice inventories generally results in a need
for larger amounts of working capital during certain times of the
year. The Company principally uses a line of credit to finance
inventories. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Liquidity and Capital
Resources."
COMPETITION. The Company competes with numerous growers and
processors, some of which are larger than the Company. Price,
quality and marketing are the principal competitive factors in
selling processed juices. The Company believes that its production
capacity and efficiencies, when fully utilized, provide it with an
enhanced ability to compete. Because of the size of the domestic
citrus industry, no individual grower or processor can exercise
appreciable influence over the selling price of the Company's bulk
citrus products nor the price of its fruit supply. However, the
market for the Company's value-added beverage products sold to food
service customers is characterized by fewer producers some of which
are significantly larger than the Company and can influence the
market price for these products. Although the Company accounted for
approximately 6.6% of Florida FCOJ production during the 1993-94
season, several other producers account for greater percentages.
Foreign processors of concentrate, particularly Brazilian, are
believed to produce concentrate at a lower cost than that produced
in the United States. Brazilian processors may also receive
subsidies from the Brazilian government to which there are no
comparable benefits received by domestic processors. The effect of
these cost advantages is partially diminished by a United States
import tariff, but, nevertheless, because of the volume of their
exports to the United States and other countries and the cost of
production, Brazilian producers significantly influence the selling
price of concentrate. Production levels and pricing by Brazilian
producers may affect the selling prices for concentrate, and
Brazilian exports of concentrate have been viewed by many in the
industry as a competitive threat to domestic processors. Even so,
the Company considers Brazilian exports to be a potential source of
supply during periods when domestic citrus products are unavailable
or in short supply. The Company further believes that the opening
of new or expanded markets for concentrate, such as Japan and
Europe, may offset to some extent the impact of Brazilian
competition.
Competition from Mexico may increase with the implementation of
the North American Free Trade Agreement (NAFTA) with Mexico, which
was implemented in January 1994. This Agreement provides for the
elimination of United States tariffs on citrus products imported
into the United States from Mexico over a 15 year period, increasing
competition for domestic suppliers.
-10-
The Company has several registered trademarks which are not
currently in wide usage.
FOREIGN AND DOMESTIC OPERATIONS. The Company derived approximately
15.2%, 6.2%, and 5.4% of its revenue from foreign sales during fiscal
1994, 1993, and 1992 respectively. All of the Company's foreign
sales are from the Florida operations.
Substantially all of the Company's assets are located in the
State of Florida except for the assets of its Mexican citrus processing
facility which represents less than 1.0% of the Company's
total assets. The plant, located in Reynosa, Mexico, is owned by
OrancoMex, S.A. de C.V., a wholly owned subsidiary of the Company.
BUSINESS SEGMENTS.
The Company's gross sales, pretax income and assets were
attributable to its two business segments: (1) citrus fruit,
processed juice, and grove management; and (2) petroleum and related
product sales. The Company's citrus related segment represented
approximately 85.5% of the Company's gross revenues for the year
ended September 30, 1994 and all of the Company's assets as of
September 30, 1994. The Company's petroleum and related product
sales operation is reported as the Discontinued Petroleum Division
and represented approximately 14.5% of the Company's gross revenues
for the year ended September 30, 1994. (See Note 15 of the Notes to
Consolidated Financial Statements "Business Segment".) As
previously mentioned the Company sold the Petroleum Division as of
September 30, 1994.
The Company has two customers in the citrus segment that
accounted for 30.9% and 10.3% of that segment's revenue for fiscal
1994. Relationships between the Company and these two customers are
currently good and are expected to remain so. All other customers in
the citrus segment individually account for less than 10% of total
sales for this segment. For further information on significant
customers over 10% of total Company Sales see Note 1 of the Notes to
the Consolidated Financial Statements "Summary of Significant
Accounting Policies".
-11-
Item 2. PROPERTIES
The following table sets forth certain information regarding the
principal properties owned by the Company and its wholly owned
subsidiaries as of November 30, 1994.
<TABLE>
<CAPTION>
Location General Character Approximate Size
<S> <C> <C>
Polk and Citrus groves and related 19,779 acres
Charlotte, acreage
DeSoto,
Counties, FL
(1)
Bartow, FL (1) Citrus processing plant 65,000 boxes per day average
capacity
Concentrate storage 7,500,000 gallon storage
facility capacity
332 acres
Wauchula, FL Concentrate storage 92 acres
(2) facility
(Decommissioned)
DeSoto County, Undeveloped land 963 acres
FL
Reynosa, Mexico Citrus processing plant Estimated 17,500 boxes
(2) (Decommissioned) per day average capacity
8.5 acres
</TABLE>
<F1>
(1)Portions of these properties are encumbered by certain
mortgages.
<F2>
(2)These properties are being held for sale. The facility in
Reynosa, Mexico is currently non-operational.
Management believes that the Company's Bartow plant and related
storage facilities are in good operating condition and are adequate
to support its current operations.
The Company is currently offering for sale various properties,
including certain undeveloped land and various idle production
facilities, among them, two former citrus processing plants which
have been partially dismantled. These properties have an aggregate
net book value as of September 30, 1994 of approximately $1,864,000.
The Company has a program to consolidate certain of its grove
holdings into more contiguous and more manageable parcels and has
begun the rehabilitation of selected parcels through the
installation of new more effective irrigation systems and
significant replanting of citrus trees. The Company has also
committed to certain other improvements including those to its
Bartow citrus processing facility (See Management Discussion and
Analysis: Liquidity and Capital Resources).
A portion of the Company's properties are subject to mortgages
securing long-term debt or are covered by negative pledges
restricting mortgages or pledges of such properties. (See Notes 4
and 7 of the Notes to Consolidated Financial Statements "Property
and Equipment" and "Notes Payable to Banks and Long-term Debt".)
-12-
ITEM 3. LEGAL PROCEEDINGS.
There are no reportable legal proceedings under this item.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not Applicable.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
SHAREHOLDER MATTERS.
The Company's common stock is traded on the New York Stock
Exchange under the symbol "OJ". The following table sets forth the
range of high and low closing prices per share for each full
quarterly period within the two most recent fiscal years.
<TABLE>
<S> <C> <C>
Fiscal 1994 High Low
First Quarter $ 5-1/4 $ 4-5/8
Second Quarter 6-3/8 5-1/8
Third Quarter 5-7/8 5-1/4
Fourth Quarter 6-3/8 5-1/2
Fiscal 1993 High Low
First Quarter $ 6-3/4 $ 5-3/4
Second Quarter 5-3/4 5-1/8
Third Quarter 5-1/2 5
Fourth Quarter 5-1/8 4-1/2
</TABLE>
On November 30, 1994 there were approximately 5,096 named holders
of record of the Company's common stock.
The Company last paid a dividend on its common stock in November
1988. Any payment of cash dividends in the future will be dependent
upon the Company's financial condition, loan covenants, capital
requirements, earnings, and other factors that the Company deems
relevant.
-13-
ITEM 6. SELECTED FINANCIAL DATA.
The following selected financial data as of, and for the year
ended August 31, 1990, for the month ended September 30,
1990 and as of, and for the years ended September 30, 1991, 1992,
1993, and 1994, have been derived from the audited financial
statements of the Company. Sales and net income from continuing
operations before income taxes reflect the treatment of the
Petroleum Division as a discontinued operation on a consistent
basis. The following data should be read in conjunction with and
is qualified in its entirety by reference to the financial statements
and the accompanying notes contained elsewhere in this report under the
heading "Financial Statements and Supplementary Data".
<TABLE>
<CAPTION>
Years Ended September 30, 1994, 1993, 1992 and 1991, the Month Ended
September 30, 1990 and the Year Ended August 31, 1990
Historical(1)
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C>
September
1994 1993 1992 1991 1990 1990
STATEMENT OF
OPERATIONS
DATA
Sales $76,756 $71,938 $79,890 $64,368 $ 4,463 $109,703
======= ======= ======= ======== ======== =========
Income(loss)
from
continuing
operations
before
income taxes
and
cumulative
effect of a
change in
accounting
principle $ 5,886 $ 3,759 $10,298 $(1,624) $ (95) $(15,088)
======= ======= ======= ======== ======== =========
Net Income
(loss)
before
cumulative
effect of a
change in
accounting
principle $ 3,345 $ 1,088 $ 7,981 $(2,070) $ (74) $ (8,743)
======= ======= ======= ======== ======== =========
Cumulative
effect of
of FAS No. 109 $ - $ - $ - $(3,444) $ - $ -
======= ======= ======= ======== ======== =========
Net income
(loss) $ 3,345 $ 1,088 $ 7,981 $(5,514) $ (74) $ (8,743)
======= ======= ======= ======== ======== =========
-14-
Net income
(loss) per
common share
before
cumulative
effect of a
change in
accounting
principle $ .32 $ .11 $ .78 $ (.20) $ (.01) $ (.86)
======= ======= ======= ======= ======== ========
Cumulative
effect of
FAS No. 109 $ - $ - $ - $ (.34) $ - $ -
======= ======= ======= ======= ======== ========
Net
income(loss) $ .32 $ .11 $ .78 $ (.54) $ (.01) $ (.86)
======= ======= ======= ======= ======== ========
</TABLE>
<TABLE>
<CAPTION>
As of September 30, 1994, 1993, 1992 and 1991 and August 31, 1990
(in thousands)
<S> <C> <C> <C> <C> <C>
1994 1993 1992 1991 1990
BALANCE SHEET
DATA
Total assets $169,404 $139,802 $136,295 $137,856 $149,845
======== ======== ======== ======== ========
Long-term debt
(less current
portion) $ 38,499 $ 19,683 $ 21,437 $ 31,893 $ 29,445
======== ======== ======== ======== ========
Stockholders'
equity $ 90,797 $ 87,452 $ 86,090 $ 77,409 $ 85,646
======== ======== ======== ======== ========
</TABLE>
The Company last paid a dividend on its Common Stock in November
1988. There have been no dividends for any of the periods
presented.
<F1>
(1)Not covered by accountant's report.
-15-
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FISCAL 1994 VERSUS FISCAL 1993
The discussion that follows is based on the Consolidated
Statements of Operations and compares the results of the
Company's continuing operations for the year ended September 30,
1994 to the Company's continuing operations for the year ended
September 30, 1993.
The following table reflects changes in sales, cost of sales
and gross profit by division and other changes in the Statements
of Operations through net income from continuing operations
between the respective periods. The respective statements have
excluded sales, cost of sales, gross profit, selling, general and
administrative expenses, interest expense and all other items of
profit and loss related to the Petroleum Division. (See Note 8
of the Notes to the Consolidated Financial Statements
"Discontinued Operations".)
<TABLE>
<CAPTION>
Year Ended September 30, 1994 vs. Year Ended September 30, 1993
Increases/(Decreases)
(in thousands)
Cost of
Goods Net
Sales Sold Change
<S> <C> <C> <C>
Beverage Division $4,545 $3,189 $1,356
Grove Management Division 273 178 95
------ ------ -------
Continuing operations 4,818 3,367 1,451
====== ====== =======
Other costs and expense, net:
General, administrative and selling expense . . . . . . . . (56)
Gain on disposition of property and equipment and property
held for disposition . . . . . . . . . . . . . . . . . . . 342
Other expense . . . . . . . . . . . . . . . . . . . . . . . 263
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . 127
-------
Income from continuing operations . . . . . . . . . . . . . 2,127
Provision for income taxes from continuing operations . . . (954)
-------
Net income from continuing operations . . . . . . . . . . . $1,173
=======
</TABLE>
RESULTS OF OPERATIONS
SALES
Total net sales from continuing operations increased
approximately $4,818,000 or 6.7% for the fiscal year ended
September 30, 1994 compared to the prior year ended September 30,
1993. The principal increase of approximately $4,545,000
occurred in the Beverage Division. The Grove Management Division
sales increased approximately $273,000 compared to the prior
year.
BEVERAGE DIVISION The Beverage Division sales increased
approximately $4,545,000 during fiscal 1994 compared to the prior
year. Revenues from the sale of the Company's bulk citrus juice products
increased approximately $4,780,000 as a result of offsetting increases and
decreases. Prices for the bulk citrus juice products increased approximately
$5,847,000 during the fiscal 1994 compared to the prior year. These higher
prices were primarily a result of a somewhat smaller Florida crop from the
1993-94 season of approximately 174,200,000 boxes of oranges compared to the
1992-
-16-
93 crop of approximately 186,500,000 boxes of oranges. The
Florida citrus industry is highly cyclical, subject to varying
weather conditions and other natural phenomena, sometimes
creating fluctuations in economic conditions and opportunities.
The price increases were partially offset by a sales decrease in
bulk citrus juice products of approximately $1,067,000 during the
fiscal 1994 as a result of a decrease in volume of bulk citrus
juice sales.
Sales of the Company's packaged citrus juices sold primarily to
the food service industry decreased approximately $2,804,000
during fiscal 1994 compared to the prior year. Prices increased
approximately $541,000 but were more than offset by a decrease in
volume of sales of these products of approximately $3,345,000
compared to the prior year. This volume decrease was principally due
to the decision of one of the Company's food service customers to
move its business to an alternate supplier in early fiscal 1993.
The Company's non-orange and drink base sales increased
approximately $750,000 during fiscal 1994 compared to the prior
year. The volume of sales of these non-orange and drink base
products increased approximately $1,294,000 principally as a
result of increased sales of the Company's new line of drink base
products acquired with the purchase of International Fruit, Inc.
This increase in volume was partially offset by price decreases of
approximately $544,000 on these products during the fiscal 1994
compared to the prior year.
Revenues from the sale of the Company's by-products including,
feed, pulp cells, and citrus oils increased approximately
$2,516,000 as a result of a higher volume of by-products being
sold during fiscal 1994 compared to the prior year due primarily
to increased production.
Storage, handling, processing citrus for customers under
contract and other revenues decreased approximately $697,000
principally as a result of decreased volume during the current
fiscal year compared to the prior year.
GROVE MANAGEMENT DIVISION Grove Management Division
sales increased approximately $273,000 or 7.1% for the current year compared to
the prior year. The principal increase of approximately $188,000 resulted
from the sale of fruit to third party packers and processors primarily
from higher prices compared to the prior year. Additionally,
revenues from grove caretaking and harvesting activities increased
approximately $85,000 during fiscal 1994 compared to the prior year.
GROSS PROFIT
Gross profit from continuing operations increased
approximately $1,451,000 or 15.0% for the fiscal year ended
September 30, 1994 compared to the prior year ended September 30,
1993. The principal increase of approximately $1,356,000
occurred in the Beverage Division. Additionally, the Grove
Management Division gross profit increased approximately $95,000
during fiscal 1994 compared to the prior year.
BEVERAGE DIVISION The gross profit of the Company's Beverage
Division increased approximately $1,356,000 during fiscal 1994
compared to the prior year. The principal increase of
approximately $1,474,000 resulted from the sale of bulk citrus
juice products during fiscal 1994 compared to the prior year. Of
this amount, price increases on these products accounted for an
increase in gross profit of approximately $5,847,000, which in
part resulted from the somewhat smaller 1993-94 Florida crop
previously mentioned compared to the prior year. Partially
offsetting these increases were decreases in gross profit of
approximately $4,373,000 as a combined result of higher cost of
raw fruit and concentrate used in the production of bulk citrus
juices and lower volumes sold compared to the prior year. The
higher costs were due in part to the prior years lower cost
carryover inventory being depleted during the second quarter of
fiscal
-17-
1994 and fiscal 1994's higher cost inventory beginning to be utilized.
Management expects the cost of bulk citrus juices sold as bulk and utilized
in its packaged citrus juice products to continue to be higher over the next
two quarters compared to the same periods in the prior year.
The Company has in the past utilized and may in the future
utilize the FCOJ futures market to hedge fruit inventory,
anticipated requirements and sales commitments of FCOJ. The
effects of this hedging activity, if any, are reflected in the
cost of inventories and flow through cost of sales in the
Consolidated Statements of Operations as a component of the cost
of FCOJ as the associated products are sold. As of September 30,
1994 the Company held contracts for FCOJ futures with unrealized
gains of approximately $132,000 which would have been realized if
said positions would have been prematurely liquidated on that
date. These unrealized gains are based upon the closing market
price of equivalent futures obligations and do not necessarily
represent prices at which the Company expects to sell the FCOJ.
Gross profit on the sale of packaged citrus juice products
sold primarily to the food service industry decreased
approximately $133,000 during the current year compared to the
prior year. The principal decrease resulted from a decrease in
the volume of these products of approximately $722,000 compared
to the prior year. Partially offsetting these decreases was an
increase in gross profit of approximately $589,000 as a combined
result of higher prices and lower conversion costs during fiscal
1994 compared to the prior year.
The gross profit from the sale of the Company's non-orange and
drink base products increased approximately $523,000 during the
current year compared to the prior year. This increase was
principally as a result of lower costs of production of
approximately $1,152,000 partially offset by a decrease in the
price of these products of approximately $544,000. Additionally,
reduced volumes in the current fiscal year decreased gross profit
approximately $85,000 compared to the prior year.
By-products including, feed, pulp cells, and citrus oils
provided an increase in gross profit of approximately $1,957,000
during the current fiscal year as a result of increased volume
and lower costs of production. Gross profit from storage,
handling and other activities decreased approximately $426,000
during fiscal 1994 principally as a result of decreased activity
compared to the prior year.
At the end of the third quarter the Company provided for a
write-down of approximately $1,547,000 to its various bulk
inventories as a net realizable value adjustment relative to the
anticipated market prices for these products as of June 30, 1994.
Market prices are highly sensitive to crop sizes as well as other
factors such as weather and competition from foreign crops.
Additionally, during the fiscal year ended September 30, 1994 the
Company recognized approximately $492,000 in losses on long
positions in excess of anticipated purchase requirements.
GROVE MANAGEMENT DIVISION Grove Management Division gross profit increased
approximately $95,000 or 11.1% during fiscal 1994 compared
to the prior year. The principal increases of approximately
$76,000 and $67,000 resulted from the sale of fruit to third
party packers and processors and the Company's grove caretaking
activities. Partially offsetting these increases was a decrease
of approximately $48,000 in harvesting gross profit during the
current year compared to the prior year.
-18-
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses increased
approximately $56,000 or 1.4% for fiscal 1994 compared to the
prior year. Of this increase, approximately $187,000 resulted from an
increase in labor costs compared to the prior year. Offsetting this increase
was a reduction in other costs of approximately $131,000 compared to
the prior year.
GAIN/(LOSS) ON DISPOSITION OF PROPERTY AND EQUIPMENT
The gain on the disposition of property and equipment
increased approximately $342,000 for the fiscal year ended
September 30, 1994 compared to the prior year. The principal
reason for this increase was a gain of approximately $484,000 on
the sale of commercial properties as compared to the gain on the
sale of certain idle properties of approximately $142,000 during
fiscal 1993.
OTHER
Other costs decreased approximately $263,000 in fiscal 1994
compared to the prior year. as a result of a charge off of
certain current assets in fiscal 1993 for which there was no
comparable charge during fiscal 1994.
INTEREST EXPENSE
Interest expense decreased by approximately $127,000 or 7.0%
in fiscal 1994 compared to the prior year. The primary reason
for this decrease was a reduction of approximately $813,000 due
to lower interest rates during fiscal 1994. Additionally,
interest capitalized during fiscal 1994 increased approximately
$157,000 compared to the prior year. Also, amortization of
deferred loan costs and other related expenses decreased
approximately $113,000 during fiscal 1994 as compared to the
prior year. Offsetting these reductions was an increase of
approximately $956,000 which resulted from an increase in the
outstanding principal balance during the current year.
OTHER SIGNIFICANT EVENTS
In October 1994 the USDA announced a Florida crop estimate of
approximately 196,000,000 boxes of oranges for the 1994-95
season which if true, will be historically the second largest Florida crop.
It is uncertain what the effect of this crop will be for the 1995 fiscal year.
As of September 30, 1994 the Company sold all of its stock in
Frank Carroll Oil Company (FCOC). The Company continued to
operate FCOC throughout fiscal 1994 while it negotiated for that
sale.
The Company's sales or costs have not been impacted
significantly by the effects of general price level inflation
during fiscal 1994.
-19-
FISCAL 1993 VERSUS FISCAL 1992
The discussion that follows is based on the Consolidated
Statements of Operations and compares the results of the
Company's continuing operations for the year ended September 30,
1993 to the Company's continuing operations for the year ended
September 30, 1992.
The following table reflects changes in sales, cost of sales
and gross profit by division and other changes in the Statements
of Operations through net income from continuing operations between the
respective periods. The statements have excluded sales, cost of sales,
gross profit, selling, general and administrative expenses, interest expense
and all other items of profit and loss related to the Petroleum
Division from continuing operations. (See Note 8 of the Notes to
the Consolidated Financial Statements "Discontinued Operations".)
<TABLE>
<CAPTION>
Year Ended September 30, 1993 vs. Year Ended September 30, 1992
Increases/(Decreases)
(in thousands)
Cost of
Goods Net
Sales Sold Change
<S> <C> <C> <C>
Beverage Division $(2,194) $ 3,956 $ (6,150)
Grove Management Division (5,758) (1,295) (4,463)
-------- -------- ---------
Continuing operations $(7,952) $ 2,661 $(10,613)
======== ========
Other costs and expense, net:
Selling, general, and administrative expense . . . . . . . 241
Provision for restructuring and other non-recurring items 2,100
Gain on disposition of property and equipment and property
held for disposition . . . . . . . . . . . . . . . . . . 246
Other expense . . . . . . . . . . . . . . . . . . . . . . . 400
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . 1,087
---------
Income from continuing operations . . . . . . . . . . . . . (6,539)
Provision for income taxes from continuing operations . . . 570
---------
Net income from continuing operations . . . . . . . . . . . $ (5,969)
=========
</TABLE>
RESULTS OF OPERATIONS
SALES
Total net sales from continuing operations decreased
approximately $7,952,000 or 10.0% for the fiscal year ended
September 30, 1993 compared to the fiscal year ended September
30, 1992. This decrease was comprised of decreases of
approximately $5,758,000 or 60.0% in the Grove Management
Division and approximately $2,194,000 or 3.1% in the Beverage
Division.
BEVERAGE DIVISION During fiscal 1993 the Beverage Division sales
decreased approximately $2,194,000 or 3.1% compared to the prior
year. Revenues from the sale of bulk and packaged citrus juices
decreased by approximately $1,769,000 as a result of
offsetting decreases and increases. Prices for the Company's
bulk citrus juices decreased approximately, $19,716,000 compared
to the same period in the prior year. These lower prices were
primarily the result of the significantly larger Florida crop
during the 1992-93 season of approximately 186,500,000 boxes of
oranges compared to the 1991-92 crop of approximately 139,800,000
boxes of oranges. The Florida citrus industry is highly
-20-
cyclical, subject to varying weather conditions and other natural
phenomena sometimes creating fluctuations in economic conditions
and opportunities.
Offsetting these decreases in revenues were increases in
revenues of approximately $27,098,000 during fiscal 1993 as a result of
increased volumes in the sales of the Company's bulk citrus juices. Of
this increase, revenues of bulk FCOJ increased approximately
$23,967,000 and revenues from other bulk citrus juices increased
approximately $3,131,000.
Offsetting these volume increases in bulk citrus juices were
decreases in revenues as a result of a decrease in volume of
sales of packaged citrus juices sold to the food service industry
of approximately $6,129,000. This reduction in volume was due in
part to the decision of one of the Company's primary food service
customers to move its business to an alternate supplier in early
fiscal 1993. Additionally, lower prices on packaged citrus juice
sold to the food service industry resulted in an additional
decrease in revenues of approximately $3,022,000 for fiscal 1993
compared to the prior year.
Additional decreases in revenues of approximately $2,346,000
resulted from decreases in the Company's non-orange and drink
base products during fiscal 1993 compared to the same period in
the prior year. Of this decrease approximately $708,000 resulted
from lower prices on the Company's non-orange packaged beverages
sold to the food service industry and approximately $2,087,000 of
the decrease resulted from reduced volumes for these same
products. This reduction in volume was also due in part to the
movement of a primary food service customer to an alternate
supplier as previously mentioned. Partially offsetting these
decreases were increases in revenues of approximately $449,000
from the Company's new line of drink base products acquired with
the purchase of International Fruit, Inc. in August 1993.
Revenues from the sale of the Company's by-products including,
feed, pulp cells and citrus oils increased approximately
$2,114,000 during fiscal 1993 compared to the same period in the
prior year. The principal increase of approximately $2,957,000
resulted from increased volumes of by-products sold as a result
of higher production levels during fiscal 1993 compared to the
prior year. Offsetting this increase was a decrease in prices of
approximately $843,000 compared to the same period in the prior
year.
Revenues from storage, handling, processing citrus for customers
under contract, and other activities increased approximately
$730,000 principally as a result of higher volumes.
The Company's Mexican facility, OrancoMex, had no sales in
fiscal 1993 compared to sales of approximately $923,000 during
the prior year. The production at this facility remained idle
due to the continued unreliability of an economical supply of
citrus fruit in Mexico as a result of the December 1989 freeze.
Management has concluded that the Company will not attempt to
operate this facility in the near future and is currently
assessing opportunities to sell this asset.
GROVE MANAGEMENT DIVISION Grove Management Division sales decreased
approximately $5,758,000 or 60% for the fiscal year ended September 30, 1993
compared to the prior year. The principal decrease of
approximately $4,897,000 for the year was due to a reduction in
the volume of fruit sold to third party packers and processors.
This resulted from the Company's decision to process
substantially all of its fruit through its plant in Bartow.
Reduced prices resulting from the industry's larger crop for the
1992-93 season resulted in reductions in sales revenue to third
party packers and processors of approximately $484,000 for the
year. Additionally, decreases in Grove Management caretaking
operations resulted in a reduction of revenues of approximately
$367,000. Also contributing to the decrease in sales for the
year was a reduction of approximately $96,000 compared to the prior
year in
-21-
the sale of fruit associated with the sale of citrus groves. There were no
such sales in the fiscal 1993.
Harvesting revenues increased approximately $86,000 for fiscal
1993 compared to the prior year, which was due primarily to a
larger crop compared to the prior year.
GROSS PROFIT
Gross profit for fiscal 1993 decreased approximately
$10,613,000 or 52.2% compared to the prior year. The principal
decrease of approximately $6,150,000 during fiscal 1993 occurred
in the Beverage Division. Additionally, Grove Management gross
profit decreased approximately $4,463,000 during fiscal 1993
compared to the prior year.
BEVERAGE DIVISION Gross profit of the Beverage Division decreased
approximately $6,150,000 during fiscal 1993 compared to the prior
year. The principal decrease of approximately $4,353,000 resulted
from lower margins on the Company's bulk citrus juice products.
Of this decrease lower prices for bulk citrus juice products
resulted in a gross profit decrease of approximately $19,716,000
compared to the same period in the prior year. Approximately
$18,195,000 of the decrease occurred in bulk FCOJ as a result of
the larger Florida orange crop from the 1992-93 season as
previously mentioned. Partially offsetting this decrease were
increases in gross profit of approximately $10,680,000 compared to
the prior year as a result of reduction of the cost of bulk citrus
juices, principally bulk FCOJ. This reduction resulted
principally from the prior year's higher cost carryover bulk FCOJ
inventory from 1992 being depleted during the second quarter and
the lower cost inventory from fiscal 1993 production beginning to
be sold. Additionally, an increase in volume of bulk citrus
juices increased gross profit approximately $4,683,000 during
fiscal 1993 compared to the prior year.
Gross profit on the sale of food service packaged citrus
juice products decreased approximately $4,211,000 during fiscal
1993 compared to the prior year. Of this decrease, approximately
$3,022,000 during the current period resulted from lower prices.
A reduction in volume accounted for a decrease in gross profit of
approximately $1,668,000 for the fiscal 1993. However, gross
profit increased approximately $479,000 due to lower costs in
fiscal 1993 compared to the prior year as a result of fiscal
1992's higher cost carryover bulk FCOJ being depleted and the
lower cost inventory of fiscal 1993 production beginning to be
sold.
Additionally, the Company experienced a decrease in gross
profit during fiscal 1993 on its non-orange and drink base
products of approximately $1,052,000 compared to the same period
in the prior year. The principal decrease of approximately
$708,000 resulted from lower prices on the Company's non-orange
package beverages sold primarily to the food service industry.
Reduced volumes on these same products resulted in decreases in
gross profit of approximately $206,000 compared to the prior year.
Higher materials and conversion costs decreased gross profit
approximately $138,000 on the Company's non-orange and drink base
products compared to the prior year.
Gross profit on the sale of the Company's by-products
including, feed, pulp cells and citrus oils increased by
approximately $1,195,000 during fiscal 1993 compared to the prior
year. Higher volumes accounted for an increase of approximately
$1,646,000. Lower production costs accounted for an additional
increase in gross profit of approximately $392,000. These
increases were partially offset by price decreases of
approximately $843,000 compared to the prior year.
-22-
Additionally, gross profit from storage, handling, processing
citrus under contract for customers and other activities increased
approximately $1,845,000 compared to the prior year principally as
a result of higher volumes.
As a result of the Company's Mexican facility being idle,
gross profit increased approximately $426,000 during fiscal 1993
compared to the prior year. As previously mentioned, management
has concluded that the Company will not attempt to operate this
facility in the near future and has been assessing opportunities
to sell this asset.
GROVE MANAGEMENT DIVISION Grove Management Division gross profit for
fiscal 1993 decreased approximately $4,463,000 compared to the prior year.
The principal decrease of approximately $2,807,000 resulted from
the previously mentioned reduction in the volume and price of
fruit sold to third party packers and processors. Additionally,
a decrease of approximately $1,468,000 for fiscal 1993 resulted from an
adjustment of standard cost in the prior year to reduce the cost of fruit
obtained through participation contracts. There was no such adjustment in
fiscal 1993. Gross profit from caretaking operations decreased approximately
$184,000 compared to the prior year due primarily to a reduction
in the volume of caretaking services performed. Gross profit
resulting from fruit sold with groves decreased approximately
$47,000 in fiscal 1993 compared to prior year as a result of no
groves being sold in fiscal 1993. Gross profit from harvesting
operations increased approximately $43,000 compared to the prior
year.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses decreased
approximately $241,000 or 5.7% for fiscal 1993 compared to the
prior year. Of the decrease in the current fiscal year,
approximately $340,000 resulted from a reduction in labor costs
related to the downsizing of the administrative support staff.
Partially offsetting this decrease was an increase of
approximately $99,000 as a result of all other spending.
PROVISION FOR RESTRUCTURING AND OTHER NON-RECURRING ITEMS
The Company reclassified OrancoMex as an asset held for
disposition in fiscal 1992 and provided additional reserves
totaling $2,100,000. There were no such charges in fiscal 1993.
GAIN/(LOSS) ON DISPOSITION OF PROPERTY AND EQUIPMENT
The gain on the disposition of property and equipment
increased approximately $246,000 for the fiscal year ended
September 30, 1993 compared to the prior year. The principal
reason for this increase was a loss of approximately $104,000 on
the disposal of a citrus grove in fiscal 1992 and gains of
approximately $142,000 on the sale of certain idle properties in
fiscal 1993.
OTHER
Other costs decreased approximately $400,000 in fiscal 1993
compared to prior year. These costs related primarily to
reorganizational costs resulting from changes in and reductions
of management and staff in the prior year. There were no
comparable costs during fiscal 1993.
INTEREST EXPENSE
Interest expense decreased by approximately $1,087,000 or
37.4% in fiscal 1993 compared to the prior year. Of this
decrease, approximately $636,000
-23-
resulted from a reduction of the outstanding principal balance,
amortization of deferred loan costs, capitalized interest and other
related charges in fiscal 1993 compared to the prior year. An
additional reduction of approximately $451,000 in fiscal 1993 was a
result of lower interest rates.
OTHER SIGNIFICANT EVENTS
During the second quarter of 1993, the Company decided to sell
its Petroleum Division composed of Frank Carroll Oil Company.
This decision resulted in a $513,000 charge in the second quarter
to write-down the assets to their estimated net realizable value.
As of September 30, 1994 the sale of the stock of Frank Carroll Oil Company
was completed.(See Note 8 of the Notes to the Consolidated Financial
Statements "Discontinued Operations".)
During the third quarter of fiscal 1993 the Company signed a
Thermal Energy Sales Agreement with an electric cogeneration
company. The thirty year agreement provides for the company to
purchase steam from an electric cogeneration facility. This
steam will be utilized in the Company's citrus processing plant
in Bartow, Florida which is expected to reduce the company's
energy cost based on current prices. The amount of savings will
depend upon the usage of steam during any particular processing
season and the corresponding cost of alternative energy sources.
Delivery of the steam is scheduled to begin in May 1995 when the
electric cogeneration facility, located adjacent to the Company's
Bartow plant, is scheduled to be completed.
On August 2, 1993 the Company purchased 100% of the capital
stock of International Fruit, Inc. This business complements the
Company's existing institutional beverage business with a line of
frozen concentrated drink bases, marketed to dairies and other
retail packers, thereby broadening the Company's product line and
customer base.
The Company's sales or costs have not been impacted
significantly by the effects of general price level inflation
during fiscal 1993.
LIQUIDITY AND CAPITAL RESOURCES
The Company's Bartow processing plant normally operates from
early November through late May or June. While the plant is in
operation, the inventory of processed juice increases to a level
which will cover anticipated deliveries until the following
December when the plant begins operation again. The company's
working capital credit facility is generally utilized to finance
these inventories. Borrowings under this credit facility
normally peak in late May or June. The Company began processing
activities for the 1993-94 season in late November and ceased
early June.
The Company's ability to generate cash adequate to meet its
needs, including the refinancing of its inventories and trade
receivables, has been supported primarily by cash flow from
operations and periodic borrowings under its $30 million credit
facility. This facility is secured principally by most of the
Company's current assets. The outstanding balance at September
30, 1994 was approximately $20,977,000 and approximately
$9,023,000 of additional borrowings were available under this
facility. As of April 1, 1994 the working capital credit
facility was increased from $20 million to $30 million. This
increase in the working capital facility was necessary to finance
the larger inventories resulting from the increased volume of
fruit being processed and due to the increased inventory storage
capacity previously mentioned. The interest rate is variable
based upon the financial institution's cost of funds plus a
margin. The terms of this agreement call for repayment of the
principal amount in January 1996, accordingly, it is classified
as long-term. As of November 30, 1994, the Company's outstanding
balance was approximately $16,313,000 and approximately $13,687,000 of
-24-
additional borrowings were available under this facility. The Company
anticipates that the working capital facility will be adequately
serviced with cash proceeds from operations.
Additionally, as of September 30, 1994 the Company had a $6
million short-term capital revolving credit facility to provide
interim financing for capital projects. As of September 30, 1994
the outstanding balance on this facility was $4 million. The
interest rate on this facility is variable based upon the financial
institution's cost of funds plus a margin. The terms of this
agreement call for repayment of the principal amount in January
1995, accordingly it is classified as short-term. As of November
30, 1994 the outstanding balance on this credit facility was
$3 million. The Company anticipated that this balance will be paid
off from operating capital in January 1995 or the terms will be
extended for one year.
Current assets increased approximately $22,291,000 as of
September 30, 1994 compared to the fiscal year ended September 30,
1993. The principal component of this was an increase in
inventories of approximately $23,091,000 in the current year due to
the Company's increased bulk storage capacity previously mentioned.
The Company's accounts receivable balance increased approximately
$1,212,000 compared to the prior fiscal year. There was a decrease
in cash and short-term cash investments of approximately $306,000
and advances on fruit purchases decreased approximately $1,662,000
to approximately $475,000 as the Company received the purchased
fruit associated with these deposits and made new deposits for the
1994-95 season.
Current liabilities increased approximately $5,432,000 during
fiscal 1994 compared to the fiscal year ended September 30, 1993.
The principal component of this increase was a $4,000,000 increase
in short-term borrowings form the bank to provide interim financing
for capital improvements as previously mentioned. Additionally,
there was an increase of approximately $1,478,000 in accounts
payable and accrued liabilities as a result of incidental
differences in the timing of the payment of participation and
various trade accounts. Also the current portion of long-term debt
decreased approximately $46,000.
At September 30, 1994 the Company's outstanding long-term debt
was approximately $38,499,000 including the working capital facility
of approximately $20,977,0000. In addition, current installments of
long-term debt were approximately $2,136,000 with the remaining
amounts due on various dates over the subsequent seventeen years.
The Company anticipates that amounts due over the next twelve months
will be paid out of working capital. At September 30, 1994, the
Company was in compliance with its loan covenants.
The Company completed the installation of new irrigation systems
for 1,670 acres of Company-owned Joshua and Bermont groves during
the fiscal year at a cost of approximately $1,370,000. Irrigation
improvements to an additional 1,142 acres are currently under
consideration. Additional expenditures of approximately $4,880,000
were made during the current year primarily for the purpose of
improving the efficiency and capacity of the Bartow processing
facility, including a completed project that expanded the capacity
of its concentrate bulk storage facility at Bartow by approximately
3.8 million gallons. Also during fiscal 1994 expenditures of
approximately $795,000 were made for grove operations equipment
other than for irrigation.
The Company anticipates that these improvements will be financed
principally from working capital or by securing additional funds under
existing mortgages.
-25-
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
INDEX
Pages
(1) Financial statements. The Company's Financial
Statements included in Item 8 hereof, as required
at September 30, 1994, 1993 and 1992.
Report of Independent Certified Public Accountants 27
Consolidated Balance Sheets 28
Consolidated Statements of Operations 29
Consolidated Statements of Cash Flows 30-31
Consolidated Statements of Stockholders' Equity 32
Notes to Consolidated Financial Statements 33-46
(2) Financial Statement Schedules. Financial
Statement Schedules of the Company appended
hereto, as required at September 30, 1994, 1993
and 1992.
Schedule IV-Indebtedness of and to Related Parties 47
Not current
Schedule V-Property, Plant and Equipment 48
Schedule VI-Accumulated Depreciation, Depletion 49
and Amortization of Property, Plant and Equipment
Schedule VIII-Allowance for Doubtful Accounts 50
Schedule IX-Short-Term Borrowings 51
Schedule X-Supplementary Income Statement 52
Information
(3) All other schedules to the Consolidated Financial
Statements required by Article 12 of Regulation
S-X are not required under the related instruction
or are inapplicable and therefore have been
omitted.
-26-
INDEPENDENT AUDITOR'S REPORT
The Board of Directors and Stockholders
Orange-co, Inc. and Subsidiaries:
We have audited the accompanying consoldiated balance sheets of Orange-co, Inc.
and subsidiaries as of September 30, 1994 and 1993, and the related
consoldiated statements of operations, stockholders' equity, and cash flows
for each of the years in the three-year period ended September 30, 1994.
In connection with our audit of the consolidated financial statements, we have
also audited the financial statement schedules as listed in Item 8 (2) herein.
These consoldiated financial statements and financial statement schedules are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements and financial
statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Orange-co, Inc. and
subsidiaries as of September 30, 1994 and 1993, and the results of their
operations and their cash flows for each of the years in the three-year period
ended September 30, 1994, in comformity with generally accepted accounting
principles. Also, in our opinion, the related financial statement schedules,
when considered in relation to the basic consolidated financial statements
taken as a whole, present fairly, in all material respects, the information
set forth therein.
KPMG Peat Marwick LLP
- - ---------------------
KPMG Peat Marwick LLP
Orlando, Florida
December 2, 1994
-27-
<TABLE>
<CAPTION>
ORANGE-CO, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1994 AND SEPTEMBER 30, 1993
(in thousands)
September 30, September 30,
1994 1993
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 765 $ 1,071
Receivables 7,119 5,907
Advances on fruit purchases 475 2,137
Inventories 43,551 20,460
Prepaid and other 41 85
--------- ---------
Total current assets 51,951 29,660
--------- ---------
Property and equipment, net 101,266 94,486
--------- ---------
Other assets:
Excess of cost over net assets of
acquired companies 12,155 12,841
Property held for disposition 1,864 1,777
Other 2,168 1,038
--------- ---------
Total other assets 16,187 15,656
--------- ---------
Total assets $169,404 $139,802
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments on long-term debt $ 2,136 $ 2,182
Note payable to bank 4,000 -
Accounts payable 4,258 3,062
Accrued liabilities 10,121 9,839
--------- ---------
Total current liabilities 20,515 15,083
Deferred income taxes 19,317 17,336
Other liabilities 276 248
Long-term debt 38,499 19,683
--------- ---------
Total liabilities 78,607 52,350
--------- ---------
Stockholders' equity:
Preferred stock, $.10 par value,
10,000,000 shares authorized;
none issued - -
Common stock, $.50 par value, 30,000,000
shares authorized, 10,349,399 shares
issued 5,175 5,175
Capital in excess of par value 71,417 71,417
Retained earnings 14,688 11,343
--------- ---------
91,280 87,935
Less:
Treasury stock, at cost: 50,924
and 50,240 shares at September
30, 1994 and 1993, respectively (483) (483)
--------- ---------
Total stockholders' equity 90,797 87,452
--------- ---------
Total liabilities and Stockholders'
equity $169,404 $139,802
========= =========
</TABLE>
The accompanying notes are an integral part of the financial
statements.
