-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KsPInj5yxR05Twm/1fhNoAiXc1+z2TUaIGfJ3F7HfWmBYC6tAC1yn1TW7SLzKOMN Sl1eJZTAjlv6GkofZAW4YQ== 0001116502-04-002106.txt : 20040817 0001116502-04-002106.hdr.sgml : 20040817 20040817090743 ACCESSION NUMBER: 0001116502-04-002106 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20040703 FILED AS OF DATE: 20040817 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DECORATOR INDUSTRIES INC CENTRAL INDEX KEY: 0000027613 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS FABRICATED TEXTILE PRODUCTS [2390] IRS NUMBER: 251001433 STATE OF INCORPORATION: PA FISCAL YEAR END: 0102 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-07753 FILM NUMBER: 04980618 BUSINESS ADDRESS: STREET 1: 10011 PINES BLVD SUITE 201 CITY: PEMBROKE PINES STATE: FL ZIP: 33024 BUSINESS PHONE: 3054368909 10-Q 1 decorator10q.txt QUARTERLY REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 3, 2004 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 1-7753 DECORATOR INDUSTRIES, INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Pennsylvania 25-1001433 - ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 10011 Pines Blvd., Suite #201, Pembroke Pines, Florida 33024 - ------------------------------------------------------ ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (954) 436-8909 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Title of each class Outstanding at August 17, 2004 ------------------- ------------------------------ Common Stock, Par Value $.20 Per Share 2,819,706 shares PART I - FINANCIAL INFORMATION Item 1. Financial Statements. DECORATOR INDUSTRIES, INC BALANCE SHEETS
July 3, January 3, 2004 2004 ----------- ----------- (UNAUDITED) ASSETS CURRENT ASSETS: Cash and Cash Equivalents $ 141,924 $ 3,991,631 Accounts Receivable, less allowance for doubtful accounts ($200,202 and $200,598) 5,412,664 3,519,418 Inventories 5,701,348 4,123,397 Other Current Assets 524,593 274,285 ----------- ----------- TOTAL CURRENT ASSETS 11,780,529 11,908,731 ----------- ----------- Property and Equipment Land, Buildings & Improvements 5,682,523 5,114,341 Machinery, Equipment, Furniture & Fixtures 6,362,926 6,064,877 ----------- ----------- Total Property and Equipment 12,045,449 11,179,218 Less: Accumulated Depreciation and Amortization 5,527,189 5,157,452 ----------- ----------- Net Property and Equipment 6,518,260 6,021,766 ----------- ----------- Goodwill, less accumulated Amortization of $1,348,569 2,731,717 2,731,717 Identifiable intangible asset, less accumulated Amortization of $331,500 4,168,500 -- Other Assets 258,052 426,108 ----------- ----------- TOTAL ASSETS $25,457,058 $21,088,322 =========== =========== LIABILITIES & STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts Payable $ 3,902,812 $ 1,878,683 Current Maturities of Long-term Debt 170,495 166,251 Accrued Expenses: Income Taxes 22,535 -- Compensation 845,159 940,158 Acquisition Liability 1,391,936 -- Other 1,105,729 915,777 ----------- ----------- TOTAL CURRENT LIABILITIES 7,438,666 3,900,869 ----------- ----------- Long-Term Debt 1,837,922 1,926,832 Deferred Income Taxes 670,000 646,000 ----------- ----------- TOTAL LIABILITIES 9,946,588 6,473,701 ----------- ----------- Stockholders' Equity Common Stock $.20 par value: Authorized shares, 10,000,000; Issued shares, 4,485,728 897,146 897,146 Paid-in Capital 1,381,503 1,426,435 Retained Earnings 21,429,766 20,576,497 ----------- ----------- 23,708,415 22,900,078 Less: Treasury stock, at cost: 1,669,022 and 1,686,840 shares 8,197,945 8,285,457 ----------- ----------- TOTAL STOCKHOLDERS' EQUITY 15,510,470 14,614,621 ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $25,457,058 $21,088,322 =========== ===========
The accompanying notes are an integral part of the financial statements. 1 DECORATOR INDUSTRIES, INC STATEMENTS OF EARNINGS (UNAUDITED)
For the Thirteen Weeks Ended For the Twenty-Six Weeks Ended ------------------------------------------- ------------------------------------------ July 3, 2004 June 28, 2003 July 3, 2004 June 28, 2003 -------------------- -------------------- ------------------- -------------------- Net Sales $ 14,320,830 100.00% $ 10,767,015 100.00% $ 27,112,878 100.00% $ 20,546,768 100.00% Cost of Products Sold 11,240,647 78.49% 8,316,549 77.24% 21,446,860 79.10% 16,026,250 78.00% ------------ ------------ ------------ ------------ Gross Profit 3,080,183 21.51% 2,450,466 22.76% 5,666,018 20.90% 4,520,518 22.00% Selling and Administrative Expenses 2,099,941 14.67% 1,640,167 15.23% 3,977,382 14.67% 3,200,891 15.58% ------------ ------------ ------------ ------------ Operating Income 980,242 6.84% 810,299 7.53% 1,688,636 6.23% 1,319,627 6.42% Other Income (Expense) Interest and Investment Income 26,035 0.18% 26,071 0.24% 53,476 0.20% 41,962 0.20% Interest Expense (28,308) -0.19% (13,442) -0.13% (55,070) -0.21% (23,786) -0.11% ------------ ------------ ------------ ------------ Earnings Before Income Taxes 977,969 6.83% 822,928 7.64% 1,687,042 6.22% 1,337,803 6.51% Provision for Income Taxes 385,000 2.69% 325,000 3.02% 665,000 2.45% 532,000 2.59% ------------ ------------ ------------ ------------ NET INCOME $ 592,969 4.14% $ 497,928 4.62% $ 1,022,042 3.77% $ 805,803 3.92% ============ ============ ============ ============ EARNINGS PER SHARE BASIC $ 0.21 $ 0.18 $ 0.36 $ 0.29 ============ ============ ============ ============ DILUTED $ 0.20 $ 0.18 $ 0.35 $ 0.29 ============ ============ ============ ============ Weighted Average Number of Shares Outstanding Basic 2,813,699 2,793,229 2,809,831 2,792,228 Diluted 2,956,044 2,796,524 2,942,386 2,802,086
The accompanying notes are an integral part of the financial statements. 2 DECORATOR INDUSTRIES, INC STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Twenty-six Weeks Ended ------------------------------ July 3, 2004 June 28, 2003 ------------ ------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 1,022,042 $ 805,803 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities Depreciation and Amortization 718,270 350,305 Provision for Losses on Accounts Receivable -- 20,000 Deferred Taxes 15,000 38,000 (Gain) Loss on Disposal of Assets (584) 10,767 Increase (Decrease) from Changes in: Accounts Receivable (1,893,246) (947,070) Inventories (320,837) 349,444 Prepaid Expenses (241,308) (23,384) Other Assets 168,056 (80,997) Accounts Payable 2,024,129 1,018,074 Accrued Expenses 117,488 (65,605) ----------- ----------- NET CASH PROVIDED BY OPERATING ACTIVITIES 1,609,010 1,475,337 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Net cash paid for acquisitions (4,696,588) -- Capital Expenditures (552,420) (397,197) Proceeds from Property Dispositions 1,150 900 ----------- ----------- NET CASH USED IN INVESTING ACTIVITIES (5,247,858) (396,297) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Long-term Debt Payments (84,666) (62,878) Dividend Payments (168,773) (167,512) Proceeds from Exercise of Stock Options 17,580 -- Issuance of Stock for Directors Trust 25,000 20,000 Proceeds on Debt from Building -- 640,000 ----------- ----------- NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES (210,859) 429,610 Net (Decrease) Increase in Cash and Cash Equivalents (3,849,707) 1,508,650 Cash and Cash Equivalents at Beginning of Year 3,991,631 2,117,762 ----------- ----------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 141,924 $ 3,626,412 =========== =========== Supplemental Disclosures of Cash Flow Information: Cash Paid for: Interest $ 26,527 $ 12,898 Income Taxes $ 621,757 $ 245,259
The accompanying notes are an integral part of the financial statements. 3 DECORATOR INDUSTRIES, INC. NOTES TO FINANCIAL STATEMENTS TWENTY-SIX WEEKS ENDED JULY 3, 2004 AND JUNE 28, 2003 (UNAUDITED) NOTE 1. In the opinion of management, the accompanying unaudited financial statements contain all adjustments necessary to present fairly the Company's financial position as of July 3, 2004, the changes therein for the twenty-six week period then ended and the results of operations for the twenty-six week periods ended July 3, 2004 and June 28, 2003. NOTE 2. The financial statements included in the Form 10-Q are presented in accordance with the requirements of the form and do not include all of the disclosures required by accounting principles generally accepted in the United States of America. For additional information, reference is made to the Company's annual report on Form 10-K for the year ended January 3, 2004. The results of operations for the twenty-six week periods ended July 3, 2004 and June 28, 2003 are not necessarily indicative of operating results for the full year. NOTE 3. INVENTORIES Inventories at July 3, 2004 and January 3, 2004 consisted of the following: July 3, 2004 January 3, 2004 ------------ --------------- Raw Material and supplies $5,238,787 $3,506,619 In Process and Finished Goods 462,561 616,778 ---------- ---------- Total Inventory $5,701,348 $4,123,397 ========== ========== NOTE 4. EARNINGS PER SHARE Basic earnings per share is computed by dividing net income by weighted-average number of shares outstanding. Diluted earnings per share includes the dilutive effect of stock options. In accordance with SFAS No. 128, the following is a reconciliation of the numerators and denominators of the basic and diluted EPS computations.
