<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
WD-40 COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
WD-40 COMPANY
1061 Cudahy Place
San Diego, California 92110
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders:
The 1999 Annual Meeting of Shareholders will be held at the Mission
Valley Doubletree Hotel, Grand Ballroom, 901 Camino del Rio South, San Diego,
California 92108, on Tuesday, December 14, 1999, at 2:00 p.m. for the
following purposes:
1. To elect a Board of Directors for the ensuing year and until their
successors are elected and qualified;
2. To change the state of incorporation of the Company from
California to Delaware;
3. To increase the number of authorized shares of common stock of the
Company from 18,000,000 to 36,000,000;
4. To ratify the selection of PricewaterhouseCoopers LLP as the
Company's independent accountants for the fiscal year 2000; and
5. To consider and act upon such other business as may properly come
before the meeting.
Only the shareholders of record at the close of business on October 18,
1999 are entitled to vote at the meeting.
By Order of the Board of Directors
Harlan F. Harmsen
Secretary
San Diego, California
November 9, 1999
1
<PAGE>
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of WD-40 Company for use at its Annual
Meeting of Shareholders to be held on December 14, 1999, and at any
postponements or adjournments thereof. This Proxy Statement and enclosed form
of Proxy are first sent to shareholders on or about November 9, 1999.
At the meeting, the shareholders of WD-40 Company will vote to (i)
elect the Board of Directors for the ensuing year, (ii) change the state of
incorporation of the Company from California to Delaware, (iii) increase the
number of authorized shares of common stock of the Company from 18,000,000 to
36,000,000, and (iv) ratify the selection of PricewaterhouseCoopers LLP as
the Company's independent accountants. Detailed information concerning these
matters is set forth below. Management knows of no other business to come
before the meeting.
The close of business on October 18, 1999 is the record date for
shareholders entitled to notice of and to vote at the Annual Meeting of
Shareholders of WD-40 Company. On October 18, 1999, WD-40 Company had
outstanding 15,562,811 Common Shares. Shareholders of record entitled to vote
at the meeting will have one vote for each share so held on the matters to be
voted upon. A majority of the outstanding shares will constitute a quorum at
the meeting. Abstentions and broker non-votes are counted for purposes of
determining the presence or absence of a quorum.
If the enclosed form of Proxy is properly executed and returned, the
shares represented thereby will be voted in accordance with the instructions
specified thereon. Except as described herein with respect to broker
non-votes, if no specification is made, the shares will be voted by the proxy
holder as set forth on the Proxy. A Proxy may be revoked by attendance at the
meeting or by filing a Proxy bearing a later date with the Secretary of the
Company.
The cost of soliciting proxies will be borne by the Company.
Solicitations other than by mail may be made by telephone or in person by
employees of the Company for which the expense will be nominal.
PRINCIPAL SECURITY HOLDERS
The following table sets forth information concerning those persons
known to the Company to be the beneficial owners of more than 5% of the common
stock of the Company.
<TABLE>
<CAPTION>
Amount and Nature
of Beneficial
Ownership Percent
Name and Address of Beneficial Owner October 18, 1999 of Class
- ------------------------------------ ---------------- --------
<S> <C> <C>
Mario L. Crivello 995,502(1) 6.4%
San Diego, California
</TABLE>
1 Mr. Crivello has sole voting and investment power over 885,514
shares held in trust for the benefit of his mother and remainder
beneficiaries. He also has sole voting and investment power over
14,780 shares held as custodian for children and 95,208 shares
held directly.
2
<PAGE>
ITEM NO. 1
NOMINEES FOR ELECTION AS DIRECTORS
AND SECURITY OWNERSHIP OF MANAGEMENT
Unless marked to the contrary, the Proxies received will be voted for
the election of the ten nominees named below to serve as Directors until the
next Annual Meeting of Shareholders and until their successors are elected or
appointed. In the event any nominee is unable or declines to serve as a
Director at the time of the Annual Meeting, his or her Proxy will be voted
for a nominee designated by the present Board of Directors to fill such
vacancy.
Each shareholder entitled to vote at the Annual Meeting has the right
to vote his or her shares cumulatively for the election of Directors,
provided at least one shareholder has given notice at the meeting of his or
her intention to vote cumulatively. If cumulative voting is in effect, each
shareholder will be entitled to cast as many votes as there are Directors to
be elected multiplied by the number of shares registered in his or her name
on the record date, and to cast all such votes for one candidate or to
distribute such votes among the nominees in accordance with his or her choice.
If cumulative voting is in effect at the Annual Meeting, unless
otherwise indicated by the shareholder, the persons named in the enclosed
form of Proxy will vote, in their discretion, for one or more of the nominees
for whom authority was not withheld and will cumulate votes in such a manner
so as to assure the election of the maximum number of the nominees of the
Board.
To be elected as a Director, a nominee must receive the affirmative
vote of a plurality of votes of Common Shares present or represented at the
meeting and entitled to vote for the election of Directors, whether
cumulative voting is in effect or not. Withheld votes and broker non-votes
(which are treated as "withheld" votes) are not counted as votes in favor of
any nominee.
Article III, Section 2 of the Bylaws of the Company, duly adopted by
its shareholders on November 25, 1997, provides that the authorized number of
Directors of the Company shall be not less than nine nor more than twelve
until changed by amendment of the Articles of Incorporation or by a bylaw
duly adopted by the shareholders. The exact number of Directors is to be
fixed from time to time by a bylaw or amendment thereof duly adopted by the
shareholders or by the Board of Directors. The number of Directors was fixed
at ten upon adoption of Article III, Section 2 of the Bylaws by the
shareholders on November 25, 1997.
3
<PAGE>
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information, including
beneficial ownership of the Company's common stock, for the ten nominees, for
the executive officers named in the Summary Compensation Table on Page 15,
and for all Directors and executive officers as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP
DIRECTOR OCTOBER 18, 1999(1)
NOMINEE AGE PRINCIPAL OCCUPATION SINCE NUMBER PERCENT OF CLASS
- ------- --- -------------------- ----- ------ ----------------
<S> <S> <C> <C> <C> <C>
John S. Barry 75 Retired; Former Chief 1970 403,145 2.6%
Executive Officer and Present
Chairman, WD-40 Company
Mario L. Crivello 59 Investor 1994 995,502(2) 6.4%
Daniel W. Derbes 69 President, Signal Ventures 1984 1,250 *
Harlan F. Harmsen 72 Retired Attorney; 1977 6,400(3) *
Secretary, WD-40 Company
Jack L. Heckel 68 Retired; Former President and 1989 4,080 *
Chief Operating Officer,
GenCorp
Garry O. Ridge 43 President and Chief 1997 45,877(4) *
Executive Officer,
WD-40 Company
Margaret L. Roulette 75 Investor 1977 761,145(5) 4.9%
Gerald C. Schleif 64 Retired, Former President and 1989 50,292 *
Chief Executive Officer,
WD-40 Company
C. Fredrick Sehnert 68 Retired; Former Chairman 1983 1,063 *
and Chief Executive Officer,
Laser Precision Corp.
Edward J. Walsh 67 President, The Sparta Group, 1988 1,250 *
Ltd
EXECUTIVE OFFICERS
Michael L. Freeman 46 Vice President Operations and N/A 18,848(6) *
Chief Information Officer,
WD-40 Company
Geoffrey J. Holdsworth 37 Managing Director Asia/Pacific N/A 10,824(7) *
WD-40 Company (Australia)
Pty. Limited
Graham P. Milner 45 Senior Vice President, N/A 28,373(8) *
The Americas, WD-40 Company
William B. Noble 41 Managing Director Europe, N/A 19,613(9) *
WD-40 Company Ltd. (U.K.)
Thomas J. Tranchina 51 Vice President Finance, Chief N/A 5,821(10) *
Financial Officer and Treasurer,
WD-40 Company
All Directors and Executive
Officers as a Group 2,353,483(11) 15.0%
</TABLE>
* Less than one (1) percent.
4
<PAGE>
1 All shares owned directly unless otherwise indicated.
2 Mr. Crivello has sole voting and investment power over 885,514
shares held in trust for the benefit of his mother and remainder
beneficiaries. He also has sole voting and investment power over
14,780 shares held as custodian for children and 95,208 shares
held directly.
3 Mr. Harmsen has sole voting and investment power over 400 shares held in
trust for others and 6,000 shares held directly.
4 Mr. Ridge has the right to acquire 36,770 shares upon exercise of
stock options. Mr. Ridge has voting power over 607 shares held
under the Company's 401(k) Plan.
5 Mrs. Roulette has sole voting and investment power over all shares
held in trust for herself and remainder beneficiaries.
6 Mr. Freeman has the right to acquire 15,187 shares upon exercise
of stock options. Mr. Freeman has voting power over 861 shares
held under the Company's 401(k) Plan.
7 Mr. Holdsworth has the right to acquire 10,524 shares upon exercise
of stock options.
8 Mr. Milner has the right to acquire 25,857 shares upon exercise of stock
options. Mr. Milner has voting power over 884 shares held under the
Company's 401(k) Plan.
9 Mr. Noble has the right to acquire 19,513 shares upon exercise of stock
options.
10 Mr. Tranchina has the right to acquire 4,335 shares upon exercise
of stock options and he has voting power over 117 shares held under the
Company's 401(k) Plan. Mr. Tranchina shares investment power over
261 shares owned by his parents.
11 Total includes the rights of executive officers to acquire 112,186
shares upon exercise of stock options and also includes 2,469
shares held under the Company's 401(k) Plan over which individual
executive officers have voting power.
NOMINEES FOR ELECTION AS DIRECTORS
John S. Barry joined the Company in 1969 as President, became a
Director in 1970 and served as Treasurer from 1972 until 1989. He served as
Chief Executive Officer from 1990 until 1992. Mr. Barry was elected Chairman
of the Board in 1990.
Mario L. Crivello was elected to the Board of Directors in 1994
following the death of his father, Sam Crivello, a Company founder. Mr.
Crivello is retired, having been the managing owner and master of Tuna Purse
Seiners.
Daniel W. Derbes was elected to the Board of Directors in 1984. He is
President of Signal Ventures, a venture capital firm. Mr. Derbes served as
President of Allied-Signal International, Inc. and Executive Vice President
of the parent corporation until his retirement in 1988. Mr. Derbes is also a
director of Sempra Energy Corporation (and its subsidiaries, San Diego Gas &
Electric Company, Pacific Enterprises, Enova Corporation and Southern
California Gas Co.) as well as Oak Industries, Inc.
Harlan F. Harmsen practiced law in San Diego, California from 1957 to
1989. He has been a Director of the Company since 1977 and was named
Secretary of the Company in 1982.
Jack L. Heckel was elected to the Board of Directors in 1984. He
served as President and Chief Operating Officer of GenCorp from 1987 through
1993. He was named President of Aerojet General (a division of GenCorp) in
1981 and was elected Chairman of the Board in 1984. Mr. Heckel joined Aerojet
General in 1956 and served as a Group Vice President from 1977 through 1981.
Mr. Heckel is also a director of Advanced Tissue Sciences, Inc. and Applied
Power Corporation.
Garry O. Ridge joined WD-40 Company in 1987 as Managing Director,
WD-40 Company (Australia) Pty. Limited and he was responsible for company
operations throughout the Pacific and Asia. Mr. Ridge transferred to the
corporate office in September 1994 as Director International Operations and
was elected Vice President - International in June 1995. He was elected to
the position of Executive Vice President/Chief Operating Officer in December
1996 and he was named President and Chief Executive Officer as of October 1,
1997. He was also elected to the Board of Directors on November 25, 1997.
Prior to joining WD-40 Company Mr. Ridge was Managing Director of Mermax
Pacific Pty. Ltd. and held a number of senior management positions with
Hawker Pacific Pty. Ltd. (A Hawker Siddeley PLC Group Company) which was a
licensee for WD-40 until 1988.
Margaret L. Roulette is the sister of Mrs. John S. Barry and is the
widow of Robert S. Roulette, a former Director and founder of the Company.
Mrs. Roulette is an investor. She has been a Director since 1977.
Gerald C. Schleif joined the Company in 1969 as Marketing Manager.
Mr. Schleif served as Chief Executive Officer from 1992 and as Company
President from 1990 through September 1997. He held the offices of Vice
President-Marketing, Executive Vice President, Treasurer and Chief Operating
Officer. Mr. Schleif has been a Director since 1989.
5
<PAGE>
C. Fredrick Sehnert has been a Director of the Company since 1983.
Mr. Sehnert served as Chairman and Chief Executive Officer of Laser Precision
Corp. from 1991 through 1994. Previously, he served as President of Wavetek
Corporation from 1988 until 1991 and he was President of Software Products
International, Inc. from 1986 until 1988. Mr. Sehnert was employed by Kratos,
Inc. from 1976 through 1984, serving as Chairman and Chief Executive Officer
from 1981 until 1984.
Edward J. Walsh was elected to the Board of Directors in 1988. He is
President of The Sparta Group, Ltd., a business consulting organization. Mr.
Walsh was employed by The Dial Corporation and its predecessor, Armour-Dial
Corporation, for 27 years, serving as its President and Chief Executive
Officer from 1984 to 1987. He is also a director of Guest Supply, Inc. and
Nortrust of Arizona Holding Corporation.
RELATED PARTY TRANSACTION
The Company's Director of Supply Logistics is Randall Barry who is
the son of John S. Barry. Randall Barry has been an employee of the Company
since 1984. For fiscal year 1999, Randall Barry received total cash
compensation in the amount of $95,755 and employer contributions to the
Company's Pension and Profit Sharing Plans were allocable to his account in
the amount of $17,552.
COMPENSATION, COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
In September 1998, the Board of Directors adopted new policies for
the compensation of outside directors effective January 1, 1999. Each outside
director receives an annual fee of $15,000, payable in quarterly
installments. In February 1999 the Board adopted a Non-Employee Director
Restricted Stock Plan to provide for the issuance of 250 shares of restricted
common stock of the Company to each non-employee member of the Board of
Directors in lieu of $5,000 of cash compensation. The issuance of shares in
lieu of cash compensation is mandatory for any Director who does not hold
shares of the Company having a fair market value of at least $50,000 and
optional for all other Directors. The shares do not become vested for resale
for a period of five years except in the event of death or retirement from
the Board. The number of shares to be issued will be reviewed annually to
account for changes in the price of the shares on the open market.
There were four scheduled meetings of the Board of Directors during
the last fiscal year. All directors attended at least 75 percent of the
aggregate of the total number of meetings of the Board and of all committees
on which the director served. The Board of Directors has an Audit Committee,
a Governance and Nominating Committee, and a Compensation Committee.
The Audit Committee is comprised of Edward J. Walsh (Chairman), Jack
L. Heckel and C. Fredrick Sehnert. One meeting was held during the last
fiscal year to consider the annual audit and review the audit with the
independent accountants after its completion. The Audit Committee also
provides its recommendations to the full Board of Directors with respect to
the selection and appointment of independent accountants for the Company.
The Governance and Nominating Committee is comprised of Daniel W.