-28-
<TABLE>
<CAPTION>
ORANGE-CO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992
(in thousands except per share data)
1994 1993 1992
<S> <C> <C> <C>
Sales $76,756 $71,938 $79,890
Cost of Sales 65,646 62,279 59,618
-------- -------- --------
Gross Profit 11,110 9,659 20,272
Other costs and expenses, net:
Selling, general and administrative (4,051) (3,995) (4,236)
Provision for restructuring and
other non-recurring items - - (2,100)
Gain(loss) on disposition of property
and equipment and property held for
disposition 484 142 (104)
Other 36 (227) (627)
Interest (1,693) (1,820) (2,907)
-------- -------- --------
Income from continuing operations before
income tax 5,886 3,759 10,298
Income tax expense 2,493 1,539 2,109
-------- -------- --------
Net income from continuing operations 3,393 2,220 8,189
-------- -------- --------
Discontinued operations:
Loss from operations of discontinued
Petroleum Division, (net of applicable
income tax (benefit) of $(71), $(13)
and $(127) (116) (22) (208)
Gain(loss) on disposal of Petroleum
Division, net of 1994 tax(benefit) of $(134) 68 (513) -
-------- ------- --------
Loss from discontinued operations (48) (535) (208)
-------- ------- --------
Net income before extraordinary item 3,345 1,685 7,981
Extraordinary (loss):
Early extinguishment of debt
(loss net of applicable tax benefit of $366) - (597) -
-------- -------- --------
Net income $ 3,345 $ 1,088 $ 7,981
======== ======== ========
Net income per common and common equivalent
shares:
Continuing operations $ .33 $ .22 $ .80
======== ======== ========
Discontinued operations $ (.01) $ (.05) $ (.02)
======== ======== ========
Extraordinary (loss) $ - $ (.06) $ -
======== ======== ========
Net income $ .32 $ .11 $ .78
======== ======== ========
Average number of common and common
equivalent shares outstanding 10,299 10,293 10,249
======== ======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements
-29-
<TABLE>
<CAPTION>
ORANGE-CO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992
(in thousands)
1994 1993 1992
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net income $ 3,345 $ 1,088 $ 7,981
-------- -------- --------
Adjustments to reconcile net income to net
cash provided by (used for) operating
activities
Depreciation and amortization 3,970 3,444 3,450
Deferred income taxes 1,981 1,160 1,982
Settlement of tax sharing agreement - - 700
Provision for restructuring and other
nonrecurring items - - 2,100
Provision for disposal of Petroleum - 513 -
Division
Loss(gain) on disposition of property and
equipment and property held for disposition (484) (137) 104
Loss on sale of Petroleum Division 66 - -
Change in assets & liabilities:
Decrease(increase) in receivables (1,212) (2,788) 2,198
Decrease(increase) in advances on fruit
purchases 1,662 (1,740) 34
Decrease(increase) in inventory (23,091) 2,364 2,003
Decrease(increase) in prepaids and other 44 (25) 9
Increase(decrease) in accounts payable
and accrued liabilities 1,478 3,047 (867)
Other, net (924) (710) 303
-------- ------- --------
Total adjustments (16,510) 5,128 12,016
-------- ------- --------
Net cash provided by (used for) operating
activities (13,165) 6,216 19,997
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property & equipment 1,514 65 639
Decrease(increase) in note & mortgage
receivables (284) (136) 44
Additions to property & equipment (11,187) (7,124) (7,858)
Proceeds from sale of property held for
disposition 46 163 1,401
-------- -------- --------
Net cash provided by (used for) investing
activities $(9,911) $(7,032) $(5,774)
-------- -------- --------
-30-
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from(Payments on)
long-term debt $18,770 $(2,046) $(11,094)
Proceeds from related parties - - 7
Payments to related parties - - (7)
Proceeds from notes payable, bank 4,000 - -
Issuance of treasury stock - 274 -
-------- -------- ---------
Net cash provided by (used for)
financing activities 22,770 (1,772) (11,094)
-------- -------- ---------
NET INCREASE/(DECREASE) IN CASH (306) (2,588) 3,129
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 1,071 3,659 530
-------- -------- ---------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 765 $ 1,071 $ 3,659
======== ======== =========
</TABLE>
Supplemental Schedule of Noncash Investing and Financing Activities:
In June 1992 the Company settled a tax sharing agreement with its
former parent company for a cash payment of $700,000. As a result
$2,800,000 of deferred taxes were reestablished and additional paid in
capital was reduced by the difference of $2,100,000. (See Note 6.)
The accompanying notes are an integral part of the financial
statements.
-31-
<TABLE>
<CAPTION>
ORANGE-CO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992
(in thousands)
Capital in Total
Common Stock Excess of Retained Treasury Stock Stockholders'
Shares Amount Par Value Earnings Shares Amount Equity
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at
Sept. 30, 1991 10,349 $5,175 $70,717 $ 2,473 101 $(956) $77,409
Settlement of
Tax Sharing
Agreement
(See Note 6) - - 700 - - - 700
Net Income - - - 7,981 - - 7,981
------ ------ ------- -------- ---- ------ -------
Balance at
Sept. 30, 1992 10,349 $5,175 $71,417 $10,454 101 $(956) $86,090
Issuance of
treasury stock - - - (199) (51) 473 274
Net Income - - - 1,088 - - 1,088
------ ------ ------- -------- ---- ----- -------
Balance at
Sept. 30, 1993 10,349 $5,175 $71,417 $11,343 50 $(483) $87,452
Purchase of
treasury stock - - - - 1 - -
Net Income - - - 3,345 - - 3,345
------ ------ ------- -------- ---- ------ -------
Balance at
Sept. 30, 1994 10,349 $5,175 $71,417 $14,688 51 $(483) $90,797
====== ====== ======= ======= ==== ====== =======
</TABLE>
The accompanying notes are an integral part of the financial statements
-32-
ORANGE-CO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies:
Description of Operations - Orange-co, Inc. and Subsidiaries
(the "Company"), a 52% owned subsidiary of Ben Hill Griffin, Inc.
and an affiliate, is principally engaged in growing and processing
citrus products as well as packaging and marketing these products
and other beverages.
During the year ended September 30, 1994, the Company had two
customers who individually accounted for approximately 30.9% and
10.3% of its citrus segment sales. During the year ended September
30, 1993, the Company had one customer who accounted for
approximately 25.9% of its citrus segment sales. During the year
ended September 30, 1992, the Company had two customers who
individually accounted for approximately 25.3% and 11.7% of its
citrus segment sales.
Principles of Consolidation - The consolidated financial
statements of the Company include the accounts of Orange-co, Inc.
and its subsidiaries after elimination of all material intercompany
accounts and transactions.
Inventories - Inventories are stated at the lower of cost or
market. The cost of inventories is principally determined on the
average cost method. Costs of growing fruit are accounted for as
fruit-on-tree inventory.
The Company has in the past utilized and may in the future
utilize the frozen concentrated orange juice (FCOJ) futures market
to hedge inventories, anticipated inventory requirements, and sales
commitments. The results of these transactions designated and
effective as hedges, if any, are reflected in the cost of
inventories and in the cost of sales in the Consolidated Statements
of Operations.
Property Held for Disposition - Property held for disposition
includes certain idle facilities (including land) which are recorded
at amounts not in excess of their estimated net realizable value.
The balances as of September 30, 1994 and 1993 are net of a
valuation allowance of approximately $2,812,000 and $2,915,000
respectively. The charges related to this allowance are included in
the provision for restructuring and other non-recurring items in the
Consolidated Statements of Operations for the year ended September
30, 1992 and earlier. The net assets of the Petroleum Division are
not included in property held for disposition.
Property and Equipment - Property and equipment is recorded at
cost less accumulated depreciation and amortization. Depreciation
and amortization are recognized principally on the straight-line
method in amounts adequate to depreciate and amortize cost over the
estimated useful lives of the applicable assets. Property and
equipment includes operating facilities which are recorded at
amounts not in excess of their net realizable value.
Costs pertaining to planting and caretaking of citrus trees are
initially capitalized and then, after the trees reach
fruit-producing age, depreciated over the estimated life of the
trees.
Maintenance, repairs and minor renewals are charged to expense
as incurred while major renewals and improvements are capitalized.
The cost and related allowance for depreciation or amortization of
assets sold or otherwise disposed of are removed from the related
accounts and the resulting gains or losses are reflected in
operations.
-33-
Excess of Cost Over Net Assets of Acquired Company - The excess
of the aggregate purchase price over the fair value of net assets
acquired is recorded at cost less accumulated amortization of
approximately $2,920,000 as of September 30, 1994 and $2,734,000 as
of September 30, 1993. Amortization is recognized over a 40-year
period using the straight-line method. Management has evaluated the
Company's excess of cost over net assets of its acquired companies
and has determined that no adjustment is necessary as no material
impairment has occurred in the opinion of the Company. In making
this assessment the Company employs various methods including
comparing the carrying value of associated assets to their net
realizable value and analysis of anticipated profitability depending
upon the facts and circumstances.
Provision for Restructuring and Other Non-Recurring Items - The
provision for restructuring and other non-recurring items for the
year ended September 30, 1992 represents estimated charges
associated with reserves to adjust assets to their net realizable
value. There were no such charges for the years ended September 30,
1993 and 1994.
Cash and Cash Equivalents - Cash and cash equivalents consist
principally of cash, time deposits and interest bearing investments
with maturities of three months or less. For purposes of the
Consolidated Statements of Cash Flows, all highly liquid investments
are considered to be cash equivalents.
Earnings Per Share - Net income(loss) per share is computed by
dividing net income(loss) by the weighted average number of common
and common stock equivalents issued and outstanding during the
period.
Reclassifications - Certain accounts may have been reclassified
in the 1993 and 1992 financial statements to conform to the 1994
financial statement presentation.
Postretirement Benefits - In December 1990, the Financial
Accounting Standards Board issued Statement No. 106, Employers'
Accounting for Postretirement Benefits Other Than Pensions (FAS No.
106). As of September 30, 1994 the Company had no Postretirement
benefits which required disclosure under the guidelines of FAS No.
106
Income Taxes - In February 1992, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards
No. 109, Accounting for Income Taxes (FAS No. 109). FAS No. 109 requires a
change from the deferred method of accounting for income taxes of
APB Opinion 11 to the asset and liability method of accounting for
income taxes. Under the asset and liability method of FAS No.
109, deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply
to taxable income in the years in which those temporary differences
are expected to be recovered or settled. Under FAS No. 109, the
effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the
enactment date. The Company adopted FAS No. 109 in 1993 and has
applied the provisions of FAS No. 109 retroactively to October 1,
1990. (See Note 6.)
Acquisition of International Fruit, Inc. - In August 1993 the
Company purchased 100% of the outstanding capital stock of
International Fruit, Inc. The purchase price is contingent upon 12%
of collected net sales during the first four years following the
purchase date. Proforma effects of this acquisition for fiscal 1993
and 1992 as of the beginning of those periods are considered
immaterial.
-34-
Financial Instruments Fair Value, Credit Risks, And Off-
Balance Sheet Risk The carrying amounts reported in the
consolidated balance sheets for cash and cash equivalents, accounts
receivable, accounts payable and short-term debt approximates fair
market value due to the short-term maturity of these financial instruments.
The fair value of notes receivable is not considered practical to estimate
due to the nature of the accounts, the lack of a market available to
approximate their fair value and their immateriality. The carrying
value of the variable rate long-term debt approximates fair value
due to frequent repricing. The fair value of the fixed rate long-
term debt is estimated using discounted cash flow based upon the
incremental borrowing rates currently available to the Company for
mortgage loans with similar remaining terms and maturity.
<TABLE>
<CAPTION>
Carrying Amount of Fair Value of
September 30, 1994 Asset/(Liability) Asset/(Liability)
(in thousands)
<S> <C> <C>
Cash and cash equivalents $ 765 $ 765
Accounts and notes receivable 7,574 7,574
Accounts and notes payable 8,258 8,258
Variable rate long-term debt 20,977 20,977
Fixed rate long-term debt
with finanical institutions 19,268 17,951
Other Long-term debt 390 390
</TABLE>
As of September 30, 1994 the Company was subjected to a
concentration of credit risk as a result of 16.7% of its trade
accounts receivable being due from companies affiliated with a
common ownership. No collateral is required on these trade
receivables due to collection experience and trade practices.
Additionally, the Company's accounts receivable are concentrated
generally in the beverage and food service industries. Management believes
the allowance for doubtful accounts is adquate under the circumstances.
As of September 30, 1994 the Company held contracts for net
FCOJ futures positions totaling $2,962,000 with unrealized gains of
$132,000. Exposure to off-balance sheet risk related to these positions
results from market fluctuations of FCOJ futures prices relative to the
Company's open positions. Cash deposits requirements with brokers as of
September 30, 1994 totaled $98,000 and vary with market price fluctuations.
-35-
2. Receivables:
<TABLE>
<CAPTION>
The major components of receivables as of September 30, 1994
and 1993 are summarized as follows (in thousands):
1994 1993
<S> <C> <C>
Trade receivables $5,847 $5,706
7%-12.9% mortgage and promissory
notes receivable 1,125 237
Deposits with brokers, net 255 616
Other 1,033 263
Allowance for doubtful accounts (686) (744)
------- -------
Net receivables 7,574 6,078
Less non-current portion 455 171
------- -------
Current receivables $7,119 $5,907
======= =======
</TABLE>
3. Inventories:
<TABLE>
<CAPTION>
The major components of inventory as of September 30, 1994 and
1993, are summarized as follows (in thousands):
1994 1993
<S> <C> <C>
Finished goods $34,201 $12,764
Fruit-on-tree inventory 6,982 6,636
Other 2,368 1,060
------- -------
Total $43,551 $20,460
======= =======
</TABLE>
4. Property and Equipment:
<TABLE>
<CAPTION>
The major components of property and equipment as of September
30, 1994 and 1993 are summarized as follows (in thousands):
Estimated
Useful
1994 1993 Life
Years
<S> <C> <C> <C>
Land and improvements $ 5,313 $ 5,249 5 to 30
Citrus groves 86,598 82,592 15 to 40
Buildings and improvements 6,881 6,411 10 to 33
Machinery and equipment 33,705 32,871 3 to 20
Construction in progress 989 1,534
-------- --------
133,486 128,657
Less accumulated depreciation
and amortization 32,220 34,171
-------- --------
Total $101,266 $ 94,486
======== ========
</TABLE>
-36-
<TABLE>
<CAPTION>
The Company leases equipment under both short and long term
operating leases. Future minimum obligations under these leases
with initial or remaining lease terms in excess of 1 year for the
years ended September 30, are as follows:
<S> <C>
1995 751,000
1996 660,000
1997 52,000
1998 25,000
1999 25,000
</TABLE>
Rent expense charged to operations amounted to approximately
$1,217,000 for the year ended September 30, 1994, $1,442,000 for the
year ended September 30, 1993, and $1,221,000 for the year ended
September 30, 1992.
5. Accrued Liabilities:
<TABLE>
<CAPTION>
The major components of accrued liabilities as of September
30, 1994 and 1993 are summarized as follows (in thousands):
1994 1993
<S> <C> <C>
Taxes $ 1,399 $1,200
Amounts due inventory suppliers 6,000 5,939
Other 2,722 2,700
------- ------
Total $10,121 $9,839
======= ======
</TABLE>
6. Income Taxes:
<TABLE>
<CAPTION>
Total income tax expense (benefit) for the years ended
September 30, 1994, 1993 and 1992 was allocated as follows (in
thousands):
1994 1993 1992
<S> <C> <C> <C>
Income from continuing operations $2,493 $1,539 $2,109
Discontinued operations (205) (13) (127)
Extraordinary item - (366) -
------- ------- -------
Total $2,288 $1,160 $1,982
======= ======= =======
</TABLE>
-37-
<TABLE>
Income tax expense attributable to income from continuing
operations for the years ended September 30, 1994, 1993 and 1992
consists of the following (in thousands):
Current Deferred Total
<S> <C> <C> <C>
Year ended September 30, 1994
U.S. federal $364 $1,782 $2,146
State and local 14 333 347
---- ------ ------
Total $378 $2,115 $2,493
==== ====== ======
Year ended September 30, 1993
U.S. federal $321 $1,070 $1,391
State and local 34 114 148
---- ------ ------
Total $355 $1,184 $1,539
==== ====== ======
Year ended September 30, 1992
U.S. federal $196 $1,710 $1,906
State and local 20 183 203
---- ------ ------
Total $216 $1,893 $2,109
==== ====== ======
</TABLE>
<TABLE>
<CAPTION>
The significant components of deferred income tax expense
attributable to income from continuing operations for the years
ended September 30, 1994, 1993 and 1992 are as follows (in
thousands):
1994 1993 1992
<S> <C> <C> <C>
Deferred tax expense $2,115 $1,184 $4,111
(exclusive of the
effects of other
components listed below)
Decrease in beginning-of-the-
year balance of the valuation
allowance for deferred
tax assets - - (2,218)
------ ------ -------
Total $2,115 $1,184 $1,893
====== ====== =======
</TABLE>
-38-
<TABLE>
<CAPTION>
Income tax expense attributable to income from continuing
operations was $2,493,000,$1,539,000, and $2,109,000 for the years
ended September 30, 1994, 1993, and 1992, respectively, and differs
from the amounts computed by applying the U.S. federal income tax
rate of 34% to pretax income from continuing operations as a result
of the following (in thousands):
1994 1993 1992
<S> <C> <C> <C>
Computed "expected" tax expense $2,001 $1,278 $3,501
Increase (reduction) in income
taxes resulting from:
Change in the beginning-of-the-year
balance of the valuation allowance
for deferred tax assets allocated
to income tax expense - - (2,218)
Loss on foreign operations 92 54 95
Amortization of goodwill and other 133 137 137
State and local income taxes, net of
federal income tax benefit 229 159 417
Other, net 38 (89) 177
------ ------- -------
Total $2,493 $1,539 $2,109
====== ======= =======
</TABLE>
<TABLE>
<CAPTION>
The tax effects of temporary differences that give rise to
significant portions of the deferred tax assets and deferred tax
liabilities at September 30, 1994 and 1993 are presented below (in
thousands):
1994 1993
<S> <C> <C>
Deferred tax assets:
Allowance for doubtful accounts $ 258 $ 283
Reserve on carrying value of property
held for disposition 326 334
Accrued reserves and expenses 996 574
Valuation reserve 1,129 1,551
Net operating loss carryforwards 4,155 6,971
Investment tax credit carryforwards 1,703 1,703
Alternative minimum tax credit carryforwards 735 536
--------- --------
Total gross deferred tax assets 9,302 11,952
Less valuation allowance (2,832) (3,193)
--------- --------
Net deferred tax assets 6,470 8,759
--------- --------
Deferred tax liabilities:
Plant and equipment, principally due
to allocation of purchase price of
businesses acquired and to differences in
depreciation and capitalized interest (24,070) (24,497)
Fruit-on-tree inventory (1,665) (1,543)
Other (52) (55)
--------- ---------
Total gross deferred tax liabilities (25,787) (26,095)
--------- ---------
Net deferred tax liability $(19,317) $(17,336)
========= =========
</TABLE>
The valuation allowance for deferred tax assets as of September
30, 1992 was $3,005,000. The net change in the total valuation
allowance for the years ended September 30, 1994 and 1993 was a
decrease of $361,000 and an increase $188,000 respectively. The
Company anticipates that the net operating loss carryforward at
September 30, 1994 will be utilized by the reversal of timing
differences.
Income taxes paid amounted to approximately $321,000 and
$52,000 for the years ended September 30, 1994 and 1993 respectively.
-39-
For tax reporting purposes as of September 30, 1994, the
Company has unused net operating loss carryforwards of approximately
$11,042,000 and investment tax credit carryforwards of approximately
$1,703,000 which expire in varying amounts through the year 2002.
In addition, the Company has alternative minimum tax credit
carryforwards of approximately $735,000 which are available to
reduce future federal regular income taxes, if any, over an
indefinite period.
Prior to the combination of Orange-co of Florida, Inc. (OCF)
and the Company in December 1986 (Combination), Stoneridge
Resources, Inc. ("Stoneridge"), the Company's former parent company,
and the Company filed a consolidated income tax return. Income
taxes of the respective companies were computed on a separate return
basis based upon a tax sharing agreement (the "Agreement"). Under
the terms of the Agreement, OCF's tax provision would be the same as
if the Company had filed a separate income tax return. In addition,
the Agreement provided that the companies were jointly and severally
liable for taxes related to the period prior to the Combination;
provided, however, as between OCF and Stoneridge, any such tax
liability would be allocated on a separate return basis. Pursuant to
the terms of the Agreement, the Company reimbursed Stoneridge
approximately $2,800,000 in fiscal 1989. For tax reporting purposes,
the Company was to be reimbursed by Stoneridge for future tax
liabilities which may arise from pre-Combination differences between
financial and tax reporting. There was no tax sharing agreement for
tax periods subsequent to the Combination, as the Company and
Stoneridge no longer filed a consolidated tax return.
As a result of negotiation during fiscal 1992, the Company and
its wholly-owned subsidiary, OCF agreed with Stoneridge to terminate
the Agreement. Due to uncertainties of when and if the conditions
of reimbursement from Stoneridge would occur, the Company settled
the Tax Sharing Agreement in June 1992 for a $700,000 cash payment
from Stoneridge. Since this transaction represents the final
settlement of a pre-Combination tax issue between the subsidiary and
its former parent, the Company reestablished its deferred income tax
liability for the $2,800,000 and reduced additional paid in capital
for the difference of $2,100,000. In connection with the adoption
of FASB Statement 109 in fiscal 1993 the Company effected the re-
establishment of the $2,800,000 deferred tax liability as of October
1, 1990.
-40-
7. Notes Payable to Banks and Long-term Debt:
<TABLE>
<CAPTION>
Notes payable to banks and long-term debt as of September 30,
1994 and 1993 consisted of the following (in thousands):
1994 1993
<S> <C> <C>
Mortgage notes payable bearing interest at
6.9% due in varying installments through 2003 $17,150 $19,110
Working capital line of credit bearing a
variable rate of interest based upon the
financial institution's cost of funds due
in January 1996 20,977 -
Revolving line of credit bearing a variable
rate of interest based upon the financial
institution's cost of funds due in January 1995 4,000 -
Mortgage notes payable bearing interest at
7% to 10.25% due monthly, principal due
annually in varying installments through
July 2010 2,118 2,507
Grove purchase installment notes, bearing
interest at 7% to 10% due in varying
installments through June 2012 390 248
------- -------
44,635 21,865
Less Current installments on long-term debt
and note payable to banks 6,136 2,182
------- -------
Total $38,499 $19,683
======= =======
</TABLE>
<TABLE>
<CAPTION>
Principal payments for the years subsequent to 1995 are as
follows:
<S> <C>
1996 $23,106
1997 $ 2,130
1998 $ 5,732
1999 $ 1,336
Thereafter $ 6,195
</TABLE>
In June 1993 the Company refinanced its $20 million working
capital facility with another financial institution. There was a
$60,000 early termination fee associated with that refinancing.
Balances outstanding are payable in January 1996 and accordingly are
classified as long-term. This facility is collateralized by most of
the Company's current assets. The interest rate is variable based
upon the financial institution's cost of funds plus a margin with a
maximum of prime less 1/2 of 1%. In April 1994 the Company increased
this working capital facility to $30 million. As of September 30,
1994 there was an outstanding balance of $20,977,000 and additional
available borrowings under this facility were approximately
$9,023,000.
In June of 1988, the Company entered into an agreement with a
lender to borrow $20 million to be repaid in varying principal
amounts through June of 1998. Of this, $10 million was at a fixed
rate of 10.7% and $10 million was at a variable rate of 5/8 of 1%
over the prime rate. In April 1993 the Company refinanced the
remaining balance of $15,425,000 at lower rates and an extended
repayment schedule. Simultaneously the Company also refinanced
approximately $3,257,000 of fixed rate 10.5% debt originating in
1986. The new debt has an
-41-
initial term of five years at a fixed rate of 6.9%, with even quarterly
payments on a 10 year amortization. The total amount refinanced including
$903,438 of the early termination fees mentioned below was approximately
$19.6 million. The associated early termination fees related to the fixed
rate debt and the above mentioned working capital facility totaling
approximately $963,438 net of tax benefit of approximately $366,000
are accounted for as an extraordinary item in the Company's Consolidated
Statements of Operations for the year ended September 30, 1993.
Interest paid net of amounts capitalized was approximately
$1,724,000, $1,784,000, and $2,976,000, for the years ended
September 30, 1994, 1993, and 1992, respectively. Interest
capitalized was approximately $543,000, $386,000, and $286,000 for
the years ended September 30, 1994, 1993 and 1992 respectively.
8. Discontinued Operations:
During the second quarter of 1993, the Company decided to sell the
Petroleum Division comprised of Frank Carroll Oil Company. This
decision resulted in a charge of $513,000 including a write down of
the operating assets to their estimated net realizable value, and an
accrual for estimated operating losses through the anticipated phase-
out period. These charges are disclosed on the Consolidated
Statements of Operations as a loss on disposal of the Petroleum
Division. Additionally, the Consolidated Statements of Operations
for the respective periods presented exclude all components of
profit or loss of the Petroleum Division from continuing operations.
The effect of these items has been reclassified net of the
applicable tax effect as "Discontinued Operations: Loss from
operations of discontinued Petroleum Division". See Note 15, for
disclosure of selected components of the Petroleum Division. A sale
of the stock of Frank Carroll Oil Company was completed effective
September 30, 1994. Proceeds from the sale of the stock totaled
$966,000 in cash and notes.
9. 401k Plan:
The Company has a retirement plan (the "Plan") which meets the
qualifications under Section 401(k) of the Internal Revenue Code
(the "Code"). Employees who have completed one year of continuous
service (as defined), are eligible to make tax-deferred
contributions. Employees who have completed the required service
(as defined) are eligible to participate in an employer matching
contribution. The Company contributed approximately $15,000,
$66,000, and $475,000 under the Plan for the years ended September
30, 1994, 1993, and 1992, respectively. The Company also accrued
approximately $64,000 during fiscal 1994 for contributions to the
Plan for the fiscal 1994 Plan year. In December 1990, the assets of
the Employees Stock Ownership Trust ("ESOT") were merged into the
Plan. At September 30, 1994 the Plan held approximately 0.6% of the
outstanding Common Stock of the Company. Effective January 1, 1993,
the 401(k) Plan was amended to provide that no further employer
discretionary profit sharing contributions would be made to the
401(k) Plan and a separate Profit Sharing Plan was adopted.
10. Profit Sharing Plan:
Effective January 1, 1993, the Company established a Profit
Sharing Retirement Plan which meets the qualifications of Section
401(c) of the Code (Profit Sharing Plan). All employees begin
participation on the later of January 1, 1993 or date of employment.
Vesting is governed by seven year graduated vesting schedule including credit
for continuous service with the Company prior to the effective date.
The Company's discretionary contribution is determined annually and
is allocated among eligible participants' accounts in the proportion
that each participant's compensation bears to the total qualified
compensation of all eligible employees during the year. The Company
contributed approximately $269,000 to the Plan during fiscal 1994,
which represented a discretionary
-42-
contribution for the 1993 Plan year. In addition, the Company accrued
approximately $581,000 during fiscal 1994 to be contributed to the Plan for the
1994 Plan year.
11. Other Retirement Benefits: Certain officers and employees have
employment contracts for additional retirement benefits, the cost of
which is being accrued on a present value basis over the remaining
term of the employment agreements. The lives of the officers and
employees have been insured as a means of funding such benefits.
These contracts became effective for fiscal 1994 and thereafter.
The accrued liability for these additional retirement benefits at
September 30, 1994 was approximately $92,000.
12. Stock Options:
In 1984, the Company adopted an incentive stock option plan
(the 1984 Plan)
which provides for the granting of ten-year options to purchase up
to 75,000 shares of common stock. Options issued under the 1984
Plan are priced at the fair market value on the grant date and 40%
are immediately exercisable and 20% on a cumulative basis each year
thereafter.
In April 1987, the Company adopted an Employee Stock Option
Plan (the 1987 Plan) under which a committee of the Board of
Directors may grant either incentive stock options ("ISOs") or
non-qualified stock options. The 1987 Plan provides that ISOs and
non-qualified options may be granted for a period of ten years to
purchase up to an aggregate of 750,000 shares of common stock. The
option price of all common stock issued or to be issued under the
1987 Plan is at least 100% of the fair market value on the date of
grant. The options granted to purchase shares generally become
exercisable on a cumulative basis at 33-1/3% each year, commencing
with the second year. Upon the change of control in May 1992 when
Stoneridge sold its 52% interest in the Company to Ben Hill Griffin,
Inc. and an affiliate, all the options granted up to that date under
the 1987 Plan became exercisable.
-43-
<TABLE>
<CAPTION>
A summary of the changes in the shares under option for each of
the plans is as follows:
l984 Plan 1987 Plan
Shares Price Shares Price
<S> <C> <C> <C> <C>
Outstanding at
September 30, 1991 17,175 13.75-18.75 548,680 5.4375-10.00
Granted - - - -
Exercised - - - -
Expired 700 13.75-18.75 36,475 5.4375-10.00
Outstanding at
September 30, 1992 16,475 13.75-18.75 512,205 5.4375-10.00
Granted - - - -
Exercised - - 50,500 5.4375
Expired 8,200 13.75-15.00 65,905 5.4375-10.00
Outstanding at
September 30, 1993 8,275 13.75-18.75 395,800 5.4375-10.00
Granted - - - -
Exercised - - - -
Expired 6,450 15.00 500 9.625-10.00
Outstanding at
September 30, 1994 1,825 13.75-15.75 395,300 5.4375-10.00
</TABLE>
Options granted under the 1987 and 1984 Plans expire at various
dates through August 2001 and December 1995, respectively.
13. Related Party Transactions:
In May 1992, Stoneridge Resources, Inc. ("Stoneridge"), which
then owned approximately 52% of the Company's outstanding Common
Shares, sold these shares and the majority ownership of Orange-co,
Inc. passed to Ben Hill Griffin, Inc., and an affiliate. Ben Hill
Griffin, Inc. is a privately owned agribusiness corporation located
in Frostproof, Florida.
During the fiscal year ended September 30, 1994 the Company had
incurred an estimated $9,657,000 in fruit participation cost from
fruit purchased from its parent, Ben Hill Griffin, Inc. Of the 1994
amount approximately $5,394,000 was paid as of September 30, 1994 with the
accrued balance of $4,263,000 to be paid March 1, 1995. Final payment
amounts under the Company's fruit participation program are based upon
returns from the ultimate disposition of the fruit received. For the
fiscal year ended September 30, 1993 the Company incurred a total of $11,444,000
in fruit participation cost from fruit purchased from its parent company Ben
Hill Griffin, Inc. As of September 30, 1993 a total of $7,242,000 had been
paid against this amount and an estimated balance of $4,358,000 was accrued
to be on March 1, 1994. Fruit purchases made from the parent company under
the Company's participation program are under terms equivalent to fruit
purchased from other grower participants. Additionally, the Company paid
approximately $1,935,000 and $736,000 to Ben Hill Griffin, Inc. for other goods
and services, principally the purchase of fertilizer and citrus trees at prices
approximating market during fiscal 1994 and 1993 respectively.
-44-
<TABLE>
<CAPTION>
14. Interim Financial Information (unaudited):
(in thousands except per share amounts)
Net Earnings
Gross Income (Loss)
Quarters Sales Profit (Loss) Per Share
Ended
<S> <C> <C> <C> <C>
Fiscal 1994
September 30 $19,555 $ 3,252 $ 745 $.07
June 30 23,200 2,084 386 .04
March 31 18,289 2,119 497 .05
December 31 15,712 3,655 1,717 .17
------- ------- ------- -----
$76,756 $11,110 $3,345 $.32
======= ======= ======= =====
Fiscal 1993
September 30 $18,778 $ 5,044 $2,164 $.21
June 30 22,286 2,257 523 .05
March 31 18,977 801 (1,611) (.16)
December 31 11,897 1,557 12 -
------- ------- ------- -----
$71,938 $ 9,659 $1,088 $.11
======= ======= ======= =====
</TABLE>
15. Business Segment:
<TABLE>
<CAPTION>
Segment financial data for the years ended September 30, 1994,
1993, and 1992 except for total assets which are as of September 30,
1994, 1993, and 1992 are as follows (in thousands):
Petroleum
and Related
Year Citrus Products Total
<S> <C> <C> <C> <C>
Sales 1994 $ 76,756 $12,986 $ 89,742
1993 71,938 15,591 87,529
1992 79,890 12,847 92,737
Operating Profit 1994 7,059 - 7,059
1993 5,664 - 5,664
1992 13,936 - 13,936
Total Assets 1994 169,404 - 169,404
1993 136,783 3,019 139,802
1992 133,219 3,076 136,295
Depreciation and
amortization 1994 3,816 154 3,970
1993 3,265 179 3,444
1992 3,251 199 3,450
Capital expenditures 1994 11,077 23 11,100
1993 7,110 14 7,124
1992 7,701 157 7,858
</TABLE>
Intersegment sales approximate market and are not significant.
-45-
<TABLE>
<CAPTION>
RECONCILIATION OF OPERATING PROFIT(LOSS) TO INCOME(LOSS) BEFORE
INCOME TAXES:
Fiscal Years
September September September
30, 1994 30, 1993 30, 1992
<S> <C> <C> <C>
Operating profit $7,059 $ 5,664 $13,936
Gain(loss) on dispositon
of property and equipment 484 142 (104)
Interest (1,693) (1,820) (2,907)
Other income (expense) 36 (227) (627)
------- -------- --------
Income from continuing operations $5,886 $ 3,759 $10,298
======= ======== ========
</TABLE>
Sales to foreign countries accounted for 15.2% of the Company's citrus segment
sales during fiscal 1994.
-46-
<TABLE>
<CAPTION>
ORANGE-CO, INC. AND SUBSIDIARIES
SCHEDULE IV - INDEBTEDNESS OF AND TO RELATED PARTIES - NOT CURRENT
FOR THE YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992
(in thousands)
Column A Column B Column C Column D Column E
Balance @ Balance @
Indebtedness Beginning End of
To of Period Additions Deletions Period
<S> <C> <C> <C> <C> <C>
Year Ended
September 30, 1994
Ben Hill
Griffin,
Inc. $ - $ - $ - $ -
===== ===== ===== =====
Year Ended
September 30, 1993
Ben Hill
Griffin,
Inc. $ - $ - $ - $ -
===== ===== ===== =====
Year Ended
September 30, 1992
Stoneridge
Resources,
Inc.(1) $ - $ 7 $ 7 $ -
===== ===== ===== =====
</TABLE>
<F1>
(1) Represents various intercompany transactions with Stoneridge,
including intercompany management services, intercompany loans and
advances.
-47-
<TABLE>
<CAPTION>
ORANGE-CO, INC. AND SUBSIDIARIES
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
FOR THE YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992
(in thousands)
Column A Column B Column C Column D Column E Column F
Balance Other
at Charges Balance
Beginning Additions Add End of
Classification of Period at Cost Retirements (Deduct) Period
<S> <C> <C> <C> <C> <C>
Year ended
September 30, 1994:
Land and improvements $ 5,249 $ 656(5) $ 592(6) $ - $ 5,313
improvements
Citrus groves 82,592 4,135(1) 129(6) - 86,598
Buildings and
improvements 6,411 1,148(5) 678(6) - 6,881
Furniture, fixtures,
machinery & equipment 32,871 6,577(5) 1,365(6) (4,378)(7) 33,705
Construction in
progress 1,534 (1,416)(5) (871)(6) - 989
-------- -------- ------- -------- --------
$128,657 $11,100 $1,893 $(4,378) $133,486
======== ======== ======= ======== ========
Year ended
September 30, 1993:
Land and improvements $ 4,827 $ 422(5) $ - $ - $ 5,249
Citrus groves 79,550 3,042(1) - - 82,592
Buildings and
improvements 6,267 144(5) - - 6,411
Furniture, fixtures,
machinery & equipment 29,490 3,748(5) 367 - 32,871
Construction in
progress 2,279 (232)(5) - (513)(4) 1,534
-------- ------- ------ -------- --------
$122,413 $ 7,124 $ 367 $ (513) $128,657
======== ======== ====== ======== ========
Year ended
September 30, 1992:
Land and improvements $ 4,797 $ 428(5) $ - $ (398)(3)$ 4,827
Citrus groves 75,295 4,538(1) 483(2) 200 79,550
Buildings and
improvements 6,661 393(5) - (787)(3) 6,267
Furniture, fixtures,
machinery & equipment 29,815 1,053(5) 488(2) (890)(3) 29,490
Construction in
progress 3,622 1,446(5) 494 (2,295)(3) 2,279
-------- -------- ------- -------- --------
$120,190 $ 7,858 $1,465 $(4,170) $122,413
======== ======= ======= ======== ========
</TABLE>
<F1>
(1)Consist of approximately $3,133,000, $3,042,000 and
$3,265,000 of capitalized interest, aftercare, and new
plantings for the years ended September 30, 1994, 1993 and
1992 respectively. Consists of approximately $1,002,000 and
$631,000 of grove purchases for the years ending September 30,
1994 and 1992 respectively. Also for the year ended September
30, 1992, approximately $642,000 was reclassified from
Construction in Progress to Citrus Groves.
<F2>
(2)Consists primarily of approximately $662,000 for the sale of
citrus groves in the year ended September 30, 1992.
<F3>
(3)Consists of approximately $2,107,000 for reclassification to
property held for disposition and approximately $2,063,000 in
reserves for losses expected to be incurred on the disposal of
certain properties in the future.
<F4>
(4)Consist of approximately $513,000 in reserves for losses
expected to be incurred on the disposal of certain properties
in the future.
<F5>
(5)Consists of additions and improvements to existing
facilities.
<F6>
(6)Consists of approximately $1,323,000 of assets disposed with
the sale of Frank Carroll Oil Company and approximately
$570,000 of other assets disposed of during the year.
<F7>
(7)Consist of an adjustment to property, plant and equipment
for assets used in production at the Bartow processing facility
which are no longer in service and were previously retired.
-48-
<TABLE>
<CAPTION>
ORANGE-CO, INC. AND SUBSIDIARIES
SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION
OF PROPERTY, PLANT AND EQUIPMENT
FOR THE YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992
(in thousands)
Column A Column B Column C Column D Column E Column F
Balance Other
at Charges Balance
Beginning Additions Add End of
Classification of Period at Cost Retirements (Deduct) Period
<S> <C> <C> <C> <C> <C>
Year ended
September 30, 1994:
Land and
improvements $ 907 $ 118 $ - $ - $ 1,025
Citrus groves 7,224 1,242 3 - 8,463
Buildings and
improvements 2,855 254 241 - 2,868
Furniture, fixtures,
machinery & equipment 23,185 1,848 938 (4,231)(2) 19,864
------- ------ ------- -------- ---------
$34,171 $3,462 $ 1,182 $(4,231) $ 32,220
======= ====== ======= ======== =========
Year ended
September 30, 1993:
Land and
improvements $ 820 $ 87 $ - $ - $ 907
Citrus groves 6,043 1,181 - - 7,224
Buildings and
improvements 2,627 228 - - 2,855
Furniture, fixtures,
machinery & equipment 22,055 1,427 297 - 23,185
------- ------ ------ -------- -------
$31,545 $2,923 $ 297 $ - $34,171
======= ====== ====== ======== =======
Year ended
September 30, 1992:
Land and
improvements $ 757 $ 63 $ - $ - $ 820
Citrus groves 5,055 1,124 136 - 6,043
Buildings and
improvements 2,437 221 - (31)(1) 2,627
Furniture, fixtures
machinery & equipment 21,612 1,650 432 (775)(1) 22,055
------- ------ ------ -------- -------
$29,861 $3,058 $ 568 $ (806) $31,545
======= ====== ====== ======== =======
</TABLE>
Depreciation and amortization are recognized principally on the
straight-line method in amounts adequate to depreciate and amortize
cost over the estimated useful life of the applicable assets. See
Note 4 of the Notes to the Consolidated Financial Statements
"Property and Equipment" for estimated useful lives.
<F1>
(1)Consists of reclassification (to) from property held for
disposition.
<F2>
(2)Consists of an adjustment to property, plant, and equipment
for assets used in production at the Bartow processing facility
which are no longer in service and were previously retired.