For the Thirteen Weeks Ended For the Twenty-Six Weeks Ended --------------------------------- --------------------------------- July 3, 2004 June 28, 2003 July 3, 2004 June 28, 2003 ------------ ------------- ------------ ------------- Numerator: Net income $ 592,969 $ 497,928 $1,022,042 $ 805,803 ========== ========== ========== ========== Denominator: Weighted-average number of common shares outstanding 2,813,699 2,793,229 2,809,831 2,792,228 Dilutive effect of stock options on net income 142,345 3,295 132,555 9,858 ---------- ---------- ---------- ---------- 2,956,044 2,796,524 2,942,386 2,802,086 ========== ========== ========== ========== Diluted earnings per share: $ 0.20 $ 0.18 $ 0.35 $ 0.29 ========== ========== ========== ==========
4 NOTE 5. BUSINESS ACQUISITION On January 22, 2004, the Company entered into an agreement, effective January 26, 2004, to purchase the land, building, machinery, equipment, inventory and other assets of Fleetwood Enterprises Inc.'s ("Fleetwood") drapery operation in Douglas, Georgia for a purchase price of $4 million in cash, plus an additional amount for inventory of up to $1,257,114. Payment for the inventory is due to Fleetwood on January 24, 2005 and will include interest at 4%. In connection with the acquisition, the Company and Fleetwood entered into an agreement for the Company to be the exclusive supplier of Fleetwood's drapery, bedspread, and other decor requirements for a period of six years. If, at the end of three years, Fleetwood is satisfied with the Company's performance under this agreement, it will extend the terms of this agreement an additional three years. The acquired business was engaged in the manufacture of curtains, valances, bedspreads and other decor items. Fleetwood used the acquired business to supply most of its Manufactured Housing and some of its Recreational Vehicle requirements for these items. Sales to other customers were negligible. The Company used internal funds for the purchase price paid at closing and will likely generate sufficient funds internally to satisfy the remaining obligation due in January 2005. At the date of closing, the Company's $5,000,000 line of credit was unused. The Company does expect to use its line of credit for working capital requirements during 2004. Fleetwood was the Company's largest customer in 2003, representing approximately 26% of total sales. The combined sales of the acquired business and the Company's to Fleetwood's Manufactured Housing and Recreational Vehicle businesses would have been approximately 36% of the Company's total sales in 2003. The total acquisition cost and liability is as follows: Total Acquisition Cost $6,088,524 Cash Paid through July 3, 2004 4,696,588 ---------- Acquisition Liability at July 3, 2004 $1,391,936 ========== 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. CAUTIONARY STATEMENT: THIS QUARTERLY REPORT ON FORM 10-Q MAY CONTAIN STATEMENTS RELATING TO FUTURE EVENTS, INCLUDING RESULTS OF OPERATIONS, THAT ARE CONSIDERED "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. FORWARD-LOOKING STATEMENTS REPRESENT THE COMPANY'S EXPECTATIONS OR BELIEF AS TO FUTURE EVENTS AND, BY THEIR VERY NATURE, ARE SUBJECT TO RISKS AND UNCERTAINTIES WHICH MAY RESULT IN ACTUAL EVENTS DIFFERING MATERIALLY FROM THOSE ANTICIPATED. IN PARTICULAR, FUTURE OPERATING RESULTS AND FUTURE LIQUIDITY WILL BE AFFECTED BY THE LEVEL OF DEMAND FOR RECREATIONAL VEHICLES, MANUFACTURED HOUSING AND HOTEL/MOTEL ACCOMMODATIONS AND MAY BE AFFECTED BY CHANGES IN ECONOMIC CONDITIONS, INTEREST RATE FLUCTUATIONS, COMPETITIVE PRODUCTS AND PRICING PRESSURES WITHIN THE COMPANY'S MARKETS, THE COMPANY'S ABILITY TO CONTAIN ITS MANUFACTURING COSTS AND EXPENSES, AND OTHER FACTORS. FORWARD-LOOKING STATEMENTS BY THE COMPANY SPEAK ONLY AS OF THE DATE MADE, AND THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE OR REVISE SUCH STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER SUCH DATE OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS. FINANCIAL CONDITION The Company's financial ratios changed significantly as illustrated below. The financial condition remains strong, and the long-term debt to total capitalization ratio remained low at 10.59% July 3, 2004 April 3, 2004 January 3, 2004 ------------ ------------- --------------- Current Ratio 1.58 1.48 3.05 Quick Ratio 0.82 0.76 2.00 LT Debt to Total Capital 10.59% 11.18% 11.65% Working Capital $4,341,863 $3,608,081 $8,007,862 The change in the Company's financial ratios reflects the acquisition in January 2004 of Fleetwood's drapery operation in Douglas, Georgia. The Company paid $4,000,000 at closing and on January 24, 2005 will pay up to $1,257,114, plus interest at 4%, for inventory purchased from Fleetwood. The Company used internal funds for the purchase price paid at closing and will likely generate sufficient funds to satisfy the remaining obligation. Days sales outstanding in accounts receivable were 33.4 days at July 3, 2004, compared to 35.8 days at June 28, 2003. Net accounts receivable increased by $1,070,965 and inventories increased by $1,662,722 from June 28, 2003 to July 3, 2004. These increases are attributable to the acquisition of the Fleetwood Drapery operation and to the overall increase in business. Capital expenditures, excluding the assets acquired from Fleetwood, were $552,420 for the twenty-six weeks ended July 3, 2004. This was primarily due to a building addition to the Company's Elkhart, Indiana facility of $303,410, which increased the Company's pleated shade capacity by 50%. The Company is under contract to purchase a manufacturing facility in Phoenix, Arizona. The cost of this facility is $1,485,000 and is scheduled to close before the end of August 2004. The Company will use its line of credit to finance this purchase. As of this date, the Company has no borrowings against its $5,000,000 line of credit. Management does not foresee any events which will adversely affect its liquidity during 2004. 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. (continued) RESULTS OF OPERATIONS The following tables show the percentage relationship to net sales of certain items in the Company's Statements of Earnings: Second Second Quarter Quarter YTD YTD Earnings Ratios 2004 2003 2004 2003 --------------- ------- ------- ----- ----- Net sales 100.0% 100.0% 100.0% 100.0% Cost of products sold 78.49 77.24 79.10 78.00 Selling and administrative 14.67 15.23 14.67 15.58 Interest and investment income (0.18) (0.24) (0.20) (0.20) Interest expense 0.19 0.13 0.21 0.11 Income taxes 2.69 3.02 2.45 2.59 Net income 4.14 4.62 3.77 3.92 THIRTEEN WEEK PERIOD ENDED JULY 3, 2004, (SECOND QUARTER 2004) COMPARED TO THIRTEEN WEEK PERIOD ENDED JUNE 28, 2003, (SECOND QUARTER 2003) Net sales for the Second Quarter 2004 were $14,320,830, compared to $10,767,015 for the same period in the previous year, a 33% increase. Excluding sales arising from the acquisition of Fleetwood's drapery operation, net sales of existing business increased approximately 17%. Sales to the Company's recreational vehicle customers increased about 36% compared to the same period of the prior year, partially due to the additional Fleetwood business. Sales to the Company's manufactured housing customers increased by 36%, due to the additional Fleetwood business. Sales to the Company's hospitality customers increased about 21% for the quarter ended July 3, 2004 compared to the same quarter of the prior year. Cost of products sold increased to 78.5% in the Second Quarter 2004 compared to 77.2% a year ago. Increases in material and labor expenses were responsible for the overall increase in cost of goods sold percentage. Selling and administrative expenses were $2,099,941 in the Second Quarter 2004 versus $1,640,167 in the Second Quarter 2003. The increase is largely due to amortization expense of the intangible asset resulting from the Fleetwood acquisition ($187,500), and expenses related to the ongoing implementation of the Company's Enterprise-Resource-Planning system (approximately $47,000). As a percentage of sales, selling and administrative expenses decreased from 15.2% to 14.7% due to increased sales volume. Interest expense increased to $28,308 in the Second Quarter 2004 from $13,442 in the Second Quarter 2003 because of periodic borrowings on the Company's line of credit, interest on the inventory purchased from Fleetwood in January 2004, and interest on the loan secured by the Company's Elkhart, Indiana facility which was not outstanding during part of the Second Quarter 2003. Net income increased to $592,969 in the Second Quarter of 2004 compared to $497,928 in the Second Quarter of 2003, an increase of 19.1%. This increase is largely the result of increased sales, partially offset by increased administrative expenses. The Company's EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) increased by 37.6% to $1,390,629 from $1,010,364 in the Second Quarter of 2003. 