-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UiuH3Nblf+BWlu5tp7KjPZoUVXJlurZVvA2dsfaw+V55KyKZQbDzPCsylBwzAhL6 wDCH0LyPFuT6DDI/dfGWhA== 0000014995-97-000016.txt : 19970515 0000014995-97-000016.hdr.sgml : 19970515 ACCESSION NUMBER: 0000014995-97-000016 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970514 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: DIXON TICONDEROGA CO CENTRAL INDEX KEY: 0000014995 STANDARD INDUSTRIAL CLASSIFICATION: PENS, PENCILS & OTHER ARTISTS' MATERIALS [3950] IRS NUMBER: 230973760 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08689 FILM NUMBER: 97603753 BUSINESS ADDRESS: STREET 1: 195 INTERNATIONAL PKWY STREET 2: STE 200 CITY: HEATHROW STATE: FL ZIP: 32746-5036 BUSINESS PHONE: 4078759000 MAIL ADDRESS: STREET 1: PO BOX 958413 STREET 2: STE 200 CITY: HEATHROW STATE: FL ZIP: 32795-8413 FORMER COMPANY: FORMER CONFORMED NAME: BRYN MAWR CORP/DE/ DATE OF NAME CHANGE: 19831002 FORMER COMPANY: FORMER CONFORMED NAME: BRYN MAWR GROUP INC DATE OF NAME CHANGE: 19730619 FORMER COMPANY: FORMER CONFORMED NAME: BRYN MAWR CAMP RESORTS INC DATE OF NAME CHANGE: 19700608 10-Q 1 MAR 31, 1997 FORM 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Judiciary Plaza, 450 Fifth Street, N.W. Washington, D.C. 20549 FORM 10-Q [ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR QUARTER ENDED MARCH 31, 1997 COMMISSION FILE NO. O-2655 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DIXON TICONDEROGA COMPANY - ----------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 23-0973760 - --------------------------------- ---------------------------------- (State or other jurisdiction I.R.S. Employer of incorporation or organization) Identification No. 195 International Parkway, Heathrow, FL 32746 - ---------------------------------------------------------------------------- (Address of principal executive offices) Zip Code (407) 829-9000 Registrant's telephone number, including area code: ---------------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ] No [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the close of the period covered by this report. Class Outstanding as of March 31, 1997 - ---------------------------- ----------------------------------------- Common Stock $1 par value 3,330,498 2 DIXON TICONDEROGA COMPANY AND SUBSIDIARIES ------------------------------------------ INDEX ----- Page ---- PART I. FINANCIAL INFORMATION Item 1. Financial Information Consolidated Balance Sheets -- March 31, 1997 and September 30, 1996 3-4 Consolidated Statements of Operations -- For The Three and Six Months Ended March 31, 1997 and 1996 5 Consolidated Statements of Cash Flows -- For The Six Months Ended March 31, 1997 and 1996 6-7 Notes to Consolidated Financial Statements 8-10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 11-15 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 16 Signatures 17 3 PART I - FINANCIAL INFORMATION Item 1. DIXON TICONDEROGA COMPANY AND SUBSIDIARIES - ------- CONSOLIDATED BALANCE SHEETS March 31, September 30, 1997 1996 ------------ ------------- CURRENT ASSETS: Cash and cash equivalents $ 2,330,600 $ 2,597,032 Receivables, less allowance for doubtful accounts of $918,029 at March 31, 1997 and $1,352,411 at September 30, 1996 18,732,139 23,442,889 Inventories 37,030,581 31,460,934 Other current assets 3,378,171 3,044,796 ----------- ----------- Total current assets 61,471,491 60,545,651 ----------- ----------- PROPERTY, PLANT and EQUIPMENT: Land and buildings 16,591,275 15,711,724 Machinery and equipment 16,788,767 16,537,994 Furniture and fixtures 919,319 917,222 ----------- ----------- 34,299,361 33,166,940 Less accumulated depreciation (18,537,198) (17,730,505) ----------- ----------- 15,762,163 15,436,435 OTHER ASSETS 2,219,942 1,866,054 ----------- ----------- $79,453,596 $77,848,140 =========== =========== 4 March 31, September 30, 1997 1996 ------------ ------------- CURRENT LIABILITIES: Notes payable $18,787,617 $14,159,143 Current maturities of long-term debt 1,709,719 1,613,773 Accounts payable 6,202,646 5,461,348 Accrued liabilities 9,111,457 10,934,838 ----------- ----------- Total current liabilities 35,811,439 32,169,102 ----------- ----------- LONG-TERM DEBT 24,429,525 25,119,305 ----------- ----------- DEFERRED INCOME TAXES AND OTHER 1,537,072 1,051,171 ----------- ----------- MINORITY INTEREST 1,547,615 3,517,006 ----------- ----------- COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY: Preferred stock, par $1, authorized 100,000 shares, none issued --- --- Common stock, par $1, authorized 8,000,000 shares; issued 3,573,931 shares as of March 31, 1997, and 3,537,211 shares as of September 30, 1996 3,573,931 3,537,211 Capital in excess of par value 2,627,374 2,489,674 Retained earnings 13,790,630 13,526,520 Cumulative translation adjustment (2,971,172) (2,669,031) ----------- ----------- 17,020,763 16,884,374 Less - treasury stock, at cost (243,433 shares) (892,818) (892,818) ----------- ----------- 16,127,945 15,991,556 ----------- ----------- $79,453,596 $77,848,140 =========== =========== The accompanying notes to consolidated financial statements are an integral part of these statements. 5 DIXON TICONDEROGA COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 1997 AND 1996 THREE MONTHS ENDED SIX MONTHS ENDED MARCH 31, MARCH 31, 1997 1996 1997 1996 -------- -------- -------- -------- REVENUES $21,906,942 $20,621,643 $44,214,822 $41,567,364 ----------- ----------- ----------- ----------- COST AND EXPENSES: Cost of goods sold 14,000,791 14,174,273 28,661,261 28,464,045 Selling and administrative expenses 6,790,832 5,431,809 13,145,424 11,107,963 Litigation and related costs -- 2,039,000 -- 2,039,000 ----------- ----------- ----------- ----------- 20,791,623 21,645,082 41,806,685 41,611,008 ----------- ----------- ----------- ----------- OPERATING INCOME 1,115,319 (1,023,439) 2,408,137 (43,644) INTEREST EXPENSE 894,973 790,444 1,694,595 1,404,859 ----------- ----------- ----------- ----------- INCOME (LOSS) FROM OPERATIONS BEFORE INCOME TAXES AND MINORITY INTEREST 220,346 (1,813,883) 713,542 (1,448,503) INCOME TAXES (BENEFIT) 24,733 (686,305) 150,707 (585,658) ----------- ----------- ----------- ----------- 195,613 (1,127,578) 562,835 (862,845) MINORITY INTEREST 145,882 126,681 298,727 240,791 ----------- ----------- ----------- ----------- NET INCOME (LOSS) $ 49,731 ($1,254,259) $ 264,108 ($1,103,636) =========== =========== =========== =========== EARNINGS (LOSS) PER COMMON SHARE $ .02 $ (.39) $ .08 $ (.34) =========== =========== =========== =========== WEIGHTED AVERAGE SHARES OUTSTANDING 3,309,690 3,212,704 3,301,647 3,204,333 =========== =========== =========== =========== The accompanying notes to consolidated financial statements are an integral part of these statements. 