SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
(Mark One)
{X} QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 2, 1995
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
_________________________________________________________________
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
35,021,666 shares of $.01 par value common stock of the Registrant
were outstanding at the close of business on May 16, 1995.
<PAGE>
REEVES INDUSTRIES, INC. AND SUBSIDIARY
INDEX
PART I. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheet as of
December 31, 1994 and April 2, 1995 3
Condensed Consolidated Statement of Income
for the quarters ended April 3, 1994
and April 2, 1995 5
Condensed Consolidated Statement of Changes
in Stockholder's Equity for the quarter
ended April 2, 1995 6
Condensed Consolidated Statement of Cash
Flows for the quarters ended April 3,
1994 and April 2, 1995 7
Notes to Condensed Consolidated Financial
Statements 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 13
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 17
SIGNATURES 18
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEET
REEVES INDUSTRIES, INC. AND SUBSIDIARY
(in thousands, except share data)
December 31, April 2,
1994 1995
____________ ________
ASSETS
Current assets
Cash and cash equivalents of $1,550
and $22 $ 17,429 $ 5,312
Accounts receivable, less allowance for
doubtful accounts of $1,232 and $1,497 52,890 59,477
Inventories (Note A) 35,909 39,699
Deferred income taxes 4,259 3,760
Other current assets 4,114 3,538
-------- --------
Total current assets 114,601 111,786
Property, plant and equipment, at cost
less accumulated depreciation (Note B) 70,629 72,772
Unamortized financing costs, less
accumulated amortization of $1,830
and $1,993 3,293 3,130
Goodwill, less accumulated amortization
of $10,771 and $11,107 42,017 41,681
Deferred income taxes 1,246 366
Other assets (Note C) 5,412 7,770
-------- --------
Total assets $237,198 $237,505
======== ========
<PAGE>
CONDENSED CONSOLIDATED BALANCE SHEET (CONTINUED)
REEVES INDUSTRIES, INC. AND SUBSIDIARY
(in thousands, except share data)
December 31, April 2,
1994 1995
____________ ________
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities
Revolving loan payable to bank (Note D) $ 21,900
Accounts payable $ 32,109 24,712
Accrued expenses and other
liabilities 18,738 17,302
-------- --------
Total current liabilities 50,847 63,914
Long-term debt (Note D) 146,278 132,803
Deferred income taxes 5,637 5,638
Other liabilities 5,621 5,862
-------- --------
Total liabilities 208,383 208,217
-------- --------
Stockholder's equity
Common stock, $.01 par value, 50,000,000
shares authorized; 35,021,666 shares
issued and outstanding 350 350
Capital in excess of par value 5,099 5,099
Retained earnings 26,908 28,629
Equity adjustments from translation (3,542) (4,790)
-------- --------
28,815 29,288
-------- --------
Commitments and contingencies
-------- --------
Total liabilities and
stockholder's equity $237,198 $237,505
======== ========
See notes to condensed consolidated financial statements.
<PAGE>
CONDENSED CONSOLIDATED STATEMENT OF INCOME
REEVES INDUSTRIES, INC. AND SUBSIDIARY
(in thousands)
Quarter Ended
____________________
April 3, April 2,
1994 1995
-------- --------
Net sales $73,242 $80,048
Cost of sales 58,317 64,460
------- -------
Gross profit on sales 14,925 15,588
Selling, general and
administrative expenses 7,252 8,585
------- -------
Operating income 7,673 7,003
Other (expense) income
Other (expense) income, net (227) 201
Interest expense and amortization of
financing costs and debt discounts (4,085) (4,347)
------- -------
(4,312) (4,146)
------- -------
Income before income taxes 3,361 2,857
Income taxes 1,124 1,136
------- -------
Net income $ 2,237 $ 1,721
======= =======
See notes to condensed consolidated financial statements.
<PAGE>
CONDENSED CONSOLIDATED STATEMENT OF CHANGES
IN STOCKHOLDER'S EQUITY
REEVES INDUSTRIES, INC. AND SUBSIDIARY
(in thousands)
Common Stock Capital Equity
$0.01 Par Value in Excess Adjustments
--------------- of Retained From
Shares Amount Par Value Earnings Translation Total
______ ______ _________ ________ ___________ _______
Balance at
December 31,
1994 35,022 $350 $5,099 $26,908 $(3,542) $28,815
Net income 1,721 1,721
Translation
adjustments (1,248) (1,248)
------ ---- ------ ------- ------- -------
Balance at
April 2,
1995 35,022 $350 $5,099 $28,629 $(4,790) $29,288
====== ==== ====== ======= ======= =======
See notes to condensed consolidated financial statements.
<PAGE>
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
REEVES INDUSTRIES, INC. AND SUBSIDIARY
(in thousands)
Quarter Ended
_____________________
April 3, April 2,
1994 1995
_________ _________
OPERATING ACTIVITIES
Net income $ 2,237 $ 1,721
Adjustments to reconcile net income
to net cash used by operating
activities:
Depreciation and amortization 2,496 2,574
Changes in operating assets and
liabilities
Increase in accounts receivable (3,637) (6,587)
Increase in inventory (4,562) (3,790)
Increase in other assets (149) (2,358)
Increase in accounts payable (1,568) (7,397)
Other changes in operating assets
and liabilities (2,542) 927
Translation adjustments 327 (413)
-------- --------
NET CASH USED BY OPERATING ACTIVITIES (7,398) (15,323)
-------- --------
INVESTING ACTIVITIES
Purchases of property, plant,
and equipment (5,686) (5,107)
-------- --------
NET CASH USED BY INVESTING ACTIVITIES (5,686) (5,107)
-------- --------
FINANCING ACTIVITIES
Net borrowings on revolving loan 5,700 8,400
-------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES 5,700 8,400
-------- --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH 198 (87)
-------- --------
DECREASE IN CASH AND CASH EQUIVALENTS (7,186) (12,117)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 12,015 17,429
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 4,829 $ 5,312
======== ========
See notes to condensed consolidated financial statements.
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
REEVES INDUSTRIES, INC. AND SUBSIDIARY
APRIL 2, 1995
GENERAL
Reeves Industries, Inc., incorporated in Delaware in 1982
("Reeves"), 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"). Reeves Brothers 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").
The accompanying unaudited condensed consolidated financial
statements of Reeves have been prepared in accordance with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X.
Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for
complete financial statements. For such information, refer to the
consolidated financial statements and footnotes thereto included in
Reeves' annual report on Form 10-K for the year ended December 31,
1994, as filed with the Securities and Exchange Commission on March
27, 1995. The condensed consolidated financial statements so
presented are, in the opinion of management, inclusive of all
adjustments (consisting only of normal recurring adjustments)
considered necessary for a fair presentation of financial position
as of April 2, 1995, and the results of operations and cash flows
for the quarters ended April 3, 1994 and April 2, 1995.
