SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
(Mark One)
{X} ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1993
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 1-4148
REEVES INDUSTRIES, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 57-0735790
------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
Highway 29 South
Post Office Box 1898
Spartanburg, S. C. 29304
- ---------------------------------------- ------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (803) 576-1210
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes x No
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of the
registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.
x
---
35,021,666 shares of $.01 par value common stock of the Registrant
were outstanding at the close of business on March 31, 1994. As of
March 31, 1994 there was no voting stock held by non-affiliates.
DOCUMENTS INCORPORATED BY REFERENCE: None
<PAGE>
PART I
ITEM 1. BUSINESS
Reeves Industries, Inc., incorporated in Delaware in
1982 ("Reeves" or "the Company"), a wholly-owned subsidiary of Hart
Holding Company Incorporated ("Hart Holding"), is a holding company
whose principal asset is the common stock of its wholly-owned subsidiary,
Reeves Brothers, Inc. ("Reeves Brothers"). The Company was acquired
by Hart Holding on May 6, 1986. Reeves is a diversified industrial
company with operations in two principal business segments,
industrial coated fabrics, conducted through its Industrial Coated
Fabrics Group ("ICF"), and apparel textiles, conducted through its
Apparel Textile Group ("ATG").
Effective October 25, 1993, HHCI, Inc., a newly formed,
wholly-owned subsidiary of Hart Holding, merged with and into the
Company with the Company surviving the merger. HHCI, Inc. was
formed as a shell corporation (no operations). As a result of this
merger, Hart Holding obtained ownership of 100% of the outstanding
shares of the common stock of the Company. See Footnote 10, Stockholder's
Equity, of the Notes to Consolidated Financial Statements of Reeves.
INDUSTRY SEGMENTS
Reeves is a diversified industrial company with operations in
two principal business segments, industrial coated fabrics,
conducted through its Industrial Coated Fabrics Group, and apparel
textiles, conducted through its Apparel Textile Group. In 1993,
ICF contributed approximately 49.6% of the Company's net sales and
approximately 71.7% of its operating income, and ATG contributed
approximately 50.4% of the Company's net sales and approximately 28.3%
of its operating income (in each case, excluding corporate expenses,
goodwill amortization and facility restructuring charges). Throughout
its businesses, the Company emphasizes specialty products, product
quality, technological innovation and rapid responses to the changing
needs of its customers.
ICF specializes in the coating of various substrate fabrics with
a variety of products such as synthetic rubber, vinyl, neoprene,
urethane and other elastomers, to produce a diverse line of products
for industrial applications. ICF's principal products include:
(1) a complete line of printing blankets used in offset lithography,
(2) coated automotive airbag materials, (3) specialty coated fabrics and
(4) coated fabrics used in industrial coverings.
The Company believes that ICF is one of the world's leading
producers of offset printing blankets and that ICF has the leading share
of the domestic market for coated automotive airbag materials.
The Company also believes that ICF is a leading domestic producer of
specialty coated fabrics used for a broad range of industrial applications.
ICF's products generally involve significant amounts of technological
expertise and precise production tolerances. The Company believes that
ICF's product development, formulation and production methods are among
the most sophisticated in the coated fabrics industry.
ATG manufactures, processes and sells specialty textile fabrics to
apparel and other manufacturers. Through its Greige Goods Division, ATG
processes raw materials into greige goods (i.e., undyed woven fabrics).
Through its Finished Goods Division, ATG functions as a converter and
commission finisher, purchasing greige goods (from the Greige Goods
Division and others) and contracting to have the goods dyed and finished
or dyeing and finishing the goods itself. The dyed and finished goods
are then sold for use in a variety of end-products.
The Company believes that ATG has developed strong positions
in niche markets in the apparel textile industry by offering unique,
custom-designed fabrics to leading apparel and specialty garment
manufacturers. ATG emphasizes "short-run" product orders and targets
market segments in which its manufacturing flexibility, rapid response
time, superior service and quality and the ability to supply exclusive
blends are key competitive factors.
The Company's business strategy has focused on the sale of
higher-margin niche products and the establishment of leading positions
in its principal markets. The Company believes that this strategy,
combined with its diverse product and customer base, the development
of new products and substantial capital investment, has helped
the Company increase its sales and profitability in spite of adverse
economic conditions in its U.S. and European markets during 1990-1993.
The following table shows the amount of total revenue contributed by
product lines which accounted for 10% or more of the Company's
consolidated revenues in any of the last three fiscal years (in thousands).
Year Ended December 31,
----------------------------
1991 1992 1993
-------- -------- --------
Industrial Coated Fabrics Group:
Specialty Materials $ 55,581 $ 61,684 $ 78,151
Graphic Arts 65,683 64,892 62,584
-------- -------- --------
$121,264 $126,576 $140,735
======== ======== ========
Apparel Textile Group:
Finished Goods and Dyeing
and Finishing $ 74,893 $ 72,977 $ 77,416
Greige Goods 73,402 71,551 65,502
-------- -------- --------
$148,295 $144,528 $142,918
======== ======== ========
Reeves does not hold any patents, trademarks, licenses and/or
franchises the loss of which would have a material adverse affect
on any of its industry segments.
Additional information about industry segments of Reeves is
contained in Footnote 14, Financial Information About Industry Segments,
of the Notes to Consolidated Financial Statements of Reeves.
INDUSTRIAL COATED FABRICS GROUP
The Industrial Coated Fabrics Group specializes in the coating of
various substrate fabrics with a variety of products, such as synthetic
rubber, vinyl, neoprene, urethane, and other elastomers, to produce a
diverse line of products for industrial applications.
ICF's products comprise four categories: (1) a complete line of
printing blankets used in offset lithography, (2) coated automotive
airbag materials, (3) specialty coated fabrics, including fluid control
diaphragm materials, tank seals, ducting materials and coated fabric
materials used for military and commercial life rafts and vests,
aircraft escape slides, flexible fuel tanks and general aviation
products, and (4) coated fabrics used in industrial coverings,
including fabrics coated with rubber and vinyl which are used to make
tarpaulins, loading dock shelters and other industrial products.
ICF's products require significant amounts of technological
expertise and the Company believes that ICF's product development,
formulation and production methods are among the most sophisticated in
the coated fabrics industry. Since 1990, ICF has been awarded six
patents with respect to polyurethane coatings and has nine pending patent
applications relating to printing blankets, airbag fabric and specialty
coatings. Approximately eight other patent applications are in process.
ICF generally manufactures specialty coated fabrics according
to a production backlog. ICF's products, other than printing blankets
and coated automotive airbag material, involve relatively short
runs and custom manufacturing. Printing blankets are sold primarily to
distributors and dealers. ICF's other products are sold directly to
end users and fabricators by its direct sales force.
Printing Blankets
The Company believes that ICF is one of the world's leading
producers of printing blankets used in offset lithography, the
predominant printing process for the commercial, financial,
publication and industrial printing markets.
Offset printing blankets are used in the printing process to transfer
a printed image from a metal printing plate onto paper or other printing
material. ICF markets a complete line of conventional, compressible and
sticky-back blankets under the VULCAN (registered trademark) name.
The Company's line includes the 714 (registered trademark), the first
compressible printing blanket, the 2,000 (registered trademark) PLUS,
an advanced general purpose blanket, the VISION SR (trademark),
a premium blanket targeted at the sheet-fed market, and the MARATHON
(registered trademark), a blanket targeted to the high-speed web press
market. Each blanket in the product line is designed for a specific printing
need and ICF sells an appropriate blanket for most types of commercial,
financial, publication and industrial printing applications.
The Company believes that ICF's blankets consistently offer high
performance and quality. This performance is due to a number of
proprietary features of the blankets, many of which are the subject
of pending patent applications. Distinctive characteristics of ICF's
blankets include unique printing surface compounds, improved composition
and placement of compressible layers, surface buffing and water and
solvent-resistant back plies.
Purchasers of ICF's blankets include commercial, financial and
industrial printers and publishers of newspapers and magazines. ICF's
blankets are sold to over 10,000 U.S. printers and more than 15,000
foreign printers, in 64 countries worldwide.
ICF has established a network of over 60 distributors and 125
dealers in the United States, Canada and Latin America to market its
printing blankets. In addition, ICF is represented by a distributor in
most of the other countries in which it does business. The Company's
distributors typically purchase rolls of uncut blankets from ICF and
then cut, finish and package the blankets prior to delivery to dealers
or end-users. Internationally, ICF's relationships with distributors
tend to be long-standing and exclusive, with most distributors dealing
only in ICF's printing blankets and ICF selling only to such
distributors in their respective territories. Domestic distributors
tend to carry printing blankets from a number of manufacturers.
Dealers generally purchase finished blankets from distributors for
resale. ICF services all of its customers, and its direct sales force
actively markets and promotes ICF's printing blankets.
Automotive Airbag Materials
Reeves believes that ICF has the leading share of the
domestic market for coated automotive airbag materials. ICF is a
significant supplier of such material to TRW, Inc. ("TRW") and the
Safety Restraints Division of Allied-Signal, Inc. ("Allied-Signal").
Allied-Signal supplies Morton International ("Morton") with airbag
components. TRW and Morton are two of four major domestic
manufacturers of airbag systems and, together with Allied-Signal,
supply all of the domestic automobile manufacturers and many of
the European and Japanese automobile manufacturers. The Company
believes that TRW and Morton account for in excess of 50% of the
worldwide market for airbag systems.
National Highway Traffic Safety Administration regulations currently
mandate the use of both driver-side and passenger-side airbags for all
1998 model year passenger cars and 1999 model year light trucks,
vans and multipurpose vehicles ("LTVs"). A phase-in schedule establishes
that at least 95% of a manufacturer's passenger cars built on or after
September 1, 1996 for sale in the United States, must be equipped with an
airbag at the driver's and the right front passenger's seating positions.
All LTVs built after September 1, 1997, must have some form of automatic
occupant protection, and at least 80% must have either driver-side or
driver-side and passenger-side airbags.
Due to market demand for airbag-equipped vehicles, automobile
manufacturers have been installing airbags (primarily driver-side) more
extensively than required by the foregoing regulations. The Company
expects sales of airbag systems and coated airbag fabric to increase
substantially in future years and believes that ICF is well-positioned
to benefit from such growth.
Following the lead of the U.S. automobile manufacturers, European
and Asian automobile manufacturers have begun installation of automobile
airbags. No legislation or regulation presently requires the installation
of airbags outside of the United States market. Reeves' Italian subsidiary,
Reeves S.p.A., has sufficient capacity for production of coated airbag
material if demand develops outside of the United States for such products.
Company participation in the airbag market to date has
been through the use of coated airbag fabric in driver-side
applications where coated airbag fabric offers certain advantages
such as greater thermal insulation to withstand the rapid inflation
of the airbag by means of hot gases and impermeability to prevent
the escape of gases. Side-impact airbags (presently offered on certain
models of Volvo and Mercedes Benz) are expected to use coated airbag
fabric.
Most passenger-side airbags are currently designed to use uncoated
fabrics. Passenger-side airbags deploy more slowly than driver-side
airbags. Consequently, they can be manufactured at a lower cost using
uncoated fabric. The Company does not presently produce an
uncoated airbag fabric. Although there can be no assurance that it will
be able to do so, the Company plans to participate in the growth
of passenger-side applications through an expansion program
capitalizing on its textile expertise and research and development
efforts. As part of this program, the Company is constructing an
approximately 100,000 square foot facility in Spartanburg, South Carolina
for weaving both coated and uncoated airbag fabric. The facility is
expected to be operational by the end of 1994.
Through its research and development activities, the Company
is continuously working to develop new proprietary fabric technologies
and procedures for the next generation of driver-side and passenger-side
airbags. Airbag fabrics must meet rigorous specifications, testing and
certification requirements and airbag fabric contracts tend to be awarded
several years in advance. These factors may deter the entry of other
manufacturers into this business.
Specialty Coated Fabrics
The Company believes that ICF is a leading domestic producer of
specialty coated fabrics used for a broad range of industrial applications.
ICF's specialty coated fabrics business is largely customer or "job shop"
oriented. In 1993, more than 90% of ICF's sales of specialty coated
fabrics were derived from fabrics manufactured to meet particular
customer's specifications.
Specialty coated fabrics generally consist of a fabric base,
or substrate layer, and an elastomer coating (i.e., coating consisting
of an elastic substance, such as rubber) which is applied to the fabric
base. The Company believes that ICF's line of elastomer-fabric combinations
is the most comprehensive in the industry, enabling it to design products
to satisfy its customers' needs. Fabric bases used in ICF's specialty
coated fabrics include polyester, nylon, cotton, fiberglass and silk.
ICF's elastomers include natural rubber, nitrile, THIOKOL (registered
trademark), NEOPRENE (registered trademark), silicone, HYPALON (registered
trademark), VITON (registered trademark) and polyurethane.
ICF sells its specialty coated fabrics under the registered trademark
REEVECOTE (registered trademark). The Company believes that ICF has
established a reputation for quality and product innovation in specialty
coated fabrics by virtue of ICF's technological capability, advanced plant
and equipment, research and development facilities and specialized
chemists and engineers.
ICF's specialty coated fabrics are separated into five product lines:
General purpose goods. This product line includes air cells, tank
seals, gaskets, compressor valves, aerosol seals and washers and coated
fabrics used by other manufacturers in the production of insulation
materials, soundproofing and inflatable "lifting bags" used to jack up
automobiles or trucks.
Gas meter diaphragms. ICF manufactures a line of rubber diaphragm
material for use in gas meters which are the primary mechanisms in gas
meters for controlling gas flow. ICF's products are sold to most of
the major manufacturers of gas meters.
Synthetic diaphragms. The Company's synthetic diaphragms are
used in carburetors, controls, meters, compressors, fuel pumps and other
applications.
Specialty products. ICF manufactures a large number of
miscellaneous specialty coated products, including v-cups for oil rig
drills, expansion joints and urethane specialty items, such as fuel
containers, commercial diaphragms and desiccant bags.
Military, marine and aerospace products. ICF produces coated
fabrics used in truck and equipment covers, waterproof duffel bags,
pneumatic air mattresses, collapsible tanks for fuel and water storage,
temporary shelters, rafts, inflatable boats, various types of safety
devices, pneumatic and electrical plane de-icers, specialty molded
aircraft parts, aerospace fuel cells, aircraft evacuation slides,
helicopter floats, surveillance balloons and miscellaneous items.
A portion of ICF's work in this area is performed as a subcontractor
on United States government contracts.
ICF's direct sales force sells primarily to fabricators who use
ICF's specialty coated fabrics in products sold to end-users.
Industrial Coverings Fabrics
ICF sells coated fabrics to customers that produce a wide variety
of industrial coverings, including truck tarpaulins, trailer covers,
cargo covers, agricultural covers, hangar curtains, industrial curtains,
boat covers, athletic field covers, temporary shelters, semi-bulk
containers and specialized flotation devices used for the containment
of oil spills and other environmental pollutants. ICF's industrial
coverings fabrics are produced by the same methods as its specialty
coated fabrics and are sold under the COVERLIGHT registered trademark.
The industrial coverings fabrics business also includes coated
fabric for loading dock shelters, which are pads or bumpers placed
around the exterior of a loading dock door for weathersealing. ICF
sells to manufacturers of loading dock shelter systems and believes
it is the leading supplier of loading dock shelter material produced
with rubber and other special elastomers.
ICF's sales force sells primarily to fabricators of industrial
coverings who in turn sell to end-users. Sales personnel concentrate
on the largest producers of industrial coverings and loading dock
shelter systems in the United States.
Principal Customers
ICF did not have a customer accounting for more than 10% of
consolidated Reeves' sales during the years 1991, 1992 or 1993.
Competition
ICF's competitive environment varies by product line.
For graphic arts products, the Company's principal competitors
are Day International and W. R. Grace. To a lesser extent, the
Company also competes with a number of other firms, including
David M, Kinyo, Zippy, Sumitomo, DYC and Meiji. The specialty materials
product line, except for airbag materials, competes in a number of
highly fragmented market segments where competition varies by product.
In the United States, competition comes from Chemprene, Archer Rubber,
Seaman Corp., Cooley, Fairprene and selected foreign suppliers.
Airbag products compete against those of Milliken and Highland
Industries as well as several other small manufacturers. Quality,
compliance with exacting product specifications, delivery terms and
price are important factors in competing effectively in ICF's markets.
APPAREL TEXTILE GROUP
The Apparel Textile Group consists of two divisions, Greige
Goods and Finished Goods. ATG concentrates on segments of the market
where its manufacturing flexibility, rapid response time, superior
service, quality and the ability to supply customers with exclusive
blends are key competitive factors.
ATG's Greige Goods Division processes raw materials into
undyed woven fabrics known as greige goods. The Greige Goods
Division manufactures greige goods of synthetic fibers, wool,
silk, flax and various combinations of these fibers. Products
of the Greige Goods Division are primarily utilized for apparel and
the Greige Goods Division's most significant customers are outside
converters and, to a lesser extent, ATG's Finished Goods Division.
The Company believes that the Greige Goods Division is
distinguished from its competitors by its ability to efficiently
manufacture small yardage runs, its rapid response time, the high quality
of its products and its ability to produce samples rapidly on demand.
ATG's greige goods plants engage principally in short production
runs producing specialty fabrics requiring a variety of blends and
textures. Fabrics are produced by the Greige Goods Division
according to an order backlog and are typically "sold ahead" three
to four months in advance. Most of the Greige Goods Division's
sales are sold under firm contracts. In comparison to manufacturers
of large volume commodity fabrics such as print cloth, corduroy and
denim, the Greige Goods Division has been less adversely affected in
recent years by foreign imports because of its position as a small
quantity, specialty fabric producer.
ATG's Finished Goods Division functions as a converter and
commission finisher. The Finished Goods Division purchases greige
goods from the Greige Goods Division and other greige suppliers and
either contracts to have such goods converted into finished fabrics
of varying weights, colors, designs and finishes or converts them
itself. The dyed and finished fabrics are used in various
end-products and sold primarily to apparel manufacturers in the
women's wear, rainwear/outerwear, men's/boys' wear and career
apparel markets.
The Company believes that ATG's Finished Goods Division
is one of the most flexible operations of its kind in the United
States due to the variety of products it can finish and the
broad range of dyeing processes and finishes it is able to offer.
The Finished Goods Division focuses on high value-added fabrics with
unique colors and specialty finishes. The Finished Goods Division's
fabrics are currently being used by a number of the leading men's
and women's sportswear manufacturers and its dyeing and finishing
services are sold to major domestic converters.
A wide variety of fabrics can be woven at the Greige Goods
Division's two weaving plants. The dyeing and finishing plant of the
Finished Goods Division is equipped to do a variety of piece dyeing,
as well as to provide specialty finishings. This manufacturing
flexibility increases ATG's ability to respond rapidly to changes
in market demand.
Substantially all of the Apparel Textile Group's products
are sold directly to customers through its own sales force. The
balance is sold through brokers and agents.
Principal Customers
ATG markets its fabrics to a wide range of customers including
H.I.S., the THOMPSON (registered trademark) men's pants division of Salant
Corporation, Eddie Haggar Ltd. and V.F. Corporation. ATG also markets
its fabrics to major retailers, including J.C. Penney, which specify
the Company's fabrics. ATG is a direct supplier of rainwear fabric to
Londontown Corporation, the maker of LONDON FOG (registered trademark),
and also markets its fabrics to specialty catalogue houses such as
Patagonia, L.L. Bean and Eddie Bauer.
ATG did not have a customer accounting for more than 10% of
consolidated Reeves sales during the years 1991, 1992 or 1993.
Competition
The textile industry is highly competitive. While there
are a number of integrated textile companies, many larger than ATG,
no single company dominates the United States market. Competition
from imported fabrics and garments continues to be a significant
factor adversely affecting much of the domestic textile industry.
Because of the nature of ATG's markets, the Company believes
it is less susceptible to foreign imports than the industry as a
whole and is more insulated from the risk of foreign imports than
high-volume commodity producers. The most important factors in
competing effectively in ATG's product markets are service, price,
quality, styling, texture, pattern design and color. ATG seeks to
maintain its market position in the industry through a high degree
of manufacturing flexibility, product quality and competitive
pricing policies.
The Greige Goods Division distinguishes itself from its
competitors by its ability to manufacture runs as small as 40,000
square yards, its rapid response time and the high quality of the
products manufactured. The Greige Goods Division has extensive
proprietary technical knowledge in the structure of its spinning and
weaving operations, which the Company believes represents a
significant competitive advantage.
The Finished Goods Division is capable of finishing a wide variety
of products and offers a broad range of dyeing processes and finishes.
This manufacturing flexibility increases the Finished Goods Division's
ability to respond rapidly to changes in market demand, which the
Company believes enhances its competitive position.
RAW MATERIALS, MANUFACTURERS AND SUPPLIERS
The principal raw materials used by ICF include polymeric resins,
natural and synthetic elastomers, organic and inorganic pigments,
aromatic and aliphatic solvents, polyurethanes, polyaramids and
calendered fabrics. ATG principally utilizes wool, flax, specialty
yarn, man-made fibers, including acrylics, polyesters, acetates,
rayon and nylon and a wide variety of dyes and chemicals. Such raw
materials are largely purchased in domestic markets and are available
from a variety of sources. The Company is not presently experiencing
any difficulty in obtaining raw materials. However, the Company has
from time to time experienced difficulty in obtaining the substrate
fabric that it uses to produce coated automotive airbag materials. The
Company anticipates that the completion of its new weaving facility in
Spartanburg, South Carolina may reduce the risk of such supply shortages.
Airbag fabric produced by the new facility will be subject to rigorous
testing and certification before it will be available for production.
FOREIGN OPERATIONS
All of Reeves' foreign operations are conducted through
Reeves S.p.A., a wholly-owned subsidiary located in Lodi Vecchio, Italy.
Reeves S.p.A. forms a part of Reeves' ICF Group. The
financial data of Reeves S.p.A. is as follows (in thousands):
1991 1992 1993
-------- -------- --------
Sales $ 35,437 $ 38,444 $ 36,932
Net income 6,808 9,165 7,446
Assets 33,011 31,608 33,092
The financial results of Reeves S.p.A. do not include any
allocations of corporate expenses or consolidated interest expense.
BACKLOG
The following is a comparison of open order backlogs at
December 31 of each year presented (in thousands):
1991 1992 1993
-------- -------- --------
Industrial Coated Fabrics
Group $ 16,942 $ 16,824 $ 17,072
Apparel Textile Group 47,129 32,994 39,390
-------- -------- --------
Totals $ 64,071 $ 49,818 $ 56,462
======== ======== ========
The increase in ICF's backlog from 1992 to 1993 is due to growth
in the coated automotive airbag materials business. The decrease in the
Apparel Textile Group backlog from 1991 to 1992 was the result of a
decrease in government business and reduced orders due to market
uncertainty. The increase in the ATG backlog from 1992 to 1993 is due to
the addition of several new customers in the Finished Goods Division.
The December 31, 1993 backlogs for the Industrial Coated
Fabrics Group and the Apparel Textile Group are reasonably expected
to be filled in 1994. Under certain circumstances, orders may be
canceled at the Company's discretion prior to the commencement of
manufacturing. Any significant decrease in backlog resulting from
lost customers could adversely affect future operations if these
customers are not replaced in a timely manner.
ENVIRONMENTAL MATTERS
The Company is subject to a number of federal, state
and local laws and regulations pertaining to air emissions, water
discharges, waste handling and disposal, workplace exposure and
release of chemicals. During 1993, expenditures in connection with
the Company's compliance with federal, state and local environmental
laws and regulations did not have a material adverse effect on its
earnings, capital expenditures or competitive position. Although
the Company cannot predict what laws, regulations and policies may
be adopted in the future, based on current regulatory standards,
the Company does not expect such expenditures to have a material
adverse effect on its operations.
EMPLOYEES
On February 1, 1994, the Company employed approximately 2,289
people, of whom 1,855 were in production, 183 were in general and
administrative functions, 52 were in sales and 199 were at Reeves S.p.A.
At such date, ICF had approximately 639 employees and ATG had
approximately 1,398 employees, with the remainder of the Company's
employees in general and administrative positions.
ITEM 2. PROPERTIES
The Company's principal facilities, their primary functions
and their locations as of March 31, 1994 are as follows:
Size (Sq. Ft.)
---------------
Location Function Owned Leased
Manufacturing Facilities
Industrial Coated Fabrics Group
Rutherfordton, NC Specialty Materials 215,000
Spartanburg, SC Graphic Arts 308,364
Lodi Vecchio, Italy Graphic Arts and
Specialty Materials 160,000 4,900
--------- -------
Subtotal 683,364 4,900
--------- -------
Apparel Textile Group
Woodruff, SC Greige Goods 368,587
Chesnee, SC Greige Goods 303,100
Bessemer City, NC Greige Goods 218,992
Bishopville, SC Finished Goods 226,684 2,400
Bishopville, SC Warehouse 72,650
--------- -------
Subtotal 1,117,363 75,050
--------- -------
Total Manufacturing Facilities 1,800,727 79,950
--------- -------
Non-Manufacturing Facilities
New York, NY Administrative & Sales 12,000
Spartanburg, SC Administrative & Sales 43,000
Darien, CT Administrative 6,800
--------- -------
Total Non-Manufacturing Facilities 43,000 18,800
--------- -------
TOTAL 1,843,727 98,750
========= =======
The Company is a party to leases with terms ranging from
month-to-month to fifteen years, with rental expense aggregating
$1.5 million for the twelve months ended December 31, 1993. The
Company believes that all of its facilities are suitable and
adequate for the current conduct of its operations.
ITEM 3. LEGAL PROCEEDINGS
The Company believes that there are no legal proceedings,
other than ordinary routine litigation incidental to the business
of the Company, to which the Company or any of its subsidiaries is
a party. Management is of the opinion that the ultimate outcome of
existing legal proceedings would not have a material adverse effect
on the Company's consolidated financial position or results of
operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On November 8, 1993, James W. Hart was re-elected as a
director of Reeves.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
At March 31, 1994, 100% or 35,021,666 shares of Reeves'
Common Stock was held by Hart Holding. There is no established
public trading market for the Common Stock.
Reeves' debt instruments restrict Reeves from declaring or
paying any dividends or making any distributions in respect of its
capital stock (other than dividends payable solely in shares of
common stock), except under certain conditions as defined therein.
See Item 7, Management's Discussion and Analysis of Financial
Condition and Results of Operation, and Footnote 7, Long-Term Debt,
of the Notes to Consolidated Financial Statements of Reeves.
ITEM 6. SELECTED FINANCIAL DATA
The historical operations and balance sheet data included
in the selected financial data set forth below are derived from the
consolidated financial statements of Reeves (in thousands
except per share data and ratios).
December 31,
------------------------------------------------
1989 1990 1991 1992 1993
---- ---- ---- ---- ----
Statement of
Operations Data (1):
Net sales
Industrial Coated
Fabrics Group $114,313 $119,749 $121,264 $126,576 $140,735
Apparel Textile
Group 143,035 138,110 148,295 144,528 142,918
-------- -------- -------- -------- --------
Total net sales $257,348 $257,859 $269,559 $271,104 $283,653
======== ======== ======== ======== ========
Operating income
Industrial Coated
Fabrics Group $ 24,715 $ 23,250 $ 23,940 $ 24,732 $ 29,287
Apparel Textile Group 11,513 10,059 10,121 10,693 11,583
Corporate expenses (5,278) (7,503) (7,278) (8,318) (10,433)
Goodwill amortization (1,140) (1,140) (1,157) (1,340) (1,340)
Facility restructuring
charges (1,003)
-------- -------- -------- -------- --------
Total operating
income $ 29,810 $ 24,666 $ 25,626 $ 25,767 $ 28,094
======== ======== ======== ======== ========
Income from
continuing
operations $ 6,100 $ 5,757 $ 4,544 $ 5,976 $ 7,857
======== ======== ======== ======== ========
Interest expense
and amortization
of financing
costs and debt
discount $ 22,590 $ 19,935 $ 21,777 $ 17,633 $ 16,394
======== ======== ======== ======== ========
Income from
continuing
operations
per share $ .32 $ .30 $ .23 $ .16 $ .22
Supplemental
earnings per
share data -
income from
continuing
operations (2) .17 .16 .12
Ratio of
earnings to
fixed charges (3) 1.6x 1.3x 1.2x 1.5x 1.7x
==== ==== ==== ==== ====
Earnings (loss)
per common share
Primary and
Fully Diluted:
Income from
continuing
operations $ .32 $ .30 $ .23 $ .16 $ .22
Income (loss)
before
extraordinary
item 1.19 (1.78) .39 .16 .22
Dividends paid
Net income (loss) 1.09 (1.78) .39 .08 .22
Weighted average
number of shares
Primary 17,471 17,938 18,118 36,724 34,978
Fully diluted 17,500 17,883 18,118 36,724 34,978
Operating Data:
Depreciation
and goodwill
amortization
expense $ 6,230 $ 6,637 $ 7,108 $ 8,116 $ 8,544
Capital
expenditures 6,718 7,007 11,015 15,788 16,506
Balance Sheet
Data:
Total assets (4) $246,910 $228,256 $214,987 $192,931 $203,025
Long-term debt
(including
current
portion) 149,863 148,837 148,960 132,576 132,677
Stockholder's
equity (5) 40,890 13,195 20,477 15,565 21,411
Footnotes to Statement of Operations and Balance Sheet Data:
(1) The fiscal year ended December 31, 1989 has been restated to
reflect the exclusion of the discontinued operations of the
ARA Automotive Group. See Footnote 3, Discontinued Operations
and Facility Restructuring Charges, of the Notes to Consolidated
Financial Statements of Reeves.
(2) Effective December 31, 1991, Reeves' Board of Directors approved
the exchange of all of its outstanding Series I Preferred Stock,
$1.00 par value, valued in the aggregate at $9,410,000, for
18,820,000 shares of Reeves' Common Stock, $.01 par value, valued
at $.50 per share. The supplemental earnings per share data is
presented for each period as if the exchange occurred on January 1,
1989.
(3) For the purpose of calculating the ratio of earnings to fixed
charges, earnings consist of income from continuing operations
before income taxes, plus fixed charges. Fixed charges
consist of interest on all indebtedness, which includes amortization
of financing costs and debt discounts, and one-third of all
rentals, which is considered representative of the interest
portion included therein, after adjustments for amounts
related to discontinued operations.
(4) Total assets include the assets of discontinued operations
prior to disposal. In 1990, Reeves discontinued the operations of
Reeves' ARA Automotive Group.
(5) The decline in stockholder's equity from 1989 to 1990 includes
the recognition of a net loss of $34,594,000 from the disposal
of the remaining operations of Reeves' ARA Automotive Group.
The decline in stockholder's equity from 1991 to 1992
primarily reflects translation adjustments of $6,626,000
caused by foreign currency fluctuations.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS (1991-1993)
SALES
Consolidated sales increased from $269.6 million in 1991 to $283.7
million in 1993 (5.2%) due to increased sales of the Industrial Coated
Fabrics Group (16.0%) related primarily to growth in coated automotive
airbag materials, partially offset by a decline in sales of the Apparel
Textile Group (3.6%) due to a shift to basic, lower margin products,
price competition, adverse recessionary influences affecting domestic
textile markets and the cessation of ATG's weaving operations at
its Woodruff, South Carolina facility in 1993.
Industrial Coated Fabrics Group. ICF's sales were $121.3 million,
$126.6 million and $140.7 million in 1991, 1992 and 1993, respectively.
The 16.0% increase during the period was due to increased sales of
specialty coated fabrics, primarily coated automotive airbag materials,
partially offset by a decline in offset printing blanket volume. The
increase in coated automotive airbag materials sales was due to an
increase in unit volume caused by the increased use of driver-side
airbags primarily in cars manufactured in the United States. The
decline in domestic printing blanket sales was primarily due to reduced
demand as a result of the slowdown in the printing industry. Sales of
Reeves Brothers' Italian subsidiary ("Reeves S.p.A.") fluctuated during
the period primarily due to movements in foreign currency exchange rates.
Apparel Textile Group. ATG's sales were $148.3 million, $144.5
million and $142.9 million in 1991, 1992 and 1993, respectively. The
2.6% sales decline in 1992 as compared to 1991 was evenly distributed
between ATG's greige and finishing divisions. The decline in each
division was primarily due to unusually strong sales in 1991 to the
U.S. military as a result of Operation Desert Storm and, to a lesser
extent, the economic recession in the United States in 1992. ATG's
products experienced both a decline in unit volume as well as a shift
to more basic, lower margin products in 1992 as compared to 1991. The
1.1% decline experienced in 1993 as compared to 1992 resulted from a
decrease in greige goods sales as a result of the cessation of weaving
operations at the Woodruff, South Carolina facility due to declining
sales to the U.S. military, offset partially by the increased sales
of finished goods due to greater demand for higher quality and more
varied product offerings and styles.