6 DIXON TICONDEROGA COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED MARCH 31, 1997 AND 1996 1997 1996 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 264,108 $(1,103,636) Adjustment to reconcile income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 1,285,689 1,173,687 Deferred taxes 171,528 177,144 Provision for doubtful accounts receivable 97,170 163,024 Income attributable to currency transactions (42,775) (32,234) Income attributable to minority interest 298,727 240,791 Changes in assets and liabilities: Receivables, net 4,399,028 (538,897) Inventories (5,739,620) (2,568,207) Other current assets (419,136) (536,880) Accounts payable and accrued liabilities (1,031,468) 278,729 Other assets (461,938) 2,302 ----------- ----------- Net cash provided by (used in) operations (1,178,687) (2,744,177) ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property, plant and equipment, net (1,074,968) (2,706,299) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Purchase of subsidiary stock (2,519,324) -- Net proceeds from notes payable 4,691,876 6,198,564 Principal reductions of long-term debt (588,319) (553,422) Exercise of stock options 174,420 40,328 Other non-current liabilities 347,436 (1,809) ----------- ----------- Net cash provided by (used in) financing activities 2,106,089 5,683,661 ----------- ----------- Effect of exchange rate changes on cash (118,866) (100,751) ----------- ----------- 7 Net increase (decrease) in cash and cash equivalents (266,432) 132,434 Cash and cash equivalents, beginning of period 2,597,032 1,513,622 ----------- ----------- Cash and cash equivalents, end of period $ 2,330,600 $ 1,646,056 =========== =========== Supplemental Disclosures: Cash paid during the period: Interest (net of amount capitalized) $ 1,596,990 $ 1,368,444 Income taxes 262,024 198,567 The accompanying notes to consolidated financial statements are an integral part of these statements. 8 DIXON TICONDEROGA COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. BASIS OF PRESENTATION: The condensed consolidated financial statements included herein have been prepared by the Registrant, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Registrant believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these financial statements be read in conjunction with the financial statements and the notes thereto included in the Registrant's latest annual report on Form 10-K/A. In the opinion of the Registrant, all adjustments (solely of a normal recurring nature) necessary to present fairly the financial position of Dixon Ticonderoga Company and subsidiaries as of March 31, 1997, and the results of their operations and cash flows for the six months ended March 31, 1997, and 1996, have been included. The results of operations for such interim periods are not necessarily indicative of the results for the entire year. Certain fiscal 1996 balances have been reclassified to conform to current year presentation. 2. INVENTORIES: Since amounts for inventories under the last-in, first-out (LIFO) method are based on annual determinations of quantities and costs as of the end of the fiscal year, the inventories at March 31, 1997 (for which the LIFO method of accounting are used) are based on certain estimates relating to quantities and costs as of year end. Under the first-in, first-out (FIFO) method of accounting, these inventories would be $1,030,000 and $958,000 higher at March 31, 1997, and September 30, 1996, respectively. Inventories consist of (in thousands): March 31, September 30, 1997 1996 ------------ ------------- Raw materials $13,549 $12,538 Work in process 4,543 4,268 Finished goods 18,939 14,655 ------- ------- $37,031 $31,461 ======= ======= 3. EFFECT OF CERTAIN NEW ACCOUNTING PRONOUNCEMENTS: The Company has adopted Financial Accounting Standards Board (FASB) Statement No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long- Lived Assets to be Disposed Of". This statement establishes accounting standards with respect to the impairment of long-lived assets. No material impairment of the Company's long-lived assets has been identified. 9 In 1995, the FASB also issued Statement No. 123, "Accounting for Stock-Based Compensation." The statement is effective for the Company in fiscal 1997 and requires that certain specific disclosures regarding the value of stock option grants made in fiscal 1996 and thereafter be included in its 1997 annual report on Form 10-K. The Company did not adopt the compensation recognition provision of the Statement, and, accordingly, it is not expected to affect the future results of operations or financial position of the Company. The specific disclosures required by this statement have not been determined at this time. 4. TRANSLATION OF FOREIGN CURRENCIES: As of January 1, 1997, Mexico is considered as a highly inflationary economy for the purpose of applying FASB Statement No. 52, "Foreign Currency Translation." Translation gains and losses will therefore impact the results of operations going forward. Foreign currency transaction gains included in net income were approximately $43,000 and $32,000 for the quarters ended March 31, 1997, and 1996, respectively. 5. ACCOUNTING FOR INCOME TAXES: The difference between income taxes calculated at the U.S. statutory federal income tax rate and the provision in the consolidated financial statements is primarily due to foreign and state income taxes and other permanent items. 6. CONTINGENCIES: The Company, in the normal course of business, is party in certain litigation. Ongoing litigation includes a claim under New Jersey's Environmental Clean-Up Responsibility Act (ECRA) by a 1984 purchaser of industrial property from the Company. In April 1996, a decision was rendered by the Superior Court of New Jersey in Hudson County finding the Company responsible for $1.94 million in certain environmental clean-up costs relating to this matter. Including pre-judgment interest on the damage award, it is estimated that the Company's exposure will not exceed approximately $3.3 million. The Company intends to pursue other responsible parties for indemnification and/or contribution to the payment of this claim (including its insurance carriers and a legal malpractice action against its former attorneys) and has filed an appeal. As a result of the judgment, a provision of approximately $2 million ($1.3 million, net of tax) was recorded in the quarter ended March 31, 1996. This amount was in addition to approximately $1.3 million ($800,000, net of tax) provided in prior periods. No anticipated recoveries from insurance carriers or other third parties have been considered in these recorded loss provisions. The Company has evaluated the merits of other litigation and believes their outcome will not have a further material effect on the Company's future results of operations or financial position. 10 The Company is aware of several environmental matters related to certain facilities purchased or to be sold. The Registrant assesses the extent of these matters on an ongoing basis. In the opinion of management (after taking into account accruals of approximately $400,000 as of March 31, 1997), the resolution of these matters will not materially affect the Company's future results of operations or financial position. 7. SUBSIDIARY STOCK REPURCHASE: In February 1997, the Company repurchased 9,900,000 shares (or approximately 30%) of its subsidiary, Dixon Ticonderoga de Mexico, S.A. de C.V., from a consortium of Mexican financial institutions. The shares, which were repurchased for approximately $2.5 million (or 25 cents per share), were originally issued in 1994, when the Company sold 16,627,760 shares of Dixon Ticonderoga de Mexico, S.A. de C.V., in an initial public offering on the Mexico Intermediate Market at a price of approximately 40 cents per share (U.S. equivalency). The Company applied the purchase method of accounting to record this repurchase of subsidiary stock. 