<PAGE> 1
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
================================================================================
(Mark one)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended MARCH 31, 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 33-75154
--------
J.B. POINDEXTER & CO., INC.
(Exact name of registrant as specified in its charter)
DELAWARE 76-0312814
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1100 LOUISIANA
SUITE 5400
HOUSTON, TEXAS
77002
----------------------------------------
(Address of principal executive offices)
(Zip code)
(713) 655-9800
----------------------------------------------------
(Registrant's telephone number, including area code)
NOT APPLICABLE
----------------------------------------------------
(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 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
------ ------
There were 3,059 shares of Common Stock, $.01 par value, of the registrant
outstanding as of May 14, 1996.
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
ASSETS 1996 1995
----------- ------------
(Unaudited)
<S> <C> <C>
Current assets
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,211 $ 1,714
Accounts receivable, net of allowance for doubtful accounts of
$2,711 and $2,626 respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,435 33,848
Inventories, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55,640 51,937
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,397 3,417
Prepaid expenses and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,544 2,299
-------- --------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105,227 93,215
Property, plant and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51,844 52,746
Goodwill, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,373 22,860
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,560 11,973
-------- --------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $192,004 $180,794
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities
Short-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,457 $ 4,184
Current portion of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . 1,986 2,337
Borrowings under revolving credit facility. . . . . . . . . . . . . . . . . . . . . . 25,310 24,288
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,391 13,826
Accrued interest payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,840 1,899
Accrued income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 363
Other accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,261 16,887
-------- --------
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78,245 63,784
Noncurrent liabilities
Long-term debt, less current portion . . . . . . . . . . . . . . . . . . . . . . . . . 104,233 104,543
Employee benefit obligations and other . . . . . . . . . . . . . . . . . . . . . . . . 3,179 3,016
-------- --------
Total noncurrent liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 107,412 107,559
Stockholder's equity
Common stock and paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,486 16,486
Cumulative translation adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . 58 46
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (10,197) (7,081)
-------- --------
Total stockholder's equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,347 9,451
-------- --------
Total liabilities and stockholder's equity . . . . . . . . . . . . . . . . . . . . $192,004 $180,794
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
-2-
<PAGE> 3
J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED-IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
-------------------------
1996 1995
------ ------
<S> <C> <C>
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . $ 98,903 $ 111,182
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . 79,343 89,349
---------- ---------
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . 19,560 21,833
Selling, general and administrative expense . . . . . . . . . 20,715 18,750
Other (income) expense, net . . . . . . . . . . . . . . . . . 31 (93)
---------- ---------
Operating income (loss) . . . . . . . . . . . . . . . . . . . (1,186) 3,176
Interest expense . . . . . . . . . . . . . . . . . . . . . . 3,915 3,782
---------- ---------
Loss before income taxes . . . . . . . . . . . . . . . . . . (5,101) (606)
Income tax benefit . . . . . . . . . . . . . . . . . . . . (1,985) (112)
---------- ---------
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . $ (3,116) $ (494)
========== =========
Loss per share . . . . . . . . . . . . . . . . . . . . . . . $ (1,018) $ (161)
========== =========
Weighted average shares outstanding . . . . . . . . . . . . 3,059 3,059
========== =========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
-3-
<PAGE> 4
J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED-IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
------------------------------
1996 1995
--------- ---------
<S> <C> <C>
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (3,116) $ (494)
Adjustments to reconcile net loss to net
cash provided (used in) by operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . 3,027 2,445
Gain on sale of equipment . . . . . . . . . . . . . . . . . . . . . . . . (7) (26)
Deferred federal income tax provision . . . . . . . . . . . . . . . . . . (863) (489)
(Decrease) increase in accrued pension liabilities . . . . . . . . . . . . (163) 73
Increase (decrease) in operating cash flows resulting from:
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,625) (9,032)
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,702) (13,393)
Prepaid expenses and other . . . . . . . . . . . . . . . . . . . . . . . . (171) (181)
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,629 8,172
Accrued income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,483) 68
Accrued expenses and other . . . . . . . . . . . . . . . . . . . . . . . . 3,780 1,303
---------- ---------
Net cash provided (used in) by operating activities . . . . . . . . . . 5,306 (11,554)
---------- ---------
Cash flows used in investing activities:
Proceeds from disposition of equipment . . . . . . . . . . . . . . . . . . 66 73
Acquisition of property, plant and equipment . . . . . . . . . . . . . . . (1,617) (3,096)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 (13)
---------- ---------
Net cash used in investing activities . . . . . . . . . . . . . . . . . (1,537) (3,036)
---------- ---------
Cash flows provided by financing activities:
Net proceeds (payments) of revolving lines of
credit and short-term debt . . . . . . . . . . . . . . . . . . . . . . . . (705) 8,703
Net proceeds (payments) of long-term debt and capital leases . . . . . . . (568) (187)
---------- ---------
Net cash provided by financing activities . . . . . . . . . . . . . . . (1,273) 8,516
---------- ---------
Increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . . 2,496 (6,074)
Cash and cash equivalents, beginning of period . . . . . . . . . . . . . . . . 1,714 9,121
---------- ---------
Cash and cash equivalents, end of period . . . . . . . . . . . . . . . . . . . $ 4,210 $ 3,047
========== =========
Supplemental information:
Cash paid for income taxes, net of refunds . . . . . . . . . . . . . . . . $ 156 $ 212
========== =========
Cash paid for interest cost . . . . . . . . . . . . . . . . . . . . . . . $ 592 $ 488
========== =========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
-4-
<PAGE> 5
J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) ORGANIZATION AND BUSINESS. J.B. Poindexter & Co., Inc. (JBPCO) and its
subsidiaries (the Subsidiaries, and together with JBPCO, the Company), operates
manufacturing and wholesale distribution businesses. Subsidiaries consist of
Morgan Trailer Mfg Co., (Morgan), Truck Accessories Group, Inc., (TAG), Lowy
Group, Inc. (Lowy), EFP Corporation (EFP), and Magnetic Instruments Corp.
(Magnetic Instruments).
The Company incurred a net loss for the year ended December 31, 1995 of
$8,536,000 and a net loss of $3,116,000 for the quarter ended March 31, 1996.
The consolidated losses were attributable to operating losses at the Truck
Accessories Group, primarily as a result of manufacturing problems associated
with new product development, design changes and the production and finishing
processes. These problems contributed to higher than normal product returns
and production delays. Management has taken steps to address these problems
including, among others, redesigning certain products and implementing
additional quality control procedures. See Management's Discussion and
Analysis of Financial Condition and Results of Operations for further
discussion of TAG operations.
The consolidated financial statements included herein have been prepared by
the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. In the opinion of management, the
information furnished reflects all adjustments, consisting only of normal
recurring adjustments, which are necessary for a fair presentation of the
results of the interim periods. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to such
rules and regulations. However, the Company believes that the disclosures are
adequate to make the information presented not misleading. These financial
statements should be read in conjunction with the audited consolidated
financial statements and notes thereto for the year ended December 31, 1995
filed with the Securities and Exchange Commission on Form 10-K.
(2) EARNINGS PER SHARE. Primary earnings per share is calculated by
dividing net income by the weighted average number of shares outstanding during
the period. No common stock equivalents exist.
(3) INVENTORIES. Consolidated net inventories consist of the following (in
thousands):
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
--------- -----------
<S> <C> <C>
FIFO Basis Inventory:
Raw Materials . . . . . . . . . . . . . . . . . . $ 20,544 $ 19,267
Work in Process . . . . . . . . . . . . . . . . . 10,150 8,094
Finished Goods . . . . . . . . . . . . . . . . . . 13,591 13,588
--------- ----------
44,285 40,949
--------- ----------
LIFO Basis Inventory:
Raw Materials . . . . . . . . . . . . . . . . . . 2,145 2,245
Work in Process . . . . . . . . . . . . . . . . . 1,536 1,529
Finished Goods . . . . . . . . . . . . . . . . . . 7,674 7,214
--------- ----------
11,355 10,988
--------- ----------
Total Inventory . . . . . . . . . . . . . . . . . . . . . $ 55,640 $ 51,937
========= ==========
</TABLE>
If the first-in, first-out method had been used for all inventory,
inventories would have been approximately $333,000 greater than reported at
March 31, 1995 and $352,000 greater than reported at December 31, 1995.
-5-
<PAGE> 6
(4) REVOLVING CREDIT AGREEMENT.
On May 23, 1994, concurrently with the consummation of the public debt
offering, the Company entered into a senior secured revolving credit agreement
(Revolving Credit Agreement) providing for borrowings by its Subsidiaries of up
to $50.0 million. The arrangement allows the Company to borrow up to the
lesser of $50,000,000 or 85 percent and 60 percent (35 percent for TAG) of
eligible accounts receivable and inventory, respectively, of the Subsidiaries.
