<PAGE> 1
United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-Q
(MARK ONE)
[x] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the Period Ended June 1, 1996
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities and
Exchange Act of 1934 for the Transition Period From ________________ to
_______________
Commission file number 0-21800
NORWOOD PROMOTIONAL PRODUCTS, INC.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
TEXAS 74-2553074
----- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
70 N.E. LOOP 410, SUITE 295 SAN ANTONIO, TEXAS 78216
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(Address of Principal executive offices) (Zip Code)
(210) 341-9440
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year, if changed since last
report)
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 periods that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- -----
Applicable Only to Issuers Involved in Bankruptcy
Proceedings During the Preceding Five Years
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by the court. Yes No
----- -----
Applicable Only to Corporate Issuers
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 5,611,571 shares of Common
Stock, no par value, as of July 8, 1996.
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NORWOOD PROMOTIONAL PRODUCTS, INC.
INDEX TO FORM 10-Q
QUARTER ENDED JUNE 1, 1996
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C> <C>
PART I. Financial Information
Item 1. Interim Condensed Consolidated Financial Statements (Unaudited)
Condensed Consolidated Statements of Income 3
Condensed Consolidated Balance Sheets 4
Consolidated Statements of Cash Flows 5
Consolidated Statements of Shareholders' Equity 6
Notes to Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis 9
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 18
Index to Exhibits 19
</TABLE>
2
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NORWOOD PROMOTIONAL PRODUCTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------ -----------------
June 1, June 3, June 1, June 3,
1996 1995 1996 1995
-------- -------- --------- ----------
<S> <C> <C> <C> <C>
Sales $ 45,034 $ 29,995 $ 108,488 $ 72,229
Cost of sales 31,379 20,059 75,749 49,549
-------- -------- --------- ----------
Gross profit 13,655 9,936 32,739 22,680
Operating expenses 8,747 6,157 23,487 15,627
-------- -------- --------- ----------
Operating income 4,908 3,779 9,252 7,053
Interest expense 765 1,138 2,634 2,476
-------- -------- --------- ----------
Income before income taxes 4,143 2,641 6,618 4,576
Provision for income taxes 1,617 1,059 2,647 1,903
-------- -------- --------- ----------
Net income $ 2,526 $ 1,582 $ 3,971 $ 2,674
======== ======== ========= ==========
Net income per common share:
Primary $0.44 $0.44 $0.82 $0.74
Fully Diluted 0.44 0.44 0.82 0.74
Weighted average number
of common shares
outstanding:
Primary 5,767 3,610 4,869 3,610
Fully Diluted 5,767 3,610 4,869 3,610
</TABLE>
See accompanying notes.
3
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NORWOOD PROMOTIONAL PRODUCTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED, IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 1, SEPTEMBER 2,
1996 1995
---------- --------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 1,450 $ 2,174
Accounts receivable 24,544 17,001
Other receivables 366 492
Inventories 31,017 23,913
Prepaid expenses and other current assets 2,612 1,916
---------- --------
Total current assets 59,989 45,496
Property, plant and equipment, net 18,975 12,090
Goodwill 35,827 30,443
Deferred income taxes 249 249
Other assets 7,976 6,581
---------- --------
Total assets $123,016 $ 94,859
========== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Trade accounts payable $ 9,635 $ 5,803
Accrued liabilities 4,284 4,246
Income taxes payable 812 866
Current portion of long term debt 4,623 3,498
---------- --------
Total current liabilities 19,354 14,413
Long-term debt, excluding current portion 46,477 59,412
Shareholders' equity:
Common stock, no par value; 20,000,000 shares authorized;
5,613,001 and 3,541,638 shares issued and 5,611,571 and 3,540,208 shares
outstanding at June 1, 1996 and September 2, 1995, respectively 51,557 19,617
Additional paid-in capital 369 369
Less cost of treasury stock, 1,430 shares at June 1, 1996
and September 2, 1995, respectively (8) (8)
Retained earnings 5,281 1,310
---------- --------
57,199 21,288
Less receivables for purchase of common stock (14) (254)
---------- --------
Total shareholders' equity 57,185 21,034
---------- --------
Total liabilities and shareholders' equity $ 123,016 $ 94,859
========== ========
</TABLE>
See accompanying notes.
4
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NORWOOD PROMOTIONAL PRODUCTS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED, IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
------------------------
JUNE 1, JUNE 3,
1996 1995
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<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 3,971 $ 2,674
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Depreciation 2,064 1,435
Amortization 2,522 1,483
(Gain) loss on sale of property & equipment (20) 4
Changes in operating assets and liabilities, net of effect of
acquisitions:
Accounts receivable, net (3,964) (2,597)
Inventory (2,150) (1,805)
Prepaid expenses and other (523) (390)
Other receivables 261 (97)
Trade accounts payable (354) (67)
Accrued liabilities (380) (469)
Income taxes payable (55) 494
---------- ---------
Net cash provided by operating activities 1,372 665
INVESTING ACTIVITIES
Business acquisitions, net of cash (17,736) (15,991)
Purchase of property, plant & equipment (3,116) (1,603)
Proceeds from sale of property, plant & equipment 27 --
---------- ---------
Net cash used in investing activities (20,825) (17,594)
FINANCING ACTIVITIES
Proceeds from long term debt 50,450 33,950
Payments on long term debt (62,915) (16,639)
Sale of common stock -- 3
Debt refinancing fees (36) --
Payments on purchase of common stock 240 --
Proceeds from stock offering 30,990 --
---------- ---------
Net cash provided by financing activities 18,729 17,314
---------- ---------
Net change in cash (724) 385
Cash at beginning of period 2,174 486
---------- ---------
Cash at end of period $ 1,450 $ 871
========== =========
</TABLE>
See accompanying notes.
5
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NORWOOD PROMOTIONAL PRODUCTS, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(UNAUDITED, IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONAL RECEIVABLES FOR PURCHASES TOTAL
COMMON STOCK PAID-IN RETAINED PURCHASES OF OF TREASURY SHAREHOLDERS'
SHARES AMOUNT CAPITAL EARNINGS COMMON STOCK STOCK EQUITY
-------- --------- ----------- ---------- --------------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at September 2, 1995 3,542 $19,617 $369 $1,310 $(254) $(8) $21,034
Payment on Purchase of
Common Stock 240 240
Stock Offering 2,015 30,990 30,990
Conversion of Debt to
Common Stock 56 950 950
Net Income 3,971 3,971
----- ------- ---- ------ ---- --- -------
Balance at June 1, 1996 5,613 $51,557 $369 $5,281 $(14) $(8) $57,185
===== ======= ==== ====== ==== === =======
</TABLE>
See accompanying notes.
6
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NORWOOD PROMOTIONAL PRODUCTS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED JUNE 1, 1996 AND JUNE 3, 1995
1. SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements include the accounts of Norwood
Promotional Products, Inc. and its directly and indirectly wholly-owned
subsidiaries, Air-Tex Corporation ("Air-Tex"), ArtMold Products Corporation
("ArtMold"), Barlow Promotional Products, Inc. ("Barlow"), Key Industries,
Inc. ("Key"), Radio Cap Company, Inc. ("RCC"), and Norcorp, Inc. ("Norcorp")
(collectively referred to as "the Company") and have been presented in
accordance with the reporting requirements for interim financial statements.
Such requirements do not include all of the disclosures normally required by
generally accepted accounting principles or those normally made in an Annual
Report of the registrant on Form 10-K. The information furnished herein
reflects all adjustments which, in the opinion of management, are of a normal
recurring nature and necessary for a fair statement of the results of interim
periods. Such results for interim periods are not necessarily indicative of
the results to be expected for a full year, principally due to seasonal
fluctuations in product line revenue.
2. ACQUISITION
Effective as of April 1, 1996, the Company acquired substantially all
the assets of Alpha Products, Inc. ("Alpha"). In connection with the
acquisition of Alpha, for approximately $6,675,000 in cash and the assumption
of certain operating liabilities, the Company acquired assets with a value of
approximately $9,843,000 and assumed or incurred liabilities of approximately
$3,168,000. Alpha is a supplier of promotional products. The condensed
pro-forma results of operations presented below summarize on an unaudited
pro-forma basis approximate results of the Company's consolidated operations
for the nine months ended June 1, 1996 and the nine months ended June 3, 1995,
assuming that the acquisition of Air-Tex, BTS Group, Designer Plastics, Inc.,
Ocean Specialty Manufacturing Corporation, TEE-OFF and Alpha occurred at the
beginning of the period.
