<PAGE> 1
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 DECEMBER 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from ___________ to ___________.
Commission file number 0-15214
PLASTI-LINE, INC.
(Exact name of registrant as specified in its charter)
TENNESSEE 62-1218546
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
623 E. EMORY ROAD
P.O. BOX 59043
KNOXVILLE, TENNESSEE 37950-9043
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (423) 938-1511
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
------------------- ------------------------------------------
NONE NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $0.001 PAR VALUE
(Title of class)
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 the registrant's knowledge, in
1
<PAGE> 2
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 voting stock held by non-affiliates of
the registrant, based upon the price of the stock as reported by the National
Association of Securities Dealers Automated Quotations System, on March 14,
1996: $16,013,064.
Number of shares outstanding of each of the registrant's classes of
common stock as of March 14, 1996: 3,783,157
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Proxy Statement, dated March 18, 1996, and
Annual Report to Stockholders for the fiscal year ended December 31, 1995, are
incorporated by reference into Parts II and III of this Annual Report on Form
10-K.
The Index to Exhibits starts at page 15 of 222 sequentially numbered pages.
PART I
ITEM 1. BUSINESS
GENERAL
Plasti-Line, Inc., which was incorporated in Tennessee in 1984, is a
leading producer of indoor and outdoor signs for corporate identification
programs. These signs are used primarily at retail outlets of large national
or regional companies such as automobile dealerships, gasoline stations, banks
and fast food restaurants. Plasti-Line, Inc. designs, engineers and
manufactures substantially all its products in Knoxville, Tennessee, Florence,
Kentucky, Columbia, South Carolina, and Ontario, California. Plasti-Line, Inc.
markets its products throughout the United States and, to a limited extent, in
Canada. As used herein, the "Company" refers to Plasti-Line, Inc. and its
subsidiaries unless the context requires otherwise.
The Company concentrates on providing a complete range of products and services
to high-volume users in the automotive, fast food, petroleum, banking and other
retail markets. The Company's manufacturing facilities in Knoxville,
Tennessee, and Ontario, California serve this aspect of the business. The
Company's subsidiary, American Sign and Marketing Services, Inc. ("American
Sign"), in Florence, Kentucky, concentrates on production and marketing of
small outdoor signs, indoor signs and menuboards.
ACQUISITION OF ASSETS
On Nobember 1, 1995, the Company formed Carter-Miot as a wholly owned
subsidiary. On November 2, 1995, Canter-Miot acquired certain assets of
Carter-Miot Engineering Company, Inc. ("CM Engineering"), located in Columbia,
South Carolina. Carter-Miot paid $4,450,000 in cash for these assets. These
assets, which are described in the Current Report on Form 8-K dated
November 2, 1995 and amended on January 16, 1996, were used by CM Engineering,
and continue to be used by the Company, in the production of indoor and outdoor
signs for corporate identification programs.
PRODUCTS
The Company's basic sign product is composed of two rigid plastic faces
that are molded and decorated to reflect the customer's name and logo. These
faces are mounted in a steel or aluminum frame and generally placed on a steel
column to permit visibility. Typically, the signs are internally illuminated to
make them visible at night. The sign faces range in size from two square feet
to 245 square feet.
The Company's products are used by its customers primarily for brand
identification of their retail outlets. For high-volume customers in the
automotive and fast food markets, and to a lesser extent for petroleum
customers, the Company produces a full package of signs used to identify a
particular retail location with the corporate image known to consumers. A
package may consist of many sign elements, including (i) road signs decorated
with the customer's logo and colors and
2
<PAGE> 3
often built in a distinctive shape; (ii) high rise signs typically used
for locations adjacent to interstate highways or in high traffic areas; (iii)
menuboards with changeable copy areas and price mechanisms to enable fast food
customers to identify and change their menus and prices; (iv) signs typically
used by petroleum customers to provide on-site advertising of the prices of
various products; (v) specialty lighting products that provide accent or
decorative lighting, typically at fast food restaurants and gasoline stations;
and (vi) illuminated fascia signage that is mounted on buildings for decoration
and identification.
The Company concentrates on high-volume, standardized products, but
also produces customized signage as an accommodation to its regular customers.
Custom signs typically require special fabrication techniques and tend to
generate low-volume production runs with longer lead times.
The Company provides at least a one-year limited warranty on all signs
for defects in materials and workmanship, with the Company being obligated to
repair or replace any defective product.
In addition to production, the Company offers a complete spectrum of
sign services, including design, site analysis, graphic analysis, installation
and maintenance. Working with the customer or a design consultant retained by
the customer, the Company assists in developing designs that meet the
customer's goals. Upon customer request, the Company coordinates the sign
package with local ordinances and regulatory requirements, assists in
determining where to place the signs for maximum visibility and assists in
obtaining necessary permits and variances. In cases where the Company has a
contract for the installation of a sign, the Company utilizes the services of a
subcontractor in the area in which the sign is to be installed. Maintenance
service, regular cleaning, inspection and replacement of lights and other parts
when needed or on a predetermined schedule are also provided through local
subcontractors.
CUSTOMERS
The Company for internal purposes separates its business by customers
into automotive, banks, fast food, petroleum and other industry groupings. For
its automotive, bank, and fast food customers, the Company typically provides a
full range of products and services, including most or all of those described
above. For the petroleum industry, the Company typically manufactures signs to
the customer's specifications and ships them for installation by the customer's
own subcontractors. Customer commitments vary by market segment and specific
account. Commitments range from multi-year contracts with firm prices for all
products and services, to specific orders for specific quantities at firm
prices. From time to time, the Company is awarded large, one-time contracts by
customers who are changing their name or image. These programs can create
concentrated surges in volume.
PRINCIPAL CUSTOMERS
Since 1969, the Company's principal customers have been subsidiaries of
General Motors Corporation ("General Motors"). General Motors accounted for
approximately 19% of the Company's net sales in fiscal 1995. The loss of
General Motors as a customer would have a material adverse effect on the
Company if it were unable to compensate promptly for that loss by generating
new business.
The Company's original contract for the supply of internally
illuminated outdoor signs for the General Motors dealership sign program
extended through December 31, 1990 with two automatic two year extensions if
the Company maintained established performance levels. Both automatic
extensions were granted to the Company as well as an extension through December
31, 1995. On December 7, 1995, the contract was extended on a month to month
basis until an official awarding of the 1996 contract. The Company furnishes
all services associated with the manufacture and installation of signs and
replacement parts ordered by General Motors for
3
<PAGE> 4
approximately 9,000 participating dealerships. The contract is
terminable on 30 days' notice by either party and is non-exclusive; however,
the Company believes that it is currently the sole supplier for the General
Motors dealership sign program. Signs are supplied for new dealerships, as
replacements of signs at existing dealerships and in connection with moves to
new locations. The Company provides General Motors with a 10-year limited
warranty for defects in materials and workmanship, with the Company being
obligated to repair or replace any defective product.
MARKETING
Products and services are marketed on a direct basis and through sales
representatives throughout the United States and, to a limited extent, in
Canada. The Company's principal marketing focus is on companies with many
retail outlets requiring substantial numbers of signs. This type of business
enables the Company to maintain economic production runs, and increases the
opportunity to provide a full range of services.
Marketing opportunities are generated by the construction of new
facilities, acquisition of existing locations requiring re-identification,
addition of signage at existing locations, design of a new image requiring
re-identification of all facilities and replacement of parts damaged by storms,
vandalism and accidents.
PRODUCTION AND RAW MATERIALS
Production of the Company's products is a labor intensive process. The
typical sign consists of large acrylic or polycarbonate faces mounted in a
metal frame and internally illuminated. The shapes of the faces are formed
using vacuum or press forming after the face material has been heated. Letters
or logos that are not molded into the faces are either glued or silk-screened
on the faces. During the production process, signs move through the plants on
an overhead monorail system. After the signs are manufactured, they are crated
and shipped from the Company's facilities principally by commercial trucking
companies.
The practice of the Company is to start producing finished goods only
after receipt of a firm order from a customer, although for customers with
long-term programs, the Company produces finished goods in anticipation of
customer needs. Credit terms are generally net 30 days from the date of sale.
Occasionally the Company engages the services of subcontractors for special
manufacturing work to assist during peak production periods.
The Company designs and engineers its products to customer specifications.
The Company's manufacturing operations include machining, welding, plastic
molding and fabrication, painting, assembly and packaging. The principal
raw materials and purchased components used in the Company's manufacturing
process are steel shapes and sheet, aluminum shapes and sheet,
electrical components (wire, sockets, ballasts and lamps) and acrylic and
polycarbonate sheets. The Company does not hold any material patents or
trademarks.
To date, the Company has experienced no difficulty in satisfying its
requirements for raw materials and subcontractor assistance. It considers its
sources of supply to be adequate.
COMPETITION
The Company defines its principal market as the volume production sign
industry. Competition varies depending on the market segment and the size of
the project. Larger projects require a more comprehensive service capability
which limits the number of competitors. Smaller, less complex projects attract
a larger number of competitors.
4
<PAGE> 5
Although no authoritative ranking of the Company's industry is published,
the Company believes that in 1995 it was the leading supplier of volume
production signs and related services in the United States. Most of the
Company's competition is from other suppliers, rather than from other products.
Competition for national accounts, the principal source of the Company's
business, is intense. The Company believes it has adequate financial
resources with which to compete. In general, the Company believes that its
products, contract conditions, terms, and warranty provisions are consistent
with those prevailing in the industry. The Company believes that its principal
advantage is its ability to provide a complete range of products and services
to customers on a competitive basis.
EMPLOYEES
The Company had a total of 1,160 full-time employees as of December 31,
1995 of which approximately 67.5 percent were employed under union contract.
PRODUCT BACKLOG
At December 31, 1995, booked orders believed to be firm amounted to
approximately $18.3 million as compared with approximately $8.9 million at
January 1, 1995. Products are shipped by the Company against customer delivery
schedules, which generally call for delivery two to four months after the order
is placed. The Company believes that substantially all of its product backlog
at December 31, 1995 will be shipped before the end of its current fiscal year.
In addition to firm product backlog, the Company has open commitments from a
number of customers to supply products as required to meet their construction
schedules. At the time such a customer gives the Company a release to ship
signs to a particular location, the Company includes the products covered by
the release in backlog and commences production or ships the items from
inventory.
SEASONALITY
The Company's sales in fiscal 1995 exhibited some limited seasonality,
with sales in the first quarter being the lowest and those in the fourth
quarter the highest. First quarter sales tend to be relatively lower because
of weather constraints which slow down customers' construction schedules and
their pattern of sign purchases. Sales normally accelerate in the second,
third and fourth quarters corresponding with accelerating construction
schedules.
5
<PAGE> 6
EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth the names, ages, present positions and
business experience of all Executive Officers of the Company. Officers are
appointed to serve at the pleasure of the Board.
NAME AGE PRESENT POSITION BUSINESS EXPERIENCE
- -------------------- --- ----------------------- --------------------
James R. Martin 53 Chief Executive Officer Chief Executive
Chairman of the Board Officer of the
President Company since 1992.
He has been the
Company's principal
stockholder since
1980. He also
serves as a
director of First
American
Corporation, a bank
holding company in
Nashville,
Tennessee.
John D. Burke 54 Chief Marketing Officer Joined the Company
Executive Vice in October 1995.
President He has had
significant general
management, sales,
and marketing
leadership
positions at
General Foods,
Hershey, Nestle,
and Young &
Rubicam.
Mark J. Deuschle 36 Chief Financial Officer Chief Financial
Vice President of Officer since July
Finance 1992. He joined
Treasurer the Company in 1989
Secretary serving as
Corporate
Controller and
Assistant
Secretary. From
1985 until
employment with the
Company, he was
employed in
various capacities
by FMC
Corporation, a
diversified
international
manufacturing
company.
C. Wayne Morris 52 Senior Vice President Senior Vice
of Marketing President of
Marketing since
February 1989.
From 1979 until his
employment with the
Company, Mr. Morris
was Vice President
of Field Sales for
the Consumer
Products Division
and subsequently
Vice President of
Sales for the
Industrial Products
Division of Black
and Decker Company.
Kathryn Coleman Wood 40 Vice President of Vice President of
Human Resources Human Resources
since August 1994.
From 1988 until
employment with the
Company, she was
Vice President of
Human Resources &
Support Services
for CTI, Inc., a
manufacturer of
medical imaging
equipment.
ITEM 2. PROPERTIES
The Company owns its corporate headquarters and manufacturing space in
Knoxville which are housed in two buildings on 45 acres of land. One
building contains approximately 23,000 square feet of office space.
The other building contains approximately 325,000 square feet of
manufacturing space. The facilities and equipment in Knoxville were
financed in part with the proceeds of industrial revenue bonds issued
on behalf of the Company and are collateralized by mortgages or liens.
American Sign owns an approximately 230,000 square foot manufacturing
and office facility in Florence, Kentucky. The Company owns an
approximately
6
<PAGE> 7
170,000 square foot manufacturing and office facility in
Centerville, Tennessee, at which operations ceased during 1992. The
Company also rents approximately 40,000 square feet of manufacturing
and office facility in Ontario, California and approximately 130,000
square feet in Columbia, South Carolina. The Company's equipment
consists primarily of molds, vacuum forming equipment, computers and
general office equipment. The Company believes its existing
facilities and equipment are adequate for present and anticipated
business.
ITEM 3. LEGAL PROCEEDINGS
On December 5, 1994, the Company and its subsidiary, American Sign,
filed a complaint (the "Complaint") against Teledyne Industries, Inc.
("Teledyne") in Knoxville, Tennessee, in the United States District
Court for the Eastern District of Tennessee, Northern Division. This
litigation arose in connection with an agreement with Teledyne whereby
Teledyne was designing and developing on behalf of the Company and
American Sign a drive-through order verification product for fast food
restaurants ("Horizon"). The Company and American Sign sought
$650,000 plus interest from Teledyne plus additional amounts to be
proven at trial in connection with their contract with Teledyne
relating to Horizon design flaws. The Company and American Sign also
sought a declaratory judgment against Teledyne stating that the
Company and American Sign were not obligated to purchase any Horizon
units.
In connection with the complaint, on January 20, 1995 Teledyne filed a
countersuit against the Company and American Sign in the United States
District Court for the Eastern District of Tennessee, Northern
Division seeking approximately $2,355,754 plus interest and additional
amounts to be proven at trial. This counterclaim was based on the
Horizon contract and related fraud and tortious interference claims.
On January 8, 1996 a settlement agreement was reached for the purpose
of compromising and settling all disputed claims. The agreement did
not and shall not constitute an admission or inference that any
conduct of the Company or Teledyne was wrongful, unlawful, negligent
or violative of any federal or state statute or regulation or any
common law. The settlement agreement requried Teledyne to make
available to the Company all Horizon kits and for the Company to pay
Teledyne a cash payment of $700,000.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
No matters were submitted to a vote of stockholders, through a
solicitation of proxies or otherwise, during the fourth quarter of the
1995 fiscal year.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
This information is incorporated by reference from the inside back
cover of the Company's 1995 Annual Report to Stockholders, which is
attached hereto as Exhibit 13.0.
ITEM 6. SELECTED FINANCIAL DATA
This information is incorporated by reference from the inside front
cover of the Company's 1995 Annual Report to Stockholders, which is
attached hereto as Exhibit 13.0.
7
<PAGE> 8
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This information is incorporated by reference from pages 21-22 of the
Company's 1995 Annual Report to Stockholders, which is attached hereto
as Exhibit 13.0.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
This information is incorporated by reference from pages 9-20 of the
Company's 1995 Annual Report to Stockholders, which is attached hereto
as Exhibit 13.0.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
Information required under this Item with respect to Directors is
incorporated by reference from pages 3-14 of the Company's Proxy
Statement dated March 18, 1996. Information about Executive Officers
of the Company is included in Item 1 of Part I of this Annual Report
on Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
Information with respect to this item may be found in the sections
captioned "Executive Compensation" appearing on pages 7 through 8 of
the Company's Proxy Statement dated March 18, 1996. Such information
is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
This information is incorporated by reference from pages 13-14 of the
Company's Proxy Statement dated March 18, 1996.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
This information is incorporated by reference from page 12 of the
Company's Proxy Statement dated March 18, 1996.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
14(a)(1). Financial Statements: See index to Financial Statements and
Financial Statement Schedules, page 11.
14(a)(2). Financial Statement Schedules: See Index to Financial Statements
and Financial Statement Schedules, page 11.
14(a)(3). Exhibits: See Index to Exhibits, page 15.
8
<PAGE> 9
14(b) Reports on Form 8-K:
A report on Form 8-K dated November 2, 1995 and amended on January
16, 1996 regarding the purchase of certain assets of Carter-Miot
Engineering Co.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Dated: 4/1/96
--------------
PLASTI-LINE, INC.
/s/ James R. Martin
--------------------
James R. Martin
(Chief Executive Officer)
Each person whose signature appears below hereby authorizes James R.
Martin and Mark J. Deuschle, and each of them, as attorneys-in-fact and agents,
with full powers of substitution, to sign on his or her behalf, amendments to
this Annual Report on Form 10-K with the Securities and Exchange Commission,
granting to said attorney-in-fact and agents full power and authority to
perform any other act on behalf of the undersigned required to be done on the
premises.
9
<PAGE> 10
Pursuant to the requirements of the Securities Exchange 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 dates indicated:
SIGNATURES TITLE DATE
- -------------------------- ----------------------- -----------
/s/ James R. Martin 4/1/96
- -------------------------- -----------
James R. Martin Chief Executive Officer
Chairman of the Board
/s/ Mark J. Deuschle 4/1/96
- -------------------------- -----------
Mark J. Deuschle Vice President of Finance
Treasurer, Secretary
(Principal Financial and
Accounting Officer)
/s/ Howard L. Clark, Jr. 3/28/96
- -------------------------- -----------
Howard L. Clark, Jr. Director
/s/ James G. Hanes, III 3/28/96
- -------------------------- -----------
James G. Hanes, III Director
/s/ James A. Haslam, III 3/28/96
- -------------------------- -----------
James A. Haslam, III Director
/s/ Donald F. Johnstone 3/28/96
- -------------------------- -----------
Donald F. Johnstone Director
/s/ J. Hoyle Rymer 3/28/96
- -------------------------- -----------
J. Hoyle Rymer Director
/s/ James F. Smith Jr. 3/28/96
- -------------------------- -----------
James F. Smith, Jr. Director
/s/ H. Mitchell Watson, Jr. 3/28/96
- --------------------------- -----------
H. Mitchell Watson, Jr. Director
10
<PAGE> 11
PLAST-LINE, INC.
INDEX TO FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES
<TABLE>
<S> <C>
1. Financial Statements Page Reference
Annual Report to
Stockholders
----------------
Consolidated statements of operations for the years ended 9
December 31, 1995 (1995), January 1, 1995 (1994), and
January 2, 1994 (1993)
Consolidated balance sheets at December 31, 1995 (1995) and 10
January 1, 1995 (1994)
Consolidated statements of stockholders' equity for the years ended 11
December 31, 1995 (1995), January 1, 1995 (1994), and
January 2, 1994 (1993)
Consolidated statements of cash flow for the years ended 12
December 31, 1995 (1995), January 1, 1995 (1994), and
January 2, 1994 (1993)
Notes to consolidated financial statements 13-20
Report of independent accountants 20
2. Financial Statement Schedules:
Page Reference
Form 10-K
---------
Schedules include:
II - Valuation and Qualifying Accounts 12
Report of the Company's independent public accountants with respect to 13
the Financial Statement Schedules
Schedules omitted - Schedules I, III, IV, and V are omitted as not applicable
because the required conditions are not present.
</TABLE>
11
<PAGE> 12
PLASTI-LINE, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
SCHEDULE II
Years ended December 31, 1995 (1995), January 1, 1995 (1994), and
January 2, 1994 (1993)
(In thousands)
<TABLE>
<CAPTION>
ADDITIONS
BALANCE AT CHARGED BALANCE AT
BEGINNING TO END OF
DESCRIPTION OF PERIOD EXPENSE DEDUCTIONS PERIOD
<S> <C> <C> <C> <C>
1995 Allowance for Doubtful Accounts $213 $720(b) $214(a) $719
1994 Allowance for Doubtful Accounts $122 $195 $104(a) $213
1993 Allowance for Doubtful Accounts $139 $177 $194(a) $122
</TABLE>
(a) Write-offs, net of recoveries, of uncollectible accounts.
(b) Includes $350 thousand for the initial setup of the allowance for doubtful
accounts for the Company's subsidiary Carter-Miot, Inc. This amount was
not charged against expense.
12
<PAGE> 13
INDEPENDENT ACCOUNTANTS' REPORT
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders and Board of Directors
Plasti-Line, Inc.
Our report on the consolidated financial statements of Plasti-Line, Inc. and
Subsidiaries has been incorporated by reference in this Form 10-K from page
20 of the 1995 Annual Report to Stockholders of Plasti-Line, Inc. In
connection with our audits of such financial statements, we have also audited
the related financial statement schedule listed in the index on page 12 of this
Form 10-K.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements as whole, presents
fairly, in all material respects, the information required to be included
therein.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Knoxville, Tennessee
February 29, 1996
13
<PAGE> 14
INDEPENDENT ACCOUNTANTS' CONSENT
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
Plasti-Line, Inc. on Form S-8 of our report dated February 29, 1996, except
for Note 7 as to which the date is March 8, 1996, on our audits of the
consolidated financial statements and financial statement schedule of Plasti-
Line, Inc. as of December 31, 1995 and January 1, 1994, and for each of the
three years in the period ended December 31, 1995, which report is incorporated
by reference in this Form 10-K.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Knoxville, Tennessee
March 29, 1996
14
<PAGE> 15
PLASTI-LINE, INC. AND SUBSIDIARIES
EXHIBIT INDEX
Exhibits marked with an asterisk are filed herewith. The remainder of
the exhibits have heretofore been filed with the Commission and are incorporated
herein by reference.
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION PAGE
<S> <C> <C>
3.1 Amended and Restated Articles of Incorporation. Incorporated by
reference to the Company's Registration Statement 33-4316 on Form S-1
dated March 20, 1986.
3.1.1 Articles of Amendment to Company's Amended and Restated Articles of
Incorporation. Incorporated by reference to the Company's Registration
Statement 33-4316 on Form S-1 dated March 20, 1986.
3.1.2 Articles of Amendment to the Articles of Incorporation of Plasti-Line,
Inc. filed April 21, 1988. Incorporated by reference to the Company's
10-K for the fiscal year ended January 1, 1989, File No. 0-15214.
3.2 Company's Bylaws (as Amended and Restated). Incorporated by reference to
the Company's Form 10-K for the fiscal year ended January 3, 1993, File
No. 0-15214.
4.2 Loan Agreement, dated November 1, 1989, between Industrial Development
Board of the County of Knox and Plasti-Line, Inc. Incorporated by
reference to the Company's Form 10-K for the fiscal year ended December
31, 1989, File No. 0-15214.
4.3 Indenture of Trust, dated November 1, 1989 between Industrial Development
Board of the County of Knox and First American National Bank, Knoxville,
Tennessee. Incorporated by reference to the Company's Form 10-K for the
fiscal year ended December 31, 1989, File No. 0-15214.
4.4 Deed of Trust, Security Agreement and Assignment of Leases, dated as of
November 1, 1989, from Plasti-Line, Inc. (the "Borrower") to Joseph P.
Congleton (the "trustee"), for the benefit of First American National
Bank, Knoxville, Tennessee. Incorporated by reference to the Company's
Form 10-K for the fiscal year ended December 31, 1989, File No. 0-15214.
4.5 Pledge and Security Agreement, dated November 1, 1989 between Plast-Line,
Inc. and First American National Bank, Knoxville, Tennessee.
Incorporated by reference to the Company's Form 10-K for the fiscal year
ended December 31, 1989, File No. 0-15214.
4.6 Reimbursement Agreement, dated November 1, 1989 between Plasti-Line, Inc.
and First American National Bank, Knoxville, Tennessee. Incorporated by
reference to the Company's Form 10-K for the fiscal year ended December
31, 1989, File No. 0-15214.
10.3 (1) Pre-Tax Savings and Profit Sharing Plan dated August 10, 1994.
Incorporated by reference to the Company's Form 10-K for the fiscal year
ended January 1, 1995, File No. 0-15214.
</TABLE>
15
<PAGE> 16
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION PAGE
<S> <C> <C>
10.5 (1) Plasti-Line, Inc. Employee's Health Plan dated July 1, 1991.
Incorporated by reference to the Company's Form 10-K for the fiscal year
ended December 29, 1991, File No. 0-15214.
10.6 Supply Agreement, effective January 1, 1983, between GM-DI Leasing
Corporation and Plasti-Line, Inc. Incorporated by reference to the
Company's Registration Statement 33-4316 on Form S-1 dated March 20,
1986.
10.7 Amendment dated December 4, 1987 between GM-DI Leasing Corporation and
Plasti-Line, Inc. Incorporated by reference to the Company's Form 10-K
for the fiscal year ended January 3, 1988, File No. 0-15214.
10.7.5 Amendment dated January 1, 1991 between GM-DI Leasing Corporation and
Plasti-Line, Inc. Incorporated by reference to the Company's Form 10-K
for the fiscal year ended December 31, 1990, File No. 0-15214.
10.8 (1) Form of Deferred Compensation Agreement. Incorporated by reference to
the Company's Registration Statement 33-4316 on Form S-1 dated March 20,
1986.
10.9 (1) Health Care Plan Trust Agreement dated December 15, 1982. Incorporated
by reference to the Company's Registration Statement 33-4316 on Form S-1
dated March 20, 1986.
10.10 (1) Supplemental Medical Plan. Incorporated by reference to the Company's
Registration Statement 33-4316 on Form S-1 dated March 20, 1986.
10.14 Agreement between Company and Local Union No 555, Sheet Metal Workers
International Association dated February 4, 1995. Incorporated by
reference to the Company's Form 10-K for the fiscal year ended January 1,
1995, File No. 0-15214.
10.18 Stock Purchase Agreement and the related Addendum thereto (original
exhibit no. 2). Incorporated by reference to the Company's Form 10-K for
the fiscal year ended December 31, 1986, File No. 0-15214.
10.26 Amended and Restated Retirement and Disability Program for Plasti-Line,
Inc. effective January 1, 1989. Incorporated by reference to the
Company's Form 10-K for the fiscal year ended December 31, 1989, File No.
0-15214.
</TABLE>
16
<PAGE> 17
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION PAGE
<S> <C> <C>
10.27 Amendment Number 1, effective February 3, 1990, to the Retirement and
Disability Program dated January 1, 1989. Incorporated by reference to
the Company's Form 10-K for the fiscal year ended December 30, 1990, File
No. 0-15214.
10.28 Agreement between Toyota Motor Sales, U.S.A. Inc. and Plasti-Line, Inc.
dated January 1, 1991. Incorporated by reference to the Company's Form
10-K for the fiscal year ended December 30, 1990, File No. 0-15214.
10.31 Amendment dated May 5, 1992 to Supply Agreement between GM-DI Leasing
Corporation and Plasti-Line, Incorporated by reference to the Company's
Form 10-K for the fiscal year ended January 3, 1993, File No. 0-15214.
10.32* Amendment dated December 7, 1995 to Supply Agreement between GM-DI 19 to 22
Leasing Corporation and Plasti-Line.
10.33* Labor Agreement between American Sign & Marketing Services, Inc. and the 23 to 61
American Sign & Marketing Services, Inc., Independent Union dated
December 31, 1995.
10.34* Revolving Credit and Term Loan Agreement between Plasti-Line, Inc. and 62 to 109
Third National Bank of East Tennessee dated April 21, 1995.
10.35* Revolving Credit Note between Plasti-Line, Inc. and Suntrust Bank of East 110 to 112
Tennessee, N.A., dated October 24, 1995.
10.36* Amended and Restated Revolving Credit Note between Plasti-Line, Inc. and 113 to 116
Suntrust Bank of East Tennessee, N.A. dated November 2, 1995.
10.37* First Amendment to Revolving Credit and Term Loan Agreement between 117 to 121
Plasti-Line, Inc. and Suntrust Bank, East Tennessee, N.A. dated November
2, 1995.
10.38* Plasti-Line, Inc./Sheet Metal Workers Local Union 555 Retirement Savings 122 to 193
Plan & Trust dated January 1, 1996.
13.0* 1995 Annual Report to Stockholders. 194 to 221
21.0 Plasti-Line, Inc. Subsidiaries. Incorporated by reference to the
Company's Registration Statement 33-4316 on Form S-1 dated March 20,
1986.
</TABLE>
17
<PAGE> 18
<TABLE>
<CAPTION>
<S> <C> <C>
23.0* Consent of Experts 14
Consent of Coopers & Lybrand filed herewith
24.0* Power of Attorney (contained on the signature page of this annual report).
27.0* Financial date schedule (for SEC use only) 222
</TABLE>
(1) Plans and arrangements where executives receive compensation.
18
<PAGE> 1
GM-DI LEASING CORPORATION
3044 W. GRAND BLVD.
DETROIT, MICHIGAN 48202 Date Dec 7, 1995
--------------
================================================================================
CO. Plasti-Line, Inc.
to ST. 623 E. Emory Road,
CITY Knoxville, TN. 37950
ZIP
================================================================================
THIS IS AN AMENDMENT - CHANGE NO. 33 TO PURCHASE ORDER No. 1241 DATED: May 1,
1983
AFTER RECORDING CHANGES NOTED BELOW, ATTACH TO AND MAKE A PART OF ORIGINAL
PURCHASE ORDER.
================================================================================
PLEASE MAKE THE FOLLOWING CHANGES
================================================================================
ITEM QUANTITY DESCRIPTION PRICE
================================================================================
AMENDMENT
The purpose of this Amendment is to extend
the existing Purchase Order and (Amendment
change #30 of Purchase Order No. 1241) on a
month to month basis at the 1995 price level,
until official awarding of the 1996 contract.
ORIGINAL
================================================================================
REASON FOR AMENDMENT
GM - DI LEASING CORPORATION
/s/ R. Benson
------------------------------
PURCHASING AGENT
======================================== BUYER
------------------------------
PLEASE RETURN THE ATTACHED CORRESPONDENCE pertaining to
ACKNOWLEDGEMENT COPY PROMPTLY this order must be addressed
to the attention of the Buyer.
===============================================================================
19
<PAGE> 2
GM-DI LEASING CORPORATION
3044 W. GRAND BLVD.
DETROIT, MICHIGAN 48202 Date Dec 7, 1995
--------------
================================================================================
CO. Plasti-Line, Inc.
to ST. 623 E. Emory Road,
CITY Knoxville, TN. 37950
ZIP
================================================================================
THIS IS AN AMENDMENT - CHANGE NO. 33 TO PURCHASE ORDER No. 1241 DATED: May 1,
1983
AFTER RECORDING CHANGES NOTED BELOW, ATTACH TO AND MAKE A PART OF ORIGINAL
PURCHASE ORDER.
================================================================================
PLEASE MAKE THE FOLLOWING CHANGES
================================================================================
ITEM QUANTITY DESCRIPTION PRICE
================================================================================
AMENDMENT
The purpose of this Amendment is to extend
the existing Purchase Order and (Amendment
change #30 of Purchase Order No. 1241) on a
month to month basis at the 1995 price level,
until official awarding of the 1996 contract.
ACKNOWLEDGEMENT
================================================================================
PLEASE SIGN AND RETURN THIS COPY AT ONCE
The above changes have been recorded and are acknowledged and accepted on the
same terms and conditions as are specified on the original purchase order.
Plasti-Line, Inc.
-------------------------------
VENDOR
BY /s/ French R. Bolen DATE 1/22/96
------------------- ------------
20
<PAGE> 3
GM-DI LEASING CORPORATION
3044 W. GRAND BLVD.
DETROIT, MICHIGAN 48202 Date Dec 7, 1995
--------------
================================================================================
CO. Plasti-Line, Inc.
to ST. 623 E. Emory Road,
CITY Knoxville, TN. 37950
ZIP
================================================================================
THIS IS AN AMENDMENT - CHANGE NO. 1 TO PURCHASE ORDER No. 951 DATED: March 20,
1995
AFTER RECORDING CHANGES NOTED BELOW, ATTACH TO AND MAKE A PART OF ORIGINAL
PURCHASE ORDER.
================================================================================
PLEASE MAKE THE FOLLOWING CHANGES
================================================================================
ITEM QUANTITY DESCRIPTION PRICE
================================================================================
AMENDMENT
The purpose of this Amendment is to
extend the existing Purchase order
and on a month to month basis at the
1995 price level until official awarding of the 1996
contract.
ORIGINAL
================================================================================
REASON FOR AMENDMENT
GM - DI LEASING CORPORATION
/s/ French R. Bolen
------------------------------
PURCHASING AGENT
======================================== BUYER
------------------------------
PLEASE RETURN THE ATTACHED CORRESPONDENCE pertaining to
ACKNOWLEDGEMENT COPY PROMPTLY this order must be addressed
to the attention of the Buyer.
===============================================================================
21
<PAGE> 4
GM-DI LEASING CORPORATION
3044 W. GRAND BLVD.
DETROIT, MICHIGAN 48202 Date Dec 7, 1995
--------------
================================================================================
CO. Plasti-Line, Inc.
to ST. 623 E. Emory Road,
CITY Knoxville, TN. 37950
ZIP
================================================================================
THIS IS AN AMENDMENT - CHANGE NO. 1 TO PURCHASE ORDER No. 951 DATED: March 20,
1995
AFTER RECORDING CHANGES NOTED BELOW, ATTACH TO AND MAKE A PART OF ORIGINAL
PURCHASE ORDER.
================================================================================
PLEASE MAKE THE FOLLOWING CHANGES
================================================================================
ITEM QUANTITY DESCRIPTION PRICE
================================================================================
AMENDMENT
The purpose of this Amendment is to
extend the existing Purchase order
and on a month to month basis at the
1995 price level until official awarding of the 1996
contract.
ACKNOWLEDGEMENT
================================================================================
PLEASE SIGN AND RETURN THIS COPY AT ONCE
The above changes have been recorded and are acknowledged and accepted on the
same terms and conditions as are specified on the original purchase order.
Plastic-Line, Inc.
-------------------------------
VENDOR
BY /s/ French R. Bolen DATE 1/22/96
------------------- ------------
22
<PAGE> 1
A G R E E M E N T
BETWEEN
AMERICAN SIGN AND MARKETING SERVICES, INC.
AND
THE AMERICAN SIGN AND MARKETING SERVICES, INC.
INDEPENDENT UNION
EFFECTIVE 12-31-95
23
<PAGE> 2
TABLE OF CONTENTS
-----------------
PAGE
----
ARTICLE 1 RECOGNITION 3
ARTICLE 2 UNION MEMBERSHIP 5
ARTICLE 3 HOURS OF WORK AND OVERTIME 7
ARTICLE 4 VACATIONS 9
ARTICLE 5 HOLIDAYS 12
ARTICLE 6 SENIORITY 13
ARTICLE 7 MANAGEMENT 16
ARTICLE 8 GENERAL/MISCELLANEOUS 18
ARTICLE 9 GRIEVANCE AND ARBITRATION PROCEDURE 21
ARTICLE 10 WORK STOPPAGES 25
ARTICLE 11 WAGES 26
ARTICLE 12 HEALTH PLAN, ACCIDENT & SICKNESS BENEFITS,
LIFE INSURANCE 28
ARTICLE 13 SAFETY AND HEALTH 30
ARTICLE 14 TOOLS AND MACHINES 31
ARTICLE 15 401 (K) PLAN 32
ARTICLE 16 BEREAVEMENT AND JURY PAY 33
ARTICLE 17 DURATION 34
APPENDIX "A" JOB CLASSIFICATIONS AND HOURLY WAGE RATES 37
Memorandum of Agreemant 38
APPENDIX "B" DUES AUTHORIZATION FORM 40
P R E A M B L E
This Agreement is made and entered into by and between American Sign and
Marketing Services, Inc. (hereinafter the "Company") and The
-2-
24
<PAGE> 3
American Sign and Marketing Services, Inc., Independent Union (hereinafter the
"Union").
The parties agree in consideration of the promises of each, hereinafter
set forth, to faithfully keep and strictly observe the following:
ARTICLE 1 RECOGNITION
Section 1.1. The term "employee" as used in this Agreement shall mean all
production employees employed by the Company at its 7430 Industrial Drive,
Florence, Kentucky facility, excluding all other employees, including clerical
employees and professional employees, guards and supervisors, as defined in the
National Labor Relations Act, as amended.
Section 1.2. The Company hereby recognizes the Union as the sole and
exclusive collective garaging representative for all of the employees of the
Company as defined in Section 1.1 above. This Agreement applies only to the
production employees as defined in Section 1.1 above, who are employed at the
Company's facility at 7430 Industrial Drive, Florence, Kentucky. This
Agreement confers no rights, duties or obligations on any of the parties in
regard to any other Company location or at any other location of the Company's
parent, subsidiary of affiliated corporation.
Section 1.3. The Company will provide space on the plant bulletin board
upon which the Union may post notices limited to notices of Union meetings,
notices of Union elections and the results thereof, notices of Union
appointments and such other official Union notices not of a political, economic
or social persuasion. Such Union notes shall be signed by the President of the
Union and a copy submitted to the Company for approval prior to posting. Any
notices from the Company or the Union posted on the Plant bulletin board shall
have the effect of official notification to all employees when the signature of
a Company
-3-
25
<PAGE> 4
representative or the signature of the Union President is affixed thereto.
Section 1.4. The Union agrees that neither the Union nor its officers,
agents, representatives or members will solicit employees for membership or
conduct any other Union business or activity during working time, unless
otherwise mutually agreed by the Union and the Company.
Section 1.5. In the event of a grievance as defined in Article 9 of this
Agreement, the Union President, Vice-President or other Union official will be
allowed to inspect Company payroll records of employees covered by this
Agreement, if such inspection is relevant and necessary to the processing of a
grievance under Article 9 of this Agreement. Copies of relevant and necessary
records will be provided to the Union after payment to the Company of
reasonable copying charges.
Section 1.6. The Company recognizes the Union's right to appoint shop
stewards. The Union shall appoint one (1) shop steward for each 20 employees
covered by this agreement. If the number of employees exceeds the 1:20 ratio
in an area, an additional shop steward may be added to that area. Shop
stewards will be appointed by the Union for all shifts. The Union shall inform
the Company, in writing, of the names and assigned areas of all shop stewards
so the Company has knowledge of their identity and areas at all times.
Section 1.7. The Company shall notify the Union President monthly, in
writing, of the names and departments of employees covered by this Agreement
who were hired during the previous month and provide the Union President with
an updated seniority list, showing the names of all employees covered by this
Agreement as of the last day of the previous month.
Section 1.8. The Company shall not enter into any agreement with any
employee covered by this Agreement which conflicts with the express terms of
this Agreement.
-4-
26
<PAGE> 5
Section 1.9. Persons employed in clerical support jobs who report to the
Company's Shipping Supervisor and who route shipments and perform other
clerical work are excluded from the bargaining unit, as defined in Section 1.1
above, as clerical employees, and shall not be covered by this Agreement and
shall not perform any production work.
ARTICLE 2
UNION MEMBERSHIP, PROBATIONARY PERIOD AND TEMPORARY EMPLOYEES
Section 2.1. All employees hired in positions covered by this Agreement
shall become members of the Union at the conclusion of ninety (90) calendar
days after their date of hire. The company shall not retain in its employ in
the bargaining unit any non-member employee who fails to apply for membership
at the conclusion of the period specified above or any employee who has been a
member at any time during the term of this Agreement who loses his membership
for failure to tender the periodic monthly dues and initiation fees uniformly
required by the Union as a condition of acquiring or retaining membership.
Section 2.2. All new employees covered under this Agreement shall serve a
probationary period of ninety (90) calendar days before receiving seniority
status. If employees are retained beyond their ninety (90) calendar day
probationary period, their seniority shall date back to their most recent date
of hire and they shall be entered on the seniority list and be covered under
this agreement.
Section 2.3. The Company may use temporary workers employed by employment
agencies, not to exceed ninety (90) calendar days of work per worker, to
perform production work, whenever the need arises. If the temporary worker
works more than (90) calendar days of work, the temporary worker will then be
employed by the Company and will then be considered to have successfully
completed his/her ninety (90) calendar day probationary period and will be
given a seniority date as of the
-5-
27
<PAGE> 6
date he/she last commenced work at the Company as a temporary worker and shall
be entered on the seniority list.
Section 2.4. Not withstanding any provisions of this Agreement to the
contrary, all new employees shall be subject to discharge, in the sole and
exclusive discretion of the Company, during the first ninety (90) calendar days
after their date of hire and if such employee is discharged, neither the
employee nor the Union shall have the right to challenge the discharge under
the grievance and/or arbitration procedure of Article 9 of this Agreement, or
any other term or provision of this Agreement. If more than one employee is
hired on the same day their seniority will be determined alphabetically by
their last name.
Section 2.5. Upon satisfactory completion of the ninety (90) calendar day
employment probationary period, the Company agrees upon written authorization
by an employee on the form set forth in Appendix "B" of this Agreement, to
deduct from each employee's pay, in three equal installments, the initiation
fee of the Union and to deduct weekly the regular membership dues of the Union
and promptly remit the dues and fees with a list of the names whose dues and
fees have been deducted, to the Union, on a monthly basis.
Section 2.6. The Union shall indemnify and save the Company harmless
against any and all claims, demands, suits or other forms of liability that
shall arise out of or by reason of any action taken or not taken by the Company
in reliance upon information furnished to the Company by the Union or for the
purpose of complying with any of the provisions of this Article.
ARTICLE 3
HOURS OF WORK AND OVERTIME
Section 3.1. This Article is intended to provide the basis for
calculation of and payment for overtime pay and shall not be construed as a
guarantee of any hours of work per day or hours of work per week, or days of
work per week. The determination of the daily and weekly
-6-
28
<PAGE> 7
work schedules shall be made by the Company, and such work schedules shall be
made by the Company, and such work schedules may be changed by the Company from
time to time to suit the fluctuation of production and other requirements.
Section 3.2. The normal hours of work will be eight (8) hours per day,
exclusive of lunch periods, and forty (40) hours per week, exclusive of lunch
periods, unless otherwise scheduled by the Company.
Section 3.3. The normal work week will consist of five (5) consecutive
work days, Monday through Friday, inclusive, and will begin at the time the
employee is scheduled to begin work on Monday, unless otherwise scheduled by
the Company.
Section 3.4. An employee shall be paid overtime pay at the rate of one
and one-half (1 1/2) times his/her regular straight time hourly rate for
either: (1) all time worked in excess of forty (40) hours of work in any one
(1) work week, or for (2) all time worked in excess of eight (8) hours of work
on any one (1) work day in any one (1) work week. No employee shall be paid
under both the forty (40) hour per week and eight (8) hour per day overtime pay
formula during the same work week. In any one (1) work week, an employee shall
be paid only under the single overtime pay formula which gives the employee the
greatest number of paid overtime hours that work week.
-7-
29
<PAGE> 8
Section 3.5. Double an employee's straight time hourly wage rate shall be
paid for all hours worked on Sunday or on a paid holiday as defined in Section
5.1 of this Agreement.
Section 3.6. Overtime pay under Section 3.4 and premium pay under
Sections 3.5 and 5.4 of this Agreement shall not be duplicated or pyramided for
the same hours worked, and to the extend that hours worked are compensated for
at overtime of premium rates under any overtime or premium pay formula set
forth in this Agreement, those hours shall not be counted as hours worked in
determining overtime or premium pay under any other overtime or premium pay
formula set forth in the Agreement.
Section 3.7. During each eight (8) hour shift, the Company shall provide
to each employee a ten (10) minute paid break period during the first four (4)
hours of work and a ten (10) minute paid break period during the second four
(4) hours of work. Another ten (10) minute paid break period will be provided
to employees who are required to work ten or more consecutive hours in any one
(1) work day and will be taken after 8 hours of work have been completed. The
Company shall provide a thirty (30) minute unpaid meal period to employees
during each eight (8) hour shift.
Section 3.8. All employees shall be required to perform overtime work
assignments unless excused from the performance of such work by the Company.
The Company will give employees two (2) hours advance notice of required Monday
through Friday overtime work, except where such advance notice cannot be given
due to an emergency. The Company shall give employees notice by 3:00 p.m. on
the preceding Thursday of any required Saturday and/or Sunday overtime work,
except where such advance notice cannot be given due to an emergency. No
individual will be required to work more than two (2) out of four (4) Sundays
in any month.
Section 3.9. Second and third shift employees shall not receive double
time pay when the commence work on a Sunday or a holiday or end work on a
Sunday or a holiday.
-8-
30
<PAGE> 9
Section 3.10. Report-in Pay. An employee who reports for work on time at
his/her regular scheduled time, not having been notified not to report, shall
be guaranteed not less than four (4) hours work or, in lieu thereof, four (4)
hours pay at his/her regular straight time hourly wage rate, provided, however,
that this Section shall not apply when work is unavailable due to conditions
over which the Company has no control, and provided that the employees must
remain at the plant for thirty (30) minutes after the employee's regular
scheduled starting time, should the plant not be open when the employee
arrives. Employees will be considered notified if the Company makes a
reasonable effort to provide notice through ordinary means of communication,
such as bulletin board notices, telephone calls, telegrams, radio
announcements, or other means. If communication is to each employee at his
home, it will be directed to the employee's last address or telephone number
given by the employee in writing to the Company.
ARTICLE 4
VACATIONS
Section 4.1. Any employee covered by this Agreement who is in the employ of
the Company as of September 30, of any year, and who meets the qualifications
contained in this Article, shall receive a vacation in accordance with the
following schedule:
Years of Service Vacation Benefits
- ---------------- -----------------
Less than 2 years 1 week, 40 hours at
straight time rate
2 years but less than 7 years 2 weeks, 80 hours at
straight time rate
7 years but less than 15 years 3 weeks, 120 hours at
straight time rate
15 years or more 4 weeks, 160 hours at
straight time rate
-9-
31
<PAGE> 10
For the purpose of this Article, straight time hourly rate means the employee's
current base hourly wage rate including any shift premium and Group Leader pay
being paid at the time the vacation is taken.
Section 4.2. To qualify for vacation pay as outlined in Section 4.1
above, an employee must work one thousand five hundred (1500) hours in the
twelve (12) month period prior to September 30 of the vacation year. A newly
hired employee who has not been in the employ of the Company continuously for
one (1) year by September 30 of any year but who has worked one thousand five
hundred (1500) hours in the period from date of hire to September 30 shall
receive a vacation of one (1) week with pay at forty (40) times the employee's
straight time hourly rate. Hours lost due to compensable injury under the
Kentucky Worker's Compensation Act shall be counted as hours worked.
Section 4.3. An employee who has been employed by the Company for one (1)
year or more, and who separates from the Company's payroll, shall be entitled
to a pro rata payment of vacation pay, provided the employee qualified under
the formula in Section 4.2 above. In order to receive a pro rate payment of
vacation pay, an employee who voluntarily terminates employment with the
Company must give five (5) working days advance notice to the Company of the
employee's intention to quit.