The Revolving Credit Agreement provides for borrowings at variable rates of
interest, based on either LIBOR (London Interbank Offered Rate, 5.44 percent at
May 8, 1996) or U.S. prime rate (8.25 percent at May 8, 1996), and expires May
23, 1997. Interest is payable monthly. The Subsidiaries are guarantors of
this indebtedness, and inventory and receivables are pledged under this
Revolving Credit Agreement. At March 31, 1996, the Company had total
borrowings of $25,310,000, bank acceptances of $2,621,000 and stand by letters
of credit of $3,025,000 outstanding pursuant to the Revolving Credit Agreement.
At March 31, 1996, the Company's unused available borrowings under the
Revolving Credit Agreement totaled approximately $10,296,000.
The Revolving Credit Agreement contains numerous restrictive covenants
which, among other things, restrict the ability of the Company to dispose of
assets, incur debt and enter into certain other transactions. In addition, the
Company is required to maintain specified financial covenants including a
minimum net worth and debt coverage ratio.
Subsequent to year-end, the lenders agreed to waive certain covenant
violations which occurred during 1995 and to amend the financial covenants of
the Revolving Credit Agreement through its May 1997 expiration. The Revolving
Credit Agreement was further amended whereby the lenders will be provided with
a security interest in certain of the Company's property, plant and equipment
in return for which the Company and its Subsidiaries will be allowed to borrow
an additional $5,500,000 under the terms of the credit facility, subject to
certain limitations, including the $50,000,000 limit on total borrowings. The
amended and reset covenants include more frequent financial tests and the
application of minimum net worth and current ratio tests of Morgan and minimum
net worth test of TAG, additional periodic reporting of collateral and a limit
on the amount advanced to TAG by JBPCO. The amendment to the loan agreement is
subject to the completion of certain documentation requirements and conditions.
The Revolving Credit Agreement as amended expires May 23, 1997.
The Revolving Credit Agreement contains provisions allowing the lender to
accelerate debt repayment upon the occurrence of an event the lender determines
to represent a material adverse change. Additionally, the Company's cash
balance is restricted under the terms of the Revolving Credit Agreement,
accordingly, balances outstanding under the Revolving Credit Agreement are
classified as a current liability.
(5) BUSINESS COMBINATIONS
On June 29, 1995, the Truck Accessories Group, acquired substantially all
of the assets of two companies, 20th Century Fiberglass, Inc., (20th Century),
and Century Distributing, Inc., (Century Distributing) and effective June 30,
1995, the Truck Accessories Group acquired substantially all of the assets of
Brown Industries Ltd., Pro-More Industries Ltd., and Lo Rider Industries Inc.,
(Raider Industries).
-6-
<PAGE> 7
The results of all businesses acquired have been included in the
consolidated financial statements from the dates of acquisition. In allocating
purchase price, the assets acquired and liabilities assumed have been initially
assigned and recorded based on preliminary estimates of fair value and may be
revised as additional information becomes available. As a result, the
financial information included in the Company's consolidated financial
statements and in the pro forma information listed below is subject to
adjustment prospectively as subsequent revisions in estimates of fair value, if
any, are necessary.
The Company's consolidated results of operations on an unaudited pro
forma basis, as though the businesses acquired during fiscal years 1995 had
been acquired on January 1, 1995, are as follows (in thousands, except per
share amounts):
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-----------------------------
1996 1995
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Pro forma net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 98,903 $ 122,230
Pro forma operating income (loss) . . . . . . . . . . . . . . . . . . . . . (1,186) 3,562
Pro forma income (loss) before extraordinary loss . . . . . . . . . . . . . (3,116) (443)
Pro forma net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . (3,116) (443)
Pro forma income (loss) per common
and common equivalent share -
Income (loss) before extraordinary loss . . . . . . . . . . . . . . . (1,018) (145)
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . (1,018) (145)
</TABLE>
These pro forma results are presented for informational purposes only
and do not purport to show the actual results which would have occurred had the
business combinations been consummated on January 1, 1995, nor should they be
viewed as indicative of future results of operations.
(6) CONTINGENCIES.
CLAIMS AND LAWSUITS. The Company is involved in certain claims and
lawsuits arising in the normal course of business. In the opinion of
management, the ultimate resolution of these matters will not have a material
adverse effect on the financial position or results of operations of the
Company.
In February 1995, a lawsuit was filed against Magnetic, JBPCO and
another entity unrelated to the Company, except through common ownership, by
two companies under common ownership alleging violation of a confidentiality
agreement entered into in 1994 when Magnetic and JBPCO were considering an
acquisition of the two companies. The plaintiffs asserted various causes of
action including fraud, breach of contract and business defamation and sought
actual and punitive damages and costs. On April 30, 1996 the parties settled
all claims on terms which did not have a material adverse effect on the
Company.
CONCENTRATION OF CREDIT RISK. Morgan has two customers (truck rental
companies) accounting for approximately 38% and 58% of Morgan's net sales
during the quarters ended March 31, 1996 and 1995, respectively, and 13% and
28% of consolidated net sales, respectively.
-7-
<PAGE> 8
ENVIRONMENTAL MATTERS. Morgan has been named as a potentially
responsible party ("PRP") with respect to its alleged disposal of certain
solvents at the Industrial Solvents and Chemical Co. state hazardous waste site
in Newberry Township, Pennsylvania ("ISCC site") and at the Berks Associates
Waste Recovery Superfund Site near Douglasville, Pennsylvania ("Berks site").
Morgan has also been requested to furnish information to the Environmental
Protection Agency concerning Morgan's alleged shipment during the 1980s of used
batteries to a battery refurbishment business that is now the Lancaster Battery
Superfund Site near Lancaster, Pennsylvania and concerning Morgan's alleged
disposal of certain paint cans and solid material at the Welsh Road Superfund
Site (Barkman Landfill) near Honey Brook, Pennsylvania. Morgan has not been
named as a potentially responsible party with respect to these sites. Under
the Comprehensive Environmental Response Compensation and Liability Act of 1980
and the Pennsylvania Hazardous Sites Clean- Up Act, past and present site
owners and operators, transporters and waste generators are all potentially
jointly and severally responsible for clean up costs. However, typically, the
generator portion of the costs are allocated among generators, with each
generator bearing costs proportionate to the volume and nature of the wastes it
disposed of at the site. With respect to the ISCC site, Morgan has joined a
group of PRPs and is a party to certain consent agreements with Pennsylvania
and other PRP group members. These consent agreements require Pennsylvania to
offer a settlement for potential future costs, including ground water
remediation costs, upon completion of the interim remedial actions. With
respect to the Berks site, Morgan has agreed to a settlement of its share of
liability with the Environmental Protection Agency and is one of a group of
PRP's negotiating with Pennsylvania for settlement of alleged natural resource
damages. Although a precise estimate of liability cannot currently be made
with respect to these sites, based upon information known to Morgan, the
agreements Morgan is party to, the size of the waste sites, their years of
operation, the large number of past users and potentially responsible parties
of some of the sites, the alleged waste contribution by Morgan at some of these
sites and the nature of the substances alleged to be present at the waste
sites, the Company currently believes that Morgan's proportionate share, if
any, of the ultimate costs related to any necessary investigation and remedial
work at those sites will not have a material adverse effect on the Company.
In 1989, NSSC was listed as a potentially responsible party at the
Wichita Brass Co., Inc. National Priority List site at 29th & Mead in Wichita,
Kansas. Although the extent of NSSC's liability, if any, is not known at this
time, management currently believes that NSSC's allocated share of the ultimate
costs related to any necessary investigation and remedial work at this site
will not have a material adverse effect on the Company. The Company is not
aware of any other significant pending environmental claims pertaining to NSSC.
Certain of the Company's operations utilize paints and solvents in their
businesses. Also, raw materials used by EFP contain pentane, which is a
volatile organic compound subject to regulation under the Clean Air Act. Based
on current and proposed regulations, EFP estimates that it will have to
purchase additional equipment for environmental compliance in the future, and
the amount of such expenditure is not known at this time. Although the Company
believes that it has made sufficient capital expenditures to maintain
compliance with existing laws and regulations, future expenditures may be
necessary if and when compliance standards and technology change.
-8-
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The Company operates in industries that are dependent on various factors
reflecting general economic conditions, including corporate profitability,
consumer spending patterns, sales of truck chassis and new pickup trucks, new
and remodeling construction activity and levels of oil and gas exploration
activity.