Derbes (Chairman), John S. Barry, Jack L. Heckel and Garry O. Ridge. Two
meetings were held during the last fiscal year. The Governance and Nominating
Committee was established to provide for regular evaluation of succession
plans and the performance, independence, qualifications and integrity of both
the Board of Directors and the management of the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee for the past fiscal year was comprised of
Daniel W. Derbes (Chairman), Jack L. Heckel, C. Fredrick Sehnert and Edward
J. Walsh, all of whom are outside directors.
The function of the Compensation Committee is to provide guidance to
the Board of Directors and oversight for all executive compensation and
benefit programs. The Committee provides recommendations for base salary and
incentive compensation awards for the CEO and executive officers. The
Compensation Committee also serves as the Stock Option Committee with
authority to grant options and administer the Company's Incentive Stock
Option Plans. The Compensation Committee met twice during the last fiscal
year.
6
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than ten
percent of the Company's stock, to file with the Securities Exchange
Commission initial reports of stock ownership and reports of changes in stock
ownership. Reporting persons are required by SEC regulation to furnish the
Company with copies of all Section 16(a) reports they file.
To the Company's knowledge, based solely on review of the copies of
such reports furnished to the Company during the last fiscal year and written
representations that no other reports were required, all Section 16(a)
requirements were complied with by all persons required to report with
respect to the Company's stock during the last fiscal year.
ITEM NO. 2
REINCORPORATION IN DELAWARE
The Board has unanimously approved a proposal to change the
Company's state of incorporation from California to Delaware. For the reasons
set forth below, the Board believes that the best interests of the Company
and its shareholders will be served by such a reincorporation. The Board
urges shareholders to read this section of the Proxy Statement and the
related appendices carefully before voting on the proposed reincorporation.
Throughout this section of the Proxy Statement, the term "WD-40
California" refers to WD-40 Company, the existing California corporation, the
term "WD-40 Delaware" refers to the new Delaware corporation of the same name
(which is currently a wholly-owned subsidiary of WD-40 California and which
would be the successor to WD-40 California in the proposed reincorporation)
and the term "Company" refers to WD-40 California or WD-40 Delaware, as
appropriate in the context.
The Company proposes to accomplish the reincorporation by merging
WD-40 California into WD-40 Delaware. Upon completion of this merger, WD-40
California would cease to exist. WD-40 Delaware would succeed to all of the
assets and liabilities of WD-40 California and would operate the business of
the Company from that time forward. Pursuant to an Agreement and Plan of
Merger (the "Merger Agreement"), each outstanding share of common stock of
WD-40 California would automatically convert into one share of common stock,
par value $0.001 per share, of WD-40 Delaware. After the proposed
reincorporation, each stock certificate representing issued and outstanding
shares of WD-40 California common stock would represent the same number of
shares of WD-40 Delaware common stock.
Shareholders would not need to exchange their existing stock
certificates for stock certificates of WD-40 Delaware. The common stock of
the Company would continue to be traded on the Nasdaq National Market,
without interruption, under the same symbol "WDFC" used by WD-40 California
prior to the reincorporation. The name of the Company would not change as a
result of the proposed reincorporation, nor would the reincorporation result
in any change in the Company's business, assets or liabilities. The location
of the Company's principal executive offices and all of its operations would
remain the same. In addition, each outstanding option or right to acquire
shares of WD-40 California common stock would be converted into an option or
right to acquire an equal number of shares of WD-40 Delaware common stock,
under the same terms and conditions as the original options or rights. WD-40
Delaware would adopt and continue all of the employee benefit plans of WD-40
California, including the Company's 1981 and 1990 Incentive Stock Option
Plans.
California law requires the affirmative vote of a majority of the
outstanding shares of WD-40 California common stock for the approval of the
proposed reincorporation. If the holders of a majority of such shares approve
the proposal as required by California law, the proposal will have been duly
approved by the shareholders, and the Board anticipates that the proposal
would be implemented as soon as practicable following the Annual Meeting of
Shareholders. If the shareholders do not approve the proposal then the
proposal will not be implemented. The Merger Agreement allows the Company to
abandon the implementation of the proposal, even after the shareholders have
approved it, if the Board decides that implementation of the proposal will
not serve the best interests of the shareholders. The Board may not amend the
principal terms of the Merger Agreement without shareholder approval, but may
otherwise amend the Merger Agreement before it becomes effective.
Pursuant to Item No. 3 below (regarding an "Increase in Authorized
Shares of Common Stock"), the Board is seeking shareholder approval of an
increase in the Company's authorized number of shares of common stock (from
18,000,000 to 36,000,000). If the reincorporation proposal is approved but the
proposal to increase the authorized number of shares of common stock is not
approved, the Certificate of Incorporation of WD-40 Delaware will be modified
prior to the reincorporation to provide for the authorization of only 18,000,000
shares of common stock.
7
<PAGE>
APPROVAL BY THE SHAREHOLDERS OF THE REINCORPORATION PROPOSAL WILL
CONSTITUTE (i) APPROVAL OF THE MERGER AGREEMENT AND THE CERTIFICATE OF
INCORPORATION AND BYLAWS OF WD-40 DELAWARE, COPIES OF WHICH ARE INCLUDED IN
THIS PROXY STATEMENT AS APPENDICES A, B AND C, (ii) APPROVAL OF THE FORM OF
INDEMNIFICATION AGREEMENT OF WD-40 DELAWARE FOR ITS OFFICERS AND DIRECTORS, A
COPY OF WHICH IS INCLUDED IN THIS PROXY STATEMENT AS APPENDIX D, AND (iii)
THE ADOPTION AND ASSUMPTION BY WD-40 DELAWARE OF THE EMPLOYEE BENEFIT PLANS
OF WD-40 CALIFORNIA.
The discussion below is qualified in its entirety by reference to
the Merger Agreement, the Articles of Incorporation and Bylaws of WD-40
California, the Certificate of Incorporation and Bylaws of WD-40 Delaware,
the Indemnification Agreements of WD-40 California and WD-40 Delaware, the
California General Corporation Law and the Delaware General Corporation Law.
PRINCIPAL REASONS FOR REINCORPORATION
As the Company plans for the future, the Board and management believe
that it is essential to be able to draw upon well established principles of
corporate governance in making legal and business decisions. The prominence
and predictability of Delaware corporate law provide a reliable foundation on
which the Company's governance decisions can be based, and the Board and
management believe that shareholders will benefit from the responsiveness of
Delaware corporate law to their needs and to the needs of the Company.
For many years, Delaware has followed a policy of encouraging
incorporation in Delaware and, in furtherance of that policy, has long been
the leader in adopting, construing and implementing comprehensive, flexible
corporate laws responsive to the legal and business needs of corporations.
The Delaware General Corporation Law is widely regarded as the most extensive
and well defined body of corporate law in the United States. Many
corporations have initially chosen Delaware for their state of incorporation
or have subsequently changed their corporate domicile to Delaware in a manner
similar to that proposed by WD-40 California. Because of Delaware's
prominence as the state of incorporation for many major corporations, both
the legislature and courts in Delaware have demonstrated an ability and a
willingness to act quickly and effectively to meet changing business needs.
Moreover, the Delaware courts have developed considerable expertise in
dealing with corporate issues and a substantial body of case law has been
developed construing Delaware law and establishing public policies with
respect to corporate legal affairs. Furthermore, there is substantial
judicial precedent in the Delaware courts as to the legal principles
applicable to the conduct of the Board under the business judgment rule. The
Company believes that its shareholders will benefit from the well-established
and flexible principles of corporate governance that Delaware law affords.
Delaware, like many other states, permits a corporation to adopt a
number of measures through amendment of the corporate charter or bylaws or
otherwise, which measures are designed to reduce a corporation's
vulnerability to unsolicited takeover attempts. The reincorporation proposal
is not being proposed in order to prevent any present attempt known to the
Board to acquire control of the Company or to obtain representation on the
Board.
The Board has considered, and may consider in the future, certain
defensive strategies designed to enhance the Board's ability to negotiate
with an unsolicited bidder. These strategies include, but are not limited to,
elimination of the shareholders' ability to act by written consent, the
implementation of a classified board, the implementation of requirements for
advance notice of any action to be taken at a shareholders' meeting,
severance agreements for management and key employees which become effective
upon the occurrence of a change in control of the Company and the
authorization of preferred stock (the rights and preferences of which could
be determined by the Board). Some of these measures may be implemented under
California law. There is nonetheless substantial judicial precedent in the
Delaware courts as to the legal principles applicable to such defensive
measures and as to the conduct of a board under the business judgment rule
with respect to unsolicited takeover attempts.
In addition to the defensive strategies noted above, the Board has
considered the possibility of adopting a stockholder rights plan as a defense
against potentially abusive takeover tactics, and may adopt one after the
reincorporation is approved. Such a plan would provide for substantial
dilution of the percentage of stock held by any person who acquires enough
stock to exercise substantial control over the Company without previously
obtaining the approval of the Board. When used responsibly by a board, a
stockholder rights plan can prevent abusive takeover tactics and protect the
long-term interests of stockholders. The Board believes that the shareholders
will benefit if a potential acquiror of the Company must negotiate directly
with the Board, which can conduct negotiations with a full understanding of
the Company's long-term business plan and the long-term value of the
Company's assets. Delaware courts have approved adoption of stockholder
rights plans and the responsible use of a stockholder rights plan by a board
to protect the long-term interests of stockholders from dangers associated
with a hostile takeover attempt. The validity of stockholder rights plans
remains less certain under California law. The proposed reincorporation would
therefore allow the Board to adopt a stockholder rights plan, should it elect
to do so in the future, with confidence as to the validity of the measure in
the Company's state of incorporation.
8
<PAGE>
POSSIBLE DISADVANTAGES
Despite the unanimous belief of the Board that the reincorporation
proposal is in the best interests of the Company and its shareholders, it
should be noted that Delaware law has been criticized by some commentators on
the grounds that it does not afford minority shareholders the same
substantive rights and protections as are available in a number of other
states. For a comparison of shareholders' rights and the powers of management
under Delaware and California law, see "Significant Differences Between the
Corporation Laws of California and Delaware."
CHARTERS AND BYLAWS OF WD-40 CALIFORNIA AND WD-40 DELAWARE
The provisions of the Certificate of Incorporation and Bylaws of
WD-40 Delaware are similar to those of the Articles of Incorporation and
Bylaws of WD-40 California in many respects. There are certain differences,
however, including those which are noted immediately below. Moreover, certain
differences under the laws of Delaware and California, as they affect the
charter and bylaws of a company, are also noted below (see "Significant
Differences Between the Corporation Laws of California and Delaware").
Approval by shareholders of the reincorporation proposal will constitute an
approval of the Certificate of Incorporation and Bylaws of WD-40 Delaware and
of each of the provisions set forth therein (see Appendices B and C hereto,
respectively).
SHAREHOLDER POWER TO CALL SPECIAL MEETINGS
Under California law, a special meeting of shareholders may be
called by the Board, the Chairman of the Board, the President, the holders of
shares entitled to cast not less than 10% of the votes at such meeting and
such persons as are authorized by the articles of incorporation or bylaws.
Under Delaware law, a special meeting of stockholders may be called by the
Board or by any other person authorized to do so in the certificate of
incorporation or the bylaws. Stockholders of a Delaware corporation do not
have the right to call a special meeting unless authorized under the
corporation's certificate of incorporation or bylaws. Since the Bylaws and
Certificate of Incorporation of WD-40 Delaware do not contain provisions
permitting any person to call a special stockholders meeting, only the Board
of Directors of WD-40 Delaware will have this ability. By not providing for
the right of stockholders to call special meetings, it may be more difficult
for the stockholders of WD-40 Delaware to initiate action opposed by the
Board of Directors other than at the annual meeting of stockholders. However,
it will not impair the rights of stockholders to elect the full Board of
Directors at an annual meeting or to take action on other issues at that time.
CUMULATIVE VOTING
Under California law, any shareholder may cumulate his or her votes
in the election of directors upon proper notice of his or her intention to do
so, except that corporations listed on the American or New York Stock
Exchanges or with securities qualified for trading on the Nasdaq National
Market, such as the Company, may eliminate cumulative voting with shareholder
approval. Although the Articles of Incorporation of WD-40 California do not
provide for cumulative voting, such rights have not been eliminated by the
Company under California law and are thus available for shareholders of WD-40
California.
Under Delaware law, cumulative voting in the election of directors
is not mandatory, and such rights will not exist unless provision is made
therefore in a corporation's certificate of incorporation. The Certificate of
Incorporation of WD-40 Delaware does not provide for cumulative voting. As a
result, the holder or holders of shares representing a majority of the votes
entitled to be cast in an election of directors for WD-40 Delaware will be
able to elect all directors then being elected. The absence of cumulative
voting could have the effect of preventing representation of minority
stockholders on the Board of Directors of WD-40 Delaware. However, the Board
believes that, in general, and especially in publicly-held companies, each
director should represent the interests of all stockholders rather than the
interests of a special constituency, and that the presence on the Board of
one or more directors representing such a constituency could disrupt and
impair the efficient management of WD-40 Delaware.
SIGNIFICANT DIFFERENCES BETWEEN THE CORPORATION LAWS OF CALIFORNIA AND DELAWARE
CHANGES IN THE SIZE OF THE BOARD
Under California law, although changes in the number of directors
must in general be approved by the shareholders, the shareholders may approve
a provision in a corporation's articles of incorporation or bylaws setting
forth a permissible range in the number of directors and the board may fix
the exact number of directors within such stated range. Delaware
9
<PAGE>
law permits corporations to provide in their certificates of incorporation
that their boards are empowered to change the authorized number of directors
by amendment to the bylaws or in the manner provided in the bylaws unless the
number of directors is fixed in the certificate of incorporation, in which
case a change in the number of directors may be made only by amendment to the
certificate of incorporation. Like the Bylaws of WD-40 California, the Bylaws
of WD-40 Delaware have set a variable range of nine (9) to twelve (12) for
the number of directors and, except for fixing the number within such range,
require stockholder approval for any modification of such provision. Thus,
like WD-40 California, except for modifications of the fixed number of
Directors within the range of nine (9) to twelve (12) Directors, changes in
the number of Directors will require approval of the stockholders of WD-40
Delaware.
CLASSIFIED BOARD OF DIRECTORS
California law generally requires that directors be elected annually
but permits a classified board if (a) the corporation is listed on a national
stock exchange or (b) the corporation's shares are quoted on the Nasdaq
National Market and are held by at least 800 shareholders. Under California
law, such a listed corporation may, with the approval of its shareholders,
divide its board into two or three classes by adopting amendments to its
articles of incorporation or bylaws. California law requires that a
corporation that adopts a classified board must have at least six directors
authorized if it divides its board into two classes, and must have at least
nine directors authorized if it divides its board into three classes.
Delaware law permits a corporation to have a classified board, but unlike
California law, does not prescribe a minimum number of directors.
REMOVAL OF DIRECTORS
Under California law, shareholders may remove a director, with or
without cause, by the affirmative vote of a majority of the outstanding
shares, unless the corporation has a classified board. If the corporation has
a classified board, shareholders cannot remove a director if other
shareholders cast votes against the removal in a number sufficient to elect
the director under cumulative voting. Under Delaware law, stockholders can
remove a director on a classified board only for cause, unless the
certificate of incorporation provides otherwise.