11 Item 2. - ------- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS REVENUES for the quarter ended March 31, 1997, increased $1,285,000 from the same quarter last year. The changes by segment are as follows: Increase % Increase (Decrease) (Decrease) --------------------- (in thousands) Total Volume Price/Mix ------------ ----- ------ --------- Consumer U.S. $ 78 1 -- 1 Consumer Foreign 1,370 43 32 11 Industrial (163) (2) (2) -- Foreign revenue in Mexico increased $1,030,000 reflecting aggressive efforts in the mass market. Revenues in Canada increased $330,000. Revenues for the six months ended March 31, 1997, increased $2,647,000 over the same period last year. The changes by segment are as follows: Increase % Increase (Decrease) (Decrease) --------------------- (in thousands) Total Volume Price/Mix ------------ ----- ------ --------- Consumer U.S. $ 130 -- (1) 1 Consumer Foreign 2,566 46 36 10 Industrial (49) -- -- -- Revenue in Mexico increased $2,000,000 due to increased shipments to the mass market and successful government bids. Revenues in Canada increased $430,000 on higher volume. The remainder of the foreign revenue increase was due to the United Kingdom distribution center. While the Company has operations in Canada, Mexico and the U.K., historically only the operating results in Mexico have been materially impacted by currency fluctuations. There has been a significant devaluation of the Mexican peso once in each of the last three decades, the last one being in December 1994. In the short term after such a devaluation, consumer confidence has been shaken, leading to an intermediate reduction in revenues in the months following the devaluation. Then, after the immediate shock, and as the peso stabilizes, revenues tend to grow. Selling prices tend to rise over the long term to offset any inflationary increases in costs. The peso, as well as any currency value, depends on many factors including international trade, investor confidence, and government policy, to name a few. These factors are impossible for the Company to predict, and thus, an estimate of potential effect on results of operations for the future cannot be made. The Company does not employ any currency hedging practices. This currency risk in Mexico is managed through local currency financing and by export sales to the U.S. denominated in U.S. dollars. 12 As of January 1, 1997, Mexico is considered as a highly inflationary economy for the purpose of applying FASB Statement No. 52 "Foreign Currency Translation." Translation gains or losses will therefore impact the results of operations going forward. Revenues decreased $401,000 from the prior quarter as follows: Increase % Increase (Decrease) (Decrease) --------------------- (in thousands) Total Volume Price/Mix ------------ ----- ------ --------- Consumer U.S. ($1,760) (14) (13) (1) Consumer Foreign 1,056 30 25 5 Industrial 303 5 5 -- The decrease in U.S. Consumer revenue reflects the historical trend where the first fiscal quarter is positively impacted by holiday sales. Foreign Consumer revenue increased primarily due to revenue from the mass market in Mexico. OPERATING INCOME increased $2,138,000 over the same quarter last year. The prior year period included $2,039,000 for litigation and related costs of a judgment against the Company under New Jersey's Environmental Clean-Up Responsibility Act (ECRA) as described in Note 6 to Consolidated Financial Statements. U.S. Consumer increased $175,000. Increased manufacturing efficiencies contributed to lower total cost of goods sold (63.9% of sales as compared with 68.7% in the prior year quarter). This improvement was largely offset by higher distribution and initial promotional costs associated with increased penetration of the mass retail and mega-store markets and administrative costs. Increases in administrative costs include higher amortization of debt costs, legal expenses, new management personnel and certain severance costs. Total selling and administrative expenses increased to 30.9% of sales as compared with 26.3% in last year's quarter. Foreign Consumer segment operating income increased $550,000 primarily due to increased volume and improved product mix in Mexico. Operating income for the six months ended March 31, 1997, increased $2,452,000 over the same period last year. As discussed above, the prior year included the provision of $2,039,000 for the ECRA judgment. U.S. Consumer increased $440,000. Increased manufacturing efficiencies contributed to lower total cost of goods sold (64.8% of sales as compared with 68.5% in the prior year period). This improvement was partially offset by increased selling, distribution and administrative expenses as described above (totalling 29.7% of sales as compared with 26.7% last year). Foreign Consumer operating income increased $700,000 primarily due to higher revenue and improved product mix in Mexico. 13 Operating income for the quarter ended March 31, 1997, decreased $178,000 from the prior quarter. Foreign Consumer operating profits increased $540,000 primarily in Mexico on higher revenues. U.S. Consumer decreased $660,000 primarily due to decreased volume with the prior quarter reflecting seasonal holiday sales. INTEREST EXPENSE increased $105,000 and $286,000 for the quarter and six months ended March 31, 1997, respectively, over the same periods last year. These increases were primarily due to the new debt incurred for the Company's corporate headquarters and subsidiary stock repurchase, as well as higher effective rates and balances of subordinated debt. Interest increased $95,000 over the prior quarter due to higher seasonal borrowings. INCOME TAXES increased $711,000 over the same quarter last year and increased $759,000 over the prior year six-month period due to the increase in before tax income. Taxes decreased $101,000 from the prior quarter. Effective tax rates for this quarter and six-month period decreased from the same periods last year due to lower foreign tax rates. MINORITY INTEREST represents 49.9% of the net income of the consolidated subsidiary, Dixon Ticonderoga de Mexico, S.A. de C.V. through January 1997. In February 1997, the Company increased its ownership, thus reducing minority interest to approximately 20%. See Note 7 to Consolidated Financial Statements. 14 LIQUIDITY AND CAPITAL RESOURCES The Company's financial condition has benefited from its recent operating success and the completion of major financing initiatives. Cash flows from operating activities in the first six months of fiscal 1997 improved by approximately $1.6 million over the same period last year, due principally to increased receivable collections from strong fourth quarter 1996 revenues. This improvement was partially offset by higher inventory levels needed to service the Company's growing Consumer Group business. Investing activities in the same period last year included approximately $2 million of costs related to the construction of the Company's new corporate headquarters. Total capital expenditures in fiscal 1997 are expected to return to more customary levels (approximately $2.2 million). Such expenditures approximated $1,075,000 in the first six months of fiscal 1997. In addition, the Company has financed certain strategic manufacturing equipment (in the amount of $2.7 million) under a long-term operating lease arrangement. Generally, all other major capital projects are discretionary in nature and thus no material purchase commitments exist. Other capital expenditures will continue to be funded from operations and existing financing arrangements. In July 1996, the Company entered into new financing arrangements with a consortium of lenders to provide additional working capital. The new loan and security agreement