The Company acquired three new pickup cap manufacturing and light truck
accessory businesses at the end of June, 1995. The acquired businesses operate
within the Truck Accessories Group which consists of four operating divisions,
namely: Leer Manufacturing, Leer Retail, National Truck Accessories and
Century/Raider.
RESULTS OF OPERATIONS
FIRST QUARTER 1996 COMPARED TO FIRST QUARTER 1995
CONSOLIDATED OPERATING RESULTS
Net sales decreased 11% to $98.9 million for the three months ended
March 31, 1996 compared to $111.2 million during 1995. The decrease was due
primarily to Morgan whose sales decreased 39% or $20.7 million which was
partially offset by sales at TAG which increased 32% or $9.0 million, which
was attributable to operations acquired during June 1995.
Cost of sales decreased 11% to $79.3 million for the three months ended
March 31, 1996 compared to $89.4 million during 1995. Gross profit declined
10% to $19.6 million (20% of net sales) for the first quarter of 1996 compared
to $21.8 million (20% of net sales) for 1995.
Selling, general and administrative expense increased 10% to $20.7
million (21% of net sales) for the three months ended March 31, 1996 compared
to $18.8 million (17% of net sales) during 1995. The increase was due
primarily to increased costs associated with the businesses acquired by TAG
during June 1995.
Operating income decreased 137% to a loss of $1.2 million for the three
months ended March 31, 1996 compared to an income of $3.2 million in 1995. The
reduction was due primarily to the decline in sales at Morgan and increased
operating losses at the Leer Manufacturing division of TAG.
Interest expense increased slightly to $3.9 million during the three
months ended March 31, 1996 compared to $3.8 million during 1995.
The income tax benefit of $2.0 million for the first three months of
1996 increased $1.9 million compared to a benefit of $0.1 for 1995 as a result
of increased losses before tax.
-9-
<PAGE> 10
MORGAN
Net sales decreased 39% to $32.3 million for the first three months of
1996 compared to record sales of $53.1 million for the first three months of
1995, as demand for Morgan's commercial van bodies decreased with the cyclical
downturn in truck sales. Shipments decreased 43% during the 1996 period
compared to 1995 primarily due to decreased shipments of consumer rental units.
Backlog increased to $46.2 million at March 31, 1996, compared to $39.4 million
at December 31, 1995.
Cost of sales decreased 36% to $29.3 million for the first quarter of
1996 compared to $45.9 million for the same period in 1995. Gross profit
decreased 58% to $3.0 million (9% of net sales) during 1996 compared to $7.1
million (13% of net sales) during 1995. The decline as a percentage of revenue
was due primarily to the fixed nature of manufacturing overhead and indirect
labor costs at lower levels of sales than for the same period in 1995.
Selling, general and administrative expense decreased 13% to $3.3
million (10% of net sales) for the first three months of 1996 compared to $3.8
million (7% of net sales) for the same period of 1995. The increase to 10% of
net sales in 1996 from 7% in 1995 was because certain fixed costs did not
decrease in proportion to the reduction in net sales.
Morgan's operating income decreased $3.6 million to a loss of $0.3
million during the first three months of 1996 compared to income of $3.3
million for the first three months of 1995 due to lower overhead absorption
arising from the reduction in sales.
TAG (FORMERLY LEER)
During 1995, TAG's operations were organized into four functional
divisions: Leer Manufacturing, consisting of the manufacturing operations of
the former Leer, Inc.; Leer Retail made up of retail operations; National Truck
Accessories (NTA) comprising the former Leer Specialty Products division of
Leer and the operations of 20th Century Distribution acquired in June 1995,
both of which are wholesale distributors of light truck and sport utility
vehicle accessories; and Century/Raider/Gem-Top consisting of the manufacturing
operations of Century Fiberglass and Raider Industries acquired June 1995 and
the Gem-Top manufacturing operations of Leer. The following operating results
for each division exclude intercompany sales. As used below, "retail sales"
refers to sales by TAG's company-owned stores.
Net sales increased $9.0 million or 32 % to $37.3 million for the first
three months of 1996 compared to $28.3 million for the first three months of
1995. Excluding operations acquired in June 1995, sales decreased $1.4 million
or 5%. Retail sales increased 8.9% to $9.6 million, primarily due to additional
stores opened during the latter part of 1995. Same store revenues remained
constant with the same period in 1995 of $8.6 million. The Company operated 48
stores at March 31, 1996 and at December 31, 1995. Wholesale sales were flat
compared to the prior year and manufacturing sales declined 13% or $2.0
million.
Gross profit increased $1.8 million or 25% to $9.3 million (25% of net
sales) for the first three months of 1996 compared to $7.5 million (26% of net
sales) for the 1995 period. Excluding operations acquired in June 1995, gross
profit declined $0.5 million, manufacturing gross profit decreased $1.1 million
or 30% partially offset by a $0.6 million or 23% increase in retail gross
margin.
-10-
<PAGE> 11
Selling, general and administrative expense increased 37% to $11.4
million (or 30% of net sales) for the first three months of 1996 compared to
$8.3 million (or 29% of net sales) for the first three months of 1995. Excluding
operations acquired during June 1995, selling, general and administrative
expense increased $0.3 million primarily due to costs associated with the retail
stores opened during the latter part of 1995.
TAG's operating loss increased $1.2 million to an operating loss of $2.1
million for the first quarter of 1996 compared to an operating loss of $0.9
million for the first quarter of 1995. Compared to the last quarter of 1995,
TAG's operating loss improved $3.3 million from a loss of $5.4 million for the
quarter ended December 31,1995. Operating losses at Leer Manufacturing improved
$2.8 million on flat revenues compared to the last quarter of 1995. The
Company continues to implement improvement measures at the TAG companies.
Steps taken by management to address the manufacturing problems include among
others, redesigning certain products and implementing additional quality
control procedures.
LOWY
Net sales decreased 9% to $16.0 million for the first three months of
1996 compared to $17.6 million for the first three months of 1995. The decrease
in sales resulted primarily from lower residential construction activity in
Lowy's trade area.
Cost of sales decreased 6% to $12.0 million for the first quarter of
1996 compared to $12.7 million for the same period in 1995. Gross profit
decreased 20% to $4.0 million (25% of net sales) for the first three months of
1996 compared to $5.0 million (28% of net sales) for the first three months of
1995, due to the reduction in sales partially offset by increased sample
expense associated with new product offerings.
Selling, general and administrative expense decreased 7% to $4.0 million
(25% of net sales) for the first three months of 1996 compared to $4.3 million
(24% of net sales) for the first three months of 1995, due primarily to reduced
sales and reduced costs associated with a reduction in sales personnel.
Lowy Group's operating income decreased $0.5 million to $0.1 million for
the first three months of 1996 compared to $0.6 million for the first three
months of 1995.
EFP
Net sales decreased 14% to $7.0 million for the first three months of
1996 compared to $8.1 million for the comparable period of 1995. Sales
increases of $0.7 million were offset by the loss of the Styrocast business of
$1.3 million during the first quarter of 1995 and sales from the beverage
cooler line of products sold during 1995 of $0.5 million.
Cost of sales decreased 18% to $5.6 million during the 1996 period
compared to $6.8 million during 1995. Gross profit increased to $1.4 million
(19% of net sales) for the first three months of 1996 compared to $1.3 million
(16% of net sales) for the first quarter of 1995. The increase in gross profit
as a percentage of sales was due to lower raw material costs and labor
efficiencies derived from upgraded manufacturing processes, and reduced
manufacturing overhead.
Selling, general and administrative expenses decreased 26% to $0.7
million (11% of net sales) for the first three months of 1996 compared to $1.0
million (12% of net sales) during the comparable period of
-11-
<PAGE> 12
1995. The decrease is due primarily to reduced personnel cost associated with a
reduction in personnel during the second quarter of 1995.
EFP's operating income increased to $0.6 million for the first three
months of 1996 compared to $0.3 million for the first three months of 1995, due
primarily to reduction in selling, general and administrative expenses.
MAGNETIC INSTRUMENTS
Net sales increased 53% to $6.3 million for the first three months of
1996 compared to $4.1 million during the comparable period in 1995, as a result
of strong demand for oil field service related products.
Cost of sales increased 52% to $4.4 million for the first three months
of 1996 compared to $2.9 million for the first three months of 1995. Cost of
Sales as a percent of net sales decreased to 70% in 1996 from 71% in 1995.
Selling, general and administrative expenses increased to $0.8 million
(12% of net sales) for the first three months of 1996 compared to $0.6 million
(15% of net sales).
Operating income increased to $1.1 million for the first three months of
1996 compared to $0.7 million for the first three months of 1995.