Section 4.4. The Company may, if it deems necessary, close its plant and
require that vacations be taken during such period. The Company reserves the
right to schedule necessary work during such vacation period. Employees who
are engaged in such necessary work will be permitted to take vacations at other
mutually agreeable times. If the Company does not close the plant for
vacations, then vacation shall be taken between October 1 and September 30 of
the following year. The vacation period for each employee will be selected by
the Company, but, in its selection of the vacation period, the Company will, so
far as possible, schedule the employee's vacation at a time most desired by the
employee, longest service employees being given a preference as to choice.
-10-
32
<PAGE> 11
Section 4.5. Vacation pay shall be paid to each eligible employee on the
pay day immediately preceding the employee's vacation.
Section 4.6. An employee who has been continuously employed by the
Company for two (2) years but less than seven (7) years but who does not
work one thousand five hundred (1500) hours by September 30 of a vacation year
shall be entitled to vacation pay for that vacation year in the amount of four
percent (4%) of his/her straight time hourly earnings during twelve (12) month
period preceding September 30 of that vacation year. An employee who has been
continuously employed by the Company for seven (7) years but less than fifteen
(15) years, but who does not work one thousand five hundred (1500) hours by
September 30 of a vacation year shall be entitled to vacation pay for that
vacation year in the amount of six percent (6%) of his/her straight time hourly
earnings during the twelve (12) month period preceding September 30 of that
vacation year. An employee who has been continuously employed by the Company
for fifteen (15) or more years but who does not work one thousand five hundred
(1500) hours by September 30 of a vacation year shall be entitled to a vacation
pay for that vacation year in the amount of eight (8%) of his/her straight time
hourly earnings during the twelve (12) month period preceding September 30 of
that vacation year.
Section 4.7. Employees may elect to work during their vacation period and
receive pay for working, plus their vacation pay, without being penalized by
the Union, provided the Company grants approval to the employee to work during
the employee's vacation period.
Section 4.8. No employee will be allowed to take any vacation time off
work of less than one (1) full eight (8) hour work day.
Section 4.9. Each employee will be allowed to schedule one (1) excused,
unpaid day between September 1 and October 31 of each year. This day should be
scheduled the as a vacation day.
ARTICLE 5
HOLIDAYS
-11-
33
<PAGE> 12
Section 5.1. All employees covered by this Agreement, and who have been
continuously employed by the Company for ninety (90) consecutive calendar days
or more, shall receive holiday pay for each of the following holidays,
providing they meet the other requirements of this Article:
New Year's Day Thanksgiving Day
Good Friday Day after Thanksgiving
Memorial Day Christmas Eve Day
Fourth of July Christmas Day
Labor Day One (1) Floating Holiday per
calendar year to be selected by
each eligible employee, but to be
taken only after the employee gives
twenty-four (24) hours advance
notice to his/her supervisor and
the supervisor approved the time
off for the holiday.
Section 5.2. In order to qualify for holiday pay, an employee must work
the employee's entire regularly scheduled shift immediately preceding and
immediately following the holiday, unless the employee has an excused absence
for a court appearance, death in the immediate family or illness or injury of
the employee or member of the employee's immediate family. Immediate family
includes only the employee's mother, father, brother, sister, spouse, child,
father-in-law, mother-in-law, stepfather, stepmother, grandparents and
grandchildren. If the excused absence is for the employee's regularly
scheduled shift immediately preceding the holiday, the employee must work the
employee's entire regularly scheduled shift immediately preceding the day of
the excused absence to qualify for holiday pay. If the excused absence is for
the employee's regularly scheduled shift immediately following the holiday, the
employee must work the employee's entire regularly scheduled shift immediately
following the day of the excused absence to qualify for holiday pay.
An employee may be tardy not to exceed sixty (60) minutes on a holiday
qualifying day and qualify for holiday pay. Any employee who is tardy inexcess
of sixty (60) minutes on a holiday qualifying day will not
-12-
34
<PAGE> 13
receive any holiday pay unless the employee has an excused absence as defined
above. Documentation concerning any tardy or excused absence on any holiday
qualifying day may be requested by the Company from any employee to verify the
reason for the absence on the qualifying day. The Human Resource Department
will review all requests for excused absences on holiday qualifying days, and
documentation, and will make the decision whether holiday pay will or will not
be paid to any employee.
Section 5.3. Holiday pay shall be computed at the rate of eight (8) hours
pay at the employee's straight time hourly rate.
Section 5.4. Employees who are required to work on any of the holidays
listed in Section 5.1 shall be paid twice their straight time hourly rate for
such holiday work in addition to holiday pay, if such employees are eligible
for holiday pay under this Article.
ARTICLE 6
SENIORITY
Section 6.1. Seniority, for the purposes of this Article, is defined as
an employee's length of continuous service with the Company from the employee's
most recent date of hire.
Section 6.2. Plant-wide seniority will apply to all cases of layoff and
recall, except for temporary lay offs as defined in Section 6.3, provided,
however, that in the application of seniority, the employee's immediate skill
and ability to perform the work available shall be the governing factor. In
the event of a layoff, the Company will determine in which work or skill area
positions must be eliminated. After any volunteers in that area, the lowest
seniority person in that area (based on plantwide seniority) will be laid off.
If a Production Specialist is laid off, he/she may elect to displace the lowest
seniority person on their preferred shift in the Production Associate
classification, provided he or she can demonstrate the skill and ability to
perform the job within a 5 day period. If a Team Leader is laid off, he/she
may elect to displace the lowest seniority Production Specialist or Production
Associate on their preferred shift, provided he/she can
-13-
35
<PAGE> 14
demonstrate the skill and ability to perform the job within a 5 day period. A
person may only displace someone who has less plantwide seniority.
If an employee is laid off or not recalled and the employee contests the lay
off or failure of recall he/she may request a Peer Review Board to review the
facts concerning the employee's immediate skill and ability to perform the work
available. The Peer Review Board will advise the Company and the Union of its
conclusions concerning the employee's immediate skill and ability to perform
the work available, within two (2) working days after the employee request.
The Peer Review Board will be composed of two (2) qualified management
representatives selected by the Company and three (3) qualified bargaining unit
employees selected by the Union. The Peer Review Board will serve only in an
advisory role to both the Company and the Union and any employee has the right
to pursue a lay off or recall grievance to the grievance procedure if the
employee desires.
Section 6.3. If there is a temporary lay off of employees for five (5)
consecutive work days or less, the Company will first request volunteer
employees for the lay off who are acceptable to the Company. If there are not
sufficient acceptable volunteer employees for the lay off, the Company may
temporarily lay off employees without regard to seniority for five (5)
consecutive work days or less. No employee shall be placed on temporary lay
off without regard to seniority under this Section more than once in any
calendar year, except employees may volunteer to be temporarily laid off in
excess of once in any calendar year.
Section 6.4. Employees who lose seniority status and are re-hired shall
be considered new employees and shall be required to serve a new probationary
period as defined in Section 2.2.
Section 6.5. An employee's seniority shall be broken, and seniority
status lost, for any one (1) of the following reasons:
(1) Voluntary quitting;
-14-
36
<PAGE> 15
(2) Termination or discharge for just cause;
(3) Retirement;
(4) Engaging in employment or self employment without Company
permission while on a leave of absence which shall be
considered as a voluntary quit;
(5) Is absent from work for three (3) consecutive work days
without express written authorization from the Company's
Personnel Director or designee, which shall be considered
as a voluntary quit;
(6) Fails to report to work after a lay off within three (3)
working days after written notice of recall has been sent by
the Company, by certified mail, to the employee at the mailing
address listed on the Company's records;
(7) "Is absent from work without pay for any reason, including
leaves of absence approved by the Company, in excess of five
(5) consecutive work days on four (4) different occasions in
any twelve (12) month period, except as otherwise provided by the
Family and Medical Leave Act of 1993."
(8) Fails to report to work within three (3) work days following
a vacation or leave of absence without an excuse satisfactory
to the Company;
(9) Obtains a leave of absence under false representation;
(10) "Is laid off in excess of three hundred sixty-five (365) calendar
days;"
(11) Is absent from work due to non-occupational illness, injury
or maternity in excess of one (1) year or is absent from work
due to occupational illness or injury in excess of two (2)
years;
(12) Failure to request a timely leave of absence within five (5)
working days as required by Section 8.4 and 8.5 of Article 8,
shall be considered a voluntary quit.
Section 6.6. If any employee is or has been promoted or transferred to a
position excluded from the bargaining unit, thus being excluded from the
coverage of this Agreement, such employee shall retain the seniority
accumulated by him/her while in the bargaining unit. In the event of being
demoted or transferred into the bargaining unit, he/she shall resume the
seniority he/she had prior to his/her promotion or transfer.
ARTICLE 7
MANAGEMENT
-15-
37
<PAGE> 16
Section 7.1. The Union recognizes that all rights, powers or
responsibilities of the Company existing before the execution of this Agreement
are retained by the Company and that those rights, powers and responsibilities
shall belong solely and exclusively to the Company during the term of this
Agreement, including, without limitation of the generality of the foregoing,
the right to manage the Company's business and property and to direct the
working forces, the right to hire, promote and demote employees, the right to
maintain order, economy and efficiency, the right to increase, maintain,
curtail or terminate the business, operations or production of the Company in
whole or in part at any location or facility, the right to determine the size,
kind and location of the Company's plants or operations, the right to
subcontract production and other work, the right to assign work, the right to
determine production schedules, methods, processes, means of manufacture and
materials and equipment to be used, including the right to introduce new and
improved tools, machines, methods or facilities, and to change existing tools,
machines, methods and facilities, the right to create new jobs and increase or
decrease the number of jobs and the number of employees holding any jobs, the
right to transfer employees, the right to discipline, suspend and discharge
employees for just cause and to lay off employees for lack of work or other
business reasons and to recall employees, the right to determine the number and
starting time of shifts, the number of hours and days of work in the work week
the hours of work in a workday, and the number and ability of employees to be
actively employed by the Company at any time and on any job, the right to
require employees to observe rules and regulations issued by the Company, the
right to issue new employee rules and regulations and to change existing
employee rules and regulations during the term of this agreement, the right to
determine the products to be manufactured and to set work and production
standards and quotas and to maintain performance records for all jobs and for
all employees.
-16-
38
<PAGE> 17
The Company retains the right to promote and demote, assign and transfer,
discipline, suspend or discharge, and to layoff or recall employees, provided
that any employee who is adversely affected by the exercise of these rights,
shall have recourse to the grievance and arbitrator procedure set forth in
Article 9 of this Agreement.
The Company may change employee rules and regulations during the term of
this Agreement, provided that at least ten (10) calendar days prior to the
effective date of any changes, the Union is informed of the changes in writing
and given an opportunity to discuss the changes with the Company if the Union
desires.
Section 7.2. The exercise by the Company of any of the rights, powers or
responsibilities defined in Section 7.1 above, except those specifically
modified by this Agreement, shall not be subject to the grievance and/or
arbitration procedure set forth in Article 9 of this Agreement.
-17-
39
<PAGE> 18
ARTICLE 8
GENERAL/MISCELLANEOUS
Section 8.1. The Company and the Union agree that there shall be no
unlawful discrimination as defined by law, against any employee based on race,
color, religion, sex, national origin, handicap, age or other unlawful grounds.
Section 8.2. It shall be the responsibility of each employee to supply
the Company in writing with his/her current address and telephone number and
any changes in address and telephone number. All notices, including those
required by the terms of this Agreement, shall be deemed sufficient if directed
by the Company to the employee at the address or telephone number last given by
him/her in writing to the Company.
Section 8.3. An employee who is required to be absent from work due to
any illness, any injury or any other medical reason, including maternity, shall
notify the Company, either in writing or by telephone, of the reason for such
absence. If an employee is required to be absent due to illness, injury or
other medical reason, including maternity, for a period in excess of five (5)
working days, the employee shall apply in writing to the employee's immediate
supervisor for a medical leave of absence. A written leave of absence not to
exceed thirty (30) calendar days will be granted on request and submission of a
statement from a duly licensed physician to the Company that such medical leave
is necessary. Extensions of such leaves may be granted on written request and
submission of a statement from a duly licensed physician to the Company that
such extended medical leave is necessary; provided, that the original leave of
absence and the extensions cannot exceed a total of one (1) year for
non-occupational medical leaves and cannot exceed a total of two (2) years for
occupational medical leaves. An employee who has been absent on any PERSONAL
or medical leave of absence, non- occupational or occupational, shall present
evidence that he/she is physically and mentally fit to return to work and
perform all of the
-18-
40
<PAGE> 19
then existing duties of his/her job. The Company, at its option, may require
the employee to pass a physical examination given by a physician of the
Company's choice, including x-rays and tests and a DRUG SCREEN, at Company
expense, prior to permitting any employee to return to work from any leave of
absence.
Section 8.4. A leave of absence for personal reasons not to exceed thirty
(30) calendar days may be granted by the Company for good cause, provided the
employee's absence will not interfere with the Company's production or
operations. Applications for personal leave of absence shall be in writing and
must be approved by the employee's immediate supervisor in writing specifying
the period of time for which the personal leave is granted.
Section 8.5. The rights of employees entering the Armed Services of the
United States shall be governed by applicable law.
Section 8.6. All unpaid leaves of absence shall be without any type of
pay, provided, however, employees on an unpaid leave of absence shall
accumulate seniority during any such leave or extension thereof.
Section 8.7. No leave of absence shall be granted for employment
elsewhere or for self-employment and any employee engaging in any employment or
self employment during any leave of absence, without prior written approval
from the Company, shall be considered to have voluntarily quit.
Section 8.8. No more than three (3) non-work related medical or personal
leaves of absence will be granted to any employee in any twelve (12) month
period except as otherwise provided by the Family and Medical Leave Act of
1993.
Section 8.9. Employees who return to work from a medical or personal
leave of absence, and who work for less than five (5) full work days, before
being placed on another medical or personal leave of absence, will be
considered to have been on a continuous leave from the date of their previous
leave of absence for all purposes under this
-19-
41
<PAGE> 20
Agreement, except as otherwise provided by the Family and Medical Leave Act of
1993.
Section 8.10. Eligible employees shall be granted an unpaid leave of
absence of up to twelve (12) work weeks, pursuant to the terms and conditions
of the Family and Medical Leave Act of 1993 (FMLA), for one or more of the
following reasons: (1) because of the birth of a son or daughter of the
employee and in order to care for such son or daughter; (2) because of the
placement of a son or a daughter with the employee for adoption or foster care;
(3) in order to care for the spouse, or a son, daughter, or parent, of the
employee, if such spouse, son, daughter, or parent has a serious health
condition: or (4) because of a serious health condition that makes the employee
unable to perform the functions of the position of such employee. An employee
shall provide notice sufficient to make the Company aware that the employee
needs FMLA-qualifying leave, and the anticipated timing and duration of the
leave. Where the need for leave is foreseeable, the employee must provide
thirty (30) days advance notice. If thirty (30) days advance notice is not
possible, notice must be given as soon as practicable. If an absence qualifies
for leave under the FMLA and any other leave provision of this Agreement, then
the leave will run concurrently under both provisions. A "rolling" twelve (12)
month measured retrospectively from the date an employee uses any FMLA leave
shall be used to determine the "twelve(12)month period" in which the twelve
weeks of FMLA leave entitlement occurs. Employees will be required to use their
available paid vacation time while on an FMLA leave.
-20-
42
<PAGE> 21
ARTICLE 9
GRIEVANCE AND ARBITRATION PROCEDURE
Section 9.1. A grievance is defined as a dispute an employee or group of
employees may have with the Company relating to the interpretation, application
or alleged violation of the express terms of this Agreement, except for those
matters excluded from the grievance and arbitration procedure under Article 7
of this Agreement. An earnest effort shall be made to adjust grievances
promptly and in the following manner and order:
FIRST STEP: An employee who claims a grievance shall, within three (3)
working days after the event has occurred giving rise to the grievance, submit
the grievance, in writing, on forms provided by the Union, signed and dated, to
the employee's immediate supervisor. The grievance shall state the alleged
cause of the grievance, the facts in support of the grievance, the provisions
of this Agreement claimed to be violated and the remedy requested. A Union
steward may assist an employee in presenting a grievance if the employee
requests assistance. The immediate supervisor or his designated representative
shall give an answer in writing to the grievance within three (3) working days
after receipt of the grievance.
SECOND STEP: If the grievance is not settled in the First Step above, the
written grievance may be presented by the employee to the Company's Director of
Manufacturing Operations or his/her designated representative, within three (3)
working days after receipt of the First Step Answer. A Union steward may
assist an employee in presenting a grievance at the Second Step of the
grievance procedure, if the employee requests assistance. Within five (5)
working days after receipt of the written grievance, a meeting shall be held to
discuss the grievance between the Company's Director of Manufacturing
Operations or his/her designated representative and any other Company
representatives the Company desires to be present, the grievant, any employee
witnesses the
-21-
43
<PAGE> 22
Company or Union desire to be present, and the Union's President and/or the
grieving employee's Union steward to their designated representatives. The
grieving employee's supervisor shall attend the meeting by mutual agreement of
the Company and Union. Within five (5) working days after the close of the
Second Step meeting, the Company shall give its answer in writing to the
grievant and to the Union President or designated representative who attended
the Second Step meeting.
THIRD STEP: If the grievance is not settled in the Second Step above, the
Union may submit the grievance to arbitration by serving a written notice of
intent to arbitrate on the Company's Director of Manufacturing Operations or
his/her designated representative within fifteen (15) working days from the
date of the Second Step answer. Such notice shall be signed by the employee(s)
who filed the grievance. All grievances notices for arbitration shall, unless
otherwise settled, be heard and decided by an arbitrator.
Section 9.2. Within ten (10) working days after receipt of the Union's
notice of intent to arbitrate, a representative of the Company and a
representative of the Union may select an arbitrator to hear and decide the
grievance. If they are unable to agree upon the selection of an arbitrator,
either the Company or the Union shall request the Federal Mediation and
Conciliation Service, Washington D.C., to submit a list of eleven (11)
arbitrators to the Company and Union. Within seven (7) calendar days after the
parties receive the list, each of the parties shall strike from his copy of the
list the names which are unacceptable to it, indicate the numerical order of
its preference among the remaining names, if any, and send a copy of the list
to the other party. If the lists thus exchanged show one (1) mutually
acceptable name, he/she shall be appointed as the arbitrator. If more than one
(1) name is mutually acceptable, the one with the lowest combined numerical
designations shall be appointed as the arbitrator. If two (2) or more names
have equal lowest combines numerical designations, the parties
-22-
44
<PAGE> 23
shall select the arbitrator from among such names by flipping a coin. If the
lists thus exchanged show no mutually acceptable choice, the parties shall
request the Federal Mediation and Conciliation Service to submit a second list
of eleven (11) names and the same selection procedure shall be applicable as
has been specified herein with respect to the first list. If the second list
exchanged show no mutually acceptable choice, the parties shall request the
Federal Mediation & Conciliation Service to submit a third list of eleven (11)
names and the same selection procedure shall be applicable as has been
specified herein with respect to the first list. If the third list exchanged
show no mutually acceptable choice, the parties shall request the Federal
Mediation & Conciliation Service to appoint an arbitrator, excluding, however,
anyone who name appeared on the list previously furnished to the parties.
Section 9.3. Any grievance which has not been presented under the
grievance procedure within the time limits for presentation of grievance, and
any grievance which is not appealed to the next step of the grievance or
arbitration procedure within the applicable time limits specified herein, shall
be considered as settled and shall not be subject to further discussion, appeal
or to arbitration. All steps and time limits specified in this Article are
mandatory and the steps may be waived and the time limits extended or reduced
only by written mutual agreement of the Union and the Company.
Section 9.4. Only grievances which involve the interpretation,
application or alleged violation of the express provisions of this Agreement
may be submitted to arbitration. The arbitrator shall have no power either
directly or indirectly or by implication, to add to, subtract from, or change,
modify or amend any of the terms or provisions of this Agreement or any other
written agreements between the parties. All decisions made by an arbitrator
within his/her authority as defined in this Agreement shall be final and
binding on the Company, the Union, and the employees covered by this Agreement.
-23-
45
<PAGE> 24
Section 9.5. Each party shall pay the costs and expenses incurred by it
in connection with an arbitration, except that the costs and expenses of the
arbitrator and the cost of a hearing room shall be paid equally by the Company
and by the Union. Either party may have a court reporter present at any
arbitration hearing. The parties shall share the costs of the court reporter
if they mutually agree to have a court reporter present. If the parties do not
mutually agree to have a court reporter present, the party desiring the
reporter shall pay the full cost; provided, however, that if the other party
wishes to purchase a copy of the court reporter's transcript or review the
court reporter's transcript, that party shall than be obligated to pay one-half
(1/2) of the cost of the court reporter. Either party may subpoena the
presence of an employee as a witness during the course of an arbitration
hearing, provided, however, that the employees' attendance at the hearing shall
be at the sole expense of the party issuing the subpoena.
Section 9.6. The Company shall not be required to make any payment for
back pay or other benefits for any period prior to the date of which a written
grievance was filed. A claim for back pay by an employee who has been
discharged or suspended for disciplinary reasons and who is later reinstated
with back pay shall be limited to the amount of pay which the employee would
otherwise have earned from employment with the Company, less any earnings,
compensation or benefits received by the employee, which the employee is not
required to return, for the period covered by the employee's back pay claim.
Section 9.7. An arbitrator may not hear and decide more than one (1)
grievance unless the presentation of more than one (1) grievance to the
arbitrator is mutually agreed to by the Company and the Union.
Section 9.8. No grievances shall be written, presented, investigated,
processed or discussed during working time unless otherwise mutually agreed by
the Company and the Union.
-24-
46
<PAGE> 25
Section 9.9. Working day as used in the Article is defined as a normally
scheduled plant production day, excluding scheduled vacation plant shut downs,
paid holidays, Saturdays and Sundays.
ARTICLE 10
WORK STOPPAGES
Section 10.1. The Union agrees that during the term of this Agreement,
neither it nor its officers, agents or representatives will authorize, cause,
instigate, condone, engage, or participate in any work stoppage, sit-down,
strike, slowdown, picketing or bannering, the honoring of any picket line,
sympathy strike, boycott, or any other action which may interrupt or interfere
with the operations or production of the Company.
Section 10.2. No employee during the term of this Agreement, shall
authorize, cause, instigate, condone, engage, or participate in any work
stoppage, sit-down, strike, slowdown, picketing or bannering, the honoring of
any picket line, sympathy strike, boycott or any other action which may
interrupt or interfere with the operations or production of the Company.
Section 10.3. In the event of any violation of Section 10.1 or Section
10.2 above, the Union agrees that, upon notification by the Company to it of
the existence of such violation, it will take immediate affirmative steps with
the employees involved (such as letters, bulletins, telephone calls, telegrams,
employee meetings, announcements and Union disciplinary action) to bring about
an immediate resumption of work. The Union shall keep the Company currently
advised of all action which it is taking to comply with its obligations as set
forth in this Section 10.3.
Section 10.4. In the event of any violation of Section 10.1 or Section
10.2 above, whether authorized or unauthorized by the Union, the Company may
discharge or otherwise discipline any employee who has violated those Sections,
whether individually or in a group, as the
-25-
47
<PAGE> 26
Company so desires within its sole and exclusive discretion. The Company shall
have the right to discharge or otherwise discipline any employee who has
violated Section 10.1 or Section 10.2 even though other employees have violated
those Sections and they are not discharged or otherwise disciplined by the
Company. In the event an employee is discharged or otherwise disciplined for
violating Section 10.1 or Section 10.2, the employee may file a grievance under
Article 9 of this Agreement. If the grievance is not resolved in the grievance
procedure, it may be submitted to arbitration, provided, however, that the
arbitrator's decision and award shall be limited to the question of whether or
not the aggrieved employee violated Section 10.1 or Section 10.2 of this
Article, and the arbitrator shall have no authority to modify the discipline
imposed by the Company unless the arbitrator finds that the employee in fact
did not violate Section 10.1 or Section 10.2 of this Article.
Section 10.5. Should there by a violation of this Article, there shall be
no discussion or negotiation regarding the difference or dispute during the
existence of such violation or before normal work has been resumed, except by
mutual agreement of the parties hereto.
Section 10.6. The Company will not lock out employees during the term of
this Agreement.
ARTICLE 11
WAGES
Section 11.1. The minimum straight time hourly wage rates to be paid to
employees in each job classification during the term of this agreement are set
forth in Appendix "A" attached to and made a part of this Agreement.
Section 11.2. Employees hired after the effective date of this Agreement
shall receive no less than the minimum straight time hourly wage rate of their
job classification as defined in Appendix "A".
-26-
48
<PAGE> 27
Section 11.3. All employees shall have their straight time hourly wage
rate increased in accordance with Appendix "A" and the memorandum of agreement
implementing the new wage structure.
Section 11.4. Second shift employees shall receive fifteen ($.15) per
hour of work as shift differential pay in addition to their respective straight
time hourly wage rates. First shift employees who work into the second shift
shall not receive second shift differential pay.
Section 11.5. Third shift employees shall receive twenty-five ($.25) per
hour of work as shift differential pay in addition to their respective straight
time hourly wage rates. Second shift employees who work into the third shift
shall not receive third shift differential pay.
Section 11.6. Shift differential pay shall be included in a second shift
or third shift employees' straight time hourly wage rate for overtime and
double time, vacation pay, holiday pay and report in pay purposes, provided the
overtime work or double time work, vacation, holiday or report in occurs while
the employee is assigned to the second or third shift, respectively.
Section 11.7. The Company agrees to establish and maintain a weekly
payday and in no case shall more than one (1) week's pay be held back.
Section 11.8. As a result of the new job classifications effective
12/31/95, employees on the Seniority List on that date will be classified into
one of the three (3) classifications contained in Appendix "A" of this
Agreement. Employee's straight time hourly wage rates will be adjusted in
accordance with Section 11.2 of this Article to bring the earnings of each
employee to at least the minimum hourly wage rate for their job classification.
ARTICLE 12
HEALTH PLAN, ACCIDENT & SICKNESS BENEFITS, LIFE INSURANCE
-27-
49
<PAGE> 28
Section 12.1. The Company agrees to offer an employee health plan and to
maintain the current or equivalent plan for the duration of this agreement. It
is recognized that the Company has selected the plan providers and
administrators. The Union agrees to allow the Company to change providers
and/or administrators as long as the level of benefits remains equivalent. The
Union also acknowledges that minor changes in benefit coverage's are allowed.
Section 12.2. The Company and the employee will share equally in the
costs associated with maintaining the employee health plan. Employees shall
contribute a weekly amount for their coverage through payroll deduction that is
based on the type of coverage elected (Single, Employee and Spouse, Employee
and Dependents or Family). Any cost increases or decreases occurring during
the term of this Agreement will be shared equally.
Section 12.3. The Company reserves the right to change health plan
administrators. The Company also has the right to determine whether to have a
self-funded or fully insured plan as long as equivalent benefits are provided.
Section 12.4. An employee's eligibility and his/her dependents'
eligibility for healthcare benefits shall be governed by the terms, conditions
and exclusions contained in the plan. If benefits are denied to any employee,
his/her dependents or their heirs, executors or assigns by any insurance
company, plan administrator or benefit provider, the Company shall not be
liable in any way.
Section 12.5. The Company's obligation to pay insurance premiums under
this Article shall terminate when an employee resigns, retires, is terminated
or discharged, enters the Armed Forces (except as otherwise provided by the
Uniform Services Employment and Re-Employment Rights Act of 1994), is laid off
or receives a personal leave of absence (except as otherwise provided by the
Family and Medical Leave Act of 1993). The Company shall pay insurance
premiums under this Article on behalf of an employee on a medical leave of
absence due to illness or injury covered
-28-
50
<PAGE> 29
by worker's compensation or a medical leave of absence not covered by worker's
compensation for a maximum period of ninety (90) calendar days after the leave
is granted by the Company.
Section 12.6. When the Company's obligation to provide coverage under
this Article terminates, employees and their eligible dependents may continue
coverage under the health plan by electing continuation coverage under the
provisions of COBRA and paying to the Company by the first of each month, for
the length of time continuation is allowed, the full monthly plan cost
applicable for the type of coverage elected.
Section 12.7. The Company will provide active employees with a weekly
Disability benefit based on the following schedule:
Less than 1 year of service No benefit
1 year of service, but less than 10 years 30%
More than 10 year 35%
The benefit will be based on the employee's current rate or the classification
maximum, whichever is lower. Eligibility for this benefit begins on the eighth
(8th) consecutive day of absence due a non-work related disability that does
not require hospitalization, or on the first (1st) day of absence due to a
non-work related hospitalization. This weekly benefit will be payable up to a
maximum of twenty-six (26) weeks if the employee remains disabled as certified
by their physician. The Company may, at its expense, request additional review
and approval by its designated physician.
Employees utilizing this benefit will return to work as soon as they are
physically able, based on the medical input from the employee's and the
Company's physicians. Light duty assignments may be provided as recommended by
the physicians.
Section 12.8. The Company will provide each active employee with Five
Thousand Dollars ($5000) of term life insurance. Optional supplemental term
life insurance is also available in increments of $5000 up to a maximum of
$30,000. The total cost of supplemental life will be paid by the employee.
The Company will seek competitive rates
-29-
51
<PAGE> 30
for the insurance. For employees on lay-off status, life insurance coverage
will terminate at the end of the calendar month in which the lay-off period
begins. Included in the basic and supplemental life insurance is an equivalent
amount of accidental death and dismemberment insurance. This life insurance
coverage is governed by the terms, conditions and exclusions contained in the
Groups Life Insurance Certificate and Policy issued by the Insurance provider
for employees of American Sign and Marketing Services, Inc.
ARTICLE 13
SAFETY AND HEALTH
With the objective of providing a safe and healthy work environment for all
employees, the representatives of the membership of the American Sign and
Marketing Services, Inc., Independent Union and the members of the Company's
Management jointly agree to the following:
Section 13.1. A formal Safety and Health Program will continue to be
developed and maintained through joint efforts with the Union and the Company.
Section 13.2. The Safety and Health Program indicated in Section 13.1
above will be developed by a joint Safety Development Group comprised of six
(6) members with a balanced representation from the Union membership and from
the Non-Union sector of the Company. The respective members from the Union and
the Non-Union sectors will be selected based on their ability to contribute to
the development of a workable and effective program. The Safety Development
Group will be given the responsibility and the authority to call upon other
resources within the Company, and as required, external to the Company that are
necessary to successfully complete their mission.
Section 13.3. The Safety and Health Program will include at least the
following elements:
* A Safety Coordinator whose basic responsibilities will be determined
by the Safety Development Group.
* Necessary training for all employees and supervision.
-30-
52
<PAGE> 31
* Representation, input, and feedback from all segments of the
organization.
* Joint Union and Non-Union investigation of all accidents and injuries
conducted in a timely manner with the objective of determining the
cause(s) and preventing repeat occurrences.
* Any and all other program elements that the joint Development Group
determines are necessary to make the program effective.
ARTICLE 14
TOOLS AND MACHINES
Section 14.1. The Company agrees to furnish all tools and machines
necessary to do all production work performed in the plant by employees covered
by this Agreement. All such tools and machines shall remain the property of
the Company and employees shall not remove any tools and machines from the
Company premises at any time, unless they first receive advance written
authorization to remove tools and/or machines.
Section 14.2. It shall be the responsibility of the Company and employees
to keep all tools and machines in a safe condition and all employees shall use
all tools and machines in a safe manner.
Section 14.3. No employee shall use any machine or tool without engaging
the proper safety device or guard.
Section 14.4. Any machine or tool an employee feels is unsafe should be
immediately reported to the employee's immediate supervisor, the Director of
Manufacturing Operations, or the Manager of Human Resources.
ARTICLE 15
401(K) PLAN
Section 15.1. On January 1, 1989, the Company agrees to make available to
employees, a 401(K) Plan consisting of The Fifth Third Bank Prototype Trust
Agreement #1, The Fifth Third Bank Basic Prototype Plan Document #01, The Fifth
Third Bank Basic Prototype Plan Document #01 Section 401(K) Amendment, The
Fifth Third Bank Prototype Profit Sharing Plan Supplemental Section 401(K)
Adoption Agreement, signed by the
-31-
53
<PAGE> 32
Company on January 2, 1987, and The Fifth Third Bank Prototype Profit Sharing
Plan #001 Adoption Agreement (Non-Standardized), signed by the Company on
January 2, 1989, (hereinafter the "Plan"), if prior to January 1, 1989, over
fifty percent (50%) of the employees agree to contribute a portion of their pay
to the Plan through voluntary written payroll deduction authorizations. The
Company will continue to make the Plan available to employees during the term
of this Agreement, but only so long as the Plan exists and The Fifth Third Bank
allows the Company to make the Plan available to employees.
Section 15.2. An employee's eligibility and the eligibility of the
employee's heirs, executors and assigns to participate in the Plan and to
receive any benefits under the Plan shall be governed by the terms and
conditions of all the Plan documents set forth in Section 15.1 above.
Section 15.3. Any disputes an employee may have under any of the Plan
documents set forth in Section 15.1 above, shall not be subject to the
grievance and/or arbitration provisions of this Agreement.
Section 15.4. The Trustee, Fifth Third Bank, will issue Certificates of
Participation to individual Plan participants semi-annually beginning with Plan
year 1992.
The Company will provide a quarterly match to individual employee contributions
in accordance with terms and provisions contained in the Plan documents
referenced in Section 15.1 of this Article.
It is understood that the Plan will be modified as necessary to comply with
changes required by legislation or other regulation and that the Company and/or
Trustee will notify the Union of any modifications made to the Plan.
ARTICLE 16
BEREAVEMENT AND JURY PAY
-32-
54
<PAGE> 33
Section 16.1. When death occurs to an employee's mother, father, brother,
sister, spouse, child, father-in-law, mother-in-law, stepmother, stepfather,
grandparents or grandchildren, the Company will allow the employee to be absent
from work for three (3) consecutive working days within five (5) calendar days
after and including the date of death, with pay at the employee's straight time
hourly wage rate, excluding any shift differential pay) for eight (8) hours per
day, provided:
(1) The employee will be paid only for those days, if any, on which it is
necessary for him/her to be absent and on which he/she otherwise would be
scheduled to work;
(2) The employee provides the Company with satisfactory evidence of the
date of death, funeral date and relationship of the decedent to the employee;
and
(3) The employee has completed his/her probationary period as defined in
this Agreement.
Section 16.2. The Company will pay an amount equal to the difference
between eight (8) times an employee's straight time hourly wage rate (excluding
any shift differential pay) and the amount an employee receives as jury duty
fees when the employee is required to serve and does serve, on any public jury
for each day of such jury duty up to a maximum of four (4) weeks per employee
in any calendar year, provided:
(1) The employee is otherwise scheduled to work, and provided such jury
duty prevents the employee from performing his job during his regularly
scheduled hours of work;
(2) The employee has completed his/her probationary period as defined in
this Agreement;
(3) The employee has notified the Company immediately after he/she has
been summoned for jury duty and furnishes satisfactory evidence to the Company
that jury duty was performed on the days on which payment is
-33-
55
<PAGE> 34
claimed by submitting a statement from the Clerk of Courts setting forth the
amount of jury duty fees received for each day of jury duty; and/or
(4) The employee reports to work for the remainder of the employee's
shift if the jury duty ceases as much as two (2) hours prior to the end of the
employee's scheduled shift.
ARTICLE 17
DURATION
Section 17.1. This Agreement shall be in effect from December 31, 1995
through December 31, 1998, and shall continue in effect from year to year
thereafter, unless either party hereto gives the other party written notice not
less than sixty (60) calendar days prior to such expiration date or the
expiration of any renewal of its desire to terminate or modify this Agreement.
Section 17.2. If either party utilized the procedure of Section 17.1
above to modify this Agreement, the notice of modification will contain all the
desired modifications.
Section 17.3. The parties acknowledge that, during the negotiations which
resulted in this Agreement, each had the unlimited right and opportunity to
make demands and proposals with respect to any subject or matter not removed by
law from the area of collective bargaining and that the understandings and
agreements arrived at by the parties after the exercise of that right and
opportunity are set forth in this Agreement. Therefore, the Company and the
Union, for the life of this Agreement, each voluntarily and unqualifiedly
waives the right, and each agrees that the other shall not be obligated to
bargain collectively with respect to any matter or subject specifically
referred to, or covered in this Agreement, or with respect to any matter or
object not specifically referred to, or covered in this Agreement, even though
such subject or matter may not have been within the knowledge or
-34-
56
<PAGE> 35
contemplation of either or both of the parties at the time they negotiated or
signed this Agreement. The parties further agree that this instrument
represents the complete Agreement between the parties and that this Agreement
supersedes any and all prior oral or written agreements, understandings,
policies, practices or procedures which may have been in effect at any time.
Section 17.4. When this Agreement or any renewal thereof terminates, as
provided in this Agreement, all rights, duties and obligations created under
this Agreement, shall also immediately terminate, and none of the terms and
conditions contained in this Agreement shall continue in effect, or transfer to
or vest in any individual employee during or after the term of this Agreement.
Section 17.5. Should any part of this Agreement be rendered or declared
illegal, or an unfair labor practice by reason of any existing or subsequently
enacted legislation, or by any final decree of a court of competent
jurisdiction, or by the final decision of any authorized government agency,
including the National Labor Relations Board, said invalidation shall not
affect any of the remaining portions of this Agreement and said remaining
portions shall continue in full force and effect.
IN WITNESS WHEREOF, the parties hereto, by their duly authorized
representatives, have set their hands this ____ day of _______________, 1996.
AMERICAN Sign & MARKETING THE AMERICAN SIGN & MARKETING
SERVICES, INC. SERVICES, INC., INDEPENDENT UNION
By: /s/ Mike Robinson By: /s/ Harrison Ward
----------------------------- ------------------------------
By: /s/ Kathryn Coleman Wood By: /s/ Rozanna Florence
----------------------------- ------------------------------
By: /s/ Garland Sanders By: /s/ Paul A. Haubner
----------------------------- ------------------------------
By: By: /s/ Jonathon Hauser
----------------------------- ------------------------------
-35-
57
<PAGE> 36
MEMORANDUM OF AGREEMENT
IMPLEMENTATION OF THE NEW WAGE STRUCTURE
1. The new wage structure will have defined minimum and maximums and
progression steps. This structure will enable our wages to be more
competitive with wages paid by other companies and will ensure more
fairness in how employees doing similar jobs are paid. No increases will
be given outside the union contract.
2. The wage structure will increase the amount of the annual wage increase on
January 1 each year of this contract.
3. Effective January 1, 1996, employees who have been on payroll for 90 days
or more will have their pay increased by the amount of the general wage
increase or will be brought to Step 1, whichever is greater. This new wage
rate will establish an initial position in the progression, regardless of
prior time in the job. If a new wage rate falls between two progression
steps, the person will receive the full amount of the wage increase but
will be considered in the lower of the two steps. They will then receive
progressional wage adjustments at the intervals defined by the progression
chart.
4. Employees in their 90 day-probationary period as of January 1, 1996, will
be brought to the minimum for their classification. As they complete
their 90 day probation, they will receive progressional wage adjustments
at the intervals defined by the progression chart.
5. Some employees are currently paid above the maximum. We value their
contributions and years of service to the Company; therefore, we will
allow base wages for these individuals to exceed the maximum and wage
adjustments will continue to be made as long as the person continues in
the same classification.
6. The Company has the right to hire new employees in the Specialist category
at up to Step Two of the progression based on skills and job experience.
If a Specialist is hired at Steps One or Two, there is no increase at the
completion of the 90 day probation.
7. If an employee is promoted to Team Leader on a long-term or temporary
basis, he or she will be moved to the minimum of the team leader
classification or receive a $1.00 increase, whichever is higher. If the
employee is paid below the maximum for the Team Leader classification, he
or she will receive progression increases at the defined intervals. The
Company has the right to make temporary assignments of team leaders for up
to a year. If any Team Leader is moved back to a Production Specialist or
Production Associate position, he or she will retain any contractual
increases that were received during that time but the initial adjustment
and any progressional increases that would not have been received in the
previous position will be removed.
58
<PAGE> 37
8. Production Associates who successfully bid on a Production Specialist
position will move to the new classification at the start rate or at
their current rate, as long as their current rate is below the maximum.
They will move in the progression at the defined time intervals.
Employees whose current rate falls above the maximum will be considered
on a case-by-case basis.
9. Production Specialists who move to a Production Associate position at
their own initiative will immediately move to the new classification at
their current rate or the maximum, whichever is lower.
10. Production Specialists who move to a Production Associate position for
other reasons (lack of work, performance, health problems, etc.) will
continue at their curent rate for up to 30 days. If the assignment
extends more than 30 days, they will be formally reclassified and will be
paid at their current rate or 15% above the maximum of the new
classification, whichever is lower, and will continue to receive
contractual increases.
For the Company For the Union
/s/ Mike Robinson /s/ Harrison Ward
---------------------------- --------------------------
/s/ Kathryn Coleman Wood /s/ Rozanna Florence
---------------------------- --------------------------
/s/ Garland Sanders /s/ Paul A. Haubner
---------------------------- --------------------------
/s/ Jonathon Hauser
---------------------------- --------------------------
59
<PAGE> 38
APPENDIX "A"
Effective 1-1-96
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Review Interval 90 Days 9 months 6 months 6 months 6 months 6 months 6 months 6 months
- ---------------------------------------------------------------------------------------------------------------------
Max-PA Max-PS/TL
TITLE START Step 1 Step 2 Step 3 Step 4 Step 5 Step 6 Step 7 Step 8
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Team Leader $10.00 $10.25 $10.50 $10.75 $11.00 $11.25 $11.50 $11.75 $12.00
- ---------------------------------------------------------------------------------------------------------------------
Production Specialist $ 9.00 $ 9.25 $ 9.50 $ 9.75 $10.00 $10.25 $10.50 $10.75 $11.00
- --------------------------------------------------------------------------------------------------------------------
Production Associate $ 7.50 $ 7.75 $ 8.00 $ 8.25 $ 8.50 $ 8.75 $ 9.00 $ 9.25
Designated Cells $ 9.55
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
Effective 1-1-97 (25 cent contractual increase)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Review Interval 90 Days 9 months 6 months 6 months 6 months 6 months 6 months 6 months
- ---------------------------------------------------------------------------------------------------------------------
Max-PA Max-PS/TL
TITLE START Step 1 Step 2 Step 3 Step 4 Step 5 Step 6 Step 7 Step 8
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Team Leader $10.25 $10.50 $10.75 $11.00 $11.25 $11.50 $11.75 $12.00 $12.25
- ---------------------------------------------------------------------------------------------------------------------
Production Specialist $ 9.25 $ 9.50 $ 9.75 $10.00 $10.25 $10.50 $10.75 $11.00 $11.25
- ---------------------------------------------------------------------------------------------------------------------
Production Associate $ 7.75 $ 8.00 $ 8.25 $ 8.50 $ 8.75 $ 9.00 $ 9.25 $ 9.50
Designated Cells $ 9.80
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
Effective 1-1-98 (25 cent contractual increase)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Review Interval 90 Days 9 months 6 months 6 months 6 months 6 months 6 months 6 months
- ---------------------------------------------------------------------------------------------------------------------
Max-PA Max-PS/TL
TITLE START Step 1 Step 2 Step 3 Step 4 Step 5 Step 6 Step 7 Step 8
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Team Leader $10.50 $10.75 $11.00 $11.25 $11.50 $11.75 $12.00 $12.25 $12.50
- ---------------------------------------------------------------------------------------------------------------------
Production Specialist $ 9.50 $ 9.75 $10.00 $10.25 $10.50 $10.75 $11.00 $11.25 $11.50
- ---------------------------------------------------------------------------------------------------------------------
Production Associate $ 8.00 $ 8.25 $ 8.50 $ 8.75 $ 9.00 $ 9.25 $ 9.50 $ 9.75
Designated Cells $10.05
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
60
<PAGE> 39
APPENDIX "B"
___________________________, 19___.
Date
I, _______________________________, the undersigned employee of American
Sign and Marketing Services, Inc., voluntarily authorize and request American
Sign and Marketing Services, Inc., of Florence, Kentucky, my employer, to
deduct from my wages the monthly membership dues and the regular initiation
fees in the amount fixed pursuant to the constitution and the by-laws of The
American Sign and Marketing Union and to pay over the same said Union or its
designated agent pursuant to the provisions of any current or future collective
bargaining agreement.
The foregoing dues deduction(s) shall be made weekly from the paycheck
issued to me and shall be remitted to the Union monthly after such deduction
has been made. The foregoing initiation fee deduction shall be made from the
paychecks issued to me over a three(3)week period in three (3) equal
installments.
This authorization shall remain in effect until revoked by me and shall be
irrevocable for a period of one year from the date hereof, or until the
termination date of any applicable collective bargaining agreement, whichever
occurs sooner.
Effective beginning with the month of __________________, 19___.
__________________________________________
Signature
__________________________________________
Social Security Number
61
<PAGE> 1
REVOLVING CREDIT AND TERM LOAN AGREEMENT
Dated as of April 21, 1995
By and Between
PLASTI-LINE, INC.