provides for a total of $48 million in financing. This includes a revolving line of credit facility in the amount of $40 million which bears interest at either the prime rate, plus 0.5%, or the prevailing LIBOR rate plus 2.5%. Borrowings under the revolving credit facility are based upon eligible accounts receivable and inventories of the Company's U.S. and Canada operations, as defined. The financing agreement also includes a term loan in the original amount of $7.75 million. The term loan bears interest at the same rate, and is payable in varying monthly installments through 2001. The Company previously executed certain interest rate "swap" agreements which effectively fix the rate of interest on approximately $13 million of this debt at 8.75% to 8.87%. The new financing arrangements are collateralized by the tangible and intangible assets of the U.S. and Canada operations (including accounts receivable, inventories, property, plant and equipment, patents and trademarks) and a pledge of the capital stock of the Company's subsidiaries. The loan and security agreement contains provisions pertaining to the maintenance of certain financial ratios and annual capital expenditure levels, as well as restrictions as to payment of cash dividends. The Company is presently in compliance with all such provisions. These new arrangements provide up to $10 million in additional financing as compared with the Company's previous primary lender agreement. At March 31, 1997, the Company had approximately $20 million of unused lines of credit available under this new financing arrangement. 15 In September 1996, the Company also completed the private placement of $16.5 million of new 12% Senior Subordinated Notes, due 2003. The net proceeds were used to retire early the remaining $7 million of the Company's prior issue of Senior Subordinated Notes due 1999, and to reduce short-term borrowings, thus providing additional working capital. This transaction also reduced the Company's annual debt service obligations by approximately $3.3 million through 1998. The Company executed a reverse interest rate "swap" agreement which converts $10 million of the notes to a floating rate of interest (approximately 10.9% at March 31, 1996). In connection with the private placement, the Company issued to noteholders warrants to purchase 300,000 shares of Company stock at $7.24 per share. The note agreement contains provisions which limit the payment of dividends and requires the maintenance of certain financial covenants and ratios, with which the Company is presently in compliance. The Company's repurchase of its Mexico subsidiary's stock in February 1997 (see Note 7 to Consolidated Financial Statements) was financed through the aforementioned revolving line of credit facility. The Company entered into the aforementioned interest rate "swap" agreements to balance and manage overall interest rate exposure and minimize overall cost of borrowings. The "swaps" are not presently expected to have a material effect on total interest expense over the term of the underlying agreements. The new and existing sources of financing and cash expected to be generated from future operations will, in management's opinion, be sufficient to fulfill all current and anticipated requirements of the Company's ongoing business and to meet all of its obligations. 16 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K - ------- --------------------------------- (a) Exhibits -------- The following exhibits are required to be filed as part of this quarterly report on Form 10-Q: (3)(i) Restated Certificate of Incorporation (3)(ii) Amended and Restated Bylaws* (4)(a) Specimen Certificate of Company Common Stock (4)(b) Amended and Restated Stock Option Plan** (27) Financial Data Schedule *** * Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended September 30, 1996, file number 0-2655, filed in Washington D.C. ** Incorporated by reference to Appendix 3 to the Company's Proxy Statement dated January 27, 1997, filed in Washington, D.C. *** Filed electronically via EDGAR. (b) Reports on Form 8-K ------------------- Not applicable. 17 SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. DIXON TICONDEROGA COMPANY Dated: May 13, 1997 By: /s/ Gino N. Pala ---------------------------- Gino N. Pala Chairman of the Board, President, Chief Executive Officer and Director Dated: May 13, 1997 By: /s/ Richard A. Asta ---------------------------- Richard A. Asta Executive Vice President of Finance and Chief Financial Officer Dated: May 13, 1997 By: /s/ John Adornetto ---------------------------- John Adornetto Vice President/Corporate Controller and Chief Accounting Officer EX-27 2 MAR 31, 1997 FDS
5 This schedule contains summary financial information extracted from the Consolidated Balance Sheets, the Consolidated Statement of Operations and the Consolidated Statement of Cash Flows, and is qualified in its entirety by reference to such financial statements. 6-MOS SEP-30-1997 MAR-31-1997 2,330,600 0 19,650,168 918,029 37,030,581 61,471,491 34,299,361 18,537,198 79,453,596 35,811,439 0 0 0 3,573,931 12,554,014 79,453,596 44,214,822 44,214,822 28,661,261 28,661,261 13,145,424 0 1,694,595 713,542 150,707 264,108 0 0 0 264,108 .08 .08
EX-3 3 EX 3(I) RESTATED CERT OF INCORPORATION 1 RESTATED CERTIFICATE OF INCORPORATION OF DIXON TICONDEROGA COMPANY DIXON TICONDEROGA COMPANY, a corporation organized and existing under the laws of the State of Delaware, hereby certifies as follows: 1. The name of the corporation is DIXON TICONDEROGA COMPANY and the name under which the corporation was originally incorporated is Bryn Mawr Corporation. The date of filing its original Certificate of Incorporation with the Secretary of State was August 22, 1978. 2. This Restated Certificate of Incorporation restates and integrates and further amends the Certificate of Incorporation by (a) amending Article Fourth increasing the Company's authorized shares of common stock from 5,000,000 shares of Common Stock par value $1 to 8,000,000 shares of Common Stock, par value $1, and (b) correcting certain typographical errors and an unintended omission. 3. Except for the amendment described in Item 2, above, which amendments were adopted by the shareholders pursuant to Section 242 of Title 8, Delaware Code, this Restated Certificate of Incorporation was duly adopted by the Board of Directors in accordance with Section 245 of Title 8, Delaware Code and, except as described in Item 2, above, it only restates and integrates and does not further amend the provision of the corporation's Certificate of Incorporation as theretofore amended or supplemented and there is no discrepancy between those provisions and the provisions of this Restated Certificate. 4. The text of the Certificate of Incorporation as amended or supplemented heretofore is further amended to read as herein set forth in full: FIRST: The name of the corporation is Dixon Ticonderoga Company. SECOND: The address of its registered office in the State of Delaware is 1209 Orange Street, City of Wilmington, County of New Castle, and State of Delaware. The name of its Registered Agent at such address is The Corporation Trust Company. 