LIQUIDITY AND CAPITAL RESOURCES
Total assets increased 6% to $192.0 million at March 31, 1996 compared
to $180.8 million at December 31, 1995. Working capital decreased 8.3% to $27.0
million at March 31, 1996 compared to $29.4 million at December 31, 1995. The
working capital ratio declined to 1.3 at March 31, 1996 compared to 1.5 at
December 31, 1995. Accounts receivable and inventory increased $8.3 million
while current liabilities rose by $13.4 million principally due to a rise in
accounts payable of $12.6 million. The increase in accounts payble is due
primarily to increased payables at Morgan, whose accounts payable balance at
December 31, 1995 was unusually low due to higher than normal levels of
inventory.
The ability to borrow under the Revolving Credit Agreement depends on
the amount of eligible collateral. The amount of eligible collateral depends on
certain advance rates applied to the value of accounts receivables and
inventory. At March 31, 1996 the Company had total borrowing capacity of $41.2
million, of which $5.6 million was used to secure letters of credit and finance
trade transactions. Additionally, $25.3 million had been borrowed to fund
operations resulting in unused available borrowing capacity of $10.2 million.
At May 8, 1996 the Company had available borrowing capacity of $13.1 million
under the terms of the Revolving Credit Facility.
Operating activities during the quarter ended March 31,1996 generated
cash of $5.3 million compared to using cash of $11.6 million during 1995,
operating losses and increased accounts receivable and inventories were offset
by increased accounts payable.
The Company believes that it has adequate resources to meet its working
capital and capital expenditure requirements consistent with past trends and
practices. Management believes that its cash
-12-
<PAGE> 13
balances and the borrowing availability under the Revolving Credit Agreement
will satisfy the Company's cash requirements for the foreseeable future given
its anticipated additional capital expenditure, working capital requirements
and its known obligations. The amendments to the Revolving Credit Facility
executed subsequent to year end include amended and reset financial covenants
and additional financial reporting requirements, including quarterly minimum
net worth and current ratio tests of Morgan, a quarterly net worth test of TAG
and a limit on the amount advanced to TAG by JBPCO. Although there are no
assurances, the Company's management believes that the operational issues
discussed above will be resolved resulting in the Company maintaining adequate
liquidity and complying with the covenants of the Revolving Credit Agreement as
amended. The Company is in compliance with the terms the Revolving Credit
Agreement at March 31, 1996.
ITEM 5. OTHER INFORMATION
MANAGEMENT CHANGES
Effective April 26, 1996 the president of Leer Manufacturing resigned
from the Company. Effective April 19, 1996 the president of Magnetic
Instruments was terminated. The Company is actively seeking replacements for
these positions.
DIRECTORS
In April, 1996 the Company received a letter of resignation from an
outside director of the Company, Ben Love. The resignation was effective March
29, 1996.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.1 Fourth Amendment to Loan and Agency Agreement dated as of March
29, 1996, among J.B. Poindexter & Co., Inc. Meridian Bank as Agent and the
Banks (as defined therein).
27 Financial Data Schedule.
99.1 Waiver Letter with respect to the Loan and Agency Agreement,
dated as of March 27, 1996, among J.B. Poindexter & Co., Inc., Meridian Bank
as Agent and the Banks (as defined therein).
(b) Reports on Form 8-K
None.
-13-
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
J.B. POINDEXTER & CO., INC.
(Registrant)
Date: May 10, 1996 By: /s/ S. MAGEE
-----------------------------------
S. Magee
Financial Officer and Treasurer
/s/ R.S. WHATLEY
-----------------------------------
R.S. Whatley, Chief
Accounting Officer
-14-
<PAGE> 15
EXHIBIT INDEX
10.1 Fourth Amendment to Loan and Agency Agreement dated as of March 29,
1996, among J.B. Poindexter & Co., Inc. Meridian Bank as Agent
and the Banks (as defined therein)
27 Financial Data Schedule.
99.1 Waiver Letter with respect to the Loan and Agency Agreement, dated
as of March 27, 1996, among J.B. Poindexter & Co., Inc.,
Meridian Bank as Agent and the Banks (as defined therein).
<PAGE> 1
EXHIBIT 10.1
EXECUTION COPY
FOURTH AMENDMENT TO LOAN AND AGENCY AGREEMENT
Fourth Amendment to the Loan and Agency Agreement (the "Fourth
Amendment"), dated as of this 29th day of March, 1996 among J.B. POINDEXTER &
CO., INC., a Delaware corporation (the "Borrower"), MERIDIAN BANK, a
Pennsylvania banking corporation ("Meridian"), MERITA BANK LTD. (f/k/a
KANSALLIS-OSAKE-PANKKI, NEW YORK BRANCH), a bank organized under the sovereign
laws of Finland ("Merita"), BOT FINANCIAL CORPORATION, a Delaware corporation
("BOT"; BOT, Merita and Meridian collectively, the "Banks") and Meridian, as
agent (together with any successor(s) thereto in such capacity, the "Agent").
W I T N E S S E T H
WHEREAS, the Borrower, the Banks and the Agent are parties to a Loan
and Agency Agreement dated as of May 23, 1994, as amended by the First
Amendment to Loan and Agency Agreement dated as of May 11, 1995, the Second
Amendment to Loan and Agency Agreement dated as of September 19, 1995 and the
Third Amendment to Loan and Agency Agreement dated as of December 29, 1995 (as
amended, modified and/or extended, the "Loan Agreement") pursuant to which the
Banks have agreed to extend credit to the Borrower during the period and upon
the terms and conditions specified in the Loan Agreement;
WHEREAS, the parties intend to amend certain terms and conditions of
the Loan Agreement as hereinafter set forth,
NOW THEREFORE, in consideration of the premises and mutual agreements
herein contained, the parties hereto, intending to be legally bound, hereby
agree to amend the Loan Agreement as herein stated.
1. Effect of this Amendment. This Fourth Amendment is intended
to amend the Loan Agreement, as it has been in effect to the date hereof and as
it shall be amended on and after the date hereof. All terms used herein as
defined terms shall have the meaning ascribed to them in the Loan Agreement
unless herein provided to the contrary.
<PAGE> 2
2. Amendments.
(a) Additional Definitions. The following definition is
hereby added to Section 12.1 in appropriate alphabetical order:
"Equipment" shall mean with respect to any Person all
machinery, equipment, furniture, fixtures, tools, (other than motor
vehicles) and all accessories, parts and equipment now or hereafter
attached thereto or used in connection therewith, whether or not the
same shall be deemed affixed to real property, and all other tangible
personal property of such Person.
"Fixed Asset Collateral" shall mean with respect to any Person
all Equipment and all additions replacements, attachments, accessions
and substitutions for any Equipment and all books and records
evidencing or relating to the foregoing of such Person.
"Fourth Amendment Collateral" shall mean, collectively, the
Mortgage Collateral and the Fixed Asset Collateral.
"Leasehold Mortgages" shall mean the leasehold mortgages in
form and substance satisfactory to the Agent and the Banks, by which
certain of the Guarantors shall grant to the Agent leasehold mortgages
with respect to certain real property as set forth on Schedule A to
the Fourth Amendment to this Agreement dated as of March 29, 1996 and
required pursuant to Article III of this Agreement, together with all
amendments, modifications, exhibits and schedules thereto as may be in
effect from time to time.
"Mortgage Collateral" shall mean collectively, the Mortgaged
Property, the Deeded Property and the Trust Property as each of those
terms are defined in one or more of the Mortgages and/or Leasehold
Mortgages.
"Mortgages" shall mean the mortgages, in form and substance
satisfactory to the Agent and the Banks by which Morgan shall grant to
the Agent a mortgage lien
- 2 -
<PAGE> 3
on the real property located in Ehrenberg, Arizona, Ephrata,
Pennsylvania and Morgantown, Pennsylvania, Leer shall grant to the
Agent a mortgage lien on the real property located in Elkhart,
Indiana, Lowy shall grant to the Agent a mortgage lien on the real
property located in Ellijay, Georgia, EFP shall grant to the Agent a
mortgage lien on the real property located in Elkhart, Indiana and MIC
shall grant to the Agent a mortgage lien on the real property located
in Brenham, Texas, as set forth on Schedule A to the Fourth Amendment
to this Agreement dated as of March 29, 1996 and required pursuant to
Article III of this Agreement, together with all amendments,
modifications, exhibits and schedules thereto as may be in effect from
time to time.
"TACO" shall mean an amount equal to ten percent (10%) of the
Consolidated Tangible Assets, as defined in the Indenture, of the
Borrower.
"Tranche A" shall have the meaning set forth in Section 1.2(a)
hereof.
"Tranche B" shall have the meaning set forth in Section 1.2(a)
hereof.