(in thousands, except per share amounts)
NINE MONTHS NINE MONTHS
ENDED ENDED
JUNE 1, JUNE 3,
1996 1995
------------- -------------
Net sales $124,585 $119,501
Operating income 9,519 7,680
Income before taxes 6,266 2,689
Net income 3,786 1,560
Primary earnings per share $0.78 $0.43
Fully-diluted earnings per shar $0.78 $0.43
7
<PAGE> 8
3. INVENTORIES
Inventories at June 1, 1996 and September 2, 1995 consist of (in
thousands):
JUNE 1, SEPTEMBER 2,
1996 1995
------- -------
Raw materials $10,357 $ 4,772
Work in process 1,285 1,061
Finished goods 19,375 18,080
------- -------
Total $31,017 $23,913
======= =======
8
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NORWOOD PROMOTIONAL PRODUCTS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
GENERAL
The following is Management's discussion and analysis of the results
of operations and financial condition of Norwood Promotional Products, Inc. and
its subsidiaries ("the Company") during the periods included in the
accompanying consolidated financial statements. The discussion below relates
to material changes in the results of operations for the three and nine months
ended June 1, 1996 as compared to the same period ended June 3, 1995, and to
material changes in the financial condition of the Company occurring since the
prior fiscal year end of September 2, 1995 as well as the acquisitions of The
Bob Allen Companies, Inc. (acquired in March 1995 and subsequently renamed
Air-Tex), Designer Plastics, Inc. (acquired in June 1995), BTS Group (acquired
in July 1995), Ocean Specialty Manufacturing Corporation (acquired in November
1995), TEE-OFF Enterprises, Inc. (acquired in January 1996) and Alpha
Products, Inc. (acquired in April 1996) (collectively referred to as the "fiscal
1995 and fiscal 1996 acquisitions"). Reference is made to Management's
Discussion and Analysis of Financial Condition and Results of Operations
included in the Company's Annual Report on Form 10-K for the year ended
September 2, 1995 for further details regarding the significant factors
affecting the results of operations and financial condition of the Company.
THREE MONTHS ENDED JUNE 1, 1996 COMPARED WITH THREE MONTHS ENDED JUNE 3, 1995
Sales for the third quarter of fiscal 1996 increased 50.1% to $45.0
million from $30.0 million in the third quarter of fiscal 1995. Of this
increase, $2.7 million was attributable to increased sales of existing product
lines, and $12.3 million was due to the fiscal 1995 and fiscal 1996
acquisitions. The $2.7 million increase in existing product line sales was
largely attributable to the success of new product introductions at Radio Cap
Company, Inc. ("RCC").
Gross Profit for the third quarter of fiscal 1996 increased by 37.4%
or $3.8 million to $13.7 million, from $9.9 million in the third quarter of
fiscal 1995. This increase was attributable to strong internal growth at RCC
and Barlow Promotional Products, Inc. ("Barlow") and the fiscal 1995 and fiscal
1996 acquisitions. Gross profit as a percentage of sales decreased by 2.8%.
This decrease was attributable to fiscal 1996 acquisitions of businesses which
operate with lower gross profit percentages than the Company's existing
businesses.
In the third quarter of fiscal 1996 operating expenses increased by
40.3% or $2.5 million to $8.7 million, from $6.2 million in the third quarter
of fiscal 1995. This increase was attributable to the fiscal 1995 and fiscal
1996 acquisitions. Operating expenses as a percentage of sales decreased by
1.1% or $495,000. This decrease was due to the acquisition of companies with
lower overhead structures.
Operating income in the third quarter of fiscal 1996 increased by
28.9% or $1.1 million to $4.9 million from $3.8 million in the third quarter of
fiscal 1995. Operating income as a percentage of sales decreased by 1.7%.
Interest expense was $765,000 during the third quarter of fiscal 1996
compared to $1.1 million in the third quarter of fiscal 1995. This decrease
was attributable to lower effective interest rates and the use of December 1995
stock offering proceeds to pay down debt, offset by borrowings used to finance
the fiscal 1995 and fiscal 1996 acquisitions.
9
<PAGE> 10
The Company's tax rate has decreased as a percentage of pre-tax income
due to improved operating performance at subsidiaries in lower taxing
authorities.
As a result of the above, third quarter net income increased $944,000
to $2.5 million from $1.6 million in the third quarter of fiscal 1995.
NINE MONTHS ENDED JUNE 1, 1996 COMPARED WITH NINE MONTHS ENDED JUNE 3, 1995
Sales for the first nine months of fiscal 1996 increased by 50.3% to
$108.5 million from $72.2 million in the first nine months of fiscal 1995. Of
this increase, $5.8 million was attributable to increased sales of existing
product lines, and $30.5 million was due to the fiscal 1995 and fiscal 1996
acquisitions. The $5.8 million increase in existing product lines sales was
largely attributable to the success of new product introductions at RCC.
Gross profit for the first nine months of fiscal 1996 increased by
44.1% or $10.0 million to $32.7 million from $22.7 million in the first nine
months of fiscal 1995. This increase was attributable to strong internal
growth at RCC and Barlow and the fiscal 1995 and fiscal 1996 acquisitions.
Gross profit as a percentage of sales decreased by 1.2%. This decrease was
attributable to fiscal 1996 acquisitions of businesses which operate with
lower gross profit percentages than the Company's existing businesses.
In the first nine months of fiscal 1996 operating expenses increased
by 50.6% or $7.9 million to $23.5 million from $15.6 million. This increase
was attributable to the fiscal 1995 and fiscal 1996 acquisitions. Operating
expenses as a percentage of sales remained flat.
Operating income in the first nine months of fiscal 1996 increased by
31.0% or $2.2 million to $9.3 million from $7.1 million in the first nine
months of fiscal 1995. Operating income as a percentage of sales decreased by
1.3%.
Interest expense was $2.6 million during the first nine months of
fiscal 1996 compared to $2.5 million in the first nine months of fiscal 1995.
This decrease was attributable to lower effective interest rates and the use of
December 1995 stock offering proceeds to pay down debt, offset by borrowings
used to finance the fiscal 1995 and fiscal 1996 acquisitions.
The Company's tax rate has decreased as a percentage of pre-tax income
due to improved operating performance at subsidiaries in lower taxing
authorities.
As a result of the above, net income for the first nine months of 1996
increased $1.3 million to $4.0 million from $2.7 million in the first nine
months of fiscal 1995.
LIQUIDITY AND CAPITAL RESOURCES
As of June 1, 1996, total outstanding borrowings under the Company's
existing bank credit facility (the "Bank Credit Facility") with The Frost
National Bank, The Boatmen's National Bank of St. Louis and Banque Paribas were
approximately $36.4 million. On December 20, 1995, the Company completed the
sale of 2,015,481 shares of Common Stock in a public offering. The net
proceeds of this offering of approximately $31.0 million were used to repay
indebtedness under the Bank Credit Facility. The Company may, subject to
certain conditions, reborrow such amounts from time to time for general
corporate purposes, including financing future acquisitions.
The Bank Credit Facility provides for aggregate borrowings of up to
$60.0 million ($1.6 million of which has been repaid as required per the
agreement and is therefore unavailable for reborrowing),
10
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comprised of a $20.0 million revolving credit facility ($13.3 million
outstanding at June 1, 1996), a $21.5 million term loan facility ($8.4 million
outstanding at June 1, 1996) and an $18.5 million acquisition loan facility
($14.7 million outstanding at June 1, 1996). The revolving loan facility is
available to finance acquisitions and for working capital and general corporate
purposes. The acquisition loan facility is available to finance acquisitions.
If available amounts are not reborrowed under the term loan facility or the
acquisition loan facility before October 15, 1996 or December 31, 1996,
respectively, the commitments thereunder will expire.
Pursuant to the terms of the Bank Credit Facility, the Company is
required to maintain certain financial ratios and minimum tangible net worth
and is subject to a prohibition on dividends, and limitations on additional
indebtedness, liens, investments, issuance of stock of subsidiaries, changes in
management and ownership, mergers and acquisitions, sale/leaseback transactions
and sales of assets. An event of default occurs under the Bank Credit Facility
if any person becomes the owner of more than 35.0% of the outstanding capital
stock of the Company, or if within a 12-month period, a majority of the
Company's Board of Directors shall be comprised of new directors. The Company
is required to make quarterly amortization payments on certain amounts
outstanding under the Bank Credit Facility. The final maturity of the Bank
Credit Facility is July 31, 2000.
Amounts outstanding under the Bank Credit Facility bear interest at a
rate equal to either the agent bank's prime rate or the London Interbank
Offered Rate, plus an interest rate spread which varies based on the ratio of
the Company's Consolidated Senior Funded Debt to Earnings Before Interest Taxes
and Depreciation (as such terms are defined in the Bank Credit Facility).