2 THIRD: The nature of the business or purpose to be conducted or promoted is to engage in any lawful act or activity which corporations may be organized under the General Corporation Law of Delaware. FOURTH: The total number of shares of all classes of stock which the corporation shall have authority to issue is 8,100,000 shares, consisting of (a) 100,000 shares of Preferred Stock, par value $1.00 per share (hereinafter referred to as "Preferred Stock"); and (b) 8,000,000 shares of Common Stock, par value $1.00 per share (hereinafter referred to as "Common Stock"). A. PREFERRED STOCK Shares of Preferred stock may be issued from time to time in one or more series as may from time to time be determined by the Board of Directors, each of said series to be distinctly designated. All shares of any one series of Preferred Stock shall be alike in every particular, except that there may be different dates from which dividends, if any, thereon shall be cumulative, if made cumulative. The voting powers and the preferences and relative, participating, optional, and other special rights of each such series, and the qualifications, limitations, or restrictions thereof, if any, may differ from those of any and all other series at any time outstanding; and, subject to the provisions of subparagraph 1 of Paragraph C of this Article Fourth, the Board of Directors of the corporation is hereby expressly granted authority to fix, by resolution or resolutions adopted prior to the issuance of any shares of a particular series of Preferred Stock, the voting powers and the designations, preferences, and relative, optional, and other special rights, and the qualifications, limitations, and restrictions of such series, including, without limiting the generality of the foregoing, the following: (a) The distinctive designation of, and the number of shares of Preferred Stock which shall constitute, such series, which number may be increased (except where otherwise provided by the Board of Directors) or decreased but not below the number of shares thereof then outstanding) from time to time by like action of the Board of Directors; 3 (b) The rate and times at which, and the terms and conditions on which, dividends, if any, on Preferred Stock of such series shall be paid, the extent of the preference or relation, if any, of such dividends to the dividends payable on any other class or classes or series of the same or other classes of stock, and whether such dividends shall be cumulative or non-cumulative; (c) The right, if any of the holders of Preferred Stock of such series to convert the same into or exchange the same for shares of any other class or classes or of any series of the same or any other class or classes of stock of the corporation and the terms and conditions of such conversion or exchange; (d) Whether or not Preferred Stock of such series shall be subject to redemption, and the redemption price or prices and the time or times at which, and the terms and conditions on which, Preferred Stock of such series may be redeemed; (e) The rights, if any, of holders of Preferred Stock of such series upon the voluntary or involuntary liquidation, merger, consolidation, distribution or sale of assets, dissolution, or winding-up of the corporation; (f) The terms of the sinking fund or redemption or purchase account, if any, to be provided for the Preferred Stock of such series; and (g) The voting powers, if any, of the holders of such series of Preferred Stock which may, without limiting the generality of the foregoing, include the right, voting as a series or by itself or together with other series of Preferred Stock or all series of Preferred Stock as a class, to elect one or more direction of the corporation if there shall have been a default in the payment of dividends on any one or more series of Preferred Stock or under such circumstances and on such conditions as the Board of Directors may determine. B. COMMON STOCK 1. After the requirements with respect to preferential dividends on the Preferred Stock (fixed in accordance with the provisions of Paragraph A of this Article Fourth), if any, shall have been met and after the corporation shall have complied with all the requirements, if any, with respect to the setting aside of sums as sinking funds or redemption or purchase accounts (fixed in accordance with the provisions of Paragraph A of this Article Fourth), if any, shall have been met and after the corporation shall have complied with all the requirements, if any, with respect to the setting aside of sums as sinking funds or redemption or purchase accounts (fixed in accordance with the provisions of Paragraph A of this Article Fourth, then and not otherwise the holders of Common Stock shall be entitled to receive such dividends as may be declared from time to time by the Board of Directors. 4 2. After distribution in full of the preferential amount, if any (fixed in accordance with the provisions of Paragraph A of this Article Fourth), to be distributed to the holders of Preferred Stock in the event of voluntary or involuntary liquidation, distribution or sale of assets, dissolution, or winding-up of the corporation, the holders of the Common Stock shall be entitled to receive all of the remaining assets of the corporation, tangible and intangible, of whatever kind available for distribution to stockholders ratably in proportion to the number of shares of Common Stock held by them respectively. 3. Except as may otherwise be required by law or by the provisions of such resolution or resolutions as may be adopted by the Board of Directors pursuant to Paragraph A of this Article Fourth, each holder of Common Stock shall have one vote in respect of each share of Common Stock held by him on all matters voted upon by the stockholders. C. OTHER PROVISIONS 1. No holder of any of the shares of any class or series of stock or of options, warrants, or other rights to purchase shares of any class or series of stock or of other securities of the corporation shall have any preemptive right to purchase or subscribe for any unissued stock of any class or series or any additional shares of any class or series to be issued by reason of any increase of the authorized capital stock of the corporation of any class or series, or bonds, certificates of indebtedness, debentures, or other securities convertible into or exchangeable for stock of the corporation of any class or series, or carrying any right to purchase stock of any class or series, but any such unissued stock, additional authorized issue of shares of any class or series of stock, or securities convertible into or exchangeable for stock, or carrying any right to purchase stock, may be issued and disposed of pursuant to resolution of the Board of Directors to such persons, firms, corporation, or associations, whether such holders or others, and upon such terms as may be deemed advisable by the Board of Directors in the exercise of its sole discretion. 5 2. The relative powers, preferences, and rights of each series of Preferred Stock in relation to the powers, preferences, and rights of each other series of Preferred Stock shall, in each case, be as fixed from time to time by the Board of Directors in the resolution or resolutions adopted pursuant to authority granted in Paragraph A of this Article Fourth and the consent, by class or series vote or otherwise, of the holders of such of the series of Preferred Stock as are from time to time outstanding shall not be required for the issuance by the Board of Directors of any other series of Preferred Stock, whether or not the powers, preferences, and rights of such other series shall be fixed by the Board of Directors as senior to, or on a parity with, the powers, preferences, and rights of such outstanding series, or any of them; provided, however, that the Board of Directors may provide in the resolution or resolutions as to any series of Preferred Stock adopted pursuant to Paragraph A of this Article Fourth that the consent of the holders of a majority (or such greater proportion as shall be therein fixed) of the outstanding shares of such series voting thereof shall be required for the issuance of any or all other series of Preferred Stock. 