(b) Certain Definitions. The definition of "Guarantor"
in Section 12.1 of the Loan Agreement is hereby amended and restated to read in
its entirety as follows:
"Guarantor" shall mean EFP, Leer, Lowy, MIC, Morgan
and any other Person who guarantees the payment and
performance of all or any part of the Obligations; provided
that for purposes of (A) the third and fourth sentences of
Section 1.2(a), (B) Section 1.5(iii), (C) Sections 2.2(j) and
(k), (D) Section 4.4(a), (E) Section 5.1, (F) the definition
of "Intercompany Loan Documents", (G) the definition of
"Intercompany Notes", (H) the definition of "Intercompany
Security Agreements", and (I) the definition of "Intercompany
Trademark Assignments", the term "Guarantor" shall not include
Raider; and provided further that for
- 3 -
<PAGE> 4
purposes of Sections 5.2(a), (b) and (c) it is understood and
agreed that consolidating statements of each of Truck
Accessories Group, Inc. (f/k/a Leer, Inc.) and Raider shall be
required to be delivered pursuant thereto.
(c) Effective on the first date to occur upon which all documents
set forth in Section 5(b) of the Fourth Amendment to this Agreement dated as of
March 29, 1996 shall have been delivered, the first paragraph of Section 1.2(a)
of the Loan Agreement shall hereby be amended and restated to read in its
entirety as follows:
(a) Revolving Loans. At any time and from time
to time during the period commencing on the Agreement Date and
ending on the Termination Date, upon the request of the
Borrower, unless this Agreement is sooner terminated as
hereinafter provided, each of the Banks agree, subject to the
terms hereof, to make Loans on a revolving credit basis (a
"Loan" or the "Loans") to the Borrower in two tranches
consisting of Tranche A ("Tranche A") and Tranche B ("Tranche
B") in an aggregate principal amount at any time outstanding
which, together with all other outstanding Advances does not
exceed the lesser of (A) the Revolving Credit Commitment or
(B) the Borrowing Base of the Borrower and the Guarantors.
Notwithstanding anything herein to the contrary (i) the
aggregate principal amount of Advances outstanding at any time
under Tranche A shall not exceed the lesser of (A) the
Aggregate Available Borrowing Base or (B) Forty-Four Million
Five Hundred Thousand Dollars ($44,500,000) and (ii) the
aggregate principal amount of Advances outstanding at any time
under Tranche B shall not exceed the lesser of (A) Five
Million Five Hundred Thousand Dollars ($5,500,000) or (B) the
difference of the Borrowing Base of the Borrower and the
Guarantors less the aggregate principal amount of Advances
then outstanding under Tranche A. Subject, with respect to
each Guarantor, to the dollar limits of each Guarantor's
respective Sub-Line, (I) Borrower
- 4 -
<PAGE> 5
hereby agrees that upon receipt of funds pursuant to any Loans
under Tranche A hereunder it will simultaneously lend such
Tranche A funds to one or more of the Guarantors but in no
case in excess of each Guarantor's respective Available
Borrowing Base and (II) Borrower hereby agrees that upon
receipt of funds pursuant to any Loans under Tranche B
hereunder it will simultaneously lend such funds to one or
more of the Guarantors. All loans made by the Borrower to the
Guarantors shall be made pursuant to the Intercompany Loan
Documents. Each LIBOR Rate Loan requested by Borrower shall
be in an amount not less than $1,000,000. If at the time of
such request, (i) the aggregate outstanding principal amount
of the Advances exceeds the lesser of (A) the Revolving Credit
Commitment or (B) the Borrowing Base of the Borrower and the
Guarantors, (ii) the aggregate outstanding principal amount of
the Advances under Tranche A exceeds the lesser of (A) the
then current Aggregate Available Borrowing Base or (B)
$44,500,000, (iii) the aggregate outstanding Advances under
Tranche B exceeds $5,500,000, (iv) the outstanding Advances
from Tranche A funds applicable to a given Guarantor exceeds
such Guarantor's then current Available Borrowing Base or (v)
the outstanding Advances, whether consisting of Tranche A
funds or Tranche B funds, applicable to a given Guarantor
exceeds such Guarantor's then current Sub-Line, then,
notwithstanding anything herein to the contrary without any
requirement of demand or notice from the Banks, the Borrower
shall immediately pay to Agent on behalf of the Banks the
amount of such excess. Within the foregoing limits and in
compliance with other terms and conditions hereof, the
Borrower may borrow, repay and reborrow from the Banks
hereunder on or after the Agreement Date and prior to the
Termination Date.
- 5 -
<PAGE> 6
(d) Section 1.20 of the Loan Agreement is hereby amended
by deleting the phrase "Business Days" appearing in the last line of such
Section and substituting therefor the phrase "calendar days".
(e) Section 3.1 of the Loan Agreement is hereby amended
and restated to read in its entirety as follows:
3.1 Security Documents. As security for the
prompt payment, performance, satisfaction and discharge when
due of all the Obligations, the Borrower shall execute and
deliver or shall cause to be executed and delivered to the
Bank, the Security Agreements, the Intercompany Loan
Documents, the Guaranty Agreements, the Collateral Assignment
of Contract, the Trademark Assignments, the Leasehold
Mortgages and the Mortgages; provided that notwithstanding the
foregoing, the aggregate amount of the Obligations secured by
the Fourth Amendment Collateral shall not exceed the TACO.
(f) Section 5.2(b) of the Loan Agreement is hereby
amended and restated to read in its entirety as follows:
(b) within forty-five (45) days after the end of
each calendar month as of the end of which the Borrower is
required to file a Quarterly Report on Form 10-Q and within
thirty (30) days after the end of all other months, a
consolidated and consolidating balance sheet, statement of
income, statement of cash flows and such other financial
statements in such detail as the Agent and the Banks may
reasonably request, which shall present fairly the financial
position of the Borrower and each Guarantor respectively as of
the end of such month and the results of their consolidated
and consolidating operations and a statement of cash flows
during such month, in accordance with GAAP, certified by the
chief
- 6 -
<PAGE> 7
financial officer of the Borrower and each Guarantor
respectively;
(g) Section 5.2(c) of the Loan Agreement are hereby
amended and restated to read as follows:
(c) Within fifteen (15) calendar days after the
end of each fiscal month, the Borrowing Base Certificates
required by Section 1.20 hereof in form satisfactory to the
Agent and the Banks executed by (i) the chief financial
officer or the controller of the Borrower as to the aggregate
amount of the Qualified Accounts of the Guarantors, the
aggregate amount of the Qualified Inventory of the Guarantors,
the Aggregate Available Borrowing Base, outstanding principal
of Revolving Credit Loans and availability under the Revolving
Credit Commitment as of end of that month, and (ii) the chief
financial officer or the controller of each of the Guarantors
respectively as to the amounts of such Guarantor's Qualified
Accounts, Qualified Inventory, Available Borrowing Base,
outstanding principal of Revolving Credit Loans and
availability under the Revolving Credit Commitment as of the
end of that month. Concurrently with the delivery of the
Borrowing Base Certificates, the Borrower shall deliver a
certificate which shall state that, based on an examination
sufficient to enable the Borrower to make an informed
statement, no Event of Default has occurred or is continuing
since the Agreement Date or since the date the last such
certificate was delivered pursuant to this Section 5.2,
whichever date is later or, if such an event has occurred,
disclosing each such event and its nature, when it occurred,
whether it is continuing and the steps being
- 7 -
<PAGE> 8
taken by the Borrower with respect to such event; and
(h) Section 5.2 of the Loan Agreement is hereby amended
by adding a new Subsection (e) to read in its entirety as follows:
(e) contemporaneously with the delivery of the
monthly financial statements pursuant to the provisions of
Section 5.2(b) hereof, the Borrower shall deliver a
certificate setting forth a written calculation of the TACO as
of the end of the immediately preceding month and stating
that, based on an examination sufficient to enable the
Borrower to make an informed statement, no Event of Default
under the Indenture has occurred and is continuing since the
Agreement Date or since the date the last such certificate was
delivered, whichever date is later, or, if an Event of Default
under the Indenture has occurred, disclosing each such Event
of Default and its nature, when it occurred, whether it is
continuing and the steps being taken by the Borrower with
respect to such Event of Default, all of which certificate
shall be in form and substance satisfactory to the Agent and
the Banks and executed by the chief financial officer or
controller of the Borrower.