7 TWENTY-SIX WEEK PERIOD ENDED JULY 3, 2004, (FIRST SIX MONTHS 2004) COMPARED TO TWENTY-SIX WEEK PERIOD ENDED JUNE 28, 2003, (FIRST SIX MONTHS 2003) Net sales for the First Six Months 2004 were $27,112,878, compared to $20,546,768 for the same period in the previous year, a 32% increase. Excluding sales arising from the acquisition of Fleetwood's drapery operation, net sales of existing business increased more than 18%. Sales to the Company's recreational vehicle customers increased about 40% compared to the same period of the prior year, partially due to the additional Fleetwood business. Sales to the Company's manufactured housing customers increased by 34%, due to the additional Fleetwood business. Sales to the Company's hospitality customers increased about 10% for the six months ended July 3, 2004 compared to the same period of the prior year. Cost of products sold increased to 79.1% in the First Six Months 2004 compared to 78.0% a year ago. Increases in material and labor expenses were responsible for the overall increase in cost of goods sold percentage. Selling and administrative expenses were $3,977,382 in the First Six Months 2004 versus $3,200,891 in the First Six Months 2003. The increase is largely due to amortization expense of the intangible asset resulting from the Fleetwood acquisition ($331,500) and expenses related to the ongoing implementation of the Company's Enterprise-Resource-Planning system (approximately $68,000). As a percentage of sales, selling and administrative expenses decreased from 15.6% to 14.7% due to increased sales volume. Interest expense increased to $55,070 in the First Six Months 2003 from $23,786 in the First Six Months 2003 because of periodic borrowings on the Company's line of credit, interest on the inventory purchased from Fleetwood in January 2004, and interest on the loan secured by the Company's Elkhart, Indiana facility which was not outstanding during the entire First Six Months 2003. Net income increased to $1,022,042 in the First Six Months 2004 compared to $805,803 in the First Six Months 2003, an increase of 26.8%. This increase is largely the result of increased sales, partially offset by increased administrative expenses. The Company's EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) increased by 43.7% to $2,460,382 from $1,711,894 in the first Six Months 2003. Item 4. Controls and Procedures. (a) The Company's Chief Executive Officer and Chief Financial Officer have reviewed the effectiveness of the Company's disclosure controls and procedures as defined in Exchange Act Rules 13a-14(c) and 15d-14(c) within 90 days of the date of this report. These officers have concluded that the Company's disclosure controls and procedures were adequate and effective to ensure that material information relating to the financial statements has been disclosed. (b) There were no significant changes in the Company's internal controls or in other factors that could significantly affect the Company's internal controls and procedures subsequent to the review date, nor any significant deficiencies or material weaknesses in such internal controls and procedures requiring corrective actions. 8 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits filed herewith: 10T.2 Amendment dated May 25, 2004 to the Employment agreement between the registrant and William Bassett. 10U.3 1995 Incentive Stock Option Plan, as amended to date. 10W.1 Amended and Restated Stock Plan for Non-Employee Directors and related Grantor Trust Agreement, as amended, effective July 1, 2004. 31.1 Certification of President 31.2 Certification of Treasurer 32 Certificate required by 18 U.S.C.ss.1350. (b) No reports on Form 8-K were filed by the Company during the quarterly period ended July 3, 2004. 9 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. DECORATOR INDUSTRIES, INC. (Registrant) Date: August 17, 2004 By: /s/ William A. Bassett ------------------------- William A. Bassett, President Date: August 17, 2004 By: /s/ Michael K. Solomon ------------------------- Michael K. Solomon, Treasurer 10 EX-10.(T)2 2 amendempagrmnt-10t2.txt AMENDMENT NO. 2 TO EMPLOYEE AGREEMENT EXHIBIT 10T.2 AMENDMENT NO.2 TO EMPLOYMENT AGREEMENT MADE AND ENTERED INTO this 25th day of May, 2004 by and between DECORATOR INDUSTRIES, INC., a Pennsylvania corporation, with offices at Suite 201, 10011 Pines Boulevard, Pembroke Pines, Florida 33024 (hereinafter called "Decorator" or "Employer") and WILLIAM BASSETT, residing at 1167 N.W. 97th Drive, Coral Springs, Florida 33071 (hereinafter called the "Employee"). WITNESSETH: WHEREAS, the parties hereto entered into an employment agreement dated August 2, 1994 (hereinafter the "Employment Agreement"), as amended by an Amendment to Employment Agreement dated July 29, 2003 (the "Agreement") (together, the "Agreement"); and WHEREAS, the parties desire to amend the Agreement as hereinafter provided. NOW, THEREFORE, in consideration of the mutual covenants, promises, warranties and agreements hereinafter set forth, the parties, intending to be legally bound hereby each for themselves and their respective heirs, successors and assigns, covenant, warrant, promise and agree that the reference to sixty percent (60%) in the 3rd line of Paragraph 3.1 of the Agreement and is deleted and seventy percent (70%) is substituted in lieu thereof. Except as provided herein, all the other terms of the Agreement shall remain as heretofore. ATTEST: DECORATOR INDUSTRIES, INC. By: The Compensation Committee /s/ Michael K. Solomon /s/ Thomas L. Dusthimer - ---------------------- ------------------------ Vice President /s/ Joseph N. Ellis ------------------------ /s/ Ellen Downey ------------------------ /s/ William Bassett ------------------------ WILLIAM BASSETT EX-10.(U)3 3 stockincentive-10u3.txt 1995 INCENTIVE STOCK OPTION PLAN EXHIBIT 10U.3 DECORATOR INDUSTRIES, INC. 1995 INCENTIVE STOCK OPTION PLAN* FOR OFFICERS AND OTHER KEY EMPLOYEES 1. Purpose The purpose of the 1995 Incentive Stock Option Plan (the "Plan") is to motivate and provide additional incentive for officers and other key employees of Decorator Industries, Inc. (the "Company") to exert their best efforts on behalf of the Company by enabling and encouraging such individuals to acquire a greater stock interest in the Company, thereby increasing their proprietary interest in the business, encouraging their continued service and promoting the interests of the Company and all its Shareholders. In addition, the Plan is intended to permit the Company to compete with other companies offering similar plans in attracting and retaining the services of executive personnel. All options granted hereunder are intended to qualify as Incentive Stock Options under Section 422 of the Internal Revenue Code of 1986, as amended (the "1986 Code"). 2. Definitions (a) "Board" - The Board of Directors of the Company. (b) "Committee" - the committee referred to in Section 3 of the Plan. (c) "Common Stock" - the common stock, par value $.20 per share, of the Company. (d) "Fair Market Value" - the "fair market value" per share of Common Stock at a given time shall be deemed to be the last sale price for shares of the Common Stock on the American Stock Exchange. (e) "Financial Statements" - the financial statements of the Company. (f) "Options" - grants of options to purchase shares of Common Stock under the Plan. (g) "Option Right" - the right to purchase a share of Common Stock upon exercise of an Outstanding Option. - --------- *As adopted by the Board of Directors on April 3, 1995 and amended by the Board on March 2, 2004, and May 25, 2004. (h) "Outstanding Option" - at any time, an option to purchase Common Stock granted by the Company pursuant to the Plan, whether or not such stock option is at such time exercisable, to the extent that such stock option at such time has not been exercised and has not terminated. (i) "Participants" - employees of the Company to whom Options have been granted under the Plan. When appropriate and not otherwise indicated that the incapacity or death of a Participant terminates or limits his rights under the Plan, as used herein the term "Participant" shall also be deemed to refer, in the event of the death or incapacity of a Participant, to his or her legal representative. 3. Administration (a) Appointment of the Committee. The Plan shall be administered by a committee (the "Committee") consisting of two or more directors of the Company; provided, however, the Board shall have the power to rescind or overrule any action taken by the Committee. Members of the Committee shall be appointed by, and serve at the pleasure of, the Board. No director shall serve as a member of the Committee unless he or she shall be a "disinterested person" within the meaning of Rule 16b-3 of the General Rules and Regulations, or the equivalent thereof from time to time in effect, under the Securities Exchange Act of 1934, as amended. Notwithstanding the foregoing, in the event there is not a sufficient number of directors who are "disinterested persons" within the meaning of Rule 16b-3, or the equivalent thereof from time to time in effect, then any director who shall exercise appropriate waivers or take such other action which, in the opinion of counsel for the Company, is then sufficient to satisfy Rule 16b-3, or the equivalent thereof from time to time in effect, shall be eligible to serve on the Committee. Commencing May 25, 2004, the Compensation Committee of the Board shall serve as the Committee. (b) Committee Action. A majority of the Committee shall constitute a quorum thereof and the action (i) of a majority of the members of the Committee present and voting at a meeting at which a quorum shall be present, or (ii) authorized in writing by all members of the Committee, shall be the action of the Committee. A member of the Committee participating in a meeting by telephone or similar communications equipment shall be deemed present for this purpose if the member or members who are present in person can hear him or her and he or she can hear them. (c) Authority of the Committee, Etc. Subject to the power of the Board to terminate or amend the Plan as provided in Section 6 and to rescind or overrule any action taken by the Committee, the Committee shall have authority to interpret the Plan and options granted, to prescribe, amend and rescind rules and regulations, if any, relating to the Plan, and to make all determinations necessary or advisable for the administration of the Plan. Decisions of the Committee shall be final and binding upon all parties who have an interest in the Plan. The Committee shall have authority to and may make recommendations to the Board as to any matter under the Plan requiring Board action for final determination, whether or not expressly so stated, but the Board shall not be bound to follow any recommendations made by the Committee. No member of the Committee shall be liable for anything done or omitted to be done by him or her or by any other member of the Committee in connection with the Plan, except for his or her own willful misconduct or recklessness. 