3. Subject to the provisions of subparagraph 2 of this Paragraph C, shares of any series of Preferred Stock may be issued from time to time as the Board of Directors of the corporation shall determine and on such terms and for such consideration as shall be fixed by the Board of Directors. 4. Shares of Common Stock may be issued from time to time as the Board of Directors of the corporation shall determine and on such terms and for such consideration as shall be fixed by the Board of Directors. 5. The authorized amount of shares of Common Stock and of Preferred Stock may, without a class or series vote, be increased or decreased from time to time by the affirmative vote of the holders of a majority of the stock of the corporation entitled to vote thereon. FIFTH: The corporation is to have perpetual existence. SIXTH: In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized: (a) To make, alter, or repeal the By-Laws of the corporation. 6 (b) To authorize and cause to be executed mortgages and liens upon the real and personal property of the corporation. (c) To set apart out of any of the funds of the corporation available for dividends a reserve or reserves for any proper purpose and to abolish any such reserve in the manner which it was created. (d) By a majority of the whole board, to designate one or more committees, each committee to consist of two or more of the directors of the corporation. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. Any such committee, to the extent provided in the resolution or in the By-Laws of the corporation, shall have and may exercise the powers of the Board of Directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; provided, however, the By-Laws may provide that in the absence or disqualification of any member of such committee or committees, the member or members thereof present any meeting and not disqualified from voting whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. (e) Except as provided in Article Tenth hereof, when and as authorized by the affirmative vote of the holders of a majority of the stock issued and outstanding having voting power given at a stockholder's meeting duly called upon such notice as is required by statute, to sell, lease, or exchange all or substantially all of the property and assets of the corporation, including its good will and its corporate franchises, upon such terms and for such consideration, which may consist in whole or in part of money or property, including shares of stock in and/or other securities of any other corporation or corporations, as its Board of Directors shall deem expedient and for the best interest of the corporation. (f) To fix the fiscal year of the corporation as the calendar year or otherwise in its discretion. SEVENTH: Notwithstanding any other provisions of this Certificate of Incorporation or the By-Laws of the corporation (and notwithstanding the fact that some lesser percentage may be specified by law, this Certificate of Incorporation, or the By-Laws of the corporation), any director or the entire Board of Directors of the corporation may be removed at any time, but only for cause 7 and only by the affirmative vote of the holders of 66-2/3%or more of the outstanding shares of capital stock of the corporation entitled to vote generally in the election of directors (considered for this purpose as one class cast at a meeting of the stockholders called for that purpose, and the affirmative vote of the holders of 66-2/3% or more of the outstanding shares of capital stock of the corporation entitled to vote generally in the election of directors (considered for this purpose as one class) shall be required to amend, alter, change, or repeal this Article Seventh of this Certificate of Incorporation. Notwithstanding the foregoing, and except as otherwise required by law, whenever the holders of any one or more series of Preferred Stock shall have the right, voting separately as a class, to elect one or more directors of the corporation, the provisions of this Article Seventh shall not apply with respect to the director or directors elected by such holders of Preferred Stock. EIGHTH: Whenever a compromise or arrangement is proposed between this corporation and its creditors or any class of them and/or between this corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this corporation or of any creditor or stockholder thereof, or on the application of any receiver or receivers appointed for this corporation under the provisions of Section 291 of Title 8 of the Delaware Code, or on the application of trustees in dissolution, or of any receiver or receivers appointed for this corporation under the provisions of Section 279 of Title 8 of the Delaware Code, order a meeting of the creditors or class of creditors and/or of the stockholders or class of stockholders of this corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors and/or the stockholders or class of stockholders of this corporation agree to any compromise or arrangement and to any reorganization of this corporation as a consequence of such compromise or arrangement, the same compromise or arrangement and the said reorganization shall, if sanctioned by the court to which said application has been made, be binding on all the creditors or class of creditors and/or on all the stockholders or class of stockholders of this corporation, as the case may be, and also on this corporation. 8 NINTH: A. The property, business, and affairs of the corporation shall be managed and controlled by the Board of Directors. The number of directors of the corporation (exclusive of directors to be elected by the holders of any one or more series of Preferred Stock voting separately as a class or classes shall not be less than five nor more than thirteen, the exact number of directors to be determined from time to time by resolution adopted by affirmative vote of a majority of the whole Board of Directors, and such exact number shall be eleven until otherwise determined by resolution adopted by affirmative vote of a majority of the whole Board of Directors. As used in this Article Ninth, the term "whole board" means the total number of directors which the corporation would have if there were no vacancies. B. The Board of Directors shall be divided into three classes, as nearly equal in number as the then total number of directors constituting the whole Board permits, with the term of office of one class expiring each year. Directors of the first class shall be elected to hold office for term expiring at the next succeeding annual meeting, directors of the second class shall be elected to hold office for a term expiring at the second succeeding annual meeting, and directors of the third class shall be elected to hold office for a term expiring at the third succeeding annual meeting. Any vacancies in the Board of Directors for any reason, and any newly created directorships resulting from any increase in the number of directors, may be filled by the Board of Directors acting by a majority of the directors then in office and