(i) Section 5.2 of the Loan Agreement is hereby amended
by adding a new Subsection (f) to read in its entirety as follows:
(f) contemporaneously with the delivery of the
monthly financial statements pursuant to the provisions of
Section 5.2(b) hereof, the Borrower shall deliver to the Agent
a certificate which shall (i) if such month is the last month
of a calendar quarter, set forth as at the end of such month
the calculations establishing whether or not
- 8 -
<PAGE> 9
the Borrower, on a combined basis, and each of the Guarantors
were in compliance with their respective financial covenants
and (ii) stating that, based on an examination sufficient to
enable the Borrower to make an informed statement, no Event of
Default has occurred and is continuing since the Agreement
Date or since the date the last such certificate was delivered
pursuant to Section 5.2(d), whichever date is later or, if
such Event of Default has occurred, disclosing each such Event
of Default and its nature, when it occurred, whether it is
continuing and the steps being taken by the Borrower with
respect to such Event of Default.
(j) Section 5.2 of the Loan Agreement is hereby amended
by adding a new Subsection (g) to read in its entirety as follows:
(g) contemporaneously with the delivery of the
monthly financial statements pursuant to the provisions of
Section 5.2(b) hereof, the Borrower shall deliver to the Agent
a certificate which shall set forth a monthly reconciliation
of the intercompany loan payable general ledger accounts for
Leer as of the end of the immediately preceding month which
certificate shall be in form and substance satisfactory to the
Agent and the Banks and executed by the respective chief
financial officers or controllers of the Borrower and Leer.
(k) Section 5.2 of the Loan Agreement is hereby amended
by adding a new Subsection (h) to read in its entirety as follows:
(h) within fifteen (15) days of the end of each
fiscal month, the Borrower shall deliver to the Agent (i)
monthly accounts receivable and accounts payable aging reports
- 9 -
<PAGE> 10
for the Borrower and each of the Guarantors for the
immediately preceding month, all of which shall be in form and
substance satisfactory to the Agent and the Banks and executed
by the respective chief financial officers or controllers of
the Borrower and each of the Guarantors and (ii) backlog
information for each of the Guarantors as of the end of the
immediately preceding month, all of which shall be in form and
substance satisfactory to the Agent and the Banks and executed
by the respective chief financial officers or controllers of
each of the Guarantors.
(l) Section 5.2 of the Loan Agreement is hereby amended
by adding a new Subsection (i) to read in its entirety as follows:
(i) Within three (3) Business Days of the end of
each week, the Borrower shall deliver to the Agent Borrowing
Base Certificates as of the end of the immediately preceding
week for each of the Guarantors including, without limitation,
(x) updated Account balances and (y) the Inventory balances as
shown on the most recent Borrowing Base Certificates delivered
pursuant to Section 5.2(c), and otherwise in form and
substance satisfactory to the Agent and the Banks executed by
the chief financial officer of each of the Guarantors.
(m) Article VI of the Loan Agreement is hereby amended by
adding a new Section 6.19 to read in its entirety as follows:
6.19 Leer Debt. The Borrower shall not permit the
aggregate principal amount of the net intercompany loans
payable to the Borrower from Leer (other than intercompany
loans evidenced by the Intercompany Note of Leer) to exceed a
maximum
- 10 -
<PAGE> 11
of Fifty-Nine Million Dollars ($59,000,000) at any time;
provided that such maximum principal amount shall be increased
or decreased on a dollar for dollar basis by the corresponding
amount of any and all non-cash transactions between the
Borrower and Leer.
(n) The notice address for the Agent set forth in Section
11.3 of the Loan Agreement is hereby amended and restated to read in its
entirety as follows:
If to the Agent:
Meridian Bank
SQ0810
601 Penn Street
P.O. Box 1102
Reading, PA 19601
Attn: Mr. Paul D. Cohn
Vice President
and
Meridian Bank
P.O. Box 7588
Philadelphia, PA 19101
Attn: Ms. Helen Wessling
Assistant Vice President
With a copy to:
Duane, Morris & Heckscher
One Liberty Place
Philadelphia, PA 19103
Attn: Thomas J. Karl, Esquire
(o) Schedule 5.15 is hereby amended and restated to read
in its entirety in the form attached hereto as Exhibit A.
3. Representations and Warranties. The Borrower hereby reaffirms
to the Banks all representations and warranties made under the Loan Agreement
and confirms that as amended by this Fourth Amendment such are true and correct
as of the date hereof
- 11 -
<PAGE> 12
(except to the extent such representations and warranties relate solely to an
earlier date). The Borrower further represents and warrants that it has the
authority and legal right to execute, deliver and carry out the terms of this
Fourth Amendment, that such actions were duly authorized by its Board of
Directors, and that this Fourth Amendment does not contravene any provision of
its Certificate of Incorporation, By-laws or of any contract or agreement to
which it is a party or by which it or any of its properties is bound. The
Borrower hereby affirms and reaffirms to the Banks all of the covenants
contained in the Loan Agreement as amended by this Fourth Amendment, including,
without limitation, those contained in Articles V and VI of the Loan Agreement,
and agrees to abide thereby in accordance and as required by the Loan Agreement
until all of the Borrower's Obligations to Banks are satisfied and/or
discharged in their entirety. All of the above representations and warranties
shall survive the making of this Fourth Amendment.
4. Further Assurances. The Borrower hereby agrees to execute and
deliver to the Agent such further agreements, security agreement, financing
statements and other documentation as may be reasonably requested by the Agent
at any time to assure the protection and enforcement of the Bank's rights under
the Loan Agreement as amended hereby.
5. Conditions. The Agent's and the Banks' obligations to enter
into this Fourth Amendment are conditioned upon the satisfaction by the
Borrower of the following conditions precedent:
(a) Documents to be delivered on or before the date
hereof. On or before the date hereof, the Borrower shall deliver, or cause to
be delivered, to the Agent the Fourth Amendment duly executed by the Borrower.
(b) Documents to be delivered on or before April 30,
1996. On or before April 30, 1996 the Borrower shall deliver, or cause to be
delivered, to the Agent the following documents each of which shall be in form
and substance satisfactory to the Agent and the Banks and their counsel:
- 12 -
<PAGE> 13
(i) The Mortgages and the Leasehold Mortgages
duly executed by the respective Guarantors party thereto;
(ii) A reaffirmation and amendment to the
Security Agreement previously executed and delivered by the Borrower,
and such Uniform Commercial Code financing statements and/or
verification statements and other documentation as the Agent may
require to be executed by the Borrower, a reaffirmation of the
Collateral Assignment of Contracts previously executed and delivered
by the Borrower, a reaffirmation of the Lockbox Agreement previously
executed and delivered by the Borrower, a reaffirmation of the
Collateral Assignment of Deposit Agreement previously executed and
delivered by the Borrower and a reaffirmation of the Bank Agency
Agreement previously executed and delivered by the Borrower all of
which shall be duly executed by the Borrower;
(iii) A reaffirmation of the Guaranty Agreement
previously executed and delivered by each Guarantor, a reaffirmation
and amendment to the Security Agreement previously executed and
delivered by each Guarantor, a reaffirmation and amendment to the
Intercompany Security Agreement previously executed and delivered by
each Guarantor (other than Raider) and such Uniform Commercial Code
financing statements and/or verification statements and other
documentation as the Agent may require to be executed by the
Guarantors all of which shall be duly executed by the Guarantors;
(iv) Certificates of the Secretary or an
Assistant Secretary (or, in the case of Raider, the Vice President) of
the Borrower and each Guarantor dated as of the date of the Fourth
Amendment including (i) resolutions duly adopted by the Borrower and
each Guarantor authorizing the transactions under the Loan Documents;
(ii) evidence of the incumbency and signature of the officers
executing on its behalf any of the Loan Documents and any other
document to be delivered pursuant to any such documents, together with
evidence of the incumbency of such Secretary or
- 13 -
<PAGE> 14
Assistant Secretary (or, in the case of Raider, the Vice President);
(iii) a certification that the by-laws and the Articles and
Certificate of Incorporation of the Borrower and each Guarantor
previously delivered to the Agent in connection with the Loan
Agreement, except as set forth in such certificates, have not been
amended, modified or rescinded and remain in full force and effect;
and (iv) certificates of authority or good standing for the Borrower
and each Guarantor from their respective jurisdictions of
incorporation and any other jurisdictions where the Borrower and each
Guarantor is qualified to do business;
(v) Reaffirmations and amendments of the
Security Agreement Questionnaires duly executed by the Borrower and
the Guarantors;
(vi) A copy of each and every authorization,
permit, consent, and approval of and other action by, and notice to
and filing with, every governmental authority and regulatory body
which is required to be obtained or made by the Borrower and/or each
Guarantor for the due execution, delivery and performance of this
Agreement and the other Loan Documents;
(vii) Officer's Certificate duly executed by
the Chief Financial Officer of the Borrower;
(viii) The opinion of Mayer, Brown & Platt in
form and substance reasonably satisfactory to the Agent and the Banks
and their counsel.
(ix) The opinions of local counsel in the States
of Arizona, Georgia, Indiana, Pennsylvania and Texas, in form and
substance reasonably satisfactory to the Agent and the Banks and their
counsel.