2 4. Effective Date and Duration The Plan shall become effective upon its adoption by the Board, subject, however, to the approval of the Plan by the Company's shareholders within twelve (12) months of such adoption. Unless sooner terminated by the Board, the Plan will expire at midnight, prevailing time in Pittsburgh, Pennsylvania, on April 2, 2005, and no Options may be made, granted or assigned under the Plan after such date. However, shares issuable upon the exercise of Options granted on or prior to such date may be subsequently delivered to Participants in accordance with the terms and conditions applicable to their respective Options. 5. Eligibility Options shall be granted under the Plan only to employees, including officers and directors who are employees, of the Company who are responsible for the management, growth and protection of the business of the Company. Only persons regularly employed on a full-time basis by the Company are eligible to receive a recommendation of the Committee, from among those eligible. 6. Amendment and Termination of the Plan The Board may at any time terminate the Plan, or from time to time make such amendments thereto, including additions or deletions, as the Board deems advisable, except that no amendment may adversely affect any Option theretofore granted to a Participant, except to the extent deemed necessary or advisable by the Board to assure that such Option qualifies as an Incentive Stock Option under Section 422 of the 1986 Code, or the equivalent thereof from time to time in effect, and meets the requirements of Rule 16b-3, or the equivalent thereof from time to time in effect. No amendment shall be made, however, unless approved by the Shareholders of the Company, which would (a) increase the maximum number of shares of Common Stock that may be issued under the Plan, (b) extend the period during which Options may be granted, (c) change the purchase price per share at which Options may be granted, (d) materially modify the requirements as to eligibility for participation in the Program, (e) increase the maximum period for exercise of any Option, or (f) cause Rule 16b-3, or the equivalent thereof from time to time in effect, to become inapplicable. 7. Stock Subject to the Plan Subject to adjustments made pursuant to Section 8, the total number of shares of Common Stock that may be issued under the Plan (which shares may be authorized but unissued shares or treasury shares) is 250,000, less any shares for which payment may be made under Section 14(e) hereof. 8. Effect of Recapitalization, Merger, Etc. (a) In the event there is a change in, reclassification, subdivision or combination of, stock dividend on, or exchange of stock or other securities of the Company for, the outstanding Common Stock, or other similar event, the maximum number and class of shares as to which Options may be granted under the Plan, the number and class of shares subject to Options theretofore granted under the Plan, and the price per share payable upon exercise of such Options shall be appropriately adjusted by the Board, whose determination shall be conclusive. 3 (b) If, prior to the expiration of any Option granted under the Plan, there shall be a merger, consolidation or reorganization of the Company with another corporation in which the Company is not the surviving corporation, the holder of any then outstanding Option shall thereafter be entitled to receive, upon exercise of the unexercised portion of the Option, the same number and kind of shares, securities or other property (including cash) as the optionee would have received had the optionee exercised the unexercised portion of the Option immediately prior to such merger, consolidation or reorganization. Notwithstanding the foregoing, any Participant may agree to the assumption of his or her Option by a corporation other than the Company, or the substitution of a stock option of a corporation other than the Company for his or her Option. 9. Procedure for Granting of Options and Related Matters (a) Board to Make Determination. Subject to the terms, provisions and conditions of the Plan, the Board, on the recommendation of the Committee, shall (i) select the employees to whom Options shall be granted, (ii) determine the number of shares subject to each Option granted, (iii) determine the time or times when Options will be granted, and (iv) determine the time or times when each Option may be exercised within the limits stated in the Plan; and the Committee shall prescribe the form, which shall be consistent with the Plan, of the instruments evidencing any Options granted hereunder. Notwithstanding the foregoing, the Compensation Committee of the Board shall have exclusive authority to (i) grant Options to the chief executive officer of the Company and determine the terms and conditions thereof and (ii) recommend to the Board any Options to be granted to other officers of the Company and the terms and conditions thereof. (b) Requisite Action by Participants, Etc. As a condition to the granting of an Option, each Participant shall be required to enter into an Agreement (the "Option Agreement") with the Company which shall contain such provisions consistent with the Plan as may be prescribed by the Board, on the recommendation of the Committee, including such restrictions as to the transferability of the shares to be issued upon the exercise of an Option as the Board may, in its discretion, deem appropriate. Such restrictions may be for the purpose of assuring compliance with Federal and state securities laws (as contemplated by Section 14(d)) or for other reasons deemed advisable by the Board. 10. Option Price Except as provided in Section 12, the purchase price per share of Common Stock under each Option granted pursuant to the Plan shall be 100% of the Fair Market Value per share of Common Stock at the time such Option is granted. 11. Duration of Options Each Option granted under the Plan shall expire not later than ten (10) years after the date on which it was granted. 12. Options for Employees Who Own More Than 10% of Common Stock In the event of a grant of an Option to an employee who owns more than 10% of the outstanding Common Stock, then (a) the purchase price per share of 4 Common Stock under each such Option granted shall be 110% of the Fair Market Value per share of Common Stock at the time of such grant, and (b) such Option shall terminate not later than five (5) years after the date it is granted. 13. Nontransferability of Options No Option granted under the Plan shall be transferable by a Participant otherwise than by will or the laws of descent and distribution; and an Option may be exercised, during a Participant's lifetime, only by the Participant. 14. Exercise of Options; Restrictions on Exercise (a) Each Option shall be exercisable according to terms set by the Board, on the recommendation of the Committee, at the time of the grant; provided, however, that the aggregate Fair Market Value (determined at the time the Option is granted) of the stock with respect to which Incentive Stock Options are exercisable for the first time by a Participant during any calendar year (under all plans of the Participant's employer corporation and its parent and subsidiary corporations) shall not exceed $100,000. The Board may direct that an Option become exercisable in installments, which need not be annual installments, over a period which may be less than the term of the Option. At such time as an installment shall become exercisable, it may be exercised at any time thereafter in whole or in part until the expiration or termination of the Option. Unless otherwise provided in the Option Agreement referred to in Section 9(b), an Option granted under the Plan shall be exercisable, prior to the expiration or termination of the Option, in whole at any time or in part form time to time. Only full shares which a Participant is entitled to purchase will be issued; no fractional shares will be issued. (b) A Participant may purchase shares pursuant to an Option granted under the Plan only by giving the Company written notice of his or her election to exercise the Option, specifying the number of shares to be purchased. Payment for the shares may be in cash, or by delivery to the Company of shares of its Common Stock owned by the Optionee having a Fair Market Value equal to the required purchase price. If the shares delivered to the Company were originally acquired from the Company, either directly or indirectly, upon the exercise of an Option or otherwise, such shares must have been held by the Optionee for the requisite period specified in Section 422(a) of the 1986 Code. At the Optionee's election, such shares may be constructively delivered to the Company through "attestation"; that is, the Optionee (or the registered securities broker holding the shares on behalf of the Optionee) shall provide the Company a written statement attesting to the Optionee's ownership of the shares that are intended to be delivered to the Company and to the period the shares have been owned by the Optionee. Upon receipt of such a statement, the Company will treat such shares as constructively exchanged and will issue to the Optionee (or the broker, if appropriate) a stock certificate for the number of shares for which the Option was exercised minus the number of shares used to pay for the exercise through the constructive delivery. (c) Each Option granted under the Plan shall be subject to the condition that if at any time, in the opinion of counsel for the Company, the registration, listing or qualification of the shares covered by the Option under the Securities Act of 1933, as amended (the "Act"), upon any securities exchange or under any state law, or the consent or approval of any governmental regulatory body or the updating, amendment or revision of any registration statement, 5 listing application or similar document, is required as a condition of, or in connection with, the purchase of shares under such Option, no such Option may be exercised unless and until such registration, listing, qualification, consent, approval, updating, amendment or revision shall have been effected or obtained