INDEMNIFICATION AND LIMITATION OF PERSONAL MONETARY LIABILITY OF
DIRECTORS
The Certificate of Incorporation of WD-40 Delaware eliminates the
liability of Directors to the Company or its stockholders for monetary
damages for breach of fiduciary duty as a Director to the fullest extent
permissible under Delaware law, as it exists currently and as it may be
amended in the future. Similarly, the Articles of Incorporation of WD-40
California eliminate the liability of Directors to the Company to the fullest
extent permissible under California law. The provision eliminating monetary
liability of directors in the Certificate of Incorporation of WD-40 Delaware
is potentially more expansive than the corresponding provision in the
Articles of Incorporation of WD-40 California, because it incorporates future
amendments to Delaware law with respect to the elimination of such liability.
However, no such future amendments are contemplated to the knowledge of the
Board, and the Board does not consider the difference to be material.
California and Delaware have similar laws allowing a corporation to indemnify
its officers, directors, employees and other agents. With certain exceptions,
the laws of both states also permit a corporation to adopt charter provisions
eliminating the liability of a director to the corporation or its
shareholders for monetary damages for breach of the director's fiduciary
duty. This section describes the differences between the laws of the two
states with regard to indemnification and limitation of director liability.
Under Delaware law, a corporation may not eliminate or limit
director monetary liability for: (a) breaches of the director's duty of
loyalty to the corporation or its stockholders; (b) acts or omissions not in
good faith or involving intentional misconduct or knowing violations of law;
(c) the payment of unlawful dividends or unlawful stock repurchases or
redemptions; or (d) transactions in which the director receives an improper
personal benefit. Delaware law also prohibits a corporation from limiting a
director's liability for violations of federal or state securities laws, and
does not allow the corporation to affect the availability of non-monetary
remedies, such as injunctive relief or rescission, in actions against its
directors. California law prohibits the elimination of monetary liability
where such liability is based on: (a) intentional misconduct or knowing and
culpable violation of law; (b) acts or omissions that a director believes to
be contrary to the best interests of the corporation or its shareholders or
that involve the absence of good faith on the part of the director; (c)
receipt of an improper personal benefit; (d) acts or omissions that show
reckless disregard for the director's duty to the corporation or its
shareholders, where the director, in the ordinary course of performing a
director's duties, should be aware of a risk of serious injury to the
corporation or its shareholders; (e) acts or omissions that constitute an
unexcused pattern of inattention that amounts to an abdication of the
director's duty to the corporation and its shareholders; (f) transactions
between the corporation and a director who has a material financial interest
in such transaction; and (g) liability for improper distributions, loans or
guarantees.
10
<PAGE>
California law requires indemnification when an individual director
successfully defends an action on the merits, while Delaware law requires
indemnification whether the defense is successful or, under circumstances
described below, unsuccessful, on the merits or otherwise. Delaware law
generally permits indemnification of expenses, including attorneys' fees,
which a director actually and reasonably incurs in the defense or settlement
of a derivative or third-party action, if a majority of a disinterested
quorum of the directors, independent legal counsel or a majority of a quorum
of the stockholders determines that the person seeking indemnification acted
in good faith and in a manner reasonably believed to be in the best interests
of the corporation. Without court approval, however, a corporation may not
indemnify a director in a derivative action in which the director is adjudged
liable for negligence or misconduct in the performance of his or her duty to
the corporation. Delaware law requires indemnification of expenses when the
indemnified individual has successfully defended any action, claim, issue or
matter therein, on the merits or otherwise. Under Delaware law and California
law, a corporation may advance expenses that the officer or director will
incur in defending an action, if the officer or director undertakes to
reimburse the corporation if he or she is ultimately not entitled to
indemnification. In addition, the laws of both states authorize a corporation
to purchase insurance for the benefit of its officers, directors, employees
and agents, whether or not the corporation would have the power to indemnify
against the liability covered by the policy. California law also permits a
California corporation to provide rights to indemnification beyond those
provided by law. Accordingly, the Articles of Incorporation of WD-40
California permit indemnification beyond that expressly mandated by
California law, in addition to limiting Director monetary liability to the
extent permitted by California law. Delaware law also permits a Delaware
corporation to provide indemnification in excess of that provided by statute.
In contrast to California law, however, Delaware law does not require
provisions in the certificate of incorporation authorizing additional
indemnification, and does not contain express prohibitions on indemnification
in certain circumstances. In any event, the Certificate of Incorporation of
WD-40 Delaware permits indemnification beyond that expressly mandated by
Delaware law, in addition to limiting Director monetary liability to the
extent permitted by Delaware law, and the relevant provision of the
Certificate of Incorporation also incorporates future amendments to Delaware
law with respect to potentially broader indemnification. As in California,
the Delaware courts may limit indemnification based on principles of public
policy.
As authorized by WD-40 California's Articles of Incorporation
specifically approved by the shareholders in 1988, the Company entered into
indemnification agreements with its directors in 1994. If the reincorporation
proposal is approved, WD-40 Delaware will enter into indemnification
agreements with its officers and directors, under Delaware law, in
substantially the form included in this Proxy Statement as Appendix D and a
vote for reincorporation will also constitute approval of such
indemnification agreements.
SHAREHOLDER DERIVATIVE SUITS
California law provides that a shareholder bringing a derivative
action on behalf of a corporation need not have held shares at the time of
the transaction in question if the shareholder meets certain requirements.
Under Delaware law, on the other hand, a stockholder may bring a derivative
action on behalf of the corporation only if the stockholder was a stockholder
of the corporation at the time of the transaction in question or if he or she
later received the stock by operation of law. California law also provides
that the corporation or the defendant in a derivative suit may make a motion
to the court for an order requiring the plaintiff shareholder to furnish a
security bond. Delaware does not have a similar bonding requirement.
DIVIDENDS AND REPURCHASES OF SHARES
Under California law, any dividends or other distributions to
shareholders, such as redemptions, are limited to the greater of (a) the
corporation's retained earnings or (b) an amount that would leave the
corporation with assets (excluding certain intangible assets) equal to at
least 125% of its liabilities (excluding certain deferred items) and current
assets equal to at least 100% (or, in certain circumstances, 125%) of its
current liabilities. Delaware law allows the payment of dividends and the
redemption of stock out of surplus (including paid-in and earned surplus) or
out of net profits for the current and immediately preceding fiscal years.
INSPECTION OF SHAREHOLDER LISTS
Both California and Delaware law allow any shareholder to inspect a
corporation's shareholder list for a purpose reasonably related to such
person's interest as a shareholder. California law provides, in addition, for
an absolute right to inspect and copy the corporation's shareholder list by
persons holding an aggregate of five percent or more of the corporation's
voting shares, or shareholders holding an aggregate of one percent or more of
such shares who are contesting an election of directors. Delaware law also
provides stockholders with the right to inspect a list of stockholders
entitled to vote at a meeting, within a ten-day period preceding the meeting,
for any purpose germane to the meeting. Delaware law contains no provisions
comparable to the absolute right of inspection provided to certain
shareholders by California law.
11
<PAGE>
STOCKHOLDER APPROVAL OF CERTAIN BUSINESS COMBINATIONS
Section 203 of the Delaware General Corporation Law prohibits a
Delaware corporation from engaging in a business combination with an
interested stockholder for three years after the person or entity becomes an
interested stockholder. With certain exceptions, an interested stockholder is
a person or entity that owns, individually or with or through certain other
persons or entities, 15% or more of the corporation's outstanding voting
stock, including any rights to acquire stock pursuant to an option, warrant,
agreement, arrangement or understanding, or on the exercise of conversion or
exchange rights, and stock with respect to which the person has voting rights
only. The three-year moratorium imposed on business combinations by section
203 does not apply if (a) the board of the subject corporation approves
either the business combination or the transaction that resulted in the
person or entity becoming an interested stockholder before the stockholder
becomes an interested stockholder; (b) on consummation of the transaction
that makes him or her an interested stockholder, the interested stockholder
owns at least 85% of the corporation's voting stock outstanding at the time
the transaction commenced, excluding from the 85% calculation shares owned by
directors who are also officers of the subject corporation and shares held by
employee stock plans that do not give employee participants the right to
decide confidentially whether to accept a tender or exchange offer; or (c) on
or after the date the person or entity becomes an interested stockholder, the
board approves the business combination and the business combination is also
approved at a stockholder meeting by two-thirds of the outstanding voting
stock not owned by the interested stockholder. Although a Delaware
corporation to which section 203 applies may elect not to be governed by
section 203, the Board intends that the provisions of section 203 will apply
to WD-40 Delaware. The Board believes that most Delaware corporations have
availed themselves of this statute and have not opted out of section 203. The
Board also believes that section 203 will encourage any potential acquiror to
negotiate with the Board. Section 203 might also limit the ability of a
potential acquiror to make a two-tiered bid for WD-40 Delaware that does not
treat all stockholders equally. The application of section 203 to WD-40
Delaware will confer on the Board the power to reject a proposed business
combination in certain circumstances, even though a potential acquiror may be
offering a substantial premium over the market price for WD-40 Delaware's
shares. Section 203 would also discourage certain potential acquirors
unwilling to comply with its provisions.
California law requires that holders of common stock receive common
stock in a merger of a target corporation with (a) the holder of more than
50% but less than 90% of the target's common stock or (b) its affiliate,
unless all of the target's shareholders consent to the transaction. This
provision of California law may render a "cash-out" merger by a majority
shareholder more difficult to accomplish. Although Delaware law does not
parallel California law in this respect, under some circumstances section 203
provides similar protection to stockholders against coercive two-tiered bids
for a corporation in which the stockholders are not treated equally.
In addition to the provisions of section 203, the Certificate of
Incorporation of WD-40 Delaware (in Article V) will include the provisions of
the Articles of Incorporation of WD-40 California which require approval of
any business combination involving a direct or indirect 10% stockholder of
the Company by holders of at least 85% of the Company's voting stock unless
certain requirements are met (such as Board approval of the business
combination in advance of the 10% stockholder's acquisition of such stake).
APPRAISAL RIGHTS
Under both California and Delaware laws, a shareholder of a
corporation participating in certain major corporate transactions may, under
varying circumstances, be entitled to appraisal rights pursuant to which the
shareholder may receive in cash the fair market value of his or her shares in
lieu of the consideration he or she would otherwise receive in the
transaction. The limitations on the availability of appraisal rights under
California law differ from those under Delaware law. Under Delaware law, fair
market value is determined exclusive of any element of value arising from the
accomplishment or expectation of the merger or consolidation, and such
appraisal rights are not available: (a) with respect to the sale, lease or
exchange of all or substantially all of the assets of a corporation; (b) with
respect to a merger or consolidation by a corporation the shares of which are
either listed on a national securities exchange, designated as a Nasdaq
National Market Security or held of record by more than 2,000 holders if such
stockholders receive only shares of the surviving corporation or shares of
any other corporation that are either listed on a national securities
exchange, designated as a Nasdaq National Market Security or held of record
by more than 2,000 holders, plus cash in lieu of fractional shares of such
corporations; or (c) to stockholders of a corporation surviving a merger if
no vote of the stockholders of the surviving corporation is required to
approve the merger under Delaware law. In contrast, shareholders of a
California corporation whose shares are listed on a national securities
exchange generally have appraisal rights if the holders of at least five
percent of the class of outstanding shares claim the right, or the
corporation or any law restricts the transfer of such shares. Appraisal
rights are unavailable if the shareholders of a California corporation or the
corporation itself, or both, immediately prior to the reorganization will own
immediately after the reorganization equity securities constituting more than
five-sixths of the voting power of the surviving or acquiring corporation or
its parent entity. Unlike Delaware law, California law generally affords
appraisal rights in sale of assets reorganizations.
12
<PAGE>
CLASS VOTE FOR CERTAIN REORGANIZATIONS
With certain exceptions, California law requires a majority vote of
each class of shares outstanding to approve mergers, reorganizations, certain
sales of assets and similar transactions. Delaware law generally does not
require class voting for such transactions, except in certain situations
involving an amendment of the certificate of incorporation that adversely
affects a specific class of shares.
SUPERMAJORITY CHARTER PROVISIONS
California law provides that any provision in a corporation's
articles of incorporation filed on or after January 1, 1989 that requires
approval by a proportion of the outstanding shares larger than a majority
will expire in two years. The specified supermajority of shareholders must
therefore re-approve supermajority requirements every two years. Delaware law
contains no such provision for the expiration of supermajority requirements.
DISSOLUTION
Under California law, shareholders holding 50% or more of the total
voting power may authorize a corporation's dissolution, with or without the
approval of the corporation's board. California corporations may not modify
this right in their articles of incorporation. Under Delaware law, unless the
board approves the proposal to dissolve, all of the stockholders entitled to
vote on the dissolution must unanimously approve the dissolution. If the
board initially approves the dissolution, a simple majority of the
outstanding shares of the corporation's stock entitled to vote may vote to
dissolve the corporation. In the event of such a board-initiated dissolution,
Delaware law allows a Delaware corporation to include in its certificate of
incorporation a supermajority voting requirement. The Certificate of
Incorporation of WD-40 Delaware contains no such supermajority voting
requirement.
APPLICATION OF THE GENERAL CORPORATION LAW OF CALIFORNIA AFTER THE PROPOSED
REINCORPORATION
Section 2115 of the California General Corporation Law subjects
certain corporations organized under other states' laws, but which have
specified significant contacts with California, to a number of provisions of
the California General Corporation Law. California law provides an exemption
from section 2115 for corporations whose shares are traded on the Nasdaq
National Market if the corporation has at least 800 stockholders as of the
record date for its most recent meeting of stockholders. Inasmuch as WD-40
California meets these requirements and the shareholders of WD-40 California
will become the stockholders of WD-40 Delaware, the Board believes that WD-40
Delaware will be exempt from the provisions of section 2115.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE PROPOSED REINCORPORATION
The reincorporation pursuant to the Merger Agreement is intended to
be a tax-free reorganization under section 368(a) of the Internal Revenue
Code of 1986, as amended. Assuming the reincorporation qualifies as a
reorganization, neither WD-40 California nor WD-40 Delaware nor their
stockholders would recognize gain or loss as a result of the proposed
reincorporation. Stockholders would have the same basis in their capital
stock of WD-40 Delaware as they have in their capital stock of WD-40
California. Each stockholder's holding period with respect to WD-40 Delaware
stock would include the period during which such holder held the
corresponding WD-40 California stock if the stockholder held the WD-40
California stock as a capital asset at the time of consummation of the
reincorporation. Neither WD-40 California nor WD-40 Delaware has obtained or
intends to request a ruling from the Internal Revenue Service or an opinion
of legal or tax counsel with respect to the consequences of the
reincorporation. The foregoing is only a summary of certain federal income
tax consequences. Shareholders should consult their own tax advisers
regarding the specific tax consequences to them of the merger, including the
applicability of the laws of any state or other jurisdiction.
BOARD RECOMMENDATION AND VOTE REQUIRED
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE PROPOSAL TO
REINCORPORATE UNDER DELAWARE LAW. The affirmative vote of a majority of the
Company's outstanding shares is required for approval of the reincorporation
proposal. A vote for the reincorporation proposal will constitute specific
approval of (i) the Merger Agreement and all other transactions and
proceedings relating to the reincorporation, (ii) the Certificate of
Incorporation and Bylaws of WD-40 Delaware, (iii) the form of Indemnification
Agreement of WD-40 Delaware for its current and future officers and
directors, and (iv) the assumption by WD-40 Delaware of all leases, stock
options, employment agreements and other obligations of WD-40 California. An
abstention or the failure of a broker or other nominee to vote shares held of
record will have the same effect as a vote against the proposal.