OPERATING INCOME
Consolidated operating income was $25.6 million, $25.8 million and
$28.1 million in 1991, 1992 and 1993, respectively. The 9.8% increase
between 1991 and 1993 resulted primarily from increased profits
contributed by ICF's specialty materials products (predominantly
coated automotive airbag materials) and to a lesser extent, increased
profits contributed by ATG (in spite of reduced sales volume) as a result
of cost reductions and productivity gains achieved during the period
related to its capital investment program. The operating income increase
experienced during the period was partially offset by increased
corporate expenses and, in 1993, by facility restructuring charges of
$1.0 million. Operating income, as a percentage of sales, increased
from 9.5% in 1991 and 1992 to 9.9% in 1993.
Industrial Coated Fabrics Group. ICF's operating income was $23.9
million, $24.7 million and $29.3 million in 1991, 1992 and 1993,
respectively, and represented 19.7%, 19.5% and 20.8% of ICF's sales
in such years. Operating income growth in 1992 as compared to 1991
was due primarily to increased sales of coated automotive airbag
materials and, to a lesser extent, the elimination of certain
lower-margin specialty coated fabric products. The 18.6% increase in
operating income in 1993 as compared to 1992 was primarily due to
the benefits of economies of scale realized in connection with
increased sales of coated automotive airbag materials. Operating
income from printing blankets declined in 1992 and 1993 reflecting
the worldwide slowdown in the printing industry partially offset
by efficiencies experienced by Reeves S.p.A. primarily related to
increased material yields.
Apparel Textile Group. ATG's operating income was $10.1 million,
$10.7 million and $11.6 million in 1991, 1992 and 1993, respectively,
and represented 6.8%, 7.4% and 8.1% of ATG's sales in such years.
The operating income and margin improvement experienced during the
period was achieved in spite of an overall 3.6% sales decline
reflecting the benefits of cost reductions and productivity
improvements realized from ATG's capacity modernization program
initiated at its Chesnee and Bishopville, South Carolina facilities.
Corporate Expenses. Corporate expenses were $7.3 million, $8.3
million and $10.4 million in 1991, 1992 and 1993, respectively, and
represented 2.7%, 3.1% and 3.7% of consolidated sales in such years.
The increase in corporate expenses during the period related primarily
to increased staffing and compensation expense necessary to support
corporate development activities. In 1993, corporate expenses included
a provision for costs related to the Company's discontinued
Buena Vista, Virginia facility of $.5 million.
Goodwill Amortization and Facility Restructuring Charges. The Company
recorded provisions for goodwill amortization of $1.2 million in 1991 and
$1.3 million in 1992 and 1993. In 1993, Reeves also recorded facility
restructuring charges of $1.0 million. The one-time charges related
primarily to the cessation of weaving activities at the Company's Woodruff,
South Carolina facility due to declining sales to the U.S. military,
the conversion of that facility into a captive yarn mill and consolidation
of weaving capacity at ATG's remaining facilities.
INTEREST EXPENSE, NET
Interest expense, net consists of consolidated interest expense plus
amortization of financing costs and debt discounts less interest income
on investments. Interest expense, net was $20.7 million, $17.2 million
and $16.2 million in 1991, 1992 and 1993, respectively. Included in
such net amounts are provisions for the amortization of financing costs
and debt discounts totaling $1.3 million, $1.0 million and $.7 million
in 1991, 1992 and 1993, respectively. The decline in interest expense,
net during the period resulted primarily from the repayment of bank debt,
the refinancing of Reeves' long-term debt in 1992 with proceeds from the
sale of the 11% Senior Notes and the repurchase of a portion of the 13 3/4%
Subordinated Debentures.
INCOME TAXES
The Company's effective income tax rate on income from continuing
operations before income taxes for 1991, 1992 and 1993 was 7.6%, 30.3% and
33.7%, respectively. The effective income tax rate on income from
continuing operations for 1991 and 1992 differed from the federal
statutory rate of 34% primarily due to the impact of goodwill
amortization and Reeves S.p.A.'s lower effective tax rate. The higher
effective income tax rate in 1992 as compared to 1991 was primarily
due to an increase in domestic taxable income which is taxed at a higher
rate than income earned at Reeves S.p.A., a new Italian tax affecting
Reeves S.p.A.'s tax liability and the adoption of Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" ("FAS 109").
During 1993, Reeves established a $.8 million valuation
reserve against the Company's deferred tax assets reflecting
estimated utilization of foreign tax credits. The Company has
foreign tax credit carryforwards of $1.9 million of which $1.7 million
expire in 1994 and $.2 million expire at varying dates through 1997.
The valuation reserve was established based on the Company's
estimate of foreign source taxable income expected to be received from
Reeves S.p.A. during the foreign tax credit carryover period.
INCOME FROM CONTINUING OPERATIONS
Income from continuing operations was $4.5 million, $6.0 million
and $7.9 million in 1991, 1992 and 1993, respectively. Income from
continuing operations excluded (i) a gain on disposal of discontinued
operations, net of taxes, aggregating $2.8 million in 1991, (ii) an
extraordinary loss of $6.1 million in 1992 from the write-off of financing
costs and debt discounts related to the early extinguishment of
long-term debt in the Company's 1992 refinancing and (iii) a gain
of $3.2 million in 1992 related to the cumulative effect of adopting
a change in accounting principle (FAS 109).
LIQUIDITY AND CAPITAL RESOURCES
Capital Expenditures
Commmencing in 1991, the Company began significantly increasing its
levels of capital investment in its businesses in order to modernize and
expand capacity, reduce its overall cost structure, increase productivity
and enhance its competitive position. Between 1991 and 1993, the Company
invested approximately $52.1 million in aggregate ($11.0 million in 1991,
$15.8 million in 1992, and $16.5 million in 1993 and $8.8 million,
representing the cost of manufacturing equipment leased under operating
leases, in 1992 and 1993).
Between 1991 and 1993, the Company invested approximately $13 million
in ICF's domestic facilities in order to purchase new production equipment,
to increase productivity and expand capacity in its traditional lines of
business as well as to enter the coated automotive airbag materials market.
In addition, ICF spent approximately $12 million in its Reeves S.p.A.
facilities to construct an 80,000 square foot addition and purchase related
equipment. Such investment increased capacity to manufacture offset printing
blankets and installed coated fabrics capacity in Europe to meet anticipated
demand for sophisticated specialty materials. Between 1991 and 1993, the
Company invested approximately $24.2 million in ATG's facilities at Chesnee
and Bishopville, South Carolina to increase productivity and manufacturing
flexibility, expand capacity for more sophisticated fabrics and allow more
rapid response to market demand and a broader product offering. Of such
$24.2 million, approximately $8.8 million represents the cost of
manufacturing equipment leased under operating leases.
The Company intends to substantially increase its capital investment in
its existing businesses during the 1994-1997 period. The Company currently
anticipates in excess of $40 million of capital expenditures in 1994 and in
excess of $100 million of aggregate spending between 1995 and 1997. In
1994, the Company anticipates spending approximately $17 million to
construct, furnish and equip a state-of-the-art plant in Spartanburg,
South Carolina to weave automotive airbag materials, approximately
$5 million to complete the capacity expansion of ATG's Chesnee, South
Carolina plant and approximately $16 million to expand the capacity of and
improve productivity at ICF's worldwide coated fabrics and offset printing
blanket facilities. Projected capital expenditures beyond 1994 are expected
to complete ATG's modernization and expansion of its textile capacity, expand
ICF's automotive airbag materials capacity in response to anticipated
domestic and international market requirements and enhance the profitability
and competitive position of ICF's printing blanket and traditional coated
fabrics businesses through additional spending for cost reductions and
productivity improvements.
As a result of the nature of the Company's business and its substantial
expenditures for capital improvements over the last several years, current
and future capital expenditure requirements are flexible as to both timing
and amount of capital required. In the event that cash flow proves
inadequate to fund currently projected expenditures, such expenditures can
be adjusted so as not to exceed available funds.
Liquidity
The Company's net cash provided by operating activities increased
from $7.6 million in 1991 to $15.2 million in 1992 and $25.2
million in 1993. The improvement in net cash provided by operating
activities resulted from higher levels of income from continuing
operations and significant improvements in working capital management.
The Company anticipates that it will be able to meet its projected
working capital, capital expenditure and debt service requirements through
internally generated funds and borrowings available under its existing
$35 million Bank Credit Agreement.
In August 1992, in conjunction with the refinancing of the Company's
bank and institutional indebtedness, the Company entered into the Bank
Credit Agreement which provides the Company with an aggregate $35 million
revolving line of credit and letter of credit facility. The Bank Credit
Agreement expires on December 31, 1995 and is secured by accounts
receivable and inventories. As of March 31, 1994, the Company had
available borrowing capacity (net of $1.3 million of outstanding letters
of credit) of $28.6 million under the Bank Credit Agreement.
IMPACT OF INFLATION
The Company does not believe that its financial results have been
materially impacted by the effects of inflation.
OTHER MATTERS
In February 1992, the Company received approximately $17 million
from the federal government in payment of a tax refund. The refund
resulted from the Company carrying back tax operating losses generated
in 1991, primarily related to the disposal of the ARA Automotive Group,
to offset previous years' taxable income.
In 1992, Reeves adopted FAS 109 effective as of the beginning of
1992. Under FAS 109, in the year of adoption, previously reported results
of operations for the year are restated to reflect the effects of applying
FAS 109, and the cumulative effect of adoption on prior years' results of
operations is shown in the income statement in the year of change. The
cumulative effect of this change in accounting principle increased net
income by $3.2 million in 1992.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Part IV, Item 14, for index to financial statements.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
None
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholder of
Reeves Industries, Inc.
In our opinion, the consolidated financial statements
listed in the index appearing under Item 14(a)(1) and (2)
present fairly, in all material respects, the financial
position of Reeves Industries, Inc. and its subsidiary at
December 31, 1992 and 1993, and the results of their
operations and their cash flows for each of the three years
in the period ended December 31, 1993, in conformity with
generally accepted accounting principles. These financial
statements are the responsibility of the Company's
management; our responsibility is to express an opinion on
these financial statements based on our audits. We conducted
our audits of these statements in accordance with generally
accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles
used and significant estimates made by management, and
evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the
opinion expressed above.
As discussed in Notes 2 and 8 to the consolidated financial
statements, the Company changed its method of accounting for
income taxes in 1992.
PRICE WATERHOUSE
Atlanta, Georgia
February 11, 1994, except as to Note 16,
which is as of March 31, 1994
<PAGE>
REEVES INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEET
(in thousands except share data)
December 31,
----------------
1992 1993
------ ------
ASSETS
Current assets
Cash and cash equivalents of $3,936
and $7,222 $ 4,165 $ 12,015
Accounts receivable, less allowance for
doubtful accounts of $1,570 and $1,467 38,876 45,925
Inventories (Note 4) 35,310 33,969
Deferred income taxes (Note 8) 6,477 5,442
Other current assets 9,814 3,300
Investment in discontinued
operations (Note 3) 2,466
-------- --------
Total current assets 97,108 100,651
Property, plant and equipment, at cost
less accumulated depreciation (Note 5) 43,526 51,415
Unamortized financing costs, less
accumulated amortization of $550 and $1,177 4,390 3,946
Goodwill, less accumulated amortization
of $8,091 and $9,431 44,697 43,357
Deferred income taxes (Note 8) 1,951 2,153
Other assets 603 1,503
Investment in discontinued
operations (Note 3) 656
-------- --------
Total assets $192,931 $203,025
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities
Accounts payable $ 15,352 $ 22,810
Accrued expenses and other
liabilities (Note 6) 18,991 21,197
Liabilities related to discontinued
operations (Note 3) 3,367
-------- --------
Total current liabilities 37,710 44,007
Long-term debt (Note 7) 132,576 132,677
Deferred income taxes (Note 8) 4,505 4,367
Other liabilities 563
Liabilities related to discontinued
operations (Note 3) 2,575
-------- --------
Total liabilities 177,366 181,614
-------- --------
Stockholder's equity (Note 10)
Common stock, $.01 par value,
50,000,000 shares authorized;
34,967,973 and 35,021,666
shares issued and outstanding 350 350
Capital in excess of par value 5,069 5,099
Retained earnings 12,107 19,964
Equity adjustments from translation (1,961) (4,002)
-------- --------
Total stockholder's equity 15,565 21,411
-------- --------
Commitments and contingencies (Note 15)
-------- --------
Total liabilities and stockholder's
equity $192,931 $203,025
======== ========
The accompanying notes are an integral part of these financial
statements.
<PAGE>
REEVES INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF INCOME
(in thousands except per share data)
Year Ended December 31,
----------------------------
1991 1992 1993
-------- -------- --------
Net sales $269,559 $271,104 $283,653
Cost of sales 216,179 216,043 222,016
-------- -------- --------
Gross profit on sales 53,380 55,061 61,637
Selling, general and administrative
expenses 27,754 29,294 32,540
Facility restructuring charges
(Note 3) 1,003
-------- -------- --------
Operating income 25,626 25,767 28,094
Other income (expense)
Other income, net 1,068 435 158
Interest expense and amortization
of financing costs and debt
discounts (21,777) (17,633) (16,394)
-------- -------- --------
(20,709) (17,198) (16,236)
-------- -------- --------
Income from continuing operations
before income taxes, extraordinary
item and cumulative effect of a
change in accounting principle 4,917 8,569 11,858
Income taxes (Note 8) 373 2,593 4,001
-------- -------- --------
Income from continuing operations 4,544 5,976 7,857
Discontinued operations
Net gain on disposal of
discontinued operations, less
applicable income tax provision
of $1,732 (Note 3) 2,830
-------- -------- --------
2,830
-------- -------- --------
Income before extraordinary item
and cumulative effect of a
change in accounting principle 7,374 5,976 7,857
Extraordinary loss from early
extinguishment of debt,
less applicable income tax
benefits of $3,148 (Note 7) (6,112)
Cumulative effect of a change in
accounting for income taxes (Note 8) 3,221
-------- -------- --------
Net income $ 7,374 $ 3,085 $ 7,857
======== ======== ========
Earnings per common share (Note 10)
Primary and fully diluted
Income from continuing operations $ .23 $ .16 $ .22
Income before extraordinary item
and cumulative effect of a change
in accounting principle .39 .16 .22
Cumulative effect of a change in
accounting for income taxes .09
Net income .39 .08 .22
Weighted average number of common
shares outstanding
Primary and fully diluted 18,118 36,724 34,978
The accompanying notes are an integral part of these financial
statements.
<PAGE>
<TABLE>
<CAPTION>
REEVES INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY
(in thousands)
Series I Capital Equity
Preferred Stock Common Stock in Excess Adjustments
$1.00 Par Value $0.01 Par Value of Retained From
Shares Amount Shares Amount Par Value Earnings Translation Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1990 1 $5,001 18,066 $181 $1,608 $ 1,648 $4,757 $13,195
Net income 7,374 7,374
Exchange of preferred stock
for common stock (1) (5,001) 18,820 188 4,813
Translation adjustments (92) (92)
--- ------ ------ ---- ------ ------- ------- -------
Balance at December 31, 1991 36,886 369 6,421 9,022 4,665 20,477
Net income 3,085 3,085
Translation adjustments (6,626) (6,626)
Purchase and cancellation
of common stock (1,918) (19) (1,352) (1,371)
--- ------ ------ ---- ------ ------- ------- -------
Balance at December 31, 1992 34,968 350 5,069 12,107 (1,961) 15,565
Net income 7,857 7,857
Translation adjustments (2,041) (2,041)
Issuance of common stock 535 5 295 300
Purchase and cancellation
of common stock (481) (5) (265) (270)
--- ------ ------ ---- ------ ------- ------- -------
Balance at December 31, 1993 35,022 $350 $5,099 $19,964 $(4,002) $21,411
=== ====== ====== ==== ====== ======= ======= =======
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
REEVES INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
Year Ended December 31,
------------------------
1991 1992 1993
------ ------ ------
Cash flows from operating activities
Net income $ 7,374 $ 3,085 $ 7,857
Adjustments to reconcile net income
to net cash provided by operating
activities
Write-off of financing costs due
to early extinguishment of debt 6,112
Cumulative effect of a change
in accounting for income taxes (3,221)
Net gain on disposal of
discontinued operations (2,830)
Depreciation and amortization 8,388 9,146 9,272
Deferred income taxes 601 (112) 694
Changes in operating assets and
liabilities
Decrease (increase) in accounts
receivable 565 2,574 (7,049)
Decrease in inventories 486 4,200 1,341
(Increase) decrease in other
current assets (1,949) (9,167) 6,514
(Increase) decrease in other
assets (254) 134 (900)
Increase (decrease) in
accounts payable 492 (546) 7,458
(Decrease) increase in accrued
expenses and other liabilities (4,920) 6,451 133
Equity adjustments from
translation (356) (3,450) (117)
------- -------- -------
Net cash provided by
operating activities 7,597 15,206 25,203
------- -------- -------
Cash flows from investing activities
Purchases of property, plant and
equipment (11,015) (15,788) (16,506)
Net proceeds (payments) from
disposal of discontinued operations 2,331 12,438 (536)
------- -------- -------
Net cash used by investing activities (8,684) (3,350) (17,042)
------- -------- -------
Cash flows from financing activities
Principal payments of long-term debt (56) (108,726)
Net payments on revolving loans (30,000)
Borrowings of long-term debt 121,644
Debt issuance costs (5,115)
Premium on early retirement of debt (4,876)
Purchases of common stock (1,075) (270)
Issuance of common stock 300
------- -------- -------
Net cash (used) provided by
financing activities (56) (28,148) 30
------- -------- -------
Effect of exchange rate
changes on cash 122 (535) (341)
------- -------- -------
(Decrease) increase in cash
and cash equivalents (1,021) (16,827) 7,850
Cash and cash equivalents,
beginning of year 22,013 20,992 4,165
------- -------- -------
Cash and cash equivalents,
end of year $20,992 $ 4,165 $12,015
======= ======== =======
The accompanying notes are an integral part of these financial
statements.
<PAGE>
REEVES INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1992 AND 1993
1. BUSINESS AND ORGANIZATION
Reeves Industries, Inc. ("Reeves" or the "Company"), a wholly-owned
subsidiary of Hart Holding Company Incorporated ("Hart Holding"),
is a holding company whose principal asset is the common stock of its
wholly-owned subsidiary, Reeves Brothers, Inc. ("Reeves Brothers").
The Company was acquired by Hart Holding on May 6, 1986.
Reeves Brothers is a diversified industrial company engaged in two
business segments: industrial coated fabrics and apparel
textiles.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of consolidation
The consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiary, Reeves Brothers. All
significant intercompany balances and transactions have been eliminated.
Inventories
Inventories are stated at the lower of cost or market. Cost
for approximately 29% and 27% of total inventories was
determined on the last-in, first-out (LIFO) method at December
31, 1992 and 1993, respectively. With respect to the
remainder of the inventories, cost is determined principally
on the first-in, first-out (FIFO) method. Market is
determined on the basis of replacement costs or selling prices
less costs of disposal. The application of Accounting
Principles Board Opinion No. 16, "Business Combinations," for the
acquisition of Reeves caused the inventories in the accompanying
consolidated balance sheet to exceed inventories used for income
tax purposes by approximately $7,320,000 as of December 31, 1993.
Property, plant and equipment
Property, plant and equipment are stated at cost.
Improvements which extend the useful lives of the assets are
capitalized while repairs and maintenance are charged to
operations as incurred. Depreciation is provided using
primarily the straight-line method for financial reporting
purposes while accelerated methods are used for income tax
purposes. When assets are replaced or otherwise disposed of,
the cost and related accumulated depreciation are removed from
the accounts and any gain or loss is reflected in income.
Fair value of financial instruments
Cash, accounts receivable, accounts payable and accrued expenses
and other liabilities are reflected in the financial statements at
fair value because of the short-term maturity of these instruments.
The fair value of the Company's debt instruments is determined based upon
a recent market price quote and is disclosed in Note 7. The fair value
of the foreign exchange contracts (used for hedging purposes) is
estimated using quoted exchange rates and is disclosed in Note 11.
Foreign currency exchange and translation
For Reeves Brothers' wholly-owned foreign subsidiary, the local
currency of the country of operation is used as the functional
currency for purposes of translating the local currency asset
and liability accounts at current exchange rates into the
reporting currency. The resulting translation adjustments are
accumulated as a separate component of stockholder's equity
reflected in the equity adjustments from translation account
in the accompanying consolidated financial statements. Gains and
losses resulting from translating asset and liability accounts
that are denominated in currencies other than the functional
currency are included in income.
Amortization policy
The Company is amortizing goodwill on a straight-line basis
over forty years. Financing costs and debt discounts are
being amortized by the interest method over the life of the
respective debt securities. Pre-operating costs associated
with the start-up of significant new operations are deferred
and amortized over five years.
Revenue recognition
Sales are generally recorded when the goods are shipped. At
the customer's request, shipment of the completed product is
sometimes delayed. In such instances, revenues are recognized
when the customer acknowledges transfer of title and accepts
the related billing.
Income taxes
The Company is a member of an affiliated group of which Hart
Holding is the common parent. Pursuant to a tax allocation
agreement with Hart Holding, the Company files a consolidated
federal income tax return with Hart Holding. Under the
agreement, the Company's tax liability is determined on a
separate return basis and any taxes payable are remitted to
Hart Holding.
During 1992, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes"
(FAS 109). Income tax accounting information is disclosed in
Note 8 to the consolidated financial statements.
For the years ended December 31, 1992 and 1993, the provision
for income taxes was based on reported earnings before income
taxes, and includes appropriate provisions for deferred income
taxes resulting from the tax effect of the differences between
the tax basis of assets and liabilities and their carrying
amounts for financial reporting purposes. Prior to January 1,
1992, deferred income taxes arose from the reporting of
certain expenses, principally depreciation, pension costs and
other expenses, differently for financial reporting purposes
than for income tax reporting purposes.
At December 31, 1993, unremitted earnings of Reeves Brothers'
foreign subsidiary were approximately $19,500,000. United States
income taxes have not been provided on these unremitted
earnings as it is the Company's intention to indefinitely
reinvest these earnings. However, Reeves Brothers' foreign
subsidiary has, in previous years, remitted a portion of its current
year earnings as dividends and expects to continue this practice in
the future.
Pension plans
The Company has noncontributory pension plans covering all
eligible domestic employees (Note 9).
Earnings per share
Earnings per share are computed based on the weighted average
number of common and common equivalent shares, where dilutive,
outstanding during each period. A deduction has been made for
cumulative preferred dividends earned during such periods the
preferred stock was outstanding even though such dividends
were not declared or paid. Fully diluted earnings per share
are computed assuming that outstanding warrants, where dilutive,
were exercised at the beginning of the period or date of issuance,
if later. Supplemental earnings per share data is provided giving
effect to the exchange of preferred stock for common stock as
discussed in Note 10.
Statement of cash flows
For purposes of the statement of cash flows, cash equivalents
are defined as highly liquid investment securities with an
original maturity of three months or less.
3. DISCONTINUED OPERATIONS AND FACILITY RESTRUCTURING CHARGES
During 1990 the Company elected to dispose of the operations
of its ARA Automotive Group. The Company has realized all of
the significant assets and continues to settle remaining
estimated liabilities related to the discontinued operation.
The remaining estimated amounts to settle such liabilities
have been included in accrued expenses and other liabilities
as of December 31, 1993.
During 1993, a facility restructuring plan was implemented
to reduce the Company's overall cost structure and to improve
productivity. The Consolidated Statement of Income includes
a charge of approximately $1,003,000 related to this plan.
The plan included the cessation of weaving activities at one
location and conversion of that facility into a captive yarn
mill, consolidating weaving capacity at remaining facilities and
implementing cost saving/state-of-the-art finishing technology.
4. INVENTORIES
Inventories at December 31, 1992 and 1993, are comprised of the
following (in thousands):
1992 1993
Raw materials $ 7,084 $ 6,815
Work in process 8,777 8,792
Manufactured and finished goods 19,449 18,362
-------- --------
$ 35,310 $ 33,969
======== ========
If inventories had been calculated on a current cost basis,
they would have been valued higher by approximately $2,933,000 and
$2,038,000 at December 31, 1992 and 1993, respectively.
5. PROPERTY, PLANT AND EQUIPMENT
The principal categories of property, plant and equipment at
December 31, 1992 and 1993, are as follows (in thousands):
1992 1993
Land and land improvements $ 794 $ 797
Buildings and improvements 14,355 16,654
Machinery and equipment 56,801 65,400
-------- --------
71,950 82,851
Less - Accumulated depreciation
and amortization (28,424) (31,436)
-------- --------
$ 43,526 $ 51,415
======== ========
6. ACCRUED EXPENSES AND OTHER LIABILITIES
Accrued expenses and other liabilities at December 31, 1992 and
1993, are comprised of the following (in thousands):
1992 1993
Accrued salaries, wages and incentives $ 3,013 $ 3,145
Product claims reserve 1,277 1,237
Interest payable 6,493 6,512
Income taxes payable 530 548
Deferred compensation 1,322 1,187
Accrued costs related to discontinued
operations 145 1,390
Italian severance pay program 2,405 2,391
Other 3,806 4,787
-------- --------
$ 18,991 $ 21,197
======== ========
7. LONG-TERM DEBT
Long-term debt at December 31, 1992 and 1993, consists of the
following (in thousands):
1992 1993
11% Senior Notes due July 15, 2002,
net of unamortized discount of $835
and $747 $121,665 $121,753
13 3/4% Subordinated Debentures due
May 1, 2000, net of unamortized
discount of $89 and $76 10,911 10,924
-------- --------
$132,576 $132,677
======== ========
In June 1992, the Company completed a public offering of
$122,500,000 of 11% Senior Notes due 2002 (the "Senior
Notes"). Proceeds of the offering were used to redeem all of
the Company's then outstanding 12 1/2% Senior Notes and 13% Senior
Subordinated Debentures and to pay and terminate the revolving
loan outstanding under a prior loan agreement.
In connection with the liquidation of the 12 1/2% Senior Notes,
the 13% Senior Subordinated Debentures and the prior revolving loan,
the Company paid early payment premiums of $4,601,000 and wrote
off related debt issuance costs and debt discounts of
$3,016,000. In addition, during 1992, the Company purchased
$5,000,000 face value of its 13 3/4% Subordinated Debentures for
$5,275,000. As a result of these transactions, the Company
recognized an extraordinary loss of $5,775,000 ($.16 per share),
net of applicable income tax benefits of $2,974,000.
The Company is required to make sinking fund payments with
respect to the remaining 13 3/4% Subordinated Debentures of
$6,000,000 on May 1, 1999 and $5,000,000 on May 1, 2000.
On August 7, 1992, the Company and Reeves Brothers entered into
the Bank Credit Agreement with a group of banks, which was amended in
1993, and which provides the Company and Reeves Brothers with an
aggregate $35,000,000 revolving line of credit (the "Revolving Loan")
and letter of credit facility. The Revolving Loan bears interest at
the Alternate Base Rate (defined below) plus 1 1/2% or Eurodollar Rate
plus 2 1/2%, at the election of the borrower. The Alternate Base Rate
is defined as the higher of the Prime Rate (6% at December 31, 1993),
Base CD Rate plus 1%, or the Federal Funds Effective Rate plus 1/2%.
The applicable rates above the Alternate Base Rate and Eurodollar Rate
decline based on a ratio of earnings to fixed charges, as defined.
The Revolving Loan is due December 31, 1995. The Revolving Loan is
secured by Reeves Brothers' accounts receivable and inventories. As
of December 31, 1993, the Company and Reeves Brothers had available
borrowings, net of $1,415,000 of outstanding letters of credit, of
$33,585,000. A commitment fee of 1/2% per annum is required on the
unused portion of the Revolving Loan.
The Senior Notes, Revolving Loan, and 13 3/4% Subordinated
Debentures contain certain restrictive covenants with respect to
Reeves and Reeves Brothers including, among other things,
maintenance of working capital, limitations on the payments of
dividends, the incurrence of additional indebtedness and certain
liens, restrictions on capital expenditures, mergers or
acquisitions, investments and transactions with affiliates, and
require the maintenance of certain financial ratios and
compliance with certain financial tests and limitations.
Interest paid amounted to $18,155,000, $12,350,000 and $15,306,000
in 1991, 1992 and 1993, respectively.
The estimated fair value of the Company's 11% Senior Notes and
13 3/4% Subordinated Debentures at December 31, 1993 is
$131,075,000 and $12,980,000, respectively.
8. INCOME TAXES
During the third quarter of 1992, the Company adopted FAS 109
effective as of the beginning of 1992. Under FAS 109, in the
year of adoption, previously reported results of operations for
the year are restated to reflect the effects of applying FAS
109, and the cumulative effect of adoption on prior years'
results of operations is shown in the income statement in the
year of change. The adoption of FAS 109 did not have a material
effect on the Company's 1992 income from continuing operations
before income taxes.
The provision (benefit) for income taxes from continuing
operations is comprised of the following (in thousands):
1991 1992 1993
Current
Federal $ (2,698) $ (401) $ 1,278
Foreign 354 954 811
State 147 174 138
-------- -------- --------
(2,197) 727 2,227
-------- -------- --------
Deferred
Federal 1,770 983 945
Foreign 641 826
State 800 242 3
-------- -------- --------
2,570 1,866 1,774
-------- -------- --------
$ 373 $ 2,593 $ 4,001
======== ======== ========
The provision (benefit) for income taxes from continuing
operations differs from taxes computed using the statutory federal
income tax rate as follows (in thousands):
1991 1992 1993
Consolidated computed
statutory taxes $ 1,672 $ 2,914 $ 4,050
State income taxes, net of
federal income tax benefit 412 275 93
Amortization of goodwill 393 456 456
Foreign tax rate less than
statutory rate (2,081) (868) (1,451)
Valuation reserve 800
Other, net (23) (184) 53
-------- -------- --------
$ 373 $ 2,593 $ 4,001
======== ======== ========
In 1990, Reeves Brothers' foreign subsidiary implemented a
reorganization allowed under the applicable country's income tax laws.
This transaction resulted in the foreign subsidiary revaluing upward
its net assets for income tax purposes. Additional depreciation
and amortization relating to this revaluation is deductible in
determining income tax expense for both financial and income tax
reporting. The effect of this revaluation resulted in the
foreign subsidiary's effective income tax rate declining from
its statutory rate of approximately 46% to 5% for 1991. Due to
tax rate increases, other tax law changes, and the adoption of
FAS 109, the foreign subsidiary's effective income tax rate for
both 1992 and 1993 is approximately 22% versus the statutory
rate of 52.2%.
The provision from continuing operations for deferred federal
income taxes for 1991, the year prior to the effective date of
adoption of FAS 109, is comprised of timing differences related
to provisions for items not deductible until incurred,
principally product claims, bad debts and insurance,
depreciation and amortization, compensation agreements and
pension costs.
Deferred tax liabilities and assets under FAS 109 are comprised of
the following temporary differences (in thousands):
1992 1993
Deferred tax liabilities
Inventories $ 2,523 $ 2,584
Depreciation 1,982 1,783
------- -------
Total deferred tax liabilities $ 4,505 $ 4,367
======= =======
Deferred tax assets
Current
Tentative minimum tax credits $ 854 $ 854
Accrued expenses 3,677 3,490
Foreign tax credit carryforwards 1,946 1,898
Valuation reserve (800)
------- -------
6,477 5,442
------- -------
Long-term
Depreciation on foreign
subsidiary assets 1,951 1,219
Foreign exchange 934
------- -------
1,951 2,153
------- -------
Total deferred tax assets $ 8,428 $ 7,595
======= =======
In adopting FAS 109, the Company recorded deferred tax assets
which included foreign tax credit carryovers and the benefits of
future depreciation related to Reeves Brothers' foreign subsidiary.
The realization of these deferred tax assets is evaluated
annually based on expected future taxable income and the
carryover period of the credits. During 1993, the Company
established an $800,000 valuation reserve against the benefit
for utilization of foreign tax credits. The Company has foreign
tax credit carry forwards of $1,898,000 of which $1,680,000
expire in 1994 and $218,000 expire at varying dates through
1997. The valuation reserve was established based on the
Company's estimate of foreign source taxable income expected to
be received from Reeves Brothers' foreign subsidiary during the
foreign tax credit carryover period.