free of any conditions not acceptable to the Board. If the right to exercise any Option is suspended for any of the foregoing reasons and the Option would otherwise expire during such suspension, the expiration date of the Option shall be extended until thirty (30) days after the date on which the holder of such Option is notified that such suspension of the right to exercise the Option has ended; provided, however, that the Option shall not be exercisable more than ten (10) years after the date on which it was granted. (d) The Board, on the recommendation of the Committee, may, as a condition to the exercise by a Participant of an Option, require that the Participant agree in writing that he or she will not dispose of the shares to be acquired upon such exercise in a transaction which, in the opinion of counsel for the Company, would violate the Act and the rules and regulations promulgated thereunder. The Board shall have the authority to require additional agreements or impose additional conditions which it reasonably believes are necessary to assure compliance with Federal and state securities and other laws. (e) The Board, on the recommendation of the Committee, in its sole discretion and under such terms and conditions as the Committee deems appropriate, may accept surrender by a Participant of a right to exercise in whole or in part an Option previously granted, and may authorize a payment in consideration therefor of an amount equal to the excess of the Fair Market Value of the shares of Common Stock over the option price, such payment to be in shares of Common Stock valued at Fair Market Value on the date of surrender of the Option, or in cash, or partly in such shares and partly in cash, provided the Committee determines that such settlement is consistent with the provisions set forth in Section 1 hereof. (f) In the event that a Participant is subject to the alternative minimum tax under Section 55 of the 1986 Code as a result of the exercise of an Option, such Participant may, with the approval of the Committee, provide for the payment of the additional income tax resulting from such exercise by delivering to the Company shares of Common Stock having a Fair Market Value equal to the additional income tax, such Fair Market Value to be credited to the Participant's income tax withholding account with the Company. (g) A Participant shall have none of the rights of a Shareholder with respect to any shares as to which he or she has exercised an Option until the shares are issued to him or her. 15. Termination of Employment, Disability, Retirement or Death (a) If the employment of a Participant by the Company or a subsidiary shall terminate for any reason except death after such Participant shall have been continuously employed by the Company for one (1) year after the granting of an Option to such Participant, such Option may be exercised by such Participant within ninety (90) days after such termination to the extent the Option might have been exercised at the date of such termination of employment and provided that the exercise would not occur later than the expiration date of the Option. (b) In the event of the death of a Participant while employed by the Company (or within ninety (90) days after the termination of such employment), 6 any Option granted to the Participant may be exercised, within one (1) year after his or her death, by the legal representative of his or her estate, but only to the extent such Option was exercisable by the Participant at the date of death and provided that the exercise would not occur later than the expiration date of the Option. (c) In the event of the termination of employment with the Company or a subsidiary by reason of the disability of a Participant while employed (or in the event of the disability of a Participant within ninety (90) days after the termination of such Participant's employment by the Company), the Board may extend the time within which such Participant or his or her legal representative may exercise any Option held by such Participant, but only to the extent such Option was exercisable by the Participant at the date of such termination of employment and provided that the exercise would not occur later then the expiration date of the Option. To the extent that any Option held by any Participant whose employment is terminated shall not have been exercised within the applicable period hereinbefore provided, such Option, and all rights to purchase shares pursuant thereto, shall thereupon expire. 16. Miscellaneous Provisions (a) Employment. No employee shall have any claim or right to be granted an Option under the Plan. Neither the Plan nor any action taken hereunder shall be construed as giving any employee any right to be retained in the employ of the Company, or to limit the right of the Company to terminate the employment of any Participant at any time, or to change the terms of such employment. (b) Nonalienation of Benefits. A Participant's rights and interests under the Plan may not be assigned or transferred in whole or in part either directly or by operation of law or otherwise (except as specifically provided in the Plan in the event of a Participant's death), including, but not by way of limitation, execution, levy, garnishment, attachment, pledge, bankruptcy or in any other manner, and no such right or interest of any Participant shall be subject to any obligations or liability of such Participant. (c) Effect Upon Other Compensation Plans. The adoption of the Plan shall not affect any other compensation or incentive plan in effect for the Company, and the Plan shall not preclude the Board from establishing any other forms of incentive or compensation for employees of the Company. 7 EX-10.(W)1 4 amendedstockplan-10w1.txt AMENDED AND RESTATED STOCK PLAN EXHIBIT 10W.1 DECORATOR INDUSTRIES, INC. AMENDED AND RESTATED STOCK PLAN FOR NON-EMPLOYEE DIRECTORS EFFECTIVE JULY 1, 2004* WHEREAS, Decorator Industries, Inc., a Pennsylvania corporation (the "Company"), created the Decorator Industries, Inc. Stock Plan for Non-Employee Directors effective May 16, 1997 (the "Original Plan"), to attract and retain qualified persons to serve as directors of the Company, to enhance the equity interest of the directors in the Company, and to encourage the highest level of director performance by providing them with a proprietary interest in the Company's performance and progress; and WHEREAS, in order to continue with such goals, the Company now desires to amend the Original Plan to set forth a new schedule for compensating non-employee directors with shares of stock in the Company; and WHEREAS, in accordance with its right to amend the Original Plan pursuant to Section 4(b) of the Original Plan, the Board of Directors now hereby amends and restates the Original Plan (the Original Plan, as amended hereby, is hereinafter referred to as the "Plan") as follows: 1. PURPOSE. The purpose of the Plan is to attract and retain qualified persons to serve as directors of the Company, to enhance the equity interest of directors in the Company, and to encourage the highest level of director performance by providing them with a proprietary interest in the Company's performance and progress, by granting them shares of the Company's Common Stock, par value $.20 per share ("Common Stock"), in lieu of cash compensation. 2. EFFECTIVE DATE AND TERM. The Plan shall be effective as of July 1, 2004 (the "Effective Date"). The Plan shall remain in effect until terminated by action of the Board of Directors of the Company (the "Board"). 3. PARTICIPATION. All Non-Employee Directors shall participate in the Plan. The term "Non-Employee Director" means any individual who was a member of the Board as of the Effective Date, or who becomes a member of the Board thereafter during the term of the Plan, and in each case during such periods as he or she is a member of the Board and is not a full-time employee of the Company or any of its subsidiaries. - --------- * As approved by the Board of Directors on May 25, 2004. 4. ADMINISTRATION; AMENDMENT. (a) The Plan will be administered by the Compensation Committee of the Board (the "Committee"), the members of which are appointed from time to time by the Board, which shall have full power and authority to interpret and construe the Plan, to establish, amend and rescind rules and regulations relating to the Plan, and to take all such actions and make all such determinations in connection with the Plan as it may deem necessary or desirable. (b) The Board may from time to time make such amendments to the Plan as it may deem proper and in the best interest of the Company without further approval of the Company's stockholders, unless and to the extent required to qualify transactions under the Plan for exemption under Rule 16b-3 promulgated under Section 16 of the Securities Exchange Act of 1934, as amended from time to time ("Rule 16b-3"). Further, if and to the extent required for the Plan to comply with Rule 16b-3, no amendment to the Plan shall be made more than once in any six-month period that would change the amount, price or timing of the grants of Common Stock hereunder other than to comport with changes in the Internal Revenue Code of 1986, as amended from time to time and any successor thereto, the Employee Retirement Income Security Act of 1974, as amended from time to time and any successor thereto, or the regulations thereunder. (c) Subject to the above provisions, the Board shall have authority, without stockholder approval, to amend the Plan to take into account changes in law and tax and accounting rules as well as other developments, including without limitation new rules which may be promulgated under Section 16 of the Securities Exchange Act of 1934, as amended from time to time, and to grant awards which qualify for beneficial treatment under such rules. 