SCHEDULE 14 C INFORMATION
Information Statement Pursuant to Section 14(c)
Of the Securities Exchange Act of 1934
Check the appropriate box:
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REINHOLD INDUSTRIES, INC.
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<PAGE>
REINHOLD INDUSTRIES, INC.
12827 EAST IMPERIAL HWY
SANTA FE SPRINGS, CALIFORNIA 90670
INFORMATION STATEMENT PURSUANT TO
SECTION 14(c) OF THE SECURITIES
EXCHANGE ACT OF 1934
This Information Statement is being mailed to shareholders on or about
August 25, 1999 by Reinhold Industries, Inc. ("Reinhold" or the "Company")
pursuant to Section 14(c) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") and Regulation 14C thereunder to the holders of record of
the Company's New Class A Common stock, par value $.01 per share (the "Class A
Common Stock"). The purpose of this Information Statement is to inform you of
the proposed shareholder ratification by written consent of the appointment of
Ralph R. Whitney, Jr. and Andrew McNally IV to the Board of Directors. You are
not required to take any action.
Santa Fe Springs, California /S/ Brett R. Meinsen
Brett R. Meinsen
Vice-President - Finance and Administration,
Treasurer and Secretary
(Principal Financial Officer)
INFORMATION RELATING TO THE COMPANY'S CLASS A COMMON STOCK
The shares of Class A Common Stock are the only class of voting
securities of Reinhold outstanding. Each share of Class A Common Stock is
entitled to one vote per share on all matters submitted to a vote of the
shareholders. The outstanding voting securities of the Company as of the date of
this Information Statement consisted of 1,998,956 shares of Class A Common
Stock.
ELECTION OF DIRECTORS
Background
On July 31, 1996, Keene Corporation ("Keene") consummated its plan of
reorganization under Chapter 11 of the United States Bankruptcy Code (the
"Plan") and emerged from bankruptcy. Pursuant to the reorganization, Reinhold
merged with and into Keene, with Keene becoming the surviving corporation.
Pursuant to the merger, all of the issued and outstanding capital stock of
Reinhold was canceled. Keene, as the surviving corporation of the merger, was
renamed Reinhold. On the effective date or the reorganization, Reinhold issued
1,998,956 shares of Common Stock, of which 1,020,000 shares of Class B New
Common Stock, par value $.01 per share (the "Class B Common Stock") were issued
to the Keene Creditors Trust (the "Trust"), which was established to administer
asbestos claims against Keene. The remaining 978,956 shares of Class A Common
Stock were issued to Keene's former stockholders. All of Keene's previously
outstanding Common Stock was canceled.
On May 21, 1999, pursuant to the Stock Purchase Agreement between
Reinhold Enterprises, Inc. ("REI") and the Trust, dated May 18, 1999 (the "Stock
Purchase Agreement"), the Trust sold 997,475 shares of its Class B Common Stock
to certain purchasers designated by REI at a purchase price of $9.00 per share.
These shares represented approximately 49.9% of the outstanding common stock of
the Company. Pursuant to the Company's Certificate of Incorporation, upon
consummation of the sale of the shares to the purchasers, all of the outstanding
shares of Class B Common Stock were automatically converted into shares of Class
A Common Stock, and at the next meeting of the stockholders of the Company
called for that purpose, the holders of the Class A Common Stock, voting as a
class, were entitled to elect all of the directors of the Company.
<PAGE>
The purchasers designated by REI are Massachusetts Mutual Life Insurance
Company, MassMutual High Yield Partners II LLC, MassMutual Corporate Value
Partners Limited, Ralph R. Whitney, Jr., Glenn Scolnik, Forrest E. Crisman, Jr.,
Andrew McNally, IV and Ward S. McNally (collectively, the "Purchasers"). Messrs.
Whitney, Scolnik, Crisman, A. McNally and W. McNally, are directors and/or
officers of Hammond, Kennedy, Whitney & Company, Inc., a private equity firm
("HKW"). Each Purchaser paid for the shares using his or its own available
funds.
Pursuant to the Stock Purchase Agreement, Lawrence H. Diamond and
Robert B. Steinberg, the members of the Board of Directors elected by the Trust
(as the sole holder of Class B Common Stock), resigned as directors. On June 3,
1999, Michael Furry, as the sole remaining director, appointed Ralph R. Whitney,
Jr. and Andrew McNally IV to serve as directors. A ratification of the
appointment of Messrs. Whitney and McNally to the Board by Written Consent of
Shareholders is proposed. The shareholder ratification will be effective upon
delivery of the Written Consent to Reinhold, but in no event sooner than 20 days
from the date of this Information Statement.