AND
THIRD NATIONAL BANK OF EAST TENNESSEE
62
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS
1.01 Definitions . . . . . . . . . . . . . . . . . . . . . 1
1.02 Accounting Terms. . . . . . . . . . . . . . . . . . . 8
ARTICLE II AMOUNT AND TERMS OF LOANS
2.01 Commitments and Revolving Credit Notes. . . . . . . . 8
2.02 Interest on Revolving Credit Notes. . . . . . . . . . 9
2.03 Method of Borrowing Under the Commitments . . . . . . 9
2.04 Selection of Successive Interest Rates and Interest
Periods . . . . . . . . . . . . . . . . . . . . . . . 10
2.05 Revolving Credit Note Interest Payment Dates. . . . . 11
2.06 Prepayment of Borrowings Under the Commitments. . . . 11
2.07 Revolving Credit Period; Termination Date . . . . . . 11
2.08 Use of Proceeds . . . . . . . . . . . . . . . . . . . 12
2.09 Commitment Fee. . . . . . . . . . . . . . . . . . . . 12
2.10 Term Note . . . . . . . . . . . . . . . . . . . . . . 12
2.11 Accrual of Interest on Term Notes . . . . . . . . . . 13
2.12 Repayment of Term Note. . . . . . . . . . . . . . . . 13
2.13 Term Note Interest Payment Dates. . . . . . . . . . . 13
2.14 Prepayment of Term Note . . . . . . . . . . . . . . . 14
2.15 Illegality. . . . . . . . . . . . . . . . . . . . . . 14
2.16 Increased Costs . . . . . . . . . . . . . . . . . . . 14
Table of Contents - page i
63
<PAGE> 3
2.17 Failure to Complete Borrowings . . . . . . . . . . . . 15
2.18 Capital Adequacy . . . . . . . . . . . . . . . . . . . 15
2.19 Survival . . . . . . . . . . . . . . . . . . . . . . . 16
2.20 Deemed to Have Funded by Purchase of
LIBOR Deposits . . . . . . . . . . . . . . . . . . . . 16
2.21 Making of Payments . . . . . . . . . . . . . . . . . . 16
2.22 Default Rate of Interest . . . . . . . . . . . . . . . 16
2.23 Intentionally Omitted. . . . . . . . . . . . . . . . . 17
2.24 Intentionally Omitted. . . . . . . . . . . . . . . . . 17
2.25 Calculation of Interest. . . . . . . . . . . . . . . . 17
2.26 Intentionally Omitted. . . . . . . . . . . . . . . . . 17
ARTICLE III CONDITIONS TO BORROWINGS
3.01 Conditions Precedent to Initial Advances . . . . . . . 17
3.02 Conditions Precedent to Each Advance and
to the Term Loan . . . . . . . . . . . . . . . . . . . 18
ARTICLE IV REPRESENTATIONS AND WARRANTIES
4.01 Corporate Existence. . . . . . . . . . . . . . . . . . 19
4.02 Corporate Power and Authority; Contravention . . . . . 19
4.03 Enforceability . . . . . . . . . . . . . . . . . . . . 20
4.04 Governmental Consent . . . . . . . . . . . . . . . . . 20
4.05 Subsidiaries . . . . . . . . . . . . . . . . . . . . . 20
4.06 Insurance. . . . . . . . . . . . . . . . . . . . . . . 20
4.07 Financial Statements . . . . . . . . . . . . . . . . . 20
4.08 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . 21
4.09 Actions Pending. . . . . . . . . . . . . . . . . . . . 21
4.10 Title to Properties. . . . . . . . . . . . . . . . . . 22
Table of Contents - page ii
64
<PAGE> 4
4.11 Federal Reserve Regulations. . . . . . . . . . . . . . 22
4.12 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . 22
4.13 Outstanding Debt . . . . . . . . . . . . . . . . . . . 23
4.14 Conflicting Agreements or Other Matters. . . . . . . . 23
4.15 Pollution and Environmental Control. . . . . . . . . . 23
4.16 Possession of Franchises, Licenses, Etc. . . . . . . . 24
4.17 Disclosure . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE V AFFIRMATIVE COVENANTS
5.01 Corporate Existence; Maintenance of Properties . . . . 24
5.02 Compliance with Laws, Etc. . . . . . . . . . . . . . . 25
5.03 Taxes and Claims . . . . . . . . . . . . . . . . . . . 25
5.04 Compliance with Other Agreements . . . . . . . . . . . 26
5.05 Inspection of Property . . . . . . . . . . . . . . . . 26
5.06 Insurance. . . . . . . . . . . . . . . . . . . . . . . 26
5.07 Business . . . . . . . . . . . . . . . . . . . . . . . 26
5.08 Keeping of Books . . . . . . . . . . . . . . . . . . . 26
5.09 Reporting of Covenants . . . . . . . . . . . . . . . . 26
5.10 Financial Covenants. . . . . . . . . . . . . . . . . . 28
ARTICLE VI NEGATIVE COVENANTS
6.01 Liens, Etc. . . . . . . . . . . . . . . . . . . . . . 29
6.02 Limitations on Restricted Payments . . . . . . . . . . 31
6.03 Debt . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.04 Restrictions on Loans, Advances, Investments,
Acquisitions and Contingent Liabilities. . . . . . . . 31
6.05 Merger and Sale of Assets. . . . . . . . . . . . . . . 32
6.06 Issuance of Stock by Subsidiaries. . . . . . . . . . . 33
Table of Contents - page iii
65
<PAGE> 5
6.07 Lease Obligations. . . . . . . . . . . . . . . . . . . . . 33
6.08 Sale and Lease-Back. . . . . . . . . . . . . . . . . . . . 33
6.09 Sale or Discount of Receivables. . . . . . . . . . . . . . 33
6.10 Compliance with ERISA. . . . . . . . . . . . . . . . . . . 33
6.11 Transactions with Affiliates . . . . . . . . . . . . . . . 34
ARTICLE VII EVENTS OF DEFAULT AND REMEDIES
7.01 Events of Default. . . . . . . . . . . . . . . . . . . . . 34
7.02 Remedies on Default. . . . . . . . . . . . . . . . . . . . 37
ARTICLE VIII INTERNATIONALLY OMITTED. . . . . . . . . . . . . . . . . . 38
ARTICLE IX MISCELLANEOUS
9.01 No Waiver . . . . . . . . . . . . . . . . . . . . . . . . 38
9.02 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.03 Governing Law . . . . . . . . . . . . . . . . . . . . . . 39
9.04 Survival of Representations and Warranties. . . . . . . . 39
9.05 Descriptive Headings. . . . . . . . . . . . . . . . . . . 39
9.06 Severability. . . . . . . . . . . . . . . . . . . . . . . 39
9.07 Time is of the Essence . . . . . . . . . . . . . . . . . 39
9.08 Counterparts. . . . . . . . . . . . . . . . . . . . . . . 39
9.09 Payment of Costs. . . . . . . . . . . . . . . . . . . . . 39
9.10 Successors and Assigns. . . . . . . . . . . . . . . . . . 40
9.11 Cumulative Remedies; No Waiver. . . . . . . . . . . . . . 40
9.12 Amendments; Consents. . . . . . . . . . . . . . . . . . . 40
9.13 Set-Off . . . . . . . . . . . . . . . . . . . . . . . . . 40
9.14 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . 41
9.15 Usury . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Table of Contents - page iv
66
<PAGE> 6
9.16 Jurisdiction and Venue. . . . . . . . . . . . . . . . . . 41
9.17 Construction. . . . . . . . . . . . . . . . . . . . . . . 41
9.18 Entire Agreement. . . . . . . . . . . . . . . . . . . . . 42
Exhibit A - Revolving Credit Note
Exhibit B - Term Note
Exhibit C - Closing Certificate
Exhibit D - Form of Borrower's Counsel's Opinion
Exhibit E - Guaranty
Schedule 4.05 - Subsidiaries
Schedule 4.09 - Actions Pending
Schedule 4.12 - Plans
Schedule 4.14 - Conflicting Agreements
Schedule 6.01 - Liens, Etc.
Schedule 6.03 - Debt
Table of Contents - page v
67
<PAGE> 7
REVOLVING CREDIT AND TERM LOAN AGREEMENT
THIS REVOLVING CREDIT AND TERM LOAN AGREEMENT, dated as of April
21, 1995 (the "Agreement"), by and between PLASTI-LINE, INC., a corporation
organized and existing under the laws of the State of Tennessee (the
"Borrower"), and THIRD NATIONAL BANK OF EAST TENNESSEE, a national banking
association (the "Bank").
W I T N E S S E T H :
WHEREAS, the Borrower, desires to obtain a revolving credit
facility from the Bank as set forth herein;
THAT for and in consideration of the sum of $10.00 in hand paid by
the Bank to the Borrower, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions. In addition to the other terms defined
herein, the following terms used herein shall have the meanings herein
specified (such meanings to be equally applicable to both the singular and
plural forms of the terms defined):
"Advance" shall mean any advance by the Bank under the Commitment,
which may be either a Base Rate Advance, a Eurodollar Advance or a Cost of Funds
Advance.
"Affiliate", shall mean, with respect to any Person, a Person directly
or indirectly controlling or controlled by, or under direct or indirect common
control with, such Person, other than a Subsidiary of such Person. A Person
shall be deemed to control a corporation if such Person possesses, directly or
indirectly, the power to direct or cause the direction of the management and
policies of such corporation, whether through the ownership of voting
securities, by contract or otherwise.
"Agreement" shall mean this Revolving Credit and Term Loan Agreement,
either as originally executed or as it may be from time to time supplemented,
amended, renewed or extended.
68
<PAGE> 8
"Amortization" shall have the meaning afforded such term under generally
accepted accounting principles, calculated on a consolidated basis.
"Applicable Margin" shall mean, with respect to any Eurodollar Borrowing
or Cost of Funds Borrowing, the percentage as determined from the matrix set
forth below which shall be calculated annually based upon the Borrower's
audited financial statements delivered pursuant to Section 5.09(a) hereof to be
effective as of the date of the delivery of such financial statements with
respect to all Borrowings requested thereafter:
<TABLE>
<CAPTION>
-----------------------------------------------------------------
LEVERAGE TEST
- --------------------------------------------------------------------------------------------
INTEREST Greater than Equal to or between Less than
COVERAGE RATIO 2.0:1.0 1.25:1.0 and 2.0:1.0 1.25:1.0
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than 2.5:1 2.500% 2.375% 2.250%
- --------------------------------------------------------------------------------------------
Equal to or
between 2.5:1.0 2.375% 2.250% 2.125%
and 4.0:1.0
- --------------------------------------------------------------------------------------------
Greater than
4.0:1.0 2.250% 2.125% 2.000%
- --------------------------------------------------------------------------------------------
</TABLE>
As of the date hereof and through the date of the next delivery of the
financial statements described above, the Applicable Margin is equal to 2.125%.
"Base Rate" shall mean the higher of (i) the Prime Rate and (ii) the
Federal Funds Rate plus one-half of one percent (0.5%) per annum.
"Base Rate Advance" shall mean any Advance hereunder that bears interest
based on the Base Rate.
"Base Rate Borrowing" shall mean any Borrowing hereunder that bears
interest based on the Base Rate.
"Borrowing" shall mean a borrowing under the Commitment consisting of
an Advance by the Bank or the Term Loan.
2
69
<PAGE> 9
"Business Day" shall mean a day of the year on which commercial banks
are not required or authorized to close in the city or cities in the United
States in which either Bank maintains its principal place of business and, if
the applicable Business Day relates to any Eurodollar Borrowing, on which
dealings are carried on in the London interbank market.
"Cash Flow" shall mean the sum of Net Income, Depreciation plus
Amortization.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the regulations promulgated and the rulings issued thereunder.
"Commitment" shall mean, with respect to Bank, the amount set forth in
Section 2.01 hereof.
"Cost of Funds Rate" shall mean, with respect to any Interest Period,
the Federal Funds Rate applicable to loans to the Bank in the approximate
amount of the requested Borrowing for the approximate duration of the Interest
Period; provided, however, in the sole discretion of Bank, the Bank may set the
Cost of Funds Rate with reference to its own internal funding sources rather
than the Federal Funds Rate.
"Cost of Funds Rate Advance" shall mean any Advance hereunder that bears
interest based on the Cost of Funds Rate.
"Cost of Funds Rate Borrowing" shall mean any Borrowing hereunder that
bears interest based on the Cost of Funds Rate.
"Current Assets" shall have the meaning afforded such term under
generally accepted accounting principles, calculated on a consolidated basis.
"Current Liabilities" shall have the meaning afforded such term under
generally accepted accounting principles, calculated on a consolidated basis.
"Current Maturities of Long-Term Debt" shall mean the sum of (a) current
maturities of Borrower's Long-Term Debt for the next twelve months, plus (b)
current portion of capital leases for the next twelve months, calculated on a
consolidated basis.
"Debt" shall mean (i) indebtedness for borrowed money or for the
deferred purchase price of property or services (other than trade accounts
payable on customary terms in the ordinary course of business), (ii) financial
obligations evidenced by bonds, debentures, notes or other similar instruments,
(iii) financial obligations as lessee under leases which shall have been or
3
70
<PAGE> 10
should be, in accordance with generally accepted accounting principles,
recorded as capital leases, and (iv) obligations under direct or indirect
guaranties in respect of, and obligations (contingent or otherwise) to purchase
or otherwise acquire, or otherwise to assure a creditor against loss in respect
of, indebtedness or financial obligations of others of the kinds referred to in
clauses (i) through (iii) above.
"Default" shall mean any event that, with notice or lapse of time or
both, would constitute an Event of Default.
"Depreciation" shall have the meaning afforded such term under generally
accepted accounting principles, calculated on a consolidated basis.
"Dollar" and the sign "$" shall mean lawful money of the United States
of America.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as the same may be amended from time to time.
"ERISA Affiliate" shall mean each trade or business (whether or not
incorporated) which, together with the Borrower, is treated as a single
employer under Section 414(b), (c), (m) or (o) of the Code.
"Eurodollar Advance" shall mean any Advance hereunder which bears
interest based on LIBOR.
"Eurodollar Borrowing" shall mean any Borrowing hereunder which bears
interest based on LIBOR.
"Event of Default" shall have the meaning set forth in Article VII.
"Federal Funds Rate" shall mean, for any period, a fluctuating interest
rate per annum equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with member banks of the
Federal Reserve System arranged by Federal funds brokers, of amounts equal or
comparable to the principal amount of such Borrowing offered for a term
comparable to such period, which rates appear on the Reuters Screen as of 10:00
a.m. Atlanta, Georgia, time on the first day of such period (or, if such day
is not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of Atlanta, or, if such rate is not shown on the Reuters Screen
for any day which is a Business Day, the average of the quotations for such day
on such transactions received by the Bank from three Federal funds brokers of
recognized standing selected by them jointly.
4
71
<PAGE> 11
"Guarantor" shall mean American Sign and Marketing Services, Inc., a
Kentucky corporation and a wholly owned Subsidiary of the Borrower.
"Guaranty" shall mean that certain Subsidiary Guaranty Agreement, dated
as of the date hereof from the Guarantor in favor of the Bank substantially in
the form of Exhibit E attached hereto, either as originally executed or as
hereafter amended, modified or supplemented.
"Interest Coverage Ratio" shall mean, with respect to the Borrower, the
ratio, calculated on a consolidated, rolling four quarter basis, of (i)
Earnings Before Interest and Taxes, to (ii) Interest Expense.
"Interest Expense" shall mean, on a consolidated basis, interest expense
as such term is defined under generally accepted accounting principles,
calculated on a consolidated basis.
"Interest Period" shall mean, with respect to any Eurodollar Borrowing,
a period of 1, 2, 3 or 6 months as the Borrower may elect as provided in this
Agreement, and with respect to any Cost of Funds Borrowing, a period of 1 to 29
days as the Borrower may elect as provided in this Agreement; provided, that
(i) the first day of an Interest Period must be a Business Day, (ii) any
Interest Period that would otherwise end on a day that is not a Business Day
shall be extended to the next succeeding Business Day, unless such Business Day
falls in the next calendar month, in which case the Interest Period shall end
on the next preceding Business Day, and (iii) the Borrower may not elect an
Interest Period which would extend beyond the Termination Date or the Maturity
Date, as those terms are defined herein.
"Leverage Test" shall mean, with respect to the Borrower, the ratio of
Total Liabilities to Tangible Net Worth, calculated on a consolidated basis in
accordance with generally accepted accounting principles, calculated on a
consolidated basis.
"LIBOR" shall mean, with respect to any Interest Period for any
Eurodollar Borrowing, the rate per annum equal to the quotient of (i) the
offered rate for deposits in Dollars of amounts equal or comparable to the
principal amount of such Eurodollar Borrowing offered for a term comparable to
such Interest Period, which rates appear on the Reuters Screen LIBO Page as of
10:00 a.m. Knoxville, Tennessee, time, two (2) Business Days prior to the first
day of such Interest Period, provided that (x) if more than one such offered
rate appears on the Reuters Screen LIBO Page, the rate used to determine LIBOR
will be the arithmetic average (rounded upward, if necessary, to the next
higher 1/16th of 1%) of such offered rates, or (y) if no
5
72
<PAGE> 12
such offered rates appear on such page, the rate used for such Interest Period
will be the arithmetic average (rounded upward, if necessary, to the next
higher 1/16th of 1%) of rates quoted by not less than two major banks in New
York, New York, selected by the Bank, at approximately 10:00 a.m., New York
time, two (2) Business Days prior to the first day of such Interest Period, for
deposits in Dollars offered to leading European banks for a period comparable
to such Interest Period in an amount comparable to the principal amount of such
Eurodollar Borrowing, divided by (ii) a number equal to 1.00 minus the Reserve
Percentage, the rate so determined to be rounded upwards to the nearest
multiple of 1/100th of 1%.
"Lien" shall mean any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including any written agreement to give any of the
foregoing, any conditional sale or other title retention agreement, any lease
in the nature thereof, and the filing of or agreement to give any financing
statement under the Uniform Commercial Code of any jurisdiction other than any
financing statement filed solely as a protective measure in connection with a
true lease.)
"Loan Documents" shall mean and include, as the context requires, this
Agreement, the Notes, the Guaranty and any and all other instruments,
agreements, documents and writings contemplated hereby or executed in
connection herewith.
"Long-Term Debt" shall have the meaning afforded such term in accordance
with generally accepted accounting principles, calculated on a consolidated
basis.
"Material Adverse Effect" shall mean any materially adverse change in
(i) the business, results of operations, financial condition, assets or
prospects of the Borrower and its Subsidiaries, taken as a whole, (ii) the
ability of the Borrower to perform its obligations under this Agreement and the
Notes, or (iii) the enforceability of the Loan Documents.
"Maturity Date" shall mean the Maturity Date of the Term Loan as defined
in Section 2.10(b) of this Agreement.
"Multiemployer Plan" means, as of any date, a "multiemployer plan" as
defined in section 4001(a)(3) of ERISA that is subject to Title IV of ERISA to
which the Borrower or any ERISA Affiliate is making or accruing an obligation
to make contributions, or has within any of the preceding five plan years made
or accrued an obligation to make contributions.
6
73
<PAGE> 13
"Net Income" shall have the meaning afforded such term under generally
accepted accounting principles, calculated on a consolidated basis.
"Notes" shall mean, collectively, the Revolving Credit Note and the Term
Note.
"PBGC" shall mean the Pension Benefit Guaranty Corporation and any
successor thereto.
"Person" shall mean an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture or other entity, or a government or any political subdivision or agency
thereof.
"Plan" shall mean any "employee benefit plan" maintained by or on behalf
of the Borrower or any ERISA Affiliate as defined in Section 3(3) of ERISA,
including, but not limited to, any defined benefit pension plan, profit sharing
plan, money purchase pension plan, savings or thrift plan, stock bonus plan,
employee stock ownership plan, Multiemployer Plan, or any plan, fund, program,
arrangement or practice providing for medical (including post-retirement
medical), hospitalization, accident, sickness, disability, or life insurance
benefits.
"Prime Rate" shall mean the per annum rate of interest published from
time to time by the Wall Street Journal (or any successor publication) in its
Money Rates Box as the prime rate, with any change in the rate of interest
resulting from a change in the Prime Rate to be effective as of the opening of
business on the day of such change. On the date of this Agreement, the Prime
Rate is nine percent (9.0%) per annum.
"Reserve Percentage" shall mean, for any day, the stated maximum rate
(expressed as a decimal) of all reserves required to be maintained with respect
to liabilities or assets consisting of or including "Eurocurrency liabilities,"
as prescribed by Regulation D of the Board of Governors of the Federal Reserve
System (or by any other governmental body having jurisdiction with respect
thereto), including, without limitation, any basic, marginal, emergency,
supplemental, special, transitional or other reserves, the rate so determined
to be rounded upward to the nearest whole multiple of 1/100 of 1%.
"Revolving Credit Note" shall mean the promissory note of the Borrower
payable to the order of Bank, in substantially the form of Exhibit A hereto,
evidencing the maximum aggregate principal indebtedness of the Borrower to Bank
under Bank's Commitment, either as originally executed or as it may be from
7
74
<PAGE> 14
time to time supplemented, modified, amended, renewed or extended.
"Stockholder's Equity" shall have the meaning afforded such term under
generally accepted accounting principles, calculated on a consolidated basis.
"Subordinated Debt" shall mean all indebtedness for money borrowed
wherein the principal, premium, if any, and interest is subordinated and junior
in right of payment to the prior payment in full of all other indebtedness of
the Borrower for money borrowed except other Subordinated Debt.
"Subsidiary" shall mean any corporation or other entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by the Borrower.
"Tangible Net Worth" shall have the meaning afforded such term under
generally accepted accounting principles, calculated on a consolidated basis.
"Termination Date" shall mean the Termination Date of the Commitment as
defined in Section 2.07(a).
"Term Loan" shall mean the term loan made by the Bank to the Borrower
pursuant to Section 2.10 evidenced by the Term Note.
"Total Liabilities" shall have the meaning afforded such term under
generally accepted accounting principles, calculated on a consolidated basis.
"Term Note" shall mean any of the promissory note issued by the Borrower
to the Bank substantially in the form of Exhibit B, either as originally
executed or as the same may from time to time be supplemented, modified,
amended, renewed or extended.
SECTION 1.02. Accounting Terms. All accounting terms not
specifically defined herein shall be construed as having the respective
meanings customary under generally accepted accounting principles consistently
applied from and after the date of the initial Advances.
ARTICLE II
AMOUNT AND TERMS OF LOANS
SECTION 2.01. Commitment and Revolving Credit Note. Subject to
and upon the terms and conditions set forth in this
8
75
<PAGE> 15
Agreement, the Bank establishes until December 31, 1998, or such later date as
may be established pursuant to Section 2.07(b) hereof, a revolving credit in
favor of the Borrower in aggregate principal at any one time outstanding equal
to the sum of Ten Million Dollars ($10,000,000.00) (the "Commitment"). Within
the limits of the Commitment, the Borrower may borrow, repay and reborrow under
the terms of this Agreement; provided, however, that the Borrower may neither
borrow nor reborrow should there exist a Default or an Event of Default.
Borrowings under the Commitment shall be made through an Advance by the Bank.
All Advances by the Bank shall be evidenced by a single Revolving Credit Note
payable to the Bank in the form of Exhibit A attached hereto with appropriate
insertions. The Revolving Credit Note shall be dated the date hereof, shall be
payable to the order of the Bank in a principal amount equal to the Commitment,
shall bear interest as hereinafter provided and shall mature on December 31,
1998, unless extended pursuant to Section 2.07(b) or sooner should the
principal and accrued interest thereon be declared immediately due and payable
as provided for hereinafter. The aggregate principal amount of each Borrowing
under the Commitment shall be not less than $10,000.00 and shall be in integral
multiples of $10,000.00. The Bank shall have no obligation to advance funds in
excess of the amount of its Commitment as set forth above.
SECTION 2.02. Interest on Revolving Credit Note. Interest shall
accrue on the unpaid principal amount of each Borrowing under the Commitment at
the following per annum rates, which may be selected by the Borrower subject to
and in accordance with the terms of this Agreement:
(i) the Prime Rate; or
(ii) LIBOR for Interest Periods of 1, 2, 3 or 6 months,
plus the Applicable Margin; or
(iii) Cost of Funds Rate for Interest Periods of 1 to 29
days plus the Applicable Margin; or
provided that the Borrower may not select a rate based on LIBOR or the Cost of
Funds Rate if the Interest Period with respect thereto would extend beyond the
Termination Date.
SECTION 2.03. Method of Borrowing Under the Commitment. The
Borrower shall give the Bank written or telephonic notice (promptly confirmed
in writing in the case of a Eurodollar Borrowing) of any requested Borrowing
under the Commitment (a "Notice of Borrowing") specifying (i) the amount of the
Borrowing, (ii) the date the proposed Borrowing is to be made (which shall be a
Business Day), (iii) whether the Borrowing will
9
76
<PAGE> 16
be a Prime Rate Borrowing, a Cost of Funds Borrowing or a Eurodollar Borrowing,
and (iv) in the case of a Cost of Funds Borrowing or a Eurodollar Borrowing,
the duration of the initial Interest Period applicable thereto. Each Notice of
Borrowing shall be given to the Bank (i) with respect to any Eurodollar
Borrowing, not later than 1:00 P.M. (Knoxville, Tennessee, time) on the second
Business Day preceding the day of such requested Borrowing, and (ii) with
respect to any Prime Rate Borrowing or Cost of Funds Rate Borrowing, not later
than 1:00 P.M. (Knoxville, Tennessee, time) on the day of such requested
Borrowing. The Bank shall be entitled to rely on any telephonic Notice of
Borrowing which it believes in good faith to have been given by a duly
authorized officer or employee of the Borrower and any Advances made by the
Bank based on such telephonic notice shall, when deposited by the Bank to the
Borrower's account no. 5618150 at the Bank, be Advances for all purposes
hereunder. Not later than 2:30 P.M. (Knoxville, Tennessee, time) on the date
specified for the Borrowing in the Notice of Borrowing and in the notice to the
Bank, the Bank shall promptly make the Borrowing available to the Borrower.
SECTION 2.04. Selection of Successive Interest Rates and Interest
Periods. The Borrower may, on the last day of the Interest Period relating
thereto, convert any Eurodollar Borrowing into a Cost of Funds Borrowing or a
Prime Rate Borrowing, or continue a Eurodollar Borrowing in the same aggregate
principal amount. The Borrower may, on the last day of the Interest Period
relating thereto, convert any Cost of Funds Borrowing into a Eurodollar
Borrowing or a Prime Rate Borrowing, or continue a Cost of Funds Borrowing in
the same aggregate principal amount. The Borrower may at any time convert a
Prime Rate Borrowing into a Eurodollar Borrowing or Cost of Funds Borrowing.
The Borrower shall give the Bank telephonic notice (promptly confirmed in
writing in the case of a Eurodollar Borrowing) at least two Business Days prior
to a conversion or continuation of any Borrowing (other than a continuation of
a Prime Rate Borrowing), such notice to specify whether the Borrowing is to be
continued as or converted to a Eurodollar Borrowing or Cost of Funds Borrowing
or converted to a Prime Rate Borrowing and, if applicable the Interest Period
selected by the Borrower for such Borrowing. If the Bank does not receive
timely notice of any succeeding interest rate and/or Interest Period selected
by the Borrower as provided for herein or if the Borrower selects an interest
rate for an Interest Period which is not available under Section 2.02 or
Section 2.11, any outstanding Borrowing for which the Borrower failed to select
an interest rate and/or Interest Period or selected an interest rate for an
Interest Period which is not available under Section 2.02 or 2.11, shall be
converted to a Prime Rate Borrowing and the Bank shall promptly notify the
Borrower by telephone, which notice
10
77
<PAGE> 17
shall be promptly confirmed in writing (including telex or telecopy) to the
Borrower, of such conversion.
SECTION 2.05. Revolving Credit Note Interest Payment Dates.
Interest on the Revolving Credit Note shall be payable (i) on the last day of
the relevant Interest Period for Eurodollar Borrowings and Cost of Funds
Borrowings, provided that, in the case of an Interest Period in excess of three
months, interest shall also be paid on the last day of each three month
interval comprising such Interest Period, (ii) on the last day of each quarter,
in arrears, commencing June 30, 1995, for Prime Rate Borrowings, and (iii) on
the Termination Date.
SECTION 2.06. Prepayment of Borrowings Under the Commitment. The
Borrower shall have the right to prepay Borrowings under the Commitment, in
whole at any time or in part from time to time, pro rata as to the Bank based
on the percentages set forth in Section 2.01, without premium or penalty but
with accrued interest on the principal amount prepaid to the date of such
prepayment, provided that (i) the Borrower gives the Bank at least two Business
Days' prior written notice of prepayment of any Eurodollar Borrowing,
specifying the date such prepayment will occur and the Eurodollar Borrowing to
be prepaid, (ii) each partial prepayment shall be in an amount of at least
$10,000.00 or integral multiples thereof, and (iii) a Eurodollar Borrowing and
a Cost of Funds Borrowing may only be prepaid on the last day of the then
current Interest Period with respect thereto.
SECTION 2.07. Revolving Credit Period; Termination Date.
(a) The unpaid principal balance and all accrued and
unpaid interest on the Revolving Credit Note will be due and payable upon the
first of the following dates or events to occur: (i) acceleration of the
maturity of a Revolving Credit Note in accordance with the remedies contained
in Section 7.02 of this Agreement; or (ii) upon the expiration of the
Commitment on December 31, 1998, unless otherwise extended pursuant to clause
(b) below (December 31, 1998 or such later date to which the Commitment has
been extended hereinafter referred to as the "Termination Date").
(b) The Bank, at its option and in its sole discretion, may
extend the term of the Commitment in the manner set forth in this clause (b) on
December 31, 1997, and on each anniversary of such date (an "Extension Date,,)
for a period of one year after the date on which the Commitment otherwise would
have expired. At any time between the 120th and the 90th day prior to any
Extension Date, the Borrower may request that the Bank extend the term of the
Commitment for one year from the applicable Extension
11
78
<PAGE> 18
Date by written notice to the Bank. Within forty-five (45) Business Days from
the Bank's receipt of such notice from the Borrower, the Bank shall notify the
Borrower of the decision of the Bank with respect to such extension. If the
Bank elects not to extend the term of its Commitment, either (i) the term of
the Commitment shall not be extended and the Commitment shall expire on the
Termination Date or (ii) the Bank may, and upon the request of the Borrower,
shall assign for adequate consideration, its rights and obligations under this
Agreement and under the Bank's Revolving Credit Note to a successor approved in
writing by the Borrower (so long as no Default or Event of Default exists
hereunder). Notwithstanding the foregoing, the Bank (and any successor) shall
have no obligation to extend the term of the Commitment and may extend the term
of the Commitment on such terms and conditions as the Bank (or any successor to
it) shall, in its sole discretion, determine.
(c) On the Termination Date, provided no Default or Event of
Default has occurred and is continuing, the Borrower shall have the right to
satisfy in full its obligation to repay the outstanding principal amount of the
Revolving Credit Note by executing and delivering to the Bank the Term Note in
accordance with Section 2.10 hereof.
SECTION 2.08. Use of Proceeds. The proceeds of each Borrowing
under the Commitment will be used by the Borrower solely for general corporate
purposes.
SECTION 2.09. Commitment Fee. From and after the date hereof up
to and including the Termination Date, the Borrower shall pay to the Bank, a
commitment fee at the rate of one quarter of one percent (0.25%) per annum
(calculated on the basis of a year of 360 days and payable for the actual
number of days elapsed) on the average daily balance of the unused portion of
the Commitment (the "Commitment Fee"). The Commitment Fee shall be payable by
the Borrower quarterly in arrears, commencing on June 30, 1995, and continuing
thereafter on the last day of each succeeding calendar quarter and on the
Termination Date. Bank shall provide a quarterly statement of the amount of
Commitment Fee due and owing to the Bank.
SECTION 2.10. Term Note.
(a) On the Termination Date, provided there exists no Default or
Event of Default, the Borrower may satisfy its obligation to repay the
principal amount of the then outstanding Borrowings by executing and delivering
to the Bank a Term Note in the form of Exhibit B attached hereto with
appropriate insertions in accordance with the provisions of paragraph (b)
below.
12
79
<PAGE> 19
(b) The Term Note shall be dated the Termination Date,
shall be payable to the Bank in a principal amount equal to the outstanding
principal balance for Advances under the Revolving Credit Note on the
Termination Date, shall bear interest on the outstanding principal balance from
the Termination Date to final payment at a fluctuating annual rate of interest
selected by the Borrower in accordance with the provisions of Section 2.11, and
shall mature on the date which is two years following the Termination Date (the
"Maturity Date"), or sooner should the principal and accrued interest on such
Term Note be declared immediately due and payable as provided for hereinafter.
SECTION 2.11. Accrual of Interest on Term Notes. Interest shall
accrue on the unpaid principal amount of the Term Note at the following per
annum rates, one of which shall be selected by the Borrower two Business Days
prior to the Termination Date and, thereafter, in accordance with the
provisions of Section 2.04:
(i) the Prime Rate; or
(ii) LIBOR for an Interest Period of 1, 2, 3 or 6 months, plus the
Applicable Margin plus an additional one quarter of one percent (0.25%) per
annum; or
(iii) the Cost of Funds Rate for an Interest Period of 1 to 29 days
plus the Applicable Margin plus an additional one quarter of one percent
(0.25%) per annum;
provided that, (i) the aggregate outstanding principal balance of the Term Note
shall bear interest at the same rate, and (ii) the Borrower may not select a
rate based on LIBOR or the Cost of Funds Rate if the Interest Period with
respect thereto would extend beyond any Installment Date (as defined in Section
2.12,) or beyond the Maturity Date.
SECTION 2.12. Repayment of Term Note. Principal on the Term Note
shall be payable in eight (8) consecutive, equal quarterly installments, each
such installment to be in an amount equal to twelve and one half of one percent
(12.5%) of the original principal balance of the Term Note, commencing on the
last day of the next calendar quarter in which the Termination Date occurs and
continuing thereafter on the last day of each succeeding calendar quarter (the
"Installment Dates") up to and through the Maturity Date, when all principal
and accrued and unpaid interest shall be due and payable in full.
SECTION 2.13. Term Note Interest Payment Dates. Interest on the
Term Note shall be payable (i) on the last day of the relevant Interest Period
for Eurodollar Borrowings or Cost of
13
80
<PAGE> 20
Funds Borrowings, provided that, for any Interest Period in excess of three
months, interest shall also be paid on the last day of each three month
interval comprising such Interest Period, (ii) on the last day of each calendar
quarter, in arrears, commencing the last day of the calendar quarter in which
the Termination Date occurs for Prime Rate Borrowings, and (iii) on the
Maturity Date.
SECTION 2.14. Prepayment of Term Note. The Borrower shall have
the right to prepay the indebtedness represented by the Term Note, in whole at
any time or in part from time to time, without premium or penalty but with
accrued interest on the principal amount prepaid to the date of such
prepayment, provided that (i) the Borrower gives the Bank two Business Days'
prior written notice of any prepayment of an Eurodollar Borrowing, (ii) each
partial prepayment shall be in the amount of $100,000.00 or integral multiples
thereof, and (iii) a Eurodollar Borrowing and a Cost of Funds Borrowing may
only be prepaid on the last day of the then current Interest Period with
respect thereto. Any partial prepayment shall be applied to installments of
principal in the inverse order of their maturity.
SECTION 2.15. Illegality. Notwithstanding any other provisions of
this Agreement, if any change in any applicable law, regulation or directive,
or in the interpretation or application thereof shall make it unlawful or
impractical for the Bank to make or maintain any portion of any Eurodollar
Borrowings or to maintain Eurodollar deposits in the London interbank market,
the obligation of the Bank hereunder to advance or maintain Eurodollar
Borrowings shall forthwith be cancelled and the Borrower shall, if any
Eurodollar Borrowings are then outstanding, promptly upon request from the
Bank, either, at the option of the Borrower, pay all such Eurodollar Borrowings
or convert such Eurodollar Borrowings to Prime Rate Borrowings or Cost of Funds
Borrowings. If any such payment or conversion of Eurodollar Borrowing is made
on a day that is not the last day of the then current Interest Period
applicable to such Eurodollar Borrowings, the Borrower shall promptly pay, upon
demand of the Bank, such amount or amounts as may be necessary to compensate
the Bank for any loss or expense sustained or incurred by the Bank as a result
of such payment or conversion. The Bank shall certify the amount of such loss
or expense to the Borrower, and such certification shall be conclusive absent
manifest error.
SECTION 2.16. Increased Costs. In the event that any change
(other than any change in the way of imposition or increase of reserve
requirements, in the case of Eurodollar Borrowings, included in the Reserve
Percentage) in any applicable law, treaty or governmental regulation, or in the
interpretation or application thereof, or compliance by the Bank with any
14
81
<PAGE> 21
guideline, request or directive (whether or not having the force of law) from
any central bank or other U.S. or foreign financial, monetary or other
governmental authority, shall: (a) subject the Bank to any tax of any kind
whatsoever with respect to this Agreement or any Borrowing or change the basis
of taxation of payments to the Bank of principal, interest, fees or any other
amount payable hereunder (except for changes in the rate of tax on the overall
net income of the Bank); (b) impose, modify, or hold applicable any reserve,
special deposit, assessment ' or similar requirement against assets held by, or
deposits in or for the account of, advances or loans by, or other credit
extended by or committed to be extended by any office of the Bank, including,
without limitation, pursuant to Regulation D of the Board of Governors of the
Federal Reserve System; or (c) impose on the Bank or on the London interbank
market any other condition with respect to this Agreement, the Notes, or any
Eurodollar Borrowing hereunder; and the result of any of the foregoing is to
increase the cost to the Bank of making or committing to make, renewing or
maintaining any Eurodollar Borrowing or to reduce the amount of any payment
(whether of principal, interest or otherwise) in respect of any Eurodollar
Borrowing, THEN, IN ANY CASE, the Borrower shall promptly pay from time to
time, upon demand of the Bank, such additional amounts as will compensate the
Bank for such additional cost or such reduction, as the case may be. The Bank
shall certify the amount of such additional cost or reduced amount to the
Borrower, and such certification shall be conclusive absent manifest error.
SECTION 2.17. Failure to Complete Borrowings. The Borrower hereby
agrees to indemnify the Bank and hold the Bank harmless from any loss, cost or
expense it may sustain or incur as a consequence of the failure by the Borrower
to complete any Eurodollar Borrowing after notice thereof has been given to the
Bank, including, without limitation, any loss, cost or expense incurred by
reason of the liquidation or reemployment of deposits or other funds acquired
by the Bank to fund its portion of such Borrowing when the Bank's Advance, as a
result of such failure, is not made on such date. The Bank shall certify the
amount of its loss or expense to the Borrower, and such certification shall be
conclusive absent manifest error.
SECTION 2.18 Capital Adequacy. If, after the date of this Agreement,
the Bank shall have determined that the adoption of any applicable law, rule or
regulation regarding capital adequacy, or any change therein, or any change in
the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Bank with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority,
15
82
<PAGE> 22
central bank or comparable agency, has or would have the effect of reducing the
rate of return on the Bank's capital as a consequence of its obligations
hereunder to a level below that which the Bank could have achieved but for such
adoption, change or compliance (taking into consideration the Bank's policies
with respect to capital adequacy) by an amount deemed by the Bank to be
material, then from time to time, promptly upon demand by the Bank, the
Borrower shall pay the Bank such additional amount or amounts as will
compensate the Bank for such reduction. A certificate of the Bank claiming
compensation under this Section and setting forth the additional amount or
amounts to be paid to it hereunder shall be conclusive absent manifest error.
In determining any such amount, the Bank may use any reasonable averaging and
attribution methods.
SECTION 2.19. Survival. The obligations of the Borrower under
Sections 2.15, 2.16 and 2.18 shall survive termination of this Agreement and
payment of the Notes.
SECTION 2.20. Deemed to have Funded by Purchase of LIBOR Deposits.
Calculation of all amounts payable to the Bank under this Article II shall be
made as though the Bank had actually funded its Eurodollar Advances through the
purchase of deposits in the relevant market bearing interest at the rate
applicable to such Eurodollar Advances in an amount equal to the amount of the
Eurodollar Advances and having a maturity comparable to the relevant Interest
Period and through the transfer of such Eurodollar Advances from an offshore
office of that Bank to a domestic office of that Bank in the United States of
America; provided however, that the Bank may fund each of its Eurodollar
Advances in any manner it sees fit and the foregoing assumption shall be used
only for calculation of amounts payable under this Article II.
SECTION 2.21. Making of Payments. All payments of the Commitment
Fee shall be made directly to the Bank by 11:00 A.M. (Knoxville Tennessee,
time) on the date due. All payments of principal of, or interest on, the Notes
shall be made in immediately available funds to the Bank at its principal
office in Knoxville, Tennessee. All such payments shall be made not later than
11:00 A.M. (Knoxville, Tennessee, time) and funds received after that hour
shall be deemed to have been received by the Bank on the next following
Business Day.
SECTION 2.22. Default Rate of Interest. If the Borrower shall
fail to pay on the due date therefor, whether by acceleration or otherwise, any
principal owing under any of the Notes, then interest shall accrue on such
unpaid principal from the due date until and including the date on which such
principal
16
83
<PAGE> 23
is paid in full at a rate of interest equal to the Prime Rate plus an
additional two percent (2.0%) per annum.
SECTION 2.23. (INTENTIONALLY OMITTED).
SECTION 2.24. (INTENTIONALLY OMITTED).
SECTION 2.25. Calculation of Interest. Interest payable on the
Notes shall be calculated on the basis of a year of 360 days and paid for the
actual number of days elapsed.
SECTION 2.26. (INTENTIONALLY OMITTED)
ARTICLE III
CONDITIONS TO BORROWINGS
The obligation of the Bank to make an Advance to the Borrower hereunder
and to accept the Term Note on the Termination Date is subject to the
satisfaction of the following conditions:
SECTION 3.01. Conditions Precedent to Initial Advances. At the
time of the making by the Bank of its initial Advance, the Bank shall have
received the following, each dated as of the date of the initial Advance in
form and substance satisfactory to the Bank and (except for the Revolving
Credit Note) in sufficient copies for the Bank:
(a) A duly completed Revolving Credit Note payable to the order
of the Bank in the principal amount of the Commitment.
(b) Copies of the organizational papers of the Borrower and the
Guarantor, certified as true and correct by the Secretary of State of the State
of the Borrower's and the Guarantor's incorporation, and certificates from the
Secretaries of State of the State of Borrower's and Guarantor's incorporation
and of those States in which the Borrower or the Guarantor is qualified to
transact business as a foreign corporation, certifying the Borrower's or the
Guarantor's good standing as a corporation in such States.
(c) Certified copies of the by-laws of the Borrower and the
Guarantor, of resolutions of the Board of Directors of the Borrower approving
this Agreement and the Notes and the Borrowings hereunder and of the Guarantor
approving the execution of the Guaranty, and of all documents evidencing other
necessary corporate action and governmental approvals, if any, with respect
17
84
<PAGE> 24
to this Agreement, the Notes, the Guaranty and the other Loan Documents.
(d) A certificate of the Secretary or Assistant Secretary of the
Borrower certifying the names and true signatures of the officers of the
Borrower authorized to execute this Agreement and the Notes and the other
documents to be delivered hereunder and a certificate of the Secretary or
Assistant Secretary of the Guarantor certifying the names and true signatures
of the officers of the Guarantor authorized to execute the Guaranty.
(e) A closing certificate, executed by a duly authorized officer
of the Borrower, substantially in the form of Exhibit C hereto.
(f) A favorable written opinion of Bernstein, Stair & McAdams,
counsel for the Borrower and the Guarantor, substantially in the form of
Exhibit D hereto, and covering such additional matters relating to the
transactions contemplated hereby as the Bank may reasonably request, addressed
to the Bank.
(g) Evidence satisfactory to the Bank in its sole discretion that
all Debt of the Borrower secured by a Lien on any assets of the Borrower (other
than Debt permitted to remain outstanding pursuant to Section 6.03 hereof
secured by Liens permitted by Section 6.01 hereof) shall have been paid in full
and all such Liens terminated.
(h) The duly executed Guaranty.
(i) All corporate and other proceedings taken or to be taken in
connection with the transactions contemplated hereby and all Loan Documents and
other documents incident thereto or delivered in connection therewith shall be
satisfactory in form and substance to the Bank.
SECTION 3.02. Conditions Precedent to Each Advance and to the Term
Loan. At the time of the making by the Bank of each Advance hereunder
(including the initial Advance) and at the time of the execution and delivery
by the Borrower of the Term Note, (a) the following statements shall be true
(and each of the giving by the Borrower of a Notice of Borrowing in accordance
with Section 2.05 hereof and the acceptance by the Borrower of the proceeds of
such Borrowing shall constitute a representation and warranty by the Borrower
that on the date of such Borrowing, before and after giving effect thereto and
to the application of the proceeds therefrom, such statements are true):
18
85
<PAGE> 25
(i) The representations and warranties contained in Article IV
hereof are true and correct on and as of the date of such Borrowing as though
made on and as of such date, and
(ii) No Default or Event of Default exists or would result from
such Borrowing or from the application of the proceeds therefrom; and
(b) the Bank shall have received such other approvals, opinions or
documents as the Bank may reasonably request within a reasonable time for the
Borrower to provide such information.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants as follows:
SECTION 4.01. Corporate Existence. The Borrower is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Tennessee and each Subsidiary is duly organized, validly existing and
in good standing under the law of the jurisdiction in which it is incorporated.
The Borrower and each Subsidiary is duly qualified and in good standing as a
foreign corporation authorized to do business in each jurisdiction (other than
the jurisdiction of its incorporation) in which the nature of its activities or
the character of the properties it owns or leases makes such qualification
necessary except where the failure to qualify would not have a Material Adverse
Effect. Within thirty (30) days after receiving a request from the Bank, the
Borrower shall deliver to the Bank a current Certificate of Status from the
Secretary of State of California confirming that the Borrower is qualified to
transact business in the State of California.
SECTION 4.02. Corporate Power and Authority: Contravention. The
execution, delivery and performance by the Borrower of this Agreement and the
Notes are within the Borrower's corporate powers, have been duly authorized by
all necessary corporate action (including any necessary shareholder action),
and do not and will not (i) violate any provision of any law, rule or
regulation, any judgment, order or ruling of any court or governmental agency,
the organizational papers or by-laws of the Borrower, or any indenture,
agreement or other instrument to which the Borrower is a party or by which the
Borrower or any of any of its properties is bound, or (ii) be in conflict with,
result in a breach of, or constitute with notice
19
86
<PAGE> 26
or lapse of time or both a default under any such indenture, agreement or other
instrument.
SECTION 4.03. Enforceability. This Agreement, the Notes, the
Guaranty and all other Loan Documents are the legal, valid and binding
agreements of the Borrower or the Guarantor, as the case may be, enforceable
against the Borrower or the Guarantor, as the case may be, in accordance with
their respective terms, except as the enforceability of any of them may be
limited by bankruptcy, insolvency, reorganization, moratorium and other laws
affecting creditors, rights and remedies generally and by general principles of
equity, whether considered in a proceeding at law or in equity.
SECTION 4.04. Governmental Consent. Neither the nature of the
Borrower or any of its Subsidiaries nor any of their respective businesses or
properties, nor any relationship between the Borrower or any Subsidiary and any
other Person, nor any circumstance in connection with the execution and
delivery of the Loan Documents and the consummation of the transactions
contemplated thereby is such as to require any authorization, consent,
approval, order, license, exemption or other action by or notice to or filing
with any court or administrative or governmental body (other than routine
filings, if any, after the date of closing with the Securities and Exchange
Commission and/or state Blue Sky authorities) in connection with the execution
and delivery of this Agreement, the Notes, and the other Loan Documents or
fulfillment of or compliance with the terms and provisions hereof or thereof.
SECTION 4.05. Subsidiaries. Schedule 4.05 attached hereto
correctly sets forth the name of each Subsidiary of the Borrower and the
jurisdiction of its incorporation. All the outstanding shares of the capital
stock of each such Subsidiary have been validly issued and are fully paid and
nonassessable and all such outstanding shares, except as noted on such
Schedule, are owned of record and beneficially by the Borrower or a wholly
owned Subsidiary of the Borrower free of any Lien or claim.
SECTION 4.06. Insurance. Each property owned by the Borrower or
any of its Subsidiaries is insured for the benefit of the Borrower or a
Subsidiary in amounts deemed adequate by the Borrower's management against
risks customarily insured against by Persons operating businesses similar to
those of the Borrower or its Subsidiaries in the localities where such
properties are located.
SECTION 4.07. Financial Statements. The Borrower has furnished
the Bank with the following financial statements, identified by the chief
financial officer of the Borrower: (i)
20
87
<PAGE> 27
consolidated balance sheets of the Borrower and its Subsidiaries as at December
30, 1990, December 29, 1991, January 3, 1993, and January 2, 1994, and January
1, 1995, and consolidated statements of income, retained earnings and
statements of cash flow of the Borrower and its Subsidiaries for such years,
all certified by Coopers & Lybrand; and (ii) unaudited consolidated balance
sheets of the Borrower and its Subsidiaries as at February 28, 1995, and
unaudited consolidated statements of income, retained earnings and statements
of cash flow for the six month period ended on such date, prepared by the
Borrower. All such financial statements (including any related schedules
and/or notes) are true and correct in all material respects (subject, as to
interim statements, to changes resulting from audits and normal year end
adjustments), have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods involved and
show all liabilities, direct and contingent, of the Borrower and its
Subsidiaries required to be shown in accordance with such principles. The
balance sheets fairly present the condition of the Borrower and its
Subsidiaries as at the dates thereof, and the statements of income and
statements of retained earnings and statements of cash flow fairly present the
results of the operations of the Borrower and its Subsidiaries for the periods
indicated. There has been no material adverse change in the business,
condition or operations (financial or otherwise), or prospects of the Borrower
and its Subsidiaries taken as a whole since January 1, 1995.
