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
For the fiscal year ended December 29, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________.
Commission file number 0-15214
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 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 10, 1997: $12,913,247.
Number of shares outstanding of each of the registrant's classes
of common stock as of March 29, 1997: 3,806,797 shares.
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Annual Report to Stockholders for
the fiscal year ended December 29, 1996, and the registrant's
Proxy Statement, dated March 18, 1997, are incorporated by
reference into Parts II and III, respectively, of this Annual
Report on Form 10-K.
<PAGE>
PART I
ITEM 1. BUSINESS
General
Plasti-Line, Inc. (the Company) was incorporated in the state of
Tennessee in 1984. As used herein, the Company refers to
Plasti-Line, Inc. and its subsidiaries unless the context
requires otherwise. The Company, has been in business since
1944, beginning as a small, privately owned company. The Company
is an industry leader providing a complete range of retail
communication products and services to customers in the
automotive, food service, petroleum, financial services, and
other retailing markets. The Company's expertise is the design,
manufacture, installation, and maintenance of exterior, interior
and on-premise signage and point-of-purchase products, integrated
by a systematized product management capability. The Company
designs, engineers and manufactures substantially all of its
products in Knoxville, Tennessee, Florence, Kentucky, Columbia,
South Carolina, and Ontario, California.
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, retail and food service 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 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. For
high-volume customers in the financial services market, in
addition to the basic signage products, the Company focuses on
all aspects of the customer's communication needs, from in-store
merchandising kiosks, to creative ATM surround solutions.
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.
<PAGE>
Design Performance Group, the Company's retail design and
merchandising services firm, offers turnkey retail design
solutions with programs that include market research, graphic and
environmental design, production, and installation.
Customers
The Company, for internal purposes, separates its business by
customers into the following groupings: automotive, food
services, financial services, petroleum, merchandising design,
and general retail. For its automotive, financial services,
retail, and food services 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 22% of the Company's
net sales in fiscal 1996. 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, on February 25, 1997, announced the signing of a new
contract for the supply of internally illuminated outdoor signs
for the General Motors dealership sign program, as well as the
administration of the sign program for over 8,000 car dealerships
in the United States. This program accounted for approximately
11% of the Company's sales in 1996. The Company furnishes all
services associated with the manufacture and installation of
signs and replacement parts ordered by General Motors. The
contract is terminable on 30 days' notice by General Motors 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.
Additionally, 11% of the Company's sales in 1996 were to
McDonald's Corporation (McDonald's) and its franchises.
The Company is not the sole supplier to this customer.
Marketing
Products and services are marketed on a direct basis and through
sales representatives throughout the United States. 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.
The Company is also investing in improving the Research and
Development function in an effort to develop marketing
opportunities and better serve customer needs. This initiative
is focused on developing a new generation of products that are
distinctive, customer-focused and add to our total offering of
products.
<PAGE>
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.
Although no authoritative ranking of the Company's industry is
published, the Company believes that in 1996 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 1,003 full-time employees as of
December 29, 1996 of which approximately 51.8 percent were
employed under union contract.
Product Backlog
At December 29, 1996, booked product orders believed to be firm
amounted to approximately $19.0 million as compared with
approximately $18.3 million at December 31, 1995. Products are
shipped by the Company against customer delivery schedules, which
generally call for delivery one month after the order is
placed. The Company believes that substantially all of its
product backlog at December 29, 1996 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.
<PAGE>
Seasonality
The Company's sales in fiscal 1996 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.
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.
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Name Age Present Position Business Experience
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James R. Martin 53 Chairman Chief Executive Officer
Chief Executive of the Company since
Officer 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.
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F. Joseph Brang 57 Vice President - Joined the Company in
Operations December 1996. Prior
to joining the Company,
he was the General
Manager of U.S.
Operations of Philips
Consumer Electronics Co.
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- --------------------------------------------------------------------
John D. Burke 55 Chief Marketing Joined the Company in
Officer October 1995. He has
Executive Vice had significant general
President management, sales, and
marketing leadership
positions at General
Foods, Hershey, Nestle,
and Young & Rubicam.
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Mark J. Deuschle 37 Chief Financial Chief Financial Officer
Officer since July 1992. He
Vice President joined the Company in
of Finance 1989 serving as
Treasurer Corporate Controller
Secretary and Assistant
Secretary. From 1985
until employment with
the Company, he was
employed in various
capacities by FMC
Corporation, a
diversified
international
manufacturing company.
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Kathryn Coleman Wood 41 Vice President Vice President of Human
of Human Resources since August
Resources 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, Tennessee 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 office facility and manufacturing space in
Florence, Kentucky which is approximately 230,000 square feet.
The Company owns a manufacturing and office facility in
<PAGE>
Centerville, Tennessee, which is approximately 170,000 square
feet, at which operations ceased during 1992. The Company also
rents a manufacturing and office facility in Ontario, California
which is approximately 56,000 square feet, and a manufacturing
and office facility in Columbia, South Carolina which is
approximately 130,000 square feet. The Company's equipment
consists primarily of molds, vacuum forming equipment, computers
and general office equipment.
ITEM 3. LEGAL PROCEEDINGS
None.
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 1996 fiscal year.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
This information is incorporated herein by reference to page 30
of the Company's 1996 Annual Report to Stockholders, which is
attached hereto as Exhibit 13.0.
ITEM 6. SELECTED FINANCIAL DATA
This information is incorporated herein by reference to page 3
of the Company's 1996 Annual Report to Stockholders, which is
attached hereto as Exhibit 13.0.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
This information is incorporated herein by reference to pages
27-28 of the Company's 1996 Annual Report to Stockholders, which
is attached hereto as Exhibit 13.0.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
This information is incorporated herein by reference to pages
13-25 of the Company's 1996 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 herein by reference to pages 2-14 of the Company's
Proxy Statement dated March 18, 1997. 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
6-7 of the Company's Proxy Statement dated March 18, 1997. Such
information is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
This information is incorporated herein by reference to pages
13-14 of the Company's Proxy Statement dated March 18, 1997.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
This information is incorporated herein by reference to page 12
of the Company's Proxy Statement dated March 18, 1997.
<PAGE>
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 8.
14 (a) (2).
Financial Statement Schedules: See Index to Financial
Statements and Financial Statement Schedules, page 8.
14 (a) (3).
Exhibits: See Index to Exhibits, page 10.
14 (b) Reports on Form 8-K:
None
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.
PLASTI-LINE, INC.
By: /s/James R. Martin
------------------
James R. Martin
(Chief Executive Officer)
Dated: 3/31/97
-------
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.
<PAGE>
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 3/31/97
James R. Martin Chief Executive Officer
Chairman of the Board
/s/ Mark J. Deuschle 3/31/97
Mark J. Deuschle Vice President of Finance
Treasurer, Secretary
(Principal Financial and
Accounting Officer)
Howard L. Clark, Jr. Director
James G. Hanes, III Director
James A. Haslam, III Director
/s/Donald F. Johnstone 3/24/97
Donald F. Johnstone Director
/s/J. Hoyle Rymer 3/24/97
J. Hoyle Rymer Director
/s/James F. Smith, Jr. 3/24/97
James F. Smith, Jr. Director
/s/H. Mitchell Watson, Jr. 3/25/97
H. Mitchell Watson, Jr. Director
<PAGE>
PLAST-LINE, INC.
INDEX TO FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES
1. Financial Statements Page Reference
Annual Report to Stockholders
Consolidated statements of operations 13
for the years ended December 29, 1996 (1996),
December 31, 1995 (1995),
and January 1, 1995 (1994),
Consolidated balance sheets at December 29, 1996 (1996) 14
and December 31, 1995 (1995)
Consolidated statements of stockholders' equity for the 15
years ended December 29, 1996 (1996), December 31, 1995
(1995), and January 1, 1995 (1994),
Consolidated statements of cash flow for the years ended 16
December 29, 1996 (1996), December 31, 1995 (1995), and
January 1, 1995 (1994),
Notes to consolidated financial statements 17-25
Report of independent accountants 26
2. Financial Statement Schedules: Form 10-K
Schedules include:
Schedules omitted - Schedules I, II, III, IV, and V are
omitted as not applicable because the required conditions are not present.
<PAGE>
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 18, 1997, on our audits of the consolidated financial
statements and financial statement schedule of Plasti-Line, Inc.
as of December 29, 1996 and December 31, 1995, and for each of
the three years in the period ended December 29, 1996, 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 26, 1997
<PAGE>
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.
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Exhibit Description
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- ----------------------------------------------------------------------
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.
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- ----------------------------------------------------------------------
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.
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- ----------------------------------------------------------------------
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.
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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.
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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.
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- ----------------------------------------------------------------------
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.
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- ----------------------------------------------------------------------
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.
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- ----------------------------------------------------------------------
4.5 Pledge and Security 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.
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- ----------------------------------------------------------------------
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.
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- ----------------------------------------------------------------------
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.
<PAGE>
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Exhibit Description
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
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.
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- ----------------------------------------------------------------------
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.
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- ----------------------------------------------------------------------
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.
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- ----------------------------------------------------------------------
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.
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- ----------------------------------------------------------------------
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.
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- ----------------------------------------------------------------------
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.
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10.33 Labor Agreement between American Sign & Marketing
Services, Inc. and the American Sign & Marketing
Services, Inc., Independent Union dated December 31,
1995.
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10.38 Plasti-Line, Inc./Sheet Metal Workers Local Union 555
Retirement Savings Plan & Trust dated January 1, 1996.
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10.39* Amended and Restated Credit Agreement between
Plasti-Line, Inc. and Suntrust Bank, East Tennessee,
N.A. dated April 30, 1996
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10.40* First Modification Agreement between Plasti-Line,
Inc. and Suntrust Bank, East Tennessee, N.A. dated
July 22, 1996
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10.41* Amended and Restated Revolving Credit Note between
Plasti-Line, Inc. and Suntrust Bank, East Tennessee,
N.A. dated April 30, 1996
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10.42* Amended and Restated Security Agreement between
Plasti-Line, Inc. and Suntrust Bank, East Tennessee,
N.A. dated April 30, 1996
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10.43* Supply Agreement between GM-DI Leasing Corporation
and Plasti-Line, Inc. dated February 24, 1997
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13.0* 1996 Annual Report to Stockholders.
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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.
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23.0* Consent of Experts
Consent of Coopers & Lybrand filed herewith
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24.0* Power of Attorney (contained on the signature page of
this annual report).
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<PAGE>
Exhibit Description
- ----------------------------------------------------------------------
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27.0* Financial date schedule (for SEC use only)
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(1) Plans and arrangements where executives receive
compensation.
IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII
$19,000,000
AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of April 30, 1996
Among
PLASTI-LINE, INC., CARTER-MIOT, INC. and
AMERICAN SIGN AND MARKETING SERVICES, INC.
(collectively, as "Borrowers")
The Banks Listed Herein
and
SUNTRUST BANK, EAST TENNESSEE, N.A.
as Administrative Agent for the Banks
IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII
<PAGE>
4
TABLE OF CONTENTS
ARTICLE I
LOANS
SECTION 1.01. Commitment................................. 1
SECTION 1.02. Funding Loans.............................. 1
SECTION 1.03. Swing Loans................................ 2
SECTION 1.04. Notes; Principal Payments.................. 3
SECTION 1.05. Interest................................... 3
SECTION 1.06. Facility Fee; Closing Fee; Termination
and Reduction of Commitments......................... 4
SECTION 1.07. Additional Interest; Alternate Rate of
Interest; Maximum Interest Rate...................... 5
SECTION 1.08. Continuation and Conversion of Loans....... 5
SECTION 1.09. Optional Prepayment of Loans............... 7
SECTION 1.10. Manner of Payment.......................... 7
SECTION 1.11. Change in Circumstances.................... 8
SECTION 1.12. Change in Legality......................... 9
SECTION 1.13. Indemnity for LIBOR Loans.................. 9
SECTION 1.14. Capital Adequacy........................... 10
SECTION 1.15. Reasonableness of Increased Costs.......... 10
SECTION 1.16. Pro Rata Treatment......................... 10
SECTION 1.17. Certain Notices............................ 10
SECTION 1.18. Borrowing Base Restrictions................ 11
ARTICLE II
COLLATERAL AND GUARANTIES
SECTION 2.01. Secured Obligations........................ 12
SECTION 2.02. No Guaranty................................ 12
SECTION 2.03. Loan Documents............................. 12
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. Initial Loans.............................. 12
SECTION 3.02. All Loans.................................. 13
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Organization; Powers; Qualification........ 13
SECTION 4.02. Authorization; Enforceability.............. 14
SECTION 4.03. Consents and Approvals..................... 14
SECTION 4.04. Financial Statements....................... 14
SECTION 4.05. No Material Adverse Change................. 15
SECTION 4.06. Subsidiaries............................... 15
<PAGE>
SECTION 4.07. Litigation................................. 15
SECTION 4.08. Tax Returns................................ 15
SECTION 4.09. Properties................................. 15
SECTION 4.10. Employee Benefit Plans..................... 15
SECTION 4.11. Government Regulation...................... 16
SECTION 4.12. Margin Stock............................... 16
SECTION 4.13. No Material Misstatements.................. 16
SECTION 4.14. Patents, Trademarks, etc................... 17
SECTION 4.15. Hazardous Wastes........................... 17
SECTION 4.16. No Brokers or Finders...................... 17
SECTION 4.17. No Default of Indebtedness; Solvency....... 17
SECTION 4.18. Agreements................................. 18
SECTION 4.19. Compliance with Law........................ 18
SECTION 4.20. Labor Controversies........................ 18
ARTICLE V
AFFIRMATIVE COVENANTS
SECTION 5.01. Corporate Existence and Maintenance of
Properties........................................... 18
SECTION 5.02. Compliance with Laws....................... 19
SECTION 5.03. Insurance.................................. 20
SECTION 5.04. Obligations and Taxes...................... 20
SECTION 5.05. Accounting Methods and Financial Records... 20
SECTION 5.06. Financial Statements, Certificates and
Reports.............................................. 20
SECTION 5.07. Access to Premises and Records............. 22
SECTION 5.08. Notice of Default.......................... 22
SECTION 5.09. Notice of Litigation....................... 22
SECTION 5.10. Notice of Strikes, Labor Controversies,
etc.................................................. 22
SECTION 5.11. Update of Subsidiaries..................... 22
SECTION 6.01. Liens...................................... 22
SECTION 6.02. Indebtedness............................... 24
SECTION 6.03. Liquidation, Sale of Assets and Merger..... 24
SECTION 6.04. Investments................................ 25
SECTION 6.05. Guarantees................................. 26
SECTION 6.06. Breach or Violation........................ 26
SECTION 6.07. Use of Proceeds............................ 26
SECTION 6.08. Transactions with Affiliates............... 26
SECTION 6.09. Restrictive Covenants...................... 26
SECTION 6.10. Increase in Benefits; New Plans............ 27
ARTICLE VII
FINANCIAL COVENANTS
SECTION 7.01. Consolidated Current Ratio................. 27
SECTION 7.02. Consolidated Tangible Net Worth............ 27
SECTION 7.03. Consolidated Debt Service Coverage......... 28
<PAGE>
SECTION 7.04. Consolidated Total Liabilities to
Consolidated Tangible Net Worth...................... 28
SECTION 7.05. Consolidated Funded Debt to Consolidated
Adjusted Cash Flow................................... 28
SECTION 7.06. Capital Expenditures...................... 28
SECTION 7.07 Consolidated Financial Covenants;
Determination Periods................................ 28
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.01. Events of Default.......................... 29
SECTION 8.02. Exercise of Remedies....................... 31
ARTICLE IX
THE ADMINISTRATIVE AGENT
SECTION 9.01. Appointment and Authorization.............. 32
SECTION 9.02. Noteholders................................ 32
SECTION 9.03. Consultation with Counsel.................. 32
SECTION 9.04. Documents.................................. 33
SECTION 9.05. Resignation or Removal of the
Administrative Agent................................. 33
SECTION 9.06. Responsibility of the Administrative
Agent................................................ 33
SECTION 9.07. Notices of Event of Default................ 35
SECTION 9.08. Bank Credit Decision....................... 35
SECTION 9.09. Indemnification............................ 35
SECTION 9.10. Benefit of Article IX...................... 35
SECTION 9.11. Administrative Agent's Fee................. 36
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Modification.............................. 36
SECTION 10.02. Waiver.................................... 36
SECTION 10.03. Payment of Expenses....................... 36
SECTION 10.04. Notices................................... 38
SECTION 10.05. Governing Law............................. 38
SECTION 10.06. Invalid Provisions........................ 39
SECTION 10.07. Nonliability of Banks..................... 39
SECTION 10.08. Binding Effect and Assignability.......... 39
SECTION 10.09. Entirety; Conflicts....................... 40
SECTION 10.10. Headings, etc............................. 40
SECTION 10.11. Survival.................................. 40
SECTION 10.12. Sale and Transfers etc.................... 40
SECTION 10.13. No Third Party Beneficiary................ 41
SECTION 10.14. Waiver of Jury Trial...................... 41
SECTION 10.15. Consent to Jurisdiction................... 42
<PAGE>
SECTION 10.16. Multiple Counterparts..................... 42
SECTION 10.17. Disclosures............................... 43
SECTION 10.18. Sharing of Setoffs........................ 43
SECTION 10.19. Repayments in Bankruptcy.................. 44
SECTION 10.20. Amendment and Restatement................. 44
ARTICLE XI
DEFINITIONS
SECTION 11.01. Definitions............................... 44
SECTION 11.02. Other Definitional Provisions............. 44
SECTION 11.03. Accounting Matters........................ 45
<PAGE>
11
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT dated as of April 30, 1996,
among PLASTI-LINE, INC., a Tennessee corporation ("Plasti-Line"), CARTER-MIOT,
INC., a Georgia corporation and AMERICAN SIGN AND MARKETING SERVICES, INC., a
Kentucky corporation (each a "Borrower" and collectively, the "Borrowers"), the
Banks set forth on the signature page hereto (collectively, the "Banks"), and
SUNTRUST BANK, EAST TENNESSEE, N.A., a national banking association, as
administrative agent for the Banks under this Agreement (in such capacity, the
"Administrative Agent") and as lender under this Agreement ("SunTrust") (unless
otherwise indicated, capitalized terms herein have the meanings set forth in
Exhibit A hereto), recites and provides as follows:
RECITALS
WHEREAS, the Borrowers have requested that the Banks extend credit to the
Borrowers in an aggregate principal amount of up to $19,000,000 to refinance
certain indebtedness owing to SunTrust and to provide funds for other general
corporate purposes; and
WHEREAS, the Banks are willing to extend such credit on the
terms and subject to the conditions set forth herein;
NOW THEREFORE, in consideration of the mutual promises set forth herein
and for other valuable consideration, the parties agree as follows:
ARTICLE I
LOANS
SECTION 1.01. Commitment. Subject to the terms and conditions and relying upon
the representations and warranties herein, each Bank, severally and not jointly,
agrees to make Loans to the Borrowers, from time to time on or after the date
hereof and until the Commitment Termination Date, in an aggregate principal
amount at any time outstanding not exceeding the amount of its Commitment;
provided, however, the aggregate principal amount of Loans outstanding at any
time shall not exceed the Borrowing Base. The Borrowers may borrow, repay and
reborrow hereunder on or after the date hereof and prior to the Commitment
Termination Date, subject to the terms and conditions herein.
SECTION 1.02. Funding Loans. (a) Each Loan shall be either a LIBOR Loan or a
Base Rate Loan as the Borrowers may request subject to and in accordance with
this Section. All LIBOR Loans and Base Rate Loans made by the Banks in any one
<PAGE>
borrowing shall be in a minimum aggregate principal amount of $1,000,000 and in
integral multiples of $100,000 in excess thereof; provided, however, (i) there
shall be no minimum borrowing restrictions on Loans made under the Swing Line
Commitment and (ii) any and all advances of LIBOR Loans or Base Rate Loans used
to repay amounts outstanding under the Swing Line Commitment may be in minimum
principal amounts of $100,000 and in integral multiples of $1,000 in excess
thereof. Subject to the limitations set forth in Section 1.03 below, Loans shall
be made ratably by the Banks in accordance with their respective Percentages;
provided, however, that the failure of any Bank to make its Loan shall not in
itself relieve any other Bank of its obligation to lend hereunder. Each Bank
may, at its option, fulfill its commitment with respect to any LIBOR Loan by
causing a foreign branch or Affiliate of such Bank to make such Loan, provided
that any exercise of such option shall not affect the obligation of the
Borrowers to repay such Loan in accordance with the terms of the applicable
Note. Subject to the other provisions of this Section and the provisions of
Section 1.08, Loans of more than one type may be outstanding at the same time.
(a) The Borrowers shall give the Administrative Agent written notice (as
provided in Section 1.17) of each borrowing under Section 1.01 except those
borrowings constituting Swing Loans. Upon receipt by the Administrative Agent of
notice from the Borrowers pursuant to this paragraph, the Administrative Agent
shall promptly notify the Banks thereof. On the borrowing date requested in such
notice, but subject to the terms of Section 1.03, each Bank shall make its
ratable share (determined by its Percentage) of the borrowing available to the
Borrowers in an account maintained at the offices of the Administrative Agent no
later than 2:00 p.m. Knoxville, Tennessee time, in federal or other immediately
available funds.
(b) Notwithstanding any provision in this Agreement to the contrary, the
Borrowers shall not in any notice of borrowing under this Section 1.02 request
any LIBOR Loan that would not be permitted if characterized as a continuation or
conversion pursuant to Section 1.08.
SECTION 1.03. Swing Loans. (a) Upon the terms and subject to the conditions of
this Agreement, SunTrust, for its own account, agrees to make one or more
advances under the Swing Line ("Swing Loans") to the Borrowers from time to time
up to but not exceeding the Swing Line Commitment. All Swing Loans shall be
deemed solely for the account of SunTrust and credited against the Commitment of
SunTrust.
(a) Advances of, and payments on, the Swing Loans shall be made
automatically without notice to or from SunTrust or the Borrowers all in
accordance with the AIS Agreement.
<PAGE>
SECTION 1.04. Notes; Principal Payments. (a) The Loans made by each Bank and the
Borrowers' obligation to repay the Loans with interest in accordance with the
terms of this Agreement shall be evidenced by this Agreement, the records of
such Bank and a Note duly executed on behalf of the Borrowers, dated the Closing
Date, in substantially the form attached hereto as Exhibit B, payable to the
order of such Bank in a principal amount equal to its Commitment. Each Note
shall bear interest from its date on the outstanding principal balance thereof
as set forth in Section 1.05. The outstanding aggregate unpaid amount of the
Loans of each Bank at any time shall be the principal amount owing on the Note
of such Bank at such time. The records of each Bank shall be prima facie
evidence of the Loans of such Bank and accrued interest thereon and of all
payments made in respect thereof.
(a) If not sooner paid, the entire unpaid principal balance of each Note
shall be due and payable on the Commitment Termination Date.
SECTION 1.05. Interest. (a) Subject to the provisions of Section 1.07, each Base
Rate Loan (whether or not constituting a Swing Loan) and each other amount
(other than principal on the Loans) becoming due hereunder shall bear interest
at a rate per annum (computed on the basis of the actual number of days elapsed
over a year of 360 days) equal to the Base Rate as in effect from time to time
plus the Base Rate Margin.
(a) Subject to the provisions of Section 1.07, each LIBOR Loan that is not
a Swing Loan under the Swing Line shall bear interest at a rate per annum
(computed on the basis of the actual number of days elapsed over a year of 360
days) equal to the LIBOR Rate plus the Applicable LIBOR Margin. The
Administrative Agent shall determine the applicable LIBOR Rate for each such
Loan under this paragraph (b) as at 11:00 a.m., London time, or as soon as
practicable thereafter, on the date when such determination is to be made in
respect of such Interest Period and shall notify the Borrowers and the Banks of
the LIBOR Rate so determined.
(b) Subject to the provisions of Section 1.07, each LIBOR Loan advanced as
a Swing Loan under the Swing Line shall bear interest at a rate per annum
(computed on the basis of the actual number of days elapsed over a year of 360
days) equal to the One Month LIBOR Rate plus the Applicable LIBOR Margin.
(c) Interest on each Loan shall be payable on each applicable Interest
Payment Date, commencing with the first of such dates after the date of such
Loan, and on each Conversion Date and the Commitment Termination Date.
<PAGE>
SECTION 1.06. Facility Fee; Closing Fee; Termination and Reduction of
Commitments.
(a) In consideration of the Commitments hereunder, the Borrowers shall pay
in immediately available funds to the Administrative Agent, for the pro rata
account of each Bank, on the last day of each calendar quarter, commencing with
the first such date after the Closing Date, and on the date of any reduction or
termination of the Commitments of the Banks hereunder, a commitment fee (the
"Facility Fee") in an amount equal to .50% multiplied by the average daily
unused amount of the Commitment of such Bank during the period or quarter then
ending; provided, however, that with respect to the Commitment of SunTrust, the
Swing Line Commitment shall be deducted from the Commitment of SunTrust in
determining the average daily unused amount of the Commitment of SunTrust. The
Facility Fee shall commence to accrue as of the Closing Date, and shall cease to
accrue on the Commitment Termination Date.
(b) On the Closing Date, the Borrowers shall pay in immediately available
funds to each Bank a non-refundable closing fee of .25% of such Bank's
Commitment (the "Closing Fee").
(c) The Borrowers may, by written notice to the Administrative Agent (as
provided in Section 1.17) terminate in full, or from time to time permanently
reduce in part, the aggregate Commitments. Each such voluntary partial reduction
of the aggregate Commitments shall be in an aggregate principal amount of
$2,000,000 and in integral multiples of $1,000,000 in excess thereof. Any and
all reductions to the Commitment of SunTrust shall be applied first to that
portion of the Commitment not constituting the Swing Line Commitment.
(d) The Borrowers may, by written notice to the Administrative Agent (as
provided in Section 1.17) terminate in full the aggregate Commitments in the
event that any of the circumstances in Section 1.11 and/or 1.14 exist at any
time, and the Borrowers, notwithstanding Section 1.11 and 1.14, may terminate
the Commitments without obligation to pay such increased compensation or costs
arising under Sections 1.11 and/or 1.14.
(e) The Borrowers shall repay the Loans upon reduction of the Commitments
pursuant to this Section 1.06 in an amount sufficient to reduce the outstanding
principal balance of the Loans to an amount not greater than the aggregate
reduced Commitments. All repayments under this Section shall be accompanied by
accrued interest on the principal amount being repaid to the date of repayment.
(f) Each reduction in the aggregate Commitments shall be made ratably
among the Banks in accordance with each Bank's Percentage. Once reduced, the
Commitments cannot be reinstated without the unanimous consent of the Banks.
<PAGE>
SECTION 1.07. Additional Interest; Alternate Rate of Interest; Maximum Interest
Rate. (a) Upon the occurrence and during the continuation of an Event of
Default, the outstanding principal balance of the Loans and all other amounts
becoming due hereunder shall accrue interest at the Default Rate.
(a) If the Administrative Agent, in its reasonable judgment, determines at
any time that dollar deposits in the amount of the principal amount of any
requested LIBOR Loan are not generally available in the relevant interbank
market, or that the rate at which such dollar deposits are being offered will
not adequately and fairly reflect the cost to the Banks of making or maintaining
the principal amount of such requested LIBOR Loan during such Interest Period,
or that reasonable means do not exist for ascertaining the LIBOR Rate, the
Administrative Agent shall, as soon as practicable thereafter, give prompt
written or telephonic notice of such determination to the Borrowers and the
Banks. After such notice has been given and until the circumstances giving rise
to such notice no longer exist, each request for a LIBOR Loan or for conversion
to or maintenance of a LIBOR Loan shall be deemed to be a request for a Base
Rate Loan. Each determination by the Administrative Agent hereunder shall be
conclusive absent manifest error.
(b) Nothing contained in this Agreement or any Note shall require the
Borrowers at any time to pay interest at a rate exceeding the Maximum Permitted
Rate. If interest payable to any Bank on any date would exceed the maximum
amount permitted by the Maximum Permitted Rate, such interest payment shall
automatically be reduced to such maximum permitted amounts, and interest for any
subsequent period, to the extent less than the maximum amount permitted for such
period by the Maximum Permitted Rate, shall be increased by the unpaid amount of
such reduction. Any interest actually received for any period in excess of such
maximum allowable amount for such period shall be deemed to have been applied as
a prepayment of the then outstanding Loans in accordance with Section 1.09.
SECTION 1.08. Continuation and Conversion of Loans. Subject to Sections 1.11 and
1.12, the Borrowers may, by written notice to the Administrative Agent (as
provided in Section 1.17) at any time, continue any LIBOR Loan or portion
thereof not constituting a Swing Loan, into a subsequent Interest Period and
convert any Loan or portion thereof into a Loan of a different type, subject in
each case to the following:
(a) no Event of Default (except in the case of conversion to Base Rate
Loans) shall have occurred and be continuing at the time of such notice or such
continuation or conversion;
<PAGE>
(b) on and as of the date of such continuation or conversion, each
representation and warranty set forth in Article IV shall be true and correct,
as determined by the Administrative Agent in its reasonable discretion, it being
understood that the representations and warranties set forth in Sections 4.04
and 4.05 shall be deemed to apply to the most recent financial statements
furnished by the Borrowers to the Banks prior to such Loan;
(c) the notice given to the Administrative Agent by the Borrowers shall
specify the Loans (identified by reference to the aggregate amount of such Loans
by all of the Banks) to be continued or converted and provide the information
required pursuant to Section 1.17 with respect to the continuation or
conversion;
(d) such continuation or conversion shall be made pro rata
among the Banks in accordance with their respective Percentages;
(e) in the case of a continuation or conversion of less than all Loans,
the aggregate principal amount of Loans continued or converted shall not be less
than the minimum borrowing amounts set forth in Section 1.02(a);
(f) no Loan may be continued or converted to a LIBOR Loan having an
Interest Period that would extend beyond the scheduled Commitment Termination
Date;
(g) the Conversion Date must be a Business Day with respect
to the new Loan;
(h) no Loan (or portion thereof) may be converted to a LIBOR Loan if,
after such conversion, and after giving effect to any prepayment of Loans, an
aggregate of more than five separate Loans of any Bank would be outstanding
hereunder, it being understood that for such purposes, LIBOR Loans having
different Interest Periods, regardless of whether they commence or end on the
same date, shall be considered separate Loans, and Base Rate Loan advances also
shall be considered a separate Loan hereunder; provided, however, that for
purposes of this paragraph (h), any and all LIBOR Loans constituting Swing Loans
shall not be considered in determining the number of separate LIBOR Loans;
(i) each request for continuation of or conversion into a LIBOR Loan not
constituting a Swing Loan that fails to state an applicable Interest Period
shall be deemed to be a request for an Interest Period of one (1) month;
(j) in the event that the Borrowers fail to give notice to continue any
LIBOR Loan not constituting a Swing Loan into a subsequent Interest Period or
convert any LIBOR Loan
<PAGE>
(whether or not a Swing Loan) into a Loan of another type, such LIBOR Loan
(unless repaid in full) shall automatically become a Base Rate Loan at (i) the
expiration of the then current Interest Period with respect to those LIBOR Loans
not constituting a Swing Loan and (ii) on the last day of the month prior to the
month in which the next succeeding Interest Payment Date occurs with respect to
those LIBOR Loans constituting Swing Loans; and
(k) each continuation or conversion shall be effected by each Bank as if
the proceeds of the new Loan were applied to payment of the existing Loan (or
portion thereof) being continued or converted, and accrued interest on the Loan
(or portion thereof) being continued or converted shall be paid by the Borrowers
on and as of the Conversion Date.
SECTION 1.09. Optional Prepayment of Loans. (a) The Borrowers shall have the
right at any time and from time to time to prepay any Base Rate Loan in whole or
in part, without premium or penalty, upon prior written notice to the
Administrative Agent; provided, however, that each such partial prepayment shall
be in the principal amount of at least $1,000,000 and in increments of $100,000
in excess thereof.
(a) The Borrowers shall have the right to prepay any LIBOR Loan not
constituting a Swing Loan, in whole or in part, upon prior written notice to the
Administrative Agent (as provided in Section 1.17); provided, however, that each
such partial prepayment shall be in the principal amount of at least $2,000,000
and in increments of $1,000,000 in excess thereof. If the Borrowers prepay any
LIBOR Loan not constituting a Swing Loan except on the last day of the Interest
Period in effect for such Loan, then the Borrowers shall make the payments
required by Section 1.13.
(b) Prepayments of LIBOR Loans constituting Swing Loans shall be made
according to the terms of the AIS Agreement and shall be made without notice and
any prepayment penalty.
(c) Each notice of prepayment under paragraphs (a) and (b) of this Section
1.09 shall specify which Loan(s) is to be prepaid, the prepayment date and the
principal amount of each Loan to be prepaid. All prepayments under this Section
shall be accompanied by accrued interest on the principal amount being prepaid
to the date of prepayment. Amounts prepaid pursuant to this Section prior to the
Commitment Termination Date shall be available to be reborrowed from the Banks
hereunder in accordance with and subject to the terms hereof.
SECTION 1.10. Manner of Payment. (a) All payments by the Borrowers hereunder and
under the Notes shall be made to the Administrative Agent, at its primary office
in Knoxville, Tennessee, for the account of each Bank, in Dollars in federal or
other immediately available funds, by 11:00 a.m., Knoxville time,
<PAGE>
on the date on which such payment is due, in all cases without any deduction or
withholdings whatsoever, including any deduction or withholding for any setoff,
recoupment, counterclaim or Tax. Whenever any payment required to be made
hereunder or under the Notes is stated to be due on a day other than a Business
Day, such payment shall be made on the next succeeding Business Day, and
interest shall continue to accrue thereon until such payment is made. Interest
in respect of any Loan hereunder shall accrue from and including the date of
such Loan to but excluding the date on which such Loan is paid in full. If such
payments are not received by the Administrative Agent within five (5) Business
Days after the due date thereof, such payments may be deducted by the Banks in
accordance with Section 10.18.
(a) All payments received by the Administrative Agent shall be remitted to
the Banks on the Business Day on which such payments are received or deemed to
be received by the Administrative Agent.
SECTION 1.11. Change in Circumstances. In the event of any Regulatory Change or
any change after the date hereof in conditions with respect to cost of funding
or otherwise affecting the transactions contemplated by this Agreement or the
Notes that:
(a) subjects any Bank to any tax of any kind or changes the basis of
taxation with respect to any LIBOR Loan (other than any tax on the overall net
income of such Bank or of the lending office or Affiliate of such Bank making
any LIBOR Loan hereunder) imposed by the United States of America or by the
jurisdiction in which such Bank has its principal office (or in which such
lending office or Affiliate is located) or any political subdivision or taxing
authority therein; or
(b) imposes, modifies or deems applicable any reserve (other than, in the
case of LIBOR Loans, any reserve taken into account in the computation of LIBOR
Statutory Reserves), deposit or similar requirement against any assets held by,
deposits with or for the account of or loans or commitments by an office of such
Bank; or
(c) imposes upon such Bank or the relevant interbank market any other
condition with respect to LIBOR Loans or upon the Bank any other condition with
respect to this Agreement;
and the result of any of the foregoing shall be to increase the cost to such
Bank of making or maintaining any LIBOR Loan hereunder or to reduce the amount
of any payment (whether of principal, interest or otherwise) received or
receivable by such Bank, or to require such Bank to make any payment in
connection with any LIBOR Loan, then and in each such case the Borrowers shall
pay to such Bank such amounts as shall be necessary to
<PAGE>
compensate such Bank for such cost, reduction or payment. The protection of this
Section shall be available to each Bank regardless of any possible contention of
the invalidity or inapplicability of any law, regulation or other condition that
gives rise to any right of such Bank for compensation hereunder.
SECTION 1.12. Change in Legality. Notwithstanding any provision in this
Agreement to the contrary, if any Regulatory Change shall make it unlawful for a
Bank to make or maintain a LIBOR Loan or to give effect to its obligations as
contemplated hereby with respect to a LIBOR Loan, then, by written notice to the
Borrowers, such Bank may:
(a) declare that LIBOR Loans will not thereafter be made by such Bank
hereunder, whereupon the Borrowers shall be prohibited from requesting LIBOR
Loans from such Bank hereunder unless such declaration is subsequently
withdrawn; and
(b) to the extent that maintenance of any LIBOR Loan has been made
unlawful, require that all outstanding LIBOR Loans made by it be converted to
Base Rate Loans, whereupon all of such LIBOR Loans shall be automatically
converted to Base Rate Loans upon receipt by the Borrowers of such notice, and
the Borrowers shall make the payments, if any, required by Section 1.13.
SECTION 1.13. Indemnity for LIBOR Loans. The Borrowers shall reimburse each Bank
for any loss incurred or to be incurred by it in the reemployment of the funds
released by any prepayment or conversion of any LIBOR Loan required or permitted
by any other provision of this Agreement if such Loan is prepaid or converted
other than on the last day of the applicable Interest Period with respect to
those LIBOR Loans not constituting Swing Loans. Such loss shall be the
difference as determined by such Bank between (a) the amount that would have
been realized by such Bank for the remainder of such Interest Period for such
Loan and (b) any lesser amount that would be realized by such Bank in
reemploying such funds by purchasing on the date of prepayment or conversion a
U.S. Treasury security in the principal amount prepaid or converted that matures
on the last day of the Interest Period of the Loan being prepaid or converted.
Without duplication of the foregoing indemnity payments, the Borrowers shall
indemnify each Bank against any actual loss or expense that such Bank may
sustain or incur as a consequence of any default in payment or prepayment of the
principal amount of any Loan or any part thereof or interest accrued thereon, as
and when due and payable (at the due date thereof, by notice of prepayment or
otherwise), or the occurrence of any Event of Default, including but not limited
to any loss or expense sustained or incurred in liquidating or employing
deposits from third parties acquired to effect or maintain such Loan or any part
thereof.
<PAGE>
SECTION 1.14. Capital Adequacy. If, after the date hereof, any Bank shall have
determined that any Regulatory Change regarding capital adequacy or compliance
by such Bank with any request or directive regarding capital adequacy (whether
or not having the force of law) of any Governmental Authority, has or would have
the effect of reducing the rate of return on such Bank's (or its holding
company's) capital, as a consequence of this Agreement or the Loans, to a level
below that which such Bank (or its holding company) could have achieved but for
such Regulatory Change or compliance (taking into consideration such Bank's
policies with respect to capital adequacy), then from time to time, the
Borrowers shall pay to such Bank such additional amount or amounts as will
compensate such Bank for such reduction. In determining any such amount, the
Bank may use any reasonable averaging and attribution methods.