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
RALPH R. WHITNEY, JR. Mr. Whitney, age 64, served as President and CEO of HKW
from 1993 to 1998. From 1998 to the present he has been Chairman of HKW. He also
serves as a director for RELM Wireless Corp., Baldwin Technology Company, Inc.,
IFR Systems, Inc., Selas Corporation of America, Dura Automotive Systems, Inc.,
and First Technology PLC. Mr. Whitney also served as CEO and a director of
Holbrook-Patterson, Inc. which filed a petition for relief under Chapter 11 of
the Federal Bankruptcy Code on July 24, 1998.
ANDREW MCNALLY IV. Mr. McNally, age 59, is retired Chairman and Chief Executive
Officer of Rand McNally & Company, a publishing and map making company. Mr.
McNally was Chairman and Chief Executive Officer from 1993 to 1997 and President
and Chief Executive Officer from 1978 to 1993 of Rand McNally & Company. In
addition, Mr. McNally is a Managing Director of HKW. He also holds three
directorships within the Morgan Stanley Funds complex, as well as directorships
for Borg Warner Security Corporation, Hubbell Incorporated and Zenith
Electronics Corporation.
MICHAEL T. FURRY. Mr. Furry, age 61, is President and Chief Executive Officer of
Reinhold. Mr. Furry has served as President of Reinhold since June 1986 and
became President of the Reorganized Company on the Effective Date. Mr. Furry had
been a Director of Keene since April 1990. From April 1976 to June 1986, Mr.
Furry was Vice President and General Manager of the composites division of
Reynolds & Taylor, Inc. Mr. Furry is a member of the audit committee.
Other Executive Officer
BRETT R. MEINSEN. Mr. Meinsen, age 39, became Vice President - Finance and
Administration, Secretary and Treasurer of Reinhold in June 1997. Prior to
coming to Reinhold, Mr. Meinsen worked from 1986 until January 1997 as the
Director of Finance and Administration, Manager of Financial Analysis, and a
senior financial analyst at Philips Medical Systems.
<PAGE>
Compensation Of Directors
During 1998, the Board of Directors of Reinhold met four times for
regular meetings and there were six special meetings. Each non-employee director
received $1,000.00 for each regular or special meeting of the Board he attended
and will receive $1,000.00 for each such regular or special meeting in 1999. In
addition, each non-employee director also receives annual compensation of
$12,000.00 per year, paid quarterly, as a retainer for being a director.
Reinhold has standing Audit and Compensation Committees of the
Board. The Audit Committee and the Compensation Committee met once. The
non-employee directors who are members of the Audit and Compensation Committees
receive $1,000.00 for each meeting attended on a day during which the Board did
not meet for a regular meeting and will receive $1,000.00 for each such meeting
in 1999.
The Audit Committee reviews and recommends to the Board the
engagement of the independent auditors of the Company, reviews with the auditors
their work and fees, and reviews accounting policies and practices and internal
accounting controls of the Company.
The Compensation Committee reviews and recommends to the Board the
compensation proposed to be paid to officers and key employees of Reinhold,
including base salaries, stock options and management incentive compensation.
The Board does not have a Nominating Committee and as a whole
performs the functions normally performed by a Nominating Committee.
Compensation of Management
<TABLE>
The following table sets forth a summary of the compensation paid to
the Chief Executive Officer and the Vice President Finance and Administration of
the Company for services rendered in all capacities to the Company for the
fiscal years ended December 31, 1998, 1997 and 1996. No executive officers of
the Company other than the Chief Executive Officer and the Vice President -
Finance and Administration were paid an annual salary (together with any bonus)
in excess of $100,000 in such fiscal years for services rendered to the Company.
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation
Name and Mgmt. All Other
Principal Position Fiscal Year Salary Incentive Compensation
<S> <C> <C> <C> <C>
Michael T. Furry 1998 $225,000 $48,000 ___
President & Chief Executive Officer 1997 $225,000 $47,800
1996 $195,833 ---
Brett R. Meinsen 1998 $100,000 $20,860 ___
Vice President Finance & Administration 1997 $ 50,385 $12,000
(1) 1996
<FN>
(1) Mr. Meinsen became Vice President - Finance and Administration on June 30,
1997.