NOTE A - INVENTORIES
Inventories at December 31, 1994 and April 2, 1995, were
comprised of the following (in thousands):
December 31, April 2,
1994 1995
____________ ________
Raw materials $ 7,591 $ 9,209
Work in process 8,536 9,900
Manufactured and finished goods 19,782 20,590
------- -------
$35,909 $39,699
======= =======
Approximately 31% and 35% of Reeves' inventories at December
31, 1994 and April 2, 1995, are valued using the last-in, first-out
("LIFO") method. Interim LIFO determinations, including those as
of April 2, 1995, are based on management's estimates of expected
year end inventory levels and costs.
NOTE B - PROPERTY, PLANT AND EQUIPMENT
On June 13, 1994 and December 13, 1994, the Company entered
into Inducement Agreements (the "Inducement Agreements") with
Spartanburg County, South Carolina, and Lee County, South Carolina,
respectively (the "Counties"), under South Carolina Code Section 4-
29-67 (the "Statute"). The Inducement Agreements provide the
Company an incentive to make capital investments in the Counties in
the form of qualified investments in land, buildings, and/or
machinery and equipment by allowing the Company to pay a fee in
lieu of ad valorem property taxes. The Company must make capital
investments equal to $85 million in the Counties beginning in 1994
and continuing through December 31, 1999. Under the Statute, the
investment threshold will be lowered in the event that the Company
meets certain job creation levels. Should the Company not invest
the specified threshold amounts by December 31, 1999, the Company
will pay the difference between the ad valorem taxes that would
have been due and the actual fee paid plus interest. Qualified
investments, which include assets leased under operating leases,
total $22,490,000 and $22,940,000 at December 31, 1994 and April 2,
1995, respectively.
On December 29, 1994, the Company entered into the agreements
required by the Statute whereby the Company transferred to the
Counties title to certain qualifying assets placed in productive
use in 1994 (the "Assets"). The Company retains all rights
associated with the possession and use of the Assets, and the
Counties cannot transfer or otherwise dispose of the Assets except
as requested in writing by the Company. The Company can reacquire
title to the Assets at any time for $1.00.
The sole purpose and the economic substance of this
transaction is to establish the property tax incentive permitted
under the Statute. The Company does not believe an economic
transfer of the Assets has occurred. Accordingly, the Company has
not recorded the transfer of nominal title to the Assets to the Counties
in the Company's financial statements. The net book value at December
31, 1994 and April 2, 1995 of Assets to which nominal title was
transferred to the Counties was $12,190,000 and $12,640,000,
respectively.
NOTE C - OTHER LONG-TERM ASSETS
The increase in other long-term assets from December 31, 1994
is primarily due to pre-operating costs related to the new weaving
facility in Spartanburg, South Carolina which will weave automotive
airbag fabric for the airbag material market. The gross amount of
capitalized pre-operating costs at December 31, 1994 and April 2,
1995 was approximately $3,666,000 and $4,701,000, respectively.
NOTE D - LONG-TERM DEBT
Long-term debt at December 31, 1994 and April 2, 1995,
consisted of the following (in thousands):
December 31, April 2,
1994 1995
____________ ________
11% Senior Notes due July 15, 2002,
net of unamortized discount of
$659 and $637 $121,841 $121,863
13 3/4% Subordinated Debentures due
May 1, 2000, net of unamortized
discount of $63 and $60 10,937 10,940
Revolving loan payable to bank 13,500
________ ________
$146,278 $132,803
======== ========
In June 1992, Reeves 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 Reeves' 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.
Reeves 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, Reeves and Reeves Brothers entered into a
credit agreement, as amended, (the "Credit Agreement") with a group
of banks which provides Reeves and Reeves Brothers with an
aggregate $35,000,000 revolving line of credit (the "Revolving
Loan") and letter of credit facility. On March 27, 1995, the
Credit Agreement was amended to increase the Revolving Loan to
$42,000,000. The Revolving Loan bears interest at the Alternative
Base Rate (defined below) plus 1 1/2% or Eurodollar Rate plus 2
1/2%, at the election of the borrower. The Alternative Base Rate
is defined as the higher of the Prime Rate (9% at April 2, 1995),
Base CD Rate plus 1%, or the Federal Funds Effective Rate plus
1/2%. The applicable rates above the Alternative Base Rate and
Eurodollar Rate decline based on a ratio of earnings to fixed
charges, as defined. The Revolving Loan is secured by Reeves
Brothers' accounts receivable and inventories. As of April 2,
1995, Reeves had available borrowings, net of $1,235,000 of
outstanding letters of credit, of $18,865,000. A commitment fee of
1/2% per annum is required on the unused portion of the Revolving
Loan.
The Revolving Loan is due April 1, 1996. Reeves is currently
engaged in discussions to arrange another revolving loan/letter of
credit facility to replace the Credit Agreement.
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 payment of
dividends, the incurrence of additional indebtedness and certain
liens, restrictions on capital expenditures, mergers or
acquisitions, investments and transactions with affiliates, and
compliance with certain financial tests and limitations.
Refer to Reeves' Annual Report on Form 10-K for the year ended
December 31, 1994, as filed with the Securities and Exchange
Commission on March 27, 1995, for a more complete description of
the Senior Notes, the Revolving Loan and the 13 3/4% Subordinated
Debentures.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following table and the discussion which follows presents
Reeves' sales and operating income by segment for the quarters
ended April 3, 1994 and April 2, 1995 (in thousands):
Quarter Ended
______________________
April 3, April 2,
1994 1995
________ ________
Net Sales:
Industrial Coated Fabrics Group $37,509 $44,377
Apparel Textile Group 35,062 34,848
Other 671 823
_______ _______
Total Net Sales $73,242 $80,048
======= =======
Operating Income:
Industrial Coated Fabrics Group $ 6,896 $ 8,635
Apparel Textile Group 2,919 1,469
Other 85 41
Corporate Expenses (2,227) (3,142)
_______ _______
Total Operating Income $ 7,673 $ 7,003
======= =======
Operating Income as a Percent
of Net Sales 10.5% 8.7%
======= =======
THREE MONTHS ENDED APRIL 3, 1994 COMPARED WITH
THREE MONTHS ENDED APRIL 2, 1995
NET SALES
Reeves' total net sales increased 9.3% for the first quarter
of 1995 compared to the first quarter of 1994. ICF's net sales
represented 55.4% of Reeves' total net sales for the first quarter
of 1995 compared to 51.2% for the comparable period in 1994. ATG's
net sales represented 43.5% of Reeves' total net sales for the
first quarter of 1995 compared to 47.9% for the comparable period
in 1994.
ICF's net sales increased 18.3% during the first quarter of
1995 compared to the first quarter of 1994. ICF's net sales
increased primarily due to higher unit volume in all product lines.
ATG's net sales decreased 0.6% during the first quarter of
1995 compared to the first quarter of 1994. The decrease is
primarily due to lower unit volume and prices in the Finished Goods
Division as a result of the slowing apparel market.
OPERATING INCOME
Operating income for the first quarter of 1995 was $7.0
million compared to $7.7 million for the first quarter of 1994. As
a percentage of net sales, operating income decreased to 8.7% for
the first quarter of 1995 compared to 10.5% in the same period of
1994.