5. SHARES. (a) Each Non-Employee Director shall receive (i) an Annual Director's Compensation Payment; and (ii) Meeting Participation Payments, in the form of shares of Common Stock, payable as set forth on Schedule A, hereto, as the same may be amended from time to time. A "Plan Year" shall be the Company's fiscal year. Either authorized but unissued or Treasury shares shall be used for this purpose. Any fractional shares will be paid in cash. Each Non-Employee Director will be required to represent that the shares are to be held for investment purposes and not with a view to resale or distribution except in compliance with the Securities Act of 1933, as amended from time to time (the "Securities Act") and to give a written undertaking, in form and substance satisfactory to the Company, that he or she will not publicly offer or sell or otherwise distribute the shares other than (i) in the manner and to the extent permitted by Rule 144 of the Securities and Exchange Commission under the Securities Act, (ii) pursuant to any other exemption from the registration provisions of the Securities Act, or (iii) pursuant to an effective registration statement. (b) If an individual becomes a Non-Employee Director during a Plan Year, he or she shall receive for that Plan Year the number of shares equal to the product of (i) the number of shares to which he or she would have been entitled under Section 5(a) had he or she been a Non-Employee Director for the full Plan Year, and (ii) the fraction obtained by dividing (x) the number of calendar months during such Plan Year that such person was a Non-Employee Director by (y) 12; provided, that for purposes of the foregoing a partial calendar month shall be treated as a whole month. 2 6. ADJUSTMENTS. In the event of any change in the Common Stock of the Company, through the declaration of stock dividends, through recapitalization resulting in stock split-ups or combinations of shares, or as the result of similar events, appropriate adjustments shall be made by the Committee in the number and kind of shares to be paid pursuant to the Plan. 7. ELECTION TO DEFER SHARES. (a) Subject to Section 7(b), each Non-Employee Director may make an irrevocable election to defer receipt of all or part of the shares granted under this Plan (the "Deferral Election"). In order to make a Deferral Election pursuant to this Section 7(a), a Non-Employee Director must deliver to the Secretary of the Company a written notice of the Deferral Election setting forth the number of shares to be deferred on such form(s) as may be prescribed by the Committee. The Deferral Election may also specify that the Non-Employee Director elects to receive distribution of his or her Director's Trust Account (as defined below) in accordance with Section 7(d) in a lump sum (a "Lump Sum Delivery Election"), or in installments over a period of less than ten years (a "Specific Installment Election"). In the case of individuals who are Non-Employee Directors as of the Effective Date, this notice must be delivered no later than June 15, 2004, with respect to shares for the partial Plan Year July 1, 2004 through January 1, 2005; in the case of individuals who become Non-Employee Directors after the Effective Date, during the term of the Plan, this notice must be delivered within thirty (30) days after the date on which the Non-Employee Director becomes a Non-Employee Director. (b) It is the intention of this Plan that Non-Employee Directors shall have the ability to make a Deferral Election as to the Annual Director's Compensation Payment and the Meeting Participation Payments on an annual basis for the Plan Year 2005 and subsequent Plan Years, provided that such annual Deferral Elections would not cause the Plan to fail to comply with Rule 16b-3. Subject to the preceding limitation, a Non-Employee Director may make a Deferral Election on an annual basis on or before June 20 of the Plan Year prior to the commencement of the first Plan Year to which the Deferral Election relates, or such later date up to and including the last business day of such prior Plan Year as may be permitted by the Committee and as permitted under Rule 16b-3. The Deferral Election made pursuant to this Section 7(b), or any subsequent Deferral Election permitted and made pursuant to this Section 7(b), shall remain in effect for subsequent Plan Years unless a subsequent different Deferral Election is permitted and made in accordance with this Section 7(b). (c) The Committee may establish a trust for the benefit of the Non-Employee Directors on such terms and conditions as the Committee shall determine (the "Plan Trust"), the assets of which shall be subject to the claims of the Company's creditors. All shares deferred pursuant to this Section 7 shall be delivered to the Plan Trust and shall be credited to the account of each Non-Employee Director in accordance with his or her Deferral Election (the "Director's Trust Account") and held for delivery in accordance with the terms of this Plan; and all earnings of a Director's Trust Account (including without limitation dividends on the Common Stock) shall be accumulated and reinvested by the trustee in the trustee's discretion. (d) All distributions from a Director's Trust Account under the Plan Trust shall be made to the Non-Employee Director (or, in the event of an eligible Non-Employee Director's death, his or her designated beneficiary) in ten (10) annual installments commencing as soon as practicable following the cessation of his or her services as a Non-Employee Director. However, if the 3 Non-Employee Director has in effect a valid Lump Sum Delivery Election or a valid Specific Installment Election pursuant to Section 7(b), such distributions shall be made in a lump sum, or in the specified number of installments as the case may be, commencing as soon as practicable following the cessation of his or her services as a Non-Employee Director. Distributions will be made in shares of Common Stock unless the Committee otherwise determines, in accordance with the terms of the Plan Trust. If such shares are to be distributed in installments, such installments shall be equal; provided, that if in order to equalize such installments fractional shares would have to be delivered, such installments shall be adjusted by rounding to the nearest whole share. If any such shares are to be delivered after the Non-Employee Director has died or become legally incompetent, the Committee shall deliver promptly all remaining undelivered shares to the Non-Employee Director's designated beneficiary or legal guardian, respectively. References to a Non-Employee Director in this Plan shall be deemed to refer to the Non-Employee Director's designated beneficiary or legal guardian, where appropriate. (e) Nothing in the Plan or the Plan Trust shall confer on any individual any right to continue as a director of the Company or interfere in any way with the right of the Company to terminate the individual's service as a director at any time. (f) A Non-Employee Director shall be entitled to early distribution of all or part of his or her Director's Trust Account in the event of an "Unforeseeable Emergency," in accordance with this paragraph. An "Unforeseeable Emergency" means severe financial hardship to the Non-Employee Director resulting from a sudden and unexpected illness or accident of the Non-Employee Director or a dependent of the Non-Employee Director, loss of the Non-Employee Director's property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Non-Employee Director. A distribution pursuant to this paragraph may only be made to the extent reasonably needed to satisfy the emergency need, and may not be made if such hardship is or may be relieved (i) through reimbursement or compensation by insurance or otherwise, (ii) by liquidation of the Non-Employee Director's assets to the extent such liquidation would not itself cause severe financial hardship, or (iii) by cessation of participation in the Plan prospectively. The determination of whether and to what extent a distribution is permitted pursuant to this paragraph shall be made by the Committee. 4 SCHEDULE A ANNUAL DIRECTOR'S COMPENSATION PAYMENT: As of the Effective Date, and continuing through the end of the Company's fiscal year ending January 1, 2005 (the "2004 Partial Year"), annual compensation shall be: (i) the amount of whole shares of Common Stock which is equal to the quotient of: Six Thousand Dollars ($6,000) divided by $8.06, which was the closing price per share of Common Stock on the American Stock Exchange on the third business day following the date of the public announcement of the Company's sales and earnings for its 2003 fiscal year. Annual compensation for the 2004 Partial Year shall be payable in two equal installments on September 15, 2004 and December 15, 2004. After the 2004 Partial Year, each subsequent "Plan Year" shall be the Company's fiscal year. The Annual Director's Compensation Payment for each succeeding Plan Year shall be equal to that number of whole shares of Common Stock which is equal to the quotient of: Eleven Thousand Dollars ($11,000) divided by the closing price per share of Common Stock on the American Stock Exchange on the third business day following the date of the public announcement of the Company's sales and earnings for its preceding fiscal year (the "Share Price"). The Annual Director's Compensation Payment shall be paid in equal quarterly installments on March 15, June 15, September 15 and December 15 of each year. MEETING PARTICIPATION PAYMENTS: As of the Effective Date, each director shall be entitled to a "Meeting Participation Payment" for (i) each meeting of the Board of Directors in excess of four (4) that such director attends in any given fiscal year, and (ii) each meeting of the Audit Committee that such director attends as a member. Each Meeting Participation Payment shall be the amount of whole shares of Common Stock which is (i) in the case of meetings of the Board of Directors, equal to the quotient of: Two Thousand Dollars ($2,000) divided by the Share Price and (ii) in the case of meetings of the Audit Committee, equal to the quotient of: Two Thousand Dollars ($2,000) for the chairman, and One Thousand Five Hundred Dollars ($1,500) for other members, divided by the Share Price. Such Meeting Participation Payments, if any, shall be added to and paid along with the next quarterly installment of the Annual Director's Compensation Payment. DECORATOR INDUSTRIES, INC. GRANTOR TRUST AGREEMENT STOCK PLAN FOR NON-EMPLOYEE DIRECTORS EFFECTIVE JUNE 13, 1997* (a) This agreement made this 13th day of June, 1997, by and between Decorator Industries, Inc. ("Company") and William A. Bassett, as trustee (the "Trustee"); (b) WHEREAS, Company has adopted the nonqualified deferred compensation plan entitled Decorator Industries, Inc. Stock Plan for Non-Employee Directors, effective May 16, 1997, as amended and restated, effective July 1, 2004, as set forth in Appendix A hereto (the "Plan"); (c) WHEREAS, Company has incurred or expects to incur liability under the terms of the Plan with respect to the individuals participating in the Plan; (d) WHEREAS, Company wishes to establish a trust (hereinafter called "Trust") and to contribute to the Trust assets that shall be held therein, subject to the claims of the Company's creditors in the event of Company's Insolvency, as herein defined, until paid to Plan participants and their beneficiaries in such manner and at such times as specified in the Plan; (e) WHEREAS, it is the intention of the parties that this Trust shall constitute an unfunded arrangement and shall not affect the status of the Plan as an unfunded plan maintained for the purpose of providing deferred compensation for a select group of non-employee directors for purposes of Title I of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"); and (f) WHEREAS, it is the intention of Company to make contributions to the Trust to provide itself with a source of funds to assist it in meeting its liabilities under the Plan; NOW, THEREFORE, the parties do hereby establish the Trust and agree that the Trust shall be composed, held and disposed of as follows: SECTION 1. ESTABLISHMENT OF TRUST - --------- ---------------------- (a) Company hereby deposits with Trustee in trust 1,076 shares of Company Common Stock which shall become the initial principal of the Trust to be held, administered and disposed of by the Trustee as provided in this Trust Agreement. (b) The Trust hereby established shall be irrevocable by the Company. - --------- * As amended by the Compensation Committee on May 25, 2004. (c) The Trust is intended to be a grantor trust, of which Company is the grantor, within the meaning of subpart E, part I, subchapter J, chapter 1, subtitle A of the Internal Revenue Code of 1986, as amended, and shall be construed accordingly. (d) The principal of the Trust, and any earnings thereon, shall be held separate and apart from other funds of Company and shall be used exclusively for the uses and purposes of Plan participants and general creditors as herein set forth. Plan participants and their beneficiaries shall have no preferred claim on, or any beneficial ownership interest in, any assets of the Trust. Any rights created under the Plan and this Trust Agreement shall be mere unsecured contractual rights of Plan participants and their beneficiaries against Company. Any assets held by the Trust will be subject to the claims of Company's general creditors under Federal and state law in the event Company is Insolvent, as defined in Section 3(a) herein. (e) Company may at any time or from time to time, make additional contributions of property in Trust with Trustee to augment the principal to be held, administered and disposed of by Trustee as provided in this Trust Agreement. SECTION 2. PAYMENTS TO PLAN PARTICIPANTS AND THEIR BENEFICIARIES - --------- ----------------------------------------------------- (a) Company shall deliver to Trustee a schedule (the "Payment Schedule") that indicates the amounts payable in respect to each Plan participant (and his or her beneficiaries), that provides a formula or other instructions acceptable to Trustee for determining the amounts so payable, the form in which such amount is to be paid (as provided for or available under the Plan), and the time of commencement for payment of such amounts. Except as otherwise provided in subparagraph (c) herein, Trustee shall make payments to the Plan participants and their beneficiaries in accordance with the Payment Schedule and the Plan. Trustee shall make provision for the reporting and withholding of any Federal, state or local taxes that may be required to be withheld with respect to the payment of benefits pursuant to the terms of the Plan and shall pay amounts withheld to the appropriate authorities or determine that such amounts have been reported, withheld and paid by Company. (b) The entitlement of a Plan participant or his or her beneficiaries to benefits under the Plan shall be determined by Company or such party as shall be designated under the Plan, and any claim for such benefits shall be considered and reviewed under the procedures set out in the Plan. (c) Company may make payment of benefits directly to Plan participants or their beneficiaries as they become due under the terms of the Plan. Company shall notify Trustee of its decision to make payment of benefits directly prior to the time amounts are payable to Plan participants or their beneficiaries. (d) If the principal of the Trust, and any earnings thereon, are not sufficient to make payments of benefits when due in accordance with the Payment Schedule and terms of the Plan, Trustee shall notify Company at least 30 days prior to the date such benefits are due. Upon notice from Trustee, Company shall make the balance of each such benefit payment as it falls due. 2 SECTION 3. TRUSTEE RESPONSIBILITY REGARDING PAYMENTS TO TRUST - --------- -------------------------------------------------- BENEFICIARIES WHEN COMPANY IS INSOLVENT. ---------------------------------------- (a) Trustee shall cease payment of benefits to Plan participants and their beneficiaries if Company is Insolvent. Company shall be considered "Insolvent" for purposes of this Trust Agreement if (i) Company is unable to pay its debts as they become due, or (ii) Company is subject to a pending proceeding as a debtor under the United States Bankruptcy Code. (b) At all times during the continuance of this Trust, as provided in Section 1(d) hereof, the principal and income of the Trust shall be subject to claims of general creditors of Company under Federal and state law as set forth below. (1) An authorized officer or director of the Company shall have the duty, on behalf of Company, to inform Trustee in writing if Company is Insolvent. If a person claiming to be a creditor of Company alleges in writing to Trustee that Company has become Insolvent, Trustee shall determine whether Company is Insolvent and, pending such determination, Trustee shall discontinue payment of benefits to Plan participants or their beneficiaries. (2) Unless Trustee has actual knowledge that Company is Insolvent, or has received notice from Company or a person claiming to be a creditor alleging that Company is Insolvent, Trustee shall have no duty to inquire whether Company is Insolvent. Trustee may in all events rely on such evidence concerning Company's solvency as may be furnished to Trustee and that provides Trustee with a reasonable basis for making a determination concerning Company's solvency. (3) If at any time Trustee has determined that Company is Insolvent, Trustee shall discontinue payments to Plan participants or their beneficiaries, shall provide written notice to Plan participants or their beneficiaries as to why payments have ceased and shall hold the assets of the Trust for the benefit of Company's general creditors. Nothing in this Trust Agreement shall in any way diminish any rights of Plan participants or their beneficiaries to pursue their rights as general creditors of Company with respect to benefits due under the Plan or otherwise. (4) Trustee shall resume the payment of benefits to Plan participants or their beneficiaries in accordance with Section 2 of this Trust Agreement only after Trustee has determined that Company is not Insolvent (or is no longer Insolvent). (c) Provided that there are sufficient assets, if Trustee discontinues the payment of benefits from the Trust pursuant to Section 3(b) hereof and subsequently resumes such payments, the first payment following such discontinuance shall include the aggregate amount of all payments due to Plan participants or their beneficiaries under the terms of the Plan for the period 3 of such discontinuance, less the aggregate amount of any payments made to Plan participants or their beneficiaries by Company in lieu of the payments provided for hereunder during any such period of discontinuance. SECTION 4. INVESTMENT AUTHORITY - --------- -------------------- (a) Company Common Stock delivered to Trustee under the provisions of the Plan shall be retained in the Trust and, subject to Section 1(d) hereof, distributed to Plan participants or their beneficiaries in accordance with the provisions of the Plan. Trustee may invest any cash dividends thereon in his discretion, including investments in securities (including stock or rights to acquire stock) or obligations issued by Company. All rights associated with assets of the Trust shall be exercised by Trustee or the person designated by Trustee, and shall in no event be exercisable by or rest with Plan participants. (b) Company shall have the right, at any time, and from time to time in its sole discretion, to substitute assets of equal fair market value for any asset held by the Trust. This right is exercisable by Company in a nonfiduciary capacity without the approval or consent of any person in a fiduciary capacity. SECTION 5. DISPOSITION OF INCOME - --------- --------------------- During the term of this Trust, all income received by the Trust, net of expenses and taxes, shall be accumulated and reinvested. SECTION 6. ACCOUNTING BY TRUSTEE - --------- --------------------- Trustee shall keep accurate and detailed records of all investments, receipts, disbursements, and all other transactions required to be made, including such specific records as shall be agreed upon in writing between Company and Trustee. SECTION 7. RESPONSIBILITY OF TRUSTEE - --------- ------------------------- (a) Trustee shall act with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in like capacity and familiar with such matters would use in the conduct of any enterprise of like character and with like aims, provided, however, that Trustee shall incur no liability to any person for any action taken pursuant to a direction, request or approval given by Company which is contemplated by, and in conformity with, the terms of the Plan or this Trust and is given in writing by Company. In the event of a dispute between Company and a party, Trustee may apply to a court of competent jurisdiction to resolve the dispute. (b) If Trustee undertakes or defends any litigation arising in connection with this Trust, Company agrees to indemnify Trustee against Trustee's reasonable costs, expenses and liabilities (including, without limitation, reasonable attorneys' fees and expenses) relating thereto and to be primarily liable for such payments. 