</FN>
</TABLE>
<PAGE>
AGGREGATE OPTION EXERCISES IN THE LAST FISCAL YEAR AND FISCAL YEAR END OPTIONS
<TABLE>
The following table sets forth the number of options exercised and
redeemed and the realized value upon exercise and redemption by the named
executive officers during the fiscal year ended December 31, 1998 and the value
of outstanding options held by each executive officer as of December 31, 1998.
<CAPTION>
No. of Securities
Underlying Unexercised
Un-exercised In-The-Money
Options at Fiscal Options at Fiscal
No. Shares Year-end Year-end
Acquired on Exercisable/ Un- Exercisable/Un-
Name Exercise Value Realized Exercisable Exercisable
<S> <C> <C> <C> <C>
--- ---
Michael T. Furry 0/0 (1) 0/0 (1)
Brett R. Meinsen ___ ___ 0/0 (1) 0/0 (1)
<FN>
(1) On June 3, 1999, the Company granted under the Reinhold Stock Incentive Plan
10,000 incentive stock options to Michael Furry and 8,000 incentive stock
options to Brett Meinsen. The Company also granted at the same time 90,000
non-qualified stock options to Mr. Furry. The stock options vest over three
years and expire 10 years from the date of grant.
</FN>
</TABLE>
Employment Agreement
An employment agreement with Michael T. Furry, as the Company's
President and Chief Executive Officer, was entered into on July 31, 1996 and
provides for employment by the Company for a period of five years commencing on
the Effective Date. The employment agreement was amended as of October 30, 1998
to provide for a base salary of $236,000 per year, and a 5% increase on October
30, 2000 and on every second year following the year 2000 during the term of the
employment agreement. The employment agreement provides for participation in the
Management Incentive Compensation Plan, Reinhold Industries, Inc. Retirement
Plan, and Reinhold Stock Incentive Plan. It also provides Mr. Furry with life
insurance with a face value of $200,000.
Management Incentive Compensation Plan
As a result of the Plan of Reorganization, Reinhold adopted the
Management Incentive Compensation Plan for the Reinhold staff, under which
awards may be made to officers and other key salaried employees of Reinhold.
Pools of award money are developed in accordance with the earnings of Reinhold
and will be limited to 15% of Reinhold's pre-tax earnings each year.
Distribution of awards to eligible employees will be dependent upon the
individual employee's achievement during a fiscal year, as measured against
predetermined specific objectives for that employee in such fiscal year.
Payments will be made in January of each year with respect to the previous
year's award.
Retirement Plan
Reinhold presently maintains a non-contributory retirement plan (the
"Retirement Plan") in which all salaried employees and certain hourly employees
participate. The Retirement Plan provides an annual normal retirement benefit at
or after age 65 for a participant equal to the greater of (a) the participants'
accrued benefit as of December 31, 1988, based on the plan in effect at that
time; (b) the product of (x) the sum of 1.3% of the participant's annual average
compensation for the five highest consecutive years of employment during the
most recent ten calendar years of employment and 0.65% of such compensation in
excess of the average of the "Social Security Taxable Wage Base" in each year
during the 35-year period prior to the participant's retirement age under the
social security law multiplied by (y) his years of service credit (to a maximum
of 25) in the Retirement Plan; or (c) the accrued benefit as of December 31,
1993, plus a benefit based on (b) above and service after December 31, 1993,
with total service not in excess of 25 years. Certain maximum benefit
limitations are incorporated in the Retirement Plan. The Retirement Plan permits
a participant who has attained age 55 and completed 10 years of service to elect
to receive an actuarially reduced early retirement benefit and provides for
payment of benefits if certain participants become permanently disabled. A
participant's accrued pension benefit becomes 100% vested on the date on which
the participant completes five years of service. Death benefits are payable to
the surviving spouse of a fully or partially vested participant who dies before
payment of benefits has commenced.
<PAGE>
<TABLE>
The following table presents information regarding estimated annual
benefits payable upon normal retirement classified by remuneration and years of
service under the Reinhold Industries, Inc. Retirement Plan in which all
salaried employees and certain hourly employees participate:
<CAPTION>
Average Compensation
At Retirement Years of Service at Retirement
- ------------- -------------------------------
5 10 15 20 25 or more
<S> <C> <C> <C> <C> <C>
$ 50,000 $ 3,863 $ 7,727 $11,590 $15,453 $19,317
$ 75,000 $ 6,301 $12,602 $18,903 $25,203 $31,504
$100,000 $ 8,738 $17,477 $26,215 $34,953 $43,692
$150,000 $13,613 $27,227 $40,840 $54,453 $68,067
$160,000 $14,588 $29,177 $43,765 $58,353 $72,942
or more
<FN>
(1) In accordance with Internal Revenue Service Regulations, the maximum
allowable compensation permitted in computing a benefit under the
Retirement Plan is $160,000 for 1998. However, employees will receive
the greater of the benefit outlined above or the accrued benefit as of
December 31, 1993, which was based on compensation in excess of
$150,000 plus a benefit based on service after December 31, 1993 and
the final average compensation based on the $150,000 limit.