ICF's operating income for the first quarter of 1995 increased
25.2% to $8.6 million compared to $6.9 million for the first
quarter of 1994. Increases in operating income were generated by
(i) the higher sales volumes in all product lines, (ii) foreign
currency exchange gains resulting from the weakening of the Italian
Lira against most other currencies and (iii) lower manufacturing
costs in ICF's domestic operations, primarily lower raw material
costs and higher overhead absorption as a result of higher
production volumes. These increases were offset by higher
manufacturing costs at ICF's foreign operations, primarily higher
raw material costs due to inflation.
ATG's operating income for the first quarter of 1995 decreased
49.7% compared to the first quarter of 1994, primarily as a
result of (i) decreased sales volume in the Finished Goods
Division, (ii) lower prices in the Finished Goods and Greige Goods
Divisions and (iii) an increase in ATG's allowance for doubtful
accounts receivable. Lower manufacturing costs at ATG's Greige
Goods Division plants, primarily due to the restructuring
implemented in 1993 and prior capital investments, partially offset
the decreases in operating income.
Corporate expenses increased $915 or 41.1% during the first
quarter of 1995 compared to the first quarter of 1994. The
increase in corporate expenses was primarily due to increased
staffing expense necessary to support business development
activities and legal costs. These increases were partially offset
by lower outside consultant costs. In addition, 1994 corporate
expenses were lower as a result of a gain related to the settlement
of a pension obligation of a previously discontinued operation.
LIQUIDITY AND CAPITAL RESOURCES
Cash used by operations during the quarter ended April 2, 1995
was $15,323,000. Cash was used by operations as a result of
increases in accounts receivable and inventory and a decrease in
accounts payable. Accounts receivable increased primarily due to
an overall slowing of customer payments. Inventories increased
primarily due to increases in ICF's inventories to meet customer
requirements for airbag products and to support higher sales at
ICF's foreign operations. The decrease in accounts payable is
primarily due to payments for capital expenditures and the timing
of payments for greige cotton material at ATG.
In June 1992, Reeves 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 Reeves' 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.
Reeves 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, Reeves and Reeves Brothers entered into a
credit agreement, as amended, (the "Credit Agreement") with a group
of banks which provides Reeves and Reeves Brothers with an
aggregate $35,000,000 revolving line of credit (the "Revolving
Loan") and letter of credit facility. On March 27, 1995, the
Credit Agreement was amended to increase the Revolving Loan to
$42,000,000. The Revolving Loan bears interest at the Alternative
Base Rate (defined below) plus 1 1/2% or Eurodollar Rate plus 2
1/2%, at the election of the borrower. The Alternative Base Rate
is defined as the higher of the Prime Rate (9% at April 2, 1995),
Base CD Rate plus 1%, or the Federal Funds Effective Rate plus
1/2%. The applicable rates above the Alternative Base Rate and
Eurodollar Rate decline based on a ratio of earnings to fixed
charges, as defined. The Revolving Loan is secured by Reeves
Brothers' accounts receivable and inventories. As of April 2,
1995, Reeves had available borrowings, net of $1,235,000 of
outstanding letters of credit, of $18,865,000. A commitment fee of
1/2% per annum is required on the unused portion of the Revolving
Loan.
The Revolving Loan is due April 1, 1996. Reeves is currently
engaged in discussions to arrange another revolving loan/letter of
credit facility to replace the Credit Agreement.
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 payment of
dividends, the incurrence of additional indebtedness and certain
liens, restrictions on capital expenditures, mergers or
acquisitions, investments and transactions with affiliates, and
compliance with certain financial tests and limitations.
Cash provided by operations is the major internal source of
liquidity and is supplemented by the Revolving Loan. In addition,
in May 1994, Reeves received a $12,000,000 commitment from an
equipment lessor for long-term operating leases of equipment. This
commitment was increased to $18,800,000 in August 1994. As of
April 2, 1995, approximately $15,150,000 was utilized.
Management believes its cash flow from operations, available
leasing capacity and funds available under the Credit Agreement
will be sufficient to meet anticipated requirements for working
capital, capital expenditure and other needs.
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits Description
10.01 Fifth Amendment, dated as of March
27, 1995, to the Credit Agreement
10.02 Sixth Amendment, dated as of May 8,
1995, to the Credit Agreement
27 Financial Data Schedule
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the
three months ended April 2, 1995.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
REEVES INDUSTRIES, INC.
DATE: May 16, 1995 By: \s\ Steven W. Hart
___________________
Steven W. Hart
Chief Financial
Officer
FIFTH AMENDMENT, dated as of March 27, 1995 (this
"Amendment"), 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); and
WHEREAS, the Company and the Parent have requested, and
the Banks have agreed, subject to the terms and conditions of
this Amendment, to amend Schedule I of the Credit Agreement to
increase the Commitments of the Banks under 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:
SECTION 1. AMENDMENT OF SCHEDULE I
OF THE CREDIT AGREEMENT
1.1 Amendment of Schedule I (Commitment Amounts and
Percentages; Lending Offices; Addresses for Notice). Schedule I
of the Credit Agreement is hereby amended by (a) deleting the
amount "$20,000,000" appearing under the "TOTAL COMMITMENT"
column for CHEMICAL BANK and inserting in lieu thereof
"$24,000,000" and (b) deleting the amount "$15,000,000" appearing
under the "TOTAL COMMITMENT" column for BANK OF BOSTON
CONNECTICUT and inserting in lieu thereof "$18,000,000".
SECTION 2. REPRESENTATIONS AND WARRANTIES;
CONDITIONS PRECEDENT TO THE
EFFECTIVENESS OF THIS AMENDMENT
2.1 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.
2.2 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:
(i) the Agent shall have received counterparts of this Amendment
executed by the Company, the Parent and the Banks;
(ii) the Agent shall have received, with a counterpart
for each Bank, the executed legal opinion of Augustus I.
duPont, Esq., general counsel to the Company and the Parent,
in each case reasonably satisfactory in form and substance
to the Agent and its counsel.
(iii) the Agent shall have received, with a
counterpart for each Bank, a certificate of the Secretary or
an Assistant Secretary of the Company and the Parent, dated
the date hereof, as to the incumbency and signature of the
officers of the Company and the Parent executing this
Amendment and any certificate or other document to be
delivered by it pursuant hereto, together with evidence of
the incumbency of such Secretary or Assistant Secretary;
(iv) the Agent shall have received two Notes of the
Parent, substantially in the form of Exhibit A to this
Amendment, with appropriate insertions as to payee, date and
principal amount, which are in substitution and replacement
of (but not in payment of) the existing Notes of the Parent.