Indebtedness under the Bank Credit Facility is secured by a first lien priority
security interest in substantially all the assets of the Company, including a
pledge of the stock of each of the Company's subsidiaries. Additionally, any
entities and assets acquired with financing under the Bank Credit Facility will
serve as security. Borrowings under the Bank Credit Facility are jointly and
severally guaranteed by all subsidiaries acquired or created by the Company.
WORKING CAPITAL AND CAPITAL EXPENDITURES
Capital expenditures were approximately $1.2 million and $328,000 for
the third quarter of 1996 and 1995, respectively, and $3.1 million and $1.6
million for the nine months ended June 1, 1996 and June 3, 1995, respectively.
The increase in capital expenditures was primarily due to the inclusion of
expenditures related to fiscal 1995 and fiscal 1996 acquisitions. Management
expects capital expenditures to be approximately $3.5 million in fiscal 1996.
The Company's principal capital needs will be to finance any future
acquisitions and ongoing capital expenditures. Although the Company currently
believes that cash flow from operations and available borrowings under the Bank
Credit Facility will be sufficient to meet the Company's working capital and
capital expenditure requirements and future debt service obligations for at
least the next 18 months, there can be no assurance that this will be the case.
The Company believes its fiscal 1996 capital expenditure requirements will be
approximately $3.5 million, but there can be no assurance that this will be the
case. The Company anticipates that such capital expenditures will be required
primarily to acquire additional processing equipment, management information
systems, furniture and fixtures and leasehold improvements.
11
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NORWOOD PROMOTIONAL PRODUCTS, INC.
FORM 10-Q FOR THE QUARTER ENDED JUNE 1, 1996
PART II
Item 6. Exhibits and Reports on Form 8-K
6(a) Exhibits:
3.1 -- Articles of Incorporation of the Registrant, as amended (1)
3.2 -- Bylaws of the Registrant, as amended. (11)
4.0 -- Specimen stock certificate evidencing the Common Stock. (1)
10.0 -- Amended and Restated 1989 Incentive Stock Option Plan of the
Registrant dated October 3, 1989. (2)
10.1 -- 1993 Non-qualified Stock Option Plan of the Registrant dated
June 4, 1993. (1)
10.2 -- 1993 Non-Employee Director Stock Purchase Plan of the
Registrant dated November 8, 1993. (3)
10.3 -- 1994 Incentive Stock Compensation Plan of the Registrant dated
November 14, 1994. (4)
10.4 -- Employee Stock Purchase Plan of the Registrant dated May 18,
1995, as amended and restated effective as of May 9, 1996. *
10.5 -- Employee 401(k) Plan, dated as of October 1, 1995, as
amended. (12)
10.6 -- Warrant certificate granted by the Registrant to Allen dated
June 23, 1993. (1)
10.7(a)-- Warrant certificate granted by the Registrant to Robert L.
Seibert, Director of the Company, dated as of November 8,
1993. (3)
10.7(b)-- Warrant certificate granted by the Registrant to John H.
Wilson III, Director of the Company, dated as of November 8,
1993. (3)
10.7(c)-- Warrant certificate granted by the Registrant to Harold
Holland, Director of the Company, dated as of July 8, 1994.
(9)
10.8 -- Warrant certificate granted by the Registrant to John H.
Josephson, Director of the Company, dated as of June 16,
1993. (11)
10.9(a)-- Warrant certificate granted by the Registrant to John H.
Josephson, Director of the Company, dated as of November 18,
1994. (11)
10.9(b)-- Warrant certificate granted by the Registrant to John H.
Wilson III, Director of the Company, dated as of November
18, 1994. (11)
10.10 -- Option certificate granted by the Registrant to Evan Holland,
12
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President of ArtMold, dated as of July 8, 1994. (6)
10.11 -- Standard Industrial Lease -- Net dated December 29, 1988, as
amended by certain letters dated October 15, 1991 and
October 22, 1991, by and between Sylvan R. Hansen and Barlow
Specialty Advertising, Inc. relating to certain property
located at 2318 Pontius Avenue, Los Angeles, California, and
assigned to Barlow Promotional Products, Inc. as of May 19,
1992. (1)
10.12 -- Standard Industrial Lease dated May 1, 1978, as amended May 1,
1980, July 22, 1980, April 30, 1984, June 21, 1989, April 26,
1990, April 26, 1991 and March 31, 1992, by and among Abram
Mansour and Granet Industries, Inc. and assigned to BSA,
relating to Industries, Inc. and assigned to BSA, relating to
certain property located at 2330 Pontius Avenue, Los Angeles,
California, and assigned to Barlow Promotional Products, Inc.
as of May 19, 1992. (1)
10.13 -- Two Leases dated December 26, 1990 by and between Southern
Pacific Transportation Company and Barlow Specialty
Advertising Inc. relating to certain property located at 2330
Pontius Avenue, Los Angeles, California, and assigned to
Barlow Promotional Products, Inc. as of May 19, 1992. (1)
10.14 -- Lease dated March 26, 1973 by and between Don E. Harley
Associates, Inc., and Arthur Salm, Inc., assigned to Exchange
National Bank of Chicago on June 12, 1973, assigned to Barlow
Specialty Advertising, Inc. in June 1986, and assigned to
Barlow Promotional Products, Inc. as of May 19, 1992. (1)
10.15 -- Lease Agreement by and between Wulfe Investments and Radio
Cap Company, Inc. commencing August 1, 1992 relating to
certain property located at 817 North Frio in San Antonio,
Texas. (1)
10.16 -- Lease Agreement by and between the Utah State Retirement Fund
and Radio Cap Company, Inc. entered into November 17, 1992
relating to the space at Rittiman East Business Park, Building
12 at 5519 Business Park in San Antonio. (1)
10.17 -- Lease Agreement by and between Joseph S. Scher, not
individually, but as Trustee under the Joseph S. Scher Trust
dated April 5, 1993, and Key Acquisition Corp., dated as of
May 1, 1994. (5)
10.18 -- Sublease by and between MM Realty Associates II, dated
13
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November 1, 1981; First Amendment to Sublease by and between
MM Realty Associates II, dated March 1, 1983; Second
Amendment to Sublease by and between Cranston Partnership
(formerly MM Realty Associates II), dated September 1, 1986
and Assignment of and Third Amendment to Sublease by and
between Cranston Partnership, Measured Marketing Services,
Inc. and ArtMold Products Corporation, dated March 1, 1992.
(5)
10.19 -- Asset Purchase Agreement dated March 1, 1995 among The Bob
Allen Companies, Inc., Robert E. Allen, Ruth E. Allen, Matthew
R. Allen, BA Acquisition, Inc. and the Registrant. (7)
10.20 -- Asset Purchase Agreement dated as of May 5, 1995 among
Designer Plastics, Inc., Peter Erenfeld, Mary Erenfeld,
Air-Tex Corporation and the Registrant. (8)
10.21 -- Asset Purchase Agreement dated July 28, 1995 among PAJ, Inc.
(formerly BTS Group), Peter B. Akers, Allen E. Ferris, James
R. Smith, Barlow Promotional Products, Inc. and the
Registrant. (10)
10.22 -- Asset Purchase Agreement dated January 22, 1996 among
TEE-OFF Enterprises, Inc., James and Vicki Schmidt, ArtMold
Products Corporation and the Company. (13)
10.23 -- Asset Purchase Agreement dated April 1, 1996 among
Alpha Products, Inc., Aladdin Industries, Incorporated, Radio
Company, Inc. and Norwood Promotional Products, Inc. (14)
10.24 -- Amended and Restated Credit Agreement dated as of July 27,
1995 among The Frost National Bank, The Boatmen's National
Bank of St. Louis, Banque Paribas and the Registrant. (9)
10.25 -- Office Sublease dated May 1995 between the Registrant and
Frito Lay, Inc. (11)
10.26 -- Standard Industrial Commercial -- Tenant Lease -- Net
effective as of November 20, 1995 between Key Industries,
Inc. and Harris/Newell Family Partnership. (11)
10.27 -- Asset Purchase Agreement dated as of November 17, 1995 among
Ocean Specialty Manufacturing Corporation, Steve Sherlin, Ron
Silverstein, Key Industries, Inc. and the Registrant. (11)
10.28 -- Registration Rights Agreement dated as of March 1, 1995 among
the Registrant, The Bob Allen Companies, Inc. and Matthew R.