</FN>
</TABLE>
Remuneration covered by the Retirement Plan in a particular year
includes that year's base salary, overtime pay and commissions but excludes
compensation received in that year under the Management Incentive Compensation
Plan in excess of 50% of the participant's annual basic pay rate as of the
December 31 of the preceding calendar year. The 1998 remuneration covered by the
Retirement Plan for each participant therefore includes management incentive
compensation (up to such 50% ceiling) paid during 1998 in respect of 1997
awards.
For each of the following persons, the credited years of service
under the Retirement Plan, as of December 31, 1998, and the remuneration
received during 1998 covered by the Retirement Plan, were, respectively, as
follows: Mr. Furry, 13 years and $160,000; Mr. Meinsen one year and $50,122.
Stock Incentive Plan
General Description
As of the Effective Date, the Company established the Reinhold Stock
Incentive Plan for key employees. The Reinhold Stock Incentive Plan permits the
grant of stock options, stock appreciation rights and restricted stock. The
total number of shares of stock subject to issuance under the Reinhold Stock
Incentive Plan may not exceed 100,000. The maximum number of shares of stock
with respect to which options or stock appreciation rights may be granted to any
eligible employee during the term of the Reinhold Stock Incentive Plan may not
exceed 10,000. The shares to be delivered under the Reinhold Stock Incentive
Plan may consist of authorized but unissued stock or treasury stock, not
reserved for any other purpose.
The exercise price of the options is established at the discretion
of a Committee of the Board of Directors (the "Committee"), provided that it may
not be less than the estimated fair value at the time of grant. The Reinhold
Stock Incentive Plan provides that the options are exercisable based on vesting
schedules, provided that in no event shall such option vest more rapidly than 33
1/3% annually. The options expire no later than ten years from the date of
grant.
<PAGE>
The Committee, in its discretion, in connection with grant of an
option, may grant to the optionee Stock Appreciation Rights (SARs). A SAR will
entitle the holder of the related option, upon exercise of the Stock
Appreciation Right, to surrender such option, and receive payment of an amount
determined by multiplying (i) the excess of the fair market value of a share of
stock on the date of exercise of such SAR over the purchase price of a share of
stock under the related option, by (ii) the number of shares as to which the
SARs has been exercised.
The Committee may grant shares of restricted stock to eligible
employees and in such amounts as it shall determine in its sole discretion.
GRANTS TO EMPLOYEES UNDER THE REINHOLD STOCK INCENTIVE PLAN
STOCK OPTIONS. The Compensation Committee can grant employees stock
options at an option exercise price not less than the fair market value of a
share on the date of grant. To exercise an option, an employee would pay the
option price in cash, or if permitted by the Committee, by delivering shares of
Reinhold Class A Common Stock already owned by the employee that have a fair
market value equal to the option price.
The term of each option is fixed by the Committee provided that no
option may be exercisable for more than 10 years after the date on which it
becomes exercisable. The Committee will determine the time or times at which
each option granted to an employee may be exercised as well as other terms and
conditions applicable to the option. Such options may be made exercisable in
installments, and the exercisability of options may be accelerated by the
Committee.
STOCK APPRECIATION RIGHTS. A SAR will entitle the holder of the
related option, upon exercise of the Stock Appreciation Right, to surrender such
option, and receive payment of an amount determined by multiplying (i) the
excess of the fair market value of a share of stock on the date of exercise of
such SAR over the purchase price of a share of stock under the related option,
by (ii) the number of shares as to which the SARs has been exercised.
A Stock Appreciation Right will be exercisable at such time or times
and only to the extent that a related option is exercisable, and will not be
transferable except to the extent that such related option may be transferable.
A Stock Appreciation Right granted in connection with an incentive stock option
shall be exercisable only if the fair market value of a share of stock on the
date of exercise exceeds the purchase price of a share of stock specified in the
related option.
Upon the exercise of a Stock Appreciation Right, the related option
shall be canceled to the extent of the number of shares of Stock as to which the
Stock Appreciation Right is exercised, and upon the exercise of an option
granted in connection with a Stock Appreciation Right, the Stock Appreciation
Right shall be canceled to the extent of the number of shares of stock as to
which the option is exercised or surrendered.