(x) Uniform Commercial Code lien search results
with respect to the Borrower and each of the Guarantors and title
search results with respect to the Mortgage Collateral all of which
shall be in form and
- 14 -
<PAGE> 15
substance satisfactory to the Agent and the Banks and their counsel.
(xi) The final audited financial statements to
be delivered to the Agent pursuant to the provisions of Section 5.2(a)
of the Loan Agreement; provided, that such final audited financial
statements shall not indicate any material changes from the drafts of
such audited financial statements previously delivered by the Borrower
to the Agent; and, provided further, that notwithstanding anything
herein to the contrary, the Borrower must deliver such final financial
statements to the Agent not later than Wednesday, April 10, 1996.
Notwithstanding anything to the contrary set forth herein, the
Banks shall not be obligated to make any Loans to the Borrower under Tranche B
unless and until each of the documents set forth in this Section 5(b) have been
delivered to the Agent on or before the applicable required date.
6. Reaffirmation and Extension of Agreement. Except as modified
by the terms hereof, all of the terms and conditions of the Loan Agreement and
the other Loan Documents are hereby affirmed and shall continue in full force
and effect as therein written.
7. Reservation of Rights. To the extent any Event of Default
exists on the date hereof that has not been waived in writing, any and all
undertakings of the Agent and the Banks under or pursuant to this Fourth
Amendment shall not be deemed a waiver by the Agent and the Banks of any such
Event of Default or any of the Agent's and the Banks' rights and remedies under
the Loan Agreement and/or applicable law; and the Agent and the Banks hereby
reserve any and all such rights and remedies.
8. Payments of Expenses. The Borrower agrees to pay for the
Agent's counsel's reasonable legal fees (and any out-of-pocket costs and
expenses) incurred in connection with the preparation and execution of this
Fourth Amendment and all other related documents.
- 15 -
<PAGE> 16
9. Effective Date. This Fourth Amendment shall have effect as of
its date.
10. Miscellaneous. This Fourth Amendment may be executed in two
or more counterparts, and by different parties on different counterparts, each
of which shall be deemed an original and in making proof of this Fourth
Amendment, it shall be necessary only to produce sufficient counterparts.
This Fourth Amendment and the rights and obligations of the parties
hereunder shall be construed in accordance with and shall be governed by the
internal laws of the Commonwealth of Pennsylvania without regard to the
conflict of law principles.
- 16 -
<PAGE> 17
IN WITNESS WHEREOF, the parties hereto have caused this Fourth
Amendment to be executed and delivered by their proper and duly authorized
officers, as of the date first above written.
Attest: J. B. POINDEXTER & CO., INC.
By:___________________________ By:__________________________
Name:_________________________ Name:________________________
Title:________________________ Title:_______________________
MERIDIAN BANK,
Individually and as Agent
By:___________________________
Name:_________________________
Title:________________________
MERITA BANK LTD.
By:___________________________
Name:_________________________
Title:________________________
BOT FINANCIAL CORPORATION
By:___________________________
Name:_________________________
Title:________________________
- 17 -
<PAGE> 18
EXHIBIT A TO
FOURTH AMENDMENT TO
LOAN AND AGENCY AGREEMENT
Schedule 5.15
FINANCIAL COVENANTS
This Schedule is a part of the Loan and Agency Agreement dated May 23,
1994 among J.B. Poindexter & Co., Inc. and the Banks referenced therein and
Meridian Bank, as Agent for the Banks, as amended.
I. BORROWER
A. Minimum Current Ratio--The Borrower on a consolidated basis
shall have a Current Ratio at the end of each calendar quarter of not less
than:
1. 1.25:1.0 for the quarter ending March 31, 1996;
2. 1.25:1.0 for the quarter ending June 30, 1996;
3. 1.25:1.0 for the quarter ending September 30, 1996;
4. 1.25:1.0 for the quarter ending December 31, 1996 and
thereafter.
B. Minimum Net Worth--The Borrower on a consolidated basis shall
have a Net Worth at the end of each calendar quarter of not less than:
1. $5,163,000 for the quarter ending March 31, 1996;
2. $6,665,000 for the quarter ending June 30, 1996;
3. $8,578,000 for the quarter ending September 30, 1996;
4. $10,343,000 for the quarter ending December 31, 1996 and
thereafter.
- 18 -
<PAGE> 19
C. Minimum Debt Coverage Ratio--The Borrower on a consolidated
basis shall have a Debt Coverage Ratio at the end of each calendar quarter of
not less than:
1. 0.63:1.0 for the quarter ending March 31, 1996;
2. 0.69:1.0 for the quarter ending June 31, 1996;
3. 1.21:1.0 for the quarter ending September 30, 1996;
4. 1.30:1.0 for the quarter ending December 31, 1996 and
thereafter.
II. MORGAN
A. Minimum Current Ratio--Morgan shall have a Current Ratio at
the end of each calendar quarter of not less than:
1. 1.52:1.0 for the quarter ending March 31, 1996;
2. 1.83:1.0 for the quarter ending June 30, 1996;
3. 1.85:1.0 for the quarter ending September 30, 1996;
4. 2.52:1.0 for the quarter ending December 31, 1996 and
thereafter.
B. Minimum Net Worth--Morgan shall have a Net Worth at the end of
each calendar quarter of not less than:
1. $13,081,000 for the quarter ending March 31, 1996;
2. $14,239,000 for the quarter ending June 30, 1996;
3. $15,425,000 for the quarter ending September 30, 1996;
4. $16,929,000 for the quarter ending December 31, 1996 and
thereafter.
- 19 -
<PAGE> 20
III. TAG
A. Minimum Net Worth--TAG shall have a Net Worth at the end of
each calendar quarter of not less than:
1. ($22,631,000) for the ending March 31, 1996;
2. ($23,283,000) for the quarter ending June 30, 1996;
3. ($23,533,000) for the quarter ending September 30, 1996;
4. ($24,285,000) for the quarter ending December 31, 1996
and thereafter.
For purposes of the Financial Covenants set forth in the Schedule 5.15
hereof, the financial results of any Unrestricted Subsidiary or any Restricted
Subsidiary which is not a Guarantor or Borrower hereunder shall not be included
in the calculation of such covenants.
For purposes of this Schedule, all capitalized terms used herein and
not otherwise defined shall have the meanings given to them, respectively, in
the Loan Agreement, and the following terms shall have the following meanings:
"Current Assets" shall mean, with respect to any Person, at any time,
all assets which, in accordance with GAAP, should be classified as current
assets of such Person.
"Current Liabilities" shall mean, with respect to any Person, at any
time, all liabilities which, in accordance with GAAP, should be classified as
current liabilities of such Person.
"Current Ratio" shall mean, with respect to any Person, at any time,
the ratio of Current Assets of such Person to Current Liabilities of such
Person.
For purposes of the definition of Current Ratio, outstanding
liabilities of a Person under this Agreement shall not be included in the
calculation of "Current Liabilities."
- 20 -
<PAGE> 21
"Debt Coverage Ratio" shall mean the ratio of EBITDA to interest
expense (exclusive of amortization of deferred financing costs or similar
expenses) plus scheduled principal repayments of long term debt, Capital Lease
Obligations due within the period and scheduled payments under
covenant-not-to-compete agreements, all as determined in accordance with GAAP
for the period for which a determination thereof is to be made; provided that
in determining interest expense for purposes of the Debt Coverage Ratio, there
shall be excluded from interest expense any amount of interest expense of a
Guarantor if the net income of such Guarantor is excluded from the calculation
of Net Income pursuant to the proviso in the definition thereof (but only in
the same proportion as the net income of such Guarantor is excluded from the
calculation of Net Income pursuant to the proviso in the definition thereof).
"EBITDA" shall mean, for the period for which a determination thereof
is to be made on a consolidated basis the Net Income for such period increased
by the sum of (i) interest expense for such period, plus (ii) income tax
expense for such period, plus (iii) the depreciation and amortization expense
included in the income statement for such period, plus (iv) other non-cash
charges (such as minority interests) for such period deducted from consolidated
revenues in determining Net Income for such period, minus (v) non-cash items
for such period increasing revenues in determining Net Income for such period.