(v) the Agent shall have received an amendment to the
Guarantee, dated as of August 6, 1992, made by the Company
in favor of the Agent for the benefit of the Banks;
(vi) the Agent shall have received a copy of the
resolutions (in form and substance reasonably satisfactory
to the Agent and its counsel) of the Board of Directors of
each of the Parent and the Company authorizing, to the
extent that each is a party thereto, the execution, delivery
and performance of this Amendment, and each transaction
contemplated hereby, certified by the Secretary or an
Assistant Secretary of the Parent and the Company as of the
Amendment Effective Date, which certificate shall state that
the resolutions thereby certified have not been amended,
modified, revoked or rescinded as of the date of such
certificate;
(vii) 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;
(viii) no Default or Event of Default shall have
occurred and be continuing after giving effect to this
Amendment and the transactions contemplated hereby; and
(ix) 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.
SECTION 3. MISCELLANEOUS
3.1 Expenses. The Company and the Parent agree to pay
all legal costs and expenses in connection with this Amendment.
3.2 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.
3.3 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.
3.4 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/ William Ewing, III
_______________________________
Title: Vice President and
Treasurer
REEVES INDUSTRIES, INC.
By: /s/ William Ewing, III
_______________________________
Title: Vice President and
Treasurer
CHEMICAL BANK,
as Agent and as a Bank
By: /s/ Peter C. Eckstein
_______________________________
Title: Vice President
BANK OF BOSTON CONNECTICUT
By: /s/ W. Lincoln Schoff, Jr.
_______________________________
Title: Director
<PAGE>
EXHIBIT A
FORM OF
REVOLVING CREDIT NOTE
$__________ New York, New York
August 6, 1992
FOR VALUE RECEIVED, the undersigned, (NAME OF BORROWER), a
Delaware corporation (the "Company"), hereby unconditionally
promises to pay on the Termination Date to the order of (NAME OF
BANK) (the "Bank" at the office of Chemical Bank, located at 270
Park Avenue, New York, New York 10017, in lawful money of the
United States of America and in immediately available funds, the
principal amount of the lesser of (a) ______ DOLLARS ($ ______)
and (b) the aggregate unpaid principal amount of all Revolving
Credit Loans made by the Bank to the undersigned pursuant to
subsection 2.1 of the Credit Agreement referred to below.
The undersigned further agrees to pay interest in like money
at such office on the unpaid principal amount hereof from time to
time from the date hereof at the rates per annum set forth in
subsections 2.9 (a) and (b) of the Credit Agreement referred to
below until any such amount shall become due and payable (whether
at the stated maturity, by acceleration or otherwise), and
thereafter on any such overdue amount at the rate per annum set
forth in subsection 2.9 (c) of the Credit Agreement until paid in
full (both before and after judgement). Interest shall be
payable in arrears on each Interest Payment Date, commencing on
the first such date to occur after the date hereof and
terminating upon payment including prepayment) in full of the
unpaid principal amount hereof; provided that interest accruing
on any overdue amount shall be payable on demand.
The holder of the note is authorized to, and so long as it
holds this Note shall, record the date, Type and amount of each
revolving Credit Loan made by the Bank pursuant to subsection 2.1
of the Credit Agreement, each continuation thereof, each
conversion of all or a portion thereof to another Type pursuant
to subsection 2.7 of the Credit Agreement, the date and amount of
each payment or prepayment of principal thereof and, in the case
of Eurodollar Loans, the length of each Interest Period and
Eurodollar and the Eurodollar Rate with respect thereto, on the
schedules annexed hereto and constituting a part hereof, or on a
continuation thereof which shall be annexed hereto and constitute
a part hereof, and any such recordation shall constitute prima
facie evidence of the accuracy of the information so recorded,
provided that failure of the Bank to make any such recordation
(or any error in such recordation) shall not affect the
obligations of the Company under this Note or under the Credit
Agreement.
This Note is one of the Revolving Credit Notes referred to
in the Credit Agreement, dated as of August 6, 1992, among the
Company, (NAME OF BORROWER NOT PARTY TO THIS NOTE), the several
banks and financial institutions from time to time parties
thereto (the "Banks") and Chemical Bank, a New York banking
corporation, as agent for the Banks thereunder (as amended,
supplemented or otherwise modified from time to time, the "Credit
Agreement"), is entitled to the benefits thereof, is secured as
provided therein, is subject to optional and mandatory prepayment
in whole or in part as provided there in and is issued in
substitution and replacement of (but not payment of) the $______
Note dated as of August 6, 1992 issued by the Company to
the Bank. Terms used herein which are defined in the Credit
Agreement shall have such defined meanings unless otherwise
defined herein or unless the contest otherwise requires.
Upon the occurrence of any one or more of the Events of
Default specified in the Credit Agreement, all amounts then
remaining unpaid on this Note shall become, or may be declared to
be, immediately due any payable, all as provided therein.
Except as expressly provided in Section 10 of the Credit
Agreement, the Company expressly waives diligence, presentment,
protest, depend and other notice of any kind.
This Revolving Credit Note shall be governed by, and
construed and interpreted in accordance with, the laws of the
State of New York.
(NAME OF BORROWER)
By:
Title:
<PAGE>
SCHEDULE A to
Revolving Credit Note
LOANS, CONVERSIONS AND PAYMENTS
OF BASE RATE LOANS
Amount of
Amount of Base Rate Unpaid
Eurodollar Loans Principal
Loans Converted Balance
Amount of Converted into Amount of Base
Base Rate into Base Eurodollar Principal Rate Notation
Date Loan Rate Loans Loans Repaid Loans Made By
- ---- --------- ---------- ---------- --------- --------- --------
<PAGE>
SCHEDULE B to
Revolving Credit Note
LOANS, CONVERSIONS AND PAYMENTS
OF EURODOLLAR LOANS
Amount
of
Euro- Amount Of
dollar Amount of Interest Eurodollar
Loan Base Rate Period and Loans Unpaid
(and Loans Eurodollar Converted Amount Principal
Contin- Converted Rate with into Base of Prin- Balance of
uations into Euro- Respect Rate cipal Eurodollar Notation
Date Thereof) dollar Loans Thereto Loans Repaid Loans Made by
- ---- -------- ------------ ---------- ---------- -------- ---------- --------
<PAGE>
REEVES BROTHERS, INC.
Secretary's Certificate
I, Jennifer H. Fray, the Secretary of Reeves Brothers,
Inc., a Delaware corporation ("Reeves Brothers"), hereby certify
that:
(a) Attached hereto as Exhibit A are true, complete and
correct copies of resolutions duly adopted by the Board of
Directors of Reeves Brothers by Unanimous Written Consent dated
March 23, 1995. Such resolutions have not been amended, modified,
revolted or rescinded since the date of the adoption thereof and
are in full force and effect on the date hereof.
(b) The individuals named below are duly elected
officers of Reeves Brothers and each is authorized to execute and
deliver the Fifth Amendment, dated March 27, 1995 (the
"Amendment"), to the Credit Agreement dated August 6, 1992, as
amended, among Reeves Brothers, Reeves Industries, Inc., the
several banks and other financial institutions from time to time
party thereto (the "Banks") and Chemical Bank, as Agent for the
Banks, and any certificate or other document to be delivered
pursuant to the Amendment, on behalf of Reeves Brothers. Each of
such individuals at the time of affixing their signatures, held
and continue to hold on the date hereof the respective offices of
Reeves Brothers set forth opposite their signatures, and the
signatures set forth below are their genuine signatures:
Name Office Signature
Augustus I. duPont Vice President and /s/ Augustus I. duPont
General Counsel
William Ewing, III Vice President and /s/ William Ewing, III
Treasurer
Jennifer H. Fray Secretary and /s/ Jennifer H. Fray
Assistant General
Counsel
Steven W. Hart Executive Vice /s/ Steven W. Hart
President and Chief
Financial Officer
IN WITNESS WHEREOF, I have hereunto set my hand this 27th
day of March, 1995.