-49-
<TABLE>
<CAPTION>
ORANGE-CO, INC. AND SUBSIDIARIES
SCHEDULE VIII - ALLOWANCE FOR DOUBTFUL ACCOUNTS
FOR THE YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992
(in thousands)
Column A Column B Column C Column D Column E
Balance @ Additions Balance @
Beginning Charged to End of
Description of Period Expense Deductions Period
<S> <C> <C> <C> <C>
Year ended
September 30, 1994 $ 744 $140 $ 198 $ 686
====== ==== ====== ======
Year ended
September 30, 1993 $ 743 $150 $ 149 $ 744
====== ==== ====== ======
Year ended
September 30, 1992 $ 788 $325 $ 370 $ 743
====== ==== ====== ======
</TABLE>
-50-
<TABLE>
<CAPTION>
ORANGE-CO, INC. AND SUBSIDIARIES
SCHEDULE IX - SHORT-TERM BORROWINGS
FOR THE YEARS ENDED SEPTEMBER 30, 1994, 1993 and 1992
(in thousands)
Column A Column B Column C Column D Column E Column F
Category of Maximum Average Weighted
Aggregate Weighted Amount Amount Average
Short Balance at Average Outstanding Outstanding Interest
Term End of Interest During the During the During
Borrowings Period Rate Period Period(1) Period(1)
<S> <C> <C> <C> <C> <C>
Year ended
September 30, 1994 $4,000 5.37% $5,000 $2,896 5.39%
====== ===== ====== ====== =====
Year ended
September 30, 1993 $ - - % $ - $ - - %
====== ===== ====== ======= =====
Year ended
September 30, 1992 $ - - % $ - $ - - %
====== ===== ====== ======= ======
</TABLE>
<F1>
(1) Based on weighted average outstanding borrowings during the
period.
-51
- - -
ORANGE-CO, INC. AND SUBSIDIARIES
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
FOR THE YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992
(in thousands)
<TABLE>
<CAPTION>
Column A Column B
Charged to Costs and Expenses
1994 1993 1992
<S> <C> <C> <C>
Maintenance and repairs $2,803 $1,973 $2,310
====== ====== ======
Depreciation and amortization $3,970 $3,444 $3,450
====== ====== ======
Taxes, other than payroll and income taxes $2,901 $3,077 $3,151
====== ====== ======
</TABLE>
-52-
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
None
PART III
Item 10. Directors and Executive Officers of the Registrant
The information required by Item 10 will be set forth in the
Company's 1995 Proxy Statement under the caption "Nominees For
Election As Directors" and is incorporated herein by reference.
Item 11. Executive Compensation
The information required by Item 11 will be set forth in the
Company's 1995 Proxy Statement under the caption "Executive Officers
and Compensation" and is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
The information required by Item 12 will be set forth in the
Company's 1995 Proxy Statement under the caption "Security Ownership
of Certain Beneficial Owners", "Nominees for Election as Directors"
and "Stock Ownership of Executive Officers", and is incorporated
herein by reference.
Item 13. Certain Relationships and Related Transactions
The information required by Item 13 will be set forth in the
Company's 1995 Proxy Statement under the caption "Transactions With
Management And Others" and is incorporated herein by reference.
-53-
PART IV
Item 14. Exhibits, Finanical Statement Schedules and Reports on Form 8K
(a) (1) The finanical statements required to be filed as part of this Report,
and the report thereon by KPMG Peat Marwick LLP, are set forth under Item 8 and
listed on Page 26 herein.
(2) The financial statement schedules required to be filed herewith are
listed on Page 26 herein.
(3) The exhibits required to be filed herewith are listed on the "Exhibit
Index" commencing at Page 57 herein.
(b) During the last quarter of the period covered by this Report the Company
filed no reports on Form 8-K.
(c) The exhibits required to be filed herewith are listed on the "Exhibit
Index" commencing on Page 57 herein and incorporated herein by reference.
(d) The financial statements required to be filed as part of the Report and
the report thereon by KPMG Peat Marwick LLP are set forth under Item 8 and are
listed on Page 26 herein and are incorporated herein by reference.
-54-
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.
ORANGE-CO, INC.
(Registrant)
Date: December 22, 1994 By: Gene Mooney
------------------------
Gene Mooney
President and
Chief Operating Officer
Date: December 22, 1994 By: Dale A. Bruwelheide
------------------------
Dale A. Bruwelheide
Vice President and
Chief Financial Officer
-55-
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934,
this report has been signed below by the following persons on behalf
of the registrant and in the capacities and on the date indicated.
Date: December 15, 1994 B.H. Griffin, III
--------------------------
B. H. Griffin, III
Chairman, CEO and Director
Date: December 15, 1994 John R. Alexander
--------------------------
John R. Alexander
Director
Date: December 15, 1994 Richard A. Coonrod
--------------------------
Richard A. Coonrod
Director
Date: December 15, 1994 Paul E. Coury, MD
--------------------------
Paul E. Coury, MD
Director
Date: December 15, 1994 George W. Harris, Jr.
--------------------------
George W. Harris, Jr.
Director
Date: December 15, 1994 Dr. W. Bernard Lester
-------------------------
Dr. W. Bernard Lester
Director
Date: December 15, 1994 Gene Mooney
------------------------
Gene Mooney
Director
Date: December 15, 1994 C. B. Myers, Jr.
-----------------------
C. B. Myers, Jr.
Director
Date: December 15, 1994 Thomas H. Taylor, Sr.
----------------------
Thomas H. Taylor, Sr.
Director
-56-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
For the fiscal year Commission File
ended September 30, 1994 Number 1-6442-1
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
ORANGE-CO, INC.
(Exact name of registrant is specified in its charter)
EXHIBITS
INDEX
-57-
EXHIBIT INDEX
Sequential
Exhibit No. Description of Exhibits Page No.
3.1 Restated Articles of Incorporation of
the company, as amended, filed as
Exhibits 3.1 to Stoneridge Resources,
Inc.'s Registration Statement No.
33-24085 on Form S-1 and incorporated
herein by reference.
3.2 By-laws of the Company, as amended
filed as Exhibit 3.2 to the Company's
Annual Report on Form 10-K for the
year ended September 30, 1992 and
incorporated herein by reference.
10.1 Orange-co, Inc. Management Incentive
Plan filed as Exhibit 10m to
Stoneridge Resources, Inc.'s
Registration Statement No. 33-24085
on Form S-1 and incorporated herein
by reference.
10.4 Orange-co, Inc. 1984 Incentive Stock
Option Plan, as amended filed as
Exhibit 10.10 to the Company's
Registration Statement No.33-16935,
as amended, on Form S-1 and
incorporated herein by reference.
10.5 Orange-co, Inc. 1987 Employee Stock
Option Plan, as amended filed as
Exhibit 10.5 to the Company Annual
Report on Form 10-K for the year
ended September 30, 1992 and incorporated
herein by reference.
10.8 Orange-co of Florida, Inc. Deferred 61
Compensation Plan effective December 1,
1988 originally filed as Exhibit 10.11
to the Company's Annual Report on Form
10-K for the fiscal year ended August 31,
1989 as amended through December 15, 1994.
10.11 Stock Purchase Agreement between
Stoneridge Resources Inc., Ben Hill
Griffin, Inc. and Ben Hill Griffin,
III, dated as of April 9, 1992 filed
as Exhibit (2) to the Company's Form
8-K filed May 28, 1992 and
incorporated herein by reference.
10.12 Loan Agreement between Orange-co,
Inc. Orange-co of Florida, Inc. and
Farm Credit of Southwest Florida,
ACA, dated April 10, 1993 and filed
as Exhibit 10.12 on Form 10-Q for the
fiscal quarter ended March 31, 1993
and incorporated herein by reference.
-58-
EXHIBITS INDEX
Sequential
Exhibit No. Description of Exhibits Page
No.
10.13 Amended and Restated Florida Mortgage
Security Agreement and Spreader Agreement
between Orange-co of Florida, Inc. and
John Hancock Mutual Life Insurance
Company, dated April 21, 1993; Renewal
Note between Orange-co of Florida, Inc.
and John Hancock Mutual Life Insurance
Company dated April 21, 1993 filed as
Exhibit 10.13 on Form 10-Q for the fiscal
quarter ended March 31, 1993 and
incorporated herein by reference.
10.14 Loan Agreement By and Among Orange-co,
Inc. and Orange-co of Florida, Inc. and
Sun Bank National Association for a
Revolving Line of Credit in the amount of
$20,000,000 dated June 16, 1993 and filed
as Exhibit 10.14 on Form 10-Q for the
fiscal quarter ended June 30, 1993 and
incorporated herein by reference.
10.15 Thermal Energy Sales Agreement By and
Between Orange-co of Florida, Inc. and AP
Cogen Ltd., dated May 27, 1993 and filed
as Exhibit 10.15 on Form 10-Q for the
fiscal quarter ended June 30, 1993 and
incorporated herein by reference.
10.16 Stock Purchase Agreement By and Between W.
Eugene Hays and George M. Nagel Jr. and
Orange-co of Florida, Inc. for the
purchase of the stock of International
Fruit, Inc., dated August 2, 1993 and
filed as Exhibit 10.16 on Form 10-Q for
the fiscal quarter ended June 30, 1993 and
incorporated herein by reference.
10.17 Orange-co of Florida, Inc. Management
Security Plan effective October 1, 1993
filed as Exhibit 10.17 on Form 10-Q for
the fiscal quarter ended December 31, 1993
and incorporated herein by reference.
10.18 The First Amendment to the Loan Agreement
By and Among Orange-co, Inc. and SunBank,
National Association for a Revolving Lined
of Credit dated April 1, 1994 and filed as
Exhibit 10.18 on Form 10-Q for the fiscal
quarter ended June 30, 1994 and
incorporated herein by reference.
10.19 The Second Amendment to the Loan Agreement
By and Among Orange-co, Inc., and SunBank
National Association for a Revolving Line
of Credit dated April 1, 1994 and filed as
Exhibit 10.19 on Form 10-Q for the fiscal
quarter ended June 30, 1994 and
incorporated herein by reference.
-59-
EXHIBITS INDEX
Sequential
Exhibit No. Description of Exhibits Page
No.
10.20 Stock Acquisition Agreement Between Orange- 68
co, Inc. and Childs Oil Company, Inc.
dated September 9, 1994 for the sale of
Frank Carroll Oil Company Stock.
16 Change in Accountants from Coopers &
Lybrand to KPMG Peat Marwick as filed on
the Company's Form 8K on August 4, 1992
and incorporated herein by reference.
21 Subsidiaries of the Company. 126
24.1 Consent letter from KPMG Peat Marwick LLP. 127
27 Financial Data Schedule (Electronic Filing
Only)
99.1 Orange-co of Florida, Inc. Profit Sharing
Plan and Trust Agreement effective January
1, 1987, as amended and restated on
January 1, 1989, including amendments through
October 14, 1993 filed as Exhibit 9934 on Form
10K for the fiscal year 1993 and incorporated
herein by reference.
99.2 First Amendment to Orange-co of Florid,a Inc. 128
401(k) Salary Deferral Plan effective December
15, 1994.
99.3 Profit Sharing Plan and Trust for Employees of 130
Orange-co of Florida, Inc. effective Janauary 1,
1993.
-60-
EXHIBIT 10.8
LT&K DRAFT
ll-29-88
ORANGE-CO OF FLORIDA INC. DEFERRED COMPENSATION Plan
Orange-co of Florida, Inc. hereby establishes a non-qualified,
unfunded plan of deferred compensation for the exclusive benefit
of select senior management and top executive employees as one
method of attracting and retaining the services of such
employees.
ARTICLE I
INTRODUCTION
Section 1.1 Name of Plan. The name of this Plan is the 0range-
co of Florida, Inc. Deferred Compensation Plan,"
Section 1.2 Effective Date, The effective date of the Plan is
December 1. 1988o
Section 1.3 Purpose, The purpose of this Plan is to provide
Eligible Employees the opportunity to provide for retirement
income and survivor benefits by deferring receipt of certain
compensation to be earned in the future.
ARTICLE II
DEFINITIONS
Section 2.1 "Account" means a Participant's individual account,
as described in Section 3.4 of this Plan,
Section 2.2 "Beneficiary" means the individual beneficiary who
the Participant has designated in writing to receive the vested
balance, if any, remaining in the Participant's Account upon the
Participant's death, If no beneficiary is designated, or if the
designated beneficiary dies prior to receipt of benefits and the
Participant has not designated another beneficiary, the
beneficiary will be the Participant's estate.
Section 2.3 "Board" means the Board of Directors of Orange-co of
Florida, Inc.
Section 2.4 "Change in Control" means the occurrence of any of
the following events:
(a) any person (including a group as Section 13(d)(3) of
the Securities Exchange Act of 1934) becoming, directly or
indirectly, the beneficial owner of twenty percent (20%) or more
of the shares of stock of Orange-co of Florida, Inc.. entitled to
vote for the election of directors;
(b) as a result of or in connection with any cash tender
offer, exchange offer, merger or other business combination, sale
of assets or contested election, or combination of the foregoing,
the persons who were directors of the Company just prior to such
event shall cease to constitute a majority of the Board; or
(c) the stockholders of the Company approve an agreement
providing for a transaction in which either the Company will
cease to be an independent publicly-owned corporation or a sale
or other disposition of all or substantially all of the assets of
the Company occurs.
Section 2.5 "Committee" means the Committee established under
Section 4.1 of this Plan.
Section 2.6 "Company" means Orange-co of Florida, Inc., any
successor thereto by merger, purchase or otherwise, and any of
its affiliated companies as may be authorized to participate in
this Plan by the Board.
Section 2.7 "Compensation" means base salary to be paid or
bonus, if applicable, to be earned in any Plan Year.
Section 2.8 "Eligible Employee" means an employee of the Company
who is designated by the Committee pursuant to Section 4.1 as
eligible to participate in this Plan.
Section 2.9 "Plan Year" means the twelve (12) consecutive month
period beginning on any December 1 and ending on the succeeding
November 30. The initial Plan Year shall be the period
beginning on December 1. 1988 and ending on November 30, 1989.
Section 2.10 "Participant" means an Eligible Employee who
participates in this Plan pursuant to Article III.
Section 2.11 "Year of Service" means a year of services as
defined for purposes of eligibility to participate in the Orange-
co, Inc., 401(k) Retirement Plan.
ARTICLE III
PARTICIPATION
Section 3.1 Participation. An Eligible Employee will
participate in this Plan if he has elected to have a portion of
his Compensation deferred under this Plan. An election to defer
Compensation must be made in writing on a form provided by the
Committee and submitted to the Committee no later than November 1
prior to the Plan Year with respect to which the Compensation is
earned; provided, however, that an employee who first becomes an
Eligible Employee after the beginning of a Plan Year may elect,
within thirty (30) days of becoming an Eligible Employee, to
defer Compensation to be earned during that Plan Year but after
the election. Notwithstanding the foregoing, an election to
defer Compensation to be earned during the Plan ending November
30, 1989, must be made no later than December 1, 1988.
Section 3.2 Irrevocability of Election. Once made, a deferral
election under Section 3.1 is irrevocable for any Plan Year to
which it relates.
Section 3.3 Company Credits. In addition to amounts deferred
pursuant to Section 3.1, the Company, in the sole discretion of
the Board, may make additional credits in any Plan Year on behalf
of any Participant hereunder.
Section 3.4 Establishment of Plan Accounts. The Company shall
establish an Account for each Participant. During each Plan
Year, each Participant's, @
Account will be credited with the amounts deferred pursuant to
Section 3.1 and amounts credited, if any, pursuant to Section
3.3. Such amounts shall be credited as a bookkeeping entry only,
to the Participant's Account at such times as the deferred
Compensation would have been paid to the Participant or the
Company credit is made.
Section 3.5 Vesting of Amounts in a Participant's Account. A
Participant shall be fully vested at all times in the amounts
credited to his Account attributable to deferrals made pursuant
to Section 3.1, including earnings thereon. A Participant shall
be fully vested in the amounts credited to his Account, if any,
pursuant to Section 3.3, including earnings thereon, upon the
Participant's completion of five (5) years of service.
Notwithstanding the foregoing, a Participant shall be fully
vested upon termination of employment on or after: attainment of
age fifty-five (55), or upon termination of employment due to the
Participant's disability (as determined by the Committee) or
death.
Section 3.6 Distribution of Amounts Credited to a Participant's
Account) Due to Retirement or Disability. Upon termination of
employment on or after attainment of age fifty-five (55), or upon
termination of employment due to the Participant's disability (as
determined by the Committee), a Participant shall be entitled to
distribution of the Participant's Account as set forth in this
Section. The amount to which Participant is entitled shall be
the amounts credited to his Account pursuant to Section 3.4
together with interest credited on such amounts (beginning on the
date such amounts are credited to the Participant's Account under
Section 3.4), until the entire Account is paid, at a rate
determined by the Committee, but no less than the Salomon
Brothers High Grade Long Term Corporate Bond Index. Payments to
Participant shall be made in ten (10) consecutive annual
installments commencing on the first business day of the year
following the Participant's termination of employment with the
Company. The amount of each installment shall be equal to the
remaining Account balance (together with interest determined
under this Section 3.6) multiplied by a fraction, the numerator
of which is one and the denominator of which is the number of
years remaining in the payment period. In the event of the death
of a Participant prior to the distribution of his entire Account
balance, the remaining balance of the Participant's Account shall
continue to be paid in installments to the Participant's
Beneficiary. Notwithstanding the foregoing, any Participant may
request, subject to the approval of the Committee, that
distribution of the Participant's entire Account balance be paid
in a single sum payment in cash. If the Committee, in its sole
discretion, grants such request, the single sum payment shall be
paid as of the first day annual payments would otherwise begin.
Any request for a single sum payment may be made at any time
before annual payments would otherwise begin.
Section 3.7 Distribution of Amounts Credited to a Participant's
Account Due to Death. Upon termination of employment due to a
Participant's death, the Participant's Beneficiary shall be
entitled to a distribution of the Participant's Account as set
forth in this Section. The amount to which the
Participant's Beneficiary is entitled shall be the greater of:
(a) five (5) times the amount deferred in the Participant's
initial year of participation pursuant to Section 3.1; or (b) the
total amounts credited to the Account pursuant to Section 3.4
together with interest credited on such amounts (beginning on the
date such amounts are credited to the Participant's Account under
Section 3,4), until the entire Account is paid, at a rate
determined by the Committee but no less than the Salomon Brothers
High Grade Long Term Corporate Bond Index. Payment to such a
Beneficiary shall be made in (10) consecutive annual installments
commencing on the first business day of the year following the
Participant's termination of employment with the Company. The
amount of each installment shall be equal to the remaining
Account balance (together with interest, if any, determined under
this Section 3.7) multiplied by a fraction, the numerator of
which is one and the denominator of which is the number of years
remaining in the payment period. Notwithstanding the foregoing,
any Beneficiary may request, subject to the approval of the
Committee that distribution of the Participant's entire Account
balance be paid in a single sum payment in cash. If the
Committee, in its sole discretion, grants such requests, the
single sum payment shall be paid effective as of the first day
annual payments would otherwise begin. Any request for a single
sum payment may be made at any time before annual payments would
otherwise begin.
Section 3.8 Distribution of Amounts Credited Upon Termination of
Employment Upon termination of employment for any reason other
than those specified in Sections 3.6 and 3.7, a Participant shall
be entitled to distribution of his Account as set forth in this
Section. The amount to which the Participant is entitled shall
be the amounts credited to his Account pursuant to Section 3.4
together with interest credited on such amounts (beginning on the
date such amounts are credited to the Participant's Account under
Section 3.4), until the entire Account is paid, at a rate of six
percent (6%) compounded annually. Payments to such a Participant
shall be made in ten (10) consecutive annual installments
commencing on the first business day of the year following the
Participant's termination of employment with the Company. The
amount of each installment shall be equal to the remaining
Account balance (together with interest determined under this
Section 3.8) multiplied by a fraction, the numerator of which is
one and the denominator of which is the number of years remaining
in the payment period. In the event of the death of a
Participant prior to the distribution of his entire Account
balance, the remaining balance of the Participant's Account shall
continue to be paid in installments, as described a above, to the
Participant's Beneficiary. Notwithstanding the foregoing, any
Participant or his Beneficiary may request, subject to the
approval of the Committee, that distribution of the participants,
entire Account balance be paid in a single sum payment in cash.
If the Committee, in its sole discretion, grants such requests,
the single sum payment shall be paid as of the first day annual
payments would otherwise begin. Any request for a single sum
payment may be made at any time before annual payments would
otherwise begin.
Section 3.9 Distribution of Amounts Credited to a Participant's
Account Upon Financial Hardship. Prior to a Participant's
termination of employment, a Participant may request a hardship
withdrawal under this Plan, by filing such a request, in writing,
with the Committee. The Committee, in its sole discretion, may
approve such a request if it finds that the Participant has
incurred a severe financial hardship occasioned by an emergency,
including, but not limited to, illness, disability or personal
injury sustained by the Participant or a member of the
Participant's immediate family. If such a request is approved,
the Participant shall receive amounts reasonably necessary to
alleviate the financial hardship from the value of his vested
Account determined as of the first day of the month in which the
Committee approves the request.
ARTICLE IV
PLAN ADMINISTRATION
Section 4.1 Committee. This Plan shall be administered by a
Committee consisting of from one to three members as selected by
the Board and the Committee shall have full authority to
administer and interpret this Plan, make payments and maintain
records hereunder. All Eligible Employees shall be selected by
the Committee, and such Eligible Employees shall be selected only
from among those employees who are senior management, top
executive or highly compensated employees. All interpretations
the Committee shall be final and binding on all parties,
including the Participants, Beneficiaries and the Company. The
Company shall indemnify and hold harmless the members of the
Committee against any and all claims, loss, damage, expense or
liability arising from any action or failure to act with respect
to this Plan, except in the case of gross negligence or willful
misconduct.
Section 4.2 Claims Procedure. Any person claiming a benefit,
requesting an interpretation or ruling under the Plan, or
requesting information under the Plan shall present the request
in writing to the Committee which shall respond in writing, as
soon as practicable. If the claim or request is denied, the
written notice of denial shall state: (a) the reasons for denial,
with specific reference to the Plan provisions on which the
denial is based; (b) a description of any additional material or
information required and an explanation of why it is necessary;
and (c) an explanation of the Plan's claim review procedure. Any
person whose claim or request is denied or who has not received a
response within thirty (30) days may request review by notice
given in writing to the Committee. The claim or request shall be
reviewed by the Committee. On review, the claimant may examine
pertinent documents, and submit issues and comments in writing.
The decision on review shall normally be made within sixty (60)
days. If an extension of time is required for special
circumstances, the claimant shall be notified and the time limit
shall be one hundred twenty (120) days. The decision shall be in
writing and shall state the reasons and the relevant plan
provisions. All decisions on review shall be final and bind a11
parties concerned.
Section 4.3 Delegated Responsibilities. The Committee shall have
the authority to delegate any of its responsibilities to such
persons as it deems proper.
Section 4.4 Amendment and Termination. The Board may amend,
modify or terminate this Plan at any time, provided, however,
that no such amendment, modification or termination shall reduce
any benefit under this Plan to which a Participant or Beneficiary
is entitled under Article III prior to the date of such amendment
or termination, unless the Participant or Beneficiary becomes
entitled to an amount equal to the actuarial value, to be
determined, in the sole discretion of the Committee, of such
benefit under another plan, program or practice adopted by the
Company. Notwithstanding the foregoing, on and after a Change in
Control, the Plan may not be amended or terminated with respect
to benefits accrued prior to such amendment or termination
without the written consent of a majority of Participants
determined as of the day before such Change in Control.
Section 4.5 Source of Benefits. The Company will pay all, all
benefits arising under this Plan and all costs, charges and
expenses relating thereto out of its general assets. The Company
may finance obligations under this Plan by the purchase of one or
more policies of life insurance upon the lives of the
Participants, with the Company as the owner of an beneficiaries
under such policies. No Participant shall have any right or
interest in any such policy or the proceeds thereof and no
Participant may require that the Company purchase such policies.
Each Participant shall cooperate fully in the application for,
and in the maintenance application for, and in the maintenance
of, any, such policy or policies of insurance upon the
Participant's life.
Section 4.6 Non-Assignability of Interests. Except as otherwise
required by law, neither any benefit payable hereunder nor the
right to receive any . future benefit under this Plan may be
anticipated, alienated, sold, transferred, assigned, pledged,
encumbered, garnished, attached or encumbered, garnished,
attached or subjected to any charge or legal process, and if any
attempt is made to do so, or a person eligible for any benefits
under this Plan becomes bankrupt, the interest under this Plan of
the person affected may be terminated by the Committee, which, in
its sole discretion, may cause the same to be held or applied for
the benefit of one or more of the dependents of such person or
make any other disposition of such benefits that it deems
appropriate.
Section 4.7 Plan Unfunded. Nothing in this Plan shall be
interpreted or construed to require the Company in any manner to
fund any obligation to the Participants or any Beneficiary
hereunder. Nothing contained in this Plan nor any action taken
hereunder shall create, or be construed to create, a trust of any
kind, or a fiduciary relationship between the Company and the
Participants, Beneficiaries, or any other persons. Any funds
which may be accumulated in order to meet any obligation under
this Plan shall for all purposes continue to be a part of the
general assets of the Company. To the extent that any
Participant or Beneficiary acquires a right to receive payments
from the Company under this Plan,, such right shall be no,
greater than the rights of any unsecured general creditor of the
Company,
Section 4.8 No Right to Continued Employment. Neither the
establishment of the Plan nor the payment of any benefits
hereunder nor any action of the Company or the Committee shall be
held or construed to confer upon any person any legal right to be
continued in the employ of the Company. The Company expressly
reserves the right to discharge any Employee whenever the
interest of the Company in its sole discretion may so require
without liability to the Company or the Committee except as to
any rights which may be expressly conferred upon such Employee
under the Plan.
Section 4.9 Severability. In the event any provision of this
Plan would serve to invalidate the Plan, that provision shall be
deemed to be null and void, and the Plan shall be construed as if
it did not contain the particular provision that would make it
invalid.
Section 4.10 Applicable Law. All questions pertaining to the
construction, validity and effect of the Plan shall be determined
in accordance with the laws of the State of Florida, to the
extent not preempted by Federal law.
Section 4.11 Headings, Gender. and Number: The headings to the
Articles and Sections of this Plan are inserted for reference
only, and are not to be taken as limiting or extending the
provisions hereof. Unless the context clearly indicates to the
contrary, in interpreting this Plan, the masculine shall include
the feminine and the singular shall include the plural.
Section 4.12 Incapacity: If the Committee shall determine that
a Participant or any other person entitled to a benefit under
this Plan is unable to care for his affairs because of illness,
accidents, mental or physical incapacity, or because such person
is a minor, the Committee may direct that any benefit payment due
such Participant or other person be paid to the individual's duly
appointed legal representative, or, if no such representative is
appointed, to the individual's spouse, child, parent, or other
blood relative, or to a person with whom the Participant or other
individual resides. Any such payment so made shall be a complete
discharge of the liabilities of the Plan with respect to such
Participant or other person.
Section 4.13 Binding Effect/Release: All persons accepting
benefits under this Plan shall be deemed to have consented to the
terms of this Plan. Any final payment or distribution to any
Participant or other individual entitled to benefits under the
Plan shall be in full satisfaction of all claims against the
Plan, the Committee, and the Company arising by virtue of this
Plan.
PMH27
FIRST AMENDMENT TO ORANGE-CO OF FLORIDA, INC. DEFERRED
COMPENSATION
CONSENT OF RESOLUTION
BOARD OF DIRECTORS OF
ORANGE-CO OF FLORIDA, INC.
The undersigned, being all of the members of the Board of
Directors of Orange-co of Florida, Inc. acting by unanimous
written consent in lieu of a meeting, do hereby adopt the
following resolution as of September 30, 1994:
RESOLVED, that the Company's Non-Qualified Deferred
Compensation Plan be and hereby modified and amended in the
following respects:
Salary Deferral shall be permitted with respect to total
compensation to be earned in any Plan Year.
B. H. Griffin, III W. Bernard Lester
B. H. Griffin, III W. Bernard Lester
John R. Alexander
John R. Alexander
EXHIBIT 10.20
STOCK ACQUISITION AGREEMENT
BETWEEN
ORANGE-CO, INC.
AND
CHILDS OIL COMPANY, INC.
TABLE OF CONTENTS
PREAMBLES
1. Certain Definitions 1
1.1 Affiliate 1
1.2 Agreement 1
1.3 Code 2
1.4 Company 2
1.5 Confidential Information 2
1.6 Contracts 2
1.7 Encumbrances 3
1.8 Equipment 3
1.9 ERISA 3
1.10 Inventory 3
1.11 Investigation Period 3
1.12 Permitted Encumberances 3
1.13 Person 4
1.15 Real Property 4
1.16 Schedules 4
1.17 Seller 4
1.18 Shares 4
1.19 Vehicles 4
2. Effective Date 4
3. Closing 5
4. Sale and Purchase of the Shares 5
5. Purchase Price 5
5.1 Amount of Purchase Price 5
5.2 Preliminary Purchase Price 6
5.3 Payment of Preliminary Purchase Price 6
5.4 Determination of Final Purchase Price 8
5.5 Security for the Closing Promissory Note
or any Replacement Promissory Note 12
6. Representation and Warranties of the Seller 13
6.1 Organization and Standing of the Company 13
6.2 Capitalization of the Company 13
6.3 Ownership of the Shares 14
6.4 Subsidiaries 14
6.5 Financial Statements 14
6.6 Absence of Undisclosed Liabilities 15
6.7 Absence of Certain Changes 15
6.8 Taxes 15
6.9 Certain Assets and Properties of the
Company 16
6.10 Inventories 17
6.11 Patents, Trademarks, Copyrights, etc. 17
6.12 Insurance 18
6.13 Contracts 18
6.14 Banks and Powers of Attorney 19
6.15 Compensation and Fringe Benefits 19
6.16 Officers and Directors 19
6.17 Indebtness 20
6.18 Litigation 20
6.19 Licenses and Permits 20
6.20 Compliance with Laws 20
6.21 Environmental Matters 21
6.22 Storage Tanks 22
6.23 Labor Relations 22
6.24 Overtime, Back Wages, Vacation and
Minimum Wages 22
6.25 Discrimination, Occupational Safety
and Other Statutes and Regulations 23
6.26 Product Warranties 23
6.27 Qualified Retirement Plans 23
6.28 Receivables 24
6.29 Organization and Standing of the Seller 25
6.30 No Violations, Conflicts or Defaults 25
6.31 Authority 25
6.32 Competition 26
6.33 Misstatement or Omissions 26
7. Representations and Warranties by the Purchase 26
7.1 Organization and Standing of the Purchaser 26
7.2 No Violations, Conflicts or Defaults 26
7.3 Authority 27
7.4 Misstatements or Omissions 27
7.5 Purchase for Investment 27
8. Additional Obligations of the Sales 28
8.1 Intercompany Debt 28
8.2 Frank Carroll Debt 29
9. Due Diligence Investigation 29
10. Business in the Ordinary Course 30
11. Further Agreements 31
11.1 Exclusivity 31
11.2 Disclosure 32
11.3 Confidentiality 32
11.4 Preservation and Availability of Records 33
11.5 Closing Date Tax Returns 34
11.6 Joint Inspection of Above Groud Storage Tanks 34
12. Closing Contingencies of the Purchase 35
13. Closing Contingencies of the Seller 37
14. Clsoing Obiligations 39
14.1 Closing Obligations of the Seller 39
14.2 Closing Obligations of the Purchase 40
15. Survival of Representations, Warranties,
Obligations, Convenants and Agreements 41
16. Indemnifications Provisions 41
16.1 Indemnifications Agreements by the Seller 41
16.2 Indemnification Agreement by the Purchaser 42
16.3 Limitations with Respect to Indemification
Agreements 42
16.4 Indemnifications Procedures 48
16.5 Purchaser's Right of Set-Off 53
17. Default 53
18. Escrow Provisions 54
19. Brokerage 57
20. Notices 57
21. Extension of Time and Waivers 58
22. Expenses 59
23. Miscellaneous Provisions 59
STOCK ACQUISITION AGREEMENT
THIS STOCK ACQUISITION AGREEMENT (the "Agreement") is made and entered into
by and between ORANGE-CO, INC., a Florida corporation (the "Seller") and CHILDS
OIL COMPANY, INC., a Florida corporation (the "Purchaser").
BACKGROUND
A. The Seller is the record owner of all of the issued and outstanding
shares of the authorized capital stock of FRANK CARROLL OIL COMPANY, a Florida
corporation (the "Company") which is engaged in business as a bulk fuel
distributor of gasoline, diesel fuel and lubricating oil and as a retail seller
of convenience store merchandise in Lee County, Florida.
B. The Purchaser desires to purchase from the Seller, and the Seller
desires to sell to the Purchaser, all of the issued and outstanding capital
stock of the Company, upon the terms and conditions set forth below.
In consideration of the mutual representations, warranties, covenants
and agreements set forth below, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Certain Definitions. The following capitalized terms not defined
elsewhere herein shall have the following meanings:
2. Affiliate. The term "Affiliate" means any Person directly or
indirectly controlling or controlled by, or under direct or indirect common
control with, the Person specified.
3. Agreement. The term "Agreement" means this Stock Acquisition
Agreement, including the Schedules attached hereto or delivered to the Purchaser
pursuant to this Agreement, as originally executed by the parties and as
subsequently amended or modified from time to time in accordance with the
provisions of Section 22.3 hereof.
1.3. Code. The term "Code" means the Internal Revenue Code of 1986,
as amended, and any predecessor or successor statute thereto.
1.4. Company. The term "Company" means Frank Carroll Oil Company, a
Florida corporation.
1.5. Confidential Information. The term "Confidential Information"
means any and all documented information with respect to the Company's assets
and properties, business, sales, technical data, know-how, plans,
specifications, reports, studies, findings and ideas, and with respect to the
Company's prices, suppliers and customers, and with respect to the Company's
business plans, methods, techniques and procedures; provided, however, the term
"Confidential Information" shall not include any of the foregoing information
(i) which, at the time such information is disclosed, or otherwise becomes
available, to the Purchaser or any of its Affiliates is otherwise available to
the general public, or (ii) which becomes at a later date available to the
general public through no fault of the Purchaser or any of its Affiliates but
then only after said later date, or (iii) which the Purchaser can demonstrate
was in its possession before any disclosure by the Seller or the Company or any
of their respective employees, agents, contractors or representatives, or (iv)
which is disclosed to the Purchaser or any of its Affiliates without restriction
on disclosure by a third party who has the lawful right to disclose such
information.
1.6. Contracts. The term "Contracts" means all contracts,
leases, warranties, commitments, agreements, arrangements, credit guaranties,
and purchase and sales orders, whether oral or written, pursuant to which the
Company enjoys any right or benefit or undertakes any obligation or liability.
1.7. Encumbrances. The term "Encumbrances" means any and all liens,
security interests, options, rights of first refusal, easements, mortgages,
charges, debentures, indentures, rights-of-way, restrictions, easements,
security agreements or any other encumbrances or other restrictions or
limitations on the use of real or personal property or irregularities in the
title thereto.
1.8. Equipment. The term "Equipment" means all machinery, equipment,
tools, computers, terminals, computer equipment, office equipment, business
machines, telephones and telephone systems, parts, accessories and other items
of tangible personal property owned or leased by the Company.
1.9. ERISA. The term "ERISA" means the Employee Retirement Income
Security Act of 1974, as amended, and the rules and regulations promulgated
thereunder.
1.10. Inventory. The term "Inventory" means all fuel and oil
products and all convenience store merchandise and supplies owned or held by the
Company.
1.11. Investigation Period. The term "Investigation Period" means
the time period beginning on the Effective Date of this Agreement (as defined in
Section 2 of this Agreement) and ending at 5:00 p.m. on Wednesday, September 21,
1994.
1.12. Permitted Encumbrances. The term "Permitted Encumbrances"
means all Encumbrances (i) described in Schedule 1.11. to this Agreement, (ii)
liens for taxes and assessments not yet due and payable, and (iii) with respect
to the Real Property, easements, rights-of-way, licenses, permits, covenants,
zoning and comprehensive plan restrictions and other restrictions or limitations
on the use thereof or irregularities in the title thereto, in each case which do
not, individually or in the aggregate, materially detract from the value of, or
impair the use of, such property by the Company.
1.13. Person. The term "Person" means any individual,
partnership, joint venture, corporation, trust, unincorporated organization,
government or department or agency thereof, or other entity.
1.14. Purchaser. The term "Purchaser" means Childs Oil Company,
Inc., a Florida corporation.
1.15. Real Property. The term "Real Property" means all parcels
of real estate, and all existing real property improvements located thereon,
owned or leased by the Company.
1.16. Schedules. The term "Schedules" means the Schedules
referred to in this Agreement. The Schedules are an integral part of this
Agreement and are expressly incorporated by reference herein.
1.17. Seller. The term "Seller" means Orange-co, Inc., a Florida
corporation.
1.18. Shares. The term "Shares" means all shares of the
outstanding capital stock of the Company held of record by the Seller,
consisting of 89.712 Shares of the common stock, par value of $100.00, of the
Company, all of which are held by the Seller.
1.19. Vehicles. The term "Vehicles" means all automobiles, motor
vehicles, trucks, tractors, trailers, forklifts and other rolling stock owned or
leased by the Company.
2. Effective Date. This Agreement shall become effective upon the date
of execution by the Seller or upon the date of execution by the Purchaser,
whichever shall be the later (referred to herein as the "Effective Date").
3. Closing. The closing of the sale and purchase of the Shares provided
for in this Agreement (referred to herein as the "Closing") shall be held at the
offices of Lane, Trohn, Clarke, Bertrand, Vreeland & Jacobsen, P.A., One Lake
Morton Drive, Lakeland, Florida 33801, on September 29, 1994, commencing at
10:00 a.m., Eastern Standard Time, or at such other time and place as the
parties hereto may agree in writing (the date on which the Closing actually
occurs is referred to herein as the "Closing Date"). Subject to the
consummation of the Closing on the Closing Date, the sale, assignment, transfer
and conveyance to the Purchaser of the Shares will be effective as of 11:59
p.m., Eastern Standard Time, on September 30, 1994 (referred to herein as the
"Effective Time").
4. Sale and Purchase of the Shares. At the Closing, subject to the terms
and conditions of this Agreement, the Seller shall sell, assign, transfer,
convey and deliver to the Purchaser, and the Purchaser shall purchase, acquire
and accept from the Seller, the Shares, free and clear of all Encumbrances
whatsoever. The transfer of the Shares shall be accomplished by the Seller
delivering to the Purchaser one or more certificates evidencing all of the
Shares, duly endorsed for transfer to the Purchaser or accompanied by stock
powers duly executed on behalf of the Seller. In addition, the Seller shall
have paid (or tendered to the Purchaser a sum sufficient to pay) all required
documentary stamps and other transfer taxes required with respect to the
transfer of the Shares from the Seller to the Purchaser.
5. Purchase Price.
5.1. Amount of Purchase Price. The total purchase price to be paid by
the Purchaser to the Seller for the Shares (referred to herein as the "Final
Purchase Price") shall be $1,000,000.00 increased or decreased, as appropriate,
by the adjustments defined in Section 5.4 hereof (collectively referred to
herein as the "Adjustments").
5.2. Preliminary Purchase Price. As used herein, the term
"Preliminary Purchase Price" shall mean $1,000,000.00.
5.3. Payment of Preliminary Purchase Price. The Purchaser shall pay
the Preliminary Purchase Price to the Seller as follows:
5.3.1. On the Effective Date, the Purchaser shall deliver, or
cause to be delivered, to the law firm of Lane, Trohn, Clarke, Bertrand,
Vreeland & Jacobsen, P.A., One Lake Morton Drive, Lakeland, Florida 33801 (the
"Escrow Agent") the sum of $25,000.00 as an earnest money deposit against the
Preliminary Purchase Price (referred to herein as the "Deposit") in the form of
the Purchaser's check made payable to the Escrow Agent's trust account. The
Escrow Agent shall forthwith acknowledge receipt of the Deposit by notice to the
Seller, with copy to the Purchaser. If the Purchaser fails to pay the Deposit
to the Escrow Agent within the time specified above, then this Agreement, and
all rights and liabilities hereunder automatically shall terminate and be of no
further force and effect. The Deposit, upon receipt by the Escrow Agent, shall
remain in the Escrow Agent's trust account at SunBank/Mid-Florida, National
Association, for so long as the Escrow Agent holds the Deposit. The Seller and
the Purchaser mutually acknowledge and confirm that the Deposit shall be held in
a non-interest bearing trust account. The Deposit shall be held and disbursed
by the Escrow Agent in accordance with the applicable terms and conditions of
this Agreement set forth below.