13
<PAGE>
ITEM NO. 3
INCREASE IN AUTHORIZED SHARES OF COMMON STOCK
The Board has unanimously approved a proposal to increase the
authorized number of shares of common stock from Eighteen Million
(18,000,000) to Thirty-Six Million (36,000,000). For the reasons stated
below, the Board believes that the Company and its shareholders will be
served by such an increase in the authorized common stock of the Company. If
approved by the shareholders, the proposed increase will be effected through
inclusion of a provision for such amount of authorized common stock in the
Certificate of Incorporation for WD-40 Delaware (as discussed in connection
with Item No. 2 above to "Reincorporation in Delaware") to be in effect prior
to the consummation of the proposed reincorporation. If the reincorporation
proposal is not consummated for any reason, then the proposed increase will
be effected through an amendment of the Articles of Incorporation of the
Company. The affirmative vote of a majority of the outstanding shares of the
Company's common stock is required for an increase in the number of shares of
authorized common stock.
THE PROPOSAL
The Articles of Incorporation of the Company presently authorize the
issuance of up to Eighteen Million (18,000,000) shares of common stock. The
proposed Certificate of Incorporation for WD-40 Delaware (or the proposed
amendment to the Articles of Incorporation of the Company) will authorize
Thirty-Six Million (36,000,000) shares of common stock. In the instance of
the Certificate of Incorporation for WD-40 Delaware, the common stock will
have a par value of $0.001 per share. In the event that an amendment is made
to the Articles of Incorporation of the Company, the common stock will be
without par value.
PURPOSE AND EFFECT OF THE PROPOSAL
The Company currently has issued and outstanding 15,562,811 shares
of common stock. Accordingly, the number of authorized but unissued shares of
common stock is relatively small (i.e., 2,437,189 or 13.5% of the total
amount of currently authorized shares). The ability of the Company to issue
additional shares of common stock will provide the Board with greater
flexibility to meet changing market conditions and to take advantage of
financial or business opportunities that may arise. The additional shares of
common stock may be used, among other things, to raise new capital for
expansion, to raise capital or serve as consideration in order to finance a
merger with, or acquisition of, another company or to compensate employees,
officers or directors of the Company. Although the Board presently has no
specific plans for any issuance of additional shares of common stock, and the
Company has not entered into any arrangement, agreement or understanding with
respect to any such issuance, the availability of the additional shares of
common stock will permit the Board to issue such shares expeditiously as
appropriate in the best interests of the Company and its shareholders.
The additional Eighteen Million (18,000,000) shares of common stock
will be a part of the existing class of common stock and, if and when issued,
would have the same rights and privileges as the shares of common stock
presently outstanding.
By authorizing additional shares of common stock, the possibility
will exist that such shares could be utilized to make a potential takeover of
the Company more difficult to achieve. For example, if the Board elects to
adopt a shareholder rights plan, the availability of such shares could
enhance the effectiveness of the plan which, in turn, could deter a third
party from attempting a takeover of the Company in the absence of successful
negotiations directly with the Board. However, like other aspects of the
Board's management of the Company in the interests of the shareholders, any
uses of the additional shares of common stock will be subject to the
Directors' responsibility to act in a manner they reasonably believe to be in
the best interests of the Company and its shareholders.
BOARD RECOMMENDATION AND VOTE REQUIRED
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
INCREASE IN THE AUTHORIZED NUMBER OF SHARES OF COMMON STOCK. Adoption of the
amendment requires the affirmative vote of a majority of the outstanding
shares of the Company's common stock. An abstention or the failure of a
broker or other nominee to vote shares held of record will have the same
effect as a vote against the proposal.
TEXT OF AMENDMENT
The proposal would approve Article IV of the Certificate of
Incorporation of WD-40 Delaware to read in full as set forth in Appendix B
hereto. Alternatively, the proposal would approve Article Fourth of the
Articles of Incorporation to read substantially in full like Article IV of
the Certificate of Incorporation of WD-40 Delaware, except that Article
Fourth of such Articles would not include a designation of par value.
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<PAGE>
EXECUTIVE COMPENSATION
The following table shows information for the three (3) fiscal years
ended August 31, 1999 concerning the Company's Chief Executive Officer and
all other executive officers.
SUMMARY COMPENSATION TABLE(1)
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION ALL OTHER
FISCAL YEAR COMPENSATION AWARDS COMPENSATION(2)
NAME AND PRINCIPAL POSITION ENDED AUG. 31 SALARY ($) BONUS ($) STOCK OPTIONS(#) ($)
<S> <C> <C> <C> <C> <C>
Garry O. Ridge 1999 $275,000 $106,650 16,000 $26,000(3)
President and Chief 1998 255,000 150,000 16,000 26,000
Executive Officer 1997 145,000 50,000 7,000 25,000
Thomas J. Tranchina 1999 $126,000 $ 29,850 6,000 $25,585(4)
Vice President Finance 1998 36,250 10,000 -0-
and Chief Financial Officer
Graham P. Milner 1999 $149,100 $ 35,150 6,000 $26,000(3)
Senior Vice President, 1998 140,000 55,000 6,000 26,000
The Americas 1997 125,000 40,000 5,000 25,000
Michael L. Freeman 1999 $143,800 $ 33,750 6,000 $26,000(3)
Vice President Operations 1998 135,000 55,000 6,000 26,000
and Chief Information Officer 1997 105,000 30,000 5,000 23,500
William B. Noble1(5) 1999 $172,850 $ 57,600 6,000 $-0-
Managing Director Europe 1998 154,500 57,900 6,000 -0-
WD-40 Company Ltd. (U.K.) 1997 126,900 36,700 6,000 -0-
Geoffrey J. Holdsworth(5)
Managing Director Asia/Pacific 1999 $ 69,100 $ 40,150 6,000 $-0-
WD-40 Company (Australia) 1998 65,400 12,950 6,000 -0-
Pty. Limited 1997 49,250 18,600 5,000 -0-
</TABLE>
1 No information for Other Annual Compensation, Restricted Stock
Awards or Long Term Incentive Payouts has been provided because
there was no such reportable compensation awarded to, earned by or
paid to the individuals named.
2 All Other Compensation includes employer contributions to the
Company's Money Purchase Pension Plan, Profit Sharing Plan and
401(k) Plan.
3 Includes $24,000 in contributions to the Company's Money
Purchase Pension Plan and Profit Sharing Plan and $2,000 in
matching contributions to the Company's 401(k) Plan.
4 Includes $23,378 in contributions to the Company's Money
Purchase Pension Plan and Profit Sharing Plan and $2,207 in
matching contributions to the Company's 401(k) Plan.
5 Mr. Noble was employed by the Company's U.K. subsidiary in 1997,
1998 and 1999. Mr. Holdsworth was employed by the Company's
Australian subsidiary in 1997, 1998 and 1999. Compensation amounts
have been converted from local currencies at average annual
exchange rates for each year.
15
<PAGE>
STOCK OPTIONS
The following table sets forth stock options granted pursuant to the
Restated WD-40 Company 1990 Incentive Stock Option Plan during the last
fiscal year to each of the Company's executive officers named in the Summary
Compensation Table above.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERCENT OF TOTAL OPTIONS GRANT
OPTIONS GRANTED GRANTED TO EMPLOYEES IN EXERCISE PRICE DATE
NAME (#) FISCAL YEAR 1999 ($/SH) EXPIRATION DATE VALUE(1)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Garry O. Ridge 16,000(2) 9.1% $23.06 9/29/2008 $68,278
Thomas J. Tranchina 6,000(3) 3.4 23.06 9/29/2008 25,604
Graham P. Milner 6,000(4) 3.4 23.06 9/29/2008 25,604
Michael L. Freeman 6,000(5) 3.4 23.06 9/29/2008 25,604
William B. Noble 6,000(6) 3.4 23.06 9/29/2008 25,604
Geoffrey J. Holdsworth 6,000(7) 3.4 23.06 9/29/2008 25,604
</TABLE>
1 The Grant Date Value of $4.27 per share has been determined
using the Black-Scholes Option Valuation model. The following
assumptions were used in determining the value: (i) a dividend
yield of 5.55%; (ii) expected volatility of 0.29; (iii) a
ten-year risk-free rate of return of 4.59%; and (iv) exercise
ten years from the grant date.
2 Mr. Ridge's options are non-qualified options exercisable in
full on September 29, 1999.
3 Mr. Tranchina's incentive stock options are exercisable as to
4,335 shares on September 29, 1999 and as to 665 shares on
January 1, 2000.
4 Mr. Milner's incentive stock options are exercisable as to 3,563
shares on January 1, 2000 and as to 2,437 shares on January 1,
2001.
5 Mr. Freeman's incentive stock options are exercisable as to
3,836 shares on January 1, 2000 and as to 2,164 shares on
January 1, 2001.
6 Mr. Noble's incentive stock options are exercisable as to 2,839
shares on January 1, 2000 and as to 3,161 shares on January 1,
2001.
7 Mr. Holdsworth's incentive stock options are exercisable as to
4,095 shares on January 1, 2000 and as to 1,905 shares on
January 1, 2001.
Except as noted for Mr. Ridge, all options granted during the
Company's last fiscal year were granted as Incentive Stock Options. The
options may be exercised for cash or in lieu of cash, an option holder may
tender shares of the Company's common stock previously held by the option
holder. In permitting the exchange of stock upon exercise of options, the
Incentive Stock Option Plan restricts the exercise of options with previously
owned stock to shares held for a minimum of six months.
16
<PAGE>
The following table sets forth the number of shares acquired on
exercise of stock options in the Company's last fiscal year, the aggregate
dollar value realized on exercise of such options and the number and dollar
value of unexercised options as of August 31, 1999 for the Company's
executive officers named in the Summary Compensation Table above.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED OPTIONS VALUE OF UNEXERCISED IN-THE-MONEY
AT AUGUST 31, 1999 (#)(1) OPTIONS AT AUGUST 31, 1999(2)
SHARES ACQUIRED VALUE REALIZED -------------------------------- ---------------------------------
NAME ON EXERCISE (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Garry O. Ridge -0- $ -0- 36,770 17,280 $42,241 $24,912
Thomas J. Tranchina -0- -0- -0- 6,000 -0- 8,622
Graham P. Milner 250 1,031 25,857 6,561 51,944 8,622
Michael L. Freeman 2,300 15,381 15,187 6,363 16,422 8,622
William B. Noble -0- -0- 19,513 7,087 34,263 8,622
Geoffrey J. Holdsworth -0- -0- 10,524 6,176 7,050 8,622
</TABLE>
1 All historical option grant information has been adjusted to
account for the 2 for 1 stock split on July 11, 1997.
2 The value of Unexercised In-the-Money Options at August 31, 1999
was determined based on the difference between the exercise
price for such options and the closing price of $24.50 for the
Company's shares as reported by The Nasdaq Stock Market.
SUPPLEMENTAL DEATH AND RETIREMENT BENEFIT PLANS
Since 1984 the Board of Directors has adopted Supplemental Death
Benefit Plans for certain key employees. Under the Death Benefit Plan
agreements, a participating employee's designated beneficiary or the
employee's estate will receive a death benefit equal to the employee's then
current base salary in the event of death prior to retirement from the
Company. No death benefit is payable if retirement benefits become due upon
the employee's retirement under the Retirement Benefit Plan agreement.
Since 1988 the Board of Directors has adopted Supplemental Retirement
Benefit Plans for certain key employees. Under the Retirement Benefit Plan
agreements, participating employees will receive retirement benefits in the
event of the participant's retirement on or after a designated retirement
date. The annual retirement benefit for participating employees will be equal
to twenty-five percent (25%) of the employee's then current base salary,
payable in quarterly installments over a period of fifteen years.
All benefits under the plans will be subject to payroll taxes and
required withholding for state and federal income taxes as deferred
compensation. The benefits are funded by key man life insurance policies
purchased and owned by the Company. The Board of Directors determines which
key employees will participate in the plans and the amount of benefits
payable for each participant. Outside directors do not participate in the
plans.
Based upon current (2000) base salaries, the death benefits and
annual retirement benefits to be provided under the plans to the executive
officers named in the Summary Compensation Table above are set forth below.
The retirement benefit will not be payable unless the executive officer
retires with the Company on or after reaching the specified retirement age.
In such event, the actual amount of the annual benefit will be dependent upon
the executive's then current annual salary.
<TABLE>
<CAPTION>
DEATH ANNUAL RETIREMENT RETIREMENT
NAME BENEFIT BENEFIT AGE
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Garry O. Ridge $295,500 $73,875 65
Graham P. Milner 159,500 39,875 65
Michael L. Freeman 154,000 38,500 65
William B. Noble -0- 45,900 65
Geoffrey J. Holdsworth 74,500 18,600 65
</TABLE>
17
<PAGE>
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with Mr. Ridge and
Mr. Tranchina for three year terms through August 1, 2002, subject to renewal
for additional three year terms unless otherwise provided by the Board of
Directors. Mr. Ridge will receive an annual base salary of at least $275,000
and Mr. Tranchina will receive an annual base salary of at least $126,000.
Each of the officers will receive such incentive bonuses as may be awarded
from time to time by the Board of Directors based upon the Company's annually
established bonus formula. In the event of a termination of employment
without cause following a change of control of the Company (defined as the
acquisition by tender offer, or other means of change of ownership, of 15% of
the outstanding shares of the Company by a single entity, group or person),
Mr. Ridge and Mr. Tranchina would be entitled to receive an amount equal to
three times their average annual gross salary, including bonuses, for the
five years immediately prior to such termination of employment. In no event
will the payments exceed the limitations of Internal Revenue Code Section
280G(d)(2) which limits the deductibility of certain payments to executives
upon changes in control.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The compensation philosophy of the Company is to be competitive in
the marketplace to attract, retain, and motivate a highly qualified
workforce. The Company uses compensation surveys, conducted by independent
consultants, to provide data to support the development of competitive
compensation plans which reinforce this philosophy. The Compensation
Committee of the Board of Directors (the "Committee") determines compensation
for the CEO and executive officers. The Committee also serves as the Stock
Option Committee under the Company's 1981 and 1990 Incentive Stock Option
Plans. In evaluating the CEO's performance, the Committee will measure the
year's results against the specific goals set forth in the annual business
plan. In addition to financial performance, the Committee considers factors
important to the Company such as ethical business conduct, environmental
responsiveness, and the general overall perception of the Company by
financial and business leaders.
The Committee is responsible for setting and administering the
policies which govern executive compensation and the stock ownership programs
of the Company. The members of the Committee are Daniel W. Derbes (Chairman),
Jack L. Heckel, C. Fredrick Sehnert and Edward J. Walsh.
Compensation of the CEO and the CEO's recommendations for the
executive officers is reviewed annually by the Committee. Changes proposed
for executive officers are evaluated and approved by the Committee on an
individual basis. As management responsibilities increase, a greater portion
of compensation is driven by financial performance measures.