SECTION 4.08. Taxes. Except where the failure to file would not
have a Material Adverse Effect, the Borrower and each of its Subsidiaries has
filed all federal, state and other income tax returns which are required to be
filed, and each has paid all taxes as shown on such returns and on all
assessments received by it to the extent that such taxes have become due or
except such as are being contested in good faith by appropriate proceedings and
for which adequate reserves have been established in accordance with generally
accepted accounting principles.
SECTION 4.09. Actions Pending. Except as specified in Schedule
4.09 attached hereto, there is no action, suit, investigation, or proceeding
pending or, to the best knowledge of the Borrower, threatened against the
Borrower or-any of its Subsidiaries or any properties or rights of the Borrower
or any of its Subsidiaries, by or before any court, arbitrator or
administrative or governmental body, which might result in any material adverse
change in the business, condition or operations (financial or otherwise), or
prospects of the Borrower and its Subsidiaries taken as a whole or which in any
manner draws into question the validity of this Agreement or any of the Notes.
21
88
<PAGE> 28
SECTION 4.10. Title to Properties. The Borrower and each of its
Subsidiaries has good-and marketable title to its respective real properties
(other than real properties that it leases) and good title to all of its other
respective properties and assets, including the properties and assets reflected
in the balance sheet as at January 1, 1995, hereinabove described (other than
properties and assets disposed of in the ordinary course of business), subject
to no Lien of any kind except Liens permitted by Section 6.01. The Borrower and
each of its Subsidiaries enjoys peaceful and undisturbed possession under all
leases necessary in any material respect for the operation of its respective
properties and assets, none of which contains any unusual or burdensome
provisions which might materially affect or impair the operations of such
properties and assets. All such leases are valid and subsisting and in full
force and effect.
SECTION 4.11. Federal Reserve Regulations. Neither the Borrower
nor any Subsidiary is in the business of extending credit for the purpose of
purchasing or carrying any "margin stock" as defined in Regulation U (12 C.F.R.
Part 221) of the Board of Governors of the Federal Reserve System (hereinafter
called "margin stock"). Each Borrowing will be used solely for the purposes
specified in this Agreement and none of such proceeds will be used, directly or
indirectly, for the purpose of purchasing or carrying any margin stock or for
the purpose of reducing or retiring any indebtedness which was originally
incurred to purchase or carry any margin stock or for any other purpose which
might constitute this transaction a "purpose credit" within the meaning of
Regulation U. Neither the Borrower nor any agent of the Borrower acting on its
behalf has taken or will take any action which might cause this Agreement or
any of the Notes to violate Regulations G, T, U, or X or (to the best knowledge
of the Borrower) any other regulation of the Board of Governors of the Federal
Reserve System or to violate the Securities Exchange Act of 1934, as amended,
in each case as now in effect or as the same may hereafter be in effect.
SECTION 4.12. ERISA. Except as disclosed on Schedule 4.12 hereto:
(a) Identification of Plans. Neither the Borrower nor any ERISA
Affiliate maintains or contributes to, or has maintained or contributed to
within the preceding six (6) years, any Plan for which a Form 5500 (or any
successor form) is required to be filed;
(b) Compliance. Each Plan has at all times been maintained, by
its terms and in operation, in accordance with all applicable laws, except such
noncompliances (when taken as a whole) that will not have a Material Adverse
Effect;
22
89
<PAGE> 29
(c) Liabilities. Neither the Borrower nor any Subsidiary is
currently or, so far as the Borrower can now reasonably foresee based upon
facts and circumstances known to the Borrower at this time, will become subject
to any liability (including withdrawal liability), tax or penalty whatsoever to
any person whomsoever with respect to any Plan including, but not limited to,
any tax, penalty or liability arising under Title I or Title IV or ERISA or
Chapter 43 of the Code, except such liabilities (when taken as a whole) as will
not have a Material Adverse Effect'; and
(d) Funding. The Borrower and each ERISA Affiliate has made
full and timely payment of all amounts (i) required to be contributed under the
terms of each Plan and applicable law and (ii) required to be paid as expenses
of each Plan. No Plan has an "amount of unfunded benefit liabilities" (as
defined in Section 4001(a)(18) of ERISA).
SECTION 4.13. Outstanding Debt. Neither the Borrower nor any of
its Subsidiaries has outstanding any Debt, on a consolidated basis, except as
permitted by Section 6.03. There exists no default under the provisions of any
instrument evidencing or securing such Debt or of any agreement otherwise
relating thereto.
SECTION 4.14. Conflicting Agreements or Other Matters. Neither
the Borrower nor any of its Subsidiaries is a party to any contract or
agreement or subject to any charter or other corporate restriction which
materially and adversely affects its business, property or assets, or financial
condition or prospects. Neither the execution or delivery of this Agreement or
the other Loan Documents, nor fulfillment of or compliance with the terms and
provisions hereof and thereof, will conflict with, or result in a breach of the
terms, conditions or provisions of, or constitute a default under, or result in
any violation of, or result in the creation of any Lien upon any of the
properties or assets of the Borrower or any of its Subsidiaries pursuant to,
the charter or by-laws of the Borrower or any Subsidiary, any award of any
arbitrator or any agreement (including any agreement with stockholders),
instrument, order, judgment, decree, statute, law, rule or regulation to which
the Borrower or any of its Subsidiaries is subject. Neither the Borrower nor
any of its Subsidiaries is a party to, or otherwise subject to any provision
contained in, any instrument evidencing indebtedness of the Borrower or any of
its Subsidiaries, any agreement relating thereto or any other contract or
agreement (including its charter) which limits the amount of, or otherwise
imposes restrictions on the incurring of, Debt of the Borrower of the type to
be evidenced by the Notes, except as set forth in the agreements listed on
Schedule 4.14 attached hereto.
SECTION 4.15. Pollution and Environmental Control. Each of the
Borrower and its Subsidiaries has obtained all permits,
23
90
<PAGE> 30
licenses and other authorizations which are required under, and is in
compliance with, all federal, state, and local laws and regulations relating to
pollution, reclamation, or protection of the environment, including laws
relating to emissions, discharges, releases or threatened releases of
pollutants, contaminants, or hazardous or toxic materials or wastes into air,
water, or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants or hazardous or toxic materials or wastes except where
the failure to comply would not have a Material Adverse Effect.
SECTION 4.16. Possession of Franchises, Licenses, Etc. The
Borrower and its Subsidiaries possess all franchises, certificates, licenses,
permits and other authorizations from governmental political subdivisions or
regulatory authorities, and all patents, trademarks, service marks, trade
names, copyrights, licenses and other rights, free from burdensome
restrictions, that are necessary for the ownership, maintenance and operation
of any of their respective material properties and assets, and neither the
Borrower nor any of its Subsidiaries is in violation of any thereof.
SECTION 4.17. Disclosure. Neither this Agreement nor any other
document, certificate or statement furnished to the Bank by or on behalf of the
Borrower in connection herewith contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the
statements contained herein and therein not misleading. There is no fact
peculiar to the Borrower or any of its Subsidiaries which materially adversely
affects or in the future may (so far as the Borrower can now reasonably foresee
based upon facts and circumstances known to the Borrower at this time) have a
Material Adverse Effect which has not been set forth in this Agreement or in
the other documents, certificates and statements furnished to the Bank by or on
behalf of the Borrower prior to the date hereof in connection with the
transactions contemplated hereby.
ARTICLE V
AFFIRMATIVE COVENANTS
So long as any Note shall remain unpaid or the Bank shall have any
Commitment hereunder, the Borrower will, unless the Bank shall otherwise
consent in writing:
SECTION 5.01. Corporate Existence: Maintenance of Properties. (i)
Do or cause to be done all things necessary to preserve and maintain, and cause
each of its Subsidiaries to
24
91
<PAGE> 31
preserve and maintain, its respective corporate existence, rights and
franchises, except as otherwise permitted pursuant to Section 6.05 hereof, (ii)
cause its properties and the properties of its Subsidiaries used or useful in
the conduct of 'their respective businesses to be maintained and kept in good
condition, repair and working order and supplied with all necessary equipment
and cause to be made all necessary repairs, renewals, replacements, betterments
and improvements thereto, all as in the judgment of the Borrower may be
necessary so that the businesses carried on in connection therewith may be
properly and advantageously conducted at all times and (iii) except where the
failure to qualify would not have a Material Adverse Effect, will and will
cause each of its Subsidiaries to qualify and remain qualified to conduct
business in each jurisdiction where the nature of the business or ownership of
property by the Borrower, or such Subsidiary, as the case may be, may legally
require such qualification.
SECTION 5.02. Compliance with Laws, Etc. Comply, and cause each
of its Subsidiaries to comply, with all applicable federal, state, and local
laws, rules, regulations and orders, including, without limitation, all
federal, state and local laws, rules, regulations and orders relating to
pollution, reclamation, or protection of the environment, including laws
relating to emissions, discharges, releases or threatened releases of
pollutants, contaminants, or hazardous or toxic materials or wastes into air,
water, or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants or hazardous or toxic materials or wastes, except
where the failure to comply would not have a Material Adverse Effect.
SECTION 5.03. Taxes and Claims. Pay, and cause each of its
Subsidiaries to pay and discharge, or cause to be paid and discharged, (i)
before the same shall become delinquent, all taxes, assessments and other
governmental charges levied or imposed upon it or upon its income, profits or
properties and (ii) all claims (including, without limitation, claims for
labor, materials, supplies or services) which might, if unpaid, become a Lien
upon and of its property, provided that, in each case, neither the Borrower nor
any Subsidiary shall be required to pay or cause to be paid or discharged any
such tax, assessment, charge or claim whose amount or validity is being
contested in good faith by appropriate proceedings and with respect to which
adequate reserves are being maintained and, provided, further, that the
Borrower shall, and shall cause each Subsidiary to, pay all such taxes,
assessments, charges and claims forthwith upon the commencement of proceedings
to foreclose any Lien which may have attached as security therefor.
25
92
<PAGE> 32
SECTION 5.04 Compliance with Other Agreements. Conduct, and cause
each Subsidiary to conduct, its business operations and obtain all necessary
permits and licenses in compliance with all agreements, indentures and
mortgages to which it is a party or by which it or any of its properties is
bound.
SECTION 5.05. Inspection of Property. Permit any Person
designated in writing by the Bank, at the Bank's expense, to visit and inspect
any of the properties of the Borrower and any of its Subsidiaries, to examine
the corporate books and financial records of the Borrower and its Subsidiaries
and make copies thereof and take extracts therefrom, and to discuss the
affairs, finances and accounts of any of such corporations with the principal
officers of the Borrower and its independent public accountants, all at such
reasonable times and as often as the Bank may reasonably request and, prior to
the occurrence of a Default or an Event of Default, upon reasonable notice to
Borrower.
SECTION 5.06. Insurance. Maintain, and cause each Subsidiary to
maintain, with financially sound and reputable carriers insurance in such
amounts and against such liabilities and hazards as customarily is maintained
by other companies operating similar businesses.
SECTION 5.07. Business. Remain, and cause each Subsidiary to
remain, substantially in the respective business in which the Borrower and each
Subsidiary is engaged as of the date of this Agreement.
SECTION 5.08. Keeping of Books. Keep, and cause each of its
Subsidiaries to keep, proper books of record and account, containing complete
and accurate entries of all financial and business transactions of the Borrower
and each Subsidiary.
SECTION 5.09. Reporting Covenants. Deliver to the Bank:
(a) as soon as available and in any event within 90 days after
the end of each fiscal year of the Borrower, a consolidated balance sheet of
the Borrower and its Subsidiaries as of the end of such fiscal year and the
related consolidated statements of income, retained earnings and statements of
cash flow for such fiscal year, setting forth in each case in comparative form
the figures for the previous fiscal year, all in reasonable detail and
accompanied by a report-thereon of Coopers & Lybrand or other independent
public accountants acceptable to the Bank (with it being agreed that any member
of the "Big 6" accounting firms will be acceptable to the Bank), which report
will be unqualified as to scope of audit and shall state that such consolidated
financial statements present fairly the
26
93
<PAGE> 33
consolidated financial condition of the Borrower and its Subsidiaries as at the
end of such fiscal year, and the consolidated results of operations and changes
in financial position of the Borrower and its Subsidiaries for such fiscal year
in accordance with generally accepted accounting principles consistently
applied and that the audit by such accountants in connection with such
consolidated financial statements was made in accordance with generally
accepted auditing standards;
(b) as soon as available and in any event within 45 days after
the end of the first three quarters of each fiscal year of the Borrower, a
consolidated balance sheet of the Borrower and its Subsidiaries as of the end
of such quarter and the related consolidated statements of income, retained
earnings and statements of cash flow for such quarter and for the portion of
the Borrower's fiscal year ended at the end of such quarter, setting forth in
each case in comparative form the figures for the corresponding quarter and the
corresponding portion of the Borrower's previous fiscal year, all certified
(subject to normal year end adjustments and changes resulting from audits) as
to fairness of presentation, preparation in accordance with generally accepted
accounting principles and consistency of accounting methods by the chief
financial officer of the Borrower;
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate of the chief
financial officer of the Borrower (i) setting forth in reasonable detail the
calculations required to establish whether the Borrower was in compliance with
the requirements of Section 5.10, on the date of such financial statements and
(ii) stating whether there exists on the date of such certificate any Default
or Event of Default and, if any Default or Event of Default then exists,
setting forth the details thereof and the action which the Borrower is taking
or proposes to take with respect thereto;
(d) forthwith upon the occurrence of any Default or Event of
Default, a certificate of the chief financial officer of the Borrower setting
forth the details thereof and the action which the Borrower is taking or
proposes to take with respect thereto;
(e) promptly upon the mailing or filing thereof, copies of all
reports and proxy statements which the Borrower sends to its security holders,
and copies of all reports and registration statements which the Borrower or any
Subsidiary files with the Securities and Exchange Commission or any national
securities exchange;
27
94
<PAGE> 34
(f) promptly after (i) the occurrence thereof, notice of the
institution by, any Person of any action, suit or proceeding or any
governmental investigation or any arbitration seeking recovery in an amount in
excess of $250,000 or which if adversely determined, would otherwise have a
Material Adverse Effect, before any court or arbitrator or any governmental or
administrative body, agency, or official, against the Borrower, any Subsidiary,
or any material property of any of them, or (ii) the receipt of actual
knowledge thereof, notice of the threat of any such action, suit, proceeding,
investigation or arbitration, each such notice under this subsection to
specify, if known, the amount of damages being claimed or other relief being
sought, the nature of the claim, the Person instituting the action, suit,
proceeding, investigation or arbitration, and any other significant features of
the claim;
(i) Promptly after the occurrence thereof with respect to any
Plan, or any trust established thereunder, notice of (A) a "reportable event"
described in Section 4043 of ERISA and the regulations issued from time to time
thereunder (other than a "reportable event" not subject to the provisions for
30-day notice to the PBGC under such regulations), or (B) any other event which
could subject the Parent, the Company or any ERISA Affiliate to any material
tax, penalty or liability under Title I or Title IV of ERISA or Chapter 43 of
the Code;
(ii) At the same time and in the same manner as such
notice must be provided to the PBGC, or to a Plan participant, beneficiary or
alternative payee, any notice required under Section 101(d), 302(f)(4), 303,
307, 4041(b)(1)(A) or 4041(c)(1)(A) of ERISA or under Section 401(a)(29) or 412
of the Code with respect to any Plan;
(iii) Upon the request of the Bank, (A) true and complete
copies of any and all documents, government reports and determination or
opinion letters for any Plan, or (B) a current statement of withdrawal
liability for each Multiemployer Plan; and
(g) such other information respecting the condition or
operations, financial or otherwise, of the Borrower or any of its Subsidiaries,
as the Bank may from time to time reasonably request.
SECTION 5.10. Financial Covenants. The Borrower shall, calculated
on a consolidated basis:
(a) Interest Coverage Ratio. Maintain an Interest Coverage
Ratio, calculated as of the last day of each fiscal quarter on a rolling four
quarter basis, of not less than
28
95
<PAGE> 35
1.75:1.0, excluding the effect of goodwill write-offs and restructuring charges
taken during the fourth quarter of 1994.
(b) Cash Flow Coverage Ratio. Maintain a minimum ratio
of Cash Flow to Current Maturities of Long- Term Debt, calculated as of the
last day of each fiscal quarter on a rolling four quarter basis, of not less
than 2.0:1.0, excluding the effect of goodwill write-offs and restructuring
charges taken during the fourth quarter of 1994.
(c) Stockholder's Equity. Maintain Stockholder's Equity,
calculated on a quarterly basis for each quarter through December 31, 1995, of
no less than $20,000,000, with such amount to be permanently increased at the
end of each fiscal quarter commencing with the fiscal quarter ending on or
about March 31, 1996, by an amount equal to 60% of the Net Income, calculated
on a consolidated basis, for such fiscal quarter; provided, however, in the
event that the Borrower suffers a net loss for any fiscal quarter, Net Income
shall be deemed to be $0, so that in no event shall the required Stockholder's
Equity at the end of any fiscal quarter be less than that required at the end
of any preceding fiscal quarter.
(d) Leverage Test. Maintain a Leverage Test, calculated on a
quarterly basis, of less than 3.0:1.0.
(e) Current Ratio. Maintain a minimum ratio of Current
Assets to Current Liabilities, calculated on a quarterly basis, of not less
than 1.5:1.0, provided that, with respect to the calculation of Current Assets,
inventory shall be valued on a FIFO basis.
ARTICLE VI
NEGATIVE COVENANTS
So long as any Note shall remain unpaid or the Bank shall have any Commitment
hereunder, the Borrower will not, without the written consent of the Bank:
SECTION 6.01. Liens, Etc. Create, assume or suffer to exist, or
permit any of its Subsidiaries to create, assume or suffer to exist, any Lien
upon any of its property or assets whether now owned or hereafter acquired,
except:
(a) Liens existing on the date hereof and described on Schedule
6.01 attached hereto;
29
96
<PAGE> 36
(b) purchase money Liens upon any property acquired or held by the
Borrower or any Subsidiary in the ordinary course of business to secure the
purchase price of such property or to secure Debt incurred solely for the
purpose of financing the acquisition of such property, provided that such Lien
does not extend to any other property;
(c) Liens existing on any property held by the Borrower or any
Subsidiary in the ordinary course of business at the time of its acquisition
(other than any such Lien created in contemplation of such acquisition);
(d) Liens existing on property of any Person acquired by the
Borrower or any of its Subsidiaries at the time of acquisition of such Person
(other than any such Lien created in contemplation of such acquisition);
(e) Liens for taxes or assessments or other governmental charges or
levies not yet due or which are being actively contested in good faith by
appropriate proceedings if adequate reserves with respect thereto are
maintained on the books of the Borrower or its Subsidiaries, as the case may
be, in accordance with generally accepted accounting principles;
(f) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other Liens imposed by law created in
the ordinary course of business for amounts not yet due or which are being
contested in good faith by appropriate proceedings and with respect to which
adequate reserves are being maintained;
(g) Liens (other than any Lien imposed by ERISA) incurred or
deposits made in the ordinary course of business in connection with workmen's
compensation, unemployment insurance and other types of social security, or to
secure the performance of tenders, statutory obligations, surety and appeal
bonds, bids, leases, contracts, performance and return-of-money bonds and other
similar obligations (other than obligations for the payment of borrowed money);
(h) easements, rights-of-way, restrictions and other similar
charges or encumbrances not interfering with the ordinary conduct of the
business of the Borrower or any of its Subsidiaries or any of their respective
properties; and
(i) extensions, renewals or replacements of any Lien referred to
in clauses (a) through (h) of this Section 6.01, provided that the principal
amount of the Debt or obligation secured thereby is not increased and that any
such extension,
30
97
<PAGE> 37
renewal or replacement is limited to the property originally encumbered by the
Lien.
SECTION 6.02. Limitations on Restricted Payments. Pay or
declare any dividend or make any other distribution on or on account of any
class of its stock or other equity (other than dividends made by any Subsidiary
of the Borrower to the Borrower in conformity with applicable law) or make cash
distributions of equity, or make interest payments on equity, or redeem,
purchase, or otherwise acquire, directly or indirectly, any shares of its stock
or other equity, or redeem, purchase or otherwise acquire, directly or
indirectly, any Subordinated Debt (except required redemptions as provided in
the indentures pursuant to which such Subordinated Debt was issued), or make
any loans, advances or investments except as permitted under Section 6.04 or
permit any Subsidiary to do any of the above (all of the foregoing being herein
called "Restricted Payments") except that the Borrower and its Subsidiaries may
make Restricted Payments such that the aggregate amount of Restricted Payments
made during the preceding twelve (12) month period does not exceed 25% of
positive Net Income during such preceding twelve month period.
SECTION 6.03. Debt. Create, incur, assume or suffer to exist, or
permit any of its Subsidiaries to create, incur, assume or suffer to exist, any
Debt, other than:
(a) Debt evidenced by this Agreement and by the Notes;
(b) unsecured Debt or secured Debt to the extent described on
Schedule 6.03 attached hereto;
(c) purchase money Debt to the extent permitted by Section 6.01(b);
(d) unsecured current liabilities (not resulting from any borrowing)
incurred in the ordinary course of business for current purposes and not
represented by a promissory note or other evidence of indebtedness; and
(e) Debt from Subsidiaries to the Borrower evidencing loans, advances
and investments permitted pursuant to Section 6.04 and Debt from the Borrower
to a Subsidiary to the extent that such Debt is expressly subordinated to the
Debt of the Borrower to the Bank.
SECTION 6.04. Restrictions on Loans, Advances, Investments,
Acquisitions and Contingent Liabilities. Make or permit to remain outstanding
any loan or advance to, or extend credit (other than credit extended in the
normal course of business to any Person which is not an Affiliate of Borrower)
to,
31
98
<PAGE> 38
or guarantee, endorse or otherwise be or become contingently liable, directly
or indirectly, in connection with the obligations, stock or dividends of, or
own, purchase or acquire any stock, obligations or securities of, or any other
interest in, or substantially all of the assets of, or make any capital
contribution to, any Person, except that the Borrower or any Subsidiary may:
(a)(i) loans to or investments in any other Subsidiary in an
aggregate amount not to exceed $500,000 at any time outstanding, and (ii) make
and permit to remain outstanding loans to or investments in the Guarantor;
(b) acquire and own stock, obligations or securities
received in settlement of debts (created in the ordinary course of business)
owing to the Borrower or any Subsidiary;
(c) acquire and own prime commercial paper and
certificates of deposit in (i) United States commercial banks whose long-term
debt is rated "All or better by Moody's Investors Service or Standard and
Poor's Corporation, or (ii) in other United States commercial banks or savings
institutions where such investment is fully insured by the Federal Deposit
Insurance Corporation, in each case due within three years from the date of
purchase and payable in the United States in dollars;
(d) acquire and own direct obligations of the United
States of America or any agency thereof, or obligations fully guaranteed as to
principal and interest by the United States of America or any agency thereof,
in each case maturing within five years from the date of creation of such
obligation;
(e) endorse negotiable instruments for collection in the
ordinary course of business; and
(f) make or permit to remain outstanding travel and other
like advances to officers and employees in the ordinary course of business.
SECTION 6.05. Merger and Sale of Assets. Enter into or
permit any Subsidiary to enter into any transaction of merger, consolidation,
pooling of interest, joint venture, syndicate or other combination with any
other Person or sell, lease, transfer or otherwise dispose or permit any
Subsidiary to sell, lease, transfer or otherwise dispose of all or a
substantial part of its assets (whether now owned or hereafter acquired) or
assets which shall have contributed a substantial part of Net Income for any of
the three fiscal years then most recently ended, in any single transaction or
series of related transactions, to any Person, except that:
32
99
<PAGE> 39
(a) any Subsidiary may merge with the Borrower, provided
that the Borrower shall be the continuing or surviving corporation, or with any
one or more other Subsidiaries;
(b) any Subsidiary may sell, lease or otherwise dispose
of any of its assets to the Borrower or another Subsidiary; and
(c) the Borrower may sell or otherwise dispose of any
fixed assets located at its Centerville location as of the date of this
Agreement in an arms-length transaction.
SECTION 6.06. Issuance of Stock by Subsidiaries. Permit any
Subsidiary (either directly or indirectly by the issuance of rights or options
for, or securities convertible into such shares) to issue, sell or dispose of
any shares of its stock of any class (other than directors, qualifying shares,
if any) except to the Borrower or another Subsidiary.
SECTION 6.07. Lease Obligations. Create or suffer to exist,
or permit any of its Subsidiaries to create or suffer to exist, any obligations
for the payment of rent for any property under operating leases or agreements
to lease (other than capital leases) having a term of one year or more which
would cause the direct or contingent liabilities of the Borrower and its
Subsidiaries, on a consolidated basis, to exceed $1,000,000.00 payable in any
period of twelve consecutive calendar months.
SECTION 6.08. Sale and Lease-Back. Enter into or permit any
Subsidiary to enter into any arrangement, with any lender or investor or under
which such lender or investor is a party, providing for the leasing by the
Borrower or any Subsidiary of real or personal property, used by the Borrower
or any Subsidiary in the operations of the Borrower or any Subsidiary, which
has been or is sold or transferred by the Borrower or any Subsidiary to such
lender or investor or to any Person to whom funds have been or are to be
advanced by such lender or investor on the security of such rental obligations
of the Borrower or such Subsidiary.
SECTION 6.09. Sale or Discount of Receivables. Sell or
permit any Subsidiary to sell with recourse or discount or otherwise sell for
less than the face value thereof, any of its notes or accounts receivable,
other than payment discounts and discounts with respect to past due accounts,
each made in the ordinary course of business.
SECTION 6.10. Compliance with ERISA. Take, or fail to take
nor permit any ERISA Affiliate to take, or fail to take, any action with
respect to a Plan including, but no limited to, (i) establishing any Plan, (ii)
amending any Plan, terminating or
33
100
<PAGE> 40
withdrawing from any Plan, or (iv) incurring an amount of unfunded benefit
liabilities, as defined in Section 4001(a)(18) of ERISA, or any withdrawal
liability under Title IV of ERISA, where such action or failure could have a
material adverse effect on the Borrower or any Subsidiary, result in a lien on
the property of the Borrower or any Subsidiary, or require the Borrower or any
Subsidiary to provide any security.
SECTION 6.11. Transactions With Affiliates. Enter into any
transaction or series of related transactions with any Affiliate of the
Borrower or any of its Subsidiaries (other than a Subsidiary) other than on
terms and conditions substantially as favorable to the Borrower or such
Subsidiary as would be obtained by the Borrower or such Subsidiary at the time
in a comparable arm's-length transaction with a Person other than an Affiliate.
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
SECTION 7.01. Events of Default. Any one or more of the following
shall constitute an Event of Default hereunder:
(a) The Borrower fails to pay when due any payment of principal or
interest due on any of the Notes or any other sum payable hereunder within two
(2) Business Days following notice from the Bank that any such amount is due
and payable; or
(b) Any representation or warranty contained herein or deemed to
have been made hereunder or made by or furnished on behalf of the Borrower in
connection herewith shall be false or misleading in any material respect as of
the date made or deemed to have been made; or
(c) The Borrower fails to perform or observe any covenant, term or
condition contained in Article V or Article VI of this Agreement; or
(d) The Borrower fails to perform or observe any other covenant or
agreement of this Agreement not specifically referred to elsewhere in this
Section 7.01 or any covenant or agreement contained in any other Loan Document
and such failure shall continue for more than 30 calendar days; or
(e) The Borrower or any Subsidiary (i) defaults in any payment of
principal or interest on any other obligation for money borrowed (or any
obligation under a capital lease, any obligation under a conditional sale or
other title retention agreement, any obligation issued or assumed as full or
partial
34
101
<PAGE> 41
payment for property whether or not secured by a purchase money mortgage, or
any obligation under notes payable or drafts accepted representing extensions
of credit) which evidences, either singly or in the aggregate with all other
defaulted obligations, obligations in excess of $250,0000 beyond any period of
grace provided with respect thereto, or (ii) fails to perform or observe any
other agreement, term or condition contained in any agreement under which any
obligation described in clause (i) is created (or if any other event shall
occur and be continuing thereunder) and the effect of such failure or
other.event is to cause or to permit the holder or holders of such obligation
(or a trustee on behalf of such holder or holders) to cause such obligation to
become due prior to any stated maturity; or
(f) The Borrower or any Subsidiary fails to pay its debts
generally as they become due or shall admit in writing its inability to pay its
debts generally; or
(g) The Borrower or any Subsidiary shall make or take any action
to make an assignment for the benefit of creditors, petition or take any action
to petition any tribunal for the appointment of a custodian, receiver or any
trustee for it or a substantial part of its assets, or shall commence or take
any action to commence any proceeding under any bankruptcy, reorganization,
arrangement, readjustment of debt, dissolution, liquidation or debtor relief
law or statute of any jurisdiction, whether now or hereafter in effect
including, without limitation, the Bankruptcy Code; or, if there shall have
been filed any such petition or application, or any such proceeding shall have
been commenced against it, in which an order for relief is entered which
remains unstayed and in effect for more than 60 days; or the Borrower or any
Subsidiary by any act or omission shall indicate its consent to, approval of or
acquiescence in any such petition, application or proceeding or order for
relief or the appointment of a custodian, receiver or any trustee for it or any
substantial part of any of its properties, or shall suffer to exist any such
custodianship, receivership or trusteeship; or any corporate action is taken by
the Borrower or any Subsidiary for the purpose of effecting any of the
foregoing; or
(h) The Borrower or any Subsidiary shall have concealed, removed,
or permitted to be concealed or removed, any part of its property, with intent
to hinder, delay or defraud its creditors or any of them, or made or suffered a
transfer of any of its property which may be fraudulent under any bankruptcy,
fraudulent conveyance or similar law; or shall have made any transfer of its
property to or for the benefit of a creditor at a time when other creditors
similarly situated have not been paid while the Borrower or such Subsidiary is
insolvent; or shall have suffered or permitted, while insolvent, any creditor
to obtain a
35
102
<PAGE> 42
Lien upon any of its property through legal proceedings or distraint; or
(i) Any order, judgment or decree is entered in any proceedings
against the Borrower or the Guarantor decreeing the dissolution of the Borrower
or the Guarantor and such order, judgment or decree remains unstayed and in
effect for more than 60 days; or
(j) Any order, judgment or decree is entered in any proceedings
against the Borrower or any Subsidiary decreeing a split-up of the Borrower or
such Subsidiary which requires the divestiture of assets representing a
substantial part, or the divestiture of the stock of a Subsidiary whose assets
represent a substantial part, of the consolidated assets of the Borrower and
its Subsidiaries (determined in accordance with generally accepted accounting
principles) or which requires the divestiture of assets or stock of a
Subsidiary which shall have contributed a substantial part of Net Income for
any of the three fiscal years then most recently ended, and such order,
judgment or decree remains unstayed and in effect for more than 30 days; or
(k) A judgment or order for the payment of money in an amount in
excess of $1,000,000 or otherwise materially adverse to the business, financial
condition, results of operations or prospects of the Borrower and its
Subsidiaries taken as a whole is rendered against the Borrower or any
Subsidiary and either (i) enforcement proceedings shall have been commenced by
any creditor upon such judgment or order or (ii) there shall be any period of
30 consecutive days during which a stay of enforcement of such judgment or
order, by reason of a pending appeal or otherwise, shall not be in effect; or
(l) Any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act) makes an acquisition
resulting in beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Securities Exchange Act) of more than thirty percent (30%) of the
combined voting power of the then outstanding voting securities of the Borrower
entitled to vote generally in the election of directors; or
(m) The Guarantor ceases to be a wholly-owned Subsidiary of the
Borrower or the Guarantor breaches any provision of the Guaranty or the
Guaranty is repudiated or otherwise declared or asserted to be wholly or
partially ineffective or unenforceable.
36
103
<PAGE> 43
SECTION 7.02. Remedies on Default.
(a) Upon the occurrence and during the continuation of an Event of
Default (other than an Event of Default described in Section 7.01(g)), the Bank
may, at its option, (i) terminate all obligations of the Bank to the Borrower,
including, without limitation, all obligations to make Advances under this
Agreement, (ii) declare the Notes, including, without limitation, principal,
accrued interest and costs of collection (including, without limitation,
reasonable attorneys' fees if collected by or through an attorney at law or in
bankruptcy, receivership or other judicial proceedings) immediately due and
payable, without presentment, demand, protest or any other notice of any kind,
all of which are expressly waived.
(b) Upon the occurrence of an Event of Default under Section
7.01(g), (i) all obligations of the Bank to the Borrower, including, without
limitation, all obligations to make Advances under this Agreement, shall
terminate automatically and (ii) the Notes, including, without limitation,
principal, accrued interest and costs of collection (including, without
limitation, reasonable attorneys, fees if collected by or through an attorney
at law or in bankruptcy, receivership or other judicial proceedings) shall be
immediately due and payable, without presentment, demand, protest, or any other
notice of any kind, all of which are expressly waived.
(c) Upon the occurrence of an-Event of Default and acceleration of
the Notes as provided in (a) or (b) above, the Bank may pursue any remedy
available under this Agreement, under the Notes, or under any other Loan
Document, or available at law or in equity, all of which shall be cumulative.
The order and manner in which the rights and remedies of the Bank under the
Loan Documents and otherwise may be exercised shall be determined by the Bank.
(d) All payments with respect to this Agreement received by the
Bank after the occurrence of an Event of Default and acceleration of the Notes,
shall be applied first, to the costs and expenses incurred by the Bank as a
result of the Default, second, to the payment of accrued and unpaid fees of the
Bank, third, to the payment of accrued and unpaid interest on the Notes, to and
including the date of such application, fourth, to the payment of the unpaid
principal of the Notes, and fifth, to the payment of all other amounts then
owing to the Bank under the Loan Documents. No application of the payments
will cure any Event of Default or prevent acceleration, or continued
acceleration, of amounts payable under the Loan Documents or prevent the
exercise, or continued exercise, of rights or remedies of the Bank hereunder or
under applicable law.
37
104
<PAGE> 44
ARTICLE VIII
(INTENTIONALLY OMITTED)
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. No Waiver. No delay or failure on the part of
the Bank or any holder of any of the Notes in the exercise of any right, power
or privilege granted under this Agreement, under any other Loan Document, or
available at law or in equity, shall impair any such right, power or privilege
or be construed as a waiver of any Event of Default or any acquiescence
therein. No single or partial exercise of any such right, power or privilege
shall preclude the further exercise of such right, power or privilege. No
waiver shall be valid against the Bank unless made in writing and signed by the
Bank, and then only to the extent expressly specified therein.
SECTION 9.02. Notices. Unless otherwise provided herein, all
notices, requests and other communications provided for hereunder shall be in
writing (including bank wire, telex, telecopy or similar teletransmission or
writing) and shall be given at the following addresses:
(1) If to the Bank: Third National Bank of East Tennessee
700 Hill Avenue
Knoxville, Tennessee 37997
Attention: T. Matthew Head
Telephone: (615) 544-2553
Telecopy: (615) 544-2125
(2) If to Borrower: Plasti-Line, Inc.
623 East Emory Road Knoxville,
Tennessee 37950-9043
Attn: Mr. Mark J. Deuschle
Telephone: (615) 947-8553
Telecopy: (615) 947-8431
38
105
<PAGE> 45
Any such notice, request or other communication shall be effective (i) if given
by telecopy, when such telecopy is transmitted to the telecopy number specified
above and the appropriate confirmation is received, (ii) if given by mail, upon
the earlier of receipt or the third Business Day after such communication is
deposited in the United States mails, registered or certified, with first class
postage prepaid, addressed as aforesaid or (iii) if given by any other means
(including, without limitation, by air courier), when delivered at the address
specified herein. The Borrower or the Bank may change its address for notice
purposes by notice to the other parties in the manner provided herein.
SECTION 9.03. Governing Law. This Agreement and all other Loan
Documents shall be governed by and interpreted in accordance with the laws of
the State of Tennessee.
SECTION 9.04. Survival of Representations and Warranties. All
representations and warranties contained herein or made by or furnished on
behalf of the Borrower in connection herewith shall survive the execution and
delivery of this Agreement and all other Loan Documents.
SECTION 9.05. Descriptive Headings. The descriptive headings of
the several sections of this Agreement are inserted for convenience only and do
not constitute a part of this Agreement.
SECTION 9.06. Severability . If any part of any provision
contained in this Agreement or in any other Loan Document shall be invalid or
unenforceable under applicable law, said part shall be ineffective to the
extent of such invalidity only, without in any way affecting the remaining
parts of said provision or the remaining provisions.
SECTION 9.07. Time is of the Essence. Time is of the essence in
interpreting and performing this Agreement and all other Loan Documents.
SECTION 9.08. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original and all
of which, taken together, shall constitute one and the same instrument.
SECTION 9.09. Payment of Costs. The Borrower shall pay all costs,
expenses, taxes and fees (i) incurred by the Bank in connection with the
preparation, execution and delivery of this Agreement and all other Loan
Documents including, without
39
106
<PAGE> 46
limitation, the costs and professional fees of counsel for the Bank, Long,
Ragsdale & Waters, P.C., whether or not the transaction contemplated hereby
shall be consummated, and any and all stamp, intangible or other taxes that may
be payable or determined in the future to be payable in connection therewith;
(ii) incurred by the Bank in connection with administration of the Borrowings
and the Loan Documents in accordance with the provisions thereof and the
preparation, execution and delivery of any waiver, amendment or consent by the
Bank relating to the Loan Documents, including, without limitation, the costs
and professional fees of counsel for the Bank; and (iii) incurred by the Bank
in enforcing the Loan Documents, including, without limitation, reasonable
attorneys, fees of counsel for the Bank after the occurrence of a Default or an
Event of Default.
SECTION 9.10. Successors and Assigns. This Agreement shall bind
and inure to the benefit of the Borrower and the Bank, and their respective
successors and assigns; provided, however, the Borrower shall have no right to
assign its rights or obligations hereunder to. any Person. Notwithstanding
anything in this Agreement to the contrary, the Bank shall have the right, but
shall not be obligated, to sell participations in the loans made pursuant
hereto to affiliates of the Bank, other banks, financial institutions and
investors; Provided, however, that any transferee shall have no rights
hereunder.
SECTION 9.11. Cumulative Remedies; No Waiver. The rights, powers,
and remedies of the Bank provided herein or in any other Loan Document are
cumulative and not exclusive of any right, power, or remedy provided by law or
equity.
SECTION 9.12. Amendments: Consents. No amendment, modification,
supplement, termination, or waiver of any provision of this Agreement or any
other Loan Document, and no consent to any departure by the Borrower or any
Subsidiary therefrom, may in any event be effective unless in writing signed by
the Bank and then only in the specific instance and for the specific purpose
given.
SECTION 9.13. Set-Off. Upon the occurrence and during the
continuation of an Event of Default, the Borrower authorizes the Bank, without
notice or demand, to apply any indebtedness due or to become due to the
Borrower from the Bank in satisfaction of any of the indebtedness, liabilities
or obligations of the Borrower under this Agreement or under any other Loan
Document, including, without limitation, the right to set-off against any
deposits or other cash collateral of the Borrower held by the Bank. The Bank
agrees to give the Borrower prompt notice of any set-off hereunder but shall
have no liability to the Borrower for failure to give such notice.
40
107
<PAGE> 47
SECTION 9.14. Indemnity. The Borrower agrees to protect, indemnify and
save harmless the Bank, and all directors, officers, employees and agents of
the Bank, from and against any and all (i) claims, demands and causes of action
of any nature whatsoever brought by any Person not a party to this Agreement
and arising from or related or incident to this Agreement or any other Loan
Document, (ii) costs and expenses incident to the defense of such claims,
demands and causes of action, including, without limitation, reasonable
attorneys' fees, and (iii) liabilities, judgments, settlements, penalties and
assessments arising from such claims, demands and causes of action, provided
such claims, costs and liabilities are not proximately caused by Bank's gross
negligence or willful misconduct or breach of this Agreement. The indemnity
contained in this section shall survive the termination of this Agreement.
SECTION 9.15. Usury. It is the intent of the parties hereto not
to violate any federal or state law, rule or regulation pertaining either to
usury or to the contracting for or charging or collecting of interest, and the
Borrower and the Bank agree that, should any provision of this Agreement or of
the Notes, or any act performed hereunder or thereunder, violate any such law,
rule or regulation, then the excess of interest contracted for or charged or
collected over the maximum lawful rate of interest shall be applied to the
outstanding principal indebtedness due to the Bank by the Borrower under this
Agreement.
SECTION 9.16. Jurisdiction and Venue. The Borrower agrees,
without power of revocation, that any civil suit or action brought against it
as a result of any of its obligations under this Agreement or under any other
Loan Document may be brought against it in any court in the State of Tennessee,
and the Borrower hereby irrevocably submits to the jurisdiction of such courts
and irrevocably waives, to the fullest extent permitted by law, any objections
that it may now or hereafter have to the laying of the venue of such civil suit
or action and any claim that such civil suit or action has been brought in an
inconvenient forum, and the Borrower agrees that final judgment in any such
civil suit or action shall be conclusive and binding upon it and shall be
enforceable against it by suit upon such judgment in any court of competent
jurisdiction.
SECTION 9.17. Construction. Should any provision of this
Agreement require judicial interpretation, the parties hereto agree that the
court interpreting or construing the same shall not apply a presumption that
the terms hereof shall be more strictly construed against one party by reason
of the rule of construction that a document is to be more strictly construed
against the party that itself or through its agents prepared the
41
108
<PAGE> 48
same, it being agreed that the Borrower, the Bank and their respective agents
have participated in the preparation hereof.
SECTION 9.18. Entire Agreement. This Agreement and the other Loan
Documents executed and delivered contemporaneously herewith, together with the
exhibits and schedules attached hereto and thereto, constitute the entire
understanding of the parties with respect to the subject matter hereof, and any
other prior or contemporaneous agreements, whether written or oral,-with
respect thereto including, without limitation, any loan commitment from the
Bank to the Borrower, are expressly superseded hereby. The execution of this
Agreement and the other Loan Documents by the Borrower was not based upon any
facts or materials provided by the Agent or the Bank, nor was the Borrower
induced to execute this Agreement or any other Loan Document by any
representation, statement or analysis made by the Bank.
WITNESS the hand and seal of the parties hereto through their duly
authorized officers, as of the date first above written.
PLASTI-LINE, INC.
By: /s/ Mark Deuschle
------------------------------
Title: Secretary
------------------------
THIRD NATIONAL BANK
OF EAST TENNESSEE
By: /s/ Matthew Head
-------------------------------
Title: Assistant Vice President
-------------------------
42
109
<PAGE> 1
REVOLVING CREDIT NOTE
October 24, 1995 $5,000,000.00
Knoxville, Tennessee
FOR VALUE RECEIVED, the undersigned, PLASTI-LINE, INC., a Tennessee
corporation (the "Borrower"), promises to pay to the order of SUNTRUST BANK,
EAST TENNESSEE, N.A., successor by name change to THIRD NATIONAL BANK OF EAST
TENNESSEE, a national banking association (the "Bank") at its main office in
Knoxville, Tennessee, or at such other place as the holder hereof may designate
by notice in writing to Borrower, in immediately available funds in lawful
money of the United States of America, on February 29, 1996, the lesser of (i)
principal sum of FIVE MILLION DOLLARS ($5,000,000.00), or (ii) so much thereof
as shall have been from time to time disbursed hereunder in accordance with the
Agreement (as hereinafter defined) and not theretofore repaid, as shown on the
records of the Bank. Borrower and Bank previously executed a Revolving Credit
and Term Loan Agreement dated as of April 21, 1995 (the "Agreement") relating
to a line of credit loan by Bank to Borrower in the principal amount of Ten
Million Dollars ($10,000,000.00). The line of credit evidenced by this Note is
in addition to the credit described in the Agreement. However, except as
specifically provided herein to the contrary, this Note and the terms of the
borrowing hereunder (including, but not limited to the interest rate, draw
requirements, covenants and events of default) shall be subject to the
Agreement. Notwithstanding the terms of the Agreement, however, the entire
principal balance and all accrued interest under this Note shall be due and
payable in full on February 29, 1996, and the Borrower shall not have the right
to extend the maturity of this Note or to convert the outstanding balance to
the term loan as provided in the Agreement.
In addition to principal, Borrower agrees to pay interest on the
principal amounts disbursed hereunder from time to time from the date of each
disbursement until paid at such simple rates of interest per annum and upon
such dates as provided for in the Agreement. Interest shall accrue on the
outstanding principal balance from the date hereof up to and through the date
on which all principal and interest hereunder is paid in full, and shall be
computed on the basis of the actual number of days elapsed in a 360-day year.
Such interest is to be paid to Bank at its main office in Knoxville, Tennessee.
This Revolving Credit Note ("Note") evidences a revolving credit loan
incurred pursuant to the terms and conditions of the Agreement to which
reference is hereby made for a full and complete description of such terms and
conditions. All capitalized terms
1
110
<PAGE> 2
used in this Note shall have the same meanings as set forth in the Agreement.
Bank shall at all times following the occurrence of an Event of
Default have a right of set-off against any deposit balances of Borrower in the
possession of the Bank and the Bank may apply the same against payment of this
Note or any other indebtedness of Borrower to the Bank. The payment of any
indebtedness evidenced by this Note prior to the Termination Date shall not
affect the enforceability of this Note as to any future, different or other
indebtedness incurred hereunder by the Borrower. In the event the indebtedness
evidenced by this Note is collected by legal action or through an
attorney-at-law, the Bank shall be entitled to recover from Borrower all costs
of collection, including, without limitation, reasonable attorneys' fees if
collected by or through an attorney-at-law.
Borrower acknowledges that the actual crediting of the amount of any
disbursement under the Agreement to an account of Borrower or recording such
amount in the records of the Bank shall, in the absence of manifest error,
constitute presumptive evidence of such disbursement, and that such Advance was
made and borrowed under the Agreement and, in the case of a Eurodollar Advance
or a Cost of Funds Rate Advance, the Interest Period and rate applicable
thereto. Such account records shall constitute, in the absence of manifest
error, presumptive evidence of principal amounts outstanding of Advances and
the payments made under the Agreement at any time and from time to time,
provided that the failure of Bank to record on the account records the type or
amount of any Advance shall not affect the obligation of the undersigned to
repay such amount together with interest thereon in accordance with this Note
and the Agreement.
Upon the existence or occurrence of any Event of Default as defined in
the Agreement, the principal and all accrued interest hereof shall
automatically become, or may be declared, due and payable in the manner and
with the effect provided in the Agreement. The Borrower further agrees that
the failure to pay any amounts due hereunder or to perform any obligations
hereunder shall, after the expiration of the applicable grace or cure period
under the Agreement, constitute an Event of Default under the Agreement.