SECTION 1.15. Reasonableness of Increased Costs. Notwithstanding anything to the
contrary in Sections 1.11, 1.12, 1.13 and 1.14, the amounts payable by the
Borrowers thereunder shall not exceed the amounts necessary to indemnify the
affected Bank against such increased cost actually incurred or the reduction in
amount actually received. A certificate in reasonable detail as to the amount of
such increased cost or reduction in amount received and the method of
calculation shall be submitted to the Borrowers by such Bank. The Borrowers
shall pay to each Bank the amounts shown as due on any such certificate within
ten (10) days after its receipt of the same. No failure on the part of any Bank
to demand compensation under such Sections above on any one occasion shall
constitute a waiver of its right to demand such compensation on any other
occasion.
SECTION 1.16. Pro Rata Treatment. Except as otherwise provided in Sections 1.03,
1.11, 1.12, 1.13 and 1.14, all payments and prepayments of principal and
interest in respect of the Loans, all payments of Facility Fees and Closing Fees
and all borrowings hereunder shall be made pro rata among the Banks in
accordance with their respective Percentages. All sale proceeds received as a
result of foreclosure and subsequent disposition of collateral and all other
rights and benefits of collateral security shall be shared by the Banks in
accordance with their respective Percentages.
SECTION 1.17. Certain Notices. Notices by the Borrowers to the Administrative
Agent of any terminations or reductions of the Commitments, of borrowings and
prepayments of Loans, of continuation and conversion of Loans, of type of Loans
and of the duration of Interest Periods shall be irrevocable and shall be
effective only if received by the Administrative Agent not later than 11:00 a.m.
Knoxville time on the number of Business Days prior to the date of the relevant
termination, reduction, borrowing, continuation, conversion, or prepayment or
the first day of such Interest Period specified below (it being understood that
<PAGE>
notices received by the Administrative Agent after 11:00 a.m. Knoxville time
shall be considered timely received on the next Business Day):
Number of
Business
Notice Days Prior
Termination or reduction of
Commitment 10
Borrowing, continuation
or prepayment of or conversion
into Base Rate Loans same day
Borrowing, continuation or prepayment
of, conversion into, or notification
of duration of Interest Period for,
LIBOR Loans not constituting Swing Loans 3
Each such notice of termination or reduction shall specify the amount of the
Commitment to be terminated or reduced. Each such notice of borrowing,
continuation, conversion or prepayment shall specify the Loans to be borrowed,
continued, converted or prepaid and the amount and type of the Loans to be
borrowed, continued, converted or prepaid and the date of borrowing,
continuation, conversion or prepayment (which shall be a Business Day). Each
such notice of the duration of an Interest Period for LIBOR Loans not
constituting Swing Loans shall specify the Loans to which such Interest Period
is to relate. In the event that the Borrowers fail to select within the time
period and otherwise as provided in this Section 1.17 the type of Loan or the
duration of the Interest Period for any LIBOR Loan not constituting a Swing
Loan, such Loan shall be automatically converted into a Base Rate Loan on the
last day of the then current Interest Period for such Loan or will remain as, or
will be made as, a Base Rate Loan. Notwithstanding anything to the contrary in
this Agreement or any other Loan Document, Borrowers shall not be required to
give notice of any Swing Loan borrowing or payment, it being the intention of
the parties hereto that Swing Loans shall be available to Borrowers for daily
cash management purposes, and all such advances and payments thereunder shall be
administered by SunTrust according to the terms of the AIS Agreement.
SECTION 1.18. Borrowing Base Restrictions. The Banks have no obligation to
advance Loan proceeds in excess of the Borrowing Base. The Borrowers shall
deliver to the Administrative Agent a Borrowing Base Certificate appropriately
completed in the form attached to this Agreement as Exhibit E, not later than
(i) the
<PAGE>
last day of each calendar month and (ii) the date on which notice is required to
be given under Section 1.17 for borrowings of Base Rate Loans and LIBOR Loans,
as applicable. If at any time the aggregate, outstanding principal balance of
Loans under this Agreement exceeds the Borrowing Base as reflected by the most
recent Borrowing Base Certificate delivered to the Administrative Agent by
Borrowers, the Borrowers will within ten (10) days and without notice from the
Administrative Agent or any Bank repay an amount sufficient to reduce the
aggregate, outstanding principal balance of the Loans to an amount not in excess
of the Borrowing Base as reflected on the most recent Borrowing Base Certificate
delivered to the Administrative Agent by the Borrowers. The Administrative Agent
shall provide the Borrowers not less than 60 days prior written notice of any
and all proposed changes in the Borrowing Base or its constituent components,
including, without limitation, Eligible Accounts Receivable.
ARTICLE 11
COLLATERAL AND GUARANTIES
SECTION 2.01. Secured Obligations. The parties acknowledge that the Loans are
secured obligations of the Borrowers and that the Borrowers are pledging certain
collateral, including, without limitation, accounts receivable, inventory and
general intangibles pursuant to the Security Agreement.
SECTION 2.02. No Guaranty. Payment of the Obligations is not guaranteed by any
third party.
SECTION 2.03. Loan Documents. The Borrowers agree to execute and deliver all
Loan Documents and other instruments contemplated by this Agreement, in form and
substance reasonably satisfactory to the parties hereto and their respective
counsel.
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. Initial Loans. In addition to the conditions precedent in Section
3.02, the obligations of the Banks to make initial Loans hereunder are subject
to the following conditions precedent:
(a) Satisfaction of each of the conditions set forth on Exhibit C hereto,
the satisfaction of which shall be determined by the Banks and the
Administrative Agent in their sole discretion.
<PAGE>
(b) All legal matters incident to this Agreement and the Loans shall be
satisfactory to Hunton & Williams, special counsel for the Administrative Agent.
SECTION 3.02. All Loans. As conditions to each Loan to be made hereunder:
(a) The Administrative Agent shall have received a notice of such Loan as
required by Section 1.02.
(b) On and as of the date of such Loan, both before and after giving
effect to such Loan and applying the proceeds thereof:
(i) each representation and warranty set forth in Article IV shall
be true and correct, as determined by the Administrative Agent in its reasonable
discretion, it being understood that the representations and warranties set
forth in Sections 4.04 and 4.05 shall be deemed to apply to the most recent
financial statements furnished by the Borrowers to the Banks prior to such Loan,
and
(ii) the Borrowers shall be in compliance with all the terms and
provisions of this Agreement on their part to be observed or performed, no
Default shall have occurred and be continuing, and the Administrative Agent and
the Banks shall have received a certificate to such effect.
(c) Such Loan will not contravene any Legal Requirement applicable to the
Administrative Agent or any Bank.
The Borrowers shall be deemed to make representations and warranties on the date
of each Loan as to the matters specified in paragraphs (b) and (c) of this
Section.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
To induce the Banks to enter into this Agreement and to make Loans
hereunder, each of the Borrowers represents and warrants to the Administrative
Agent and to each of the Banks that:
SECTION 4.01. Organization; Powers; Qualification. It is (a) a corporation duly
organized, validly existing and in good standing under the laws of the State of
its incorporation, (b) has the power and authority to own its properties and to
carry on its businesses as now conducted, (c) is qualified to do business in all
jurisdictions where failure to qualify would have a Material Adverse Effect, (d)
is not required to be qualified in
<PAGE>
any other jurisdiction where the failure to be so qualified would have a
Material Adverse Effect, and (e) has the power to execute, deliver and perform
its obligations under this Agreement, to borrow hereunder and to execute and
deliver the Notes and the other Loan Documents and to perform its obligations
thereunder.
SECTION 4.02. Authorization; Enforcability. The execution, delivery and
performance of this Agreement, the borrowings hereunder, the execution, delivery
and performance of the Notes and the other Loan Documents and the transactions
contemplated hereby and thereby (a) have been duly authorized by all requisite
action on the part of each Borrower, (b) will not (i) violate (A) the
Organizational Documents of any Borrower or (B) to the best knowledge of
Borrowers, any applicable order of any Governmental Authority, (ii) violate,
conflict with, breach or constitute (with due notice or lapse of time or both) a
default under any indenture, agreement for borrowed money, bond, note,
instrument or other agreement to which any Borrower is a party or by which such
Borrower or any of its property is bound or (iii) result in the creation or
imposition of any Lien of any nature whatsoever upon any property or assets of
such Borrower except as provided for pursuant to the Loan Documents. This
Agreement has been duly executed and delivered by the Borrowers and constitutes,
and the Notes and the other Loan Documents when executed and delivered will
constitute, legal, valid and binding obligations of the Borrowers enforceable
against Borrowers in accordance with their respective terms.
SECTION 4.03.Consents and Approvals. No action, consent or approval of, or
registration or filing with, or any other action by any Governmental Authority
or of shareholders is required in connection with the execution, delivery and
performance by the Borrowers of this Agreement, the borrowings hereunder or the
execution, delivery and performance of the Notes or any other Loan Document by
the Borrowers.
SECTION 4.04. Financial Statements. Plasti-Line has heretofore furnished the
following financial statements to each of the Banks: consolidated balance sheet
as of the 1995 fiscal year end of Plasti-Line and its consolidated statements of
income, retained earnings and cash flows for the fiscal year then ended,
reported on by Coopers & Lybrand, Knoxville, Tennessee, independent public
accountants. Such financial statements fairly present the consolidated financial
condition of Plasti-Line and its Consolidated Subsidiaries as of the dates
thereof and the consolidated results of operations for the periods covered
thereby and are complete and correct. All such financial statements were
prepared in accordance with Generally Accepted Accounting Principles applied on
a consistent basis (subject, in the case of such interim statements, to the
omission of footnotes and year-end audit adjustments).
<PAGE>
SECTION 4.05. No Material Adverse Change. There has been no material adverse
change in the business, assets, liabilities, condition (financial or otherwise),
results of operations or business prospects, on a consolidated basis, of
Plasti-Line since fiscal year end 1995.
SECTION 4.06. Subsidiaries. Set forth on Schedule 4.06(a) is a complete and
accurate list of all Material Subsidiaries of Plasti-Line on the date hereof,
showing as to each such Material Subsidiary the jurisdiction of its
organization, its type of entity and its principal place of business. All of the
outstanding Capital Securities of each of the Material Subsidiaries are wholly
owned, directly or indirectly, by Plasti-Line. Such Capital Securities are owned
free and clear of all Liens except Permitted Liens, and Plasti-Line, as the
owner of such Capital Securities, has the unrestricted right to vote, and
(subject to limitations imposed by applicable law) to receive dividends and
distributions on, such Capital Securities.
SECTION 4.07. Litigation. Each Borrower has filed with the SEC all reports it is
required to file with the SEC regarding any action, suit or proceeding at law or
in equity or by or before any court or Governmental Authority now pending or
threatened against or affecting such Borrower or any property or rights of such
Borrower.
SECTION 4.08. Tax Returns. The Borrowers have filed or caused to be filed all
federal, state and local tax returns that are required to be filed and have paid
or caused to be paid all taxes as shown on such returns or on any assessment
received by any of them to the extent that such taxes have become due, except
taxes the validity of which is being contested in good faith by appropriate
proceedings and with respect to which the Borrowers have set aside on their
respective books adequate reserves, if any, required in accordance with
Generally Accepted Accounting Principles.
SECTION 4.09. Properties. The Borrowers have good and marketable title (subject
to minor title defects) to all their respective properties and assets reflected
on the consolidated balance sheet of Plasti-Line and its Consolidated
Subsidiaries, referred to in Section 4.04, except for such properties and assets
as (i) have been disposed of since such date, (ii) no longer necessary in the
conduct of their respective businesses or (iii) have been disposed of in the
ordinary course of business, and the Borrowers own all such properties and
assets free and clear of any Liens except Permitted Liens.
SECTION 4.10. Employee Benefit Plans. Schedule 4.10 sets forth a true and
complete list of all Plans that each Borrower maintains, or expects to maintain,
or to which such Borrower is, or is expected to be, required to make any
contribution. Each of
<PAGE>
the Borrowers and each Plan are in compliance in all material respects with the
applicable provisions of law, including the applicable provisions of ERISA and
the regulations and published interpretations thereunder. No Plan is (i) a
multiemployer plan (as defined in Section 3(37) of ERISA), (ii) subject to the
provisions of Title IV of ERISA or (iii) subject to the minimum funding
provisions of ERISA or the Internal Revenue Code. Neither any Borrower nor any
ERISA Affiliate has maintained, contributed to, or had an obligation to
contribute to, any Plan described in items (i), (ii) or (iii) of the preceding
sentence. Except for the continued coverage requirements of the Consolidated
Omnibus Budget Reconciliation Act of 1985 and subsequent legislation, no
Borrower is obligated to provide medical benefits, hospitalization benefits or
benefits under any other employee welfare benefit plan (within the meaning of
Section 3(1) of ERISA) to any former employee or the spouse or dependent of any
former employee.
SECTION 4.11. Government Regulation. No Borrower is subject to regulation under
the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Investment Company Act of 1940, the Interstate Commerce Act (as any of such acts
may be amended) or any other law (other than Regulation X) that regulates the
incurring by such Borrower of indebtedness.
SECTION 4.12. Margin Stock. No proceeds of any Loan will be used 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 a
Margin Stock or for any other purpose which might constitute this transaction a
"purpose credit" within the meaning of Regulation U or G. No Borrower is engaged
in the business of extending credit for the purpose of purchasing or carrying
Margin Stocks. No Borrower nor any Person acting on behalf of such Borrower has
taken or will take any action which might cause the Notes or any of the other
Loan Documents, including this Agreement, to violate Regulation U or G or any
other regulations of the Federal Reserve Board or to violate Section 7 of the
Securities Exchange Act of 1934 or any rule or regulation thereunder, in each
case as now in effect or as the same may hereinafter be in effect. No Borrower
owns Margin Stock except that which, as of the date hereof, does not exceed 25%
of the value of all of such Borrower's assets.
SECTION 4.13. No Material Misstatements. All information, financial statements
and documents furnished to the Administrative Agent and the Banks in connection
herewith are complete and accurate in all material respects. No information,
report, financial statement, exhibit or schedule furnished by or on behalf of
the Borrowers to the Administrative Agent or any Bank in connection with the
negotiation, execution, delivery or performance of this Agreement, any Note or
any other Loan Document hereunder, or any schedule hereto or thereto contains
<PAGE>
any material misstatement of fact or omitted or omits to state any material fact
necessary to make the statements herein or therein not misleading. There is no
event or fact that the Borrowers have not disclosed to the Banks in writing that
causes a Material Adverse Effect or, so far as the Borrowers can now foresee, is
likely to cause a Material Adverse Effect.
SECTION 4.14. Patents, Trademarks, etc. Each Borrower possesses adequate assets,
licenses, patents, patent applications, copyrights, trademarks, service marks,
trademark applications, trade names, technology, processes and permits and other
governmental approvals and authorizations to conduct its business. There are no
existing or, to the knowledge of the Borrowers, threatened claims of any Person
based on the use of such permits, patents, trademarks, trade names, copyrights,
technology and processes by the Borrowers and to the knowledge of the Borrowers,
no such use infringes on the rights of any Person.
SECTION 4.15. Hazardous Wastes. To the best of each Borrower's knowledge, all
land owned, leased or otherwise used by such Borrower is free from reportable
quantities of Hazardous Wastes, and no portion of such land would subject such
Borrower to liability under federal, state or local law or regulation because of
the presence of stored, leaked or spilled Toxic Substances or Hazardous Wastes,
underground storage tanks, "asbestos" (as defined in 40 C.F.R. ss. 61.141) or
the past or present accumulation, spillage or leakage of any such substance, nor
have the Borrowers arranged for disposal or treatment (or arranged with a
transporter for transport for disposal or treatment) of any such substance to
any other location except in compliance with Environmental Laws. No Borrower has
received any notice from the Environmental Protection Agency or any other
Governmental Authority alleging that it is a "responsible party" with respect to
any of the foregoing.
SECTION 4.16. No Default of Indebtedness; Solvency. No broker or finder brought
about or contributed to the obtaining, making or closing of the Loans made
pursuant to this Agreement, and the Borrowers have no obligation to any person
in respect of any finder's or brokerage fees in connection with the Loans
contemplated by this Agreement.
(a) No Borrower is in default of any Indebtedness, and no holder of any
such Indebtedness has given notice of an asserted default thereunder. No
liquidation, dissolution or other winding up of any Borrower and no bankruptcy
or similar proceedings relative to it or its property are pending or, to the
knowledge of such Borrower, threatened against it.
<PAGE>
(b) On the date hereof, each of the Borrowers is, and after consummation
of this Agreement and after giving effect to all Indebtedness incurred (assuming
the entire Commitment is fully advanced on the Closing Date) and Liens, if any,
created by such Borrower in connection herewith will be, Solvent.
SECTION 4.18. Agreements. No Borrower is a party to any agreement or instrument
or subject to any provision in its Organizational Documents that could have a
Material Adverse Effect or conflict with or constitute a Default under this
Agreement or any other Loan Document. No Borrower is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any agreement or instrument to which it is a party in
any manner that could have a Material Adverse Effect.
SECTION 4.19. Compliance with Law. Each Borrower has complied in all material
respects with all applicable statutes, rules, regulations, orders and
restrictions of any Governmental Authority.
SECTION 4.20. Labor Controversies. No Borrower is a party to any collective
bargaining agreement. To the best knowledge of the Borrowers, each is in
compliance with all applicable laws respecting employment and employment
practices where such failure to comply could reasonably be expected to have a
Material Adverse Effect.
ARTICLE V
AFFIRMATIVE COVENANTS
Each of the Borrowers covenants and agrees with the Administrative Agent
and the Banks that until the Repayment Date, unless the Majority Banks otherwise
consent in writing, as follows:
<PAGE>
replacements thereto, so that the business carried on in connection therewith
may be properly conducted at all times.
SECTION 5.02. Compliance with Laws. Each Borrower shall, and shall cause each
other Borrower to, do or cause to be done all things necessary to comply with
all laws and regulations applicable to it, including without limitation the
following:
(a) SEC Filings. Make on a timely basis, all filings, if
any, it is required to make with the SEC.
(b) ERISA. Comply, and shall cause each of its ERISA Affiliates to comply,
in all material respects with the applicable provisions of ERISA and as soon as
possible, and in any event within 10 days after such Borrower knows or has
reason to know of a violation of ERISA with respect to any Plan, shall deliver
to the Administrative Agent and each Bank a statement signed by a senior
financial officer of such Borrower setting forth details respecting such event
or condition and the action, if any, that such Borrower or its ERISA Affiliate
proposes to take with respect thereto.
(c) Environmental Laws. (i) Remain in compliance in all material respects
with the provisions of all federal, state and local environmental, health and
safety laws, codes and ordinances, and all rules and regulations issued
thereunder; notify the Administrative Agent immediately of any notice of a
hazardous discharge or environmental complaint received from any Governmental
Authority or any other Person; notify the Administrative Agent immediately of
any hazardous discharge from or affecting the Premises, which is also required
to be reported to any Governmental Authority; immediately contain and remove the
same, in compliance with all applicable Legal Requirements; in the event of such
hazardous discharge, permit the Banks to inspect the Premises, to conduct tests
thereon, and to inspect all books, correspondence and records pertaining
thereto; and at any Bank's request, and at the Borrowers' expense, provide a
report of a qualified environmental engineer satisfactory in scope, form, and
contents to the Banks, and such other and further assurances reasonably
satisfactory to the Banks that the condition has been corrected.
(ii) Each Borrower acknowledges that the Administrative Agent and
the Banks have entered into this Agreement and that the Banks have made the
Loans in reliance upon such Borrower's representations and warranties in Section
4.15 and its covenants in this Section 5.02(c). Accordingly, the Borrowers
hereby agree that they shall be jointly and severally liable for all costs and
expenses incurred by or asserted against the Administrative Agent or any Bank
arising under violations of the terms of this Section 5.02(c) or a breach of any
representation or warranty contained in Section 4.15 of this
<PAGE>
Agreement. All of the representations and warranties contained in Section 4.15
and the Borrowers' covenants under this Section 5.02(c) shall survive the
Repayment Date.
SECTION 5.03. Insurance. Each Borrower shall maintain insurance with financially
sound and reputable insurance companies or associations, in such amounts and
covering such risks (but including, in any event, public liability) as is
usually carried by companies engaged in the same or similar businesses and
owning similar properties in the same general areas in which such Borrower
operates and furnishes to the Administrative Agent, upon reasonable request,
full information (including certificates and originals or certified copies of
the policies) as to the insurance carried.
SECTION 5.04. Obligations and Taxes. Each Borrower shall pay all of its
Indebtedness and obligations promptly and in accordance with the terms thereof
and pay and discharge promptly all taxes, assessments and governmental charges
or levies imposed upon it or upon its income or profits or in respect of its
property, before the same shall become in default or delinquent, as the case may
be, as well as all lawful claims for labor, materials and supplies or otherwise
that, if unpaid, might become a Lien upon such properties or any part thereof;
provided, however, that no Borrower shall be required to pay and discharge or to
cause to be paid and discharged any such tax, assessment, charge, levy or claim
so long as the validity or amount thereof is contested in good faith by
appropriate proceedings and such Borrower sets aside on its books adequate
reserves therefor, if any, required in accordance with Generally Accepted
Accounting Principles.
SECTION 5.05. Accounting Methods and Financial Records. Each Borrower shall
maintain a system of accounting and financial records in accordance with
Generally Accepted Accounting Principles, and keep such books, records and
accounts (which shall be true and complete), as may be required or necessary to
permit (a) the preparation of financial statements required to be delivered
pursuant to Section 5.06 and (b) the determination of such Borrower's compliance
with the terms of this Agreement.
SECTION 5.06. Financial Statements, Certificates and Reports. The Borrowers
and/or Plasti-Line, as applicable, shall furnish to the Banks:
(a) Quarterly Financial Statements. As soon as available, and in any event
within forty-five (45) days after the end of each of the first three fiscal
quarters of Plasti-Line, copies of the Quarterly Report of Plasti-Line on Form
10-Q as filed with the SEC, containing a balance sheet of Plasti-Line and its
Consolidated Subsidiaries as of the end of such quarter, and consolidated
statements of income and cash flows of Plasti-Line
<PAGE>
and its Consolidated Subsidiaries for such quarter and for the portion of the
fiscal year ending with such quarter, in each case setting forth in comparative
form the figures for the corresponding period of the preceding fiscal year;
(b) Annual Statements. As soon as available and in any event within one
hundred twenty (120) days after the close of each fiscal year of Plasti-Line,
copies of the Annual Report of Plasti-Line on Form 10-K as filed with the SEC,
containing a consolidated balance sheet of Plasti-Line and its Consolidated
Subsidiaries as of the close of such fiscal year and consolidated statements of
income and cash flows of Plasti-Line and its Consolidated Subsidiaries for such
fiscal year, in each case setting forth in comparative form the figures for the
preceding fiscal year;
(c) Other SEC Filings. Promptly upon its becoming available, one copy of
each financial statement, report, notice or proxy statement sent by Plasti-Line
to holders of its Capital Securities and of each regular or periodic report,
registration statement or prospectus, if any, filed by Plasti-Line with any
securities exchange or the SEC or any successor agency, including without
limitations Forms 10-K, 8-K and 10-Q;
(d) Audit Reports. Promptly upon receipt thereof, one copy
of each written report submitted to Plasti-Line and/or any other
Borrower by independent accountants in any annual, quarterly or
special audit made;
(e) Annual Operating Plan. Within thirty (30) days of
the end of each fiscal year of Plasti-Line, the Annual Operating
Plan of Plasti-Line;
(f) Monthly Financial Information. As soon as available, and in any event
within thirty (30) days after the end of each fiscal month of Plasti-Line
hereafter, company prepared consolidated financial statements, including a
Compliance Certificate, a Borrowing Base Certificate, Accounts Receivable and
Accounts Payable Aging Reports and Inventory Reports;
(g) Notices of Discrepancies. Immediately after any Borrower's discovery
thereof, written notice of any inaccuracy or incorrect statement contained in
any of the foregoing that is material or that changes any of the financial
calculations under this Agreement, including a statement containing the correct
information required; and
(h) Other Information. Such other information concerning
the business, properties or financial condition of the Borrowers
as the Banks shall request.
<PAGE>
SECTION 5.07. Access to Premises and Records. Upon reasonable notice, the
Borrowers shall permit representatives of each Bank to have access to the
financial records and the premises of such Borrower at reasonable times and to
make copies of such records.
SECTION 5.08. Notice of Default. The Borrowers shall give to each Bank, promptly
after learning of the occurrence of any Default that has not previously been
disclosed in writing to the Administrative Agent and/or the Banks, (a) notice of
such event, (b) the Borrowers' assessment of the effect such event is likely to
have on the financial condition of the Borrowers during the following ninety
days, (c) the Borrowers' plan for minimizing the adverse effects of such event
and (d) a description of any material development in any such event.
SECTION 5.09. Notice of Litigation. The Borrowers shall, upon request, deliver
or cause to be delivered to the Administrative Agent, a description of any
material development in any of the matters described in Section 4.07 that has
been disclosed in filings with the SEC.
SECTION 5.10. Notice of Strikes, Labor Controversies, etc. The Borrowers shall
deliver or cause to be delivered to the Administrative Agent, promptly after
learning of the occurrence of any event described in Section 4.20 that has not
previously been disclosed in writing to the Administrative Agent and/or the
Banks, (a) notice of such event, (b) the Borrowers' assessment of the effect
such event is likely to have on the financial condition of the Borrowers during
the following ninety days, (c) the Borrowers' plan for minimizing the adverse
effects of such event and (d) a description of any material development in any
such event.
SECTION 5.11. Update of Subsidiaries. Plasti-Line shall, upon request, deliver
or cause to be delivered to each Bank an update of the Material Subsidiaries
listed on Schedule 4.06(a).
ARTICLE VI
NEGATIVE COVENANTS
Each Borrower covenants and agrees with the Administrative Agent and the Banks
that, until the Repayment Date, unless the Majority Banks otherwise consent in
writing, as follows:
SECTION 6.01. Liens. It shall not, directly or indirectly, create, incur, assume
or suffer to exist any Lien upon or with respect to any of its assets or
properties, now owned or hereafter acquired, or assign or otherwise convey any
right to
<PAGE>
receive income; provided that, the foregoing restrictions shall not
apply to Liens:
(a) for taxes, assessments or governmental charges or levies on its
property if they (i) are not delinquent at the time or thereafter can be paid
without penalty and (ii) are being contested in good faith and by appropriate
proceedings and with respect to which it has set aside on its books adequate
reserves, if any, required in accordance with Generally Accepted Accounting
Principles;
(b) imposed by law, such as carriers', warehousemen's and mechanics' liens
and other similar liens, that arise in the ordinary course of business with
respect to obligations not yet due or being contested in good faith and by
appropriate proceedings and with respect to which it has set aside on its books
adequate reserves, if any, required in accordance with Generally Accepted
Accounting Principles;
(c) arising in the ordinary course of business out of pledges or deposits
under workmen's compensation laws, unemployment insurance, pensions, or other
social security or retirement benefits, or similar legislation;
(d) incidental to the conduct of its business or the ownership of its
property and assets (such as easements, zoning restrictions and restrictive
covenants) not incurred in connection with the borrowing of money or the
obtaining of advances or credit, and which do not in the aggregate materially
detract from the value of its property or assets or materially impair the use
thereof in the operation of its business;
(e) arising in the ordinary course of business out of pledges or deposits
to secure performance in connection with bids, tenders, contracts (other than
contracts for the payment of money), bonds (other than bonds of or for the
benefit of such Borrower) or leases to which such Borrower is a party;
(f) securing Indebtedness owing by such Borrower to another
Borrower;
(g) in respect of property acquired or constructed by it after the date
hereof for use in the business of any Borrower (such as real property,
automobiles and other vehicles and equipment), which Liens (including
Capitalized Lease Obligations) exist or are created at the time of acquisition
or completion of construction of such property or within 60 days thereafter, to
secure Indebtedness assumed or incurred to finance all or any part of the
purchase price or cost of construction of such property, but any such Lien shall
cover only the property so acquired or constructed and the aggregate amount
secured by such Liens shall not exceed $500,000 at any time outstanding;
<PAGE>
(h) on assets of any Person existing at the time such Person becomes, by
acquisition, consolidation or merger, a Material Subsidiary of any Borrower,
provided that such Lien covers only the assets of the Person so acquired and was
not created in connection with or in contemplation of such acquisition; and
(i) set forth in Schedule 6.01.
SECTION 6.02. Indebtedness. The Borrowers shall not, directly or indirectly,
create, incur, assume or suffer to exist any Indebtedness, except:
(a) Indebtedness hereunder and under the Loan Documents in
respect of the Notes;
(b) Indebtedness of (i) a Borrower to another Borrower and
(ii) a Material Subsidiary to a Borrower;
(c) Indebtedness assumed or incurred to finance all or any part of the
purchase price or cost of acquisition or construction of property and secured by
Liens permitted pursuant to Section 6.01(g) and (h);
(d) Indebtedness assumed in connection with any acquisition permitted
pursuant to Section 6.03 provided that such Indebtedness was not created in
connection with or in contemplation of such acquisition; and
(e) Indebtedness payable to the applicable seller as all or any part of
the purchase price of any acquisition permitted pursuant to Section 6.03.
SECTION 6.03. Liquidation, Sale of Assets and Merger.
(a) Except as otherwise provided herein, each Borrower shall not, and
shall not cause, permit or suffer any of its Material Subsidiaries to, (i) sell,
lease, transfer or otherwise dispose of any portion of its properties and assets
to any Person (other than in the ordinary course of business) or (ii) liquidate
or discontinue its business; provided, however, that a Material Subsidiary may
sell, lease or transfer all or substantially all of its assets to any Borrower
or another Material Subsidiary and any Borrower may acquire (for an amount not
exceeding the fair value thereof) all or substantially all of the properties and
assets of any Material Subsidiary or other Borrower so to be sold, leased or
transferred to it, if immediately before and after giving effect to such sale,
lease or transfer, no Default shall have occurred and be continuing.
(b) The Borrowers shall not, and shall not cause, permit or suffer
any of their Material Subsidiaries to, merge or
<PAGE>
consolidate with or into any other Person or acquire all or substantially all
the Capital Securities, properties or assets of any other Person except that (i)
a Material Subsidiary may be merged into, or consolidated with, any Borrower or
another Material Subsidiary and (ii) any Borrower or any Material Subsidiary may
acquire all or substantially all of the properties or assets of any other Person
or a Controlling Interest in any other Person, provided that (A) if the
acquisition of such Controlling Interest is by way of a merger with such
Borrower, that Borrower will be the surviving entity, (B) if a Controlling
Interest is acquired other than through a merger with a Borrower, such
Controlling Interest shall constitute such Person a Material Subsidiary, (C)
immediately prior to such acquisition, no Default shall have occurred and be
continuing, and (D) immediately after giving effect to such acquisition, no
Default shall have occurred or be continuing.
SECTION 6.05. Gurantees. The Borrowers shall not issue any Guaranty except that
(i) the Borrowers may endorse checks for deposit in the ordinary course of
business and (ii) the Borrowers may guarantee the obligations of a Material
Subsidiary to the extent such obligations are permitted hereunder (provided,
however, that the Borrowers shall not guarantee, directly or indirectly, the
obligations of any partnership or joint venture which is a Subsidiary or in
which any Borrower or any Subsidiary has invested).
SECTION 6.06. Breach or Violation. The Borrowers shall not enter into any
agreement containing any provision that would be violated or breached by the
performance of the Borrowers' obligations under this Agreement, the Notes or any
of the other Loan Documents.
SECTION 6.07. Use of Proceeds. The Borrowers shall not use any of the proceeds
of any of the Loans for any purpose other than the purposes set forth in the
Recitals herein. Without limiting the generality of the foregoing, no part of
the proceeds of the Loans hereunder will be used (a) to purchase or carry any
Margin Stock or to extend credit to others for the purpose of purchasing or
carrying any Margin Stock if such action would violate, or be inconsistent with,
any rules or regulations of the Federal Reserve Board, including without
limitation any provisions of Regulation G, U or X, or (b) to acquire any
security in any transaction that is subject to Section 13 or 14 of the
Securities Exchange Act of 1934, including particularly (but without limitation)
Sections 13(d) and 14(d) thereof. If requested by the Administrative Agent or
any Bank, each Borrower will furnish to the Banks a statement in conformity with
the requirements of Federal Reserve Form U-1 referred to in Regulation U.
SECTION 6.08. Transactions with Affiliates. The Borrowers shall not effect any
transaction with any Affiliate on a basis less favorable than would at the time
be obtainable for a comparable transaction in arms-length dealing with an
unrelated third party.
SECTION 6.09. Restrictive Covenants. Except as may otherwise be specifically
provided for in this Agreement or any other Loan Document, each Borrower shall
not, and shall not cause, permit or suffer any of its Material Subsidiaries to,
enter into any Contract, or otherwise create or cause or permit to exist or
become effective any consensual restriction, limiting
<PAGE>
the ability (whether by covenant, event of default or otherwise) of any Material
Subsidiary to (a) pay dividends or make any other distributions on its Capital
Securities held by such Borrower or any other Material Subsidiary, (b) pay any
obligation owed to such Borrower or any other Material Subsidiary, (c) make any
loans or advances to or investments in other Borrower or in any other Material
Subsidiary, (d) transfer any of its property or assets to any other Borrower or
any other Material Subsidiary, or (e) create any Lien (other than Permitted
Liens) upon its property or assets whether now owned or hereafter acquired or
upon any income or profits therefrom.
SECTION 6.10. Increase in Benefits; New Plans. The Borrowers shall not, and
shall not cause, permit or suffer any ERISA Affiliate to, (a) increase benefits
under any Plan or adopt or establish any new employee benefit plans (within the
meaning of Section 3(3) of ERISA), fringe benefit plans or arrangements, or
executive or incentive plans, if such action would require it to make
substantial additional contributions thereto or to incur a substantial
obligation thereto, except for changes in the ordinary course of business
consistent with past practices of the Borrowers (such as annual cost of living
increases) and changes to existing benefits or new benefits deemed necessary by
the Borrowers to remain competitive with the benefits generally offered by other
companies in the same business as the Borrowers; or (b) adopt, establish, or
become a party to any Plan that is subject to the provisions of Title IV of
ERISA or any multiemployer plan (within the meaning of Section 3(37) of ERISA).
ARTICLE VII
FINANCIAL COVENANTS
Plasti-Line covenants and agrees with the Administrative Agent and the
Banks that, until the Repayment Date, unless the Majority Banks otherwise
consent in writing, it shall comply with the following financial covenants:
SECTION 7.01. Consolidated Current Ratio. The ratio of Consolidated Current
Assets to Consolidated Current Liabilities as of the last day of each fiscal
quarter shall not be less than 1.75 to 1.00.
SECTION 7.02. Consolidated Tangible Net Worth. During fiscal year 1996,
Consolidated Tangible Net Worth shall not be less than $21,500,000. Beginning
the first day of the first fiscal quarter of 1997 through the last day of the
fourth fiscal quarter of 1997, Consolidated Tangible Net Worth shall not be less
than the greater of (a)(i) $21,500,000 plus (ii) 50% of
<PAGE>
positive Consolidated Net Income (if any) for Plasti-Line's 1996 fiscal year or
(b) $23,500,000 (with the greater of (a) and (b) of this sentence hereinafter
referred to as the "1997 Minimum Consolidated Tangible Net Worth"). Beginning
the first day of the first fiscal quarter of 1998 through the last day of the
fourth fiscal quarter of 1998, Consolidated Tangible Net Worth shall not be less
than the greater of (a)(i) the 1997 Minimum Consolidated Tangible Net Worth,
plus (ii) 50% of positive Consolidated Net Income (if any) for Plasti-Line's
1997 fiscal year or (b) $25,500,000.
SECTION 7.03. Consolidated Debt Service Coverage. The ratio of Consolidated
Adjusted Cash Flow to Consolidated Debt Service shall not be less than 2.50 to
1.00 from the Closing Date and thereafter, measured quarterly on a rolling four
quarters basis; provided, however, that for the purposes of calculating
Consolidated Debt Service at fiscal year end 1995, Plasti-Line shall exclude
$1,000,000 from CMLTD.
SECTION 7.04. Consolidated Total Liabilities to Consolidated Tangible Net Worth.
The ratio of Consolidated Total Liabilities to Consolidated Tangible Net Worth
shall not exceed (a) 2.50 to 1.00 from the Closing Date through fiscal year end
1997 and (b) 2.00 to 1.00 during fiscal year 1998 and thereafter.
SECTION 7.05. Consolidated Funded Debt to Consolidated Adjusted Cash Flow. The
ratio of Consolidated Funded Debt to Consolidated Adjusted Cash Flow shall not
exceed (a) 5.25 to 1.00 beginning the Closing Date through and including the
last day of the third fiscal quarter of 1996; (b) 3.00 to 1.00 beginning the
first day of the fourth fiscal quarter of 1996 through fiscal year end 1997; and
(c) 2.50 to 1.00 beginning the first day of the first fiscal quarter of 1998 and
thereafter, all as measured quarterly on a rolling four quarters basis.
SECTION 7.06. Capital Expenditures. Plasti-Line together with its Consolidated
Subsidiaries shall not make, or incur any obligation to make, any Capital
Expenditures in any one fiscal year in excess of an aggregate of $3,000,000.
SECTION 7.07. Consolidated Financial Covenants; Determination Periods. Unless
otherwise expressly designated above, all financial covenants set forth above in
this Article VII shall be calculated on a consolidated basis using the financial
statements to be delivered to the Banks pursuant to Section 5.06 hereof. Except
as may otherwise be provided for in Section 7.01 through 7.06, all financial
covenants set forth in such Sections shall be measured on an annual basis (as
opposed to a rolling four-quarters basis).