any directors so chosen would hold office until the next election of the class for which such directors have been chosen and until their successors are elected and qualified. No decrease in the number of directors shall shorten the term of any incumbent director. Notwithstanding the foregoing, and except as otherwise required by law, whenever the holders of any one or more series of Preferred Stock shall have the right, voting separately as a class, to elect one or more directors of the corporation, the terms of the director or directors elected by such holders shall expire at the next succeeding annual meeting of stockholders. Subject to the foregoing, at each annual meeting of stockholders the successors to the class of director whose term shall then expire shall be elected to hold office for a term expiring at the third succeeding annual meeting. Notwithstanding any other provisions of this Certificate of Incorporation or the By-Laws of the corporation (and notwithstanding the fact that some lesser percentage may be specified by law, this Certificate of Incorporation, or the By-Laws of the corporation), the affirmative vote of the holders of 66-2/3% or more the outstanding shares of capital stock of the corporation entitled to vote generally in the election of directors (considered 9 for this purpose as one class) shall be required to amend, alter, change, or repeal this Article Ninth. TENTH: It is hereby declared to be a proper corporate purpose, reasonably calculated to benefit stockholders, for the Board of Directors to base the response of the corporation to any "Acquisition Proposal" on the Board of Directors' evaluation of what is in the best interests of the corporation and for the Board of Directors, in evaluating what is in the best interests of the corporation, to consider (a) the best interest of the stockholders; for this purpose the Board shall consider, among other factors, not only the consideration being offered in the Acquisition Proposal, in relation to the then current market price, but also in relation to the then current value of the corporation in a freely negotiated transaction and in relation to the Board of Directors' then estimate of the future value of the corporation as an independent entity; and (b) such other factors as the Board of Directors determines to be relevant, including, among other factors, the social, legal, and economic effects upon franchisees, employees, suppliers, customers, and business. "Acquisition Proposal" means any proposal of any person (a) for a tender offer or exchange offer for any equity security of the corporation, (b) to merge or consolidate the corporation with another corporation, or (c) to purchase or otherwise acquire all or substantially all of the properties and assets of the corporation. ELEVENTH: Subject to all other applicable provisions of this Certificate of Incorporation and to all applicable provisions of the law of Delaware, relating, inter alia, to stockholder approval, the Board of Directors shall have the power to merge or consolidate the corporation with another corporation or to sell, lease, or exchange all or substantially all of the property and assets of the corporation, including its good will and its corporate franchises, upon such terms and conditions and for such consideration, which may be in whole or in part shares of stock in, and/or other securities of, any corporation or corporations, as the Board of Directors shall deem expedient and for the best interests of the corporation, but, regardless of any other provision of this 10 Certificate of Incorporation, if any party to any such transaction shall be a person or entity owning, immediately prior to the consummation of such transaction of record or beneficially, 2% or more of the stock of the corporation issued and outstanding having voting power, such power of the Board of Directors shall be exercisable only when and as duly authorized by the affirmative vote of the holders of not less than 66-2/3% of the stock of the corporation issued and outstanding having voting power given at a stockholder's meeting duly called for that purpose; provided, however, that the Board of Directors shall have the power to merge the corporation with another corporation without action by the stockholders to the extent and in the manner permitted from time to time by the law of Delaware. In determining whether or not any person or entity (the "Primary Holder") owns, of record or beneficially, 2% or more of the stock of the corporation issued an outstanding having voting power, there shall be aggregated with all shares of such stock owned of record or beneficially by the Primary Holder (a) all shares of such stock owned of record or beneficially by any person or entity who or which would be deemed to be controlling, controlled by, or under common control with the Primary Holder under the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, any federal statute enacted to take the place of either or both such statutes, or any regulation promulgated under either of such statues or such successor statutes (an "Affiliate"), and (b) all shares of such stock owned of record or beneficially by any person or entity acting in concert with the Primary Holder and/or with an Affiliate of the Primary Holder. This Article Eleventh shall not be altered, amended, or repealed except by the affirmative vote of the holders of not less than 66-2/3% of the stock of the corporation issued and outstanding having voting power, given at a stockholders' meeting duly called for that purpose, upon a proposal adopted by the Board of Directors. TWELFTH: No person shall be liable to the corporation for any loss or damage suffered by it on account of any action taken or omitted to be taken by him as a director or officer of the corporation in good faith, if such person exercised or used the same degree of care and skill as a prudent man would have exercised or used in the circumstances in the conduct of his own affairs. THIRTEENTH: No contract or transaction entered into by the corporation shall be affected by the fact that a director of the corporation was personally interested in it, if, at the meeting of the Board of Directors making, authorizing, or confirming such contract or 11 transaction, the interested director discloses his interest therein and refrains from voting on such contract or transactions, and such contract or transaction is adopted or ratified by a majority of a quorum of directors present. FOURTEENTH: Each director and officer of this corporation (and each officer or director of any other corporation and serving as such at the request of this corporation because of this corporation's interest in such other corporation) shall be indemnified by the corporation against all costs and expenses (including not limited to counsel fees, amounts of judgments paid, and amounts paid in settlement) reasonably incurred in connection with the defense of any claim, action, suit, or proceeding, whether civil, criminal, administrative, or other, in which he or they may be involved by virtue of such person's being or having been such director, officer, or employee; provided, however, that such indemnity shall not be operative with respect to (a) any matter as to which such person shall have been finally adjudged in such action, suit, or proceeding to be liable for negligence or misconduct in the performance of his duties as such director, officer, or employee, or (b) any matter settled or compromised, unless, in