Failure or forbearance of Bank to exercise any right hereunder, or
otherwise granted by the Agreement or by law, shall not affect or release the
liability of Borrower hereunder, and shall not constitute a waiver of such
right unless so stated by Bank in writing. This Note shall be deemed to be
made under, and shall be construed in accordance with and governed by, the laws
of the State of Tennessee. Time is of the essence of this Note.
2
111
<PAGE> 3
It is the intention of the Bank and Borrower to comply strictly with
applicable usury laws; and, accordingly, in no event and upon no contingency
shall Bank ever be entitled to receive, collect, or apply as interest any
interest, fees, charges or other payments equivalent to interest, in excess of
the maximum rate which Bank may lawfully charge under applicable statutes and
laws from time to time in effect; and in the event that the holder hereof ever
receives, collects, or applies as interest any such charges in an amount which,
but for this provision, would be excessive interest, such excess shall be
applied to the reduction of the principal amount of the indebtedness hereby
evidenced; and if the principal amount of the indebtedness evidenced hereby,
and all lawful interest thereon, is paid in full, any remaining excess shall
forthwith be paid to Borrower, or other party lawfully entitled thereto. In
determining whether or not the interest paid or payable, under any specific
contingency, exceeds the highest rate which the Bank may lawfully charge under
applicable law from time to time in effect, Borrower and Bank shall, to the
maximum extent permitted under applicable law, characterize any non-principal
payment as a reasonable loan charge, rather than as interest. Any provision
hereof, or of any other agreement between Bank and Borrower that operates to
bind, obligate, or compel Borrower to pay interest in excess of such maximum
rate shall be construed to require the payment of maximum rate only. The
provisions of this paragraph shall be given precedence over any other provision
contained herein or in any other agreement between Bank and Borrower that is in
conflict with the provisions of this paragraph.
PRESENTMENT FOR PAYMENT, NOTICE OF DISHONOR AND PROTEST ARE HEREBY
WAIVED.
IN WITNESS WHEREOF, the Borrower has caused this Note to be executed
by its duly authorized officers and its corporate seal affixed hereto as of the
day and year first above written.
PLASTI-LINE, INC.
By: /s/ Mark Deuschle
----------------------------
Title: VP-Finance
----------------------
3
112
<PAGE> 1
AMENDED AND RESTATED REVOLVING CREDIT NOTE
November 2, 1995 $16,000,000.00
Knoxville, Tennessee
FOR VALUE RECEIVED, the undersigned, PLASTI-LINE, INC., a Tennessee corporation
(the "Borrower"), promises to pay to the order of SUNTRUST BANK OF EAST
TENNESSEE, N.A., successor by name change to Third National Bank of East
Tennessee, a national banking association (the "Bank") at its main office in
Knoxville, Tennessee, or at such other place as the holder hereof may designate
by notice in writing to Borrower, in immediately available funds in lawful
money of the United States of America, on April 30, 1996 (the "Termination
Date"), the lesser of (i) principal sum of SIXTEEN MILLION DOLLARS
($16,000,000.00), or (ii) so much thereof as shall have been from time to time
disbursed hereunder in accordance with that certain Revolving Credit and Term
Loan Agreement dated as of April 12, 1995, by and between the Borrower and
Bank, as amended by First Amendment of even date herewith (as hereinafter
amended, supplemented or modified, the "Agreement"), and not theretofore
repaid, as shown on the records of the Bank.
In addition to principal, Borrower agrees to pay interest on the principal
amounts disbursed hereunder from time to time from the date of each
disbursement until paid at such simple rates of interest per annum and upon
such dates as provided for in the Agreement. Interest shall accrue on the
outstanding principal balance from the date hereof up to and through the date
on which all principal and interest hereunder is paid in full, and shall be
computed on the basis of the actual number of days elapsed in a 360-day year.
Such interest is to be paid to Bank at its main office in Knoxville, Tennessee.
This Amended and Restated Revolving Credit Note ("Note") evidences a
revolving credit loan incurred pursuant to the terms and conditions of the
Agreement to which reference is hereby made for a full and complete description
of such terms and conditions. This note also evidences a refinancing of a
certain Revolving Credit Note of the Borrower dated April 21, 1995, payable to
the order of the Bank in the original principal amount of TEN MILLION DOLLARS
(10,000,000.00), (the "Prior Note") and the extension of additional credit
under the terms of the Agreement. All capitalized terms used in this Note
shall have the same meanings as set forth in the Agreement.
This Note and the interest are secured by a Security Agreement dated as of
November 2, 1995, relating property owned by the Borrower and its subsidiaries,
and by several other collateral
1
113
<PAGE> 2
documents previously executed and executed in connection herewith, (such
documents, the Agreement and all instruments now or hereafter evidencing or
securing the indebtedness evidenced hereby being collectively referred to
herein as the "Loan Documents"), and this Note is made pursuant to the
Agreement and is subject to the provisions of the Loan Documents; the terms and
conditions of all of such instruments are made a part hereof and shall control
in the interpretation and enforcement of this Note, and reference is hereby
made to all of such instruments for a description of the property, the nature
and extent of the security, the rights of the holder of this Note with respect
thereto and for the statement of additional terms and conditions under which
the loan evidenced hereby was made and is to be repaid or its due date
accelerated. This Note is included in the indebtedness referred to in the Loan
Documents above, and is entitled to the benefits of those documents, but
neither this reference to those documents nor any provisions thereof shall
affect or impair the absolute and unconditional obligation of the Borrower to
pay the principal of and interest on this Note when due. Any default under any
of the Loan Documents (after the expiration of any applicable grace or notice
periods) shall constitute a default hereunder.
Bank shall at all times following the occurrence of an Event of Default
have a right of set-off against any deposit balances of Borrower in the
possession of the Bank and the Bank may apply the same against payment of this
Note or any other indebtedness of Borrower to the Bank. The payment of any
indebtedness evidenced by this Note prior to the Termination Date shall not
affect the enforceability of this Note as to any future, different or other
indebtedness incurred hereunder by the Borrower. In the event the indebtedness
evidenced by this Note is collected by legal action or through an
attorney-at-law, the Bank shall be entitled to recover from Borrower all costs
of collection, including, without limitation, reasonable attorneys' fees if
collected by or through an attorney-at-law.
Borrower acknowledges that the actual crediting of the amount of any
disbursement under the Agreement to an account of Borrower or recording such
amount in the records of the Bank shall, in the absence of manifest error,
constitute presumptive evidence of such disbursement, and that such Advance was
made and borrowed under the Agreement and, in the case of a Eurodollar Advance
or a Cost of Funds Rate Advance, the Interest Period and rate applicable
thereto. Such account records shall constitute, in the absence of manifest
error, presumptive evidence of principal amounts outstanding of Advances and
the payments made under the Agreement at any time and from time to time,
provided that the failure of Bank to record on the account records the type or
amount of any Advance shall not affect the obligation of the undersigned to
repay
2
114
<PAGE> 3
such amount together with interest thereon in accordance with this Note and the
Agreement.
Upon the existence or occurrence of any Event of Default as defined in the
Agreement, the principal and all accrued interest hereof shall automatically
become, or may be declared, due and payable in the manner and with the effect
provided in the Agreement.
This Note is not intended to, and will not, effect a novation of the Prior
Note, and this Note shall be entitled to the same benefit (and priority) of the
Loan Documents; and the lien of the Loan Documents is not intended to be
released, altered or changed in any manner except as specifically stated herein
or in the documents executed by the Borrower and the Lender in connection with
this Note.
Failure or forbearance of Bank to exercise any right hereunder, or
otherwise granted by the Agreement or by law, shall not affect or release the
liability of Borrower hereunder, and shall not constitute a waiver of such
right unless so stated by Bank in writing. This Note shall be deemed to be
made under, and shall be construed in accordance with and governed by, the laws
of the State of Tennessee. Time is of the essence of this Note.
It is the intention of the Bank and Borrower to comply strictly with
applicable usury laws; and, accordingly, in no event and upon no contingency
shall Bank ever be entitled to receive, collect, or apply as interest any
interest, fees, charges or other payments equivalent to interest, in excess of
the maximum rate which Bank may lawfully charge under applicable statutes and
laws from time to time in effect; and in the event that the holder hereof ever
receives, collects, or applies as interest any such charges in an amount which,
but for this provision, would be excessive interest, such excess shall be
applied to the reduction of the principal amount of the indebtedness hereby
evidenced; and if the principal amount of the indebtedness evidenced hereby,
and all lawful interest thereon, is paid in full, any remaining excess shall
forthwith be paid to Borrower, or other party lawfully entitled thereto. In
determining whether or not the interest paid or payable, under any specific
contingency, exceeds the highest rate which the Bank may lawfully charge under
applicable law from time to time in effect, Borrower and Bank shall, to the
maximum extent permitted under applicable law, characterize any non-principal
payment as a reasonable loan charge, rather than as interest. Any provision
hereof, or of any other agreement between Bank and Borrower that operates to
bind, obligate, or compel Borrower to pay interest in excess of such maximum
rate shall be construed to require the payment of maximum rate only. The
provisions of this paragraph shall be given precedence over any other provision
contained herein or in any other agreement between Bank and Borrower that is in
conflict with the provisions of this paragraph.
3
115
<PAGE> 4
PRESENTMENT FOR PAYMENT, NOTICE OF DISHONOR AND PROTEST ARE HEREBY WAIVED.
IN WITNESS WHEREOF, the Borrower has caused this Note to be executed by
its duly authorized officers and its corporate seal affixed hereto as of the
day and year first above written.
PLASTI-LINE, INC.
By: /s/ Mark Deuschle
----------------------------
Title: VP - Finance
---------------------
4
116
<PAGE> 1
FIRST AMENDMENT TO REVOLVING CREDIT AND TERM LOAN AGREEMENT
This First Amendment to Revolving Credit and Term Loan Agreement, made as of
the 2nd day of November, 1995, between PLASTI-LINE, INC., a Tennessee
corporation ("Borrower") and SUNTRUST BANK, EAST TENNESSEE, N.A., successor by
name change to Third National Bank of East Tennessee ("Bank").
RECITALS:
Borrower and Bank executed a Revolving Credit and Term Loan Agreement dated as
of April 21, 1995 (the "Loan Agreement") pursuant to which the Bank extended to
the Borrower a revolving line of credit in the original principal amount of Ten
Million Dollars ($10,000,000.00). In connection with the Loan Agreement, the
Borrower executed a Revolving Credit Note dated April 21, 1995, payable to the
order of the Bank in the original principal amount of Ten Million Dollars
($10,000,000.00) (the "Initial Revolving Credit Note").
The Bank extended additional credit to the Borrower pursuant to the
Revolving Credit Note of the Borrower dated October 24, 1995, payable to the
order of the Bank in the original principal amount of Five Million Dollars
($5,000,000.00) (the "Additional Note").
The Borrower desires to acquire certain assets of Carter-Miot Engineering
Company, Inc. The Borrower has requested that the lender increase its
commitment under the Loan Agreement to Sixteen Million Dollars ($16,000,000.00)
in order to provide additional financing relating to such acquisition.
The parties desire to modify certain provisions of the Loan Agreement as
provided herein.
NOW, THEREFORE, in consideration of the foregoing Recitals, the extension
of additional credit by the Bank to the Borrower, the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Unless otherwise defined herein, all capitalized terms in this First
Amendment shall have the same meanings as in the Loan Agreement.
2. Section 1.01 of the Loan Agreement is amended by deleting the
definitions of "Notes" and "Term Note" and by adding the following definitions
thereto:
117
<PAGE> 2
"Additional Note" shall mean the Revolving Credit Note of the
Borrower dated October ___, 1995, payable to the order of the Bank in the
original principal amount of Five Million Dollars ($5,000,000.00), either as
originally executed or as it may from time to time be supplemented, modified,
amended, renewed or extended.
"Carter" shall mean Carter-Miot Engineering Company, Inc., a
____________________ corporation.
"Carter Assets" shall mean substantially all of the inventory,
equipment, accounts receivable and other tangible and intangible personal
property of Carter.
"Notes" shall mean, collectively, the Revolving Credit Note, the
Additional Note, and the Replacement Note.
"Replacement Note" shall mean the Amended and Restated Revolving
Credit Note of the Borrower dated November 2, 1995, payable to the order of
Bank in the original principal amount of Sixteen Million Dollars
($16,000,000.00), either as originally executed or as it may from time to time
be supplemented, modified, amended, renewed or extended.
3. Section 2.01 of the Loan Agreement is amended and restated as
follows:
Subject to and upon the terms and conditions set forth in this
Agreement, the Bank establishes until April 30, 1996, or such later
date as may be established pursuant to Section 2.07(b) hereof, a
revolving credit in favor of the Borrower in aggregate principal at
any one time outstanding equal to the sum of Sixteen Million Dollars
($16,000,000.00) (the "Commitment"). Within the limits of the
Commitment and subject to the conditions set forth in Article III
hereof, the Borrower may borrow, repay and reborrow under the terms
of this Agreement; provided, however, that the Borrower may neither
borrow nor reborrow should there exist a Default or an Event of
Default. Borrowings under the Commitment shall be made through an
Advance by the Bank. All Advances by the Bank shall be evidenced by
a single Note payable to the order of the Bank in a principal amount
equal to the Commitment, shall bear interest as hereinafter provided
and shall mature on April 30, 1996, unless extended pursuant to
Section 2.07(b) or sooner should the principal and accrued interest
2
118
<PAGE> 3
thereon be declared immediately due and payable as provided for
hereinafter. Except as provided in the Automatic Investment Service
Agreement between Borrower and Bank, the aggregate principal amount
of each Borrowing under the Commitment shall be not less than
$10,000.00 and shall be in integral multiples of $10,000.00. The
Bank shall have no obligation to advance funds in excess of the
amount of its Commitment as set forth above.
4. Section 2.07 of the Loan Agreement is hereby modified as follows:
(a) The "Termination Date" as defined in Section 2.07(a) of the
Loan Agreement is hereby changed to April 30, 1996.
(b) Section 2.07(b) of the Loan Agreement is hereby deleted.
(c) Section 2.07(c) of the Loan Agreement is hereby deleted.
5. Sections 2.10 through 2.14 of the Loan Agreement are hereby deleted.
6. The following is added to Article III of the Loan Agreement as a new
Section 3.03:
SECTION 3.03. Additional Conditions Precedent to Advances in
Excess of the Aggregate Principal Amount of $10,000,000.00. The Bank
shall not be obligated to make and Advance under the Replacement Note
if, at the time of such Advance or as a result of such Advance, the
aggregate outstanding principal balance under the Replacement Note
exceeds or will exceed $10,000,000.00, unless and until the Bank has
received the following, all of which shall be satisfactory to the
Bank in its reasonable discretion:
(a) Evidence in the form of bills of sale, opinions of
counsel or otherwise that the Borrower or a Subsidiary has acquired
(or will acquire with the proceeds of the Advance) the Carter Assets
free and clear of all liens and encumbrances.
3
119
<PAGE> 4
(b) Security agreement(s) and financing statements granting and
perfecting in favor of Bank a first lien security interest in all
accounts receivable and inventory of Borrower and its Subsidiaries,
including, but not limited to, the Subsidiary that acquires the
Carter Assets.
(c) Certified copies of resolutions of the boards of
directors of the Subsidiaries approving this First Amendment and
approving the execution and delivery of the Replacement Note, the
security agreement(s), the financing statements required under
Section 3.03(b), and any other documents that may be reasonably
required in connection therewith.
(d) A favorable written opinion of counsel to the Borrower
and the Subsidiaries addressing such matters relating to the
transactions described herein as Bank may reasonably request.
7. The Bank will, from time to time, upon request by the Bank, cause to
be made, executed and delivered any further instruments, certificates and
documents as may, in the reasonable opinion of Bank, be necessary or desirable
in order to effect, complete or document the transactions described herein and
to complete, perfect or preserve the security interests contemplated herein.
8. The Borrower warrants that it has no claims, defenses, offsets or
counterclaims against the Bank or any of Bank's officers, employees or agents
and does hereby release and hold harmless the Bank, its officers, employees and
agents from and against any actions, claims, lawsuits, demands, costs, expenses
or liabilities of any kind whether known or unknown relating in any way to the
Loan.
9. Except as specifically modified hereby, the Loan Agreement shall
remain in full force and effect. This First Amendment is not intended to, and
will not, effect a novation of the indebtedness evidenced by the Revolving
Credit Note. This First Amendment shall bind and inure to the benefit of the
parties, their successors and assigns and may be further amended only by
written instrument signed by the parties hereto. This First Amendment shall be
governed by and construed in accordance with the laws of the State of
Tennessee.
4
120
<PAGE> 5
10. This First Amendment may be executed in any number of counterparts,
each of which, when executed and delivered, shall be an original, but such
counterparts shall, together, constitute one and the same instrument.
IN WITNESS WHEREOF, this First Amendment has been executed by the parties
as of the day and year first above written.
PLASTI-LINE, INC.
By: /s/ Mark J. Deuschle
-----------------------------
Its VP - Finance
--------------------
SUNTRUST BANK, EAST TENNESSEE, N.A.
By: /s/ Roger D. Osborne
-----------------------------
Its Senior Vice President
-----------------------
5
121
<PAGE> 1
PLASTI-LINE, INC./SHEET METAL WORKERS
LOCAL UNION 555
RETIREMENT SAVINGS PLAN AND TRUST
Effective as of January 1, 1996
122
<PAGE> 2
PLASTI-LINE, INC./SHEET METAL WORKERS
LOCAL UNION 555
RETIREMENT SAVINGS PLAN AND TRUST
EFFECTIVE AS OF JANUARY 1, 1996
CONTENTS
<TABLE>
<S> <C>
ARTICLE 1 -- INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.01 Establishment of Plan . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2 -- DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.01 Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.02 Act or Erisa . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.03 Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.04 Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.05 Authorized Leave of Absence . . . . . . . . . . . . . . . . . . . . . 2
2.06 Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.07 Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.08 Break in Service . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.09 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.10 Collective Bargaining Agreement . . . . . . . . . . . . . . . . . . . 3
2.11 Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.12 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.13 Disability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.14 Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.15 Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.16 Eligible Employee . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.17 Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.18 Employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.19 Employer Contribution . . . . . . . . . . . . . . . . . . . . . . . . 5
2.20 Employer Contribution Account . . . . . . . . . . . . . . . . . . . . 5
2.21 Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.22 Entry Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.23 Family Member . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.24 Fiduciary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.25 Former Participant . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.26 Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.27 Highly Compensated Employee . . . . . . . . . . . . . . . . . . . . . 6
2.28 Hour of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.29 Investment Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.30 Joint Administrative Committee . . . . . . . . . . . . . . . . . . . 7
2.31 Non-Highly Compensated Employee . . . . . . . . . . . . . . . . . . . 9
</TABLE>
123
<PAGE> 3
<TABLE>
<S> <C>
2.32 Normal Retirement Date . . . . . . . . . . . . . . . . . . . . . . . 9
2.33 Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.34 Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.35 Plan Administrator or Administrator . . . . . . . . . . . . . . . . . 9
2.36 Plan Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.37 Pre-Tax Contribution . . . . . . . . . . . . . . . . . . . . . . . . 9
2.38 Pre-Tax Contribution Account . . . . . . . . . . . . . . . . . . . . 9
2.39 Qualified . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.40 Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.41 Rollover Account . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.42 Spouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.43 Termination of Employment . . . . . . . . . . . . . . . . . . . . . . 10
2.44 Treasury Regulation . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.45 Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.46 Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.47 Union . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.48 Valuation Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.49 Year of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE 3 -- PARTICIPATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.01 Commencement of Participation . . . . . . . . . . . . . . . . . . . . 12
3.02 Notice of Eligibility . . . . . . . . . . . . . . . . . . . . . . . . 12
3.03 Election to Make Pre-Tax Contributions . . . . . . . . . . . . . . . 12
3.04 Participation and Rehire . . . . . . . . . . . . . . . . . . . . . . 12
3.05 Not Contract for Employment . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE 4 -- CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.01 Pre-Tax Contributions . . . . . . . . . . . . . . . . . . . . . . . . 14
4.02 Elections Regarding Pre-Tax Contributions . . . . . . . . . . . . . . 14
4.03 Change in Employee Contribution Election or Suspension of Contributions 15
4.04 Deadline for Contribution And Allocation of Pre-Tax Contributions . . 16
4.05 Employer Contributions . . . . . . . . . . . . . . . . . . . . . . . 16
4.06 Rollover Contributions . . . . . . . . . . . . . . . . . . . . . . . 17
4.07 Forfeitures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.08 Form and Timing of Contributions . . . . . . . . . . . . . . . . . . 17
ARTICLE 5 -- ACCOUNTS AND ALLOCATIONS . . . . . . . . . . . . . . . . . . . . . . 19
5.01 Participant Accounts . . . . . . . . . . . . . . . . . . . . . . . . 19
5.02 Valuation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.03 Plan Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.04 Directed Investments . . . . . . . . . . . . . . . . . . . . . . . . 20
5.05 Errors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>
- ii -
124
<PAGE> 4
<TABLE>
<S> <C>
ARTICLE 6 -- VESTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.01 Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.02 Death or Disability . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.03 Termination of Employment . . . . . . . . . . . . . . . . . . . . . . 22
6.04 Vesting Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.05 Break in Service . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE 7 -- DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.01 Termination of Employment . . . . . . . . . . . . . . . . . . . . . . 24
7.02 Death . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.03 Consent of Participant . . . . . . . . . . . . . . . . . . . . . . . 24
7.04 Designation of a Beneficiary . . . . . . . . . . . . . . . . . . . . 24
7.05 Hardship Withdrawals . . . . . . . . . . . . . . . . . . . . . . . . 24
7.06 Joint Administrative Committee Guidelines . . . . . . . . . . . . . . 25
7.07 Method of Distribution . . . . . . . . . . . . . . . . . . . . . . . 25
7.08 Payment to Minors and Incapacitated Persons . . . . . . . . . . . . . 25
7.09 Application for Benefits . . . . . . . . . . . . . . . . . . . . . . 25
7.10 Special Distribution Rules . . . . . . . . . . . . . . . . . . . . . 25
7.11 Distributions Pursuant to Qualified Domestic Relations Orders . . . . 26
7.12 Direct Rollovers . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE 8 -- IN-SERVICE WITHDRAWALS . . . . . . . . . . . . . . . . . . . . . . . 28
8.01 Hardship Withdrawals . . . . . . . . . . . . . . . . . . . . . . . . 28
8.02 Definition of Hardship . . . . . . . . . . . . . . . . . . . . . . . 28
8.03 Maximum Hardship Distribution . . . . . . . . . . . . . . . . . . . . 28
8.04 Procedure to Request Hardship . . . . . . . . . . . . . . . . . . . . 29
ARTICLE 9 -- ADMINISTRATION OF THE PLAN . . . . . . . . . . . . . . . . . . . . . 30
9.01 Named Fiduciaries . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.02 Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.03 Administrative Duties of the Joint Administrative Committee . . . . . 30
9.04 Standard of Fiduciary Duty . . . . . . . . . . . . . . . . . . . . . 32
9.05 Claims Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.06 Indemnification of Joint Administrative Committee . . . . . . . . . . 33
ARTICLE 10 -- AMENDMENT AND TERMINATION . . . . . . . . . . . . . . . . . . . . . 34
10.01 Right to Amend . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
10.03 IRS Approval of Termination . . . . . . . . . . . . . . . . . . . . 35
ARTICLE 11 -- SPECIAL DISCRIMINATION RULES . . . . . . . . . . . . . . . . . . . . 36
11.01 In General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
11.02 $7,000 Limit on Pre-Tax Contributions . . . . . . . . . . . . . . . 37
11.03 Average Actual Deferral Percentage . . . . . . . . . . . . . . . . . 38
</TABLE>
- iii -
125
<PAGE> 5
<TABLE>
<S> <C>
11.04 Special Rules for Determining Average Actual Deferral Percentage . . 39
11.05 Distribution of Excess ADP Deferrals . . . . . . . . . . . . . . . . 40
11.06 Order of Applying Certain Sections of Article . . . . . . . . . . . 41
ARTICLE 12 -- HIGHLY COMPENSATED EMPLOYEES . . . . . . . . . . . . . . . . . . . . 42
12.01 In General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
12.02 Highly Compensated Employees . . . . . . . . . . . . . . . . . . . . 42
12.03 Former Highly Compensated Employee . . . . . . . . . . . . . . . . . 43
12.04 Family Aggregation Rules . . . . . . . . . . . . . . . . . . . . . . 43
12.05 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
12.06 Other Methods Permissible . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE 13 -- MAXIMUM BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . 47
13.01 General Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
13.02 Combined Plan Limitation . . . . . . . . . . . . . . . . . . . . . . 49
13.03 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE 14 -- TRUST FUND AND TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . 52
14.01 General Nature of Trustee's Responsibilities . . . . . . . . . . . 52
14.02 Investment Powers . . . . . . . . . . . . . . . . . . . . . . . . . 52
14.03 Valuation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
14.04 Other Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
14.05 Prohibited Transaction . . . . . . . . . . . . . . . . . . . . . . . 56
14.06 Administration of the Plan, Payments of Benefits, Reliance on Committee 56
14.07 Directing the Trustee . . . . . . . . . . . . . . . . . . . . . . . 57
14.08 Records and Reports . . . . . . . . . . . . . . . . . . . . . . . . 57
14.09 Notification to Trustee . . . . . . . . . . . . . . . . . . . . . . 58
14.10 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
14.11 Trustee's Tenure and Succession . . . . . . . . . . . . . . . . . . 59
14.12 Successor Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 60
14.13 Bond and Security . . . . . . . . . . . . . . . . . . . . . . . . . 60
14.14 Commingling . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
ARTICLE 15 -- MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
15.01 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
15.02 Action by Employer; Union . . . . . . . . . . . . . . . . . . . . . 62
15.03 Spendthrift Clause . . . . . . . . . . . . . . . . . . . . . . . . . 62
15.04 Distributions Upon Special Occurrences . . . . . . . . . . . . . . . 62
15.05 Discrimination . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
15.06 Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
15.07 Compliance with Applicable Laws . . . . . . . . . . . . . . . . . . 63
15.08 Agents for Service of Process . . . . . . . . . . . . . . . . . . . 63
</TABLE>
- iv -
126
<PAGE> 6
<TABLE>
<S> <C>
15.09 Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
15.10 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
15.11 Protected Benefits . . . . . . . . . . . . . . . . . . . . . . . . . 64
15.12 Location of Participant or Beneficiary Unknown . . . . . . . . . . . 64
APPENDIX A -- EMPLOYER CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . 66
</TABLE>
- v -
127
<PAGE> 7
PLASTI-LINE, INC./SHEET METAL
WORKERS LOCAL UNION 555
RETIREMENT SAVINGS PLAN AND TRUST
EFFECTIVE AS OF JANUARY 1, 1996
ARTICLE 1
INTRODUCTION
1.01 Establishment of Plan. Plasti-Line, Inc. (the "Company") and Sheet
Metal Workers Local Union 555 (the "Union"), having determined that
it is in the best interests of the Company's hourly employees who are
covered by the collective bargaining agreement by and between the
Union and the Company to provide a qualified salary deferral plan for
the exclusive benefit of such employees, hereby establish a profit
sharing and 401(k) plan as set forth in its entirety in this
document, which shall be known as the Plasti-Line, Inc./Sheet Metal
Workers Local Union 555 Retirement Savings Plan and Trust (the
"Plan"). The Plan has been established and shall be maintained in
such manner as to meet the requirements of Sections 401(a) and 401(k)
of the Internal Revenue Code of 1986, as amended and the Employee
Retirement Income Security Act of 1974, as amended ("ERISA").
1.02 Purpose. This Plan is intended to qualify as a profit sharing plan
under Code Section 401(a) and to provide a cash or deferred
arrangement under Code Sections 401(a) and 401(k). Under the Plan,
Participants can direct that a specified percentage of the amount
that otherwise would have been paid to them as Compensation be
contributed by the Employer to the Plan. The benefits described in
the Plan are provided for the exclusive benefit of the Participants
and their Beneficiaries.
128
<PAGE> 8
ARTICLE 2
DEFINITIONS
Certain terms of this Plan have defined meanings which are set forth in this
Article and which shall govern unless the context in which they are used
clearly indicates that some other meaning is intended.
2.01 Account shall mean the Account established and maintained by the
Joint Administrative Committee or Trustee for each Participant or
their Beneficiaries to which shall be allocated each Participant's
interest in the Fund. Each Account shall be comprised of the
sub-accounts described in Section 5.01.
2.02 Act or ERISA shall mean Public Law No. 93-406, the Employee
Retirement Income Security Act of 1974, as amended from time to time.
2.03 Adjustment shall mean, for any Valuation Date, the aggregate
earnings, realized or unrealized appreciation, losses, expenses, and
realized or unrealized depreciation of the Fund since the immediately
preceding Valuation Date. The determination of the adjustment shall
be made by the Trustee and shall be final and binding.
2.04 Affiliate shall mean the Company and any corporation which is a
member of a controlled group of corporations (as defined in Code
Section 414(b)) which includes the Company; any trade or business
which is under common control (as defined in Code Section 414(c))
with the Company; any organization which is a member of an affiliated
service group (as defined in Code Section 414(m)) which includes the
Company; and any other entity required to be aggregated with the
Company pursuant to regulations under Code Section 414(o).
2.05 Authorized Leave of Absence shall mean any absence authorized by the
Employer under the provisions of the Collective Bargaining Agreement
in force at the time the Authorized Leave of Absence begins,
provided that all persons under similar circumstances must be
treated alike in the granting of such Authorized Leaves of Absence.
2.06 Beneficiary.
(a) Unmarried Participants. For unmarried Participants, any
individual(s), trust(s), estate(s), partnership(s), corporation(s) or
other entity or entities designated by the Participant in accordance
with procedures established by the Joint Administrative Committee to
receive any distribution to which the Participant is entitled under
the Plan in the event of the Participant's death. The Joint
Administrative Committee may require certification by a Participant
in any
- 2 -
129
<PAGE> 9
form it deems appropriate of the Participant's marital status prior
to accepting or honoring any Beneficiary designation. Any
Beneficiary designation shall be void if the Participant revokes the
designation or marries. Any Beneficiary designation shall be void to
the extent it conflicts with the terms of a qualified domestic
relations order.
If an unmarried Participant fails to designate a Beneficiary or if
the designated Beneficiary fails to survive the Participant and the
Participant has not designated a contingent Beneficiary, the
Beneficiary shall be the Participant's estate.
(b) Married Participants. A married Participant's Beneficiary
shall be his Spouse at the time of his death unless the Participant
has designated a non-spouse Beneficiary (or Beneficiaries) with the
written consent of his Spouse given in the presence of a notary
public on a form provided by the Joint Administrative Committee, or
unless the terms of a qualified domestic relations order require
payment to a non-spouse Beneficiary. A married Participant's
designation of a non-spouse Beneficiary in accordance with the
preceding sentence shall remain valid until revoked by the
Participant or until the Participant marries a Spouse who has not
consented to a designation in accordance with the preceding sentence.
For the purposes of this Section, revocation of prior Beneficiary
designations will occur when a Participant (i) files a valid
designation with the Joint Administrative Committee; or (ii) files a
signed statement with the Joint Administrative Committee evidencing
his intent to revoke any prior designations.
2.07 Board shall mean the Board of Directors of the Company.
2.08 Break in Service shall mean a period of five consecutive One-Year
Breaks in Service. "One-Year Break in Service" means any Plan Year
in which an Employee accrues 500 or fewer Hours of Employment. A
period of an Authorized Leave of Absence shall not result in a Break
in Service if employment is resumed immediately upon expiration of
such period.
2.09 Code shall mean the Internal Revenue Code of l986, as amended.
2.10 Collective Bargaining Agreement shall mean the Agreement, as amended
from time to time, which is in force between the Union and
Plasti-Line, Inc.
2.11 Company shall mean Plasti-Line, Inc. and its successors and assigns
which adopt this Plan.
2.12 Compensation shall mean (except as provided below), for any Plan
Year, all payments for services as reported on the Participant's
Federal Income Tax Withholding Statement Form W-2, including, but not
limited to, a Participant's
- 3 -
130
<PAGE> 10
regular salary (including salary deferrals under a Code Section
401(k) plan or Code Section 125 cafeteria plan but excluding all
other salary deferrals), wages and commissions paid within such Plan
Year, and overtime, but excluding contributions made by the Employer
on behalf of the Participant under this Plan or any other fringe
benefit program of the Employer, awards, perquisites, dues and
severance. Compensation shall include perquisites (other than
relocation and moving expenses) and dues. Compensation shall exclude
vacation pay paid as a lump sum and all bonuses.
In addition to the other applicable limitations set forth in the
Plan, and notwithstanding any other provisions of the Plan to the
contrary, the annual compensation of each employee taken into account
under the Plan shall not exceed the OBRA '93 annual compensation
limit. The OBRA '93 annual compensation limit is $150,000, as
adjusted by the Commissioner for increases in the cost of living in
accordance with Code Section 401(a)(17)(B). The cost-of-living
adjustment in effect for a calendar year applies to any period, not
exceeding twelve (12) months, over which compensation is determined
(determination period) beginning in such calendar year. If a
determination period consists of fewer than twelve (12) months, the
OBRA '93 annual compensation limit will be multiplied by a fraction,
the numerator of which is the number of months in the determination
period, and the denominator of which is 12. Any reference in this
Plan to the limitation under Code Section 401(a)(17) of the Code
shall mean the OBRA '93 annual compensation limit set forth in this
provision.
Notwithstanding the general definition of Compensation set forth
above, this Plan shall use a special definition of Compensation for
the purposes set forth below:
(1) See Section 10.01 for the definition of Compensation
used for complying with the requirements of Code
Section 401(a) (discrimination testing).
(2) See Section 11.05 for the definition of Compensation
used for complying with the requirements of Code
Section 414(q) (highly compensated employees).
(3) See Section 12.03(c) for the definition of
Compensation used for complying with the
requirements of Code Section 415 (annual limitations
on benefits).
2.13 Disability shall mean a physical or mental condition which totally and
presumably permanently prevents a Participant from engaging in any
substantially gainful activity, based on a medical examination by a
qualified physician or clinic satisfactory to the Joint Administrative
Committee. If requested by the Joint Administrative Committee, a
Participant must submit to a medical examination by
- 4 -
131
<PAGE> 11
a physician selected by the Joint Administrative Committee as part of
the Joint Administrative Committee's determination of the
Participant's Disability status.
2.14 Distribution shall mean payment by the Trustee to or for the benefit
of a Participant, Spouse, Beneficiary or other person entitled to
benefits as provided in this Plan.
2.15 Effective Date shall mean January 1, 1996.
2.16 Eligible Employee shall mean an Employee who has completed ninety
(90) days of Employment.
2.17 Employee shall mean any person who, on or after the Effective Date,
is covered by the Collective Bargaining Agreement and is receiving
remuneration for personal services rendered to the Employer (or would
be receiving such remuneration except for an Authorized Leave of
Absence). "Employee" shall specifically exclude the following:
(i) Supervisory Employees as defined in the
National Labor Relations Act, as amended,
(ii) Office and Clerical Employees,
(iii) Professional Employees, and
(iv) Guards and Watchmen.
2.18 Employer shall mean the Company and any Affiliate.
2.19 Employer Contribution shall mean contributions made to the Plan by
the Employer pursuant to Section 4.05.
2.20 Employer Contribution Account shall mean that portion of a
Participant's Account attributable to Employer Contributions, and the
total of the Adjustments which have been made or credited to or
deducted from a Participant's Account with respect to Employer
Contributions.
2.21 Employment shall mean the active service of an Employee with the
Employer.
2.22 Entry Date shall have the following meanings:
(a) For purposes of becoming eligible for Pre-Tax Contributions,
the initial Entry Date is February 5, 1996. Thereafter, the
Entry Date is the first day of any payroll period.
- 5 -
132
<PAGE> 12
(b) For purposes of becoming eligible for an Employer
Contribution, the first day of the payroll period coincident
with or immediately following the date the Employee first
becomes an Eligible Employee.
2.23 Family Member shall have that meaning as defined in Section 12.04(b).
2.24 Fiduciary shall mean the Employer and the Joint Administrative
Committee, but only with respect to the specific responsibilities of
each for Plan and Trust.
2.25 Former Participant shall have that meaning as defined in Section
3.04.
2.26 Fund shall mean the money and other properties held and administered
by the Trustee in accordance with the Plan.
2.27 Highly Compensated Employee shall have that meaning as defined in
Article 12.
2.28 Hour of Employment shall mean:
(a) Each hour for which a Participant is paid, or
entitled to payment, by the Employer for the performance of duties
for an Employer during the Plan Year;
(b) Each hour for which an Employee is paid, or entitled
to payment, by an Employer on account of a period of time during
which no duties are performed (irrespective of whether the employment
relationship has terminated) due to vacation, holiday, illness,
incapacity (including disability), layoff, jury duty, military duty
or leave of absence; and
(c) Each hour for which back pay irrespective of
mitigation of damages, is either awarded or agreed to by an Employer;
(d) Each hour for which an Employee is on a
Maternity/Paternity Leave. Hours credited under this paragraph shall
be credited at the rate of 10 hours per day, 45 hours per week but
shall not, in the aggregate, exceed the number of hours required to
prevent the Employee from incurring a Break in Service under Code
Section 410(a)(5) (a maximum of 501 hours) during the first Plan Year
in which a Break in Service would otherwise occur.
(e) Notwithstanding the foregoing:
(i) The same Hour of Employment shall not be
credited under both subparagraph (a) or (b) above, as the
case may be, and under subparagraph (iii) above or under
subparagraphs (a) - (c) above, as the case may be, and under
subparagraph (d) above;
- 6 -
133
<PAGE> 13
(ii) No more than 501 Hours of Employment shall
be credited under subparagraph (b) above 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 Plan Year);
(iii) An hour is not required to be credited
under subparagraph (b) above if the payment is made or due
under a plan maintained solely for the purpose of complying
with applicable workmen's compensation, unemployment
compensation or disability insurance law; and
(iv) Hours of Employment shall not be credited
for a payment which solely reimburses an Employee for
medical or medically related expenses incurred by the
Employee.
(f) For purposes of determining Hours of Employment and
for purposes of determining to which Plan Year Hours of Employment
shall be credited, the rules set forth in Department of Labor
Regulations Section 2530.200b-2(b) and (c) and other applicable
regulations issued by the Department of Labor shall be followed, and
such rules are incorporated herein by reference.
(g) The term "Maternity/Paternity Leave" shall mean the
Employee's cessation of employment with the Employer on account of
(i) the pregnancy of the Employee, (ii) birth of a child of the
Employee, (iii) placement of a child with the Employee in connection
with the adoption of the child by the Employee, or (iv) caring for a
child referred to in paragraphs (i) through (iii) immediately
following birth or placement.
2.29 Investment Fund shall mean the separate funds under the Fund which
are distinguished by their investment objectives.
2.30 Joint Administrative Committee shall mean the group of
representatives that administers the Plan. The Joint Administrative
Committee shall consist of up to six (6) members. Up to three (3)
members shall be selected by and serve at the pleasure of the Union
and up to three (3) members shall be selected by and serve at the
pleasure of the Board. All members of the Joint Administrative
Committee shall serve as such without compensation. The Board and
the Union shall have the right to remove any of its members of the
Joint Administrative Committee at any time, with or without cause.
Any Joint Administrative Committee member may resign at any time by
written notice to the Joint Administrative Committee, the Board and
the Union. If a vacancy in the Joint Administrative Committee should
occur, a successor shall be appointed by the entity for whom the
member served. The term "Joint Administrative Committee" shall be
interchangeable with "Plan Administrator."
- 7 -
134
<PAGE> 14
The Joint Administrative Committee shall appoint a Chairman and a
Secretary from among its members. All resolutions, determinations
and other actions shall be by unanimous written consent or by a
majority vote of all members of the Joint Administrative Committee
during any meeting. The Joint Administrative Committee may appoint
such agents, who need not be members of the Joint Administrative
Committee, as it deems necessary for the effective performance of its
duties, and may delegate to such agents such powers and duties,
whether ministerial or discretionary, as the Joint Administrative
Committee deems expedient or appropriate. The compensation of such
agents shall be fixed by the Joint Administrative Committee;
provided, however, that in no event shall compensation be paid if
such payment violates the provisions of Section 408 of the Act and is
not exempted from such prohibitions by Section 408 of the Act.
Each member of the Joint Administrative Committee shall have one vote
on all matters, and concurrence of a majority of the members of the
Joint Administrative Committee present and voting shall be required
for any action taken at a meeting; provided, however, that no action
may be taken at a meeting on any matter unless there is a quorum of
two (2) members of the Joint Administrative Committee appointed by
the Union ("Union Member") and two (2) members of the Joint
Administrative Committee appointed by the Company ("Company Member")
present at the meeting; and, provided further, that when the number
of members of the Joint Administrative Committee present is not equal
as between Company and Union Members, there shall be a like number of
votes cast by both Union and Company Members of the Joint
Administrative Committee.
Where the failure of the Company or Union to appoint a successor
member of the Joint Administrative Committee results in a situation
in which the number of Members of the Joint Administrative Committee
then in office constitutes less than a quorum, the remaining Members
of the Joint Administrative Committee may act on the basis of equal
representation by Company and Union Members of the Joint
Administrative Committee.
If the Joint Administrative Committee is unable to reach a resolution
of any issue or dispute, the matter shall remain open to be discussed
at future meetings of the Joint Administrative Committee until such
matter is finally resolved. However, after failing to resolve any
issue or dispute after two meetings, any three members of the Joint
Administrative Committee may vote to refer the matter to arbitration
or such other procedure as agreed to by the Joint Administrative
Committee. If the matter is referred to arbitration, the Joint
Administrative Committee shall follow the arbitration procedure set
forth in the collective bargaining agreement by and between the
Company and the Union (including the allocation of arbitration
expenses between the parties).
- 8 -
135
<PAGE> 15
2.31 Non-highly Compensated Employee shall mean an Employee of the
Employer who is neither a Highly Compensated Employee nor a Family
Member of a Highly Compensated Employee.
2.32 Normal Retirement Date shall mean the date a Participant attains age
fifty-five (55).
2.33 Participant shall mean an Employee who becomes eligible to
participate in the Plan as provided in Article 3.
2.34 Plan shall mean the Plasti-Line, Inc./Sheet Metal Workers Local Union
555 Retirement Savings Plan and Trust as set forth in this document,
together with any subsequent amendments hereto.
2.35 Plan Administrator or Administrator shall mean the Joint
Administrative Committee established to administer the Plan.
2.36 Plan Year shall mean the twelve-month period from each January 1
through the following December 31.
2.37 Pre-Tax Contribution shall mean contributions made to the Plan during
the Plan Year by the Employer, at the election of the Participant, in
lieu of cash compensation and that are made pursuant to a salary
reduction agreement. Such contributions are nonforfeitable when made
and distributable only as specified in Article 7.
2.38 Pre-Tax Contribution Account shall mean the portion of a
Participant's Account attributable to Pre-Tax Contributions, and the
total of the Adjustments which have been credited to or deducted from
a Participant's Account with respect to Pre-Tax Contributions.
2.39 Qualified, as used in "qualified plan" or "qualified trust," shall
mean a plan and trust which are entitled to the tax benefits provided
respectively by Code Sections 401 and 501, and related provisions of
the Code.
2.40 Retirement shall mean the Termination of Employment of a Participant
for reasons other than death on or after his Normal Retirement Date.
2.41 Rollover Account shall mean that portion of a Participant's Account
which is attributable to a rollover from a prior employer's plan as
permitted under Section 4.06 and the earnings generated by such
rollover amounts.
2.42 Spouse shall mean the person who was married to the Participant (in
a civil or religious ceremony recognized under the laws of the state
where the marriage was contracted) immediately prior to the date on
which payments to the
- 9 -
136
<PAGE> 16
Participant from the Plan begin. If the Participant dies prior to
the commencement of benefits, Spouse shall mean a person who is
married to a Participant (as defined in the immediately preceding
sentence) on the date of the Participant's death. A Participant
shall not be considered married to another person as a result of any
common law marriage whether or not such common law marriage is
recognized by applicable state law.
2.43 Termination of Employment shall mean that an Employee has ceased to
be employed by the Employer for any of the following reasons:
(i) voluntary resignation from the service of the
Employer;
(ii) discharge from the service of the Employer by the
Employer;
(iii) Retirement;
(iv) death; or
(v) Disability.
Notwithstanding the foregoing, an Employee who ceases to be actively
employed by reason of an Authorized Leave of Absence shall not be
considered as having a Termination of Employment.
2.44 Treasury Regulation means regulations pertaining to certain sections
of the Code as issued by the Secretary of the Treasury.
2.45 Trust shall mean the trust described in Article 14.
2.46 Trustee shall mean the Joint Administrative Committee, or any
individual of the Joint Administrative Committee (where applicable)
acting as Trustee under the provisions of Article 14.
2.47 Union shall mean the Sheet Metal Workers Local Union No. 555.
2.48 Valuation Date shall mean June 30 and December 31 of each Plan Year.
2.49 Year of Service shall mean any twelve (12) consecutive month period
in which an Employee earns at least 1,000 Hours of Employment
(including Hours of Employment both before and after the Effective
Date).
Other Rules. A defined term, such as "Retirement," will normally
govern the definitions of derivatives therefrom, such as "Retire,"
even though such derivatives are not specifically defined and even if
they are or are not initially capitalized. The masculine gender,
where appearing in the Plan, shall be deemed
- 10 -
137
<PAGE> 17
to include the feminine gender, unless the context clearly indicates
to the contrary. Singular and plural nouns and pronouns shall be
interchangeable as the factual context may allow or require. The
words "hereof," "herein," "hereunder" and other similar compounds of
the word "here" shall mean and refer to the entire Plan and not to
any particular provision or section.
- 11 -
138
<PAGE> 18
ARTICLE 3
PARTICIPATION
3.01 Commencement of Participation.
(a) All Eligible Employees who are in active Employment as of
the Effective Date shall be eligible to participate in this Plan as
of the Effective Date. However, such Eligible Employees may not
begin making Pre-Tax Contributions until February 5, 1996.
(b) An Eligible Employee not described in Paragraph (a) above
shall be eligible to commence participation in the Plan as of the
next Entry Date (provided the Participant is an Eligible Employee as
of the Entry Date).
3.02 Notice of Eligibility. The Plan Administrator shall give, or cause
to be given, to each Employee notice of his eligibility to become a
Participant in the Plan, the manner in which he may become a
Participant and a copy or summary of the Plan. In addition, the Plan
Administrator shall furnish or make available, or cause to be
furnished or made available, to each Participant, or Beneficiary
receiving benefits under the Plan, such other information or
documentation, in such a manner and at such time or times, as may be
required by law.
3.03 Election to Make Pre-Tax Contributions. Any Eligible Employee may
elect to make Pre-Tax Contributions as provided for in this Plan and
the Employer to reduce his Compensation. Such election and
authorization shall be made at such time and in such manner as the
Plan Administrator may prescribe.