The sources of income (loss) from continuing operations before
income taxes are as follows (in thousands):
1991 1992 1993
Domestic $(2,245) $ 1,327 $ 2,774
Foreign 7,162 7,242 9,084
------- ------- -------
$ 4,917 $ 8,569 $11,858
======= ======= =======
Income taxes paid amounted to approximately $0, $2,406,000 and
$1,686,000 in 1991, 1992 and 1993, respectively.
9. PENSION PLANS
The Company sponsors two noncontributory defined benefit pension
plans covering substantially all of its domestic salaried and
hourly employees. The Reeves Brothers salaried pension plan benefits
are based on an employee's years of accredited service. The Reeves
Brothers hourly pension plan provides benefits, exclusive of benefits
related to former ARA Automotive Group retirement plan participants,
of stated amounts based on years of accredited service. The Reeves
Brothers hourly pension plan also provides benefits to both the ARA
union and non-union employees in accordance with their separate
benefit calculations. The ARA non-union plan was merged with the
Reeves Brothers hourly pension plan effective December 1990; the ARA
union plan was merged with the Reeves Brothers' hourly pension plan
effective April 1993. The Company's funding policy is to fund at
least the minimum amount required by the Employee Retirement Income
Security Act of 1974.
Combined data
The following table presents the combined funded status of the
Company's plans at December 31, 1992 and 1993 (in thousands):
1992 1993
Actuarial present value of accumulated
benefit obligation
Vested $ 13,731 $ 19,300
Nonvested 866 914
-------- --------
Accumulated benefit obligation $ 14,597 $ 20,214
======== ========
Plan assets at fair value $ 24,148 $ 25,450
Projected benefit obligation for
services rendered to date 19,129 24,553
-------- --------
Plan assets greater than projected
benefit obligation 5,019 897
Unrecognized net transition obligation 2,132 1,955
Unrecognized net gain subsequent to
transition (7,097) (3,696)
-------- --------
Pension asset (liability) recognized
in the consolidated balance sheet $ 54 $ (844)
======== ========
Plan assets consist primarily of fixed income securities, equity
securities, and certificates of deposit.
Pension cost includes the following components (in thousands):
1991 1992 1993
Service cost - benefits earned
during the period $ 929 $ 942 $ 936
Interest cost on projected benefit
obligation 1,409 1,456 1,643
Actual return on plan assets (3,700) (2,961) (2,531)
Net amortization and deferral 2,283 1,351 754
------ ------ ------
Pension cost $ 921 $ 788 $ 802
====== ====== ======
A weighted average discount rate of 8.5% and 7.25%, and rate of
increase in future compensation of 5.5% and 5.0% were used in
determining the actuarial present value of the projected benefit
obligation in 1992 and 1993, respectively. The long-term
expected rate of return on assets was 8.0% in both 1992 and 1993.
In December 1990, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 106,
"Employers' Accounting for Postretirement Benefits Other Than
Pensions" (FAS 106), which requires accrual, during an employee's
active years of service, of the expected costs of providing
postretirement benefits to employees and their beneficiaries and
dependents. The Company adopted FAS 106 in 1992, the effect of
which was not material to the consolidated financial statements.
10. STOCKHOLDER'S EQUITY
Capital stock
The capitalization of Reeves consists of one class of
common stock, $.01 par value (the "Common Stock"). The previously
outstanding Series I Preferred Stock, $1.00 par value with a
stated value of $5,001,000 (the "Preferred Stock") was wholly-
owned by Hart Holding. Effective December 31, 1991, the
Company's Board of Directors approved the exchange of all the
outstanding Preferred Stock held by Hart Holding for 18,820,000
shares of the Company's Common Stock. 250,000 shares of
Preferred Stock remain authorized, with no Preferred Stock
currently outstanding.
Supplemental earnings per share data
The following supplemental earnings per share data is presented
for the year ended December 31, 1991 as if the exchange of
Preferred Stock for Common Stock described above occurred on
January 1, 1991:
1991
Income from continuing operations $ .12
Income before extraordinary item and cumulative
effect of a change in accounting principle .20
Net income .20
Weighted average number of common shares
outstanding - primary and fully diluted
(in thousands) 36,886
Settlement of litigation
In November 1992, pursuant to a court ordered settlement of a
lawsuit brought by the Company against Drexel Burnham Lambert
and certain of its affiliates (collectively, the "Defendants"),
Reeves received 1,918,132 shares of its common stock from the
Defendants which were subsequently cancelled and retired.
Merger with HHCI, Inc.
Effective October 25, 1993, HHCI, Inc., a newly formed, wholly-
owned subsidiary of Hart Holding, merged with and into the
Company with the Company surviving the merger. HHCI, Inc. was
formed as a shell corporation (no operations) with a $300,000
capital contribution from Hart Holding. As a result of the
merger, Hart Holding was issued 535,000 shares of the Company's
common stock and acquired the 481,307 shares of its common stock not
held by Hart Holding. These shares were subsequently cancelled and
retired. As a result of this merger, Hart Holding obtained ownership
of 100% of the outstanding shares of the common stock of the Company and
the other stockholders of Reeves received $.56 per share in cash.
11. FOREIGN EXCHANGE
The Company enters into foreign exchange forward contracts to hedge
risk of changes in foreign currency exchange rates associated with
certain assets and future foreign currency transactions, primarily
cash flows from accounts receivable and firm purchase commitments.
The Company does not engage in speculation. While the forward
contracts affect the Company's results of operations, they do so only
in connection with the underlying transactions. Gains and losses on
these contracts are deferred until the underlying hedged
transaction is completed. The cash flows from the forward contracts
are classified consistent with the cash flows from the transactions
being hedged. As a result, they do not subject the Company to risk
from foreign exchange rate movements, because gains and losses on
these contracts offset losses and gains on the transactions being hedged.
At December 31, 1993, the Company had foreign currency hedge
contracts outstanding, equivalent to $14,883,000, to exchange
various currencies, including the U.S. dollar, Japanese yen,
pound sterling, Deutsche mark, and French franc into Italian
Lire. The contracts mature during 1994. The December 31, 1993
fair value of these foreign currency hedge contracts was $14,407,000.
12. CONCENTRATIONS OF CREDIT RISK
Concentrations of credit risk with respect to trade receivables
are limited due to the wide variety of customers and markets
into which the Company's products are sold, as well as their
dispersion across many different geographic areas. As a result,
at December 31, 1993, the Company does not consider itself to
have any significant concentrations of credit risk.
13. RELATED PARTY TRANSACTIONS
During the years ended December 31, 1991, 1992 and 1993, the
Company and its subsidiary paid management fees to Hart Holding
of $1,200,000, $1,910,000 and $1,804,000, respectively.
During 1992, Reeves Brothers purchased the residences of three
officers of Reeves Brothers for an aggregate amount of $1,015,000.
During 1993, the Company recognized a loss of approximately $161,000
on the sale of two of the properties including related expenses.
The remaining residence, which has a carrying value of $244,000 at
December 31, 1993, is presently being marketed for sale.
14. FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
The Company, through Reeves Brothers, operates in two principal
industry segments: industrial coated fabrics and apparel textiles.
The Industrial Coated Fabrics Group manufactures newspaper and
graphic art printing press blankets, protective coverings,
inflatable aerospace and survival equipment, diaphragms for
meters, pump and tank seals and material used in automotive
airbags. The Apparel Textiles Group manufactures, dyes and
finishes greige goods.
The products of the Industrial Coated Fabrics Group and the
Apparel Textiles Group are sold in the United States and in
certain foreign countries primarily by Reeves Brothers' merchandising
and sales personnel and through a network of independent distributors
to a variety of customers including converters, apparel
manufacturers, industrial users and contractors. Sales offices
are maintained in New York, New York, Dallas, Texas,
Spartanburg, South Carolina and Milan, Italy.
The following table presents certain information concerning each
segment (in thousands):
1991 1992 1993
Net sales
Industrial coated fabrics $121,264 $126,576 $140,735
Apparel textiles 148,295 144,528 142,918
-------- -------- --------
$269,559 $271,104 $283,653
======== ======== ========
Operating income
Industrial coated fabrics $ 23,940 $ 24,732 $ 29,287
Apparel textiles 10,121 10,693 11,583
Corporate expenses (8,435) (9,658) (11,773)
Facility restructuring
charges (1,003)
-------- -------- --------
Operating income 25,626 25,767 28,094
Other income, net 1,068 435 158
Interest expense and
amortization of
financing costs (21,777) (17,633) (16,394)
-------- -------- --------
Income from continuing
operations before income
taxes, extraordinary item
and cumulative effect of
a change in accounting
principle $ 4,917 $ 8,569 $ 11,858
======== ======== ========
Depreciation
Industrial coated fabrics $ 2,598 $ 3,175 $ 3,632
Apparel textiles 2,983 2,913 3,465
Corporate 370 688 107
-------- -------- --------
$ 5,951 $ 6,776 $ 7,204
======== ======== ========
Capital expenditures
Industrial coated fabrics $ 7,579 $ 6,353 $ 11,459
Apparel textiles 2,994 8,623 4,693
Corporate 442 812 354
-------- -------- --------
$ 11,015 $ 15,788 $ 16,506
======== ======== ========
Identifiable assets
Industrial coated fabrics $ 68,403 $ 65,752 $ 75,625
Apparel textiles 60,410 65,111 63,822
Corporate, principally
discontinued operations
(in 1991 and 1992),
goodwill and debt
issuance costs 86,174 62,068 63,578
-------- -------- --------
$214,987 $192,931 $203,025
======== ======== ========
Financial data of Reeves Brothers' foreign operation is as
follows (in thousands):
1991 1992 1993
Sales $ 35,437 $ 38,444 $ 36,932
Net income 6,808 9,165 7,446
Assets 33,011 31,608 33,092
Intersegment sales are not material.
15. COMMITMENTS AND CONTINGENCIES
The Company leases certain operating facilities and equipment
under long-term operating leases. At December 31, 1993 future
minimum rentals, related to continuing operations, required by
operating leases having initial or remaining noncancellable
lease terms in excess of one year are as follows: 1994 -
$1,853,000; 1995 - $1,811,000; 1996 - $1,800,000; 1997 -
$1,800,000; 1998 - $1,800,000; thereafter - $2,945,000.
Rental expense charged to continuing operations was approxi-
mately $1,187,000, $1,420,000 and $1,473,000 during the years
ended December 31, 1991, 1992 and 1993, respectively.
There are various lawsuits and claims pending against the
Company and its subsidiary, including those relating to
commercial transactions. The outcome of these matters is not
presently determinable but, in the opinion of management, the
ultimate resolution of these matters will not have a material
adverse effect on the results of operations and financial
position of the Company.
16. SUBSEQUENT EVENTS
On January 26, 1994, the Board of Directors approved a non-
qualified stock option agreement between the Company and the
Chairman of the Board of Directors. The agreement grants an
option to purchase up to 3,800,000 shares of common stock of
the Company, par value $.01 per share, and has an expiration
date of December 31, 2023. The option is exercisable at
$.56 per share for 1,400,000 shares (exercisable immediately),
$.75 per share for 1,400,000 shares (exercisable one year from
grant date) and $1.00 per share for 1,000,000 shares (exercisable
two years from grant date).
On March 9, 1994 Hart Holding organized Reeves Holdings, Inc.
as a wholly-owned subsidiary (the "Issuer") through a capital
contribution of $1,000. The Issuer was formed for the purpose of
holding all of the outstanding common stock of the Company. On
March 31, 1994 the Issuer filed a Registration Statement on Form S-1
under the Securities Act of 1933, as amended, for the purpose of
offering Senior Discount Debentures due 2006 anticipated to yield
proceeds of approximately $100,000,000. As of March 31, 1994 the
Company's common stock has not been contributed to the Issuer.
<PAGE>
PART III
ITEM 10. DIRECTOR AND EXECUTIVE OFFICERS
The sole director of Reeves and Reeves Brothers is James W. Hart.
The following table sets forth the name, positions with Reeves and Reeves
Brothers, age and principal business experience during the past five years
of each executive officer of Reeves and Reeves Brothers. Any executive
officer, unless otherwise stated, holds the identical position or
positions in both Reeves and Reeves Brothers.
Name Position Age
Richard W. Ball Treasurer 47
Anthony L. Cartagine Vice President; President - 59
Apparel Textile Group
David L. Dephtereos Vice President and 39
General Counsel
Jennifer H. Fray Secretary and Assistant 29
General Counsel
Douglas B. Hart Senior Vice President - 31
Operations
James W. Hart Chairman of the Board 60
James W. Hart, Jr. President, Chief Executive 40
Officer and Chief Operating
Officer
Steven W. Hart Executive Vice President 37
and Chief Financial Officer
V. William Lenoci Vice President; 58
President and Chief Executive
Officer - Industrial
Coated Fabrics Group
Joseph P. O'Brien Vice President - Finance 53
Patrick M. Walsh Vice President - Administration 53
Mr. Ball joined Reeves and Reeves Brothers in January 1992 as
Treasurer. He served as Treasurer of Hart Holding from June 1992 to
December 1992. From 1990 through 1991, Mr. Ball was Corporate
Treasurer for Turner Corporation, a world-wide construction and
development company. From 1988 through 1989, Mr. Ball was Vice
President and Chief Financial Officer of Nuclear Energy Services,
Inc., an engineering services subsidiary of Penn Central Corporation.
Mr. Cartagine has been with Reeves Brothers since 1964. He was
named President - Greige Goods Division of the Apparel Textile Group
in 1984 and President of the Apparel Textile Group in 1986. He was
named Vice President of Reeves and Reeves Brothers in 1988.
Mr. Dephtereos joined Hart Holding, Reeves and Reeves Brothers in
May 1991 as Vice President, General Counsel and Secretary. He served as
Vice President and Secretary of Hart Holding from 1991 to 1992 and
Secretary of Reeves and Reeves Brothers from 1991 until 1992. From 1985
through May 1991, Mr. Dephtereos was Vice President, General Counsel and
Secretary of Air Express International Corporation, a publicly-held,
international transportation company.
Ms. Fray joined Hart Holding, Reeves and Reeves Brothers in
September 1992 as Assistant General Counsel. In 1992, she was named
Secretary of Hart Holding, Reeves and Reeves Brothers. From 1990 to
1992, Ms. Fray was engaged in studies leading to a Master of Laws Degree
in Taxation from Boston University, from 1990 to 1991 she was employed
as a Tax Associate at Coopers & Lybrand, certified public accountants,
in Boston, Massachusetts and from 1987 to 1990 she was engaged in studies
leading to a Juris Doctor Degree from Suffolk University.
Mr. Douglas B. Hart served as a Director of Reeves and Reeves Brothers
from 1991 to 1992. He was named Vice President - Real Estate in 1989,
Senior Vice President in 1991 and Senior Vice President - Operations in 1992
of Reeves and Reeves Brothers. Mr. Hart served as a Director of Hart Holding
from 1991 to 1992, as Vice President - Real Estate of Hart Holding from 1989
to 1991 and as Senior Vice President of Hart Holding from 1991 to 1992.
In 1992, Mr. Hart became President, Chief Executive Officer and Chief
Operating Officer of Hart Investment Properties Corporation, a wholly-owned
diversified corporate investment entity of Hart Holding, with current
holdings in real estate. Prior to 1989, Mr. Hart was an Assistant Vice
President at Sentinel Real Estate Corporation in New York, an owner/developer
of malls, shopping centers, office buildings and single family residential
communities throughout the United States.
Mr. James W. Hart has been a Director of Reeves and Reeves Brothers since
1986 and became Chairman of the Board in 1987. Mr. Hart served as President
and Chief Executive Officer of Reeves and Reeves Brothers from 1988 until
1992. Mr. Hart has been a Director, President, Chief Executive Officer, and
Chairman of the Board of Hart Holding since 1975 and became Chief Operating
Officer and Chief Financial Officer of Hart Holding in 1992.
Mr. James W. Hart, Jr. served as a Director of Reeves
and Reeves Brothers from 1986 to 1992. Mr. Hart became Vice
President of Reeves and Reeves Brothers in 1987 and was named
Senior Vice President - Operations in 1988 and Executive Vice
President and Chief Operating Officer in 1989. In 1992, he was
named President, Chief Executive Officer and Chief Operating Officer
of Reeves and Reeves Brothers. Mr. Hart served as a Director
of Hart Holding from 1984 to 1992. He served as Vice President of Hart
Holding from 1984 to 1992, Senior Vice President - Operations of
Hart Holding from 1988 to 1992 and as Executive Vice President and
Chief Operating Officer of Hart Holding from 1989 to 1992.
Mr. Steven W. Hart served as a Director of Reeves and Reeves
Brothers from 1986 to 1992. He became Vice President of
Reeves and Reeves Brothers in 1987 and was named Senior Vice
President and Chief Financial Officer in 1988 and Executive Vice
President and Chief Financial Officer in 1989. Mr. Hart served as
a Director, Treasurer and Chief Financial Officer of Hart Holding
from 1984 to 1992, Vice President of Hart Holding from 1984 to 1988,
Senior Vice President of Hart Holding from 1988 to 1989 and
Executive Vice President of Hart Holding from 1989 to 1992. Mr. Hart
joined Hart Holding in 1983 as Vice President - Strategic Planning.
Mr. Lenoci has been with Reeves since 1967. He was
named President - Industrial Coated Fabrics Group in 1986 and Vice
President of Reeves and Reeves Brothers in 1988. In 1990, he
became Chief Executive Officer of the Industrial Coated Fabrics Group.
Mr. O'Brien joined Reeves and Reeves Brothers in 1993
as Vice President - Finance. From 1980 to 1993, Mr. O'Brien served
as Vice President - Finance of Howmet Corporation, an integrated
manufacturer of components for gas turbine jet engines and aircraft
structural parts.
Mr. Walsh has been with Reeves since 1987, as Director of
Human Resources. In 1990, he was elected Vice President - Administration
of Reeves Brothers and in 1993, Vice President - Administration of Reeves.
Mr. James W. Hart is the father of Ms. Fray and
Messrs. Douglas B. Hart, James W. Hart, Jr. and Steven W. Hart.
Directors of Reeves and Reeves Brothers are elected at
each annual meeting of the stockholders. The term of office
of each director is from the time of his election and qualification
until the next annual meeting of stockholders and until his
successor shall have been duly elected and qualified, unless such
director shall have earlier been removed. Executive officers serve
at the discretion of the Boards of Directors of Reeves and Reeves Brothers.
ITEM 11. EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION
The following table sets forth information concerning the
cash compensation and cash equivalent remuneration paid or accrued
by the Company for the years ended December 31, 1993, 1992
and 1991, for those persons who were at December 31, 1993, (i) the
chief executive officer, and (ii) the other four most highly
compensated executive officers of the Company.
Summary Compensation Table
Annual Compensation All
---------------------------- Other
Name and Principal Position Year Salary Bonus(1) Compensation
Anthony L. Cartagine 1993 $256,357 $ 92,000 -
Vice President; 1992 235,144 100,000 -
President - Apparel 1991 205,430 112,500 -
Textile Group
Douglas B. Hart 1993 204,500 125,000 -
Senior Vice President 1992 - 100,000 -
- Operations 1991 - 70,000 -
James W. Hart, Jr. 1993 398,750 380,000 -
President, Chief 1992 365,000 200,000 -
Executive Officer and 1991 355,000 185,000 -
Chief Operating Officer
Steven W. Hart 1993 398,750 230,000 -
Executive Vice 1992 365,000 200,000 $31,819 (2)
President and Chief 1991 355,000 185,000 -
Financial Officer
V. William Lenoci 1993 293,750 142,000 -
Vice President; President 1992 240,249 105,000 -
and Chief Executive 1991 204,079 87,500 19,272 (3)
Officer - Industrial
Coated Fabrics Group
(1) Annual bonus amounts are earned and accrued under the Management
Incentive Bonus Plan during the years indicated and paid
subsequent to the end of each year except for a portion of
those amounts awarded and paid to the executive officers during
1993. Also, a portion of those amounts awarded during 1992 for
James W. Hart, Jr., Steven W. Hart and Anthony L. Cartagine
were paid in 1992.
(2) Represents reimbursement of certain moving expenses.
(3) Represents the payment of certain life insurance premiums.
EMPLOYMENT CONTRACTS
Reeves Brothers entered into employment agreements with Messrs.
Cartagine and Lenoci during 1991 that provide for base compensation
and participation in the Management Incentive Bonus Plan, plus certain
other benefits.
DIRECTORS' COMPENSATION
Reeves and Reeves Brothers pay no remuneration to directors for
serving as such.
PENSION PLANS
Annual Pension at Age 65 After Years of Service
Remuneration 15 20 25 30 35
$ 125,000 $ 21,357 $ 30,732 $ 40,107 $ 49,482 $ 58,857
150,000 26,982 38,232 49,482 60,732 71,982
175,000 32,607 45,732 58,857 71,982 85,107
200,000 38,232 53,232 68,232 83,232 98,232
225,000 43,857 60,732 77,607 94,482 111,357
250,000 49,482 68,232 86,982 105,732 118,800
300,000 60,732 83,232 105,732 118,800 118,800
350,000 71,982 98,232 118,800 118,800 118,800
Notes To Pension Plan Table
(A)(1) Compensation covered by the tax-qualified salaried employees
pension plan each year is generally all compensation reported on a
participant's Form W-2. The plan's formula is based on average
compensation for the participant's highest five consecutive calendar
years. However, except in the cases of Messrs. Cartagine and
Lenoci, compensation for any year is limited by the compensation cap
for that year under section 401(a)(17) of the Internal Revenue Code.
For 1993, that limit is $235,840. A supplemental plan provides
Messrs. Cartagine and Lenoci the benefits limited under the
tax-qualified plan.
(2) Starting in 1994, the maximum annual compensation that may
be taken into account is $150,000. Participants in the pension plan
prior to 1994 may have accrued higher benefits than those shown in
the table to the extent their average highest compensation exceeded
$150,000. Those higher accrued benefits are preserved by law.
(3) For 1994, the maximum benefit under the pension plan is
$118,800.
(B) Years of service for named executive officers:
Officer Years of Service
Anthony L. Cartagine 30.02
Douglas B. Hart 4.42
James W. Hart, Jr. 9.68
Steven W. Hart 10.59
V. William Lenoci 26.63
(C) Benefits are computed on the basis of a straight life annuity
and are reduced by 50% of the participant's primary Social Security
benefit.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN
COMPENSATION DECISIONS
The Reeves' and Reeves Brothers' Boards of Directors do
not have compensation committees, and all final compensation decisions
are made by the respective Boards of Directors. The Reeves Brothers
Salary Compensation Committee, which is comprised of Douglas B. Hart,
James W. Hart, Jr., Steven W. Hart and Patrick M. Walsh, all of whom
are officers of Reeves Brothers, advises Reeves Brothers' Board with
respect to compensation.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
Ownership of Common Stock of Reeves
The following table sets forth certain information at March 31,
1994 with respect to ownership of Reeves and Hart Holding common stock
by each person who is known to own beneficially, or who may be
deemed to own beneficially, more than 5% of the outstanding shares
of common stock, directors, the chief executive officer, the other
four most highly compensated executive officers and all directors and
executive officers as a group. Unless otherwise stated, common stock
is directly owned.
Reeves
-----------------------------
Amount and
Name and Nature of Percent of
address of beneficial Class
beneficial owner ownership
Hart Holding Company
Incorporated 35,021,666 100.0%
1120 Boston Post Road
Darien, CT 06820
Anthony L. Cartagine (1) 0 0.0%
104 West 40th Street
New York, NY 10018
Douglas B. Hart 0 0.0%
1120 Boston Post Road
Darien, CT 06820
James W. Hart (2) 36,421,666 100.0%
1120 Boston Post Road
Darien, CT 06820
James W. Hart, Jr. (3) 0 0.0%
1120 Boston Post Road
Darien, CT 06820
Steven W. Hart (4) 0 0.0%
1120 Boston Post Road
Darien, CT 06820
V. William Lenoci (5) 0 0.0%
Highway 29 South
Spartanburg, SC 29304
Directors and Executive
Officers as a Group (6) 36,421,666 100.0%
(1) As of March 31, 1994, Anthony L. Cartagine is the indirect
beneficial owner of 1,000 shares of Hart Holding's common stock,
respresenting less than 1% of such outstanding common stock.
(2) On January 26, 1994, James W. Hart was granted an option to
purchase up to 3,800,000 shares of common stock of Reeves,
which has an expiration date of December 31, 2023. The option
is exercisable at $.56 per share for 1,400,000 shares (exercisable
immediately), $.75 per share for 1,400,000 shares (exercisable
one year from grant date) and $1.00 per share for 1,000,000
shares (exercisable two years from grant date). Mr. James W. Hart
and Hart Holding may be deemed to be controlling persons of Reeves.
As of March 31, 1994, James W. Hart is the beneficial owner
of 13,623,507 shares of Hart Holding's commmon stock (94.6%)
of which (i) 12,123,507 shares are owned directly, and (ii)
1,500,000 shares are subject to a presently exercisable
option (the "Hart Holding Option") issued in November 1993.
The Hart Holding Option expires on December 31, 2028 and provides
for the issuance of up to 4,000,000 shares upon exercise
of options as follows: 1,500,000 immediately exercisable at
$2.25 per share; 1,500,000 exercisable one year from grant date
at $2.50 per share; and 1,000,000 exercisable two years from
grant date at $2.75 per share.
(3) As of March 31, 1994, James W. Hart, Jr. is the beneficial
owner of 60,300 shares of Hart Holding common stock
(representing less than 1% of such outstanding common stock), of
which 300 shares are owned directly and the balance is subject
to a presently exercisable option.
(4) As of March 31, 1994, Steven W. Hart is the beneficial owner
of 240,300 shares of Hart Holding common stock (1.9%) of which
180,300 shares are owned directly and the balance is subject
to a presently exercisable option.
(5) As of March 31, 1994, V. William Lenoci is the beneficial
owner of 5,000 shares of Hart Holding common stock, representing
less than 1% of such outstanding common stock.
(6) As of March 31, 1994, the directors and executive officers
of Hart Holding as a group beneficially own an aggregate of
13,930,107 shares of Hart Holding common stock (96%).
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In connection with the acquisition of the Company, Hart Holding,
the Company, Reeves Brothers and three subsidiaries of Reeves Brothers
entered into a Tax Allocation Agreement dated as of May 1, 1986,
which has been amended and restated from time to time (the "Tax Agreement").
The Tax Agreement provides that Hart Holding and its subsidiaries will
file consolidated federal income tax returns as long as they remain
members of the same affiliated group. Pursuant to the Tax Agreement,
the Company and its subsidiaries generally will pay to Hart Holding amounts
equal to the taxes that the Company and its subsidiaries would otherwise
have to pay if they were to file separate federal, state or local income
tax returns but for the use of tax deductible items of Hart Holding.
Hart Holding charges a management fee and allocates portions of its
corporate expenses to Reeves on a monthly basis. The management
fee and expense allocation aggregated $1.2 million, $1.9 million and
$1.8 million for the years ended December 31, 1991, 1992 and 1993,
respectively.
Effective October 25, 1993, HHCI, Inc., a newly formed, wholly-owned
subsidiary of Hart Holding, merged with and into Reeves with Reeves
surviving the merger. HHCI, Inc. was formed as a shell corporation
(no operations) with a $300,000 capital contribution from Hart Holding.
As a result of this merger, Hart Holding obtained ownership of 100% of
the outstanding shares of common stock of Reeves and the other
stockholders of Reeves received $.56 in cash for each share held by
such stockholders.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
1. Consolidated Financial Statements of Reeves
Industries, Inc. and Subsidiary:
Report of Independent Accountants
Consolidated Balance Sheet at December 31,
1992 and 1993
Consolidated Statement of Income for the
years ended December 31, 1991, 1992, and 1993
Consolidated Statement of Changes in Stockholder's
Equity for the years ended December 31, 1991,
1992, and 1993
Consolidated Statement of Cash Flows for the years
ended December 31, 1991, 1992, and 1993
Notes to Consolidated Financial Statements
2. Financial Statement Schedules for the years ended
December 31, 1991, 1992 and 1993
Schedule V - Property, plant and equipment
Schedule VI - Accumulated depreciation, depletion and
amortization of property, plant and equipment
Schedule VIII - Valuation and qualifying accounts
Schedule X - Supplementary income statement
information
All other schedules are omitted because they
are not applicable or required information
is shown in the consolidated financial
statements or notes thereto.
3. Exhibits
Exhibit No. Name
3.1 @ Restated Certificate of Incorporation of Reeves Industries, Inc.
3.2 (1) Bylaws of Reeves Industries, Inc.
4.1 (2) Purchase Agreement, dated as of May 1, 1986, among Schick
Acquisition Corp., A.R.A. Manufacturing Company of
Delaware, Inc. and each of the Purchasers.
4.2 (2) Subordinated Debenture Indenture, dated as of May 1,
1986, between Schick Acquisition Corp. and Fleet National
Bank, as Trustee (the "Subordinated Debenture Trustee").
4.3 (2) First Supplemental Indenture, dated as of May 6, 1986,
between Reeves Industries, Inc. and the Subordinated
Debenture Trustee.
4.4 (2) Second Supplemental Indenture, dated as of October 15,
1986, between Reeves Industries, Inc. and the Subordinated
Debenture Trustee.
4.5 (3) Third Supplemental Indenture, dated as of March 24, 1988,
between Reeves Industries, Inc. and the Subordinated
Debenture Trustee.
4.6 (4) Fourth Supplemental Indenture, dated as of May 7, 1991,
between Reeves Industries, Inc. and the Subordinated
Debenture Trustee.
4.7 (1) Fifth Supplemental Indenture, dated as of June 30, 1992,
between Reeves Industries, Inc. and the Subordinated
Debenture Trustee.
4.8 (2) Registration Rights Agreement, dated as of May 1, 1986,
among Schick Acquisition Corp. and the purchasers.
4.9 (5) Senior Note Indenture dated as of June 1, 1992, between
Reeves Industries, Inc. and Chemical Bank, as Trustee.
10.01 (1) Credit Agreement, dated as of August 6, 1992 (the "Credit
Agreement") among Reeves Brothers, Inc., Reeves Indus-
tries, Inc., the Banks signatory thereto and Chemical
Bank, as Agent.
10.02 (6) First Amendment, Waiver and Consent, dated as of October
25, 1993, to the Credit Agreement.
10.03 @ Second Amendment, dated as of December 28, 1993, to the
Credit Agreement.
10.04 (7) Tax Allocation Agreement, effective as of January 1, 1992
by and among Hart Holding Company Incorporated, Reeves
Industries, Inc., Reeves Brothers, Inc., Fenchurch, Inc.,
Turner Trucking Company, Reeves Penna, Inc., A.R.A.
Manufacturing Company, Hart Investment Properties Corpo-
ration and Hart Capital Corporation.
10.05 (8) * Reeves Corporate Management Incentive Bonus Plan.
10.06 (4) * Employment Agreement dated July 1, 1991, between Reeves
Brothers, Inc. and Anthony L. Cartagine.
10.07 @* Employment Agreement dated November 1, 1991, and amended
May 18, 1993, between Reeves Brothers, Inc. and Vito W.
Lenoci.
10.08 @* Reeves Brothers, Inc. 401(a)(17) Plan, effective January
1, 1989.
10.09 @ Non-Qualified Stock Option Agreement, dated as of January
26, 1994, between Reeves Industries, Inc. and James W.
Hart.
10.10 (6) Agreement and Plan of Merger, dated as of October 22,
1993, between Reeves Industries, Inc. and HHCI, Inc.
10.11 (4) Lease Agreement, dated March 28, 1991, between Springs
Industries, Inc., Lessor, and Reeves Brothers, Inc.,
Lessee.
11 Calculation of primary and fully diluted earnings per
common share.
12 Computation of Ratio of Earnings to Fixed Charges.
21 Subsidiaries of Reeves Industries, Inc.
(1) Previously filed by Reeves Industries, Inc. as an exhibit to
Reeves Industries' Annual Report on Form 10-K dated March 31,
1993, which is incorporated by reference herein.
(2) Previously filed by Reeves Industries, Inc. as an exhibit to
Newreeveco's Registration Statement on Form S-1, Registration
No. 33-8192, dated August 21, 1986, as amended October 20,
1986, which is incorporated by reference herein.