There are four components in the Company's executive compensation
program:
i. Base salary
ii. Performance Incentive
iii. Pension and Profit Sharing
iv. Long-term Stock Options
The Committee has determined that compensation for the CEO and other
executive officers should be weighted more heavily in favor of performance
factors. Annual Performance Incentives could range between 0-50% of total
cash compensation based on the level of achievement of the current fiscal
year's business plan goals.
BASE SALARY
Base salaries for the CEO and executive officers are established at
the beginning of each fiscal year. Detailed position descriptions, scope and
complexity of the position as well as external market factors are used to
determine base salary levels. Independent compensation surveys such as Wyatt
Data Services are the basis for these comparables and base salary levels are
pegged at the 50-75th percentile for similar companies. The companies
included in these surveys do not necessarily include any of the companies
included in the Peer Group identified with reference to the Stock Performance
Graph that follows this report. Salary changes are based on guidelines
established for all employees using individual performance and comparable
adjustments from midpoint levels for the various job classifications. Mr.
Ridge's base salary for fiscal year 1999 was $275,000. For fiscal year 2000
Mr. Ridge will receive a base salary of $295,500, an increase of 7.5%.
18
<PAGE>
PERFORMANCE INCENTIVE
The Performance Incentive is that substantial portion of the annual
compensation for each executive officer that is related to and contingent
upon the individual's contribution and performance and upon the performance
of the Company as a whole. Consideration is also given to the performance of
any business units under his or her management. The Performance Incentive
bonus can range anywhere from 0-50% of total compensation based primarily on
the level of business plan achievement. In this way, the Company seeks to
encourage continuing focus on increasing the Company's revenue and
profitability and shareholder value while at the same time motivating its
executive officers to perform to the fullest extent of their abilities. Mr.
Ridge's Performance Incentive compensation for fiscal year 1999 was 27.9% of
his total cash compensation.
PENSION AND PROFIT SHARING PLANS
Since 1963 the Company has maintained tax qualified Pension and
Profit Sharing Plans for the benefit of all full time employees, including
executive officers. The Company's present Plans include a Money Purchase
Pension Plan providing for required contributions for participating employees
equal to 10% of their covered compensation, a Profit Sharing Plan providing
for discretionary contributions which will be generally limited to 5% of
covered compensation and a 401(k) Plan which allows employees to defer up to
6.6% of covered compensation and provides a matching contribution equal to
one-half of the amounts deferred. The Plans serve to provide Company
employees with tax-advantaged retirement savings and to focus the attention
of employees on profits and the effective use of assets.
LONG-TERM STOCK OPTIONS
The Company has employed stock options as a means of providing
long-term compensation to its key employees for many years. Options are
granted at the beginning of each fiscal year to executive officers and other
employees based upon the level of management responsibility. Options grants
are not generally based on prior performance or results of operations. The
Company's Stock Option Plan has been established to:
a. Focus attention on corporate strategic business direction; and
b. Increase ownership and retention in the Company's stock, thereby
aligning the interests of the participant employees with those
of the Company's shareholders.
For fiscal year 2000, the Stock Option Committee granted options to
purchase a total of 247,600 shares to 71 company employees at $23.50 per
share on September 28, 1999. In 1997 the Board of Directors significantly
increased the number of employees participating in the Stock Option Plan.
This increase was due to increased employment as well as a decision to
broaden the scope of the Plan to include lower level management employees.
The Board of Directors believes that wider participation will further enhance
employee productivity, loyalty and commitment as well as providing more
employees with an opportunity to benefit from increasing share values.
On September 28, 1999 Mr. Ridge received options to purchase 20,000
shares. Options granted in September 1998 to Mr. Ridge and the executive
officers are set forth in the Stock Option Table included above.
The Committee believes the Company has a unique overall compensation
plan which fulfills current Company philosophy and which historically has been
successful in producing increased shareholder value.
Daniel W. Derbes (Chairman)
Jack L. Heckel
C. Fredrick Sehnert
Edward J. Walsh
19
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return on
the Company's Common Shares with the cumulative total return of a Peer Group of
consumer product companies and the Standard & Poor's 500 Composite Stock Index
(the "S&P 500 Index") for the five fiscal years ending August 31, 1999. The
comparison assumes $100 invested on August 31, 1994 in the Company's Common
Shares and in each of the indices.
COMPARISON OF FIVE-YEAR CUMULATIVE RETURNS
WD-40 Company, a Peer Group and S&P 500 Index
[STOCK PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31
1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
WD-40 Company 100.00 108.96 121.85 154.87 121.24 144.97
Peer Group 100.00 108.48 122.05 174.20 162.14 197.04
S&P 500 Index 100.00 121.45 144.20 202.81 219.23 306.54
</TABLE>
The Peer Group returns are based upon beginning-of-year market
capitalization weighting of the cumulative returns for the following 14
consumer product companies: Alberto-Culver Co., Church & Dwight, Inc., Enesco
Group, Inc., Kimball International, Lancaster Colony Corp., La-Z-Boy Chair
Co., National Presto Industries, Inc., NCH Corp., Oneida Ltd., RPM Inc.-Ohio,
Royal Appliance Manufacturing Co., Scotts Company, Valspar Corp. and Wynn's
International, Inc. One company, First Brands Corp., has been eliminated from
the Peer Group following its acquisition by Clorox Company.
20
<PAGE>
ITEM NO. 4
RATIFICATION OF INDEPENDENT ACCOUNTANTS
WD-40 Company shareholders will vote to ratify the selection of
PricewaterhouseCoopers LLP as WD-40 Company's independent accountants. A
majority of the votes of the Common Shares present or represented at the
meeting is required for approval. Broker non-votes will be voted in favor of
approval. PricewaterhouseCoopers LLP acted as the Company's independent
public accountants during the past fiscal year and will continue to act in
such capacity during the current fiscal year. It is anticipated that a
representative of PricewaterhouseCoopers LLP will attend the Annual Meeting
of Shareholders, will have an opportunity to make a statement if he or she
desires to do so and will be available to respond to appropriate questions.
The Company's independent accountants perform audit services (which
include reading filings with the Securities and Exchange Commission as well
as quarterly and annual reports) and tax-related services for the Company.
PricewaterhouseCoopers LLP also provided computer systems consulting services
and assistance with the acquisition of the Lava brand during the past fiscal
year. Before audit services are performed, the Audit Committee approves an
estimated fee. The possible effect on the independence of the accountants is
considered by the Audit Committee. There is no direct or indirect
understanding or agreement that places a limit on current or future years'
audit fees.
SHAREHOLDER PROPOSALS
Shareholder proposals must be received by the Company not later than
July 12, 2000 to be included in the Proxy Statement and form of Proxy for the
next annual meeting.
By Order of the Board of Directors
Harlan F. Harmsen
Secretary
Dated: November 9, 1999
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, SHAREHOLDERS
ARE URGED TO FILL IN, SIGN AND RETURN THE ACCOMPANYING FORM OR FORMS OF PROXY
IN THE ENCLOSED ENVELOPE.
21
<PAGE>
APPENDIX A
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
December __, 1999, by and between WD-40 Company, a California corporation
(the "California Company"), and WD-40 Company, a Delaware corporation (the
"Delaware Company"), is made with reference to the following facts:
A. The California Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of California and,
on the date of this Agreement, has authority to issue Eighteen Million
(18,000,000) shares of common stock, no par value ("California Common Stock").
B. On the date of this Agreement, the California Company had issued
and outstanding [__________] shares of California Common Stock.
C. The Delaware Company is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware and,
on the date of this Agreement, has authority to issue Thirty-Six Million
(36,000,000) shares of common stock, $0.001 par value per share ("Delaware
Common Stock").
D. The Delaware Company currently has ONE HUNDRED (100) shares of
its common stock issued and outstanding, all of which are owned by the
California Company.
E. The respective Boards of Directors of the California Company and
the Delaware Company have determined that it is advisable and in the best
interests of each such corporation that the California Company be merged with
and into the Delaware Company upon the terms and subject to the conditions
provided in this Agreement for the purpose of effecting a reincorporation of
the California Company in the State of Delaware and have, by resolutions duly
adopted, approved this Agreement and directed that it be submitted to a vote
of their respective shareholders and executed by the undersigned officers.
NOW, THEREFORE, the parties agree as follows:
ARTICLE 1
DEFINITIONS
When used in this Agreement, the following terms shall have the
following meanings, respectively:
1.1 "CALIFORNIA LAW" shall mean the California Corporations Code as
currently in effect on the date of this Agreement.
1.2 "DELAWARE LAW" shall mean the Delaware General Corporation Law as
currently in effect on the date of this Agreement.
1.3 "EFFECTIVE TIME" shall mean the date and time when the Merger
shall have become effective, in accordance with Section 2.2 below.
1.4 "MERGER" shall mean the merger of the California Company with and
into the Delaware Company.
1.5 "SURVIVING CORPORATION" shall mean the Delaware Company from and
after the Effective Time.
A-1
<PAGE>
ARTICLE 2
MERGER
2.1 FILINGS AND EFFECTIVENESS. The Merger shall become effective when
the following actions shall have been completed:
(i) This Agreement and the Merger shall have been adopted
and approved by the sole stockholder of the Delaware Company and
the shareholders of the California Company;
(ii) All of the conditions precedent to the consummation of
the Merger specified in this Agreement shall have been satisfied
or duly waived by the party entitled to satisfaction thereof;
(iii) An executed Certificate of Merger shall have been filed
with the Secretary of State of the State of Delaware; and
(iv) An executed counterpart of this Agreement, along with a
certificate of a duly authorized officer of both the California
Company and the Delaware Company, each meeting the requirements of
California Law, shall have been submitted for filing with the
Secretary of State of the State of California.
2.2 MERGER. The Merger shall become effective for all purposes of
Delaware law when proper documentation has been filed with the Secretary of
State of the State of Delaware in accordance with Section 2.1 above. The
Merger shall become effective for purposes of California law as of the time
the Merger becomes effective in Delaware, once proper documentation has been
filed with the Secretary of State of the State of California in accordance
with Section 2.1 above. When the Merger becomes effective, the California
Company shall merge with and into the Delaware Company, the separate
existence of the California Company shall cease, and the Delaware Company
shall continue in existence under Delaware Law.
2.3 EFFECTS. At the Effective Time:
(i) the California Company shall be merged with and into the
Delaware Company and the separate existence of the California
Company shall cease;
(ii) the Certificate of Incorporation of the Delaware Company
in effect at the Effective Time shall continue as the Certificate
of Incorporation of the Surviving Corporation;
(iii) the Bylaws of the Delaware Company in effect at the
Effective Time shall continue as the Bylaws of the Surviving
Corporation;
(iv) each director of the California Company immediately
prior to the Effective Time shall become a director of the
Surviving Corporation, each to serve for such term as shall be
indicated in the proxy statement to be submitted to the
shareholders of the California Company in connection with the
1999 annual meeting of shareholders of the California Company;
(v) each officer of the California Company in office
immediately prior to the Effective Time shall become as an
officer in the same capacity of the Surviving Corporation;
(vi) each share of California Common Stock outstanding
immediately prior to the Effective Time shall be converted into
one share of Delaware Common Stock pursuant to Article 3 below,
with an amount equal to the par value of the Delaware Common
Stock to be allocated to the stated capital account of the
Delaware Company, and all amounts in excess of such amount shown
on the books of the California Company to be allocated to retained
earnings or the capital surplus account, in accordance with good
accounting practice; and
(vii) without further transfer, act or deed, the separate
existence of the California Company shall cease and the Surviving
Corporation shall possess all of the rights, privileges, powers and
franchises of a public as well as of a private nature, and shall be
subject to all the restrictions, disabilities and duties of the
California Company; and each and all of the rights, privileges,
powers and franchises of the California Company, and all property,
real, personal and mixed, and all debts due to the California
Company on whatever account, stock
A-2
<PAGE>
subscriptions and other things in action or belonging to the
California Company shall be vested in the Surviving Corporation;
and all property, rights, privileges, powers and franchises,
and each and every other interest of the California Company
shall be thereafter as effectually the property of the Surviving
Corporation as they were of the California Company; and the title
to any real estate vested by deed or otherwise, under the laws of
the State of Delaware, in the California Company shall not revert
or be in any way impaired by reason of the Merger; and all rights
of creditors of the California Company and all liens upon any
property of the California Company shall be preserved unimpaired;
and all debts, liabilities and duties of the California Company
shall thenceforth attach to the Surviving Corporation and may be
enforced against it to the same extent as if such debts,
liabilities and duties had been incurred or contracted by it.
2.4 FURTHER ASSURANCES. The California Company agrees that if, at any
time after the Effective Time, the Surviving Corporation shall consider or be
advised that any further deeds, assignments or assurances are necessary or
desirable to vest, perfect or confirm in the Surviving Corporation title to any
property or rights of the California Company, the Surviving Corporation and its
proper officers and directors may execute and deliver all such proper deeds,
assignments and assurances and do all other things necessary or desirable to
vest, perfect or confirm title to such property or rights in the Surviving
Corporation and otherwise to carry out the purposes of this Agreement, in the
name of the California Company or otherwise.
ARTICLE 3
CONVERSION OF SHARES
3.1 CONVERSION OF SHARES. At the Effective Time:
(i) each share of California Common Stock issued and
outstanding immediately prior to the Effective Time shall, by
virtue of the Merger and without any action on the part of the
holder thereof, be converted into one (1) share of Delaware
Common Stock; and
(ii) each share of Delaware Common Stock issued and
outstanding immediately prior to the Effective Time shall be
canceled and retired and no shares shall be issued in the Merger
in respect thereof.
3.2 STOCK CERTIFICATES. At and after the Effective Time, all of the
outstanding certificates which immediately prior to the Effective Time
represent shares of California Common Stock shall be deemed for all purposes
to evidence ownership of, and to represent, the shares of Delaware Common
Stock into which the shares of California Common Stock formerly represented
by such certificates have been converted as provided in this Agreement. The
registered owner on the books and records of the Delaware Company or its
transfer agents of any such outstanding stock certificate shall, until such
certificate shall have been surrendered for transfer or otherwise accounted
for to the Delaware Company or its transfer agents, have and be entitled to
exercise any voting and other rights with respect to, and to receive any
dividends and other distributions upon, the shares of Delaware Common Stock
evidenced by such outstanding certificate as above provided.
3.3 STOCK OPTIONS. Each right or option to purchase shares of
California Common Stock granted under the WD-40 Company 1981 Incentive Stock
Option Plan or the WD-40 Company 1990 Incentive Stock Option Plan
(collectively, the "Plans") of the California Company, or granted
irrespective and not in connection with the Plans, which is outstanding
immediately prior to the Effective Time, shall, by virtue of the Merger and
without any action on the part of the holder thereof, be converted into and
become a right or option to purchase the same number of shares of Delaware
Common Stock at the same price per share, and upon the same terms and subject
to the same conditions (as set forth in an agreement pursuant to a Plan or
otherwise, as applicable), as in effect at the Effective Time. The same
number of shares of Delaware Common Stock shall be reserved for purposes of
the Plans as is equal to the number of shares of California Common Stock so
reserved as of the Effective Time. As of the Effective Time, the Delaware
Company hereby assumes the Plans and any and all obligations of the
California Company under such Plans, including the outstanding options
granted pursuant to the Plans.