5.3.2. At the Closing, the balance of the Preliminary Purchase
Price, after credit for the Deposit, shall be paid as follows:
5.3.2.1. The sum of $750,000.00 shall be evidenced by the
Purchaser's Promissory Note (referred to herein as the "Closing Promissory
Note"), which Closing Promissory Note shall bear simple interest at the rate of
eight percent (8%) per annum, shall provide for a ten (10) year amortization and
shall provide for the principal and interest to be paid in eighteen (18)
consecutive, equal quarterly installments, with the first such quarterly
installment of principal and interest to be due and payable six (6) months after
the date of the Closing Promissory Note and with the entire unpaid principal
balance, plus all accrued interest, to be due and payable in full on or before
five (5) years after the date of the Closing Promissory Note. The Closing
Promissory Note shall be substantially in the form of Schedule 5.3 to this
Agreement, and the original of the Closing Promissory Note shall be duly
executed by the President of the Purchaser and delivered by the Purchaser to the
Seller at the Closing.
5.3.2.2. The balance of the Purchase Price, being
$225,000.00 shall be paid to the Seller by one or more bank checks issued by a
Florida bank reasonably acceptable to the Seller or by a wire transfer of
immediately available funds to a bank account designated by the Seller. In the
event of a wire transfer, the Purchaser shall request a Federal Reserve
Reference Number at the time of the wire transfer for the purpose of assisting
the Seller in confirming receipt of such balance of the Preliminary Purchase
Price.
5.4. Determination of Final Purchase Price.
5.4.1. Within forty (40) days following the Closing Date, the
Purchaser shall cause the Company to prepare an unaudited balance sheet of the
Company as of the Effective Time (referred to herein as the "Adjustment Balance
Sheet"). The Adjustment Balance Sheet shall be prepared in the same manner and
using the same accounting policies as were used in preparing the Reference
Balance Sheet (as defined in Section 6.5 hereof). Furthermore, notwithstanding
the provisions of Section 8 of this Agreement, the Adjustment Balance Sheet
shall reflect as liabilities of the Company (i) the amount of the Intercompany
Debt owed by the Company to the Seller, as such amount exists immediately prior
to the cancellation and forgiveness of such Intercompany Debt by the Seller
pursuant to the provisions of Section 8.1 hereof and (ii) the amount equal to
the unpaid principal balance, and all accrued interest, of the Frank Carroll
Debt (as defined in Section 8.2 hereof), as the same exists immediately prior to
the pay-off of the Frank Carroll Debt by the Seller pursuant to the provisions
of Section 8.2 hereof.
5.4.2. The Seller shall have thirty (30) days from the date of
receipt of the Adjustment Balance Sheet to review the Adjustment Balance Sheet
and to agree or disagree as to the amount of the Total Stockholder's Equity
reflected thereon (referred to herein as the "Adjustment Total Stockholder's
Equity"). If the Seller disagrees with the Adjustment Total Stockholder's
Equity reflected on the Adjustment Balance Sheet, then the Seller shall, within
such thirty (30) day period, deliver a written objection to the Purchaser which
shall specify in reasonable detail the basis for the objection, and a
computation of the Adjustment Total Stockholder's Equity asserted by the Seller
(referred to herein as the "Objection"). Upon receipt of any Objection, the
Purchaser shall have fifteen (15) days to review the Objection and to negotiate
a mutually satisfactory settlement with the Seller (referred to herein as the
"Settlement Period"). If, at the expiration of the Settlement Period, the
Purchaser and the Seller shall not have agreed to the amount of the Adjustment
Total Stockholder's Equity, the Purchaser shall cause the Adjustment Balance
Sheet, the Objection and the computations of the Seller, and all work papers
related thereto (collectively referred to herein as the "Determination
Materials") to be submitted to a certified public accounting firm mutually
agreed upon by the Purchaser and the Seller (referred to herein as the
"Accounting Firm"). The Accounting Firm shall review the Determination
Materials and shall make a determination as to which of the positions asserted,
either that asserted by the Purchaser in the Adjustment Balance Sheet or that
asserted by the Seller in the Objection, is the more correct, and shall notify
the Purchaser and the Seller of its determination within forty-five (45) days
following the receipt of the Determination Materials, which determination shall
be final, conclusive and binding for all purposes on the Company, the Seller and
the Purchaser. The fees and expenses of the Accounting Firm shall be borne by
the party whose asserted Adjustment Total Stockholder's Equity does not prevail
in the determination of the Accounting Firm. The Adjustment Total Stockholder's
Equity, as reflected in the Adjustment Balance Sheet, or as mutually agreed upon
by the Seller and the Purchaser, or as determined by the Accounting Firm, is
referred to herein as the "Final Adjustment Total Stockholder's Equity". The
Adjustment Balance Sheet, as adjusted to reflect the Final Adjustment Total
Stockholder's Equity, is referred to herein as the "Final Adjustment Balance
Sheet".
As used herein, the term "First Adjustment Amount" means any difference
between the Total Stockholder's Equity, as reflected in the Reference Balance
Sheet, and the Final Adjustment Total Stockholder's Equity.
5.4.3. The Purchaser acknowledges and confirms that the amount
of the Intercompany Debt, as reflected in the Reference Balance Sheet, is
$150,000.00 (referred to herein as the "Reference Intercompany Debt Amount").
The amount of the Intercompany Debt, as reflected in the Final Adjustment
Balance Sheet, is referred to herein as the "Final Intercompany Debt Amount").
5.4.4. On the last business day prior to the Closing Date, or
on such other date as shall be mutually agreed upon by the Seller and the
Purchaser, an equal number of representatives of the Seller and the Purchaser
shall inspect the Company's inventories of gasoline, diesel fuel and lubricating
oil and convenience store merchandise for the sole purpose of determining that
such inventories consist of items of a quality and quantity useable or saleable
in the normal course of the Company's business (referred to herein as the
"Inspection"). The Seller and the Purchaser shall negotiate in good faith as to
any items of the inventories which are not of a quality or quantity useable or
salable in the normal course of the Company's business (with any such items
being referred to herein as the "Unsalable Items"). Each of the Unsalable Items
shall then be valued using the Company's costs for each such item.
As used herein, the term "Third Adjustment Amount" shall mean the aggregate
value of all Unsalable Items, determined in accordance with the foregoing
provisions.
5.4.5. At such time as the First Adjustment Amount, if any,
the Second Adjustment Amount, if any, and the Third Adjustment Amount, if any,
have been determined, whichever shall last occur, the Final Purchase Price shall
be determined by increasing or decreasing the Preliminary Purchase Price of
$1,000,000.00 as follows:
5.4.5.1. If the Final Adjustment Total Stockholder's Equity
shall exceed the Total Stockholder's Equity, as reflected in the Reference
Balance Sheet, then the Preliminary Purchase Price shall be increased by the
First Adjustment Amount; or, if the Total Stockholder's Equity, as reflected in
the Reference Balance Sheet, shall exceed the Final Adjustment Total
Stockholder's Equity, then the Preliminary Purchase Price shall be decreased by
the First Adjustment Amount.
5.4.5.2. If the Final Intercompany Debt Amount shall exceed
the Reference Intercompany Debt Amount, then the Preliminary Purchase Price
shall be increased by the Second Adjustment Amount; or, if the Reference
Intercompany Debt Amount shall exceed the Final Intercompany Debt Amount, then
the Preliminary Purchase Price shall be decreased by the Second Adjustment
Amount.
5.4.5.2. The Preliminary Purchase Price shall be reduced by
the Third Adjustment Amount, if any.
5.4.5.3. The Final Purchase Price shall be equal to the
Preliminary Purchase Price of $1,000,000.00, increased or decreased by the net
amount of the foregoing Adjustments. If the Final Purchase Price equals the
Preliminary Purchase Price, then the Closing Promissory Note shall remain in
full force and effect without any change. If the Final Purchase Price is either
more or less than the Preliminary Purchase Price, then the Seller and the
Purchaser mutually agree that a replacement Promissory Note shall be prepared in
exactly the same form as the Closing Promissory Note (referred to herein as the
"Replacement Promissory Note"), except that the principal amount of the
Replacement Promissory Note shall be equal to the amount of the Final Purchase
Price less $250,000.00 and except that the amount of the quarterly payments of
principal and interest shall be adjusted accordingly. The Purchaser shall
promptly execute and deliver to the Seller any Replacement Promissory Note in
exchange for a written confirmation by the Seller that the Replacement
Promissory Note is in substitution of, and replaces, the Closing Promissory
Note.
5.5 Security for the Closing Promissory Note or any Replacement
Promissory Note. The prompt payment of the Closing Promissory Note or, if
applicable, the Replacement Promissory Note, in accordance with the terms
thereof, shall be secured by a pledge of all of the Shares. At the Closing, the
Seller, the Purchaser and the Escrow Agent named therein shall execute and
deliver a Pledge And Escrow Agreement providing for the pledge by the Purchaser
to the Seller of all of the Shares, which Pledge And Escrow Agreement shall be
substantially in the form of Schedule 5.5 to this Agreement. In addition, at
the Closing, the Seller and the Purchaser shall execute and deliver any and all
other documents required under the terms of the Pledge And Escrow Agreement.
6. Representations and Warranties of the Seller. The Seller represents
and warrants to the Purchaser as follows:
6.1. Organization and Standing of the Company. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Florida and has full power and authority to carry on its
business as it is now being conducted and to own or hold under lease the
properties and assets it now owns or holds under lease. The Company is not
qualified to do business in any other state or other jurisdiction except the
State of Florida. The nature of the business conducted by the Company and the
character or ownership of the properties owned or leased by the Company do not
require the Company to be qualified to do business in any other state or other
jurisdiction.
6.2. Capitalization of the Company. The Company is authorized to
issue up to 500 shares of voting common stock having a par value of $100.00 per
share, being the only class of stock authorized to be issued by the Company. A
total of 89.712 shares of such stock have been issued and are presently
outstanding (referred to herein as the "Shares"). All of the Shares have been
duly authorized and validly issued and are fully paid and are non-assessable.
There are no outstanding subscriptions, options, warrants, calls, commitments,
obligations or agreements of any kind whatsoever requiring the issuance of any
additional shares of the authorized stock of the Company or any other securities
convertible into shares of the authorized stock of the Company or any other
equity security of any class or character whatsoever.
During the entire period that the Seller has owned any shares of the
authorized capital stock of the Company, no shares of the authorized capital
stock of the Company have been registered under the provisions of any federal or
state securities laws and, during such period, the Company has never filed or
been required to file any report with any federal or state securities
commission, department, division or agency.
6.3. Ownership of the Shares. The Seller is the record and beneficial
owner of the Shares.
6.4. Subsidiaries. The Company has no subsidiaries.
6.5. Financial Statements. Attached to this Agreement as Schedule 6.5
are true and complete copies of the following described internally prepared
financial statements of the Company:
6.5.1. Balance Sheet as of September 30, 1993;
6.5.2. Income Statement for the twelve (12) month period
ending September 30, 1993;
6.5.3. Balance Sheet as of June 30, 1994; and
6.5.4. Income Statement for the nine (9) months period ending
June 30, 1994.
Except as disclosed in Schedule 6.5 to this Agreement, each of the
foregoing financial statements of the Company is true and complete, is in
accordance with the books and records of the Company and presents fairly the
financial condition and results of operations of the Company as of the date and
for the period indicated; however, none of the foregoing financial statements of
the Company have been prepared in accordance with generally accepted accounting
principles and the Seller makes no representation or warranty whatsoever that
any of the foregoing financial statements have been prepared in accordance with
generally accepted accounting principles.
The term "Reference Balance Sheet", as used herein means the internally
prepared, unaudited balance sheet of the company as of June 30, 1994. Also, the
term "Reference Balance Sheet Date", as used herein, means June 30, 1994.
6.6. Absence of Undisclosed Liabilities. Except with respect to
matters otherwise disclosed in this Agreement or disclosed in Schedule 6.6 to
this Agreement or in any other Schedule to this Agreement, and except to the
extent reflected or reserved against in the Reference Balance Sheet, the
Company, as of the Reference Balance Sheet Date, did not have any liabilities or
obligations, whether accrued, absolute, contingent or otherwise, and whether due
or to become due.
6.7. Absence of Certain Changes. Since the Reference Balance Sheet
Date, the business and operations of the Company have been conducted only in the
ordinary course of business and in substantially the same manner as theretofore
conducted. Except as disclosed in Schedule 6.7 to this Agreement, since the
Reference Balance Sheet Date, there has not been any change in the financial
condition or results of operations of the Company, or in the Company's assets
and properties or in the Company's business except changes occurring in the
ordinary course of business, none of which has been materially adverse and all
of which in the aggregate have not been materially adverse. For purposes of
this Agreement, price changes and other changes affecting the industry generally
shall not be deemed to be material adverse changes.
6.8. Taxes. The Company has filed or will file all tax returns and
reports (federal, state and local) required to be filed by the Company on or
before the Effective Time, and all taxes of any kind or nature whatsoever shown
to be due and payable on such returns or on any assessments received by the
Company and all other taxes (federal, state and local) due and payable by the
Company on or before the Effective Time have been paid or will be paid on or
before the Effective Time. The Company has received no notice of any asserted
or threatened tax deficiency or penalty. Except as and to the extent set forth
in Schedule 6.8 to this Agreement, during the period of the ownership of the
Shares by the Seller, no tax return (federal, state or local) of the Company has
been audited, nor has the Company received any notice that any tax return
(federal, state or local) of the Company is proposed to be audited, by any
federal, state or local taxing authority; furthermore, there are no agreements,
waivers or other arrangements providing for an extension of time with respect to
the assessment of any tax or deficiency against the Company; furthermore, the
Company has not received any notice of any pending or threatened action, suit,
proceeding, investigation or claim against the Company in respect of any tax or
assessment by any federal, state or local taxing authority. The provisions
made for taxes in the books of the Company are or will be sufficient for the
payment of all accrued and unpaid federal, state and local taxes for all periods
through the Effective Time except as otherwise provided in Section 11.5 hereof
with respect to federal and state income taxes for the 1993-1994 Fiscal Year.
6.9. Certain Assets and Properties of the Company.
6.9.1. Schedule 6.9.1. to this Agreement contains a legal
description of each parcel of Real Property owned in fee simple by the Company.
Except as disclosed in Schedule 6.9.1. to this Agreement, the Company has good
and marketable title to the Real Property, free and clear of Encumbrances other
than the Permitted Encumbrances.
6.9.2. The Company does not rent or lease any Real Property.
6.9.3. Schedule 6.9.3. to this Agreement contains a complete
list of all items of Equipment and Vehicles owned by the Company as of the
Balance Sheet Date. Except as disclosed in Schedule 6.9.3., the Company has
good and valid title to all of the Equipment and all of the Vehicles listed in
Schedule 6.9.3. to this Agreement or otherwise reflected in the Company's
Balance Sheet (except as disposed of in the ordinary course of business since
the Balance Sheet Date), free and clear of all Encumbrances except for the
Permitted Encumbrances.
6.9.4. Schedule 6.9.4. to this Agreement contains correct and
complete copies of each and every lease or license of personal property,
tangible or intangible, to which the Company is a party as a lessee, licensee or
user. Except as disclosed in Schedule 6.9.4. to this Agreement, each of said
leases and licenses are in full force and effect and constitutes a legal, valid
and binding obligation of the Company, and, to the knowledge of the Seller,
constitutes a legal, valid and binding obligation of each other party thereto,
enforceable in accordance with its terms. The Company enjoys peaceful and
undisturbed possession of the items of personal property under each of said
leases and licenses, and there is not any existing default or event or condition
which, with notice or lapse of time, or both, would constitute an event of
default under any of such leases in respect of which the Company has not taken
or caused to be taken adequate steps to prevent an event of default from
occurring.
6.10. Inventories. To the knowledge of the Seller, the
inventories of the Company in the amounts reflected on the Balance Sheet and the
inventories thereafter acquired prior to the date hereof consists of items of a
quality and quantity usable or saleable in the normal course of the Company's
business.
6.11. Patents, Trademarks, Copyrights, Etc.. Except as disclosed
in Schedule 6.11 to this Agreement, the Company does not own, or have registered
in its name, any patents, trademarks or copyrights and, to the knowledge of the
Seller, no patents, trademarks or copyrights are required in the conduct of the
Company's business as presently conducted by it except as identified in Schedule
6.11. There is no claim pending or, to the knowledge of the Seller, threatened
against the Company with respect to any alleged infringement of any United
States patent, copyright, trademark or trade name of any other person or entity
whomsoever.
6.12. Insurance. Schedule 6.12. to this Agreement contains a
correct and complete list of all insurance policies (specifying the insurer, the
amount of the coverage, the type of insurance, and the policy number) maintained
by the Company on its properties, assets, business and personnel. To the
knowledge of the Seller, the Company is not in default with respect to any
provision contained in any such insurance policy, nor has the Company failed to
give any notice or present any claim thereunder in a timely fashion.
6.13. Contracts. Schedule 6.13. to this Agreement contains a list
and summary descriptions or copies of all material contracts and agreements to
which the Company is a party or by which the Company or any of its assets or
properties are in any manner bound or affected to the extent not listed in or
included as a part of any other Schedule to this Agreement. Except as disclosed
in Schedule 6.13., or in any other Schedule to this Agreement, the Company is
not a party to any oral or written: (i) contract or agreement not made in the
ordinary course of business; (ii) contract for the employment of any person
which is not terminable (without liability) on not more than thirty (30) days'
notice; (iii) representative, sales agency or advertising agreement; (iv) lease,
mortgage, pledge, conditional sales contract, security agreement, factoring
agreement or other similar agreement with respect to any real or personal
property, whether as lessor, lessee or otherwise; (v) contract to provide
facilities, equipment, services, merchandise or equipment to any other person,
firm or corporation; (vi) contract for the future purchase of materials,
supplies, services, merchandise or equipment; (vii) profit sharing, bonus,
deferred compensation, stock option, severance pay, pension, retirement or other
plan or agreement providing employee benefits; (viii) agreement or arrangement
for the sale, exchange or other disposition of any of its assets, properties or
rights other than in the ordinary course of business or for the grant of any
preferential rights to purchase or acquire any interest in any of its assets,
properties or rights; (ix) guaranty, subordination or other similar or related
type of agreement; (x) contract or commitment for capital expenditures in excess
of $10,000.00; or (xi) contract, agreement, commitment, license or sublicense
relating to patents, trademarks, trade names, copyrights, inventions, processes,
know-how or trade secrets.
6.14. Banks and Powers of Attorney. Schedule 6.14. to this
Agreement contains a complete list of each bank in which the Company has an
account or safe deposit box and the names of all persons authorized to draw
thereon or to have access thereto, and the names of all persons, firms or
corporations, if any, holding general or special powers of attorney from the
Company and a summary statement of the terms thereof.
6.15. Compensation and Fringe Benefits. Schedule 6.15. to this
Agreement contains a correct and complete list of the names and current annual
salaries of each employee of the Company whose annual salary exceeds $10,000.00
and the profit sharing, bonus or other form of compensation (other than salary)
paid or payable to or for the benefit of each such person, and also a
description of all fringe benefits provided, directly or indirectly, to
employees of the Company other than any Qualified Retirement Plans identified in
Section 6.27. hereof.
6.16. Officers and Directors. Schedule 6.16. to this Agreement
contains a correct and complete list of all current officers and directors of
the Company.
6.17. Indebtednesses. Schedule 6.17. to this Agreement contains a
complete list of all instruments, agreements or arrangements pursuant to which
the Company has borrowed any money, incurred any indebtedness or established any
line of credit which represents a liability of the Company.
6.18. Litigation. Except as disclosed in Schedule 6.18. to this
Agreement, there are no suits, actions, claims, investigations by any
governmental body, or any administrative or arbitration proceedings pending or,
to the knowledge of the Company, threatened against or affecting the Company or
any of its properties, assets or business. Furthermore, except as disclosed in
Schedule 6.18., there is no outstanding order, writ, injunction, judgment or
decree of any court, governmental agency or arbitration tribunal against or
affecting the Company or any of its properties, assets or business.
6.19. Licenses and Permits. Schedule 6.19 to this Agreement,
contains a list of all existing material licenses and permits of the Company
(federal, state and local) necessary for the Company to conduct its business as
it is presently being conducted, and all such licenses and permits are in full
force and effect. The Company has not received any notice of any violations in
respect of such licenses or permits, and no proceeding is pending or, to the
knowledge of the Seller, threatened involving any potential revocation of or
limitation on any such licenses or permits.
6.20. Compliance with Laws. Except as disclosed in Schedule 6.20
to this Agreement or in Section 6.21. of this Agreement, and to the knowledge of
the Seller, the Company is in substantial compliance with all laws, ordinances,
rules and regulations applicable to its business and to its assets and
properties.
6.21. Environmental Matters. Except as disclosed in Schedule
6.21. to this Agreement, the Seller has no knowledge of any Hazardous Materials
ever having leaked or otherwise escaped or been spilled, discharged or released
at, upon or into all or any part of the Real Property; and, with respect to any
and all ongoing remediation activities at any of the Real Property, the Company,
to the knowledge of the Seller, is in compliance, in all material respects, with
all requirements as to such remediation activities heretofore imposed by any
applicable governmental agency.
As used in this Agreement, the term "Hazardous Materials" shall mean:
hazardous wastes, toxic substances, asbestos, agricultural chemicals, petroleum
or any related or similar materials and substances; any substance designated as
a "hazardous substance" pursuant to Section 311 of the Clean Water Act, 33
U.S.C. Section 1251 et seq. (33 U.S.C. Section 1321), or listed pursuant to
Section 307 of the Clean Water Act (33 U.S.C. Section 1317); any substance
designated as a "hazardous air pollutant" pursuant to the federal Clean Air Act;
any substance defined as a "hazardous waste" or a "solid waste" pursuant to the
Resource Conservation and Recovery Act, 42 U.S.C. section 6901 et seq. (42
U.S.C. Section 6903); any substance defined as a "hazardous substance" pursuant
to Section 101 of the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. Section 9601 et seq. (42 U.S.C. Section 9601); or any
substance defined as a "hazardous substance," "pollutant," "petroleum,"
"contaminant," "waste" or "petroleum product" under Chapters 376 or 403, Florida
Statutes; and any other substance or material that is now regulated under any
applicable law, regulation, order or guidance document regarding environmental
matters.
6.22. Storage Tanks. Schedule 6.22 to this Agreement contains a
list, by location, of all above-ground and underground storage tanks located at
or under any of the Real Property to the extent known to the Seller, together
with a description of the materials stored therein. Also, Schedule 6.22. to
this Agreement contains a list, by location, of all above-ground and underground
storage tanks, and underground lines and pumps related thereto, which are owned
by the Company and which have been provided to customers of the Company pursuant
to leases between the Company and such customers.
6.23. Labor Relations. The Company is not a party to any
collective bargaining agreement or other contract or commitment to or with any
labor union or other similar organization, and, to the knowledge of the Seller,
no representative of any labor union or other similar organization has made any
attempt to organize or represent all or any part of the employees of the
Company. There are no unfair labor practice charges, pending trials of unfair
labor practice charges, pending grievance proceedings or adverse decisions of a
Trial Examiner of the National Labor Relations Board against the Company, or any
agent, representative or employee of the Company, and, to the knowledge of the
Seller, there are no existing facts which would lead to any such unfair labor
practice charge.
6.24. Overtime, Back Wages, Vacation and Minimum Wages. Except as
disclosed in Schedule 6.24 to this Agreement, to the knowledge of the Seller, no
present or former employee of the Company has any claim against the Company
(whether under federal, state, foreign or local law) under any employment
agreement, or otherwise, on account of or for (i) overtime pay, other than
overtime pay for the current payroll period; (ii) wages, salary or commissions
for any period other than the current payroll period; (iii) vacation or time off
(or pay in lieu thereof), other than that earned in respect of the current
fiscal year of the Company; or (iv) any violation of any law, ordinance, rule or
regulation relating to minimum wages or maximum hours of work.
6.25. Discrimination, Occupational Safety and Other Statutes and
Regulations. Except as disclosed in Schedule 6.25. to this Agreement, to the
knowledge of the Seller, no persons or parties (including, without limitation,
governmental agencies of any kind) have any claim, or any basis for any claim,
action or proceeding, against the Company arising out of any law, ordinance,
rule or regulation relating to discrimination in employment or employment
practices or occupational safety and health standards.
6.26. Product Warranties. Except as disclosed in Schedule 6.26.
to this Agreement and except for any warranties created by operation of law and
except for any warranties contained in contracts with customers identified in or
included as a part of any Schedule to this Agreement, the Company has made no
warranties of any kind or nature whatsoever with respect to any items or
products sold by the Company.
6.27. Qualified Retirement Plans. Except as disclosed in Schedule
6.27. to this Agreement, the Company does not maintain or contribute to, nor has
the Company ever in the past maintained or contributed to, any employee pension
benefit plan, as defined in Section 3(2) of ERISA. Without limiting the
generality of the immediately preceding sentence, the Company does not now
maintain or contribute to, nor has the Company ever in the past maintained or
contributed to, any defined benefit pension plan as defined in Section 3(35) of
ERISA, or any multi-employer plan as defined in Section 4001(a)(3) of ERISA.
All plans identified in Schedule 6.27. to this Agreement (collectively the
"Plans") are currently qualified under Section 401(a) of the Code and have been
maintained in full compliance with the applicable provisions of ERISA and the
Code. There have been no prohibited transactions within the meaning of Section
406 of ERISA and Section 4975 of the Code with respect to any of the Plans, and
there have been no violations of the fiduciary responsibilities required by Part
4 of Title I of ERISA. All reporting and disclosure requirements imposed by
ERISA and the Code have been met. All payments required to be made by the
Company with respect to all Plans have been made on a timely basis or will be
reflected as liabilities of the Company in the books of the Company.
As disclosed in Schedule 6.27. to this Agreement, the Company is a
participating employer in the Orange-co of Florida, Inc. 401(k) Profit Sharing
Plan, presently maintained by Orange-co of Florida, Inc., a subsidiary of the
Seller (referred to herein as the "Existing Plan"). A complete list of all of
the present or former employees of the Company who are current or former
participants in the Existing Plan and who presently have account balances under
the Existing Plan is set forth in Schedule 6.27.(A) to this Agreement
(collectively referred to herein as the "Company Participants"). Effective as
of the Effective Time, the participation of all of the Company Participants in
the Existing Plan will be terminated and, as soon as is administratively
practicable after the Effective Time and in accordance with the terms of the
Existing Plan, the account balances of all of the Company Participants will be
distributed to or at the direction of the Company Participants.
6.28. Receivables. Except as disclosed in Schedule 6.28 to this
Agreement, all accounts receivable reflected in the Balance Sheet of the Company
and all accounts receivable accruing since the date thereof, are, to the
knowledge of the Seller, valid and genuine and subject to no legally valid
defenses, set-offs or counterclaims; however, the Seller makes no representation
or warranty whatsoever as to the collectability of the Company's accounts
receivable.
6.29. Organization and Standing of the Seller. The Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Florida and has the corporate power to own the Shares.
6.30. No Violations, Conflicts or Defaults. Except as disclosed
in Schedule 6.30. to this Agreement, the execution and delivery of this
Agreement by the Seller does not, and the performance of this Agreement by the
Seller will not, (i) violate, result in a breach of, or constitute a default
under, the Articles of Incorporation or Bylaws of either of the Seller or the
Company, or of any indenture, contract, agreement, license or other instrument
or obligation to which either the Seller or the Company is now a party or by
which the Seller or the Company or any of their respective properties or assets
may be bound or affected, or (ii) result in any violation of any order, writ,
injunction, decree or judgment of any court, administrative agency or
governmental body to which either the Seller or the Company is a party or is or
may be bound, or (iii) result in the creation of any lien, claim or charge
against any of the assets and properties of the Company.
6.31. Authority. The Seller has all necessary corporate power and
authority to execute, deliver and perform this Agreement, and the execution,
delivery and performance of this Agreement by the Seller have been duly approved
by all necessary corporate action on its part. To the knowledge of the Seller,
no authorization, approval or consent of any third person or entity whomsoever
or whatsoever is required as a condition to the valid execution, delivery and
performance of this Agreement by the Seller. When executed and delivered, this
Agreement will constitute the legal, valid and binding obligation of the Seller,
enforceable against the Seller in accordance with the terms hereof.
6.32. Competition. Except as disclosed in Schedule 6.32. to this
Agreement or any other Schedule to this Agreement, and except for minor stock
interests (not exceeding five percent (5%) of the equity securities thereof) in
publicly traded companies, neither the Seller, nor any officers, directors or
shareholders of the Seller, nor any officers or directors of the Company, has
any interest, direct or indirect, as a shareholder, partner, officer, director,
employee or otherwise, in any firm, corporation or other entity which is engaged
in any activity substantially competitive with the activities of the Company or
which is a supplier, distributor, customer, licensor, landlord or creditor of or
as to the Company.
6.33. Misstatement or Omissions. No representation, warranty or
other statement made by the Seller in this Agreement or in any Schedule to this
Agreement contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact necessary to make the statements
contained herein or therein not misleading.
7. Representations and Warranties by the Purchaser. The Purchaser
represents and warrants to the Seller that:
7.1. Organization and Standing of the Purchaser. The Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Florida and has full power and authority to carry on its
business as it is now being conducted.
7.2 No Violations, Conflicts or Defaults. Except to the extent
disclosed in Schedule 7.2. to this Agreement, the execution and delivery of this
Agreement by the Purchaser does not, and the performance of this Agreement by
the Purchaser will not (i) violate, result in a breach of, or constitute a
default under, the Articles of Incorporation or Bylaws of the Purchaser or of
any indenture, contract, agreement, license or other instrument or obligation to
which the Purchaser is now a party or by which the Purchaser or of its
properties or assets may be bound or affected, or (ii) result in any violation
of any order, writ, injunction, decree or judgment of any court, administrative
agency or governmental body of any kind or nature whatsoever to which the
Purchaser is a party or is or may be bound.
7.3. Authority. The Purchaser has all necessary corporate power and
authority to execute, deliver and perform this Agreement, and the execution,
delivery and performance of this Agreement by the Purchaser have been duly
approved by all necessary corporate action on its part. To the knowledge of the
Purchaser, no authorization, approval or consent of any third person or entity
whomsoever or whatsoever is required as a condition to the valid execution,
delivery and performance of this Agreement by the Purchaser. When executed and
delivered, this Agreement will constitute the legal, valid and binding
obligation of the Purchaser, enforceable against the Purchaser in accordance
with the terms hereof.
7.4. Misstatements or Omissions. No representation, warranty or other
statement by the Purchaser in this Agreement or in any Schedule to this
Agreement contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact necessary to make the statements
contained herein or therein not misleading.
7.5. Purchase for Investment. The Purchaser is purchasing the Shares
hereunder for its own account, as principal, and for investment purposes only,
and not with a view to, or for resale in connection with, any distribution or
underwriting of any of the Company's stock, or any rights to purchase any of the
Company's stock. The Purchaser is not participating, directly or indirectly, in
any distribution or underwriting of any of the Company's stock. The Purchaser
is not investing in the Company's stock as an agent, nominee or representative
for the account or benefit of any other person or entity whomsoever or
whatsoever, and the Purchaser has not agreed to, or arranged to, sell, assign,
transfer, subdivide, exchange or otherwise dispose of all or any part of the
Company's stock to any other person or entity whomsoever or whatsoever.
The Purchaser acknowledges that (i) no state or federal agency has passed
upon any of the shares of the Company's stock, including, without limitation,
the Shares, and (ii) none of the shares of the Company's stock, including,
without limitation, the Shares, have been, or will be on or prior to the Closing
Date, registered under either the Securities Act of 1933, as amended, or any
state securities laws, and no shares of the Company's stock including, without
limitation, the Shares, may be offered for sale, sold, assigned, pledged,
hypothecated or otherwise transferred or encumbered unless the transaction is
registered under those laws or qualifies for an available exemption from the
registration under those laws. After the Closing, the Purchaser shall not offer
for sale, sell, assign, pledge, hypothecate or otherwise transfer or encumber at
any time any of the shares of the Company's stock, including, without
limitation, the Shares, except upon full compliance with all applicable federal
and state securities laws.
8. Additional Obligations of the Seller.
8.1. Intercompany Debt. The Seller, not later than the close of
business on the last day prior to the Closing Date, shall execute and deliver
any and all documents and take any and all other actions as shall be reasonably
required in order to cancel and forgive, effective not later than the close of
business on the last day prior to the Closing Date, the Final Intercompany Debt
Amount (as defined in Section 5.4.3 hereof). The cancellation and forgiveness
of the Final Intercompany Debt by the Seller shall constitute a contribution by
the Seller to the capital of the Company.
8.2. Frank Carroll Debt. As used herein, the term "Frank Carroll
Debt" means the unpaid principal balance, plus accrued but unpaid interest,
under the terms of that certain 10% Non-Negotiable Promissory Note, dated July
10, 1981, in the original principal amount of $695,000.00, a true copy of which
is attached to this Agreement as Schedule 8.2. Notwithstanding any contrary
provision contained in this Agreement, the Seller shall be obligated to pay-off
the Frank Carroll Debt in full not later than the close of business on the last
day prior to the Closing Date and shall be obligated to obtain satisfaction(s),
in recordable form, of any and all outstanding mortgages and security agreements
held as security for the Frank Carroll Debt encumbering any assets and
properties of the Company.
9. Due Diligence Investigation. During the Investigation Period, the
Seller shall cause the Company to (i) give to the Purchaser's designated
representatives full and complete access, from time to time, during normal
business hours, and upon reasonable advance notice, to the Company's business
offices, premises, books, records and business information, (ii) permit the
Purchaser's designated representatives to make such examinations of the
foregoing, and conduct such other investigations, as they consider appropriate
to determine and verify the business or condition (financial or otherwise) of
the Company and to consummate the transactions contemplated by this Agreement,
and (iii) furnish to the Purchaser's designated representatives such additional
information with respect to the business of the Company as they may reasonably
request from time to time. If the transactions contemplated by this Agreement
shall not be consummated for any reason, the Purchaser shall promptly return, or
cause to be returned, to the Company all Confidential Information (including,
without limitation, originals, copies and summaries thereof) that was furnished
to, prepared by, or otherwise obtained by, the Purchaser's representatives
pursuant to either this Agreement or the investigation of the Company permitted
by this Agreement.
If the Purchaser's Due Diligence Investigation is not satisfactory to the
Purchaser, in the Purchaser's reasonable judgment, then the Purchaser shall have
the right to withdraw from this Agreement by notice to the Seller given prior to
the expiration of the Investigation Period and, in such event, the Escrow Agent
shall be both authorized and directed to promptly return the Purchaser's Deposit
to the Purchaser and, upon doing so, all rights and liabilities under this
Agreement shall terminate and be of no further force and effect except as
otherwise provided in Sections 9, 11.2 and 11.3 hereof. However, if the
Purchaser does not notify the Seller prior to the expiration of the
Investigation Period that the Purchaser's Due Diligence Investigation is not
satisfactory to the Purchaser, then the Purchaser's Due Diligence Investigation
shall be deemed satisfactory to the Purchaser.
10. Business in the Ordinary Course. Except as otherwise expressly
required or permitted by this Agreement and except as otherwise authorized or
approved by the Purchaser between the Effective Date of this Agreement and the
Effective Time, the Seller shall cause the Company to conduct its business
between the Effective Date of this Agreement and the Effective Time in the
ordinary course and shall cause the Company to: (i) use reasonable efforts to
maintain and preserve its business organization intact, to keep available the
services of its present employees and to preserve the goodwill of suppliers,
customers and other(s) having business relations with it; (ii) maintain its
properties in customary repair, working order and condition, reasonable wear and
tear excepted; and (iii) keep in force at no less than their present limits all
policies of insurance listed in Schedule 6.12 to this Agreement.
In the event any portion of the assets and properties of the Company shall
be damaged or destroyed by reason of fire or other casualties prior to the
Closing Date, and if such damage and destruction is not fully repaired and
restored prior to the Closing Date, then the Purchaser shall have the right, at
the Purchaser's sole option, upon notice to the Seller, to either (i) withdraw
from this Agreement, or (ii) accept the assets and properties of the Company in
an "AS IS" condition and consummate the purchase of the Shares as otherwise
provided in this Agreement. If the Purchaser elects to withdraw from this
Agreement, then the Escrow Agent shall be both authorized and directed to
promptly return the Purchaser's Deposit to the Purchaser, and upon doing so, all
rights and liabilities of the parties under this Agreement shall terminate and
be of no further force and effect except as otherwise provided in Sections 9,
11.2 and 11.3 of this Agreement. On the other hand, if the Purchaser elects to
accept the assets and properties of the Company in an "AS IS" condition and to
consummate the purchase of the Shares as otherwise provided in this Agreement,
then all insurance proceeds payable as a result of any such damage or
destruction shall remain the property of and belong to the Company.
11. Further Agreements.
11.1. Exclusivity. Between the Effective Date and the Closing
Date, the Seller shall not enter into any negotiations or agreements, or cause
or permit the Company to enter into any negotiations or agreements, with any
person or entity other than the Purchaser with respect to the sale of all or any
part of the Company's stock or with respect to the sale of all or any part of
the assets and properties of the Company except in the ordinary course of the
Company's business and except as otherwise expressly required or permitted by
this Agreement.
11.2. Disclosure of Transactions. Between the Effective Date and
the Closing Date, neither the Purchaser nor the Seller shall make, or permit to
be made, any pubic announcement or other disclosure whatsoever concerning this
Agreement or the transactions contemplated by this Agreement (except in
confidence to their respective agents, employees, contractors and
representatives on a need-to-know basis, and except as such disclosure may be
compelled by law) without the prior written consent of all other parties.
Furthermore, from and after the Effective Date, regardless of whether or not the
transactions contemplated by this Agreement are ever consummated, all of the
parties to this Agreement, and their respective agents, employees, contractors
and representatives, shall treat as confidential all information with respect to
the Purchase Price and all other material terms and conditions of the
transactions contemplated by this Agreement (collectively the "Price and
Terms"), and shall not make, or permit to be made, any public announcement or
other disclosure whatsoever of the Price and Terms (except as such disclosure
may be compelled by law) without the prior consent of all other parties.
11.3. Confidentiality. The Purchaser and its Affiliates, and
their respective agents, employees, contractors and representatives, shall treat
as confidential any and all Confidential Information which heretofore was
disclosed or which hereafter is disclosed to, or which heretofore otherwise
became available to or which hereafter otherwise becomes available to, the
Purchaser, or any of its Affiliates, or any of their respective agents,
employees, contractors and representatives, and neither the Purchaser, nor any
of its Affiliates nor any of their respective agents, employees, contractors or
representatives, shall divulge, disclose or communicate, for any reason or in
any manner, to any person or entity that is not a party to this Agreement, any
of such Confidential Information (except as such disclosure may be compelled by
law), nor shall any of them make any use whatsoever of any such Confidential
Information for any purpose whatsoever other than in furtherance of the
transactions contemplated by this Agreement. Furthermore, if the transactions
contemplated by this Agreement are not consummated on the Closing Date, then,
during the entire period between the Effective Date of this Agreement and ending
on the tenth (10th) anniversary of the Effective Date of this Agreement, the
Purchaser and its Affiliates, and their respective agents, employees,
contractors and representatives, shall treat as confidential any and all
Confidential Information which is disclosed to, or becomes available to, the
Purchaser and its Affiliates, and their respective agents, employees,
contractors and representatives, in connection with the transactions
contemplated by this Agreement, and shall not divulge, disclose or communicate,
for any reason or in any manner, any such Confidential Information to any person
or entity who is not a party to this Agreement, and shall not make any use
whatsoever of any such Confidential Information for any purpose whatsoever.
11.4. Preservation and Availability of Records.
11.4.1. For a period of seven (7) years from and after the
Closing Date, the Purchaser shall preserve and keep, or cause to be preserved
and kept, all books and records, in whatever form, of the Company in existence
on the Closing Date and in the possession of the Company on the Closing Date
(collectively the "Books and Records"); and, furthermore, the Purchaser shall
not thereafter dispose of, or permit to be disposed of, any of the Books and
Records without first offering to deliver such items to the Seller by written
notice to the Seller given at least thirty (30) days prior to any proposed
disposal thereof.
11.4.2. Subject to the provisions of subsection 12.4.1., from
and after the Closing Date, the Purchaser shall make available to the Seller,
and its authorized representatives, all of the Books and Records during normal
business hours and upon reasonable advance notice to the Purchaser, for
inspection, copying and making excerpts therefrom, for the purpose of complying
with any applicable federal, state or local tax laws, rules and regulations,
including, without limitation, for the purpose of preparing the Seller's
consolidated tax return(s) for the short tax period ending on the Closing Date,
or in connection with any claims or legal proceedings by or against the Seller,
or for any other bona fide business purpose (which is not competitive with the
business of the Purchaser).