(3) Previously filed by Reeves Industries, Inc. as an exhibit to
Reeves Industries' Annual Report on Form 10-K dated April 12,
1988, which is incorporated by reference herein.
(4) Previously filed by Reeves Industries, Inc. as an exhibit to
Reeves Industries' Annual Report of Form 10-K dated March 30,
1992, which is incorporated by reference herein.
(5) Previously filed by Reeves Industries, Inc. as an exhibit to
Reeves Industries' Quarterly Report on Form 10-Q dated August
12, 1992, which is incorporated by reference herein.
(6) Previously filed by Reeves Industries, Inc. as an exhibit to
Reeves Industries' Quarterly Report on Form 10-Q dated
November 10, 1993, which is incorporated by reference herein.
(7) Previously filed by Reeves Industries, Inc. as an exhibit to
Reeves Industries' Registration Statement on Form S-2,
Registration No. 33-47254, dated April 16, 1992, as amended
May 28, 1992, which is incorporated by reference herein.
(8) Previously filed by Reeves Industries, Inc. as an exhibit to
Reeves Industries' Annual Report on Form 10-K dated March 28,
1991, which is incorporated by reference herein.
@ Available from the Company.
* Management contract or compensatory plan filed pursuant to
Item 14(c) of this report.
(b) Reports on Form 8-K:
There were no reports on Form 8-K filed during the fourth
quarter of 1993.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
REEVES INDUSTRIES, INC.
Registrant
Date: March 31, 1994 By: /s/ Steven W. Hart
------------------
Steven W. Hart
Executive Vice President
and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities and on the
dates indicated.
Signature Title Date
(i) Principal Executive Officer:
/s/ James W. Hart, Jr. President, Chief March 31, 1994
Executive Officer and
James W. Hart, Jr. Chief Operating Officer
(ii) Principal Financial Officer:
/s/ Steven W. Hart Executive Vice President, March 31, 1994
Chief Financial Officer
Steven W. Hart
(iii) Principal Accounting Officer:
/s/ Joseph P. O'Brien Vice President - Finance March 31, 1994
Joseph O'Brien
(iii) A Majority of the Board of Directors:
/s/ James W. Hart Director March 31, 1994
James W. Hart
<PAGE>
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED
PURSUANT TO SECTION 15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT
REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE ACT
No annual report to security holders covering the Registrant's
last fiscal year or proxy material with respect to any meeting of
security holders has been sent to security holders of the Registrant.
<PAGE>
<TABLE>
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
REEVES INDUSTRIES, INC. AND SUBSIDIARY
(In thousands)
<CAPTION>
For the Balance Balance at
Year Ended Beginning Additions End
December 31 Classification of Period at Cost Retirements Other(1) of Period
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1991 Land and land improvements $ 886 $ 39 $ 925
Buildings and improvements 9,768 $ 1,548 $ (20) (52) 11,244
Machinery and equipment 43,790 9,467 (2,275) (137) 50,845
------- ------- ------- ------- -------
Total $54,444 $11,015 $(2,295) $ (150) $63,014
======= ======= ======= ======= =======
1992 Land and land improvements $ 925 $ 50 $ (181) $ 794
Buildings and improvements 11,244 4,406 (1,295) 14,355
Machinery and equipment 50,845 11,332 $(2,397) (2,979) 56,801
------- ------- ------- ------- -------
Total $63,014 $15,788 $(2,397) $(4,455) $71,950
======= ======= ======= ======= =======
1993 Land and land improvements $ 794 $ 65 $ (62) $ 797
Buildings and improvements 14,355 2,699 (400) 16,654
Machinery and equipment 56,801 13,742 $(2,973) (2,170) 65,400
------- ------- ------- ------- -------
Total $71,950 $16,506 $(2,973) $(2,632) $82,851
======= ======= ======= ======= =======
- --------------
(1) Primarily a result of fluctuations in exchange rates.
</TABLE>
<PAGE>
<TABLE>
SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION AND
AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
REEVES INDUSTRIES, INC. AND SUBSIDIARY
(In thousands)
<CAPTION>
For the Balance Balance at
Year Ended Beginning Other End
December 31 Classification of Period Additions Retirements Changes(1) of Period
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1991 Buildings and improvements $ 3,411 $ 639 $ (20) $ (29) $ 4,001
Machinery and equipment 20,088 5,312 (2,275) (745) 22,380
------- ------ ------- ------- -------
Total $23,499 $5,951 $(2,295) $ (774) $26,381
======= ====== ======= ======= =======
1992 Buildings and improvements $ 4,001 $ 660 $ (236) $ 4,425
Machinery and equipment 22,380 6,116 $(2,397) (2,100) 23,999
------- ------ ------- ------- -------
Total $26,381 $6,776 $(2,397) $(2,336) $28,424
======= ====== ======= ======= =======
1993 Buildings and improvements $ 4,425 $ 949 $ (199) $ 5,175
Machinery and equipment 23,999 6,255 $(2,973) (1,020) 26,261
------- ------ ------- ------- -------
$28,424 $7,204 $(2,973) $(1,219) $31,436
======= ====== ======= ======= =======
- --------------
(1) Primarily a result of fluctuations in exchange rates.
</TABLE>
<PAGE>
<TABLE>
SCHEDULE VIII - ANALYSIS OF THE ALLOWANCE FOR DOUBTFUL ACCOUNTS
REEVES INDUSTRIES, INC. AND SUBSIDIARY
(In thousands)
<CAPTION>
Column A Column B Column C Column D Column E
Description Balance at Additions Deductions Balance at
beginning of describe end of
period charged (credited) charged to other period
to costs and accounts - describe
expenses
<S> <C> <C> <C> <C> <C>
December 31, 1990 Balance $ 2,477
Provision $ (49)
Recoveries $ 110
Write-offs $ (457)
------- --------- ------- ------- -------
December 31, 1991 Balance $ 2,477 $ (49) $ 110 $ (457) $ 2,081
======= ========= ======= ======= =======
Provision $ (148)
Recoveries $ 23
Write-offs $ (386)
------- --------- ------- ------- -------
December 31, 1992 Balance $ 2,081 $ (148) $ 23 $ (386) $ 1,570
======= ========= ======= ======= =======
Provision $ 427
Recoveries $ 108
Write-offs $ (638)
------- --------- ------- ------- -------
December 31, 1993 Balance $ 1,570 $ 427 $ 108 $ (638) $ 1,467
======= ========= ======= ======= =======
</TABLE>
<PAGE>
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
REEVES INDUSTRIES, INC. AND SUBSIDIARY
Column A Column B
Charged to
Item (1) Costs and Expenses
------------------
(In thousands)
Maintenance and repairs
Year ended December 31, 1991 $ 7,922
========
Year ended December 31, 1992 $ 7,745
========
Year ended December 31, 1993 $ 6,328
========
(1) Other items are less than 1% of revenues or not applicable.
INDEX TO EXHIBITS
Exhibit No. Name
3.1 Restated Certificate of Incorporation of Reeves Industries, Inc.
10.03 Second Amendment, dated as of December 28, 1993, to the Credit
Agreement.
10.07 Employment Agreement dated November 1, 1991, and amended May 18,
1993, between Reeves Brothers, Inc. and Vito W. Lenoci.
10.08 Reeves Brothers, Inc. 401(a)(17) Plan, effective January 1, 1989.
10.09 Non-Qualified Stock Option Agreement, dated as of January 26,
1994, between Reeves Industries, Inc. and James W. Hart.
11 Calculation of primary and fully diluted earnings per common
share.
12 Computation of Ratio of Earnings to Fixed Charges.
21 Subsidiaries of Reeves Industries, Inc.
State of Delaware
Office of Secretary of State
------------------------
I, MICHAEL RATCHFORD, SECRETARY OF STATE OF THE STATE OF
DELAWARE DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY
OF THE CERTIFICATE OF RESTATED CERTIFICATE OF INCORPORATION OF
"NEWREEVECO, INC." FILED IN THIS OFFICE ON THE TWENTY-FIFTH DAY OF
JUNE, A.D. 1982, AT 12:05 O'CLOCK P.M.
* * * * * * * * * *
/s/ Michael Ratchford
SECRETARY OF STATE
AUTHENTICATION:
*3368888
DATE: 03/04/1992
RESTATED CERTIFICATE OF INCORPORATION
OF
NEWREEVECO, INC.
(originally incorporated under the name
"Newrevco, Inc." on April 1, 1982)
---------------------------------
Under Section 245 of the General
Corporation Law of the State of
Delaware
---------------------------------
FIRST: The name of the corporation is
Newreeveco, Inc.
SECOND: The registered office of the corpo-
ration in the State of Delaware is located at 306 South
State Street, Kent County, Dover, Delaware. The name
of its registered agent at such address is the United
States Corporation Company.
THIRD: The purpose of the corporation is to
engage in any lawful act or activity for which corpora-
tions may be organized under the General Corporation
Law of Delaware as presently in effect or as it may
hereafter be amended.
FOURTH: A. The total number of shares of
capital stock which the corporation shall have
authority to issue is 145,000 shares, classified as
follows:
(i) 115,000 shares of Common Stock, par
value $1.00 per share (hereinafter
called "Common Stock"), to be issued in
three classes, (a) 99,057 shares of
which are hereby designated Class A
Common Stock (hereinafter called "Class
A Common Stock"), (b) 3,000 shares of
which are hereby designated Class B
Common Stock (hereinafter called "Class
B Common Stock") and (c) 12,943 shares
of which are hereby designated Class C
Common Stock (hereinafter called "Class
C Common Stock"); and
(ii) 30,000 shares of Series A Cumulative
Preferred Stock, without par value
(hereinafter called the "Series A
Preferred Stock").
B. The following is a statement of the
designations, powers, preferences and
relative, participating, optional or other
special rights, and qualifications,
limitations or restrictions thereof, of the
Series A Preferred Stock, the Class A Common
Stock, the Class B Common Stock and the Class
C Common Stock:
Section 1.
Series A Preferred Stock Dividend Rights
1.1 Subject to the provisions of subsection
1.2, the holders of the shares of Series A
Preferred Stock shall be entitled to receive, if,
as and when declared by the Board of Directors of
the corporation out of any funds at the time
legally available for the declaration of
dividends, cumulative cash dividends with respect
to the Dividend Period (as defined in section 19
of this paragraph B) then ended at the rate of $14
per share per annum, and no more, payable
quarterly on each Dividend Payment Date (as
defined in such section 19) of each year,
beginning on November 16, 1982. Dividends on the
Series A Preferred Stock shall be cumulative from
the date on which the shares of Series A Preferred
Stock are issued.
1.2 Notwithstanding the provisions of
subsection 1.1, the corporation shall not declare
or pay or set apart for payment any amount for
dividends or make any other distribution on the
Series A Preferred Stock in excess of the greater
of (a) Consolidated Earned Surplus Accumulated
From and After July 4, 1982 (as defined in section
19 of this paragraph B) or (b) Earned Surplus of
the Corporation (as defined in such section 19).
1.3 If, on any date on which dividends
are payable on the Series A Preferred Stock as
provided in subsection 1.1, the amount of the
dividends to be paid by the corporation is in the
aggregate less than the full dividends payable on
such data, the dividends declared and to be paid
by the corporation on such date shall be allocated
pro rata among the shares of outstanding Series A
Preferred Stock.
Section 2.
Series A Preferred Stock Liquidation,
etc. Rights
2.1 In the event of any liquidation,
dissolution or winding up of the corporation,
whether voluntary or involuntary, before any
distribution of the assets of the corporation
shall be made to or set apart for the holders of
any Junior Stock (as defined in section 19 of this
paragraph B) the holders of the Series A Preferred
Stock shall be entitled to the payment in cash of
$100 per share, together with a sum equal to Full
Cumulative Dividends (as defined in such section
19) thereon to the date of final distribution to
the holders of the Series A Preferred Stock.
2.2 If, upon any such liquidation,
dissolution or winding up, the assets of the
corporation distributable among the holders of the
Series A Preferred Stock shall be insufficient to
pay to them in full the preferential amounts to
which they are entitled as specified in subsection
2.1 above, then such assets, or the proceeds
thereof, shall be distributed among the holders of
the Series A Preferred Stock ratably in proportion
to the amounts which would be payable to them,
respectively, if such preferential amounts were
paid to them in full.
2.3 Neither a merger nor a consolidation of
the corporation (whether or not the corporation is
the surviving corporation) nor a sale of all or
substantially all of the assets of the corporation
shall constitute a liquidation, dissolution or
winding up of the corporation for purposes of this
section 2.
Section 3.
Series A Preferred Stock
Mandatory Redemption
Subject to the provisions of section 6 of
this paragraph B, commencing on the Mandatory
Redemption Date (as defined in section 19 of this
paragraph B) occurring in 1991, and thereafter on
each succeeding Mandatory Redemption Date up to
and including the Mandatory Redemption Date
occurring in 1994, the corporation shall redeem
out of any funds of the corporation at the time
legally available for redemptions (a) 7,500 (or
such lesser number as shall then be outstanding)
shares of Series A Preferred Stock at a cash
redemption price equal to the Redemption Price (as
defined in such section 19), and (b) Series A
Preferred Stock required to be redeemed under this
section 3 in prior years, if any, but not yet
redeemed by reason of a deficiency of funds
legally or under this Article FOURTH available for
redemption, at a cash redemption price equal to
the Redemption Price. If on any date on which the
corporation is required to redeem shares of Series
A Preferred Stock hereunder, all of such shares
may not be redeemed by reason of a deficiency of
funds legally or under this Article FOURTH
available for redemptions, the corporation shall
nevertheless redeem in accordance with the
provisions of subsection 6.4 such number of shares
as it may redeem on such date.
Section 4.
Series A Preferred Stock
Optional Redemption
Subject to the provisions of section 6 of
this paragraph B, commencing on the Mandatory
Redemption Date occurring in 1992, and thereafter
on the Mandatory Redemption Dates occurring in
1993 and 1994, the Series A Preferred Stock shall
be subject to redemption, as a whole or in part,
at the option of the corporation, at a cash
redemption price equal to the Redemption Price out
of any funds of the corporation at the time
legally available for redemptions.
Section 5.
Series A Preferred Stock Repurchase
Subject to the provisions of section 6 of
this paragraph B, the corporation may at any time
and at its option offer in writing to repurchase
all or any of the Series A Preferred Stock for
such price and on such other terms as the
corporation may determine (except that if any such
offer is made at any time that the Series A
Preferred Stock is redeemable the price offered by
the corporation shall not be greater than the
Redemption Price), provided that if such an offer
is made to any holder of Series A Preferred Stock
other than an Original Series A Preferred Stock-
holder (as defined in section 19 of this paragraph
B), the corporation shall make an identical offer
in writing to each Original Series A Preferred
Stockholder, pro rata based on the total number of
shares of Series A Preferred Stock held of record
by (x) all offerees (other than the Original
Series A Preferred Stockholders) and (y) the
Original Series A Preferred Stockholders.
Section 6.
General Provisions Applicable to
Series A Preferred Stock
Redemptions and Repurchases
6.1 Notwithstanding the provisions of
sections 3, 4, 5 and 9 of this paragraph B, the
corporation shall not pay or set apart any amount
for the redemption of Series A Preferred Stock, or
pay any amount for the repurchase of any Series A
Preferred Stock, if at the time such redemption or
repurchase is prohibited by the provisions of the
Bank Debt (as defined in section 19 of this
paragraph B), the Senior Subordinated Indebtedness
(as defined in such section 19), or the Junior
Subordinated Indebtedness (as defined in such
section 19).
6.2 Notwithstanding the provisions of sec-
tions 3, 4, 5 and 9 of this paragraph B, the
corporation shall not pay or set apart any amount
for the redemption of any Series A Preferred
Stock, or pay any amount for the repurchase of any
Series A Preferred Stock, in excess of the greater
of (a) Consolidated Earned Surplus Accumulated
From and After July 4, 1982 (as defined in section
19 of this paragraph B) or (b) Earned Surplus of
the Corporation (as defined in such section 19).
6.3 In the case of each redemption of Series
A Preferred Stock pursuant to sections 3 and 4 of
this paragraph B, the corporation shall give
written notice thereof to all holders of Series A
Preferred Stock not less than thirty (30) nor more
than ninety (90) days prior to the date fixed for
such redemption, specifying (a) the date fixed for
such redemption, (b) the cash redemption price
payable for each share of Series A Preferred Stock
to be redeemed on such date, (c) the number and,
if less than all shares of Series A Preferred
Stock are to be redeemed, the certificate numbers,
of the shares of Series A Preferred Stock to be
redeemed, and (d) the section of this paragraph B
pursuant to which such redemption is to be made.
In the case of each offer to repurchase Series A
Preferred Stock made pursuant to section 5 of this
paragraph B, if the corporation shall have made
such an offer to any holder of Series A Preferred
Stock other than an Original Series A Preferred
Stockholder, the corporation shall give written
notice thereof to the Original Series A Preferred
Stockholders not more than fifteen (15) days after
such offer to repurchase has been made to such
other holder, and not less than thirty (30) days
prior to the date fixed for such repurchase. Such
notice shall (a) specify the price and other terms
of the offer to repurchase and (b) extend an
identical offer to repurchase Series A Preferred
Stock of the Original Series A Preferred
Stockholders on a pro rata basis in accordance
with section 5 of this paragraph B.
6.4 If less than all the shares of Series A
Preferred Stock are to be redeemed, the shares of
Series A Preferred Stock to be redeemed shall be
allocated by the corporation in proportion (as
nearly as practicable) to the number of shares of
Series A Preferred Stock held of record by the
holders of such Series A Preferred Stock at the
time outstanding.
6.5 The corporation shall pay or set apart
for payment the amounts payable upon the
redemption or repurchase of Series A Preferred
Stock to the holders thereof (a) in the case of
optional redemptions pursuant to section 4 of this
paragraph B, on the date fixed for redemption
specified in the notice referred to in subsection
6.3 (which date shall be a Mandatory Redemption
Date), (b) in the case of mandatory redemptions
pursuant to section 3 of this paragraph B, on the
Mandatory Redemption Date (as defined in section
19 of this paragraph B), and (c) in the case of
repurchases pursuant to section 5 of this
paragraph B, on the date specified therefor in the
offer to repurchase. Upon such payment or if on
or prior to the date fixed for redemption or
repurchase such amounts have been set apart for
payment, all rights of such holders as
stockholders of the corporation by reason of the
ownership of such redeemed or repurchased Series A
Preferred Stock shall cease, whether or not the
certificates for such Series A Preferred Stock
shall have been surrendered for cancellation; and,
after such payment or setting apart for payment,
such Series A Preferred Stock shall not be deemed
outstanding. In addition, shares of Series A
Preferred Stock which have been called for
redemption shall not be deemed to be outstanding
shares for the purpose of voting or determining
the total number of shares of Series A Preferred
Stock entitled to vote on any matter on and after
the date on which written notice of redemption has
been sent to holders thereof and a sum sufficient
to redeem such shares has been irrevocably
deposited or set aside to pay the cash redemption
price to the holders of the shares of Series A
Preferred Stock to be so redeemed. If requested
by the corporation, such holders shall surrender
and, at the expense of the corporation, deliver
certificates for such Series A Preferred Stock
being redeemed or purchased to the corporation.
All Series A Preferred Stock redeemed or
repurchased by the corporation shall be retired
and cancelled and shall not be available for re-
issuance by the corporation.
6.6 For purposes hereof, the phrases "set
apart for payment" and "setting apart for payment"
shall mean the actual deposit of funds for the
purpose of making any redemption or repurchase
with a bank or trust company located in the City
of New York having a combined capital and surplus
of not less than $50,000,000.
Section 7.
Series A Preferred Stock Voting Powers
7.1 Except as otherwise expressly provided
herein or by law, the holders of Series A
Preferred Stock shall have no right as such
holders to vote at or participate in any meeting
of stockholders of the corporation or to receive
any notice of any such meeting.
7.2 The holders of record of Series A
Preferred Stock shall have the special right,
voting separately as a single class, to elect two
directors to the Board of Directors of the
corporation at the special meeting of holders of
record of Series A Preferred Stock referred to in
subsection 7.3 (and at each succeeding annual
meeting of stockholders thereafter until such
right shall terminate as hereinafter provided)
upon the occurrence and during the continuance of
any of the following conditions:
(a) if at any time the corporation
shall be in arrears in the payment of all or
any part of the cash redemption price payable
upon any mandatory redemption of the Series A
Preferred Stock pursuant to section 3 of this
paragraph B (regardless of whether such
arrearages result by virtue of the provisions
of subsections 6.1 or 6.2 or otherwise); or
(b) if at any time the corporation
shall be in arrears with respect to full cash
dividend payments for four quarterly dividend
periods, whether or not consecutive, pursuant
to section 1 of this paragraph B (regardless
of whether such arrearages result by virtue
of the provisions of subsection 1.2 or
otherwise); or
(c) if at any time there exists a de-
fault (which shall mean for purposes hereof
any event which shall constitute an event of
default and as to which any requirement of
notice or the lapse of time or both has been
satisfied) under any of the agreements
relating to the Bank Debt, the Senior Sub-
ordinated Indebtedness or the Junior Sub-
ordinated Indebtedness, respectively.
7.3 If any condition referred to in
subsection 7.2 shall occur, the corporation shall
give notice thereof to the holders of record of
the Series A Preferred Stock within twenty (20)
days after the occurrence of such condition and
any officer or the directors of the corporation
shall call a special meeting of the holders of
record of Series A Preferred Stock to take place
within thirty (30) days following the occurrence
of such condition, provided that failure to give
such notice or call such meeting shall not affect
the rights of the holders of the Series A
Preferred Stock conferred by subsection 7.2. If
such a meeting shall not have been called as
provided above, such meeting may be called, at the
expense of the corporation, by the holders of
record of not less than 5% of the Series A
Preferred Stock at the time outstanding on written
notice specifying the time and place of the
meeting given by mail not less than seven (7) nor
more than sixty (60) days before the date of such
meeting specified in such notice.
7.4 Subject to the provisions of subsection
7.6, each director elected by the holders of
record of the Series A Preferred Stock, voting
separately as a single class as provided in
subsection 7.2, shall hold office until the annual
meeting of stockholders next succeeding his
election and until his successor, if any, is
elected by such holders and qualifies.
7.5 In case any vacancy shall occur among
the directors elected by the holders of Series A
Preferred Stock, voting separately as a single
class as provided in subsection 7.2, such vacancy
may be filled for the unexpired portion of the
term by vote of the single remaining director
theretofore elected by such stockholders, or his
successor in office or by the vote of such stock-
holders given at a special meeting of such stock-
holders called for the purpose.
7.6 The persons elected as directors as pro-
vided in subsections 7.2 and 7.5, together with
the directors elected by the holders of Common
Stock, shall constitute the Board of Directors of
the corporation. If all arrearages and defaults
constituting the conditions referred to in subsec-
tion 7.2 shall cease to exist or are cured, the
right of the holders of record of Series A
Preferred Stock, voting separately as a class, to
elect two directors as provided in subsection 7.2
shall expire, subject to revival from time to time
upon the recurrence of any such condition, and the
terms of the directors so elected shall terminate.
7.7 Upon any proposal (i) to effect a merger
or consolidation of the corporation with or into
any other corporation, except in a case where the
corporation is the surviving corporation, or (ii)
to effect a sale of all or substantially all the
corporation's assets, the holders of record of the
Series A Preferred Stock at the time outstanding
shall, in addition to any other voting rights
granted to such holders by law, be entitled to
vote on such proposal with the holders of Common
Stock, as a single class, with one vote per share
of Series A Preferred Stock. At any meeting at
which a proposal of the type referred to in this
subsection 7.7 is to be considered, the presence
in person or by proxy of the holders of record of
a majority of shares of Series A Preferred Stock
and of Common Stock, taken as a single class,
shall be necessary to constitute a quorum for such
purpose.
7.8 Without the consent of the holders of
record of at least a majority of the Series A
Preferred Stock at the time outstanding (includ-
ing, in any event, the Original Series A Preferred
Stockholders who at the time hold shares of Series
A Preferred Stock), given in person or by proxy,
either in writing without a meeting or at a
special or annual meeting of stockholders called
for the purpose, at which the holders of record of
Series A Preferred Stock shall vote separately as
a class, the corporation shall not issue any
additional Series A Preferred Stock or any shares
of Parity Stock (as defined in section 19 of this
paragraph B).
7.9 Without the consent of the holders of
record of all of the Series A Preferred Stock at
the time outstanding, given in person or by proxy,
either in writing without a meeting or at a
special or annual meeting of stockholders called
for the purpose, at which the holders of record of
Series A Preferred Stock shall vote separately as
a class, the corporation shall not issue any
shares of Prior Stock (as defined in section 19 of
this paragraph B).
7.10 Subject to the provisions of subsection
7.11 of this paragraph B, without the consent of
the holders of record of at least two-thirds of
the Series A Preferred Stock at the time
outstanding (including, in any event, the Original
Series A Preferred Stockholders who at the time
hold shares of Series A Preferred Stock), given in
person or by proxy, either in writing without a
meeting or at a special or annual meeting of
stockholders called for the purpose, at which the
holders of Series A Preferred Stock shall vote
separately as a class, the corporation shall not:
(a) effect any division of the Series A
Preferred Stock or any combination thereof
with any other class or series of stock; or
(b) effect any amendment to the
Certificate of Incorporation of the
corporation which would materially alter the
relative rights and preferences of the Series
A Preferred Stock so as to adversely affect
the holders thereof.
7.11 Notwithstanding the provisions of
subsection 7.10 hereof, no amendment to this
Certificate of Incorporation which (w) changes any
amount payable on the Series A Preferred Stock as
dividends, or upon mandatory or optional
redemption or liquidation, or (x) changes the date
when any such amount is payable, or (y) changes
any consent requirement of subsection 7.8, 7.9,
7.10, or 7.11 of this paragraph B, or (z) changes
the provisions of subsection 1.2, 6.1 or 6.2 of
this paragraph B shall be effective without, in
each case, the consent of the holders of record of
all the Series A Preferred Stock at the time
outstanding, given in person or by proxy, either
in writing without a meeting or at a special or
annual meeting of stockholders called for the
purpose, at which the holders of Series A
Preferred Stock shall vote separately as a class.
7.12 At each annual or special meeting of
stockholders at which the holders of Series A Pre-
ferred Stock shall have the special right, voting
separately as a single class, to elect directors
as provided in subsection 7.2 or to take any other
action on which such stockholders are entitled to
vote as a class, (i) except as provided in subsec-
tion 7.7, the presence in person or by proxy of
the holders of record of one-third of the total
number of shares of Series A Preferred Stock then
issued and outstanding shall be necessary to con-
stitute a quorum of such class for such election
as a class, (ii) the affirmative vote of the
majority of shares of Series A Preferred Stock
present in person or represented by proxy at such
meeting shall be necessary to elect directors,
(iii) the affirmative vote of a majority of all
shares entitled to vote shall be necessary to
approve any proposal referred to in subsection 7.7
and (iv) the affirmative vote of the number of
shares of Series A Preferred Stock set forth in
subsections 7.8, 7.9, 7.10 and 7.11 of this
paragraph B shall be necessary to take the actions
described in such subsections, respectively.
Section 8.
Series A Preferred Stock
Restrictions on Other Payments, etc.
8.1 Unless the corporation shall have de-
clared and paid, or shall have set apart a sum in
cash sufficient for the payment of, all cash
dividend payments pursuant to Section 1 of this
paragraph B with respect to all Dividend Payment
Dates occurring on or prior to the date on which
the corporation proposes to take any action
specified in clause (a), (b) or (c) of this
subsection 8.1, the corporation shall not:
(a) declare or pay or set apart for
payment any dividend or make any other dis-
tribution on any Junior Stock, or redeem,
purchase or otherwise acquire any Junior
Stock except for purchases of Common Stock
pursuant to paragraphs C, D and E of the
Stockholders' Agreement (as defined in such
section 19), provided the corporation shall
on the date of such purchase resell any such
Common Stock so purchased at a net price at
least equal to the purchase price paid by the
corporation for such shares; or
(b) declare or pay or set apart for
payment any dividend or make any other dis-
tribution on any Parity Stock, except divi-
dends paid proportionately (based on the
relative amounts of dividends payable or in
arrears) on the Series A Preferred Stock and
on all Parity Stock on which dividends are
payable or in arrears; or
(c) redeem, purchase or otherwise
acquire any Parity Stock except pursuant to
mandatory redemptions made in accordance with
the terms of such Parity Stock.
8.2 Unless the full cash redemption price
for all mandatory redemption payments on the
Series A Preferred Stock required to be made shall
have been made on or prior to the date on which
the corporation proposes to take any action
specified in clause (a) or (b) of this subsection
8.2, the corporation shall not:
(a) declare or pay or set apart for
payment any dividend or make any other
distribution on any Junior Stock, or redeem,
purchase or otherwise acquire any Junior
Stock except for purchases of Common Stock
pursuant to paragraphs C, D and E of the
Stockholders' Agreement, provided the
corporation shall on the date of such pur-
chase resell any such Common Stock so pur-
chased at a net price at least equal to the
purchase price paid by the corporation for
such shares; or
(b) redeem, purchase or otherwise
acquire any Parity Stock except pursuant to
mandatory redemptions made proportionately
(based on the relative amounts of mandatory
redemption payments payable or in arrears) on
the Series A Preferred Stock and on all
Parity Stock on which mandatory redemption
payments are payable or in arrears.
Section 9.
Series A Preferred Stock Redemption in
connection with Issuance of Additional
Preferred Stock, Parity Stock or Prior Stock
Subject to the provisions of section 6 of
this paragraph B, if at any time the corporation
sends a written notice to the holders of Series A
Preferred Stock, which notice requests that such
holders grant the requisite consent pursuant to
subsections 7.8 or 7.9, as the case may be, to the
issuance by the corporation of additional Series A
Preferred Stock, Parity Stock or Prior Stock and
such consent is not obtained within thirty (30)
days following the date on which the notice was
sent by the corporation, the corporation shall
have the right, at its option, to redeem, on the
second Dividend Payment Date after the end of the
fiscal year of the corporation in which such
notice was sent by the corporation, at a cash
price equal to the Redemption Price out of any
funds of the corporation at the time legally
available for redemption, all of the Series A
Preferred Stock the holders of which did not
consent to such request.
Section 10.
No Series A Preferred Stock
Preemptive Rights
No holder of Series A Preferred Stock shall,
as such holder, have any preemptive right in or
preemptive right to purchase or subscribe to any
shares or other securities of the corporation.
Section 11.
Series A Preferred Stock Payments
and Notices; Consents
All notices and all payments with respect to
the Series A Preferred Stock shall be mailed to
the holders of Series A Preferred Stock at their
respective addresses, as the same shall appear on
the books of the corporation, or at such other ad-
dress as may have been furnished to the
corporation in writing by any such holder;
provided however that the corporation and any
holder of Series A Preferred Stock may agree in
writing that notices or payments or both shall be
made in a manner different from that set forth in
this section 11. Any consent by a holder of
Series A Preferred Stock may be given in writing
or by vote at any regular or special meeting of
stockholders.
Section 12.
Common Stock Junior to Preferred Stock
The rights of the holders of the Common Stock
as to dividends and assets shall be junior to the
rights and preferences of the holders of the
Series A Preferred Stock.
Section 13.
Common Stock Powers, Etc.
Except as otherwise provided in this Certi-
ficate of Incorporation, Class A Common Stock,
Class B Common Stock and Class C Common Stock
shall have the same powers, preferences and rela-
tive, participating, optional or other special
rights, and qualifications, limitations or
restrictions thereof.
Section 14.
Common Stock Dividends
Subject to the provisions of section 8 of
this paragraph B, the holders of the Class A
Common Stock, the Class B Common Stock and the
Class C Common Stock shall be entitled to share
equally, on a share-by-share basis, in dividends
out of any funds of the corporation at the time
legally available for the purpose, if, as and when
declared by the Board of Directors and paid to
the holders of Class A Common Stock, Class B
Common Stock and Class C Common Stock. No
dividends shall be declared and paid on the Common
Stock unless an equal amount, on a share-by-share
basis, is declared and paid on the Class A Common
Stock, the Class B Common Stock and the Class C
Common Stock; provided, however, that in
connection with any dividend consisting of Common
Stock, the holders of shares of Common Stock of
any particular class shall only be entitled to
receive shares of Common Stock of the same class.
Section 15.