Allen. (11)
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10.29 -- Standard Industrial Commercial -- Tenant Lease -- Net
effective as of February 22, 1996 between Barlow Promotional
Products, Inc. and AMG Holding, Inc. (15)
11.0 -- Computation of per share earnings. *
21.0 -- Subsidiaries of the Registrant. (11)
27.0 -- Financial data schedule. *
- -------------------------
* Filed with this Report.
(1) Previously filed as an Exhibit to the Registrant's Registration
Statement on Form S-1 (File No. 33-61740) filed with the Securities
and Exchange Commission on June 16, 1993 and incorporated herein by
reference.
(2) Previously filed as an Exhibit to the Registrant's Registration
Statement on Form S-8 filed with the Securities and Exchange Commission
on December 3, 1993 and incorporated herein by reference.
(3) Previously filed as an Exhibit to the Registrant's Form 10-Q for the
quarter ended November 27, 1993 filed with the Securities and
Exchange Commission on January 10, 1994 and incorporated herein by
reference.
(4) Previously filed as an Exhibit to the Registrant's Registration
Statement on Form S-8 filed with the Securities and Exchange
Commission on July 7, 1995 and incorporated herein by reference.
(5) Previously filed as an Exhibit to the Registrant's Form 8-K filed with
the Securities and Exchange Commission on May 14, 1994 and
incorporated herein by reference.
(6) Previously Filed as an Exhibit to the Registrant's Form 8-K filed with
the Securities and Exchange Commission on July 15, 1994.
(7) Previously filed as an Exhibit to the Registrant's Form 8-K filed with
the Securities and Exchange Commission on March 15, 1995.
(8) Previously filed as an Exhibit to the Registrant's Form 8-K filed with
the Securities and Exchange Commission on June 26, 1995.
(9) Previously filed as an Exhibit to the Registrant's Form 8-K filed with
the Securities and Exchange Commission on August 10, 1995.
(10) Previously filed as an Exhibit to the Registrant's Form 8-K filed with
the Securities and Exchange Commission on August 10, 1995.
(11) Previously filed as an Exhibit to the Registrant's Registration
Statement on Form S-1 filed with the Securities and Exchange Commission
on October 17, 1995, as amended by Amendment No. 1 filed with the
Securities and Exchange Commission on November 24, 1995.
(12) Previously filed as an Exhibit to the Registrant's Registration
Statement on Form S-8 filed with the Securities and Exchange Commission
on December 29, 1995.
(13) Previously filed as an Exhibit to the Registrant's Form 8-K filed with
the Securities and Exchange
15
<PAGE> 16
Commission on February 2, 1996.
(14) Previously filed as an Exhibit to the Registrant's Form 8-K filed with
the Securities and Exchange Commission on April 16, 1996.
(15) Previously filed as an Exhibit to the Registrant's Form 10-Q filed
with the Securities and Exchange Commission on April 16, 1996.
16
<PAGE> 17
6 (b) Reports on Form 8-K:
The following is the date and description of the events reported on Forms
8-K filed during the third quarter of 1996:
Date of Earliest Event
Reported on Form 8-K Description
-------------------- -----------
January 23, 1996 The Company caused its subsidiary,
ArtMold Products Corporation, a
Delaware corporation, to acquire
substantially all of the assets of
TEE-OFF Enterprises, Inc., a
Wisconsin corporation.
April 1, 1996 The Company caused its subsidiary,
Radio Cap Company, Inc., a Delaware
corporation, to acquire substantially
all of the assets of Alpha Products,
Inc., a Georgia corporation.
17
<PAGE> 18
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Norwood Promotional Products, Inc.
-------------------------------------------------
(Registrant)
Date: July 15, 1996 /s/ J. Max Waits
-------------------------------------------------
J. Max Waits
Secretary, Treasurer and Chief Financial Officer
18
<PAGE> 19
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
<S> <C>
3.1 -- Articles of Incorporation of the Registrant, as amended.(1)
3.2 -- Bylaws of the Registrant, as amended.(11)
4.0 -- Specimen stock certificate evidencing the Common Stock.(1)
10.0 -- Amended and Restated 1989 Incentive Stock Option Plan of the
Registrant dated October 3, 1989.(2)
10.1 -- 1993 Non-qualified Stock Option Plan of the Registrant dated
June 4, 1993.(1)
10.2 -- 1993 Non-Employee Director Stock Purchase Plan of the
Registrant dated November 8, 1993.(3)
10.3 -- 1994 Incentive Stock Compensation Plan of the Registrant
dated November 14, 1994.(4)
10.4 -- Employee Stock Purchase Plan of the Registrant dated May 18,
1995, as amended and restated effective as of May 9, 1996. *
10.5 -- Employee 401 (k) Plan, dated as of October 1, 1995, as
amended.(12)
10.6 -- Warrant certificate granted by the Registrant to Allen and
Company, Incorporated, dated June 23,1993.(1)
10.7(a) -- Warrant certificate granted by the Registrant to Robert L.
Seibert, Director of the Company, dated as of November 8,
1993.(3)
10.7(b) -- Warrant certificate granted by the Registrant to John H.
Wilson III, Director of the Company, dated as of November 8,
1993.(3)
10.7(c) -- Warrant certificate granted by the Registrant to Harold
Holland, Director of the Company, dated as of July 8, 1994.(9)
10.8 -- Warrant certificate granted by the Registrant to John H.
Josephson, Director of the Company, dated as of June 16,
1993 .(11)
10.9(a) -- Warrant certificate granted by the Registrant to John H.
Josephson, Director of the Company, dated as of November 18,
1994.(11)
10.9(b) -- Warrant certificate granted by the Registrant to John H.
Wilson III, Director of the Company, dated as of November 18,
1994.(11)
10.10 -- Option certificate granted by the Registrant to Evan Holland,
President of ArtMold, dated as of July 8, 1994.(6)
10.11 -- Standard Industrial Lease -- Net dated December 29, 1988, as
amended by certain letters dated October 15, 1991 and October
22, 1991, by and between Sylvan R. Hansen and Barlow Specialty
Advertising, Inc.
</TABLE>
<PAGE> 20
INDEX TO EXHIBITS
<TABLE>
<S> <C>
relating to certain property located at 2318 Pontius Avenue,
Los Angeles, California, and assigned to Barlow Promotional
Products, Inc. as of May 19, 1992.(1)
10.12 -- Standard Industrial Lease dated May 1, 1978, as amended May
1, 1980, July 22, 1980, April 30, 1984, June 21, 1989, April
26, 1990, April 26, 1991 and March 31, 1992, by and among
Abram Mansour andGranet Industries, Inc. and assigned to BSA,
relating to certain property located at 2330 Pontius Avenue,
Los Angeles, California, and assigned to Barlow Promotional
Products, Inc. as of May 19, 1992.(1)
10.13 -- Two Leases dated December 26, 1990 by and between Southern
Pacific Transportation Company and Barlow Specialty
Advertising, Inc. relating to certain property located at
2330 Pontius Avenue, Los Angeles, California, and assigned to
Barlow Promotional Products, Inc. as of May 19, 1992.(1)
10.14 -- Lease dated March 26, 1973 by and between Don E. Harley
Associates, Inc., and Arthur Salm, Inc, assigned to Exchange
National Bank of Chicago on June 12, 1973, assigned to Barlow
Specialty Advertising, Inc. in June 1986, and assigned to
Barlow Promotional Products, Inc. as of May 19, 1992.(1)
10.15 -- Lease Agreement by and between Wulfe Investments and Radio
Cap Company, Inc. commencing August 1, 1992 relating to
certain property located at 817 North Frio in San Antonio,
Texas.(1)
10.16 -- Lease Agreement by and between the Utah State Retirement Fund
and Radio Cap Company, Inc. entered into November 17, 1992
relating to the space at Rittiman East Business Park,
Building 12 at 5519 Business Park in San Antonio. (1)
10.17 -- Lease Agreement by and between Joseph S. Scher, not
individually, but as Trustee under the Joseph S. Scher Trust
dated April 5, 1993, and Key Acquisition Corp., dated as of
May 1, 1994.(5)
10.18 -- Sublease by and between MM Realty Associates II, dated
November 1, 1981; First Amendment to Sublease by and between
MM Realty Associates II, dated March 1, 1983; Second
Amendment to Sublease by and between Cranston Partnership
(Associates II)formerly MM Realty, dated September 1, 1986
and Assignment of and Third Amendment to Sublease by and
between Cranston Partnership,
</TABLE>
<PAGE> 21
INDEX TO EXHIBITS
<TABLE>
<S> <C>
Measured Marketing Services, Inc. and ArtMold Products
Corpration dated March 1, 1992.(5)
10.19 -- Asset Purchase Agreement dated March 1, 1995 among The Bob
Allen Companies, Inc., Robert E. Allen, Ruth E. Allen, Matthew
R. Allen, BA Acquisition, Inc. and the Registrant. (7)
10.20 -- Asset Purchase Agreement dated as of May 5, 1995 among
Designer Plastics, Inc., Peter Erenfeld, Mary Erenfeld,
Air-Tex Corporation and the Registrant. (8)
10.21 -- Asset Purchase Agreement dated July 28, 1995 among PAJ, Inc.