<PAGE>
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.01. Events of Default. Each of the following shall constitute an
"Event of Default", whatever the reason for such event and whether it shall be
voluntary or involuntary, or within or beyond the control of the Borrowers, or
be effected by operation of law or pursuant to any judgment or order of any
court or any order, rule or regulation of any governmental or nongovernmental
body:
(a) any payment of the principal of or interest on any Note or of the
Facility Fee or Closing Fee, or any other amount due under this Agreement or the
Notes, shall not be made, within five Business Days after the same shall become
due and payable, whether at the due date thereof or at a date fixed for
prepayment thereof or by acceleration thereof or otherwise;
(b) any representation or warranty made herein or in any other Loan
Document or any statement or representation made in any report, certificate,
financial statement or other instrument furnished by any Borrower to the
Administrative Agent and/or the Banks, as applicable, pursuant to this Agreement
shall prove to have been false or misleading in any material respect (whether or
not known to such Borrower) when made or delivered or when deemed made in
accordance with the terms hereof;
(c) any Borrower gives notice to the Administrative Agent or the Banks or
the Banks otherwise become aware that an event has occurred or a circumstance
exists or has become known after the Closing Date, including without limitation
notices pursuant to Sections 5.02. 5.06, 5.08, 5.09 and 5.10, that, after notice
to the Borrowers and an opportunity (within five Business Days) to discuss such
Borrower's plans with respect thereto, the Administrative Agent and/or the
Banks, as applicable, determine could reasonably be expected to have a Material
Adverse Effect;
(d) the Borrowers or any Subsidiary shall fail to observe or perform any
covenant, warranty or agreement contained in or referred to in Sections 5.02 and
5.07 and Article VII;
(e) the Borrowers or any Subsidiary shall fail to observe or perform any
covenant, warranty or agreement contained in or referred to in Article VI,
provided that any such inadvertent failure made in good faith shall not
constitute an Event of Default if it is curable and is cured promptly after
notice from Administrative Agent (not to exceed, in any event, 15 days);
(f) the Borrowers or any Subsidiary shall fail to observe or perform any
other covenant, condition or agreement to be
<PAGE>
observed or performed pursuant to the terms hereof and such default shall
continue unremedied for thirty (30) days after written notice thereof to the
Borrowers by the Administrative Agent or the Majority Banks;
(g) the Borrowers or any Material Subsidiary shall fail to pay any
Indebtedness greater than $1,000,000 other than the Loans hereunder, or any
interest or premium thereon, when due (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise), and such failure shall continue
after the applicable grace period, if any, specified in the agreement or
instrument relating to such Indebtedness and Borrowers' failure to pay causes
the lender in question to accelerate such Indebtedness; or the Borrowers or any
Material Subsidiary shall fail to perform any term, covenant or agreement on its
part to be performed under any agreement or instrument evidencing or securing or
relating to such Indebtedness; provided that in the case of Indebtedness payable
to sellers in connection with acquisitions by any Borrower and its Subsidiaries,
such failure shall not constitute an Event of Default if there is a valid
dispute regarding the payment or a valid counterclaim exists against such seller
and, in either case, the payment of such Indebtedness is contested in good
faith;
(h) any Borrower or any Material Subsidiary shall (i) voluntarily commence
any proceeding or file any petition seeking relief under Title 11 of the United
States Code or any other federal, state or foreign bankruptcy, insolvency or
similar law, (ii) consent to the institution of, or fail to controvert in a
timely and appropriate manner, any such proceeding or the filing of any such
petition, (iii) apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator or similar official for such Borrower or such Material
Subsidiary or for a substantial part of its property, (iv) file an answer
admitting the material allegations of a petition filed against it in any such
proceeding, (v) make a general assignment for the benefit of creditors, (vi)
admit in writing its inability or fail generally to pay its debts as they become
due, or (vii) take corporate action for the purpose of effecting any of the
foregoing;
(i) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (i) relief
in respect of any Borrower or any Material Subsidiary, or of a substantial part
of its property, under Title 11 of the United States Code or any other federal,
state or foreign bankruptcy, insolvency or similar law, (ii) the appointment of
a receiver, trustee, custodian, sequestrator or similar official for such
Borrower or such Material Subsidiary or for a substantial part of its property
or (iii) the winding-up or liquidation of any Borrower or such Material
Subsidiary; and such proceeding or petition shall continue undismissed for 60
days or
<PAGE>
an order or decree approving or ordering any of the foregoing shall continue
unstayed and in effect for 30 days;
(j) a default or event of default shall have occurred and be continuing
pursuant to any other Loan Document after the expiration of any applicable
notice and cure period provided therein;
(k) a judgment or order for the payment of money shall be entered against
any Borrower or any Material Subsidiary by any court, and either (i) such
judgment or order shall continue undischarged and unstayed for a period of 10
days in which the aggregate amount of all such judgments and orders exceeds
$500,000 or (ii) enforcement proceedings shall have been commenced upon such
judgment or order;
(l) any Person or group of related Persons owns of record or beneficially,
or files with the SEC notice of intent to acquire, 20% or more of the voting
Capital Securities of Plasti-Line (excluding amounts owned by such Persons as of
the date hereof), it being understood that for purposes hereof employees of
Plasti-Line and its Subsidiaries shall not be deemed to be "related Persons"
solely as a result of their common employment;
(m) (i) any Borrower shall engage in any transaction involving any Plan
that is prohibited under Internal Revenue Code Section 4975 or ERISA Section 406
and not exempt under Internal Revenue Code Section 4975 or ERISA Section 408 or
(ii) any Borrower or any ERISA Affiliate shall fail to pay when due an amount
that is payable by it to a Plan, except that no event or condition referred to
in clauses (i) or (ii) shall constitute an Event of Default if it, together with
all other such events or conditions at the time existing, has not subjected, or
in the reasonable determination of the Majority Banks would not subject, such
Borrower or any ERISA Affiliate to any Indebtedness or liability that, alone or
in the aggregate with all such Indebtedness and liabilities, would have a
Material Adverse Effect; or
(n) the Borrowers shall fail to deliver any notice required to be
delivered to the Administrative Agent and/or the Banks, as applicable, pursuant
to any of Sections 5.02. 5.06, 5.08, 5.09 and 5.10 within ten (10) days after
the event giving rise to the obligation to give notice thereunder.
SECTION 8.02. Exercise of Remedies. Upon the occurrence of an Event of Default
and in every such event and at any time thereafter during the continuance of
such event, the Administrative Agent, upon written request from the Majority
Banks, shall by written notice to the Borrowers, take either or both of the
following actions, at the same or different times:
<PAGE>
(a) terminate the Commitments and
(b) declare the Notes to be forthwith due and payable, whereupon the Notes
shall become forthwith due and payable, both as to principal and interest
(which, after such declaration, shall bear interest as provided in Section
1.07(a)), without presentment, demand, protest or any other notice of any kind,
all of which are hereby expressly waived by the Borrowers, anything contained
herein or in the Notes to the contrary notwithstanding. Notwithstanding the
foregoing, if an Event of Default specified in paragraph (h) or (i) of Section
8.01 occurs with respect to any Borrower or any Material Subsidiary, the
Commitments shall automatically terminate and the Notes shall become immediately
due and payable, both as to principal and interest, without any action by any
Bank or the Administrative Agent and without presentment, demand, protest or any
other notice of any kind, all of which are hereby expressly waived by the
Borrowers, anything contained herein or in the Notes to the contrary
notwithstanding. The Administrative Agent shall further be entitled to exercise,
for the benefit of the Banks, all of the rights and remedies available under the
Loan Documents and applicable law.
ARTICLE IX
THE ADMINISTRATIVE AGENT
SECTION 9.01. Appointment and Authorization. Each Bank hereby irrevocably
appoints and authorizes the Administrative Agent to take such action on its
behalf and to exercise such powers hereunder and under the other Loan Documents
as are delegated to the Administrative Agent by the terms hereof and thereof
together with such powers as are incidental thereto. With respect to the Loans
made by it and the Notes issued to it, the Administrative Agent shall have the
same rights and powers under this Agreement and the other Loan Documents as any
other Bank and may exercise the same as though it were not the Administrative
Agent; and the term "Bank" or "Banks" shall, unless otherwise expressly
indicated, include the Administrative Agent in its capacity as a Bank. The
Administrative Agent and its Affiliates may accept deposits from, lend money to,
act as trustee under indentures of and generally engage in any kind of business
with, the Borrowers, and any Person that may do business with the Borrowers, all
as if the Administrative Agent were not the Administrative Agent hereunder and
without any duty to account therefor to the Banks.
SECTION 9.02. Noteholders. The Administrative Agent may treat the payee of any
Note as the holder thereof.
SECTION 9.03. Consultation with Counsel. The Banks agree that the Administrative
Agent may consult with legal counsel
<PAGE>
selected by it and shall not be liable for any action taken or suffered in good
faith by it in accordance with the advice of such counsel.
SECTION 9.04. Documents. The Administrative Agent shall not be under a duty to
examine or pass upon the validity, effectiveness, enforceability, genuineness or
value of any of the Loan Documents or any other instrument or document furnished
pursuant thereto or in connection therewith, and the Administrative Agent shall
be entitled to assume that the same are valid, effective, enforceable and
genuine and what they purport to be.
SECTION 9.05. Resignation or Removal of the Adminstrative Agent. Subject to the
appointment and acceptance of a successor Administrative Agent as provided
below, the Administrative Agent may resign at any time by giving written notice
thereof to the Banks and the Borrowers and the Administrative Agent may be
removed at any time with or without cause by the Majority Banks. Upon any such
resignation or removal, the Majority Banks shall have the right to appoint a
successor Administrative Agent. If no successor Administrative Agent shall have
been so appointed by the Majority Banks and shall have accepted such appointment
within thirty (30) days after the retiring Administrative Agent's giving of
notice of resignation or the Majority Banks' removal of the retiring
Administrative Agent, then the retiring Administrative Agent may, on behalf of
the Banks, appoint a successor Administrative Agent. Upon the acceptance of any
appointment as the Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
Administrative Agent, and the retiring Administrative Agent shall be discharged
from its duties and obligations hereunder. After any retiring Administrative
Agent's resignation or removal hereunder as the Administrative Agent, the
provisions of this Article IX shall continue in effect for its benefit in
respect to any actions taken or omitted to be taken by it while it was acting as
the Administrative Agent. The Borrowers shall have the right under this Section
9.05 to approve, in the Borrowers' reasonable judgment, of any successor
Administrative Agent.
SECTION 9.06. Responsibility of the Administrative Agent.
(a) It is expressly understood and agreed that the obligations of the
Administrative Agent under the Loan Documents are only those expressly set forth
in the Loan Documents and that the Administrative Agent shall be entitled to
assume that no Default has occurred and is continuing, unless the Administrative
Agent has actual knowledge of such fact or has received written notice from the
Borrowers or from a Bank that such Bank considers that a Default has occurred
and is continuing and specifying the nature thereof. The Banks recognize and
agree that the Administrative
<PAGE>
Agent shall not be required to determine independently whether the conditions
described in Articles I and III have been satisfied and, in disbursing funds to
the Borrowers, may rely fully upon statements contained in the relevant notice.
Neither the Administrative Agent nor any of its directors, officers or employees
shall be liable for any action taken or omitted to be taken by it under or in
connection with the Loan Documents, except for its own gross negligence or
willful misconduct. The Administrative Agent shall incur no liability under or
in respect of any of the Loan Documents by acting upon any notice, consent,
certificate, warranty or other paper or instrument believed by it to be genuine
or authentic or to be signed by the proper party or parties, or with respect to
anything that it may do or refrain from doing in the reasonable exercise of its
judgment, or that may seem to it to be necessary or desirable in the
circumstances.
(a) The Administrative Agent shall not be responsible to the Banks for any
recitals, statements, representations or warranties contained in this Agreement,
or in any certificate or other document referred to or provided for in, or
received by any Bank under, this Agreement, or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any document referred to or provided for herein or for any failure by the
Borrowers to perform any of their obligations hereunder. The Administrative
Agent may employ agents and attorneys-in-fact and shall not be answerable,
except as to money or securities received by it or its authorized agents, for
the negligence or misconduct of any such agents or attorneys-in-fact.
(b) The relationship between the Administrative Agent and each of the
Banks is only that of agent and principal and has no fiduciary aspects, and the
Administrative Agent's duties hereunder are acknowledged to be only
administrative and ministerial and not involving the exercise of discretion on
its part. Nothing in this Agreement or elsewhere contained shall be construed to
impose on the Administrative Agent any duties or responsibilities other than
those for which express provision is herein made. In performing its duties and
functions hereunder, the Administrative Agent does not assume and shall not be
deemed to have assumed, and hereby expressly disclaims, any obligation or
responsibility toward or any relationship of agency or trust with or for the
Borrowers. As to any matters not expressly provided for by this Agreement
(including, without limitation, enforcement or collection of the Notes), the
Administrative Agent shall not be required to exercise any discretion or take
any action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Majority Banks and such instructions shall be binding upon all the Banks and
all holders of Notes; provided, however, that the Administrative Agent shall not
be required to take any action that exposes the
<PAGE>
Administrative Agent to personal liability or that is contrary to this Agreement
or applicable law.
SECTION 9.07. Notices of Event of Default. In the event that the Administrative
Agent shall have acquired actual knowledge of any Default or Event of Default,
the Administrative Agent shall promptly give notice thereof to the other Banks.
SECTION 9.08. Bank Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon the Administrative Agent or any other
Bank and based on the financial information referred to in Section 4.04 and such
other documents and information as it has deemed appropriate, made its own
independent credit analysis and decision to enter into this Agreement. Each Bank
also acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Bank and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement.
SECTION 9.09. Indemnification. (a) The Banks jointly and severally agree to
indemnify the Administrative Agent (to the extent not reimbursed by the
Borrowers), from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses, or disbursements
of any kind or nature whatsoever that may be imposed on, incurred by or asserted
against the Administrative Agent in any way relating to or arising out of the
Loan Documents or any action taken or omitted by the Administrative Agent (other
than in its capacity as a Bank hereunder) under the Loan Documents, provided
that (i) payment of each Bank's indemnification shall be made ratably according
to its Percentage unless one or more Banks is not able or permitted to make such
indemnification, in which case each other Bank ratably shall make payments on
behalf of the Bank(s) not so permitted or able and (ii) no Bank shall be liable
for any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from the
Administrative Agent's gross negligence or willful misconduct.
(b) The Banks hereby agree that any amounts owed to the Administrative
Agent by any of the Banks may be deducted by the Administrative Agent, and
applied to such amounts, from amounts made available, in accordance with any of
the Loan Documents to the Administrative Agent for the account of the Banks,
with the Banks remaining liable for any deficiency.
SECTION 9.10. Benefit of Article IX. The agreements contained in this Article IX
are solely for the benefit of the Administrative Agent and the Banks, and are
not for the benefit of or to be relied upon by, the Borrowers or any third
party.
<PAGE>
SECTION 9.11. Administrative Agent's Fee. The Borrowers shall pay to
Administrative Agent in immediately available funds a fee in the amount of
$7,500 on the Closing Date and annually thereafter on June 30 of each year
beginning June 30, 1996.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Modification. All modifications, consents, amendments or waivers
of any provision of any Loan Document, or consent to any departure by the
Borrowers therefrom, shall be effective only if the same shall be in writing and
concurred in by the Majority Banks and then shall be effective only in the
specific instance and for the purpose for which given; provided, however, that
no change in the provisions of Articles I, III and VII, this Section 10.01 or in
the definition of the Majority Banks, shall be effective absent the written
concurrence of all of the Banks, and no change in the provisions of Article IX
shall be effective absent the written concurrence of the Administrative Agent.
SECTION 10.03. Payment of Expenses. Whether or not any Loans are made hereunder,
the Borrowers shall, on demand, pay or reimburse (a) the Administrative Agent
and the Banks for all transfer, documentary, stamp and similar taxes, and all
recording and filing fees, payable in connection with, arising out of or in any
way related to the execution, delivery and performance of this Agreement, the
Notes or the making of the Loans, (b) the Administrative Agent for all of its
costs and expenses (including reasonable fees and disbursements of legal counsel
and other experts employed or retained by the Administrative Agent) incurred,
and all payments made, and indemnify and hold the Administrative Agent harmless
from and against all losses suffered, by the Administrative Agent and the Banks
in connection with, arising out of, or in any way related to (i) the
<PAGE>
negotiation, preparation, execution and delivery of (A) this Agreement and the
other Loan Documents and (B) (whether or not executed) any waiver, amendment or
consent hereunder or thereunder and (ii) the administration of any operations
under this Agreement, and (c) the Administrative Agent and the Banks for all of
their reasonable costs and expenses (including reasonable fees and disbursements
of legal counsel and other experts employed or retained by the Administrative
Agent and the Banks) incurred, and all payments made, and indemnify and hold the
Administrative Agent and the Banks harmless from and against all losses
suffered, by the Administrative Agent and the Banks in connection with, arising
out of, or in any way related to (i) consulting with respect to any matter in
any way arising out of, relating to, or connected with, this Agreement or any
other Loan Document, including but not limited to the enforcement by the
Administrative Agent and the Banks of any of their rights hereunder or
thereunder or the performance by the Administrative Agent and the Banks of any
of their obligations hereunder or thereunder, (ii) protecting, preserving,
exercising or enforcing any of the rights of the Administrative Agent and the
Banks hereunder and under the other Loan Documents, (iii) any claim (whether
asserted by the Administrative Agent, the Banks or the Borrowers or any other
Person and whether asserted before or after the payment, performance and
observance in full of the Borrowers' obligations hereunder and under the other
Loan Documents) and the prosecution or defense thereof, in any way arising
under, related to, or connected with, this Agreement, the other Loan Documents
or the relationship established hereunder or thereunder and (iv) any
governmental investigation arising out of, relating to, or in any way connected
with this Agreement or any other Loan Document, except that the foregoing
indemnity shall not be applicable to any loss suffered by the Administrative
Agent and the Banks to the extent such loss is determined by a judgment of a
court that is binding on the Administrative Agent and the Banks, final and not
subject to review on appeal, to be the result of acts or omissions on the
Administrative Agent's or the Banks' part, as the case may be, constituting (x)
willful misconduct, (y) knowing violations of law or, in the case only of claims
by the Borrowers against the Administrative Agent or the Banks, the
Administrative Agent's or the Banks' failure, as the case may be, to comply with
its contractual obligations under this Agreement or any other Loan Document or,
but only to the extent not waivable thereunder, applicable law. Upon request of
the Borrowers, the Banks shall request an itemization (with reasonable detail)
of all costs and expenses from all third parties for which it seeks
reimbursement hereunder and shall provide a copy thereof to the Borrowers upon
receipt. Further, the Administrative Agent and the Banks shall not be entitled
to reimbursement for costs and expenses of third party consultants (other than
their regular inside and outside legal counsel) unless an Event of Default has
occurred and is continuing or a bona fide dispute exists hereunder.
<PAGE>
SECTION 10.04. Notices. All notices and other communications provided for herein
(including, without limitation, any modifications of, or waivers or consents
under, this Agreement) shall (unless otherwise indicated) be given or made by
telecopy or in writing and telecopied, mailed or delivered to the intended
recipient at the address of such party as follows:
(a) Any or all of the Borrowers:
Plasti-Line, Inc.
Attn: Mark J. Deuschle
623 East Emory Road
Knoxville, Tennessee 37950-9043
Fax: (423) 947-8565
And with a copy of such notice to:
Thomas N. McAdams
Bernstein, Stair & McAdams
530 South Gay Street, Suite 600
Knoxville, Tennessee 37902
Fax: (423) 522-8879
(b) The Administrative Agent or any Bank at its address shown below its
name on the signature pages hereof.
With a copy of such notice to:
Hunton & Williams
900 South Gay Street, Suite 2000
Knoxville, Tennessee 37901
Attn: Jeffrey J. Wall
Fax: (423) 549-7704
Except as otherwise provided in this Agreement, all such communications shall be
deemed to have been duly given when transmitted by telecopier, personally
delivered or, in the case of a mailed notice, upon receipt, in each case given
or addressed as aforesaid. Any such notice or communication that is delivered by
mail shall be presumed to have been received three Business Days after the day
it is mailed. Unless otherwise indicated, notices received after 5:00 p.m.
Knoxville time on any day shall be deemed to have been given by the sender on
the next succeeding Business Day. Any party may change its address for purposes
of this Agreement by giving notice of such change to the other parties pursuant
to this Section 10.04.
SECTION 10.05. Governing Law. This Agreement has been prepared, is being
executed and delivered, and is intended to be performed in the State of
Tennessee, and the substantive laws of such state (without regard to choice of
law provisions thereof)
<PAGE>
shall govern the validity, construction, enforcement and interpretation of this
Agreement and all of the other Loan Documents.
SECTION 10.06. Invalid Provisions. If any provision of any Loan Document is held
to be illegal, invalid or unenforceable under present or future laws during the
term of this Agreement, such provision shall be fully severable; such Loan
Document shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part of such Loan Document; and
the remaining provisions of such Loan Document shall remain in full force and
effect and shall not be affected by the illegal, invalid or unenforceable
provision or by its severance from such Loan Document. Furthermore, in lieu of
each such illegal, invalid or unenforceable provision shall be added as part of
such Loan Document a provision mutually agreeable to the Borrowers, the
Administrative Agent and the Majority Banks as similar in terms to such illegal,
invalid or unenforceable provision as may be possible and be legal, valid and
enforceable. In the event the Borrowers, the Administrative Agent, and the
Majority Banks are unable to agree, after good faith negotiations, upon a
provision to be added to the Loan Document within a period of ten (10) Business
Days after a provision of the Loan Document is held to be illegal, invalid or
unenforceable, then a provision acceptable to the Administrative Agent and the
Majority Banks as similar in terms to the illegal, invalid or unenforceable
provision as is possible and be legal, valid and enforceable shall be added
automatically to such Loan Document. In either case, the effective date of the
added provision shall be the date upon which the prior provision was held to be
illegal, invalid or unenforceable.
SECTION 10.07. Nonliability of Banks. The relationship between the Borrowers and
the Banks is, and shall at all times remain, solely that of borrowers and
lenders, and the Banks and the Administrative Agent neither undertake nor assume
any responsibility or duty to the Borrowers to review, inspect, supervise, pass
judgment upon, or inform the Borrowers of any matter in connection with any
phase of the Borrowers' businesses, operations, or condition, financial or
otherwise. The Borrowers shall rely entirely upon their own respective judgments
with respect to such matters, and any review, inspection, supervision, exercise
of judgment, or information supplied to the Borrowers by any Bank or the
Administrative Agent in connection with any such matter is for the protection of
the Banks and the Administrative Agent, and neither the Borrowers nor any third
party is entitled to rely thereon.
SECTION 10.08. Binding Effect and Assignability. The Loan Documents shall be
binding upon and inure to the benefit of the Borrowers, the Administrative Agent
and the Banks and their respective successors, assigns and legal
representatives;
<PAGE>
provided, however, that no Borrower may, without the prior written consent of
the Administrative Agent and the Banks, assign any rights, powers, duties or
obligations thereunder.
SECTION 10.09. Entirety; Conflicts. The Loan Documents embody the entire
agreement between the parties and supersede all prior agreements and
understandings, if any, relating to the subject matter hereof and thereof. In
the event of any conflict in the provisions of this Agreement with the
provisions of any other Loan Document, the provisions of this Agreement shall
govern.
SECTION 10.10. Headings, etc. Article and Section headings and captions and the
table of contents hereto are for convenience of reference only and shall in no
way affect the interpretation of this Agreement.
SECTION 10.11. Survival. All representations and warranties made by the
Borrowers herein shall survive delivery of the Notes and the making of the
Loans.
SECTION 10.12. Sale and Transfers etc. of Commitments and Notes; Particpations
in Commitments and Notes.
(a) Each Bank shall have the right at any time to sell, assign, transfer
or negotiate all or part (but not less than $3,000,000 in principal amount) of
its Commitments, Loans, Notes, and other rights and obligations under this
Agreement and each other Loan Document, upon payment to the Administrative Agent
of an assignment fee of $2,000 for each such transaction.
(b) Each Bank may grant participations in all or any part of its
Commitment, Loans and its Notes; provided, however, no holder of any such
participation, other than an Affiliate of such Bank, shall be entitled to
require such Bank to take or omit to take any action hereunder and no Bank
shall, as among the Borrowers and such Bank, be relieved of any of its
obligations hereunder as a result of any such granting of a participation, but
the participating Bank shall be entitled to rely on, and possess all rights
under, any opinions, certificates, or other instruments delivered under or in
connection with this Agreement or any other Loan Document.
(c) Each Borrower authorizes each Bank to disclose to any participant,
assignee or Purchasing Bank (each, a "Transferee") and any prospective
Transferee any and all financial and other information in such Bank's possession
concerning the Borrowers and the Subsidiaries, if any, that has been delivered
to such Bank by the Borrowers pursuant to this Agreement or that has been
delivered to such Bank by the Borrowers.
<PAGE>
(d) If, pursuant to this Section 10.12, any interest in this Agreement or
any Commitment, Loan or Note is transferred to any Transferee that is organized
under the laws of any jurisdiction other than the United States or any state
thereof, the transferor Bank shall cause such Transferee (other than any
participant), and shall cause any participant, concurrently with the
effectiveness of such transfer, (i) to represent to the transferor Bank (for the
benefit of the transferor Bank, the Administrative Agent, and the Borrowers)
that under applicable law and treaties no taxes will be required to be withheld
by the Administrative Agent, and the Borrowers or the transferor Bank with
respect to any payments to be made to such Transferee in respect of the Loans,
(ii) to furnish to the transferor Bank, the Administrative Agent and the
Borrowers either U.S. Internal Revenue Service Form 4224 or U.S. Internal
Revenue Service Form 1001 (wherein such Transferee claims entitlement to
complete exemption from U.S. federal withholding tax on all interest payments
hereunder) and (iii) to agree (for the benefit of the transferor Bank, the
Administrative Agent and the Borrowers) to provide the transferor Bank, the
Administrative Agent and the Borrowers a new Form 4224 or Form 1001 upon the
obsolescence of any previously delivered form and comparable statements in
accordance with applicable U.S. laws and regulations and amendments duly
executed and completed by such Transferee, and to comply from time to time with
all applicable U.S. laws and regulations with regard to such withholding tax
exemption.
SECTION 10.13. No Third Party Beneficiary. Without limiting the effect of
Sections 10.08, 10.12 and 10.18, the parties do not intend the benefits of this
Agreement to inure to any third party, nor shall this Agreement be construed to
make or render the Administrative Agent or the Banks liable to any materialman,
supplier, contractor, subcontractor, purchaser or lessee of any property owned
by the Borrowers, or for debts or claims accruing to any such persons against
the Borrowers. Notwithstanding anything contained herein or in the Notes, or in
any other Loan Document, or any conduct or course of conduct by any or all of
the parties hereto, before or after signing this Agreement nor any other Loan
Document shall be construed as creating any right, claim or cause of action
against the Administrative Agent or the Banks, or any of their officers,
directors, agents or employees, in favor of any materialman, supplier,
contractor, subcontractor, purchaser or lessee of any property owned by the
Borrowers, nor to any other person or entity other than the Borrowers.
SECTION 10.14. Waiver of Jury Trial. TO THE FULLEST EXTENT PERMITTED BY LAW, THE
ADMINISTRATIVE AGENT, THE BANKS AND THE BORROWERS HEREBY KNOWINGLY, VOLUNTARILY,
AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH,
THIS AGREEMENT, THE NOTES OR ANY LOAN DOCUMENT,
<PAGE>
OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (VERBAL OR WRITTEN), OR
ACTIONS OF THE ADMINISTRATIVE AGENT, THE BANKS, OR THE BORROWERS. THIS PROVISION
IS A MATERIAL INDUCEMENT FOR THE ADMINISTRATIVE AGENT AND THE BANKS ENTERING
INTO THIS AGREEMENT.
SECTION 10.15. Consent to Jurisdiction. (a) Each Borrower, in respect of itself
and its properties, represents that it is subject to (and hereby irrevocably
submits to) the nonexclusive jurisdiction of any United States federal or
Tennessee state court sitting in Knoxville, Tennessee in respect of any suit,
action or proceeding arising out of or relating to this Agreement or the Notes,
and irrevocably agrees that all claims in respect of any such suit, action or
proceeding may be heard and determined in any such court. Each Borrower
irrevocably waives, to the fullest extent it may effectively do so under
applicable law, any objection to the laying of the venue of any such suit,
action or proceeding brought in any such court and any claim that any such suit,
action or proceeding brought in any such court has been brought in an
inconvenient forum.
(a) Each Borrower hereby irrevocably appoints Mark J. Deuschle with an
office on the date hereof at 623 East Emory Road, Knoxville, Tennessee
37950-9043 as its agent to receive and acknowledge on behalf of itself and its
properties and assets service of any and all process that may be served in any
suit, action or proceeding of the nature referred to in the preceding paragraph
in any United States federal or Tennessee state court sitting in Knoxville,
Tennessee. Said designation and appointment shall, to the fullest extent
permitted by law, be irrevocable until the Repayment Date. If (i) such agent (or
any agent appointed pursuant to this sentence) shall cease so to act or (ii) the
appointment of such agent (or any agent appointed pursuant to this sentence)
shall prove to be ineffective for any reason, then such Borrower shall without
delay appoint another such agent satisfactory to the Majority Banks and shall
promptly deliver to the Administrative Agent evidence in writing of such other
agent's acceptance of such appointment.
(b) The foregoing provisions shall not limit the right of any Bank, the
Administrative Agent or any other party hereto to serve process in any other
manner permitted by law or limit the right of any Bank or the Administrative
Agent or other party hereto to bring any suit, action or proceeding or to obtain
execution on any judgment rendered in any suit, action or proceeding in any
other appropriate jurisdiction or in any other manner.
SECTION 10.16. Multiple Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same agreement, and any of
<PAGE>
the parties hereto may execute this Agreement by signing any such counterpart.
SECTION 10.17. Disclosures. The Administrative Agent and each Bank may disclose
to, and exchange and discuss with, any other Person (the Administrative Agent,
each Bank and each such other Person being hereby irrevocably authorized to do
so) any information concerning the Borrowers or any Subsidiary (whether received
by the Administrative Agent, the Bank or such Person in connection with or
pursuant to this Agreement or otherwise) solely as may be determined by the
disclosing party to be required by applicable law or necessary or desirable for
the purpose of protecting, preserving, exercising or enforcing any rights
hereunder or under the Notes, or consulting with respect to any such rights or
any rights of the Borrowers.
SECTION 10.18. Sharing of Setoffs. Upon the occurrence and during the
continuance of an Event of Default, the holder of any Note shall have the right,
in addition to and not in limitation of any right that any such holder may have
under applicable law or otherwise, to setoff against the unpaid balance of any
Note or Notes or participations therein held by it any debt owing to the
Borrowers or any of them by such holder, including, without limitation, any
funds in any deposit account maintained by the Borrowers or any of them with
such holder, and nothing in this Agreement shall be deemed any waiver or
prohibition of any Bank's right of banker's lien or setoff. Each holder of a
Note agrees that if it shall, through the exercise of a right of banker's lien,
setoff, counterclaim or otherwise, obtain payment of a proportion of any Notes
held by it in excess of the proportion of the Notes of the other holders of the
Notes being paid simultaneously or required hereby to be paid proportionately,
it shall be deemed to have simultaneously purchased from such other holders a
participation in the Notes held by such other holders so that the aggregate
unpaid principal amount of all Notes then outstanding as the principal amount of
such note held by it prior to such exercise of banker's lien, setoff or
counterclaim or receipt of other payment was to the principal amount of all
Notes outstanding prior to such exercise of banker's lien, setoff or
counterclaim or receipt of other payment, and it shall promptly remit to each
such holder the amount of the participation thus deemed to have been purchased.
Each Borrower expressly consents to the foregoing arrangement and agrees that
any holder of a participation in a Note so acquired may exercise any and all
rights of banker's lien, setoff, counterclaim or otherwise with respect to any
and all moneys owing by such holder to such Borrower as fully as if such holder
were a holder of a Note in the amount of such participation. If all or any
portion of any such excess payment is thereafter recovered from the holder that
received the same, the purchase provided for herein shall be deemed to have been
rescinded to the extent of such recovery, without interest. Each holder of a
Note agrees to give prompt
<PAGE>
written notice to the Borrowers of any setoff made pursuant to this Section
10.18.
SECTION 10.19. Repayments in Bankruptcy. In the event any amount of the
Indebtedness of the Borrowers to the Banks hereunder is paid by the Borrowers
and because of bankruptcy or other laws relating to creditors' rights the Banks
repay any such amounts to the Borrowers or to any trustee, receiver or
otherwise, then the amounts so repaid shall again become part of the Loans
payable by the Borrowers.
SECTION 10.20. Amendment and Restatement. This Agreement amends and restates the
Revolving Credit and Term Loan Agreement dated as of April 21, 1995 by and
between Plasti-Line and Third National Bank of East Tennessee, predecessor (by
name change) to SunTrust.
ARTICLE XI
DEFINITIONS
SECTION 11.01. Definitions. For purposes of this Agreement, unless the context
otherwise requires, capitalized terms shall have the respective meanings
assigned to them in Exhibit A hereto.
SECTION 11.02. Other Definitional Provisions. (a) Except as otherwise specified
herein, all references herein (i) to any Person shall be deemed to include such
person's, successors, transferees and assignees, but only, in the case of
transferees and assignees of the Borrowers, the Administrative Agent and the
Banks, to the extent the applicable transfer or assignment complies with the
provisions of this Agreement, (ii) to any applicable law defined or referred to
herein shall be deemed references to such applicable law as the same may have
been or may be amended or supplemented from time to time and (iii) to any
Contract defined or referred to herein shall be deemed references to such
Contract (and, in the case of any instrument, any other instrument issued in
substitution therefor) as the terms thereof may have been or may be amended,
supplemented, waived or otherwise modified from time to time.
(b) When used in this Agreement, the words "herein", "hereof", and
"hereunder" and words of similar import shall refer to this Agreement as a whole
and not to any provision of this Agreement, and the words "section", "schedule"
and "exhibit" shall refer to Sections of and Schedules and Exhibits to this
Agreement unless otherwise specified.
<PAGE>
(c) Whenever the context so requires, the neuter gender includes the
masculine or feminine, and the singular number includes the plural, and vice
versa.
(d) All terms defined in this Agreement shall have the defined meanings
when used in the Notes, and except as otherwise expressly stated therein, any
certificate, opinion or other Loan Document delivered pursuant hereto or
referred to herein.
SECTION 11.03. Accounting Matters. Unless otherwise specified herein, all
accounting determinations hereunder and all computations utilized by the
Borrower in complying with the covenants contained herein shall be made, all
accounting terms used herein shall be interpreted, and all financial statements
required to be delivered hereunder shall be prepared, in accordance with
Generally Accepted Accounting Principles, except, in the case of such financial
statements, for departures from Generally Accepted Accounting Principles that
may from time to time be approved in writing by the independent certified
accountants who are at the time in accordance with Section 5.05 reporting on the
Borrower's financial statements.
{REMAINDER OF PAGE INTENTIONALLY LEFT BLANK}
{SIGNATURES BEGIN ON THE FOLLOWING PAGE}
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their duly authorized officers as of the day and year
first above written.
PLASTI-LINE, INC.
/s/ Mark J. Deuschle By:
- -----------------------------
Mark J. Deuschle
Title: Vice President-Finance
CARTER-MIOT, INC.
/s/ Mark J. Deuscle By:
- -----------------------------
Mark J. Deuschle
Title: Secretary-Treasurer
AMERICAN SIGN AND MARKETING
SERVICES, INC.
/s/ Mark J. Deuschle By:
- -----------------------------
Mark J. Deuschle
Title: Secretary
SUNTRUST BANK, EAST TENNESSEE
N.A., as Administrative Agent
/S/ T. L. "Chip" Smallwood By:
- -----------------------------
T. L. "Chip" Smallwood
Title: Vice President
Address: 700 Hill Avenue
Knoxville, Tennessee 37915
<PAGE>
Amount of Percentage
Commitment Interest
SUNTRUST BANK, EAST TENNESSEE, N.A.,
as Bank
*$9,500,000 50% By:
/s/ T.L. Chip Smallwood
T. L. "Chip" Smallwood
Title: Vice President
Address: 700 Hill Avenue
Knoxville,
Tennessee 37915
Fax: (423) 544-2125
NATIONAL CITY BANK, KENTUCKY,
as Bank
$9,500,000 50% By:
/S/ Carrie Tate
Carrie Tate
Title: Vice President
Address: 5304 Chaversham Lane
Norcross, Georgia 30092
Fax: (770) 441-1525
*Includes $2,000,000 Swing Line Commitment.
<PAGE>
EXHIBIT A
DEFINITIONS
This is Exhibit A to that certain Amended and Restated Credit Agreement
dated as of April 30, 1996, among Plasti-Line, Inc., Carter-Miot, Inc. and
American Sign and Marketing Services, Inc., as Borrowers, SunTrust Bank, East
Tennessee, N.A., as Administrative Agent, and the Banks listed therein (the
"Agreement"). When used in this Exhibit, the words "herein", "hereof", and
"hereunder" and words of similar import shall refer to the Agreement, and the
words "section", "schedule" and "exhibit" shall refer to Sections of and
Schedules and Exhibits to the Agreement, unless otherwise specified.
"Account Debtors" has the meaning provided in the Security Agreement.
"Accounts Payable" means "accounts payable" as determined in accordance
with Generally Accepted Accounting Principles and which are unpaid 90 days or
longer after their respective billing dates.
"Accounts" means any "Account", as such term is defined in Section 9-106
of the Uniform Commercial Code as adopted in Tennessee, in which any Borrower
shall now or hereafter have any right, title or interest.
"Administrative Agent" shall have the meaning assigned to such term in the
preamble hereof, and any successor thereto pursuant to Article IX hereof.
"Affiliate" means, with respect to any Person, any other Person directly
or indirectly, through one or more intermediaries, controlling, controlled by,
or under common control with, such first Person. For the purposes of this
definition, "control" (including the terms "controlled by" and "under common
control with"), as used with respect to any Person, shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of Capital
Securities having voting rights or by contract or otherwise. Unless otherwise
specified, "Affiliate" means an Affiliate of any Borrower.
"Agreement" means the Amended and Restated Credit Agreement among the
Borrowers, the Banks and the Administrative Agent, dated as of April 30, 1996,
as the same may be amended, modified, supplemented or restated from time to
time.
"AIS Agreement" means the Automatic Investment Service Agreement by and
between SunTrust and Plasti-Line dated August 30, 1995, as the same may be
amended, modified, restated or supplemented from time to time.