Common Stock Liquidation, etc. Rights
Subject to the provisions of section 2 of
this paragraph B, upon liquidation, dissolution or
winding up of the corporation, whether voluntary
or involuntary, all of the assets of the corpora-
tion available for distribution to stockholders
shall be distributed to the holders of Class A
Common Stock, Class B Common Stock and Class C
Common Stock, and the holders of the Class A
Common Stock, Class B Common Stock and Class C
Common Stock shall be entitled to share equally,
on a share by share basis, in the assets of the
corporation available for distribution to the
holders of Class A Common Stock, Class B Common
Stock and Class C Common Stock.
Section 16.
Common Stock Voting Powers
16.1 Subject to the provisions of section 7
of this paragraph B and except as otherwise
provided by law, the entire voting rights and
power of the corporation's capital stock shall be
vested in the holders of the Common Stock.
16.2 Each holder of record of Class A Common
Stock shall be entitled to one vote for each share
of Class A Common Stock held by such holder of
record.
16.3 Each holder of record of Class B Common
Stock shall be entitled to (a) one vote for each
share of Class B Common Stock held by such holder
of record and (b) in addition, for each share of
Class B Common Stock held by such holder of
record, a number of votes equal to (x) the number
of shares of Class C Common Stock at the time
outstanding, times 0.67, divided by (y) the number
of shares of Class B Common Stock at the time
outstanding.
16.4 Each holder of record of Class C Common
Stock shall be entitled to 0.33 votes for each
share of Class C Common Stock held by such holder
of record.
16.5 Subject to the provisions of section 7
of this paragraph B and except as otherwise
provided by law, (a) at each meeting of the
stockholders of the corporation, the presence in
person or by proxy of the holders of shares of
Common Stock having a majority of the total number
of votes to which the shares of Common Stock are
at the time entitled shall be necessary to
constitute a quorum for the transaction of any
business, and (b), except as provided in
subsection 17.2 of this paragraph B, the affir-
mative vote of the number of shares of Common
Stock having a majority of the total number of
votes to which the shares of Common Stock are at
the time entitled which are present in person or
by proxy at a meeting shall be necessary for any
acts of the stockholders.
Section 17.
Common Stock Preemptive Rights
17.1 If at any time any authorized but
unissued shares of any class of Common Stock of
the corporation are issued or any previously
issued shares of any class of Common Stock are
acquired by the corporation and resold or any
securities of the corporation shall be issued
which are convertible into, exchangeable for or
otherwise entitle the holders of such securities
to receive shares of any class of Common Stock,
the holders of Common Stock at the time
outstanding shall have the preemptive right to
subscribe therefor, pro rata on the basis of the
number of shares of Common Stock held by them of
record, at such price and on such other terms as
may be established by the Board of Directors in
its sole discretion in each instance, unless
(a) at the time of such issuance or
resale, any class of equity securities of the
corporation is registered under the
Securities Exchange Act of 1934 as at the
time in effect (or any similar federal
statute at the time in effect); or
(b) such issuance or resale is in
connection with a public offering of such
Common Stock pursuant to an effective
registration statement filed under the
Securities Act of 1933 as at the time in
effect (or any similar federal statute at the
time in effect); or
(c) such shares were acquired by the
corporation in accordance with the Stockhol-
ders' Agreement (as defined in section 19 of
this paragraph B) and such shares are being
resold by the corporation in accordance with
the Stockholders' Agreement; or
(d) such shares are being issued pur-
suant to the conversion rights set forth in
section 18 of this paragraph B; or
(e) such shares are being issued pur-
suant to the Note and Stock Purchase Agree-
ments (as defined in such section 19).
17.2 Without the consent of the holders of
record of at least two-thirds of the shares of the
Class A Common Stock, the Class B Common Stock,
and the Class C Common Stock, voting together as a
single class, the corporation shall not effect any
amendment of this section 17.
Section 18.
Common Stock Conversion Rights
18.1 Upon the transfer by an Original Class
C Common Stockholder (as defined in section 19 of
this paragraph B) of any Class C Common Stock to a
Non-Affiliate (as defined in such section 19) of
such Original Class C Common Stockholder, such
Original Class C Common Stockholder shall give
written notice to the corporation of such
transfer. Any such Non-Affiliate (or any
transferee of such Non-Affiliate who is also a
Non-Affiliate of such Original Class C Common
Stockholder) may, at its sole option, elect by
written notice to the corporation to convert each
share of Class C Common Stock so transferred into
one fully paid and nonassessable share of Class A
Common Stock.
18.2 If at any time the Original Class C
Common Stockholder is permitted by applicable law
to exercise voting power in excess of that origin-
ally held, such Original Class C Common
Stockholder may, at its option, by written notice
to the corporation, convert all or any number of
its shares of Class C Common Stock specified in
such notice into the same number of fully paid and
nonassessable shares of Class A Common Stock.
18.3 At such time as there are no shares of
Class C Common Stock issued and outstanding, all
(and not less than all) of the issued and
outstanding shares of Class B Common Stock shall
without notice or other action be automatically
converted into the same number of shares of fully
paid and nonassessable shares of Class A Common
Stock. Upon any such conversion taking place, the
Corporation shall as promptly as practicable
thereafter notify each holder of shares of Class B
Common Stock of such conversion. Each share of
Class B Common Stock shall bear the following
legend:
"In accordance with subsection 18.3 of
Paragraph B of Article FOURTH of the Certi-
ficate of Incorporation of the Corporation
the shares of Class B Common Stock
represented by this Certificate shall without
notice to the holder hereof be automatically
converted into shares of Class A Common Stock
of the Corporation upon the happening of the
events specified in such subsection 18.3."
18.4 Any conversion of shares of Class B
Common Stock or Class C Common Stock shall become
effective upon receipt by the corporation of the
written notice of such conversion called for by
subsection 18.1 or 18.2 of this paragraph B.
Outstanding certificates representing shares of
Class B Common Stock or Class C Common Stock
converted as aforesaid shall thenceforth represent
the same number of shares of Class A Common Stock
theretofore represented by such certificate for
shares of Class B Common Stock or Class C Common
Stock, as the case may be, and the holder of such
converted shares shall be entitled to precisely
the same rights which it would enjoy if it held
certificates representing shares of Class A Common
Stock. Upon surrender of a certificate or
certificates representing the shares of Class B
Common Stock or the Class C Common Stock so
converted, the holder shall be entitled to receive
in lieu thereof one or more certificates for
shares of Class A Common Stock representing in the
aggregate the total number of shares of Class A
Common Stock into which such shares of Class B
Common Stock or Class C Common Stock has been
converted. If all of the shares of Class C Common
Stock represented by the certificate or
certificates so surrendered are not to be so
converted, the holder shall also be entitled to
receive one or more certificates for Class C
Common Stock representing in the aggregate the
total number of shares of such Class C Common
Stock not so converted. All shares of Class B
Common Stock or Class C Common Stock so converted
shall be cancelled and retired and shall not be
reissued. The authorized amount of shares of
Class B Common Stock or Class C Common Stock, as
the case may be, shall be deemed to be reduced to
the extent of the shares so converted and the
corporation shall execute and file a Certificate
of Reduction or any other such instrument that may
be required to be filed in respect thereof from
time to time under applicable law. So long as any
of the shares of Class B Common Stock or Class C
Common Stock are outstanding, the corporation
shall reserve and keep available out of its
authorized but unissued shares of Class A Common
Stock, solely for issuance upon the conversion of
Class B Common Stock or Class C Common Stock as
herein provided, sufficient shares of Class A
Common Stock to satisfy the full conversion
requirements of the Class B Common Stock and Class
C Common Stock.
Section 19.
Definitions
19.1 An "Affiliate" of any person or entity
shall mean any person or entity (other than the
corporation) that directly or indirectly controls,
or is controlled by, or is under common control
with, such other person or entity.
19.2 "Bank Debt" shall mean the Term Loan
Agreement dated as of June 25, 1982 between the
corporation and the banks listed therein and
Bankers Trust Company, as agent, and each of the
Reeves Bank Debt Agreements and Newreeveco Debt
Agreements (as such terms are defined in such Term
Loan Agreement) including any extensions,
renewals, refinancings, modifications or
amendments of any of the foregoing and any other
agreement pursuant to which Indebtedness (as such
term is defined in the Term Loan Agreement) is
incurred (a) as may be approved by the Board of
Directors of the corporation and (b) which does
not contravene or is permitted by the provisions
of paragraph 5.8 of the Preferred Stock Purchase
Agreement.
19.3 "Consolidated Earned Surplus
Accumulated From and After July 4, 1982" shall
mean the amount, calculated as of the last day of
the corporation's fiscal quarter ending
immediately preceding the date of determination,
of total consolidated earned surplus of the
corporation and its subsidiaries, accumulated by
the corporation and its subsidiaries from and
after July 4, 1982, all determined in accordance
with generally accepted accounting principles,
minus all dividends, distributions, redemption or
repurchase payments (other than the particular
proposed dividend, distribution, redemption or
repurchase payment which is being measured) previ-
ously paid or made or concurrently being paid or
made on the Series A Preferred Stock since the
last day of such fiscal quarter.
19.4 "Dividend Payment Date" shall mean as
to any Dividend Period the forty-fifth (45th) day
next following the last day of the fiscal quarter
of the corporation which ended within such
Dividend Period (with the first Dividend Payment
Date being November 16, 1982), unless such forty-
fifth (45th) day is not a Business Day (as such
term is defined in the Term Loan Agreement
referred to in subsection 19.2), in which case on
the next succeeding Business Day.
19.5 "Dividend Period" means the three-month
period ending on the thirtieth (30th) day after
the last day of a fiscal quarter of the
corporation (except with respect to the Dividend
Period ending on November l, 1982, which shall
begin on the date of issuance of the Series A
Preferred Stock and end on November 1, 1982).
19.6 "Earned Surplus of the Corporation"
shall mean the amount, calculated as of the last
day of the corporation's fiscal quarter ending
immediately preceding the date of determination,
of total earned surplus of the corporation (on an
unconsolidated basis), all determined in accord-
ance with generally accepted accounting
principles, minus all dividends, distributions,
redemption or repurchase payments (other than the
particular proposed dividend, distribution,
redemption or repurchase payment which is being
measured) previously paid or made or concurrently
being paid or made on the Series A Preferred Stock
since the last day of such fiscal quarter.
19.7 "Full Cumulative Dividends" on any
Series A Preferred Stock shall mean cumulative
cash dividends on such Series A Preferred Stock
computed, to the date with reference to which the
expression is used, at the rate of $14 per share
per annum (whether or not such amount or any part
thereof shall have been declared as dividends and
whether or not there exists or shall have existed
available funds out of which dividends in such
amount might be or might theretofore have been
declared), less the aggregate of all dividends
paid thereon to such date.
19.8 "Junior Stock" shall mean any stock
ranking junior, either as to dividends or upon
liquidation, to the Series A Preferred Stock.
19.9 "Junior Subordinated Indebtedness"
shall mean the Zero Coupon Junior Subordinated
Notes due June 30, 1990, in the aggregate
principal amount at stated maturity of
$119,209,000, issued pursuant to the Note and
Stock Purchase Agreements, including any
extensions, renewals, refinancings, or modifi-
cations or amendments of any of the foregoing (a)
as may be approved by the Board of Directors of
the corporation and (b) which does not contravene
or is permitted by the provisions of paragraph 5.8
of the Preferred Stock Purchase Agreement.
19.10 "Mandatory Redemption Date" shall mean
the second Dividend Payment Date after the end of
each fiscal year of the corporation, the first
Mandatory Redemption Date being in 1991 and the
last Mandatory Redemption Date being in 1994.
19.11 "Non-Affiliate" shall mean any person
or entity that is not an Affiliate of the person
or entity with respect to which such term is used.
19.12 "Note and Stock Purchase Agreements"
shall mean the several Note and Stock Purchase
Agreements dated as of June 25, 1982 between the
corporation, on the one hand, and the purchasers
named therein, on the other hand, providing for
the issuance in the aggregate of 42,771 shares of
Class A Common Stock and 12,943 shares of Class C
Common Stock.
19.13 "Original Class C Common Stockholder"
shall mean a person to whom shares of Class C Com-
mon Stock are initially issued by the corporation
and any Affiliate of such person which is a trans-
feree of Class C Common Stock from such person.
19.14 "Original Series A Preferred
Stockholder" shall mean a person to whom shares of
Series A Preferred Stock are initially issued by
the corporation and any Affiliate of such person
which is a transferee of Series A Preferred Stock
from such person.
19.15 "Parity Stock" shall mean any stock
ranking on a parity, either as to dividends or
upon liquidation, with the Series A Preferred
Stock.
19.16 "Preferred Stock Purchase Agreement"
shall mean the Preferred Stock Purchase Agreement
dated as of June 25, 1982 between the corporation
and Metropolitan Life Insurance Company as the
same may be amended, modified, supplemented or
waived.
19.17 "Prior Stock" shall mean any stock
ranking senior, either as to dividends or upon
liquidation, to the Series A Preferred Stock.
19.18 "Redemption Price" shall mean $100 per
share plus Full Cumulative Dividends on each share
of Series A Preferred Stock to be redeemed on any
given date to the date fixed for redemption of
such shares.
19.19 "Senior Subordinated Indebtedness"
shall mean the 20% Senior Subordinated
Participating Notes Due June 30, 1989 in the
aggregate original principal amount of $20,000,000
issued pursuant to the Note and Stock Purchase
Agreements, including any extensions, renewals,
refinancings, or modifications or amendments of
any of the foregoing (a) as may be approved by the
Board of Directors of the corporation and (b)
which does not countravene or is permitted by the
provisions of paragraph 5.8 of the Preferred Stock
Purchase Agreement.
19.20 "Stockholders' Agreement" shall mean
the "Stockholders' Agreement" dated as of June 25,
1982 among the corporation and the individuals and
entities named therein providing for certain first
refusal rights and other agreements relating to
shares of Common Stock of the corporation.
C. Each share of common stock, par value
$1.00 per share, outstanding immediately prior to
the time this Restated Certificate of
Incorporation is filed with the Secretary of State
of the State of Delaware shall be, and hereby is,
upon such filing reclassified as and changed into
(i) 0.90 fully-paid and non-assessable shares of
Class A Common Stock and (ii) 0.10 fully-paid and
non-assessable shares of Class B Common Stock.
FIFTH: For the management of the business and for
the conduct of the affairs of the corporation, and in
further definition, limitation, and regulation of the
powers of the corporation and of its directors and
stockholders, it is further provided that:
1. The election of directors of the corporation
need not be by written ballot unless the by-laws so
require.
2. In furtherance and not in limitation of the
powers conferred by statute, the Board of Directors is
expressly authorized:
(a) To adopt, amend or repeal by-laws of the
corporation in the manner provided in the by-laws
of the corporation.
(b) Without the assent or vote of the
stockholders, to authorize and issue obligations
of the corporation, secured or unsecured, and to
include therein such provisions as to redeem-
ability, convertibility or otherwise, as the Board
of Directors, in its sole discretion, may
determine.
(c) To exercise all of the powers of the
corporation except those which by law or this
Certificate of Incorporation expressly require the
consent of the stockholders.
3. Any vote or votes authorizing liquidation of
the corporation or proceedings for its dissolution may
provide, subject to the rights of creditors and
preferred stockholders, if any, for the distribution
pro rata among the stockholders of the corporation of
the assets of the corporation, wholly or in part, in
cash or in kind, whether such assets be in cash or
other property, and any such vote or votes may
authorize the Board of Directors of the corporation to
determine the valuation of the different assets of the
corporation for the purpose of such liquidation and may
divide or authorize the Board of Directors to divide
such assets or any part thereof among the stockholders
of the corporation, in such manner that every
stockholder will receive a proportionate amount in
value (determined as aforesaid) of cash and/or property
of the corporation upon such liquidation or dissolution
even though each stockholder may not receive a strictly
proportionate part of each such asset.
SIXTH: Except as otherwise expressly provided
herein, the corporation reserves the right to amend,
alter, change or repeal any provision contained in this
Certificate of Incorporation, in the manner now or
hereinafter prescribed by statute, and all rights
conferred upon stockholders, directors and other
persons herein are granted subject to this reservation.
IN WITNESS WHEREOF, this Restated Certificate
of Incorporation having been duly adopted by the stock-
holders of the corporation in accordance with Sections
228, 242 and 245 of the Delaware General Corporation
Law, we have signed this certificate this 25th day of
June, 1982.
/s/ Joseph D. Moore
______________________________________
President
ATTEST: /s/ Daniel H. Kahrs
______________________________________
Secretary
State of Delaware
Office of Secretary of State
____________________________
I, MICHAEL RATCHFORD, SECRETARY OF STATE OF THE STATE OF
DELAWARE DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT
COPY OF THE CERTIFICATE OF AMENDMENT OF "NEWREEVECO, INC." FILED
IN THIS OFFICE ON THE SIXTEENTH DAY OF JANUARY, A.D. 1984, AT 9
O'CLOCK A.M.
* * * * * * * * * *
/s/ Michael Ratchford
___________________________________
SECRETARY OF STATE
AUTHENTICATION: *3368889
DATE: 03/04/1992
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
NEWREEVECO, INC.
______________________________
Pursuant to
Section 242 of
the General Corporation
Law of the State
of Delaware
______________________________
Newreeveco, Inc. (the "Corporation"), a
corporation organized and existing under and by virtue
of the General Corporation Law of the State of
Delaware, does hereby certify:
FIRST: That the Board of Directors of the
Corporation, at a meeting duly called and held, adopted
a resolution proposing and declaring advisable the
following amendment to the Restated Certificate of
Incorporation of the Corporation:
RESOLVED, that Article FOURTH of the Certi-
ficate of Incorporation of the Corporation be
amended to read in its entirety as follows:
FOURTH: A. The total number of shares of
capital stock which the corporation shall have
authority to issue is 129,057 shares, classified
as follows:
(i) 99,057 shares of Common Stock, par value
$1.00 per share (hereinafter called
"Common Stock"); and
(ii) 30,000 shares of Series A Cumulative
Preferred Stock, without par value
(hereinafter called the "Series A
Preferred Stock").
B. The following is a statement of the
designations, powers, preferences and relative,
participating, optional or other special rights,
and qualifications, limitations or restrictions
thereof, of the Series A Preferred Stock and the
Common Stock:
Section 1.
Series A Preferred Stock Dividend Rights
1.1 The holders of the shares of Series A
Preferred Stock shall be entitled to receive, if,
as and when declared by the Board of Directors of
the corporation out of any funds at the time
legally available for the declaration of
dividends, cumulative cash dividends with respect
to the Dividend Period (as defined in section 18
of this paragraph B) then ended at the rate of $14
per share per annum, and no more, payable
quarterly on each Dividend Payment Date (as
defined in such section 18) of each year,
beginning on November 16, 1982. Dividends on the
Series A Preferred Stock shall be cumulative from
the date on which the shares of Series A Preferred
Stock are issued.
1.2 If, on any date on which dividends are
payable on the Series A Preferred Stock as
provided in subsection 1.1, the amount of the
dividends to be paid by the corporation is in the
aggregate less than the full dividends payable on
such date, the dividends declared and to be paid
by the corporation on such date shall be allocated
pro rata among the shares of outstanding Series A
Preferred Stock.
Section 2.
Series A Preferred Stock Liquidation,
etc. Rights
2.1 In the event of any liquidation,
dissolution or winding up of the corporation,
whether voluntary or involuntary, before any
distribution of the assets of the corporation
shall be made to or set apart for the holders of
any Junior Stock (as defined in section 18 of this
paragraph B) the holders of the Series A Preferred
Stock shall be entitled to the payment in cash of
$100 per share, together with a sum equal to Full
Cumulative Dividends (as defined in such section
18) thereon to the date of final distribution to
the holders of the Series A Preferred Stock.
2.2 If, upon any such liquidation,
dissolution or winding up, the assets of the
corporation distributable among the holders of the
Series A Preferred Stock shall be insufficient to
pay to them in full the preferential amounts to
which they are entitled as specified in subsection
2.1 above, then such assets, or the proceeds
thereof, shall be distributed among the holders of
the Series A Preferred Stock ratably in proportion
to the amounts which would be payable to them,
respectively, if such preferential amounts were
paid to them in full.
2.3 Neither a merger nor a consolidation of
the corporation (whether or not the corporation is
the surviving corporation) nor a sale of all or
substantially all of the assets of the corporation
shall constitute a liquidation, dissolution or
winding up of the corporation for purposes of this
section 2.
Section 3.
Series A Preferred Stock
Mandatory Redemption
Subject to the provisions of section 6 of this
paragraph B, commencing on the Mandatory Redemption
Date (as defined in section 18 of this paragraph B)
occurring in 1991, and thereafter on each succeeding
Mandatory Redemption Date up to and including the
Mandatory Redemption Date occurring in 1994, the
corporation shall redeem out of any funds of the
corporation at the time legally available for
redemptions (a) 7,500 (or such lesser number as shall
then be outstanding) shares of Series A Preferred Stock
at a cash redemption price equal to the Redemption
Price (as defined in such section 18), and (b) Series A
Preferred Stock required to be redeemed under this
section 3 in prior years, if any, but not yet redeemed
by reason of a deficiency of funds legally or under
this Article FOURTH available for redemption, at a cash
redemption price equal to the Redemption Price. If on
any date on which the corporation is required to redeem
shares of Series A Preferred Stock hereunder, all of
such shares may not be redeemed by reason of a
deficiency of funds legally or under this Article
FOURTH available for redemptions, the corporation shall
nevertheless redeem in accordance with the provisions
of subsection 6.2 such number of shares as it may
redeem on such date.
Section 4.
Series A Preferred Stock
Optional Redemption
Subject to the provisions of section 6 of this
paragraph B, commencing on the Mandatory Redemption
Date occurring in 1992, and thereafter on the Mandatory
Redemption Dates occurring in 1993 and 1994, the Series
A Preferred Stock shall be subject to redemption, as a
whole or in part, at the option of the corporation, at
a cash redemption price equal to the Redemption Price
out of any funds of the corporation at the time legally
available for redemptions.
Section 5.
Series A Preferred Stock Repurchase
Subject to the provisions of section 6 of this
paragraph B, the corporation may at any time and at its
option offer in writing to repurchase all or any of the
Series A Preferred Stock for such price and on such
other terms as the corporation may determine (except
that if any such offer is made at any time that the
Series A Preferred Stock is redeemable the price
offered by the corporation shall not be greater than
the Redemption Price), provided that if such an offer
is made to any holder of Series A Preferred Stock other
than an Original Series A Preferred Stockholder (as
defined in section 18 of this paragraph B), the
corporation shall make an identical offer in writing to
each Original Series A Preferred Stockholder, pro rata
based on the total number of shares of Series A
Preferred Stock held of record by (x) all offerees
(other than the Original Series A Preferred
Stockholders) and (y) the Original Series A Preferred
Stockholders.
Section 6.
General Provisions Applicable to
Series A Preferred Stock
Redemptions and Repurchases
6.1 In the case of each redemption of Series A
Preferred Stock pursuant to sections 3 and 4 of this
paragraph B, the corporation shall give written notice
thereof to all holders of Series A Preferred Stock not
less than thirty (30) nor more than ninety (90) days
prior to the date fixed for such redemption, specifying
(a) the date fixed for such redemption, (b) the cash
redemption price payable for each share of Series A
Preferred Stock to be redeemed on such date, (c) the
number and, if less than all shares of Series A
Preferred Stock are to be redeemed, the certificate
numbers, of the shares of Series A Preferred Stock to
be redeemed, and (d) the section of this paragraph B
pursuant to which such redemption is to be made.
In the case of each offer to repurchase Series A
Preferred Stock made pursuant to section 5 of this
paragraph B, if the corporation shall have made such an
offer to any holder of Series A Preferred Stock other
than an Original Series A Preferred Stockholder, the
corporation shall give written notice thereof to the
Original Series A Preferred Stockholders not more than
fifteen (15) days after such offer to repurchase has
been made to such other holder, and not less than
thirty (30) days prior to the date fixed for such
repurchase. Such notice shall (a) specify the price
and other terms of the offer to repurchase and (b)
extend an identical offer to repurchase Series A
Preferred Stock of the Original Series A Preferred
Stockholders on a pro rata basis in accordance with
section 5 of this paragraph B.
6.2 If less than all the shares of Series A
Preferred Stock are to be redeemed, the shares of
Series A Preferred Stock to be redeemed shall be
allocated by the corporation in proportion (as nearly
as practicable) to the number of shares of Series A
Preferred Stock held of record by the holders of such
Series A Preferred Stock at the time outstanding.
6.3 The corporation shall pay or set apart for
payment the amounts payable upon the redemption or
repurchase of Series A Preferred Stock to the holders
thereof (a) in the case of optional redemptions
pursuant to section 4 of this paragraph B, on the date
fixed for redemption specified in the notice referred
to in subsection 6.1 (which date shall be a Mandatory
Redemption Date), (b) in the case of mandatory
redemptions pursuant to section 3 of this paragraph B,
on the Mandatory Redemption Date (as defined in section
18 of this paragraph B), and (c) in the case of
repurchase pursuant to section 5 of this paragraph B,
on the date specified therefor in the offer to repur-
chase. Upon such payment or if on or prior to the date
fixed for redemption or repurchase such amounts have
been set apart for payment, all rights of such holders
as stockholders of the corporation by reason of the
ownership of such redeemed or repurchased Series A
Preferred Stock shall cease, whether or not the
certificates for such Series A Preferred Stock shall
have been surrendered for cancellation; and, after such
payment or setting apart for payment, such Series A
Preferred Stock shall not be deemed outstanding. In
addition, shares of Series A Preferred Stock which have
been called for redemption shall not be deemed to be
outstanding shares for the purpose of voting or
determining the total number of shares of Series A
Preferred Stock entitled to vote on any matter on and
after the date on which written notice of redemption
has been sent to holders thereof and a sum sufficient
to redeem such shares has been irrevocably deposited or
set aside to pay the cash redemption price to the
holders of the shares of Series A Preferred Stock to be
so redeemed. If requested by the corporation, such
holders shall surrender and, at the expense of the
corporation, deliver certificates for such Series A
Preferred Stock being redeemed or purchased to the
corporation. All Series A Preferred Stock redeemed or
repurchased by the corporation shall be retired and
cancelled and shall not be available for reissuance by
the corporation.
6.4 For purposes hereof, the phrases "set apart
for payment" and "setting apart for payment" shall mean
the actual deposit of funds for the purpose of making
any redemption or repurchase with a bank or trust
company located in the City of New York having a
combined capital and surplus of not less than
$50,000,000.
Section 7.
Series A Preferred Stock Voting Powers
7.1 Except as otherwise expressly provided herein
or by law, the holders of Series A Preferred Stock
shall have no right as such holders to vote at or
participate in any meeting of stockholders of the
corporation or to receive any notice of any such
meeting.
7.2 The holders of record of Series A Preferred
Stock shall have the special right, voting separately
as a single class, to elect two directors to the Board
of Directors of the corporation at the special meeting
of holders of record of Series A Preferred Stock
referred to in subsection 7.3 (and at each succeeding
annual meeting of stockholders thereafter until such
right shall terminate as hereinafter provided) upon the
occurrence and during the continuance of any of the
following conditions:
(a) if at any time the corporation shall be
in arrears in the payment of all or any part of
the cash redemption price payable upon any
mandatory redemption of the Series A Preferred
Stock pursuant to section 3 of this paragraph B;
or
(b) if at any time the corporation shall be
in arrears with respect to full cash dividend
payments for four quarterly dividend periods,
whether or not consecutive, pursuant to section 1
of this paragraph B; or
(c) if at any time there exists a default
(which shall mean for purposes hereof any event
which shall constitute an event of default and as
to which any requirement of notice or the lapse of
time or both has been satisfied) under any of the
agreements relating to the Bank Debt or the Senior
Indebtedness.
7.3 If any condition referred to in subsection
7.2 shall occur, the corporation shall give notice
thereof to the holders of record of the Series A
Preferred Stock within twenty (20) days after the
occurrence of such condition and any officer or the
directors of the corporation shall call a special
meeting of the holders of record of Series A Preferred
Stock to take place within thirty (30) days following
the occurrence of such condition, provided that failure
to give such notice or call such meeting shall not
affect the rights of the holders of the Series A Pre-
ferred Stock conferred by subsection 7.2. If such
meeting shall not have been called as provided above,
such meeting may be called, at the expense of the
corporation, by the holders of record of not less than
5% of the Series A Preferred Stock at the time
outstanding on written notice specifying the time and
place of the meeting given by mail not less than seven
(7) nor more than sixty (60) days before the date of
such meeting specified in such notice.
7.4 Subject to the provisions of subsection 7.6,
each director elected by the holders of record of the
Series A Preferred Stock, voting separately as a single
class as provided in subsection 7.2, shall hold office
until the annual meeting of stockholders next
succeeding his election and until his successor, if
any, is elected by such holders and qualifies.
7.5 In case any vacancy shall occur among the
directors elected by the holders of Series A Preferred
Stock, voting separately as a single class as provided
in subsection 7.2, such vacancy may be filled for the
unexpired portion of the term by vote of the single
remaining director theretofore elected by such
stockholders, or his successor in office or by the vote
of such stockholders given at a special meeting of such
stockholders called for the purpose.
7.6 The persons elected as directors as provided
in subsections 7.2 and 7.5, together with the directors
elected by the holders of Common Stock, shall
constitute the Board of Directors of the corporation.
If all arrearages and defaults constituting the
conditions referred to in subsection 7.2 shall cease to
exist or are cured, the right of the holders of record
of Series A Preferred Stock, voting separately as a
class, to elect two directors as provided in subsection
7.2 shall expire, subject to revival from time to time
upon the recurrence of any such condition, and the
terms of the directors so elected shall terminate.
7.7 Upon any proposal (i) to affect a merger or
consolidation of the corporation with or into any other
corporation, except in a case where the corporation is
the surviving corporation, or (ii) to effect a sale of
all or substantially all the corporation's assets, the
holders of record of the Series A Preferred Stock at
the time outstanding shall, in addition to any other
voting rights granted to such holders by law, be
entitled to vote on such proposal with the holders of
Common Stock, as a single class, with one vote per
share of Series A Preferred Stock. At any meeting at
which a proposal of the type referred to in this
subsection 7.7 is to be considered, the presence in
person or by proxy of the holders of record of a
majority of shares of Series A Preferred Stock and of
Common Stock, taken as a single class, shall be
necessary to constitute a quorum for such purpose.
7.8 Without the consent of the holders of record
of at least a majority of the Series A Preferred Stock
at the time outstanding (including, in any event, the
Original Series A Preferred Stockholders who at the
time hold shares of Series A Preferred Stock), given in
person or by proxy, either in writing without a meeting
or at a special or annual meeting of stockholders
called for the purpose, at which the holders of record
of Series A Preferred Stock shall vote separately as a
class, the corporation shall not issue any additional
Series A Preferred Stock or any shares of Parity Stock
(as defined in section 18 of this paragraph B).
7.9 Without the consent of the holders of record
of all of the Series A Preferred Stock at the time
outstanding, given in person or by proxy, either in
writing without a meeting or at a special or annual
meeting of stockholders called for the purpose, at
which the holders of record of Series A Preferred Stock
shall vote separately as a class, the corporation shall
not issue any shares of Prior Stock (as defined in
section 18 of this paragraph B).
7.10 Subject to the provisions of subsection 7.11
of this paragraph B, without the consent of the holders
of record of at least two-thirds of the Series A
Preferred Stock at the time outstanding (including, in
any event, the Original Series A Preferred Stockholders
who at the time hold shares of Series A Preferred
Stock), given in person or by proxy, either in writing
without a meeting or at a special or annual meeting of
stockholders called for the purpose, at which the
holders of Series A Preferred Stock shall vote
separately as a class, the corporation shall not:
(a) effect any division of the Series A Pre-
ferred Stock or any combination thereof with any
other class or series of stock; or
(b) effect any amendment to the Certificate
of Incorporation of the corporation which would
materially alter the relative rights and
preferences of the Series A Preferred Stock so as
to adversely affect the holders thereof.
7.11 Notwithstanding the provisions of subsection
7.10 hereof, no amendment to this Certificate of
Incorporation which (w) changes any amount payable on
the Series A Preferred Stock as dividends, or upon
mandatory or optional redemption or liquidation, or (x)
changes the date when any such amount is payable, or
(y) changes any consent requirement of subsection 7.8,
7.9, 7.10 or 7.11 of this paragraph B shall be
effective without, in each case, the consent of the
holders of record of all the Series A Preferred Stock
at the time outstanding, given in person or by proxy,
either in writing without a meeting or at a special or
annual meeting of stockholders called for the purpose,
at which the holders of Series A Preferred Stock shall
vote separately as a class.