(formerly BTS Group), Peter B. Akers, Allen E. Ferris, James
R. Smith, Barlow Promotional Products, Inc. and the
Registrant. (10)
10.22 -- Asset Purchase Agreement dated January 22, 1996 among
TEE-OFF Enterprises, Inc., James and Vicki Schmidt, ArtMold
Products Corporation and the Company. (13)
10.23 -- Asset Purchase Agreement dated April 1, 1996 among
Alpha Products, Inc., Aladdin Industries, Incorporated, Radio
Company, Inc. and Norwood Promotional Products, Inc. (14)
10.24 -- Amended and Restated Credit Agreement dated as of July 27,
1995 among The Frost National Bank, The Boatmen's National
Bank of St. Louis, Banque Paribas and the Registrant. (9)
10.25 -- Office Sublease dated May 1995 between the Registrant and
Frito Lay, Inc. (11)
10.26 -- Standard Industrial Commercial -- Tenant Lease -- Net
effective as of November 20, 1995 between Key Industries,
Inc. and Harris/Newell Family Partnership. (11)
10.27 -- Asset Purchase Agreement dated as of November 17, 1995 among
Ocean Specialty Manufacturing Corporation, Steve Sherlin, Ron
Silverstein, Key Industries, Inc. and the Registrant. (11)
10.28 -- Registration Rights Agreement dated as of March 1, 1995 among
the Registrant, The Bob Allen Companies, Inc. and Matthew R.
Allen. (11)
10.29 -- Standard Industrial Commercial -- Tenant Lease -- Net
effective as of February 22, 1996 between Barlow Promotional
Products, Inc. and AMG Holding, Inc. (15)
11.0 -- Computation of per share earnings. *
21.0 -- Subsidiaries of the Registrant. (11)
27.0 -- Financial data schedule. *
</TABLE>
- -------------------------
* Filed with this Report.
<PAGE> 22
(1) Previously filed as an Exhibit to the Registrant's Registration
Statement on Form S-1 (File No. 33-61740) filed with the Securities
and Exchange Commission on June 16, 1993 and incorporated herein by
reference.
(2) Previously filed as an Exhibit to the Registrant's Registration
Statement on Form S-8 filed with the Securities and Exchange
Commission on December 3, 1993 and incorporated herein by reference.
(3) Previously filed as an Exhibit to the Registrant's Form 10-Q for the
quarter ended November 27, 1993 filed with the Securities and Exchange
Commission on January 10, 1994 and incorporated herein by reference.
(4) Previously filed as an Exhibit to the Registrant's Registration
Statement on Form S-8 filed with the Securities and Exchange
Commission on July 7, 1995 and incorporated herein by reference.
(5) Previously filed as an Exhibit to the Registrant's Form 8-K filed with
the Securities and Exchange Commission on May 14, 1994 and
incorporated herein by reference.
(6) Previously Filed as an Exhibit to the Registrant's Form 8-K filed with
the Securities and Exchange Commission on July 15, 1994.
(7) Previously filed as an Exhibit to the Registrant's Form 8-K filed with
the Securities and Exchange Commission on March 15, 1995.
(8) Previously filed as an Exhibit to the Registrant's Form 8-K filed with
the Securities and Exchange Commission on June 26, 1995.
(9) Previously filed as an Exhibit to the Registrant's Form 8-K filed with
the Securities and Exchange Commission on August 10, 1995.
(10) Previously filed as an Exhibit to the Registrant's Form 8-K filed with
the Securities and Exchange Commission on August 10, 1995.
(11) Previously filed as an Exhibit to the Registrant's Registration
Statement on Form S-1 filed with the Securities and Exchange
Commission on October 17, 1995, as amended by Amendment No. 1 filed
with the Securities and Exchange Commission on November 24, 1995.
(12) Previously filed as an Exhibit to the Registrant's Registration
Statement on Form S-8 Filed with the Securities and Exchange
Commission on December 29, 1995.
(13) Previously filed as an Exhibit to the Registrant's Form 8-K filed with
the Securities and Exchange Commission on February 2, 1996.
(14) Previously filed as an Exhibit to the Registrant's Form 8-K filed with
the Securities and Exchange Commission on April 16, 1996.
(15) Previously filed as an Exhibit to the Registrant's Form 10-Q filed
with the Securities and Exchange Commission on April 16, 1996.
<PAGE> 1
Exhibit 10.4
Employee Stock Purchase Plan of the Registrant
dated May 18, 1995, as amended and restated effective as of May 9, 1996
<PAGE> 2
NORWOOD PROMOTIONAL PRODUCTS, INC.
EMPLOYEE STOCK PURCHASE PLAN
The following constitute the provisions of the Employee Stock Purchase
Plan of Norwood Promotional Products, Inc., as amended and restated effective
as of May 9, 1996.
1. Purpose. The purpose of the Plan is to provide employees of the
Company and its Subsidiaries with an opportunity to purchase Common Stock of
the Company. It is the intention of the Company to have the Plan qualify as an
"Employee Stock Purchase Plan" under section 423 of the Code. The provisions
of the Plan shall, accordingly, be construed so as to extend and limit
participation in a manner consistent with the requirements of that section of
the Code.
2. Definitions.
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(c) "Common Stock" shall mean the common stock, no par value, of
the Company.
(d) "Company" shall mean Norwood Promotional Products, Inc., a
Texas corporation, or any successor which adopts this Plan.
(e) "Compensation" for the Offering Period shall mean the regular
gross earnings excluding overtime and bonuses paid to the
Employee by the Employer.
(f) "Continuous Status as an Employee" shall mean the absence of
any interruption or termination of service as an Employee.
Continuous Status as an Employee shall not be considered
interrupted in the case of a leave of absence that meets the
requirements of paragraph 10(b).
(g) "Employee" shall mean any person, including an officer, who
is customarily employed for at least twenty (20) hours per
week and for more than five (5) months in the calendar year by
an Employer and whose wages are subject to withholding for
purposes of federal income taxes.
(h) "Employer" shall mean the Company and each of its
Subsidiaries, excluding any Subsidiary that has declined to
participate in the Plan.
(i) "Enrollment Date" shall mean the first day of each Offering
Period.
(j) "Exercise Date" shall mean the last day of each Offering
Period.
(k) "Exercise Price" shall have the meaning as defined in
paragraphs 7(b) and 7(c).
(l) "Offering Period" shall mean the period of six (6) months
during which an option granted pursuant to the Plan may be
exercised, as described in paragraph 4.
(m) "Participant" shall mean an Eligible Employee in Continuous
Status as an Employee who has been offered the opportunity to
purchase Common Stock hereunder and who has elected to
participate herein.
(n) "Participant Account" shall mean that separate account
maintained hereunder to record the amount that a Participant
has contributed to the Plan.
(o) "Plan" shall mean the Norwood Promotional Products, Inc.
Employee Stock Purchase Plan.
(p) "Subsidiary" shall mean a corporation, domestic or foreign, of
which at the time of the granting of the option pursuant to
paragraph 7, not less than 50% of the total combined voting
power of all classes of stock are held by the Company or a
Subsidiary, whether or not such corporation now exists or is
hereafter organized or acquired by the
<PAGE> 3
Company or a Subsidiary.
(q) "One Year of Service" shall mean a consecutive three hundred
sixty-five (365) day period, beginning the day of the year on
which an Employee commences employment with an Employer or a
Subsidiary.
(r) "Plan Custodian" shall mean Boatmen's Trust Company or any
successor appointed by the Company.
3. Eligibility.
(a) General Rule. Any Employee, as defined in paragraph 2, who
has completed One Year of Service and is employed by an
Employer on a given Enrollment Date shall be eligible to
participate in the Plan as an "Eligible Employee," subject to
the requirements of paragraph 5(a) and the limitations imposed
by section 423(b) of the Code. Any Eligible Employee who
terminates employment and rehires with an Employer shall not
be required to complete another One Year of Service.