3.4 VALIDITY OF DELAWARE COMMON STOCK. All shares of Delaware Common
Stock into which California Common Stock is to be converted pursuant to the
Merger shall not be subject to any statutory or contractual preemptive
rights, shall be validly issued, fully paid and nonassessable and shall be
issued in full satisfaction of all rights pertaining to such California
Common Stock.
A-3
<PAGE>
3.5 RIGHTS OF FORMER HOLDERS. From and after the Effective Time, no
holder of certificates which evidenced California Common Stock immediately
prior to the Effective Time shall have any rights with respect to the shares
formerly evidenced by those certificates, other than to receive the shares of
Delaware Common Stock into which such California Common Stock shall have been
converted pursuant to the Merger.
ARTICLE 4
COVENANTS TO BE PERFORMED PRIOR TO CLOSING DATE
4.1 CONSENTS. Each of the California Company and the Delaware
Company shall use its best efforts to obtain the consent and approval of each
person (other than shareholders of the California Company in their capacities
as such) whose consent or approval shall be required in order to permit
consummation of the Merger.
4.2 GOVERNMENTAL AUTHORIZATIONS. Each of the California Company and
the Delaware Company shall cooperate in filing any necessary reports or other
documents with any federal, state, local or foreign authorities having
jurisdiction with respect to the Merger.
ARTICLE 5
CONDITIONS
The obligations of the California Company and the Delaware Company
to consummate the Merger are subject to satisfaction of the following
conditions:
5.1 AUTHORIZATION. The holders of a majority of the California
Common Stock shall have approved and adopted this Agreement and the Merger in
accordance with California Law. All necessary action shall have been taken to
authorize the execution, delivery and performance of this Agreement by the
California Company and the Delaware Company. The California Company and the
Delaware Company shall have full power and authority to consummate the Merger.
5.2 CONSENTS AND APPROVALS. All authorizations, consents and
approvals (contractual or otherwise) of any state, federal, local or foreign
government agency, regulatory body or official or any person (other than the
California Company or the Delaware Company) necessary for the valid
consummation of the Merger in accordance with this Agreement shall have been
obtained and shall be in full force and effect.
ARTICLE 6
MISCELLANEOUS
6.1 WAIVER AND AMENDMENT. This Agreement may be amended by action of
the respective Boards of Directors of the California Company and the Delaware
Company without action by the respective shareholders and stockholder of the
parties, except that (i) any amendments to Section 3.1 above, (ii) any
amendment changing the terms, rights, powers or preferences of Delaware
Common Stock or (iii) any amendment altering any terms of this Agreement if
such alteration would adversely affect the holders of any class or series of
the capital stock of the California Company or the Delaware Company must be
approved by the holders of a majority of the California Common Stock.
6.2 TERMINATION. This Agreement may be terminated and the Merger and
other transactions provided for by this Agreement abandoned at any time prior
to the Effective Time, whether before or after adoption and approval of this
Agreement by the shareholders of the California Company, by action of the
Board of Directors of the California Company if the Board determines that the
consummation of the transactions contemplated by this Agreement would not,
for any reason, be in the best interests of the California Company and its
shareholders.
6.3 ENTIRE AGREEMENT. This Agreement contains the entire agreement
among the parties with respect to the Merger and supersedes all prior and
concurrent arrangements, letters of intent or understandings relating to the
Merger.
6.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be an original, but all of which when taken
together shall constitute one and the same agreement. This Agreement shall
become effective when one or more counterparts have been signed by each of
the parties and delivered to each of the parties.
A-4
<PAGE>
6.5 HEADINGS. The article, section and paragraph headings in this
Agreement are intended principally for convenience and shall not, by
themselves, determine rights and obligations of the parties to this Agreement.
6.6 NO WAIVER. No waiver by any party of any condition, or the
breach of any term or covenant contained in this Agreement, whether by
conduct or otherwise, in any one or more instances, shall be deemed to be a
further or continuing waiver of any such condition or breach or a waiver of
any other condition or breach of any other term or covenant contained in this
Agreement.
6.7 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, and so far as
applicable, the merger provisions of the California Corporations Code.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first above written.
WD-40 COMPANY,
a California corporation
By:
----------------------------------
Its:
-------------------------------
By:
----------------------------------
Its:
-------------------------------
WD-40 COMPANY,
a Delaware corporation
By:
----------------------------------
Its:
-------------------------------
By:
----------------------------------
Its:
-------------------------------
A-5
<PAGE>
APPENDIX B
CERTIFICATE OF INCORPORATION
OF
WD-40 COMPANY
ARTICLE I
The name of the corporation (the "Corporation") is:
WD-40 COMPANY
ARTICLE II
The address of the Corporation's registered office in the State of
Delaware is 1209 Orange Street, in the City of Wilmington, County of New
Castle. The name of the Corporation's registered agent at such address is The
Corporation Trust Company.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General
Corporation Law of the State of Delaware.
ARTICLE IV
The Corporation is authorized to issue only one class of stock, to
be designated "Common Stock." The total number of shares of Common Stock
which the Corporation is authorized to issue is Thirty-Six Million
(36,000,000), with a par value of $0.001 per share.
ARTICLE V
In addition to the requirements of applicable law and the other
provisions of this Certificate of Incorporation:
1. The affirmative vote or consent of eighty-five percent (85%)
of the outstanding shares of Voting Stock (defined below) of the Corporation
shall be required for the adoption or authorization of a Business Combination
(defined below) unless:
(a) The Board of Directors of the Corporation shall have
approved the proposed Business Combination prior to the date a
Controlling Person (defined below) who proposes to enter into or be a
party to or be involved in the Business Combination first became a
Controlling Person; or
(b) (i) The Business Combination will result in an involuntary
sale, redemption, cancellation or other termination of ownership of all
shares of Voting Stock of the Corporation owned by stockholders who do
not vote in favor of, or consent in writing to, the Business
Combination and the cash or fair value of other readily marketable
consideration to be received by such stockholders for such shares shall
at least be equal to the Minimum Price Per Share (defined below); and
(ii) A proxy statement responsive to the requirements
of the Securities Exchange Act of 1934 (defined below) will be mailed
to the stockholders of the Corporation for the purposes of soliciting
stockholder approval of the proposed Business Combination. Such proxy
statement shall allow individual Directors to express their opinion as
to the relative merits of the proposed Business Combination in a
prominent place therein; and
(iii) After the Controlling Person who proposes to
enter into or be a party to or be involved in the Business Combination
has become a Controlling Person and prior to the consummation of the
proposed Business Combination:
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(1) except as approved by a unanimous vote
of the Directors, there shall have been no failure to declare
and pay at the regular date therefor any full quarterly
dividends (whether or not cumulative) on any outstanding
preferred stock;
(2) there shall have been (A) no reduction
in the annual rate of dividends paid on the Common Stock
(except as necessary to reflect any subdivision of the Common
Stock), except as approved by a unanimous vote of the
Directors, and (B) an increase in such annual rate of
dividends as necessary to reflect any reclassification
(including any reverse stock split), recapitalization,
reorganization, or any similar transaction which has the
effect of reducing the number of outstanding shares of the
Common Stock, unless the failure so to increase such annual
rate is approved by a unanimous vote of the Directors; and
(3) such Controlling Person shall have not
become the Beneficial Owner (defined below) of any additional
shares of Voting Stock except as part of the transaction which
results in such Controlling Person becoming a Controlling
Person; and
(iv) After such Controlling Person has become a
Controlling Person, such Controlling Person shall not have received the
benefit, directly or indirectly (except proportionately, solely in such
Controlling Person's capacity as a stockholder of the Corporation), of
any loans, advances, guarantees, pledges, or other financial assistance
or any tax credits or other tax advantage provided by the Corporation,
whether in anticipation of or in connection with the proposed Business
Combination or otherwise.
2. For purposes of this Article V, the following definitions shall
apply:
(a) An "Affiliate" of the specified Person (defined below)
shall mean a Person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common
control with the Person specified.
(b) An "Associate" of a specified Person shall mean (1) any
corporation or organization of which such Person is an officer or
partner or is, directly or indirectly the Beneficial Owner of five
percent (5%) or more of any class of equity securities, (2) any trust
or other estate in which such Person has a five percent (5%) or larger
beneficial interest of any nature or as to which such Person serves as
trustee or in a similar fiduciary capacity, (3) any spouse of such
Person, and (4) any relative of such Person, or any relative of a
spouse of such Person, who has the same residence as such Person or
spouse.
(c) "Beneficial Ownership" of shares of Voting Stock shall
include without limitation (i) all shares directly or indirectly owned
by a Person, by an Affiliate of such Person or by an Associate of such
Person or such Affiliate, (ii) all shares which such Person, Affiliate,
or Associate has the right to acquire through the exercise of any
option, warrant or right (whether or not currently exercisable),
through the conversion of a security, pursuant to the power to revoke a
trust, discretionary account or similar arrangement, or pursuant to the
automatic termination of a trust, discretionary account or similar
arrangement, and (iii) all shares which are beneficially owned,
directly or indirectly, by any other Person with whom such
first-mentioned Person, Affiliate, or Associate has, directly or
indirectly, any contract, arrangement, understanding, relationship or
otherwise (including without limitation any written or unwritten
agreement to act in concert but specifically excluding any
participation agreement, arrangement, understanding or relationship
between or among any two or more commercial banks made or established
in connection with and in furtherance of a bona fide lending
arrangement with the Corporation and/or one or more Subsidiaries
(defined below)) with respect to exercise of the voting power (which
includes the power to vote or to direct the voting of such shares) or
investment power (which includes the power to dispose or to direct the
disposition of such shares, or both) incident to ownership of such
shares.
(d) "Business Combination" shall mean (1) any merger or
consolidation of the Corporation with or into a Controlling Person or
Affiliate of a Controlling Person or Associate of such Controlling
Person or Affiliate, (2) any sale, lease, exchange, transfer or other
disposition, including without limitation a mortgage or any other
security device, in a single transaction or series of related
transactions, of all or any Substantial Part (defined below) of the
assets of the Corporation, including without limitation any voting
securities of a Subsidiary, or of a Subsidiary, to a Controlling Person
or Affiliate of a Controlling Person or Associate of such Controlling
Person or Affiliate, (3) any merger into the Corporation, or into a
Subsidiary, of a Controlling Person or an Affiliate of a Controlling
Person or an Associate of such Controlling Person or Affiliate, (4) any
sale, lease, exchange, transfer or other disposition to the Corporation
or a Subsidiary of all or any part of the assets of a Controlling
Person or
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Affiliate of a Controlling Person or Associate of such Controlling
Person or Affiliate, but not including any dispositions of assets
which, if included with all other dispositions consummated during the
same fiscal year of the Corporation by the same Controlling Person,
Affiliates thereof and Associates of such Controlling Person or
Affiliates, would not result in dispositions during such year by all
such Persons of assets having an aggregate fair value (determined at
the time of disposition of the respective assets) in excess of one
percent (1%) of the total consolidated assets of the Corporation (as
shown on its certified balance sheet as of the end of the fiscal year
preceding the proposed disposition), provided, however, that in no
event shall any disposition of assets be excepted from stockholder
approval by reason of the preceding exclusion if such disposition when
included with all other dispositions consummated during the same, and
immediately preceding nine, fiscal years of the Corporation by the same
Controlling Person, Affiliates thereof and Associates of such
Controlling Person or Affiliates, would result in dispositions by all
such Persons of assets having an aggregate fair value (determined at
the time of disposition of the respective assets) in excess of five
percent (5%) of the total consolidated assets of the Corporation (as
shown on its certified balance sheet as of the end of the fiscal year
preceding the proposed disposition), (5) any reclassification of Common
Stock of the Corporation, or any recapitalization involving Common
Stock of the Corporation, consummated within ten years after the
Controlling Person who proposes such reclassification or
recapitalization becomes a Controlling Person, and (6) any agreement,
contract or other arrangement providing for any of the transactions
described in this definition of Business Combination, but,
notwithstanding anything to the contrary herein, Business Combination
shall not include any transaction involving a Controlling Person or
Affiliate of a Controlling Person or Associate of such Controlling
Person or Affiliate which is to be consummated or become effective
after such Controlling Person has been a Controlling Person for at
least ten years. A Person who is or was a Controlling Person as of (i)
the time any definitive agreement relating to a Business Combination is
entered into, (ii) the record date for the determination of
stockholders entitled to notice of and to vote on a Business
Combination, or (iii) immediately prior to the consummation of a
Business Combination shall be deemed to be a Controlling Person for
purposes of this definition.
(e) "Control" of a Person shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership
of voting securities, by contract or otherwise.
(f) "Controlling Person" shall mean any Person who
Beneficially Owns a number of shares of Voting Stock of the
Corporation, whether or not such number includes shares not then
outstanding or entitled to vote, which exceeds a number equal to ten
percent (10%) of the outstanding shares of Voting Stock of the
Corporation, but does not include any one or a group of more than one
of the members of the Board of Directors of the Corporation who (i)
were members of the Board of Directors on the date this Article V
became effective, (ii) are members of the Board of Directors promptly
following the merger of WD-40 Company, a California corporation, with
and into the Corporation, or (iii) were first elected as Directors
prior to the date a Controlling Person who proposes to enter into or be
a party to or be involved in a Business Combination became a
Controlling Person.
(g) "Minimum Price Per Share" shall mean the sum of (a) the
higher of (i) the highest gross per share price paid or agreed to be
paid to acquire any shares of Voting Stock of the Corporation
Beneficially Owned by a Controlling Person, provided such payment or
agreement to make payment was made within ten years immediately prior
to the record date set to determine the stockholders entitled to vote
or consent to the Business Combination in question, or (ii) the highest
per share closing public market price for such Voting Stock during such
ten-year period, plus (b) the aggregate amount, if any, by which ten
percent (10%) for each year, beginning on the date on which such
Controlling Person became a Controlling Person, of such higher per
share price exceeds the aggregate amount of all Common Stock dividends
per share paid in cash since the date on which such Person became a
Controlling Person. The calculation of the Minimum Price Per Share
shall require appropriate adjustments for capital changes, including
without limitation stock splits, stock dividends and reverse stock
splits.
(h) "Person" shall mean an individual, a corporation, a
partnership, an association, a limited liability company, a joint-stock
company, a trust, any unincorporated organization, a government or
political subdivision thereof and any other entity (other than the
Corporation, its Subsidiaries or a trustee holding stock for the
benefit of employees of the Corporation or its Subsidiaries, or any one
of them, pursuant to one or more employee benefit plans or
arrangements).
(i) "Securities Exchange Act of 1934" shall mean the
Securities Exchange Act of 1934, as amended from time to time, as well
as any successor or replacement statute.
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(j) "Subsidiary" shall mean any corporation more than
twenty-five percent (25%) of whose outstanding securities representing
the right to vote for the election of Directors is Beneficially Owned
by the Corporation and/or one or more Subsidiaries.
(k) "Substantial Part" shall mean more than ten percent (10%)
of the total assets of the corporation in question, as shown on its
certified balance sheet as of the end of the most recent fiscal year
ending prior to the time the determination is being made.
(l) "Voting Stock" of the Corporation shall mean all
outstanding shares of Capital Stock of the Corporation entitled to vote
generally in the election of Directors, and each reference to a
proportion of shares of Voting Stock shall refer to such proportion of
the votes entitled to be cast by such shares.