11.5. Closing Date Tax Returns. The Seller and the Purchaser
acknowledge that Federal and Florida income tax returns will be required of the
Company for the fiscal year which began on October 1, 1993 and which will end on
September 30, 1994 (referred to herein as the "1993-1994 Fiscal Year"). The
Seller shall timely prepare said returns in accordance with the applicable
provisions of the Code and the Regulations issued thereunder. The Seller shall
bear the costs of any taxes attributable to the operations of the Company with
respect to the 1993-1994 Fiscal Year (after application of any applicable net
operating loss), together with any interest and penalties thereon. The
Purchaser and the Company shall be liable for all federal and state income taxes
attributable to the operations of the Company from and after the end of the
1993-1994 Fiscal Year.
11.6. Joint Inspection of Above Ground Storage Tanks. Within the
Investigation Period, the Seller and the Purchaser will cooperate fully with
each other in arranging and conducting a joint inspection, through designated
representatives of the Seller and the Purchaser, of each of the above ground
storage tanks identified in Schedule 6.22. to this Agreement (referred to herein
as the "Joint Inspection"). The Seller shall bear its expenses in connection
with the Joint Inspection and the Purchaser shall bear it expenses in connection
with the Joint Inspection.
The Purchaser acknowledges and confirms that the Seller does not maintain
any insurance coverage with respect to any of the above ground storage tanks
identified in Schedule 6.22 to this Agreement.
If, as a result of the Joint Inspection, the Purchaser is not satisfied
with the condition of the above ground storage tanks identified in Schedule
6.22, then the Purchaser shall have the right to withdraw from this Agreement by
notice to the Seller given prior to the expiration of the Investigation Period
and, in such event, the Escrow Agent shall be both authorized and directed to
promptly return the Purchaser's Deposit to the Purchaser and, upon doing so, all
rights and liabilities of the parties under this Agreement shall be terminated
and of no further force and effect except as otherwise provided in Sections 9,
11.2 and 11.3 hereof. However, if the Purchaser shall not so notify the Seller
prior to the expiration of the Investigation Period that the Purchaser is not
satisfied with the condition of the above ground storage tanks identified in
Schedule 6.22, then the condition of such above ground storage tanks shall be
deemed satisfactory to the Purchaser.
12. Closing Contingencies of the Purchaser. The closing obligations of
the Purchaser under this Agreement are subject to the following conditions
precedent, in addition to all other conditions precedent contained in this
Agreement, each of which must be satisfied on or before the Closing Date, unless
waived by the Purchaser:
12.1. All representations and warranties made by the Seller in
this Agreement, or in any Schedule to this Agreement, or in any certificate
furnished by the Seller to the Purchaser pursuant to this Agreement, shall be
true and complete in all material respects on the Closing Date with the same
force and effect as though such representations and warranties had been made at
and as of the Closing Date, except as affected by transactions expressly
required or permitted by this Agreement and except for changes occurring in the
ordinary course of the Company's business, the aggregate cumulative effect of
which on the financial condition, results of operations, business or prospects
of the Company shall not be materially adverse; and the Seller shall have
delivered to the Purchaser a certificate of its President or a Vice President,
dated the Closing Date, certifying to the foregoing.
12.2. The Seller shall have performed and observed all covenants,
agreements and conditions required by this Agreement to be performed or observed
by the Seller on or before the Closing Date; and the Seller shall have delivered
to the Purchaser a certificate of its President or a Vice President, dated the
Closing Date, certifying to the foregoing.
12.3. The Company is currently a party to a Star Enterprise
Marketing Agreement with Texaco (the "Texaco Agreement"). During the
Investigation Period, the Purchaser shall have satisfied itself that Texaco will
continue the Texaco Agreement with the Company, or will enter into a new Star
Enterprise Marketing Agreement with the Company, upon terms and conditions at
least as attractive as the current terms and conditions. During the
Investigation Period, the Purchaser shall use its best efforts to satisfy such
closing contingency including, without limitation, promptly furnishing to Texaco
any and all financial and other information with respect to the Purchaser as
shall be reasonably requested by Texaco. If, notwithstanding the best efforts
of the Purchaser, such closing contingency shall not be satisfied prior to the
expiration of the Investigation Period, then the Purchaser shall have the right
to withdraw from this Agreement by giving notice to that effect to the Seller
prior to the expiration of the Investigation Period and, in such event, the
Escrow Agent shall be both authorized and directed to promptly return the
Purchaser's Deposit to the Purchaser and, upon doing so, all rights and
liabilities of the parties under this Agreement shall terminate and be of no
further force and effect except as otherwise provided in Sections 9, 11.2 and
11.3 of this Agreement. However, if the Purchaser shall not so notify the
Seller prior to the expiration of the Investigation Period, then the foregoing
closing contingency shall be deemed satisfied.
13. Closing Contingencies of the Seller. The closing obligations of the
Seller under this Agreement are subject to the following conditions precedent,
in addition to all other conditions precedent contained in this Agreement, each
of which must be satisfied on or before the Closing Date, unless waived by the
Seller:
13.1. All representations and warranties made by the Purchaser in
this Agreement, in any Schedule to this Agreement or in any certificate
furnished by the Purchaser to the Seller pursuant to this Agreement shall be
true and complete in all material respects on the Closing Date with the same
force and effect as though such representations and warranties had been made at
and as of the Closing Date; and the Purchaser shall have delivered to the Seller
a certificate of its President or a Vice President, dated the Closing Date,
certifying to the foregoing.
13.2. The Purchaser shall have performed and observed all
covenants, agreements and conditions required by this Agreement to be performed
or observed by the Purchaser on or before the Closing Date; and the Purchaser
shall have delivered to the Seller a certificate of its President or a Vice
President, dated the Closing Date, certifying to the foregoing.
13.3. Schedule 13.3 to this Agreement contains a list of certain
indebtednesses, liabilities and obligations of the Company with respect to which
the Seller has personal liability (collectively referred to herein as the
"Guaranteed Liabilities"), and the Seller shall have received such instruments,
in form and substance reasonably satisfactory to counsel for the Seller, as
shall be required, in the opinion of counsel for the Seller, to provide to the
Seller a full and complete release with respect to the all of the Guaranteed
Liabilities. During the Investigation Period, the Purchaser shall use its best
effort to arrange for the Seller to be fully and completely released with
respect to all of the Guaranteed Liabilities. The Purchaser shall keep the
Seller fully advised as to its progress in satisfying the closing contingency.
If, notwithstanding the best efforts of the Purchaser, such closing contingency
shall not be satisfied prior to the expiration of the Investigation Period,
then the Seller shall have the right to withdraw from this Agreement by notice
to that effect given to the Purchaser prior to the expiration of the
Investigation Period and, in such event, the Escrow Agent shall be both
authorized and directed to promptly return the Purchaser's Deposit to the
Purchaser and, upon doing so, all rights and liabilities of the parties under
this Agreement shall terminate and be of no further force and effect except as
otherwise provided in Sections 9, 11.2 and 11.3 of this Agreement. The
foregoing closing contingency shall not be deemed satisfied unless the Seller
shall so notify the Purchaser prior to the expiration of the Investigation
Period.
14. Closing Obligations.
14.1. Closing Obligations of the Seller. At the Closing, the
Seller shall be obligated to:
14.1.1. Deliver to the Purchaser a certificate of the Company's
Corporate Secretary, dated the Closing Date, certifying that attached is a true
and complete copy of the Articles of Incorporation of the Company, and all
amendments thereto, as in full force and effect on the date of the certificate.
14.1.2. Deliver to the Purchaser a current Good Standing
Certificate of the Company issued by the Secretary of State of the State of
Florida.
14.1.3. Deliver to the Purchaser a certificate of the Company's
Corporate Secretary, dated the Closing Date, certifying that attached is a true
and complete copy of the duly adopted Bylaws of the Company, as in full force
and effect on the date of the certificate.
14.1.4. Deliver to the Purchaser a certificate of Seller's
Corporate Secretary, dated the Closing Date, certifying that attached is a true
and correct copy of resolutions of the Board of Directors of the Seller
authorizing the execution and delivery of this Agreement by one or more
designated officers of the Seller, and authorizing the performance of this
Agreement by the Seller and further certifying that no approval of the
shareholder(s) of the Seller is required for the execution, delivery and
performance of this Agreement by the Seller.
14.1.5. Deliver to the Purchaser the written resignations of
all Officers and Directors of the Company, effective as of the Closing Date,
except as otherwise directed by the Purchaser and agreed to by the particular
Officer and/or Director.
14.1.16. Deliver to the Purchaser the minute book(s), stock
book(s) and corporate seal(s) of the Company.
14.1.7. Deliver to the Purchaser the certificate or
certificates evidencing the Shares as provided in Section 4 of this Agreement.
14.2. Closing Obligations of the Purchaser. At the Closing, the
Purchaser shall be obligated to:
14.2.1. Deliver to the Seller a current Good Standing
Certificate of the Purchaser issued by the Secretary of State of the State of
Florida.
14.2.2. Deliver to the Seller a certificate of the Purchaser's
Corporate Secretary, dated the Closing Date, certifying that attached is a true
and correct copy of resolutions of the Board of Directors of the Purchaser
authorizing the execution and delivery of this Agreement by one or more
designated officers of the Purchaser, and authorizing the performance of this
Agreement by the Purchaser, and further certifying that no approval of the
Purchaser's shareholders is required with respect to the execution, delivery and
performance of this Agreement by the Purchaser.
14.2.3. Pay to the Seller the balance of the Preliminary
Purchase Price as provided in Section 5 of this Agreement.
14.2.4. Deliver to the Seller the written commitment of the
Purchaser that the Company will honor all of the Company's obligations,
including, without limitation, all severance pay obligations, under the terms of
the existing Employment Agreement between the Company and Lloyd Socky.
15. Survival of Representations, Warranties, Obligations, Covenants and
Agreements. Each of the representations, warranties, obligations, covenants and
agreements of the Seller and of the Purchaser included or provided for in this
Agreement or in any Schedule to this Agreement or in any certificate delivered
pursuant to this Agreement shall survive the execution and delivery of this
Agreement and the consummation of the transactions contemplated by this
Agreement, and the same shall be effective for, but only for, the period of six
(6) months beginning on the Closing Date; provided, however, that such six (6)
months survival period shall not be applicable to any warranty, representation,
obligation, covenant or agreement which, by the express terms thereof, relates
to or expressly contemplates a specific date or period of time inconsistent with
such six (6) months survival period; and, provided further, that the survival
period for the representations and warranties set forth in Section 6.8. hereof
shall continue until the expiration of the applicable period of limitations;
and, provided further, that the survival period for the representations and
warranties set forth in Section 6.21 hereof shall continue until December 31,
2000; and, provided further, that the representations and warranties relating to
the ownership of, and the title to, the Shares or any assets and properties of
the Company shall survive in perpetuity.
16. Indemnification Provisions.
16.1. Indemnification Agreement by the Seller. The Seller agrees
to indemnify and hold harmless the Purchaser and the Company from and against
any loss, damage, liability and expense, including, without limitation,
reasonable attorneys' fees and litigation expenses at the negotiation level, the
trial level and in connection with all appellate proceedings (collectively
referred to below as the "Purchaser's Damages"), resulting to the Purchaser and
the Company, or either of them, from any material inaccuracy in, or material
breach of, any representation, warranty, obligation, covenant or agreement of
the Seller contained in this Agreement, or in any Schedule to this Agreement, or
in any certificate delivered to the Purchaser pursuant to this Agreement,
incurred within the applicable survival period determined under the provisions
of Section 16 hereof.
16.2. Indemnification Agreement by the Purchaser. The Purchaser
agrees to indemnify and hold harmless the Seller from and against any loss,
damage, liability and expense, including, without limitation, reasonable
attorneys' fees and litigation expenses at the negotiation level, the trial
level and in connection with all appellate proceedings (collectively referred to
below as the "Sellers' Damages"), resulting to the Seller from any material
inaccuracy in, or material breach of, any warranty, representation, obligation,
agreement or covenant of the Purchaser contained in this Agreement, or in any
Schedule to this Agreement, or in any certificate delivered to the Seller
pursuant to this Agreement, incurred within the applicable survival period
determined under the provisions of Section 16 hereof.
16.3. Limitations with Respect to Indemnification Agreements.
16.3.1. Notwithstanding any provision to the contrary contained
in this Agreement, the Seller's indemnification for tax liability shall be
limited, as to Federal or Florida income taxes, to those tax returns reflecting
the result of operations of the Company for periods ending on or prior to the
Effective Time, (it being expressly understood and agreed that the Seller shall
not have any liability whatsoever with respect to the preparation or filing of
any Federal or Florida income tax return reflecting the results of operations of
the Company for any period ending after the Effective Time, nor with respect to
any taxes, assessments, fees, penalties, interest or other charges ever
determined to be attributable to the operations of the Company for any period
from and after the Effective Time), and, as to other taxes, including, without
limitation, sales taxes, excise taxes, employment taxes and property taxes, to
those actually due and payable prior to the Effective Time. In addition, with
respect to the Seller's liability for any additional income taxes, the
indemnification by the Seller shall be limited to the amount by which any
additional income taxes, together with penalties and interest, imposed upon or
assessed against the Company under the Code, or under the laws of the State of
Florida, shall exceed the net tax benefit to the Company, or any successor(s) or
assign(s) of the Company, which results from any related and corresponding
adjustment involved in any determination of a deficiency for additional income
taxes, with an appropriate adjustment for interest or discount (computed at the
rate in effect pursuant to Section 6621 of the Code per annum) for any delay in
the actual realization of any such deferred tax benefits by the Company, or by
any successor(s) or assign(s) of the Company. For purposes hereof, each such
tax benefit shall be deemed to be equal (adjusted as aforesaid) to each such
deficiency or such part thereof as may be appropriate where the deficiency or
any part thereof resulted (i) from increasing the basis of any depreciable
assets of the Company, or any successor(s) or assign(s) of the Company, (ii)
from the shifting of items of income or deductions of the Company, or any
successor(s) or assign(s) of the Company, from one year to one or more other
years, (iii) from capitalizing items treated as deductions where such
capitalized amounts may be depreciated or amortized by the Company, or by any
successor(s) or assign(s) of the Company, for income tax purposes, (iv) from any
credits to the Company, or any successor(s) or assign(s) of the Company,
relating to any adjustments, or (v) from any other similar adjustments resulting
in a similar tax benefit to the Company, or any successor(s) or assign(s) of the
Company. It is the intent of the immediately preceding sentence to limit the
liability of the Seller for any income or similar taxes to the "net" cost to the
Company, or any successor(s) or assign(s) of the Company, as a result of any
determination of a deficiency for additional income or similar taxes
attributable to any period ending on or prior to the Effective Time.
16.3.2 Notwithstanding any contrary provision contained in
this Section 16 or otherwise in this Agreement, the Seller shall have no
indemnification liability to either the Purchaser or the Company pursuant to the
provisions of Section 16.1. hereof unless and until the aggregate amount of the
Purchaser's Damages (as defined in Section 16.1. hereof) exceeds the sum of
$20,000.00; that is, until such time as the Purchaser and the Company, or either
of them, has incurred Purchaser's Damages by reason of any material inaccuracy
in, or material breach of, any representation, warranty, obligation, covenant or
agreement of the Seller contained in this Agreement, or in any Schedule to this
Agreement, or in any certificate delivered to the Purchaser pursuant to this
Agreement, within the applicable survival period determined under the provisions
of Section 16 hereof in an aggregate amount in excess of $20,000.00, the Seller
shall have no indemnification obligation to either the Purchaser or the Company
of any kind or nature whatsoever. Notwithstanding the foregoing provisions of
this Section 16.3.2, the indemnification cushion of $20,000.00 shall not be
applicable with respect to any of the following:
16.3.2.1 The Seller's indemnification liability for either
any First Remediation Costs or any Second Remediation Costs (as such terms are
defined in Section 16.3.3 below);
16.3.2.2 The Seller's indemnification liability for taxes
as defined in Section 16.3.1 hereof; or
16.3.2.3. Any Adjustment to the Preliminary Purchase Price
pursuant to the provisions of Section 5.4 hereof.
16.3.3. As used herein, the term "Hazardous Materials Laws" shall
mean all local, state and federal laws, ordinances, rules, regulations and
orders relating to environmental protection or the use, analysis, generation,
manufacture, storage, disposal or transportation of any Hazardous Materials (as
defined in Section 6.21 hereof). Also, as used herein, the term "Remediation
Costs" shall mean any and all costs actually incurred in connection with the
investigation and assessment of site conditions, and any and all costs of any
required or necessary repair, clean-up, detoxification, decontamination or other
remediation to any real property required to place any such real property in
compliance with applicable regulatory maximum contamination levels, standards or
criteria, and the preparation and implementation of any assessment, closure,
remediation or other required plans in connection therewith, and the payment of
any fines or penalties relating thereto, all pursuant to applicable Hazardous
Materials Laws. Also, as used herein, the term "First Remediation Costs" shall
mean, and shall be limited to, Remediation Costs actually incurred by the
Company or the Purchaser after the Closing Date with respect to the real
properties identified in Schedule 16.3.3 to this Agreement, and any real
properties adjacent thereto, as a direct result of any releases of Hazardous
Materials into the air, soil, groundwater or surface water of any of the real
properties identified in Schedule 16.3.3 to this Agreement which occurred on or
prior to the Closing Date. Also, as used herein, the term "Second Remediation
Costs" shall mean, and shall be limited to, Remediation Costs, excluding any
First Remediation Costs (as defined above), actually incurred by the Company or
the Purchaser after the Closing Date as a direct result of any releases of
Hazardous Materials into the air, soil, groundwater or surface water of any real
properties other than the real properties identified in Schedule 16.3.3 to this
Agreement which occurred on or prior to the Closing Date and which were caused
by any act or omission of the Company or of the Seller.
Notwithstanding any contrary provision contained in this Section 16 or
otherwise in this Agreement, the amount of the Purchaser's Damages which the
Seller shall ever have any indemnification obligation under this Section 16 with
respect to any First Remediation Costs (as defined above) shall be fifty percent
(50%) thereof and with respect to any Second Remediation Costs (as defined
above) shall be one hundred percent (100%) thereof; provided, however, all of
the remaining provisions of this Section 16 shall be applicable with respect to
the Seller's indemnification liability for either any First Remediation Costs or
for any Second Remediation Costs. Furthermore, the Seller's indemnification
obligation under this Section 16 with respect to any First Remediation Costs or
any Second Remediation Costs shall be subject to the Company continuing to
maintain in full force and effect the Commerce and Industry Company, Florida
Storage Tank third party liability insurance policy currently in force (the
"Current Policy") or to procure and maintain replacement insurance substantially
equivalent to the Current Policy or with such higher limits as may be required
by law, and shall be subject to the Purchaser and the Company taking any and all
actions as shall be reasonably required from and after the Effective Time to
keep all of the underground storage tanks, and underground lines and pumps
related thereto, listed in Schedule 6.22 to this Agreement eligible for
reimbursement pursuant to the Florida Early Detection Incentive Program, the
Florida Abandoned Tank Program, the Florida Petroleum Liability and Restoration
Insurance Program, to the extent applicable, and any similar state or federal
program now or hereafter in existence.
Notwithstanding any contrary provision contained in this Section 16 or
otherwise in this Agreement, the amount of the Seller's Damages which the
Purchaser shall ever have any indemnification obligation under this Section 16
with respect to any First Remediation Costs (as defined above) shall be fifty
percent (50%) thereof and with respect to any Second Remediation Costs (as
defined above) shall be zero percent (0%) thereof; provided, however, the
Purchaser acknowledges and confirms to the Seller that the Purchaser's
indemnification obligation under this Section 16 shall extend to one hundred
percent (100%) of any and all Remediation Costs incurred as a result of any
releases of Hazardous Materials into the air, soil, groundwater or surface water
of any of the real properties identified in Schedule 16.3.3 to this Agreement
which occur after the Effective Time and any and all Remediation Costs incurred
as a result of any releases of Hazardous Materials into the air, soil,
groundwater or surface water of any real properties other than the real
properties identified in Schedule 16.3.3 to this Agreement which occur after the
Effective Time and which are caused by any act or omission of the Company or of
the Purchaser.
16.3.4. Notwithstanding any contrary provision contained in
this Section 16 or otherwise in this Agreement, the amount of the Purchaser's
Damages which the Seller shall ever have any indemnification obligation under
this Section 16 shall be reduced by any of the following described amounts
recoverable by the Purchaser, the Company or either of them:
16.3.4.1. Any proceeds, either directly or indirectly,
pursuant to any insurance policy; and
16.3.4.2. Any reimbursements, either directly or indirectly,
pursuant to the Florida Early Detection Incentive Program, the Florida Abandoned
Tank Program, the Florida Petroleum Liability and Restoration Insurance Program
or any similar state or federal program now or hereafter in existence.
16.3.5. Notwithstanding any contrary provision contained in
this Section 16 or otherwise in this Agreement, no party's indemnification
obligations under this Section 16, whether based on contract, warranty, tort
(including negligence), strict liability or otherwise, shall ever extend to or
include special, incidental, consequential or punitive damages of any kind
whatsoever, except to the extent that the party entitled to indemnification is
obligated to pay any of such damages to a third party under any claim for which
such indemnification is sought.
16.4. Indemnification Procedures. Any party claiming
indemnification under this Section 16 is referred to below as an "Indemnified
Party" and any party against whom such claims are asserted under this Section 16
is referred to below as an "Indemnifying Party." All claims of indemnification
by an Indemnified Party under this Section 16 shall be asserted and resolved as
follows:
16.4.1. If any claim or demand for which an Indemnifying Party
would be liable for damages to an Indemnified Party hereunder is asserted
against or sought to be collected from such Indemnified Party by a third party
(the "Third Party Claim"), said Indemnified Party shall, promptly after the
Third Party Claim is so asserted or sought against the Indemnified Party,
notify the Indemnifying Party of such Third Party Claim, enclosing copies of all
papers served, if any, and specifying the nature of and specific basis of such
Third Party Claim and the estimated amount thereof (the "Claim Notice").
Notwithstanding the foregoing, the Indemnifying Party, nevertheless, shall be
obligated to indemnify the Indemnified Party with respect to any such Third
Party Claim except to the extent that a failure to notify the Indemnifying Party
in accordance with the provisions of this Agreement in reasonably sufficient
time actually prejudices the Indemnifying Party's ability to defend against the
Third Party Claim. The Indemnifying Party shall have twenty (20) days from the
delivery of the Claim Notice (the "Notice Period") in which to notify the
Indemnified Party whether the Indemnifying Party disputes the liability of the
Indemnifying Party to the Indemnified Party hereunder with respect to such Third
Party Claim and whether the Indemnifying Party desires, at the sole cost and
expense of the Indemnifying Party, to defend the Indemnified Party against such
Third Party Claim.
16.4.1.1. If the Indemnifying Party notifies the Indemnified
Party within the Notice Period that the Indemnifying Party does not dispute its
liability to the Indemnified Party and that the Indemnifying Party desires to
defend the Indemnified Party with respect to the Third Party Claim pursuant to
this Section, then the Indemnifying Party shall have the right to defend, at its
sole cost and expense, such Third Party Claim by all appropriate proceedings,
which proceedings shall be diligently prosecuted by the Indemnifying Party to a
final conclusion or settlement at the discretion of the Indemnifying Party. The
Indemnifying Party shall have full control of such defense and proceedings,
including any compromise or settlement thereof; provided, however, that the
Indemnified Party is hereby authorized, at the sole cost and expense of the
Indemnifying Party (but only if the Indemnified Party is actually entitled to
indemnification hereunder or if the Indemnifying Party assumes the defense with
respect to the Third Party Claim), to file during the Notice Period any motion,
answer or other pleadings which the Indemnified Party shall deem necessary or
appropriate to protect its interests or those of the Indemnifying Party (it
being understood and agreed that if an Indemnified Party takes any such action
which conclusively causes final adjudication which is adverse to the
Indemnifying Party, the Indemnifying Party shall be relieved of its obligations
hereunder with respect to such Third Party Claim); provided, further, however,
that if requested by the Indemnifying Party, the Indemnified Party agrees, at
the sole cost and expense of the Indemnifying Party, to cooperate with the
Indemnifying Party and its counsel in contesting any Third Party Claim which the
Indemnifying Party elects to contest, or, if appropriate and related to the
Third Party Claim in question, in making any counterclaim against the person or
entity asserting the Third Party Claim, or any cross-complaint against any
person or entity. The Indemnified Party may participate in, but not control,
any defense or settlement of any Third Party Claim controlled by the
Indemnifying Party pursuant to this Section 16 and, except as provided in the
preceding sentence, the Indemnified Party shall bear its own costs and expenses
with respect to such participation.
If the Indemnifying Party fails to notify the Indemnified Party within the
Notice Period that the Indemnifying Party does not dispute its liability to the
Indemnified Party and that the Indemnifying Party desires to defend the
Indemnified Party pursuant to this Section, or if the Indemnifying Party fails
to diligently and promptly prosecute the Third Party Claim or to settle it, or
if the Indemnifying Party fails to give any notice whatsoever within the Notice
Period, then the Indemnified Party shall have the right to defend, at the sole
cost and expense of the Indemnifying Party, the Third Party Claim by all
appropriate proceedings, which proceedings shall be promptly and vigorously
prosecuted by the Indemnified Party to a final conclusion or settlement. The
Indemnified Party shall have full control of such defense and proceedings,
including any compromise or settlement thereof; provided, however, that if
requested by the Indemnified Party, the Indemnifying Party agrees, at the sole
cost and expense of the Indemnifying Party, to cooperate with the Indemnified
Party and its counsel in contesting any Third Party Claim which the Indemnified
Party is contesting, or, if appropriate and related to the Third Party Claim in
question, in making any counterclaim against the person or entity asserting the
Third Party Claim, or any cross-complaint against any person or entity.
Notwithstanding the foregoing provisions of this Section 16, if the Indemnifying
Party has timely notified the Indemnified Party that the Indemnifying Party
disputes its liability to the Indemnified Party and if such dispute is resolved
in favor of the Indemnifying Party by a final, nonappealable order of a court of
competent jurisdiction, then the Indemnifying Party shall not be required to
bear the costs and expenses of the Indemnified Party's defense or of the
Indemnifying Party's participation therein at the Indemnified Party's request,
and the Indemnified Party shall reimburse the Indemnifying Party in full for all
costs and expenses of such litigation. The Indemnifying Party may participate
in, but not control, any defense or settlement controlled by the Indemnified
Party pursuant to this Section 16, and the Indemnifying Party shall bear its own
cost and expenses with respect to such participation.
16.4.2. In the event any Indemnified Party shall have a claim
against any Indemnifying Party hereunder which does not involve a Third Party
Claim being asserted against or sought to be collected from the Indemnified
Party, the Indemnified Party shall notify the Indemnifying Party of such claim
by the Indemnified Party, specifying the nature of and specific basis for such
claim and the amount of the estimated amount of such claim (the "Indemnity
Notice"). If the Indemnifying Party does not notify the Indemnified Party
within twenty (20) days from the delivery of the Indemnify Notice that the
Indemnifying Party disputes such claim, the amount or estimated amount of such
claim specified by the Indemnified Party shall be conclusively deemed a
liability of the Indemnifying Party hereunder. However, if the Indemnifying
Party has timely disputed such claim, as provided above, then such dispute shall
be resolved by mutual agreement of the Indemnified Party and the Indemnifying
Party or by mediation as provided in Section 23.11 hereof or by litigation in
any appropriate court of competent jurisdiction.
16.5. Purchaser's Right of Set-Off. If, pursuant to the foregoing
provisions of this Section 16, a final determination shall be made that the
Seller has an indemnification obligation to either the Purchaser, the Company or
both in a liquidated amount (determined by mutual agreement, mediation or
litigation), and if the Seller shall fail or refuse to pay such liquidated
amount to the Purchaser, the Company or both within a period of ten (10) days
after written demand by the Purchaser, then the Purchaser shall have the right
to set-off such liquidated amount against the payment or payments next coming
due under the terms of the Closing Promissory Note or, if applicable, the
Replacement Promissory Note.
17. Default. If any of the conditions precedent to the Purchaser's
obligations to consummate the transactions provided for in this Agreement shall
not be satisfied or fulfilled, or waived by the Purchaser, on or before the
Closing Date, or if the Seller otherwise shall fail or refuse to consummate the
transactions provided for in this Agreement except by reason of any condition
precedent to the Seller's obligations to consummate the transactions provided
for in this Agreement not having been satisfied or fulfilled, or waived by the
Seller, then the Purchaser, at the option of the Purchaser, may seek specific
performance of this Agreement or, alternatively, the Purchaser, by notice to the
Seller and the Escrow Agent shall be entitled to an immediate refund of the
Purchaser's Deposit and, in addition, shall be entitled to sue for any damages
suffered by the Purchaser.
Alternatively, if all of the conditions precedent to the Purchaser's
obligations to consummate the transactions provided for in this Agreement either
have been satisfied or fulfilled, or waived by the Purchaser, on or before the
Closing Date, but the Purchaser nevertheless fails or refuses to consummate the
transactions provided for in this Agreement on the Closing Date, or if all
conditions precedent to the obligations of the Seller to consummate the
transactions provided for in this Agreement either have not been satisfied or
fulfilled, or waived by the Seller, on or before the Closing Date, then the
Seller, at the option of the Seller, may seek specific performance of this
Agreement or, alternatively, the Seller, by notice to the Purchaser and the
Escrow Agent, shall be entitled to receive the Purchaser's Deposit as agreed
liquidated damages, consideration for the execution of this Agreement and in
full settlement of any claims which the Seller may have against the Purchaser.
18. Escrow Provisions. Notwithstanding any contrary provision contained
in this Agreement, if either the Seller or the Purchaser, pursuant to any of the
applicable provisions of this Agreement, shall make a claim for the payment of
the principal amount of the Purchaser's Deposit, the claimant shall given
written notice thereof to the Escrow Agent. The Escrow Agent shall give written
notice of any claim to the other party within a period of ten (10) days after
receipt of such claim. If the Escrow Agent does not receive a written objection
to such claim from the other party within a period of ten (10) days after giving
such notice, then the Escrow Agent shall have the absolute right to pay the
principal amount of the Purchaser's Deposit as requested by the claimant, and,
upon doing so, the Escrow Agent shall stand discharged and released from any
further liability whatsoever under the terms of this Agreement.
However, if the Escrow Agent does receive a written objection to such claim
from the other party within such ten-day period, then the Escrow Agent, in its
sole and absolute discretion, shall have complete authority to continue to hold
the principal amount of the Purchaser's Deposit until receipt of one of the
following:
18.1. A written agreement, duly executed by all of the parties to
this Agreement and in a form satisfactory to the Escrow Agent, directing the
distribution of the principal amount of the Purchaser's Deposit and relieving
the Escrow Agent of all further liability with respect to the principal amount
of the Purchaser's Deposit upon compliance with such written agreement; or
18.2. A certified copy of a final judgment of a court of competent
jurisdiction specifying the party entitled to the principal amount of the
Purchaser's Deposit and evidence satisfactory to the Escrow Agent that any
applicable appeals period has expired or that all possible appeals have been
exhausted.
As an alternative, the Escrow Agent, it its sole and absolute discretion, shall
have the complete authority to interplead the principal amount of the
Purchaser's Deposit with the Clerk of the Circuit Court of Polk County, Florida,
and, upon notifying all parties to this Agreement of such action, all liability
of the Escrow Agent under the terms of this Agreement shall terminate and be of
no further force and effect, except to the extent of accounting for the
principal amount of the Purchaser's Deposit.
As a condition to the Escrow Agent agreeing to serve as escrow agent under the
terms of this Agreement, the Seller and the Purchaser severally acknowledge and
agree that in the event of any dispute or litigation among the parties, or any
of them, wherein the Escrow Agent is made a party by virtue of acting as the
escrow agent, the Escrow Agent shall be entitled to recover all costs and
expenses incurred in connection therewith, including reasonable attorneys' fees
at the trial level and in connection with all appellate proceedings, with all
such costs, expenses and fees to be charged and assessed as court costs,
expenses and fees to be charged and assessed as court costs against the losing
party, as opposed to the prevailing party, as determined by the court having
jurisdiction thereof. Additionally, if any person, whether or not a party to
this Agreement, shall institute any suit against the Escrow Agent, or shall join
the Escrow Agent in any suit, and the Escrow Agent then interpleads, or has
previously interpled, the principal amount of the Purchaser's Deposit with the
court having jurisdiction of such suit, then said person or party suing the
Escrow Agent shall forthwith dismiss the Escrow Agent from such lawsuit, with
prejudice, and for all purposes of this Agreement, shall be deemed to be the
"losing party" with respect to the Escrow Agent, whereupon the Escrow Agent
shall be immediately entitled to a determination and judgment of costs, expenses
and reasonable attorneys' fees (including a reasonable amount for time expended
by the Escrow Agent in such litigation) prior to a final adjudication between
the parties to such lawsuit. For any and all purposes under the terms of this
Agreement, the "Escrow Agent" shall include, without limitation, any and all
attorneys employed by the Escrow Agent.
As a further condition to the agreement of the Escrow Agent to serve as escrow
agent under the terms of this Agreement, the Seller and the Purchaser severally
acknowledge and agree that the Escrow Agent shall not be liable to any party or
person whomsoever for misdelivery of all or any part of the Purchaser's Deposit
unless such misdelivery shall have resulted from a willful breach of the terms
of this Agreement or shall have resulted from the gross negligence of the Escrow
Agent.
Each of the parties to this Agreement further acknowledges that the Escrow Agent
is the attorney for the Purchaser and that the Escrow Agent, in acting in its
capacity as the escrow agent under the terms of this Agreement, could, at some
time, have a conflict of interest. Therefore, each of the parties to this
Agreement hereby waives any claim or complaint whatsoever because of said fact,
or any implication therefrom.
19. Brokerage. The Seller represents and warrants to the Purchaser that
the Seller has had no contact with any broker or other person or entity who
might have a basis for claiming any brokerage commission, finder's fee or like
payment with respect to the transactions provided for in this Agreement.
The Purchaser represents and warrants to the Seller that the Purchaser has
had no contact with any broker or other person or entity who might have a basis
for claiming any brokerage commission, finder's fee or like payment with respect
to the transactions provided for in this Agreement.
20. Notices. Each notice, request, demand, consent, approval or other
communication required or permitted under this Agreement (collectively a
"notice") shall be valid only if it is (a) in writing (or sent by telex,
telegram or telecopy and promptly confirmed in writing) and (b) addressed by the
sender to the other party at its address and in the manner set forth below:
(a) If to the Seller: ORANGE-CO., INC.
Post Office Box 2158
Bartow, Florida 33831-2158
Attention: Gene Mooney, its President
With copy to: LANE, TROHN, CLARKE, BERTRAND,
VREELAND & JACOBSEN, P.A.
Post Office Box 3
Lakeland, Florida 33802-0003
(b) If to the Purchaser: CHILDS OIL COMPANY, INC.
Post Office Box 1417
Arcadia, Florida 33821
Attention: Martha R. Childs, its President
With copy to: DUNLAP, MORAN & LOPEZ, P.A.
Southrust Bank Plaza
Suite 903
Second Street
Sarasota, Florida 34236
Unless otherwise provided herein, each notice shall be effective only upon
its receipt, whether delivered personally or by courier service or forwarded by
first class, postage prepaid, certified or registered, United States mail with
return receipt requested.
Any party wishing to change the person or address to which notices are to
be given may do so by complying with the notice provisions of this paragraph.
21. Extension of Time and Waiver.
21.1. Time is of the essence with respect to this Agreement.
However, the parties hereto may, by mutual agreement in writing, extend the time
for the performance of any of the obligations of the parties hereto.
Furthermore, if the last day for taking any action required or permitted under
this Agreement shall fall on a Saturday, Sunday or United States Post Office
holiday, then the time for taking any such action shall be extended to the next
day which is not a Saturday, Sunday or United States Post Office holiday.
21.2. Each party for whose benefit a representation, warranty,
obligation, covenant, agreement or condition is intended may, in writing: (i)
waive any inaccuracies in the warranties and representations contained in this
Agreement; and (ii) waive compliance with any of the covenants, agreements or
conditions contained herein or made pursuant hereto and so waive performance of
any of the obligations of the other parties hereto, and any default hereunder;
provided, however, that any such waiver shall not affect or impair the waiving
party's rights in respect to any other representation, warranty, obligation,
covenant, agreement or condition, or any default with respect thereto.
22. Expenses. Except as otherwise agreed in writing by the Purchaser, the
Company shall not bear any fees or expenses arising out of the transactions
provided for in this Agreement. All professional fees and expenses incurred by
the Seller shall be the sole responsibility of the Seller and all professional
fees and expenses incurred by the Purchaser shall be the sole responsibility of
the Purchaser. The Purchaser shall be responsible for the costs of the
documentary stamps required to be affixed to the Closing Promissory Note and any
additional documentary stamps required by reason of any Replacement Promissory
Note.
23. Miscellaneous Provisions.
23.1. Any number of counterparts of this Agreement may be signed
and delivered, each of which shall be considered an original and all of which,
together, shall constitute one and the same instrument.
23.2. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida.
23.3. This Agreement constitutes the entire agreement and
understanding between the parties hereto with respect to the transactions
contemplated hereby, expressly superseding all prior agreements and
understandings, whether oral or written, and no change, modification or
attempted waiver of any of the provisions of this Agreement shall be binding
unless reduced to writing and signed by or on behalf of each party to this
Agreement.
23.4. Each party to this Agreement severally acknowledges and
confirms that such party has been involved in the preparation of this Agreement
and that the normal rule of construction to the effect that any ambiguities are
to be resolved against the drafting party shall not be utilized in the
interpretation or construction of this Agreement.
23.5. To the extent any matter is disclosed in any Schedule to
this Agreement, such matter shall be deemed disclosed for all purposes of this
Agreement.
23.6. Subject to the terms and conditions provided in this
Agreement, the parties hereto shall use their best efforts to take, or cause to
be taken, such action or actions, and to execute and deliver, or cause to be
executed and delivered, such additional documents and instruments, and to do, or
cause to be done, all other things necessary, proper or advisable under the
provisions of this Agreement and under applicable law to consummate and make
effective the transactions provided for in this Agreement and to satisfy all
conditions required hereunder to be satisfied.
23.7. The representations, warranties, obligations, covenants and
agreements contained in this Agreement are for the sole benefit of the parties
hereto and, in the case of Section 16 hereof, each Indemnified Party, and its
respective successors and assigns, and no such representations, warranties,
obligations, covenants and agreements shall be construed as conferring any
rights on any other persons or entities whomsoever or whatsoever.
23.8. The section and paragraph headings in this Agreement are for
convenience of reference only and shall not be deemed to alter or affect any
provision hereof.
23.9. If any covenant or condition of this Agreement is determined
to be invalid, illegal or incapable of being enforced, all other covenants and
conditions of this Agreement shall, nevertheless, remain in full force and
effect, and no covenant or condition shall be dependent upon any other covenant
or condition unless so express herein.
23.10. This Agreement shall not be assignable by either party to
this Agreement without the prior written consent of the other party.
23.11. Any controversy or claim arising out of, or relating to
this Agreement, or any breach thereof, prior or subsequent to Closing, shall be
submitted to non-binding arbitration or mediation in DeSoto County, Florida, at
the request of either party. The parties shall mutually agree to a mediator who
shall either be a retired judge or a member in good standing of the Florida Bar.
If the parties cannot mutually agree to one mediator, then each party shall
appoint a mediator and the two appointed mediators shall select the mediator who
shall hear the dispute. The parties shall present the relevant portions of the
dispute to the mediator who shall make a recommendation concerning the
settlement of the dispute. However, the mediator's recommendation shall not be
binding upon the parties and either party shall be entitled to all of its rights
and remedies, including the litigation of the dispute in a court of competent
jurisdiction. The mediator's fee shall be borne equally by the Seller and the
Purchaser. Except for the mediator's fee, all fees and expenses incurred by the
Seller in connection with any mediation shall be the sole responsibility of the
Seller and all fees and expenses incurred by the Purchaser in connection with
any mediation shall be the sole responsibility of the Purchaser.
23.12. In the event any litigation is instituted for the purpose of
interpreting or enforcing any of the provisions of this Agreement, the
prevailing party, as determined by the court having jurisdiction thereof, shall
be entitled to recover from the non-prevailing party, in addition to all other
relief, all costs and expenses incurred in connection with such litigation
including, without limitation, reasonable attorneys' fees at the trial level and
in connection with all appellate proceedings.
23.13. Subject to the provisions of Section 23.10 above, the
provisions hereof shall be binding upon, and shall inure to the benefit of, the
parties hereto, and their respective successors and assigns.
IN WITNESS WHEREOF, the Seller has caused this Agreement to be executed by its
undersigned officer duly authorized this 9th day of September, 1994.