7.12 At each annual or special meeting of
stockholders at which the holders of Series A Preferred
Stock shall have the special right, voting separately
as a single class, to elect directors as provided in
subsection 7.2 or to take any other action on which
such stockholders are entitled to vote as a class, (i)
except as provided in subsection 7.7, the presence in
person or by proxy of the holders of record of one-
third of the total number of shares of Series A
Preferred Stock then issued and outstanding shall be
necessary to constitute a quorum of such class for such
election as a class, (ii) the affirmative vote of the
majority of shares of Series A Preferred Stock present
in person or represented by proxy at such meeting shall
be necessary to elect directors, (iii) the affirmative
vote of a majority of all shares entitled to vote shall
be necessary to approve any proposal referred to in
subsection 7.7 and (iv) the affirmative vote of the
number of shares of Series A Preferred Stock set forth
in subsections 7.8, 7.9, 7.10 and 7.11 of this
paragraph B shall be necessary to take the actions
described in such subsections, respectively.
Section 8.
Series A Preferred Stock
Restrictions on Other Payments, etc.
8.1 Unless the corporation shall have declared
and paid, or shall have set apart a sum in cash
sufficient for the payment of, all cash dividend
payments pursuant to section 1 of this paragraph B with
respect to all Dividend Payment Dates occurring on or
prior to the date on which the corporation proposes to
take any action specified in clause (a), (b) or (c) of
this subsection 8.1, the corporation shall not:
(a) declare or pay or set apart for payment
any dividend or make any other distribution on any
Junior Stock, or redeem, purchase or otherwise
acquire any Junior Stock except for purchases of
Common stock pursuant to paragraphs C and D of the
Stockholders' Agreement (as defined in such
section 18), provided the corporation shall on the
date of such purchase resell any such Common Stock
so purchased at a net price at least equal to the
purchase price paid by the corporation for such
shares; or
(b) declare or pay or set apart for payment
any dividend or make any other distribution on any
Parity Stock, except dividends paid
proportionately (based on the relative amounts of
dividends payable or in arrears) on the Series A
Preferred Stock and on all Parity Stock on which
dividends are payable or in arrears; or
(c) redeem, purchase or otherwise acquire
any Parity Stock except pursuant to mandatory
redemptions made in accordance with the terms of
such Parity Stock.
8.2 Unless the full cash redemption price for all
mandatory redemption payments on the Series A Preferred
Stock required to be made shall have been made on or
prior to the date on which the corporation proposes to
take any action specified in clause (a) or (b) of this
subsection 8.2, the corporation shall not:
(a) declare or pay or set apart for payment
any dividend or make any other distribution on any
Junior Stock, or redeem, purchase or otherwise
acquire any Junior Stock except for purchases of
Common Stock pursuant to paragraphs C and D of the
Stockholders' Agreement, provided the corporation
shall on the date of such purchase resell any such
Common Stock so purchased at a net price at least
equal to the purchase price paid by the
corporation for such shares; or
(b) redeem, purchase or otherwise acquire
any Parity Stock except pursuant to mandatory
redemptions made proportionately (based on the
relative amounts of mandatory redemption payments
payable or in arrears) on the Series A Preferred
Stock and on all Parity Stock on which mandatory
redemption payments are payable or in arrears.
Section 9.
Series A Preferred Stock Redemption in
connection with Issuance of Additional
Preferred Stock, Parity Stock or Prior Stock
Subject to the provisions of section 6 of this
paragraph B, if at any time the corporation sends a
written notice to the holders of Series A Preferred
Stock, which notice requests that such holders grant
the requisite consent pursuant to subsections 7.8 or
7.9, as the case may be, to the issuance by the
corporation of additional Series A Preferred Stock,
Parity Stock or Prior Stock and such consent is not
obtained within thirty (30) days following the date on
which the notice was sent by the corporation, the
corporation shall have the right, at its option, to
redeem, on the second Dividend Payment Date after the
end of the fiscal year of the corporation in which such
notice was sent by the corporation, at a cash price
equal to the Redemption Price out of any funds of the
corporation at the time legally available for
redemption, all of the Series A Preferred Stock the
holders of which did not consent to such request.
Section 10.
No Series A Preferred Stock
Preemptive Rights
No holder of Series A Preferred Stock shall, as
such holder, have any preemptive right in or preemptive
right to purchase or subscribe to any shares or other
securities of the corporation.
Section 11.
Series A Preferred Stock Payments
and Notices; Consents
All notices and all payments with respect to the
Series A Preferred Stock shall be mailed to the holders
of Series A Preferred Stock at their respective
addresses, as the same shall appear on the books of the
corporation, or at such other address as may have been
furnished to the corporation in writing by any such
holders; provided however that the corporation and any
holder of Series A Preferred Stock may agree in writing
that notices or payments or both shall be made in a
manner different from that set forth in this section
11. Any consent by a holder of Series A Preferred
Stock may be given in writing or by vote at any regular
or special meeting of stockholders.
Section 12.
Common Stock Junior to Preferred Stock
The rights of the holders of the Common Stock as
to dividends and assets shall be junior to the rights
and preferences of the holders of the Series A
Preferred Stock.
Section 13.
Common Stock Powers, Etc.
All Common Stock shall have the same powers, pre-
ferences and relative, participating, optional or other
special rights, and qualifications, limitations or
restrictions thereof.
Section 14.
Common Stock Dividends
Subject to the provisions of section 8 of this
paragraph B, the holders of the Common Stock shall be
entitled to share equally, on a share-by-share basis,
in dividends out of any funds of the corporation at the
time legally available for the purpose, if, as and when
declared by the Board of Directors and paid to the
holders of Common Stock.
Section 15.
Common Stock Liquidation, etc. Rights
Subject to the provisions of section 2 of this
paragraph B, upon liquidation, dissolution or winding
up of the corporation, whether voluntary or
involuntary, all of the assets of the corporation
available for distribution to stockholders shall be
distributed to the holders of Common Stock, and the
holders of the Common Stock shall be entitled to share
equally, on a share by share basis, in the assets of
the corporation available for distribution to the
holders of Common Stock.
Section 16.
Common Stock Voting Powers
16.1 Subject to the provisions of section 7 of
this paragraph B and except as otherwise provided by
law, the entire voting rights and power of the corpora-
tion's capital stock shall be vested in the holders of
the Common Stock.
16.2 Each holder of record of Common Stock shall
be entitled to one vote for each share of Common Stock
held by such holder of record.
16.3 Subject to the provisions of section 7 of
this paragraph B and except as otherwise provided by
law, (a) at each meeting of the stockholders of the
corporation, the presence in person or by proxy of the
holders of shares of Common Stock having a majority of
the total number of votes to which the shares of Common
Stock are at the time entitled shall be necessary to
constitute a quorum for the transaction of any
business, and (b), except as provided in subsection
17.2 of this paragraph B, the affirmative vote of the
number of shares of Common Stock having a majority of
the total number of votes to which the shares of Common
Stock are at the time entitled which are present in
person or by proxy at a meeting shall be necessary for
any acts of the stockholders.
Section 17.
Common Stock Preemptive Rights
17.1 If at any time any authorized but unissued
shares of any class of Common Stock of the corporation
are issued or any previously issued shares of any class
of Common Stock are acquired by the corporation and
resold or any securities of the corporation shall be
issued which are convertible into, exchangeable for or
otherwise entitle the holders of such securities to
receive shares of any class of Common Stock, the
holders of Common Stock at the time outstanding shall
have the preemptive right to subscribe therefor, pro
rata on the basis of the number of shares of Common
Stock held by them of record, at such price and on such
other terms as may be established by the Board of
Directors in its sole discretion in each instance,
unless
(a) at the time of such issuance or resale,
any class of equity securities of the corporation
is registered under the Securities Exchange Act of
1934 as at the time in effect (or any similar
federal statute at the time in effect); or
(b) such issuance or resale is in connection
with a public offering of such Common Stock
pursuant to an effective registration statement
filed under the Securities Act of 1933 as at the
time in effect (or any similar federal statute at
the time in effect); or
(c) such shares were acquired by the
corporation in accordance with the Stockholders'
Agreement (as defined in section 18 of this
paragraph B) and such shares are being resold by
the corporation in accordance with the
Stockholders' Agreement; or
(d) such shares are being issued pursuant to
the Note and Stock Purchase Agreements (as defined
in such section 18).
17.2 Without the consent of the holders of
record of at least two-thirds of the shares of the
Common Stock, the corporation shall not effect any
amendment of this section 17.
Section 18.
Definitions
18.1 An "Affiliate" of any person or entity shall
mean any person or entity (other than the corporation)
that directly or indirectly controls, or is controlled
by, or is under common control with, such other person
or entity.
18.2 "Bank Debt" shall mean the Term Loan Agree-
ment dated as of January 16, 1984 among the corporation
and the banks listed therein and Bankers Trust Company,
as agent, and each of the Reeves Bank Debt Agreements
and Newreeveco Debt Agreements (as such terms are
defined in such Term Loan Agreement) including any
extensions, renewals, refinancings, modifications or
amendments of any of the foregoing and any other
agreement pursuant to which Indebtedness (as such term
is defined in the Term Loan Agreement) is incurred (a)
as may be approved by the Board of Directors of the
corporation and (b) which does not contravene or is
permitted by the provisions of paragraph 5.8 of the
Preferred Stock Purchase Agreement.
18.3 "Dividend Payment Date" shall mean as to any
Dividend Period the forty-fifth (45th) day next
following the last day of the fiscal quarter of the
corporation which ended within such Dividend Period
(with the first Dividend Payment Date being November
16, 1982), unless such forty-fifth (45th) day is not a
Business Day (as such term is defined in the Term Loan
Agreement referred to in subsection 18.2), in which
case on the next succeeding Business Day.
18.4 "Dividend Period" means the three-month
period ending on the thirtieth (30th) day after the
last day of a fiscal quarter of the corporation (except
with respect to the Dividend Period ending on November
1, 1982, which shall begin on the date of issuance of
the Series A Preferred Stock and end on November 1,
1982).
18.5 "Full Cumulative Dividends" on any Series A
Preferred Stock shall mean cumulative cash dividends on
such Series A Preferred Stock computed, to the date
with reference to which the expression is used, at the
rate of $14 per share per annum (whether or not such
amount or any part thereof shall have been declared as
dividends and whether or not there exists or shall have
existed available funds out of which dividends in such
amount might be or might theretofore have been
declared), less the aggregate of all dividends paid
thereon to such date.
18.6 "Junior Stock" shall mean any stock ranking
junior, either as to dividends or upon liquidation, to
the Series A Preferred Stock.
18.7 "Mandatory Redemption Date" shall mean the
second Dividend Payment Date after the end of each
fiscal year of the corporation, the first Mandatory
Redemption Date being in 1991 and the last Mandatory
Redemption Date being in 1994.
18.8 "Note and Stock Purchase Agreements" shall
mean the several Note and Stock Purchase Agreements
dated as of June 25, 1982, between the corporation, on
the one hand, and the purchasers named therein, on the
other hand, providing for the issuance in the aggregate
of 55,714 shares of Common Stock, as the same may be
amended, modified, supplemented or waived.
18.9 "Original Series A Preferred Stockholder"
shall mean a person to whom shares of Series A
Preferred Stock are initially issued by the corporation
and any Affiliate of such person which is a transferee
of Series A Preferred Stock from such person.
18.10 "Parity Stock" shall mean any stock ranking
on a parity, either as to dividends or upon
liquidation, with the Series A Preferred Stock.
18.11 "Preferred Stock Purchase Agreement" shall
mean the Preferred Stock Purchase Agreement dated as of
June 25, 1982, between the corporation and Metropolitan
Life Insurance Company, as the same may be amended,
modified, supplemented or waived.
18.12 "Prior Stock" shall mean any stock ranking
senior, either as to dividends or upon liquidation, to
the Series A Preferred Stock.
18.13 "Redemption Price" shall mean $100 per
share plus Full Cumulative Dividends on each share of
Series A Preferred Stock to be redeemed on any given
date to the date fixed for redemption of such shares.
18.14 "Senior Indebtedness" shall mean the 12.95%
Senior Secured Notes Due February 16, 1994 in the
aggregate original principal amount of $35,000,000
issued pursuant to a Note Agreement, dated as of
January 16, 1984, between Metropolitan Life Insurance
Company and the corporation including any extensions,
renewals, refinancings, or modifications or amendments
of any of the foregoing (a) as may be approved by the
Board of Directors of the corporation and (b) which
does not contravene or is permitted by the provisions
of paragraph 5.8 of the Preferred Stock Purchase
Agreement.
18.15 "Stockholders' Agreement" shall mean the
Stockholders' Agreement dated as of June 25, 1982, as
amended and restated as of January 16, 1984, among the
corporation and the individuals and entities named
therein, providing for certain first refusal rights and
other agreements relating to shares of Common Stock of
the corporation, as the same may be amended, modified,
supplemented or waived.
SECOND: That in lieu of a meeting and vote
of stockholders, the stockholders of the Corporation
have given their unanimous written consent to such
amendment in accordance with the provisions of Section
228(a) of the General Corporation Law of the State of
Delaware.
THIRD: That such amendment was duly adopted
in accordance with the applicable provisions of Section
242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, we have signed this
Certificate this 13th day of January, 1984.
NEWREEVECO, INC.
By /s/ Daniel H. Kahrs
___________________________
Vice President
Attest:
By /s/ George E. Mosely
__________________________________
Secretary
State of Delaware
Office of Secretary of State
______________________________
I, MICHAEL RATCHFORD, SECRETARY OF STATE OF THE
STATE OF DELAWARE DO HEREBY CERTIFY THE ATTACHED IS A
TRUE AND CORRECT COPY OF CERTIFICATE OF CHANGE OF
ADDRESS OF REGISTERED AGENT AS IT APPLIES TO
"NEWREEVECO, INC." AS RECEIVED AND FILED IN THIS OFFICE
ON THE FOURTEENTH DAY OF FEBRUARY, A.D. 1986, AT 4:30
O'CLOCK P.M.
* * * * * * * * * * * *
/s/ Michael Ratchford
_______________________________
SECRETARY OF STATE
AUTHENTICATION: *3368890
DATE: 03/04/1992
CERTIFICATE OF CHANGE OF ADDRESS OF
REGISTERED OFFICE AND OF REGISTERED AGENT
PURSUANT TO SECTION 134 OF TITLE 8 OF THE DELAWARE CODE
TO: DEPARTMENT OF STATE
Division of Corporations
Townsend Building
Federal Street
Dover, Delaware 19903
Pursuant to the provisions of Section 134 of
Title 8 of the Delaware Code, the undersigned Agent for
service of process, in order to change the address of the
registered office of the corporations for which it is
registered agent, hereby certifies that:
1. The name of the agent is United States
Corporation Company.
2. The address of the old registered office
was 306 South State Street, Dover, Delaware 19901.
3. The address to which the registered
office is to be changed is 229 South State Street,
Dover, Delaware 19901. The new address will be
effective on February 18th, 1986.
4. The names of the corporations represented
by said agent are set forth on the list annexed to this
certificate and made a part hereof by reference.
IN WITNESS WHEREOF, said agent has caused
this certificate to be signed on its behalf by its Vice
President and Secretary this 13th day of February,
1986.
UNITED STATES CORPORATION COMPANY
/s/ Dennis E. Howarth
_____________________________________
Dennis E. Howarth
Vice President
ATTEST:
/s/ Grant Dawson
________________________________
Grant Dawson
Secretary
D20X1805 03/20/86 PAGE: 182
STATE OF DELAWARE - DIVISION OF CORPORATIONS
CHANGE OF ADDRESS FILING FOR
UNITED STATES CORP. AS OF FEBRUARY 14, 1986
**DOMESTIC**
0934914 FISCHER IMAGING MIDWEST, INC. 04/01/1982 D DE
0934915 LEAWOOD CORPORATION 04/01/1982 D DE
0934916 RUBLOFF PROPERTIES, INC. 04/01/1982 D DE
0934920 CHRYTEX INDUSTRIALS CORP. 04/01/1982 D DE
0934939 NEWREEVECO, INC. 04/01/1982 D DE
0934973 HERZOG INC. 04/02/1982 D DE
0934974 REFRIGERATED WAREHOUSE INVESTMENTS HOLDING CORPORATION 04/02/1982 D DE
0934975 GIESECKE & DEVRIENT SECURITY SYSTEMS, INC. 04/02/1982 D DE
0934976 OCEAN CAPITAL CORPORATION 04/02/1982 D DE
0934977 UNIFRIDGE HOLDING CORPORATION 04/02/1982 D DE
0934978 DAUTEL AMERICA CORP. 04/02/1982 D DE
0935023 DIAMOND INTERNATIONAL CORPORATION 04/02/1982 D DE
0935036 NABISCO BRANDS (U.K.) LIMITED 04/05/1982 D DE
0935058 AMERICAN AUTO SOUND, INC. 04/05/1982 D DE
0935059 NATIONAL TELECOM, INC. 04/05/1982 D DE
0935060 OXFORD (HOLDING) INC. 04/05/1982 D DE
0935064 THEODORE M. SCHWARTZ AND ASSOCIATES, INC. 04/05/1982 D DE
0935086 SUNTREE PRODUCTIONS, LTD. 04/05/1982 D DE
0935099 AMERICAN SCIENTIFIC CORPORATION 04/05/1982 D DE
0935116 MINERTECH, INC. 04/06/1982 D DE
0935229 SWISS CHALET HOLDINGS INC. 04/07/1982 D DE
0935242 TLC YACHTING, INC. 04/07/1982 D DE
0935286 PHOENIX CORPORATION OF AMERICA 04/08/1982 D DE
0935288 MAJOLAJO INC. 04/08/1982 D DE
0935328 WOODRUN MANAGEMENT CORPORATION 04/08/1982 D DE
0935329 ASTRA MARITIME AGENCIES, LTD. 04/08/1982 D DE
0935331 NORTON MANAGEMENT, INC. 04/08/1982 D DE
0935332 METRO-CAMMELL U.S.A., INC. 04/08/1982 D DE
0935333 DOLIN REALTY CORP. 04/08/1982 D DE
0935354 COUNCIL TRAVEL SERVICES, INC. 04/12/1982 D DE
0935377 TIMEX COMPUTER CORPORATION 04/12/1982 D DE
0935404 GRAPHIC PACKAGING CORPORATION 04/12/1982 D DE
0935414 NEW COURT AMERICAN PROPERTY FUND, INC. 04/12/1982 D DE
0935420 MCI CELLULAR TELEPHONE COMPANY 04/12/1982 D DE
0935429 DEVIL'S DEN CHARTERERS, INC. 04/12/1982 D DE
0935462 OPEN ROAD PRODUCTIONS, INC. 04/13/1982 D DE
0935463 SAATCHI & SAATCHI COMPTON WORLDWIDE, INC. 04/13/1982 D DE
0935464 SAATCHI & SAATCHI HOLDINGS (USA), INC. 04/13/1982 D DE
0935519 AMFO, INC. 04/13/1982 D DE
0935521 TRANSMARKET CAPITAL CORP. 04/13/1982 D DE
0935531 GRAPHIC ARTS SHOW COMPANY, INC. 04/13/1982 D DE
0935586 SCHERING BIOTECH CORPORATION 04/14/1982 D DE
0935588 EXECUTAIR SALES & LEASING, INC. 04/14/1982 D DE
0935589 ESTHECONSULT INC. 04/14/1982 D DE
0935590 WORLD RESOURCES INSTITUTE 04/14/1982 D DE
0935604 CONSOLIDATED CREDIT CORPORATION 04/14/1982 D DE
0935638 INTERNATIONAL THOMSON COMMUNICATIONS INC. 04/15/1982 D DE
State of Delaware
Office of Secretary of State
____________________________
I, MICHAEL RATCHFORD, SECRETARY OF STATE OF THE STATE OF
DELAWARE DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT
COPY OF THE CERTIFICATE OF MERGER OF DELAWARE CORPORATIONS OF
"NEWREEVECO, INC." FILED IN THIS OFFICE ON THE SIXTH DAY OF MAY,
A.D. 1986, AT 12 O'CLOCK P.M.
* * * * * * * * * *
/s/ Michael Ratchford
__________________________________
SECRETARY OF STATE
AUTHENTICATION: *3368891
DATE: 03/04/1992
CERTIFICATE OF MERGER
OF
SCHICK ACQUISITION CORP.
INTO
NEWREEVECO, INC.
-------------------------------------------
Pursuant to Section 251(c) of the General
Corporation Law of the State of Delaware
-------------------------------------------
NEWREEVECO, INC., a Delaware corporation, hereby certifies
as follows:
FIRST: The name and state of incorporation of each of the
constituent corporations is as follows:
Name State of Incorporation
Newreeveco, Inc. Delaware
Schick Acquisition Corp. Delaware
SECOND: An Agreement of Merger dated March 6, 1986, among
Schick Acquisition Corp., Schick Incorporated and Newreeveco, Inc.
(the "Merger Agreement") has been approved and adopted by written
consent (with delivery of written notice of the taking of such
action without a meeting by less than unanimous written consent to
those stockholders who did not thereby consent in writing) in
accordance with Section 228 of the General Corporation Law of the
State of Delaware, and executed, acknowledged and certified by
each of the constituent corporations in accordance with Section
251(c) of the General Corporation Law of the State of Delaware.
THIRD: The name of the surviving corporation is Newreeveco,
Inc. (the "Surviving Corporation").
FOURTH: Article Fourth of the Restated Certificate of
Incorporation of Newreeveco, Inc. shall be amended at the
effective time of the merger to read as follows:
FOURTH: Number of Shares. The total number of shares
of capital stock which the corporation shall have authority
to issue is 270,000 shares, classified as follows:
(1) 20,000 shares of Common Stock, par value $.Ol
per share (hereinafter called the "Common Stock").
(2) 250,000 shares of Preferred Stock, par value
$1.00 per share (hereinafter called the "Preferred
Stock"). The Preferred Stock may be divided into such
number of series as the Board of Directors of this
corporation may determine. The Board of Directors of
this corporation is authorized to determine and alter
the rights, preferences, privileges and restrictions
granted to and imposed upon any wholly unissued series
of Preferred Stock, and to fix the number of shares of
any such series of Preferred Stock and the designation
of any such series of Preferred Stock. The Board of
Directors, within the limits and restrictions stated in
any resolution or resolutions of the Board of Directors
originally fixing the number of shares constituting any
series, may increase or decrease (but not below the
number of shares of such series then outstanding) the
number of shares of any series subsequent to the issue
of shares of that series.
FIFTH: An executed copy of the Merger Agreement is on file
at the principal place of business of the Surviving Corporation,
P.O. Box 1898, Spartanburg, South Carolina 29304, and a copy of
the Merger Agreement will be furnished by the Surviving
Corporation, on request and without cost, to any stockholder of
either constituent corporation.
IN WITNESS WHEREOF, Newreeveco, Inc. has caused this
Certificate of Merger to be executed in its corporate name by its
Vice President and attested by its Secretary this 6th day of May,
1986.
NEWREEVECO, INC.
By /s/ Daniel H. Kahrs
_____________________________
Vice President
Attest:
/s/ George E. Moseley
___________________________________
Secretary
State of Delaware
Office of Secretary of State
_______________________
I, MICHAEL RATCHFORD, SECRETARY OF STATE OF THE STATE OF
DELAWARE DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY
OF THE CERTIFICATE OF AMENDMENT OF "NEWREEVECO, INC." FILED IN
THIS OFFICE ON THE TWENTY-THIRD DAY OF OCTOBER, A.D. 1986, AT 9
O'CLOCK A.M.
* * * * * * * * * *
/s/ Michael Ratchford
_________________________________
SECRETARY OF STATE
AUTHENTICATION: *3368892
DATE: 03/04/1992
CERTIFICATE OF AMENDMENT
OF THE
RESTATED CERTIFICATE OF INCORPORATION
OF
NEWREEVECO, INC.
Pursuant to Sections 242 and 228 of the
General Corporation Law of the
State of Delaware
* * * * * * * * * *
NEWREEVECO, INC., a corporation organized and existing under
and by virtue of the General Corporation Law of the State of
Delaware (the "Corporation") DOES HEREBY CERTIFY:
FIRST: That the Restated Certificate of Incorporation of the
Corporation is amended by adding a new Article SEVENTH to read in
its entirety as follows:
SEVENTH: A director of this corporation shall under no
circumstances have any personal liability to the corporation
or its stockholders for monetary damages for breach of
fiduciary duty as a director except for those specific
breaches and acts or omissions with respect to which the
Delaware General Corporation Law expressly provides that this
provision shall not eliminate or limit such personal
liability of directors.
SECOND: That the foregoing amendment has been duly adopted
in accordance with the provisions of Section 242 of the General
Corporation Law of the State of Delaware and by the written
consent of holders of the majority of each class of outstanding
stock of the Corporation entitled to vote thereon in accordance
with the provisions of Section 228 of the General Corporation Law
of the State of Delaware.
THIRD: That written notice has been given to those
stockholders who have not consented in writing to the foregoing
amendment in accordance with the provisions of Section 228 of the
General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, said NEWREEVECO, INC. has caused this
certificate to be signed by J. E. Reeves, Jr., its President and
attested by George E. Moseley, its Secretary, this 17th day of
September, 1986.
ATTEST: NEWREEVECO, INC.
/s/ George E. Moseley By: /s/ J. E. Reeves, Jr.
________________________ ________________________________
George E. Moseley J. E. Reeves, Jr.
Secretary President
737.AO81
State of Delaware
Office of Secretary of State
___________________________
I, MICHAEL RATCHFORD, SECRETARY OF STATE OF THE STATE OF
DELAWARE DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY
OF THE CERTIFICATE OF MERGER OF DELAWARE CORPORATIONS OF
"NEWREEVECO, INC." FILED IN THIS OFFICE ON THE THIRTIETH DAY OF
MARCH, A.D. 1988, AT 11:45 O'CLOCK A.M.
* * * * * * * * * *
/s/ Michael Ratchford
___________________________________
SECRETARY OF STATE
AUTHENTICATION: *3368893
DATE: 03/04/1992
CERTIFICATE OF MERGER
OF
A.R.A. MANUFACTURING COMPANY OF DELAWARE, INC.
INTO
NEWREEVECO, INC.
_________________________
Pursuant to Section 251(c) of the General Corporation Law
of the State of Delaware
_________________________
Newreeveco, Inc., a corporation formed under the laws of the
State of Delaware, which desires to merge A.R.A. Manufacturing
Company of Delaware, Inc., a corporation formed under the laws of
the State of Delaware, into Newreeveco, Inc. pursuant to the
provisions of Section 251(c) of the General Corporation Law of the
State of Delaware, DOES HEREBY CERTIFY as follows:
FIRST: The name and state of incorporation of each of the
constituent corporations are as follows:
Name State of Incorporation
A.R.A. Manufacturing Company Delaware
of Delaware, Inc.
Newreeveco, Inc. Delaware
SECOND: A Plan and Agreement of Merger dated as of March 30,
1988 (the "Merger Agreement"), between Newreeveco, Inc. and A.R.A.
Manufacturing Company of Delaware, Inc. (together called the
"Constituent Corporations"), has been approved, adopted,
certified, executed and acknowledged by each of the Constituent
Corporations in accordance with Section 251(c) of the General
Corporation Law of the State of Delaware.
THIRD: The name of the surviving corporation is Newreeveco,
Inc.
FOURTH: The Restated Certificate of Incorporation of
Newreeveco, Inc., which was filed in the Office of the Secretary
of State of Delaware on June 25, 1982, and subsequently duly
recorded, is hereby amended, pursuant to the Merger Agreement, as
follows: By striking out the whole of Article FOURTH thereof as
it now exists and inserting in lieu thereof a new Article FOURTH,
providing as follows:
FOURTH: (a) The total number of shares of all classes
of stock which the Corporation shall have authority to issue
is Thirty Million Two Hundred Fifty Thousand (30,250,000)
shares consisting of Two Hundred Fifty Thousand (250,000)
shares of Preferred Stock having a par value of one dollar
($1.00) per share (hereinafter called "Preferred Stock") and
Thirty Million (30,000,000) shares of Common Stock having a
par value of one cent ($.01) per share (hereinafter called
"Common Stock").
(b) The following is a statement of the
designations and the powers, preferences and rights, and the
qualifications, limitations or restrictions thereof, in
respect of the classes of stock of the Corporation, and of
the authority with respect thereto expressly vested in the
Board of Directors of the Corporation.
The Preferred Stock may be issued from
time to time in one or more series, the shares of each series
to have such designations, preferences, voting rights and
relative, participating, optional or other special rights,
and qualifications, limitations or restrictions thereof, as
are stated and expressed herein and in a resolution or
resolutions providing for the issue of such series, adopted
by the Board of Directors.
Authority is hereby expressly granted to
the Board of Directors to authorize the issue of one or more
series of Preferred Stock, and with respect to each such
series to fix by resolution or resolutions providing for the
issue of such series, the designations, preferences and
relative, participating, optional or other special rights, if
any, including voting, redemption and convertibility
features, and qualifications, limitations or restrictions
thereof.
(c) The holders of Common Stock shall be
entitled to receive such dividends as may be declared and
deemed by the Board of Directors of the Corporation payable
out of funds legally available therefor except that any
dividends payable in Common Stock of the Corporation shall be
payable pro rata to all holders of Common Stock. Subject to
the prior rights of any shares of Preferred Stock, the
holders of Common Stock shall have one vote for each share of
Common Stock.
(d) The number of authorized shares of any
class or classes of stock of the Corporation may be increased
or decreased (but not below the number of shares thereof then
outstanding) by the affirmative vote of the holders of a
majority of the stock of the Corporation entitled to vote.
FIFTH: The executed Merger Agreement is on file at the
principal place of business of Newreeveco, Inc. located at Highway
29 South, Spartanburg, South Carolina 29304.
SIXTH: A copy of the Merger Agreement will be furnished by
Newreeveco, Inc., on request and without cost, to any stockholder
of either of the Constituent Corporations.
IN WITNESS WHEREOF, Newreeveco, Inc. has caused Certificate
of Merger to be signed by Steven W. Hart, its Vice President, and
attested by James W. Hart, Jr., its Assistant Secretary, this
30th day of March, 1988.
NEWREEVECO, INC.
By: /s/ Steven W. Hart
_____________________________
Steven W. Hart
Vice President
ATTEST:
By: /s/ James W. Hart, Jr.
________________________________
James W. Hart, Jr.
Assistant Secretary
State of Delaware
Office of Secretary of State
I, MICHAEL RATCHFORD, SECRETARY OF STATE OF THE STATE OF
DELAWARE DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY
OF THE CERTIFICATE OF STOCK DESIGNATION OF "NEWREEVECO, INC."
FILED IN THIS OFFICE ON THE THIRTIETH DAY OF MARCH, A.D. 1988, AT
11:46 O'CLOCK A.M.
* * * * * * * * * *
/s/ Michael Ratchford
_________________________________
SECRETARY OF STATE
AUTHENTICATION: *3368894
DATE: 03/04/1992
CERTIFICATE
DESIGNATING SERIES I PREFERRED STOCK
OF
NEWREEVECO, INC.
Pursuant to Section 151(g) of the
Delaware General Corporation Law
_________________________________
NEWREEVECO, INC., a Delaware corporation (the "Corpora-
tion"), by its Vice President and Assistant Secretary, DOES HEREBY
CERTIFY:
That pursuant to authority granted to the Board of
Directors by Article FOURTH of the Restated Certificate of In-
corporation, as amended, the Board of Directors of the
Corporation, acting pursuant to unanimous written consent, duly
adopted the following resolution creating a series of Preferred
Stock designated as "Series I Preferred Stock".
RESOLVED, there is hereby established and
designated one series of the Corporation's Preferred
Stock, designated Series I (the "Shares") , which shall
consist of one thousand (1,000) shares and which shall
have rights, preferences and limitations as follows:
1. The holders of Shares shall have no voting
rights, except as required by law.