3. This Article V shall not be altered, changed or repealed unless the
amendment effecting such alteration, change or repeal shall have received the
affirmative vote or consent of eighty-five percent (85%) of the outstanding
shares of Common Stock of the Corporation; provided, however, that this
Paragraph 3 shall not apply to, and such vote shall not be required for, any
such alteration, change or repeal recommended to stockholders by a unanimous
vote of the Directors and any such alteration, change or repeal so recommended
shall require only the vote, if any, required under the applicable provisions of
the General Corporation Law of the State of Delaware (as amended from time to
time).
4. A Controlling Person shall be subject to all fiduciary and other
standards of conduct and obligations imposed by law.
5. The provisions of this Article V are severable: if any provision is
held by a court of competent jurisdiction to be invalid, void or unenforceable,
the remaining provisions shall continue in full force without being impaired or
invalidated in any way.
ARTICLE VI
The number of Directors which constitute the whole Board of Directors
of the Corporation shall be as specified in the Bylaws of the Corporation.
ARTICLE VII
In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make, amend, rescind
or repeal the Bylaws of the Corporation.
ARTICLE VIII
Elections need not be by ballot unless otherwise specified in the
Bylaws of the Corporation; provided, however, that all elections for Directors
must be by ballot upon any demand made by a stockholder at the meeting and
before the voting begins.
ARTICLE IX
Meetings of stockholders may be held within or without the State of
Delaware, as the Bylaws of the Corporation may provide. The books of the
Corporation may be kept (subject to any provision contained in the General
Corporation Law of the State of Delaware) 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 Bylaws of the Corporation.
ARTICLE X
The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
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ARTICLE XI
1. A Director's liability to the Corporation for breach of any duty to
the Corporation or its stockholders shall be limited to the fullest extent
permissible by the laws of the State of Delaware as now in effect or hereafter
amended. In particular, no Director shall be liable to the Corporation or any of
its stockholders for monetary damages for breach of fiduciary duty as a
Director, except for liability (a) for any breach of the Director's duty of
loyalty to the Corporation or its stockholders, (b) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (c) under Section 174 of the General Corporation Law of the State of
Delaware, as the same exists or hereafter may be amended, or (d) for any
transaction from which the Director derived an improper personal benefit.
2. Any repeal or modification of the foregoing paragraph shall not
adversely affect any right or protection of a Director existing at the time of
such repeal or modification.
3. If the General Corporation Law of the State of Delaware is amended
to authorize corporate action further eliminating or limiting the liability of
directors, then a Director, in addition to the circumstances in which he or she
is not now liable, shall be free of liability to the fullest extent permitted by
the General Corporation Law of the State of Delaware, as so amended.
ARTICLE XII
1. The Corporation shall be authorized to indemnify its officers,
Directors, employees and agents to the fullest extent permitted by the General
Corporation Law of the State of Delaware, which power to indemnify shall
include, without limitation, the power to enter into indemnification agreements
and amendments thereto upon such terms as the Board of Directors shall deem
advisable.
2. Any repeal or modification of the foregoing paragraph shall not
adversely affect any right or protection of any officer, Director, employee or
agent of the Corporation existing at the time of, or increase the liability of
any Director with respect to any acts or omissions of any officer, Director,
employee or agent of the Corporation occurring prior to, such repeal or
modification.
ARTICLE XIII
The name and mailing address of the incorporator of the Corporation is:
Thomas J. Tranchina
WD-40 COMPANY
1061 Cudahy Place
San Diego, CA 92110
THE UNDERSIGNED incorporator, for the purpose of forming a corporation
pursuant to the General Corporation Law of the State of Delaware, hereby
acknowledges that the foregoing Certificate of Incorporation is his act and
deed and that the facts stated therein are true.
Dated: , 1999
---------------------------------
Thomas J. Tranchina
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APPENDIX C
BYLAWS
OF
WD-40 COMPANY
(a Delaware corporation)
ARTICLE I - OFFICES
Section 1. REGISTERED OFFICE. The initial registered office of WD-40
Company, a Delaware corporation (the "Corporation"), in Delaware shall be The
Corporation Trust Company, 1209 Orange Street, in the City of Wilmington,
County of New Castle, 19801.
Section 2. PRINCIPAL EXECUTIVE OFFICE. The initial principal
executive office of the Corporation is hereby fixed and located at 1061
Cudahy Place, San Diego, California 92110. The Board of Directors (the
"Board") is hereby granted full power and authority to change said principal
executive office from one location to another. Any such change shall be noted
on the Bylaws opposite this Section, or this Section may be amended to state
the new location.
Section 3. OTHER OFFICES. Branch or subordinate offices of the
Corporation may at any time be established by the Board at any place or
places.
ARTICLE II - STOCKHOLDERS
Section 1. PLACE OF MEETING. Meetings of stockholders shall be held
either at the principal executive office of the Corporation or at any other
place within or without the State of Delaware which may be designated either
by the Board or by the written consent of all persons entitled to vote
thereat, given either before or after the meeting and filed with the
Secretary.
Section 2. ANNUAL MEETINGS. The annual meeting of stockholders shall
be held on that Tuesday falling the closest to December 15 of each year at 2
o'clock P.M., local time, or such other date or such other time as may be
fixed by the Board; provided, however, that should said day fall upon a legal
holiday observed by the Corporation at its principal executive office, then
any such annual meeting of stockholders shall be held at the same time and
place on the next day ensuing which is a full business day. At such meetings,
Directors shall be elected and any other proper business may be transacted.
Section 3. NOTICE OF ANNUAL OR SPECIAL MEETING. Written notice of
each annual or special meeting of stockholders shall be given not less than
10 nor more than 60 days before the date of the meeting to each stockholder
entitled to vote thereat. Such notice shall state the place, date, and hour
of the meeting and (i) in the case of a special meeting the general nature of
the business to be transacted, and no other business may be transacted, or
(ii) in the case of the annual meeting, those matters which the Board, at the
time of the mailing of the notice, intends to present for action by the
stockholders, but, subject to the provisions of applicable law, any proper
matter may be presented at the meeting for such action. The notice of any
meeting at which Directors are to be elected shall include the names of
nominees intended at the time of the notice to be presented by the Board for
election. Notice of a stockholders' meeting shall be given either personally
or by mail, including third class mail, or by other means of written
communication, addressed to the stockholder at the address of such
stockholder appearing on the books of the Corporation or given by the
stockholder to the Corporation for the purpose of notice; or, if no such
address appears or is given, at the place where the principal executive
office of the Corporation is located or by publication at least once in a
newspaper of general circulation in the county in which the principal
executive office is located. The notice shall be deemed to have been given at
the time when delivered personally or deposited in the mail or sent by other
means of written communication.
Section 4. QUORUM. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders, except
as otherwise provided by statute or by the Corporation's Certificate of
Incorporation (the "Certificate of Incorporation"). When a quorum is present
at any meeting, the vote of the holders of a majority of the stock having
voting power present in person or represented by proxy shall decide any
question brought before such meeting, unless the question is one upon which,
by express provision of any applicable statute or of the Certificate of
Incorporation, a different vote is required, in which case such express
provision shall govern and control the decision of such question.
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Section 5. ADJOURNED MEETING AND NOTICE THEREOF. Any stockholders'
meeting, whether or not a quorum is present, may be adjourned from time to
time by the vote of a majority of the shares, the holders of which are either
present, in person or represented by proxy thereat, but in the absence of a
quorum (except as provided in Section 4 of this Article) no other business
may be transacted at such meeting. It shall not be necessary to give any
notice of the time and place of the adjourned meeting or of the business to
be transacted thereat, other than by announcement at the meeting at which
such adjournment is taken; provided, however, that when any stockholders'
meeting is adjourned for more than 30 days or, if after adjournment a new
record date is fixed for the adjourned meeting, notice of the adjourned
meeting shall be given as in the case of an original meeting.
Section 6. VOTING. The stockholders entitled to notice of any
meeting or to vote at any such meeting shall be only persons in whose name
shares stand on the stock records of the Corporation on the record date
determined in accordance with Section 7 of this Article. Voting shall in all
cases be subject to the provisions of the Delaware General Corporation Law
and to the following provisions:
(a) Subject to clause (g) below, shares held by an
administrator, executor, guardian, conservator or custodian may
be voted by such holder either in person or by proxy, without
a transfer of such shares into the holder's name; and shares
standing in the name of a trustee may be voted by the trustee,
either in person or by proxy, but no trustee shall be entitled
to vote shares held by such trustee without a transfer of such
shares into the trustee's name.
(b) Shares standing in the name of a receiver may be voted by
such receiver; and shares held by or under the control of a
receiver may be voted by such receiver without the transfer
thereof into the receiver's name if authority to do so is
contained in the order of the court by which such receiver
was appointed.
(c) Subject to the provisions of Section 217 of the Delaware
General Corporation Law, and except where otherwise agreed in
writing between the parties, a stockholder whose shares are
pledged shall be entitled to vote such shares until the shares
have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so
transferred.
(d) Shares standing in the name of a minor may be voted and
the Corporation may treat all rights incident thereto as
exercisable by the minor, in person or by proxy, whether or not
the Corporation has notice, actual or constructive, of the
nonage, unless a guardian of the minor's property has been
appointed and written notice of such appointment given to the
Corporation.
(e) Shares standing in the name of another corporation,
domestic or foreign, may be voted by such officer, agent or
proxyholder as the bylaws of such other corporation may
prescribe or, in the absence of such provision, as the board
of directors of such other corporation may determine or, in
the absence of such determination, by the chairman of the
board of directors, president or any vice president of such
other corporation, or by any other person authorized to do so
by the board of directors, president or any vice president of
such other corporation. Shares which are purported to be voted or
any proxy purported to be executed in the name of a corporation
(whether or not any title of the person signing is indicated)
shall be presumed to be voted or the proxy executed in
accordance with the provisions of this subdivision, unless
the contrary is shown.
(f) Shares of the Corporation owned by any subsidiary shall
not be entitled to vote on any matter.
(g) Shares held by the Corporation in a fiduciary capacity,
and shares of the Corporation held in a fiduciary capacity by
any subsidiary, shall not be entitled to vote on any matter,
except to the extent that the settlor or beneficial owner
possesses and exercises a right to vote or to give the
Corporation binding instructions as to how to vote such shares.
(h) If shares stand of record in the names of two or more
persons, whether fiduciaries, members of a partnership, joint
tenants, tenants in common, husband and wife as community
property, tenants by the entirety, voting trustees, persons
entitled to vote under a stockholder voting agreement or
otherwise, or if two or more persons (including proxyholders)
have the same fiduciary relationship respecting the same shares,
unless the Secretary of the Corporation is given written notice
to the contrary and is furnished with a copy of the instrument
or order appointing them or creating the relationship wherein
it is so provided, their acts with respect to voting shall
have the following effect:
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(i) If only one votes, such act binds all;
(ii) If more than one vote, the act of the
majority so voting;
(iii) If more than one vote, but the vote is
evenly split on any particular matter, each faction
may vote the securities in question proportionately.
If the instrument so filed or the registration of the shares shows
that any such tenancy is held in unequal interests, a majority or even split
for the purpose of this section shall be a majority or even split in interest.
Section 7. RECORD DATE. The Board may fix, in advance, a record date
for the determination of the stockholders entitled to notice of any meeting or
to vote or entitled to receive payment of any dividend or other distribution, or
any allotment of rights, or to exercise rights in respect to any other lawful
action. The record date so fixed shall be not more than 60 nor less than 10 days
prior to the date of the meeting nor more than 60 days prior to any other
action. When a record date is so fixed, only stockholders of record on that date
are entitled to notice of and to vote at the meeting or to receive the dividend,
distribution, or allotment of rights, or to exercise of the rights, as the case
may be, notwithstanding any transfer of shares on the books of the Corporation
after the record date. A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall apply to any adjournment
of the meeting unless the Board fixes a new record date for the adjourned
meeting. The Board shall fix a new record date if the meeting is adjourned for
more than 30 days.
If no record date is fixed by the Board, the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders
shall be at the close of business on the business day next preceding the day
on which notice is given or, if notice is waived at the close of business on
the business day next preceding the day on which the meeting is held. The
record date for determining stockholders for any purpose other than set forth
in this Section 7 or Section 9 of this Article shall be at the close of
business on the day on which the Board adopts the resolution relating
thereto, or the 60th day prior to the date of such other action, whichever is
later.
Section 8. CONSENT OF ABSENTEES. The transactions of any meeting of
stockholders, however called and noticed, and wherever held, are as valid as
though had at a meeting duly held after regular call and notice, if a quorum
is present either in person or by proxy, and if, either before or after the
meeting, each of the persons entitled to vote, not present in person or by
proxy, signs a written waiver of notice or a consent to the holding of the
meeting or an approval of the minutes thereof. All such waivers, consents or
approvals shall be filed with the corporate records or made a part of the
minutes of the meeting.
Section 9. ACTION WITHOUT MEETING. Unless otherwise restricted by
the Certificate of Incorporation, any action which may be taken at any annual
or special meeting of stockholders may be taken without a meeting and without
prior notice if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding shares having not less than the
minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Prompt notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing. Every written consent shall
bear the date of signature of each stockholder who signs the consent and no
written consent shall be effective to take the corporate action referred to
therein unless, within sixty (60) days of the earliest dated consent
delivered to the Corporation in the manner required by the Delaware General
Corporation Law, written consents signed by a sufficient number of
stockholders to take such action are delivered to the Corporation by delivery
to its registered office in the State of Delaware, its principal place of
business or an officer or agent of the Corporation having custody of the book
in which proceedings of meetings of stockholders are recorded. Delivery made
to the Corporation's registered office shall be by hand or by certified or
registered mail, return receipt requested.
Section 10. PROXIES. Unless otherwise provided in the Certificate of
Incorporation, each stockholder shall, at every meeting of the stockholders,
be entitled to one vote in person or by proxy for each share of the capital
stock having voting power held by such stockholder, except that no proxy
shall be voted on after 11 months from its date, unless such proxy provides
for a longer period. A duly executed proxy shall be irrevocable if it states
that it is irrevocable and if, and only as long as, it is coupled with an
interest sufficient in law to support an irrevocable power. A proxy may be
made irrevocable regardless of whether the interest with which it is coupled
is an interest in the stock itself or an interest in the Corporation
generally.
Section 11. INSPECTORS OF ELECTION. The Corporation shall, in
advance of any meeting of stockholders, appoint one or more inspectors to act
at the meeting and make a written report thereof. The Corporation may
designate one or more persons as alternate inspectors to replace any
inspector who fails to act. If no inspector or alternate is able to act at a
meeting of stockholders, the person presiding at the meeting shall appoint
one or more inspectors to act at the meeting. Each inspector, before entering
upon the discharge of his duties, shall
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take and sign an oath faithfully to execute the duties of inspector with
strict impartiality and according to the best of his or her ability. The
inspector(s) shall: (1) ascertain the number of shares outstanding and the
voting power of each; (2) determine the shares represented at a meeting and
the validity of the proxies or ballots; (3) count all votes and ballots; (4)
determine and retain for a reasonable period a record of the disposition of
any challenges made to any determination by the inspectors; and (5) certify
the determination of the number of shares represented at the meeting, and the
count of all votes and ballots. The inspector(s) may appoint or retain other
persons or entities to assist the inspector(s) in the performance of the
duties of the inspector(s).