Signed in the presence of two witnesses: ORANGE-CO., INC.
H. Margaret Dashinger By:Gene Mooney
- - --------------------- -------------
H. Margaret Dashinger Gene Mooney
its President
Dale A. Bruwelheide
- - -------------------
Dale A. Bruwelheide
(Two witnesses as to the Seller)
IN WITNESS WHEREOF, the Purchaser has caused this Agreement to be executed by
its undersigned officer duly authorized this 9th day of September,
1994.
Signed in the presence of two witnesses: CHILDS OIL COMPANY, INC.
H. Margaret Dasinger By: Martha R. Childs
- - -------------------- --------------------
H. Margaret Dasinger Martha R. Childs
its President
Dale A. Bruwelheide
- - -------------------
Dale A. Bruwelheide
(Two witnesses as to the Purchaser)
AGREEMENT BY ESCROW AGENT
The undersigned, being the Escrow Agent named in the foregoing Stock Acquisition
Agreement, hereby agrees to hold and disburse the Purchaser's Deposit specified
in the foregoing Stock Acquisition Agreement, after receipt of the same, in
accordance with the applicable provisions of the foregoing Agreement.
EXECUTED this 9th day of September, 1994.
Signed in the presence of two witnesses: LANE, TROHN, CLARKE, BERTRAND,
VREELAND & JACOBSEN, P.A.
H. Margaret Dasinger By: Robert J. Bertrand
- - -------------------- ----------------------
H. Margaret Dasinger Robert J. Bertrand
its Vice President
Dale A. Bruwelheide
- - -------------------
Dale A. Bruwelheide
(Two witnesses as to the Escrow Agent)
EXHIBIT 21
ORANGE-CO, INC. AND SUBSIDIARIES
SUBSIDIARIES OF THE COMPANY
The following is a list of subsidiaries of Orange-co, Inc.
as
of December 15, 1994, other than subsidiaries which, considered
in
the aggregate as a single subsidiary, would not constitute a
significant subsidiary as defined by Securities and Exchange
Commission Regulation S-X. All of the subsidiaries are included
in
the Consolidated Financial Statements of Orange-co, Inc.
State or Country of
Name of Subsidiary Incorporation
Orange-co of Florida, Inc. (1) Florida
Florida Fresh-Pak Corporation (1) (4) Florida
Orange-co Dispenser Services, Inc. (2) (5) Florida
International Fruit, Inc. (2) Florida
Interfruit Holdings, Inc. (1) Cayman Islands
OrancoMex, S.A. de C.V. (3) Mexico
(1) A wholly-owned subsidiary of Orange-co, Inc.
(2) A wholly-owned subsidiary of Orange-co of Florida, Inc.
(3) A wholly-owned subsidiary of Interfruit Holdings, Inc.
(4) Inactive subsidiary
(5) Formerly JV #1, Inc.
Consent of Independent Accountants
The Board of Directors and Stockholders
Orange-co, Inc. and Subsidiaries:
We consent to incorporation by reference in the registration
statement (No. 33-17386) on Form S-8 of Orange-co, Inc. and
subsidiaries of our report dated December 2, 1994, relating to
the consolidated balance sheet of Orange-co, Inc. and
subsidiaries as of September 30, 1994 and the related
consolidated statements of operations, stockholders' equity, and
cash flows and related schedules for the year then ended, which
report appears in the September 30, 1994 annual report on Form 10-
K of Orange-co, Inc. and subsidiaries.
KPMG Peat Marwick LLP
---------------------
KPMG Peat Marwick LLP
Orlando, Florida
December 2, 1994
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000004507
<NAME> ORANGE-CO, INC.
<MULTIPLIER> 1,000
<CURRENCY> U.S.DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-START> OCT-01-1993
<PERIOD-END> SEP-30-1994
<EXCHANGE-RATE> 1
<CASH> 765
<SECURITIES> 0
<RECEIVABLES> 7,805
<ALLOWANCES> (686)
<INVENTORY> 43,551
<CURRENT-ASSETS> 51,951
<PP&E> 133,486
<DEPRECIATION> 32,220
<TOTAL-ASSETS> 169,404
<CURRENT-LIABILITIES> 20,515
<BONDS> 0
<COMMON> 76,592
0
0
<OTHER-SE> 14,688
<TOTAL-LIABILITY-AND-EQUITY> 169,404
<SALES> 76,756
<TOTAL-REVENUES> 76,756
<CGS> (65,646)
<TOTAL-COSTS> (65,646)
<OTHER-EXPENSES> (3,531)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (1,693)
<INCOME-PRETAX> 5,886
<INCOME-TAX> (2,493)
<INCOME-CONTINUING> 3,393
<DISCONTINUED> (48)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,345
<EPS-PRIMARY> 0.32
<EPS-DILUTED> 0.32
</TABLE>
EXHIBIT 99.2
FIRST AMENDMENT TO
ORANGE-CO OF FLORIDA, INC.
401(k) SALARY DEFERRAL PLAN
Orange-co of Florida, Inc., a Florida corporation (the "Employer"), and B.H.
Griffin, III, (the "Trustee") hereby agree and consent this 15th day of
December, 1994 to amend the Orange-co of Florida, Inc. 401(k) Salary Deferral
Plan entered into by and between the parties hereto, as amended and restated in
its entirety effective January 1, 1994 (the "Plan"), this First Amendment being
effective December 15, 1994, as follows:
1. Section 5.3 is deleted in its entirety and the following is substituted in
lieu thereof:
5.3 Matching Contributions. Subject to Section 5.6, Matching
Contributions, if any, made by the Employer with respect to any Allocation
Period shall be allocated to the Matching Contribution Account of each Active
Participant who is employed by the Employer on the last day of the Plan Year in
the proportion that the amount of each such Participant's Salary Reduction
Election in effect for the Allocation Period (and which is otherwise allowable
under the Plan for that Plan Year) bears to the total amount of the Salary
Reduction Elections in effect for all such Participants for that Allocation
Period; provided, however, that for purposes of this Section 5.3, the Employer
may specify, by action taken prior to the last day of the Allocation Period,
that the maximum Salary Reduction Election taken into account on behalf of any
Participant for that Allocation Period shall not exceed a specified percentage
of the Participant's Compensation for the Allocation Period. If the employment
of a Participant terminates by reason of death, Total and Permanent Disability
or attainment of Retirement Date, such Participant's Matching Contribution
Account shall receive an Allocation of Matching Contributions for the Plan Year
in which such termination occurs to the same extent as if the Participant were
employed by the Employer on the last day of the Plan Year.
2. Section 9.11 is amended by deleting the first two sentences and substituting
the following in lieu thereof:
9.11 Hardship Distributions. A Participant may request a distribution of
his Salary Reduction Contribution Account (not including any earnings on Salary
Reduction Contributions), Profit Sharing Contribution Account or Rollover
Contribution Account in the case of an immediate and heavy financial need. The
value of a Participant's Salary Reduction Contribution Account, Profit Sharing
Contribution Account or Rollover Contribution Account shall be based on the
value of such account as of the immediately preceding Valuation Date.
Except as hereinabove modified and amended, the Plan shall remain
unchanged and continue in full force and effect.
Signed, sealed and delivered EMPLOYER
in the presence of: Orange-co of Florida, Inc.
John R. Alexander Gene Mooney
_________________ ------------------
John R. Alexander Gene Mooney, President
C. B. Myers, Jr.
- - -----------------
C. B. Myers, Jr.
Witnesses as to Employer
TRUSTEE
John R. Alexander B. H. Griffin, III
- - ----------------- --------------------
John R. Alexander B. H. Griffin, III
C. B. Myers, Jr.
- - -----------------
C. B. Myers, Jr.
______________________
Witnesses as to Trustee
EXHIBIT 99.3
PROFIT SHARING PLAN AND TRUST
FOR EMPLOYEES OF
ORANGE-CO OF FLORIDA, INC.
SECTION INDEX PAGE
ARTICLE I
DEFINITIONS
1.1 "Active Participant" 1
1.2 "Aggregate Account" 1
1.3 "Aggregation Group" 1
1.4 "Anniversary Date" 1
1.5 "Annual Addition" 2
1.6 "Beneficiary" or "Beneficiaries" 2
1.7 "Break in Service" 2
1.8 "Cash Out" 2
1.9 "Code" 2
1.10 "Compensation" 2
1.11 "Defined Benefit Plan Fraction" 3
1.12 "Defined Contribution Plan Fraction" 3
1.13 "Determination Date" 4
1.14 "Employee" 4
1.15 "Employer" 4
1.16 "Employer Contribution Account" 5
1.17 "ERISA" 5
1.18 "Excess Amount" 5
1.19 "Fiduciary" 5
1.20 "Fiscal Year" 5
1.21 "Forfeiture" 5
1.22 "Highly Compensated Employee" 5
1.23 "Hour of Service" 6
1.24 "Investment Manager" 7
1.25 "Involuntary Cash Out" 7
1.26 "Key Employee" 7
1.27 "Limitation Year" 8
1.28 "Maximum Permissible Amount" 8
1.29 "Non-Highly Compensated Employee" 8
1.30 "Non-Key Employee" 8
1.31 "Owner-Employee" 9
1.32 "Participant" 9
1.33 "Participant Directed Account" 9
1.34 "Permissive Aggregation Group" 9
1.35 "Plan" 9
1.36 "Plan Administrator" or "Administrator" 9
1.37 "Plan Year" 9
1.38 "Qualifying Employer Real Property" 9
1.39 "Qualifying Employer Securities" 9
1.40 "Required Aggregation Group" 9
1.41 "Retirement Date" 9
1.42 "Segregated Account" 9
1.43 "Shareholder-Employee" 10
1.44 "Total and Permanent Disability" 10
1.45 "Trustee" 10
1.46 "Trust Fund" or "Trust" 10
1.47 "Valuation Date" 10
1.48 "Vested Interest" 10
1.49 "Voluntary Cash Out" 10
1.50 "Year of Service" 10
ARTICLE II
ELIGIBILITY
2.1 Qualification as a Participant 11
2.2 Notice of Participation 11
2.3 Leave of Absence 11
2.4 Reparticipation 11
2.5 Omission of Eligible Employee 11
2.6 Inclusion of Ineligible Employee 12
ARTICLE III
TOP-HEAVY PROVISIONS
3.1 Special Top-Heavy Plan Requirements 12
3.2 Determination of Top-Heavy Status 12
ARTICLE IV
CONTRIBUTIONS
4.1 Employer Contributions 13
4.2 Maximum Limitation Applicable to
Combination of Defined Contribution Plans 13
4.3 Time of Payment of Employer Contributions 13
ARTICLE V
ALLOCATIONS
5.1 Minimum Allocations for Top-Heavy Plan Years 14
5.2 Allocation Formula 14
5.3 Overall Limitation of Benefits 15
5.4 Adjustment for Excess Annual Additions 16
5.5 Segregated Accounts for Participants 16
ARTICLE VI
VALUATIONS
6.1 Valuation of the Trust Fund 16
6.2 Method of Valuation 16
ARTICLE VII
DETERMINATION OF AGGREGATE ACCOUNT
7.1 Determination of Vested Interest Upon Retirement 17
7.2 Determination of Vested Interest Upon Death;
Beneficiaries 17
7.3 Determination of Vested Interest Upon Total and
Permanent Disability 17
7.4 Determination of Vested Interest Upon Termination
of Employment 18
ARTICLE VIII
DISTRIBUTION OF BENEFITS
8.1 Distributable Events 20
8.2 Distribution of Aggregate Account 20
8.3 Cash Out of Vested Interest in Aggregate
Account Upon Termination of Employment 20
8.4 Commencement of Distributions 20
8.5 Distributions in Cash or in Kind 21
8.6 Distributions to Minors and Incompetents 21
8.7 Location of Participant or Beneficiary Unknown 21
8.8 Qualified Domestic Relations Orders 22
ARTICLE IX
MINIMUM DISTRIBUTIONS
9.1 Minimum Distributions 22
9.2 Required Beginning Date 22
9.3 Limits on Distribution Periods 22
9.4 Determination of Amount to be Distributed
Each Year 23
9.5 Death Distribution Provisions 23
9.6 Definitions 24
ARTICLE X
FIDUCIARY RESPONSIBILITY AND INVESTMENT OF PLAN FUNDS
10.1 Basic Responsibilities of Trustee 26
10.2 Assets Held as Single Fund 26
10.3 Powers of Trustee 26
10.4 Selection of Investment Objectives 27
10.5 Directed Investment by Investment Manager 28
10.6 Directed Investment by Participants 28
10.7 Powers and Duties of Plan Administrator 30
10.8 Records and Reports 30
10.9 Compensation of the Trustee and
Administrative Expenses of the Trust 30
10.10 Communication to Trustee to be in Writing 31
10.11 Taxes 31
10.12 Fiduciary Responsibility 31
10.13 Removal and Resignation of Trustee 32
10.14 Bonding 32
ARTICLE XI
PARTICIPATING EMPLOYERS
11.1 Adoption by Other Employers 32
11.2 Contributions by Employer and Participating
Employers 32
11.3 Employee Transfers and Terminations 33
11.4 Designation of Employer as Agent 33
11.5 Expenses Shared by Participating Employers 33
11.6 Amendment 33
11.7 Discontinuance of Participation 33
ARTICLE XII
AMENDMENT AND TERMINATION
12.1 Right to Amend 34
12.2 Right to Terminate 34
12.3 Permanent Discontinuance of Contributions 34
ARTICLE XIII
MISCELLANEOUS
13.1 Exclusive Benefit of Participants 34
13.2 Plan Does Not Restrict Employer's Employment and
Business Policies 34
13.3 Rights Against Employer 34
13.4 Intention to Continue Plan 35
13.5 Assumption of Plan by Successor 35
13.6 Predecessor Employer 35
13.7 Controlled or Affiliated Service Groups 35
13.8 Leased Employees 36
13.9 Interest in Trust not Subject to
Creditors' Claims 36
13.10 Internal Revenue Service Approval of Employer's
Plan 36
13.11 Mistake of Fact 37
13.12 Disallowance of Deduction 37
13.13 Restrictions on Return of Contributions 37
13.14 Claims 37
13.15 Direct Rollovers 37
13.16 Agent for Service of Process 38
13.17 Masculine, Feminine 38
13.18 Applicable Law 38
PROFIT SHARING PLAN AND TRUST
FOR EMPLOYEES OF
ORANGE-CO OF FLORIDA, INC.
THIS AGREEMENT is made and entered into this day of
December 20, 1994, by and between Orange-co of Florida, Inc., a
Florida corporation (the "Employer"), and B. H. Griffin, III (the
"Trustee").
WHEREAS, the Employer desires to recognize the contri
bution made to its successful operation by its employees and to
reward that contribution by means of a Profit Sharing Plan for
those employees who qualify as participants hereunder; and
WHEREAS, the Profit Sharing Plan provides for the
establishment of a Trust into which contributions may be made by
the Employer for later distribution to the participants, their
beneficiaries or their estates; and
WHEREAS, this Profit Sharing Plan is intended to be quali
fied under Section 401(a) of the Internal Revenue Code of 1986, as
amended, and the Trust is intended to be exempt from taxation under
Section 501(a) thereof.
NOW, THEREFORE, effective January 1, 1993 (the "Effective
Date"), the Employer hereby adopts this Profit Sharing Plan and
creates a Trust hereunder as the funding vehicle for the exclusive
benefit of the participants and their beneficiaries, and the
Trustee hereby accepts the Profit Sharing Plan and Trust on the
terms and conditions set forth herein.
ARTICLE I
DEFINITIONS
DEFINITIONS:
1.1 "Active Participant" means any Participant who, with
respect to a Plan Year, is eligible to participate in the Plan
under Article and (i) is eligible to receive an allocation of the
Employer contribution under Section or (ii) if the Plan is a Top-
Heavy Plan (as defined in Section ) for that Plan Year, is a Non-
Key Employee and is employed by the Employer on the last day of the
Plan Year. Notwithstanding the above, any Participant who is
considered an Active Participant solely because of clause (ii) of
the preceding sentence shall not be considered an Active
Participant for the Plan Year to the extent that the sum of the
allocations (other than earnings) to his Employer Contribution
Account for the Plan Year exceeds the lesser of three percent (3%)
of the Participant's Compensation or the greatest contribution
(expressed as a percentage of Compensation) made on behalf of any
Key Employee, taking into account the sum of all Employer
contributions (excluding earnings) allocated to such Key Employee's
Employer Contribution Account for that Plan Year. A Participant's
status as an Active Participant will be determined without regard
to such Participant's attainment of any age.
1.2 "Aggregate Account" means, with respect to a Par
ticipant, the value of all accounts established and maintained on
behalf of the Participant.
1.3 "Aggregation Group" means either a Permissive Aggre
gation Group or a Required Aggregation Group, as hereinafter
defined.
1.4 "Anniversary Date" means the last day of the Plan
Year.
1.5 "Annual Addition" means the sum of the following
amounts credited to a Participant's accounts for a Limitation Year:
(a) Employer contributions;
(b) Forfeitures;
(c) amounts allocated to an individual medical
benefit account (as defined in Section 415(1)(2) of the Code) that
is part of a pension or annuity plan maintained by the Employer;
and
(d) amounts derived from contributions that are
attributable to post-retirement medical benefits allocated to the
separate account of a Key Employee (as defined in
Section 419A(d)(3) of the Code) under a welfare benefit fund (as
defined in Section 419(e) of the Code) maintained by the Employer.
1.6 "Beneficiary" or "Beneficiaries" means the person or
persons to whom a deceased Participant's Aggregate Account is
payable.
1.7 "Break in Service" means a twelve (12) consecutive
month period (the "computation period") during which an Employee
has not completed more than 200 Hours of Service with the Employer.
Notwithstanding the preceding sentence, a Break in Service shall
not result from an authorized leave of absence, as defined in
Section , and shall not occur in a computation period during which
an Employee becomes a Participant or in which he retires, dies or
suffers Total and Permanent Disability.
In determining whether an Employee incurred a Break in
Service for a computation period in which, or following which, a
maternity or paternity absence (as defined below) occurs, the Hours
of Service which normally would have been credited but for the
maternity or paternity absence (or 8 Hours of Service per day if
the Plan Administrator is unable to determine the Hours of Service
which normally would have been credited) shall be credited to the
computation period in which such absence begins, if the Employee
would incur a Break in Service if the hours were not so credited;
in all other cases the Hours of Service shall be credited to the
following computation period. Notwithstanding the above, the total
Hours of Service credited under a maternity or paternity absence
shall not exceed 201 hours.
A "maternity or paternity absence" is one in which an
Employee is absent from work because of (i) the pregnancy of the
Employee, (ii) the birth of a child of the Employee, (iii) the
placement of a child with the Employee in connection with the
adoption of such child by the Employee or (iv) the caring for the
child immediately following such birth or placement. As a con
dition of the receipt by an Employee of credit for Hours of Service
pursuant to this Section, the Administrator may require that the
Employee timely furnish such information as is reasonably necessary
to establish that the absence from work was for a cause stated in
subparagraphs (i) through (iv) above and to verify the number of
days attributable to such cause.
1.8 "Cash Out" means either an Involuntary Cash Out or
Voluntary Cash Out.
1.9 "Code" means the Internal Revenue Code of 1986, as
amended.
1.10 "Compensation" means, with respect to any Participant,
wages, tips and other payments described in Treasury Regulation
Section 1.415-2(d)(11)(i) (W-2 earnings) actually paid to such
Participant during the Plan Year for services rendered to the
Employer. Compensation shall not include contributions that are
made by the Employer on behalf of a Participant to a cafeteria
plan, as defined in Section 125 of the Code, or amounts contributed
pursuant to Sections 402(a)(8), 402(h) and 403(b) of the Code, and
shall not include (i) relocation expenses and (ii) taxable life
insurance premiums. For purposes of this Section, in the case of a
Participant's first year of participation or reparticipation in the
Plan, Compensation will be based on the Participant's Compensation
for that portion of the Plan Year during which he was a Partici
pant; however, for purposes of the minimum allocations required
under Section , the Participant's Compensation for the entire Plan
Year shall be taken into account.
Notwithstanding the foregoing, however, the Compensation of
each Participant taken into account under the Plan for any year
shall not exceed $200,000 for Plan Years beginning before
January 1, 1994, and $150,000 for Plan Years beginning after
December 31, 1993, as adjusted by the Secretary of the Treasury at
the time and in the manner prescribed under Section 415(d) of the
Code (the "compensation limitation"). For this purpose, the dollar
increase in effect on January 1 of any calendar year is effective
for Plan Years beginning in such calendar year. If any Plan Year
contains fewer than twelve (12) calendar months, then the annual
compensation limitation is an amount equal to the annual
compensation limitation for the calendar year in which the
compensation period begins, multiplied by the ratio obtained by
dividing the number of full months in the period by twelve (12).
In determining the Compensation of a Participant for purposes of
the compensation limitation, the rules of Section 414(q)(6) of the
Code shall apply, except that in applying such rules the term
"family" shall include only the spouse of the Participant and any
lineal descendants of the Participant who have not attained age 19
before the close of the Plan Year. If, as a result of the
application of such rules the compensation limitation is exceeded,
then the compensation limitation shall be prorated among the
affected individuals in proportion to each such individual's
Compensation prior to the application of the compensation
limitation.
1.11 "Defined Benefit Plan Fraction" means, for any Plan
Year, the following fraction:
(a) the numerator is the "projected annual benefit"
of the Participant under all defined benefit plans (whether or not
terminated) maintained by the Employer (determined as of the close
of the Plan Year); and
(b) the denominator is the lesser of (i) one hun
dred twenty-five percent (125%) of the dollar limitation determined
for the Limitation Year under Sections 415(b) and (d) of the Code,
or (ii) one hundred forty percent (140%) of the Participant's
average Compensation for the three (3) consecutive Years of Service
in which he received his highest compensation.
For purposes of paragraph (a) above, "projected annual
benefit" means the annual retirement benefit (adjusted to an
actuarially equivalent straight life annuity if such benefit is
expressed in any form other than a straight life annuity or
qualified joint and survivor annuity) to which the Participant
would be entitled under the terms of the Plan assuming (i) the
Participant will continue employment until his Retirement Date
under the Plan (or current age, if later), and (ii) the Parti
cipant's Compensation for the current Limitation Year and all other
relevant factors used to determine benefits under the Plan will
remain constant for all future Limitation Years.
1.12 "Defined Contribution Plan Fraction" means, for any
Plan Year, the following fraction:
(a) the numerator is the sum of the Annual Addi
tions to the Participant's account under all defined contribution
plans (whether or not terminated) maintained by the Employer for
the current and all prior Limitation Years, including Annual
Additions attributable to (i) the Participant's nondeductible
employee contributions to all defined benefit plans (whether or not
terminated) maintained by the Employer, (ii) all welfare benefit
funds (as defined in Section 419(e) of the Code) maintained by the
Employer, and (iii) all individual medical benefit accounts (as
defined in Section 415(1)(2) of the Code) maintained by the
Employer; and
(b) the denominator is the sum of the maximum
aggregate amounts for the current and all prior Limitation Years,
regardless of whether a defined contribution plan was maintained by
the Employer. The maximum aggregate amount in any Limitation Year
is the lesser of (i) one hundred twenty-five percent (125%) of the
dollar limitation in effect under Section 415(c)(1)(A) of the Code
or (ii) thirty-five percent (35%) of the Participant's Compensation
for such Limitation Year.
Notwithstanding the above, if the Participant was a
participant as of the end of the first day of the first Limitation
Year beginning after December 31, 1986 in one or more defined
contribution plans maintained by the Employer that were in
existence on May 6, 1986, then the numerator of this fraction will
be adjusted if the sum of the fraction and the Defined Benefit Plan
Fraction would otherwise exceed 1.0 under the terms of this Plan.
Under this adjustment, an amount equal to the product of (i) the
excess of the sum of such fractions over 1.0 times (ii) the de
nominator of the fraction will be permanently subtracted from the
numerator of the fraction. This adjustment is calculated using the
fractions as they would be computed as of the end of the last
Limitation Year beginning before January 1, 1987, and disregarding
any changes in the terms and conditions of the Plan made after
May 5, 1986, but using the Section 415 limitation applicable to the
first Limitation Year beginning on or after January 1, 1987.
1.13 "Determination Date" means, in the case of the first
Plan Year, the last day of such Plan Year. For all other Plan
Years it shall mean the last day of the preceding Plan Year.
1.14 "Employee" means any person who is employed by the
Employer and any person who is required to be considered an
Employee of the Employer under Section 414(n) of the Code, but
excludes the following:
(a) independent contractors;
(b) individuals included in a unit covered by a
collective bargaining agreement between the Employer and employee
representatives, if retirement benefits were the subject of good
faith bargaining (for this purpose, "employee representatives" does
not include any organization more than half of whose members are
employees who are owners, officers or executives of the Employer);
and
(c) nonresident aliens who receive no income from
the Employer which constitutes income from sources within the
United States.
"Employee" includes any employee of the Employer main
taining the Plan or any other employer required to be aggregated
with the Employer under Sections 414(b), 414(c), 414(m), 414(n) or
414(o) of the Code, but only to the extent such provisions require
that employees of another employer be treated as an employee of the
Employer.
1.15 "Employer" means the Employer that adopts this Plan
and any other employer that has adopted this Plan by resolution or,
in the case of an unincorporated trade or business, other
appropriate action (hereinafter a "Participating Employer"). All
members of a controlled group of corporations (as defined in
Section 414(b) of the Code), all trades or businesses--whether or
not incorporated--under common control (as defined in
Section 414(c) of the Code), all members of an affiliated service
group (as defined in Section 414(m) of the Code) and any other
entity required to be aggregated with the Employer pursuant to the
regulations issued under Section 414(o) of the Code shall be
treated as a single Employer, but only to the extent and for the
limited purposes specified in those provisions. For purposes of
Section 415 of the Code, the rules in Section 414(b) and 414(c) of
the Code shall be modified as provided in Section 415(h) of the
Code. Further, except as specifically provided herein, the
employees of all members of a controlled group of corporations (as
defined in Section 414(b) of the Code), all trades or businesses--
whether or not incorporated--under common control (as defined in
Section 414(c) of the Code), all members of an affiliated service
group (as defined in Section 414(m) of the Code) and any other
entity required to be aggregated with the Employer pursuant to
Section 414(o) of the Code and the regulations issued thereunder
shall be treated as employed by the Employer, but only for Plan
Years with respect to which the Employer consents to the
participation of that organization in the Plan as a Participating
Employer.
1.16 "Employer Contribution Account" means the account
established and maintained for each Participant with respect to his
total interest in the Plan attributable to the Employer's
contributions made under Section and the earnings thereon.
1.17 "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended.
1.18 "Excess Amount" means the excess of a Participant's
Annual Additions for the Limitation Year over the Maximum
Permissible Amount.
1.19 "Fiduciary" means any person who:
(a) exercises discretionary authority or control
with regard to the management of the Plan or the disposition of
Plan assets;
(b) renders investment advice for a fee or other
remuneration (direct or indirect) with respect to monies or other
property of the Plan; or
(c) has discretionary authority or responsibility
as to the administration of the Plan.
1.20 "Fiscal Year" means the Employer's accounting period
of twelve (12) months, commencing on October 1 of each year and
ending on the following September 30.
1.21 "Forfeiture" means that portion of a Participant's
Employer Contribution Account that is not vested, but only upon the
earlier of:
(a) the distribution of the entire vested portion
of the Participant's Employer Contribution Account; or
(b) the last day of the Plan Year in which the
Participant incurs five (5) consecutive Breaks in Service.
1.22 "Highly Compensated Employee" means any "highly
compensated active employee" or "highly compensated former
employee."
A "highly compensated active employee" includes any
Employee who performs services for the Employer during the deter
mination year and who, during the look-back year, (i) received
compensation (as defined below) from the Employer in excess of
$75,000 (as adjusted under Section 415(d) of the Code),
(ii) received compensation from the Employer in excess of $50,000
(as adjusted under Section 415(d) of the Code) and was a member of
the top-paid group for such year, or (iii) was an officer of the
Employer and received compensation during such year that is greater
than fifty percent (50%) of the dollar limitation in effect under
Section 415(b)(1)(A) of the Code. The term "Highly Compensated
Employee" also includes (i) Employees who are both described in the
preceding sentence if the term "determination year" is substituted
for the term "look-back year" and the Employee is one of the one
hundred (100) Employees who received the most compensation from the
Employer during the determination year, and (ii) Employees who are
five percent (5%) owners at any time during the look-back year or
determination year. If no officer has satisfied the compensation
requirement of (iii) above during either a determination year or
look-back year, then the highest paid officer for such year shall
be treated as a Highly Compensated Employee.
For purposes of this Section, the determination year shall
be the Plan Year, and the look-back year shall be the twelve (12)
month period immediately preceding the determination year. Notwith
standing the foregoing, the Employer may elect to compute the look-
back year on the basis of the calendar year ending with or within
the determination year, as provided under Treasury Regulation
Section 1.414(q)-1T Q&A-14(b) and subject to the provisions
thereof.
A "highly compensated former employee" includes any
Employee who separated from service (or was deemed to have sepa
rated) prior to the determination year, performs no service for the
Employer during the determination year and was a highly compensated
active employee for either the separation year or any determination
year ending on or after such employee's 55th birthday.
If, during a determination year or look-back year, an
active or former Employee is a family member of either a five
percent (5%) owner or a Highly Compensated Employee who is one of
the ten (10) most Highly Compensated Employees (ranked on the basis
of compensation paid by the Employer during such year), then the
family member and the five percent (5%) owner or top-ten Highly
Compensated Employee shall be aggregated. In such case, the family
member and five percent (5%) owner or top-ten Highly Compensated
Employee shall be treated as a single Employee receiving compen
sation and plan contributions or benefits equal to the sum of such
compensation and contributions or benefits of the family member and
five percent (5%) owner or top-ten Highly Compensated Employee.
For purposes of this Section, family member includes the spouse,
lineal ascendants and descendants of the Employee or former
Employee and the spouses of such lineal ascendants and descendants.
The determination of who is a Highly Compensated Employee,
including the determination of the number and identity of Employees
in the top-paid group, the top one hundred (100) Employees, the
number of Employees treated as officers and the compensation that
is considered, will be made in accordance with Section 414(q) of
the Code and the regulations issued thereunder. In determining
which Employees are members of the top-paid group, the Employer may
elect under Treasury Regulation Section 1.414(q)-1T Q&A-9(b)(2) to
exclude Employees based on a shorter period of service or lower age
than otherwise allowable, provided that any such election must be
uniform and consistent with respect to all situations in which
Section 414(q) of the Code is applicable to the Employer.
For purposes of this Section, "compensation" means
compensation within the meaning of Section 415(c)(3) of the Code,
without regard to Sections 125, 402(a)(8) and 402(h)(1)(B) of the
Code.
1.23 "Hour of Service" means:
(a) each hour for which an Employee is directly or
indirectly compensated or entitled to compensation from the
Employer for the performance of duties during the applicable
computation period;
(b) each hour for which an Employee is directly or
indirectly compensated or entitled to compensation from the
Employer--irrespective of whether the employment relationship has
terminated--for reasons other than the performance of duties (such
as vacation, holidays, sickness, disability, lay-off, military duty
or leave of absence) during the applicable computation period; and
(c) each hour for which back pay is awarded or
agreed to by the Employer, without regard to mitigation of damages.
Hours of Service will be credited for employment with all
members of a controlled group of corporations (as defined in
Section 414(b) of the Code), all trades or businesses--whether or
not incorporated--under common control (as defined in
Section 414(c) of the Code) of which the Employer is a member, all
members of an affiliated service group (as defined in
Section 414(m) of the Code), and any other entity required to be
aggregated with the Employer pursuant to Section 414(o) of the Code
and the regulations thereunder.
Hours of Service will also be credited to any individual
considered an Employee for purposes of this Plan under Sec
tions 414(n) or 414(o) of the Code and the regulations issued there
under, but only for the purposes and to the extent required under
those provisions.
Notwithstanding paragraph (b) above, no more than 501 Hours
of Service are required to be credited to an Employee on account of
any single continuous period during which the Employee performs no
duties (whether or not such period occurs in a single computation
period), and an hour for which an Employee is directly or
indirectly paid, or entitled to payment, on account of a period
during which no duties are performed is not required to be credited
to the Employee if such payment is made or due under a plan
maintained by the Employer solely for the purpose of complying with
applicable worker's compensation, unemployment compensation or
disability insurance laws. In addition, Hours of Service are not
required to be credited hereunder for a payment which solely
reimburses an Employee for medical or medically related expenses
incurred by the Employee. For this purpose, the provisions of
Sections 2530.200b-2(b) and (c) of the Department of Labor Regu
lations are incorporated herein by reference.
For purposes of this Section, a payment shall be deemed to
be made by or due from the Employer regardless of whether such
payment is made by or due from the Employer directly or indirectly
through a trust, fund or insurer to which the Employer contributes
or pays premiums.
1.24 "Investment Manager" means any person, firm or
corporation that:
(a) is (i) registered as an investment adviser
under the Investment Advisers Act of 1940, (ii) a bank, as defined
in that Act, or (iii) an insurance company, as defined in that Act;
(b) has the power to manage, acquire or dispose of
Plan assets; and
(c) acknowledges in writing its Fiduciary status
with respect to the Plan.
1.25 "Involuntary Cash Out" means a distribution to a
Participant that meets the following conditions: (i) the Partici
pant's entire Vested Interest in his Aggregate Account
is distributed to him, (ii) the Vested Interest so distributed does
not exceed $3,500, and (iii) the distribution is made on account of
the Participant's termination of participation in the Plan.
1.26 "Key Employee" means any Employee or former Employee
(and his Beneficiary or Beneficiaries) who, at any time during the
Plan Year or any of the preceding four (4) Plan Years, is or was:
(a) an officer of the Employer if such individual's
Annual Compensation (as defined below) exceeded fifty percent (50%)
of the dollar limitation under Section 415(b)(1)(A) of the Code;
(b) one of the ten (10) Employees owning (or con
sidered as owning within the meaning of Section 318 of the Code)
the largest interests in the Employer if such individual's Annual
Compensation exceeded one hundred percent (100%) of the dollar
limitation under Section 415(c)(l)(A) of the Code;
(c) a "Five Percent Owner" of the Employer, meaning
any person who owns (or is considered as owning within the meaning
of Section 318 of the Code) more than five percent (5%) of the
outstanding stock of the Employer, or stock possessing more than
five percent (5%) of the total combined voting power of all classes
of stock of the Employer. In determining percentage ownership for
purposes of this paragraph (c), Employers that would otherwise be
aggregated under Sections 414(b), (c) and (m) of the Code shall be
treated as separate Employers; or
(d) a "One Percent Owner" of the Employer, meaning
any person who owns (or is considered as owning within the meaning
of Section 318 of the Code) more than one percent (1%) of the
outstanding stock of the Employer or stock possessing more than one
percent (1%) of the total combined voting power of all classes of
stock of the Employer, having Annual Compensation from the Employer
of more than $150,000. In determining percentage ownership for pur
poses of this paragraph (d), Employers that would otherwise be
aggregated under Sections 414(b), (c) and (m) of the Code shall be
treated as separate Employers; however, in determining whether an
individual has Annual Compensation of more than $150,000, Annual
Compensation from each Employer required to be aggregated under
Sections 414(b), (c) and (m) of the Code shall be taken into
account.
For purposes of this Section, "Annual Compensation" means
compensation as defined in Section 415(c)(3) of the Code, but
includes amounts contributed by the Employer pursuant to a salary
reduction agreement (which are excludable from the Employee's gross
income under Sections 125, 402(a)(8), 402(h)(1)(B) or 403(b) of the
Code).
The rules applicable to Key Employees shall be determined
in accordance with Section 416(i)(1) of the Code and the
regulations issued thereunder.
1.27 "Limitation Year" means the Plan Year, unless another
twelve (12) consecutive month period is selected by the Employer.
All qualified plans maintained by the Employer must use the same
Limitation Year. If the Limitation Year is changed, the new
Limitation Year must begin on a date within the Limitation Year in
which the amendment implementing the change is made.
1.28 "Maximum Permissible Amount" means, with respect to
any Limitation Year, the maximum Annual Addition that may be
contributed or allocated to a Participant's account under the Plan,
which shall not exceed the lesser of (a) the defined contribution
dollar limitation (as determined under Section 415 (c)(1)(A) of the
Code), or (b) twenty-five percent (25%) of the Participant's
Compensation for that year. The compensation limitation referred
to in (b) above shall not apply to any contribution for medical
benefits (within the meaning of Sections 401(h) or 419A(f)(2) of
the Code) which is otherwise treated as an Annual Addition under
Sections 415(l)(1) or 419A(d)(2) of the Code. If a short
Limitation Year results from an amendment changing the Limitation
Year to a different twelve (12) consecutive month period, the
Maximum Permissible Amount will not exceed the defined contribution
dollar limitation multiplied by a fraction, the numerator of which
is the number of months in the short Limitation Year and the
denominator of which is twelve (12).
1.29 "Non-Highly Compensated Employee" means an Employee
who is not a Highly Compensated Employee.
1.30 "Non-Key Employee" means an Employee who is not a Key
Employee.
1.31 "Owner-Employee" means an individual who is a sole
proprietor or a partner in a partnership who owns more than ten
percent (10%) of either the capital interest or the profits
interest of the partnership.
1.32 "Participant" means (i) any Employee who, with respect
to the Plan Year, is eligible to participate in the Plan as
provided in Section or (ii) any individual who has accrued
benefits under the Plan.
1.33 "Participant Directed Account" means one or more
accounts designated as such by the Plan Administrator over which
the Participant has the authority to direct investments pursuant to
Section .
1.34 "Permissive Aggregation Group" means a group of plans
not required to be included in a Required Aggregation Group. The
Employer may treat any plan not required to be included in an
Aggregation Group as being part of such group if the group would
continue to meet the requirements of Sections 401(a)(4) and 410 of
the Code with that plan being taken into account.
1.35 "Plan" means this document and all amendments thereto,
as well as the Trust used to fund benefits hereunder.
1.36 "Plan Administrator" or "Administrator" means the
Employer, or the individual or entity designated by the Employer to
administer the Plan.
1.37 "Plan Year" means the period of twelve (12) months,
commencing on January 1 of each year and ending on the following
December 31.
1.38 "Qualifying Employer Real Property" means parcels of
real property leased by the Plan to the Employer or its affiliate,
provided that:
(a) a substantial number of the parcels are geo
graphically dispersed; and
(b) each parcel and its improvements are suitable
or readily adaptable to more than one use.
1.39 "Qualifying Employer Securities" means securities
consisting of stock or marketable obligations that are issued by
the Employer or its affiliates and that are described in
Section 407(d)(5) of ERISA.
1.40 "Required Aggregation Group" means:
(a) each plan of the Employer in which at least
one (1) Key Employee participates or participated at any time
during the determination period (regardless of whether the plan has
terminated); and
(b) each other qualified plan of the Employer which
enables a plan described in paragraph (a) above to meet the
requirements of Sections 401(a)(4) and/or 410 of the Code.
1.41 "Retirement Date" means the first day of the month
coinciding with or immediately preceding the date on which a
Participant reaches age sixty-five (65).
1.42 "Segregated Account" means an account the assets of
which are set apart and invested separately from the other assets
of this Plan.
1.43 "Shareholder-Employee" means a Participant who is an
Employee or officer of an electing small business corporation under
Section 1362 of the Code and who owns (or is considered as owning
within the meaning of Section 318(a)(l) of the Code), on any day
during the Fiscal Year of such corporation, more than five
percent (5%) of the outstanding stock of the corporation.
1.44 "Total and Permanent Disability" means a physical or
mental condition of a Participant resulting from bodily injury,
disease or mental disorder which renders him incapable of
continuing his usual and customary employment with the Employer.
The disability of a Participant shall be determined by a licensed
physician chosen by the Plan Administrator; provided, however, that
if a Participant has been certified as eligible to receive a
disability benefit under Title II of the Federal Social Security
Act, such certificate shall be treated as conclusive proof that the
Participant is Totally and Permanently Disabled. The determination
of disability hereunder shall be applied uniformly to all
Participants.
1.45 "Trustee" means the person or entity designated as
Trustee on the first page of this Plan and any successors subse
quently named to serve in said capacity.
1.46 "Trust Fund" or "Trust" means the Trust which is
established to hold and invest contributions under this Plan,
together with investment gains and losses, as maintained by the
Trustee.
1.47 "Valuation Date" means the last day of the Plan Year,
or such other dates designated by the Plan Administrator.
1.48 "Vested Interest" means that portion of a Par
ticipant's Aggregate Account that is nonforfeitable.