<PAGE>
"Applicable LIBOR Margin" means the annual rate of interest to be added to
the LIBOR Rate in calculating interest payable on LIBOR Loans and shall be
determined based on the ratio of Consolidated Funded Debt to Consolidated
Adjusted Cash Flow as of the last day of the most recent fiscal quarter for
which quarterly financial statements have been delivered to the Banks and such
determination shall be based on a rolling four quarters basis:
Ratio Applicable LIBOR Margin
3.50 to 1.00 or greater 2.85%
Greater than or equal to
3.00 to 1.00 but less
than 3.50 to 1.00 2.70%
Greater than or equal to
2.50 to 1.00 but less
than 3.00 to 1.00 2.50%
Greater than or equal to
2.00 to 1.00 but less
than 2.50 to 1.00 2.15%
Greater than or equal to
1.50 to 1.00 but less
than 2.00 to 1.00 1.90%
Less than 1.50 to 1.00 1.65%
The ratio upon which a determination of "Applicable LIBOR Margin" is based shall
be computed on the basis of the financial statements delivered by Borrowers
pursuant to Section 5.06(a). Changes in the Applicable LIBOR Margin shall be
effective as of the first day of the month next succeeding the date of
determination. In the event that any financial information provided by Borrowers
is subsequently determined to be inaccurate and accurate information would have
resulted in a higher Applicable LIBOR Margin, such higher Applicable LIBOR
Margin shall be given effect retroactively, and Borrowers shall promptly pay to
the Administrative Agent for the benefit of the Banks such amount as is
necessary to give effect to such change.
"Banks" means the institutions indicated as Banks on the signature pages
hereof, and shall include, at such times as they shall become parties hereto,
Purchasing Banks, if any.
"Base Rate Margin" means zero percent (0%) per annum.
"Base Rate Loan" shall mean a Loan on which interest accrues based on the
Base Rate in accordance with Article I.
<PAGE>
"Base Rate" means the greater of "a) the Federal Funds Rate plus 1/4 of 1% and
(b) the rate of interest announced from time to time by the Administrative Agent
as its prime rate of interest (which rate of interest may not be the lowest rate
charged by the Administrative Agent or any Bank on similar loans). Each change
in the Base Rate shall become effective without prior notice to the Borrowers
automatically as of the date of such change in the Base Rate.
"Borrower" and "Borrowers" shall have the meaning assigned to such terms
in the preamble hereof.
"Borrowing Base" means the sum of the following:
(a) 80% of Eligible Accounts Receivable, plus
(b) 50% of Eligible Inventory, minus
(c) 50% of Customer Deposits, minus
(d) Accounts Payable.
The Banks shall be permitted to change the Borrowing Base from time to
time upon providing to the Borrowers not less than 60 days prior written notice
of such proposed changes; provided, however, that such proposed changes must be
mutually acceptable to the Banks and the Borrowers in their reasonable judgment;
provided further, however, that in the event that the Banks and the Borrowers
are unable to agree on such proposed changes, any and all final decisions
regarding proposed changes shall be made by the Banks in their reasonable
discretion.
"Borrowing Base Certificate" shall mean the certificate in the form
attached as Exhibit E to this Agreement.
"Business Day" means any day other than Saturday, Sunday or a day on which
banks are required or authorized to be closed for business in Knoxville,
Tennessee, and, with respect to any LIBOR Loan, means any such Business Day on
which transactions are effected in deposits of U.S. Dollars in the relevant
interbank foreign currency deposits market and on which commercial banks are
open for domestic and international business (including dealings in Dollar
deposits) in the jurisdiction in which such interbank market is located.
"Capital Lease" means, as of any date, any lease of property, real or
personal, that would be capitalized on a balance sheet of the lessee prepared as
of such date in accordance with Generally Accepted Accounting Principles,
together with any other lease by such lessee that is in substance a financing
lease, including without limitation, any lease under which (a) such lessee has
or will have an option to purchase the
<PAGE>
property subject thereto at a nominal amount or an amount less than a reasonable
estimate of the fair market value of such property as of the date such lease is
entered into, or (b) the term of the lease approximates or exceeds the expected
useful life of the property leased thereunder.
"Capital Securities" means with respect to any Person that is (a) a
corporation, any shares of capital stock of such corporation, (b) a general or
limited partnership, any general or limited partnership interest of such
partnership, (c) a limited liability company, any stock or other membership or
ownership interests in such limited liability company, and also means any
security convertible into, or any option, warrant or other right to acquire, any
of the items described in clause (a), (b) or (c) above of such Person.
"Capitalized Lease Obligations" means all obligations of Plasti-Line
and the Consolidated Subsidiaries under Capital Leases.
"Closing Date" means April 30, 1996, or such other date as the Borrowers
and the Banks may agree.
"Closing Fee" shall have the meaning assigned to such term in Section 1.06
hereof.
"CMLTD" means current maturities of Long Term Debt and shall be determined
both as to classification of items and amounts in accordance with Generally
Accepted Accounting Principles.
"Commitment Termination Date" means the Maturity Date, or such earlier
date and time on which the Commitments are terminated pursuant to Article VIII.
"Commitment Transfer Supplement" means an agreement among the
Administrative Agent, a Bank, the Borrowers and a Purchasing Bank providing for
the transfer of a portion of the Loans and the Commitment of such Bank (or any
prior Purchasing Bank) to a Purchasing Bank, which shall be in form and
substance satisfactory to the Borrowers, the Administrative Agent and such Bank
and shall set forth the reallocations of the Commitment and the outstanding
principal amounts of the Loans by each Bank.
"Compliance Certificate" shall mean a certificate of the chief financial
officer of Plasti-Line in the form of Exhibit D hereto setting forth
computations in reasonable detail as of the date thereof of compliance with
Article VII.
"Commitment" means, with respect to
<PAGE>
each Bank, the amount of the Commitment of such Bank as set forth opposite such
Bank's name on the signature pages hereof, as the same may be reduced from time
to time pursuant to this Agreement, and with respect to SunTrust, the
"Commitment" of SunTrust shall include the Swing Line Commitment.
"Consolidated Adjusted Cash Flow" means, for any period, the sum for
Plasti-Line and its Consolidated Subsidiaries, of (a) Consolidated Net Income
for such period plus (b) to the extent deducted in determining Consolidated Net
Income for such period, (i) depreciation and amortization, (ii) taxes, and (iii)
Interest Expense.
"Consolidated Current Assets" means, at any date, the aggregate amount of
all assets of Plasti-Line and its Consolidated Subsidiaries determined on a
consolidated basis that would be classified as current assets according to
Generally Accepted Accounting Principles.
"Consolidated Current Liabilities" mans, at any date, the aggregate amount
of all liabilities of Plasti-Line and its Consolidated Subsidiaries determined
on a consolidated basis that would be classified as current liabilities
according to Generally Accepted Accounting Principles.
"Consolidated Debt Service" means, for any twelve month period, the sum
(determined on a consolidated basis) for Plasti-Line and its Consolidated
Subsidiaries of (a) CMLTD for such period plus (b) Interest Expense for such
period.
"Consolidated Funded Debt" means, as of any date of determination, the sum
of all Indebtedness (including the current portion thereof) of Plasti-Line and
its Consolidated Subsidiaries on such date constituting Notes Payable, Long Term
Debt, Letters of Credit in excess of an aggregate of $3,000,000 and Capitalized
Lease Obligations.
"Consolidated Net Income" means, for any period, the consolidated net
income of Plasti-Line and the Consolidated Subsidiaries for such period (taken
as a cumulative whole) all as determined in accordance with Generally Accepted
Accounting Principles.
"Consolidated Subsidiaries" means, as of any date, all Affiliates of
Plasti-Line included as of such date in the consolidated financial statements of
Plasti-Line (including, without limitation, the other Borrowers).
"Consolidated Tangible Net Worth" means, at any date, the net worth of
Plasti-Line and its Consolidated Subsidiaries after subtracting therefrom the
aggregate amount of intangible assets including, without limitation, goodwill,
franchises, licenses, patents, trademarks, trade names, copyrights, service
marks, brand names, experimental or organization expenses, unamortized debt
discount and expenses, deferred charges, and treasury stock
<PAGE>
and all subordinated stockholder loans, including, but not limited to, accounts
or subordinated stockholder loans evidenced by promissory notes or other
instruments.
"Contract" means an indenture, agreement (other than this Agreement),
other contractual restriction, lease, instrument (other than the Notes),
certificate or Organizational Document.
"Controlled Group" means (a) the controlled group of corporations as
defined in Section 1563 of the Internal Revenue Code or (b) the group of trades
or businesses under common control as defined in Section 414(c) of the Internal
Revenue Code of which the Borrower is a part or may become a part.
"Controlling Interests" means ownership of a sufficient interest in a
Person to approve mergers, sales of assets, dissolutions, amendments to
Organizational Documents and other acts requiring a "supermajority" vote under
applicable law and such Person's Organizational Documents.
"Conversion Date" means the date on which any Loan is converted from a
Base Rate Loan or a LIBOR Loan to a Loan of a different type pursuant to Section
1.08 hereof.
"Customer Deposits" means any and all advances and/or deposits made by
Borrowers' customers to such Borrower(s) for goods sold by such Borrower(s) to
such customer(s) and made prior to delivery of such goods, for credit against
the purchase price of such goods.
"Default Rate" means the Base Rate plus two percent (2%) per annum.
"Default" means an Event of Default or any condition or event that with
the giving of notice or the lapse of time or both would become an Event of
Default.
"Dollars" and the sign "$" shall refer to lawful currency of the United
States of America.
"Eligible Accounts Receivable" means such Accounts which are and at all
times shall continue to be acceptable to the Banks in all respects, including,
without limitation, the following: (i) those Accounts outstanding less than 90
days from invoice date and (ii) those Accounts arising from sales to General
Motors Corporation which are outstanding less than 180 days from invoice date;
provided, however, that should 50% or more of any given Account balance be
outstanding for greater than 90 days, the entire Account balance for such
Account shall not be eligible for inclusion in the Borrowing Base; further
provided, however, that if the standard contract payment terms on any such given
Account permits payment without late charges up to 90 days after invoice,
<PAGE>
then should 50% or more of such Account's balance be outstanding for greater
than 179 days after invoice, then the entire Account balance for such Account
shall be ineligible for inclusion in the Borrowing Base. Criteria for
eligibility shall be fixed and revised from time to time by the Banks in their
reasonable judgment.
"Eligible Inventory" means, as of any time, all Inventory of the Borrowers
which is in good and saleable condition, is not obsolete or unmerchantable, in
which the Banks have been granted a first priority security interest which the
Banks have perfected and is acceptable to the Banks in all respects in the
Banks' exclusive judgment; provided, however, that this definition shall not
include any work-in-process.
"Environmental Laws" means all laws relating to Hazardous Waste disposal,
Toxic Substances, or environmental conservation.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, together with all regulations and official rulings and interpretations
issued pursuant thereto.
"ERISA Affiliate" means any corporation or trade or business, whether or
not incorporated, which together with the Borrower would be treated as a single
employer under ERISA or the Internal Revenue Code.
"LIBOR Loan" means a Loan on which interest accrues based on the LIBOR
Rate in accordance with Article I.
"Event of Default" shall have the meaning assigned to such term in Article
VIII.
"Facility Fee" shall have the meaning assigned to such term in Section
1.06 hereof.
"Federal Funds Rate" means for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/16th of 1%) equal to the weighted
average of the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers on such day, as
published by the Federal Reserve Bank of New York, on the Business Day next
succeeding such day, provided that (a) if the day for which such rate is to be
determined is not a Business Day, the Federal Funds Rate for such day shall be
such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day, and (b) if such rate is not so
published for any day, the Federal Funds Rate for such day shall be the average
rate charged to the Administrative Agent on such day on such transactions as
determined by the Administrative Agent.
<PAGE>
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System and any successor agency.
"Generally Accepted Accounting Principles" means those generally accepted
accounting principles and practices that are recognized as such by the American
Institute of Certified Public Accountants acting through its Accounting
Principles Board or by the Financial Accounting Standards Board or through other
appropriate boards or committees thereof and that are consistently applied for
all periods after the date of the most recent balance sheet of Plasti-line
referred to in Section 5.06 so as to properly reflect the financial condition,
and the results of operations and cash flows, of Plasti-Line and its
Consolidated Subsidiaries, except that any accounting principle or practice
required to be changed by the Accounting Principles Board or Financial
Accounting Standards Board (or other appropriate board or committee of such
Boards) in order to continue as a generally accepted accounting principle or
practice may so be changed. In the event of a change in Generally Accepted
Accounting Principles, the Banks and the Borrowers will thereafter negotiate in
good faith to revise any covenants of this Agreement affected by such change in
order to make such covenants consistent with Generally Accepted Accounting
Principles then in effect.
"Governmental Authority" means (a) with respect to the Borrowers, any
government (or any political unit thereof), court, bureau, agency or other
governmental authority having or claiming jurisdiction over the Borrowers or any
of their respective businesses, operations or properties and (b) with respect to
the Administrative Agent, the Banks and their Affiliates, the Federal Reserve
Board, the Comptroller of the Currency, any state banking regulator or any other
government (or any political unit thereof), court, bureau, agency or other
governmental authority having or claiming jurisdiction or regulatory authority
over the Administrative Agent, such Bank or their Affiliates or any of their
respective businesses, operations or properties.
"Guaranty" of any Person means any contract, agreement or understanding of
such Person pursuant to which such Person provides for the payment of any
Indebtedness of any other Person (the "Primary Obligor") or otherwise
protecting, or having the practical effect of protecting, the holder of such
Indebtedness against loss, in any manner, whether directly or indirectly,
contingent or otherwise, including without limitation agreements: (a) to
purchase such Indebtedness or any property constituting security therefor, (b)
to advance or supply funds (i) for the purchase or payment of such Indebtedness,
or (ii) to maintain net worth or working capital or other balance sheet
conditions, or otherwise to advance or make available funds for the purchase or
payment of such Indebtedness, (c) to purchase property, securities or service
primarily for the purpose of assuring the
<PAGE>
holder of such Indebtedness of the ability of the Primary Obligor to make
payment of the Indebtedness, or (d) otherwise to assure the holder of the
Indebtedness of the Primary Obligor against loss in respect thereof.
"Hazardous Wastes" means all waste materials subject to regulation or
defined as such under the Comprehensive Environmental Response, Compensation,
and Liability Act as modified by the Superfund Amendments and Reauthorization
Act of 1986, the Resource Conservation and Recovery Act, the Clean Air Act, the
Federal Water Pollution Control Act, the Toxic Substance Control Act, or any
applicable state law and any other applicable federal, state or local laws and
their regulations now in force or hereafter enacted relating to hazardous waste
disposal or environmental conservation.
"Indebtedness" means, with respect to any Person and without duplication:
(a) all obligations of such Person for borrowed money or the deferred purchase
price of goods or services (except trade payables in the ordinary course of
business); (b) all obligations of such Person in respect of any Guaranty (other
than endorsements of checks for deposit in the ordinary course of business), (c)
all obligations of such Person in respect of any Capital Lease, (d) all
obligations, indebtedness and liabilities, including any refinancings thereof,
secured by any lien or any security interest on any property or assets of such
Person, and (e) all Mandatorily Redeemable Securities of such Person valued in
accordance with Generally Accepted Accounting Principles.
"Intercreditor Agreement" means the Intercreditor Agreement dated as of
April 30, 1996 by and among the Administrative Agent and the Banks, as the same
may be amended, modified, restated or supplemented from time to time.
"Interest Expense" means, for any period, all interest in respect of
Indebtedness accrued or capitalized during such period (whether or not actually
paid during such period).
"Interest Payment Date" means (a) with respect to each LIBOR Loan not
constituting a Swing Loan, (i) the last day of each Interest Period for all
Loans having a one (1), two (2) or three (3) month Interest Period and the
Commitment Termination Date, as applicable, and (ii) the last day of the third
month and the last day of the Interest Period and the Commitment Termination
Date, as applicable, for all LIBOR Loans having a six (6) month Interest Period;
(b) with respect to each LIBOR Loan constituting a Swing Loan, the first day of
each calendar month and the Commitment Termination Date, as applicable; and (c)
with respect to each Base Rate Loan (whether or not constituting a Swing Loan),
the first day of each calendar month and the Commitment Termination Date.
<PAGE>
"Interest Period" means, as to any LIBOR Loan not constituting a Swing
Loan, the period commencing on the date of such LIBOR Loan or continuation
thereof and ending on the numerically corresponding day (or, if there is no
numerically corresponding day, on the last day) in the calendar month that is 1,
2 or 3 months thereafter, as the Borrower may elect; provided, however, that (y)
if any Interest Period would end on a day that is not a Business Day, such
Interest Period shall be extended to the next succeeding Business Day unless
such next succeeding Business Day would fall in the next calendar month, in
which case such Interest Period shall end on the next preceding Business Day and
(z) no Interest Period with respect to any LIBOR Loan not constituting a Swing
Loan shall end later than the Commitment Termination Date.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended, and all regulations and official rulings and interpretations thereunder
or thereof.
"Inventory" has the meaning provided in the Security Agreement.
"Legal Requirement" means any requirement imposed upon the Administrative
Agent or any Bank by any law of the United States of America or any other
jurisdiction exercising or claiming authority over the Administrative Agent or
such Bank, including without limitation, any regulation, order, interpretation,
ruling or official directive (whether or not having the force of law) of any
Governmental Authority.
"Letters of Credit" means "letters of credit" as determined in accordance
with Generally Accepted Accounting Principles.
"LIBOR Rate" means, with respect to any Interest Period for any LIBOR
Loan, the rate per annum equal to the quotient of (i) the offered rate for
deposited in Dollars of amounts equal or comparable to the principal amount of
such LIBOR Loan 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 such offered rates appear on such page,
the rate used for such Interest Period will be the arithmetic average (rounded
upward, is 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 Majority Banks,
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
<PAGE>
to such Interest Period in an amount comparable to the principal amount of such
Eurodollar Loan, 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" means any lien, mortgage, security interest, tax lien, attachment,
levy, charge, pledge, encumbrance, conditional sale or title retention
arrangement, or any other interest in property or assets (or the income or
profits therefrom) designed to secure the repayment of Indebtedness, whether
consensual or nonconsensual and whether arising by agreement or under any
statute or law, or otherwise.
"Loan Documents" means this Agreement, the Notes, the Security Agreement,
the Intercreditor Agreement and any other document now or hereafter executed or
delivered in connection with this Agreement or the Obligations, including,
without limitation, any life insurance assignment, pledge agreement, security
agreement, financing statement, deed of trust, mortgage, promissory note, or
subordination agreement (including any renewals, extensions and refundings
thereof and any modifications, supplements and amendments thereto and
substitutes therefor), each of which shall be in form and substance satisfactory
to the Banks.
"Loan" means an amount advanced pursuant to Section 1.01 and a Loan of a
"type" means a Loan that bears, or is to bear, as the context may require,
interest based on the Base Rate or LIBOR Rate.
"Long Term Debt" means "long term debt" as determined in accordance with
Generally Accepted Accounting Principles.
"Majority Banks" means, as of any date, Banks holding Notes representing
at least eighty percent (80%) of the aggregate unpaid principal amount of the
Loans outstanding on such date, and in the event no Loans are outstanding on
such date, Banks holding at least sixty-six percent (66%) of the aggregate
Commitments of all Banks.
"Mandatorily Redeemable Securities" means, as applied to a Person, any of
such Person's Capital Securities or debt to the extent that it is redeemable,
payable or required to be purchased or otherwise retired or extinguished (a) at
a fixed or determinable date, whether by operation of a sinking fund or
otherwise, (b) at the option of any Person other than such Person or (c) upon
the occurrence of a condition not solely within the control of such Person, such
as a redemption required to be made out of future earnings.
<PAGE>
"Margin Stock" means "margin stock" as defined in Regulation U or G.
"Material Adverse Effect" means any material adverse effect upon (a) the
validity, performance or enforceability of any Loan Document or (b) the ability
of the Borrowers to fulfill their obligations under the Loan Documents.
"Material Subsidiary" means any of the Subsidiaries listed on Schedule
4.06(a) and any other domestic Subsidiary now or in the future that has annual
revenues (either historically or on a pro forma basis) exceeding 2.25% of total
consolidated revenues of Plasti-Line and the Consolidated Subsidiaries, provided
that the sum of all revenues of all Material Subsidiaries shall not be less than
75% of total consolidated revenues of Plasti-Line and the Consolidated
Subsidiaries, and if less, additional Subsidiaries (in descending order of total
revenues) shall become Material Subsidiaries until the sum of all revenues
exceeds 75%.
"Maturity Date" means June 30, 1998, provided, however, that the Banks in
their absolute, sole discretion may extend the Maturity Date for one additional
year each year beginning June 30, 1997 by providing written notice to the
Borrowers of such extension, and such notice shall be made not later than June
30 of each year prior to the Maturity Date or such extended Maturity Date, as
applicable.
"Maximum Permitted Rate" means, with respect to interest payable on any
amount, the rate of interest on such amount that, if exceeded could, under
applicable law, result in (a) civil or criminal penalties being imposed on any
Bank or (b) any Bank's being unable to enforce payment of (or if collected, to
retain) all or part of such amount or the interest payable thereon.
"Notes Payable" means "notes payable" as determined in accordance with
Generally Accepted Accounting Principles.
"Notes" means the promissory notes executed by the Borrowers and delivered
to the Banks pursuant to Section 1.04 of this Agreement, together with any
renewals, extensions, replacements or modifications thereof.
"Obligations" means all indebtedness, liabilities and obligations, whether
now existing or hereafter arising, direct or indirect, fixed or contingent,
secured or unsecured, matured or unmatured, joint, several or joint and several,
arising out of or in connection with this Agreement, the Notes, the Loans or any
other Loan Document or other document executed or delivered in connection with
this Agreement or the Loans.
"One Month LIBOR Rate" means the LIBOR Rate for an Interest Period having
a one (1) month duration.
<PAGE>
"Organizational Documents" means the fundamental organizational and
governing documents of a Person and includes, without limitation, (a) in the
case of a corporation, its articles of incorporation and other charter
documents, bylaws and agreements among shareholders, (b) in the case of a
partnership, its certificate of partnership, partnership agreement and other
agreements among partners and (c) in the case of a limited liability company,
its articles of organization, operating agreement and other agreements among
members.
"Percentage" means, with respect to each Bank, the percentage set forth
opposite the name of such Bank on the signature pages hereof.
"Permitted Liens" shall mean the Liens permitted pursuant to the
provisions of Section 6.01.
"Person" shall include an individual, a sole proprietorship, a
corporation, a joint venture, a general or limited partnership, a trust, an
unincorporated organization, a mutual company, a joint stock company, an estate,
a union, an employee organization or a Governmental Authority.
"Plan" means an employee benefit plan as defined in Section 3(3) of ERISA
maintained by the Borrower or any Subsidiary for employees of the Borrower
and/or the Subsidiaries, and every other employee benefit arrangement not
subject to ERISA, including but not limited to, those arrangements providing
profit-sharing, stock bonus, stock option, executive compensation, deferred
compensation, severance, hospitalization, medical, dental, disability or life
insurance benefits.
"Premises" means any and all of the real property owned, leased or
otherwise used by any Borrower and its Material Subsidiaries.
"Purchasing Bank" shall have the meaning assigned to such term in Section
10.12 hereof.
"Regulations D, G, U and X" means Regulations D, G, U and X of the Federal
Reserve Board, as the same is from time to time in effect, and all official
rulings thereunder or thereof.
"Regulatory Change" means (a) any new, or any change in any existing, law,
regulation, interpretation, directive or request (whether or not having the
force of law) or (b) any change in the administration or enforcement of any such
applicable law, regulation, interpretation, directive or request that becomes
effective after the date of this Agreement, whether as a result of an enactment
or determination of a Governmental Authority or otherwise.
<PAGE>
"Repayment Date" means the later of (a) the Commitment Termination Date or
the reduction to zero of the Commitments, whichever first occurs and (b) the
date on which the Loans and all other amounts payable hereunder are paid in
full.
"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 1/100th of 1%.
"SEC" means the Securities and Exchange Commission of the United States
and any successor agency thereto.
"Security Agreement" means the Amended and Restated Security Agreement
made by the Borrowers for the benefit of the Administrative Agent dated as of
April 30, 1996, as such may be amended, modified, restated or supplemented from
time to time.
"Solvent" means, with respect to any Person on a particular date, that on
such date (a) the fair value of the property of such Person is greater than the
total amount of liabilities, including, without limitation, contingent
liabilities, of such Person, (b) the amount that will be required to pay the
probable liabilities of such Person on its debts as they become absolute and
matured will not be greater than the fair salable value of the assets of such
Person at such time, (c) such Person is able to realize upon its assets and pay
its debts and other liabilities, contingent obligations and other commitments as
they mature in the normal course of business, (d) such Person does not intend
to, and does not believe that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities mature, and (e) such
Person is not engaged in business or a transaction, and is not about to engage
in business or a transaction, for which such Person's property would constitute
unreasonably small capital after giving due consideration to prevailing
practices in the industry in which such Person is engaged. In computing the
amount of any contingent liability at any time, it is intended that such
liability will be computed at the amount which, in light of all the facts and
circumstances existing at such time, represents the amount that might reasonably
be expected to become an actual or matured liability.
"State Official" means, with respect to any Person, the Secretary of State
or other appropriate official of the jurisdiction in which such Person was
incorporated or organized who is authorized to certify official records of such
Person on file in such jurisdiction.
<PAGE>
"Subsidiary" means, with respect to any Person, any other Person fifty
percent (50%) or more of the outstanding Capital Securities of each class of
which is owned or controlled, directly or indirectly, by such first Person and
its Affiliates.
"SunTrust" means SunTrust Bank, East Tennessee, N.A., a national banking
association.
"Swing Line Commitment" means the obligation of SunTrust to make Swing
Loans to the Borrowers under the Swing Line in an aggregate principal amount at
any time not exceeding $2,000,000, all in accordance with the terms of this
Agreement.
"Swing Line" means the revolving line of credit under the Swing Line
Commitment made by SunTrust for the benefit of the Borrowers as set forth in
Section 1.03 of this Agreement.
"Swing Loans" shall have the meaning assigned to such term in Section 1.03
hereof.
"Tax" means, in relation to any LIBOR Loan and the applicable LIBOR, any
federal, state, local or foreign tax, levy, impost, duty, deduction, withholding
or other charge of whatever nature required by any Legal Requirement (a) to be
paid by the Banks or (b) to be withheld or deducted from any payment otherwise
required hereby to be made by the Borrower to the Banks; provided, however, that
the term "Tax" shall not include any taxes imposed upon the net income of the
Banks by the United States, any political subdivision thereof or any other
taxing authority.
"Toxic Substances" means and includes any materials present on the
Premises which have been shown to have significant adverse effects on human
health or which are subject to regulation under the Toxic Substances Control
Act, applicable state law, or any other applicable federal, state or local laws
now in force or hereafter enacted relating to toxic substances. "Toxic
Substances" includes, but is not limited to, asbestos, polychlorinated biphenyls
("PCBs"), petroleum products, and lead-based paints.
<PAGE>
EXHIBIT B
[Form of Amended and Restated
Revolving Credit Note]
$9,500,000 Knoxville, Tennessee
April 30, 1996
FOR VALUE RECEIVED, PLASTI-LINE, INC., CARTER-MIOT, INC. and AMERICAN SIGN
AND MARKETING SERVICES, INC., each a Tennessee corporation (collectively, the
"Borrower"), hereby promise, jointly and severally, to pay to the order of
___________________________________, a national banking association (the
"Bank"), at the office of SunTrust Bank, East Tennessee, N.A., as Administrative
Agent (the "Administrative Agent"), at 700 Hill Avenue, Knoxville, Tennessee
37915, on the dates provided in the Credit Agreement dated as of the date hereof
among the Borrower, the Administrative Agent and the Banks described therein
(the "Credit Agreement"), but in no event later than the Commitment Termination
Date, in lawful money of the United States of America, in immediately available
funds, the principal amount of NINE MILLION FIVE HUNDRED THOUSAND DOLLARS
($9,500,000) or, if less than such principal amount, the aggregate unpaid
principal amount of the Loans (as defined in the Credit Agreement) made by the
Bank to the Borrower pursuant to the Credit Agreement, and to pay interest from
the date hereof on the unpaid principal amount hereof, in like money, at said
office, on the dates and at the rates selected in accordance with Article I of
the Credit Agreement. Capitalized terms used herein, but not defined herein,
shall have the meanings set forth in the Credit Agreement.
The Borrower promises to pay interest, payable on demand, on any overdue
principal and, to the extent permitted by law, overdue interest from their due
dates at a rate or rates determined as set forth in the Credit Agreement.
The Borrower hereby waives diligence, presentment, demand, protest and
notice of any kind whatsoever. The nonexercise by the holder of any of its
rights hereunder in any particular instance shall not constitute a waiver
thereof in that or any subsequent instance.
All borrowings evidenced by this Note and all payments and prepayments of
the principal hereof and interest hereon and the respective dates thereof shall
be evidenced by the books and records of the Administrative Agent and the Bank.
This Note is one of the Notes referred to in the Credit Agreement which,
among other things, contains provisions for the acceleration of the maturity
hereof upon the happening of certain
<PAGE>
events, for optional prepayment of the principal hereof prior to the maturity
thereof and for the amendment or waiver of certain provisions of the Credit
Agreement, all upon the terms and conditions therein specified. This Note shall
be construed in accordance with and governed by the laws of the State of
Tennessee. This Note amends and restates (a) the Amended and Restated Revolving
Credit Note dated February 29, 1996 made by Plasti-Line payable to SunTrust in
the principal amount of $3,000,000 and (b) the Amended and Restated Revolving
Credit Note dated November 2, 1995 made by Plasti-Line payable to SunTrust in
the principal amount of $16,000,000.
IN WITNESS WHEREOF, the parties hereto have caused this Note to be duly
executed by their duly authorized officers as of the day and year first above
written.
PLASTI-LINE, INC.
By: _____________________________
Mark J. Deuschle
Title: Vice President-Finance
CARTER-MIOT, INC.
By: _____________________________
Title: __________________________
AMERICAN SIGN AND MARKETING
SERVICES, INC.
By: _____________________________
Title: __________________________
<PAGE>
EXHIBIT C
CONDITIONS TO INITIAL LOANS
This is Exhibit C to that certain Amended and Restated Credit Agreement
dated as of April 30, 1996, among Plasti-Line, Inc., Carter-Miot, Inc., American
Sign and Marketing Services, Inc., SunTrust Bank, East Tennessee, N.A., as
Administrative Agent, and the Banks listed therein (the "Agreement"). All
capitalized terms used but not defined herein or in the appendices hereto shall
have the meanings given to them in the Agreement.
1 The Borrower shall have delivered, or caused to be delivered, to each
Bank:
(a) a duplicate original of the Agreement executed on the Borrower's behalf by
its duly authorized officer.
(b) a duly executed Note payable to its order and otherwise complying with the
provisions of Section 1.03 of the Agreement.
(c) a duly executed Security Agreement and the corresponding UCC-1 and UCC-3
Financing Statements (as recorded with the proper filing offices).
(d) the written opinion of Bernstein, Stair & McAdams, counsel to the Borrower,
substantially in the form attached as Appendix 1 to this Exhibit, and addressing
such other legal matters as the Banks and their counsel may require.
2. The Borrower shall have delivered, or caused to be delivered, to the
Administrative Agent:
(a) A copy of the Borrower's Articles of Incorporation or Charter, as amended,
certified as of a recent date by a State Official.
(b) A certificate of a State Official, dated as of a recent date, as to the good
standing and charter documents of the Borrower on file in the office of such
State Official.
(c) A certificate of the Secretary or an Assistant Secretary of the Borrower
dated as of the Closing Date substantially in the form attached as Appendix 2 to
this Exhibit.
(d) A certificate of the Chief Financial Officer of the Borrower, substantially
in the form attached as Appendix 3 to this Exhibit, certifying that (i) the
Borrower is in compliance
<PAGE>
with all the terms and provisions of the Agreement and at the time of and
immediately after such borrowing no Default has occurred or is continuing and
(ii) the representations and warranties contained in Article IV of the Agreement
are true and correct.
(e) Certified copies of all consents and required governmental approvals, if
any, necessary for the execution, delivery and performance of the Agreement, the
Notes, and the other Loan Documents and the transactions contemplated thereby.
(f) Payment in full of all fees required to be paid on the Closing Date
(including the fees, if any, payable pursuant to Section 1.06 of the Agreement)
and all of the Banks' out-of-pocket costs and expenses (including counsel fees
and disbursements) payable in accordance with Section 10.03 for which invoices
have been submitted on or prior to such date.
(g) A notice of such Loan as required by Section 1.02 of the Agreement.
(h) Such other documents as the Administrative Agent, the Banks and their
counsel may request.
<PAGE>
APPENDIX 1
FORM OF OPINION
[Letterhead of Counsel to Borrower]
April 30, 1996
[Addressed to the Administrative Agent and the Banks]
Dear Sirs:
We have acted as counsel to Plasti-Line, Inc. ("Plasti-Line"), a Tennessee
corporation, Carter-Miot, Inc., a Georgia corporation and American Sign and
Marketing Services, Inc., a Kentucky corporation (each a "Borrower" and
collectively, the "Borrowers"), in connection with the preparation, execution
and delivery of the Amended and Restated Credit Agreement dated as of April 30,
1996 (the "Credit Agreement"), among the Borrowers and SunTrust Bank, East
Tennessee, N.A., as administrative agent (the "Administrative Agent") and
lender, and the lenders named therein (collectively, the "Banks").
Terms capitalized but not defined herein shall have the meanings given to
them in the Credit Agreement.
In so acting, we have reviewed executed copies of the Credit Agreement,
the Notes and the other Loan Documents. We have relied upon originals or copies
certified or otherwise identified to our satisfaction, of such records,
documents, certificates, and other instruments, and have made such other
investigations, as in our judgment are necessary or appropriate to enable us to
render the opinions expressed below. Except with respect to the Borrowers, we
have assumed the genuineness of all signatures and the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified copies or photocopies and the
authenticity of the originals of such latter documents.
Based upon and subject to the foregoing and the qualifications and
assumptions set forth below, we are of the opinion that:
1 Each Borrower is a corporation duly organized, validly existing and in
good standing under the laws of the State of its organization. Each Borrower has
the corporate power and authority to own its respective properties and to carry
on its respective businesses as now conducted and is duly qualified to do
business, and is in good standing as a foreign entity in all jurisdictions
wherein such qualification is required by reason of the nature of its business
and activities or the location of its
<PAGE>
property. Each Borrower has the corporate power to execute, deliver and perform
the Credit Agreement, to borrow thereunder and to execute and deliver the Notes.
2 The execution and delivery by each Borrower of, and performance by each
Borrower of the obligations provided for in, the Loan Documents have been duly
authorized by all proper and necessary corporate action. Each of the Loan
Documents to which the Borrowers are a party has been duly executed and
delivered by the Borrowers.
3 The Loan Documents constitute the legal, valid and binding obligations
of each Borrower, enforceable against such Borrower in accordance with their
terms, except as may be limited by (a) bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting the rights of creditors generally
and (b) general principles of equity (whether considered in a proceeding in at
law or in equity).
4 No action, suit, proceeding, inquiry or investigation before or by any
arbitrator or any court, public body, board, administrative agency or other
Governmental Authority is pending or, to best of our knowledge, threatened
against or affecting any Borrower.
5 To the best of our knowledge, no Borrower is in default with respect to
any judgment, writ, injunction, decree, rule or regulation of any governmental
instrumentality or other agency where such default could have a material and
adverse affect on the financial condition of any Borrower.
6 No approval of, consent from or filing with, any Governmental Authority
or any other Person, which approval, consent or filing has not heretofore been
obtained, given or made, is required in connection with the execution and
delivery by the Borrowers of any of the Loan Documents.
7 The execution and delivery of the Loan Documents, the consummation of
the transactions therein contemplated, the performance of and compliance with
the provisions thereof and the application of the proceeds of the Loans as
therein contemplated do not and will not (A) violate, conflict with, result in
the breach of, or constitute a default under (i) any provision of law, (ii) the
Organizational Documents of any Borrower, (iii) any instrument, agreement or
contract to which any Borrower is a party, or by or to which any Borrower or any
properties of any Borrower may be affected, bound or subject, or (iv) any order,
writ, injunction or decree of any court, arbitrator or Governmental Authority,
or (B) result in the creation or imposition of any lien, charge or encumbrance
upon any assets of any Borrower except in favor of the Administrative Agent for
the benefit of the Banks.
<PAGE>
8 The execution, delivery and performance of the Credit Agreement and the
use of the proceeds of the Loans thereunder do not and will not constitute a
violation of Regulations G, X or U of the Board of Governors of the Federal
Reserve System.
9 The Security Agreement is in a form sufficient to create a valid
security interest under Article 9 of the Code in those items and types of
Collateral which are subject to the provisions of Article 9 of the Code (such
Collateral collectively referred to hereinafter as the "UCC Collateral") as
security for the payment of the Obligations. We express no opinion as to the
status of title to, or concerning the priority of any lien or security interest
encumbering the Collateral.
The Financing Statements to be filed in Tennessee are in proper form for
filing in the Office of the Secretary of State of Tennessee (the "Filing
Office"). With respect to the UCC-3 Assignment executed by SunTrust in favor of
the Collateral Agent (as defined in the Security Agreement) in connection with
SunTrust's assignment of its security interest in the UCC Collateral to the
Collateral Agent (the "UCC-3 Assignment"), the due filing and indexing of the
UCC-3 Assignment among the financing statements records of the Filing Office
will be sufficient to validly assign the security interest perfected by the
UCC-1 Financing Statement referred to in the UCC-3 Assignment to the
Administrative Agent as secured party for the benefit of the Banks, and such
UCC-3 Assignment shall not act to terminate the security interest previously
perfected by the UCC-1 Financing Statement referred to in the UCC-3 Assignment.
Once value has been given by the Banks, the due filing and indexing of the UCC-1
Financing Statements among the financing statements records of the Filing Office
will be sufficient to perfect the security interests created by the Security
Agreement in those items and types of the UCC Collateral in which a security
interest may be perfected by the filing of a financing statement in the State of
Tennessee under the Code, except that we express no opinion as to the perfection
of any lien or security interest in any UCC Collateral that is or may become a
fixture. No further filing or refiling or any other action is necessary under
the Code to perfect or maintain such perfection, except that a continuation
statement must be filed within the period of eight months prior to the
expiration of five years from the date of each original filing and within the
period of eight months prior to the expiration of each succeeding period of five
years from the date of such original filing to maintain the effectiveness of the
filings referred to in this paragraph.
10. The payment by the Borrowers and receipt by the Banks,
as applicable, of interest and other payments required to be
paid pursuant to the terms of the Credit Agreement and the
Notes will not constitute unlawful interest or otherwise
violate the usury laws of the State of Tennessee.
<PAGE>
This opinion is being delivered to you at the request of our clients
pursuant to Section 1(c) of Exhibit C to the Credit Agreement. This opinion is
solely for your benefit and may not be relied upon by any other person without
our prior written consent.
We are members of the Bar of the State of Tennessee and express no opinion
with respect to the law of any jurisdiction other than the laws of the State of
Tennessee and the federal laws of the United States, in each case as in effect
on the date hereof.