3.04 Participation and Rehire.
(a) Status as a Participant. A Participant's participation in
the Plan shall continue until the Participant's Termination
of Employment. On or after his Termination of Employment,
the Employee shall be known as a "Former Participant" and
his benefits shall thereafter be governed by the provisions
of Article 7. The individual's status as a Former
Participant shall cease as of the date the individual ceases
to have any balance in his Account. If a Participant ceases
to be an Eligible Employee but does not have a Termination
of Employment, then such person shall continue to be known
as a "Participant," but shall not be eligible to make
Pre-Tax Contributions and shall not be eligible to receive
Employer Contributions.
(b) Rehire of Person who was a Participant in this Plan. An
Eligible Employee who was a Participant in this Plan at the
time of his Termination of Employment and who is
subsequently rehired by an Employer, shall be eligible to
participate in this Plan on the date coinciding with or
- 12 -
139
<PAGE> 19
immediately following the date of his rehire or, if later,
on the date he becomes an Eligible Employee.
3.05 Not Contract for Employment. Participation in the Plan shall not
give any Employee the right to be retained in the Employer's employ,
nor shall any Employee, upon dismissal from or voluntary termination
of his employment, have any right or interest in the Fund, except as
herein provided.
- 13 -
140
<PAGE> 20
ARTICLE 4
CONTRIBUTIONS
4.01 Pre-Tax Contributions.
(a) Cash or Deferred Election. Except during periods of
suspension as set forth in Section 4.03(b), effective as of
February 5, 1996, a Participant may elect to make Pre-Tax
Contributions to the Plan by means of payroll deduction. A
Participant may contribute as a Pre-Tax Contribution any whole
percentage from 1% to 15% of his Compensation or any specific
dollar amount defined on an hourly basis not to exceed 15% of
his Compensation.
(b) Joint Administrative Committee Guidelines. The Joint
Administrative Committee may establish guidelines and rules in
order to effectuate the provisions of this Section.
(c) If the Employer pays a bonus to Participants, the Joint
Administrative Committee may permit such Participants to defer
all or any part of such bonus (other than any amount required
to be withheld by any governmental authority and subject to
the other limitations set forth in this Plan).
4.02 Elections Regarding Pre-Tax Contributions.
(a) Procedure for Making Elections. Elections by a Participant to
make Pre-Tax Contributions to the Plan shall be made in the
manner prescribed by the Joint Administrative Committee and by
designating on such form the percentage of Compensation that
will be contributed as a Pre-Tax Contribution during each pay
period. The election to make Pre-Tax Contributions shall be
effective on the first Entry Date that is at least thirty days
(or such lesser number of days as determined by the Joint
Administrative Committee) after the Joint Administrative
Committee receives the Participant's election.
(b) Treatment as 401(k) Contributions. It is expressly intended
that, to the extent allowable by law, Pre-Tax Contributions
shall not be included in the gross income of the Participant
for income tax purposes and shall be deemed contributions
under a cash or deferred arrangement pursuant to Code Section
401(k).
(c) Additional Limitations of Pre-Tax Contributions. Pre-Tax
Contributions shall be subject to the limitations described in
Section 11.02 (maximum dollar contribution limit), Section
11.03 (ADP non- discrimination test) and
- 14 -
141
<PAGE> 21
Article 13 (Code Section 415 limit).
4.03 Change in Employee Contribution Election or Suspension of
Contributions.
(a) Change of Employee Election Contribution. A Participant may
increase or decrease his Contribution Election by providing
notice (in a manner prescribed by the Joint Administrative
Committee) to the Trustee. A Participant shall be permitted
to change his contribution election as of the final payroll
period in February, May, August and November of each Plan
Year. The Participant's new election shall be effective as of
the beginning of a payroll period that is at least thirty days
(or such lesser number of days as determined by the Joint
Administrative Committee) after the Joint Administrative
Committee receives the election.
(b) Suspension of Contributions. A Participant may suspend his
Pre-Tax Contributions at any time by properly notifying the
Trustee. The suspension of Pre-Tax Contributions will be
effective on the first day of a payroll period that is at
least thirty days (or such lesser number of days as determined
by the Joint Administrative Committee) after the Joint
Administrative Committee receives the Participant's election.
A Participant may resume making Pre-Tax Contributions as of an
Entry Date only after informing the Joint Administrative
Committee at least thirty days (or such lesser number of days
as determined by the Joint Administrative Committee) before
the applicable Entry Date. A Participant's Pre-Tax
Contributions shall automatically be suspended beginning on
the first payroll period that commences after the Participant
is not in receipt of Compensation, the Participant's layoff or
the Participant's Authorized Leave of Absence without pay. A
Participant who returns to active Employment upon the
conclusion of such layoff or Authorized Leave of Absence shall
have his prior election to defer Compensation automatically
reinstated and effective unless the Participant notifies the
Trustee otherwise.
(c) Other Rules.
(1) See Section 8.03 for circumstances under which a
Participant's Pre-Tax Contributions could be
suspended for a period of at least twelve (12) months
after such Participant receives a hardship
distribution.
(2) In order to satisfy the provisions of Article 11 and
Article 13, the Joint Administrative Committee may
from time to time either temporarily suspend the
Pre-Tax Contributions of Participants or reduce the
maximum permissible Pre-Tax Contribution that may be
made to the Plan by Participants.
- 15 -
142
<PAGE> 22
(3) Any reduction, increase, or suspension of Pre-Tax
Contributions described in this Article 4.03 shall be
made in such manner as the Joint Administrative
Committee may prescribe from time to time consistent
with the provisions of this Article.
4.04 Deadline for Contribution and Allocation of Pre-Tax Contributions.
Pre-Tax Contributions shall be deducted by the Employer from the
Participant's Compensation and paid to the Trustee as promptly as
possible after the end of each regular pay period but in no event
later than within the time period prescribed by ERISA.
4.05 Employer Contributions.
(a) Allocation of Employer Contribution. Pursuant to the terms of
the Collective Bargaining Agreement, the Employer will make an
Employer Contribution on behalf of its Eligible Employees who
satisfy the requirements of Section 4.05(c) ("Eligible
Participant"). The Employer Contribution shall be equal to
the contribution rate set forth in Appendix A multiplied by
the number of Hours of Service the Eligible Participant worked
during the Plan Year. For purposes of this Section 4.05, the
term "Hours of Service" shall have that meaning as set forth
in Section 4.05(d).
(b) Start-Up Contribution. The Employer shall make a one-time
Employer Contribution based on each eligible Employee's Hours
of Service (as defined below) during the period beginning
January 30, 1995 and ending December 31, 1995 (the
"Contribution Period") ("1995 Employer Contribution"). In
order to be eligible to receive the 1995 Employer
Contribution, an individual must have been on the payroll of
the Employer on January 1, 1996. The 1995 Employer
Contribution for each eligible Employee shall equal one cent
($.01) multiplied by the Employee's Hours of Service, up to a
maximum contribution of $19.07.
(c) Eligibility to Receive Contribution. The Employer
Contribution described in Section 4.05(a) shall be allocated
among the Employer Contribution Accounts of Eligible
Employees.
(d) Hour of Service for purposes of this Section 4.05 shall mean
each hour for which a Participant is paid, or entitled to
payment, by the Employer. After becoming a Participant, all
of the Participant's Hours of Service during the 90 day period
preceding the date the Eligible Employee becomes a Participant
shall count in computing the Participant's Employer
Contribution.
- 16 -
143
<PAGE> 23
4.06 Rollover Contributions.
(a) Without regard to any limitation on contributions set forth in
this Article, an Eligible Employee may, if the Joint
Administrative Committee consents (based on non-discriminatory
criteria), transfer to the Trustee during any Plan Year
additional property acceptable to the Trustee, provided such
property:
(1) was received by the Participant from a Qualified plan
maintained by a previous employer of the Participant
and qualifies as a rollover contribution within the
meaning of Code Section 402(a)(5) or
(2) was received by the Participant from an individual
retirement account or individual retirement annuity
and qualifies as a rollover contribution within the
meaning of Code Section 408(d)(3)(A)(ii).
(b) Such property shall be held by the Trustee in the Employee's
Rollover Account. All such amounts so held shall at all times
be fully vested and nonforfeitable. Such amounts shall be
distributed to the Eligible Employee after his Termination of
Employment in the manner provided in Article 7.
4.07 Forfeitures. Forfeitures shall be used first, to reduce expenses of
the Plan and Trust (to the extent permitted by ERISA and the Code) and
second, to restore amounts previously forfeited pursuant to Section
6.05. If any forfeitures remain, they shall then be allocated as an
additional Employer Contribution among the Accounts of Participants in
the same manner as set forth in Section 4.05(a).
4.08 Form and Timing of Contributions.
(a) Employer contributions shall be made in cash. Employer
contributions shall be delivered to the Trustee as soon as
administratively possible following each payroll period but no
later than the date prescribed by the Code for filing the
Employer's federal income tax return, including authorized
extensions.
(b) Except as provided in this Section 4.08, all Employer
Contributions shall be irrevocable, shall never inure to the
benefit of any Employer, shall be held for the exclusive
purpose of providing benefits to Participants and their
Beneficiaries (and contingently for defraying reasonable
expenses of administering the Plan), and shall be held and
distributed by the Trustees only in accordance with this Plan.
- 17 -
144
<PAGE> 24
(c) Upon an Employer's request and to the extent permitted by the
Code and other applicable laws and regulations thereunder, a
contribution which was made by a mistake in fact, or
conditioned upon the initial qualification of the Plan under
Code Section 401(a), or upon the deductibility of the
contribution under Code Section 404 shall be returned to the
Employer within one year after the payment of the
contribution, the denial of the Plan's initial qualification,
or the disallowance of the deduction (to the extent
disallowed), whichever is applicable. All contributions to
this Plan are expressly conditioned on the deductibility of
such contributions under Code Section 404 and on the initial
qualification of the Plan.
- 18 -
145
<PAGE> 25
ARTICLE 5
ACCOUNTS AND ALLOCATIONS
5.01 Participant Accounts.
(a) Individual Account Plan. This Plan is an "individual account
plan," as that term is used in ERISA. A separate Account
shall be maintained for each Participant, Former Participant
or Beneficiary, so long as he has an interest in the Fund.
(b) Sub-Accounts. Each Account shall be divided (as appropriate)
into the following sub-accounts:
(1) the Pre-Tax Contribution Account, which shall reflect
Pre-Tax Contributions contributed to this Plan and
any Adjustments thereto.
(2) the Employer Contribution Account, which shall
reflect the value of all Employer Contributions
contributed to this Plan and any Adjustments thereto.
(3) the Rollover Account, which shall reflect the value
of all investments derived from the Participant's
Rollover Contributions under this Plan and any
Adjustments thereto.
In addition, the Joint Administrative Committee may direct the
Trustee to divide such sub-accounts into such additional
sub-portions as the Joint Administrative Committee deems to be
necessary or advisable under the circumstances or to establish
other accounts or sub-accounts as needed.
(c) Value of Account as of Valuation Date. As of each Valuation
Date, each Participant's Account shall equal:
(1) his total Account as determined on the immediately
preceding Valuation Date, plus
(2) one-half the total of the Pre-Tax Contributions,
Employer Contributions and Rollover Contributions
added to his Account since the immediately preceding
Valuation Date, minus
(3) his Distributions, if any, since the immediately
preceding Valuation Date, plus or minus
- 19 -
146
<PAGE> 26
(4) his allocable share of Adjustments.
5.02 Valuation.
The Adjustment shall be calculated as of each Valuation Date and shall
be allocated to each Account in the proportion that each Account bears
to the total of all Accounts. For this purpose, a Participant's
Account shall be his Account balance as of the preceding Valuation
Date increased by fifty percent of any Pre-Tax Contributions allocated
to the Participant's Account since the preceding Valuation Date and
minus any Distribution made from the Participant's Account since the
preceding Valuation Date. The Participant's Account shall be further
adjusted, pursuant to the rules established by the Joint
Administrative Committee, to reflect any Rollover Contributions
allocated to the Participant's Account since the preceding Valuation
Date, taking into account the timing of such contributions during the
Plan Year.
5.03 Plan Expenses. The Joint Administrative Committee may direct that
expenses attributable to general Plan administration be allocated
among the Accounts of all Participants in proportion to their Account
balances. Expenses charged by the Trustee on a per capita basis may
be charged to the Participant's Accounts on a per capita basis.
5.04 Directed Investments.
[Note: This Section 5.04 shall not be effective until a resolution is
passed by the Joint Administrative Committee making this Section 5.04
effective.] A Participant who has attained age 50 as of a January 1
may request the Trustee to transfer all or a portion of the
Participant's Account to a common segregated account established by
the Trustee ("Segregated Account"). The Segregated Account shall have
as its objective the preservation of capital and income generation
with such assets as determined by the Trustee in its sole discretion.
A Participant eligible to make such a request shall do so by filing
notice in writing with the Joint Administrative Committee at least 30
days prior to the applicable January 1 using a form provided by the
Joint Administrative Committee. The form shall designate the percent
of the Participant's Account that should be transferred to the
Segregated Account and what percentage of the Participant's future
allocations of Employer Contributions that should be allocated to the
Segregated Account. Separate records shall be maintained with respect
to the Segregated Account and the Participant's Account shall be
credited with the actual income derived from the Segregated Account
and may be reduced by expenses attributable to such Segregated
Account.
5.05 Errors. Where an error or omission is discovered in any Participant's
Account, the Joint Administrative Committee shall make appropriate
corrective adjustments as of the end of the Plan Year in which the
error or omission is discovered. If it is not practical to correct
the error retroactively, then the Joint Administrative
- 20 -
147
<PAGE> 27
Committee shall take such action in its sole discretion as may be
necessary to make such corrective adjustments, provided that any such
actions shall treat similarly situated Participants alike and shall
not discriminate in favor of Highly Compensated Employees.
- 21 -
148
<PAGE> 28
ARTICLE 6
VESTING
6.01 Retirement. Upon a Participant's Retirement, all amounts credited to
the Participant's Account shall become fully vested and nonforfeitable
and shall be distributed in accordance with Section 7.
6.02 Death or Disability. In the event that a Participant experiences a
Termination of Employment because of death or Disability, all amounts
credited to the Participant's Account shall become fully vested and
nonforfeitable and shall be distributed in accordance with Section 7.
6.03 Termination of Employment. Upon a Participant's Termination of
Employment for any reason other than Retirement, Disability or death,
the Participant shall be entitled to the vested portion of his
Account. That portion of the Participant's Account which is not
vested upon Termination of Employment shall be forfeited.
6.04 Vesting Schedule. The vested portion of any Participant's Account
shall be determined as follows:
(i) A Participant who ceases to be an Employee of the
Employer shall always be 100% vested in his Pre-Tax
Contribution Account and Rollover Account.
(ii) A Participant who ceases to be an Employee of the
Employer shall have a vested interest in his Employer
Contribution Account as follows:
<TABLE>
<CAPTION>
Years of Service
As of Date Vested
of Termination Percentage
-------------- ----------
<S> <C>
Less than 5 years 0%
5 years or more 100%
</TABLE>
6.05 Break in Service.
(a) No Distribution of Account Prior to Break In Service. A
Participant who incurs a Termination of Employment but who
does not receive a Distribution of his vested Account prior to
incurring a Break in Service shall, upon incurring the Break
in Service, forfeit the non-vested portion of his Account. If
the terminated Participant resumes Employment with the
Employer prior to incurring a Break in Service, then the
Participant's entire
- 22 -
149
<PAGE> 29
Account, unreduced by any forfeiture, shall become his
beginning Account on the date he resumes participation in the
Plan.
(b) Distribution of Vested Account Prior to Break in Service. A
Participant who incurs a Termination of Employment and
receives a Distribution of his entire vested Account prior to
incurring a Break in Service, shall, upon such Distribution,
forfeit the non-vested portion of his Account. A Participant
who is not vested in his Account shall be deemed to have
received a Distribution of his entire vested Account upon his
Termination of Employment, and the Participant's non-vested
Account shall be immediately forfeited.
(c) Repayment of Account; Restoration of Non-Vested Account.
Except as provided below, a Participant who is rehired by the
Employer shall have the right to repay to the Plan the portion
of the Participant's Account which was previously distributed
to him. In the event the Participant repays the entire
Distribution he received from the Plan, the Employer shall
restore the non-vested portion of the Participant's Account.
A Participant's Account shall first be restored, to the extent
possible, out of forfeitures under the Plan in the Plan Year
in which the Participant repays his prior Distribution. To
the extent such forfeitures are insufficient to restore the
Participant's Account, restoration shall be made from Employer
Contributions. A Participant who was deemed to have received
a Distribution of his vested Account (see subsection (b)
above) shall be deemed to have repaid such vested Account if
such Participant is rehired before incurring a Break in
Service.
(d) Restrictions of Repayment Account. Notwithstanding anything
to the contrary in this Plan, a Participant shall not have the
right to repay to the Plan the portion of his Account which
was previously distributed to him after any of the following
events: (i) the Participant incurs a Break in Service before
returning to Employment, (ii) the Participant fails to repay
the prior Distribution within five years after the Participant
is re-employed by the Employer, or (iii) the Participant
received a Distribution of his entire Account balance at the
time of such earlier Distribution.
- 23 -
150
<PAGE> 30
ARTICLE 7
DISTRIBUTIONS
7.01 Termination of Employment. Except as provided below, the payment of a
Participant's or Beneficiary's benefits under this Plan shall commence
on a date selected by the Participant or Beneficiary, provided the
benefit commencement date selected is administratively feasible and
occurs (a) after the first Valuation Date following the Participant's
Termination of Employment and (b) after the Participant or Beneficiary
properly completes and files a benefit claim form with the Joint
Administrative Committee.
7.02 Death. If a Participant has a Termination of Employment on account of
death, the Participant's Account shall be distributed no later than
ninety days after the Valuation Date following the Participant's
death, unless the particular facts and circumstances require a longer
waiting period.
7.03 Consent of Participant. Notwithstanding the foregoing, under the
following circumstances the Joint Administrative Committee shall
direct the Trustee to distribute a Participant's vested Account
regardless of whether the Participant or Beneficiary consents to such
distribution:
(i) If the Participant incurs a Termination of Employment
with a vested Account balance of $3,500 or less,
benefits will commence within 60 days after the end
of the Plan Year coincident with or immediately
following the Participant's Termination of
Employment;
(ii) Once the Participant attains age 62, benefits shall
commence within 60 days after the end of the Plan
Year coincident with or immediately following the
later of (A) the date the Participant attains age 62
or (B) the Participant's Termination of Employment;
or
(iii) If a distribution is required under Section 7.10, the
Participant's Account shall be distributed as
provided in such Section.
7.04 Designation of a Beneficiary. See Section 2.06.
7.05 Hardship Withdrawals. Hardship withdrawals (see Article 8) shall
commence no later than ninety (90) days after such request is approved
by the Joint Administrative Committee.
- 24 -
151
<PAGE> 31
7.06 Joint Administrative Committee Guidelines. The Joint Administrative
Committee may establish, for administrative purposes, uniform and
nondiscriminatory guidelines concerning the commencement of benefits.
7.07 Method of Distribution. The sole method of distribution of a
Participant's Account (regardless of whether such distribution is made
by reason of withdrawal or Termination of Employment) shall be payment
in a single lump sum. Distributions shall be made in cash. No
distribution shall be made in the form of an annuity.
7.08 Payment to Minors and Incapacitated Persons. In the event that any
amount is payable to a minor or to any person who, in the judgment of
the Joint Administrative Committee, is incapable of making proper
disposition thereof, such payment shall be made for the benefit of
such minor or such person in any of the following ways as the Joint
Administrative Committee, in its sole discretion, shall determine:
(a) by payment to the legal representative of such minor or such
person;
(b) by payment directly to such minor or such person; or
(c) by payment in discharge of bills incurred by or for the
benefit of such minor or such person.
The Trustee shall make such payments without the necessary
intervention of any guardian or like fiduciary, and without any
obligation to require bond or to see to the further application of
such payment. Any payment so made shall be in complete discharge of
the Plan's obligation to the Participant and his Beneficiaries.
7.09 Application for Benefits. The Joint Administrative Committee may
require a Participant or Beneficiary to complete and file certain
forms as a condition precedent to the payment of benefits. The Joint
Administrative Committee may rely upon all such information given to
it, including the Participant's current mailing address. It is the
responsibility of all persons interested in distributions from the
Fund to keep the Joint Administrative Committee informed of their
current mailing addresses.
7.10 Special Distribution Rules.
(a) To the extent that the distribution rules described in this
Section provide exceptions to or limitations upon distribution
rules stated elsewhere in this Plan, the distribution rules
stated in this Section shall take precedence over such
conflicting rules. However, under no circumstances shall the
rules stated in this Section be deemed to provide distribution
rights to Participants or their Beneficiaries which are more
expansive or greater than the distribution rights stated
elsewhere in this Plan.
- 25 -
152
<PAGE> 32
(b) In no event may the distribution of a Participant's Account
commence later than April 1 following the calendar year in
which the Participant attains age 70-1/2 (the "required
beginning date"). However, if a Participant attained age
70-1/2 prior to January 1, 1988 and is not a 5% owner of an
Employer (as defined in Code Section 401(a)(9) and the
Treasury Regulations thereunder), such Participant's Account
shall commence to be distributed no later than April 1
following the calendar year in which incurs his Termination of
Employment. The entire interest of each Participant shall be
distributed, beginning not later than the required beginning
date, in a single lump sum.
(d) If a Participant dies before the required beginning date, the
Participant's vested Account must be distributed in a lump sum
within five years after the death of the Participant.
(e) Notwithstanding anything to the contrary herein, distributions
under the Plan will comply with Treasury Regulations issued
under Code Section 401(a)(9) and any other provisions
reflecting Code Section 401(a)(9) as prescribed by the
Commissioner of the Internal Revenue Service.
7.11 Distributions Pursuant to Qualified Domestic Relations Orders.
Notwithstanding anything to the contrary in this Plan, a "qualified
domestic relations order," as defined in Code Section 414(p), may
provide that any amount to be distributed to an alternate payee may be
distributed immediately, even though the Participant is not yet
entitled to a distribution under the Plan. The intent of this Section
is to provide for the distribution of benefits to an alternate payee
as permitted by Treasury Regulation 1.401(a)-13(g)(3).
7.12 Direct Rollovers.
(a) In General. 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.
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 (i) any
distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for
the life (or life
- 26 -
153
<PAGE> 33
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; (ii) any distribution to the extent such distribution
is required under Code Section 401(a)(9); and (iii) the
portion of any distribution that is not includible in gross
income (determined without regard to the exclusion for net
unrealized appreciation with respect to employer securities).
Eligible Retirement Plan. An Eligible Retirement Plan is an
individual retirement account described in Code Section
408(a), an individual retirement annuity described in Code
Section 408(b), an annuity plan described in Code Section
403(a), or a Qualified trust described in Code Section 401(a),
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.
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 an alternate payee under a
qualified domestic relations order, as defined in Code Section
414(p), are Distributees with regard to the interest of the
spouse or former spouse.
Direct Rollover. A Direct Rollover is a payment by the Plan
to the Eligible Retirement Plan specified by the Distributee.
- 27 -
154
<PAGE> 34
ARTICLE 8
IN-SERVICE WITHDRAWALS
8.01 Hardship Withdrawals.
(a) In General. Any Participant may request that the Joint
Administrative Committee distribute to him part or all of his
Pre-Tax Contribution Account (other than earnings on the
Participant's Pre-Tax Contribution Account as provided below).
(b) No Distribution of Earnings. Income or gain that is allocated
to a Participant's Pre-Tax Contribution Account may not be
distributed in a hardship withdrawal.
8.02 Definition of Hardship. Hardship shall mean an immediate and heavy
financial need experienced by reason of:
(a) expenses of any accident to or sickness of such Participant,
his Spouse or his dependents or expenses necessary to provide
medical care for such Participant, his Spouse or his
dependents;
(b) purchase of a primary residence for such Participant;
(c) payment of tuition and related educational fees (including
room and board) for the next twelve months of post-secondary
education for the Participant, his Spouse, children or
dependents;
(d) the need to prevent the eviction of the Participant from his
principal residence or foreclosure on the Participant's
principal residence; or
(e) other financial hardships as permitted by Treasury Regulations
or other regulatory or judicial authority and approved by the
Joint Administrative Committee.
8.03 Maximum Hardship Distribution. A hardship distribution cannot exceed
the amount required to meet the immediate financial need created by
the hardship (after taking into account applicable federal, state, or
local income taxes and penalties) and not reasonably available from
other resources of the Participant. In order to ensure compliance
with this requirement, the Joint Administrative Committee may require
the Participant to satisfy any or all of the provisions described in
(a), (b), or (c) below as a condition precedent to the Participant
receiving a hardship distribution:
- 28 -
155
<PAGE> 35
(a) No Other Sources Available. Certification by the Participant
on a form provided by the Joint Administrative Committee for
such purpose that the financial need cannot be relieved (1)
through reimbursement or payment by insurance; (2) by
reasonable liquidation of the Participant's assets; (3) by
ceasing Pre-Tax Contributions under the Plan for the remainder
of the Plan Year; (4) by in- service distributions under any
other plan maintained by the Employer; or (5) by borrowing
from commercial lenders on reasonable commercial terms.
(b) Suspension of Future Contributions. The Participant must
agree to the following limitations and restrictions:
(1) The Participant's Pre-Tax Contributions shall
automatically be suspended beginning on the first
payroll period that commences after such Participant
requests and receives a hardship distribution. Such
Participant may resume making Pre-Tax Contributions
only on the first day of a payroll period that begins
at least twelve (12) months after the effective date
of such suspension and only after informing the
Trustee at least thirty (30) days (or such lesser
time as specified by the Joint Administrative
Committee) prior to the date on which the Pre-Tax
Contributions are to resume.
(2) The maximum Pre-Tax Contribution the Participant may
make for the calendar year following his hardship
distribution shall be reduced by the amount of
Pre-Tax Contributions made by the Participant during
the calendar year in which he received his hardship
distribution.
(3) The Participant shall be prohibited under a legally
enforceable agreement from making an employee
contribution to any other plan maintained by the
Employer for at least twelve (12) months after the
receipt of the hardship distribution. For this
purpose, the phrase "any other plan" includes all
Qualified and nonqualified plans of deferred
compensation, stock option plans and stock purchase
plans. It does not include a health or welfare plan
including one that is part of a Code Section 125
cafeteria plan.
(c) Other. Any other condition or method approved by the Internal
Revenue Service.
8.04 Procedure to Request Hardship. The request to receive a hardship
distribution shall be made on such forms and following such procedures
as the Joint Administrative Committee may prescribe from time to time.
Under no circumstances shall the Joint Administrative Committee permit
a Participant to repay to the Plan the amount of any withdrawal by a
Participant under this Section.
- 29 -
156
<PAGE> 36
ARTICLE 9
ADMINISTRATION OF THE PLAN
9.01 Named Fiduciaries. The Company and the Joint Administrative Committee
are the named Fiduciaries of the Plan and shall have the authority to
control and manage the operation and administration of the Plan.
These Fiduciaries shall have only the powers and duties expressly
allocated to them in the Plan and shall have no other powers and
duties in respect of the Plan; provided, however, that if a power or
responsibility is not expressly allocated to a specific named
Fiduciary, the power or responsibility shall be that of the Company.
No Fiduciary shall have any liability for, or responsibility to
inquire into, the acts and omissions of the other Fiduciary in the
exercise of powers or the discharge of responsibilities assigned to
such other Fiduciary under this Plan.
9.02 Trustee. The Joint Administrative Committee acts as Trustee for the
Trust and shall exercise all of the powers and duties assigned in
Article 14.
9.03 Administrative Duties of the Joint Administrative Committee.
(a) The Joint Administrative Committee shall have complete control
of the administration of the Plan with all powers necessary to
enable it to properly carry out the provisions of the Plan.
In addition to all implied powers and responsibilities
necessary to carry out the objectives of the Plan and to
comply with the requirements of the Act, the Joint
Administrative Committee shall have the following specific
powers and responsibilities:
(1) to construe the Plan and to determine all questions
arising in the administration, interpretation and
operation of the Plan;
(2) to amend any or all of the provisions of the Plan in
whole or in part pursuant to the procedures provided
hereunder;
(3) to decide all questions relating to the eligibility
of Employees to participate in the benefits of the
Plan;
(4) to determine the benefits of the Plan to which any
Participant, Beneficiary or other person may be
entitled;
(5) to keep records of all acts and determinations of the
Joint Administrative Committee, and to keep all such
records, books of accounts, data and other documents
as may be necessary for the proper administration of
the Plan;
- 30 -
157
<PAGE> 37
(6) to prepare and distribute to all Plan Participants
and Beneficiaries information concerning the Plan and
their rights under the Plan, including, but not
limited to, all information which is required to be
distributed by the Act, the regulations thereunder,
or by any other applicable law;
(7) to file with the Secretary of Labor such reports and
additional documents as may be required by the Act
and regulations issued thereunder, including, but not
limited to, summary plan description, modifications
and changes, annual reports, terminal reports and
supplementary reports;
(8) to file with the Secretary of the Treasury all
reports and information required to be filed by the
Internal Revenue Code, the Act and regulations issued
under each; and
(9) to do all things necessary to operate and administer
the Plan in accordance with its provisions and in
compliance with applicable provisions of federal law.
(b) The Joint Administrative Committee may delegate to members of
the Employer's management the duty to perform day-to-day
administration of the Plan.
(c) To enable the Joint Administrative Committee to perform its
functions, the Employer shall supply full and timely
information of all matters relating to the compensation and
length of service of all Participants, their retirement, death
or other cause of , and such other pertinent facts as the
Joint Administrative Committee may require. The Joint
Administrative Committee and the Employer shall be entitled to
rely upon all certificates and reports made by a Certified
Public Accountant selected or approved by the Employer. The
Joint Administrative Committee, the Employer and its officers
shall be fully protected in respect of any action suffered by
them in good faith in reliance upon the advice or opinion of
any accountant or attorney, and all action so taken or
suffered shall be conclusive upon each of them and upon all
other persons interested in the Plan.
- 31 -
158
<PAGE> 38
9.04 Standard of Fiduciary Duty. Any Fiduciary, or any person designated
by a Fiduciary to carry out fiduciary responsibilities with respect to
the Plan, shall discharge his duties solely in the interests of the
Participants and Beneficiaries for the exclusive purpose of providing
them with benefits and defraying the reasonable expenses of
administering the Plan. Any Fiduciary shall discharge his duties with
the care, skill, prudence and diligence under the circumstances then
prevailing that a prudent man acting in a like capacity and familiar
with such matter would use in the conduct of an enterprise of a like
character and with like aims. Any Fiduciary shall discharge his
duties in accordance with the documents and instruments governing the
Plan insofar as such documents and instruments are consistent with the
provisions of the Act. Notwithstanding any other provisions of the
Plan, no Fiduciary shall be authorized to engage in any transaction
which is prohibited by Sections 408 and 2003(a) of the Act or Code
Section 4975 in the performance of its duties hereunder.
9.05 Claims Procedure. Any Participant, Former Participant, Beneficiary,
or Spouse or authorized representative thereof (hereinafter referred
to as "Claimant"), may file a claim for benefits under the Plan by
submitting to the Joint Administrative Committee a written statement
describing the nature of the claim and requesting a determination of
its validity under the terms of the Plan. Within ninety (90) days
after the date such claim is received by the Joint Administrative
Committee, it shall issue a ruling with respect to the claim.
If special circumstances require an extension of time for processing,
the Joint Administrative Committee shall send the Claimant written
notice of the extension prior to the termination of the 90-day period.
In no case, however, shall the extension of time delay the Joint
Administrative Committee's decision on such appeal request beyond
one-hundred eighty (180) days following receipt of the actual request.
If the claim is wholly or partially denied, written notice shall be
furnished to the Claimant, which notice shall set forth in a manner
calculated to be understood by the Claimant:
(1) the specific reason or reasons for denial;
(2) specific reference to pertinent Plan provisions on which the
denial is based;
(3) a description of any additional material or information
necessary for the Claimant to perfect the claim and an
explanation of why such material or information is necessary;
and
(4) an explanation of the claims review procedures.
- 32 -
159
<PAGE> 39
Any Claimant whose claim for benefits has been denied, may appeal such
denial by resubmitting to the Joint Administrative Committee a written
statement requesting a further review of the decision within sixty
(60) days of the date the Claimant receives notice of such denial.
Such statement shall set forth the reasons supporting the claim, the
reasons such claim should not have been denied, and any other issues
or comments which the Claimant deems appropriate with respect to the
claim. The Claimant must seek further review within sixty (60) days
or the Claimant will lose his right to appeal.
If the Claimant shall request in writing, the Joint Administrative
Committee shall make copies of the Plan documents pertinent to his
claim available for examination of the Claimant.
Within sixty (60) days after the request for further review is
received, the Joint Administrative Committee shall review its
determination of benefits and the reasons therefor and notify the
Claimant in writing of its final decision.
If special circumstances require an extension of time for processing,
the Joint Administrative Committee shall send the Claimant written
notice of the extension prior to the termination of the 60-day period.
In no case, however, shall the extension of time delay the Joint
Administrative Committee's decision on such appeal request beyond
one-hundred twenty (120) days following receipt of the actual request.
Such written notice shall include specific reasons for the decision,
written in a manner calculated to be understood by the Claimant, with
specific references to the pertinent Plan provisions on which the
decision is based. The Joint Administrative Committee's decision of
appeal may be reviewed by the Board, which shall have the right to
overrule the Joint Administrative Committee.
9.06 Indemnification of Joint Administrative Committee. To the extent
permitted under the Act, the Plan shall indemnify the Joint
Administrative Committee against any cost or liability which they may
incur in the course of administering the Plan and executing the duties
assigned pursuant to the Plan. The Employer shall indemnify the Joint
Administrative Committee and its members against any personal
liability or cost not provided for in the preceding sentence which
they may incur as a result of any act or omission in relation to the
Plan or its Participants except when the same is due to gross
negligence or willful misconduct of a member of the Joint
Administrative Committee. The Employer has the option but not the
obligation to purchase fiduciary liability insurance to insure its
obligation under this Section.
- 33 -
160
<PAGE> 40
ARTICLE 10
AMENDMENT AND TERMINATION
10.01 Right to Amend. The Company and the Union intend for the Plan to be
permanent so long as the Company exists; however, the Company and the
Union reserve the right to modify, alter, or amend this Plan, from
time to time, to any extent that it may deem advisable, to insure the
continued qualification of the Plan under Code Sections 40l(a) and
401(k) or to insure compliance with the Act. The Joint Administrative
Committee shall have the right to modify, alter, or amend the Plan in
whole or in part for any reason the Joint Administrative Committee
deems advisable; provided, however, that the Plan shall not be amended
in any manner which will:
(a) permit any part of the Fund (other than such part as is
required to pay taxes and administrative expenses) to be used
for or diverted to purposes other than for the exclusive
benefit of the Participants or their Beneficiaries; or
(b) cause or permit any portion of the funds to revert to or
become the property of the Employer.
Furthermore, the Company, without the consent of any party, may amend
the Plan to the extent necessary to maintain the qualified status of
the Plan under Code Section 401(a).
10.02 Termination and Discontinuance of Contributions. While the Company
and the Union are legally or voluntarily subject to the terms of a
collective bargaining agreement by and between the Company and the
Union (whether or not such collective bargaining agreement has
expired), only the Joint Administrative Committee may terminate this
Plan. At any other time, the Company shall have the right at any
time to terminate this Plan. Any termination of the Plan is referred
to as "Plan Termination." Upon Plan Termination, the Trustee shall
first pay any expenses properly chargeable against the Fund. The
Trustee shall then distribute all amounts held in the Fund to the
Participants and others entitled to Distributions in proportion to the
Accounts of such Participants and other Distributees as of the date of
such Termination. In the event that this Plan is partially
terminated, then the provisions of this Section 10.02 shall apply, but
solely with respect to the Employees affected by the partial
termination. The termination of sponsorship of the Plan by any
Affiliate shall not affect the sponsorship of the Plan by the Company
or any other Affiliate.
- 34 -
161
<PAGE> 41
10.03 IRS Approval of Termination. Notwithstanding Section 10.02, the
Trustee shall not be required to make any Distribution from this Plan
in the event of complete or partial termination until the authorized
officials of the Internal Revenue Service shall have determined that
there will be no liability against the Trustee by reason of such
Distribution.
- 35 -
162
<PAGE> 42
ARTICLE 11
SPECIAL DISCRIMINATION RULES
11.01 In General
Definitions.
Actual Deferral Percentage or ADP shall mean the ratio (expressed as
a percentage) of (i) the sum of Pre-Tax Contributions on behalf of a
Participant for the Plan Year (excluding any Excess Deferrals by a
Non-highly Compensated Employee) to (ii) the Participant's
Compensation for the Plan Year.
Average Actual Deferral Percentage shall mean the average (expressed
as a percentage) of the Actual Deferral Percentages of the
Participants in a group. The percentage shall be rounded to the
nearest one-hundredth of 1% (four decimal places).
Compensation for purposes of this Article 11 shall be that definition
selected by the Joint Administrative Committee that satisfies the
requirements of Code Sections 414(s) and 401(a)(17). Such definition
may change from year to year but must apply uniformly among all
Eligible Employees being tested under the Plan for a given Plan Year
and among all Employees being tested under any other plan that is
aggregated with this Plan during the Plan Year. If the Joint
Administrative Committee fails to select a definition of Compensation
for purposes of this Article 11, Compensation shall have the same
meaning as defined in Article 2.
Excess Deferrals shall have that meaning as defined in Section 11.02.
Excess ADP Deferrals shall have that meaning as defined in Section
11.05.
Family Member shall have that meaning as defined in Article 12.
Highly Compensated Employee shall have that meaning as defined in
Article 12.
Non-highly Compensated Employee shall have that meaning as defined
in Article 12.
Participant. For purposes of this Article 11, a Participant shall
mean any Eligible Employee who is eligible to make a Pre-Tax
Contribution, including (i) an Eligible Employee whose right to make
Pre-Tax Contribution has been suspended because of an election not to
participate or a hardship distribution and (ii) an Eligible Employee
who is unable to make a Pre-Tax Contribution because his Compensation
is less than a stated amount.
- 36 -
163
<PAGE> 43
11.02 $7,000 Limit on Pre-Tax Contributions.
(a) Notwithstanding any other provision of the Plan to the
contrary, the aggregate of a Participant's Pre-Tax
Contributions during a calendar year may not exceed $7,000
(or such greater amount as established by the Secretary of
the Treasury pursuant to Code Section 402(g)(5)). Any
Pre-Tax Contributions in excess of the foregoing limits
("Excess Deferral"), plus any income and minus any loss
allocable thereto, may be distributed to the applicable
Participant no later than April 15 following the Plan Year
in which the Pre-Tax Contributions were made.
(b) Any Participant who has an Excess Deferral during a calendar
year may receive a distribution of the Excess Deferral
during such calendar year plus any income or minus any loss
allocable thereto, provided (1) the Participant requests the
distribution of the Excess Deferral, (2) the distribution
occurs after the date the Excess Deferral arose, and (3) the
Joint Administrative Committee designates the distribution
as a distribution of an Excess Deferral.
(c) If a Participant makes a Pre-Tax Contribution under this
Plan and in the same calendar year makes a contribution to a
Code Section 401(k) plan containing a cash or deferred
arrangement (other than this Plan), a Code Section 408(k)
plan (simplified employee pension plan) or a Code Section
403(b) plan (tax sheltered annuity) and, after the return of
any Excess Deferral pursuant to Section 10.02(a) and (b),
the aggregate of all such Pre-Tax Contributions and
contributions exceed the limitations contained in Code
Section 402(g), then such Participant may request that the
Joint Administrative Committee return all or a portion of
the Participant's Pre-Tax Contributions for the calendar
year plus any income and minus any loss allocable thereto.
The amount by which such Pre-Tax Contributions exceed the
Code Section 402(g) limitations will also be known as an
Excess Deferral.
(d) Any request for a return of Pre-Tax Contributions arising
out of contributions to a plan described in Section 11.02(c)
above and which is maintained by an entity other than the
Employer must:
(i) be made in writing;
(ii) be submitted to the Joint Administrative Committee
not later than the March 1 following the Plan Year
in which the Excess Deferral arose;
- 37 -
164
<PAGE> 44
(iii) specify the amount of the Excess Deferral;
(iv) contain a statement that if the Excess Deferral is
not distributed, it will, when added to amount
deferred under other plans or arrangements described
in Code Sections 401(k), 408(k),or 403(b), exceed
the limit imposed on the Participant by Code Section
402(g) for the year in which the Excess Deferral
occurred.
In the event an Excess Deferral arises out of contributions
to a plan (including this Plan) described in Section
11.02(c) above which is maintained by the Employer, the
Participant making the Excess Deferral shall be deemed to
have requested a return of the Excess Deferral.
(e) Pre-Tax Contributions may only be returned to the extent
necessary to eliminate a Participant's Excess Deferral.
Excess Deferrals shall not be treated as Annual Additions
under the Plan. In no event shall the returned Excess
Deferrals for a particular calendar year exceed the
Participant's aggregate Pre-Tax Contributions for such
calendar year.
(f) The income or loss allocable to a Pre-Tax Contribution that
is returned to a Participant pursuant to Sections 11.02(a)
or (c) shall be determined by multiplying the income or loss
allocable to the Participant's Account for the calendar year
in which the Excess Deferral arose by a fraction. The
numerator of the fraction is the Excess Deferral. The
denominator of the fraction is the value of the
Participant's Account balance on the last day of the
calendar year in which the Excess Deferral arose reduced by
any income allocated to the Participant's Account for such
calendar year and increased by any loss allocated to the
Participant's Account for such calendar year.
(g) The income or loss allocable to an Excess Deferral that is
returned to a Participant pursuant to Section 11.02(b) shall
be determined using any reasonable method adopted by the
Plan to measure income earned or loss incurred during the
Plan Year or any other method authorized by the Internal
Revenue Service to compute the income earned or loss
incurred for the period commencing on January 1 of the
calendar year in which the Pre-Tax Contribution was made and
ending on the date the Excess Deferral was distributed.
11.03 Average Actual Deferral Percentage.
(a) The Average Actual Deferral Percentage for Highly
Compensated Employees for each Plan Year and the Average
Actual Deferral Percentage for Non-highly Compensated
Employees for the same Plan Year must satisfy one of the
following tests:
- 38 -
165
<PAGE> 45
(i) the Average Actual Deferral Percentage for
Participants who are Highly Compensated Employees
for the Plan Year shall not exceed the Average
Actual Deferral Percentage for Participants who are
Non-highly Compensated Employees for the Plan Year
multiplied by 1.25; or
(ii) the excess of the Average Actual Deferral Percentage
for Participants who are Highly Compensated
Employees for the Plan Year over the Average Actual
Deferral Percentage for Participants who are
Non-highly Compensated Employees for the Plan Year
is not more than two percentage points, and the
Average Actual Deferral Percentage for Participants
who are Highly Compensated employees is not more
than the Average Actual Deferral Percentage for
Participants who are Non-highly Compensated
Employees multiplied by two.
(b) If at the end of the Plan Year, the Plan does not comply
with the provisions of Section 11.03(a), the Employer may
distribute Pre-Tax Contributions to certain Highly
Compensated Employees as provided in Section 11.05, except
as otherwise provided in the Code or Treasury Regulations.
11.04 Special Rules For Determining Average Actual Deferral Percentage.
(a) The Actual Deferral Percentage for any Highly Compensated
Employee for the Plan Year who is eligible to have Pre-Tax
Contributions allocated to his Account under two or more
arrangements described in Code Section 401(k) that are
maintained by an Employer or its Affiliates shall be
determined as if such Pre-Tax Contributions were made under
a single arrangement.
(b) If two or more plans maintained by the Employer or its
Affiliates are treated as one plan for purposes of the
nondiscrimination requirements of Code Section 401(a)(4) or
the coverage requirements of Code Section 410(b) (other than
for purposes of the average benefits test), all Pre-Tax
Contributions that are made pursuant to those plans shall be
treated as having been made pursuant to one plan.
(c) For purposes of determining the ADP of a Highly Compensated
Employee who is either a 5% or more owner of an Employer or
one of the ten highest paid Highly Compensated Employees
during the Plan Year, the Pre-Tax Contributions and
Compensation of such Participant shall include the Pre-Tax
Contributions and Compensation of his Family Members. Any
person who is a Family Member shall not be treated as a
- 39 -
166
<PAGE> 46
separate Employee in determining the Average Actual Deferral
Percentage for either Non-highly Compensated Employees or
for Highly Compensated Employees.
(d) The determination and treatment of the Pre-Tax Contributions
and Actual Deferral Percentage of any Participant shall be
in accordance with such other requirements as may be
prescribed from time to time in Treasury Regulations.
11.05 Distribution of Excess ADP Deferrals.
(a) Pre-Tax Contributions exceeding the limitations of Section
11.03(a) ("Excess ADP Deferrals") and any income or loss
allocable to such Excess ADP Deferrals shall be designated
by the Joint Administrative Committee as Excess ADP
Deferrals and shall be distributed to Highly Compensated
Employees whose Accounts were credited with Excess ADP
Deferrals in the preceding Plan Year. In determining the
amount of Excess ADP Deferrals for each Highly Compensated
Employee, the Joint Administrative Committee shall reduce
the ADP for each Highly Compensated Employee as follows:
(1) the ADP for the Highly Compensated Employee(s) with
the highest ADP will be reduced until equal to the
second highest ADPs under the Plan; then
(2) the ADP for the two (or more) Highly Compensated
Employees with the highest ADPs under the Plan will
be reduced until equal to the third highest ADP
level under the Plan; then
(3) the steps described in (i) and (ii) shall be
repeated with respect to the third and successive
highest ADP levels under the Plan until the Plan
complies with one or both of the ADP tests described
in Section 11.03(a).
(b) To the extent administratively possible, the Joint
Administrative Committee shall distribute all Excess ADP
Deferrals and any income or loss allocable thereto (for the
Plan Year) prior to March 15 following the end of the Plan
Year in which the Excess ADP Deferrals arose. In any event,
however, the Excess ADP Deferrals and any income or loss
allocable thereto (for the Plan Year) shall be distributed
prior to the end of the Plan Year following the Plan Year in
which the Excess ADP Deferrals arose. Excess ADP Deferrals
shall be treated as annual additions under the Plan.
- 40 -
167
<PAGE> 47
(c) The income or loss allocable to Excess ADP Deferrals shall
be determined by multiplying the income or loss allocable to
the Participant's Account for the Plan Year in which the
Excess ADP Deferrals arose by a fraction. The numerator of
the fraction is the Excess ADP Deferral. The denominator of
the fraction is the value of the Participant's Account
balance on the last day of the Plan Year in which the Excess
ADP Deferrals arose reduced by any income allocated to the
Participant's Account for such Plan Year and increased by
any loss allocated to the Participant's Account for the Plan
Year.
(d) If an Excess Deferral has been distributed to the
Participant pursuant to Section 11.02(a) or (b), then any
Excess ADP Deferral allocable to such Participant for the
same Plan Year shall be reduced by the amount of such Excess
Deferral.
(e) Distribution of Excess ADP Deferrals to Participants
described in Section 11.05(c) shall be made in accordance
with the provisions of Treasury Regulation section
1.401(k)-1(f)(5)(ii) or any successor Treasury Regulation
thereto.