(b) Exceptions. Any provisions of the Plan to the contrary
notwithstanding, no Employee shall be granted an option to
purchase Common Stock under the Plan if:
(i) Immediately after the grant, such Employee (or any
other person whose stock would be attributed to such
Employee pursuant to section 424(d) of the Code)
would own stock (including for purposes of this
paragraph 3(b) any stock he/she holds outstanding
options to purchase) possessing five percent (5%) or
more of the total combined voting power or value of
all classes of stock of the Company or of any
Subsidiary computed in accordance with the Code
423(b)(3), or
(ii) Such option would permit such Employee's right to
purchase stock under all employee stock purchase
plans (described in section 423 of the Code) of the
Company and its Subsidiaries to accrue at a rate
which exceeds Twenty-Five Thousand Dollars ($25,000)
of the fair market value of such stock (determined at
the time such option is granted) for each calendar
year in which such option is outstanding at any time,
in accordance with the provisions of Code 423(b)(8).
4. Offering Periods. The first Offering Period shall begin July 1, 1996
and end December 31, 1996, unless terminated earlier in accordance with
paragraph 19. Absent action by the Board, each subsequent Offering Period
shall be for a period of six (6) months, and after December 31, 1996 new
Offering Periods shall commence on each January 1 and July 1. The Board shall
have the power to change the duration of the Offering Periods with respect to
future offerings without stockholder approval if such change is announced at
least fifteen (15) days prior to the scheduled beginning of the first Offering
Period to be affected.
5. Participation.
(a) An eligible Employee may become a Participant in the Plan by
completing a subscription agreement, in a form substantially
similar to Exhibit A attached to the Plan ("Subscription
Agreement"), and filing it with the Company's Human Resources
Department prior to the applicable Enrollment Date, unless a
later time for filing the Subscription Agreement is set by the
Board for all eligible Employees with respect to a given
Offering Period.
(b) An Eligible Employee may waive his right to participate for
any Offering Period by declining to authorize a payroll
deduction. Such declination must be filed in writing in the
time and manner specified by the Company. The filing of a
written declination shall result in the Employee's waiver of
participation for the current Offering Period and all
subsequent Offering Periods and shall be irrevocable with
respect to the current Offering Period. Except as otherwise
provided in this paragraph, an Employee's waiver of
participation for a specified Offering Period shall not, in
and of itself, adversely impact the right of such Employee to
participate in the Plan during any subsequent Offering
Periods.
6. Payment for Common Stock.
(a) At the time a Participant files his or her Subscription
Agreement, such Participant shall elect to have payroll
deductions made on each pay date during the Offering Period at
the rate not to exceed fifteen percent (15%) of the
Compensation which he or she receives on each pay date during
the Offering Period, provided that the aggregate
<PAGE> 4
amount of such payroll deductions during the Offering Period
shall not exceed fifteen percent (15%) of the Participant's
aggregate Compensation during said Offering Period.
(b) All payroll deductions made by a Participant shall be credited
to his or her Participant Account under the Plan.
(c) A Participant may discontinue or change the rate of his or her
payroll deductions during the Offering Period by completing
and filing with the Human Resources Department of the Company
a new Subscription Agreement. Such change or discontinuance
shall be effective as soon as administratively feasible after
the Company's receipt of the new Subscription Agreement.
7. Grant of Option.
(a) On the Enrollment Date of each Offering Period each Eligible
Employee in such Offering Period shall be granted an option to
purchase on the Exercise Date during such Offering Period up
to a number of whole shares of the Company's Common Stock
determined by dividing fifteen percent (15%) of the Eligible
Employee's Compensation by the Exercise Price on the Exercise
Date for such Offering Period; provided, however, that the
number of shares subject to such option shall be reduced, if
necessary, to a number of shares which would not exceed the
limitations described in paragraph 3(b) or paragraph 12(a)
hereof. In addition, the maximum number of shares any
Participant may be granted an option to purchase in any
Offering Period is one thousand five hundred (1500) shares.
The Exercise Price of a share of the Company's Common Stock
shall be determined as provided in paragraph 7(b) herein.
(b) Subject to paragraph 7(c) the exercise price per share of the
shares offered in a given Offering Period (the "Exercise
Price") shall be 85% of the average fair market value of a
share of the Common Stock during such Offering Period. The
fair market value of the Company's Common Stock during a given
Offering Period shall be the average of the closing prices of
Common Stock as reported by the Nasdaq Stock Market (or
reported on such other national exchange as it may, from time
to time, be reported on) for the first trading day of each
calendar month during such Offering Period, unless the Common
Stock ceases to be traded on the Nasdaq Stock Market or a
national exchange. If the Common Stock ceases to be traded on
the Nasdaq Stock Market or a national exchange, its average
fair market value shall be determined by the Board in its
discretion. Notwithstanding any provision of the Plan to the
contrary, no determination made with respect to the fair
market value of Common Stock shall be inconsistent with Code
423 or the regulations thereunder.
(c) In no event shall the exercise price per share of the shares
offered in a given Offering Period be less than the lesser of
(i) 85% of the fair market value of a share of the Common
Stock on the Exercise Date or (ii) 85% of the fair market
value of a share of the Common Stock on the Enrollment Date of
such Offering Period. The fair market value of the Company's
Common Stock on a given date shall be the closing price of
such Stock as reported by the Nasdaq Stock Market (or reported
on such other national exchange as it may, from time to time,
be reported on) for the Exercise Date or the Enrollment Date,
as the case may be, (or if the Common Stock did not trade on
such date, for the most recent trading day preceding the
Exercise Date or the Enrollment Date, as the case may be, on
which the Common Stock traded), unless the Common Stock ceases
to be traded on a national exchange. If the Common Stock
ceases to be traded on a national exchange, its fair market
value shall be determined by the Board in its discretion.
Notwithstanding any provision of the Plan to the contrary, no
determination made with respect to the fair market value of
Common Stock shall be inconsistent with Code 423 or the
regulations thereunder.
8. Exercise of Option. The Participant's option for the purchase of
Common Stock will be exercised automatically on each Exercise Date of each
Offering Period, and the maximum number of shares subject to such option
computed to the fourth decimal will be purchased at the applicable exercise
price with the funds in his or her Participant Account and held in the
Participant Account unless prior to such Exercise Date the Participant has
withdrawn from the Offering Period pursuant to paragraph 10. During a
Participant's lifetime a Participant's option to purchase shares hereunder is
exercisable only by such Participant.
9. Delivery and Voting. Shares issued pursuant to the exercise of the
option will be held in custody by the Plan Custodian until withdrawal by the
Participant. The Participant may request a certificate for full shares held in
his or her Participant Account immediately after the Exercise Date or as of the
10th of any month thereafter. A Participant shall be entitled to vote any
shares held by the Plan Custodian in his or her Participant account by
furnishing instructions to the Plan Custodian.
<PAGE> 5
Unless directions are given by the Participant, the shares shall not be voted.
10. Withdrawal; Termination of Employment.
(a) A Participant may withdraw all, but not less than all, of the
payroll deductions credited to his or her Participant Account
and not yet used toward the exercise of his or her option
under the Plan at any time by giving written notice to the
Company on a form substantially similar to Exhibit B attached
to this Plan. Withdrawal shall be effective no earlier than
the date such notice is received by the Board or the committee
appointed by the Board pursuant to paragraph 13. All of the
Participant's payroll deductions credited to his or her
Participant Account will be paid to such Participant promptly
after receipt of his or her notice of withdrawal. A
withdrawal of a Participant's Participant Account shall
terminate the Participant's participation for the Offering
Period in which the withdrawal occurs, and no further payroll
deductions for the purchase of shares will be made during that
Offering Period.
(b) Upon termination of the Participant's Continuous Status as an
Employee of the Company for any reason, he or she will be
deemed to have elected to withdraw from the Plan and any full
shares held by the Plan Custodian for the Participant will be
issued in the name of the Participant and mailed together
with a check for any fractional shares. Any funds credited to
his or her Participant Account and not then used toward the
exercise of his or her option under the Plan will be returned
to such Participant and his or her option will be cancelled;
provided, however, that a Participant who goes on a leave of
absence shall be permitted to remain in the Plan with respect
to an Offering Period which commenced prior to the beginning
of such leave of absence. If such Participant is not
guaranteed re-employment by contract or statute and the leave
of absence exceeds ninety (90) days, such Participant shall be
deemed to have terminated employment on the ninety-first day
of such leave of absence. Payroll deductions for a
Participant who has been on a leave of absence will resume
upon return to work at the same rate as in effect prior to
such leave unless changed by such Participant or unless the
leave of absence begins in one Offering Period and ends in a
subsequent Offering Period, in which case the Participant
shall not be permitted to re-enter the Plan until a new
Subscription Agreement is filed with respect to an Offering
Period which commences after such Participant has returned to
work from the leave of absence.