RESTRICTED STOCK. The Committee at any time and from time to time,
may grant shares of Restricted Stock under the Reinhold Stock Incentive Plan to
such Eligible Employees and in such amounts as it shall determine in its sole
discretion. Each grant of Restricted Stock shall be made pursuant to a written
agreement which shall contain such restrictions, terms and conditions as the
Committee may determine in its discretion. Restrictions upon shares of
Restricted Stock shall lapse at such time or times and on such terms and
conditions as the Committee may determine; provided, however, that in no event
shall such restrictions on vesting lapse at a rate more rapidly, on an annual
basis, than 33 1/3% of the number of shares such Restricted Stock subject to
such grant beginning on the first anniversary date following the grant of such
Restricted Stock.
TERMINATION OF EMPLOYMENT. Unless otherwise determined by the
Committee, in the event of termination of employment by reason of retirement,
long term disability or death, any option may thereafter be exercised in full
for a period of three years (or such shorter period as the Committee shall
determine at grant), subject in each case to the stated term of the option. In
the event of termination of employment for any reason other than retirement,
disability or death, unless otherwise determined by the Committee, any
outstanding options held by the terminated employee will be canceled. The
Committee may permit an employee whose employment terminates for any such other
reason up to three years following termination to exercise an option.
<PAGE>
CHANGE IN CONTROL PROVISIONS. The Reinhold Stock Incentive Plan
provides that, except as provided below, in the event of a "Change in Control"
(as defined in the Reinhold Stock Incentive Plan), the Committee, either at the
time Employee Options or shares of Restricted Stock are granted or, if so
provided in the applicable Option Agreement or Restricted Stock grant, at any
time thereafter, shall [have the authority to] accelerate in whole or in part
the exercisability of Employee Options and/or the last day of the period of
restriction upon a Change in Control. The Option Agreements and Restricted Stock
grants approved by the Committee may contain provisions whereby, in the event of
a Change in Control, the acceleration of the exercisability of Employee Options
and/or the last day of the period of restriction may be automatic or may be
subject to the discretion of the Committee or may depend upon whether the Change
in Control shall be approved by a majority of the members of the Board or such
other criteria as the Committee may specify. Nothing herein shall obligate the
Committee to take any action upon a Change in Control.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
<TABLE>
The following table presents information regarding beneficial ownership
of Reinhold Common Stock as of that date by (i) persons known by Reinhold to be
a beneficial owner of 5% or more of Reinhold's issued and outstanding Common
Stock, (ii) each member of the Board of Directors, executive officers, and (iii)
by all directors and officers of Reinhold as a group. The information contained
in this table reflects "beneficial" ownership within the meaning of Rule 13d-3
under the Exchange Act.
<CAPTION>
Security Ownership Of Certain Beneficial Owners And Management
Amount and Nature of Beneficial Percentage of Issued and
Name and Address of Ownership of Reinhold Common Outstanding
Beneficial Owner Stock Common Stock
<S> <C> <C>
Massachusetts Mutual Life 748,106(1) 37.4%
Insurance Company
1295 State Street
Springfield, MA 01111
MassMutual High Yield 314,204 15.7%
Partners II, LLC
1295 State Street
Springfield, MA 01111
MassMutual Corporate Value 119,697 6.0%
Partners Limited
1295 State Street
Springfield, MA 01111
Andrew McNally IV 61,336(2) 3.1%
Ralph R. Whitney, Jr. 45,476 2.3%
Michael T. Furry 11,115 *
Brett R. Meinsen 1,000 *
All directors and officers of Reinhold as a 118,927 6.0%
group (4 persons)
<FN>
*The percentage of shares owned does not exceed 1% of the issued and outstanding
Common Stock.
(1) Includes 314,204 shares owned by MassMutual High Yield Partners II LLC
and 119,697 shares owned by MassMutual Corporate Value Partners
Limited, as to which Massachusetts Mutual Life Insurance Company shares
voting and dispositive power but disclaims beneficial ownership.
(2) Includes 46,737 shares owned by Andrew Management IV, L.P. of which
Mr. McNally is the general partner and has sole voting and investment
power.
</FN>
</TABLE>
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on its review of Forms 3, 4 and 5 received by the
Company, or written representations from certain reporting persons that no Forms
5 were required for such persons, the Company believes that, during the fiscal
year ended December 31, 1998, the Company's officers, directors and 10%
shareholders satisfied all filing requirements under Section 16(a) of the
Securities Exchange Act of 1934.