11.06 Order of Applying Certain Sections of Article. In applying the
provisions of this Article 11, the determination and distribution of
Excess Deferrals shall be made first, and the determination and
elimination of Excess ADP Deferrals shall be made second.
- 41 -
168
<PAGE> 48
ARTICLE 12
HIGHLY COMPENSATED EMPLOYEES
12.01 In General. For the purposes of this Plan, the term "Highly
Compensated Employee" is any active Employee described in Section
12.02 below and any Former Employee described in Section 12.03 below.
Various definitions used in this Article are contained in Section
12.05. A Non-Highly Compensated Employee is an Employee who is
neither a Highly Compensated Employee nor a Family Member of a Highly
Compensated Employee.
12.02 Highly Compensated Employees.
(a) Look-Back Year. An Employee is a Highly Compensated
Employee if during a Look Back Year the Employee:
(1) is a 5 Percent Owner;
(2) receives Compensation in excess of $75,000;
(3) receives Compensation in excess of $50,000 and is a
member of the Top Paid Group; or
(4) is an Includable Officer.
The dollar amounts described above shall be increased annually as
provided in Code Section 414(q)(1).
(b) Determination Year. An Employee is a Highly Compensated
Employee if during a Determination Year the Employee:
(1) is a 5 Percent Owner; or
(2) is one of the 100 Employees who receives the most
Compensation from the Employer during the Determination Year
and during the Determination Year (A) receives Compensation
in excess of $75,000; (B) receives Compensation in excess of
$50,000 and is a member of the Top Paid Group; or (C) is an
Includable Officer.
The dollar amounts described above shall be increased
annually as provided in Code Section 414(q)(1).
(c) Election to Use Simplified Method.
- 42 -
169
<PAGE> 49
(1) If elected by the Committee (which election may change from
year to year), an Employee's status as a Highly Compensated
Employee shall be etermined pursuant to the simplified
method described in Code Section 401(q)(12).
(2) If the Committee elects to use the simplified method for the
Look Back Year, an Employee's status during the Look Back
Year shall be determined by substituting "$50,000" for
"$75,000" in subsection (a)(2) and by ignoring the
provisions of subsection (a)(3).
(3) If the Committee elects to use the simplified method for the
Determination Year, an Employee's status for the
Determination Year shall be determined by substituting
"$50,000" for "$75,000" in subsection (b)(2)(A) and by
ignoring the provisions of subsection (b)(2)(B).
(4) The Committee may make separate elections for both Look Back
Year and for the Determination Year.
(5) The simplified method may not be elected for a given year
unless (i) at all times during such year the Employer
maintained significant business activities and employed
Employees in at least two significantly separate geographic
areas and (ii) the Employer satisfies all other conditions
rescribed by the Secretary of the Treasury or his delegate
as a prerequisite for electing the simplified method.
12.03 Former Highly Compensated Employee. A Former Employee is a Highly
Compensated Employee if (applying the rules of Section 12.02(a) or
(b)) the Former Employee was a Highly Compensated Employee during a
Separation Year or during any Determination Year ending on or after
the Former Employee's 55th birthday. With respect to a Former
Employee whose Separation Year was prior to January 1, 1987, such
Former Employee will be treated as a Highly Compensated Employee only
if the Former Employee was a 5% Owner or received Compensation in
excess of $50,000 during (i) the Former Employee's Separation Year
(or the year preceding such Separation Year); or (ii) any year ending
on or after such Former Employee's 55th birthday (or the last year
ending before such Former Employee's 55th birthday).
12.04 Family Aggregation Rules.
(a) For purposes of this Article 12, an Employee who is, for a
given Determination Year or Look Back Year, either (i) a 5%
Owner, or (ii) a Highly Compensated Employee who is one of
the ten most highly compensated Employees ranked on the
basis of Compensation paid during such year, shall be
aggregated with such Employee's Family Members.
- 43 -
170
<PAGE> 50
(b) For purposes of this Section 12.04, the term "Family Member"
means, with respect to an Employee described in Section
12.04(a), a person who is, on any day during the given
Determination Year or Look Back Year:
(1) his spouse; or
(2) his lineal ascendant or descendant; or
(3) the spouse of his lineal ascendant or descendant.
(c) The determination of Employees and Family Members
who must be aggregated for purposes of this Article
12 shall be made in accordance with Temporary
Treasury Regulation section 1.414(q)-1T, Q&A-11 and
Q&A-12.
(d) For purposes of applying the limits of Code Section
401(a)(17) (i.e., the limit on compensation, as
adjusted) with respect to Compensation under
Articles 11 (401(k) test) and 13 (Code Section 415
limits), the Compensation for any Employee described
in Section 12.04(a) and for any Family Member who is
such Employee's spouse or lineal descendant under
age 19, shall be aggregated. In such event, the
deemed Compensation for each such Employee shall be
an amount equal to the Section 401(a)(17) limit for
the Plan Year (as adjusted) multiplied by a
fraction, the numerator of which is the Employee's
actual Compensation for the Plan Year, and the
denominator of which is the aggregate Compensation
of the Employee and the aggregated Family Member for
the Plan Year. The same procedure shall then be
used to determine the deemed Compensation of the
aggregated Family Member.
12.05 Definitions.
The following special definitions shall apply to this Article 12:
Compensation for purposes of this Article 12 shall mean the gross
annual earnings reported on the Participant's IRS Form W-2 (Box 1 -
Wages, Tips and Compensation, or its comparable location as provided
on Form W-2 in future years) as required by Code Sections 6041(d) and
6051(a)(3). In addition, Compensation shall include compensation
which is not includible in the Participant's IRS Form W-2 (Box 1) by
reason of Code Section 402(a)(8) (employee pre-tax contributions
under a Code Section 401(k) plan) or Code Section 125 (salary
deferrals under a cafeteria plan). Compensation shall not include
amounts paid or reimbursed by the Employer for moving expenses if, at
the time of the payment of such moving expenses, it is reasonable to
believe that the moving expenses will be deductible by the
Participant under Code Section 217.
- 44 -
171
<PAGE> 51
Compensation shall be determined by ignoring any income exclusions
under Code Section 3401(a) based on the nature or location of
employment. In no event shall Compensation in excess of the
limitations under Code Section 401(a)(17) be taken into account for
any Employee.
Determination Year shall mean the Plan Year for which the ADP is
computed.
Employer for purposes of this Article 12 shall mean the Company and
its Affiliates.
5 Percent Owner shall mean any Employee who owns or is deemed to own
(within the meaning of Code Section 318), more than five percent of
the value of the outstanding stock of the Employer or stock
possessing more than five percent of the total combined voting power
of the Employer.
Former Employee shall mean an Employee (i) who has incurred a
severance from service or (ii) who remains employed by the Employer
but who has not performed services for the Employer during the
Determination Year (e.g., an Employee on an Authorized Leave of
Absence).
Includible Officer shall mean any officer of the Employer who, during
the applicable year, receives Compensation in excess of 50% of the
dollar limitations under Code Section 415(b)(1)(A)(as adjusted by the
Secretary of the Treasury for cost of living increases). The
Employer shall be deemed to have a minimum of three (3) officers or,
if greater, a number equal to 10% of all Employees. However, no more
than fifty (50) officers shall be considered Includible Officers
under this Article 12. If the Employer does not have any Includible
Officers because no officer receives Compensation in excess of the
dollar limitations of Code Section 415(b)(1)(A), the Employer's
highest paid officer shall be considered an Includible Officer.
Look Back Year shall mean the Plan Year preceding the Determination
Year, or if the Employer elects, the calendar year ending with or
within the determination year.
Separation Year shall mean any of the following years:
(1) an Employee who incurs a Termination of Employment shall
have a Separation Year in the Determination Year in which
such Termination of Employment occurs;
(2) an Employee who remains employed by the Employer but who
temporarily ceases to perform services for the Employer
(e.g., an Employee on Authorized Leave of Absence) shall
have a Separation Year in the calendar year in which he last
performs services for the Employer; and
- 45 -
172
<PAGE> 52
(3) an Employee who remains employed by the Employer but whose
Compensation for a calendar year is less than 50% of the
Employee's average annual Compensation for the immediately
preceding three calendar years (or the Employee's total
years of employment, if less) shall have a Separation Year
in such calendar year. However, such Separation Year shall
be ignored if the Employee remains employed by the Employer
and the Employee's Compensation returns to a level
comparable to the Employee's Compensation immediately prior
to such Separation Year.
Top Paid Group shall mean the top 20% of all Employees ranked on the
basis of Compensation received from the Employer during the
applicable year. The number of Employees in the Top Paid Group shall
be determined by ignoring Employees who are non-resident aliens and
Employees who do not perform services for the Employer during the
applicable year. The Employer elects to compute the Top Paid Group
without the age and service exclusion provided in applicable Treasury
Regulations.
12.06 Other Methods Permissible. To the extent permitted by the Code,
judicial decisions, Treasury Regulations and Internal Revenue Service
pronouncements, the Joint Administrative Committee may (without
further amendment to this Plan) take such other steps and actions or
adopt such other methods or procedures (in addition to those methods
and procedures described in this Article 12) to determine and
identify Highly Compensated Employees (including adopting alternative
definitions of Compensation which satisfy Code Section 414(q)(7) and
are uniformly applied).
- 46 -
173
<PAGE> 53
ARTICLE 13
MAXIMUM BENEFITS
13.01 General Rule.
(a) Notwithstanding any other provision of this Plan, for any
Plan Year, the Annual Additions to a Participant's Account,
when combined with the Annual Additions to the Participant's
Account under all other Qualified individual account plans
maintained by the Employer or its Affiliates shall not
exceed the lesser of (i) $30,000 or (ii) 25% of the
Participant's Compensation for such Plan Year (the "maximum
permissible amount").
(b) The Employer hereby elects that the Limitation Year for
purposes of Code Section 415 shall be the Plan Year.
(c) For purposes of determining the limit on Annual Additions
under paragraph (a) of this Section, the dollar limit
described therein, to wit, $30,000, shall be increased for
each Plan Year to the extent permitted by law.
(d) If the amount to be allocated to a Participant's Account
exceeds 25% of the Participant's Compensation, the excess
will be disposed of in the following order as follows:
(1) First, if the Participant's Annual Additions exceed
the maximum permissible amount as a result of (i) a
reasonable error in estimating the Participant's
Compensation, (ii) a reasonable error in estimating
the amount of Pre-Tax Contributions that the
Participant could make under Code Section 415 or
(iii) other facts and circumstances that the
Internal Revenue Service finds justifiable, the
Joint Administrative Committee may direct the
Trustee to return to the Participant his Pre-Tax
Contributions for such Plan Year to the extent
necessary to reduce the excess amount. Such
returned Pre-Tax Contributions shall be ignored in
performing the discrimination tests of Article 11.
(2) Second, if after the application of subparagraph (1)
an excess amount still exists, and the Participant
is covered by the Plan at the end of the Limitation
Year, the excess amount in the Participant's Account
will be used to reduce employer contributions for
such Participant in the next Limitation Year, and
each succeeding Limitation Year, if necessary.
- 47 -
174
<PAGE> 54
(3) Third, if after the application of subparagraph (2)
an excess amount still exists, and the Participant
is not covered by the Plan at the end of a
Limitation Year, the excess amount will be held
unallocated in a suspense account. The suspense
account will be applied to reduce the employer
contributions for all remaining Participants in the
next Limitation Year, and each succeeding Limitation
Year if necessary.
(4) If a suspense account is in existence at any time
during a Limitation Year pursuant to this Section,
it will not participate in the allocation of the
Fund's investment gains and losses. If a suspense
account is in existence at any time during a
particular Limitation Year, all amounts in the
suspense account must be allocated and reallocated
to Participants' Accounts before any contributions
which would constitute Annual Additions may be made
to the Plan for that Limitation Year. Excess
amounts may not be distributed to Participants or
Former Participants.
(e) If the amount to be allocated to a Participant's Account
exceeds $30,000 (as adjusted), the excess will be disposed
of in the following order as follows:
(1) First, if the Participant's Annual Additions exceed
the maximum permissible amount as a result of (i) a
reasonable error in estimating the Participant's
Compensation, (ii) a reasonable error in estimating
the amount of Pre-Tax Contributions that the
Participant could make under Code Section 415 or
(iii) other facts and circumstances that the
Internal Revenue Service finds justifiable, the
Joint Administrative Committee may direct the
Trustee to return to the Participant his Pre-Tax
Contributions for such Plan Year to the extent
necessary to reduce the excess amount. Such
returned Pre-Tax Contributions shall be ignored in
performing the discrimination tests of Article 11.
(2) Second, any excess Annual Additions still remaining
after the return of Pre-Tax Contributions pursuant
to paragraph (1) above shall be held unallocated in
[a suspense account.] All amounts in the suspense
account shall be allocated to Participants' Accounts
(subject to the limitations of Code Section 415)
before any contributions which would constitute
Annual Additions may be made to the Plan for that
Limitation Year.
(3) If a suspense account is in existence at any time
during a Limitation Year pursuant to this Section,
it will not participate in the allocation of the
Fund's investment gains and losses. If a suspense
account is
- 48 -
175
<PAGE> 55
in existence at any time during a particular
Limitation Year, all amounts in the suspense account
must be allocated and reallocated to Participants'
Accounts before any contributions which would
constitute Annual Additions may be made to the Plan
for that Limitation Year. Excess amounts may not be
distributed to Participants or Former Participants.
(f) If the Participant is covered under another Qualified
defined contribution plan maintained by an Employer during
any Limitation Year, the Annual Additions which may be
credited to a Participant's account under this Plan for any
such Limitation Year shall not exceed the maximum
permissible amount reduced by the Annual Additions credited
to a Participant's account under all such plans for the same
Limitation Year. If a Participant's Annual Additions under
this Plan and such other plans would result in an excess
amount for a Limitation Year, the excess amount will be
deemed to consist of Annual Additions under the other
defined contribution plan first and Annual Additions under
this Plan second.
Any excess amount attributed to this Plan will be disposed in the
manner described in this Section 13.01 above.
13.02 Combined Plan Limitation. If the Employer or its Affiliates
maintains, or at any time maintained, a Qualified defined benefit
plan covering any Participant in this Plan, the sum of the
Participant's defined benefit plan fraction and defined contribution
plan fraction shall not exceed 1.0 in any Limitation Year and the
annual benefit otherwise payable to the Participant under such
defined benefit plan shall be frozen or reduced to the extent
necessary so that the sum of such fractions shall not exceed 1.0.
13.03 Definitions. For the purposes of this Article 13, the following
definitions shall apply:
(a) "Annual Addition" shall mean the sum of:
(1) Pre-Tax Contributions,
(2) Employer Contributions,
(3) forfeitures, and
(4) amounts described in Code Sections 415(l)(1) and
419A(d)(2).
Annual Additions shall not include any amounts credited to the
Participant's Account resulting from Rollover Contributions.
- 49 -
176
<PAGE> 56
(b) "Affiliates" shall have that meaning contained in Article 2
except that for purposes of determining who is an Affiliate
the phrase "more than 50 percent" shall be substituted for
the phrase "at least 80 percent" each place it appears in
Code Section 1563(a)(1).
(c) "Compensation" shall have that meaning as set forth in
Treasury Regulation Section 415-2(d). Compensation for
purposes of Article 13 shall not include Pre-Tax
Contributions under this Plan and shall not include salary
deferrals under a Code Section 125 Cafeteria Plan.
(d) "Defined Benefit Fraction" shall mean a fraction, the
numerator of which is the sum of the Participant's projected
annual benefits under all the defined benefit plans (whether
or not terminated) maintained by the Employer or its
Affiliates, and the denominator of which is the lesser of
(i) 125% of the dollar limitation in effect for the
Limitation Year under Code Section 415(b)(1)(A) or (ii) 140%
of the Highest Average Compensation. Notwithstanding the
foregoing, if the Participant was a Participant as of the
first day of the first Limitation Year beginning after
December 31, 1986, in one or more defined benefit plans
maintained by the Employer or its Affiliates which were in
existence on May 6, 1986, the denominator of this fraction
will not be less than 125% of the sum of the annual benefits
under such plans which the Participant had accrued as of the
end of the last Limitation Year beginning before January 1,
1987, but determined without regard to any changes in the
terms and conditions of the Plan occurring after May 5,
1986. The preceding sentence applies only if the defined
benefit plans individually and in the aggregate satisfied
the requirements of Code Section 415 for all Limitation
Years beginning before January 1, 1987.
(e) "Defined Contribution Fraction" shall mean a fraction, the
numerator of which is the sum of the Annual Additions to the
Participant's account under all the defined contribution
plans (whether or not terminated) maintained by the Employer
or its Affiliates for the current and all prior Limitation
Years, and the denominator of which is the sum of the
Maximum Aggregate Amounts for the current and all prior
Limitation Years of service with the Employer or its
Affiliates (regardless of whether a defined contribution
plan was maintained by the Employer or its Affiliates). The
Maximum Aggregate Amount in any Limitation Year is the
lesser of (i) 125% of the dollar limitation in effect under
Code Section 415(c)(1)(A); or (ii) 35% of the Participant's
compensation for such year.
(f) "Highest Average Compensation" shall mean the average
compensation for the three (3) consecutive years of service
with the employer that produces the highest average.
- 50 -
177
<PAGE> 57
(g) "Projected Annual Benefit" shall mean the annual retirement
benefit (adjusted to an actuarially equivalent Straight Life
Annuity if such benefit is expressed in a 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 Normal Retirement Age under the
Plan (or current age, if later), and (ii) the Participant'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.
- 51 -
178
<PAGE> 58
ARTICLE 14
TRUST FUND AND TRUSTEE
14.01 General Nature of Trustee's Responsibilities.
(a) To the extent acceptable to it, the Trustee shall receive
such sums of money or other property as shall from time to
time be paid or delivered by the Employer to hold for
management and distribution under the terms of the Plan.
All such money and property so held, together with all
investments made therewith and proceeds thereof, and such
earnings, profits, increments, and accruals thereon as may
occur from time to time, less any payments which the
Trustee, from time to time, may be authorized to make
therefrom, shall constitute the Trust Fund.
(b) The Fund shall be held by the Trustee in trust and shall be
administered, controlled and invested in accordance with the
Plan. In the management of the Fund and the discharge of
its duties hereunder, the Trustee shall act solely in the
interests of the Participants, Former Participants and their
Spouses or Beneficiaries. The Trustee shall discharge its
duties in accordance with this Plan with the care, skill,
prudence and diligence under the circumstances then
prevailing that a prudent man acting in a like capacity and
familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims. The
Trustee's obligations relate solely to the Trust Fund and it
shall have no responsibility whatsoever for the control,
management, administration or revision of the Plan itself or
for procuring contributions required in the Plan.
(c) Anything contained in this Plan to the contrary
notwithstanding, it shall be impermissible at any time prior
to the satisfaction of all liabilities with respect to
Participants, Former Participants and their Spouses, except
for payments of benefits under the terms of the Plan for any
part of this Fund to be used for or diverted to any purpose
other than the exclusive benefit of such Participants,
Former Participants and their Spouses or Beneficiaries,
except for payments of expenses and charges properly payable
out of the Fund as set forth herein.
14.02 Investment Powers.
(a) Any investment determinations made by the Trustee shall be
made in conformity with the standard of fiduciary duty
(especially the prudent man rule) set forth in ERISA.
- 52 -
179
<PAGE> 59
(b) The Trustee shall cause the investments of the Trust Fund to
be diversified to the extent necessary to minimize the risk
of large losses (unless such diversification would be
imprudent).
(c) In no event shall the Trustee maintain the indicia of
ownership of any assets of the Fund outside the jurisdiction
of the United States District Courts.
(d) The Trustee shall exercise its investment discretion so as
to provide sufficient cash assets as necessary from time to
time to meet the liquidity requirements for the
administration of the Plan.
(e) The foregoing paragraphs of this Section 14.02 are
limitations on the investment powers of the Trustee and
(except as expressly provided) take precedence over the
powers set forth in this paragraph (e). Except as
specifically limited above, the Trustee is authorized and
empowered to retain, invest and reinvest any and all of the
trust funds as it shall deem to be in the best interests of
the Participants and there shall be no other additional
restrictions--whether by law or otherwise--on the investment
powers of the Trustee. Consequently the Trustee may invest
the Fund in property (or a part interest therein) which is
real or personal, tangible or intangible, wherever located,
whether or not productive of income or consisting of wasting
assets, as the Trustee shall deem best for the Participants,
former Participants and their spouses and Beneficiaries.
Furthermore, the Trustee may, without regard to any law now
or hereafter in force limiting investments by fiduciaries,
invest in a range of investments which includes, inter alia,
real estate (whether income-producing or not); securities
issued by any Employer which has adopted the Plan or any
other corporation; speculative common stocks; any common
trust fund or mutual fund held or administered by the
Trustee, any of its subsidiaries, or any other corporation;
any real estate investment trust in which the Trustee or any
other corporation may have any interest whatsoever; low risk
bonds; mortgages on real or personal property wherever
situated; equipment trust certificates; notes or other
evidence of indebtedness; shares of investment companies and
mutual funds; interests in partnerships and trusts;
insurance policies and contracts; option contracts such as
those traded on an option exchange; and any other property
or joint or other part interest in property (including
without limitation, part interests in bonds and mortgages or
notes and mortgages), real or personal, of any kind, class
or character, which the Trustee may in its discretion deem
suitable for the Fund, and irrespective (except to the
extent specifically set forth above) of whether any Trustee,
individually or as Trustee, is acting as a participator of
any part interest in property that may be acquired.
- 53 -
180
<PAGE> 60
(i) The Trustee is explicitly authorized and directed,
in accordance with the terms of the Plan, to acquire
and hold "qualifying employer securities" and
"qualifying employer real property", as those terms
are defined in ERISA, to the maximum of such amounts
and percentages allowed by ERISA.
(ii) The Trustee is explicitly authorized to invest all
or part of the Fund in deposits which bear a
reasonable rate of interest in any bank, or trust
company or other financial institution, (including
the Trustee, if applicable).
(iii) The Trustee is explicitly authorized to engage in a
transaction with a common or collective trust fund
or pooled investment fund maintained now or created
and maintained at a future time by any bank or trust
company (including the Trustee, if applicable)
supervised by a State or Federal agency provided
that such transaction is a sale or a purchase of an
interest in such common or collective trust and
further provided that such bank or trust company
receives not more than reasonable compensation.
This general power is meant to be broad enough to
avoid specific identification of all such funds in
this document; and any officer of the Employer, is
authorized (A) to certify to bank examiners and
other parties which specific funds are included in
this general power and (B) to adopt any declarations
or enter into any agreements required so that the
Trustee may make investments in such funds.
14.03 Valuation. The fair market value of the Fund shall be determined by
the Trustee as of each Valuation Date and on such other dates as the
Trustee deems advisable.
14.04 Other Powers. In the management, care and disposition of the Fund,
the Trustee, and its successors, may do all things and execute such
instruments as may be deemed necessary or proper in order to carry
out the provisions of the Plan and this Article, including the
following powers (in addition to the investment powers set forth
above), all of which may be exercised without order of or report to
any court and without giving bond:
(a) To sell, exchange, or otherwise dispose of any property at
any time held in the Fund at public or private sale, for
cash or on terms without advertisement; and no person
dealing with the Trustee shall be bound to see to the
application of monies paid;
- 54 -
181
<PAGE> 61
(b) To retain, manage, operate, repair and improve and to
mortgage and/or lease and/or grant options to sell (for any
period whatsoever) any real or personal property held by the
Trustee;
(c) To compromise, compound, and settle any debt or obligation
due to or from it as Trustee hereunder and to reduce the
rate of interest on, to extend or otherwise modify, or to
foreclose upon default or otherwise enforce, and to abandon,
if it shall deem it advisable, any property, whether real or
personal, which may at any time be held by it, and in
general to protect in every way the interest of the Fund,
either before or after default;
(d) To vote in person or by proxy on any stocks or other
securities held by it, unless by law or regulatory authority
the right to vote be proscribed as to it but vested in
Participants of the Fund, in which latter event the vote
shall be only by the Participants or as directed by them;
(e) To join in, or to dissent from or oppose, the
reorganization, capitalization, consolidation, sale or
merger of corporations or properties in which the Trustee
may be interested as Trustee, upon such terms and conditions
as it may deem wise, and to accept any securities which may
be issued upon any such reorganization, recapitalization,
consolidation, sale or merger and thereafter to hold the
same;
(f) To register any stocks, bonds, or other securities except
interests in real property, held in the Fund in its own name
as Trustee or in the name of a nominee and to hold any
investment in bearer form, or to combine certificates
representing such investments with certificates of the same
issue held by the Trustee in other fiduciary capacities, or
to deposit or to arrange for the deposit of such securities
in a qualified central depository even though, when so
deposited such securities may be merged and held in bulk in
the name of the nominee of such depository with other
securities deposited therein by any other person, or to
deposit or to arrange for the deposit of any securities
issued by the United States Government, or any agency or
instrumentality thereof, with a federal reserve bank,
provided that the books and records of the Trustee shall at
all times show that all such investments are part of the
Fund;
(g) To borrow or raise monies for purposes deemed appropriate by
the Trustee, including the making of distributions under the
Plan in such amount and upon such terms and conditions as in
its absolute discretion the Trustee may deem advisable; and
for any sums so borrowed to issue its promissory note as
Trustee and to secure the repayment thereof by pledging all
or any part of the Fund; and no person lending money to the
Trustee shall be bound to see to the application of the
money loaned or
- 55 -
182
<PAGE> 62
to inquire into the validity, expediency or propriety of any
such borrowing;
(h) To employ agents from time to time, at the expense of the
Fund, and to delegate to them such ministerial and limited
duties as the Trustee sees fit;
(i) To consult with counsel, who may be counsel to the
undersigned Employer, actuaries and other professional
advisors, and to act upon the legal advice of such counsel;
(j) To make, execute, and acknowledge and deliver any and all
deeds, leases, assignments and instruments and to do all
acts which they may deem necessary or proper to carry out
the investment provisions of the Plan;
(k) To make distributions wholly or partly in cash or in kind;
and
(l) To reserve from investment and keep unproductive of income
any amounts or part of the Fund as it may from time to time
deem advisable.
14.05 Prohibited Transaction. Anything in this Plan to the contrary
notwithstanding (and especially the powers granted to the Trustee
herein), the Trustee shall not be authorized to engage in any
transaction which is prohibited by Sections 406 and/or 2003(a) of
ERISA or Section 4975 of the Code unless the Trustee determines that
such transaction is exempt under the terms of ERISA and the Code
therefrom.
14.06 Administration of the Plan; Payments of Benefits. The Joint
Administrative Committee shall have the exclusive authority and
responsibility for the administration of the Plan and the payment of
benefits thereunder (including payees, amounts, addresses, dates of
payments, etc.). In the event the Trustee shall deem it necessary to
withhold any payments or distributions pending compliance with legal
requirements with respect to probate of wills, appointment of
personal representative, payment of or provision for estate or
inheritance taxes, or for death duties or otherwise, the Trustee
shall no action pending compliance, or pending receipt of the Joint
Administrative Committee's instructions to distribute. Orders and
directions from the Joint Administrative Committee need not specify
the purpose of the payment so ordered, and the Trustee shall not be
responsible in any way respecting the purpose or propriety of such
payments or for the administration of the Plan. The Trustee shall
not be responsible in any respect for the adequacy of the Fund to
meet or discharge any payments or liabilities under the Plan; and
payments shall be limited to amounts available in the Fund. Any
order or direction from the Joint Administrative Committee shall
constitute a certification to the Trustee that the action directed is
- 56 -
183
<PAGE> 63
one which is in conformity with the provisions of the Plan and of
ERISA. To the extent permitted by law, the Trustee shall not be
liable for any action taken (especially any payment made from the
Fund) at the direction of the Joint Administrative Committee or for
any failure to act, if such action can under the terms of the Plan be
taken only after receipt from the Joint Administrative Committee of
specific directions or for failure to act pending receipt of
directions from the Joint Administrative Committee when direction is
required or is requested in writing by the Trustee.
14.07 Directing the Trustee.
(a) The Joint Administrative Committee may from time to time
direct the Trustee as to the investment of all or part of
the Trust Fund. The Joint Administrative Committee may also
from time to time appoint an Investment Manager or Managers
for all, or any part, of the Trust Fund; provided that no
Investment Manager shall be appointed unless it qualifies as
an Investment Manager within the meaning of Section 3(38) of
ERISA. Any such Investment Manager shall be a named
fiduciary of the Plan and shall qualify by accepting its
appointment as Investment Manager in writing.
(b) Upon the appointment and qualification of an Investment
Manager, the Investment Manager shall have, subject to any
guidelines issued by the Joint Administrative Committee,
exclusive power and authority for the investment and
reinvestment of the portion of the Trust Fund designated by
the Joint Administrative Committee and shall have the power
to direct the acquisition and disposition of any and all
assets and investment of the Trust Fund. The Trustee shall
be relieved from any liability for the making, retention, or
sale of any investment by or at the direction of an
Investment Manager appointed in the manner herein set forth
or by or at the direction of the Employer. So long as the
Joint Administrative Committee and the Trustee consist of
the same individuals, nothing herein shall be construed to
relieve the Joint Administrative Committee of its obligation
to review the performance of the Investment Manager from
time to time.
14.08 Records and Reports.
(a) The Trustee shall keep accurate and detailed accounts of all
investments, receipts and disbursements, and other
transactions hereunder. Within ninety (90) days following
the close of each fiscal year, the Trustee shall file a
written report with the Employer or the Joint Administrative
Committee setting forth all investments, receipts and
disbursements, and other transactions effected by the
Trustee during such fiscal year. Upon the expiration of
ninety (90) days from the date
- 57 -
184
<PAGE> 64
of filing such annual or other account, the Trustee shall be
forever released and discharged from any liability or
accountability to the Employer as respects the propriety of
its acts or transactions shown in such accounts (other than
liability for acts of fraud or willful misconduct), except
with respect to any such acts or transactions as to which
the Employer shall within such ninety (90) day period file
with the Trustee a written statement claiming a breach of
the Trustee's fiduciary duties or failure to fulfill the
Trustee's obligations under the Plan. The Trustee shall
never be required to file any inventory or appraisals, or
any annual or other returns to any court or to post bond.
(b) The Trustee shall be entitled to have a judicial settlement
of any account for which it is responsible. In any such
proceeding or for any judicial instructions required in
connection with the Fund, the only necessary parties thereto
in addition to the Trustee will be the Employer and the
Joint Administrative Committee. However, the Trustee may
bring in other persons as a party or party defendant.
(c) Any party entitled to written notice or accounting may waive
such notice or accounting required under this Section. So
long as the Trustee is also the Joint Administrative
Committee, the Employer and the Joint Administrative
Committee shall be deemed to waive the notice and accounting
requirements unless the Employer or Joint Administrative
Committee notifies the Trustee, within the required notice
period, that it intends to enforce the writing and
accounting requirement.
14.09 Notification to Trustee.
(a) Any action by the Employer pursuant to any of the provisions
of the Plan or of this Article 15 shall be authorized or
evidenced by a resolution of the Board or by an officer of
the Employer authorized by resolution of the Board to take
actions in connection with this Plan. The Trustee and every
other person shall be entitled to rely conclusively upon any
and all such notices, directions, orders, requests,
certifications and instructions received from the Joint
Administrative Committee or from the Employer and reasonably
believed to be properly executed, and shall act and be fully
protected in acting in accordance therewith.
(b) The Trustee from time to time may request and be entitled to
certified copies of resolutions of the Employer and of the
Union, evidencing the appointment and termination of office
of any members of the Joint Administrative Committee and of
successors to such members together with specimens of their
signatures, and the Trustee shall be entitled to rely
conclusively upon such resolutions and signatures as
evidence of
- 58 -
185
<PAGE> 65
the identity of the members of the Joint Administrative
Committee and shall not be charged with notice of any change
with respect thereto until the Employer or the Union shall
have furnished the Trustee with certified copies of
resolutions relative to such change.
14.10 Expenses.
(a) In General. All expenses of the Employer, the Joint
Administrative Committee, and the Trust shall be paid from
the Trust to the extent they constitute reasonable expenses
of administering the Plan; provided that, the obligation of
the Trust to pay such expenses shall cease to exist to the
extent such expenses are paid by the Employer. This
provision shall be deemed a part of any contract to provide
for expenses of plan administration, whether or not the
signatory to such contract is, as a matter of convenience,
the Employer.
(b) Trust Expenses. The Trustee shall compute all expenses of
the Trust. The Trustee is authorized to pay expenses shown
on the statement from the Trust Fund to the extent permitted
by law.
(c) Other Expenses. The Trustee shall pay out of the Trust Fund
such other expenses of administering the Plan, including but
not limited to, accounting, actuarial and legal expenses, as
the Joint Administrative Committee may direct and as are
permissible under the provisions of ERISA.
(d) Charge to Participant Accounts. To the extent expenses of
the Trustee relating to the acquisition and disposition of
investments of the Trust are paid out of the Trust Fund,
such expenses shall be a charge against and paid from the
Participant's Account for which such acquisition or
disposition relates. All other expenses which are not
directly attributable to a Participant's Account shall be
charged against the Accounts of Participants in the manner
provided by the Plan.
14.11 Trustee's Tenure and Succession.
(a) Within ninety (90) days after removal or resignation of a
Trustee (in the same manner as described in Section 2.30),
the removed or resigning Trustee shall file with the
Employer or the Joint Administrative Committee a written
account setting forth all investments, receipts and
disbursements, and other transactions in which such Trustee
has participated since the end of the latest fiscal year in
which such an accounting was filed with the Employer or
Joint Administrative Committee and containing an exact
description of all securities purchased and sold, the cost
or net proceeds of sale, and showing the
- 59 -
186
<PAGE> 66
securities and investments held at the date of such removal
or resignation and the cost of each item thereof as carried
on the books of the Trustee.
(b) Any party entitled to written notice or accounting may waive
the written notice and accounting required under this
Section. So long as the removed or resigning Trustee is
also a member of the Joint Administrative Committee, then at
the time of such Trustee's removal or resignation, the
Employer and the Joint Administrative Committee shall be
deemed to waive the notice and accounting requirements
unless the Employer or Joint Administrative Committee
notifies the removed or resigning Trustee, within the
required notice period, that it intends to enforce the
notice and accounting requirements.
14.12 Successor Trustee. Upon the removal or resignation of a Trustee
acting under this Plan, a successor Trustee may be appointed as
provided herein. The Trustee who has resigned or has been removed
shall do anything required so that the successor Trustee shall be
able to carry out the rights, duties and obligations of the Trustee
set forth herein. A successor Trustee shall not be responsible for
any act or omission of a predecessor Trustee, and shall not be
required to make any claim or demand against a predecessor Trustee
unless the Joint Administrative Committee shall in writing request
the successor Trustee to participate in a claim against a predecessor
Trustee. A successor Trustee shall have and may exercise all the
rights, powers and duties given to an original Trustee named herein,
as such rights, powers and duties may be amended from time to time.
Such rights, powers and duties attach to the office of Trustee and
are not personal to any specific Trustee which may be serving as
Trustee under this Plan at any given time.
14.13 Bond and Security. The Trustee shall not be required to give any
bond or any other security for the faithful performance of the
Trustee's duties under this Plan, except such as may be required by
any law which prohibits the waiver thereof.
14.14 Commingling. If the Joint Administrative Committee consents or
directs, the Fund may be commingled with the trust assets of any
Affiliate which adopts this Plan. No individual Employer shall at
any time own any specific assets in such commingled Fund, its
interest being an undivided interest of its pro rata portion of the
entire Fund.
14.15 Meetings. Each Trustee shall have one vote on all matters, and
concurrence of a majority of the Trustees present and voting shall be
required for any action taken at a meeting; provided, however, that
no action may be taken at a meeting on any matter unless there is a
quorum of two (2) Trustees appointed by the Union ("Union Trustee")
and two (2) Trustees appointed by the Company ("Company Trustee")
present at the meeting; and, provided further, that when the number
of
- 60 -
187
<PAGE> 67
members of Trustees present is not equal as between Company and
Union, there shall be a like number of votes cast by both Union and
Company Trustees
Where the failure of the Company or Union to appoint a successor
Trustee results in a situation in which the number of Trustees then
in office constitutes less than a quorum, the remaining Trustees may
act on the basis of equal representation by Company and Union
Trustees.
- 61 -
188
<PAGE> 68
ARTICLE 15
MISCELLANEOUS
15.01 Headings. The headings and sub-headings in this Plan have been
inserted for convenience of reference only and are to be ignored in
any construction of the provisions hereof.
15.02 Action by Employer; Union. Any action by an Employer or the Union
under this Plan shall be by resolution of its board, or by any person
or persons duly authorized by resolution of said board to take such
action.
15.03 Spendthrift Clause. Except as otherwise required by a "qualified
domestic relations order" as defined in Code Section 414(p), none of
the benefits, payments, proceeds or distributions under this Plan
shall be subject to the claim of any creditor of any Participant or
Beneficiary, or to any legal process by any creditor of such
Participant or Beneficiary, and none of them shall have any right to
alienate, commute, anticipate or assign any of the benefits,
payments, proceeds or distributions under this Plan except for the
extent expressly provided herein to the contrary. If any Participant
shall attempt to dispose of the benefits provided for him hereunder,
or to dispose of the right to receive such benefits, or in the event
there should be an effort to see such benefits or the right to
receive such benefits by attachment, execution or other legal or
equitable process, such right to benefits shall pass and be
transferred, at the discretion of the Plan Administrator, to such one
or more as may be appointed by the Plan Administrator from among the
Beneficiaries, if any theretofore designated by the Participant, or
from the Spouse, children or other dependents of the Participant, in
such shares as the Joint Administrative Committee may appoint. Any
appointment so made by the Joint Administrative Committee may be
revoked by it at any time and further appointment made by it which
may include the Participant.
15.04 Distributions Upon Special Occurrences.
(a) Pre-Tax Contributions and any income attributable thereto,
shall be distributed to Participants or their Beneficiaries
as soon as administratively feasible after the termination
of the Plan, provided that neither the Employer nor its
Affiliates maintain a successor plan.
(b) Pre-Tax Contributions and any income attributable thereto
shall be distributed to Participants as soon as
administratively feasible after the sale, to an entity that
is not an Affiliate, of substantially all of the assets used
by the Employer in the trade or business in which the
Participant is employed.
- 62 -
189
<PAGE> 69
(c) After the sale of an incorporated Affiliate's interest in a
subsidiary to an entity that is not an Affiliate, Pre-Tax
Contributions and any income attributable thereto of a
Participant who continues to work for such subsidiary shall
be distributed as soon as administratively feasible.
(d) The provisions of this Section 15.04 including the
definitions of terms such as "successor plan" and
"substantially all of the assets" shall be governed by
Treasury Regulation section 1.401(k)- 1(d)(1)(iii) or any
successor Treasury Regulation thereto.
15.05 Discrimination. The Employer, the Joint Administrative Committee,
the Trustee and all other persons involved in the administration and
operation of the Plan shall administer and operate the Plan in a
uniform and consistent manner with respect to all Participants
similarly situated and shall not permit discrimination in favor of
Highly Compensated Employees.
15.06 Release. Any payment to a Participant or Beneficiary, or to their
legal representatives, in accordance with the provisions of this
Plan, shall to the extent thereof be in full satisfaction of all
claims hereunder against the Trustee, Plan Administrator, Joint
Administrative Committee and the Employer, any of whom may require
such Participant, Beneficiary, or legal representative, as a
condition precedent to such payment, to execute a receipt and release
therefor in such form as shall be determined by the Trustee, the
Joint Administrative Committee or the Employer, as the case may be.
15.07 Compliance with Applicable Laws. The Plan Administrator shall
interpret and administer the Plan in such manner that the Plan shall
remain in compliance with the Code, with the Act, and all other
applicable laws, regulations, and rulings.
15.08 Agents for Service of Process. The agents for service of process of
this Plan shall be the Plan Administrator.
15.09 Merger. In the event of any merger or consolidation of the Plan with
any other Plan, or the transfer of assets or liabilities by the Plan
to another Plan, each Participant must receive (assuming that the
Plan would terminate) the benefit immediately after the merger,
consolidation, or transfer which is equal to or greater than the
benefit such Participant would have been entitled to receive
immediately before the merger, consolidation, or transfer (assuming
that the Plan had then terminated), provided such merger,
consolidation, or transfer took place after the date of enactment of
the Act.
15.10 Governing Law. The Plan shall be governed by the laws of the State
of Tennessee to the extent that such laws are not preempted by
federal law.
- 63 -
190
<PAGE> 70
15.11 Protected Benefits. Early retirement benefits, retirement-type
subsidies, or optional forms of benefits protected under Code Section
411(d)(6) ("Protected Benefits") shall not be reduced or eliminated
with respect to benefits accrued under such Protected Benefits unless
such reduction or elimination is permitted under the Code authority
issued by the Internal Revenue Service, or judicial authority.
15.12 Location of Participant or Beneficiary Unknown. In the event that
all or any portion of the distribution payable to a Participant or
his Beneficiary shall remain unpaid solely by reason of the Joint
Administrative Committee's inability to ascertain the whereabouts of
such Participant or Beneficiary, the amount unpaid shall be
forfeited. However, such forfeiture shall not occur until five (5)
years after the amount first became payable. The Joint
Administrative Committee shall make a diligent effort to locate the
Participant or Beneficiary including the mailing of a registered
letter, return receipt requested, to the last known address of such
Participant or Beneficiary. In the event a Participant or
Beneficiary is located subsequent to his benefit being forfeited,
such benefit shall be restored and distributed.
- 64 -
191
<PAGE> 71
IN WITNESS WHEREOF, the Company and the Union have caused this Plan
to be duly executed and its seal to be hereunto affixed on the date indicated
below, but effective as of January 1, 1996.
PLASTI-LINE, INC.
By: /s/ Kathryn Coleman Wood
--------------------------------------
Title: VP - Human Resources
-----------------------------------
Date: 2/13/96
------------------------------------
TRUSTEES:
UNION TRUSTEES:
By: /s/ Richard Burkhart
--------------------------------------
Date: 2/13/96
------------------------------------
By: /s/ Robert L. Minton
--------------------------------------
Date: 2/13/96
------------------------------------
By: /s/ C.D. Penland
--------------------------------------
Date: 2/13/96
------------------------------------
COMPANY TRUSTEES:
By: /s/ Kathryn Coleman Wood
--------------------------------------
Date: 2/13/96
------------------------------------
By: /s/ Mark J. Deuschle
--------------------------------------
Date: 2/13/96
------------------------------------
- 65 -
192
<PAGE> 72
APPENDIX A
EMPLOYER CONTRIBUTIONS
1996 EMPLOYER CONTRIBUTION - $.10 per Hour of Employment, up to a maximum of
2,080 Hours of Employment under the Current Contract between the Company and
the Union as negotiated on 2/3/95.
193
<PAGE> 1
(LOGO)
-----------------
PLASTI-LINE, INC.
=================
1 9 9 5
=================
ANNUAL REPORT
-----------------
<PAGE> 2
CONTENTS
1 MISSION STATEMENT
4-6 CAPABILITIES OVERVIEW
7 LETTER TO STOCKHOLDERS
9-12 CONSOLIDATED FINANCIAL STATEMENTS
13-20 NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
20 REPORT OF INDEPENDENT ACCOUNTANTS
21-22 MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
PROFILE
PLASTI-LINE, INC., IS AN INDUSTRY LEADER PROVIDING A COMPLETE RANGE OF CORPORATE
INDENTITY PRODUCTS AND SERVICES TO THE RETAILING INDUSTRY. OUR EXPERTISE IS
THE DESIGN, MANUFACTURE, INSTALLATION, AND MAINTENANCE OF EXTERIOR, INTERIOR,
AND ON-PREMISE SIGNAGE AND POINT-OF-PURCHASE PRODUCTS, INTEGRATED BY A
SYSTEMIZED PROJECT MANAGEMENT CAPABILITY. HEADQUARTERED IN KNOXVILLE,
TENNESSEE, THE COMPANY ALSO HAS FACILITIES IN KENTUCKY, SOUTH CAROLINA, AND
CALIFORNIA AND EMPLOYS 1,100 PEOPLE.
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS(1)(2) (in thousands, except per share data)
- ------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C>
Net Sales $103,247 $77,309 $90,362 $83,220 $71,548
Income (loss) before taxes
and cumulative effect
of accounting change 2,202 (5,361) 4,643 4,006 1,739
Income (loss) before
cumulative effect of
accounting change 1,397 (4,837) 2,854 2,385 901
Cumulative effect of
accounting change - - - (648) -
- --------------------------------------------------------------------------------------------------
Net income (loss) $ 1,397 $(4,387) $ 2,854 $ 1,737 $ 901
- --------------------------------------------------------------------------------------------------
Income (loss) per share
before cumulative effect
of accounting change $ .38 $ (1.31) $ .77 $ .65 $ .25
Cumulative effect of
accounting change - - - (.18) -
- --------------------------------------------------------------------------------------------------
Net income (loss) per share $ .38 $ (1.31) $ .77 $ .47 $ .25
- --------------------------------------------------------------------------------------------------
Working capital $ 33,112 $23,349 $18,713 $17,554 $13,405
Total assets 77,150 51,450 49,522 53,424 49,282
Long-term debt less current maturities 23,575 12,004 6,536 7,960 7,555
Stockholders' equity 23,891 22,353 27,081 24,084 22,270
</TABLE>
(1) Please refer to Notes to Consolidated Financial Statements contained
herein.
(2) The Company has paid no dividends during the above periods.
<PAGE> 3
MISSION STATEMENT
OUR MISSION IS TO EXCEED OUR CUSTOMER'S EXPECTATIONS.
TO ACHIEVE THIS MISSION:
WE WILL CREATE AND PROVIDE CORPORATE IDENTIFICATION AND POINT-OF-PURCHASE
MARKETING PRODUCTS AND SERVICES.
WE WILL BE THE HIGHEST QUALITY, MOST RESPONSIVE, AND CONSISTENTLY COMPETITIVE
SUPPLIER TO THE CUSTOMERS WE SERVE.
WE WILL CREATE AN ENVIRONMENT THAT OFFERS INVOLVEMENT, OPPORTUNITY,
RECOGNITION, AND PERSONAL SATISFACTION, BASED ON A FOUNDATION OF CONTINUOUS
IMPROVEMENT.
WE WILL ACHIEVE A SUPERIOR RETURN FOR OUR STOCKHOLDERS, MAINTAIN MUTUALLY
PROFITABLE LONG-TERM RELATIONSHIPS WITH OUR SUPPLIERS, AND BE A RESPONSIBLE
MEMBER OF OUR COMMUNITY.
(LOGO)
<PAGE> 4
Plasti-Line, Inc., produces and sells a broad line of high-quality products and
services for the vast retailing industry. These products and services are
integral parts of a retailer's merchandising package for fixed-site locations
affecting both exterior and interior retail branding and merchandising
communications programs. The breadth of the Company's offering is one of its
key strengths as it provides a complete line enabling retailers and
manufacturers to fill a wide variety of their needs through a single source.