Very truly yours,
<PAGE>
APPENDIX 2
FORM OF SECRETARY'S CERTIFICATE
Plasti-Line, Inc.
(the "Company")
Secretary's Certificate Regarding
Incumbency, Resolutions,
Articles of Incorporation, By-Laws and Certificate of Existence
The undersigned, being the duly appointed, qualified and acting Secretary
of the Company, hereby certifies that the persons named below are, on the date
hereof, the duly elected, qualified and acting officers of the Company and
occupy the offices set opposite their respective names, and the signatures
opposite their names below are their true and correct signatures:
Name Office Signature
------------------
==================
and hereby further certifies that:
(a) The Board of Directors of the Company adopted, on ______________, at a
duly called meeting at which a quorum was present and voting throughout, the
resolutions set forth in Exhibit "A" attached hereto, none of which has been
amended or repealed in any respect since such date, and all of which remain in
full force and effect as of the date hereof.
(b) Attached hereto as Exhibit "B" is a true, correct and complete copy of
the Articles of Incorporation of the Company, certified by the appropriate State
Official, and no action has been taken by the Board of Directors of the Company
or its Shareholders to amend or in contemplation of amending the Articles of
Incorporation since such certification date.
(c) Attached hereto as Exhibit "C" is a true, correct and complete copy of
the By-Laws of the Company in effect on the date hereof.
(d) Attached hereto as Exhibit "D" is a true, correct and complete copy of
the Certificate of Existence of the Company issued by the appropriate State
Official certifying the good standing of the Company in the State of Tennessee.
<PAGE>
IN WITNESS WHEREOF, I have hereunto set my hand and the corporate seal of
the Company as of this ___ day of April, 1996.
--------------------------
______________, Secretary
[SEAL]
I, ___________________, _____________________ of the Company do hereby
certify that __________________ is the duly elected, qualified and acting
Secretary of the Company, and that his signature set forth above is his true
signature.
IN WITNESS WHEREOF, I have hereunto set my hand as of this __ day of
April, 1996.
--------------------------
<PAGE>
APPENDIX 3
FORM OF OFFICER'S CERTIFICATE
[Company letterhead]
[Plasti-Line, Inc.]
(the "Company")
The undersigned, who is [Vice President of Finance] of the Company, in
connection with a certain Amended and Restated Credit Agreement dated as of
April 30, 1996 (the "Credit Agreement"), among the Company, the other borrowers
party thereto, the banks listed therein (the "Banks") and SunTrust Bank, East
Tennessee, N.A., as the administrative agent for the Banks (the "Administrative
Agent"), hereby certifies to the Administrative Agent and each of the Banks
that, as of the date of this certificate:
(a) The Company is in compliance with all the terms and provisions of
the Credit Agreement and no Default has occurred or is continuing; and
(b) Each of the representations and warranties contained in Article IV of
the Credit Agreement are true and correct.
Terms used herein but not defined shall have the meanings ascribed to them
in the Credit Agreement.
IN WITNESS WHEREOF, I have hereunto set my hand and the corporate seal of
the Company as of this ___ day of April, 1996.
[PLASTI-LINE, INC.
By: _____________________________
Mark J. Deuschle
Title: Vice President - Finance]
<PAGE>
EXHIBIT D
FORM OF COMPLIANCE CERTIFICATE
[company letterhead]
[To the Administrative Agent and the Banks]
Plasti-Line, Inc.
Ladies and Gentlemen:
This certificate is delivered to you pursuant to Section 5.06(f) of the
Amended and Restated Credit Agreement, dated as of April __, 1996 (the "Credit
Agreement"), among Plasti-Line, Inc., Carter-Miot, Inc. and American Sign and
Marketing Services, Inc. (collectively, the "Borrower"), the banks listed
therein as, or that may from time to time become, parties thereto (collectively,
the "Banks"), and SunTrust Bank, East Tennessee, N.A., as the administrative
agent (the "Administrative Agent") for the Banks. Unless otherwise defined,
terms used herein (including the Attachment hereto) have the meanings ascribed
to them in the Credit Agreement.
The undersigned hereby certifies that he is the Vice President of Finance
of Plasti-Line, Inc. and further certifies that as of ________, 199_ (the
"Computation Date"):
(a) the Borrowers's (i) Consolidated Current Assets was $_____, (ii)
Consolidated Current Liabilities was $_____, and (iii) Consolidated Current
Ratio was ________, as shown in detail on the Attachment hereto, which
[complies] [does not comply] with the requirements of Section 7.01 of the Credit
Agreement;
(b) the Borrower's Consolidated Tangible Net Worth was $__________, as
shown in detail on the Attachment hereto, which [complies][does not comply] with
the requirements of Section 7.02 of the Credit Agreement;
(c) the Borrower's (i) Consolidated Adjusted Cash Flow was $_________,
(ii) Consolidated Debt Service was $_____, and (iii) Consolidated Debt Service
Coverage ratio was ________, as shown in detail on the Attachment hereto, which
[complies][does not comply] with the requirements of Section 7.03 of the Credit
Agreement;
(d) The Borrower's (i) Consolidated Total Liabilities was $_____, (ii)
Consolidated Tangible Net Worth was $_____, and (iii) ratio of Consolidated
Total Liabilities to Consolidated Tangible Net Worth was _____, as shown in
detail on the Attachment hereto, which [complies] [does not comply] with the
requirements of Section 7.04 of the Credit Agreement;
<PAGE>
(e) the Borrower's (i) Consolidated Adjusted Funded Debt was $________,
(ii) Consolidated Adjusted Cash Flow was $______ and (iii) ratio of Consolidated
Adjusted Funded Debt to Consolidated Adjusted Cash Flow was _________, as shown
in detail on the Attachment hereto, which [complies][does not comply] with the
requirements of Section 7.05 of the Credit Agreement, and which results in an
Applicable Margin of _______; and
(f) the Borrower's Capital Expenditures for the fiscal year ending 199_
was $________, which [complies] [does not comply] with the requirements of
Section 7.06 of the Credit Agreement.
IN WITNESS WHEREOF, I have hereunto set my hand and the corporate seal of
the Borrower as of this ___ day of ______, 19__.
PLASTI-LINE, INC.
By: _____________________________
Mark J. Deuschle
Title: Vice President - Finance
<PAGE>
ATTACHMENT
to
----\ ---\ ---
Compliance Certificate
1. Consolidated Current Ratio:
(a) Consolidated Current Assets of $____________
Plasti-Line and its Consolidated
Subsidiaries
(b) Consolidated Current Liabilities of $____________
Plasti-Line and its Consolidated
Subsidiaries
(c) Ratio is _____ to 1.0
2. Consolidated Tangible Net Worth (for Fiscal Year 1997):
(a) Base amount, plus $ 21,500,000
(b) Fifty percent (50%) of positive $____________
Consolidated Net Income of
Plasti-Line and its Consolidated
Subsidiaries for fiscal year
1996, equals
CONSOLIDATED TANGIBLE NET WORTH
3. Consolidated Tangible Net Worth (for Fiscal Year 1998):
(a) Base amount (the greater of $____________
(i) $23,500,000 and (ii)
the Consolidated Tangible Net Worth for Fiscal Year 1997 as set forth
in Item 2 above), plus
(b) Fifty percent (50%) of Consolidated $___________
Net Income of Plasti-Line and its
Consolidated Subsidiaries for fiscal
year 1997, equals
CONSOLIDATED TANGIBLE NET WORTH $___________
4. Consolidated Adjusted Cash Flow:
(a) Consolidated Net Income of $____________
Plasti-Line and its
Consolidated Subsidiaries, plus
<PAGE>
(b) Depreciation and amortization $____________
(to the extent deducted in
determining Consolidated
Net Income), plus
(c) Taxes (to the extent deducted in $____________
determining Consolidated
Net Income), plus
(d) Interest Expense (to the extent $____________
deducted in determining
Consolidated Net Income), equals
CONSOLIDATED ADJUSTED CASH FLOW
5. Consolidated Debt Service:
(a) CMLTD of Plasti-Line and its $____________
Consolidated Subsidiaries for
the immediately preceding twelve-
month period
(b) Interest Expense of Plasti-Line and $___________
and its Consolidated Subsidiaries
(on a consolidated basis) for the
immediately preceding twelve-month
period, equals
CONSOLIDATED DEBT SERVICE
6. Consolidated Total Liabilities to Consolidated Tangible Net Worth:
(a) The Consolidated Total Liabilities of $____________
Plasti-Line and its Consolidated
Subsidiaries
(b) The Consolidated Tangible Net Worth $____________
of Plasti-Line and its Consolidated
Subsidiaries (pursuant to Item [2]
[3] above)
(c) Ratio is _____ to 1.0
7. Consolidated Adjusted Funded Debt:
All Indebtedness (including
the current portion thereof)
of Plasti-Line and its
Consolidated Subsidiaries
constituting:
<PAGE>
(i) Notes Payable, plus $____________
(ii) Long-Term Debt, plus $____________
(iii) Letters of Credit in $____________
excess of $3,000,000
aggregate, plus
(iv) Capitalized Lease $____________
Obligations, equals
CONSOLIDATED ADJUSTED FUNDED DEBT $____________
<PAGE>
EXHIBIT E
BORROWING BASE CERTIFICATE
Pursuant to Section 1.18 of the Amended and Restated Credit Agreement
dated as of April __, 1996 by and among Plasti-Line, Inc., Carter-Miot, Inc. and
American Sign and Marketing Services, Inc. (collectively, the "Borrowers") and
SunTrust Bank, East Tennessee, N.A., as administrative agent and lender and the
other lenders named therein (collectively, the "Banks") (as at any time further
amended, modified, supplemented or restated, the "Credit Agreement")
(capitalized terms herein shall have the respective meanings assigned to them in
the Credit Agreement), the undersigned certify, on behalf of the Borrowers, as
follows, as of the date hereof:
1. Borrowing Base:
(a) As of the date hereof, the aggregate outstanding principal
amount of the Loans................... $__________
(b) If applicable, the aggregate amount of advances being
requested concurrently with the delivery of
this Certificate...................... $__________
(c) Sum of 1(a) and (b)................... $__________
(d) Borrowing Base: Value of:
(i) 80% of Eligible Accounts Receivable,
plus $__________
(ii) 50% of Eligible Inventory,
minus $__________
(iii) 50% of Customer Deposits,
minus $__________
(iv) Accounts Payable $__________
Subtotal (i)-(iv) $__________
(e) Borrowing Availability ((d) less (c)) (negative number indicates
Loan will Borrowing Base).. $__________
2. By delivery of this Certificate, the Borrowers hereby represent and
warrant that they are in compliance with all of the terms and provisions of the
Credit Agreement and that there exists no Event of Default specified in Section
8.01 of the Credit Agreement, and there exists no condition, event or act which,
with the giving of notice or lapse of time, or both, would constitute such an
Event of Default.
IN WITNESS WHEREOF, the undersigned have executed this Certificate on
behalf of the Borrowers as of the ___ day of _______, 199_.
PLASTI-LINE, INC. ..... AMERICAN SIGN AND MARKETING SERVICES, INC.
By: _______________________________ By:
Title: ______________________________ Title:
CARTER-MIOT, INC.
By: _______________________________
Title: ______________________________
<PAGE>
Schedule 4.06(a)
List of Material Subsidiaries
(a) Carter-Miot, Inc.
(b) American Sign and Marketing Services, Inc.
<PAGE>
Schedule 6.01
Additional Permitted Liens
(a) Liens in favor of SunTrust Bank, East Tennessee, N.A.
(b) Liens in favor of First American National Bank or other creditors
in connection with (a) the Industrial Revenue Refunding Bonds
(Plasti-Line, Inc. Project) Series 1989A in the original
aggregate principal amount of $6,295,000 issued by the Industrial
Development Board of the County of Knox (the "Board") and (b) the
Industrial Revenue Bonds (Plasti-Line, Inc. Project) Series 1989B
in the original aggregate principal amount of $2,400,000 issued
by the Board.
March 29, 1997
KX BB U:\SUNTRUST\PL\CREDITAG.08
<PAGE>
FIRST MODIFICATION AGREEMENT
THIS FIRST MODIFICATION AGREEMENT (this "Agreement"), dated
as of the ____ day of July, 1996, by and among PLASTI-LINE, INC.,
CARTER-MIOT, INC. and AMERICAN SIGN AND MARKETING SERVICES, INC.
(collectively, the "Borrowers"), and SUNTRUST BANK, EAST TENNESSEE,
N.A. ("SunTrust") and NATIONAL CITY BANK, KENTUCKY ("NCB")
(hereinafter SunTrust and NCB are referred to collectively as the
"Lenders"), recites and provides:
RECITALS:
By a certain Amended and Restated Credit Agreement dated as of April
30, 1996 by and among the Borrowers, the Lenders and SunTrust as Administrative
Agent for the Lenders (in such capacity, hereinafter, the "Administrative
Agent") (the "Loan Agreement"), the Lenders agreed to make to the Borrowers
revolving credit loans in the aggregate principal amount not to exceed
$19,000,000 pursuant to their respective Commitments. The Loans were evidenced
by (a) an Amended and Restated Revolving Credit Note dated April 30, 1996 made
by the Borrowers payable to SunTrust in the original principal amount of
$9,500,000 (the "SunTrust Note") and (b) an Amended and Restated Revolving
Credit Note dated April 30, 1996 made by the Borrowers payable to NCB in the
original principal amount of $9,500,000 (the "NCB Note") (hereinafter the
SunTrust Note and the NCB Note are referred to collectively as the "Notes", and
unless otherwise defined herein, all capitalized terms herein shall be as
defined in the Loan Agreement). The Notes were secured by an Amended and
Restated Security Agreement dated as of April 30, 1996 from the Borrowers to
SunTrust as collateral and administrative agent for the Lenders (the "Security
Agreement"). The rights and obligations of the Lenders vis-a-vis each other are
as set forth in the Intercreditor Agreement by and between the Borrowers, the
Lenders and the Administrative Agent dated as of April 30, 1996 (the
"Intercreditor Agreement"). The Loan Agreement, the Notes, the Security
Agreement, the Intercreditor Agreement and all other documents and instruments
evidencing and securing the Loans are hereinafter referred to collectively as
the "Loan Documents."
The parties hereto now wish to modify the Loan Agreement and the
Intercreditor Agreement to provide for an additional $2,000,000 swing line under
the Commitment of NCB, which swing line will not increase the Commitment of NCB,
but rather will be included in the Commitment of NCB as it currently exists.
MODIFICATION AGREEMENT:
FOR and in consideration of the sum of $10.00 cash in hand paid and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
<PAGE>
1. Modification of Loan Agreement.
(a) The Loan Agreement is hereby modified as follows:
(i) The following capitalized terms defined in Exhibit A in the
Loan Agreement shall have the definitions set forth below:
(A) "Commitment" means, with respect to each Bank, the
amount of the Commitment of such Bank as set forth opposite such
Bank's name on the signature pages hereof, as the same may be
reduced from time to time pursuant to this Agreement, and with
respect to each Bank, the "Commitment" of each Bank shall
include the Swing Line Commitment of such Bank.
(B) "NCB" means National City Bank, Kentucky, as a Bank.
(C) If the context so requires, references to "Swing Line
Commitment" shall become a reference to "Swing Line
Commitments", and "Swing Line Commitment" shall mean (a) the
obligation of SunTrust to make Swing Loans to the Borrowers
under the Swing Line of SunTrust in an aggregate principal
amount at any time not exceeding $2,000,000 and (b) the
obligation of NCB to make Swing Loans to the Borrowers under the
Swing Line of NCB in an aggregate principal amount at any time
not exceeding $2,000,000, which obligation shall be separate and
distinct from SunTrust's obligation under this definition.
(D) If the context so requires, references to "Swing Line"
shall become a reference to "Swing Lines", and "Swing Lines"
shall mean the separate revolving lines of credit under the
Swing Line Commitments made by each of SunTrust and NCB for the
benefit of the Borrowers, as set forth in Section 1.03 of this
Agreement.
(ii) Section 1.03 shall be modified to read as
follows:
SECTION 1.03. Swing Loans. (a) Upon the terms and subject to the
conditions of this Agreement, (i) SunTrust, for its own account,
agrees to make one or more advances under its Swing Line to the
Borrowers from time to time up to but not exceeding its Swing
<PAGE>
Line Commitment and (ii) NCB, for its own account, may make one
or more advances under its Swing Line from time to time up to
but not exceeding its Swing Line Commitment (all such advances
in (i) and (ii), collectively, "Swing Loans"). All Swing Loans
made by SunTrust shall be deemed solely for the account of
SunTrust and credited against the Commitment of SunTrust, and
all Swing Loans made by NCB shall be deemed solely for the
account of NCB and credited against the Commitment of NCB.
(b) Advances of, and payments on, the Swing Loans made by
SunTrust shall be made automatically without notice to or from
SunTrust (excepting notice to NCB as may be required hereunder)
or the Borrowers all in accordance with the AIS Agreement.
Advances of, and payments on, the Swing Loans made by NCB shall
be made through the notification process as described herein and
in the Intercreditor Agreement and without two day prior notice.
The Banks shall in their sole discretion settle with each other
the outstanding Swing Loans by each Friday with SunTrust making
proper notifications to NCB.
(iii) Paragraphs (a) and (c) of Section 1.06 shall
be modified to read as follows:
(a) In consideration of the Commitments hereunder, the
Borrowers shall pay in immediately available funds to the
Administrative Agent, for the pro rata account of each Bank, on
the last day of each calendar quarter, commencing with the first
such date after the Closing Date, and on the date of any
reduction or termination of the Commitments of the Banks
hereunder, a commitment fee (the "Facility Fee") in an amount
equal to .50% multiplied by the average daily unused amount of
the Commitment of such Bank during the period or quarter then
ending.
(c) The Borrowers may, by written notice to the
Administrative Agent (as provided in Section 1.17) terminate in
full, or from time to time permanently reduce in part, the
aggregate Commitments. Each such voluntary partial reduction of
the aggregate Commitments shall be in an aggregate principal
amount of $2,000,000 and in integral multiples of $1,000,000 in
excess thereof. Any and all reductions to the Commitments of
SunTrust or NCB shall be applied first to that portion of such
Commitment not constituting such Bank's Swing Line Commitment.
(iv) Paragraph (c) of Section 1.09 shall be
modified to read as follows:
<PAGE>
(c) Prepayment of LIBOR Loans constituting Swing Loans
made by SunTrust shall be made according to the terms of the AIS
Agreement and shall be made without notice to Borrowers and any
prepayment penalty. Prepayments of LIBOR Loans constituting
Swing Loans made by NCB shall be made without notice to
Borrowers and any prepayment penalty.
(v) The final sentence of Section 1.17 shall be
modified to read as follows:
Notwithstanding anything to the contrary in this Agreement
or any other Loan Document, the Borrowers shall not be required
to give notice of any Swing Loan borrowing or payment, it being
the intention of the parties hereto that the Swing Loans made by
SunTrust shall be available to Borrowers for daily cash
management purposes and the Swing Loans made by NCB shall be
used as a mechanism to enable each Bank to hold as often as
possible approximately 50% of the outstanding indebtedness under
this Agreement. All such advances and payments under SunTrust's
Swing Line Commitment shall be administered by SunTrust
according to the terms of the AIS Agreement, and all advances
and payments under NCB's Swing Line Commitment shall be
administered by NCB and SunTrust (to the extent required)
according to the terms herein and the terms of the Intercreditor
Agreement. Fundings and payments of the Swing Loans shall be
made as often as needed, with such fundings and payments being
made by the same day of notification to NCB by SunTrust.
(vi) The signature page of the Loan Agreement on which the
"Amount of Commitment" and "Percentage Interest" are set forth shall
be modified to reflect that an additional asterisk (*) shall be noted
after the $9,500,000 Amount of Commitment set opposite the NCB
signature line.
(b) Except as specifically modified hereby, the terms and provisions
set forth in the Loan Agreement, including but not limited to all
representations and covenants, are hereby ratified and confirmed and remain in
full force and effect.
2. Modification of Intercreditor Agreement. (a) Section 2
of the Intercreditor Agreement shall be modified to read as follows:
In order to provide for the orderly administration of the Revolving
Credit Loans, the Borrower agrees to make to the
<PAGE>
Agent all payments and repayments in respect of Revolving
Credit Loans pursuant to Section 1.10 of the Credit
Agreement, and to establish and maintain with the Agent a
deposit account (the "Deposit Account"). No later than the
close of business on the date specified by the Borrower in a
notice given pursuant to Section 1.17 of the Credit
Agreement for the making of a Revolving Credit Loan, each
Bank shall make available to the Agent such Bank's ratable
share (determined pursuant to Sections 1.02 and 1.16 of the
Credit Agreement) of such Loan in dollars and in immediately
available funds by wire transfer or other method acceptable
to the Banks to the Deposit Account (and in making its share
of such Revolving Credit Loan available to the Agent in
accordance with this Section 2, Second Bank may rely on
written or oral notice received from the Agent specifying
the amount of such Revolving Credit Loan, Second Bank's
share thereof and the date such Revolving Credit Loan is to
be made); provided, however, that if the Agent receives a
payment pursuant to Section 1.10 of the Credit Agreement
from the Borrower on the date specified for the making of a
Revolving Credit Loan, the Agent shall telephonically notify
each Bank of such Bank's share (determined pursuant to
Section 1.02 of the Credit Agreement) of such payment and
the amount of each Bank's share of the Revolving Credit Loan
to be made available to the Agent on such date shall be
reduced by the amount of each Bank's share of such payment.
In the event the Agent receives a payment on the date on
which a Revolving Credit Loan is not made or in the event
that the payment received on the date a Revolving Credit
Loan is made exceeds the amount of such Loan, then the Agent
shall distribute to each Bank, in accordance with the
provisions of Sections 1.10 and 1.16 of the Credit
Agreement, the Bank's share of the payment received, or the
amount by which such payment exceeds the amount of such
Loan, by wire transfer or other method acceptable to the
Banks on the date of receipt; provided, however, that the
Agent does not guarantee that payments received by it after
12:00 p.m. will be received by the Banks in time to be
applied by them to their respective Note on the same day.
Notwithstanding the terms of this Agreement, either Bank,
after providing written notice to the other Bank, may
request that the Borrower make payments made pursuant to
Section 1.10 of the Credit Agreement directly to such Bank.
(b) Except as specifically modified hereby, the terms and provisions
set forth in the Intercreditor Agreement, including but not limited to all
representations and covenants, are hereby ratified and confirmed and
remain in full force and effect.
3. Waiver of Claims. As part of the consideration to the Lenders herein,
the Borrowers hereby waive all set-offs, counterclaims, claims and all other
defenses of every nature whatsoever which each may have with respect to the Loan
Documents.
<PAGE>
4. Consent of Administrative Agent. SunTrust, as Administrative Agent,
executes this Agreement to evidence its consent to the modifications effected
hereby; provided, however, that such consent shall neither be nor be deemed to
be a consent to, or a waiver of the necessity of obtaining the consent of the
Administrative Agent to, any future modification.
5. Further Assurances. The Borrowers hereby covenant and agree to execute
and deliver, or cause to be executed and delivered, and to do or make, or cause
to be done or made, upon the reasonable request of the Lenders and/or the
Administrative Agent, any and all instruments, papers, deeds, acts or things,
supplemental, confirmatory or otherwise, as may be reasonably required by such
party or parties for the purpose of effecting the modifications described
herein.
6. Completeness and Modification. This Agreement
constitutes the entire agreement between the parties hereto as to
the transactions contemplated hereby and supersedes all prior
discussions, understandings or oral agreements between the parties
hereto.
7. No Novation. This Agreement does not constitute a discharge or novation
of any Note or any other documents executed in connection with the Loans, as
herein modified, and such Loan Documents shall continue in full force and effect
and shall be fully binding upon all parties hereto.
8. Successors and Assigns. This Agreement shall bind and
inure to the benefit of the parties hereto and their respective
successors and assigns.
9. Governing Law. This Agreement and all other instruments
referred to herein shall be governed by, and shall be construed
according to, the laws of the State of Tennessee.
10. Counterparts. To facilitate execution, this Agreement may be executed
in as many counterparts as may be required. It shall not be necessary that the
signature on behalf of the parties hereto appear on each counterpart hereof, and
it shall be sufficient that the signature on behalf of each party hereto appear
on one or more such counterparts. All counterparts shall collectively constitute
a single agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their duly authorized officers as of the day and year first
above written.
BORROWERS:
PLASTI-LINE, INC.
By: /s/ Mark J. Deuschle
Mark J. Deuschle
Title: Vice President - Finance
CARTER-MIOT, INC.
By: /s/ Mark J. Deuschle
Mark J. Deuschle
Title: Secretary-Treasurer
AMERICAN SIGN AND MARKETING
SERVICES, INC.
By: /s/ Mark J. Deuschle
Mark J. Deuschle
Title: Secretary
LENDERS:
SUNTRUST BANK, EAST TENNESSEE, N.A.,
as Lender
By: /s/ T. L. Chip Smallwood
T. L. "Chip" Smallwood
Title: Vice President
NATIONAL CITY BANK, KENTUCKY, as
a Lender
By: /s/ Carrie Tate
Carrie Tate
Title: Vice President
<PAGE>
ADMINISTRATIVE AGENT:
SUNTRUST BANK, EAST TENNESSEE, N.A.,
as Administrative Agent
By: /s/ T. L. Chip Smallwood
T. L. "Chip" Smallwood
Title: Vice President
U:\SUNTRUST\PL\1STMOD\MODAGR.02
<PAGE>
Amended and Restated
Revolving Credit Note
$9,500,000 Knoxville, Tennessee
April 30, 1996
FOR VALUE RECEIVED, PLASTI-LINE, INC., CARTER-MIOT, INC. and AMERICAN SIGN
AND MARKETING SERVICES, INC., each a Tennessee corporation (collectively, the
"Borrower"), hereby promise, jointly and severally, to pay to the order of
NATIONAL CITY BANK, KENTUCKY, a national banking association (the "Bank"), at
the office of SunTrust Bank, East Tennessee, N.A., as Loan Administrator (the
"Loan Administrator"), at 700 Hill Avenue, Knoxville, Tennessee 37915, on the
dates provided in the Credit Agreement dated as of the date hereof among the
Borrower, the Loan Administrator and the Banks described therein (the "Credit
Agreement"), but in no event later than the Commitment Termination Date, in
lawful money of the United States of America, in immediately available funds,
the principal amount of NINE MILLION FIVE HUNDRED THOUSAND DOLLARS ($9,500,000)
or, if less than such principal amount, the aggregate unpaid principal amount of
the Loans (as defined in the Credit Agreement) made by the Bank to the Borrower
pursuant to the Credit Agreement, and to pay interest from the date hereof on
the unpaid principal amount hereof, in like money, at said office, on the dates
and at the rates selected in accordance with Article I of the Credit Agreement.
Capitalized terms used herein, but not defined herein, shall have the meanings
set forth in the Credit Agreement.
The Borrower promises to pay interest, payable on demand, on any overdue
principal and, to the extent permitted by law, overdue interest from their due
dates at a rate or rates determined as set forth in the Credit Agreement.
The Borrower hereby waives diligence, presentment, demand, protest and
notice of any kind whatsoever. The nonexercise by the holder of any of its
rights hereunder in any particular instance shall not constitute a waiver
thereof in that or any subsequent instance.
All borrowings evidenced by this Note and all payments and prepayments of
the principal hereof and interest hereon and the respective dates thereof shall
be evidenced by the books and records of the Loan Administrator and the Bank.
This Note is one of the Notes referred to in the Credit Agreement which,
among other things, contains provisions for the acceleration of the maturity
hereof upon the happening of certain events, for optional prepayment of the
principal hereof prior to the maturity thereof and for the amendment or waiver
of certain provisions of the Credit Agreement, all upon the terms and conditions
therein specified. This Note shall be construed in
<PAGE>
accordance with and governed by the laws of the State of Tennessee. This Note
amends and restates (a) the Amended and Restated Revolving Credit Note dated
February 29, 1996 made by Plasti-Line payable to SunTrust in the principal
amount of $3,000,000 and (b) the Amended and Restated Revolving Credit Note
dated November 2, 1995 made by Plasti-Line payable to SunTrust in the principal
amount of $16,000,000.
IN WITNESS WHEREOF, the parties hereto have caused this Note to be duly
executed by their duly authorized officers as of the day and year first above
written.
PLASTI-LINE, INC.
By: /s/ Mark J. Deuschle
Mark J. Deuschle
Title: Vice President-Finance
CARTER-MIOT, INC.
By: /s/ Mark J. Deuschle
Title: Secretary - Treaurer
AMERICAN SIGN AND MARKETING
SERVICES, INC.
By: /s/ Mark J. Deuschle
Title: Secretary
U:\SUNTRUST\PL\NOTE.NCB
THIS AGREEMENT SECURES
OBLIGATORY ADVANCES MADE
FOR COMMERCIAL PURPOSES
AMENDED AND RESTATED
SECURITY AGREEMENT
THIS AMENDED AND RESTATED SECURITY AGREEMENT (this "Security Agreement"), dated
as of April 30, 1996 made by PLASTI-LINE, INC., a Tennessee corporation,
CARTER-MIOT, INC., a Georgia corporation, and AMERICAN SIGN AND MARKETING
SERVICES, INC., a Kentucky corporation (each a "Grantor" and collectively, the
"Grantors") to SUNTRUST BANK, EAST TENNESSEE, N.A., a national banking
association, Knoxville, Tennessee (the "Administrative Agent"), acting in its
capacity as collateral and administrative agent for the equal and ratable
benefit of (a) SunTrust Bank, East Tennessee, N.A. as lender ("SunTrust")
pursuant to the terms of a $9,500,000 Amended and Restated Revolving Credit Note
dated as of the date hereof made by the Grantors payable to SunTrust (as such
may be amended, modified, restated or supplemented from time to time, the
"SunTrust Note") and (b) National City Bank, Kentucky ("NCB"), a national
banking association, as lender pursuant to the terms of an $9,500,000 Revolving
Credit Note dated as of the date hereof made by the Grantors payable to NCB (as
such may be amended, modified, restated or supplemented from time to time, the
"NCB Note") (hereinafter the SunTrust Note and the NCB Note are referred to
collectively as the "Notes", and SunTrust and NCB in their capacities as lenders
under the Notes and pursuant to the terms of the Amended and Restated Credit
Agreement by and among the Grantors, the Administrative Agent and SunTrust and
NCB as lenders dated as of the date hereof (as such may be amended, modified,
restated or supplemented from time to time, the "Credit Agreement") are referred
to collectively as the "Lenders"), recites and provides:
W I T N E S S E T H :
WHEREAS, pursuant to the Notes and the Credit Agreement, the Lenders have agreed
to extend revolving credit loans (collectively, the "Loans") to the Grantors in
an aggregate principal amount not to exceed $19,000,000 in accordance with their
respective Commitments for those business purposes set forth in the Credit
Agreement; and WHEREAS, the Lenders are willing to make the Loans and enter into
the Credit Agreement, but only upon the condition, among
<PAGE>
others, that the Grantors shall have executed and delivered this Security
Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
Section 1. Defined Terms. The following capitalized terms when used herein
shall have the meanings set forth below. Capitalized terms not defined herein
shall have the meanings set forth in the Credit Agreement. "Accounts": any
"Account", as such term is defined in Section 9-106 of the Code, in which the
Grantors shall now or hereafter have any right, title or interest.
"Account Debtor": the party who is obligated on an
Account.
"Administrative Agent": the meaning set forth in the
preamble to this Security Agreement.
"Chattel Paper": any "chattel paper", as such term is
defined in Section 9-105 of the Code, in which the Grantors
shall now or hereafter have any right, title or interest.
"Code": the Uniform Commercial Code as adopted in
Tennessee, as amended from time to time.
"Collateral": the meaning assigned to it in Section
2 of this Security Agreement.
"Collateral Account": the meaning assigned to it in
Section 3 of this Security Agreement.
"Credit Agreement": the meaning set forth in the
preamble to this Security Agreement.
"Documents": any "documents", as such term is defined
in Section 9-105 of the Code, in which the Grantors shall
now or hereafter have any right, title or interest.
"Event of Default": any of the events specified in
Section 8 of this Security Agreement.
"General Intangibles": any "general intangibles", as
such term is defined in Section 9-106 of the Code, in which
the Grantors shall now or hereafter have any right, title or
interest.
<PAGE>
"Grantor" and "Grantors": the meanings set forth in the preamble to this
Security Agreement.
"Instrument": any "instrument", as such term is defined in Section 9-105 of
the Code, in which the Grantors shall now or hereafter have any right, title or
interest.
"Inventory": any "inventory", as such term is defined in Section 9-109(4)
of the Code, in which the Grantors shall now or hereafter have any right, title
or interest.
"Lenders": the meaning set forth in the preamble to this Security
Agreement.
"Lien": any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind whatsoever (including 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).
"Loan Documents": the meaning set forth in the Credit Agreement, and also
including any and all documents and instruments executed in connection therewith
(as such may be amended, modified, restated or supplemented from time to time).
"Loans": the meaning set forth in the recitals to this Security Agreement.
"NCB": the meaning set forth in the preamble to this Security Agreement.
"Notes": the meaning set forth in the recitals to this Security Agreement.
"Obligations": all indebtedness, liabilities and obligations of any and all
of the Grantors to the Lenders, and/or either Lender, now existing or hereafter
incurred, direct or indirect, absolute or contingent, secured or unsecured,
matured or unmatured, joint or several, whether for principal, interest, fees,
expenses or other costs, whether arising out of or in connection with any Loan
Document, and whether written or oral, or arising by operation of law and
whether or not evidenced by promissory notes or other evidence of indebtedness.
"Permitted Liens": Liens permitted to exist under the Credit Agreement.
"Proceeds": any "proceeds", as such term is defined in Section 9-306 of the
Code.
<PAGE>
"Security Agreement": this Security Agreement, as such may be amended,
modified, restated or supplemented from time to time.
"SunTrust": the meaning set forth in the recitals to this Security
Agreement.
Section 2. Grant of Security Interest. As collateral security for the
prompt and complete payment and performance when due of all the Obligations, the
Grantors hereby sell, assign, convey, mortgage, pledge, hypothecate and transfer
to the Administrative Agent for the equal and ratable benefit of the Lenders,
all of the following property of Grantors (all of which being hereinafter
collectively referred to as the "Collateral"):
(i) all Accounts;
(ii) all Chattel Paper;
(iii) all Documents;
(iv) all General Intangibles;
(v) all Instruments;
(vi) all Inventory;
(vii) all Grantors' books of account, records,
ledger sheets and documents relating to the
foregoing; and
(viii) to the extent not otherwise included, all
Proceeds and products of any or all of the
foregoing.
Section 3. Rights of the Administrative Agent. (a) If required by the
Administrative Agent at any time after the occurrence of an Event of Default,
any Proceeds collected by any or all of the Grantors and received as payment in
respect of any Collateral shall be promptly deposited by the Grantor(s) in
precisely the form received, except for its endorsement when required, in a
special bank account maintained by the Administrative Agent (the "Collateral
Account"), subject to withdrawal by the Administrative Agent only, as
hereinafter provided, and until so turned over, shall be deemed to be held in
trust by the Grantor(s) for and as the property of the Administrative Agent and
shall not be commingled with the Grantors' other funds. Such proceeds, when
deposited, shall continue to be collateral security for all of the Obligations
and shall not constitute payment thereof until applied as hereinafter provided.
If an Event of Default shall have occurred and be continuing, the Administrative
Agent shall, at such intervals as
<PAGE>
it shall determine, apply all or any part of the funds on deposit in the
Collateral Account on account of the principal of and/or interest on any of the
Obligations, the order and method of such application to be in the discretion of
the Administrative Agent, and any part of such funds which the Administrative
Agent elects not so to apply and deems not required as collateral security for
the Obligations shall be paid over from time to time by the Administrative Agent
to the Grantor(s). If an Event of Default shall not be continuing, funds
deposited in the Collateral Account shall be immediately released to the
Grantor(s). At the Administrative Agent's request, the Grantor(s) shall deliver
to the Administrative Agent all original and other documents evidencing, and
relating to, the sale and delivery of Inventory or the performance of labor or
service which created the Accounts, including, but not limited to, all original
orders, invoices and shipping receipts.
(b) The Administrative Agent may at any time notify Account Debtors that
the Accounts have been assigned to the Administrative Agent and that payments
shall be made directly to the Administrative Agent. Upon the request of the
Administrative Agent at any time, the Grantors will so notify such Account
Debtors. The Administrative Agent may in its own name or in the name of others
communicate with Account Debtors in order to verify with them, to the
Administrative Agent's satisfaction, the existence, amount and terms of any
Accounts.
(c) The Administrative Agent shall have the right to make test
verifications of the Accounts in any manner and through any medium it considers
advisable, and the Grantors agree to furnish all such assistance and information
as the Administrative Agent may require in connection therewith. The Grantors at
their expense will cause independent public accountants satisfactory to the
Administrative Agent to furnish to the Administrative Agent at any time and from
time to time promptly upon the Administrative Agent's request, the following
reports: (i) reconciliation of all Accounts, (ii) an aging of all Accounts,
(iii) trial balances, and (iv) a test verification of such Accounts.
Section 4. Representations and Warranties. The Grantors hereby represent
and warrant that:
(a) This Security Agreement constitutes a valid obligation of the Grantors,
legally binding upon them and enforceable in accordance with its terms. No
consent of any other party (including, without limitation, any stockholders or
other creditors of the Grantors) and no consent, license, approval or
authorization of, or registration or declaration with, any governmental
authority, except for filings of financing statements in the appropriate filing
offices, all of which have been duly made or are presently contemplated
<PAGE>
to be made, is required in connection with the execution, delivery,
performance, validity or enforceability of this Security Agreement with respect
to Collateral in existence on the date hereof.
(b) The Grantors are (or, in the case of after- acquired property, will be)
the sole owner or owners, as applicable, of each item of the Collateral, having
good and marketable title thereto, free and clear of any and all Liens except
for Permitted Liens. No amounts payable under or in connection with any of the
Collateral are evidenced by promissory notes or other instruments.
(c) No security agreement, financing statement, equivalent security or Lien
instrument or continuation statement covering all or any part of the Collateral
is on file or of record in any public office, except such as may have been filed
in connection with the Permitted Liens or except as may otherwise have been
disclosed to the Administrative Agent.