2. The holders of record of Shares shall, upon
declaration of the Board of Directors of the Corporation
setting forth both the record date and payment date, be
entitled to receive on such payment date, in the
aggregate as a series, and before any dividends or other
distributions shall be made to the holders of any series
or class of the Common Stock, whether previously or
hereinafter designated by the Board of Directors of the
Corporation, or any series or class of the Preferred
Stock designated by the Board of Directors of the
Corporation after the date hereof, cumulative dividends
("Preferred Dividends") as indicated in the following
schedule:
On or before Amount
November 7, 1988 $5,040,000
November 7, 1989 960,000
November 7, 1990 900,000
November 7, 1991 840,000
November 7, 1992 780,000
November 7, 1993 720,000
November 7, 1994 660,000
TOTAL $9,900,000
The amount paid to the holders of Shares by the Corporation for any
repurchase or redemption thereof, which repurchase or redemption
shall be in the discretion of the Board of Directors of the
Corporation, shall be deducted from the amount of Preferred
Dividends to be paid hereafter pursuant to this Paragraph 2. After
November 7, 1994, the holders of Shares shall not have any dividend
rights, except to the extent of any cumulated unpaid Preferred
Dividends.
3. In the event of liquidation, dissolution, distribution of
the assets of or winding up of the Corporation, whether voluntary or
involuntary, the holders of Shares shall be entitled to receive, out
of the assets of the Corporation (whether from capital or surplus or
both) in the aggregate as a series, before any distribution shall be
made to the holders of any series or class of the Common Stock
whether previously or hereinafter designated by the Board of
Directors of the Corporation, or any series or class of any
Preferred Stock designated by the Board of Directors of the
Corporation after the date hereof, a liquidation preference of
$5,000,000, reduced by the amount shown in the following schedule
for the period in which such liquidation, dissolution, distribution
of assets of or winding up of the Corporation occurs:
For the year beginning Amount
November 7, 1988 $1,770,000
November 7, 1989 2,280,000
November 7, 1990 2,800,000
November 7, 1991 3,330,000
November 7, 1992 3,870,000
November 7, 1993 4,430,000
November 7, 1994 5,000,000
provided that, if for any period set forth above, the Corporation
has not paid to holders of the Shares all Preferred Dividends
required to be paid by virtue of Paragraph 2 hereof due prior to
such distribution, then and in that event, the liquidation
preference herein granted shall be increased by the aggregate amount
of the Preferred Dividends accumulated and not paid.
If, upon such liquidation, dissolution, distribution of the assets
of or winding up of the Corporation, the assets of the Corporation
(from capital and surplus) shall be insufficient to permit payment
in full to the holders of the Shares of the amount distributable to
them as aforesaid, then the entire assets of the Corporation (both
capital and surplus) shall be distributed ratably among the holders
of the Shares to the exclusion of the holders of any series or class
of the Common Stock, whether previously or hereinafter designated by
the Board of Directors of the Corporation, and the holders of any
other series or class of the Preferred Stock designated by the Board
of Directors of the Corporation after the date hereof. The
foregoing provisions of this Paragraph 3 shall not, however, be
deemed to require the distribution of assets among the holders of
the Shares of any other series or class of the Preferred Stock or
the Common Stock in the event of a consolidation, merger, lease or
sale of substantially all the assets, which does not in fact result
in the liquidation or winding up of the business of this
Corporation.
After payment of all of the Preferred Dividends set forth in
Paragraph 2 hereof, the holders of Shares shall not have any rights
to distribution upon liquidation, dissolution, distribution of the
assets of or winding up of the Corporation. The Shares may be
redeemed at any time by the Corporation at a redemption price equal
to $1.00 per Share, plus the remaining aggregate amount of Preferred
Dividends unpaid at the date of redemption.
4. The payment of any dividend by the Corporation upon,
or the redemption or repurchase by the Corporation of, any Shares as
set forth above shall be made to the holder of record of the Shares
as of the record date or on the date for payment set forth by
resolution of the Board of Directors in their discretion and funds
for any such purpose shall be reserved and set aside in each
instance only at such record date upon the express resolution of the
Corporation's Board of Directors and shall be subject to any
restriction with respect to such dividends or other payments
contained in all loan agreements, debentures, indentures or other
agreements entered into by the Corporation. Nothing contained
herein or in any agreement or instrument of the Corporation, any
affiliate of the Corporation or the holder of the Shares shall be
deemed to require the payment of the Preferred Dividends or to
require repurchase or redemption of the Shares.
IN WITNESS WHEREOF, NEWREEVECO, INC. has caused this
Certificate to be executed by its Vice President and attested by
its Assistant Secretary this 30th day of March, 1988.
NEWREEVECO, INC.
By: /s/ Steven W. Hart
_____________________________
Steven W. Hart
Vice President
ATTEST:
/s/ James W. Hart, Jr.
___________________________________
James W. Hart, Jr.
Assistant Secretary
State of Delaware
Office of Secretary of State
___________________________
I, MICHAEL RATCHFORD, SECRETARY OF STATE OF THE STATE OF
DELAWARE DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY
OF THE CERTIFICATE OF AMENDMENT OF "NEWREEVECO, INC." FILED IN THIS
OFFICE ON THE THIRD DAY OF JUNE, A.D. 1988, AT 10 O'CLOCK A.M.
* * * * * * * * * *
/s/ Michael Ratchford
___________________________________
SECRETARY OF STATE
AUTHENTICATION: *3368895
DATE: 03/04/1992
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF NEWREEVECO, INC.
Pursuant to Section 242
of the General Corporation Law
of the State of Delaware
* * * * * * * * * *
Newreeveco, Inc., a corporation organized and existing under
and by virtue of the General Corporation Law of the State of
Delaware (the "Corporation"),
DOES HEREBY CERTIFY:
FIRST: That ARTICLE FIRST of the Restated Certificate of
Incorporation which states the Corporation's name is amended to read
in full as follows:
"FIRST: The name of the Corporation is Reeves
Industries, Inc."
SECOND: That the aforesaid amendment was duly adopted in
accordance with the provisions of Section 242 of the General
Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, said Newreeveco, Inc. has caused this
certificate to be signed by James W. Hart, its President, and
attested by James W. Hart, Jr., its Assistant Secretary, this 3rd
day of June, 1988.
NEWREEVECO, INC.
By /s/ James W. Hart
_______________________
James W. Hart
President
ATTEST:
/s/ James W. Hart, Jr.
________________________________
James W. Hart, Jr.
Assistant Secretary
State of Delaware
Office of Secretary of State
_________________________
I, MICHAEL RATCHFORD, SECRETARY OF STATE OF THE STATE OF
DELAWARE DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY
OF CERTIFICATE OF CHANGE OF ADDRESS OF REGISTERED AGENT AS IT
APPLIES TO "REEVES INDUSTRIES, INC." AS RECEIVED AND FILED IN THIS
OFFICE ON THE TWENTY-SEVENTH DAY OF OCTOBER, A.D. 1989, AT 4:30
O'CLOCK P.M.
* * * * * * * * * *
/s/ Michael Ratchford
___________________________
SECRETARY OF STATE
AUTHENTICATION: *3368896
DATE: 03/04/1992
D20x1805 10/28/89
STATE OF DELAWARE - DIVISION OF CORPORATIONS
CHANGE OF ADDRESS FILING FOR
UNITED STATES CORPORATION COMPANY, AS OF OCTOBER 27, 1989
** DOMESTIC **
0933884 WINDY CITY INC. 03/17/1982 D DE
0933970 I. O. B. LIMITED 03/18/1982 D DE
0933971 WOMEN'S FUNDING COALITION, INC. 03/18/1982 D DE
0933972 CLEVELAND PRECISION TOOL HOLDER COMPANY 03/18/1982 D DE
0934029 GELBER GROUP, INC. 03/18/1982 D DE
0934030 TECHNOLOGY CENTERS INTERNATIONAL, INC. 03/18/1982 D DE
0934052 POSNER INDUSTRIES, INC. 03/19/1982 D DE
0934054 SILVERMAN MACHINES INTERNATIONAL, LTD. 03/19/1982 D DE
0934056 DIGITAL DESIGN INC. 03/19/1982 D DE
0934191 FEDERAL SIGNAL CREDIT CORPORATION 03/22/1982 D DE
0934210 WORLD COURIER GROUP, INC. 03/22/1982 D DE
0934410 CHICAGO METROPOLITAN COMPUTERS, INC 03/24/1982 D DE
0934461 LJIC COMPUTER SERVICES CORPORATION 03/25/1982 D DE
0934506 LIT AMERICA, INC. 03/25/1982 D DE
0934507 NATIONAL GATE CONSTRUCTION COMPANY 03/25/1982 D DE
0934527 MECATEC, INC. 03/26/1982 D DE
0934614 PEGASUS ASSOCIATES, INC. 03/29/1982 D DE
0934685 CORNELL OIL & GAS COMPANY 03/29/1982 D DE
0934709 NEWCITY COMMUNICATIONS OF SYRACUSE, INC. 03/30/1982 D DE
0934712 S. L. PRODUCTIONS, INC. 03/30/1982 D DE
0934715 GOLD STANDARD BAKING, INC. 03/30/1982 D DE
0934721 VENMARK, LTD. 03/30/1982 D DE
0934876 DIAMOND LANDS CORPORATION 03/31/1982 D DE
0934914 FISHCER IMAGING MIDWEST, INC. 04/01/1982 D DE
0934920 CHRYTEX INDUSTRIALS CORP. 04/01/1982 D DE
0934939 REEVES INDUSTRIES, INC. 04/01/1982 D DE
0934973 HERZOG INC. 04/02/1982 D DE
0934974 REFRIGERATED WAREHOUSE INVESTMENTS HOLDING CORPORATION 04/02/1982 D DE
0934975 GIESECKE & DEVRIENT SECURITY SYSTEMS, INC. 04/02/1982 D DE
0934976 OCEAN CAPITAL CORPORATION 04/02/1982 D DE
0934977 UNIFRIDGE HOLDING CORPORATION 04/02/1982 D DE
0934978 DAUTEL AMERICA CORP. 04/02/1982 D DE
0935023 DIAMOND INTERNATIONAL CORPORATION 04/02/1982 D DE
0935036 NABISCO BRANDS (U.K.) LIMITED 04/05/1982 D DE
0935058 AMERICAN AUTO SOUND, INC. 04/05/1982 D DE
0935060 OXFORD (HOLDING) INC. 04/05/1982 D DE
0935086 MARION-FUNT ORGANIZATION, INC. 04/05/1982 D DE
0935229 SWISS CHALLET HOLDINGS INC. 04/07/1982 D DE
0935286 PHOENIX CORPORATION OF AMERICA 04/08/1982 D DE
0935328 WOODRUN MANAGEMENT CORPORATION 04/08/1982 D DE
0935332 METRO-CAMMELL U.S.A., INC. 04/08/1982 D DE
0935333 DOLIN REALTY CORP. 04/08/1982 D DE
0935354 COUNCIL TRAVEL SERVICES, INC. 04/12/1982 D DE
0935377 TIMEX COMPUTER CORPORATION 04/12/1982 D DE
0935414 NEW COURT AMERICAN PROPERTY FUND, INC. 04/12/1982 D DE
0935462 OPEN ROAD PRODUCTIONS, INC. 04/13/1982 D DE
0935463 SAATCHI & SAATCHI COMPTON WORLDWIDE, INC. 04/13/1982 D DE
CERTIFICATE OF CHANGE OF ADDRESS OF
REGISTERED OFFICE AND OF REGISTERED AGENT
PURSUANT TO SECTION 134 OF TITLE 8 OF THE DELAWARE CODE
TO: DEPARTMENT OF STATE
Division of Corporations
Townsend Building
Federal Street
Dover, Delaware 19903
Pursuant to the provisions of Section 134 of Title 8 of
the Delaware Code, the undersigned Agent for service of process, in
order to change the address of the registered office of the
corporations for which it is registered agent, hereby certifies
that:
1. The name of the agent is United States Corporation
Company.
2. The address of the old registered office was 229 South
State Street, Dover, Kent County, Delaware 19901.
3. The address to which the registered office is to be
changed is 32 Loockerman Square, Suite L-100, Dover, Kent County,
Delaware 19901. The new address will be effective on October 27,
1989.
4. The names of the corporations represented by said
agent are set forth on the list annexed to this certificate and
made a part hereof by reference.
IN WITNESS WHEREOF, said agent has caused this certificate
to be signed on its behalf by its Vice President and Assistant
Secretary this 10th day of October 1989.
UNITED STATES CORPORATION COMPANY
/s/ Alan E. Spiewak
_________________________________
Alan Spiewak, Vice President
ATTEST:
State of Delaware
Office of Secretary of State
_________________________
I, MICHAEL RATCHFORD, SECRETARY OF STATE OF THE STATE OF
DELAWARE DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY
OF THE CERTIFICATE OF STOCK DESIGNATION OF "REEVES INDUSTRIES,
INC." FILED IN THIS OFFICE ON THE EIGHTH DAY OF NOVEMBER, A.D.
1989, AT 4:30 O'CLOCK P.M.
* * * * * * * * * *
/s/ Michael Ratchford
SECRETARY OF STATE
AUTHENTICATION: *3368897
DATE: 03/04/19
AMENDED CERTIFICATE
DESIGNATING SERIES I PREFERRED STOCK
OF
REEVES INDUSTRIES, INC.
____________________
Pursuant to Section 151(g) of the
Delaware General Corporation Law
____________________
REEVES INDUSTRIES, INC., a Delaware corporation (the
"Corporation"), by its Vice President and Assistant Secretary, DOES
HEREBY CERTIFY:
FIRST: That pursuant to authority granted to the Board of
Directors by Article FOURTH of the Restated Certificate of
Incorporation, as amended, the Board of Directors of the
Corporation, acting pursuant to unanimous written consent, duly
adopted the following resolution amending the series of Preferred
Stock heretofore designated as "Series I Preferred Stock".
RESOLVED, that, effective upon receipt of the approval of
the holders of a majority of each class of outstanding
capital stock of the Corporation entitled to vote thereon,
the resolution adopted by this Board of Directors on March
29, 1988 creating the Series I Preferred Stock be, and it
hereby is, amended by deleting paragraphs 2 and 3 thereof
in their entirety and inserting in lieu thereof:
"2. The holders of record of Shares shall, upon
declaration of the Board of Directors of the Corporation
setting forth both the record date and payment date, be
entitled to receive on such payment date, in the aggregate
as a series, and before any dividends or other
distributions shall be made to the holders of any series
or class of the Common Stock, whether previously or
hereinafter designated by the Board of Directors of the
Corporation, or any series or class of the Preferred Stock
designated by the Board of Directors of the Corporation
after the date hereof, cumulative dividends ("Preferred
Dividends") as indicated in the following schedule:
On or before Amount
June 30, 1990 $6,000,000
November 7, 1990 900,000
November 7, 1991 840,000
November 7, 1992 780,000
November 7, 1993 720,000
November 7, 1994 660,000
TOTAL $9,900,000
The amount paid to the holders of Shares by the
Corporation for any repurchase or redemption thereof,
which repurchase or redemption shall be in the discretion
of the Board of Directors of the Corporation, shall be
deducted from the amount of Preferred Dividends to be paid
hereafter pursuant to this Paragraph 2. After November 7,
1994, the holders of Shares shall not have any dividend
rights, except to the extent of any cumulated unpaid
Preferred Dividends.
3. In the event of liquidation, dissolution,
distribution of the assets of or winding up of the
Corporation, whether voluntary or involuntary, the holders
of Shares shall be entitled to receive, out of the assets
of the Corporation (whether from capital or surplus or
both) in the aggregate as a series, before any
distribution shall be made to the holders of any series or
class of the Common Stock, whether previously or
hereinafter designated by the Board of Directors of the
Corporation, or any series or class of any Preferred Stock
designated by the Board of Directors of the Corporation
after the date hereof, a liquidation preference of
$5,000,000, reduced by the amount shown in the following
schedule for the period in which such liquidation,
dissolution, distribution of assets of or winding up of
the Corporation occurs:
For the period beginning Amount
June 30, 1990 $2,280,000
For the year beginning
November 7, 1990 2,800,000
November 7, 1991 3,330,000
November 7, 1992 3,870,000
November 7, 1993 4,430,000
November 7, 1994 5,000,000
provided that, if for any period set forth above, the Corporation
has not paid to holders of the Shares all Preferred Dividends
required to be paid by virtue of Paragraph 2 hereof due prior to
such distribution, then and in that event, the liquidation
preference herein granted shall be increased by the aggregate amount
of the Preferred Dividends accumulated and not paid.
If, upon such liquidation, dissolution, distribution of the assets
of or winding up of the Corporation, the assets of the Corporation
(from capital and surplus) shall be insufficient to permit payment
in full to the holders of the Shares of the amount distributable to
them as aforesaid, then the entire assets of the Corporation (both
capital and surplus) shall be distributed ratably among the holders
of the Shares to the exclusion of the holders of any series or class
of the Common Stock, whether previously or hereinafter designated by
the Board of Directors of the Corporation and the holders of any
other series or class of the Preferred Stock designated by the Board
of Directors of the Corporation after the date hereof. The
foregoing provisions of this Paragraph 3 shall not, however, be
deemed to require the distribution of assets among the holders of
the Shares of any other series or class of the Preferred Stock or
the Common Stock in the event of a consolidation, merger, lease or
sale of substantially all the assets, which does not in fact result
in the liquidation or winding up of the business of this
Corporation.
After payment of all of the Preferred Dividends set forth in
Paragraph 2 hereof, the holders of Shares shall not have any rights
to distribution upon liquidation, dissolution, distribution of the
assets of or winding up of the Corporation. The Shares may be
redeemed at any time by the Corporation at a redemption price equal
to $1.00 per Share, plus the remaining aggregate amount of Preferred
Dividends unpaid at the date of redemption."
SECOND: The holders of record of all shares of each
class of the outstanding capital stock of the Corporation entitled
to vote thereon have consented to the foregoing amendment to the
Series I Preferred Stock by written consent dated as of November 3,
1989.
IN WITNESS WHEREOF, REEVES INDUSTRIES, INC. has caused
this Certificate to be executed by its Vice President and attested
by its Assistant Secretary this 6th day of November, 1989.
REEVES INDUSTRIES, INC.
By: /s/ Steven W. Hart
_____________________________
Steven W. Hart
Vice President
ATTEST:
/s/ James W. Hart, Jr.
___________________________________
James W. Hart, Jr.
Assistant Secretary
State of Delaware
Office of Secretary of State
____________________
I, MICHAEL RATCHFORD, SECRETARY OF STATE OF THE STATE OF
DELAWARE DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY
OF THE CERTIFICATE OF AMENDMENT OF "REEVES INDUSTRIES, INC." FILED
IN THIS OFFICE ON THE THIRTY-FIRST DAY OF DECEMBER, A.D. 1991, AT 9
O'CLOCK A.M.
* * * * * * * * * *
/s/ Michael Ratchford
_________________________________
SECRETARY OF STATE
AUTHENTICATION: *3368898
DATE: 03/04/1992
CERTIFICATE OF AMENDMENT
OF THE
RESTATED CERTIFICATE OF INCORPORATION
OF
REEVES INDUSTRIES, INC.
Pursuant to Section 242 and 228 of the
General Corporation Law of the
State of Delaware
* * * * * * * * * *
REEVES INDUSTRIES, INC., a corporation organized and
existing under and by virtue of the General Corporation Law of the
State of Delaware (the "Corporation") DOES HEREBY CERTIFY:
FIRST: That Paragraph (a) of Article FOURTH of the
Restated Certificate of Incorporation of the Corporation is amended
to read in its entirety as follows:
FOURTH: (a) The total number of shares of all classes of
stock which the Corporation shall have authority to issue is
Fifty Million Two Hundred Fifty Thousand (50,250,000) shares
consisting of Two Hundred Fifty Thousand (250,000) shares of
Preferred Stock having a par value of one dollar ($1.00) per
share (hereinafter called "Preferred Stock") and Fifty Million
(50,000,000) shares of Common Stock having a par value of one
cent ($.Ol) per share (hereinafter called "Common Stock").
SECOND: That the foregoing amendment has been duly
adopted in accordance with the provisions of Section 242 of the
General Corporation Law of the State of Delaware and by the written
consent of holders of the majority of each class of outstanding
stock of the Corporation entitled to vote thereon in accordance with
the provisions of Section 228 of the General Corporation Law of the
State of Delaware.
THIRD: That written notice has been given to those
stockholders who have not consented in writing to the foregoing
amendment in accordance with the provisions of Section 228 of the
General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, said REEVES INDUSTRIES, INC. has
caused this certificate to be signed by Steven W. Hart, its Vice
President, and attested by David L. Dephtereos, its Secretary, this
31st day of December, 1991.
ATTEST: REEVES INDUSTRIES, INC.
/s/ David L. Dephtereos By: /s/ Steven W. Hart
____________________________ _______________________________
David L. Dephtereos Steven W. Hart
Secretary Vice President
State of Delaware
Office of the Secretary of State
I, WILLIAM T. QUILLEN, SECRETARY OF STATE OF THE STATE OF
DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT
COPY OF THE CERTIFICATE OF MERGER OF "HHCI, INC." MERGING WITH
AND INTO "REEVES INDUSTRIES, INC." UNDER THE NAME OF "REEVES
INDUSTRIES, INC." AS RECEIVED AND FILED IN THIS OFFICE THE
TWENTY-FIFTH DAY OF OCTOBER, A.D. 1993, AT 9:30 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO
THE APPROPRIATE COUNTY RECORDER OF DEEDS ON THE TWENTY-FIFTH DAY
OF OCTOBER, A.D. 1993 FOR RECORDING.
* * * * * * * * * *
/s/ William T. Quillen
William T. Quillen, Secretary of State
AUTHENTICATION: *4115150
DATE: 10/25/1993
932985084
CERTIFICATE OF MERGER
of
HHCI, INC.
into
REEVES INDUSTRIES, INC.
____________________
Pursuant to Section 251(c) of the General Corporation Law
of the State of Delaware
____________________
Reeves Industries, Inc., a corporation formed under the
laws of the State of Delaware, which desires to merge HHCI, Inc., a
corporation organized under the laws of the State of Delaware, into
Reeves Industries, Inc. pursuant to the provisions of Section 251(c)
of the General Corporation Law of the State of Delaware, DOES HEREBY
CERTIFY as follows:
FIRST: The name and state of incorporation of each of
the constituent corporations are as follows:
Name State of Incorporation
HHCI, Inc. Delaware
Reeves Industries, Inc. Delaware
SECOND: An Agreement and Plan of Merger dated as of October
22, 1993 (the "Agreement") between Reeves Industries, Inc. and
HHCI, Inc. (together the "Constituent Corporations") has been
approved, adopted, certified, executed and acknowledged by each of
the Constituent Corporations in accordance with Section 251(c) of
the General Corporation Law of the State of Delaware.
THIRD: The name of the surviving corporation is Reeves
Industries, Inc.
FOURTH: The Certificate of Incorporation of Reeves
Industries, Inc. shall be the certificate of incorporation of the
surviving corporation.
FIFTH: The executed Agreement is on file at the principal
place of business of Reeves Industries, Inc. at Highway 29 South,
Spartanburg, South Carolina 29304.
SIXTH: A copy of the Agreement will be furnished by Reeves
Industries, Inc., on request and without cost, to any stockholder of
either of the Constituent Corporations.
IN WITNESS WHEREOF, Reeves Industries, Inc. has caused this
Certificate of Merger to be signed by James W. Hart, its Chairman of
the Board, and attested by Jennifer H. Fray, its Secretary, this
25th day of October, 1993.
REEVES INDUSTRIES, INC.
By: /s/ James W. Hart
_______________________________
James W. Hart
Chairman of the Board
Attest:
By: /s/ Jennifer H. Fray
____________________________
Jennifer H. Fray
Secretary
SECOND AMENDMENT, dated as of December 28, 1993 (this
"Amendment"), to the Credit Agreement referred to below, among
REEVES BROTHERS, INC., a Delaware corporation (the "Company"),
REEVES INDUSTRIES, INC., a Delaware corporation (the "Parent"),
the several banks and other financial institutions from time to
time parties to the Credit Agreement referred to below (the
"Banks") and CHEMICAL BANK as agent for the Banks (in such
capacity, the "Agent").
W I T N E S S E T H:
WHEREAS, the Company, the Parent, the Agent and the
Banks are parties to the Credit Agreement, dated as of August 6,
1992 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"; terms defined in the Credit
Agreement shall have their defined meanings when used herein,
unless otherwise defined herein);
WHEREAS, the Company and the Parent have requested, and
the Banks have agreed, subject to the terms and conditions of
this Amendment, to amend subsection 7.1(a) (Maintenance of
Current Ratio) of the Credit Agreement;
NOW, THEREFORE, in consideration of the premises and
mutual agreements herein contained and for other good and
valuable consideration, the undersigned agree as follows:
1. Amendment to Subsection 7.l(a) (Maintenance of
Current Ratio). Subsection 7.1(a) of the Credit Agreement is
hereby amended by deleting clause (ii) thereof in its entirety
and substituting in lieu thereof the following new clause (ii):
"(ii) 2.00 to 1.0 at any time thereafter."
2. Representations; No Default. On and as of the date
hereof and after giving effect to this Amendment and the
transactions contemplated hereby, each of the Company and the
Parent hereby (i) confirms, reaffirms and restates the
representations and warranties set forth in Section 4 of the
Credit Agreement, except to the extent that such representations
and warranties relate solely to an earlier date in which case
each of the Company and the Parent hereby confirms, reaffirms and
restates such representations and warranties for such earlier
date, provided that the references to the Credit Agreement
therein shall be deemed to be to the Credit Agreement as amended
by this Amendment and (ii) represents that no Default or Event of
Default has occurred and is continuing.
3. Conditions Precedent to Effectiveness. This
Amendment shall become effective on the date (the "Amendment
Effective Date") on which all of the following conditions
precedent have been satisfied or waived:
(a) the Agent shall have received counterparts of this
Amendment executed by the Company, the Parent and the Banks;
(b) each of the representations and warranties made by
the Parent and its Subsidiaries in or pursuant to this
Amendment, the Credit Agreement as amended by this Amendment
and any other Loan Document to which it is a party and the
representations of the Parent and its Subsidiaries which are
contained in any certificate, document or financial or other
statement furnished under or in connection herewith or
therewith on or before the Amendment Effective Date shall be
true and correct in all material respects on and as of the
Amendment Effective Date as if made on and as of such date
both before and after giving effect hereto;
(c) no Default or Event of Default shall have occurred
and be continuing after giving effect to this Amendment and
the transactions contemplated hereby; and
(d) all corporate and other proceedings and all other
documents and legal matters in connection with the
transactions contemplated by this Amendment shall be
reasonably satisfactory in form and substance to the Agent
and its counsel.
4. Limited Effect. Except as expressly amended,
modified, waived or supplemented hereby, the provisions of the
Credit Agreement and other Loan Documents are and shall remain in
full force and effect and any amendment, modification, waiver or
supplement contained herein shall be limited precisely as drafted
and shall not constitute an amendment, modification, waiver or
supplement of any other terms or provisions of the Credit
Agreement or any other Loan Document.
5. Counterparts. This Amendment may be signed in any
number of counterparts, each of which shall constitute an
original, and all of which taken together shall constitute a
single agreement with the same effect as if the signature thereto
and hereto were upon the same instrument.
6. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed and delivered by their respective duly
authorized officers as of the date first above written.
REEVES BROTHERS, INC.
By: /s/Richard W. Ball
Title: TREASURER
REEVES INDUSTRIES, INC.
By: /s/Richard W. Ball
Title: TREASURER
CHEMICAL BANK,
as Agent and as a Bank
By: /s/William Ewing, III
Title: MANAGING DIRECTOR
BANK OF BOSTON CONNECTICUT
By: /s/W. Lincoln Schoff
Title: VICE PRESIDENT
REEVES
REEVES INDUSTRIES, INC.
JAMES W. HART, JR. 1120 POST ROAD
PRESIDENT AND DARIEN, CT. 06820
CHIEF EXECUTIVE OFFICER (203) 655-6855
January 27, 1993
V. W. Lenoci
99 Stratford Road
Asheville, North Carolina 28804
Re: Employment Agreement
Dear Bill:
This will confirm that the Employment Agreement,
dated as of November 1, 1991, between Reeves Brothers, Inc.
and you, is amended in that Number 5, Additional Fringe
Benefits, will read as follows:
5. Financial and Tax Planning Costs up to
$10,000, including taxes.
All other terms of the Employment Agreement will remain the
same.
Please indicate your agreement to the foregoing by
executing the attached copy of this letter and returning it
to me.
Sincerely,
/s/ James W. Hart, Jr.
Agreed to:
/s/ V. W. Lenoci
V. W. Lenoci
May 18, 1993
EMPLOYMENT AGREEMENT
Vito W. Lenoci
EMPLOYMENT AGREEMENT dated as of November 1, 1991,
between REEVES BROTHERS, INC., a Delaware corporation having its
principal place of business at Highway 29 South, Post Office Box
1898, Spartanburg, S.C. 29304 (the "Employer") and Vito W. Lenoci
residing at 99 Stratford Road, Asheville, N.C. 28804 (the
"Employee").
WHEREAS, the Employer desires to obtain the services of
the Employee on the terms and conditions hereinafter stated, and
the Employee is willing to furnish his services on such terms and
conditions;
NOW, THEREFORE, the parties agree as follows:
1. Employment. The Employer hereby employs the
Employee in the position designated in Paragraph 6, and the
Employee hereby accepts such employment on the terms and
conditions hereinafter set forth.
2. Term. Subject to the provisions for earlier
termination as hereinafter provided in Paragraph 7 of this
Agreement, the term of this Agreement shall be five (5) years,
unless extended as set forth below, commencing on November 1,
1991 and ending October 31, 1996. The Term of this Agreement
shall be automatically extended for two one-year periods unless
on or before a date 120 days prior to the end of the original
termination date, or any subsequent termination date, the
Employer or Employee provides written notice to the other party
that they do not intend to extend the Agreement.
3. Compensation. For all services rendered by the
Employee under this Agreement and for the agreements of the
Employee contained in Paragraphs 8 and 9, the Employer shall
during the Employment Term compensate the Employee as follows:
(a) Base Salary. The Employer shall during the
Employment Term pay the Employee a base salary of $229,000 per
year, payable in equal semi-monthly installments on the fifteenth
and last days of each month. Such Base Salary shall be subject
to adjustments pursuant to the Employer's salary administration
program.
(b) Incentive Compensation. In addition to the
foregoing base salary, the Employee shall receive additional
compensation as provided under the Employer's Management
Incentive Bonus Plan of the Employer for its Corporate and
Divisional Officers, as in effect from time to time pursuant to
resolutions adopted by the Board of Directors of the Employer, or
any successor thereto.
4. Expenses. The Employee shall be entitled to
receive reimbursement for reasonable out-of-pocket expenses
incurred in connection with the performance of the Employee's
duties hereunder upon presentation from time to time of itemized
accounts of, and customary receipts for, such expenses.
5. Benefits. During the Employment Term, the
Employee shall receive benefits as described in Exhibit A hereto
and such other general and specific benefits which shall not be
less than those generally provided to Employees in the position
and status of Employee by the Employer on November 1, 1991. The
Employee shall be furnished office space, working facilities,
secretarial and other services and facilities suitable to his
position and adequate for the performance of his duties. The
Employee shall be entitled each year during the Employment Term
to a vacation of four weeks, during which time his compensation
will be paid in full.
6. Duties. The Employee shall be employed as
President and Chief Executive Officer of the Industrial Coated
Fabrics Division of the Employer and in such capacity as may be
determined by the Board of Directors of Employer, and shall have
the authority and powers to perform all duties as are customary
to such offices, subject to the control and direction of the
Board of Directors of the Employer. The Employee shall also
serve as a director of the Employer, Reeves Industries, Inc.
("Reeves Industries") and any of their respective subsidiaries,
if elected by the shareholders or appointed by the Board of
Directors of the particular corporation. The Employee agrees to
use his best efforts, skill and experience in connection with his
employment, shall devote faithful service, including
substantially all of his business time and attention, to such
employment and shall not engage in any activity of any nature
whatsoever which would in any way materially interfere with his
so devoting his service, business time and attention to his
duties hereunder.
7. Termination of Employment Prior to Expiration of
the Employment Term. This Agreement may be terminated prior to
the end of the Employment Term, as set forth below.
(a) Death. In the event of the Employee's death
during the Employment Term, all of the obligations of the
Employer hereunder shall be terminated as of the last day of the
month in which death occurs, except that Employer shall pay to
the Employee's estate for one year from the date of death, the
Base Salary payable to the Employee pursuant to Paragraph
3 (a) hereof (as the same may have been adjusted from time to
time).