the opinion of independent counsel selected by or in a manner determined by the Board of Directors, there is not reasonable ground for such person's being adjudged liable for negligence or misconduct in the performance of his duties as such director, officer, or employee, or (c) any amount paid or payable to the corporation of such other enterprise. The foregoing indemnification shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any by-law, agreement, vote of shareholders, or otherwise. FIFTEENTH: Meetings of stockholders may be held within or without the State of Delaware, as the By-Laws may provide. The books of the corporation may be kept (subject to any provision contained in the statutes) outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the By-Laws of the corporation. Elections of directors need not be by written ballot unless the By-Laws of this corporation so provide. SIXTEENTH: Except as hereinbefore provided, the corporation reserves the right to amend, alter, change, or repeal any provision contained in the Certificate of Incorporation, in the manner now or hereafter prescribed by the statutes, and all rights conferred upon stockholders herein are granted subject to this reservation. 12 SEVENTEENTH: Notwithstanding any other provision of the Certificate of Incorporation or the By-Laws of the corporation, a director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under unlawful payment of dividends or unlawful stock purchases or redemptions, or (iv) for any transaction from which the director derived any improper personal benefit. The foregoing provision shall not eliminate or limit the liability of a director for any act or omission occurring prior to the effective date of the amendment to the Certificate of Incorporation. If the Delaware General Corporation Law hereafter is amended to further eliminate or limit the liability of a director, then a director of the corporation, in addition to the circumstances in which a director is not personally liable as set forth in the preceding sentence, shall not be liable to the fullest extent permitted by the amended Delaware General Corporation Law. Any repeal or modification of the foregoing paragraph by the stockholders of the corporation shall not adversely affect any right or protection of a director of the corporation existing at the time of such repeal or modification. IN WITNESS WHEREOF, said Dixon Ticonderoga Company has caused this certificate to be signed by Gino N. Pala, its President and Chief Executive Officer, and attested by Laura Hemmings, its Secretary this 17th day of February, 1989. DIXON TICONDEROGA COMPANY By: Gino N. Pala President and CEO CORPORATE SEAL Attest: Laura Hemmings Secretary 13 STATE OF FLORIDA COUNTY OF INDIAN RIVER The foregoing Restated Certificate of Incorporation was sworn to and acknowledged before me this 17 day of February, 1989, by Gino N. Pala and Laura Hemmings, President and Secretary, respectively, of the corporation, on behalf of the corporation. My commission expires: Kenneth A. Baer Notary Public March 1, 1990 EX-4 4 EX 4(A) SPECIMEN STOCK CERTIFICATE EXHIBIT 4.1 Specimen Certificate of the Company's Common Stock Common Stock Number Par Value $1.00 per share P5961 Incorporated under the laws of the State of Delaware DIXON LOGO Shares [SPECIMEN] See reverse side for certain definitions DIXON TICONDEROGA COMPANY This certificate is transferrable in the cities of Charlotte or New York. [CUSIP 255860 10 8] THIS CERTIFIES THAT SPECIMEN is the owner of Shares of the fully paid and non-assessable common stock of the par value $1.00 per share of DIXON TICONDEROGA COMPANY transferable on the books of the Company by the holder hereof in person or by duly authorized attorney upon surrender of this certificate properly endorsed. This certificate and the shares represented hereby are issued and shall be held subject to all the provisions of (1) the Articles of Incorporation and all amendments and (2) any statement on the reverse side of this certificate. This certificate is not valid unless countersigned by the Transfer Agent and registered by the Registrar. WITNESS the facsimile seal of the Company and the facsimile signature of its duly authorized officers. Dated: Countersigned and Registerd: CORPORATE /s/ Gino N. Pala First Union National Bank of North Carolina SEAL President (Charlotte, North Carolina) Transfer Agent and Registrar, /s/ Kenneth Baer By: Treasurer Authorized Officer
25 [REVERSE SIDE OF SPECIMEN STOCK CERTICIATE] DIXON TICONDEROGA COMPANY The Company will furnish to any shareholder, upon request and without charge, a fully or summary statement of the designations, preferences, limitations and relative rights of the shares of each class authorized to be issued, and the variations in the relative rights and preferences between (1) the shares of Common, Preferred and Preference Stock, (2) any classes of Preference Stock and (3) any series within classes of Preference Stock, so far as the same have been fixed and determined the Articles of Incorporation fo this Company and in addition, with respect to the Preference Stock, in the resolution or resolutions providing for the issue of Preference Stock adopted from time to time by the board of directors, without the necessity of any action by the shareholders. The following abbreviations, when used in the inscription of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations. TEN COM - as tenants in common UNIF GIFT MIN ACT__________Custodian ___________ TEN ENT - as tenants by the entireties (Cust) (Minor) JT TEN - as joint tenants with right of under Uniform Gifts to Minors survivorship and not as tenants in common Act________________________________ (State) UNIF TRF MIN ACT________Custodian (until age ___) ________ under uniform Transfers (Minor) to Minors Act ___________________ (State) Additional abbreviations may also be used though not in the above list. FOR VALUE RECEIVED, ______________________ hereby sell, assign and transfer unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE [_________________________]________________________________________________________________________________________ ___________________________________________________________________________________________________________________ (Please print or typewrite name and address, including ZIP Code of assignee) ___________________________________________________________________________________________________________________ _____________________________________________________________________________________________________________Shares of the common stock represented by the within Certificate, and do hereby irrevocably constitute and appoint ___________________________________________________________________________________________________________Attorney to transfer the said stock on the books of the within named Corporation with full power of substitution in the premises. Dated______________________________ X________________________________________________________ X________________________________________________________ NOTICE: The signature(s) to this assignment must correspond with the name(s) as written upon the face of the certificate in every particular, without alteration or enlargement or any change whatever. SIGNATURE(S) GUARANTEED: By:_______________________________ The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program), pursuant to SEC Rule 17Ad-15.
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