4 (c) Trustee shall have, without exclusion, all powers conferred on trustees by applicable law, unless expressly provided otherwise herein, provided, however, that if an insurance policy is held as an asset of the Trust, Trustee shall have no power to name a beneficiary of the policy other than the Trust, to assign the policy (as distinct from conversion of the policy to a different form) other than to a successor trustee, or to loan to any person the proceeds of any borrowing against such policy. (d) Notwithstanding any powers granted to Trustee pursuant to this Trust Agreement or to applicable law, Trustee shall not have any power that could give this Trust the objective of carrying on a business and dividing the gains therefrom, within the meaning of Section 301.7701-2 of the Procedure and Administrative Regulations promulgated pursuant to the Internal Revenue Code. SECTION 8. COMPENSATION AND EXPENSES OF TRUSTEE - --------- ------------------------------------ Company shall pay all administrative and Trustee's fees and expenses. If not so paid, the fees and expenses shall be paid from the Trust, provided that such fees and expenses shall not exceed the income received by the Trust. SECTION 9. RESIGNATION AND REMOVAL OF TRUSTEE - --------- ---------------------------------- (a) Trustee may resign at any time by written notice to Company, which shall be effective ninety (90) days after receipt of such notice unless Company and Trustee agree otherwise. (b) Trustee may be removed by Company on thirty (30) days written notice or upon shorter notice accepted by Trustee. (c) Upon resignation or removal of Trustee and appointment of a successor trustee, all assets of the Trust shall subsequently be transferred to the successor trustee. The transfer to the successor trustee shall be completed within thirty (30) days after receipt of notice of resignation or removal, unless Company extends the time limit. (d) If Trustee resigns or is removed, a successor shall be appointed in accordance with Section 10 hereof, by the effective date of resignation or removal under paragraphs (a) and (b) of this Section. If no such appointment has been made, Trustee may apply to a court of competent jurisdiction for appointment of a successor or for instructions. All expenses of Trustee in connection with the proceeding shall be allowed as administrative expenses of the Trust. SECTION 10. APPOINTMENT OF SUCCESSOR - ---------- ------------------------ (a) If Trustee resigns or is removed in accordance with Section 9(a) or (b) hereof, Company may appoint any third party, including a bank trust department or other party that may be granted corporate trustee powers under state law, as a successor to replace Trustee upon resignation or removal. The appointment shall be effective when accepted in writing by the new trustee, who shall have all of the rights and powers of the former Trustee, including ownership rights in the Trust assets. The former Trustee shall execute any instrument necessary or reasonably requested by Company or the successor trustee to evidence the transfer. (b) If Trustee resigns or is removed and, pursuant to the provisions of Section 9(d) hereof, a successor trustee is selected, such successor trustee may be any third party, including a bank trust department or other party that may be granted corporate trustee powers under state law. The 5 appointment of a successor trustee shall be effective when accepted in writing by the new trustee. The new trustee shall have all the rights and powers of the former Trustee, including ownership rights in Trust assets. The former Trustee shall execute any instrument necessary or reasonably requested by the successor trustee to evidence the transfer. (c) The successor trustee need not review the records and acts of any prior Trustee and may retain or dispose of existing Trust assets, subject to Sections 4, 6 and 7 hereof. The successor trustee shall not be responsible for any claim or liability resulting from any action or inaction of any prior Trustee or from any other past event, or any condition existing at the time it becomes successor trustee. SECTION 11. AMENDMENT OR TERMINATION - ---------- ------------------------ (a) This Trust Agreement may be amended by a written instrument executed by Trustee and Company. Notwithstanding the foregoing, no such amendment shall conflict with the terms of the Plan or violate this Section 11. (b) The Trust shall not terminate until the date on which Plan participants and their beneficiaries are no longer entitled to benefits pursuant to the terms of the Plan. Upon termination of the Trust, any assets remaining in the Trust shall be returned to Company. (c) No Section of this Trust Agreement may be amended by Company for one (1) year following a Change of Control, as defined herein. SECTION 12. MISCELLANEOUS - ---------- ------------- (a) Any provision of this Trust Agreement prohibited by law shall be ineffective to the extent of any such prohibition, without invalidating the remaining provisions hereof. (b) Benefits payable to Plan participants and their beneficiaries under this Trust Agreement may not be anticipated, assigned (either at law or in equity), alienated, pledged, encumbered or subjected to attachment, garnishment, levy, execution or other legal or equitable process. (c) This Trust Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania. (d) For purposes of this Trust, Change of Control shall mean any of the following events: (1) Acquisitions in one or more transactions by any person or group, directly or indirectly, which in the aggregate cumulatively result in transfer of beneficial ownership of fifty percent (50%) or more of the combined voting power of the outstanding voting securities of Company entitled to vote generally in the election of directors, provided, however, that any acquisition by Company or any of its subsidiaries, or any employee benefit plan (or related trust) sponsored or maintained by Company or any of its subsidiaries shall not constitute a Change of Control; (2) A liquidation or dissolution of Company or the sale of all or substantially all of Company's assets; or (3) The reorganization, merger or consolidation of Company into or with another person or entity, by which reorganization, merger or consolidation the shareholders of Company having beneficial ownership, directly or indirectly, of the combined voting power of the then outstanding voting securities of Company entitled to vote generally in the election of directors receive less than fifty percent (50%) of the outstanding voting shares of the new or continuing corporation. SECTION 13. EFFECTIVE DATE - ---------- -------------- The effective date of this Trust Agreement shall be June 13, 1997. IN WITNESS WHEREOF, Company and Trustee have executed and delivered this Trust Agreement on the date set forth above. ATTEST DECORATOR INDUSTRIES, INC. /s/ Willam A. Johnson By: /s/ Michael K. Solomon - ------------------------------- -------------------------------- Title: Vice President /s/ William A. Bassett -------------------------------- William A. Bassett, as Trustee 6 EX-31.1 5 ex311.txt CERTIFICATION EXHIBIT 31.1 I, William A. Bassett, President, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Decorator Industries, Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonable likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal controls over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): (a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 17, 2004 By: /s/ William A. Bassett ------------------------- William A. Bassett, President EX-31.2 6 ex312.txt CERTIFICATION EXHIBIT 31.2 I, Michael K. Solomon, Treasurer, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Decorator Industries, Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonable likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal controls over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): (a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 17, 2004 By: /s/ Michael K. Solomon ------------------------- Michael K. Solomon, Treasurer EX-32 7 ex32.txt CERTIFICATION EXHIBIT 32 CERTIFICATION REQUIRED BY 18 U.S.C. SS.1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the quarterly report of Decorator Industries, Inc. ("the Company") on Form 10-Q for the quarterly period ended July 3, 2004, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), we, William A. Bassett, Chief Executive Officer of the Company, and Michael K. Solomon, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. ss.1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: August 17, 2004 By: /s/ William A. Bassett ------------------------------------------------ William A. Bassett, Chief Executive Officer Date: August 17, 2004 By: /s/ Michael K. Solomon ------------------------------------------------ Michael K. Solomon, Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----