(d) This Security Agreement constitutes a valid and continuing Lien on the
Collateral, and upon the proper filing of financing statements in accordance
with the Code, Administrative Agent shall possess a perfected security interest
in the Collateral in favor of the Administrative Agent (excepting that
Collateral in which a security interest cannot be perfected under the Code by
the filing of financing statements), and such security interest shall be prior
to all other liens, encumbrances, security interests and rights of others except
for Permitted Liens, and is enforceable as such as against creditors of and
purchasers from the Grantors. All action necessary or desirable to protect and
perfect such security interest in each item of the Collateral currently existing
has been duly taken or is presently contemplated to be taken.
(e) The Grantors' principal places of business and chief executive offices
and the locations where their records concerning the Collateral are kept is set
forth on Exhibit A attached hereto (hereinafter, collectively, the "Main
Offices"), and the Grantors will not change the Main Offices or remove such
records therefrom without the express prior written consent of the
Administrative Agent. The Inventory is located at the Main Offices.
(f) The amount represented by the Grantors to the Administrative Agent from
time to time as owing by each Account Debtor or by all Account Debtors in
respect of the Accounts will at such time be the correct amount actually and
unconditionally owing by such Account Debtors thereunder.
<PAGE>
(g) The only names under which the Collateral is owned, used or sold are
the names of the Grantors as described in this Security Agreement.
(h) Each Schedule and/or Exhibit hereto contains true and complete
information with respect to the subject matter covered thereby.
Section 5. Covenants. Each of the Grantors covenants and agrees that from
and after the date of this Security Agreement and until the Obligations are
fully satisfied:
(a) Further Documentation. At any time and from time to time, upon the
written request of the Administrative Agent, and at the sole expense of the
Grantors, the Grantors will promptly and duly execute and deliver any and all
such further instruments and documents and take such further action as the
Administrative Agent may reasonably deem desirable in obtaining the full
benefits of this Security Agreement and the rights and powers herein granted,
including, without limitation, the filing of any financing or continuation
statements under the Code with respect to the Liens and security interests
granted hereby, transferring Collateral to the Administrative Agent's possession
and using its best efforts to obtain waivers from any landlords and mortgagees.
The Grantors also hereby authorize the Administrative Agent to file any such
financing or continuation statement without the signature of the Grantors to the
extent permitted by applicable law.
(b) Limitation on Liens on Collateral. The Grantors will not create, permit
or suffer to exist, and will defend the Collateral against and take such other
action as is necessary to remove, any Lien on the Collateral except Permitted
Liens and will defend the right, title and interest of the Administrative Agent
in and to any of the Grantors' rights in the Collateral and in and to the
Proceeds and products thereof against the claims and demands of all persons
whomsoever.
(c) Limitations on Dispositions of Collateral. The Grantors will not sell,
transfer, lease or otherwise dispose of any of the Collateral, or attempt, offer
or contract to do so except such as are in the ordinary course of Grantors'
businesses.
(d) Further Identification of Collateral. The Grantors will furnish to the
Administrative Agent from time to time statements and schedules further
identifying and describing the Collateral and such other reports in connection
with the Collateral as the Administrative Agent may reasonably request, all in
reasonable detail.
<PAGE>
(e) Notices. The Grantors will advise the Administrative Agent
promptly, in reasonable detail, (i) of any Lien asserted or claim made
against any of the Collateral, (ii) of any material change in the
composition of the Collateral, (iii) of the occurrence of any other
event which would have a material adverse effect on the aggregate value
of the Collateral or on the security interests created hereunder and
(iv) of any Event of Default hereunder.
(f) Continuous Perfection. No Grantor will change its name,
identity or corporate structure in any manner which might make any
financing or continuation statement filed hereunder seriously
misleading within the meaning of Section 9-402(7) of the Code, unless
such Grantor shall have given the Administrative Agent at least 30
days' prior written notice thereof, or shall have delivered to the
Administrative Agent acknowledgment copies of UCC-3 financing
statements duly executed and duly filed in each jurisdiction in which
UCC-l filings were required in order to perfect the security interest
granted by this Security Agreement in the Collateral and shall have
taken all action (or made arrangements to take such action
substantially simultaneously with such change if it is impossible to
take such action in advance) necessary or reasonably requested by the
Administrative Agent to amend such financing statement or continuation
statement so that it is not seriously misleading.
Section 6. Administrative Agent's Appointment as Attorney- in-Fact.
Each Grantor hereby irrevocably constitutes and appoints the Administrative
Agent and any officer or agent thereof, with full power of substitution, as its
true and lawful attorney-in-fact with full irrevocable power and authority in
the place and stead of such Grantor and in the name of such Grantor or in its
own name, from time to time in the Administrative Agent's discretion, for the
purpose of carrying out the terms of this Security Agreement, to take any and
all appropriate action and to execute any and all documents and instruments
which may be necessary or desirable to accomplish the purposes of this Security
Agreement.
Section 7. Performance by Administrative Agent of Grantors'
Obligations. If any Grantor fails to perform or comply with any of its
agreements contained herein and the Administrative Agent, as provided for by the
terms of this Security Agreement, shall itself perform or comply, or otherwise
cause performance or compliance, with such agreement, the expenses of the
Administrative Agent incurred in connection with such performance or compliance,
together with interest thereon at the highest rate provided for in respect of
the Notes, shall be
<PAGE>
payable by such Grantor to the Administrative Agent on demand and shall
constitute Obligations secured hereby.
Section 8. Events of Default. Each of the following shall
constitute an Event of Default under this Security Agreement:
(a) Failure of any Grantor to perform or observe any
covenant set forth herein;
(b) Discovery by the Administrative Agent or either Lender
that any representation or warranty made by the Grantors herein, or any
statement or representation made in any certificate, report or opinion delivered
pursuant hereto or in connection herewith was materially untrue or is breached
in any material respect; or
(c) The occurrence of an Event of Default under or
with respect to any Loan Document.
Section 9. Remedies, Rights Upon Default. (a) If an Event
of Default shall occur and be continuing:
(i) All payments received by any and all Grantors under or in
connection with any of the Collateral shall be held by such Grantor(s)
in trust for the Administrative Agent, shall be segregated from other
funds of such Grantor(s) and shall forthwith upon receipt by such
Grantor(s), be turned over to the Administrative Agent, in the same
form as received by such Grantor(s) (duly indorsed by such Grantor(s)
to the Administrative Agent, if required). Any and all such payments so
received by the Administrative Agent (whether from any Grantor or
otherwise) may, in the sole discretion of the Administrative Agent, be
held by the Administrative Agent as collateral security for, and/or
then or at any time thereafter applied in whole or in part by the
Administrative Agent, against all or any part of the Obligations in
such order as the Administrative Agent shall elect. Any balance of such
payments held by the Administrative Agent and remaining after payment
in full of all the Obligations shall be paid over to the Grantor(s) or
to whomsoever may be lawfully entitled to receive the same.
(ii) The Administrative Agent may exercise in addition to all
other rights and remedies granted to it in this Security Agreement and
in any other instrument or agreement securing, evidencing or relating
to the Obligations, all rights and remedies of a secured party under
the Code.
(iii) Upon request of the Administrative Agent, the Grantors
shall assemble the Collateral, make it available to the Administrative
Agent at a place or places which the Administrative Agent shall select
which shall be reasonably
<PAGE>
convenient to the Administrative Agent and the Grantors, whether at a
Grantor's premises or elsewhere. To the extent permitted by applicable
law, the Grantors waive all claims, damages, and demands against the
Administrative Agent and the Lenders arising out of the repossession,
retention or sale of the Collateral. The Grantors agree that the
Administrative Agent need not give more than 10 days' notice (which
notification shall be deemed given when mailed, postage prepaid,
addressed to the Grantors at their respective addresses set forth in
Section 12 hereof) of the time and place of any public sale or of the
time after which a private sale may take place and that such notice is
reasonable notification of such matters.
(b) The Grantors also agree to pay all costs of the
Administrative Agent and any Lender, including reasonable attorneys' fees,
incurred with respect to the collection of any of the Obligations and the
enforcement of any of their respective rights hereunder.
(c) The Grantors hereby waive presentment, demand, protest or
any notice (to the extent permitted by applicable law) of any kind in connection
with this Security Agreement or any Collateral, except as otherwise provided
herein or in the Credit Agreement.
Section 10. Limitation on Administrative Agent's Duty in Respect of
Collateral. Beyond the safe custody thereof, the Administrative Agent shall not
have any duty as to any Collateral in its possession or control or in the
possession or control of any agent or nominee of it or any income thereon or as
to the preservation of rights against prior parties or any other rights
pertaining thereto. The powers conferred on the Administrative Agent hereunder
are solely to protect the Lenders' respective interests in the Collateral and
shall not impose any duty upon the Administrative Agent to exercise any such
powers. The Administrative Agent shall be accountable only for amounts that it
actually receives as a result of the exercise of such powers and neither it nor
any of its officers, directors, employees or agents shall be responsible to the
Grantors for any act or failure to act, except for its own gross negligence or
willful misconduct.
Section 11. Concerning Administrative Agent. In furtherance and not in
derogation of the rights, privileges and immunities of Administrative Agent set
forth herein and in the Loan Documents, Administrative Agent is authorized to
take all such action as is provided to be taken by it hereunder and all other
action reasonably incidental thereto. As to any matters not expressly provided
for herein (including the timing and methods of realization upon the
Collateral), Administrative Agent may act or
<PAGE>
refrain from acting in the exercise of its sole and absolute
discretion.
Section 12. Notices. All notices hereunder to either party
hereto shall be delivered:
(a) if to the Grantors, in all cases to:
Plasti-Line, Inc.
Attn: Mark J. Deuschle
623 East Emory Road
Knoxville, Tennessee 37950-9043
Fax: (423) 947-8565
(b) if to any Lender, in all cases to the Administrative
Agent at:
700 Hill Avenue
Knoxville, Tennessee 37915
(Attn: T. L. "Chip" Smallwood)
Fax: (423) 544-2125
with a copy to:
National City Bank, Kentucky
5304 Chaversham Lane
Norcross, Georgia 30092
(Attn: Carrie Tate)
Fax: (770) 441-1525
Section 13. Severability. Any provision of this Security Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 14. Successors and Assigns; Governing Law. This
-------------------------------------
Security Agreement and all obligations of the Grantors hereunder
shall be binding upon the successors and assigns of the Grantors,
and shall, together with the rights and remedies of the
Administrative Agent hereunder, inure to the benefit of the
Administrative Agent and its successors and assigns. This
Security Agreement shall be governed by, and construed and
interpreted in accordance with, the laws of the State of
Tennessee.
<PAGE>
Section 15. Amendments. This Security Agreement may be
modified or amended only by a writing executed by the parties
hereto.
Section 16. Entire Agreement. This Security Agreement
constitutes the entire agreement as to the matters set forth
herein and supersedes all prior oral discussions or agreements as
to the matters set forth herein.
Section 17. Waivers. Administrative Agent may at any time and from time
to time waive any one or more of the terms, covenants, provisions or conditions
contained in this Security Agreement, but any such waiver shall be deemed made
in pursuance hereof or thereof and not in modification thereof, and any such
waiver in any particular instance or circumstance shall in no event or under any
circumstance be considered a waiver of any such term, covenant, provision or
condition in any other instance or any other circumstance.
Section 18. Amendment and Restatement. This Security
Agreement amends and restates the Security Agreement dated as of
November 2, 1995 by and among SunTrust, Plasti-Line, Inc., CM
Acquisition Corp. and American Sign and Marketing Services, Inc.
<PAGE>
IN WITNESS WHEREOF, each of the Grantors and the Administrative Agent
have caused this Security Agreement to be executed by their duly authorized
officers as of the date first set forth above.
SUNTRUST BANK, EAST TENNESSEE
N.A., as Administrative Agent
By: /s/ T.L. Chip Smallwood
T.L. "Chip" Smallwood
Title: Vice President
PLASTI-LINE, INC., as Grantor
By: /s/ Mark J. Deuschle
Mark J. Deuschle
Title: Vice President - Finance
CARTER-MIOT, INC., as Grantor
By: /s/ Mark J. Deuschle
Title: Secretary - Treasurer
AMERICAN SIGN AND MARKETING
SERVICES, INC., as Grantor
By: /s/ Mark J. Deuschle
Title: Secretary
<PAGE>
EXHIBIT A
Plasti-Line, Inc.
623 East Emory Road
Knoxville, Tennessee 37950-9043
Carter-Miot, Inc.
1828 Shop Road
Columbia, South Carolina 29201
American Sign and Marketing Services, Inc.
7430 Industrial Road
Florence, Kentucky 41042
<PAGE>
SUPPLY AGREEMENT
This Agreement, effective as of the 24th day of February 1997, is between
GM-DI LEASING CORPORATION, a Delaware corporation with its principal off~ces at
3044 West Grand Boulevard, Detroit, Michigan (hereinafter called "GM-DI"), and
PLASTI-LINE INC., a Tennessee corporation, with its principal offices at 623
East Emory Road, Powell, Tennessee (hereinafter called PLASTI-LINE ),
WITNESSETH:
WHEREAS, GM-DI is in the business of leasing "Dealer Identification
Signs," as such term is hereinafter defined, to motor vehicle dealers and/or
distributors franchised by and/or under contract with General Motors
Corporation, a Delaware corporation, its divisions, units, subsidiaries and
affiliates; and
WHEREAS, PLASTI-LINE is in the business of manufacturing and assembling
signs and has made a proposal which is acceptable to GM-DI to furnish GM-DI with
Dealership Identification Signs and certain replacement parts therefor which
meet GMDl's specifications;
NOW, THEREFORE, in consideration of the mutual conditions and promises
expressed herein, GM-DI and PLASTI-LINE agree as follows:
1. DEFINITIONS
1.01 "Bailment Agreement" shall mean the Bailment Agreement, dated
February 24, 1997, by and between GM-DI and PLASTI-LINE .
1.02 "Dealer" shall mean the individual,
partnership or corporation, including all authorized
representatives thereof, to whom Dealership
Identification Signs are leased by GM-DI.
1.03 "Direct Labor Costs" shall mean all straight-time wages of employees
who perform manufacturing or erecting operations which add to the dollar value
of the products being produced, assembled or erected.
1.04 "Erector" shall mean PLASTI-LINE or its "Subcontractor," as such term
is hereinafter defined, performing work at a dealership location or other
locations as specified by GM-DI.
1.05 "Lease Agreement" shall mean GM-Dl's authorized Dealership
Identification Lease Agreement with its lessees, including Exhibits A through D
thereof, a specimen copy of which is attached hereto as Exhibit H.
1.06 "Program" shall mean the General Motors
Corporation Dealership Identification Sign Program.
<PAGE>
1.07 "Program Specifications" shall mean the general specifications for
the General Motors Dealership Identification Sign Program, dated September 28,
1995, pages 1 through 59 inclusive and the latest revisions thereto, a copy of
which is attached hereto as Exhibit B.
1.08 "PLASTI-LINE Cost" shall mean applicable Direct Labor Costs and
mutually agreed upon manufacturing and overhead costs and/or direct material
costs or invoice costs to PLASTI-LINE for products and services purchased,
equipment purchased or rented, and/or used on GM-Dl's behalf, including erection
costs of subcontractors and freight charges used exclusively on GM-Dl's behalf.
1.09 "Subcontractor" shall mean any person or firm performing work for
PLASTI-LINE other than an employee.
1.10 "Survey" shall mean the on-site inspection of dealership facilities
by PLASTI-LINE or its representatives in accordance with the procedures set
forth in the survey instruction booklet of GM-DI, a copy of which is attached
hereto as Exhibit G.
1.11 "Installation" shall mean all work required or performed by
PLASTILINE, its erectors, agents, and/or subcontractors, to put Dealership
Identification Signs, Replacement Faces, and/or Component Parts, in place and
ready for their intended use, in accordance with Program Specifications. Such
work shall include but not be limited to all standard program foundation types,
regardless of ground and/or soil conditions or surface materials, and all
required travel and equipment.
1.12 "Non Standard Prices" shall mean the price charged by PLASTI-LINE for
the manufacture, fabrication, refurbishment, and/or installation of Dealership
Identification Signs, Replacement Faces, and/or Component Parts or for services
performed, which are not
set forth in Exhibit D attached hereto.
1.13 "Returned Goods" shall mean the sign box frame, full height columns,
rotator support weldments, and base covers of any sign which has been authorized
by GMDl to be removed and returned to inventory by issuance of a Purchase Order
release
1.14 "Established Time Periods" shall mean the number of days allotted for
the completion of Installations as provided in Section 13.03, Removals as
provided in Section 18.02, Replacement Parts as provided in Section 20.02, and
Relocations as provided in Section 20.02 of this Agreement.
1.15 "GM-DI" shall mean GM-DI Leasing Corporation, General Motors
Corporation, and/or any designated agent employee, or representative.
1.16 "PLASTI-LINE's Actual Cost" shall mean the invoice price paid by
Plasti- Line, including all price reductions but without markup, for materials
and/or services.
2. TENDERS
GM-DI reserves the right to accept or reject any bid or any part of any bid.
<PAGE>
3. AGREEMENT TO FURNISH SERVICES AND GOODS
Upon and subject to the terms and conditions of this Agreement, PLASTILINE
agrees to fabricate, assemble, remanufacture, transport, install, service and
repair Dealership identification Signs and certain replacement parts therefor;
and GM-Di agrees to pay PLASTi- LINE for the fabrication, assembly,
remanufacture, transportation, installation, service and repair of such
Dealership Identification Signs and such replacement parts. PLASTI-LINE hereby
acknowledges and agrees, however, that GM-DI may, at its option, contract with
firms other than PLASTI-LINE for the fabrication, assembly, remanufacture,
transportation, installation, service and repair of Dealership Identification
Signs, replacement parts tnerefor, and any other signs to be installed or
removed under this Agreement.
4. PRICES FOR THIS QUOTATION
4.01 The prices for the fabrication, assembly and/or installation of
Dealership Identification Signs and /or replacement parts shall be as set forth
in
Exhibit H attached hereto.
4.02 The prices for the installation of Dealership Identification Signs,
Replacement Faces, and/or component parts shall include all costs incurred by
PLASTILINE, both known and unknown at the time of installation, including all
surface and/or soil conditions, travel and equipment, which are associated with
the installation of such Dealership Identification Signs, Replacement Faces,/or
Component Parts with exception as noted in Section 4.09. Mod)fications such as
special wiring or changes to circuit disconnections and switches which are
occasionally required by local code in certain areas are part of the work
contemplated by this Agreement and are included in such prices.
4.03 The prices for product shall include the cost to manufacture,
fabricate, refurbish, and/or assemble Dealership Identification Signs,
Replacement Faces and/or component Parts~ in accordance with Program
Specifications. Such prices shall include items such as but not limited to: sign
box, columns, base covers, logo boxes, cladding, ballast, interior wiring,
lamps, sockets, faces, as well as associated nuts, bolts, and miscellaneous
hardware.
4.04 The prices for the installation of the electrical circuits necessary
to energize Dealership Identification Signs shall be on a per linear foot basis
which includes the cost of all trenching, backfill, compaction, resurfacing to
like conditions, conduit, wire, labor and other work necessary to achieve a
complete and finished job regardless of surface and/or sub soil conditions or
the length of the electrical run. The Plot Plan and associated electrical wiring
diagram, which is Exhibit B to the respective Lease Agreement, shall be used in
determining the field electrical requirements for a specific installation. When
electrical runs exceed more than four hundred fifty (450) feet, PLASTI-LINE may
utilize a metered power pole to provide the electrical power to the sign,
however, the power drop may not be closer than fifty (50) feet unless local code
warrants otherwise.
<PAGE>
4.05 Dealership sizes are generally determined on the basis of dealership
planning potential and the categories may differ between different divisions of
General Motors Corporation; and the dealership size shown on GM-Dl's Survey
Request form for such dealership shali establish the dealership size for
purposes of this section.
4.06 The freight charges for the transportation of Dealership
Identification Signs, Replacement Faces and/or component parts, to dealership
locations shall be invoiced to GM-DI by PLASTI-LINE at PLASTI-LINE's actual cost
without mark-up. Al1 discounts, reductions, refunds, abatements or other forms
of price benefit received by PLASTI-LINE shall be passed through to GM-DI at the
time of invoicing. Any such discount, reduction, refund, abatement or other form
of price benefit received by PLASTI-LINE subsequent to invoicing of the original
transportation charge shall be passed through to GMDl immediately upon receipt
by PLASTI-LINE.
4.07 The prices for the other services and goods which PLASTI-LINE is
specificaliy authorized to furnish to GM-DI under this Agreement shall be
determined in accordance with the applicable formula set forth in the other
Sections of this Agreement which describe such services and goods.
4.08 GM-DI acknowledges that on occasion, PLASTI-LINE will be required to
manufacture and/or install Dealership Identification Signs, Replacement Faces,
and/or Component Parts or perform services for which contract pricing has not
been established. On such occasions, prior to beginning work, PLASTI-LINE shall
submit a "Non Standard Letter" to GM-DI detailing the estimated cost and the
reason for such work. In the event that the work is subcontracted by
PLASTI-LINE, PLASTI-LINE shall obtain a minimum of three bids from equally
qualified subcontractors and shall submit the bids to GM-DI. Thereafter, no work
shall be done until GM-Dl's approval is obtained. In the event the estimated
cost is approved, said costs will be invoiced by PLASTI-LINE at PLASTI-LINE 's
actual cost.
4.09 GM-DI acknowledges that the prices for the installation of Dealership
Identification Signs, Replacement Faces, and/or Component Parts, as set forth in
Exhibit H shall not include the cost of the following, which will be invoiced to
GM-DI at Non Standard Prices:
Costs resulting from dealer interruptions and/or interference.
Costs associated with special foundations such as pilings and soil borings.
- - Costs of installation of roof and/or wall projections sub-structures.
4.10 Pricing under the terms of this Agreement shall be fixed for a period
of three (3) years following the commencement of this agreement. Thereafter, and
in each subsequent year during the life of this Agreement, PLASTI-LINE shall
submit to GM-DI proposed pricing adjustments for consideration by GM-DI. Price
adjustments submitted for consideration must be market justifed.
5. TAXES
The prices charged by PLASTI-LINE under this Agreement include all
applicable federal, state and local taxes except for sales or use taxes and
personal property taxes assessed against the personal property of GM-DI
furnished to PLASTI-LINE under this Agreement.
<PAGE>
6. INSURANCE
6.01 PLASTI-LINE shall, during the term of this
Agreement, obtain and maintain the following insurance
policies in addition to any insurance policies required under any purchase
orders issued to PLASTI-LINE by GM-DI under this Agreement or under any other
sections of this
Agreement.
A. A comprehensive General Liability Insurance Policy (which includes
Contractual Liability coverage) including Products Completed Operations coverage
with a single limit of liability of not less than $2.0 million per occurrence as
protection against risks of damage or destruction of property or personal
injury, sickness or disease (including death resulting at any time therefrom) of
persons resulting from any action, omission or operation under this Agreement or
in connection with the work.
B. A Comprehensive Automobile Liability Insurance policy covering all owned or
non-owned equipment used in connection with the work with a single limit of
liability of not less than $2.0 million per occurrence as protection against
risks of damage or destruction of property or bodily injury, sickness or disease
(including death resulting at any time therefrom) of persons.
C. Workers' Compensation and any insurance required by any Employee Benefit Acts
or other statutes applicable. All such insurance shall be in amounts aufficient
to protect PLASTI-LINE from any liability for bodily injury, sickness or disease
(including death resulting at any time therefrom) of any of their employees,
including any liability or damage which may arise by virtue of any statute or
law in force. If PLASTI-LINE is a self-insurer, the certificate(s) issued by the
appropriate agency of the state shall be furnished by such agency directly to
GM-DI.
6.02 All insurance policies shall be underwritten by an insurer or insurers
class)fied as "A+10" or better or by Best's Policyholder's Rating, or in the
alternative, by an insurer or insurers satisfactory to GM-DI. The Comprehensive
General Liability and Comprehensive Automobile Liability policies shall name
GM-DI as an additional insured thereunder, and shall provide for a minimum of
ten (10) days' prior written notice of cancellation to GM-DI. Plasti-Line agrees
to hold GM-DI harmless from any action, claim or settlement by and/or with any
employee, independent contractor, or subcontractor under workmen's compensation
or any other employee benefits act or statute. PLASTI-LINE shali annually
provide GM-DI with certificates evidencing all insurance.
<PAGE>
7. INVOICING & PAYMENT
7.01 PLASTI-LINE may invoice GM-DI for materials and services which have
been specifically authorized by GM-DI as evidenced by the issuance of a valid
Purchase Order release. Such invoices shall be submitted to GM-DI only upon
completion of all work required under the applicable line item of a valid
Purchase Order release. GM-DI shall pay invoices and other claims for payment,
which are submitted to GM-DI within six (6) months of the completion of the
underlying Purchase Order release. Thereafter, GM-DI shall have no obligation to
pay invoices and other claims for payment and payment of such, shall be at the
sole option of GM-DI.
7.02 Upon installation of any Dealership Identification sign(s) and/or
replacement part(s), PLASTI-LINE shall invoice GM-DI for one hundred percent
(100%) of the product price, transportation charges, installation charges,
permit and/or variance charges, and all other charges related to the applicable
line item of the related Purchase Order release. Each invoice submitted by
PLASTI-LINE pursuant to this section shall be accompanied by any and all
subcontractor and/or PLASTI-LINE invoices for materials and/or services which
are not included as a component of the contract price of materials and/or
services for which GM-DI is invoiced.
7.03 For re manufactured Dealership Identification signs, PLASTI-LINE
shall invoice GM-DI for one hundred percent (100%) of the current contract price
for such items upon completion of all work required by the applicable line item
of the related Purchase Order release and such price shall include all costs of
refurbishing columns, base cover, sign box frames, and rotator support weldments
when applicable and all other components which require refurbishment. Such
invoices shall be submitted pursuant to Section 7.01 above and shall include
transportation charges, installation charges, permit and/or variance charges,
and all other charges related to the applicable line item of the related
Purchase Order release.
7.04 In addition to any other documents which PLASTI-LINE is required to
procure or submit in connection with invoices under this section, upon
completion of any installation of Dealership Identitcation Sign(s), regardless
of whether such installation is a new installation, a relocation, a removal or a
reinstallation, PLASTI-LINE shall have the dealer execute a completed dealer
acceptance form and submit such dealer acceptance form, a description of the
Dealership Identification Sign(s) installed, a listing of the serial numbers of
the Dealership Identification Sign(s) installed, photographs of the Dealership
Identification Sign(s) installed and such other information as GM-DI may
reasonably require, with the PLASTI- LINE invoice to GM-DI. In addition, at
least one (1) of the photographs must be from such a distance that the entire
Dealership Identification Sign(s) (including the graphics of the Dealership
Identification Sign(s) face are visible. if PLASTI-LINE is unable to obtain the
dealer's signature on the dealer acceptance form for reasons other that
PLASTI-LINE 's failure to complete the installation in accordance with the
Program Specitcations, PLASTI-LINE shall submit a written report to GM-Di
detailing the problem prior to submitting an invoice. GM-DI shall advise PLASTI-
LINE within forty-five days after receiving such report as to whether
PLASTI-LINE is authorized to submit an invoice to GMDl without the dealer
acceptance form. Upon approval, PLASTI-LINE may invoice GM-DI for the complete
work without the completed dealer acceptance form.
<PAGE>
7.05 For any Dealership Identification sign(s) and/or replacement part(s)
which will not be installed by PLASTI-LINE, PLASTI-LINE may invoice GM-DI for
one hundred percent (100%) of the price for such items plus the actual cost of
freight at the time that such Dealership Identification sign(s) and/or
replacement part(s) are delivered.
7.06 The payment term for all invoices submitted by PLASTI-LINE under this
agreement shall be net 24TH PROXIMO. Ail payments are subject to charge-back if
installation deficiencies and or omissions are subsequently noted.
7.07 Each invoice shall be accompanied by a copy of the relevant
permit(s). If no permit(s) are required, a statement to that effect is to be
attached. PLASTI-LINE shall also submit the following documents in addition to
such other documents which may be required under other sections of this
agreement:
Replacement Parts Order
Original Dealer Acceptance Form
Original Before and After Photographs
Original Destruction Photographs
Original Destruction Certificate
Removal Order
Original Dealer Acceptance Form
Original Before and After Photographs
Original Destruction Photographs
Original Destruction Certificate
Foundation Release Form (When Foundation Is Not Removed)
Foundation Resurface Photograph
Sign Installation Orders
Original Dealer Acceptance Form
Original Before and After Photographs
Electrical Service Diagram
Junction Box Photo
Photocopy Of Permits
Relocation Orders
Original Dealer Acceptance Form
Original Before and After Photographs
Electrical Service Diagram
Junction Box Photograph
Photocopy Of Permits
<PAGE>
Non Standard Letters
Original Non Standard Letter
Original Completion Photographs
Original Invoices for Subcontracted Work
Original Invoices for Materiai Used and/or Equipment Rented by
Erector
Photocopies of Invoices for Materials Used and/or Equipment
Rented by Erector
Original Invoices for Freight
Original Staff Time Logs
8. STATUS REPORTS
8.01 PLASTI-LINE shall, on a daily basis, transmit to GM - Dl status of
purchase order releases and other work requests. These transmissions will
consist of Order, Product and Line item status, also Line Item Delay Codes.
8.02 PLASTI-LINE shall also furnish GM-Di with such other information
which GM-DI may hereafter reasonably require.
9. FIELD REPRESENTATIVES
9.01 Throughout the term of this Agreement, PLASTI-LINE shall employ a
number of field representatives agreed to by GM-DI, aufficient to adequately
provide the required service within the allotted time frame. Such field
representatives shall be located throughout the United States in order to
properly control all field activities where PLASTILINE has installed or will
install Dealership Identification Signs.
9.02 The field representatives shall be responsible for supervising all
aspects of the installation of Dealership Identification Signs, including (i)
the taking of Surveys, (ii) the securing of permits and variances, (iii)
investigation of easements and rights-of-way, (iv) job coordination, (v) the
filing of progress reports, (vi) final inspection of any Dealership
Identification Signs installed, and (vii) procuring the Dealer's acceptance of
the installation of any Deaiership Identification Signs. Accordingly,
PLASTI-LINE agrees that it shall take actions as are necessary to ensure that
such field representatives shall have full and complete knowledge of this
Agreement and its provisions, and that such field representatives shall be
trained in all phases of the taking of Surveys and of sign construction,
installation and removal.
9.03 The held representatives shall have, on behalf of PLASTI-LINE direct
contact with the Dealers at the dealership locations. Whenever a Survey is
requested by GM-DI, the field representative shall personally contact the Dealer
and its respective zone office to arrange for the taking of the Survey. Before
and after the Survey is taken, the field representative shall discuss the
Program with the Dealer. Further, the field representative shall also review the
results of the Survey with the Dealer and obtain the Dealer's approval of the
Survey on the Survey form, a specimen copy of which is attached hereto as
Exhibit F. In the event the Dealer does not agree with the results of the
Survey, the field representative shall note that fact on the Survey form and
shall also indicate thereon the Dealer's preferences.
<PAGE>
9.04 At the discretion of the field representative, a Subcontractor may be
employed to assist in the taking of Surveys or in the installation of Dealership
Identification Signs. Prior to the Subcontractor's making any contact with the
Dealer, however, the field representative shall fully apprise the Subcontractor
of this Agreement and of their responsibilities hereunder.
10. SUBCONTRACTORS
10.01 PLASTI-LINE shall make prompt payments to any Subcontractors upon
completion of their required work and upon their submission of proper
documentation to PLASTI- LINE . Further, nothing in this Agreement shall be
construed as prohibiting PLASTI-LINE from making payments to Erectors or their
subcontractors for portions of work completed in accordance with the Program
Specifications prior to final acceptance of the entire work by GM- DI.
10.02 GM-DI shall, if necessary, advise PLASTI-LINE of unsatisfactory
performance of a Subcontractor. PLASTI-LINE shall thereafter take immediate
action to correct the situation.
10.03 PLASTI-LINE shall provide all Subcontractor manuals and/or
instructions which specifically include program entitlements to dealers local
restrictions and determines what the dealer requires. PLASTI-LINE shall provide
these manuals without expense to GM - Dl. At the onset of this Agreement,
PLASTI-LINE shall supply copies of all manuals and/or instructions to GM-DI for
approval, and PLASTI-LINE shall not distribute any such manuals or instructions
until the same have been approved by GM-DI.
11. QUALITY CONTROL
11.01 PLASTI-LINE shall install and maintain in its plant a quality
control and inspection system, using standards acceptable to GM-DI, in order to
ensure absolute conformity to all fabrication requirements and color ranges
established by the Program Specifications.
11.02 PLASTI-LINE agrees that GM-DI shall be permitted to inspect and
review PLASTI-LINE plant facilities from time to time during PLASTI-LINE regular
business hours to ensure quality is being maintained throughout.
12. SURVEYS
12.01 GM-DI may, from time to time, require PLASTI-LINE to conduct a
Survey or Surveys at a particular dealership location. All requests for the
taking of such Surveys shall be through the issuance by GM-DI of a purchase
order release.
<PAGE>
12.02 All Surveys shall be conducted by qualified persons ("Surveyors")
utilized by PLASTI-LINE for that purpose, and shall be conducted in accordance
with the instructions set forth in the survey instruction booklet of GM-DI. In
particular, the Surveyor will review with the Dealer all local sign code
restrictions with emphasis on possible installation delays which may result from
variance appeals. The Survey form(s) are to be completely filled out by the
Surveyor, reviewed in detail and approved by the Dealer, and submitted to GM-DI
within thirty (30) d_ys after PLASTI-LINE receipt of the Survey Request form. If
this deadline is not met, PLASTI-LINE will incur the cost of the survey. In the
event the surveyor does not agree with the recommended sign location, he should
indicate so on the survey.
12.03 If an installation of a Dealership Identification Sign or Signs at a
dealership location is unacceptable because of incorrect or incomplete
information from Plasti- Line contained in the Survey, PLASTI-LINE shall be
responsible for, at the sole option of GM-DI, all costs of having a Surveyor
recontact the Dealer to resolve the problem, and if necessary, of having the
Dealership Identification Sign(s) returned to PLASTI-LINE plant or having the
Dealership Identification Sign(s) relocated to such locations(s) as may be
agreed to by the Dealer and GM-DI.
12.04 In the event it is necessary to have the Surveyor recontact the
dealership in order to clarify PLASTI-LINE previous Survey of the dealership
location, PLASTI- LINE agrees to have such recontact made at its expense within
thirty (30) days after GM-DI not)fies PLASTI-LINE that such recontact is
necessary. If an additional Surveyor contact is requested by GM-DI in writing
for reasons other than for the clarification of PLASTI-LINE previous Survey,
PLASTI-LINE shall conduct a full and complete Survey and shall submit to GM- DI
all necessary forms and photographs. Thereafter, PLASTI-LINE shall invoice GM-DI
at the applicable price set forth in Exhibit H.
12.05 In the event that a request for a Survey is canceled by GM-DI after
PLASTI-LINE has incurred costs related to the survey but before the survey has
begun, PLASTI- LINE shall cease all work on the survey and invoice GM-DI at
fifty percent (50%) of the contract price for such survey. If the survey has
already begun, PLASTI-LINE is to complete the survey and to submit the results
of the survey with an invoice at the regular price for such survey.
13. DEALERSHIP IDENTIFICATION SIGN ORDERS
13.01 In the event GM-DI wishes PLASTI-LINE to fabricate and assemble
Dealership Identification Signs, GM-DI shall issue a purchase order release to
PLASTI-LINE indicating the number and types of Dealership Identification Signs
to be produced.
13.02 GM-DI shall have no responsibility to pay PLASTI-LINE for the
fabrication and assembly of any Dealership Identification Signs unless such
Dealership Identification Signs were fabricated and assembled pursuant to
purchase order releases issued by GM-DI.
<PAGE>
13.03 In the event GM-DI wishes PLASTI-LINE to install all or any of the
Dealership Identification Sign(s) specified in any purchase order release, GM-DI
shall so indicate that fact on such purchase order release. Thereafter,
PLASTI-LINE or its Subcontractor shall, in accordance with the procedures set
forth in Section 14 hereof, promptly secure any and all permits and/or variances
necessary to allow for the installation of the Dealership Identification Sign(s)
in question; and PLASTI-LINE shall not proceed with the production and
installation of the Dealership Identification Sign(s) ordered by GM-DI until
such permits and/or variances have been obtained. The required time frame from
secural of
14. PERMITS AND VARIANCES
14.01 PLASTI-LINE or its Subcontractor shall promptly secure all permits
and/or variances necessary to allow for the installation of any Dealership
identification Signs ordered by GM-DI if the purchase order release for such
Dealership Signs indicates that PLASTI- LINE is to install the Dealership
Identification Signs specified in such release. PLASTI-LINE shall advise GM-DI
as soon as such permits and/or variances have been obtained. In the event the
Dealership Identification Signs are to be installed in an area where it is not
necessary to obtain such permits and/or variances, PLASTI-LINE shall provide
GM-DI with a written statement to that effect. Until such permits and/or
variances have been obtained, or until Gl\l-DI has received not)fication from
PLASTI-LINE that no such permits and/or variances are necessary, PLASTI-LINE
shall not produce or install the Dealership Identification Signs in question.
14.02 Any engineering certification costs or other special engineering
fees required to obtain a sign permit shall be invoiced to GM-DI with complete
details of the services involved at PLASTI-LINE Cost . PLASTI-LINE is to notify
GM - Dl of the probability of obtaining the permiVvariance. Whenever permits
cannot be obtained without appeal to formal proceedings, PLASTI-LINE shall
obtain prior approval from GM-DI before making any filing or incurring any legal
fees. Under no circumstances shall GM-DI be a party to any proceedings in law
without its prior written approval, and PLASTI-LINE shall be solely responsible
for the payment and reasonableness of any legal fees incurred. PLASTILINE shall
invoice GM-DI for PLASTI-LINE reasonable cost of such expenses, including legal
fees.
14.03 Should it become necessary for PLASTI-LINE to perform services over
and above those normally required to obtain a permit, such as appealing an
adverse decision regarding the permit application, PLASTI-LINE shali notify
GM-DI promptly of its intention to perform such services, and if the total costs
of any such services will exceed $240.00, PLASTI- LINE shall not commence
performing such services until it has received the written approval of GM-DI to
perform such services. Upon completion of its performance of any such additional
services, PLASTI-LINE may invoice GM-DI at PLASTI-LINE Cost for its performance
of such services. All such invoices submitted by PLASTI-LINE must be itemized
and must be accompanied by the necessary documentation to substantiate the
expenses incurred by PLASTI- LINE in performing such additional services.