(c) A Participant's withdrawal from one Offering Period will not
have any effect upon his or her eligibility to participate in
a different Offering Period or in any similar Plan which may
hereafter be adopted by the Company.
11. Interest. No interest shall accrue on the payroll deductions of a
Participant in the Plan.
12. Stock.
(a) The maximum number of shares of the Company's Common Stock
which shall be made available for sale under the Plan shall be
fifty thousand (50,000) shares, subject to adjustment upon
changes in capitalization of the Company as provided in
paragraph 18. Either authorized and unissued shares or issued
shares heretofore or hereafter reacquired by the Employer may
be made subject to purchase under the Plan, in the sole and
absolute discretion of the Board. Further, if for any reason
any purchase of Common Stock under the Plan is not
consummated, shares subject to such purchase agreement may be
subjected to a new Subscription Agreement under the Plan. If,
on a given Exercise Date, the number of shares with respect to
which options are to be exercised exceeds the number of shares
then available under the Plan, the Company shall make a pro
rata allocation of the shares remaining available for purchase
in as uniform a manner as shall be practicable and as it shall
determine to be equitable. In such event, the Company shall
give written notice of such reduction of the number of shares
which each Employee shall be allowed to purchase.
Notwithstanding anything to the contrary herein, the Company
shall not be obligated to issue Common Stock hereunder if, in
the opinion of counsel for the Company, such issuance would
constitute a violation of Federal or state securities laws.
(b) The Participant will have no interest or voting right in
shares covered by his or her option until such option has been
exercised and the shares purchased.
(c) Shares to be delivered to a Participant under the Plan will be
registered in the name of the Participant or, at the prior
written request of the Participant, in the names of the
Participant and his or her spouse.
13. Administration. The Plan shall be administered by the Board or a
committee appointed by the Board. If a committee is
<PAGE> 6
appointed by the Board, such committee shall have all of the powers of the
Board with respect to the Plan except for those powers set forth in paragraph
19 hereof. Members of the Board who are eligible employees are permitted to
participate in the Plan; provided, however, that (i) members of the Board who
are eligible Employees may not vote on any matter affecting the administration
of the Plan or the grant of any option pursuant to the Plan, and (ii) if a
committee is appointed by the Board to administer the Plan, no committee member
will be eligible to participate in the Plan. The Board or a committee
appointed hereunder shall have the following powers and duties:
(a) To direct the administration of the Plan in accordance with
the provisions herein set forth;
(b) To adopt rules of procedure and regulations necessary for the
administration of the Plan provided the rules are not
inconsistent with the terms of the Plan;
(c) To determine all questions with regard to rights of Employees
and Participants under the Plan, including, but not limited
to, rights of eligibility of an Employee to participate in the
Plan;
(d) To enforce the terms of the Plan and the rules and regulations
it adopts;
(e) To direct the distribution of the shares of Common Stock
purchased hereunder;
(f) To furnish the Employer with information which the Employer
may require for tax or other purposes;
(g) To engage the service of counsel (who may, if appropriate, be
counsel for the Employer) and agents whom it may deem
advisable to assist it with the performance of its duties;
(h) To prescribe procedures to be followed by Participants in
electing to participate herein;
(i) To receive from each Employer and from Employees such
information as shall be necessary for the proper
administration of the Plan;
(j) To maintain, or cause to be maintained, separate accounts in
the name of each Participant to reflect the Participant's
Participant Account under the Plan; and
(k) To interpret and construe the Plan.
14. Designation of Beneficiary.
(a) A Participant may file a written designation of a beneficiary
who is to receive any shares from the Participant's
Participant Account under the Plan in the event of such
Participant's death subsequent to an Exercise Date on which an
option is exercised but prior to the issuance of such shares.
In addition, a Participant may file a written designation of a
beneficiary who is to receive any cash from the Participant's
Participant Account under the Plan in the event of such
Participant's death prior to the Exercise Date of the option.
(b) Such designation of beneficiary may be changed by the
Participant at any time by written notice. In the event of
the death of a Participant and in the absence of a beneficiary
validly designated under the Plan who is living at the time of
such Participant's death, the Company shall deliver such
shares and/or cash to the executor or administrator of the
estate of the Participant, or if no such executor or
administrator has been appointed (to the knowledge of the
Company), the Company, in its discretion, may deliver such
shares and/or cash to the spouse or to any one or more
dependents or relatives of the Participant, or if no spouse,
dependent or relative is known to the Company, then to such
other person as the Company may designate.
15. Transferability. Neither any monies credited to Participant's
Participant Account nor any rights with regard to the exercise of an option to
receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in paragraph 14 hereof) by the Participant. Any
such attempt at assignment, transfer, pledge or other disposition shall be
without effect, except that the Company may treat such act as an election to
withdraw funds in accordance with paragraph 10.
16. Use of Funds. All payroll deductions received or held by the Company
under the Plan may be used by the Company for
<PAGE> 7
any corporate purpose, and the Company shall not be obligated to segregate such
funds.
17. Reports. Individual Participant Accounts will be maintained for each
Participant in the Plan. Statements of Participant Account will be given to
participating Employees promptly following an Exercise Date, which statements
will set forth the amounts of payroll deductions, the per share purchase price,
the number of shares purchased and the remaining cash balance, if any.
18. Adjustments Upon Changes in Capitalization. If an option under this
Plan is exercised subsequent to any stock dividend, stock split, spinoff,
recapitalization, merger, consolidation, exchange of shares or the like,
occurring after such option was granted, as a result of which shares of any
class shall be issued in respect of the outstanding shares, or shares shall be
changed into a different number of the same or another class or classes, the
number of shares to which such option shall be applicable and the option price
for such shares shall be appropriately adjusted by the Company. Any such
adjustment, however, in the Common Stock shall be made without change in the
total price applicable to the portion of the Common Stock purchased hereunder
which has not been fully paid for, but with a corresponding adjustment, if
appropriate, in the price for each share of Common Stock.
In the event of the proposed dissolution or liquidation of the Company, the
Offering Period will terminate immediately prior to the consummation of such
proposed action, unless otherwise provided by the Board. In the event of a
proposed sale of all or substantially all of the assets of the Company, or the
merger of the Company with or into another corporation, each option under the
Plan shall be assumed or an equivalent option shall be substituted by such
successor corporation or a parent or subsidiary of such successor corporation,
unless the Board determines, in the exercise of its sole discretion and in lieu
of such assumption or substitution, that the Participant shall have the right
to exercise the option. If the Board makes an option fully exercisable, in
lieu of assumption or substitution in the event of a merger or sale of assets,
the Board shall notify the Participant that the option shall be fully
exercisable for a period of thirty (30) days from the date of such notice, and
the option will terminate upon the expiration of such period.
19. Amendment or Termination. The Board may at any time and for any
reason terminate or amend the Plan. The Plan shall automatically terminate on
the Exercise Date that Participants become entitled to purchase a number of
shares greater than the number of shares available for purchase under paragraph
12. In the event of an automatic termination, reserved shares remaining as of
such Exercise Date shall be sold to Participants on a pro rata basis, as
described in paragraph 12.
Except as specifically provided in the Plan, as required to comply with Code
section 423, or as required to obtain a favorable ruling from the Internal
Revenue Service, no amendment may make any change in any option theretofore
granted which adversely affects the rights of any Participant.
20. Notices. All notices or other communications by a Participant to the
Company under or in connection with the Plan shall be deemed to have been duly
given when received in the form specified by the Company at the location, or by
the person, designated by the Company for the receipt thereof.
21. Shareholder Approval. Commencement of the Plan shall be subject to
approval by the shareholders of the Company within twelve months before or
after the date the Plan is adopted. Notwithstanding any provision to the
contrary, failure to obtain such shareholder approval shall void the Plan, any
stock purchases pursuant to the Plan and all rights of all Participants.
22. Conditions Upon Issuance of Shares. Shares shall not be issued with
respect to an option unless the exercise of such option and the issuance and
delivery of such shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Act, the rules and regulations
promulgated under both sets of laws, and the requirements of any stock exchange
upon which the shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.
As a condition to the exercise of an option, the Company may require the person
exercising such option to represent and warrant at the time of any such
exercise that the shares are being purchased only for investment and without
any present intention to sell or distribute, such shares if, in the opinion of
counsel for the Company, such a representation is required by any of the
aforementioned applicable provisions of law.
23. Term of Plan. The Plan shall become effective upon the earlier to
occur of its adoption by the Board or its approval by the stockholders of the
Company as described in paragraph 21. It shall continue in effect for a term
of ten (10) years unless sooner terminated under paragraph 19.