(b) Disability. In the event that the Employee shall
be unable to perform his duties during the Employment Term by
reason of any adjudicated incompetency or permanent disability,
-2-
the Employer may, on thirty (30) days' written notice, terminate
this Agreement. Permanent disability shall have the meaning set
forth in the definition of total permanent disability (or such
term having similar import) contained in any disability insurance
policy purchased by the Employer to cover the Employee and an
Employee shall be considered permanently disabled for purposes of
this Agreement when so considered by the insurance company
obligated under such policy. In addition, regardless of whether
any such policy is in force at the applicable time, permanent
disability shall mean the inability of an Employee due to
accident or illness to perform full time active services on
behalf of the Employer (x) for a continuous one-year period or
(y) if a medical doctor shall certify to the satisfaction of the
Board of Directors of the Employer that such inability shall
continue for at least one year after the date of such accident or
illness. In the event of such termination by reason of the
Employee's illness or incapacity, the Employer shall pay to the
Employee or the Employee's estate for the shorter of (i) 215 days
from the date of termination or (ii) the remainder of the
Employment Term, the Base Salary payable to the Employee pursuant
to Paragraph 3(a) hereof (as the same may have been adjusted from
time to time). Any payment hereunder may be funded by the
Employer through disability insurance paid for by the Employer.
(c) Acts Not in the Best Interests of the Employer.
The Employer shall have the right to terminate this Agreement
upon a finding by the Employer's Board of Directors that the
Employee has acted in a manner which is not in the best interests
of the Employer. In the event of such termination by reason of
the Employee's acting in a manner which is not in the best
interests of the Employer, the Employee shall receive no
compensation or benefits (except as required by law) after the
date of termination.
(d) Right of the Employer to Terminate for Other
Reasons. The Employer shall have the right to terminate this
Agreement for any other reason in addition to those specified in
subparagraphs (a) , (b) and (c) of this Paragraph 7 upon the
giving of sixty (60) days' written notice to the Employee. In
the event of such termination by the Employer other than pursuant
to subparagraphs (a), (b) and (c) of this Paragraph 7, the
Employer shall pay to the Employee or the Employee's estate for
the remainder of the Employment Term, the Base Salary payable to
the Employee pursuant to Paragraph 3(a) hereof (as the same may
have been adjusted from time to time), reduced by an amount equal
to any compensation received during such remainder of the
Employment Term, as the case may be, by the Employee in
connection with any new employment.
(e) Right of the Employee to Terminate this Agreement.
Subject to the provisions of paragraph 8 hereof, the Employee
shall have the right to terminate this Agreement for any reason
upon the giving of sixty (60) days' written notice to the
-3-
Employer. In the event of such termination by the Employee, the
Employee shall be entitled to no further compensation or benefits
(except as required by law) under this Agreement after the date
of termination.
8. Restrictive Covenants. During the Employment Term
the Employee shall not directly or indirectly own, manage,
operate, control, be employed by, participate in, or be connected
in any manner with the ownership, management, operation or
control of any business other than the Employer or Reeves
Industries and their respective subsidiaries. The Employee may,
without being deemed to violate any provision hereof, serve
during the Employment Term on the boards of banks, charitable,
civic or social organizations and acquire not more than five
percent (5%) of the outstanding shares of publicly-held
corporations. Notwithstanding anything to the contrary herein
contained, the ownership, management, control or operation of,
employment by, participation in, or any other connection with the
ownership, management, operation or control of any business by
any member of the Employee's family shall not be deemed to cause
Employee to be in violation of any provision hereof. During a
period of one year following termination of Employee's employment
under this Agreement, the Employee shall not (i) directly or
indirectly, as employee, officer, director, stockholder, partner
or otherwise, own, manage, operate, control, be employed by,
participate in, or be connected in any manner with, the
ownership, management, operation or control of any business or
enterprise which is in competition with any business carried on,
or in active contemplation of being carried on, by the Employer,
Reeves Industries or any of their subsidiaries or affiliates at
such time; provided, however, that ownership of not more than
five percent (5%) of the outstanding shares of a publicly-held
corporation shall not be deemed to violate any provision hereof;
(ii) directly or indirectly employ, retain or negotiate with
respect to employment or retention of any person whom the
Employer, Reeves Industries, or any of their subsidiaries or
affiliates has employed or retained; or (iii) directly or
indirectly sell, offer to sell, or negotiate with respect to
orders or contracts for, any product or service similar to a
product or service now sold or offered by the Employer, Reeves
Industries, or any of their subsidiaries or affiliates to or with
anyone with whom the Employer, Reeves Industries, or any of their
subsidiaries or affiliates has so dealt. In connection with the
foregoing restrictive covenant, Employer shall continue to pay
Employee the Base Salary payable to Employee pursuant to
paragraph 3 (a) (as the same may have been adjusted from time to
time). Notwithstanding anything in the foregoing to the
contrary, the aforesaid restrictions on the Employee shall not
apply for periods after termination of employment if the
Employee's termination resulted from wrongful discharge by the
Employer or from the Employee's resignation by reason of the
Employer' s material wrongful act or material violation of this
Agreement, provided that the Employer has not cured such wrongful
-4-
discharge, wrongful act or wrongful violation within thirty (30)
days after notice thereof by the Employee. The restrictive
covenants of this paragraph shall apply for one year after
termination of employment without payment of any compensation if
Employee terminates his employment pursuant to paragraph 7(e) or
if Employee is terminated pursuant to paragraph 7 (c) . In the
event of an actual or threatened breach by the Employee of the
provisions of this paragraph, the Employer shall be entitled to
an injunction restraining the Employee from owning, managing,
operating, controlling, being employed by, participating in, or
being in any way so connected with any such business or from
soliciting employees or customers of the Employer as herein
provided. Nothing herein stated shall be construed as prohibiting
the Employer from pursuing any other remedies available to the
Employer for such breach or threatened breach, including the
recovery of damages from the Employee.
9. Disclosure of Information. The Employee
recognizes and acknowledges that the lists of the Employer's
customers, suppliers, formulas, processes and other confidential
information (collectively "Confidential Information") as they may
exist from time to time, are valuable, special, and unique assets
of the Employer's business. The Employee agrees that he will
not, during or at any time after the Employment Term,
intentionally disclose any Confidential Information, to any
person, firm, corporation, association or other entity for any
reason or purpose whatsoever, except as may be authorized by the
Employer's Board of Directors. In the event of a breach or
threatened breach by the Employee of the provisions of this
paragraph, the Employer shall be entitled to an injunction
restraining the Employee from disclosing, in whole or in part,
any Confidential Information, or from rendering any services to
any person, firm, corporation, association or other entity to
whom such Confidential Information, in whole or in part, has been
disclosed or is threatened to be disclosed. Nothing herein shall
be construed as prohibiting the Employer from pursuing any other
remedies available to the Employer for such breach or threatened
breach, including the recovery of damages from the Employee.
10. Notices. Any notice required or permitted to be
given under this Agreement shall be sufficient if in writing and
if sent by registered mail to the addresses of the parties set
forth above or to such other addresses as may subsequently be
furnished in writing by one party to the other.
11. Waivers. The waiver by either party hereto of any
breach or requirement of any provision of this Agreement by the
other party shall not operate or be construed as a waiver of any
subsequent breach or requirement by such party, whether similar
or different.
12. Assignment. The rights and obligations of the
Employer under this Agreement shall inure to the benefit of and
-5-
shall be binding upon the successors and assigns of the Employer.
In the event of merger, consolidation or liquidation of the
Employer, or in the event of a sale or transfer of substantially
all the operating assets of the Employer to any other person,
firm, corporation, association or other entity, the provisions
hereof shall inure to the benefit of, and be binding upon, the
surviving corporation or such purchaser or transferee, as the
case may be. Any assignment of this Agreement by the Employer
shall not relieve or release the Employer from any of its
obligations set forth herein.
13. Entire Agreement. This Agreement contains the
entire agreement of the parties with respect to the subject
matter hereof, and all prior and other agreements between them,
oral or written, concerning the same subject matter are merged
into this Agreement. Any prior agreement relating to the
employment of Employee by Employer is terminated as of the
effective date hereof.
14. Amendments. This Agreement may not be amended or
modified except by a writing executed by the Employer and the
Employee.
15. Governing Law. This Agreement shall be governed
by and construed and enforced in accordance with the laws of the
State of North Carolina.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the day and year first above written.
REEVES BROTHERS, INC.
By /s/ James W. Hart, Jr.
Executive Vice President
/s/ Vito W. Lenoci
Employee: Vito W. Lenoci
-6-
Exhibit A to
Employment Agreement
of Vito W. Lenoci
Additional Fringe Benefits
1. Supplemental Executive Retirement Plan (SERP for 401(A)(17))
2. Annual Physical
3. Medical Reimbursements
4. Spouse Travel on Selected Business Trips
5. Financial and Tax Planning Costs up to $5000, including
taxes
THE REEVES BROTHERS, INC.
401(a)(17) PLAN
Effective January 1, 1989
<PAGE>
Definitions............................................................1
Section 1.01. Beneficiary...............................1
Section 1.02. Board.....................................1
Section 1.03. Code......................................1
Section 1.04. Committee.................................1
Section 1.05. Company...................................1
Section 1.06. Employee..................................1
Section 1.07. ERISA.....................................1
Section 1.08. Participating Affiliated Companies........1
Section 1.09. Pension Plan..............................2
Section 1.10. Plan......................................2
Section 1.11. Plan Year...............................2
Purpose of Plan........................................................3
Section 2.01. Purpose..........................................3
Eligibility............................................................4
Section 3.01. Eligibility......................................4
Section 3.02. Limitation on Eligibility........................4
Benefits...............................................................5
Section 4.01. Amount of Benefits...............................5
Section 4.02. Pension Plan Benefits............................5
Section 4.03. Form and Time of Benefit Payments................6
Section 4.04. Beneficiary in the Event of Death................6
Section 4.05. Benefits Unfunded................................7
Administration.........................................................8
Section 5.01. Duties of Committee..............................8
Section 5.02. Finality of Decisions............................8
Amendment and Termination..............................................9
Section 6.01. Amendment and Termination........................9
Section 6.02. Contractual Obligation...........................9
Miscellaneous.........................................................10
Section 7.01. No Employment Rights............................10
Section 7.02. Assignment......................................10
Section 7.03. Law Applicable..................................10
<PAGE>
THE REEVES BROTHERS, INC.
401(a)(17) PLAN
ARTICLE I
Definitions
The words and phrases defined hereinafter shall have the following
meaning when capitalized unless the context otherwise requires:
Section 1.01. Beneficiary. The person or persons named under the
provisions of Section 4.04 of this Plan.
Section 1.02. Board. The Board of Directors of the Company.
Section 1.03. Code. The Internal Revenue Code of 1986, as amended,
or as it may be amended from time to time.
Section 1.04. Committee. The Pension Committee described in Article
7 of the Pension Plan.
Section 1.05. Company. Reeves Brothers, Inc., a Delaware
corporation, or any successor corporation which agrees to assume the duties
of the Company hereunder.
Section 1.06. Employee. A participant in the Pension Plan who is
employed by the Company or one or more Participating Affiliated
Companies.
Section 1.07. ERISA. The Employee Retirement Income Security Act
of 1974, as amended, or as it may be amended.
Section 1.08. Participating Affiliated Companies. Any affiliate of the
Company designated by the Board as a participating employer under the
Pension Plan.
Section 1.09. Pension Plan. The Reeves Brothers, Inc. Pension Plan
for Salaried Employees.
Section 1.10. Plan. The Reeves Brothers, Inc. 401(a)(17) Plan.
Section 1.11. Plan Year. The calendar year.
<PAGE>
ARTICLE 2
Purpose of Plan
Section 2.01. Purpose. The purpose of this Plan is simply to restore
to employees of the Company the benefits they lose under the Pension Plan as a
result of the compensation limit in section 401(a)(17) of the Code ("section
401(a)(17)") and shall be construed accordingly.
<PAGE>
ARTICLE 3
Eligibility
Section 3.01. Eligibility. Any Employee or Beneficiary eligible to
receive benefits from the Pension Plan shall be eligible to receive benefits
under this Plan if (a) his or her benefits cannot be fully provided by the
Pension Plan because of provisions thereof implementing section 401(a)(17)
and (b) they are designated in Appendix A.
Section 3.02. Limitation on Eligibility. Notwithstanding Section 3.01,
no benefits shall be paid an Employee or his or her Beneficiary unless the
Employee retires under the Normal Retirement, Early Retirement, Vested
Deferred or Disability Retirement Pension sections of the Pension Plan, or
dies while employed by the Company (or Participating Affiliated
Companies) under circumstances that entitle his Beneficiary to Death
Benefits under the Pension Plan.
<PAGE>
ARTICLE 4
Benefits
Section 4.01. Amount of Benefits. The benefit payable under this Plan
to an Employee (or his or her Beneficiary) will equal the benefit, if any,
which would have been payable to the Employee (or his or her Beneficiary
as the case may be) under the terms of the Pension Plan, but for the
restrictions of section 401(a)(17) and section 415 of the Code ("section
415"), less the amounts described in (b).
(a) Benefits under this Plan will only be paid to supplement benefit
payments actually made from the Pension Plan. If benefits are not payable
under a Pension Plan because the Employee has failed to vest, or because the
Pension Plan is terminated or for any other reason, no payments will be
made under this Plan with respect to such Pension Plan.
(b) The benefits payable under this Plan will be reduced by the
combined amounts of "Pension Plan Benefits" described in Section 4.02 and
the amount of benefits which would have been payable to the Employee (or
his or her Beneficiary as the case may be) under the terms of the Pension
Plan, but for the restrictions of section 415.
Section 4.02. Pension Plan Benefits. The term "Pension Plan
Benefits" generally means the benefits actually payable to an Employee or
Beneficiary under the Pension Plan. However, this Plan is only intended to
remedy benefit reductions caused by the operation of section 401 (a)(17)
and not reductions caused for any other reason. In those instances where
pension benefits are reduced for some other reason, the term "Pension Plan
Benefits" shall be deemed to mean the benefits that would have been
actually payable but for such other reason.
Examples of such other reasons include, but are not limited to, the
following:
(a) A reduction in pension benefits as a result of a distress
termination (as described in ERISA section 4041(c) or any comparable
successor provision of law) of the Pension Plan. In such a case, the
Pension Plan Benefits will be deemed to refer to the payments that
would have been made from the Pension Plan had it terminated on a
fully funded basis as a standard termination (as described in ERISA
section 4041(b) or any comparable successor provision of law).
(b) A reduction of accrued benefits as permitted under section
412(c)(8) of the Code, or any comparable successor provision of
law.
(c) A reduction of pension benefits as a result of payment of
all or a portion of an Employee's benefits to a third party on behalf
of or with respect to an Employee.
Section 4.03. Form and Time of Benefit Payments. Benefits due under
this Plan shall be paid at such time or times following the Employee's
retirement or death as may be selected by the Committee in its sole
discretion from among the options available under the Pension Plan. In no
event will benefits under this Plan be payable earlier than benefits under the
Pension Plan.
Section 4.04. Beneficiary in the Event of Death. Upon the death of an
Employee, any remaining benefits due under this Plan to an Employee shall
be distributed to (1) the Beneficiary designated by the Employee under the
Pension Plan, or if none, (2) the Beneficiary determined in accordance with
Section 5.01 of the Pension Plan.
Section 4.05. Benefits Unfunded. Benefits payable under this Plan
shall be paid by the Company each year out of its general assets and shall not
be funded in any manner. The Company may enter into separate written
agreements to provide for the funding of all or part of the benefits under
this Plan.
<PAGE>
ARTICLE 5
Administration
Section 5.01. Duties of Committee. This Plan shall be administered by
the Committee in accordance with its terms and purposes. The Committee
shall have full discretionary authority to determine eligibility, to construe
and interpret the terms of the Plan, including the power to remedy possible
ambiguities, inconsistencies or omissions, and to determine the amount and
manner of payment of the benefits due to or on behalf of each Employee
and/or his or her Beneficiary from this Plan.
Section 5.02. Finality of Decisions. The decisions made by and the
actions taken by the Committee in the administration of this Plan shall be
final and conclusive on all persons, and the members of the Committee shall
not be subject to individual liability with respect to this Plan. The Committee
shall provide for appeals of claim denials as required by ERISA section 503.
<PAGE>
ARTICLE 6
Amendment and Termination
Section 6.01. Amendment and Termination. While the Company
intends to maintain this Plan in conjunction with the Pension Plan for as long
as necessary, the Company reserves the right to amend and/or terminate the
Plan at any time for whatever reasons it may deem appropriate.
Section 6.02. Contractual Obligation. Notwithstanding Section 6.01,
the Company intends to assume a contractual commitment to pay the benefits
under this Plan, to the extent they have accrued prior to amendment or
termination under section 6.01, to the extent it is financially capable of
meeting such obligations.
<PAGE>
ARTICLE 7
Miscellaneous
Section 7.01. No Employment Rights. Nothing contained in this Plan
shall be construed as a contract of employment between the Company or any
Participating Affiliated Companies and any Employee, or as a right of any
Employee to be continued in employment or as a limitation of the right of
the Company or any Participating Affiliated Companies to discharge any
Employee with or without cause.
Section 7.02. Assignment. The benefits payable under this Plan may
not be assigned or alienated.
Section 7.03. Law Applicable. This Plan shall be governed by the laws
of the State of New York.
REEVES BROTHERS, INC.
By /s/Steve W. Hart
ATTEST:
/s/David L. Dephtereos
<PAGE>
APPENDIX A
Vito W. Lenoci
Anthony L. Cartagine
REEVES INDUSTRIES, INC.
Non-Qualified Stock Option Agreement
THIS AGREEMENT is entered into by and between REEVES
INDUSTRIES, INC., a Delaware Corporation (the "Company"), and
JAMES W. HART (the "Optionee").
W I T N E S S E T H
WHEREAS, Optionee has provided continuous and valuable
service to the Company as an officer and/or director since 1986;
WHEREAS, the Board of Directors of the Company has
determined that it is in the Company's best interest to issue to
the Optionee an option in consideration of his continued service
to the Company;
WHEREAS, to secure the continued loyal services of
Optionee into the future, the Board of Directors of the Company
has granted to Optionee, affective January 15, 1994 (the "Grant
Date"), a non-qualified stock option (the "Option") to purchase
shares of the Common Stock, par value One Cent ($.01) per share
(the "Common Stock"), of the Company upon the terms and
conditions hereinafter stated;
WHEREAS, Optionee has agreed to continue to provide
services to the Company as Chairman of the Board and in such
other capacity as requested by the Board of Directors on such
terms and conditions as are agreed to by Optionee and the Company
for three years following the Grant Date;
NOW, THEREFORE, in consideration of the covenants
herein set forth, the parties agree as follows:
1. Shares; Price. This Agreement hereby evidences
the Option granted to Optionee effective as of the Grant Date, to
purchase, upon and subject to the terms and conditions herein
stated all or any part of an aggregate of Three Million Eight
Hundred Thousand (3,800,000) shares of Common Stock of the
Company. This Option shall (i) be immediately exercisable (in
whole or in part) for 1,400,000 shares at the exercise price of
$.56; (ii) be exercisable (in whole or in part) for an additional
1,400,000 shares on or after the first anniversary of the Grant
Date at the exercise price of $.75 per share; and (iii) be
exercisable (in whole or in part) for an additional 1,000,000
shares on or after the second anniversary of the Grant Date at
the exercise price of $1.00 per share.
2. Term of Option. This option and all rights
hereunder shall expire on December 31, 2023.
3. Exercise. This Option may be exercised, as to any
or all shares covered by this Option, at any time after the
exercise dates set forth in Paragraph 1 above and prior to the
expiration or termination of this Option by delivery to the
Company at its principal office of (a) written notice of exercise
of this Option, stating the number of shares then being purchased
hereunder; (b) a check or cash in the amount of the full purchase
price of such shares; (c) the written statement provided for in
Section 7 hereof; and (d) such other documents or instruments as
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may be required by any then applicable federal or state laws or
regulations, or regulatory agencies pertaining to this option,
any exercise thereof and/or any offer, issue, sale or purchase of
any shares covered by this option. At the time of the exercise
of this Option, Optionee shall make arrangements which are
acceptable to the Board of Directors of the Company, in its sole
discretion, for the withholding of federal and state taxes
required by law to be withheld with respect to such exercise.
Not less than 5,000 shares may be purchased at any one time.
After the Company has received all of the foregoing, the Company
shall proceed with reasonable promptness to issue the shares so
purchased upon such exercise of the Option.
4. Termination of Employment or Service. The Option
granted hereunder shall survive any termination of optionee's
employment or service with the Company or a subsidiary and may be
exercised by Optionee in accordance with Section 3 hereof,
notwithstanding such termination of employment or service, for a
period ending (i) ten years after such termination or until
December 31, 2023, whichever first occurs if such termination is
prior to Optionee's 65th birthday and (ii) December 31, 2023, if
such termination is on or after Optionee's 65th birthday;
provided however, if Optionee shall quit the employ of the
Company without cause prior to the second anniversary of the
Grant Date the total number of shares of Common Stock subject to
this Option shall be reduced to the number of shares that the
Option is exercisable for at the time of Optionee's resignation.
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Notwithstanding any other provision contained herein, if
Optionee shall die or become unable to perform service for the
Company as a result of a physical or mental disability, this
option shall become immediately exercisable in its entirety, and
his personal representative or the person entitled to succeed to
his rights hereunder shall have the right, at any time prior to
December 31, 2023, to exercise this Option in full. However, in
no event shall this option extend beyond the period of its
expiration or termination as described in Section 2 hereof. No
provision of this Option shall confer any right to continue in
the employ or service of the Company or any of its subsidiaries
or interfere in any way with the right of the Company and its
subsidiaries to terminate any employment or service at any time.
5. No Assignment. This Option shall not be
assignable or transferable except by will or by the laws of
descent and distribution and shall be exercisable during his
lifetime only by Optionee.
6. No Rights as Stockholder. Optionee shall have no
right as a stockholder with respect to the Common Stock covered
by the Option until the date of the issuance of a stock
certificate or stock certificates to him. Except as provided in
Section 10 hereof, no adjustment will be made for dividends or
other rights for which the record date (or if there is no record
date established, then the date established for the distribution
of such dividend or right) is prior to the date such stock
certificates are issued.
-4-
7. Shares Purchased for Investment. Optionee
represents and agrees that if he exercises this Option in whole
or in part, he will acquire the shares upon such exercise for the
purpose of investment and not with a view to their resale or
distribution, and Optionee agrees that, if requested by the
Company so to do, upon each exercise of this Option, Optionee or
any person or persons entitled to exercise this option pursuant
to the provisions of Section 4 hereof shall furnish to the
Company a written statement that Optionee or such person or
persons are acquiring such shares upon exercise for purposes of
investment and not with a view to their resale or distribution.
No shares shall be purchased and the Company shall have no
obligation to issue any shares, upon any exercise of this option
unless and until: (a) any then applicable requirement of state
and federal laws and regulatory agencies pertaining to this
Option, and exercise thereof and/or the offer, issue, sale or
purchase of any shares covered by this option shall have been
fully complied with to the satisfaction of the Company and its
counsel; and (b) if requested by the Company so to do, upon each
exercise of this Option, Optionee or any person or persons
entitled to exercise this Option pursuant to the provisions of
Section 4 hereof, shall have furnished to the Company a written
statement to the affect that such shares are being acquired upon
such exercise for the purpose of investment and not with a view
to their resale or distribution, such written statement to be
satisfactory in form and substance to the Company. The Company
may, at its option, place a legend on each certificate
representing shares purchased upon exercise of this Option,
stating, in effect, that such shares have not been registered
under the Securities Act of 1933, as amended (the "Act"), and
that the transferability thereof is restricted. If the shares
represented by this option are registered under the Act, either
before or after any exercise of this option (in whole or in
part) , the Board of Directors shall relieve Optionee of the
foregoing investment representations and agreements.
8. Bonus. In connection with the exercise of all or
any part of this Option pursuant to Section 3, Optionee or any
person or persons entitled to exercise this option under Section
4 hereof may, in the discretion of the Board of Directors, be
paid a cash bonus equal to an amount up to the excess, if any, of
the fair market value per share of the Common Stock of the
Company on the date of exercise over the Option price per share
multiplied by the number of shares of Common Stock acquired
pursuant to such exercise. Such bonus shall be paid not later
than 90 days after the date of the exercise of the Option. The
Company shall have the right to deduct all applicable federal and
state taxes required by law to be withheld from all payments made
hereunder with respect to such bonus. A bonus in such amount
shall, in the discretion of the Board of Directors, be paid in
connection with each exercise of this option otherwise allowable
hereunder.
9. Modificaions and Termination. The rights of
Optionee are not subject to modification and termination except
with the written consent of the Optionee, or, after his death,
his successor or heir.
10. Anti-Dilution Rights. In the event of any change
in outstanding Common Stock of the Company by reason of a stock
dividend, recapitalization, merger, consolidation, split-up,
combination or exchange of shares, or the issuance on a pro rata
basis to stockholders of any rights, warrants or options to
acquire stock, or any other change in the capitalization of the
Company, the aggregate number of shares subject to this Option,
and the Option price, shall be appropriately adjusted by the
Board of Directors of the Company, whose determination shall be
conclusive.
11. Registration Rights. The holders of the shares
issuable under the Option shall have the registration rights set
forth in Appendix 1 hereto with respect to such shares.
12. Purpose of this Option. The Company is of the
opinion that the granting of the Option to Optionee will
stimulate the effort of Optionee, strengthen his desire to remain
in the active service of the Company and provide him with a more
direct interest in the Company and thereby further the objective
of the Company for the benefit of all the stockholders.
13. Miscellaneous. Section and other headings are
included herein for reference purposes only and shall not be
construed or interpreted as part of this Agreement. Wherever and
-7-
whenever the context of this Agreement shall so require, the
gender of any noun or pronoun shall include both the
masculine and feminine and the singular shall include the
plural and the plural shall include the singular.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the 26th day of January, 1994.
REEVES INDUSTRIES, INC
By:/s/James W. Hart
Title: Chairman
OPTIONEE
/s/James W. Hart
James W. Hart
APPENDIX 1
REGISTRATION RIGHTS
A. Obligations of Company. The Company shall use its
best efforts to cause a registration statement on Form S-8 (or
any successor form) to be filed with the Securities and Exchange
Commission (the "SEC") and declared effective under the
Securities Act of 1933, as amended (the "Act"), relating to the
shares underlying the Option to which these registration rights
are attached (the "Shares") prior to the expiration of the
Option. The foregoing obligation of the Company is not
contingent upon a request from the holder (the "Holder") of the
Option (or the Shares, in the event the option has been
exercised) and the Company shall give the Holder prompt notice of
the filing and effectiveness of the registration statement on
Form S-8. The Company's obligations under this provision are
subject to the other terms of this Appendix 1 including those
terms relating to expenses of registration.
B. Piggy-back Registration Rights. In the event that
the Company, following the exercise of the Option to which these
right apply, files a registration statement under the Act
relating to the offer of its common stock for cash, except for
offers in connection with an employee benefit plan of the
Company, an acquisition, merger or similar transaction, the
Company shall give the Holder of the Shares written notice of the
proposed filing at least 15 days in advance thereof and if,
within 10 days after the Holder receives such notice, the Company
is notified in writing from the Holder that he wishes to include
the Shares in such registration statement for sale thereunder,
the Company shall use its best efforts to cause the Shares to be
included in such registration statement; provided, however, the
Company shall have no such duty unless the shares sought to be
included in such registration statement equal not less than
50,000 shares. In connection with such underwriting, the Holder
agrees to enter into an appropriate underwriting agreement with
the Company and the principal underwriter.
C. Obligations of Optionee. The Holder shall furnish
to the Company in writing all information required by the Act and
the rules and regulations of the SEC thereunder relating to the
proposed distribution of the Holder's Shares or any other matters
required to be disclosed with respect to Holder in the
registration statement or prospectus.
D. Terms and Conditions of the Company's Obligations.
The obligations of the Company and Holder under this agreement
shall be subject to the following additional terms and
conditions. The Company shall: (i) except with respect to a
registration statement on Form S-8 under Section A, not be
obligated to register shares if counsel for the Company renders a
written opinion that registration of the shares is not required
under the provisions of the Act in connection with a public sale
thereof; (ii) not be obligated to keep any registration statement
in effect for more than a reasonable length of time following the
effective date of any such registration statement and in no event
longer than 120 days from its effective date and may deregister
all or a portion of the shares covered thereby after such time;
and (iii) be supplied by the Holder with any information
regarding the Holder required to be stated in the registration
statement and in connection with sales pursuant thereto. The
registration rights set forth herein expire with respect to
Shares which are transferred by the Optionee as set forth in the
Option Agreement or any subsequent Holder upon the transfer of
such Shares other than by a private placement.
E. Expenses of Registration. If shares are
registered under this agreement, the Holder shall, except with
respect to a registration statement on Form S-8 under Section A,
pay its pro rata share of the fees (including filing fees with
any governmental or regulatory body), underwriting discounts and
commissions attributable to the shares included under the
registration statement pursuant to this agreement; provided,
however, that if the registration statement is withdrawn without
the concurrence of the Holder, then such fees and expenses shall
be paid by the Company. To the extent permitted by state or
federal securities law, the Company shall pay all additional
costs in preparing and filing the registration statement,
including fees of the Company's counsel and auditors, the costs
of printing and distribution.
F. Change in SEC Procedures and Forms. In the event
the SEC shall adopt new procedures or forms which authorize or
allow other amounts of secondary distribution which may require
action by the Company other than registration under the Act, the
Company and the Holder agree that the foregoing provisions shall
apply, as nearly as may be practicable, to such new procedures or
forms.
EXHIBIT 11. CALCULATION OF PRIMARY AND FULLY DILUTED EARNINGS
PER COMMON SHARE
REEVES INDUSTRIES, INC. AND SUBSIDIARY
(In thousands, except per share data)
Year Ended December 31,
----------------------------
1991 1992 1993
------ ------ ------
Income from continuing operations $ 4,544 $ 5,976 $ 7,857
Adjustments
Preferred dividends (298)
-------- -------- --------
Income from continuing operations
attributable to common shares 4,246 5,976 7,857
Net gain on disposal of discontinued
operations 2,830
-------- -------- --------
Income before extraordinary item
and cumulative effect of a change
in accounting principle
attributable to common shares 7,076 5,976 7,857
Extraordinary loss from early
extinguishment of debt (6,112)
Cumulative effect of a change
in accounting principle 3,221
-------- -------- --------
Net income attributable to
common shares $ 7,076 $ 3,085 $ 7,857
======== ======== ========
PRIMARY AND FULLY DILUTED EARNINGS
PER COMMON SHARE:
Income from continuing operations $ .23 $ .16 $ .22
Income before extraordinary item
and cumulative effect of a change
in accounting principle $ .39 $ .16 $ .22
Cumulative effect of a change
in accounting principle $ .09
Net income $ .39 $ .08 $ .22
WEIGHTED AVERAGE COMMON SHARES
PRIMARY AND FULLY DILUTED 18,118 36,724 34,978
======== ======== ========
EXHIBIT 12. COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
REEVES INDUSTRIES, INC. AND SUBSIDIARY
(In thousands, except ratio)
Fiscal Year Ended December 31,
------------------------------------------
1989 1990 1991 1992 1993
------ ------ ------ ------ ------
Income from continuing
operations before
income taxes $12,583 $6,467 $4,917 $8,569 $11,858
Plus fixed charges
Interest expense
and amortization
of financing costs
and debt discount 22,590 19,935 21,777 17,633 16,394
Interest portion of
rent expense 358 213 396 476 491
------- ------ ------ ------ ------
Total fixed charges 22,948 20,148 22,173 18,109 16,885
------- ------ ------ ------ ------
Earnings plus fixed
charges $35,531 $26,615 $27,090 $26,678 $28,743
======= ======= ======= ======= =======
Ratio of earnings to
fixed charges 1.6x 1.3x 1.2x 1.5x 1.7x
======= ======= ======= ======= =======
EXHIBIT 21. SUBSIDIARIES OF THE REGISTRANT
SUBSIDIARIES OF REEVES INDUSTRIES, INC.
State or Country
of Incorporation
Reeves Brothers, Inc. Delaware
Subsidiaries of Reeves Brothers, Inc.
Turner Freight Systems, Inc. South Carolina
Reeves S.p.A Italy