/s/ Jennifer H. Fray
Jennifer H. Fray
Secretary
I, Augustus I. duPont, Vice President and General Counsel
of Reeves Brothers, hereby certify that Jennifer H. Fray is, and
at all times since November 23, 1992 has been, the duly elected
and qualified Secretary of Reeves Brothers and that the signature
set forth above is her genuine signature.
IN WITNESS WHEREOF, I have hereunto set my hand this 27th
day of March, 1995.
/s/ Augustus I. duPont
--------------------------
Augustus I. duPont
Vice President and General
Counsel
<PAGE>
UNANIMOUS WRITTEN CONSENT
OF THE BOARD OF DIRECTORS OF
REEVES BROTHERS, INC.
The undersigned, being all of the directors of Reeves Brothers,
Inc., a Delaware corporation (hereinafter called the
"Corporation"), hereby adopt as of the 23rd of March, 1995 by
consent in writing in accordance with Section 141 (f) of the
Delaware General Corporation Law, the following resolutions with
the same force and effect as if they had been adopted at a duly
convened meeting of the Board of Directors of the Corporation.
RESOLVED, that this Board of Directors believes it to be
advisable and in the best interest of this Corporation to enter
into a Fifth Amendment (the "Amendment") to the Credit Agreement
by and among the Corporation, Reeves Industries, Inc., the banks
and other financial institutions signatory thereto and Chemical
Bank, as Agent and that the form, terms and provisions of, and
the transactions contemplated by, the Amendment, substantially in
the form presented to the Board, be, and they hereby are,
approved and adopted in all respects subject to such changes
therein as may be approved by this Corporation, and the proper
officers of this Corporation shall be and hereby are authorized
and directed to execute and deliver the Amendment, with changes
approved as aforesaid, which execution shall be conclusive
evidence of such approval on behalf of this Corporation; and
further
RESOLVED, that the proper officers of this Corporation be,
and hereby are, authorized and directed to take or cause to be
taken all such further actions and to execute and deliver or
cause to be executed and delivered all such further instruments
and documents and to supply such information to governmental
authorities, in the name and on behalf of this Corporation and to
incur all such fees and expenses as in their judgement shall be
necessary or advisable in order to carry into affect the purpose
and intent of the foregoing resolution; and further
RESOLVED, that all actions previously taken by any officer
or director of this Corporation in connection with the
transactions contemplated by the foregoing resolutions are hereby
adopted, ratified, confirmed and approved in all respect as the
acts and deeds of the Corporation.
IN WITNESS WHEREOF, the undersigned has executed this
Consent as of the date set forth above.
/s/ James W. Hart
James W. Hart
Chairman of the Board
<PAGE>
REEVES INDUSTRIES, INC.
Secretary's Certificate
I, Jennifer H. Fray, the Secretary of Reeves Industries,
Inc., a Delaware corporation ("Reeves Industries"), hereby certify
that:
(a) Attached hereto as Exhibit A are true, complete and
correct copies of resolutions duly adopted by the Board of
Directors of Reeves Industries by Unanimous Written Consent dated
March 23, 1995. Such resolutions have not been amended, modified,
revolted or rescinded since the date of the adoption thereof and
are in full force and effect on the date hereof.
(b) The individuals named below are duly elected
officers of Reeves Industries and each is authorized to execute and
deliver the Fifth Amendment, dated March 27, 1995 (the
"Amendment"), to the Credit Agreement dated August 6, 1992, as
amended, among Reeves Industries, Reeves Brothers, Inc., the
several banks and other financial institutions from time to time
party thereto (the "Banks") and Chemical Bank, as Agent for the
Banks, and any certificate or other document to be delivered
pursuant to the Amendment, on behalf of Reeves Industries. Each of
such individuals at the time of affixing their signatures, held
and continue to hold on the date hereof the respective offices of
Reeves Industries set forth opposite their signatures, and the
signatures set forth below are their genuine signatures:
Name Office Signature
Augustus I. duPont Vice President and /s/ Augustus I. duPont
General Counsel
William Ewing, III Vice President and /s/ William Ewing, III
Treasurer
Jennifer H. Fray Secretary and /s/ Jennifer H. Fray
Assistant General
Counsel
Steven W. Hart Executive Vice /s/ Steven W. Hart
President and Chief
Financial Officer
IN WITNESS WHEREOF, I have hereunto set my hand this 27th
day of March, 1995.
/s/ Jennifer H. Fray
--------------------
Jennifer H. Fray
Secretary
I, Augustus I. duPont, Vice President and General Counsel
of Reeves Industries, hereby certify that Jennifer H. Fray is, and
at all times since November 23, 1992 has been, the duly elected
and qualified Secretary of Reeves Industries and that the signature
set forth above is her genuine signature.
IN WITNESS WHEREOF, I have hereunto set my hand this 27th
day of March, 1995.
/s/ Augustus I. duPont
----------------------
Augustus I. duPont
Vice President and General
Counsel
<PAGE>
UNANIMOUS WRITTEN CONSENT
OF THE BOARD OF DIRECTORS OF
REEVES INDUSTRIES, INC.
The undersigned, being all of the directors of Reeves Industries,
Inc., a Delaware corporation (hereinafter called the
"Corporation"), hereby adopt as of the 23rd of March, 1995 by
consent in writing in accordance with Section 141 (f) of the
Delaware General Corporation Law, the following resolutions with
the same force and effect as if they had been adopted at a duly
convened meeting of the Board of Directors of the Corporation.
RESOLVED, that this Board of Directors believes it to be
advisable and in the best interest of this Corporation to enter
into a Fifth Amendment (the "Amendment") to the Credit Agreement
by and among the Corporation, Reeves Brothers, Inc., the banks
and other financial institutions signatory thereto and Chemical
Bank, as Agent and that the form, terms and provisions of, and
the transactions contemplated by, the Amendment, substantially in
the form presented to the Board, be, and they hereby are,
approved and adopted in all respects subject to such changes
therein as may be approved by this Corporation, and the proper
officers of this Corporation shall be and hereby are authorized
and directed to execute and deliver the Amendment, with changes
approved as aforesaid, which execution shall be conclusive
evidence of such approval on behalf of this Corporation; and
further
RESOLVED, that the proper officers of this Corporation be,
and hereby are, authorized and directed to take or cause to be
taken all such further actions and to execute and deliver or
cause to be executed and delivered all such further instruments
and documents and to supply such information to governmental
authorities, in the name and on behalf of this Corporation and to
incur all such fees and expenses as in their judgement shall be
necessary or advisable in order to carry into affect the purpose
and intent of the foregoing resolution; and further
RESOLVED, that all actions previously taken by any officer
or director of this Corporation in connection with the
transactions contemplated by the foregoing resolutions are hereby
adopted, ratified, confirmed and approved in all respects as the
acts and deeds of the Corporation.