<PAGE>
15. UNAUTHORIZED PAYMENTS OR GRATUITIES
It is understood and agreed by the parties hereto, and PLASTI-LINE hereby
represents to GM-DI, that in performing services under this Agreement or in
connection herewith, neither PLASTI-LINE nor any person acting on its behalf has
given or offered to give, or will give or offer to give, any sum of money or
anything of value, to any person, directly or indirectly, as an inducement to
influence the granting of any permit or variance or the terms and conditions
under which any permit or variance is to be obtained, regardless of whether such
an act constitutes a violation of law.
16. BUILDING MOUNTED INSTALLATIONS
16.01 Whenever PLASTI-LINE is required to install a building mounted
Dealership Identification Sign, GM-DI shall obtain the services of a registered
professional engineer who is registered in the state in which the installation
work is to be performed (i) to determine the soundness of the dealership
building structure, what mod)fications will be required thereto, and the design
of the supporting structure for the Dealership Identification Sign(s); and (ii)
to prepare and submit to GM-DI certified installation plans and related
calculations and specifications for any such supporting structure. All such
plans, calculations and specifications shall be signed by the engineer and shall
have his registered engineer's seal affxed to them. Should GM-DI desire
PLASTI-LINE to obtain these services, GM-DI shall reimburse PLASTI-LINE for
PLASTI-LINE costs of procuring the services of the registered engineer at
PLASTI-LINE Cost. Any registered professional engineer used to perform work
under this Agreement shali carry Architects and Engineers Professional Liability
Insurance (Errors or Omissions Policy) with policy limits of not less than $2
million per person, $2 million per occurrence and $2 million property damage per
occurrence.
16.02 PLASTI-LINE shall, within forty-five (45) days of its receipt of the
aforesaid plans and specifications use such plans and specifications to secure
no less than three (3) bids of construction of the necessary structure for
mounting the roof or wall projecting Dealership Identification Signs from
qualified structural steel contracting firms. These bids shall be submitted to
GM-DI along with such other price data as GM-DI shall request, and thereafter
GM-DI shall instruct PLASTI-LINE as to purchase of the necessary structure(s).
However, GM- DI may, either in lieu of or in addition to the bids obtained by
PLASTI-LINE, obtain bids for construction of the necessary structure direct from
qualified structural steel contracting firms and accept a bid so obtained. GM-DI
shall reimburse PLASTI-LINE for any structure it purchases at GM-Dl's direction
at PLASTI-LINE cost.
16.03 Photographs of the completed structure and Notice of Completion form
signed by the Dealer must accompany all invoices for payments submitted to
GM-DI.
<PAGE>
16.04 As with all installations, GM-DI reserves the right to audit and
inspect PLASTI-LINE installation of all building mounted Deaiership
Identification Sign structure to ensure that the installation conforms to the
applicable Program Specificatio.ns. If an installation does not conform to the
Program Specifications, or is of less than first-class workmanship, GM-DI may
debit PLASTI-LINE account in an amount equal to the amount of the invoice(s)
previously paid by GM-DI for the installation of the Dealership Identification
Sign in question. PLASTI-LINE shall thereafter immediately correct whatever
portion of the work that is substandard at PLASTI-LINE sole expense and may then
re invoice GM-DI in the amount previously debited.
17. NON-PROGRAM SIGN REMOVAL
17.01 In the event the dealer insists a non-program sign be removed or a
local code dictates such, in order to secure a permit for a GM-DI sign, the
subcontractor shall quote the cost of such removal to the dealer for his
approval. Upon approval, the subcontractor shall invoice the dealer directly.
17.02 PLASTI-LINE shall obliterate from each sign removed, whether hauled
away or not, all names, trademarks and service marks of General Motors
Corporation, its divisions, subsidiaries or affiliated corporations, and shall
paint out any sign or signs as indicated on the Exhibit "H."
18. REMOVALAND REMANUFACTURE
18.01 GM-DI may from time to time order the removal of previously installed
Deaiership Identification Signs or component parts thereof from specified
dealership locations. Such removals shall be authorized by GM-Dl's issuance of a
valid purchase order release.
18.02 All such Dealership Identification Signs or component parts are to be
removed from the dealership location within twenty-one days of PLASTI-LINE
receipt of the Durchase order release. PLASTI-LINE shall submit to GM-DI before
and ~er photographs evidencing the fact that such Dealership Identification
Signs or component parts were removed. PLASTI-LINE shall return the Dealership
Identification Signs or component parts to PLASTI- LINE plant w~thin~forty fve
(45) days of PLASTI-LINE 's receipt of the purchase order release unless
otherwise instructed in writing by GM-DI.
18.03 After PLASTI-LINE returns any such Dealership Identification Signs or
component parts thereof to its plant, PLASTI-LINE shall place such signs into
one of the following classes:
Class I Field Return Signs Never Installed
Class II Complete disassembly and remanufacture
Upon completion of the foregoing, PLASTI-LINE may commence "re manufacturing"
Class II signs. Class II signs shall be defined in accordance with the
definition of "returned goods."
<PAGE>
18.04 PLASTI-LINE shall use Dealership Identification Signs or component
parts which have been returned from the fieid in every instance where GM-DI has
placed orders which specify that model of Dealer Identification signs or
component parts; provided, however, that PLASTI-LINE shall not use any such
component parts in its fabrication of sign boxes for new Dealership
Identification Signs.
18.05 Class I Dealership Identification Signs, Replacement Faces, and/or
Component Parts, returned to PLASTI-LINE 's plant under this Section shall be
deemed the property of PLASTI-LINE. Upon return of Class I Dealership
Identification Signs, Replacement Faces, and/or Component Parts to Supplier's
plant, PLASTI-LINE shall refund to GM-DI the sale price for such materials and
shall bill GM-DI for the actual costs incurred by PLASTI-LINE in shipping said
materials to the installation site and in returning said materials to
PLASTI-LINE's plant.
18.06 In lieu of having PLASTI-LINE return previously installed Dealership
Identification Signs or component parts to its plant, GM-DI may instruct
PLASTI-LINE to scrap certain materials in the field. Any such items authorized
by GM-DI to be scrapped shall, at no additional expense to GM-DI, be cut or
broken apart in at least two pieces, rendering such items unusable. All monies
derived by PLASTI-LINE from such scrapped items shall be forwarded to GM-DI.
PLASTI-LINE shall submit a notarized Destruction Certificate and photographs of
the items scrapped with any invoices submitted to GM-DI.
18.07 Returned Goods which PLASTI-LINE shall remanufacture for use in Class
II signs shall be limited to fifty percent (50%) of expected annual usage for
each specific item or category of items. At, or prior to the first of each year,
PLASTI-LINE and GM-DI shall establish the annual usage rate for specific items
or categories of Returned Goods.
19. REPLACEMENT PART ORDERS
19.01 From time to time it will be necessary for component parts or face
panels of Dealership Identification Signs to be installed at dealership
locations. Orders for the installation of such replacement component parts and
face panels shall be placed by GM-DI or other designated companies. Orders
originating from GM-DI or other designated companies shall be evidenced by the
issuance of purchase order release.
19.02 PLASTI-LINE shall complete any installation orders within forty-five
(45) days of its receipt of a purchase order r~eease. However, in the event
PLASTI-LINE c;~ ~= tive time period because of damage occurring to the component
part(s) and/or face panet~ch~ems were in transit from PLASTI-LINE plant to the
respective dealership location, GM-DI agrees to extend, for a reasonable period
the time period in which PLASTI-LINE has to complete the order, provided that,
PLASTI-LINE promptly notifies GM-DI of such damage and submits documentation
(e.g;, photographs and the bill of lading) to substantiate the same.
<PAGE>
20. DEALERSHIP IDENTIFICATION SIGN RELOCATION
20.01 GM-DI may from time to time order the relocation of previously
installed Dealership Identification Signs at specified dealership locations.
Such locations shall be ordered by GM-Dl's issuance of a purchase order release.
20.02 Upon receipt of a relocation order, PLASTI-LINE shall promptly
obtain all necessary permits and/or variances to allow for the relocation of the
Desiership Identification Sign(s). PLASTI-LINE shall have thirty-five (35) days
after its procurement of the necessary permits and/or variances to effect such
relocation.
20.03 PLASTI-LINE shall relocate such Dealership Identification Signs in
accordance with the procedures set forth in pages 33 through 57 of the Program
Specifications.
21. DEALERSHIP PREMISES
21.01 During Dealership Identification Sign installation and preparation
therefor, Erector shall conduct its work so as not to interfere with the normal
conduct of business at the dealership location. In the event of a delay in
installing any Dealership Identification Sign(s), any material previously
delivered to the job site shall be removed and stored in a protected area until
work is resumed.
21.02 The Erector shall at all times keep the entire premises of the
dealership free of rubbish and debris caused by its work and its employees and,
upon completion of the work, shall leave the area broom clean and in a condition
reasonably equal to that which existed before the work commenced. Erector
cleanup shall include, but is not limited to, touch-up painting, hole patching,
roof patching, replacement of concrete, sod, shrubbery and trench filling.
Electrical trenches will be properly filled, compacted and resurfaced with
material of a like quality and nature to the surrounding area. Asphalt drives
and parking areas shall be hot- rolled patched to match the depth and surface of
existing bituminous coverings. If weather conditions prohibit hot-rolled
patching, a temporary cold patch will be allowed. Upon not)fication by
PLASTI-LINE, GM-Di will authorize a return trip when weather permits for the
proper patching at prices agreed upon by GM-DI and PLASTILINE . Should the
Erector fail to do the required cleaning, repair or restoration work,
PLASTI-LINE shall have thirty (30) days to make necessary correction(s) or GM-DI
may employ a firm directly to do the work and PLASTI-LINE shall pay the cost
thereof.
21.03 The Erector shall obtain the written approval of the Dealer before
using any explosives at the dealership location.
21.04 In the event a Dealer demands that a Dealership Identification Sign
be installed in a manner which is not in accordance with the applicable Program
Specifications, PLASTI-LINE will cease work and promptly notify GM-DI indicating
the specifics concerning the matter. GM-DI will thereafter instruct PLASTI-LINE
as to when and how to proceed with respect to such installation.
<PAGE>
21.05 Extra precaution should be exercised by PLASTI-LINE during spring
thaw and wet seasons, to prevent damage to lawns or grassy areas. If it is
impractical to enter the site due to wet or unstable soil conditions, obtain
dealer's consent to risk damaging the area or reschedule the trip.
22. WARRANTY
22.01 PLASTI-LINE warrants that all services and products which it
furnishes to GM-DI under this Agreement shall be of good material and
workmanship and free from defects, and shall be fabricated and assembled,
manufactured, installed, and performed in accordance with plans and
specifications therefor furnished by GM-DI and appearing in the Program
Specifications. Upon receipt of a written notice to the contrary, PLASTI-LINE,
at its expense, shall promptly repair or replace such product or perform such
services so that the same shall conform to the plans and specifications
furnished by GM-DI.
Plasti-Line's obligation hereunder shall be to repair and replace warranted
items. In no event shall Plasti-Line be responsible for incidental or
consequential damages.
22.02 PLASTI-LINE further warrants, covenants and agrees that in the event
a defect appears in any Dealership Identification Sign fabricated and assembled
by PLASTI-LINE under this Agreement, or in its installation, within ten (10)
years from the date installation of said Dealership Identification Sign is
certified to GM-DI by the Erector and the Dealer, PLASTI- LINE shall, after
receiving written notice of such defect(s) from GM-DI, take all necessary
actions to correct such defect(s) without charge to GM-DI or to the Dealer.
However, PLASTI- LINE shall have no responsibility to correct any defects
appearing in (i) lamps, ballasts, time delay relays, lamp sockets and internal
sign box wiring from the low voltage side of the lead ballast attached to the
110-volt primary circuitry in such Dealership Identification Signs; or (ii) the
material(s) used to seal roof and/or wall penetrations for building mounted
Dealership Identification Signs after two (2) years from the date the
installation of such Dealership Identification Sign is certified.
22.03 PLASTI-LINE agrees that the covenants and agreements to repair set
forth in the preceding section shall also apply to any Dealership Identification
Signs re manufactured by PLASTI-LINE under this Agreement, regardless of whether
such Dealership Identification Signs were originally built and/or installed by
other firms, and to any replacement Dealership Identification Sign face panels
fabricated and assembled by PLASTI-LINE under this Agreement.
22 04 GM-DI shall take action to enforce its warranty claim(s) within four
(4) years of the ten (10) year expiration date, limiting PLASTI-LINE 's
liability to fourteen (14) years.
<PAGE>
23. CANCELLATION OF INSTALLATION INSTRUCTIONS
23.01 GM-DI may, for any reason, cancel any purchase order releases issued
to PLASTI-LINE for Dealership Identification Sign installation prior to
PLASTI-LINE installation of such Dealership Identification Signs. In the event
GM-Di cancels any such purchase order releases, PLASTI-LINE, shall return the
sign to inventory. GM-DI will pay for the costs incurred up to the point of
order cancellation, including the actual cost of return freight, provided such
work is properly substantiated by photographs and other required documentation.
PLASTI-LINE shall not bill GM-DI for cost of said sign.
23.02 With respect to any face panels from Class I Dealership
Identification Signs returned to PLASTI-LINE plant, PLASTI-LINE shall maintain
such face panels without charge to GM-DI. PLASTI-LINE may, however, dispose of
those face panels which contain a desiersnip name upon them. PLASTI-LINE can
then bill GM-DI for the panels that were disposed.
24. WAIVER OF LIENS OR OTHER INTEREST(S)
24.01 PLASTI-LINE hereby waives the benefits of the mechanic's lien laws
of the state in which any Dealership Identification Signs being fabricated,
assembled, installed, serviced and repaired are located. PLASTI-LINE agrees to
procure a waiver of any claim to a mechanic's lien which any Subcontractor may
have or might acquire as a result of work done under this Agreement from such
Subcontractor before final payment by GM-DI. PLASTI-LINE agrees to retain a copy
of any such waiver for a period of six (6) years. Should PLASTI-LINE fail to
procure such a waiver, PLASTI-LINE shall promptly advise GM-DI of this fact. In
the event a lien or claim is filed, PLASTI-LINE shall, at its expense, procure a
bond to indemnify GM- DI against such all lien and/or claim made by such
Subcontractor relating to the Dealership Identification Signs and their
installation.
24.02 In addition to the foregoing, PLASTI-LINE hereby waives, releases
and disclaims any interest in or to the Dealership Identification Signs or
replacement parts fabricated, assembled, manufactured, installed, serviced and
repaired by it under this Agreement, and agrees that its only right with respect
to such Dealership Identification Signs or replacement parts is to receive
payment for their fabrication, assembly, manufacture, installation, service and
repair in accordance with the provisions of this Agreement.
25. BUYER'S ORIGINAL INVENTORY
25.01 Upon acceptance of this agreement, GM-DI may require that PLASTILINE
purchase from GM-DI and/or supplier(s) to GM-DI, quantities of raw materials,
work in process, finished goods and other sign components (Original Inventory)
which PLASTILINE shall use in the performance of its obligations under this
Agreement. Said Inventory shall be the sole property of the PLASTI-LINE and
GM-DI shall have no financial responsibility or obligation with respect to said
Inventory except that:
<PAGE>
In the event of termination of this Agreement by GM-Di within the twelve (12)
month period immediately following commencement of the Agreement, GM-DI shall
pay to PLASTI-LINE the actual costs of the remaining quantity of the Original
Inventory which PLASTI-LINE purchased at the commencement of the Agreement.
Upon expiration of the twelve (12) month period immediately following
commencement of the Agreement, GM-DI shall have no obligation to pay to
PLASTI-LINE any costs incurred by PLASTI-LINE in acquiring, storing or disposing
of any portion of the Original Inventory.
25.02 PLASTI-LINE shall coordinate its orders for materials and its use of
Original Inventory items in the fabricating and assembling of said Dealership
identification Signs and replacement parts therefor with current orders of
GM-DI. PLASTI-LINE shall be responsible for the correct usage of such materials.
26. STORAGE
26.01 PLASTI-LINE shall provide adequate storage for any GM-DI property.
This is currently estimated to be 20,000 square feet with 20 foot high clearance
for 15,000 square feet of the total 20,000 square feet.
27. TOOLING
27.01 From time to time GM-DI may request that PLASTI-LINE produce, or
procure from third parties, at mutually agreed upon prices, tools, gauges,
molds, dies, hxtures, patterns and similar items ("Tooling"). After approval of
designs for any Tooling, and after approval of production parts manufactured
with the Tooling, PLASTI-LINE may invoice GM- DI for such Tooling.
27 02 Any Tooling purchased by GM-DI under this Section shall be clearly
and conspicuously marked as the property of GM-DI, and PLASTI-LINE shall not
commingle the Tooling with its property or that of any third party.
27.03 PLASTI-LINE shall, at its expense, maintain the Tooling in proper
repair and working condition, and make any and all necessary replacements of the
Tooling. However, in the event any changes, adjustments or mod)fications to the
Tooling are necessary because of GM-DI-mandated design changes in the graphics
for Dealership Identification Sign faces, GM-DI agrees to pay PLASTI-LINE, at
mutually agreed upon prices, for all changes, adjustments or mod)fications to
the Tooling necessitated by such design changes.
27.04 In the event that PLASTI-LINE has possession of the Tooling at the
expiration of this Agreement, PLASTi-LINE agrees to store the Tooling, at no
expense to GM-DI, for a period not to exceed six (6) months: and upon GM-Dl's
request, PLASTI-LINE shall deliver the Tooling, properly prepared and packaged
for shipment to any location designated by GM-DI, F.O.B. PLASTI-LINE plant dock,
in which event GM-DI shall pay PLASTI-LINE for any costs incurred in preparing
the Tooling for shipment at PLASTI-LINE Cost.
<PAGE>
27.05 In the event of Program termination, PLASTI-LINE shall destroy the
Tooling if requested in writing to do so by GM-DI, in which event GM-DI shall
pay PLASTILINE for PLASTI-LINE Costs incurred in destroying the Tooling at
PLASTI-LINE
27.06 Any Tooling purchased by GM-DI under this Section which thereafter
remains in the possession of PLASTI-LINE shall be retained by PLASTI-LINE upon
and subject to the terms and conditions of the Bailment Agreement and shall be
deemed to be "Bailed Property" as such term is used therein.
28. MACHINERY AND RELATED TOOLING
28.01 GM-DI shall furnish to PLASTI-LINE the machinery and toolinq listed
and identified in Exhibits M and N attached hereto (the "Machinery and
Tooling").
28.02 Unless otherwise authorized in writing by GM-DI, PLASTI-LINE shall
not use the Machinery and Tooling for any purpose(s) other than the performance
of its obligations to GM-DI under this Agreement.
28.03 PLASTI-LINE shall periodically inspect the Machinery and Tooling,
and shall, at its expense, provide normal maintenance for, (e.g., cleaning,
lubrication, sharpening of dies), and make minor repairs to, the Machinery and
Tooling in order to keep it in proper repair and working condition.
28.04 GM-DI shall be responsible for the cost of major repair to, or for
the cost of replacing, the Machinery and Tooling necessitated by normal wear and
tear, unless such repair or replacement cost arose from or was caused by (i)
PLASTI-LINE 's improper use or maintenance of the Machinery and Tooling, (ii)
PLASTI-LINE 's use of the Machinery and Tooling for purposes other than the
performance of its obligations under this Agreement, and/or (iii) vandalism, in
which events PLASTI-LINE shall be responsible for such repair or replacement
costs.
28.05 In the event that major repairs are necessary and PLASTI-LINE
believes that such repair is the responsibility of GM-DI, PLASTI-LINE shall
promptly notify GM-DI as to (i) the condition of the Machinery and Tooling, (ii)
the cause of the breakdown or damage, (iii) the amount of work necessary to make
the repair(s) and (iv) the estimated cost of such repairs Thereafter, GM-Di
shall inspect the Machinery and Tooling and shall issue written instructions to
PLASTI-LINE on how to proceed. In the event GM-DI authorizes PLASTI-LINE to make
the necessary repairs, GM-DI shali reimburse PLASTILINE for its actual costs
incurred in making such repairs.
28.06 To the maximum extent practicable, the Machinery and Tooling shall
be located in the same area of PLASTI-LINE 's plant, and shall be clearly
identified as the property of GM-DI.
28.07 Seller shall bear all risks of loss or damage to the Machinery and
Tooling while such items are in the possession or custody of PLASTI-LINE .
<PAGE>
28.08 In the even PLASTI-LINE has possession of the Machinery and Tooling
at the expiration of this Agreement, PLASTI-LINE agrees to store the Machinery
and Tooling, at no expense to GM-DI, for a period not to exceed six (6) months;
and upon GM-Dl's request, PLASTI- LINE shall deliver the Machinery and Tooling
properly prepared and packaged for shipment to any location designated by GM-DI,
FOB PLASTI-LINE 's plant dock, in which event GM-DI shall pay PLASTI-LINE for
any costs incurred in preparing the Machinery and Tooling for shipment at
~PLASTI-LINE 's Cost" as such term is defined in this Agreement.
28.09 The Machinery and Tooling furnished to PLASTI-LINE under this
Agreement shall be held by PLASTI-LINE upon and subject to the terms and
conditions of the "Bailment Agreement", dated as of February 24, 1997, by and
between GM-DI and PLASTI- LINE, and shall be deemed to be "Bailed Property" as
such term is used therein.
29. ENGINEERING DRAWINGS AND SPECIFICATIONS
29.01 PLASTI-LINE shall hold and maintain all engineering drawings and/or
specifications condifential, and shall not disclose any such information to any
person or entity without GM-Dl's written consent, except as required to furfill
PLASTI-LINE's obligations under the terms of this Agreement.
29.02 PLASTI-LINE agrees not to use the engineering drawings and/or
specifications for any purposes other than those directed by GM-DI.
30. SELLER'S INVENTORY
PLASTI-LINE shall coordinate its orders for materials it uses in the
fabricating and assembling of said Dealership Identification Signs and
replacement parts therefor with current orders of GM-DI, and PLASTI-LINE shall
be responsible for ordering the correct amount of such materials to efficiently
run their operations.
31. MAINTENANCE OF DEALERSHIP IDENTIFICATION SIGNS
GM-DI shall provide maintenance on the Dealership Identification Signs
installed hereunder in accordance with the maintenance specifications set forth
in the program Specifications. GM-DI may contract such maintenance to
PLASTI-LINE or such other qualified firms as GM-DI may from time to time select.
<PAGE>
32. FAILURE TO MEET ESTABLISHED TIME PERIODS
32.01 In the event PLASTI-LINE fails to install, remove, or relocate
Dealership Identification Signs, face panels, or component parts within
established time periods, and any extensions thereof, excluding delays resulting
from factors which are beyond the control of PLASTI-LINE, PLASTI-LINE shall,
when requested by GM-DI, reduce the sale price to GM-DI for the products and/or
services. If such work is to be performed at the expense of PLASTI-LINE,
PLASTI-LINE shall pay to GM-DI a fee for the inconvenience caused by
PLASTI-LINE's failure to meet the established time period.
32.02 The price reduction shall equal the percentage resulting when the
number of days between the date of the purchase order release and the date of
completion of the order, less the established time period, is compared to the
established time period.
32.03 The fee for inconvenience for work done at the expense of PLASTILINE
shall be calculated by multiplying the normal sales price for the work being
done, by the number of days late divided by the established time period.
32.04 The total price reduction or fee for inconvenience to which GM-DI is
entitled under the terms of this section shall be limited to, the lesser of the
sales price of the item or $2,500 on new installations and $500 on replacement
parts, relocations and removals (maximum consequential damage fee, see Exhibit
A1). Such price reduction or fee for inconvenience shall be GM-Dl's sole and
exclusive remedy under the terms of this section.
32.05 If in the opinion of GM-DI, PLASTI-LINE demonstrates an inability to
meet the established time periods, GM-DI shall allow PLASTI-LINE a period of
time which, in the opinion of GM-DI, is suffcient to correct such
non-performance. If by the end of this period PLASTI-LINE is unable to correct
the non-performance, GM-DI shall notify PLASTI-LINE of GM- Dl's intent to
exercise its rights under Section 32.01. After such notice, the terms of Section
32.01 shall apply only to orders issued after the date of said notice. In
exercising its rights under Section 32.01, GM-DI shall provide to PLASTI-LINE a
listing of the orders which are subject to the terms of Section 32.01 and shall
allow PLASTI-LINE ten (10) days in which to identify any circumstances, in each
case, that were beyond the control of PLASTI-LINE. Until the validity of such
factors is determined by the parties, the consequential damage fee shall not be
invoked. Thereafter, GM-DI shall have the right to debit the account of
PLASTI-LINE for the amounts determined to be due to GM-DI, as a consequential
damage fee. under the terms of Section 32.01.
32.06 in the event GM-DI must waive collection of any rental payment(s) on
a Dealership Identification Sign because of the failure by PLASTI-LINE to
install, remove, or relocate Dealership Identificat~on Signs, face panels, or
component parts within established time periods, and any extensions thereof,
GM-DI may issue a debit to PLASTILINE 's account in an amount equal to the
amount of the rent reasonably waived by GM-DI based on the number of days
between the date of the purchase order release and the date of completion of the
order, less the established time period.
32.07 GM-DI may elect to invoke either Section 32.01 or Section 32.06 but
only one section may be applied to each order.
<PAGE>
33. CONTRACT ADMINISTRATION
33.01 There are no other agreements or understandings, oral or written,
between the parties affecting this Agreement or the subject matter hereof except
as provided for or referred to herein. The Terms and Conditions appearing on the
face and reverse side of the Purchase Order(s) of GM-DI issued hereunder shall
be construed to the extent possible, as consistent with the provisions of this
Agreement and as cumulative. However, in the event such a construction is
unreasonable, the provisions of this Agreement shall control.
33.02 In the event PLASTI-LINE believes that any instructions issued by
GM-DI during the term o, this Agreement are in conflict with the provisions of
this Agreement, or affect the prices paid by GM-DI to PLASTI-LINE for work
performed under this Agreement, PLASTI-LINE shall promptly notify GM-DI in
writing. Thereafter, should GM-DI determine that a change is required in any of
the provisions of this Agreement or any prices paid to PLASTI-LINE hereunder,
GM-DI shall issue an appropriate amendment which details the necessary change(s)
and/or increased or decreased price(s). In no event, however, shall any such
amendment(s) render void this Agreement; and no claim by PLASTI-LINE for any
change to this Agreement or for any change in the prices paid for work performed
under this Agreement shall be valid unless done in pursuance of a written order
from GM-DI.
34. RIGHT TO AUDIT
PLASTI-LINE shall maintain and keep a proper and adequate system of books
of accounts and records in accordance with generally accepted accounting
principles and business methods so as to show accurately and completely all
expenditures or costs concerning the fabrication. assembly, manufacture,
refurbishment, shipment and erection of Dealership Identihcation Signs and
replacement parts and other activities for and on behalf of GM-DI. PLASTI-LINE
further agrees to permit General Motors Corporation, GM-DI Leasing Corporation,
their accountants, authorized representatives, and others who need to know to
examine and copy upon request during normal business hours all books and records
of PLASTI-LINE in any way pertaining to such expenditures or costs. PLASTI-LINE
shall preserve such records for at least six (6) years after the close of the
calendar year to which they relate. GM-DI shall maintain such information
confidential and shall not disclose any such information to any other person or
entity without Plasti-Line's written consent.
35. AFFIRMATIVE ACTION COMPLIANCE PROGRAM
PLASTI-LINE certifies that it has developed and presently has in full
force and effect a written afffirmative action compliance program in accordance
with the requirements set forth in Title 41, part 60-1 Obligations of
Contractors and Subcontractors, Section 60- 1.40, of the Code of Federal
Regulations, effective July 1, 1968, as amended.
<PAGE>
36. EEO INFORMATION REPORT
PLASTI-LINE certifies that EEO -1, Standard Form 100 promulgated jointly
by the Office of Federal Contract Compliance and the Equal Employment
Opportunity Commission has been and is being filed in accordance with the
requirements set forth in Title 41, part 60-1 Obligations of Contractors and
Subcontractors, Section 60-1.7, of the Code of Federal Regulations, effective
July 1, 1968, as amended.
37. NOTIFICATION OF EQUAL EMPLOYMENT OPPORTUNITY POLICY
It is the policy of GM-DI to extend employment opportunities to qualified
applicants and employees on an equal basis regardless of an individual's age,
race, color, sex, religion or national origin. GM-DI requests that its
subcontractors, vendors and PLASTI-LINE take appropriate action with respect to
implementation of their own equal employment opportunity policies.
38. TERMINATION AT OPTION OF BUYER
38.01 Performance of work under this Agreement or any purchase order
releases may be terminated by GM-DI at its option, in whole or in part, at any
time upon giving thirty (30) days' prior written notice of termination to
PLASTI-LINE . Performance of work under this Agreement or any purchase order
releases may be terminated by PLASTILINE at its option, in whole but not in
part, at any time upon giving thirty (30) days' prior written notice of
termination to GM-DI. Such rights of termination shall exist notwithstanding the
existence of any of the Terms and Conditions of GM-Dl's Purchase Order(s) issued
hereunder.
38.02 After receipt of a notice of termination PLASTI-LINE shall, unless
otherwise directed by GM-DI, immediately terminate all work under this Agreement
or any purchase order releases and shall, unless directed by GM-DI, (1)
terminate all orders and subcontracts relating to the performance of the work
terminated by the notice of termination; (2) settle all claims arising out of
such termination of orders and subcontracts, provided, however, GM-DI shall have
no liability with respect to any penalty or liquidated damages clause in any
subcontract or order between PLASTI-LINE and any third party unless PLASTI-LINE
shall have obtained GM-Dl's prior written approval of any such clause; (3)
transfer title (where applicable) and deliver to GM-DI (when directed to do so
by GM-DI) (i) all completed work which conforms to the requirements of this
Agreement or any purchase order releases and (ii) all reasonable quantities of
work-in-process and materials produced or acquired with respect to the
performance of the work terminated which are of a type and quality suitable for
producing items or services which conform to the requirements of this Agreement
or any purchase order releases and which cannot reasonably be used by
PLASTI-LINE in producing such items or services~for itself or for its other
customers; (4) take all action necessary to protect property in PLASTI-LINE's
possession in which GM-DI has or may acquire an interest; (5) submit to GM-DI
promptly, but not later than ninety (90) days from the effective date of
termination [thirty (30) days in the case of partial termination] its
termination claim; provided, however, that in the event of failure of
PLASTI-LINE to submit its termination claim within such period, GM-DI may
determine, notwithstanding the
<PAGE>
provisions of the following section of this Section, on the basis of information
available to it, the amount, if any, due PLASTI-LINE with respect to the
termination, and such determination shall be final. GM-DI, or its agents, shall
have the right to audit and examine all books, records, facilities, work,
material, inventories, and other items relating to any termination claim of
PLASTI-LiNE .
38.03 After termination by GM-DI under this Section, GM-DI shall pay to
PLASTI-LINE the following amounts without duplication: (1) the price for all
items or services which have been completed in accordance with this Agreement or
any purchase order releases not previously paid for, (2) the actual costs of
work-in-process and raw materials incurred by PLASTI-LINE in furnishing the
items or services under this Agreement or any purchase order releases to the
extent such costs are reasonable in amount and are properly allocable or
apportionable under generally accepted accounting practices to the terminated
portion of this Agreement, including the actual cost of work-in-process and
materials delivered to GM-DI in accordance with the preceding section of this
Section and including the reasonable cost of discharging liabilities which are
so allocable or apportionable; less, however, (i) the reasonable value or cost
(whichever is higher) of any items used or sold by PLASTI-LINE without GM-Dl's
consent, (ii) the agreed value of any items used or sold by PLASTI-LINE with
GM-Dl's consent, and (iii) the cost of any defective, damaged or destroyed work
or material. GM-DI agrees to pay PLASTI-LINE either (x) its actual inventory
costs for acrylic plastic, aluminum extrusions, ballasts, lamps, cladding,
columns, base covers, and sign box frames or (y) the actual amount of such
inventory material which would be required to complete the equivalent of product
orders during the six (3) months prior to termination, whichever is less.
Payments made under this Section shall not exceed the aggregate price(s)
specified in this Agreement, less payments otherwise made or to be made. In no
event shall GM-DI be liable for, and GM-DI shall make no payment to PLASTI-LINE
directly or on account of, claims by PLASTI-LINE's subcontractors, with respect
to loss of anticipated profit, unabsorbed overhead, interest on claims arising
from termination of this Agreement or any purchase order releases, facilities
and equipment rearrangement costs or rental, unamortized depreciation costs, and
general and administrative burden charges, with respect to any items or work
terminated by PLASTILINE pursuant to this Section.
38.04 The provisions of this Section shall not apply if GM-DI cancels this
Agreement or any purchase order releases because of a material breach by
PLASTI-LINE of its obligations hereunder or for any other cause allowed by law
or under this Agreement.
38.05 Upon termination of the Agreement, PLASTI-LINE shall, if requested
by GM-DI deliver the materials, properly prepared and packaged for shipment, to
any location designated by GM-DI, F.O.B. PLASTI-LINE plant dock, in which event
GM-DI shall pay PLASTI- LINE for any costs incurred in preparing the materials
for shipment at PLASTILINE cost.
39. MOST FAVORED NATION
During the contract period, PLASTI-LINE shall offer GM-DI the lowest
prices and highest quality services compared to those offered to others for like
producVmaterial. If PLASTI- LINE does not offer GM-DI the lowest prices compared
to those offered to others, PLASTI-LINE will compensate GM-DI through a rebate
and /or credit.
<PAGE>
40. SPECIFICATIONS OR SOURCING IMPROVEMENTS
40.1 GM-DI expects PLASTI-LINE will utilize modern technology to produce a
"world class" product, i.e., signs competitive in quality with similar product
produced anywhere and at cost competitive with costs of other domestic sign
manufactures.
40.02 In the event GM-DI reasonably determines that PLASTI-LINE is not
competitive as to quality as herein provided, GM-DI shall notify PLASTI-LINE in
writing specifying the reason for this determination that PLASTI-LINE is
non-competitive. PLASTILINE shall have thirty (30) days following such notice,
in which to advise GM-DI of its efforts to achieve "world class" quality. If
after an additional thirty (30) days "world class" quality has not been
achieved, then GM-DI may at its option, terminate this agreement in accordance
with the termination provision of this agreement.
40.03 In an effort to maintain "world class" product GM-DI and PLASTILINE
will coordinate their resources to develop product and service improvements.
Before implementing the improvements and/or perceived cost savings ideas, GM-DI
and PLASTILINE will jointly review the proposed improvements prior to enactment.
40.04 PLASTI-LINE shall notify GM-DI within thirty (30) days of
implementation of any specification changes, sourcing changes or other
improvements in the program resulting in cost savings. Such changes and/or
improvements in the program resulting in cost savings will be shared as follows:
GM-DI recommendations will result in 90% of the savings passed on to GM-DI.
Joint recommendations will result in 50% of the savings passed on to GM-DI.
41. PROTOTYPES
Occasionally, PLASTI-LINE will be asked to provide prototypes. The
prototypes consist primarily of faces although other items may be included.
Pricing for any prototype work will be consistent with the comparable components
of the normal program pricing.
<PAGE>
42. APPLICABILITY TO OTHER AGREEMENTS
GM-DI and PLASTI-LINE agree that, for purposes of the Bailment Agreement
and the Service Agreement, this Agreement shall be deemed to be a "Supply
Agreement" as such is used therein.
43. WAIVERS
The failure of either party hereto at any time to require performance by
the other party of any responsibility or obligation hereuhder shall in no way
affect this full right to require such performance at any time thereafter. Nor
shall the waiver by either party of a breach of any provision hereof constitute
a waiver of any succeeding breach of the same or any such provisions nor
constitute a waiver of the responsibility or obligation itself.
44. REMEDY OF DEFAULT
In the event PLASTI-LINE defaults in the performance of any of its
obligations under this Agreement, or if PLASTI-LINE breaches any of its
covenants contained in this Agreement, GM-DI may, at its option, remedy any such
default or breach and charge PLASTI- LINE therefor.
45. NON-ASSIGNMENT
PLASTI-LINE shall not assign or transfer this Agreement, nor may
PLASTILINE transfer or assign any right or transfer or delegate any obligation
or responsibility under this Agreement without the prior written permission of
GM-DI.
46. GOVERNING LAW
This Agreement shall be governed and construed according to the laws of
the State of Michigan. However, if any provision of this Agreement contravenes
any applicable law, then such provision shall be deemed reformed or deleted, but
only to the extent necessary to comply with any such applicable law, and the
remaining provisions of this Agreement shall remain in full force and effect.
47. NOTICES
Any notices permitted or required to be given by either party under or in
connection with this Agreement shall be in writing and shall be deemed duly
given when personally delivered or sent by mail as follows:
TO SELLER: Plasti-Line Inc
622 East Emory Road
Knoxville, Tennessee 37950
TO BUYER: GM-DI Leasing Corporation
3044 West Grand Blvd.
Detroit, Michigan 48202
<PAGE>
48 TERM
48.01 The effective date of this Agreement is the date first appearing on the
first page hereof. This Agreement shall expire January 1, 2004, except that all
work described on all purchase order releases issued by GM-DI on or before that
date shall be completed by PLASTI-LINE, INC., in due course under this
Agreement. GM-DI shall pay actual freight cost on all orders released prior to
January 1, 2004, but shipped after that date at PLASTI-LINE's Cost without
Mark-Up, provided PLASTI-LINE provides documentation substantiating such freight
costs.
48.02 GM-DI shall issue written instructions to PLASTI-LINE on or before July
1, 2003, indicating GM-Dl's intentions with respect to transactions between the
parties subsequent to the expiration of this contract.
48.03 In the event GM-DI makes known its desire either to let the Agreement
expire, to invite competitive bids, or to negotiate an on-going contract with
PLASTi-LINE, PLASTI-LINE shall then coordinate its inventories accordingly.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement in
duplicate as of the day and year appearing on the first page hereof.
PLASTI-LINE, INC.
In the presence of
/s/ Craig Rohde By: /s/ James R. Martin
Witness Chief Executive Officer
/s/ Craig Rohde Attest: /s/ Mark J.Deuschle
Witness Vice-President of Finance
GM-DI LEASING CORPORATION
In the presence of:
/s/ Kristen M. Davis By: /s/ Matt Cullen
Witness President of GM-DI
/s/ J. Lagustrom Attest: /s/ Eric O. Campbell
Witness Asst. Secretary
(LOGO and Cover Page)
Plasti-Line, Inc.
============
1996
============
Annual Report
<PAGE>
96
Our Mission
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.