1.49 "Voluntary Cash Out" means a distribution to a
Participant that meets the following conditions: (i) the Parti
cipant has voluntarily elected to receive a distribution of all or
a portion of the Vested Interest in his Aggregate Account, (ii) the
Vested Interest so distributed exceeds $3,500, and (iii) the
distribution is made on account of the Participant's termination of
participation in the Plan.
1.50 "Year of Service" means a period of twelve (12)
consecutive months (the "computation period") during which an
Employee completes at least 400 Hours of Service.
In determining Years of Service and Breaks in Service for
purposes of vesting, the computation period shall be the Plan Year,
and all Years of Service shall be taken into account (except as
otherwise provided herein). Notwithstanding anything contained
herein to the contrary, in determining an Employee's Years of
Service with the Employer any period in which the Employee is or
was covered under a collective bargaining agreement between
employee representatives and the Employer shall be taken into
account in accordance with the above rules, regardless of whether
that individual was excluded from participation in the Plan on
account of coverage under such collective bargaining agreement.
The Administrator may, in accordance with a uniform and non
discriminatory policy, elect to credit Hours of Service pursuant to
this Plan using one of the following methods:
(a) actual Hours of Service for which an Employee
is paid or entitled to payment.
(b) 190 Hours of Service for each month in which an
Employee is paid or entitled to payment for at least one Hour of
Service.
(c) 95 Hours of Service for each semimonthly period
in which an Employee is paid or entitled to payment for at least
one Hour of Service.
(d) 45 Hours of Service for each week in which an
Employee is paid or entitled to payment for at least one Hour of
Service.
(e) 10 Hours of Service for each day in which an
Employee is paid or entitled to payment for at least one Hour of
Service.
ARTICLE II
ELIGIBILITY
ARTICLE II
ELIGIBILITY:
2.1 Qualification as a Participant.
(a) Each individual who is an Employee, but not a
leased employee (as defined in Section (c)), on the Effective Date
set forth on the first page hereof shall participate in the Plan on
the Effective Date. Each additional Employee who is not a leased
employee shall participate as of the date he first renders an Hour
of Service to the Employer.
(b) The Plan Administrator shall determine the
eligibility of each Employee for participation in the Plan based
upon information furnished by the Employer, and that determination
shall be conclusive and binding upon all persons.
2.2 Notice of Participation. The Plan Administrator shall
give each Employee who qualifies as a Participant under Section
notice of his eligibility to participate and shall furnish the
Employee a written summary of the Plan as then in effect.
2.3 Leave of Absence.
(a) A nonpaid leave of absence for an Employee for
no longer than one (1) year may be authorized by the Employer on a
uniform and nondiscriminatory basis. During such a leave of
absence, the Employee shall retain full eligibility under this
Plan; provided, however, that if the Employee does not return to
active employment with the Employer within thirty (30) days fol
lowing the expiration of the leave of absence period, said Employee
shall be considered as having terminated employment as of the
commencement of the period of absence.
(b) To the extent required by law, the absence of a
Participant by reason of military duty in the armed forces of the
United States shall not be considered a Break in Service, provided
the Participant returns to active employment with the Employer
within ninety (90) days from the date of his separation from the
armed forces.
2.4 Reparticipation. A Participant shall commence par
ticipation in this Plan immediately upon his return to the
Employer's employ.
2.5 Omission of Eligible Employee. If, in any Plan Year,
an Employee who should be included as an Active Participant in the
Plan is erroneously omitted and the discovery of such omission is
not made until after a contribution by the Employer for the Plan
Year has been made, the Employer shall make a subsequent
contribution with respect to the omitted Employee in the amount
which the Employer would have contributed had he not been omitted.
Such contribution shall be made regardless of whether or not it is
deductible in whole or in part for tax purposes under the Code.
2.6 Inclusion of Ineligible Employee. If, in any Plan
Year, an Employee who should not have been included as an Active
Participant in the Plan is erroneously included and the discovery
of such incorrect inclusion is not made until after a contribution
for the Plan Year has been made, the Employer shall not be entitled
to recover the contribution made with respect to the ineligible
person regardless of whether or not a deduction is allowable with
respect to such contribution. In such event, the amount
contributed with respect to the ineligible person shall be
forfeited in the Plan Year in which the discovery is made. Such
forfeited amount shall then be allocated to the Employer Contri
bution Accounts of Active Participants in accordance with
Section (a).
ARTICLE III
TOP-HEAVY PROVISIONS
ARTICLE III
TOP-HEAVY PROVISIONS:
3.1 Special Top-Heavy Plan Requirements. In any Plan Year
in which this Plan is determined to be a "Top-Heavy Plan" (as
defined in Section below), the following provisions shall apply
and shall supersede and override any other provisions in the Plan
to the contrary:
(a) the vesting requirements of Section (a); and
(b) the minimum contribution and allocation
requirements of Section .
3.2 Determination of Top-Heavy Status.
(a) This Plan shall be a Top-Heavy Plan for any
Plan Year in which, as of the Determination Date, any of the
following conditions exist:
(i) the Top-Heavy Ratio (as defined in
paragraph (c) below) exceeds sixty percent (60%) and the Plan
is not part of any Required Aggregation Group or Permissive
Aggregation Group; or
(ii) the Plan is part of a Required Aggregation
Group but not part of a Permissive Aggregation Group and the
Top-Heavy Ratio for the Required Aggregation Group of plans
exceeds sixty percent (60%); or
(iii) the Plan is part of a Required Aggregation
Group and a Permissive Aggregation Group and the Top-Heavy
Ratio for the Permissive Aggregation Group exceeds sixty
percent (60%).
(b) This Plan shall be a Super Top-Heavy Plan for
any Plan Year in which, as of the Determination Date, the Top-Heavy
Ratio exceeds ninety percent (90%).
(c) If the Employer maintains one or more defined
contribution plans (including a simplified employee pension plan)
and has not maintained any defined benefit plan which, during the
five (5) year period ending on the Determination Date, has had
accrued benefits, the Top-Heavy Ratio for this Plan alone or for
the Required or Permissive Aggregation Group (as appropriate) is a
fraction, the numerator of which is the sum of the account balances
of all Key Employees as of the Determination Date (including any
account balance distributed in the five (5) year period ending on
the Determination Date) and the denominator of which is the sum of
all account balances (including any account balance distributed in
the five (5) year period ending on the Determination Date), both
computed in accordance with Section 416 of the Code and the
regulations issued thereunder. Both the numerator and denominator
of the Top-Heavy Ratio shall be adjusted to reflect any
contribution not actually made as of the Determination Date but
which is required to be taken into account on that date under
Section 416 of the Code and the regulations issued thereunder.
(d) If the Employer maintains one or more defined
contribution plans (including a simplified employee pension plan)
and maintains or has maintained one or more defined benefit plans
which, during the five (5) year period ending on the Determination
Date, has had any accrued benefit, the Top-Heavy Ratio for any
Required or Permissive Aggregation Group (as appropriate) is a
fraction, the numerator of which is the sum of account balances
under the aggregated defined contribution plan or plans for all Key
Employees, determined in accordance with paragraph (c) above, and
the present value of accrued benefits under the aggregated defined
benefit plan or plans for all Key Employees as of the Determination
Date, and the denominator of which is the sum of the account
balances under the aggregated defined contribution plan or plans
for all Participants, determined in accordance with paragraph (a)
above, and the present value of accrued benefits under the defined
benefit plan or plans for all Participants as of the Determination
Date, all determined in accordance with Section 416 of the Code and
the regulations issued thereunder. The accrued benefits under a
defined benefit plan in both the numerator and denominator of the
Top-Heavy Ratio shall be adjusted for any distribution of an
accrued benefit made in the five (5) year period ending on the
Determination Date.
(e) For purposes of paragraphs (c) and (d) above,
the value of account balances and the present value of accrued
benefits will be determined as of the most recent Valuation Date
that coincides with or falls within the twelve (12) month period
ending on the Determination Date, except as provided in Section 416
of the Code and the regulations issued thereunder for the first and
second Plan Years of a defined benefit plan. The account balances
and accrued benefits of a Participant who is not a Key Employee but
who was a Key Employee in a prior year or who has not been credited
with at least one (1) Hour of Service with an Employer maintaining
the plan at any time during the five (5) year period ending on the
Determination Date will be disregarded. The calculation of the Top-
Heavy Ratio and the extent to which distributions, rollovers and
transfers are taken into account will be made in accordance with
Section 416 of the Code and the regulations issued thereunder.
When aggregating plans, the value of account balances and accrued
benefits will be calculated with reference to the Determination
Dates that fall within the same calendar year.
The accrued benefit of a Participant other than a Key
Employee shall be determined under (a) the method, if any, that is
uniform for accrual purposes under all defined benefit plans
maintained by the Employer, or (b) if there is no method, as if
such benefit accrued not more rapidly than the slowest accrual rate
permitted under the fractional rule of Section 411(b)(1)(C) of the
Code.
ARTICLE IV
CONTRIBUTIONS
ARTICLE IV
CONTRIBUTIONS:
4.1 Employer Contributions. For the Fiscal Year of the
Employer during which the Plan is adopted, and for each Fiscal Year
thereafter, the Employer shall contribute to this Plan an amount to
be determined by the Employer; provided, however, that such amount
shall not exceed fifteen percent (15%) of the aggregate Compensa
tion of all Active Participants, or such other amount allowable as
a deduction to the Employer under the Code. All contributions by
the Employer under this Section shall be made in cash or in such
other property as is acceptable to the Trustee.
4.2 Maximum Limitation Applicable to Combination of
Defined Contribution Plans. In the event the Employer maintains
this Plan and another defined contribution plan, the aggregate
amount of contributions to both such plans for any Fiscal Year
shall not exceed twenty-five percent (25%) of the total Compen
sation paid or accrued on behalf of all Active Participants for
that year, or such other percentage as may be permitted from time
to time by the Code.
4.3 Time of Payment of Employer Contributions. The
Employer shall pay to the Trustee its contribution to the Plan for
each Fiscal Year in one or more installments, the total amount to
be deposited in the Trust within the time prescribed by law for
filing the Employer's federal income tax return for its Fiscal Year
(including extensions) coinciding with or within which the Plan
Year ends.
ARTICLE V
ALLOCATIONS
ARTICLE V
ALLOCATIONS:
5.1 Minimum Allocations for Top-Heavy Plan Years.
(a) For each Plan Year in which the Plan is
determined to be a Top-Heavy Plan (as defined in Section ), the
Employer's contributions and Forfeitures allocated to the account
of each Participant who is a Non-Key Employee and is employed on
the last day of the Plan Year shall be the lesser of (i) three
percent (3%) of such Non-Key Employee's Compensation or (ii) the
largest allocation of the Employer's contribution and Forfeitures,
when expressed as a percentage of Compensation, that was allocated
to the account of any Key Employee. The minimum allocations
required under the preceding sentence shall be made to the accounts
of all Non-Key Employees who are Participants and who are employed
by the Employer on the last day of the Plan Year, including Non-Key
Employees who failed to complete a Year of Service during that Plan
Year, and those minimum allocations shall be determined without
regard to any Social Security contribution made by the Employer.
(b) If a Key Employee is a Participant in both a
defined benefit plan and a defined contribution plan that are part
of an Aggregation Group (but neither of which plans is a Super Top-
Heavy Plan within the meaning of Section (b)), and if the Employer
desires to avoid the adjustments in the Defined Benefit Plan
Fraction and Defined Contribution Plan Fraction, then the account
of each Non-Key Employee who is a Participant shall receive an
allocation of an additional one percent (1%) of Compensation.
(c) The minimum allocations required under para
graphs (a) and (b) above may not (to the extent required to be
fully vested under Section 416(b) of the Code) be forfeited under
Sections 411(a)(3)(B) or 411(a)(3)(D) of the Code.
(d) Notwithstanding anything contained in this
Section to the contrary, in any Plan Year in which a Non-Key
Employee is a Participant in both this Plan and another qualified
plan maintained by the Employer, and both such plans are Top-Heavy
Plans, the Employer shall be required to provide that Non-Key
Employee with a minimum allocation under this Plan only to the
extent that such benefit is not provided under the other plan.
Therefore, for Non-Key Employees who are participating in a defined
benefit plan or another defined contribution plan maintained by the
Employer and either the required minimum benefits are accruing on
behalf of, or the required minimum allocations are made with
respect to those Employees under such other plans, the provisions
for minimum allocations set forth herein shall not be applicable,
and no minimum contribution to this Plan shall be required on
behalf of such Non-Key Employees.
5.2 Allocation Formula.
(a) Subject to Section and paragraphs and , the
contribution made by the Employer for any Plan Year shall be
allocated to the Employer Contribution Account of each Active
Participant who is employed by the Employer on the last day of the
Plan Year in the ratio that his total Compensation for the Plan
Year bears to the total Compensation of all such Active
Participants for that Plan Year.
(b) Notwithstanding the foregoing, if the Plan
fails to comply with Sections 410(b) and 401(a)(26) of the Code on
account of the exclusion of Participants who were not employed on
the last day of the Plan Year, then any Employer contributions and
Forfeitures attributable to Employer contributions made with
respect to that Plan Year shall be allocated in accordance with the
above provisions on behalf of a sufficient number of individuals
who would have been Active Participants if the Plan did not require
that Participants be employed with the Employer on the last day of
the Plan Year in order to share in the allocation, to cause the
Plan to comply with Sections 410(b) and 401(a)(26) of the Code.
For purposes of this paragraph, individuals described above as
being eligible to be taken into account under this provision shall
be taken into account based on their relative Compensation,
beginning with the individual with the least Compensation and
progressing to the extent required above to the individual with the
greatest Compensation. For any Plan Year in which this Plan is a
Top-Heavy Plan, the amounts allocated to the accounts of Non-Key
Employees shall not be reduced below the benefits required under
Section , and no Employer contribution and Forfeiture shall be
required to be allocated hereunder on behalf of a Participant who
(without regard to this paragraph) was an Active Participant for
the Plan Year solely because he met the eligibility requirements of
Section , was a Non-Key Employee and was employed on the last day
of the Plan Year.
(c) As of each Valuation Date (and at such other
times as the Plan Administrator, in its discretion, deems appro
priate), before the allocation of Forfeitures and Employer
contributions, any earnings, gains or losses of the Trust Fund
shall be allocated to the accounts of Participants in the same
proportion that their nonsegregated accounts bear to the total of
all nonsegregated accounts as of such date. Each Segregated
Account maintained on behalf of a Participant shall be credited or
charged with its own separate earnings and losses. In the case of
a Participant whose accounts change from segregated to
nonsegregated (or vice versa), such Participant's nonsegregated
accounts shall receive a proportionate share of the earnings, gains
and losses of the Trust Fund for the period of time that the
accounts were nonsegregated.
(d) Notwithstanding anything to the contrary con
tained in this Section, if the employment of a Participant termi
nates by reason of death, Total and Permanent Disability or
attainment of Retirement Date, such Participant's Employer Con
tribution Account shall receive an allocation of the Employer
contribution for the Plan Year in which such termination occurs.
(e) As of each Valuation Date, any amounts which
became Forfeitures since the last Valuation Date shall first be
used, to the extent required, to restore amounts forfeited by
Participants, if any, pursuant to Section (c). The remaining
Forfeitures, if any, shall be allocated among the Employer Con
tribution Accounts of Active Participants for the Plan Year in
accordance with the allocation formula in paragraph (a) above;
provided, however, that in the event the allocation of Forfeitures
shall cause the Annual Addition to any Active Participant's account
to exceed the Maximum Permissible Amount, the Excess Amount shall
be reallocated in accordance with Section hereof.
5.3 Overall Limitation of Benefits.
(a) Notwithstanding anything to the contrary
contained in this Plan, the Annual Additions to a Participant's
Employer Contribution Account for a Plan Year shall not exceed the
Maximum Permissible Amount. For purposes of this limitation, all
defined contribution plans maintained by the Employer shall be
considered one plan.
(b) If an Employee is a Participant in one or more
defined benefit plans and one or more defined contribution plans
maintained by the Employer, the sum of the Defined Benefit Plan
Fraction and the Defined Contribution Plan Fraction for any Plan
Year may not exceed 1.0. If the sum of the Defined Benefit Plan
Fraction and the Defined Contribution Plan Fraction shall exceed
1.0 in a Plan Year for any Participant in this Plan, the Employer
shall adjust the numerator of either fraction so that the sum of
both fractions shall not exceed 1.0 in such year for that Par
ticipant.
5.4 Adjustment for Excess Annual Additions. If, as the
result of a reasonable error in the allocation of Forfeitures or in
estimating a Participant's Compensation, or other facts and
circumstances to which Treasury Regulation Section 1.415-6(b)(6)
applies, the Annual Addition to a Participant's Employer
Contribution Account shall exceed the Maximum Permissible Amount,
the Plan Administrator shall, pursuant to Treasury Regulation
Section 1.415-6(b)(6)(iii), hold the Excess Amount unallocated in
a suspense account (hereinafter called the "Section 415 Suspense
Account") and shall allocate and reallocate such excess in the next
Plan Year to the Participants in the Plan before the allocation of
any Employer contributions. Any Excess Amount held in the
Section 415 Suspense Account shall be used to reduce Employer
contributions for the next Plan Year (and succeeding Plan Years, as
necessary) for all of the Participants of the Plan. In no event
shall any Excess Amount in the Section 415 Suspense Account be
distributed to Participants or Beneficiaries. The Section 415
Suspense Account shall not share in the allocation of earnings or
losses of the Trust Fund.
5.5 Segregated Accounts for Participants. The amounts to
which a Participant, other than an Active Participant, is entitled
but which have not been paid out for any reason may, at the
election of the Participant and upon written direction by the Plan
Administrator to the Trustee, be set aside and held by the Trustee
in Segregated Accounts, in which event such Participant shall no
longer share in the allocation of the earnings or losses of the
Trust or in the appreciation or depreciation in the value of the
assets thereof, but shall only be credited or charged with the
earnings or losses and with the appreciation or depreciation of
that portion of the Trust Fund so set aside in the Segregated
Accounts. For purposes of this Section, the Employer shall
designate the investment objectives of Segregated Accounts, and the
Trustee may charge the Segregated Accounts with fees and costs
attributable to those accounts as well as an allocable portion of
the general expenses of the Trust Fund.
ARTICLE VI
VALUATIONS
ARTICLE VI
VALUATIONS:
6.1 Valuation of the Trust Fund. As of each Valuation
Date, and at such other times as may be requested by the Plan
Administrator, the Trustee shall determine the fair market value of
the assets comprising the Trust Fund. In determining the fair
market value of such assets, the Trust Fund shall be reduced by all
amounts that were paid out or set aside because of the
Participant's death, Total and Permanent Disability, attainment of
Retirement Date or termination of employment with the Employer
since the last Valuation Date.
6.2 Method of Valuation. In determining the fair market
value of securities held in the Trust Fund that are listed on a
registered stock exchange, the Trustee shall value such securities
based on the closing sales price at which they were last traded on
the exchange on the Valuation Date. If such securities were not
traded on the Valuation Date, or if the exchange on which they are
traded was not open for business on the Valuation Date, then the
securities shall be valued at the closing sales price at which they
were last traded prior to the Valuation Date. Any unlisted
security held in the Trust Fund shall be valued based on the
average of the closing bid and asked price for such security. In
determining the fair market value of other assets of the Trust
Fund, the Trustee may appraise the assets or, alternatively, may
employ one or more appraisers for that purpose and, in such event,
shall be entitled to rely on the values established by the
appraiser or appraisers. The fair market value of any life
insurance or annuity contract shall be deemed to be its cash
surrender value.
ARTICLE VII
DETERMINATION OF AGGREGATE ACCOUNT
ARTICLE VII
DETERMINATION OF AGGREGATE ACCOUNT:
7.1 Determination of Vested Interest Upon Retirement. A
Participant shall become fully vested in his Employer Contribution
Account upon attaining his Retirement Date. A Participant who
continues in the employ of the Employer after his Retirement Date
shall remain a Participant in this Plan until the last day of the
Plan Year in which his termination actually occurs.
7.2 Determination of Vested Interest Upon Death;
Beneficiaries Beneficiaries;.
(a) In the event of the death of a Participant
prior to his Retirement Date or termination of employment with the
Employer, all amounts credited to his Employer Contribution Account
shall become fully vested. The deceased Participant's surviving
Beneficiary shall receive a distribution of the deceased
Participant's Aggregate Account in accordance with one of the forms
of distribution provided under Article .
(b) In the event of the death of a Participant
following his termination of employment with the Employer, the
Participant's Vested Interest in his Employer Contribution Account
shall be determined under Section (a).
(c) Each Employee, upon becoming a Participant, may
designate in writing a primary and secondary Beneficiary to receive
benefits from the Plan in the event of his death. Such designation
shall be made on forms provided by the Plan Administrator. Except
as otherwise provided in Article , a Participant may at any time
revoke his designation or change his Beneficiary by filing written
notice of such revocation or change with the Plan Administrator.
Notwithstanding anything in this Section to the contrary, in the
event of the death of a Participant, the surviving spouse of such
Participant is deemed to be the sole Beneficiary unless the sur
viving spouse has consented in writing to a different election, has
acknowledged the effect of such election and both the consent and
acknowledgment are witnessed by a notary public; provided, however,
that the consent of the spouse shall not be necessary if it is
established to the satisfaction of the Plan Administrator that
there is no spouse, that the spouse cannot reasonably be located,
or that such other circumstances exist as the Treasury Regulations
may prescribe. The consent of a spouse or the reasons for not
requiring such consent shall be applicable only to that spouse. If
the spouse of a Participant who originally cannot be found is later
located, or if a Participant remarries, it shall be the duty of
that individual to bring that fact to the attention of the
Administrator. Upon such notification, the Administrator shall
then, if applicable, make available to the spouse the consent
procedure described in this paragraph. If no Beneficiary is
designated by the Participant and if the Participant has no
surviving spouse, then the Participant's issue, per stirpes, shall
be the Beneficiary or Beneficiaries; if no issue of the Participant
are living, then the personal representative of the Participant
shall be the Beneficiary.
(d) Prior to making distributions under the Plan,
the Trustee may request the Administrator to provide proof of death
of the Participant and/or evidence of a claimant's status as
Beneficiary. In such event, the Administrator's determination of
death and of the right of any person to receive benefits hereunder
shall be conclusive and binding upon all parties.
7.3 Determination of Vested Interest Upon Total and
Permanent Disability.
(a) In the event of a Participant's Total and
Permanent Disability prior to his termination of employment with
the Employer, the Participant shall become fully vested in his
Employer Contribution Account. The Participant (or his properly
authorized guardian) may then elect to receive a distribution of
his Vested Interest in the Plan in accordance with one of the
distribution options specified in Article .
(b) In the event of the Total and Permanent Disa
bility of a Participant following his termination of employment
with the Employer, the Vested Interest of such Participant shall be
determined under Section (a) without regard to that disability, and
the Participant (or his properly authorized guardian) may then
elect to receive a distribution of his Vested Interest in the Plan
in accordance with one of the distribution options specified in
Article .
7.4 Determination of Vested Interest Upon Termination of
Employment.
(a) In the case of a Participant who separates from
service prior to his Retirement Date for any reason other than
death or Total and Permanent Disability, the Vested Interest of
such Participant in his Employer Contribution Account shall be
determined on the basis of the number of the Participant's Years of
Service with the Employer, according to the following schedule:
Years of Service Vested Interest
0-2 Years 0%
3 Years 20%
4 Years 40%
5 Years 60%
6 Years 80%
7 or more Years 100%
Notwithstanding the foregoing, for any Plan Year in which
this Plan is a Top-Heavy Plan (as determined under Section ), a
Participant's Vested Interest in his Employer Contribution Account
shall be determined as provided in the preceding paragraph, except
under the following schedule:
Years of Service Vested Interest
1 Year 0%
2 Years 20%
3 Years 40%
4 Years 60%
5 Years 80%
6 or more Years 100%
(b) In the case of a Participant who has five (5)
or more consecutive one (1) year Breaks in Service, Years of
Service after such Breaks in Service will be disregarded for
purposes of determining the Participant's Vested Interest in his
Employer Contribution Account prior to such Breaks in Service. The
Participant's Years of Service before a Break in Service will count
in determining the Participant's Vested Interest in his Employer
Contribution Account after such Breaks in Service only if (i) such
Participant has any nonforfeitable interest in his account at the
time of separation from service, or (ii) upon returning to service
the number of consecutive Breaks in Service is less than the
aggregate number of the Participant's Years of Service before such
Breaks in Service.
(c) If a Participant receives a Cash Out and is
then re-employed by the Employer, the portion of such Participant's
Employer Contribution Account that was forfeited shall be
reinstated if he repays to the Plan the full amount of the
distribution attributable to Employer contributions before the
earlier of (i) five (5) years after the date on which the
Participant is re-employed or (ii) the date that the Participant
incurs five (5) consecutive one (1) year Breaks in Service
following the date of distribution. If the Participant repays the
full amount distributed to him, the undistributed portion of his
Employer Contribution Account shall be restored in full, unadjusted
by any gains or losses occurring subsequent to the Anniversary Date
or other Valuation Date preceding his termination. If a
Participant is deemed to receive a distribution pursuant to
Section , and the Participant is re-employed by the Employer before
the date he incurs five (5) consecutive one (1) year Breaks in
Service, then, upon such re-employment, his Employer Contribution
Account will be restored by the Employer to the balance in exis
tence on the date of the deemed distribution.
(d) The Vested Interest of a Participant who
terminated employment with the Employer but is later rehired by the
Employer prior to incurring a Break in Service shall, upon his
reemployment, be identical to his Vested Interest as it existed on
the date of his termination of employment; provided, however, that
if the Participant received a Cash Out, the Participant must repay
the full amount distributed to him in accordance with paragraph (c)
above.
(e) If a Participant is re-employed by the Employer
after a Break in Service has occurred, he shall receive credit for
Years of Service prior to his Break in Service in accordance with
the following rules:
(i) If a Participant incurs a Break in Service,
his pre-break and post-break service shall be used for computing
Years of Service for vesting purposes only after he has been
employed for one (1) Year of Service following the date of his
reemployment by the Employer.
(ii) In the case of a Participant who previously
had no Vested Interest, Years of Service before his Break in
Service shall not be taken into account if the number of his
consecutive Breaks in Service equals or exceeds the greater of
(A) five (5), or (B) the aggregate number of his pre-break Years
of Service;
(iii) Years of Service after the Participant has
incurred five (5) consecutive one (1) year Breaks in Service
shall not be taken into account for purposes of determining
his Vested Interest in contributions attributable to pre-break
service, but both pre-break and post-break service will count
for purposes of determining his Vested Interest in
contributions that accrue after such breaks.
(f) Separate accounts will be maintained for pre-
break contributions (if not distributed) and post-break contribu
tions made by the Employer on behalf of Participants who are
rehired before incurring five (5) consecutive one (1) year Breaks
in Service, and both accounts will share in the earnings and losses
of the Plan.
(g) A Participant's Vested Interest shall not be
reduced as the result of an amendment to this Plan. In the event
that the Plan is amended to change the vesting schedule, or is
amended in a way that directly or indirectly affects the computa
tion of a Participant's Vested Interest, then each Participant with
at least three (3) Years of Service as of the expiration date of
the election period set forth below may elect in writing to have
his Vested Interest computed without regard to such amendment. The
election period shall commence on the date the amendment is adopted
and shall end sixty (60) days after the latest of:
(i) the date of adoption of the amendment;
(ii) the effective date of the amendment; or
(iii) the date the Participant receives written
notice of the amendment from the Employer, Trustee or Plan
Administrator.
Notwithstanding the above, no election need be provided for
a Participant whose Vested Interest under this Plan, as amended,
cannot be less at any time than his Vested Interest determined
without regard to the amendment.
ARTICLE VIII
DISTRIBUTION OF BENEFITS
ARTICLE VIII
DISTRIBUTION OF BENEFITS:
8.1 Distributable Events. A Participant's Vested Interest
in his Aggregate Account shall become distributable to him in
connection with one of the following events:
(a) death,
(b) Total and Permanent Disability,
(c) attainment of age 70-1/2,
(d) attainment of his Retirement Date,
(e) termination of employment, or
(f) pursuant to the terms of a qualified domestic
relations order (subject to Section below).
8.2 Distribution of Aggregate Account.c.:8.2 Distribution
of Aggregate Account;. That portion of a Participant's Aggregate
Account to which he is entitled shall be distributed to him (or, in
the event of his death, to his Beneficiary) by the Trustee in one
lump sum distribution.
8.3 Cash Out of Vested Interest in Aggregate Account Upon
Termination of Employment.c.:8.3 Cash Out of Vested Interest in
Aggregate Account Upon Termination of Employment;.
(a) If the Vested Interest of a Participant who has
terminated employment with the Employer does not exceed (nor at the
time of any prior distribution exceeded) $3,500, such Participant
shall receive an Involuntary Cash Out. If the value of the Partici
pant's Vested Interest is zero, such Participant shall be deemed to
have received a distribution of his Vested Interest in his account
on the date he ceased to be an Employee.
(b) If the Vested Interest of a Participant who has
terminated employment with the Employer exceeds (or at the time of
any prior distribution exceeded) $3,500, then at the time permitted
by Section (b)(i), such Participant may elect to receive a
Voluntary Cash Out. If the Participant elects to receive a
Voluntary Cash Out of his entire Vested Interest, or at such
earlier time provided under Section , the nonvested portion of the
Participant's account balance shall become a Forfeiture. If the
Participant elects to receive less than his entire Vested Interest
derived from Employer contributions as a Voluntary Cash Out, the
nonvested portion will not be treated as a Forfeiture until
otherwise provided under Section above. If a Participant does not
elect to receive a Voluntary Cash Out, then the Vested Interest in
such Participant's Aggregate Account shall remain in the Plan until
such amounts otherwise become distributable under the terms hereof.
8.4 Commencement of Distributions.
(a) Unless a Participant or Beneficiary files a
written election to the contrary with the Plan Administrator, the
payment of benefits must begin within sixty (60) days after the end
of the Plan Year following the later of:
(i) the Participant's attainment of his Retirement
Date;
(ii) the tenth (10th) anniversary of the
Participant's participation in this Plan; or
(iii) the Participant's termination of employ
ment with the Employer.
If the amount of the payment required to commence on a
certain date determined under this Section cannot be ascertained by
that date, or if it is not possible to make the payment on that
date because the Plan Administrator has been unable to locate the
Participant after making reasonable efforts to do so, a payment
retroactive to such date may be made no later than sixty (60) days
after the earliest date on which the amount of the payment can be
ascertained or the date on which the Participant is located,
whichever is applicable.
(b) Upon the occurrence of a distributable event,
as defined in Section , distributions will be made no later than as
soon as administratively feasible following the close of the Plan
Year in which the Participant terminates employment with the
Employer as a result of death, Total and Permanent Disability or
attainment of Retirement Date. If a Participant's employment shall
terminate for any other reason, distribution of the Vested Interest
of his Aggregate Account will be made no earlier than as follows:
(i) if the Vested Interest of the Participant's
Aggregate Account exceeds $3,500, at the earliest of the
following to occur: death, Disability or Normal Retirement
Age; or
(ii) if the Vested Interest of the
Participant's Aggregate Account does not exceed $3,500, at the
end of the second Plan Year that begins after the
Participant's termination of employment with the Employer.
8.5 Distributions in Cash or in Kind. All distributions
shall be in cash or in kind, subject to the approval of the
Participant or Beneficiary receiving the distribution, provided
that under the law and the terms of the investment that investment
may be held by such individual, and that the Participant's account
bears all costs and expenses allocable to the distribution.
8.6 Distributions to Minors and Incompetents. If the Plan
Administrator determines that any person entitled to receive
payments hereunder is a minor or is incompetent by reason of phys
ical or mental disability, it may direct the Trustee to make all
payments thereafter becoming due to such person to any other person
for the benefit of the minor or incompetent, without responsibility
to follow the actual application of amounts so paid. Payments
properly made pursuant to this direction shall completely discharge
the Trustee from all liability connected therewith.
8.7 Location of Participant or Beneficiary Unknown. In
the event that all or any portion of a distribution payable to a
Participant or his Beneficiary hereunder shall, at the expiration
of five (5) years after it shall become payable, remain unpaid
solely by reason of the inability of the Administrator, after
sending a registered letter, return receipt requested, to the last
known address, and after further diligent effort, to ascertain the
whereabouts of the Participant or Beneficiary, the amount so
distributable shall be forfeited and shall be allocated to the
Employer Contribution Accounts of Active Participants in accordance
with the provisions of Section (a). In the event a Participant or
Beneficiary is located subsequent to the reallocation of his
benefit, such benefit shall be restored by an additional contri
bution made by the Employer. Notwithstanding the above, if in
connection with the termination of the Plan the Plan Administrator
cannot ascertain the whereabouts of a Participant or Beneficiary
after sending a registered letter, return receipt requested, to the
last known address of such Participant or Beneficiary, and after
contacting known relatives of the Participant or Beneficiary, the
Trustee, upon confirmation of same by the Plan Administrator, may
(i) deposit those amounts in a federally insured savings account in
the name of the Participant or Beneficiary or (ii) request that the
Department of Banking and Finance of the State of Florida hold
those amounts under Chapter 717 of the Florida Statutes as
unclaimed property, and upon the grant of that request, the Trustee
may submit those amounts to the Department of Banking and Finance
of the State of Florida in accordance with Chapter 717 of the
Florida Statutes.
8.8 Qualified Domestic Relations Orders.
(a) Notwithstanding any other provisions of this
Article , the Trustee may make distributions pursuant to a
qualified domestic relations order (as defined in Section 414(p) of
the Code), provided that the Plan Administrator has properly
notified the Participant and any alternate payee of its receipt of
the order and has determined that the order is in fact a qualified
domestic relations order. The Plan Administrator shall adopt
reasonable procedures to determine the qualified status of such
orders and to administer distributions thereunder.
(b) During the period in which a determination is
being made as to whether the order is a qualified domestic rela
tions order, the Plan Administrator shall separately account for
the amounts that would have been payable to the alternate payee
during such period if the order had been determined to be a
qualified domestic relations order. The Plan Administrator may
direct the Trustee to hold those amounts in one or more funds, the
primary objective of which is the preservation of principal, or it
may continue to invest the amounts with the general assets of the
Trust. If within eighteen (18) months the order is determined to
be a qualified domestic relations order, then the Plan
Administrator shall pay the amount subject to the order to the
person entitled thereto; otherwise, those amounts shall be paid to
the person who would have been entitled to them had there been no
order.
(c) Benefits payable to an alternate payee under a
qualified domestic relations order may be paid upon the earlier of
(i) the date on which the Participant is entitled to a distribution
under the Plan, or (ii) the later of (A) the date the Participant
attains age fifty (50) or (B) the earliest date on which the
Participant could begin receiving benefits under the Plan if the
Participant separated from service with the Employer. However, not
withstanding the preceding sentence, if the qualified domestic
relations order specifically provides for an earlier distribution
pursuant to an agreement between the Participant and the alternate
payee, then the Trustee may make an earlier distribution to the
alternate payee; provided, however, that if the distribution to the
alternate payee exceeds $3,500, then the alternate payee must
consent in writing to such distribution.
ARTICLE IX
MINIMUM DISTRIBUTIONS
ARTICLE IX
MINIMUM DISTRIBUTIONS:
9.1 Minimum Distributions.
(a) This Section shall apply to distributions of a
Participant's interest and will take precedence over any
inconsistent provisions of this Plan.
(b) All distributions required under this
Article shall be determined and made in accordance with the
proposed regulations issued under Section 401(a)(9) of the Code,
including the minimum distribution incidental benefit requirement
of Section 1.401(a)(9)-2 of the proposed regulations.
9.2 Required Beginning Date. The entire interest of a
Participant must either be distributed or distribution of such
interest must begin no later than the Participant's Required
Beginning Date.
9.3 Limits on Distribution Periods. As of the first
Distribution Calendar Year, distributions may not be made over a
period that exceeds the following (or a combination thereof):
(a) the life of the Participant;
(b) the life of the Participant and a Designated
Beneficiary;
(c) a period certain not extending beyond the Life
Expectancy of the Participant; or
(d) a period certain not extending beyond the joint
and last survivor expectancy of the Participant and a Designated
Beneficiary.
9.4 Determination of Amount to be Distributed Each Year.
If the Participant's interest is to be distributed in other than a
single sum, the following minimum distribution rules shall apply on
or after the Required Beginning Date:
(a) If a Participant's Benefit is to be distributed
over (i) a period not extending beyond the Life Expectancy of the
Participant or the joint life and last survivor expectancy of the
Participant and the Participant's Designated Beneficiary, or (ii) a
period not extending beyond the Life Expectancy of the Designated
Beneficiary, the amount required to be distributed for each
calendar year, beginning with the distribution for the first
Distribution Calendar Year, must at least equal the quotient
obtained by dividing the Participant's Benefit by the Applicable
Life Expectancy.
The amount to be distributed each year, beginning with
distributions for the first Distribution Calendar Year, shall not
be less than the quotient obtained by dividing the Participant's
Benefit by the lesser of (i) the Applicable Life Expectancy, or
(ii) if the Participant's spouse is not the Designated Beneficiary,
the applicable divisor determined from the table set forth in Q&A-4
of Section 1.401(a)(9)-2 of the proposed regulations.
Notwithstanding the above, distributions after the death of the
Participant shall be made using the Applicable Life Expectancy as
the relevant divisor without regard to Section 1.401(a)(9)-2 of the
proposed regulations. The minimum distribution required for the
Participant's first Distribution Calendar Year must be made on or
before the Participant's Required Beginning Date. The minimum
distribution for other calendar years, including the minimum
distribution for the Distribution Calendar Year in which the
Employee's Required Beginning Date occurs, must be made on or
before December 31 of that Distribution Calendar Year.
(b) If the Participant's Benefit is distributed in
the form of an annuity purchased from an insurance company, then
distributions thereunder shall be made in accordance with the
requirements of Section 401(a)(9) of the Code and the proposed
regulations issued thereunder.
9.5 Death Distribution Provisions.
(a) If a Participant dies after distribution of his
interest has begun, the remaining portion of such interest will
continue to be distributed at least as rapidly as under the method
of distribution being used prior to the Participant's death.
(b) If the Participant dies before distribution of
his interest begins, the distribution of the Participant's entire
interest shall be completed by December 31 of the calendar year
containing the fifth anniversary of the Participant's death, except
to the extent that an election is made to receive distributions in
accordance with (i) or (ii) below:
(i) If any portion of the Participant's interest
is payable to a Designated Beneficiary, then distributions may be
made over the Life Expectancy or over a period certain not
greater than the Life Expectancy of the Designated Beneficiary,
commencing on or before December 31 of the calendar year
immediately following the calendar year in which the
Participant died.
(ii) If the Designated Beneficiary is the
Participant's surviving spouse, then the date distributions are
required to begin under paragraph (a) above shall not be
earlier than the later of (A) December 31 of the calendar year
immediately following the calendar year in which the
Participant died or (B) December 31 of the calendar year in
which the Participant would have attained age 70-1/2.
If the Participant has not made an election pursuant to
this paragraph (b) by the time of his or her death, then the
Participant's Designated Beneficiary must elect the method of
distribution no later than the earlier of (i) December 31 of the
calendar year in which distributions would be required to begin
under this Section, or (ii) December 31 of the calendar year which
contains the fifth anniversary of the date of death of the
Participant. If the Participant has no Designated Beneficiary or
if the Designated Beneficiary does not elect a method of distri
bution, then the distribution of the Participant's entire interest
must be completed by December 31 of the calendar year containing
the fifth anniversary of the Participant's death.
(c) If the surviving spouse dies after the
Participant but before payments to such spouse begin, then the
provisions of paragraph (b) above (with the exception of clause
(ii) therein) shall be applied as if the surviving spouse were the
Participant.
(d) For purposes of this Section, any amount paid
to a child of the Participant will be treated as if it had been
paid to the surviving spouse if the amount becomes payable to the
surviving spouse when the child reaches the age of majority.
(e) For purposes of this Section, the distribution
of a Participant's interest is considered to begin on the Partici
pant's Required Beginning Date (or, if paragraph (c) above is
applicable, the date distribution is required to begin to the
surviving spouse pursuant to paragraph (b) above). If a distribu
tion in the form of an annuity irrevocably commences to the Partici
pant before the Required Beginning Date, then the date the
distribution is considered to begin is the date distribution
actually commences.
9.6 Definitions.
(a) "Applicable Life Expectancy" means the Life
Expectancy (or joint and last survivor expectancy) calculated using
the attained age of the Participant (or Designated Beneficiary) as
of the Participant's (or Designated Beneficiary's) birthday in the
applicable calendar year, reduced by one for each calendar year
which has elapsed since the date the Life Expectancy was first
calculated. If the Life Expectancy is being recalculated, the
Applicable Life Expectancy shall be the Life Expectancy as so
recalculated. The applicable calendar year shall be the first
Distribution Calendar Year and, if the Life Expectancy is being
recalculated, such succeeding calendar year.