IN WITNESS WHEREOF, the undersigned has executed this
Consent as of the date set forth above.
/s/ James W. Hart
-----------------
James W. Hart
Chairman of the Board
<PAGE>
March 27, 1995
Chemical Bank
270 Park Avenue
New York, New York 10017
Bank of Boston Connecticut
One Landmark Square
Stamford, Connecticut 06901
Ladies and Gentlemen:
I am General Counsel of Reeves Industries, Inc., a Delaware
corporation (the "Parent"), and Reeves Brothers, Inc., a Delaware
corporation (the "Company") (the Parent and the Company,
collectively, the "Borrowers"), and have acted as such in
connection with the negotiation, execution and delivery of the
Fifth Amendment dated as of March 27, 1995 (the "Amendment") to
the Credit Agreement, dated as of August 6, 1992, as amended,
supplemented or otherwise modified from time to time (the "Credit
Agreement"), among the Parent, the Company, the several banks party
thereto (the "Banks") and Chemical Bank, as agent for the Banks
(the "Agent").
This opinion is being furnished to you pursuant to Section
2.2 (ii) of the Amendment. Unless otherwise defined herein,
capitalized terms herein shall have the meaning assigned to such
terms in, or by reference in, the Credit Agreement.
In connection with this opinion, I have (i) investigated
such questions of law, (ii) examined an executed copy of the
Amendment, the Credit Agreement, the Security Agreement and
originals or certified, conformed or reproduction copies of such
charter documents, instruments, documents and records of the
Borrowers, and such certificates of public officials and such
other documents, and (iii) received such information from
officers and representatives of the Borrowers, in each case as I have
deemed necessary or appropriate for the purposes of this opinion.
In all such examinations, I have assumed, but have not verified, the
legal capacity of all natural persons executing documents, the genuiness
of all signatures on original or certified, conformed or reproduction
copies of documents of all parties other than the Borrowers, and the
authenticity of original and certified copies of all copies submitted to
me as conformed or reproduction copies. As to various questions of
fact relevant to the opinions expressed herein, I have relied
upon, and assume the accuracy of, representations and warranties
contained in, and by reference in, the Credit Agreement and the
Agreement and the Amendment and certificates and oral or written
statements and other information of representatives of the
Borrowers and others and assume compliance on the part of all
parties to the Credit Agreement and the Amendment with their
covenants and agreements contained therein.
Based upon the foregoing and subject to the limitations,
qualifications and assumptions set forth herein, I am of the
opinion that:
1. Each of the Borrowers (a) is duly organized validly
existing and in good standing under the laws of the jurisdiction
of its organization, (b) has the corporate power and authority,
and the legal right, to own and operate its property, to lease
the property it operates as lessee and to conduct the business in
which it is currently engaged, (c) is duly qualified as a foreign
corporation and in good standing under the laws of each
jurisdiction where its ownership, leasor operation of property or the
conduct of its business requires such qualification, except
to the extent that the failure to be so qualified and in good
standing could not, in the aggregate, reasonably be expected to
have a Material Adverse Effect.
2. Each of the Borrowers (i) has the corporate power
and authority, and the legal right, to make, deliver and perform
the Amendment and to perform the Credit Agreement, to consummate
each of the transactions contemplated thereby, and to comply with
each of the provisions thereof, and (ii) has taken all necessary
corporate action to authorize the execution, delivery and
performance of the Amendment and the performance of the Credit
Agreement, to consummate each of the transactions contemplated
thereby, and to comply with each of the provisions thereof.
3. The Amendment has been duly and validly executed and
delivered by each of the Borrowers and each of the Amendment and
the Credit Agreement constitutes the legal, valid and binding
obligation of each Borrower party thereto enforceable against
such borrower in accordance with its terms, except as limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights
generally, and by applicable laws (including any applicable
common law and equality) and judicial decisions which may affect
the remedies provided therein.
4. No consent, approval, waiver, license or
authorization of, filing with or other act by or in respect of,
any Governmental Authority of or within the State of New York or
in respect of the General Corporation Law of the State of Delaware
("Delaware Corporate Law") or of any other Person is required on
the part of either of the Borrowers in connection with the
execution, delivery, performance, validity or enforceability of
the Amendment or the performance, validity or enforceability of
the Credit Agreement, the consummation of the transactions
contemplated thereby, or the compliance with each of the
provisions thereof.
5. The execution, delivery and performance of the
Amendment and the performance of the Credit Agreement, the
consummation of the transaction contemplated thereby, and the
compliance with each of the provisions thereof, do not and will
not conflict with, constitute a default under or violate any
Requirement of Law of any Governmental Authority of or within the
State of New York or in respect of Delaware Corporate Law or, to
the best of my knowledge, any Contractual Obligation of either of
the Borrowers, and will not result in, or require, the creation
or imposition of any Lien on any of its or their respective
properties or revenues pursuant to any such Requirement of Law or
Contractual Obligation.
6. No litigation, investigation or proceeding of or
before any arbitrator of Governmental Authority is pending, or to
the best of my knowledge, threatened by or against any Borrower
or against any of its respective properties or revenues (a) with
respect to the Credit Agreement or the Amendment or any of the
transactions contemplated thereby, or (b) which could reasonably
be expected to have a Material Adverse Effect.
7. Neither of the Borrowers is an "investment company"
or a company "controlled" by an "investment company", within the
meaning of the Investment Company Act of 1940, as amended.
8. Neither of the Borrowers is subject to regulation
under any federal or New York state statute or regulation which
limits its ability to incur Indebtedness under the Credit
Agreement or the Amendment.
9. In connection with the Amendment, no additional
action or filing is necessary in order to continue the security
interest in the Collateral and the perfection of such security
interest as collateral security for the Obligations, as such
security interest and the perfection thereof existed immediately
prior to the execution and delivery of the Amendment.
The opinions set forth above are subject to the
qualifications and limitations that I have rendered the opinions
expressed herein based on facts, circumstances, laws, rules,
regulations, court decisions, and regulatory authority
determinations in effect on the date hereof and assume no
obligation to update or supplement this opinion or reflect any
facts, circumstances, laws, rules, regulations, or any changes
thereto, or any court decisions or regulatory authority
determinations which may hereafter occur or come to my attention.
The opinions expressed herein are limited to the laws of
the State of New York, the General Corporation Law of the State
of Delaware and the federal laws of the United States of America,
in each case as currently in effect.
In connection with the opinion in paragraph 5, such opinion
is limited to laws of the State of New York and the federal laws
of the United States of America, which are normally applicable to
transactions of the type provided for in the Credit Agreement and
the Amendment.