Plasti-Line, Inc.
<PAGE>
Plasti-Line, Inc. Is an industry leader providing a complete range of corporate
identity 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.
<PAGE>
(Graphs excluded)
<TABLE>
<CAPTION>
Financial Highlights (1) (2) (in thousands, except per share data)
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net sales ......................... $130,876 $103,247 $77,309 $90,362 $ 83,220
Income (loss) before taxes
and cumulative effect
of accounting change ............. 4,929 2,202 (5,361) 4,643 4,006
Income (loss) before
cumulative effect
of accounting change ............. 3,148 1,397 (4,837) 2,854 2,385
Cumulative effect of
accounting change ................ - - - - (648)
- --------------------------------------------------------------------------------
Net income (loss) ................. $ 3,148 $ 1,397 $(4,837) $ 2,854 $ 1,737
- --------------------------------------------------------------------------------
Income (loss) per share
before cumulative effect
of accounting change ............. $ .83 $ .38 $(1.31) $ .77 $ .65
Cumulative effect of
accounting change ................ - - - - (.18)
- --------------------------------------------------------------------------------
Net income (loss) per share ....... $ .83 $ .38 $ (1.31) $ .77 $ .47
- --------------------------------------------------------------------------------
Working capital .................... $25,753 $33,112 $ 23,349 $ 18,713 $ 17,554
Total assets ....................... 67,244 77,150 51,450 49,522 53,424
Long-term debt less
current maturities ............... 12,220 23,575 12,004 6,536 7,960
Stockholders' equity ............... 27,202 23,891 22,353 27,081 24,084
</TABLE>
1 Please refer to Notes to Consolidated Financial Statements contained herein.
2 The Company has paid no dividends during the above periods.
3 Included $3.9 million write-off of goodwill and $2.4 million restructuring
charge. See Notes 4 and 5 Consolidated Financial Statements.
<PAGE>
(Customer Logo Page)
<PAGE>
To Our Stockholders
I am pleased to report the continued strengthening our the results for our
Company. For 1996, sales were $131 million, up $28 million or 27%, from the
prior year. This increase represented the second consecutive year of greater
than 25% sales growth. In addition, our earnings more than doubled from the
prior year level to $.83 per share. Finally, our balance sheet position improved
dramatically with a $7 million, or 22%, reduction in our net working capital
despite the growth in the business. I am proud of each of these accomplishments
and believe that they provide a solid foundation for future growth.
In addition to our financial accomplishments during 1996, our Company made great
strides in enhancing its marketing strategy and in improving its internal
operations. I will address each of these in turn.
Let me begin with the progress we have made in transforming the Company into a
leading retail communications company. First, we have aligned our business
management and sales capability along market lines. For example, we now have a
Financial Services Strategic Business Unit that focuses on all aspects of the
communication needs of our bank customers, from in-house merchandising kiosks,
to creative ATM surround solutions, to exterior signage requirements. We believe
that this market-oriented approach will better enable us to understand and
fulfill the varying needs of each of the major retail markets we serve. Second,
we have placed a renewed emphasis on our research and development capabilities.
We believe that a more focused, market-driven approach to this process will
result in creative solutions to the problems and needs of our customers.
Finally, we have taken several steps to add to the in-store sales and marketing
resources of Design Performance Group, our retail design and merchandising
services firm, in order to capitalize on the in-store opportunities that exist
with both our customers and retailers in general. The opportunities created by
our in-store and exterior signage sales forces working together are expected to
provide incremental future revenues.
From an operating standpoint, the Company has made considerable progress over
the past several years, beginning with the business re-engineering we started in
1994. The investments in the Company's infrastructure have been made to support
future growth, to reduce costs, and, most importantly, to improve the speed with
which we fulfill our customer's demands. By being the most responsive supplier
to our customers, we will achieve a significant competitive advantage. Let me
provide you with some examples of the progress we made towards these goals in
1996. First, during the year, we began a process to centralize the management of
many key operating functions (for example customer service) to allow for
improved responsiveness and lower costs by more standardized and efficient
processes. Second, at our manufacturing facilities, we have made significant
progress toward shortening manufacturing lead-times by migrating fully to a
make-to-order environment. This step has allowed us to improve our capacity
utilization, lower our inventory investment, and improve our response to our
customer's need. These are just a couple of the steps we are taking in our
continuous improvement process aimed at providing differentiated value-added
service to our customers.
In addition, I would like to welcome F. Joseph Brang to the management team as
our new Vice President of Operations. Joe brings many years of progressive
manufacturing experience to our Company, and we are confident that his
contribution will continue to improve our manufacturing and technical expertise.
I am optimistic about our Company's future and am confident that we will
continue to capitalize on the opportunities that our markets have to offer.
Thank you for your support.
/s/ James R. Martin
James R. Martin
Chairman and Chief Executive Officer
<PAGE>
Building For A New Retailing Era
The Market
Retailing today is an extremely dynamic and rapidly changing industry. The pace
of change is accelerating due to emerging customer shopping trends, competitive
forces, and the technological explosion. The retail industry is entering an
unprecedented era of upheaval, turmoil, progress and uncertainty because change
is not only occurring at a faster rate but also is less predictable,
understandable and controllable due to the complexity of the market dynamics.
This seemingly turbulent state is being primarily driven by the impact of
changing shopping habits and practices and artificial intelligence.
In this mature, yet fractionated marketplace, the shifting within segments is
constant as undifferentiated retail concepts perish and new, more meaningful
ones take their place. Store and product merchandising displays and decor are
often altered for each merchandising season, placing an exacting premium on
speed- to-market as well as innovation. In this hostile environment, all aspects
of store marketing communications must be anticipated, integrated, well-planned
and implemented, well within the time parameters of this shrinking horizon for
change.
Realizing the fast-changing nature of the retail communications market, our goal
is to become a valuable partner for retail and manufacturing customers by
helping them plan and implement their identity and merchandising programs.
<PAGE>
The Company in 1996
In 1996, Plasti-Line focused on several initiative that collectively put us in a
noticeably superior position relative to our competition. The primary focal
points were, and continue to be, providing superior market- driven customer
service and innovative retail marketing communications techniques that
significantly enhance retailer and manufacturer branding and merchandising at
the store. These initiatives are interrelated and yield a total quality
impression of superiority. Our results indicate that these efforts closely match
our company to the needs of retailers and manufacturers.
Project Management
Without question, our project management expertise is the glue that binds our
entire business together. In order to ensure the Company's competitive
advantage, a substantial investment was made in 1995 in a technology based
system to link manufacturing, sales, engineering and design, and service
capabilities. This integrated network provided us with significant dividends in
1996 in terms of improved customer response time, increased ability to handle
national or multi-regional quick turn assignments, better linkage between our
production facilities, more geographic flexibility for customers, significantly
improved product quality, and heightened production efficiencies. We are
continuing to make refinements and enhancements to this network to even better
match it to evolving customer needs. This effort will place us in the forefront
of all competitors for the next decade in terms of customer satisfaction.
<PAGE>
Manufacturing
Major investments in our facilities, equipment, and systems catapulted our
production effectiveness to new heights. The acquisition of the assets of the
former Carter-Miot Engineering in 1995 significantly broadened our product line
and placed us in a favorable position to service the growing financial services
market. Computerized laser cutting machinery enabled the company to offer
quintessential product quality. Equipment advances like these have resulted in
new products that deliver innovative communication solutions.
Additionally, the growth and development of Plasti-Line West has greatly
improved our ability to serve West Coast markets in a timely manner. Our
Florence, Kentucky plant is performing at record levels, and our Knoxville,
Tennessee plant has installed systems and procedures that are becoming the
standard for the standard for the Company.
The four plant facilities are being joined through an advanced computer network
which enables us to efficiently schedule customer assignments and constantly
monitor production status and inventory levels. This network has not only
improved our production status and inventory levels. This network has not only
improved our production speed but more importantly has reduced operating costs
and is helping us greatly improve our ability to reliably and quickly serve our
customers.
Research and Development
A focused effort to improve our product offering required dedication to
improving our Research and Development function. A concerted effort was
<PAGE>
undertaken in 1996 to invest in the people and systems that would allow us to
develop products that better fulfill customer needs. This 1996 initiative is
still underway, and early signs are that it will enable us to make a quantum
leap in terms of offering a new generation of products that are distinctive,
customer focused and add to our total offering, well ahead of competition.
Market-focused Sales and Project Management Units
One of the most important changes in 1996 was the decision to align our
production management and sales staff by key market segments. This initiative
will position us to better anticipate our customer needs and respond in a
superior fashion to the demands of similar customers within segments. Our
knowledge and experienced sales and project management staff provides the
greatest breadth of selling and customer service capabilities in the industry.
From technical "know-how" to the conceptual arena, the Plasti-Line organization
has created a standard of excellence that positions the company as a business
partner committed to acting with integrity and fully contributing to achieve
superior business results. Plasti-Line has the selling and service force to
provide total solution programs to our clients targeted at their goals and
objectives.
The approach will enable us to build and leverage our vast knowledge about
markets and to work proactively with customers on these valuable insights. The
market-focused units are Automotive, Financial Services, Food Service, General
Retail, Petroleum, and Merchandising Design.
<PAGE>
Automotive
Our long standing, dominant position in this segment was enhanced in 1996 with
the acquisition of several new customers from the 1995 Carter-Miot Engineering
acquisition, namely Ford/Lincoln Mercury, Mercedes, and Subaru. Our ability to
be involved in a wide variety of automotive identity and merchandising programs
has resulted in sharp revenue gains and also broadened our sales, service and
manufacturing knowledge base about emerging customer needs. The key to future
performance is in using our knowledge and resources to better solve customer
problems in retail site marketing and merchandising areas.
Food Service
The share position in this segment was strengthened in 1996 due to growth among
our large existing chain accounts (McDonald's, Burger King, Taco Bell, KFC) and
new concepts like Boston Market. Performance was also positively affected by our
menu products, especially the new drive through items. Our research and
development efforts identified several new menu products that were successfully
test marketed in 1996. The expansion and constant improvement of our product
line will continue to lead to robust growth.
Financial Services
Consolidation activity in this market segment in 1996 was exceptionally high and
was responsible for our substantiated share gains. Our participation in the
Wells Fargo and NationsBank acquisitions of First Interstate and Boatment's
respectively, moved us into a leadership position within the segment.
Additionally, an acquisition expanded our bank product offering and customer
base in Financial Services. We are projecting continued strong growth in the
next few years due to new product introductions and continued industry
consolidation.
<PAGE>
General Retail
This is a relatively new segment for the company and one that shows all the
vital signs of being a lucrative segment over the long-term. The segment offers
us an opportunity to market our extensive exterior and interior product lines
for both brand awareness and merchandising. Growth should be further propelled
by mergers and acquisitions within the retail arena and move toward innovative
retail environments designed to promote increased shopping frequency.
Petroleum
We are increasing our level of focus in this market segment. It is an attractive
segment because of its heightened retail orientation as food and additional
service offerings are added. Petroleum companies are placing more emphasis on
their total offering, which will call for a higher level of quality retail
communications at the point of sale.
Merchandising Design
Design Performance Group, our retail design and merchandising services firm,
exhibited strong performance across all market segments. This strength appears
to be linked to increased retailers and manufacturer's focus on point of sale
activity. Entering 1997, two accounts, Ameritech and Midas, have put us in a
strong position. We will continue to broaden and expand our strategic marketing
capabilities in this area by adding key resources that are complimentary to our
strong customer orientation.
<PAGE>
(Customer Logo Page)
<PAGE>
Consolidated
Statements of
Operations
<TABLE>
<CAPTION>
Fiscal Years Ended
(in thousands, except per share data)
Dec. 29, Dec. 31, Jan. 1,
1996 1995 1995
- --------------------------------------------------------------------------------
Revenue
<S> <C> <C> <C>
Net sales ........................... $ 130,876 $ 103,247 $ 77,309
Other income ........................ 303 571 853
- --------------------------------------------------------------------------------
Total revenue .................... 131,179 103,818 78,162
Cost and expenses
Cost of sales ....................... 107,956 85,114 63,060
Selling, general and administrative . 16,701 14,979 13,349
Interest expense, net ............... 1,593 1,040 712
Goodwill write-off .................. - - 3,986
Provision for restructuring costs ... - - 2,416
Provision for pension curtailment ... - 483 -
- --------------------------------------------------------------------------------
Total cost and expenses .......... 126,250 101,616 83,523
- --------------------------------------------------------------------------------
Income (loss) before (provision)
benefit for income taxes ......... 4,929 2,202 (5,361)
(Provision) benefit for income taxes (1,781) (805) 524
- --------------------------------------------------------------------------------
Net income (loss) ................... $ 3,148 $ 1,397 $ (4,837)
================================================================================
Net income (loss) per share ......... $ .83 $ .38 $ (1.31)
================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
Consolidated
Balance
Sheets
<TABLE>
<CAPTION>
(in thousands of dollars, except par values)
1996 1995
- --------------------------------------------------------------------------------
Assets
Current assets
<S> <C> <C>
Cash ..............................................$ 10 $ 10
Accounts receivable, net .......................... 22,870 27,050
Inventories ....................................... 27,331 31,564
Prepaid expenses .................................. 754 1,080
Deferred income taxes ............................. 1,337 1,876
- --------------------------------------------------------------------------------
Total current assets ........................... 52,302 61,580
Property and equipment, net ....................... 13,260 13,854
Goodwill .......................................... 1,403 1,508
Other assets ...................................... 279 208
- --------------------------------------------------------------------------------
Total assets ...................................$ 67,244 $ 77,150
================================================================================
Liabilities and Stockholders' Equity
Current liabilities
Current portion of long-term debt .................$ 745 1,723
Accounts payable .................................. 8,096 14,660
Accrued liabilities ............................... 6,116 5,704
Income taxes currently payable .................... 83 708
Customer deposits and deferred revenue ............ 11,509 5,673
- --------------------------------------------------------------------------------
Total current liabilities ...................... 26,549 28,468
Long-term debt .................................... 12,220 23,575
Deferred income taxes ............................. 1,196 1,123
Deferred liabilities .............................. 77 93
Commitments and contingencies (Notes 7 and 12)
Stockholders' equity
Preferred stock - $.001 par value, 5,000,000 shares
authorized, none issued and outstanding ........ - -
Common stock - $.001 par value, 20,000,000 shares
authorized, issued and outstanding:
1996: 3,803,414 1995: 3,779,157 4 4
Additional paid-in-capital ........................ 2,859 2,729
Notes receivable, common stock .................... (136) (169)
Retained earnings ................................. 24,475 21,327
- --------------------------------------------------------------------------------
Total stockholders' equity ..................... 27,202 23,891
- --------------------------------------------------------------------------------
Total liabilities and stockholders' equity .....$ 67,244 $ 77,150
================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
Consolidated
Statements of
Stockholders' Equity
<TABLE>
<CAPTION>
Fiscal Years Ended
(in thousands of dollars)
Dec. 29, Dec. 31, Jan. 1,
1996 1995 1995
- --------------------------------------------------------------------------------
Common stock
<S> <C> <C> <C>
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 ......... $ 2,729 $ 2,571 $ 2,484
Sale of common stock to
employees and directors, ........... 130 158 87
1996: 6,000 shares
1995: 30,000 shares
1994: 11,000 shares
- --------------------------------------------------------------------------------
Balance at end of year ................ $ 2,859 $ 2,729 $ 2,571
================================================================================
Notes receivable, common stock
Balance at beginning of year ......... $ (169) $ (152) $ (174)
Issuance of notes receivable
common stock ........................ - (99) (28)
Payments of notes receivable,
common stock ........................ 33 82 50
- --------------------------------------------------------------------------------
Balance at end of year ................ $ (136) $ (169) $ (152)
================================================================================
Retained earnings
Balance at beginning of year $ 21,327 $ 19,930 $ 24,767
Net income (loss) ..................... 3,148 1,397 (4,837)
- --------------------------------------------------------------------------------
Balance at end of year ................ $ 24,475 $ 21,327 $ 19,930
================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Fiscal Years Ended ........................ Dec. 29, Dec. 31, Jan. 1,
(in thousands of dollars) ................. 1996 1995 1995
- --------------------------------------------------------------------------------
Cash flows from operating activities:
<S> <C> <C> <C>
Net income (loss) ......................... $ 3,148 $ 1,397 $ (4,837)
Adjustments to reconcile net income
(loss) to net cash provided by
(used in) operating activities
Depreciation and amortization ............. 2,262 1,710 1,875
(Gain) loss on disposal of fixed assets .. - 82 138
Provision for losses on accounts receivable 332 206 121
Deferred tax provision (benefit) .......... 612 129 (694)
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 ............................ 3,848 (10,058) (2,497)
Inventories ............................ 4,233 (9,959) (2,637)
Prepaid expenses and other assets ...... 206 161 (756)
Accounts payable ....................... (6,564) 7,579 1,696
Accrued liabilities .................... 412 1,202 (519)
Income taxes payable ................... (625) 754 (473)
Deferred liabilities ................... 5,820 313 (838)
- --------------------------------------------------------------------------------
Net cash provided by (used in)
operating activities) ................... 13,684 (6,001) (3,019)
- --------------------------------------------------------------------------------
Cash flows from investing activities:
Proceeds from sales of fixed assets ...... - 23 1
Proceeds from sales of investments ....... - 593 400
Investment in marketable securities ....... - - (499)
Capital expenditures ...................... (1,514) (2,755) (2,460)
Purchase of Plasti-Line Columbia,
Inc. assets ............................. - (4,550) -
- --------------------------------------------------------------------------------
Net cash used by investing activities ..... (1,514) (6,689) (2,558)
- --------------------------------------------------------------------------------
Cash flows from financing activities:
Net borrowings (payments) under
line of credit ......................... (11,586) 13,295 6,213
Repayments of long-term debt .............. (747) (746) (745)
Sale of common stock ...................... 130 59 59
Payments of notes receivable,
common stock .......................... 33 82 50
- --------------------------------------------------------------------------------
Net cash provided by (used in)
financing activities .................. (12,170) 12,690 5,577
- --------------------------------------------------------------------------------
Net increase (decrease) in cash ........... - - -
Cash, beginning of year ................... 10 10 10
- --------------------------------------------------------------------------------
Cash, end of year ......................... $ 10 $ 10 $ 10
================================================================================
Supplemental disclosures of cash flow
information:
Interest paid ............................. $ 1,639 $ 937 $ 799
Income taxes paid ......................... $ 1,894 $ 53 $ 786
================================================================================
Non-cash transactions:
Amortization of compensation from
restricted stock ...................... $ 54 $ 1 $ 35
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.
<PAGE>
Notes to
Consolidated
Financial
Statements
1 Description of Business
Plasti-Line, Inc. (the Company) is a publicly held company whose principal
business is the marketing, production, and installation of interior and exterior
sign and point-of-purchase marketing products for retailers and manufacturers.
2 Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of the Co mpany and
its wholly-owned subsidiaries, American Sign & Marketing Services, Inc.
(American Sign) and Plasti-Line Columbia, Inc. (Columbia), formerly known as
Carter-Miot, Inc. 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.
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.
The following represent the useful lives over which the assets are depreciated:
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 currently. 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.
<PAGE>
2 Summary of Significant Accounting Policies - continued
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 3,812,000, 3,714,000, and
3,695,000 for December 29,1996, December 31, 1995, and January 1, 1995,
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.
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 Columbia subsidiary,
certain operating assets of a corporation located in Columbia, South Carolina.
The total 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. This
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 Columbia, principally accounts receivable, inventory, and
machinery and equipment. The consideration paid exceeded the underlying fair
values of the separately identifiable assets of Columbia 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
Columbia had been acquired at the beginning of the respective periods are as
follows:
<TABLE>
<CAPTION>
In thousands of dollars except per share data
1995 1994
- --------------------------------------------------------------------------------
<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 pro forma 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.
<PAGE>
4 Goodwill
Goodwill, as of December 29, 1996, is composed of $1,521,000 relating to the
1995 purchase of Columbia, net of accumulated amortization of $118,000.
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.
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 $162 thousand for costs relating to disposal of the
Centerville facility (Note 12).
6 Supplemental Consolidated Financial Statement Data
<TABLE>
<CAPTION>
Dec. 29, Dec. 31,
(in thousands of dollars) 1996 1995
- --------------------------------------------------------------------------------
Accounts receivable, net consists of:
<S> <C> <C>
Accounts receivable ..........................................$ 23,144 $ 27,769
Less: allowances for doubtful accounts ...................... (274) (719)
- --------------------------------------------------------------------------------
Total accounts receivable, net ...............................$ 22,870 $ 27,050
================================================================================
Inventories consist of:
Raw materials ...............................................$ 6,314 $ 7,330
Work-in-process .............................................. 4,397 4,289
Finished goods ............................................... 20,006 22,008
- --------------------------------------------------------------------------------
Total inventory (FIFO) ....................................... 30,717 33,627
- --------------------------------------------------------------------------------
LIFO reserve ................................................. (3,386) (2,063)
- --------------------------------------------------------------------------------
Total inventory (LIFO) .......................................$ 27,331 $ 31,564
================================================================================
Property and equipment consists of:
Land .........................................................$ 1,177 $ 1,177
Buildings and improvements ................................... 12,690 12,492
Machinery and equipment ...................................... 18,448 17,138
- --------------------------------------------------------------------------------
Total property and equipment, gross .......................... 32,315 30,807
Less: accumulated depreciation .............................. (19,055) (16,953)
- --------------------------------------------------------------------------------
Total property and equipment, net ........................... $ 13,260 $ 13,854
================================================================================
</TABLE>
<PAGE>
7 Long-Term Debt
Long-term debt consists of the following: Dec. 29, Dec. 31,
(in thousands of dollars) 1996 1995
- --------------------------------------------------------------------------------
Knox County Industrial Revenue Bonds
$2.15 million bearing interest at a variable rate
(4.15% at December 29, 1996, and 5.05% at December 31, 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. $ 3,990 $ 4,670
Revolving Credit Facility:
Up to the amount of $19 million expiring on June 30, 1998
The line bears interest at a variable rate (8.413% at December
29, 1996, and 7.935% at December 31, 1995), collateralized by
accounts receivable and inventory ............................ 8,391 16,000
Term Note:
Up to the amount of $5 million. The line bears interest at a
variable rate (7.935% at December 31, 1995), collateralized by
accounts receivable and inventory. Expired February 29, 1996 - 3,978
Industrial Revenue Bonds of American Sign:
Interest payable quarterly, at a variable rate (7.4% at
December 29, 1996, and 7.9% at December 31, 1995). Principal
of $16.25 thousand payable quarterly through December 1, 2005,
collateralized by Florence, Kentucky real property ........... 584 650
Less current maturities ...................................... (745) (1,723)
- --------------------------------------------------------------------------------
Total long-term debt .........................................$ 12,220 $ 23,575
================================================================================
The Revolving Credit Facility contains various covenants including restricting
other borrowings, the payment of dividends, the sales 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, and cash flow ratios, as well as a minimum net worth.
<PAGE>
Maturities of long-term debt in each of the next five years are as follows (in
thousands of dollars):
1997 $ 745
1998 9,136
1999 2,695
2000 65
2001 65
Thereafter 259
$ 12,965
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 noncancelable lease terms in excess of one
year (in thousands of dollars):
1997 $ 371
1998 371
1999 213
2000 73
2001 6
$ 1,034
Operating lease rental expense was $1,088,000, $828,000, and $658,000 for 1996,
1995, and 1994, respectively.
8 Income Taxes
Components of income tax provisions (benefit) are as follows:
<TABLE>
<CAPTION>
Dec. 29, Dec. 31 Jan. 1,
(in thousands of dollars) ................... 1996 1995 1995
- --------------------------------------------------------------------------------
Current tax provisions:
<S> <C> <C> <C>
Federal ...............................$ 1,011 $ 608 $ 136
State .................................... 158 68 34
- --------------------------------------------------------------------------------
1,169 676 170
Deferred income taxes related to:
Depreciation ............................. 73 161 (54)
Recognition of bad debts ................. (3) (48) (34)
Horizon write-off ........................ 270 369 (640)
Financial reserves ....................... 212 (86) (129)
Maintenance revenue recognition .......... (12) (1) 31
Pension liability ........................ 28 (238) -
Other items .............................. 44 (28) 132
- --------------------------------------------------------------------------------
Total .................................$ 1,781 $ 805 $(524)
================================================================================
</TABLE>
<PAGE>
8 Income Taxes - continued
The primary components of the deferred tax assets and (liabilities) are as
follows:
<TABLE>
(in thousands of dollars)
Dec. 29, Dec. 31,
1996 1995
- --------------------------------------------------------------------------------
Current:
<S> <C> <C>
Inventory valuation ..................................$ 389 $ 479
Workers' compensation
and other financial reserves ....................... 149 232
Vacation reserve ..................................... 196 238
Deferred sales ....................................... 94 126
Plant close reserve .................................. 64 64
Environmental reserve ................................ - 36
Horizon write-off .................................... - 271
Other financial reserves ............................. 463 420
Pension asset (liability) ............................ (18) 10
- --------------------------------------------------------------------------------
Total current ........................................ 1,337 $ 1,876
================================================================================
Long-term:
Property and equipment ............................. $(1,236) $(1,123)
================================================================================
</TABLE>
The differences between the U.S. federal statutory tax rate and the Company's
effective tax rate are as follows.
<TABLE>
<CAPTION>
Dec. 29, Dec. 31, Jan.1,
(in thousands of dollars) ...................... 1996 1995 1995
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Marginal federal tax rate ...................... 34.0% 34.0% (34.0)%
State income taxes net of federal .............. 3.4 2.7 (.6)
Non-deductible expenses of
acquired companies .......................... - - 26.7
Other .......................................... (1.3) (.1) (1.9)
- --------------------------------------------------------------------------------
Effective rate ................................. 36.1% 36.6% (9.8)%
================================================================================
</TABLE>
<PAGE>
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 550,000 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 three to ten if certain earnings per share measures are met. In
addition, 15,000 restricted shares of stock were purchased by certain key
managers in 1995. These shares, purchased at $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 $54,000, $1,000, and $35,000 was
recognized for restricted shares awarded and purchased in 1996, 1995, and 1994
respectively.
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>
Shares Price Per Share
- --------------------------------------------------------------------------------
<S> <C> <C>
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
Granted 52,000 8.25-12.00
Exercised (6,000) 5.00- 8.00
Canceled (25,500) 5.25-12.00
- --------------------------------------------------------------------------------
Outstanding as of December 29, 1996 237,500 4.75-12.00
================================================================================
</TABLE>
In addition, on January 1, 1995, the Company implemented the 1995 Equity
Compensation Plan for Non-Employee Directors. Under this plan, 150,000 shares of
common stock are available for issue. In 1996, directors of the Company earned
awards of 5,621 shares of common stock which represented 50% of the value of
their director fees for the year.
10 Statement 123, "Accounting for Stock-Based Compensation"
Plasti-Line, Inc. has elected to continue follow ing Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees (APB 25) and related
Interpretations in accounting for its 1991 Stock Incentive Program (Key
Employees and Directors) rather than the alternative fair value accounting
provided for under FASB Statement 123, "Accounting for Stock-Based
Compensation." Under APB 25, because the exercise price of the Company's stock
options equals the market price of the underlying stock on the date of the
grant, no compensation expense is recognized in the accompanying financial
statements. Pro-forma information regarding net income and earnings per share is
required by Statement 123, and has been determined as if the Company had
accounted for its stock options under the fair value method of that Statement.
The Company has determined that the difference between historical results and
such pro forma information is inconsequential.
<PAGE>
11 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 $100 thousand in 1996, $45 thousand in 1995, and $0 in
1994. 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 makes an annual contribution equal to one
quarter of the participants' contributions up to a maximum Company contribution
equal to six percent of the participant's compensation. The total contributions
were $108 thousand in 1996, $83 thousand in 1995, and $59 thousand in 1994. 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. 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. The weighted average discount rate used in
determining the actuarial present value of the projected benefit obligation was
7.5% as of December 29, 1996, and 7.0% at December 31, 1995. The expected
long-term rate of return on assets was 7.5% at December 29, 1996 and 7.0% at
December 31, 1995. Net pension cost included the following components:
<TABLE>
<CAPTION>
Dec. 29, Dec. 31, Jan. 1,
(in thousands of dollars) 1996 1995 1995
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost $ - $ 87 $ 91
Interest cost 274 262 251
Actual return on plan assets (604) (1,042) 3
Net amortization and deferral 257 837 (189)
- --------------------------------------------------------------------------------
Net pension cost $ (73) $ 144 $ 156
================================================================================
</TABLE>
<PAGE>
11 Employee Benefit Plans - continued
The following table sets forth the pension plan's funded status and amount
recognized in the Company's balance sheet.
<TABLE>
<CAPTION>
Dec. 29, Dec. 31,
(in thousands of dollars) 1996 1995
- --------------------------------------------------------------------------------
Actuarial present value of
benefit obligations:
<S> <C> <C>
Vested $ 3,745 $ 3,792
Non-vested 158 221
- --------------------------------------------------------------------------------
Accumulated and projected 3,903 4,013
Plan assets at fair value, primarily
listed stocks and bonds 5,029 4,593
- --------------------------------------------------------------------------------
Plan assets above accumulated
benefit obligation 1,126 580
Unrecognized net gain from past experience
different from that assumed and effects of
changes in assumptions (1,079) (607)
- --------------------------------------------------------------------------------
Total pension asset (liability) $ 47 $ (27)
================================================================================
</TABLE>
On January 1, 1996, the Company provided hourly workers at the Knoxville
location with a defined contribution plan, the Knoxville Union 401(k) Plan.
Under this plan the Company contributes 10 cents an hour for each hour worked up
to a maximum of 2,080 hours per year. The Company contributed $90,000 to this
plan in 1996.
12 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 certain debt obligations. 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.
Sales to one automotive customer were 22%, 19%, and 16% of the Company's sales
in 1996, 1995, and 1994, respectively. Sales to a fast food customer were 11% of
sales in 1996. 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
11% of the Company's 1996 sales expired. The Company has since been awarded a
new, long-term contract with this customer, which extends through January 1,
2004.
In order to alleviate excess manufacturing capacity, the Company closed its
Centerville, Tennessee, manufacturing facility in 1992. The December 29, 1996
and December 31, 1995 balance sheets include an accrual of $392 thousand and
$405 thousand, respectively, which reflects the remaining disposal costs of the
Centerville facility.
<PAGE>
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 29, 1996 and December 31, 1995, and the
related consolidated statements of operations, changes in stockholders' equity,
and cash flows for each of the three years in the period ended December 29,
1996. 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 29, 1996 and December 31, 1995 and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 29, 1996 in conformity with generally
accepted accounting principles.
Coopers & Lybrand L.L.P.
Knoxville, Tennessee
February 18, 1997
<PAGE>
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Results of Operations
Fiscal Year 1996 Compared to Fiscal Year 1995
Revenue:
Total revenue increased $27.4 million (26.4%), from $103.8 million to $131.2
million, due to higher sales volumes across all business including a full year
of Plasti-Line Columbia, Inc. (Columbia) sales in 1996 as compared to two months
in 1995. Contributing to the increased volume were higher sales at Plasti-Line
East, the Company's Knoxville and Florence locations ($13.5 million), primarily
with automotive and fast food customers, as well as sales increases at
Plasti-Line West ($2.3 million), Design Performance Group ($2.1 million), and
Columbia ($9.5 million). Sales decreased in the fourth quarter of 1996 by $3.8
million as compared to the same period in 1995. Fourth quarter 1995 sales
included $11.3 million for a major sign re-image that was completed for one of
Plasti-Line East's bank customers.
Costs and Expenses:
Income before taxes and interest was $6.5 million as compared to $3.2 million in
1995. The improvement in income was due to an increase in gross profit ($4.8
million) from higher sales. Gross profit as a percent to sales was relatively
flat at 17.5% and 17.6% in 1996 and 1995, respectively. Partially offsetting the
higher gross profit was an increase in selling, general, and administrative
costs ($1.7 million) caused primarily by the increased volumes. Selling,
general, and administrative expenses as a percentage of sales improved from
15.0% in 1995 to 12.8% in 1996, partially due to both the benefits of reduced
costs and improved efficiency as a result of the business re-engineering
completed in 1995, as well as increased sales volumes. Selling, general, and
administrative costs in 1995 also included $1.5 million in costs associated with
the Company's business re-engineering initiative which was completed in the
fourth quarter of 1995. Interest expense of $1.6 million increased $553 thousand
from the prior year. Higher working capital related to increased volumes, caused
the increase.
Income Taxes:
The Company's effective tax rate for 1996 was only slightly lower than 1995 at
36.1% of pre-tax income as compared to 36.6% in 1995.
Other: The Company's current supply contract with General Motors expired
December 31, 1995. The Company has since been awarded a new, long-term contract
with this customer, which extends through January 1, 2004.
Fiscal Year 1995 Compared to Fiscal Year 1994
Revenue:
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, as well as
sales increases at Plasti-Line West ($4.7 million), Design Performance Group
($2.9 million), and our newest subsidiary, Columbia ($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.
Costs and Expenses:
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
<PAGE>
Management's Discussion and Analysis of Financial Condition and Results of
Operations - continued
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 Columbia subsidiary as well as higher working capital
related to fourth quarter volumes, were responsible for the increase.
Income Taxes:
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.
Liquidity and Capital Resources
Liquidity:
The Company has met its capital requirements with funds generated from
operations and from the Company's $19 million Revolving Credit Facility (line of
credit).
Funds of $13.7 million were provided by operating activities during 1996
primarily as a result of decreases in net receivables and inventories, as well
as increased deferred liabilities. The increased funds provided by operating
activities were used to pay down the term note and line of credit from $20.0
million in 1995 to $8.4 million in 1996. The Company had working capital of
$25.8 million in 1996 as compared to $33.1 million in 1995. The reduction was
primarily the result of reduced receivables and inventories. Investing
activities relating to capital expenditures used $1.5 million in 1996. Financing
activities used $12.2 million, primarily to reduce the line of credit ($11.6
million). The Company's future capital expenditures will relate 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
customer's construction schedules and their pattern of sign purchases. Sales
have normally accelerated in the second, third, and fourth quarters
corresponding with accelerating construction schedules.
<PAGE>
Summary of Quarterly Results of Operations
(in thousands, except per share data)
<TABLE>
<CAPTION>
Year ended December 29, 1996:
First Second Third Fourth Year
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales $30,142 $32,310 $33,960 $34,464 $130,876
Gross profit 4,983 5,337 6,163 6,437 22,920
Net income 458 677 1,038 975 3,148
Net income
per share .12 .18 .27 .26 .83
Price range of common stock as reported by Nasdaq:
High 8.750 9.000 10.000 14.500 14.500
Low 6.750 8.000 7.500 9.000 6.750
Year ended December 31, 1995:
First Second Third Fourth Year
- --------------------------------------------------------------------------------
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 10.875 8.750 7.750 6.250 10.875
Low 7.750 7.250 5.250 4.750 4.750
</TABLE>
<PAGE>
Common Stock Information and Dividend Policy
Plasti-Line, Inc. Common stock trades on the Nasdaq National Market tier of The
Nasdaq Stock Market under the Symbol: SIGN. As of February 24, 1997, there were
160 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.
Board of Directors
Howard L. Clark, Jr.
Vice-Chairman
Lehman Brothers, Inc.
James G. Hanes, III
Investor
James A. Haslam, III
Chief Executive Officer
Chief Operating Officer
Pilot Oil Corporation
Donald F. Johnstone
President
Chief Executive Officer
Whittle Communications, L.P.
James R. Martin
Chairman
Chief Executive Officer
Plasti-Line, Inc.
J. Hoyle Rymer
President
JHR Company
James F. Smith, Jr.
Chairman of the
Executive Committee
First American Corporation
H. Mitchell Watson, Jr.
President
Sigma Group of America
Executive Officers
James R. Martin
Chairman
Chief Executive Officer
John D. Burke
Executive Vice-President
Chief Marketing Officer
Mark J. Deuschle
Vice-President - Finance
Chief Financial Officer
Treasurer/Secretary
F. Joseph Brang
Vice-President - Operations
Kathryn Coleman Wood
Vice-President - Human Resources
Independent Accountants
Coopers & Lybrand, L.L.P.
800 S. Gay Street, Suite 1600
Knoxville, Tennessee 37929
Stock Transfer Agent
Wachovia Bank & Trust Company
P.O. Box 3001
Winston-Salem, North Carolina 27102
Form 10-K
Additional information regarding Plasti-line, Inc., including copies of Form
10-K 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, Tennessee 37950-9043
Annual Meeting
11:00 a.m. Eastern Standard Time, Tuesday, April 8, 1997, at the corporate
offices of Plasti-Line, Inc.
<PAGE>
Building for a New Retailing Era
(Company Logo)
Plasti-Line, Inc.
(Shipping address)
623 E. Emory Road
Powell, Tennessee 37849
(423) 938-1511
Plasti-Line Columbia, Inc.
1829 Shop Road
Columbia, South Carolina 29201
1 771-4005
American Sign & Marketing Services, Inc.
7430 Industrial Road
Florence, Kentucky 41042-0247
(606) 371-2880
Design Performance Group
1895 Airport Exchange Blvd.
Erlanger, Kentucky 41018
(606) 282-9223
Plasti-Line West
13489 Slover Avenue
Fontana, California 92337
(909) 823-1239
<PAGE>
Plasti-Line, Inc.
P.O. Box 59043
Knoxville, Tennessee 37950-9043
1-800-444-7446 Toll-free
1 947-8444 Facsimile
(Various Logos)
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
"consolidated financial 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-29-1996
<PERIOD-START> Jan-01-1996
<PERIOD-END> Dec-29-1996
<CASH> 10
<SECURITIES> 0
<RECEIVABLES> 23144
<ALLOWANCES> 274
<INVENTORY> 27331
<CURRENT-ASSETS> 52302
<PP&E> 32315
<DEPRECIATION> 19055
<TOTAL-ASSETS> 67244
<CURRENT-LIABILITIES> 26549
<BONDS> 0
0
0
<COMMON> 4
<OTHER-SE> 27198
<TOTAL-LIABILITY-AND-EQUITY> 67244
<SALES> 130876
<TOTAL-REVENUES> 131179
<CGS> 107956
<TOTAL-COSTS> 107956
<OTHER-EXPENSES> 16369
<LOSS-PROVISION> 332
<INTEREST-EXPENSE> 1593
<INCOME-PRETAX> 4929
<INCOME-TAX> 1781
<INCOME-CONTINUING> 3148
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3148
<EPS-PRIMARY> 0.83
<EPS-DILUTED> 0.83
</TABLE>