(b) "Designated Beneficiary" means the individual
who is designated as the Beneficiary under the Plan in accordance
with Section 401(a)(9) of the Code and the proposed regulations
issued thereunder.
(c) "Distribution Calendar Year" means a calendar
year for which a minimum distribution is required. For distribu
tions beginning before the Participant's death, the first Distri
bution Calendar Year is the calendar year immediately preceding the
calendar year which contains the Participant's Required Beginning
Date. For distributions beginning after the Participant's death,
the first Distribution Calendar Year is the calendar year in which
distributions are required to begin.
(d) "Life Expectancy" means the life expectancy or
joint and last survivor expectancy computed by use of the expected
return multiples in Tables V and VI of Treasury Regulation
Section 1.72-9.
Unless otherwise elected by the Participant (or spouse, in
the case of distributions described in Section (b)(ii) above) by
the time distributions are required to begin, Life Expectancies
shall be recalculated annually. Such election shall be irrevocable
as to the Participant (or spouse) and shall apply to all subsequent
years. The Life Expectancy of a nonspouse Beneficiary may not be
recalculated.
(e) "Participant's Benefit" means the account
balance as of the last Valuation Date in the calendar year immedi
ately preceding the Distribution Calendar Year (valuation calendar
year) increased by the amount of any contributions or Forfeitures
allocated to the account balance as of dates in the valuation
calendar year after the Valuation Date and decreased by
distributions made in the valuation calendar year after the Valu
ation Date; provided, however, that if any portion of the minimum
distribution for the first Distribution Calendar Year is made in
the second Distribution Calendar Year on or before the Required
Beginning Date, the amount of the minimum distribution made in the
second Distribution Calendar Year shall be treated as if it had
been made in the immediately preceding Distribution Calendar Year.
(f) "Required Beginning Date" means the first day
of April of the calendar year following the calendar year in which
the Participant attains age 70-1/2. Notwithstanding the foregoing,
the Required Beginning Date of a Participant who attained age 70-
1/2 before January 1, 1988 shall be determined as follows:
(i) The Required Beginning Date of a Participant
who is not a 5-percent owner (as defined in Section 416(i)(1)(B)(i)
of the Code) is the first day of April of the calendar year following
the calendar year in which the Participant retires or attains age
70-1/2, whichever occurs later.
(ii) The Required Beginning Date of a Participant
who is a 5-percent owner during any year beginning after
December 31, 1979 is the first day of April following the later of:
(A) the calendar year in which the Participant
attains age 70-1/2, or
(B) the earlier of the calendar year with or
within which ends the Plan Year in which the Participant becomes
a 5-percent owner, or the calendar year in which the Participant retires.
The Required Beginning Date of a Participant who is not a 5-
percent owner who attains age 70-1/2 during 1988 and who has not
retired as of January 1, 1989, is April 1, 1990.
For purposes of this Section, a Participant is treated as a
5-percent owner if such Participant is a 5-percent owner at any
time during the Plan Year ending with or within the calendar year
in which the Participant attains age 66-1/2 or any subsequent Plan
Year.
Once distributions have begun to a 5-percent owner under
this Section, they must continue, even if the Participant ceases to
be a 5-percent owner in a subsequent year.
ARTICLE X
FIDUCIARY RESPONSIBILITY AND INVESTMENT OF PLAN FUNDS
ARTICLE X
FIDUCIARY RESPONSIBILITY AND INVESTMENT OF PLAN FUNDS:
10.1 Basic Responsibilities of Trustee. The Trustee shall
have the following categories of responsibilities:
(a) Consistent with the funding policy established
by the Employer, to invest, manage and maintain custody of the
Trust assets.
(b) At the direction of the Plan Administrator, to
distribute benefits to Participants or their Beneficiaries as
required under the terms of the Plan.
(c) To maintain records of receipts and disburse
ments on behalf of the Trust Fund and to furnish the Employer
and/or Plan Administrator with the information required hereunder.
If there shall be more than one Trustee, they shall act by
a majority of their number, but may authorize one or more of them
to act on their behalf.
10.2 Assets Held as Single Fund. The Trustee shall invest
and reinvest the Trust assets, together with the income thereof, in
its absolute discretion (except to the extent directed by an
Investment Manager under Section or by Participants under
Section ), without distinction between principal and income. All
contributions from time to time paid to the Trustee by or on behalf
of the Employer, along with the income therefrom, may after alloca
tion be held and administered by the Trustee as a single fund, and
the Trustee shall not be required to segregate or invest separately
any share of a Participant in the Trust, except as otherwise
provided in this Plan.
10.3 Powers of Trustee. In carrying out the Plan's funding
policy and method, as established by the Employer (and except as
directed by an Investment Manager or by the Participants), the
Trustee is authorized:
(a) to invest and reinvest the monies accumulated
in the Trust, without distinction between principal and income, in
common or preferred stocks (whether or not listed on any exchange),
bonds, notes, debentures, mortgages, equipment trust certificates,
investment trust certificates, mutual funds or other securities,
real estate, personal property, limited partnership units, stock
options (including puts and calls), guaranteed insurance contracts,
repurchase agreements, commercial paper and such other investments
(including its own savings accounts, certificates of deposit and
common or pooled investment funds) as it may deem suitable and
which are not prohibited under the Code or ERISA;
(b) to sell, exchange, convey, transfer or other
wise dispose of any property held by it, by private contract or at
public auction, and no person dealing with the Trustee shall be
required to see to the application of the purchase money or to
inquire into the validity, expediency or propriety of any such sale
or other disposition;
(c) to vote upon any stocks, bonds or other
securities and to give general or special proxies or powers of
attorney with or without power of substitution (provided, however,
that the Trustee shall have no responsibility for voting proxies
with respect to those assets of the Trust Fund that are managed by
an Investment Manager, or with respect to assets held in a
Participant Directed Account), to exercise any conversion
privileges, subscription rights or other options and to make
payments incidental thereto, to open and maintain margin accounts
in connection with the purchase of securities, to consent to or
otherwise participate in corporate reorganizations or other changes
affecting corporate securities, to delegate discretionary powers
and to pay any assessments or charges in connection therewith, and,
generally, to exercise all of the powers of owner with respect to
stocks, bonds, securities and other property held in the Trust;
(d) to negotiate, execute and deliver an option or
agreement for the purchase of securities, including bonds,
preferred or common stocks and mutual funds, and real or personal
property;
(e) to make, execute, acknowledge and deliver
documents of transfer and conveyance and any and all other
instruments that may be necessary or appropriate to carry out the
powers granted herein;
(f) to register any investment held in the Trust in
its own name or in the name of a nominee and to hold any investment
in bearer form, but the books and records of the Trustee shall at
all times show that such investments are part of the Trust;
(g) to employ suitable agents and counsel and to
pay their reasonable expenses and compensation;
(h) to borrow on behalf of the Plan and to use
assets of the Trust as security for such loans;
(i) to purchase insurance on the life of any
Participant in accordance with the terms of the Plan;
(j) to invest funds in Qualifying Employer Real
Property and Qualifying Employer Securities, but not to exceed ten
percent (10%) of the fair market value of the assets of the Trust;
(k) to settle, compromise or submit to arbitration
any claims or debts due to or owed from the Plan;
(l) to commence or defend suits or administrative
proceedings, and to represent the Plan in connection therewith;
(m) to do all acts, whether or not specifically
authorized herein, which it deems necessary or proper for the
protection of the Trust assets and the administration of the Trust;
and
(n) to apply for and procure from an insurer, at
the direction of the Administrator, such annuity or other contracts
on the life of any Participant as the Administrator shall deem
proper, to exercise whatever rights and privileges may be granted
under such annuity or other contracts and to collect, receive and
settle for the proceeds of all such annuity or other contracts as
and when entitled to do so under the provisions thereof.
The Trustee may keep such portion of the Trust in cash or
cash equivalents as it deems appropriate and shall not be required
to pay interest on cash held by it pending investment.
10.4 Selection of Investment Objectives. Subject to the
provisions of Section (a), the Employer may designate in writing
the investment objectives of the Trust Fund, such as the proportion
or percentage of Trust assets, if any, to be placed in equity
investments (including equity funds of any collective, commingled
or common trust fund maintained by the Trustee), fixed income
investments (including fixed income funds of any collective,
commingled or common trust fund maintained by the Trustee) or life
insurance contracts. In the event the Employer fails to designate
in writing its preference regarding the investment of the assets of
the Trust, such assets shall be invested by the Trustee, the
primary objective of which is the preservation of principal, except
as otherwise directed under the terms of the Plan.
10.5 Directed Investment by Investment Manager.
(a) The Employer may appoint an Investment Manager
and, in such event, may direct, by written notice, the segregation
of any portion of the Trust in a separate investment account or
accounts for investment and reinvestment by the Investment Manager.
If the investment of the Trust is to be directed in whole or in
part by an Investment Manager, the Employer shall deliver to the
Trustee a copy of the document appointing the Investment Manager
and evidencing the Investment Manager's acceptance of such
appointment, an acknowledgment in writing by the Investment Manager
that it is a Fiduciary with respect to the Plan, and, if
applicable, a certificate evidencing the Investment Manager's
current registration under the Investment Advisers Act of 1940.
The Trustee shall be fully protected in relying upon those
instruments until otherwise notified in writing by the Employer.
(b) The Trustee shall follow the directions of the
Investment Manager regarding the investment and reinvestment of the
Trust (or such portion thereof as shall be under management by the
Investment Manager). The Trustee shall be under no duty or
obligation to review any investment to be acquired, held or
disposed of pursuant to such direction or to make any recommen
dations with respect to the disposition or continued retention of
any such investment, and the Investment Manager shall have sole
responsibility for voting proxies for those assets of the Trust
that it manages. The Trustee shall have no liability or
responsibility for acting or not acting pursuant to the direction
of, or for failing to act in the absence of any direction from the
Investment Manager, unless the Trustee knows that by such action or
failure to act it would be committing a breach of fiduciary duty or
participating in a breach of fiduciary duty by the Investment
Manager. The Employer hereby agrees to indemnify and hold the
Trustee harmless from and against any and all liability by reason
of its acting pursuant to the direction of the Investment Manager
or failing to act in the absence of such direction.
(c) An Investment Manager may from time to time
issue orders for the purchase or sale of securities directly to a
broker and, in order to facilitate such transaction, the Trustee
upon request shall execute and deliver the appropriate trading
authorizations. Notification of the issuance of each order shall
be given promptly to the Trustee by the Investment Manager, and the
execution of such orders shall be confirmed by notice to the
Trustee by the Investment Manager or the broker in accordance with
standard commercial practices. Upon such notification the Trustee
shall be authorized to pay for securities purchased against receipt
thereof and to deliver securities sold against payment therefor, as
the case may be.
(d) In the event that an Investment Manager shall
resign or be removed by the Employer, the Trustee, after written
notification of such removal or resignation, and upon acceptance by
the Trustee, shall manage the investment of the Trust unless and
until it is notified of the appointment of another Investment
Manager.
10.6 Directed Investment by Participants.
(a) The Employer, in its sole discretion, may
permit Participants (on a uniform and nondiscriminatory basis) to
direct the investment of the assets of any one or more of their
accounts. The Employer may, in its discretion, limit the invest
ment options available to Participants to those investments desig
nated by the Employer or it may permit the Participants to direct
the investment of the assets of their accounts in any manner
requested by the Participant; provided, however, that no
Participant may designate that any portion of his accounts be
invested in "collectibles," as that term is defined in
Section 408(m)(2) of the Code. If the Employer elects to limit the
investment to certain designated alternatives, the Employer may add
or delete investment options from time to time. The Employer, in
its sole discretion, may determine each Plan Year whether
Participants shall be permitted to direct the investment of all or
any of their accounts, regardless of whether Participants were
permitted to direct the investment of any account in prior Plan
Years.
(b) In the event that the Employer permits Par
ticipants to direct the investment of one or more of their accounts
for a Plan Year, the following procedures shall apply:
(i) The Employer shall advise the Plan Ad
ministrator in writing of the accounts over which Participants
will be permitted to direct investments and the available
investment options, if any. The Plan Administrator shall then
communicate that information to the Participants and allow
them to make written investment elections in accordance with
its administrative policy. Upon receipt of those written
directions, the Plan Administrator shall forward them to the
Trustee, who shall make investments in accordance therewith
within a period of thirty (30) days after receipt thereof.
(ii) Pending receipt of the initial investment
direction from a Participant as provided in (i) above (or in
the absence of such direction), the Trustee shall invest the
entire amount of that Participant's Directed Account with the
nonsegregated accounts or, if there are no nonsegregated
accounts, in one or more funds the primary objective of which
is the preservation of principal, and such amounts shall
remain so invested until the Trustee receives from the Plan
Administrator written investment directions from the
Participant to the contrary. Once a Participant has selected
a particular investment with respect to all or a portion of
his Participant Directed Account, such portion shall remain so
invested until the Participant directs otherwise (in
accordance with this Section), and neither the Trustee nor the
Plan Administrator shall have any obligation or responsibility
to review or monitor the performance of that investment.
(iii) The Plan Administrator shall establish
reasonable procedures for notifying Participants of the
available investment alternatives and for implementing the
selection by Participants of the various investment options,
and either the Plan Administrator or Trustee may refuse to
carry out any investment election that is not made in accor
dance with those procedures. The Employer may change avail
able investment options or designate additional investment
options from time to time in it sole discretion.
(iv) The account of any Participant may be
charged for the expenses of carrying out the investment
elections of that Participant.
(c) Except as otherwise required by law, no
Participant shall be deemed a Fiduciary by reason of giving in
vestment directions hereunder, and no person who is otherwise a
Fiduciary shall be liable for any loss attributable to such
directed investments, or for the result of a Participant's exercise
of control over the investment of his or her accounts which would
otherwise constitute a breach of fiduciary responsibility. Neither
the Trustee, the Plan Administrator nor any other person shall be
under a duty to question the selection of an investment by a
Participant or to make suggestions to him in connection therewith.
Any loss occasioned by a Participant's selection of an investment
(or his failure to change a selection) shall not be the
responsibility of the Trustee, the Administrator or any other
person. Neither the Trustee nor the Administrator shall be liable
to any Participant for the failure to make an investment selected
by him if, in the exercise of due diligence, the Trustee has not
been able to (i) acquire such investment or other property on
reasonable terms, taking into account the price and conditions of
purchase, (ii) acquire securities or other property that satisfy
the specifications and parameters established by the Administrator
as an investment option available to Participants, or (iii) obtain
sufficient cash to make the investment in accordance with a
Participant's election on account of the lack of funds in such
Participant's accounts or a lack of liquidity of existing
investments.
(d) Any increase in the cost of administration of
the Plan charged by the Trustee arising out of the segregation and
individual direction of account balances at the election of a
Participant may, upon the direction of the Employer, be paid by
that Participant or, if not so paid, withdrawn from the Partici
pant's account.
10.7 Powers and Duties of Plan Administrator. The primary
responsibility of the Plan Administrator is to administer this Plan
in accordance with its terms for the exclusive benefit of the
Participants and their Beneficiaries. In this regard, the
Administrator shall determine all questions arising in connection
with the administration, interpretation and application of the
Plan. Specifically, the Administrator is empowered:
(a) to determine the eligibility of Employees to
participate hereunder;
(b) to direct the Trustee with respect to the form
and timing of the distribution of benefits to Participants and
Beneficiaries;
(c) to interpret the provisions of the Plan and to
formulate rules and regulations for its operation;
(d) to communicate with the Participants as neces
sary and to assist any Participant regarding his rights, benefits
or options available under the Plan; and
(e) to perform all other functions required here
under and to take any further action, whether specified herein or
directed by the Employer or the Trustee, as may be necessary for
the proper administration of this Plan.
Any decision by or action of the Plan Administrator shall
be final and binding unless clearly arbitrary and capricious.
10.8 Records and Reports.
(a) The Trustee shall maintain records of the
disposition of the assets of the Trust, which shall be open to
inspection at all reasonable times to any person designated in
writing by the Employer. Within ninety (90) days following the
close of each Plan Year (or such later date as may be agreed upon
between the Trustee and the Employer), the Trustee shall file with
the Employer a written statement (i) setting forth all investments,
receipts, disbursements and other transactions effected during such
year, (ii) containing an exact description of all securities
purchased and sold and (iii) showing the cost or net proceeds of
sale, and listing the securities and other Plan assets held at the
end of the year, and the cost of each item as carried on the books
of the Trustee.
(b) The Plan Administrator shall maintain records
of the administration of this Plan, which shall be open to inspec
tion at all reasonable times to any person designated in writing by
the Employer. The Administrator shall be responsible for preparing
and filing all reports, tax returns and other materials required by
the Department of the Treasury and the Department of Labor, and for
supplying the Participants and Beneficiaries with all information
regarding the operation of the Plan and Trust as required by law.
10.9 Compensation of the Trustee and Administrative
Expenses of the Trust. Subject to the prohibited transaction rules
set forth in Section 4975 of the Code, the Trustee shall be
entitled to reasonable compensation for services rendered as may be
agreed with the Employer from time to time. The Trustee and the
Plan Administrator shall be entitled to payment of all reasonable
expenses incurred in the performance of their duties hereunder,
including taxes and fees for legal and accounting services. The
compensation and expenses of the Trustee and the Plan Administrator
may be charged against and paid out of the Trust upon either the
written request of the Employer or, if not paid within thirty (30)
days after an invoice for such compensation or expenses is
presented to the Employer, in the discretion of the Trustee.
10.10 Communication to Trustee to be in Writing. Any
determination or action of the Employer pursuant to the provisions
of this Plan shall be communicated in writing to the Trustee. The
Trustee shall be entitled to rely on all information received from
the Employer, and shall be under no duty to make a determination as
to its validity.
10.11 Taxes. The Trustee shall have the right to pay out
of the Trust all taxes imposed or levied with respect to Trust
assets, and in its discretion may contest the validity or amount of
any tax, assessment, claim or demand with respect to the Trust or
any part thereof.
10.12 Fiduciary Responsibility.
(a) The Trustee is designated as a Fiduciary of
this Plan and Trust and (except to the extent directed by an
Investment Manager under Section or by Participants under
Section ) is charged with the making of Trust investments and the
maintenance of the necessary records as specified in Section (a).
In this regard, all investments under the Plan shall be made by the
Trustee in a prudent manner, and in making investments all
Participants in similar circumstances shall be treated equally and
on a nondiscriminatory basis. In addition, the Trustee shall
maintain diversity in selecting Plan investments unless under the
circumstances it is clearly prudent not to do so. Although the
Employer has the right to recommend general areas of investment
under Section , its powers are advisory only and its recommenda
tions shall be reviewed by the Trustee and implemented only when
determined by the Trustee to be prudent and proper in light of the
current assets of the Trust, the probable benefit to the
Participants and whatever other factors the Trustee shall in its
discretion deem important.
(b) The Trustee shall not be liable for, and the
Employer shall indemnify and hold the Trustee harmless against any
liability, loss, expense, assessment or cost, including, but not
limited to, legal fees, expenses and costs incurred by the Trustee
(i) as a direct or indirect result of (A) the duties and
responsibilities allocated to it under this Plan, including action
taken at the direction of the Employer, the Plan Administrator or
their agents, (B) reliance on advice of counsel, (C) any failure to
act if action can reasonably be taken only after receipt from the
Employer, the Plan Administrator or their agents of specific
directions where such directions are either required under the Plan
or are requested by the Trustee, or (D) any act or failure to act
by the Trustee as a direct or indirect result of the failure of the
Employer, the Plan Administrator, any predecessor trustee,
custodian or other fiduciaries of the Plan to act in accordance
with its terms or applicable law and (ii) which are not
attributable to the Trustee's own negligence, willful misconduct or
lack of good faith.
(c) The Plan Administrator is designated as a
Fiduciary of this Plan and Trust. The Plan Administrator shall
have responsibility, subject to the terms hereof, for the admin
istration and operation of this Plan and the maintenance of the
necessary records as specified in Section (b). The Plan
Administrator may be removed by the Employer or may voluntarily
resign from said capacity. Such removal or resignation shall be in
writing and shall be effective only upon the appointment of a
successor and the written acceptance by the new Plan Administrator
of the responsibility and liability attaching to that position as
set forth herein. In the event of removal or resignation, the Plan
Administrator shall transfer to its successor such records as may
be reasonably required for the proper administration of the Plan.
10.13 Removal and Resignation of Trustee.
(a) The Trustee may be removed by the Employer by
the delivery to the Trustee of a written directive to that effect.
The Trustee may resign by the delivery to the Employer of a written
resignation. Such removal or resignation shall become effective
thirty (30) days from the date of the delivery of the directive or
resignation, as the case may be, unless otherwise agreed by the
Employer and the Trustee. In the event of such removal or
resignation, the successor trustee, upon acceptance of the
appointment by an instrument in writing delivered to the Employer,
shall become vested with all the rights and shall assume all the
duties of the Trustee under this Plan and Trust.
(b) In the event of the death, incapacity, removal
or resignation of the Trustee and the appointment of (and
acceptance by) a successor, the Trustee (or his personal repre
sentative) shall endorse, transfer, assign, convey and deliver to
said successor all of the funds, securities and other property then
held by it in the Trust and such records as may be reasonably
required for the proper administration of the Trust. In addition,
the Trustee (or his personal representative) shall, as soon as
administratively feasible, file with the Employer a statement and
report of the operation of this Plan and Trust to the effective
date of such death, incapacity, removal or resignation.
(c) If the Employer fails to amend the Plan and
Trust and to appoint a successor trustee within ninety (90) days
from the date of death, incapacity, resignation or removal of the
Trustee, the Plan and Trust shall terminate and all benefits held
in the Trust for the benefit of Participants shall become nonfor
feitable and shall be distributed in accordance with Article .
10.14 Bonding. Every Fiduciary, unless exempted under
ERISA, shall be bonded in an amount equal to not less than ten
percent (10%) of the funds such Fiduciary handles; provided,
however, that the minimum bond shall be $1,000 and the maximum bond
$500,000. The amount of funds handled shall be determined at the
beginning of each Plan Year based on the funds handled by such
Fiduciary and his predecessors, if any, during the preceding Plan
Year or, if there is no preceding Plan Year, then by the amount of
funds to be handled during the current Plan Year. The bond shall
provide protection to the Plan against any loss by reason of acts
of fraud or dishonesty by the Fiduciary, alone or in connivance
with others, and shall be in a form approved by the Secretary of
Labor. Notwithstanding anything in this Plan to the contrary, the
cost of such bond may, at the election of the Employer, be paid
from the Trust Fund or by the Employer. No Fiduciary shall be
liable for the failure of any other Fiduciary to comply with the
bonding requirements of this Section.
ARTICLE XI
PARTICIPATING EMPLOYERS
ARTICLE XI
PARTICIPATING EMPLOYERS:
11.1 Adoption by Other Employers. With the consent of the
Employer and the Trustee, any other corporation or entity, whether
or not a member of a controlled group of corporations or affiliated
service group of which the Employer is a member (as described in
Section ), may adopt this Plan and participate herein as a
"Participating Employer" by execution of a document acceptable to
the Employer evidencing said adoption.
11.2 Contributions by Employer and Participating Employers.
(a) Contributions made by the Employer or any
Participating Employer under this Plan and Forfeitures allocable to
such contributions shall be allocated separately on behalf of the
employees of that Employer or Participating Employer; however, all
contributions by the Employer and each Participating Employer shall
be deposited with and held by the Trustee subject to the terms and
conditions hereof and all assets held under the Plan shall be
available to pay benefits to any Participant and Beneficiary of the
Employer or any Participating Employer. The Plan Administrator
shall keep books and records that reflect the total contributions
made by the Employer and Participating Employers hereunder and the
allocation of said contributions to the accounts of the
Participants.
(b) Notwithstanding paragraph (a) above, if one or
more corporations, partnerships or unincorporated trades or
businesses that adopts this Plan as a Participating Employer is a
member of a controlled group of corporations (as defined under
Section 414(b) or 414(c) of the Code) or affiliated service group
(as defined in Section 414(m) of the Code) with one or more other
corporations, partnerships or unincorporated trades or businesses
that has adopted this Plan, and if that entity is prevented in
whole or in part from making a contribution to this Plan, then all
or any portion of the contribution that such corporation,
partnership or unincorporated trade or business does not make may
be made for the benefit of the employees of that entity by the
other corporations, partnerships or unincorporated trades or
businesses, as permitted under the Code and applicable Treasury
Regulations.
11.3 Employee Transfers and Terminations. The transfer of
employment of any Participant from the Employer to a Participating
Employer or from a Participating Employer to the Employer shall not
affect a Participant's rights under this Plan. In such event, all
amounts credited to that Participant's Aggregate Account shall
remain intact and no part thereof shall be forfeited. In addition,
the Participant's Years of Service with the transferor or prede
cessor and his length of participation in this Plan shall continue
without interruption, and the transferee or successor shall be obli
gated to such Participant under the Plan in the same manner as the
former employer. The Employer or Participating Employer to whom a
Participant is transferred shall notify the Plan Administrator in
writing of the transfer.
11.4 Designation of Employer as Agent. With respect to all
dealings with the Trustee and Plan Administrator under this Plan,
each Participating Employer shall be deemed to have irrevocably
designated the Employer as its agent. Unless the context of the
Plan indicates the contrary, "Employer" shall be deemed to include
all Participating Employers.
11.5 Expenses Shared by Participating Employers. All
expenses of the Trust shall be paid by each Participating Employer
in the same proportion that the total amount credited to the Aggre
gate Accounts of all Participants employed by the Participating
Employer bears to the total amount credited to the Aggregate
Accounts of all Participants in this Plan, except that any such
expense specifically arising out of the adoption of this Plan by a
Participating Employer or resulting from the participation of its
employees shall be charged to and paid by that Participating
Employer.
11.6 Amendment. If one or more Participating Employers has
adopted this Plan, then any amendment to the Plan shall be
effective only upon its written adoption by each Participating
Employer.
11.7 Discontinuance of Participation. Any Participating
Employer may discontinue or revoke its participation in this Plan
by written notice to the Trustee and Plan Administrator. In such
event, the Trustee and Administrator shall transfer a portion of
the assets of the Trust to the successor trustee, representing the
allocable share of the account balances of the Participants
employed by that Participating Employer, and shall deliver copies
of the applicable records of the Plan to the successor admin
istrator designated in writing by the Participating Employer. If
no successors are designated within thirty (30) days of receipt of
the aforesaid written notice by the Trustee, this Plan and Trust
shall be deemed to have terminated as to that Participating
Employer and the account balances of employees of that
Participating Employer shall be distributed in accordance with
Article .
ARTICLE XII
AMENDMENT AND TERMINATION
ARTICLE XII
AMENDMENT AND TERMINATION:
12.1 Right to Amend.
(a) To the extent consistent with the requirements
of qualification for income tax purposes, the Employer reserves the
right to amend this Plan and Trust, either retroactively or
prospectively, by delivering to the Trustee and Plan Administrator
a written amendment. Any such amendment shall be effective only
upon its execution by the Employer and Trustee. An amendment which
materially affects the rights of the Participants hereunder shall
be communicated to the Participants in writing.
(b) Notwithstanding paragraph (a) above, neither
the Employer nor the Trustee shall have the power to amend this
Plan and Trust in such a manner as would decrease a Participant's
account balance (except to the extent permitted under
Section 412(c)(8) of the Code), eliminate an optional form of
benefit or distribution, cause or permit any part of the Trust to
be diverted to purposes other than for the exclusive benefit of the
Participants or their Beneficiaries or estates, or to take such
action as would cause or permit any portion of the assets of the
Trust to revert to or become the property of the Employer (except
as permitted under Sections , , and hereof); and provided,
further, that no amendment shall cause or permit the retroactive
diminution of any rights which the Participants have acquired with
respect to contributions made prior to the date of any such
amendment, unless the amendment is required to obtain approval from
the Internal Revenue Service for the continued qualification of
this Plan and Trust for tax purposes.
12.2 Right to Terminate. The Employer shall have the right
to terminate this Plan (with or without the termination of the
Trust) by delivering to the Trustee a written notice of termination
at least thirty (30) days prior to the effective date thereof. In
the event of the termination or partial termination of this Plan,
the account balances of all participating Employees affected by
such termination shall become fully vested and the provisions of
Article shall apply.
12.3 Permanent Discontinuance of Contributions. The
permanent discontinuance on the part of the Employer of further
contributions to this Plan shall constitute termination of the Plan
and shall result in the full vesting of the account balances of the
Employer's participating Employees. For purposes of this Section,
permanent discontinuance will not be deemed to have occurred merely
because of a temporary suspension of contributions by the Employer.
ARTICLE XIII
MISCELLANEOUS
ARTICLE XIII
MISCELLANEOUS:
13.1 Exclusive Benefit of Participants. Except as set
forth in Sections , , and hereof, no part of the Trust shall
revert to the Employer or be used or diverted for any purpose other
than for the exclusive benefit of the Participants or their
Beneficiaries.
13.2 Plan Does Not Restrict Employer's Employment and
Business Policies. Nothing in this Plan shall be construed as a
contract of employment or as modifying or limiting in any way the
right of the Employer to terminate the employment of any Employee,
to establish policy, or otherwise to conduct business in the same
manner as though this Plan and Trust had not been entered into.
13.3 Rights Against Employer. Neither the establishment of
this Plan, any allocation made hereunder, nor the accumulation of
benefits in the Trust shall be construed as giving any Participant
or any other person a legal or equitable right against the Trustee,
the Plan Administrator or the Employer, or any member, officer,
director, Employee, agent, partner or stockholder thereof, except
as expressly provided herein or as required by law.
13.4 Intention to Continue Plan. The Employer expects to
continue this Plan and the payment of contributions hereunder
indefinitely; however, the permanence of the Plan is not assumed as
a contractual obligation and, in the event of the termination of
the Plan for any reason, the disposition of the funds in the Trust
shall be made in accordance with the applicable provisions hereof.
13.5 Assumption of Plan by Successor.
(a) If the Employer is merged or consolidated with
any other employer, or if any other employer acquires substantially
all the assets of the Employer, such surviving or purchasing
employer may elect to continue this Plan. In that event, the
Participants employed by the Employer who continue their employment
with such successor employer shall remain as Participants of this
Plan without a Break in Service. Those Participants employed by
the Employer who are not retained by the successor employer (or, if
the successor employer does not continue this Plan, all
Participants) shall be fully vested in their account balances,
which shall be paid in accordance with the provisions of Article .
(b) Upon any merger or consolidation with another
employer, or upon the transfer of assets or liabilities to another
plan, each Participant shall be entitled to receive immediately
thereafter a benefit which is at least equal in value to the
benefit he would have been entitled to receive immediately before
the merger, consolidation or transfer if the Plan had then
terminated.
13.6 Predecessor Employer. If, by adopting this Plan, the
Employer is maintaining the plan of a predecessor employer, then
service for such predecessor shall be treated as service for the
Employer.
13.7 Controlled or Affiliated Service Groups.
(a) The Employees of all corporations which are
members of a controlled group of corporations (as defined in
Section 414(b) of the Code, as modified by Section 415(h) of the
Code), the Employees of all trades or business--whether or not
incorporated--which are under common control (as defined in
Section 414(c) of the Code, as modified by Section 415(h) of the
Code), and the Employees of all members of an affiliated service
group (as defined in Section 414(m) of the Code) shall be treated
as employed by a single employer, but only for the specific pur
poses cited in those provisions of the Code.
(b) If this Plan provides contributions or benefits
for one or more Owner-Employees who control both the business for
which this Plan is established and one or more other trades or
businesses, this Plan and the plan established for such other
trades or businesses must, when examined as a single plan, satisfy
Sections 401(a) and (d) of the Code for the Employees of this and
all other trades or businesses.
If this Plan provides contributions or benefits for
one or more Owner-Employees who control one or more other trades or
businesses, the employees of the other trades or businesses must be
included in a plan that satisfies Sections 401(a) and (d) of the
Code and that provides contributions and benefits not less
favorable than those provided for the Owner-Employees under this
Plan.
If an individual is covered as an Owner-Employee under
the plan or plans of two or more trades or businesses that are not
controlled and the individual controls a trade or business, then
the contributions or benefits of an employee under the plan or
plans of the trades or businesses that are controlled must be as
favorable as those provided for him under the most favorable plan
of the trade or business that is not controlled.
(c) For purposes of paragraph (b) above, an Owner-
Employee or two or more Owner-Employees will be considered to
"control" a trade or business if that Owner-Employee or the two or
more Owner-Employees together (i) own the entire interest in an
unincorporated trade or business or (ii) in the case of a
partnership, own more than fifty percent (50%) of either the
capital interest or the profits interest in the partnership. For
purposes of this paragraph (c), an Owner-Employee or two or more
Owner-Employees shall be treated as owning any interest in a part
nership that is owned, directly or indirectly, by a partnership
that such Owner-Employee or such two or more Owner-Employees are
considered to control within the meaning of the preceding sentence.
13.8 Leased Employees.
(a) A leased employee shall be treated as an
employee of the recipient employer; provided, however, that
contributions or benefits furnished by the leasing organization
that are attributable to services performed for the recipient
employer shall be treated as provided by the recipient employer.
(b) Paragraph (a) above shall not apply to any
leased employee if (i) such employee is covered by a money purchase
pension plan providing (A) a nonintegrated employer contribution
rate of at least ten percent (10%) of compensation, (B) immediate
participation, and (C) the full and immediate vesting of benefits,
and (ii) leased employees do not constitute more than twenty
percent (20%) of the recipient employer's Non-Highly Compensated
Employee work force. For purposes of this paragraph,
"compensation" shall include amounts contributed pursuant to a
salary reduction agreement which are excludable from the leased
employee's gross income under Sections 125, 402(a)(8), 402(h)(1)(B)
or 403(b) of the Code.
(c) For purposes of this Section, the term "leased
employee" means any person who, pursuant to an agreement between
the recipient and any other person or entity (the "leasing
organization"), has performed services for the recipient (or for
the Employer and related persons, determined in accordance with
Section 414(n)(6) of the Code) on a substantially full-time basis
for a period of at least one (1) year and such services are of a
type historically performed by employees in the business field of
the recipient employer.
13.9 Interest in Trust not Subject to Creditors' Claims.
Except to the extent required by law, neither the benefits,
payments, proceeds nor rights of any Participant hereunder shall be
subject to the claims of creditors, to attachment or garnishment or
other legal process, or to alienation, sale, transfer, pledge,
encumbrance or assignment, and any attempt by a Participant to
alienate, sell, transfer, pledge, encumber or assign any of the
benefits, payments or proceeds that he may expect to receive
hereunder shall be void. The preceding sentence shall also apply
to the creation, assignment or recognition of a right to any
benefit payable with respect to a Participant pursuant to a
domestic relations order unless such order is determined to be a
qualified domestic relations order, as defined in Section 414(p) of
the Code.
13.10 Internal Revenue Service Approval of Employer's
Plan. Notwithstanding anything to the contrary contained herein,
this Plan is created on the condition precedent that the Plan and
Trust meet the qualification requirements of Sections 401(a) and
501(a) of the Code, so as to permit the Employer to deduct for
income tax purposes all funds contributed by it to the Trust, and
so as to permit the Trust to be exempt from income taxation. If
such qualification is not obtained, this Plan shall, upon affir
mative action taken by the Employer within sixty (60) days of
receiving notice of disapproval, terminate, in which event the
Trustee shall immediately deliver to the Employer all of the assets
of the Trust.
13.11 Mistake of Fact. In the event the Employer shall
make a contribution to the Trust under a mistake of fact, the
Employer may make written demand for the repayment of the amount so
contributed at any time within one (1) year following the time of
payment, and the Trustee shall then return such amount to the
Employer within said one (1) year period.
13.12 Disallowance of Deduction. Any contribution by the
Employer to the Trust is conditioned upon the deductibility of the
contribution by the Employer under the Code and, to the extent that
any such deduction is subsequently disallowed, the Employer may,
within one (1) year following a final determination of the
disallowance, make written demand for the repayment of the
disallowed amount, and the Trustee shall then return such sum
within the said one (1) year period.
13.13 Restrictions on Return of Contributions.
(a) For purposes of Sections and above, the
amount that may be returned to the Employer shall be limited to the
excess of the amount contributed by the Employer to the Plan over:
(i) as to Section, the amount that would have been
contributed had the mistake of fact not occurred; or
(ii) as to Section , the amount of the
deduction allowed by the Internal Revenue Service during the Plan
Year of the disallowance.
(b) Earnings attributable to the contributions
returned under Sections and shall not revert to the Employer, but
any losses attributable thereto shall reduce the amount so
returned. Notwithstanding anything to the contrary contained in
Sections and , no amounts shall be returned to the Employer to the
extent that such return would cause the balance of the account of
any Participant to be reduced to less than the balance that existed
prior to the mistake of fact or the disallowance of the deduction.
13.14 Claims. A Participant or Beneficiary may file with
the Plan Administrator a written claim for benefits upon the oc
currence of any event which in the claimant's opinion gives rise to
the payment of benefits hereunder. In the event the Administrator
shall determine that the claimant is not entitled to the claimed
benefits, it shall so notify the claimant in writing within
ninety (90) days of receipt of the claim and shall set forth the
reasons for such determination, with specific reference to the
terms of the Plan upon which the denial is based. The claimant may
request that an adverse determination be reviewed by the Employer
and shall be given the opportunity within ninety (90) days of said
request to present any additional information which may establish
his right to the benefit so claimed. The decision of the Employer
with respect to any such appeal shall be rendered in writing and
shall be delivered to the claimant within sixty (60) days following
receipt of the appeal. The Employer's decision shall be final and
binding on all parties. The Administrator and the Employer shall
keep the Trustee fully advised in writing of the filing and
disposition of all claims hereunder.
13.15 Direct Rollovers.
(a) This Section applies to distributions made on
or after January 1, 1993. Notwithstanding any provision of the
Plan to the contrary that would otherwise limit a distributee's
election under this Section, a distributee may elect, at the time
and in the manner prescribed by the Plan Administrator, to have any
portion of an eligible rollover distribution paid directly to an
eligible retirement plan specified by the distributee in a direct
rollover.
(b) Definitions.
(i) Eligible rollover distribution: An eligible
rollover distribution is any distribution of all or any
portion of the balance to the credit of the distributee,
except that an eligible rollover distribution does not
include: any distribution that is one of a series of sub
stantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the
distributee or the joint lives (or joint life expectancies) of
the distributee and the distributee's designated beneficiary,
or for a specified period of ten years or more; any
distribution to the extent such distribution is required under
Section 401(a)(9) of the Code; and the portion of any
distribution that is not includable in gross income (deter
mined without regard to the exclusion for net unrealized
appreciation with respect to employer securities).
(ii) Eligible retirement plan: An eligible
retirement plan is an individual retirement account described
in Section 408(a) of the Code, an individual retirement
annuity described in Section 408(b) of the Code, an annuity
plan described in Section 403(a) of the Code, or a qualified
trust described in Section 401(a) of the Code that accepts the
distributee's eligible rollover distribution. However, in the
case of an eligible rollover distribution to the surviving
spouse, an eligible retirement plan is an individual
retirement account or individual retirement annuity.
(iii) Distributee: A distributee includes an
employee or former employee. In addition, the employee's or
former employee's surviving spouse and the employee's or
former employee's spouse or former spouse who is the alternate
payee under a qualified domestic relations order, as defined
in Section 414(p) of the Code, are distributees with regard to
the interest of the spouse or former spouse.
(iv) Direct rollover: A direct rollover is a
payment by the plan to the eligible retirement plan specified
by the distributee.
13.16 Agent for Service of Process. For all purposes
under this Plan and Trust, including the filing of claims pursuant
to Section , the Plan Administrator shall be the agent for service
of process.
13.17 Masculine, Feminine. In construing this Plan, the
masculine shall be read to include the feminine and vice versa,
except where the context expressly indicates otherwise.
13.18 Applicable Law. The provisions of this Plan and
Trust shall be construed, administered and enforced according to
the laws of the State of Florida, except to the extent that such
laws are inconsistent with or are superseded by the Code or ERISA.
IN WITNESS WHEREOF, this Plan and Trust has been executed
on the date set forth on the first page.
Signed, sealed and delivered
in the presence of:
EMPLOYER:
Orange-co of Florida, Inc.
Kay L. Hodgkins By: Gene Mooney
- - --------------- ----------------
Kay L. Hodgkins Gene Mooney, President,
President
Gwen C. Banks
- - --------------
Gwen C. Banks
Witnesses as to Employer
TRUSTEE:
Kay L. Hodgkins By: B.H. Griffin, III
- - --------------- ----------------------
Kay L. Hodgkins B. H. Griffin, III
Gwen C. Banks
- - --------------
Gwen C. Banks
Witnesses as to Trustee