In connection with the opinion in paragraph 9, I have assumed that
the substantive law of the states listed on Schedule II to the Credit
Agreement is the same as the substantive law of the State of New York.
This opinion is rendered to you solely for your benefit and
may not be furnished, used, circulated, quoted or relied upon by
any other person, firm or corporation (other than a successor to
or assignee of the Agent of any Bank) for any purposes without my
prior written consent.
Very truly yours,
/s/ Augustus I. duPont
<PAGE>
REVOLVING CREDIT NOTE
COPY
$9,428,571 New York, New York
August 6, 1992
FOR VALUE RECEIVED, the undersigned, REEVES INDUSTRIES,
INC., a Delaware corporation (the "Company"), hereby
unconditionally promises to pay on the Termination Date to the
order of BANK OF BOSTON CONNECTICUT (the "Bank") at the office of
Chemical Bank, located at 270 Park Avenue, New York, New York
10017, in lawful money of the United States of America and in
immediately available funds, the principal amount of the lesser
of (a) NINE MILLION FOUR HUNDRED TWENTY-EIGHT THOUSAND FIVE
HUNDRED SEVENTY-ONE AND 00/100 DOLLARS ($9,428,571) and (b) the
aggregate unpaid principal amount of all Revolving Credit Loans
made by the Bank to the undersigned pursuant to subsection 2.1 of
the Credit Agreement referred to below.
The undersigned further agrees to pay interest in like
money at such office on the unpaid principal amount hereof from
time to time from the date hereof at the rates per annum set
forth in subsections 2.9(a) and (b) of the Credit Agreement
referred to below until any such amount shall become due and
payable (whether at the stated maturity, by acceleration or
otherwise), and thereafter on any such overdue amount at the rate
per annum set forth in subsection 2.9(c) of the Credit Agreement
until paid in full (both before and after judgment). Interest
shall be payable in arrears on each Interest Payment Date,
commencing on the first such date to occur after the date hereof
and terminating upon payment (including prepayment) in full of
the unpaid principal amount hereof; provided that interest
accruing on any overdue amount shall be payable on demand.
The holder of this Note is authorized to, and so long as it
holds this Note shall, record the date, Type and amount of each
Revolving Credit Loan made by the Bank pursuant to subsection 2.1
of the Credit Agreement, each continuation thereof, each
conversion of all or a portion thereof to another Type pursuant
to subsection 2.7 of the Credit Agreement, the date and amount of
each payment or prepayment of principal thereof and, in the case
of Eurodollar Loans, the length of each Interest Period and the
Eurodollar Rate with respect thereto, on the schedules annexed
hereto and constituting a part hereof, or on a continuation thereof which
shall be annexed hereto and constitute a part hereof, and any such
recordation shall constitute prima facie evidence of the accuracy of the
information so recorded, provided that failure of the Bank to
make any such recordation (or any error in such recordation)
shall not affect the obligations of the Company under this Note
or under the Credit Agreement.
This Note is one of the Revolving Credit Notes referred to
in the Credit Agreement, dated as of August 6, 1992, among the
Company, Reeves Brothers, Inc., the several banks and financial
institutions from time to tome parties thereto (the "Banks") and
Chemical Bank, a New York banking corporation, as agent for the Banks
thereunder (as amended, supplemented or otherwise modified
from time to time, the "Credit Agreement"), is entitled to the
benefits thereof, is secured as provided therein, is subject to
optional and mandatory prepayment in whole or in part as provided
therein and is issued in substitution and replacement of (but not
in payment of) the $6,428,571 Note dated as of August 6, 1992
issued by the Company to the Bank. Terms used herein which are
defined in the Credit Agreement shall have such defined meanings
unless otherwise defined herein or unless the context otherwise
requires.
Upon the occurrence of any one or more of the Events of
Default specified in the Credit Agreement, all amounts then
remaining unpaid on this Note shall become, or may be declared to
be, immediately due and payable, all as provided therein.
Except as expressly provided in Section 10 of the Credit
Agreement, the Company expressly waives diligence, presentment,
protest, demand and other notices of any kind.
This Revolving Credit Note shall be governed by, and
construed and interpreted in accordance with, the laws of the
State of New York.
REEVES INDUSTRIES, INC.
By: /s/ William Ewing, III
---------------------------
Title : Vice President and
Treasurer
<PAGE>
SCHEDULE A to
Revolving Credit Note
LOANS, CONVERSIONS AND PAYMENTS
OF BASE RATE LOANS
Amount of
Amount of Base Rate Unpaid
Eurodollar Loans Principal
Loans Converted Balance
Amount of Converted into Amount of Base
Base Rate into Base Eurodollar Principal Rate Notation
Date Loan Rate Loans Loans Repaid Loans Made By
- ---- --------- ---------- ---------- --------- --------- --------
<PAGE>
SCHEDULE B to
Revolving Credit Note
LOANS, CONVERSIONS AND PAYMENTS
OF EURODOLLAR LOANS
Amount
of
Euro- Amount of
dollar Amount of Interest Eurodollar
Loan Base Rate Period and Loans Unpaid
(and Loans Eurodollar Converted Amount Principal
Contin- Converted Rate with into Base of Prin- Balance of
uations into Euro- Respect Rate cipal Eurodollar Notation
Date Thereof) dollar Loans Thereto Loans Repaid Loans Made by
- ---- -------- ------------ ---------- --------- -------- ---------- --------
<PAGE>
REVOLVING CREDIT NOTE
COPY
$12,571,429 New York, New York
August 6, 1992
FOR VALUE RECEIVED, the undersigned, REEVES INDUSTRIES,
INC., a Delaware corporation (the "Company"), hereby
unconditionally promises to pay on the Termination Date to the
order of CHEMICAL BANK (the "Bank") at the office of Chemical
Bank, located at 270 Park Avenue, New York, New York 10017, in
lawful money of the United States of America and in immediately
available funds, the principal amount of the lesser of (a) TWELVE
MILLION FIVE HUNDRED SEVENTY-ONE THOUSAND FOUR HUNDRED TWENTY-
NINE AND 00/100 DOLLARS ($12,571,429) and (b) the aggregate
unpaid principal amount of all Revolving Credit Loans made by the
Bank to the undersigned pursuant to subsection 2.1 of the Credit
Agreement referred to below.
The undersigned further agrees to pay interest in like
money at such office on the unpaid principal amount hereof from
time to time from the date hereof at the rates per annum set
forth in subsections 2.9(a) and (b) of the Credit Agreement
referred to below until any such amount shall become due and
payable (whether at the stated maturity, by acceleration or
otherwise), and thereafter on any such overdue amount at the rate
per annum set forth in subsection 2.9(c) of the Credit Agreement
until paid in full (both before and after judgment). Interest
shall be payable in arrears on each Interest Payment Date,
commencing on the first such date to occur after the date hereof
and terminating upon payment (including prepayment) in full of
the unpaid principal amount hereof; provided that interest
accruing on any overdue amount shall be payable on demand.