"Net Income" shall mean, for any period, the net income (before the
deduction of federal and state income taxes) of the Borrower, determined in
accordance with GAAP, excluding:
(a) the proceeds of any insurance policy;
(b) any gain or loss arising from:
(1) the sale or other disposition of any assets
(other than Current Assets);
(2) any write-up of assets; or
(3) the acquisition of outstanding securities
representing Indebtedness of the Borrower;
- 21 -
<PAGE> 22
(c) any earnings, prior to the date of acquisition, of
any Person acquired in any manner;
(d) any earnings of a successor to or transferee of
the assets of the Borrower prior to becoming such successor or transferee;
(e) any deferred credit (or amortization of a deferred
credit) arising from the acquisition of any Person; and
(f) any other item constituting an extraordinary gain
or loss under GAAP.
provided that there shall be excluded from Net Income the net income (but not
net loss) of any Guarantor which is subject to restrictions which prevent the
payment of dividends or the making of distributions (by loans, advances,
intercompany transfers or otherwise) to the Borrower to the extent of such
restrictions.
"Net Worth" shall mean total stockholder's equity as defined under
GAAP and used herein with the same meaning.
- 22 -
<PAGE> 23
SCHEDULE A
TO FOURTH AMENDMENT TO
LOAN AND AGENCY AGREEMENT
LIST OF MORTGAGE COLLATERAL
<TABLE>
<CAPTION>
Location Square Feet
-------- -----------
Owned/Leased
------------
<S> <C> <C>
I. MORGAN
------
18275 Morgan Drive
Ehrenberg, Arizona 85334 112,000
Owned
485 Wenger Drive
Ephrata, Pennsylvania 17522 50,000
Owned
Grace Mines Plant #7
Commerce Drive
New Morgan Borough
Morgantown, Pennsylvania 19543 62,900
Owned
One Morgan Way
Morgantown, Pennsylvania 19543 261,500
Owned
115 Thousand Oaks Boulevard
Morgantown, Pennsylvania 19543 9,600
Owned
II. LEER (Century/Raider/Gemtop)
----------------------------
1131 D.I. Drive
Elkhart, Indiana 46514 91,900
Owned
Plant #4
</TABLE>
- 23 -
<PAGE> 24
<TABLE>
<S> <C> <C>
28722 Jamie Drive
Elkhart, Indiana 46514 18,400
Leased
III. LOWY (Blue Ridge)
-----------------
100 Progress Road
Ellijay, Georgia 30540 195,000
Leased
IV. LOWY (Courier)
--------------
Highway 282
Ellijay, Georgia 30540 66,000
Leased
V. EFP
---
223 Middleton Run Road
Elkhart, Indiana 46516 211,600
Leased
530 Riverview Avenue
Elkhart, Indiana 46515 24,900
Leased
VI. MIC
---
1801 Industrial Boulevard
Brenham, Texas 77834 75,500
Leased
</TABLE>
- 24 -
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 1996 1ST
QUARTER 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 4,211
<SECURITIES> 0
<RECEIVABLES> 41,146
<ALLOWANCES> 2,711
<INVENTORY> 55,640
<CURRENT-ASSETS> 105,227
<PP&E> 51,844
<DEPRECIATION> 0
<TOTAL-ASSETS> 192,004
<CURRENT-LIABILITIES> 78,245
<BONDS> 104,233
<COMMON> 0
0
16,486
<OTHER-SE> (10,139)
<TOTAL-LIABILITY-AND-EQUITY> 192,004
<SALES> 98,903
<TOTAL-REVENUES> 98,963
<CGS> 79,343
<TOTAL-COSTS> 79,343
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,915
<INCOME-PRETAX> (5,101)
<INCOME-TAX> (1,985)
<INCOME-CONTINUING> (3,116)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,116)
<EPS-PRIMARY> (1.018)
<EPS-DILUTED> (1.018)
</TABLE>
<PAGE> 1
March 27, 1996
J. B. Poindexter & Co., Inc.
1100 Louisiana Street
Suite 5400
Houston, TX 77002
Attn: Mr. John B. Poindexter
Chief Executive Officer
Re: Loan and Agency Agreement among J.B. Poindexter & Co., Inc.,
the Banks party thereto and Meridian Bank, as Agent for the
Banks dated as of May 23, 1994, as amended.
Gentlemen:
Reference is hereby made to that certain Loan and Agency Agreement
dated as of May 23, 1994, as amended (as amended, modified and/or extended, the
"Credit Agreement") whereby certain Banks listed therein agreed to extend
certain credit facilities to the Borrower, subject to the terms and conditions
therein. In addition, certain Guaranty Agreements were executed by EFP
Corporation ("EFP"), Leer, Inc. now known as Truck Accessories Group,
Inc. ("TAG"), Lowy Group, Inc. ("Lowy"), Magnetic Instruments Corp. and Morgan
Trailer Mfg. Co. Reference is hereby made to the Credit Agreement for a
statement of the terms thereof. Terms capitalized herein and not otherwise
defined shall have the meanings given to them, respectively, in the Credit
Agreement.
You have notified us that as of December 31, 1995 (i) the Net
Worth of the Borrower was less than the amount required as of such date under
Section 5.15 of the Credit Agreement, (ii)
<PAGE> 2
the Debt Coverage Ratio of the Borrower as of December 31, 1995 was less than
the amount required as of such date under Section 5.15 of the Credit Agreement
and (iii) as of December 31, 1995 the Advances to EFP, TAG and Lowy exceeded
their respective Available Borrowing Bases. Accordingly, the Borrower is in
violation of Sections 5.15 and 1.2 of the Credit Agreement and an Event of
Default has occurred under the Credit Agreement.
You have requested that the Agent and the Banks waive such
above-referenced Events of Default and amend and reset the financial covenants
set forth in the Credit Agreement for the period January 1, 1996 through and
including May 31, 1997. Accordingly, the Agent and the Banks, pursuant to such
request, hereby waive the Events of Default by virtue of the Borrower's failure
to be in compliance with the above-referenced Section of the Credit Agreement
and agree to amend and reset the financial covenants set forth in the Credit
Agreement for the period January 1, 1996 through and including May 31, 1997 on
the following conditions:
1. On or before Friday, March 29, 1996 the Borrower and
each of the Guarantors, as appropriate, shall execute and deliver an amendment
to the Credit Agreement (the "Fourth Amendment") which shall be substantially
in accordance with the terms and conditions set forth in the Term Sheet
attached hereto as Exhibit A (the "Term Sheet") and otherwise in form and
substance satisfactory to the Agent and the Banks.
2. On or before Tuesday, April 30, 1996 the Borrower and
each of the Guarantors shall execute and deliver such other documentation as
the Agent and the Banks shall request or require in connection with the Fourth
Amendment and the Term Sheet all of which shall be in form and substance
satisfactory to the Agent and the Banks. Without limiting the foregoing, the
Borrower and the Guarantors shall grant the Agent on behalf of the Banks valid
perfected first priority liens on their respective fixed assets including,
without limitation, machinery and equipment, and valid perfected first lien
mortgages on certain real property of the Borrower and/or the Guarantors to be
determined by the Agent and the Banks in their sole discretion; provided that
the indebtedness secured by such liens on fixed assets and mortgages shall be
limited as set forth in the Term Sheet.
<PAGE> 3
The undersigned hereby expressly reserves all rights,
remedies, powers and privileges under the Credit Agreement, the other Loan
Documents and applicable law, which the undersigned may have in connection with
the occurrence of any and all Event(s) of Default other than the Events of
Default enumerated above which may have occurred or which may occur in the
future.
This waiver shall have effect only with respect to the Event
of Default as specifically provided in this letter in relation to the
referenced Section of the Credit Agreement. Except as specifically provided
herein, neither this letter nor anything in connection herewith shall
constitute a waiver of other violations of or defaults under such Section, all
of which shall remain in full force and effect or of any other violations or
defaults presently existing under the Credit Agreement, whether or not known to
the Bank and shall not extend to the incurrence of any subsequent default under
such referenced Section or any other section of the Credit Agreement. Except
for the specific violations herein described for the dates described herein,
and except for any violations which have previously been waived in writing, the
Borrower shall be strictly accountable for any and all past, present and future
violations of any and all terms, conditions and covenants under the Credit
Agreement and under any and all other agreements for which the Borrower is a
party with the Bank.
Nothing herein is intended to constitute a custom or course of
conduct on the part of the Bank with respect to the request for similar waivers
or extensions in the future.
<PAGE> 4
If the forgoing terms are acceptable to you, please execute a
copy of this letter and return it to the undersigned.
MERIDIAN BANK, in its capacity as a
Bank and as Agent for the Banks
By: ________________________________
Paul Cohn
Vice President
MERITA BANK LTD.
By: ________________________________
Name:
Title:
BOT FINANCIAL CORPORATION
By: ________________________________
Name:
Title:
cc: Paul Clemenceau, Esquire
Mayer Brown & Platt
<PAGE> 5
ACKNOWLEDGED AND AGREED
The undersigned hereby acknowledges and agrees to the foregoing terms
this ____ day of March, 1996.
J.B. POINDEXTER & CO., INC.
By:__________________________
Name:
Title:
