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, 1994
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
35,021,666 shares of $.01 par value common stock of the Registrant
were outstanding at the close of business on March 27, 1995. As of
March 27, 1995 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 "Registrant"), 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 consisting of: (i) the Industrial
Coated Fabrics Group, which manufactures and sells rubber and
synthetic coated fabrics, and (ii) the Apparel Textile Group, which
manufactures, processes and sells specialty textile fabrics.
Effective October 25, 1993, HHCI, Inc., a newly formed,
wholly-owned subsidiary of Hart Holding, merged with and into the
Registrant with the Registrant surviving the merger. Subsequent to
and as a result of this merger, 100% of the Registrant's
outstanding common stock is held by Hart Holding. See Footnote 11,
Shareholder's Equity, of the Notes to Consolidated Financial
Statements of Reeves.
INDUSTRY SEGMENTS
Reeves is a diversified industrial company with operations in
two principal industry segments: industrial coated fabrics,
conducted through its Industrial Coated Fabrics Group, and apparel
textiles, conducted through its Apparel Textile Group. The
Industrial Coated Fabrics Group manufactures and sells rubber and
synthetic coated fabrics such as (i) offset printing blankets and
other graphic arts products for industrial applications, and (ii)
specialty coated fabrics (truck tarpaulins, gaskets, gas meters and
other molded, flat diaphragms and materials used in automotive
airbags). The Apparel Textile Group manufactures, processes and
sells specialty textile fabrics to apparel and other manufacturers.
Throughout its businesses, Reeves emphasizes specialty products,
product quality, technological innovation and quick response to the
changing needs of its customers.
The products of the Industrial Coated Fabrics Group and the
Apparel Textile Group are sold in the United States and in 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; Los Angeles, California;
Spartanburg, South Carolina and Lodivecchio, Italy.
The following table sets forth the amount of total revenue
contributed by product line in each of Reeves' industry segments
which accounted for 10% or more of Reeves' consolidated revenue in
any of the last three fiscal years (in thousands).
1992 1993 1994
Industrial Coated Fabrics Group:
Graphic Arts $ 64,892 $ 62,584 $ 66,807
Specialty Coated Fabrics 61,684 78,151 89,229
-------- -------- --------
$126,576 $140,735 $156,036
======== ======== ========
Apparel Textile Group:
Finished Goods and
Dyeing and Finishing $ 72,977 $ 77,416 $ 89,008
Greige Goods 69,706 63,480 57,588
-------- -------- --------
$142,683 $140,896 $146,596
======== ======== ========
Other $ 1,845 $ 2,022 $ 2,637
======== ======== ========
Reeves does not hold any patents, trademarks, licenses and/or
franchises the loss of which would have a material adverse effect
on any of its industry segments.
Additional information about Reeves' industry segments is
contained in Footnote 15, Financial Information About Industry
Segments, of the Notes to Consolidated Financial Statements of
Reeves.
INDUSTRIAL COATED FABRICS GROUP
The Industrial Coated Fabrics Group ("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 products include: (1) a complete line of printing
blankets used in offset lithography, (2) specialty coated fabrics,
including fluid control diaphragm materials, tank seals, ducting
materials, coated automotive airbag 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 (3) 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 Reeves 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
seven patents with respect to polyurethane coatings and currently
has eight 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 materials, 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
ICF is a leading producer 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 printed material. ICF markets a complete line of
conventional, compressible and sticky-back blankets under the
VULCAN (registered trademark) name. Reeves' line includes the 714
(registered trademark), the first compressible printing blanket,
the 2,000 PLUS (registered trademark), an advanced general purpose
blanket, the VISION SR and REFLECTION (trademarks), two premium
blankets targeted at the sheet-fed market, and the MARATHON and
HORIZON (registered trademarks), blankets 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. Reeves is a co-licensee of the
latest blanket technology known to offset printing. Heidelberg
Harris, a world leader in the manufacture of printing presses,
chose Reeves as one of only two worldwide blanket manufacturers to
license and produce the new cylindrical blanket for their high
speed gapless "Sunday" press, the M3000. This press utilizes
Reeves' new VULCAN GENESIS (registered trademark) cylindrical
blanket.
Reeves 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. Reeves' 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
relationship 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, to both
distributors and end-users.
Specialty Coated Fabrics
Reeves 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 specialty oriented. In 1994, more than 90% of ICF's
sales of specialty coated fabrics were derived from fabrics
manufactured to meet particular customers' specifications.
Specialty coated fabrics generally consist of a fabric base,
a substrate layer, and an elastomer coating (i.e.,coating
consisting of an elastic substance, such as rubber) which is
applied to the fabric base. Reeves 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. Reeves 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 include the following:
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 material, 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. ICF has
the leading share of the domestic market in the segment.
Synthetic diaphragms. ICF'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 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,
environmental applications and miscellaneous items. A portion of
ICF's work in this area is performed as a subcontractor on United
States government contracts.
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. Reeves believes that TRW and Morton account for a
majority 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 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.
Reeves expects sales of airbag systems and associated fabrics 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 automotive airbags. No legislation or regulation presently
requires the installation of airbags outside of the United States
market. Reeves S.p.A., a wholly-owned subsidiary located in
Lodivecchio, Italy, has sufficient capacity for production of
coated automotive airbag materials if demand develops outside of
the United States for such products.
Reeves' 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
impermeability to allow rapid inflation. Coated airbag fabrics
also act as an insulator to withstand the means of inflation
(currently hot gases). Side-impact airbags (presently offered on
certain models of Volvo, BMW and Mercedes Benz) are also expected
to use coated airbag fabric.
Most passenger-side airbags are currently designed to use
uncoated fabrics. Passenger-side airbags do not require coated
fabrics because space is available to permit less rapid inflation
of the airbag and impermeability is not required. Consequently,
they can be manufactured at a lower cost using uncoated fabric.
Reeves 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, Reeves has constructed a facility in Spartanburg,
South Carolina for weaving fabric for both coated and uncoated
airbag applications. The facility is producing fabric for customer
review.
Through its research and development activities, Reeves 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.
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, play
ground covers for Discovery Zone, 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 weather sealing.
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.
Competition
ICF's competitive environment varies by product line. For
graphic arts products (in which Reeves believes it is one of the
three leading firms), the Company's principal competitors are Day
International and Polyfibron Technologies, formerly a division of
W. R. Grace. To a lesser extent, ICF also competes with a number
of other firms. In its specialty materials product line, ICF
produces numerous products and 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.
Reeves' coated automotive airbag materials 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.
Principal Customers
ICF did not have a customer accounting for more than 10% of
consolidated Reeves' sales during the years 1992, 1993 or 1994.
APPAREL TEXTILE GROUP
The Apparel Textile Group ("ATG") 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, cotton,
wool, silk, flax and various combinations of these fibers.
Products of the Greige Goods Division are primarily utilized for
apparel. The Greige Goods Division's most significant customers are
outside converters and, to a lesser extent, ATG's Finished Goods
Division.
Reeves believes that the Greige Goods Division is
distinguished from its competitors by its ability to manufacture
small yardage runs, its rapid response time, the high quality of
its products and the 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.
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-boy's and career apparel
markets.
Reeves 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 ATG's products are sold directly to
customers through its own sales force. The balance is sold through
brokers and agents.
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.
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 Reeves 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. Reeves believes that this increases the Finished
Goods Division's ability to respond rapidly to changes in market
demand and enhances its competitive position.
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, and V. F. Corporation. ATG also markets its
fabrics to major retailers, including J. C. Penney and 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 1992, 1993 or 1994.
FOREIGN OPERATIONS
All of Reeves' foreign operations are conducted through Reeves
S.p.A., a wholly-owned subsidiary located in Lodivecchio, Italy.
Reeves S.p.A. forms a part of Reeves' ICF Group. The following
table provides approximate sales, net income and identifiable
assets (in thousands) for each of the last three years attributable
to Reeves S.p.A. In addition, Reeves' domestic operations generated
export sales of approximately $6,898,000, $7,088,000 and $5,104,000
in 1992, 1993 and 1994, respectively:
1992 1993 1994
Sales $ 38,444 $ 36,932 $ 41,339
Net income 9,165 7,446 6,989
Identifiable assets 31,608 33,092 39,738
The decrease in net income is primarily attributable to an increase
in Reeves S.p.A.'s effective tax rate and a $3.5 million credit in
1992 related to the adoption of SFAS 109, Accounting for Income
Taxes ("FAS 109"). Income before income taxes and cumulative
effect of the adoption of FAS 109 increased from $7.2 million in
1992 to $9.4 million in 1994.
The financial results of Reeves S.p.A. do not include any
allocations of corporate expenses or consolidated interest expense.
BACKLOG
At December 31, 1994, Reeves had unfilled orders of
approximately $64,024,000 as compared to approximately $56,462,000
at December 31, 1993. The following is a comparison, by Group, of
open order backlogs at December 31 of each year presented (in
thousands):
1992 1993 1994
Industrial Coated
Fabrics Group $16,824 $17,072 $24,223
Apparel Textile Group 32,994 39,390 39,801
------- ------- -------
Total $49,818 $56,462 $64,024
======= ======= =======
The increase in ATG's backlog from 1992 to 1993 is due to the
addition of several new Finished Goods Division customers. ATG's
backlog increased in 1994 compared to 1993 due to growth in the
greige goods business, offset by a decline in the finished goods
business. The greige goods business increased as a result of
Reeves' modernization and expansion program, which increased ATG's
greige goods manufacturing capacity and allowed this Division to
accept more orders. The finished goods business decreased due to
a slow down in the 100% cotton goods retail market.
The increase in the ICF Domestic backlog from 1992 to 1994 is
due to growth in the coated automotive airbag materials business
and, to a lesser extent, growth in the offset printing blanket
business.
The December 31, 1994, backlogs for ICF and ATG are reasonably
expected to be filled in 1995. Under certain circumstances, orders
may be cancelled at Reeves' 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.
RAW MATERIALS, MANUFACTURING 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 and
polyaramid and calendared fabrics. ATG principally utilizes
cotton, 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.
Reeves is not presently experiencing any difficulty in obtaining
raw materials.
ENVIRONMENTAL MATTERS
Reeves 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 1994, expenditures in connection with Reeves'
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 Reeves
cannot predict what laws, regulations and policies may be adopted
in the future, based on current regulatory standards, Reeves does
not expect such expenditures to have a material adverse effect on
its operations.
EMPLOYEES
On February 1, 1995, Reeves employed approximately 2,370
people, of whom 1,891 were in production, 184 were in general and
administrative functions, 71 were in sales and 224 were at Reeves
S.p.A. At such date, ICF had approximately 955 employees,
including employees at Reeves S.p.A., ATG had approximately 1,305
employees, with the remainder of Reeves' employees in other and
general and administrative positions.
ITEM 2. PROPERTIES
The principal facilities of Reeves and their locations as of
March 27, 1995, are as follows:
Size (Sq. Ft.)
Location Function Owned Leased
Manufacturing
Industrial Coated Fabrics Group
Rutherfordton, NC Coated Fabrics 215,000
Rutherfordton, NC Warehouse 45,000
Spartanburg, SC Graphic Arts and
Airbag Fabric 408,364
Lodivecchio, Italy Graphic Arts and
Coated Fabrics 160,000 4,900
--------- -------
Subtotal 783,364 49,900
--------- -------
Apparel Textile Group
Woodruff, SC Yarn Mill 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 1,900,727 124,950
--------- -------
Non-Manufacturing
New York, NY Administrative/
Sales 12,000
Spartanburg, SC Administrative/
Sales 43,000
Norwalk, CT Administrative 6,800
--------- -------
Total Non-Manufacturing Facilities 43,000 18,800
--------- -------
Total 1,943,727 143,750
========= =======
Reeves is party to leases with terms ranging from
month-to-month to fifteen years, with rental expense aggregating
$.5 million for the twelve months ended December 31, 1994. Reeves
believes that all of its facilities are suitable and adequate for
the current conduct of its operations.
All of the listed facilities were occupied by Reeves, Reeves
Brothers or its subsidiaries as of December 31, 1994.
ITEM 3. LEGAL PROCEEDINGS
Reeves believes that there are no legal proceedings, other than
ordinary routine litigation incidental to the business of Reeves,
to which Reeves 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 Reeves'
consolidated financial position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to stockholders during the fourth
quarter of 1994.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
At March 27, 1995, 100% or 35,021,666 shares of the
Registrant's 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 Operations, and Footnote 8, 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). This summary should be read in
conjunction with the consolidated financial statements and related
notes contained herein.
December 31,
1990 1991 1992 1993 1994
Statement of
Operations Data:
Net sales
Industrial Coated
Fabrics Group $119,749 $121,264 $126,576 $140,735 $156,036
Apparel Textile
Group 136,384 146,568 142,683 140,896 146,596
Other 1,726 1,727 1,845 2,022 2,637
-------- -------- -------- -------- --------
Total net sales $257,859 $269,559 $271,104 $283,653 $305,269
======== ======== ======== ======== ========
Operating income
Industrial Coated
Fabrics Group $ 23,250 $ 23,940 $ 24,732 $ 29,287 $ 30,918
Apparel Textile
Group 9,787 9,848 10,407 11,251 12,264
Other 272 273 286 332 197
Corporate
expenses (8,643) (8,435) (9,658) (11,773) (12,059)
Restructuring
charges (1,003) (402)
-------- -------- -------- -------- --------
Total operating
income $ 24,666 $ 25,626 $ 25,767 $ 28,094 $ 30,918
======== ======== ======== ======== ========
Income from
continuing
operations $ 5,757 $ 4,544 $ 5,976 $ 7,857 $ 8,794
======== ======== ======== ======== ========
Interest expense
and amortization
of financing
costs and debt
discount $ 19,935 $ 21,777 $ 17,633 $ 16,394 $ 16,385
======== ======== ======== ======== ========
Ratio of
earnings to
fixed charges (1) 1.3x 1.2x 1.5x 1.7x 1.8x
======== ======== ======== ======== ========
Operating Data:
Depreciation and
goodwill
amortization
expense $ 6,637 $ 7,108 $ 8,116 $ 8,544 $ 9,678
Capital
expenditures 7,007 11,015 15,788 16,506 27,264
Balance Sheet Data:
Total assets (2) $228,256 $214,987 $192,931 $203,025 $237,198
Long-term debt
(including
current
portion) 148,837 148,960 132,576 132,677 146,278
Shareholder's
equity (3) 11,345 18,627 13,715 19,561 28,815
Footnotes to Statement of Operations and Balance Sheet Data:
(1) For the purposes 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, amortization of
financing costs and debt discount, and one-third of all
rentals, which is considered representative of the interest
portion included therein, after adjustments for amounts
related to discontinued operations. See Exhibit 12, Ratio of
Earnings to Fixed Charges.
(2) Total assets include the assets of discontinued operations
prior to disposal. In 1990, Reeves discontinued the operations
of Reeves' ARA Automotive Group.
(3) During 1994 Reeves determined that the 1986 tax expense was
understated by approximately $1,850,000 due to an error in the
calculation of the 1986 tax provision. Accordingly during
1994, Reeves recorded an adjustment to retained earnings and
income taxes payable of $1,850,000. The adjustment is
reflected in Reeves' selected financial data as if
it occurred on December 31, 1990. The decline in
shareholder'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
Reeves operates in two principal industry segments, Industrial
Coated Fabrics and Apparel Textiles. The table below sets forth
selected operating data (in thousands of dollars and as a percentage
of net sales) in each of the last three years for Reeves:
December 31,
1992 1993 1994
Net Sales $271,104 $283,653 $305,269
Operating income before
restructuring charges $ 25,767 $ 29,097 $ 31,320
9.5% 10.3% 10.3%
Restructuring charges $ 1,003 $ 402
.4% .1%
Operating income $ 25,767 $ 28,094 $ 30,918
9.5% 9.9% 10.1%
1994 Compared to 1993
Net sales for 1994 increased $21.6 million or 7.6% to $305.3
million compared to $283.7 million in 1993. The increase is due to
a 10.9% increase in sales of the Industrial Coated Fabrics Group,
primarily increased sales of coated automotive airbag materials and
offset printing blankets, and a 4.0% increase in the sale of apparel
textiles, primarily finished goods.
Operating income before restructuring charges in 1994
increased 7.6% to $31.3 million or 10.3% of net sales. This
compares to operating income before restructuring charges in 1993 of
$29.1 million or 10.3% of net sales. Operating income, after
restructuring charges in 1994 of $.4 million, increased 10.0% to
$30.9 million or 10.1% of net sales.
Industrial Coated Fabrics
ICF reported a 10.9% increase in 1994 net sales to $156.0
million compared to $140.7 million in 1993. 1994 net sales
increased primarily due to an 11.7% increase in domestic sales,
primarily due to higher coated automotive airbag materials and
offset printing blankets sales volumes. The increase in sales of
coated automotive airbag fabrics and offset printing blankets was
partially offset by a decrease in sales of specialty coated fabrics.
The decrease in specialty coated fabrics sales was primarily due to
lower sales of rubber specialty products used by the military.
ICF's operating income increased 5.6% to $30.9 million in 1994
compared to $29.3 million in 1993, and represented 19.8% of ICF's
net sales in 1994 compared to 20.8% in 1993. The 5.6% increase in
operating income in 1994 as compared to 1993 was primarily due to
higher coated automotive airbag materials and offset printing
blanket volume plus foreign currency exchange gains which resulted
from the weakening of the Italian Lira against most other
currencies. The increases were partially offset by lower unit
volumes in specialty coated fabrics, primarily military related
business.
Apparel Textiles
ATG reported a 4.0% increase in 1994 net sales to $146.6
million compared to $140.9 million in 1993. The increase is due to
a higher sales volume of finished goods products offset by lower
greige goods sales. Greige goods sales decreased primarily due to
the cessation of weaving operations at the Woodruff, South Carolina
facility.
ATG's operating income before restructuring charges increased
9.0% to $12.3 million in 1994 compared to $11.3 million in 1993, and
represented 8.4% of ATG's net sales in 1994 compared to 8.0% in
1993. The 9.0% increase in operating income in 1994 as compared to
1993 was primarily due to the higher finished goods sales volume and
an increase in the greige goods gross margins. The increase in
operating income was offset by a decrease in finished goods gross
margins, primarily due to lower prices.
Corporate Expenses
Corporate expenses increased approximately 2.4% in 1994
compared to 1993. The increase is primarily due to higher legal
fees and outside consulting fees related to strategic planning.
Increases in corporate expenses were offset by lower pension and
management incentive costs. The management fee paid to Hart Holding
decreased in 1994 compared to 1993. The decrease was due to Reeves
paying more of the expenses formerly covered by the management fee.
Accordingly, the net effect on corporate expenses was not material.
Restructuring Charge
In 1994 Reeves recorded a facility restructuring charge of $.4
million. The one time charge, representing only costs incurred
during 1994, related to the cessation of yarn operations at Reeves'
Bessemer City, North Carolina facility and the transfer of those
operations to Reeves' Woodruff, South Carolina yarn mill.
Interest Expense
Interest expense and amortization of financing costs and debt
discount was $16.4 million compared to $16.4 million in 1993.
Interest capitalized during 1994 as part of the cost of constructing
and equipping the new weaving facility in Spartanburg, South
Carolina was $419,000.
Income Taxes
The effective income tax rate on income from operations before
income taxes for 1994 and 1993 was 39.7% and 33.7%, respectively.
The effective income tax rate on income from operations differed
from the federal statutory rate of 34% primarily due to the impact
of goodwill amortization, Reeves S.p.A.'s lower effective tax rate
of approximately 25.0% versus a statutory rate of 52.2% and the
expiration of foreign tax credits.
1993 Compared to 1992
Net sales for 1993 increased $12.6 million or 4.6% to $283.7
million compared to $271.1 million in 1992. The increase is due to
an 11.2% increase in the sale of industrial coated fabrics,
primarily growth in sales of coated automotive airbag materials.
Sales of apparel textiles decreased 1.3% in 1993 compared to 1992
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.
Operating income before restructuring charges increased 12.9%
to $29.1 million or 10.3% of net sales. This compares to 1992
operating income of $25.8 million or 9.5% of net sales. After
restructuring charges of $1 million, Reeves' operating income
increased 9.0% to $28.1 million or 9.9% of net sales.
Industrial Coated Fabrics
ICF reported an 11.2% increase in 1993 net sales to $140.7
million compared to $126.6 million in 1992. The increase in 1993
sales is primarily due to a 17.8% increase in domestic sales
primarily due to an increase in the volume of coated automotive
airbag materials caused by the increased use of driver-side airbags
primarily in cars manufactured in the United States. The increase
in coated automotive airbag materials sales was offset by a decrease
in offset printing blanket sales. The decrease in offset printing
blanket sales was primarily due to pricing pressures as a result of
the slowdown in the printing industry.
ICF's operating income increased 18.4% compared to 1992
primarily due to the increase in sales of coated automotive airbag
materials. Operating income from offset printing blankets declined
in 1993 reflecting the worldwide slowdown in the printing industry
partially offset by efficiencies experienced by Reeves S.p.A.
related to increased material yields.
Apparel Textiles
ATG reported a 1.3% decrease in 1993 net sales to $140.9
million compared to $142.7 million in 1992. The decrease is
primarily due to continued pricing pressures in the textile market
and foreign competition.
ATG's operating income before restructuring charges increased
8.1% compared to 1992. The increase occurred even though sales
decreased, as ATG continues to benefit from cost reductions derived
from previous and current capital investments and other cost and
manufacturing process improvements. In addition, ATG benefited from
the restructuring of the weaving operations discussed in the
Restructuring Charge section below.
Corporate Expenses
Corporate expenses increased 21.9% to $11.8 million in 1993
compared to $9.7 million in 1992. The increase related primarily to
increased staffing and compensation expense necessary to support
corporate development activities and a $.5 million provision for
costs related to Reeves' discontinued Buena Vista, Virginia,
operation.
Restructuring Charge
In 1993 Reeves recorded a facility restructuring charge of $1
million. The one-time charge related primarily to the cessation of
weaving activities at Reeves' 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
Interest expense and amortization of financing costs and debt
discounts decreased 7.0% to $16.4 million in 1993 compared to $17.6
million in 1992. The 7.0% decrease reflects the full year effect of
the 1992 refinancing of Reeves' long-term debt and the redemption of
$5.0 million of the 13 3/4% Subordinated Debentures.
Income Taxes
The effective income tax rate on income from operations before
income taxes for 1993 and 1992 was 33.7% and 30.3%, respectively.
The effective income tax rate on income from operations differed
from the federal statutory rate of 34% primarily due to the impact
of goodwill amortization, Reeves S.p.A.'s lower effective tax rate
of approximately 22% versus a statutory rate of 52.2% and the
valuation reserve established related to Reeves estimate of the
benefit for utilization of foreign tax credits.
LIQUIDITY AND CAPITAL RESOURCES
Cash provided by operations in 1994 was $19.1 million compared
to $25.2 million in 1993. The decrease in cash provided by
operations was primarily due to increases in (i) inventories,
related to an expansion of operations, and (ii) other assets,
related to the pre-operating costs associated with the new weaving
facility in Spartanburg, South Carolina. In addition, cash provided
by operations was higher in 1993 compared to 1994 due to receipt in
1993 of a tax refund receivable and proceeds from a lease
transaction completed in 1992. Increases in net income, deferred
income taxes and accounts payable, related to the expansion of
operations, offset these decreases.
Cash provided by operations is the major internal source of
liquidity and is supplemented by a revolving loan agreement with a
group of banks which provides Reeves and Reeves Brothers with an
aggregate $35.0 million revolving line of credit (the "Credit
Agreement"). The Credit Agreement terminates April 1, 1996 and is
secured by Reeves' accounts receivable and inventory. As of
December 31, 1994, Reeves and Reeves Brothers had available
borrowing, net of $1,250,000 of outstanding letters of credit, of
$20,250,000 under the Credit Agreement. Management believes the
funding available is sufficient to meet anticipated requirements for
working capital, capital expenditures and other needs.
Reeves, as a result of a June 1992 public offering, has
outstanding $121,841,000, net of unamortized discount of $659,000,
of 11% Senior Notes due July 15, 2002. In addition, Reeves has
outstanding $10,937,000, net of unamortized discount of $63,000, of
13 3/4% Subordinated Debentures, payable $6,000,000 on May 1, 1999
and $5,000,000 on May 1, 2000.
Reeves' debt instruments (the 11% Senior Notes, 13 3/4%
Subordinated Debentures and the Credit Agreement) contain certain
restrictive covenants. See Footnote 8, Long-Term Debt, of the Notes
to Consolidated Financial Statements of Reeves.
In May 1994, Reeves received a $12.0 million commitment from
an equipment lessor for long-term operating leases of equipment.
This commitment was increased to $18.8 million in August 1994. As of
December 31, 1994, $14.8 was utilized. Reeves believes that the
balance will be utilized in 1995.
Reeves believes that its cash flow from operations, available
leasing capacity and funds available under the Credit Agreement will
be sufficient to fund working capital needs, capital expenditure
requirements, and debt service obligations in future years.
Investment Activities
Capital expenditures were $15.8 million, $16.5 million and
$27.3 million in 1992, 1993 and 1994, respectively. During 1994,
Reeves constructed a facility in Spartanburg, South Carolina for
weaving fabric for both coated and uncoated automotive airbag
materials applications and expanded its Chesnee, South Carolina
facility. Reeves plans to continue the modernization of its
manufacturing operations and expand its automotive airbag materials
capacity with capital spending in 1995 anticipated to approximate
$30.5 million.
EFFECTS OF INFLATION
Management believes that the relatively moderate rate of
inflation has had minimal impact on Reeves' operating results over
the last three years.
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
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE
REGISTRANT
The following table and narrative sets forth the age, as of January
1, 1995, positions with Reeves and Reeves Brothers and principal
business experience during the past five years of each director,
executive officer and significant employee of Reeves and Reeves
Brothers. Any director or executive officer, unless otherwise
stated, holds the identical position or positions in both Reeves and
Reeves Brothers. Significant employees are employed by Reeves
Brothers.
Name Position Age
Anthony L. Cartagine Vice President; 60
President - Apparel
Textile Group
Augustus I. duPont Vice President - 43
General Counsel
William Ewing, III Vice President and Treasurer 48
Jennifer H. Fray Secretary and Assistant 30
General Counsel
Douglas B. Hart Senior Vice President - 32
Operations
James W. Hart Chairman of the Board and 61
Director
James W. Hart, Jr. President, Chief Executive 41
Officer and Chief Operating
Officer
Steven W. Hart Executive Vice President 38
and Chief Financial Officer
V. William Lenoci Vice President; President 59
and Chief Executive
Officer - Industrial
Coated Fabrics Group
Donald R. Miller Vice President - Finance 47
Jeffrey W. Potter Vice President - 32
Business Development
Patrick M. Walsh Vice President - 54
Administration
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. duPont joined Reeves and Reeves Brothers in May 1994 as
Vice President-General Counsel. From 1987 through 1993 Mr. duPont
was Vice President, General Counsel and Secretary for Sprague
Technologies, Inc., a manufacturer of electronic components.
Mr. Ewing joined Reeves and Reeves Brothers in March 1995 as
Vice President and Treasurer. Prior to joining Reeves, Mr. Ewing
had 20 years experience with Chemical Bank and its predecessor,
Manufacturers Hanover Trust Co. From 1990 to 1995 Mr. Ewing was
Managing Director of Banking and Corporate Finance. From 1985 to 1990
he was Senior Vice President for Corporate Banking of Manufacturers
Hanover Bank of Delaware.
Ms. Jennifer H. Fray joined Hart Holding, Reeves and Reeves
Brothers in September 1992 as Assistant General Counsel. In 1994,
she was named General Counsel of Hart Holding. In 1992, she was
named Secretary of Hart Holding, Reeves Industries 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.
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. In 1992, Mr. Hart was
named President, Chief Executive Officer and Chief Operating Officer
of Hart Capital Corporation, Hart Holding's investment firm, whose
primary business is the investment in private equity transactions.
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. Miller joined Reeves and Reeves Brothers in August 1992 as
the Industrial Coated Fabrics Group Controller. He was named Vice
President-Finance in August 1994. From 1988 to 1992, Mr. Miller
served as an Area Controller for Mead Corporation, a manufacturer of
paper and paper products.
Mr. Potter joined Reeves and Reeves Brothers in July 1994 as
Vice President-Business Development. From 1990 through 1994, Mr.
Potter was an Associate with CS First Boston Corporation, an
investment bank. From 1988 to 1990 Mr. Potter was engaged in
studies leading to a Masters Degree in Public and Private Management
from Yale University.
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 and Reeves Brothers.
Mr. James W. Hart is the father of Ms. Jennifer H. 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
Reeves during the years ended December 31, 1994, 1993 and 1992, for
those persons who were at December 31, 1994, (i) the chief executive
officer, and (ii) the other four most highly compensated executive
officers of Reeves.
Summary Compensation Table
Annual Compensation All
Name and Principal Position Year Salary Bonus(1) Other
Anthony L. Cartagine 1994 $266,694 $101,000 -
Vice President; President - 1993 256,357 92,000 -
Apparel Textile Group 1992 235,144 100,000 -
Douglas B. Hart 1994 $246,576 $165,000 -
Senior Vice President - 1993 204,500 125,000 -
Operations 1992 - 100,000 -
James W. Hart, Jr. 1994 $432,500 $270,000 -
President, Chief Executive 1993 398,750 380,000 -
Officer and Chief Operating 1992 365,000 200,000 -
Officer
Steven W. Hart 1994 $432,500 $270,000 -
Executive Vice President 1993 398,750 230,000 -
Chief Financial Officer 1992 365,000 200,000 $31,819 (2)
V. William Lenoci 1994 $312,375 $165,740 -
Vice President; President 1993 293,750 142,000 -
and Chief Executive 1992 240,249 105,000 -
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 officers during 1993.
A portion of those amounts awarded during 1992 for James W.
Hart, Jr., Steven W. Hart, and Anthony L. Cartagine were paid
in 1992. The amounts awarded during 1994 for Douglas B. Hart,
James W. Hart, Jr. and Steven W. Hart were paid in 1994.
(2) Represents reimbursement of certain moving expenses.
EMPLOYMENT CONTRACTS
Reeves Brothers entered into employment agreements (the
"Agreements") with Messrs. Cartagine and Lenoci during 1991 for a
term expiring on June 30, 1995 (subject to extension for up to
four successive six-month periods) and October 31, 1996
(subject to extension for two one year periods), respectively.
Reeves or the employee must provide 120 days notice if they do not
intend to renew the Agreement. The Agreements provide for base
compensation and that each employee participate in the Management
Incentive Bonus Plan, plus certain other benefits.
DIRECTORS' COMPENSATION
Reeves pays no remuneration to directors for serving as such.
PENSION PLANS
Reeves sponsors a noncontributory defined benefit pension plan
covering all of its domestic salaried and hourly employees. Reeves'
funding policy is to fund at least the minimum amount required by
the employee Retirement Income Security Act of 1974.
Effective June 1, 1994, The Reeves Brothers, Inc. Pension Plan
for Hourly employees merged into The Reeves Brothers, Inc. Pension
Plan for Salaried Employees (the "Salaried Plan") with the Salaried
Plan surviving the merger. Concurrent with the merger, the Salaried
Plan changed its name to the "Reeves Brothers, Inc. Pension Plan"
(the "Pension Plan"). Pursuant to the merger, the general
provisions of the Salaried Plan govern the benefits earned by the
participants of the Pension Plan subsequent to the merger. The
Pension Plan benefits are based on an employee's years of accredited
service.
The basic annual benefit for salaried employees under the Pension
Plan is equal to 12 times 1.5% of the average W-2 earnings for the
highest five consecutive calendar years of compensation multiplied by
the years of service less the Social Security benefit.
Annual Pension at Age 65 After Years of Service
Remuneration 15 20 25 30 35
$125,000 $21,243 $30,618 $ 39,993 $ 49,368 $ 58,743
150,000 26,868 38,118 49,368 60,618 71,868
175,000 32,493 45,618 58,743 71,868 84,993
200,000 38,118 53,118 68,118 83,118 98,118
225,000 43,743 60,618 77,493 94,368 111,243
250,000 49,368 68,118 86,868 105,618 120,000
300,000 60,618 83,118 105,618 120,000 120,000
350,000 71,868 98,118 120,000 120,000 120,000
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 (the "Code"). For 1993,
that limit was $235,840. Under a supplemental non-qualified plan,
Messrs. Cartagine and Lenoci would receive a supplemental pension
benefit to make up the limitation of section 401 (a)(17) of the
Code upon retirement in accordance with the Pension Plan. The
retirement benefit payable under the supplemental plan to Messrs.
Cartagine and Lenoci, assuming retirement at age 65 and increases
in covered compensation of five percent per year, would be $45,000
and $62,000, respectively.
(2) Starting in 1994, the maximum annual compensation under
applicable IRS Regulations 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 1995, the Pension Plan's maximum benefit under applicable
IRS Regulations is $120,000.
(B) Years of service for named executive officers:
Officer Years of Service
Anthony L. Cartagine 31.02
Douglas B. Hart 5.42
James W. Hart, Jr. 10.68
Steven W. Hart 11.75
V. William Lenoci 27.63
(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' Salary Compensation Committee is comprised of
Douglas B. Hart, James W. Hart, Jr., Steven W. Hart and Patrick M.
Walsh, all of whom are officers of Reeves. See "Certain
Relationships and Related Transactions" regarding transactions
involving Douglas B. Hart and Steven W. Hart.
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
27, 1995 with respect to ownership of Reeves common stock by each
person who is known by Reeves to own beneficially, or who may be
deemed to own beneficially, more than 5% of the outstanding shares
of Reeves common stock, directors, the chief executive officer,
the four most highly compensated executive officers and all
directors and executive officers of Reeves as a group. Unless
otherwise stated, Reeves common stock is directly owned.
Amount and
Name and Nature of
Address of Beneficial Percent of
Beneficial Owner Ownership Class
Hart Holding Company
Incorporated . . . . . . . 35,021,666 100.0%
401 Merritt 7 Corporate Park
Norwalk, CT 06856
Anthony L. Cartagine (1) . . 0 0.0%
104 West 40th Street
New York, NY 10018
Douglas B. Hart . . . . . . 0 0.0%
401 Merritt 7 Corporate Park
Norwalk, CT 06856
James W. Hart (2) . . . . . 35,021,666 100.0%
401 Merritt 7 Corporate Park
Norwalk, CT 06856
James W. Hart, Jr. (3) . . . 0 0.0%
401 Merritt 7 Corporate Park
Norwalk, CT 06856
Steven W. Hart (4) . . . . . 0 0.0%
401 Merritt 7 Corporate Park
Norwalk, CT 06856
V. William Lenoci (5). . . . 0 0.0%
Highway 29 South
Spartanburg, SC 29304
Reeves Industries . . . . . 35,021,666 100.0%
Directors and Executive
Officers as a Group (6)
(1) As of March 27, 1995, Anthony L. Cartagine is the indirect
beneficial owner of 2 shares of Hart Holding common stock,
representing less than 1% of such outstanding common stock.
(2) As of March 27, 1995, James W. Hart is the beneficial owner
of 25,206 shares of Hart Holding common stock (96.5%), of
which (i) 20,206 shares are owned directly, and (ii) 5,000
shares are subject to a presently exercisable option (the
"Hart Holding Option") granted in November 1993. The Hart
Holding Option expires on December 31, 2028 and provides for
the issuance of up to 6,667 shares upon exercise of options as
follows: 2,500 immediately at $1,350 per share; 2,500
exercisable one year from grant date at $1,500 per share; and
1,667 exercisable two years from grant date at $1,650 per
share.
On January 26, 1994, James W. Hart was granted options to
purchase 3,800,000 shares of common stock of the Registrant,
par value $.01 per share, and has an expiration date of
December 31, 2023. The options contain an exercise price of
$.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).
(3) As of March 27, 1995, James W. Hart, Jr. is the beneficial
owner of 100 shares of Hart Holding common stock (representing
less than 1% of such outstanding common stock), all of which
are subject to a presently exercisable option.
(4) As of March 27, 1995, Steven W. Hart is the beneficial owner
of 401 shares of Hart Holding common stock (1.9%).
(5) As of March 27, 1995, V. William Lenoci is the beneficial
owner of 9 shares of Hart Holding common stock, representing
less than 1% of such outstanding common stock.
(6) As of March 27, 1995, the directors and executive officers of
Hart Holding as a group beneficially own an aggregate of
26,119 shares of Hart Holding common stock (99.7%).
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In connection with the acquisition of Reeves, Hart Holding,
Reeves, Reeves Brothers and certain subsidiaries entered into a Tax
Allocation Agreement dated as of May 1, 1986, as amended and
restated effective January 1, 1992 (the "Tax Agreement"). The Tax
Agreement provides that Hart Holding and Reeves will file
consolidated Federal income tax returns as long as they remain
members of the same affiliated group.
During the years ended December 31, 1992, 1993 and 1994,
Reeves' paid management fees to Hart Holding of $1,910,000,
$1,804,000 and $980,000, respectively.
Effective December 31, 1991, Hart Holding exchanged its 1,000
shares of Reeves Series I Preferred Stock, par value $1.00 per
share, valued in the aggregate at $9,410,000, for 18,820,000 shares
of Reeves common stock, par value $.01 per share, valued at $.50 per
share. This transaction resulted in Hart Holding's percentage
ownership in Reeves' common stock increasing from 86.7% to 93.5%.
Pursuant to a November 1992 court-ordered settlement of a
lawsuit brought by Hart Holding and Reeves 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.
This transaction resulted in Hart Holding's percentage ownership in
Reeves common stock increasing from 93.5% to 98.6%.
Effective October 25, 1993, HHCI, Inc., a newly formed,
wholly-owned subsidiary of Hart Holding, merged with and into the
Registrant with the Registrant 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 was issued 535,000 shares of the Registrant's common
stock. Additionally, the Registrant purchased 481,307 shares of its
common stock not held by Hart Holding and the shares were
subsequently cancelled and retired. As a result of this merger,
Hart Holding owns 100% of the outstanding shares of the common stock
of the Registrant.
During 1992, Reeves purchased the residences of three officers
of Reeves, Jennifer H. Fray, Douglas B. Hart, and Steven W. Hart,
for $215,000, $225,000 and $575,000, respectively. In each case,
the price paid was less than a current appraisal on such property
or, in the case of Jennifer H. Fray, less than the cost of such
property in 1990 plus the cost of improvements. The Board of
Directors determined at the time that the price for each residence
was not greater than the fair market value for such property.
During 1993 and 1994, Reeves recognized a loss of approximately
$161,000 and $105,000, respectively, on the sale of the properties
including related expenses.
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, 1993 and
1994
Consolidated Statement of Income for the Years Ended
December 31, 1992, 1993, and 1994
Consolidated Statement of Changes in Shareholder's
Equity for the Years Ended December 31, 1992, 1993, and
1994
Consolidated Statement of Cash Flows for the Years
Ended December 31, 1992, 1993, and 1994
Notes to Consolidated Financial Statements
2. Financial Statement Schedules for the Years Ended
December 31, 1992, 1993 and 1994
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 Name
No.
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
Industries, 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 (9) Second Amendment, dated as of December 28, 1993, to the
Credit Agreement.
10.04 Third Amendment and Waiver, dated as of September 27,
1994, to the Credit Agreement.
10.05 Fourth Amendment and Waiver, dated as of March 10, 1995,
to the Credit Agreement.
10.06 (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
Corporation and Hart Capital Corporation.
10.07 (8) Reeves Corporate Management Incentive Bonus Plan.
10.08 Employment Agreement dated July 1, 1991, and amended
December 1, 1994, between Reeves Brothers, Inc. and
Anthony L. Cartagine.
10.09 (9) Employment Agreement dated November 1, 1991 and amended
May 18, 1993, between Reeves Brothers, Inc. and Vito W.
Lenoci.
10.10 (9) Reeves Brothers, Inc. 401(a)(17) Plan, effective January
1, 1989.
10.11 (9) Non-Qualified Stock Option Agreement, dated as of January
26, 1994, between Reeves Industries, Inc. and James W.
Hart.
10.12 (6) Agreement and Plan of Merger, dated as of October 22,
1993, between Reeves Industries, Inc. and HHCI, Inc.
10.13 (4) Lease Agreement, dated March 28, 1991, between Springs
Industries, Inc., Lessor, and Reeves Brothers, Inc.,
Lessee.
12 Statement of Computation of Ratio of Earnings to Fixed
Charges.
21 Subsidiaries of Reeves Industries, Inc.
27 Financial Data Schedule
(1) Previously filed by Reeves Industries, Inc. as an exhibit to
Reeves' 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' 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' 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' 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' 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' 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' Annual Report on Form 10-K dated March 28, 1991, which
is incorporated by reference herein.
(9) Previously filed by Reeves Industries, Inc. as an Exhibit to
Reeves' Annual Report on Form 10-K dated March 31, 1994, which
is in corporated by reference herein.
(b) Reports on Form 8-K:
There were no reports on Form 8-K filed during the fourth
quarter of 1994.
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 27, 1995 By:/s/ Steven W. Hart
-------------- ----------------------------
Steven W. Hart
Executive Vice-President &
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 27, 1995
---------------------- Executive Officer and --------------
James W. Hart, Jr. Chief Operating Officer
(ii) Principal Financial Officer:
/s/ Steven W. Hart Executive Vice President March 27, 1995
---------------------- & Chief Financial Officer --------------
Steven W. Hart
(iii) Principal Accounting Officer:
/s/ Donald R. Miller Vice President - Finance March 27, 1995
---------------------- --------------
Donald R. Miller
(iv) A Majority of the Board of Directors:
/s/ James W. Hart Director March 27, 1995
---------------------- --------------
James W. Hart
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>
REEVES INDUSTRIES, INC.
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1993 AND 1994
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholder of
Reeves Industries, Inc.
In our opinion, the consolidated financial statements listed in the
index appearing under Item 14(a)(1) and (2) on page 42, after
giving retroactive effect to the adjustment described in Note 11,
present fairly, in all material respects, the financial position of
Reeves Industries, Inc. and its subsidiary at December 31, 1993 and
1994, and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 1994, 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.
Price Waterhouse LLP
Atlanta, Georgia
February 17, 1995
<PAGE>
REEVES INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEET
(in thousands except share data)
December 31,
1993 1994
ASSETS
Current assets
Cash and cash equivalents
of $7,222 and $1,550 $ 12,015 $ 17,429
Accounts receivable, less allowance
for doubtful accounts
of $1,467 and $1,232 45,925 52,890
Inventories (Note 4) 33,969 35,909
Deferred income taxes (Note 9) 5,442 4,259
Other current assets 2,909 4,114
-------- --------
Total current assets 100,260 114,601
Property, plant and equipment, at cost
less accumulated depreciation (Note 5) 51,415 70,629
Unamortized financing costs, less
accumulated amortization of $1,177
and $1,830 3,946 3,293
Goodwill, less accumulated amortization
of $9,431 and $10,771 43,357 42,017
Deferred income taxes (Note 9) 2,153 1,246
Other long-term assets (Note 6) 1,894 5,412
-------- --------
Total assets $203,025 $237,198
======== ========
<PAGE>
REEVES INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEET
(in thousands except share data)
December 31,
1993 1994
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities
Accounts payable $ 22,810 $ 32,109
Accrued expenses and other
liabilities (Note 7) 18,671 18,738
-------- --------
Total current liabilities 41,481 50,847
Long-term debt (Note 8) 132,677 146,278
Deferred income taxes (Note 9) 4,367 5,637
Other long-term liabilities (Note 7) 4,939 5,621
-------- --------
Total liabilities 183,464 208,383
-------- --------
Shareholder's equity (Note 11)
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 (Note 11) 18,114 26,908
Equity adjustments from translation (4,002) (3,542)
-------- --------
19,561 28,815
-------- --------
Commitments and contingencies (Note 16)
-------- --------
Total liabilities and
shareholder's equity $203,025 $237,198
======== ========
The accompanying notes are an integral part of these financial
statements.
<PAGE>
REEVES INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF INCOME
(in thousands)
Year ended December 31,
1992 1993 1994
Net sales $271,104 $283,653 $305,269
Cost of sales 216,043 222,016 243,575
-------- -------- --------
Gross profit on sales 55,061 61,637 61,694
Selling, general and
administrative expenses 29,294 32,540 30,374
Restructuring charges (Note 3) 1,003 402
-------- -------- --------
Operating income 25,767 28,094 30,918
Other income (expense)
Other income, net 435 158 44
Interest expense and
amortization of financing
costs and debt discounts (17,633) (16,394) (16,385)
-------- -------- --------
(17,198) (16,236) (16,341)
-------- -------- --------
Income before income taxes,
extraordinary item and
cumulative effect of a change
in accounting principle 8,569 11,858 14,577
Income taxes (Note 9) 2,593 4,001 5,783
-------- -------- --------
Income before extraordinary item
and cumulative effect of a
change in accounting principle 5,976 7,857 8,794
Extraordinary loss from early
extinguishment of debt, less
applicable income tax benefits
of $3,148 (Note 8) (6,112)
Cumulative effect of a change in
accounting for income taxes
(Note 9) 3,221
-------- -------- --------
Net income $ 3,085 $ 7,857 $ 8,794
======== ======== ========
The accompanying notes are an integral part of these financial
statements.
<PAGE>
REEVES INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
Year ended December 31,
1992 1993 1994
Cash flows from operating
activities
Net income $ 3,085 $ 7,857 $ 8,794
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)
Depreciation and
amortization 9,146 9,272 10,433
Deferred income taxes (112) 694 3,360
Changes in operating assets
and liabilities
Decrease (increase) in
accounts receivable 2,574 (7,049) (6,965)
Decrease (increase) in
inventories 4,200 1,341 (1,940)
(Increase) decrease in other
current assets (9,167) 6,514 (1,205)
Decrease (increase) in other
assets 134 (900) (3,518)
(Decrease) increase in
accounts payable (546) 7,458 9,299
Increase in accrued expenses
and other liabilities 6,451 133 749
Equity adjustments from
translation (3,450) (117) (163)
Other 236
-------- -------- --------
Net cash provided by operating
activities 15,206 25,203 19,080
-------- -------- --------
Cash flows from investing
activities
Purchases of property, plant
and equipment (15,788) (16,506) (27,264)
Net proceeds (payments)
from disposal of discontinued
operations 12,438 (536)
-------- -------- --------
Net cash used by investing
activities (3,350) (17,042) (27,264)
-------- -------- --------
Cash flows from financing
activities
Principal payments of long-term
debt (108,726)
Net (payments) borrowings
on revolving loans (30,000) 13,500
Borrowings of long-term debt 121,644
Debt issuance costs (5,115)
Premium on early retirement
of debt (4,876)
Issuance of common stock 300
Purchases of common stock (1,075) (270)
-------- -------- --------
Net cash (used) provided by
financing activities (28,148) 30 13,500
-------- -------- --------
Effect of exchange rate
changes on cash (535) (341) 98
-------- -------- --------
(Decrease) increase in cash
and cash equivalents (16,827) 7,850 5,414
Cash and cash equivalents,
beginning of year 20,992 4,165 12,015
-------- -------- --------
Cash and cash equivalents,
end of year $ 4,165 $ 12,015 $ 17,429
======== ======== ========
The accompanying notes are an integral part of these financial
statements.
<PAGE>
REEVES INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY
(in thousands)
Equity
Capital Adjust-
Common Stock in ments
$.01 Par Value Excess From
--------------- of Par Retained Trans-
Shares Amount Value Earnings lation Total
December 31, 1991 36,886 $369 $6,421 $ 9,022 $4,665 $20,477
Prior period
adjustment (Note 11) (1,850) (1,850)
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)
------ ---- ------ ------- ------- -------
December 31, 1992 34,968 350 5,069 10,257 (1,961) 13,715
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)
------ ---- ------ ------- ------- -------
December 31, 1993 35,022 350 5,099 18,114 (4,002) 19,561
Net income 8,794 8,794
Translation adjustments 460 460
------ ---- ------ ------- ------- -------
December 31, 1994 35,022 $350 $5,099 $26,908 $(3,542) $28,815
====== ==== ====== ======= ======= =======
The accompanying notes are an integral part of these financial
statements.
<PAGE>
REEVES INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1993 AND 1994
1. BUSINESS AND ORGANIZATION
Reeves Industries, Inc. ("Reeves" or the "Company"), a wholly-
owned subsidiary of Hart Holding Company Incorporated ("Hart
Holding" or the "Parent"), 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 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 27% and 31% of total inventories was determined on
the last-in, first-out ("LIFO") method at December 31, 1993 and
1994, 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
$6,833,000 as of December 31, 1994.
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.
The Company capitalizes interest as part of the cost of
constructing major facilities and equipment. Interest
capitalized during 1992, 1993 and 1994 was $0, $0 and $419,000,
respectively.
Fair value of financial instruments
Cash, accounts receivable, accounts payable and accrued
liabilities are reflected in the consolidated financial
statements at fair value because of the short-term maturity of
these instruments. The fair value of the Company's 11% Senior
Notes is determined based upon a recent market price quote and
is disclosed in Note 8. The fair value of the Company's 13 3/4%
Subordinated Debentures is estimated by discounting the future
cash flows using the current rates at which similar loans would
be made with similar credit ratings and for the same remaining
maturity. The fair value of foreign currency exchange contracts
(used for hedging purposes) is estimated using quoted exchange
rates and is disclosed in Note 12.
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 shareholder'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 and gains and losses on forward foreign currency
exchange contracts not designated as hedges are included in
income. Gains and losses on long-term intercompany transactions
are recorded net of tax in the equity adjustments from
translation account.
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
significant new operations are deferred and amortized over five
years or the life of the asset associated with the pre-operating
costs, which is generally five to seven 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
9 to the consolidated financial statements.
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.
At December 31, 1994, unremitted earnings of the foreign
subsidiary were approximately $26,500,000. 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, the 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 a noncontributory pension plan covering all
eligible domestic employees (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.
Reclassifications
Certain amounts in the 1992 and 1993 consolidated financial
statements and notes have been reclassified to conform with the
1994 presentation.
3. RESTRUCTURING CHARGES
During 1993 and 1994, the Company implemented restructuring
plans to reduce the Company's overall cost structure and to
improve productivity. The Consolidated Statement of Income for
the year ended December 31, 1993 includes a charge of
approximately $1,003,000 related to the plan implemented in 1993
(the "1993 Plan"). The 1993 Plan includes 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. The Consolidated
Statement of Income for the year ended December 31, 1994
includes a charge, representing only costs incurred during 1994,
of approximately $402,000 related to the plan implemented in
1994 (the "1994 Plan"). The 1994 Plan includes the cessation of
yarn operations at one location and the transfer of those
operations to another location.
4. INVENTORIES
Inventories at December 31, 1993 and 1994 are comprised of the
following (in thousands):
1993 1994
Raw materials $ 6,815 $ 7,591
Work in process 8,792 8,536
Manufactured and finished goods 18,362 19,782
------- -------
$33,969 $35,909
======= =======
If inventories had been calculated on a current cost basis, they
would have been valued higher by approximately $2,038,000 and
$2,397,500 at December 31, 1993 and 1994, respectively.
5. PROPERTY, PLANT AND EQUIPMENT
The principal categories of property, plant and equipment at
December 31, 1993 and 1994 are as follows (in thousands):
1993 1994
Land and land improvements $ 797 $ 735
Buildings and improvements 16,570 23,232
Machinery and equipment 56,555 65,719
Construction in progress 8,929 17,077
-------- --------
82,851 106,763
Less - Accumulated depreciation
and amortization (31,436) (36,134)
-------- --------
$ 51,415 $ 70,629
======== ========
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 at December 31, 1994.
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 title to the Assets to the Counties in
the Company's financial statements. The net book value at
December 31, 1994 of Assets to which nominal title was
transferred to the Counties is $12,190,000.
6. OTHER LONG-TERM ASSETS
Other long-term assets at December 31, 1993 and 1994 are
comprised of the following (in thousands):
1993 1994
Pre-operating costs $ 742 $ 3,666
Other 1,152 1,746
------- -------
$ 1,894 $ 5,412
======= =======
7. ACCRUED EXPENSES AND OTHER LIABILITIES
Accrued expenses and other liabilities at December 31, 1993 and
1994 are comprised of the following (in thousands):
1993 1994
Accrued salaries, wages and incentives $ 3,145 $ 4,920
Product claims reserve 1,237 437
Interest payable 6,512 6,626
Income taxes payable 2,398 1,662
Deferred compensation 171
Italian severance pay program 421 22
Other 4,787 5,071
------- -------
$18,671 $18,738
======= =======
Other long-term liabilities at December 31, 1993 and 1994 are
comprised of the following (in thousands):
1993 1994
Deferred compensation $ 1,016 $ 1,117
Accrued costs related to discontinued
operations 1,390 1,174
Italian severance pay program 1,970 2,727
Other 563 603
------- -------
$ 4,939 $ 5,621
======= =======
8. LONG-TERM DEBT
Long-term debt at December 31, 1993 and 1994 consists of the
following (in thousands):
1993 1994
11% Senior Notes due July 15, 2002,
net of unamortized discount
of $747 and $659 $121,753 $121,841
13 3/4% Subordinated Debentures due
May 1, 2000, net of unamortized
discount of $76 and $63 10,924 10,937
Revolving loan payable to bank 13,500
-------- --------
$132,677 $146,278
======== ========
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 in 1992 of $5,775,000 ($.16 per
share), net of applicable income tax benefits of $2,974,000.
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 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 (8.5% at December 31, 1994), Base CD Rate plus
1%, or the Federal Funds Effective Rate plus 1/2%. The Alternate
Base Rate and Eurodollar Rate decline based on a ratio of
earnings to fixed charges, as defined. The Revolving Loan
weighted average interest rate at December 31, 1994 was 8.9%.
The Revolving Loan is due April 1, 1996. The Revolving Loan is
secured by Reeves Brothers' accounts receivable and inventory.
As of December 31, 1994, the Company and Reeves had available
borrowings, net of $1,250,000 of outstanding letters of credit,
of $20,250,000 under the Revolving Loan. A commitment fee of 1/2%
per annum is required on the unused portion of the Revolving
Loan.
The Senior Notes, Credit Agreement, 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, including that related to discontinued
operations, amounted to $12,350,000, $15,306,000 and $15,753,000
in 1992, 1993 and 1994, respectively.
The estimated fair value of the Company's Senior Notes and 13 3/4%
Subordinated Debentures at December 31, 1994 is $122,500,000 and
$10,919,000, respectively.
9. 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 for income taxes from continuing operations is
comprised of the following (in thousands):
1992 1993 1994
Current:
Federal $ (401) $1,278 $ 934
Foreign 954 811 1,596
State 174 138 241
------ ------ ------
727 2,227 2,771
------ ------ ------
Deferred:
Federal 983 945 2,063
Foreign 641 826 832
State 242 3 117
------ ------ ------
$2,593 $4,001 $5,783
====== ====== ======
The provision for income taxes from continuing operations
differs from taxes computed using the statutory federal income
tax rate as follows (in thousands):
1992 1993 1994
Consolidated computed
statutory taxes $2,914 $4,050 $5,002
State income taxes, net of
federal income tax benefit 275 93 236
Amortization of goodwill 456 456 456
Foreign tax rate less than
statutory rate (868) (1,451) (774)
Expiring foreign tax credits 1,577
Other, net (184) 53 86
Valuation reserve 800 (800)
------ ------ ------
$2,593 $4,001 $5,783
====== ====== ======
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 52.2% to 22% for both 1992 and 1993 and
approximately 25% for 1994.
Deferred tax liabilities (assets) under FAS 109 are comprised of
the following temporary differences (in thousands):
1993 1994
Deferred tax liabilities
Inventories $ 2,584 $ 2,392
Depreciation 1,783 2,145
Amortization 1,100
------- -------
$ 4,367 $ 5,637
======= =======
Current deferred tax assets
Tentative minimum tax credits $ 854 $ 500
Accrued expenses 3,490 3,438
Foreign tax credit carryforwards 1,898 321
Valuation reserve (800)
------- -------
5,442 4,259
------- -------
Long-term deferred tax assets
Depreciation on foreign
subsidiary assets 1,219 (140)
Tentative minimum tax credits 895
Foreign exchange on note of
foreign subsidiary 934 491
------- -------
2,153 1,246
------- -------
$ 7,595 $ 5,505
======= =======
The sources of income from operations before income taxes are as
follows (in thousands):
1992 1993 1994
Domestic $ 1,327 $ 2,774 $ 5,160
Foreign 7,242 9,084 9,417
------- ------- -------
$ 8,569 $11,858 $14,577
======= ======= =======
Income taxes paid amounted to approximately $2,406,000,
$1,686,000 and $2,016,000 in 1992, 1993 and 1994, respectively.
10. PENSION PLANS
The Company sponsors a noncontributory defined benefit pension
plan covering all of its domestic salaried and hourly employees.
The Company's funding policy is to fund at least the minimum
amount required by the Employee Retirement Income Security Act
of 1974.
Effective June 1, 1994, The Reeves Brothers, Inc. Pension Plan
for Hourly Employees (the "Hourly Plan") was merged into The
Reeves Brothers, Inc. Pension Plan for Salaried Employees (the
"Salaried Plan") with the Salaried Plan surviving the merger.
Concurrent with the merger, the Salaried Plan changed its name
to the "Reeves Brothers, Inc. Pension Plan" (the "Pension
Plan"). Pursuant to the merger, the general provisions of the
Salaried Plan will begin to govern the benefits earned by the
participants of the Pension Plan subsequent to the merger. The
Pension Plan benefits are based on an employee's years of
accredited service.
The 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 Hourly Plan effective December 1990; the ARA union plan was
merged with the Hourly Plan effective April 1993.
The following table presents the funded status of the Pension
Plan at December 31, 1993 and 1994 (in thousands):
1993 1994
Actuarial present value of accumulated
benefit obligation:
Vested $19,300 $18,145
Nonvested 914 663
------- -------
Accumulated benefit obligation $20,214 $18,808
======= =======
Plan assets at fair value $25,450 $24,412
Projected benefit obligation for
services rendered to date 24,553 22,291
------- -------
Plan assets greater than projected
benefit obligation 897 2,121
Unrecognized net transition obligation 1,955 2,303
Unrecognized net gain subsequent to
transition (3,696) (5,317)
------- -------
Pension liability recognized
in the consolidated balance sheet $ (844) $ (893)
======= =======
Plan assets consist primarily of fixed income securities, equity
securities, and certificates of deposit.
Pension cost includes the following components (in thousands):
1992 1993 1994
Service cost - benefits
earned during the period $ 942 $ 936 $1,243
Interest cost on projected
benefit obligation 1,456 1,643 1,623
Actual return on plan assets (2,961) (2,531) (2,106)
Net amortization and deferral 1,351 754 125
------ ------ ------
Pension cost $ 788 $ 802 $ 885
====== ====== ======
A weighted average discount rate of 7.25% and 8.0%, and rate of
increase in future compensation of 5.0% and 5.5% were used in
determining the actuarial present value of the projected benefit
obligation in 1993 and 1994, respectively. The long-term
expected rate of return on assets was 8.0% in 1993 and 1994.
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 financial
statements.
11. SHAREHOLDER'S EQUITY
Capital stock
The capitalization of Reeves consists of one class of common
stock, $.01 par value (the "Common Stock"). 250,000 shares of
Preferred Stock remain authorized, with no Preferred Stock
currently outstanding.
Retained Earnings
During 1994 the Company determined that the 1986 tax expense
was understated by approximately $1,850,000 due to an error in
the calculation of the 1986 tax provision. Accordingly, during
1994, the Company recorded an adjustment to retained earnings
and income taxes payable of $1,850,000. The adjustment is
reflected in the Company's consolidated financial statements as
if it occurred on December 31, 1991.
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. Additionally, the Company purchased the 481,307
shares of its common stock not held by Hart Holding and the
shares were subsequently cancelled and retired. As a result of
this merger, Hart Holding owns 100% of the outstanding shares of
the common stock of the Company.
Non-qualified Stock Option
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
options 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 options contain an exercise
price of $.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).
12. FOREIGN EXCHANGE
The Company's foreign subsidiary enters into forward currency
exchange contracts to hedge certain firm sales commitments and
certain anticipated but not yet committed sales expected to be
denominated in currencies other than the Italian Lire. The
purpose of the Company's foreign currency hedging activities is
to protect the Company from the risk that the eventual Lire cash
flows resulting from sales to international customers will be
adversely affected by changes in exchange rates. The term of
the foreign currency exchange contracts usually does not exceed
one year. Counterparties to the forward currency exchange
contracts are major Italian financial institutions. Credit loss
from counterparty nonperformance is not anticipated.
At December 31, 1993 and 1994, the Company had foreign currency
exchange contracts outstanding, equivalent to $14,883,000 and
$0, respectively, to exchange various currencies, including the
U.S. dollar, Japanese yen, pound sterling, Deutsche mark, and
French franc into Italian Lire. Gross deferred unrealized gains
and losses from hedging firm sales commitments and anticipated
but not yet committed sales transactions, based on market
prices, were a $23,000 gain and a $499,000 loss at December 31,
1993. The contracts outstanding at December 31, 1993 matured
during 1994 and all gains or losses on the contracts were
recognized in earnings in 1994. The December 31, 1993, fair
value of these foreign currency contracts as hedge instruments
was $14,407,000.
13. 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, 1994, the Company does not consider itself to
have any significant concentrations of credit risk.
14. RELATED PARTY TRANSACTIONS
During the years ended December 31, 1992, 1993 and 1994, the
Company and its subsidiary paid management fees to Hart Holding
of $1,910,000, $1,804,000 and $980,000, respectively.
During 1992, Reeves purchased the residences of three officers
of Reeves for an aggregate amount of $1,015,000. During 1993
and 1994, the Company recognized a loss of approximately
$161,000 and $105,000, respectively, on the sale of the
properties including related expenses.
15. 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 arts 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 and industrial users. Sales
offices are maintained in New York, New York; Dallas, Texas; Los
Angeles, California; Spartanburg, South Carolina and
Lodivecchio, Italy.
The following table presents certain information concerning
each segment (in thousands):
1992 1993 1994
Net sales:
Industrial coated fabrics $126,576 $140,735 $156,036
Apparel textiles 142,683 140,896 146,596
Other 1,845 2,022 2,637
-------- -------- --------
$271,104 $283,653 $305,269
======== ======== ========
Operating income:
Industrial coated fabrics $ 24,732 $ 29,287 $ 30,918
Apparel textiles 10,407 11,251 12,264
Other 286 332 197
Corporate expenses (9,658) (11,773) (12,059)
Restructuring charges (1,003) (402)
-------- -------- --------
Operating income 25,767 28,094 30,918
Other income, net 435 158 44
Interest expense and
amortization of financing
costs (17,633) (16,394) (16,385)
-------- -------- --------
Income before income taxes,
extraordinary item and
cumulative effect of a
change in accounting principle $ 8,569 $ 11,858 $ 14,577
======== ======== ========
Depreciation:
Industrial coated fabrics $ 3,175 $ 3,632 $ 4,515
Apparel textiles 2,782 3,303 3,384
Other 131 162 270
Corporate 688 107 169
-------- -------- --------
$ 6,776 $ 7,204 $ 8,338
======== ======== ========
Capital expenditures:
Industrial coated fabrics $ 6,353 $ 11,459 $ 22,502
Apparel textiles 8,483 4,140 1,825
Other 140 553 284
Corporate 812 354 2,653
-------- -------- --------
$ 15,788 $ 16,506 $ 27,264
======== ======== ========
Identifiable assets:
Industrial coated fabrics $ 65,752 $ 75,625 $103,995
Apparel textiles 64,293 62,528 64,217
Other 818 1,077 1,190
Corporate, principally
discontinued operations
(in 1992), cash, goodwill
and debt issuance costs 62,068 63,795 67,796
-------- -------- --------
$192,931 $203,025 $237,198
======== ======== ========
Financial data of Reeves' foreign operation is as follows (in
thousands):
1992 1993 1994
Sales $ 38,444 $ 36,932 $ 41,339
Net income 9,165 7,446 6,989
Assets 31,608 33,092 39,738
Intersegment sales are not material.
16. COMMITMENTS AND CONTINGENCIES
The Company leases certain operating facilities and equipment
under long-term operating leases. At December 31, 1994 future
minimum rentals, required by operating leases having initial or
remaining noncancellable lease terms in excess of one year are
as follows: 1995 - $4,862,000; 1996 - $4,718,000; 1997 -
$4,685,000; 1998 - $4,630,000; 1999 - $4,613,000; thereafter -
$6,409,000.
Rental expense charged to continuing operations was
approximately $1,420,000, $1,473,000 and $2,800,000 during the
years ended December 31, 1992, 1993 and 1994, 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.
<PAGE>
SCHEDULE VIII - ANALYSIS OF THE ALLOWANCE FOR DOUBTFUL ACCOUNTS
REEVES INDUSTRIES, INC. AND SUBSIDIARIES
(In thousands)
Column A Column B Column C Column D Column E
--------------------
charged
Balance, (credited) charged
begin- to costs to other Balance,
ning of and accounts Deductions end of
Description period expenses describe describe period
December 31, 1991 $2,081
Provision $(148)
Recoveries $ 23
Write-off $(386)
------ ----- ---- ----- ------
December 31, 1992 $2,081 $(148) $ 23 $(386) $1,570
====== ===== ==== ===== ======
Provision $ 427
Recoveries $108
Write-off $(638)
------ ----- ---- ----- ------
December 31, 1993 $1,570 $ 427 $108 $(638) $1,467
====== ===== ==== ===== ======
Provision $ 335
Recoveries $ 26
Write-off $(596)
------ ----- ---- ----- ------
December 31, 1994 $1,467 $ 335 $ 26 $(596) $1,232
====== ===== ==== ===== ======
<PAGE>
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
REEVES INDUSTRIES, INC. AND SUBSIDIARIES
Column A Column B
Charged to
Item (1) Costs and Expenses
(In thousands)
Maintenance and repairs
Year Ended December 31, 1992 $ 7,745
========
Year Ended December 31, 1993 $ 6,328
========
Year Ended December 31, 1994 $ 7,341
========
(1) Other items are less than 1% of revenues or not applicable.
<PAGE>
INDEX TO EXHIBITS
Exhibit Name
No.
3.1 Restated Certificate of Incorporation of Reeves
Industries, Inc.
10.04 Third Amendment and Waiver, dated as of September 27,
1994, to the Credit Agreement.
10.05 Forth Amendment and Waiver, dated as of March 10, 1995,
to the Credit Agreement.
10.08 Employment Agreement dated July 1, 1991, and amended
December 1, 1994, between Reeves Brothers, Inc. and
Anthony L. Cartagine.
12 Statement of Computation of Ratio of Earnings to Fixed
Charges.
21 Subsidiaries of Reeves Industries, Inc.
27 Financial Data Schedule
PAGE 1
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 CHANGE OF REGISTERED AGENT OF "REEVES
INDUSTRIES, INC.", FILED IN THIS OFFICE ON THE NINETEENTH DAY OF
APRIL, A.D. 1994, AT 10 O'CLOCK A.M.
/s/ William T. Quillen
-------------------------
William T. Quillen,
Secretary of State
AUTHENTICATION: 7093842
DATE: 04-19-94
<PAGE>
CERTIFICATE OF CHANGE OF REGISTERED AGENT
AND
REGISTERED OFFICE
Reeves Industries, Inc., a corporation organized and existing
under and by virtue of the General Corporation Law of the State of
Delaware, DOES HEREBY CERTIFY:
The present registered agent of the corporation is United States
Corporation Company and the present registered office of the
corporation is in the county of Kent
The Board of Directors of Reeves Industries, Inc. adopted the
following resolution on the 14th day of April, 1994.
Resolved, that the registered office of Reeves Industries,
Inc. in the state of Delaware be and it hereby is changed to
Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle, and the authorization of
the present registered agent of this corporation be and the
same is hereby withdrawn, and THE CORPORATION TRUST COMPANY,
shall be and is hereby constituted and appointed registered
agent of this corporation at the address of its registered
office.
IN WITNESS WHEREOF, Reeves Industries, Inc. has caused this
statement to be signed by James W. Hart, Jr., its ________ President
and attested by Jennifer H. Fray, its __________ Secretary this 14th
day of April, 1994.
By /s/ James W. Hart, Jr.
____________________________________
______________ President
ATTEST:
By /s/ Jennifer H. Fray
________ Secretary
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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 04/12/1982 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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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:
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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.
* * * * * * * * * *
/s/ William T. Quillen
William T. Quillen, Secretary of State
AUTHENTICATION: *4115150
DATE: 10/25/1993
<PAGE>
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
THIRD AMENDMENT AND WAIVER, dated as of September 27, 1994 (this
"Amendment and Waiver"), 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
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, pursuant to the waiver, dated as of May 11,
1994, the Company and the Parent requested and the Banks agreed to
a waiver of the provisions of subsection 7.4 (Limitation on
Guarantee Obligations) of the Credit Agreement to the extent and
only to the extent such provisions would be violated by the
Parent's guarantee of the Company's obligations under leases with
Sanwa General Equipment Leasing Incorporated or similar
institutional lessors (the "Lessors") in 1994 of certain textile
and other manufacturing equipment to be installed at domestic
facilities of the Company with an aggregate invoice cost not to
exceed $15,000,000 (the "1994 Leases");
WHEREAS, in addition to the 1994 Leases, the Company
intends in 1994 and 1995 to enter into similar leases with the
Lessors of certain textile and other manufacturing equipment to be
installed at domestic facilities of the Company with an aggregate
invoice cost not to exceed $15,000,000 (the "1994-1995 Leases");
WHEREAS, it may be a condition to the 1994-1995 Leases
that the Parent guarantee the Company's obligations to the Lessors
in connection with the 1994-1995 Leases;
WHEREAS, the Company and the Parent have requested that
the Banks waive compliance with subsection 7.4 of the Credit
Agreement to the extent the provisions of such subsection would be
violated by the transactions contemplated by the 1994-1995 Leases
and the Banks are willing to waive compliance with such subsection
on the terms and conditions of this Amendment and Waiver; and
WHEREAS, the Company and the Parent have requested, and
the Banks have agreed, subject to the terms and conditions of this
Amendment and Waiver, to amend subsection 7.16 (Limitation on
Leases) 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. WAIVER OF SUBSECTION 7.4
OF THE CREDIT AGREEMENT
1.1 Waiver of Subsection 7.4 (Limitation on
Guarantee Obligations). The provisions of subsection 7.4 of the
Credit Agreement are hereby waived to the extent and only to the
extent such provisions wold be violated by the Parent's guarantee of
the Company's obligations to the Lessors in connection with the
transactions contemplated by the 1994-1995 Leases; provided that the
term of any 1994-1995 Lease shall be at least five years subject to
certain repurchase options. This waiver is in addition to the waiver
granted with respect to the 1994 leases.
SECTION 2. AMENDMENT OF SUBSECTION 7.16
OF THE CREDIT AGREEMENT
2.1 Amendment of Subsection 7.16 (Limitation on Leases).
Subsection 7.16 of the Credit Agreement is hereby amended by
deleting the amount "$5,000,000" appearing at the end thereof and
substituting in lieu thereof the amount "$7,500,000".
SECTION 3. REPRESENTATIONS AND WARRANTIES:
CONDITIONS PRECEDENT TO THE
EFFECTIVENESS OF THIS
AMENDMENT AND WAIVER.
3.1 Representations; No Default. On and as of the date
hereof and after giving effect to this Amendment and Waiver 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.
3.2 Conditions Precedent to Effectiveness. This
Amendment and Waiver shall become effective on the date on which
the Agent shall have received counterparts of this Amendment and
Waiver executed by the Company, the Parent and the Banks.
SECTION 4. MISCELLANEOUS
4.1 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.
4.2 Counterparts. This Amendment and Waiver 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.
4.3 GOVERNING LAW. THIS AMENDMENT AND WAIVER 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 and Waiver to be executed and delivered by their
respective duly authorized officers as of the date first above
written.
REEVES BROTHERS, INC.
By: /s/ Steven W. Hart
---------------------------
Title:
REEVES INDUSTRIES, INC.
By: /s/ Steven W. Hart
---------------------------
Title:
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, Jr.
----------------------------
Title: Director
FOURTH AMENDMENT AND WAIVER, dated as of March 10, 1995
(this "Amendment and Waiver"), 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, Reeves S.p.A., a Restricted Subsidiary of the
Company, plans to issue hybrid convertible debentures
substantially in the form of Exhibit A hereto (the "Convertible
Debentures") to the Company and to Reeves Penna Inc., a
Restricted Subsidiary of the Company, in an aggregate principal
amount equivalent to $30 million;
WHEREAS, the Company and the Parent have requested that
the Banks waive compliance with certain provisions of subsections
7.2 (Limitation on Indebtedness) and 7.9 (Limitation on
Investments, Loans and Advances) of the Credit Agreement to the
extent the provisions of such subsections would be violated by
the transactions contemplated by the issuance of the Convertible
Debentures and the Banks are willing to waive compliance with
such subsections on the terms and conditions of this Amendment
and Waiver; and
WHEREAS, the Company and the Parent have requested, and
the Banks have agreed, subject to the terms and conditions of
this Amendment and Waiver, to extend the Termination Date of the
Credit Agreement to April 1, 1996 and to amend certain other
provisions of the Credit Agreement as provided for herein;
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. WAIVER OF SUBSECTIONS 7.2 and 7.9
OF THE CREDIT AGREEMENT
1.1 Waiver of Subsections 7.2 (Limitation on
Indebtedness) and 7.9 (Limitation on Investments, Loans and
Advances). The provisions of subsections 7.2 and 7.9 of the
Credit Agreement are hereby waived to the extent and only to the
extent such provisions would be violated by the issuance of the
Convertible Debentures by Reeves S.p.A.; provided, that the
Convertible Debentures shall be substantially in the form of
Exhibit A.
SECTION 2. AMENDMENT OF SUBSECTIONS
1.1, 7.1(b) and 7.8
OF THE CREDIT AGREEMENT
2.1 Amendment of Subsection 1.1 (Defined Terms).
Subsection 1.1 of the Credit Agreement is hereby amended by
deleting the date "December 31, 1995" from the definition of
"Termination Date" and inserting in lieu thereof "April 1, 1996".
2.2 Amendment of Subsection 7.1(b) (Maintenance of Net
Worth). Subsection 7.1(b) of the Credit Agreement is hereby
amended by deleting the terms "through 12/31/95" from the last
line thereof and substituting in lieu thereof the words "and
thereafter".
2.3 Amendment of Subsection 7.8 (Limitation on Capital
Expenditures). Subsection 7.8 of the Credit Agreement is hereby
amended by inserting at the end of the table included therein the
following:
"1996 15,000,000".
SECTION 3. AMENDMENT OF SUBSECTION 7.1(c)
OF THE CREDIT AGREEMENT
3.1 Amendment of Subsection 7.1(c) (Consolidated EBIT
Interest Coverage). Subsection 7.1(c) of the Credit Agreement is
hereby amended by (i) inserting after the date "12/31/95" in the
last line thereof the words "and any quarter thereafter" and (ii)
deleting the Interest Coverage Ratio of "2.00 to 1.0" for the
four quarters ending 12/31/94 and substituting in lieu thereof
"1.90 to 1.0".
SECTION 4. REPRESENTATIONS AND WARRANTIES;
CONDITIONS PRECEDENT TO THE
EFFECTIVENESS OF THIS
AMENDMENT AND WAIVER.
4.1 Representations; No Default. On and as of the date
hereof and after giving effect to this Amendment and Waiver 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.
4.2 Conditions Precedent to Effectiveness. This Amendment
and Waiver 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 and Waiver 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 Waiver
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 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 Waiver, 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;
(v) each of the representations and warranties made by the
Parent and its Subsidiaries in or pursuant to this Amendment
and Waiver, the Credit Agreement as amended by this Amendment
and Waiver 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;
(vi) no Default or Event of Default shall have occurred and
be continuing after giving effect to this Amendment and Waiver
and the transactions contemplated hereby; and
(vii) all corporate and other proceedings and all other
documents and legal matters in connection with the
transactions contemplated by this Amendment and Waiver shall
be reasonably satisfactory in form and substance to the Agent
and its counsel.
SECTION 6. MISCELLANEOUS
6.1 Expenses. The Company and the Parent agree to pay
all legal costs and expenses in connection with this Amendment and
Waiver.
6.2 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.
6.3 Counterparts. This Amendment and Waiver 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.
6.4 GOVERNING LAW. THIS AMENDMENT AND WAIVER 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 and Waiver to be executed and delivered by their
respective duly authorized officers as of the date first above
written.
REEVES BROTHERS, INC.
By: /s/ Steven W. Hart
_______________________________
Title: Executive Vice President
and Chief Financial
Officer
REEVES INDUSTRIES, INC.
By: /s/ Steven W. Hart
_______________________________
Title: Executive Vice President
and Chief Financial
Officer
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
December 1, 1994
Mr. Anthony L. Cartagine
55 Eden Way
Roslyn Harbor, New York 11576
Dear Tony:
This letter will constitute an amendment to your employment
agreement with Reeves Brothers, Inc. dated as July 1, 1991.
Specifically, we agree to amend paragraph 2 of the agreement to
read as follows:
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 four (4) years,
unless extended as set forth below, commencing on July 1, 1991 and
ending on June 30, 1995. The Term of this Agreement shall be
automatically extended for up to four successive six-month 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 the Employee provides written notice to the other party
of the intention not to extend the Agreement."
Except as modified by the forgoing, the employment agreement
shall remain in full force and effect.
If this letter correctly sets forth our understanding, please
execute the enclosed copy of this letter and return it to me.
Please call me if you have any questions.
Sincerely,
Reeves Brothers, Inc.
/S/ James W. Hart, Jr.
-------------------------
By: James W. Hart, Jr.
President and
Chief Executive Officer
Accepted and agreed:
/s/ Anthony L. Cartagine
Anthony L. Cartagine
Date: 12/07/94
EMPLOYMENT AGREEMENT
Anthony L. Cartagine
EMPLOYMENT AGREEMENT dated as of July 1, 1991, between
REEVES BROTHERS, INC., a New York corporation having its principal
place of business at Highway 29 South, Post Office Box 1898,
Spartanburg, S.C. 29304 (the "Employer") and Anthony L. Cartagine,
residing at 55 Eden Way, Roslyn Harbor, N.Y. 11576 (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 four (4) years,
unless extended as set forth below, commencing on July 1, 1991 and
ending June 30, 1995. 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 Paragraph 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 $225,000 per
year, payable in equal semi-monthly installments on the first and
fifteenth 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
forgoing 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 July 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 a Group
President 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 the shorter of (i) one year from the date of
death 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).
(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, 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 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 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
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 New York.
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/ Anthony L. Cartagine
-------------------------------
Employee: Anthony L. Cartagine
Exhibit A to
Employment Agreement
of Anthony L. Cartagine
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
6. Health Club Membership
EXHIBIT 12. RATIO OF EARNINGS TO FIXED CHARGES
REEVES INDUSTRIES, INC. AND SUBSIDIARIES
(In thousands, except ratios)
Fiscal Year Ended December 31,
1990 1991 1992 1993 1994
Income from
continuing
operations before
income taxes $ 6,467 $ 4,917 $ 8,569 $11,858 $14,577
Plus fixed charges:
Interest expense
and amortization
of financing costs
and debt discount 19,935 21,777 17,633 16,394 16,385
Interest portion of
rent expense 213 396 476 491 933
------- ------- ------- ------- -------
Total fixed charges 20,148 22,173 18,109 16,885 17,318
------- ------- ------- ------- -------
Earnings plus fixed
charges $26,615 $27,090 $26,678 $28,743 $31,895
======= ======= ======= ======= =======
Ratio of earnings to
fixed charges 1.3x 1.2x 1.5x 1.7x 1.8x
======= ======= ======= ======= =======
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 Penna, Inc. Pennsylvania
Reeves S.p.A. Italy
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<ARTICLE> 5
<MULTIPLIER>1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 17,429
<SECURITIES> 0
<RECEIVABLES> 54,122
<ALLOWANCES> 1,232
<INVENTORY> 35,909
<CURRENT-ASSETS> 114,601
<PP&E> 70,629
<DEPRECIATION> 36,134
<TOTAL-ASSETS> 237,198
<CURRENT-LIABILITIES> 50,847
<BONDS> 0
<COMMON> 350
0
0
<OTHER-SE> 28,465
<TOTAL-LIABILITY-AND-EQUITY> 237,198
<SALES> 305,269
<TOTAL-REVENUES> 305,269
<CGS> 243,575
<TOTAL-COSTS> 243,575
<OTHER-EXPENSES> 30,776
<LOSS-PROVISION> 335
<INTEREST-EXPENSE> 16,385
<INCOME-PRETAX> 14,577
<INCOME-TAX> 5,783
<INCOME-CONTINUING> 8,794
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,794
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
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