This yields a high level of synergy and efficiency for the customer. As we
have looked for growth and opportunity in the marketplace, we have determined
that the retail market is changing dramatically due to a rapidly shifting
consumer environment. This change is being driven by lifestyle alterations and
technology, both of which are forcing retailers and manufacturers to rethink
long-standing merchandising paradigms. The most significant change has been
the movement by consumers toward making purchase decisions at the retail
outlet, especially for low cost goods and services. This change in behavior is
being driven by the increasingly hectic and time-constrained lifestyles of
today's shoppers. According to a recent study by POPAI, the association for the
point-of-purchase industry, more than 70% of consumers shopping in mass
merchandising and grocery store outlets make their decisions on what brand or
product to buy while in the store. This is up markedly from the approximately
60% rate a decade ago. The importance of this factor is that retailers and
marketers are allocating more of their marketing expenditures to in-store
communications programs. Plasti-Line is well positioned to serve this emerging
and fast growing point-of-sale market by redirecting our existing exterior
businesses to create greater synergy with new and acquired interior-driven
businesses:
The Company's outdoor sign business serves most of the major using categories,
such as auto, food service, banking, and general merchandise and the market
leaders in these categories. These brand identity signs are and will continue
to be a key component of every retailer's program. Moreover, as new venues
emerge, such as the multi-stored convenience stops, requiring a totally
different visual presentation, the outdoor business will continue to grow.
The Company's retail design group offers high-quality design and merchandising
services to both retailers and manufacturers who are searching for breakthrough
merchandising solutions. These products and services deliver immediate volume
and profit results for customers.
Our menuboard and drive-through products are critical items within the food
service industry, as these are the key merchandising devices that lead to
higher unit volume and profit performance. These products are undergoing a
transformation as new technologies surface, suggesting the need for innovative
techniques in the next few years.
The ATM (automatic teller machine) surrounds product is linked to the
high-growth ATM market, which is rapidly expanding to new distribution points.
Our customized architectural sign making capability enables the Company to
enter the high-quality, specialized sign business, which is a new and growing
market.
<PAGE> 5
Plasti-Line is poised to continue to move forward in new and innovative
performance-driven partnerships with our customers. The integration of our
historic strengths with the emergence of new opportunities bodes well for an
exciting new strategic focus for our organization.
<PAGE> 6
Plasti-Line's outdoor sign products and services business is a highly complex
offering that involves surveying and permitting, sign production, on-site
installation, and ongoing maintenance services. This multi-faceted sign
program is tied together by an expert project management capability which
requires a high level of coordination from the manufacturing facility to the
customer site. Our successful venture into the regional sign company concept
has brought Plasti-Line West forward as a full-service sign company. Unlike
the other Plasti-Line facilities, they manufacture large outdoor signs that
frequently incorporate electronic message features.
The Design Performance Group's design and merchandising product offering helps
retailers and manufacturers tackle short-term and long-term merchandising
needs. More importantly, the products and services are geared to deliver
immediate volume movement, a key objective of marketers. This offering is
complemented by a project management capability that effectively sources
products and ensures timely installation that matches the specific needs of
each location.
American Sign and Marketing is uniquely prepared to manage large-scale indoor
and outdoor menuboard production projects, beginning with concept development
and design and followed by full-scale prototype and custom production.
Specialized menuboard manufacturing equipment allows for production of low
maintenance, ergonomic design. An in-house menu strip production and
preloading service allows shipment of "ready-to-use" menuboards.
Carter-Miot's ATM surrounds product is a key part of the banking industry
interactive electronic marketing program. As ATMs expand to new distribution
points, distinctive designs will be needed to increase the consumer appeal of
the ATM product offering. In addition to ATM surrounds, Carter-Miot produces
high quality metal architectural products for corporate identification in
banking, health care, and unique corporate facilities. The ability to manage
complex projects further enhances Carter-Miot's product offerings.
<PAGE> 7
I am pleased to report the results of our Company in 1995. The dramatic
strengthening of our sales volumes, culminating in our record fourth quarter,
demonstrates the success of our business development efforts in prior years.
For the year, sales were $103 million, up $26 million or 33.6% from the prior
year. In addition, our earnings, while impacted negatively during the year by
the costs of the now completed business re-engineering project, strengthened
considerably in the fourth quarter. Income before taxes and interest,
excluding the 1994 write-off of goodwill and restructuring costs, was up 85%.
Before we look to the future, I would like to touch on a few of our
non-financial accomplishments during 1995 which strengthened our infrastructure
and existing business. First, with great effort we completed the business
re-engineering project during the fourth quarter. I am optimistic that this
project, which touched all parts of the Company and required a complete change
in the systems and hardware that support our business, will achieve
substantial benefits. These benefits include a dramatic reduction in leadtime
across our business, a reduction in working capital per sales dollar, and
significant reductions in operating costs. Second, we expanded our customer
base, product offerings, and manufacturing capabilities with the addition of
Carter-Miot, Inc., in November of 1995. Third, both Design Performance Group
and Plasti-Line West saw strong sales and profit increases. Lastly, we
significantly strengthened our marketing capabilities with the addition of John
D. Burke as our Executive Vice President of Marketing.
As we look to the future, we have initiated a new marketing strategy designed
to position Plasti-Line for growth opportunities in the changing retailing
marketplace. This market is in a significant state of flux due to changing
consumer life styles and technology. This rapidly changing environment has
placed more emphasis on store interiors, which mandates modifications in the
way we approach the marketplace. To that end, we are evolving our current
products and adding new ones which complement our exterior sign business and
better align the company with emerging retail trends. We have begun to set the
stage for this growth initiative by both strengthening and adding to our
in-store capabilities. Our recent purchase of the assets of Carter-Miot
Engineering Co., a company with a reputation for quality in the financial
industry, stengthened our traditional sign business and opened up a new
interactive point-of-sales market for our Company. The decision to expand
Design Performance Group, our design and merchandising services firm, has
further bolstered our existing in-store presence. Both of these strategic
decisions have broadened our customer appeal and are natural extensions of our
base business.
Our strategy is to continue our expansion with other retail products and
service offerings which suit the new retailing market. This will be
accomplished by a combination of internal developments and acquisitions. It is
our intent to be a major factor in the dynamic retail communications business.
In summary, I am excited about our Company's future and am confident that our
dedicated employees, strong customer base, and the investments we have made
over the last two years will be reflected in the results over the coming years.
I would like to express my gratitude to our employees, customers and
suppliers, and to you, our stockholders, for your support over the years.
/s/ James R. Martin
- -------------------
James R. Martin
Chairman and Chief Executive Officer
<PAGE> 8
CONSOLIDATED
STATEMENTS
OF
OPERATIONS
[LOGO]
<TABLE>
<CAPTION>
FISCAL YEARS ENDED DEC. 31, JAN. 1, JAN. 2,
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA) 1995 1995 1994
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues
Net sales $ 103,247 $ 77,309 $ 90,362
Other income 571 853 751
- -------------------------------------------------------------------------------------
Total revenues 103,818 78,162 91,113
Cost and expenses
Cost of sales 85,114 63,060 74,433
Selling, general
and administrative 14,979 13,349 11,353
Interest expense 1,040 712 684
Goodwill write-off - 3,986 -
Provision for restructuring costs - 2,416 -
Provision for pension curtailment 483 - -
- -------------------------------------------------------------------------------------
Total cost and expenses 101,616 83,523 86,470
- -------------------------------------------------------------------------------------
Income (loss) before (provision) benefit for
income taxes 2,202 (5,361) 4,643
(Provision) benefit for income taxes (805) 524 (1,789)
- -------------------------------------------------------------------------------------
Net income (loss) $ 1,397 $ (4,837) $ 2,854
=====================================================================================
Net income (loss) per share $ .38 $ (1.31) $ .77
=====================================================================================
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
9
204
<PAGE> 9
CONSOLIDATED
BALANCE
SHEETS
[LOGO]
<TABLE>
<CAPTION>
DEC. 31, JAN. 1,
(IN THOUSANDS OF DOLLARS, EXCEPT PAR VALUE) 1995 1995
- -----------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 10 $ 10
Marketable securities - 599
Accounts receivable, net 27,050 16,010
Inventory 31,564 19,213
Prepaid expenses 1,080 1,679
Deferred income taxes 1,876 1,869
- -----------------------------------------------------------------------------
Total current assets 61,580 39,380
Property and equipment, net 13,854 11,947
Goodwill 1,508 -
Other assets 208 123
- -----------------------------------------------------------------------------
Total assets $ 77,150 $ 51,450
=============================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt $ 1,723 $ 745
Accounts payable 14,660 6,750
Accrued liabilities 5,704 4,078
Income taxes currently payable 708 (46)
Customer deposits and deferred revenue 5,673 4,504
- -----------------------------------------------------------------------------
Total current liabilities 28,468 16,031
Long-term debt 23,575 12,004
Deferred income taxes 1,123 987
Deferred liabilities 93 75
Commitments and
contingencies (Notes 7 and 11)
Stockholders' equity
Preferred stock - $.001 par value,
5,000,000 shares authorized, none issued - -
Common stock - $.001 par value,
20,000,000 shares authorized, 3,779,157 shares
issued and outstanding in 1995, 3,684,286 shares
issued and outstanding in 1994 4 4
Additional paid-in-capital 2,729 2,571
Notes receivable, common stock (169) (152)
Retained earnings 21,327 19,930
- -----------------------------------------------------------------------------
Total stockholders' equity 23,891 22,353
- -----------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 77,150 $ 51,450
=============================================================================
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
10
205
<PAGE> 10
CONSOLIDATED
STATEMENTS
OF
STOCKHOLDERS'
EQUITY
[LOGO]
<TABLE>
<CAPTION>
FISCAL YEARS ENDED DEC. 31, JAN. 1, JAN. 2,
(IN THOUSANDS OF DOLLARS) 1995 1995 1994
- ------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCK
Balance at beginning of year $ 4 $ 4 $ 4
Sales of common stock to
employees and directors - - -
- -----------------------------------------------------------------------
Balance at end of year $ 4 $ 4 $ 4
=======================================================================
ADDITIONAL PAID-IN-CAPITAL
Balance at beginning of year $ 2,571 $ 2,484 $ 2,360
Sales of common stock to
employees and directors,
30,000 shares in 1995,
11,000 shares in 1994,
and 11,000 shares in 1993 158 87 124
- -----------------------------------------------------------------------
Balance at end of year $ 2,729 $ 2,571 $ 2,484
=======================================================================
NOTES RECEIVABLE,
COMMON STOCK
Balance at beginning of year $ (152) $ (174) $ (193)
Issuance of notes receivable
common stock (99) (28) -
Payments of notes receivable
common stock 82 50 19
- -----------------------------------------------------------------------
Balance at end of year $ (169) $ (152) $ (174)
=======================================================================
RETAINED EARNINGS
Balance at beginning of year $ 19,930 $ 24,767 $ 21,913
Net income (loss) 1,397 (4,837) 2,854
- -----------------------------------------------------------------------
Balance at end of year $ 21,327 $ 19,930 $ 24,767
=======================================================================
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
11
206
<PAGE> 11
CONSOLIDATED
STATEMENTS
OF
CASH FLOW
[LOGO]
<TABLE>
<CAPTION>
FISCAL YEARS ENDED DEC. 31, JAN. 1, JAN. 2,
(IN THOUSANDS OF DOLLARS) 1995 1995 1994
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities
Net income (loss) $ 1,397 $ (4,837) $ 2,854
Adjustments to reconcile net income
(loss) to net cash provided by (used in)
operating activities
Depreciation and amortization 1,710 1,875 1,642
(Gain) loss on disposal of fixed assets 82 138 (5)
Provision for losses on accounts receivable 206 121 139
Deferred tax provision (benefit) 129 (694) 459
Goodwill write-off - 3,986 -
Provision for restructuring costs - 2,416 -
Provision for pension curtailment 483 - -
Changes in assets and liabilities, net of acquisition
Receivables (10,058) (2,497) (51)
Inventory (9,959) (2,637) 1,763
Prepaid expenses and other assets 161 (756) (12)
Accounts payable 7,579 1,696 (1,053)
Accrued liabilities 1,202 (519) (2,052)
Income taxes payable 754 (473) 132
Deferred liabilities 313 (838) (2,122)
- ----------------------------------------------------------------------------------------------
Net cash provided by (used in)
operating activities (6,001) (3,019) 1,694
- ----------------------------------------------------------------------------------------------
Cash flows from investing activities
Proceeds from sales of fixed assets 23 1 43
Proceeds from sales of investments 593 400 -
Investments in marketable securities - (499) 1,515
Capital expenditures (2,755) (2,460) (1,971)
Purchase of Carter-Miot assets (4,550) - -
- ----------------------------------------------------------------------------------------------
Net cash used by investing activities (6,689) (2,558) (413)
- ----------------------------------------------------------------------------------------------
Cash flows from financing activities
Net borrowings under line of credit 13,295 6,213 (679)
Repayments of long-term debt (746) (745) (745)
Sale of common stock 59 59 124
Payments of notes receivable -
common stock 82 50 19
- ----------------------------------------------------------------------------------------------
Net cash provided by (used in)
financing activities 12,690 5,577 (1,281)
- ----------------------------------------------------------------------------------------------
Net increase (decrease) in cash and
cash equivalents - - -
Cash and cash equivalents,
beginning of year 10 10 10
- ----------------------------------------------------------------------------------------------
Cash and cash equivalents,
end of year $ 10 $ 10 $ 10
==============================================================================================
Supplemental disclosures of cash
flow information
Interest paid $ 937 $ 799 $ 730
Income taxes paid $ 53 $ 786 $ 1,326
==============================================================================================
Non-cash transactions
Amortization of compensation
from restricted stock $ 1 $ 35 $ 66
Issuance of notes receivable -
common stock $ (99) $ (28) $ -
Acquisition liabilities assumed $ 1,630 $ - $ -
==============================================================================================
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
12
207
<PAGE> 12
NOTES TO
CONSOLIDATED
FINANCIAL
STATEMENTS
[LOGO]
1 DESCRIPTION OF BUSINESS
Plasti-Line, Inc. (the Company) is a publicly held company whose principal
business is the manufacture and sale of internally illuminated signs.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries, American Sign & Marketing Services, Inc.
(American Sign) and Carter-Miot, Inc. (Carter-Miot). The accounts of
Carter-Miot are included in the consolidated operations since the date of
acquisition, November 2, 1995 (see Note 3). All significant intercompany
accounts and transactions have been eliminated.
FISCAL YEAR
The Company's fiscal year consists of four quarters of thirteen weeks ending on
the last Sunday of the quarter. Each quarter's first two months consist of four
weeks with the last month of the quarter consisting of five weeks.
CASH AND MARKETABLE SECURITIES
Cash and cash equivalents consist of cash on hand and on deposit, and highly
liquid instruments with maturities of three months or less. Marketable
securities at January 1, 1995 (valued at cost, which approximates market)
consisted of certificates of deposit of $100,000 and U.S. Government and U.S.
Agency Obligations totaling $499,000.
INVENTORIES
Inventories are stated at lower of cost or market. Cost is determined by the
last-in, first-out ("LIFO") method.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost, less accumulated depreciation. The
provision for depreciation has been calculated using the straight-line method
over the following useful lives:
- ------------------------------------------------------------------------
Buildings and improvements 15 - 40 years
Machinery and equipment 3 - 7 years
- ------------------------------------------------------------------------
Major renewals and improvements are capitalized, while replacements,
maintenance, and repairs which do not improve or extend the life of the
respective assets are expensed. When depreciable assets are sold or retired,
the cost and related accumulated depreciation are removed from the accounts,
and any gain or loss is included in the earnings for the period.
INCOME TAXES
Deferred tax assets and liabilities have been recorded to reflect the expected
future tax consequences of events that have been included in the financial
statements or tax returns based on the difference between the financial and tax
bases of assets and liabilities using enacted tax rates in effect for the year
in which the differences are expected to reverse.
REVENUE RECOGNITION
The Company recognizes revenue and cost upon completion of sign installation.
If the Company is not installing the signage, revenue is recognized upon
shipment.
PER SHARE DATA
Net income (loss) per common share is computed by dividing net income (loss) by
the weighted average number of common shares and dilutive common equivalent
shares outstanding during each period. For purposes of computing common stock
equivalent shares outstanding, shares relating to options have been calculated
using the treasury stock method for the portion of each period for which the
options were outstanding and using the fair value of the Company's common stock
for each of the respective periods. The weighted average number of common
shares and dilutive common equivalent shares outstanding were 3,714,000,
3,695,000, and 3,710,000 at December 31, 1995, January 1, 1995, and January 2,
1994, respectively.
PREFERRED STOCK
The Company's authorized preferred stock may be issued from time to time in
series having such designated preferences and rights, qualifications and
limitations as the Board of Directors may determine.
13
208
<PAGE> 13
NOTES TO
CONSOLIDATED
FINANCIAL
STATEMENTS
[LOGO]
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Unless indicated otherwise, the book value of the Company's financial
instruments approximates fair value.
3 ACQUISITION
On November 2, 1995, the Company purchased, through its Carter-Miot subsidiary,
certain operating assets of a corporation located in Columbia, South Carolina.
Carter-Miot primarily produces internally illuminated outdoor signs and
automated teller machine surrounds. The purchase price was approximately
$4,550,000 in cash, including estimated professional fees and other
acquisition-related costs. In addition, the Company has paid certain
obligations totaling approximately $1,630,000. The transaction has been
accounted for using the purchase method of accounting, and accordingly, the
purchase price has been allocated to the separately identifiable assets of
Carter-Miot, principally accounts receivable, inventory, and machinery and
equipment. The consideration exceeded the underlying fair values of the
separately identifiable assets by approximately $1,521,000. This amount has
been reflected in the accompanying balance sheet as goodwill and is being
amortized using the straight-line method over 15 years.
Pro-forma unaudited results of operations for 1995 and 1994, assuming that
Carter-Miot had been acquired at the beginning of the fiscal year, are as
follows:
<TABLE>
<CAPTION>
1995 1994
(IN THOUSANDS OF DOLLARS EXCEPT PER SHARE DATA) (UNAUDITED) (UNAUDITED)
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Revenues $ 117,225 $ 97,616
==========================================================================================
Net income (loss) $ 1,427 $ (4,009)
==========================================================================================
Net income (loss) per share $ .39 $ (1.08)
==========================================================================================
</TABLE>
The proforma financial information is presented for informational purposes only
and is not necessarily indicative of the operating results that would have
occurred had the acquisition been consummated as of the above dates, nor are
they necessarily indicative of future operating results.
4 GOODWILL
Goodwill is composed of the following:
<TABLE>
<CAPTION>
ACCUMULATED
(IN THOUSANDS OF DOLLARS) GROSS AMORTIZATION NET
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance at January 2, 1994 $ 4,982 $ (871) $ 4,111
Amortization of goodwill - (125) (125)
Goodwill write-off (4,982) 996 (3,986)
- --------------------------------------------------------------------------------
Balance at January 1, 1995 - - -
Acquisition of Carter-Miot 1,521 (13) 1,508
- --------------------------------------------------------------------------------
Balance at December 31, 1995 $ 1,521 $ (13) $ 1,508
================================================================================
</TABLE>
Goodwill represents the excess of acquisition costs over fair market value of
net assets acquired in the purchase of Carter-Miot in 1995. Prior to 1995
goodwill represented the excess of acquisition costs over fair market value of
net assets acquired in the purchase of American Sign in 1986. In 1994, the
Company determined that projected results would not support the future
amortization of American Sign's remaining goodwill balance of $4.0 million.
Accordingly, the Company wrote off the unamortized balance of goodwill in the
fourth quarter of 1994.
14
209
<PAGE> 14
NOTES TO
CONSOLIDATED
FINANCIAL
STATEMENTS
[LOGO]
5 PROVISION FOR RESTRUCTURING COSTS
The 1994 operating results include a pre-tax charge for restructuring of $2.4
million. This charge primarily consisted of a $1.7 million charge for inventory
and related costs associated with a fast food restaurant drive-through order
verification product ("Horizon") at the Company's American Sign subsidiary. In
addition to the Horizon provision, the restructuring charge included $367
thousand for a loss on abandonment of certain equipment in Knoxville, $167
thousand for severance and outplacement costs related to the business
re-engineering project, and $162 thousand for costs relating to disposal of the
Centerville facility (Note 11).
6 SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENT DATA
<TABLE>
<CAPTION>
DEC. 31, JAN. 1,
(IN THOUSANDS OF DOLLARS) 1995 1995
- -------------------------------------------------------------------
<S> <C> <C>
Accounts receivable $ 27,769 $ 16,223
Less: allowances for doubtful accounts (719) (213)
- -------------------------------------------------------------------
Total accounts receivable, net $ 27,050 $ 16,010
===================================================================
INVENTORY CONSISTS OF:
Raw materials $ 7,330 $ 5,763
Work-in-process 4,289 1,818
Finished goods 22,008 13,625
- -------------------------------------------------------------------
Total inventory (FIFO) 33,627 21,206
- -------------------------------------------------------------------
LIFO reserve (2,063) (1,993)
- -------------------------------------------------------------------
Total inventory (LIFO) $ 31,564 $ 19,213
===================================================================
PROPERTY AND EQUIPMENT CONSISTS OF:
Land $ 1,177 $ 1,177
Buildings and improvements 12,492 12,231
Machinery and equipment 17,138 15,085
- -------------------------------------------------------------------
Total property and equipment, gross 30,807 28,493
Less: accumulated depreciation (16,953) (16,546)
- -------------------------------------------------------------------
Total property and equipment, net $ 13,854 $ 11,947
===================================================================
</TABLE>
7 LONG-TERM DEBT
Long-term debt consists of the following:
DEC. 31, JAN. 1,
(IN THOUSANDS OF DOLLARS) 1995 1995
- -------------------------------------------------------------------
KNOX COUNTY INDUSTRIAL REVENUE BONDS:
$2.15 million bearing interest at a
variable rate (5.05% at December 31, 1995,
and 5.4% at January 1, 1995) and the
balance at a fixed rate of 7.65%. Interest
is payable quarterly and $680 thousand of
principal payable annually with $2.63
million payable on November 1, 1999,
collateralized by Knoxville, Tennessee
real and fixed assets $ 4,670 $ 5,350
REVOLVING LINE OF CREDIT in the amount
of $16 million expiring on April 30,
1996. The line bears interest at a
variable rate (7.935% at December 31,
1995, and 6.735% at January 1, 1995),
collateralized by accounts receivable and
inventory 16,000 6,682
TERM NOTE up to the amount of $5 million
expiring February 29, 1996. The line
bears interest at a variable rate (7.935%
at December 31, 1995), collateralized
by accounts receivable and inventory 3,978 -
INDUSTRIAL REVENUE BONDS OF AMERICAN SIGN,
interest payable quarterly, at a
variable rate (7.9% at December 31, 1995,
and 7.65% at January 1, 1995)
Principal of $16.25 thousand payable
quarterly through December 1, 2005,
collateralized by Florence, Kentucky
real property 650 717
Less current maturities, as refinanced (1,723) (745)
- -------------------------------------------------------------------
Total long-term debt $ 23,575 $ 12,004
===================================================================
15
210
<PAGE> 15
NOTES TO
CONSOLIDATED
FINANCIAL
STATEMENTS
[LOGO]
On March 8, 1996, the Company entered into an agreement to replace its
revolving line of credit with a $19 million revolving credit facility. The new
facility expires on June 30, 1997. Borrowings under the facility are
collateralized by accounts receivable and inventory and bear interest at LIBOR
plus a margin ranging from 1.65% to 2.85%, based on certain operating
performance measures. The $16 million outstanding at December 31, 1995, under
the previous revolving line of credit, and $3 million of the term note balance
have been classified as non-current in accompanying balance sheet as the
proceeds of the new $19 million credit facility will be used to refinance
outstanding borrowings.
The new Revolving Line of Credit contains various covenants including
restricting other borrowings, the payment of cash dividends, the sale of
certain assets, and the Company's ability to acquire other businesses without
written consent. The covenants also require the Company to maintain liability
to net worth, interest coverage, cash flow ratios, and a minimum net worth.
Maturities of long-term debt, after giving effect to the refinancing described
above, in each of the next five years are as follows (in thousands of dollars):
1996 $ 1,723
1997 $ 19,745
1998 $ 745
1999 $ 2,695
2000 $ 65
The following is a schedule of future minimum rental payments for certain
manufacturing and data processing equipment which are required under operating
leases that have initial or remaining non-cancelable lease terms in excess of
one year (in thousands of dollars):
1996 $ 555
1997 $ 338
1998 $ 230
1999 $ 84
2000 $ 3
Operating lease rental expense was $828,000, $658,000, and $824,000 for 1995,
1994, and 1993, respectively.
16
211
<PAGE> 16
NOTES TO
CONSOLIDATED
FINANCIAL
STATEMENTS
[LOGO]
8 INCOME TAXES
Components of income tax provisions (benefit) are as follows:
<TABLE>
<CAPTION>
DEC. 31, JAN. 1, JAN. 2,
(IN THOUSANDS OF DOLLARS) 1995 1995 1994
- ---------------------------------------------------------------------
<S> <C> <C> <C>
Current tax provisions:
Federal $ 608 $ 221 $ 1,230
State 68 34 100
- ---------------------------------------------------------------------
676 255 1,330
Deferred income taxes related to:
Depreciation 161 (54) (53)
Recognition of bad debts (48) (34) 7
Horizon write-off 369 (640) -
Financial reserves (86) (129) 416
Maintenance revenue recognition (1) 31 19
Pension liability (238) - -
Other items (28) 47 70
- ---------------------------------------------------------------------
Total $ 805 $ (524) $ 1,789
=====================================================================
</TABLE>
The primary components of the deferred tax assets and (liabilities) are as
follows:
<TABLE>
<CAPTION>
DEC. 31, JAN. 1,
(IN THOUSANDS OF DOLLARS) 1995 1995
- -----------------------------------------------------------
<S> <C> <C>
Current:
Inventory valuation $ 479 $ 547
Workers' compensation and other
financial reserves 232 277
Vacation reserve 238 165
Deferred sales 126 126
Plant close reserve 64 84
Environmental reserve 36 37
Horizon write-off 271 640
Other financial reserves 420 221
Pension (asset) liability 10 (228)
- -----------------------------------------------------------
Total current $ 1,876 $ 1,869
===========================================================
Long-term:
Property and equipment $(1,123) $ (987)
===========================================================
</TABLE>
Reconciliation of income tax expense (benefit) at the statutory federal tax
rate with the actual effective income tax rate is as follows:
<TABLE>
<CAPTION>
DEC. 31, JAN. 1, JAN. 2,
1995 1995 1994
- --------------------------------------------------------------------------
<S> <C> <C> <C>
Marginal federal tax rate 34.0% (34.0)% 34.0%
State income taxes net of federal taxes 2.0% (2.6) 2.1
Non-deductible expenses of
acquired companies - 28.4 1.0
Other .6% (1.6) 1.4
- --------------------------------------------------------------------------
Effective rate 36.6% (9.8)% 38.5%
==========================================================================
</TABLE>
17
212
<PAGE> 17
NOTES TO
CONSOLIDATED
FINANCIAL
STATEMENTS
[LOGO]
9 STOCK OPTION PLANS
The Company has a Stock Incentive Program consisting of a Key Employee Plan and
a Director Plan under which options to purchase up to 350,000 shares of common
stock may be granted. Under the terms of the Key Employee Plan, the Company may
grant options to certain employees of the Company. The option price is equal to
the published bid price of the stock on the date of the grant. The options
become exercisable ratably over four years, beginning one year after the date
of the grant, and expire in five to ten years. Also included in the Key
Employee Plan are shares awarded to certain key managers. These shares are
restricted for ten years from the date of the grant unless earned earlier. The
shares can be earned in years one to three if certain earnings per share
measures are met. In addition, 15,000 restricted shares of stock were purchased
by certain key managers during 1992 and 1995, and 6,100 were purchased during
1994. These shares, purchased at $4.00 - $6.60 per share, vest two years from
the date of purchase. The Company has accepted notes from these individuals in
payment for this stock with interest paid monthly and principal paid annually
for ten years. The notes receivable for these shares are shown as a reduction
of Stockholders' Equity. Compensation expense of $1,000 was recognized in 1995
for restricted shares awarded and purchased.
Under the Director Plan, the Company has granted non-qualified options to
purchase shares to members of its Board of Directors. These options are priced
from $5.00 to $11.00 per share, vest as soon as the director has completed two
years of service, and expire ten years from the date of grant.
Activity and price information regarding the Stock Incentive Program during the
last three fiscal years is as follows:
<TABLE>
<CAPTION>
OPTION PRICE
SHARES PER SHARE
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Outstanding as of January 3, 1993 152,050 $ 4.50-12.00
Granted 30,500 10.50-12.00
Exercised (11,000) 5.00-11.00
Canceled (11,250) 4.50- 6.00
- ------------------------------------------------------------------------------------------
Outstanding as of January 2, 1994 160,300 4.50-12.00
Granted 39,000 5.25- 8.00
Exercised (4,900) 4.50- 5.00
Canceled (16,350) 4.50-12.00
- ------------------------------------------------------------------------------------------
Outstanding as of January 1, 1995 178,050 4.75-12.00
Granted 107,500 6.50- 8.38
Exercised (11,250) 5.00- 5.75
Canceled (57,300) 5.00-12.00
- ------------------------------------------------------------------------------------------
Outstanding as of December 31, 1995 217,000 $ 4.75-12.00
==========================================================================================
</TABLE>
In addition, on January 1, 1995, the Company implemented an Equity Compensation
Plan for non-employee directors. Under this plan, 150,000 shares are available
for issuance. In 1995, directors of the Company earned awards of 6,449 shares
of common stock which represented 50% of the value of their director fees for
the year.
10 EMPLOYEE BENEFIT PLANS
The Company maintains a profit sharing plan for salaried employees. The Company
is required to contribute at least three percent of current period net income.
Total contributions were $45 thousand in 1995, $0 in 1994, and $115 thousand in
1993. Additionally, the Company maintains a savings plan available to all
salaried employees. Each participant may elect to defer up to twelve percent of
their annual compensation. The Company contributes twenty-five cents for each
dollar the employee defers on the first six percent of employee deferred
compensation. The total contributions were $83 thousand in 1995, $59 thousand
in 1994, and $73 thousand in 1993.
18
213
<PAGE> 18
NOTES TO
CONSOLIDATED
FINANCIAL
STATEMENTS
[LOGO]
10 EMPLOYEE BENEFIT PLANS - CONTINUED
The Company also has a non-contributory defined benefit pension plan that
covers substantially all hourly employees at the Knoxville location. Benefits
are based on a fixed amount for each year of service.
The weighted average discount rate used in determining the actuarial present
value of the projected benefit obligation and the expected long-term rate of
return on assets was 7.0% as of December 31, 1995, and 7.5% at January 1, 1995.
Net pension cost included the following components:
<TABLE>
<CAPTION>
DEC. 31, JAN. 1, JAN. 2,
(IN THOUSANDS OF DOLLARS) 1995 1995 1994
- -------------------------------------------------------------------
<S> <C> <C> <C>
Service cost $ 87 $ 91 $ 70
Interest cost 262 251 238
Actual return on plan assets (1,042) 3 (194)
Net amortization and deferral 837 (189) 18
- -------------------------------------------------------------------
Net pension cost $ 144 $ 156 $ 132
===================================================================
</TABLE>
In December of 1995, the Board of Directors approved an amendment to the
pension plan which resulted in the freezing of all future benefits under the
plan as of December 31, 1995. As a result, the Company recognized a curtailment
loss of $483 thousand which included $467 thousand of unrecognized prior
service cost and a $16 thousand unrecognized transitional liability. Beginning
in January 1996, a defined contribution plan has been implemented for the
hourly employees of the Knoxville location.
The following table sets forth the pension plan's funded status and amount
recognized in the Company's balance sheet:
<TABLE>
<CAPTION>
DEC. 31, JAN. 1,
(IN THOUSANDS OF DOLLARS) 1995 1995
- ------------------------------------------------------------------------------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested $ 3,792 $ 3,333
Non-vested 221 318
- ------------------------------------------------------------------------------
Accumulated and projected 4,013 3,651
Plan assets at fair value, primarily listed
stocks and bonds 4,593 3,715
- ------------------------------------------------------------------------------
Plan assets above accumulated benefit obligation 580 64
Unrecognized net gain from past experience
different from that assumed and effects of
changes in assumptions (607) 5
Prior service cost not yet recognized in net periodic
pension cost - 531
- ------------------------------------------------------------------------------
Total pension asset (liability) $ (27) $ 600
==============================================================================
</TABLE>
11 CONTINGENCIES AND OTHER LIABILITIES
The Company has become subject to various lawsuits, claims, and other legal
matters in the course of conducting business. The Company, based in part upon
opinions of counsel, believes the outcome of such lawsuits, claims, and other
legal matters will not have a material impact on the Company's future
consolidated financial position, results of operations, and cash flows.
The Company is contingently liable for a $700,000 letter of credit issued
pursuant to a Tax Indemnity agreement related to the Industrial Revenue Bonds.
The Company also has irrevocable letters of credit in the amount of $1,566,000
pursuant to the Company's self-insurance with regard to workmens' compensation.
There are no outstanding balances on these letters of credit.
19
214
<PAGE> 19
NOTES TO
CONSOLIDATED
FINANCIAL
STATEMENTS
[LOGO]
11 CONTINGENCIES AND OTHER LIABILITIES - CONTINUED
Sales to one automotive customer were 19%, 16%, and 16% of the Company's sales
in 1995, 1994, and 1993, respectively. Sales to a bank customer were 11% of
sales in 1995. Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of trade receivables.
Concentrations of credit risk with respect to trade receivables are limited due
to the large number of customers comprising the Company's base and their
dispersion across a number of different industries, principally automotive,
petroleum, banking, and fast foods.
At December 31, 1995, a long-term contract with a customer that accounted for
19% of the Company's 1995 sales expired. The Company has been awarded an
extension until the customer is able to evaluate competitive bids, including
the Company's.
In order to alleviate excess manufacturing capacity, the Company closed its
Centerville, Tennessee, manufacturing facility in 1992. The December 31, 1995
and January 1, 1995 balance sheets include an accrual of $405 thousand and $460
thousand, respectively, which reflects the remaining estimated disposal costs
of the Centerville facility.
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE STOCKHOLDERS AND BOARD OF DIRECTORS OF PLASTI-LINE, INC.
We have audited the accompanying consolidated balance sheets of Plasti-Line,
Inc. and Subsidiaries as of December 31, 1995 and January 1, 1995, and the
related consolidated statements of operations, stockholders' equity, and cash
flows for each of the three years in the period ended December 31, 1995. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements 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 financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Plasti-Line, Inc.
and Subsidiaries as of December 31, 1995 and January 1, 1995, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1995 in conformity with generally
accepted accounting principles.
Coopers & Lybrand L.L.P.
Knoxville, Tennessee
February 29, 1996, except for Note 7,
as to which the date is
March 8, 1996
20
215
<PAGE> 20
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
RESULTS OF OPERATIONS
FISCAL YEAR 1995 COMPARED TO FISCAL YEAR 1994
Net sales increased $25.9 million (33.6%) due to higher volumes across the
business. Contributing to the increased volume were higher sales to automotive
($5.8 million) and bank customers ($7.1 million) at Plasti-Line East (the
Company's Knoxville and Florence locations), as well as sales increases at
Plasti-Line West ($4.7 million), Design Performance Group ($2.9 million), and
our newest subsidiary, Carter-Miot ($1.1 million). Sales increased in the
fourth quarter of 1995 by $14.3 million (59.7%) as compared to the same period
in 1994 due to an increase in volume at all locations. Fourth quarter sales
included $11.3 million for a major sign re-image that was completed for one of
Plasti-Line East's bank customers.
Income before taxes and interest was $3.2 million as compared to $1.8 million
in 1994 (excluding the goodwill write-off and the provision for restructuring
charges). The improvement in income was due to an increase in gross profit
($3.6 million) from higher sales. Partially offsetting the higher gross profit
was an increase in selling, general and administrative costs ($1.6 million)
which was related to the increased volumes. Selling, general, and
administrative costs in each of 1995 and 1994 included approximately $1.5
million in costs associated with the Company's business re-engineering
initiative which was completed during the fourth quarter of 1995. Also
partially offsetting the favorable impact of the gross profit improvement was a
one-time charge of $483 thousand related to the curtailment of a defined
benefit pension plan. This plan, for the benefit of the union employees of the
Knoxville facility, was frozen on December 31, 1995. Future retirement benefits
for this employee group will be earned in a newly established defined
contribution plan. The impact of this curtailment was a one-time non-cash
charge for unrecognized prior service costs that otherwise would have been
expensed over future years.
Interest expense of $1,040 thousand increased $328 thousand from the prior
year. Higher average interest rates as well as increased borrowings, related to
the purchase of assets for the Carter-Miot subsidiary as well as higher working
capital related to fourth quarter volumes, were responsible for the increase.
The Company's effective tax rate for 1995 was 36.6% of pre-tax income as
compared to -9.8% in 1994. The 1994 rate was primarily due to the net loss
combined with an increase in non-deductible expenses associated with the
goodwill write-off.
The Company's current supply contract with General Motors expired December 31,
1995. The Company has been awarded an extension until the customer is able to
evaluate competitive bids, including the Company's. In 1995, this customer
represented 19% of the Company's total sales.
FISCAL 1994 YEAR COMPARED TO FISCAL YEAR 1993
Net sales decreased $13.1 million (14.4%) due to reduced sales at Knoxville.
Contributing to the lower volume were lower sales to automotive ($5.6 million)
and to bank ($7.2 million) customers due to slower re-image activity in these
markets during 1994. Sales increased in the fourth quarter of 1994 by $2.0
million (9.3%) as compared to the same period in 1993 due to an increase in
volume at all locations, including the Company's new division, Plasti-Line
West.
Income before taxes and interest, excluding the goodwill write-off and the
provision for restructuring charges, was $1.8 million as compared to $5.3
million in 1993. The decrease in income, excluding the goodwill write-off and
the restructuring charge, was due to a reduction in gross profit ($1.7 million)
from lower sales as well as an increase in selling, general and administrative
costs ($2.0 million). Despite the reduction in gross profit as a result of
lower sales, gross profit as a percent to sales improved to 18.4% versus 17.6%
in 1993 largely due to manufacturing performance improvements at both plants.
Selling, general, and administrative costs increased in 1994 versus 1993 due to
$1.5 million in costs associated with the Company's business re-engineering
initiative combined with $475 thousand in costs related to the Company's new
division, Plasti-Line West. The Company's business re-engineering project is
expected to lower costs by reducing lead times throughout the business,
improving working capital management, increasing manufacturing efficiencies,
and reducing salaried personnel costs.
The loss before taxes and interest was $5.4 million due to a $2.4 million
restructuring charge and $4.0 million goodwill write-off. The $2.4 million
charge for restructuring primarily consisted of a $1.7 million charge for
inventory and related costs associated with its fast food restaurant
drive-through order verification product ("Horizon") at the Company's American
Sign subsidiary. Horizon had been in the development phase for several years at
American Sign. The Company believes there is demand for this type of product;
however, the Horizon unit, designed and manufactured by a third party, has
failed to operate as specified. During the fourth quarter, the Company made the
decision not to sell the current version of this product. In addition to the
Horizon provision, the restructuring charge includes $367 thousand for a loss
on abandonment of certain manufacturing equipment, $167 thousand for severance
and outplacement costs related to the business re-engineering project, and $162
thousand for costs relating to disposal of the Centerville manufacturing
facility.
21
216
<PAGE> 21
The 1994 operating results also included a $4.0 million charge representing the
write-off of the remaining goodwill from the American Sign acquisition.
Plasti-Line purchased the stock of American Sign in December 1986, allocating
$5 million of the purchase price to goodwill. Since the acquisition, American
Sign has not achieved the sales and earnings levels projected at the time of
acquisition due to increased competitive pressures, unsuccessful efforts to
replace an aging product line, and management turnover. These conditions have
resulted in reduced earnings and even losses over the last several years.
During the fourth quarter, the Company determined, based upon the trend of
operating results, exclusive of the projected benefits of lower costs from the
business re-engineering project currently underway on future projections, that
its projected results would not support the future amortization of the
remaining goodwill balance of $4 million.
Interest expense of $712 thousand increased $28 thousand, or 4.1%, from the
prior year. This was due to increased interest rates and borrowings under the
Company's revolving line of credit.
The Company's effective tax rate for 1994 was -9.8% of pre-tax income as
compared to 38.5% for 1993. The 1994 rate was primarily due to the net loss
combined with an increase in non-deductible expenses associated with the
goodwill write-off.
LIQUIDITY AND CAPITAL RESOURCES
The Company has met its capital requirements with funds generated from
operations and from the Company's line of credit. The Company has a new
revolving loan agreement in the amount of $19 million. At December 31, 1995,
the Company had a $19 million balance outstanding on this revolving loan as
compared to a $6.6 million balance at the end of fiscal 1994. Funds of $6.0
million were used in operating activities during 1995 primarily as a result of
increased receivable and inventory levels. The Company had working capital of
$33.1 million at December 31, 1995 as compared to $23.3 million at the end of
fiscal 1994. This increase in working capital related primarily to the higher
volumes the Company is experiencing as well as a spike in accounts receivables
related to a delay in billings during the fourth quarter due to the impact of
the business re-engineering system conversion. Investing activities used $6.6
million during 1995. The Company made capital expenditures of $2.7 million in
1995 and $2.5 million in 1994. In addition, in 1995 the Company invested cash
of $4.6 million to purchase the assets of Carter-Miot, Inc., located in
Columbia, South Carolina. The assets purchased were primarily accounts
receivable, inventory, and machinery and equipment. Financing activities
provided $12.7 million during 1995. Net borrowings under the revolving line of
credit primarily provided funds from financing activities. The Company's future
capital expenditures will relate principally to the acquisition of new
machinery and equipment and furniture and fixtures designed to increase
productivity and efficiency. The Company believes the cash generated from
operations and funds available under the existing line of credit are sufficient
for all planned operating and capital requirements.
SEASONALITY
The Company's sales exhibit limited seasonality with sales in the first quarter
generally being the lowest and fourth quarter sales the highest. First quarter
sales tend to be relatively lower because of weather constraints which slow
down customers' construction schedules and their pattern of sign purchases.
Sales have normally accelerated in the second, third, and fourth quarters
corresponding with accelerating construction schedules.
NEW ACCOUNTING STANDARD
The Financial Accounting Standards Board issued a new accounting standard (SFAS
No. 123) that introduces a preferable fair-value based method of accounting for
stock-based compensation. The Company will adopt the disclosure provisions of
SFAS 123 in fiscal 1996. As the elective recognition provisions of the new
standard will not be adopted, this accounting standard will have no effect on
future results of operations.
22
217
<PAGE> 22
SUMMARY OF QUARTERLY RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT PER SHARE DATA) FIRST SECOND THIRD FOURTH YEAR
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1995:
Net sales $ 20,056 $ 22,512 $ 22,402 $ 38,277 $ 103,247
Gross profit 3,370 4,154 3,842 6,767 18,133
Net income 27 120 110 1,140 1,397
Net income per share .01 .03 .03 .30 .38
Price range of common stock as
reported by NASDAQ:
High 7 7-1/2 9-1/8 8-3/4 9-1/8
Low 4-3/4 5-1/2 7-1/2 7-7/8 4-3/4
- ------------------------------------------------------------------------------------------------------
YEAR ENDED JANUARY 1, 1995:
Net sales $ 15,971 $ 19,438 $ 17,933 $ 23,967 $ 77,309
Gross profit 2,780 3,381 3,461 4,627 14,249
Net income (loss) 24 69 53 (4,983)(1) (4,837)
Net income (loss) per share .01 .02 .01 (1.35)(1) (1.31)
Price range of common stock as
reported by NASDAQ:
High 10-7/8 8-3/4 7-3/4 6-1/4 10-7/8
Low 7-3/4 7-1/4 5-1/4 4-3/4 4-3/4
</TABLE>
(1) See footnotes 4 and 5 of the consolidated financial statements.
COMMON STOCK INFORMATION AND DIVIDEND POLICY
Plasti-Line, Inc. common stock is quoted on the Nasdaq National Market System.
As of March 6, 1995, there were 175 holders of record of Plasti-Line, Inc.
common stock. The Company has never paid cash dividends. The Board of Directors
plans to continue this policy, retaining future earnings to support growth and
expansion of the Company's business.
ANNUAL MEETING
11:00 a.m. EST Tuesday, April 16, 1996 at the corporate offices of Plasti-Line,
Inc., 623 E. Emory Road, Knoxville, Tennessee 37950
FORM 10K
Additional information about Plasti-Line, Inc., including copies of Form 10K
reports to the Securities and Exchange Commission, may be obtained without
charge by written request to:
Mark J. Deuschle
Plasti-Line, Inc.
P.O. Box 59043
Knoxville, TN 37950-9043
NASDAQ SYMBOL
SIGN
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
800 S. Gay Street, Suite 1600
Knoxville, TN 37929
STOCK TRANSFER AGENT
Wachovia Bank & Trust Company
P.O. Box 3001
Winston-Salem, NC 27102
EXECUTIVE OFFICERS
James R. Martin
Chairman of the Board
Chief Executive Officer
John D. Burke
Executive Vice President of
Marketing
Mark J. Deuschle
Vice-President of Finance,
Treasurer, Secretary, and
Chief Financial Officer
C. Wayne Morris
Senior Vice-President of
Marketing
Kathryn C. Wood
Vice-President of
Administration
BOARD OF DIRECTORS
Howard L. Clark, Jr.
Vice-Chairman
Lehman Brothers
James G. Hanes, III
Investor
James A. Haslam, III
Chief Executive & Chief
Operating Officer
Pilot Oil Corporation
Donald F. Johnstone
President & Chief Executive
Officer
Whittle Communications
James R. Martin
Chairman and Chief
Executive Officer
Plasti-Line, Inc.
J. Hoyle Rymer
President
JHR Co.
James F. Smith, Jr.
Chairman of the Executive
Committee
First American Corporation
H. Mitchell Watson, Jr.
President
Sigma Group of America
220
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENTS OF OPERATIONS, CONSOLIDATED BALANCE SHEETS, AND
ACCOMPANYING NOTES AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ANNUAL
REPORT FILED WITH THE COMPANY'S FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31,
1995, FILE NO. 0-15214.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-02-1995
<PERIOD-END> DEC-31-1995
<CASH> 10
<SECURITIES> 0
<RECEIVABLES> 27,769
<ALLOWANCES> 719
<INVENTORY> 31,564
<CURRENT-ASSETS> 61,580
<PP&E> 30,807
<DEPRECIATION> 16,593
<TOTAL-ASSETS> 77,150
<CURRENT-LIABILITIES> 28,468
<BONDS> 0
0
0
<COMMON> 4
<OTHER-SE> 23,887
<TOTAL-LIABILITY-AND-EQUITY> 77,150
<SALES> 103,247
<TOTAL-REVENUES> 103,818
<CGS> 85,114
<TOTAL-COSTS> 85,114
<OTHER-EXPENSES> 15,256
<LOSS-PROVISION> 206
<INTEREST-EXPENSE> 1,040
<INCOME-PRETAX> 2,202
<INCOME-TAX> 805
<INCOME-CONTINUING> 1,397
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,397
<EPS-PRIMARY> .38
<EPS-DILUTED> .38
</TABLE>