The holder of this Note is authorized to, and so long as it
holds this Note shall, record the date, Type and amount of each
Revolving Credit Loan made by the Bank pursuant to subsection 2.1
of the Credit Agreement, each continuation thereof, each
conversion of all or a portion thereof to another Type pursuant
to subsection 2.7 of the Credit Agreement, the date and amount of
each payment or prepayment of principal thereof and, in the case
of Eurodollar Loans, the length of each Interest Period and the
Eurodollar Rate with respect thereto, on the schedules annexed
hereto and constituting a part hereof, or on a continuation thereof
which shall be annexed hereto and constitute a part hereof, and any such
recordation shall constitute prima facie evidence of the accuracy of the
information so recorded, provided that failure of the Bank to
make any such recordation (or any error in such recordation)
shall not affect the obligations of the Company under this Note
or under the Credit Agreement.
This Note is one of the Revolving Credit Notes referred to
in the Credit Agreement, dated as of August 6, 1992, among the
Company, Reeves Brothers, Inc., the several banks and financial
institutions from time to time parties thereto (the "Banks") and Chemical
Bank, a New York banking corporation, as agent for the Banks
thereunder (as amended, supplemented or otherwise modified
from time to time, the "Credit Agreement"), is entitled to the
benefits thereof, is secured as provided therein, is subject to
optional and mandatory prepayment in whole or in part as provided
therein and is issued in substitution and replacement of (but not
in payment of) the $8,571,429 Note dated as of August 6, 1992
issued by the Company to the Bank. Terms used herein which are
defined in the Credit Agreement shall have such defined meanings
unless otherwise defined herein or unless the context otherwise
requires.
Upon the occurrence of any one or more of the Events of
Default specified in the Credit Agreement, all amounts then
remaining unpaid on this Note shall become, or may be declared to
be, immediately due and payable, all as provided therein.
Except as expressly provided in Section 10 of the Credit
Agreement, the Company expressly waives diligence, presentment,
protest, demand and other notices of any kind.
This Revolving Credit Note shall be governed by, and
construed and interpreted in accordance with, the laws of the
State of New York.
REEVES INDUSTRIES, INC.
By: /s/ William Ewing, III
---------------------------
Title : Vice President and
Treasurer
<PAGE>
SCHEDULE A to
Revolving Credit Note
LOANS, CONVERSIONS AND PAYMENTS
OF BASE RATE LOANS
Amount of
Amount of Base Rate Unpaid
Eurodollar Loans Principal
Loans Converted Balance
Amount of Converted into Amount of of Base
Base Rate into Base Eurodollar Principal Rate Notation
Date Loan Rate Loans Loans Repaid Loans Made By
- ---- --------- ---------- ---------- --------- --------- --------
<PAGE>
SCHEDULE B to
Revolving Credit Note
LOANS, CONVERSIONS AND PAYMENTS
OF EURODOLLAR LOANS
Amount
of
Euro- Amount Of
dollar Amount of Interest Eurodollar
Loan Base Rate Period and Loans Unpaid
(and Loans Eurodollar Converted Amount Principal
Contin- Converted Rate with into Base of Prin- Balance of
uations into Euro- Respect Rate cipal Eurodollar Notation
Date Thereof) dollar Loans Thereto Loans Repaid Loans Made by
- ---- -------- ------------ ---------- --------- -------- ---------- --------
<PAGE>
March 27, 1995
Chemical Bank, as Agent
270 Park Avenue
New York, New York 10017
Ladies and Gentlemen:
We refer to the Guarantee, dated as of August 6, 1992, (the
"Guarantee") made by Reeves Brothers, Inc., a Deleware
corporation (the "Guarantor"), in favor of Chemical Bank, as
agent (in such capacity the "Agent") for the banks (the "Banks")
parties to the Credit Agreement, dated as of August 6, 1992 (as
amended, supplemented or otherwise modified from time to time,
the "Credit Agreement"), among the Guarantor, Reeves Industries,
Inc. (the "Parent"), the Banks and the Agent.
By this letter agreement, the Guarantor agrees to amend the
Guarantee by deleting the phrase "Fifteen Million U.S. Dollars
(U.S. $15,000,000)" from the sixth line of the second paragraph
of Section 2 (Guarantee), and inserting in lieu thereof "Twenty-
Two Million U.S. Dollars (U.S. $22,000,000)".
This letter agreement 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.
Chemical Bank, as Agent -2- March 27, 1995
THIS LETTER AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
Very truly yours,
REEVES BROTHERS, INC.
By: /s/ William Ewing, III
--------------------------
Title: Vice President and
Treasurer
Accepted and agreed to as of
the date first above written:
CHEMICAL BANK, AS AGENT
By: /s/ Peter C. Eckstein
- ----------------------------
Title: Vice President
SIXTH AMENDMENT, dated as of May 8, 1995 (this
"Amendment"), 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); and
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(b) and Subsection 7.1(c)
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:
SECTION 1. AMENDMENT OF SUBSECTIONS
7.1(b) and 7.1(c)
OF THE CREDIT AGREEMENT
1.1 Amendment of Subsection 7.1(b) (Maintenance of Net
Worth). Subsection 7.1(b) of the Credit Agreement is hereby
amended by (i) deleting the amount "30,000,000" for the period
from 3/31/95 through 6/29/95 and substituting in lieu thereof the
amount "28,000,000" and (ii) deleting the amount "32,000,000" for
the period from 6/30/95 through 9/29/95 and substituting in lieu
thereof "28,000,000".
1.2 Amendment of Subsection 7.1(c) (Consolidated EBIT
Interest Coverage). Subsection 7.1(c) of the Credit Agreement is
hereby amended by (i) deleting the Interest Coverage Ratio of
"2.00 to 1.0" for the four quarters ending 3/31/95 and
substituting in lieu thereof "1.65 to 1.0" and (ii) deleting the
Interest Coverage Ratio of "2.00 to 1.0" for the four quarters
ending 6/30/95 and substituting in lieu thereof "1.65 to 1.0".
SECTION 2. REPRESENTATIONS AND WARRANTIES:
CONDITIONS PRECEDENT TO THE
EFFECTIVENESS OF THIS AMENDMENT.
2.1 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.
2.2 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:
(i) the Agent shall have received counterparts of this Amendment
executed by the Company, the Parent and the Banks;
(ii) 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;
(iii) no Default or Event of Default shall have
occurred and be continuing after giving effect to this
Amendment and the transactions contemplated hereby; and
(iv) 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.
SECTION 3. MISCELLANEOUS
3.1 Expenses. The Company and the Parent agree to pay
all legal costs and expenses in connection with this Amendment.
3.2 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.
3.3 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.
3.4 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/ William Ewing, III
_______________________________
Title: Vice President and
Treasurer
REEVES INDUSTRIES, INC.
By: /s/ William Ewing, III
_______________________________
Title: Vice President and
Treasurer
CHEMICAL BANK,
as Agent and as a Bank
By: /s/ D. J. Corcoran
_______________________________
Title: VP
BANK OF BOSTON CONNECTICUT
By: /s/ W. Lincoln Schoff, Jr.
_______________________________
Title: Director
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