<PAGE> 8
24. No Rights Implied. Nothing contained in this Plan or any modification
or amendment to the Plan or in the creation of any Participant Account, or the
execution of any participation election form, or the issuance of any shares of
Stock, shall give any Employee or Participant any right to continue employment,
any legal or equitable right against the Employer or Company or any officer,
director, or Employee of the Employer or Company, except as expressly provided
by the Plan.
25. Severability. In the event any provision of the Plan shall be held to
be illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining provisions of the Plan, but shall be fully severable and
the Plan shall be construed and enforced as if the illegal or invalid provision
had never been included herein.
26. Notice. Any notice required to be given herein by the Employer, the
Company or the Board shall be deemed delivered, when (a) personally delivered,
or (b) placed in the United States mails, in an envelope addressed to the last
known address of the person to whom the notice is given.
27. Waiver of Notice. Any person entitled to notice under the Plan may
waive the notice.
28. Successors and Assigns. The Plan shall be binding upon all persons
entitled to purchase Common Stock under the Plan, their respective heirs,
legatees, and legal representatives upon the Employer, its successors and
assigns.
29. Headings. The titles and headings of the paragraphs are included for
convenience of reference only and are not to be considered in construction of
the provisions hereof.
30. Law. All questions arising with respect to the provisions of this
Agreement shall be determined by application of the laws of the State of Texas
except to the extent Texas law is preempted by Federal statute. The obligation
of the Employer to sell and deliver Common Stock under the Plan is subject to
applicable laws and to the approval of any governmental authority required in
connection with the authorization, issuance, sale or delivery of such Common
Stock.
31. No Liability for Good Faith Determinations. Neither the members of
the Board nor any member of the committee (nor their delegates) shall be liable
for any act, omission, or determination taken or made in good faith with
respect to the Plan or any right to purchase shares of Common Stock granted
under it, and members of the Board and the committee (and their delegates)
shall be entitled to indemnification and reimbursement by the Company in
respect of any claim, loss, damage, or expense (including attorneys' fees, the
costs of settling any suit, provided such settlement is approved by independent
legal counsel selected by the Company, and amounts paid in satisfaction of a
judgment, except a judgment based on a finding of bad faith) arising therefrom
to the full extent permitted by law and under any directors and officers
liability or similar insurance coverage that may from time to time be in
effect.
32. Participating Employers. This Plan shall constitute the employee
stock purchase plan of each Subsidiary which shall be deemed to have adopted
this Plan until and unless its board of directors declines in writing to do so.
A Subsidiary may withdraw from the Plan as of any Enrollment Date by giving
written notice to the Board, which notice must be received by the Board at
least thirty (30) days prior to such Enrollment Date.
IN WITNESS WHEREOF, this Employee Stock Purchase Plan has been executed this
18th day of May, 1995, effective as of August 1, 1995.
NORWOOD PROMOTIONAL PRODUCTS, INC.
/s/ Robert P. Whitesell
------------------------------------------
By: Robert P. Whitesell
ATTEST: Its President and Chief Operating Officer
/s/ J. Max Waits
- ----------------------------------
J. Max Waits
Secretary
<PAGE> 9
EXHIBIT A
NORWOOD PROMOTIONAL PRODUCTS, INC.
EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
I, ____________________________________, have read the attached prospectus
explanation of the Norwood Promotional Products, Inc. (the "Company") Employee
Stock Purchase Plan. I have decided: (check one)
_____NOT to participate.
_____TO PARTICIPATE. I wish to purchase that amount of common stock
that can be purchased with (select only one) $_____ per pay period
(enter a dollar amount no greater than fifteen percent (15%) of your
Compensation) or ______% of my Compensation per pay period (enter the
percentage of your compensation from 1 to 15, in increments of 1, that
you elect to contribute).
_____TO STOP my current payroll deductions and withdraw from the
current Offering Period. Please pay to me, as promptly as possible,
all cash amounts in my account.
In order to pay for the shares of Company common stock that I have elected
to purchase, I irrevocably authorize my Employer to deduct the percentage of my
compensation that I specified above from my pay each pay period while this
election is in effect.
I understand that said payroll deductions shall be accumulated for the
purchase of shares of Common Stock, at the applicable purchase price determined
in accordance with the Stock Purchase Plan. I further understand that, except
as otherwise set forth in the Stock Purchase Plan, shares will be purchased for
me automatically on each Exercise Date of the Offering Period in the maximum
number of shares computed to the fourth decimal place that the amount of funds
in my Participant Account will buy.
I have read a copy of the NORWOOD PROMOTIONAL PRODUCTS, INC. EMPLOYEE
STOCK PURCHASE PLAN (included in the Company's most recent booklet that
describes the Stock Purchase Plan) and a copy of the INFORMATION STATEMENT FOR
PARTICIPANTS. I understand that my participation in the Stock Purchase Plan is
in all respects subject to the terms of the Plan. I hereby agree to be bound
by the terms of the Stock Purchase Plan. The effectiveness of this
Subscription Agreement is dependent upon my eligibility to participate in the
Stock Purchase Plan.
In the event of my death, I hereby designate the following as my
beneficiary to receive all payments and shares due me and not yet purchased or
issued under the Stock Purchase Plan:
Name and Address of Designated Beneficiary: Relationship:
- ------------------------------------------- -----------------------------
- -------------------------------------------
- -------------------------------------------
Name and Address of Participant:
- -------------------------------------------
- -------------------------------------------
- -------------------------------------------
Signature: Date:
--------------------------------- ------------------------
<PAGE> 10
EXHIBIT B
NORWOOD PROMOTIONAL PRODUCTS, INC.
EMPLOYEE STOCK PURCHASE PLAN
NOTICE OF WITHDRAWAL FROM PLAN
By signing this form, I hereby notify the Company that effective as of the end
of the next payroll period following receipt of this form by the Company (the
"Withdrawal Date"), I withdraw from the Stock Purchase Plan. Pay to me as
promptly as possible following the Withdrawal Date all cash amounts in my
Participant Account. Also deliver to me all whole shares of stock in my
account and a check for any partial shares. I understand and agree that by
withdrawing from the Plan no further payroll deductions or stock purchases will
take place.
Name and Address of Participant (please print):
- ----------------------------------------------------
- ----------------------------------------------------
- ----------------------------------------------------
Signature:
------------------------------------------
Date:
-----------------------------------------------
Date Received:
--------------------------------------
<PAGE> 1
EXHIBIT 11.0
COMPUTATION OF EARNINGS PER SHARE
(UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
JUNE 1, JUNE 3, JUNE 1, JUNE 3,
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
PRIMARY:
Average common shares outstanding 5,556 3,540 4,660 3,540
Average common equivalent shares outstanding 211 70 209 70
------- ------- ------- -------
Total 5,767 3,610 4,869 3,610
======= ======= ======= =======
Net Income $ 2,526 $ 1,582 $ 3,971 $ 2,674
Per share amount $ 0.44 $ 0.44 $ 0.82 $ 0.74
FULLY DILUTED:
Average common shares outstanding 5,556 3,540 4,660 3,540
Average common equivalent shares outstanding 211 70 209 70
------- ------- ------- -------
Total 5,767 3,610 4,869 3,610
======= ======= ======= =======
Net Income $ 2,526 $ 1,582 $ 3,971 $ 2,674
Per share amount $ 0.44 $ 0.44 $ 0.82 $ 0.74
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF NORWOOD PROMOTIONAL PRODUCTS, INC. FOR THE NINE MONTHS
ENDED JUNE 1, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH 10-Q.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> JUN-01-1996
<CASH> 1,450
<SECURITIES> 0
<RECEIVABLES> 25,290
<ALLOWANCES> 746
<INVENTORY> 31,017
<CURRENT-ASSETS> 59,989
<PP&E> 27,872
<DEPRECIATION> 8,897
<TOTAL-ASSETS> 123,016
<CURRENT-LIABILITIES> 19,354
<BONDS> 0
<COMMON> 51,557
0
0
<OTHER-SE> 5,628
<TOTAL-LIABILITY-AND-EQUITY> 123,016
<SALES> 108,488
<TOTAL-REVENUES> 108,488
<CGS> 75,749
<TOTAL-COSTS> 75,749
<OTHER-EXPENSES> 23,487
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,634
<INCOME-PRETAX> 6,618
<INCOME-TAX> 2,647
<INCOME-CONTINUING> 3,971
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,971
<EPS-PRIMARY> 0.82
<EPS-DILUTED> 0.82
</TABLE>