Section 12. STOCKHOLDER LISTS. The officer who has charge of the
stock ledger of the Corporation shall prepare and make, at least ten days
before every meeting of stockholders, a complete list of the stockholders
entitled to vote at the meeting, arranged in alphabetical order, and showing
the address of each stockholder and the number of shares registered in the
name of each stockholder. Such list will be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten days prior to the meeting, either at a
place within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified, at the place
where the meeting is to be held. The list also shall be produced and kept at
the time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present.
ARTICLE III - DIRECTORS
Section 1. POWERS. The business and affairs of the Corporation shall
be managed by or under the direction of the Board, which may exercise all
such powers of the Corporation and do all such lawful acts and things as are
not by statute or by the Certificate of Incorporation or by these Bylaws
directed or required to be exercised or to be done by the stockholders.
Section 2. NUMBER AND QUALIFICATION OF DIRECTORS. Unless otherwise
specified in the Certificate of Incorporation, the authorized number of
Directors shall be not less than nine (9) nor more than twelve (12) until
changed by an amendment of this Section 2 duly adopted by the stockholders.
The exact number of Directors shall be fixed, within the limits specified in
the immediately preceding sentence, by a resolution adopted by the Board or
by the stockholders. The exact number of Directors shall initially be ten
(10) until changed as provided in this Section 2.
Section 3. ELECTION AND TERM OF OFFICE. The Directors shall be
elected at each annual meeting of stockholders, but if any such annual
meeting is not held or the Directors are not elected thereat, the Directors
may be elected at any special meeting of stockholders held for that purpose.
Each Director shall hold office until the next annual meeting and until a
successor has been elected and qualified.
Section 4. VACANCIES. Any Director may resign effective upon giving
written notice to the Chairman of the Board, the President, Secretary or the
Board, unless the notice specifies a later time for the effectiveness of such
resignation. If the resignation is effective at a future time, a successor
may be elected to take office when the resignation becomes effective.
Vacancies in the Board, including those existing as a result of a removal of
a Director, may be filled by approval of the Board or, if the number of
Directors then in office is less than a quorum, by (1) the unanimous written
consent of the Directors then in office, (2) the affirmative vote of a
majority of the Directors then in office at a meeting held pursuant to notice
or waivers of notice as required for special meetings, or (3) by a sole
remaining Director. Except as provided herein, each Director so elected shall
hold office until the next annual meeting and until such Director's successor
has been elected and qualified. If, at the time of filling any vacancy or any
newly created directorship, the Directors then in office shall constitute
less than a majority of the whole Board (as constituted immediately prior to
any such increase), the Court of Chancery may, upon application of any
stockholder or stockholders holding at least 10% of the total number of the
shares at the time outstanding and having the right to vote for such
Directors, summarily order an election to be held to fill any such vacancies
or newly created directorships, or to replace the Directors chosen by the
Directors then in office as aforesaid. A vacancy or vacancies in the Board
shall be deemed to exist in case of the death, resignation or removal of any
Director, or if the authorized number of Directors be increased, or if the
stockholders fail, at any annual or special meeting of stockholders at which
any Director or Directors are elected, to elect the full authorized number of
Directors to be voted for at that meeting. The Board may declare vacant the
office of a Director who has been declared of unsound mind by an order of
court or convicted of a felony. The stockholders may elect a Director or
Directors at any time to fill any vacancy or vacancies not filled by the
Directors. Any such election by written consent requires the consent of a
majority of the outstanding shares entitled to vote. If the Board accepts the
resignation of a Director tendered to take effect at a future time, the Board
or the stockholders shall have power to elect a successor to take office when
the resignation is to become effective.
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Section 5. PLACE OF MEETING. Regular or special meetings of the
Board shall be held at any place within or without the State of Delaware
which has been designated from time to time by the Board. In the absence of
such designation regular meetings shall be held at the principal executive
office of the Corporation.
Section 6. REGULAR MEETINGS. Immediately following each annual
meeting of stockholders, the Board shall hold a regular meeting for the
purpose of organization, election of officers, and the transaction of other
business. Other regular meetings of the Board shall be held without notice at
such date, time and place as may be fixed by the Board in advance thereof
following the end of each of the second, third and fourth quarters of the
Corporation's fiscal year. If the Board fails to fix the date, time and place
of any such regular meeting, the Chairman of the Board, the President or the
Secretary shall do so and the meeting shall be called and noticed as for
special meetings.
Section 7. SPECIAL MEETINGS. Special meetings of the Board for any
purpose or purposes may be called at any time by the Chairman of the Board,
the President or the Secretary or by any two Directors. Special meetings of
the Board shall be held upon four days' written notice or 48 hours' notice
given personally or by telephone, including a voice messaging system or other
system or technology designed to record and communicate messages, telegraph,
facsimile, electronic mail or other electronic means. Any such notice shall
be addressed or delivered to each Director at such Director's address or by
such means as it is shown upon the records of the Corporation or as may have
been given to the Corporation by the Director for purposes of notice or, if
such address is not shown on such records or is not readily ascertainable, at
the place in which the meetings of the Directors are regularly held.
Section 8. QUORUM. A majority of the authorized number of Directors
constitutes a quorum of the Board for the transaction of business, except to
adjourn as hereinafter provided. Every act or decision done or made by a
majority of the Directors present at a meeting duly held at which a quorum is
present shall be regarded as the act of the Board, unless a greater number be
required by law or by the Certificate of Incorporation. If a quorum shall not
be present at any meeting of the Board, the Directors present thereat may
adjourn the meeting from time to time, without notice other than announcement
at the meeting, until a quorum shall be present.
Section 9. PARTICIPATION IN MEETINGS BY CONFERENCE TELEPHONE.
Members of the Board may participate in a meeting through use of conference
telephone or similar communications equipment, so long as all members in such
meeting can hear one another.
Section 10. WAIVER OF NOTICE. The transactions of any meeting of the
Board, however called and noticed or wherever held, are as valid as though
had at a meeting duly held after regular call and notice if a quorum be
present and if either before or after the meeting, each of the Directors not
present signs a written waiver of notice, a consent to holding such meeting
or an approval of the minutes thereof. All such waivers, consents or
approvals shall be filed with the corporate records or made a part of the
minutes of the meeting.
Section 11. ADJOURNMENT. A majority of the Directors present,
whether or not a quorum is present, may adjourn any Directors' meeting to
another time and place. Notice of the time and place of holding an adjourned
meeting need not be given to absent Directors if the time and place be fixed
at the meeting adjourned. If the meeting is adjourned for more than 24 hours,
notice of any adjournment to another time or place shall be given prior to
the time of the adjourned meeting to the Directors who were not present at
the time of the adjournment.
Section 12. FEES AND COMPENSATION. Directors and members of
committees may receive such compensation, if any, for their services, and
such reimbursement for expenses, as may be fixed or determined by the Board.
No such payment shall preclude any Director from serving the Corporation in
any other capacity and receiving compensation therefor. Members of committees
designated by the Board may be allowed like compensation for their services
to the Corporation.
Section 13. ACTION WITHOUT MEETING. Any action required or permitted
to be taken by the Board may be taken without a meeting if all members of the
Board shall individually or collectively consent in writing to such action.
Such consent or consents shall have the same effect as a unanimous vote of
the Board and shall be filed with the minutes of the proceedings of the Board.
Section 14. RIGHTS OF INSPECTION. Every Director shall have the
absolute right at any reasonable time to inspect and copy all books, records
and documents of every kind and to inspect the physical properties of the
Corporation and also of its subsidiary corporations, domestic or foreign.
Such inspection by a Director may be made in person or by agent or attorney
and includes the right to copy and obtain extracts.
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Section 15. COMMITTEES. The Board may, by resolution passed by a
majority of the whole Board, designate one or more committees, each committee
to consist of one or more of the Directors, which to the extent provided in
the resolution of the Board, or in these Bylaws, shall have and may exercise
all the powers and authority of the Board 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, except as limited by
Delaware General Corporation Law. Each committee of the Board may fix its own
rules of procedure and shall hold its meetings as provided by such rules,
except as may otherwise be provided by the resolution of the Board
designating such committee, but in all cases the presence of at least a
majority of the members of such committee shall be necessary to constitute a
quorum. In the event that a member of such committee is absent or
disqualified, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he, she or they constitute a quorum,
may unanimously appoint another member of the Board to act at the meeting in
place of any such absent or disqualified member. Each committee shall keep
regular minutes of its meetings and report the same to the Board when
required.
ARTICLE IV - OFFICERS
Section 1. OFFICERS. The officers of the Corporation shall be a
president, secretary, and a treasurer. The Corporation may also have, at the
discretion of the Board, a chairman of the Board, one or more vice
presidents, one or more assistant secretaries, one or more assistant
treasurers, and such other officers as may be elected or appointed in
accordance with the provisions of Section 3 of this Article.
Section 2. ELECTION. The officers of the Corporation, except such
officers as may be elected or appointed in accordance with the provisions of
Section 3 or Section 5 of this Article, shall be chosen annually by, and
shall serve at the pleasure of, the Board, and shall hold their respective
offices until their resignation, removal or other disqualification from
service, or until their respective successors shall be elected.
Section 3. SUBORDINATE OFFICERS. The Board may elect, and may
empower the President to appoint, such other officers as the business of the
Corporation may require, each of whom shall hold office for such period, have
such authority and perform such duties as are provided in these Bylaws or as
the Board may from time to time determine.
Section 4. REMOVAL AND RESIGNATION. Any officer may be removed,
either with or without cause, by the Board at any time, or, except in the
case of an officer chosen by the Board, by any officer upon whom such power
of removal may be conferred by the Board. Any such removal shall be without
prejudice to the rights, if any, of the officer under any contract of
employment of the officer. Any officer may resign at any time by giving
written notice to the Corporation, but without prejudice to the rights, if
any, of the Corporation under any contract to which the officer is a party.
Any such resignation shall take effect at the date of the receipt of such
notice or at any later time specified therein; and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary
to make it effective.
Section 5. VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification, or any other cause shall be filled in
the manner prescribed in these Bylaws for regular election or appointment to
such office.
Section 6. CHAIRMAN OF THE BOARD. The Chairman of the Board, if
there shall be such an officer, shall, if present, preside at all meetings of
the Board and exercise and perform such other powers and duties as may be
from time to time assigned by the Board.
Section 7. PRESIDENT. Subject to such powers, if any, as may be
given by the Board to the Chairman of the Board, if there be such an officer,
the President is the general manager and chief executive officer of the
Corporation and has, subject to the control of the Board, general
supervision, direction, and control of the business and officers of the
Corporation. The President shall preside at all meetings of the stockholders
and, in the absence of the Chairman of the Board, or if there be none, at all
meetings of the Board. The President has the general powers and duties of
management usually vested in the office of president and general manager of a
corporation and such other powers and duties as may be prescribed by the
Board.
Section 8. VICE PRESIDENT. In the absence or disability of the
President, the Vice President (in order of their rank as fixed by the Board,
or if not ranked, the Vice President designated by the Board) shall perform
all the duties of the President, and when so acting shall have all the powers
of and be subject to all the restrictions upon the President. The Vice
Presidents shall have such other powers and perform such other duties as from
time to time may be prescribed for them respectively by the Board.
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Section 9. SECRETARY. The Secretary shall keep or cause to be kept,
at the principal executive office and such other place as the Board may
order, a book of minutes of all meetings of stockholders, the Board and its
committees, with the time and place of holding, whether regular or special,
and, if special, how authorized, the notice thereof given, the names of those
present at Board and committee meetings, the number of shares present or
represented at stockholders' meetings, and the proceedings thereof. The
Secretary shall keep, or cause to be kept, a copy of the Bylaws of the
Corporation at the principal executive office or business office in
accordance with Section 213 of the Delaware General Corporation Law. The
Secretary shall keep, or cause to be kept, at the principal executive office
or at the office of the Corporation's transfer agent or registrar, if one be
appointed, a share register, or a duplicate share register, showing the names
of the stockholders and their addresses, the number and classes of shares
held by each, the number and date of certificates issued for the same, and
the number and date of cancellation of every certificate surrendered for
cancellation. The Secretary shall give, or cause to be given, notice of all
the meetings of the stockholders and of the Board and of any committees
thereof required by these Bylaws or by law to be given, shall keep the seal
of the Corporation in safe custody, and shall have such other powers and
perform such other duties as may be prescribed by the Board.
Section 10. TREASURER. The Treasurer is the chief financial officer
of the Corporation and shall keep and maintain, or cause to be kept and
maintained, adequate and correct accounts of the properties and business
transactions of the Corporation, and shall send or cause to be sent to the
stockholders of the Corporation such financial statements and reports as are
by law or these Bylaws required to be sent to them. The books of account
shall at all times be open to inspection by any Director. The Treasurer shall
deposit all moneys and other valuables in the name and to the credit of the
Corporation with such depositories as may be designated by the Board. The
Treasurer shall disburse the funds of the Corporation as may be ordered by
the Board, shall render to the President and Directors, whenever they request
it, an account of all transactions as Treasurer and of the financial
condition of the Corporation, and shall have such other powers and perform
such other duties as may be prescribed by the Board.
ARTICLE V - OTHER PROVISIONS
Section 1. INSPECTION OF BYLAWS. The Corporation shall keep in its
principal executive office the original or a copy of these Bylaws as amended
to date which shall be open to inspection by stockholders at all reasonable
times during office hours. If the principal executive office of the
Corporation is outside the State of Delaware and the Corporation has no
principal business office in such state, it shall upon the written notice of
any stockholder furnish to such stockholder a copy of these Bylaws as amended
to date.
Section 2. ENDORSEMENT OF DOCUMENTS; CONTRACTS. Subject to the
provisions of applicable law, any note, mortgage, evidence of indebtedness,
contract, share certificate, conveyance, or other instrument in writing and
any assignment or endorsements thereof executed or entered into between this
Corporation and any other person, when signed by the Chairman of the Board,
the President, or any Vice President, and the Secretary, any Assistant
Secretary, the Treasurer or any Assistant Treasurer of this Corporation shall
be valid and binding on this Corporation in the absence of actual knowledge
on the part of the other person that the signing officers had not authority
to execute the same. Any such instruments may be signed by any other person
or persons and in such manner as from time to time shall be determined by the
Board, and, unless so authorized by the Board, no officer, agent or employee
shall have any power or authority to bind the Corporation by any contract or
engagement or to pledge its credit or to render it liable for any purpose or
amount.
Section 3. CERTIFICATES OF STOCK. Every holder of shares of the
Corporation shall be entitled to have a certificate signed in the name of the
Corporation by the Chairman of the Board, the President or a Vice President
and by the Treasurer or an Assistant Treasurer or the Secretary or an
Assistant Secretary, certifying the number of shares and the class or series
of shares owned by the stockholder. Any or all of the signatures on the
certificate may be facsimile. If any officer, transfer agent or registrar who
has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officers, transfer agent or registrar before
such certificate is issued, it may be issued by the Corporation with the same
effect as if such person were an officer, transfer agent or registrar at the
date of issue. Certificates for shares may be issued prior to full payment
under such restrictions and for such purposes as the Board may provide;
provided, however, that on any certificate issued to represent any partly
paid shares, the total amount of the consideration to be paid therefor and
the amount paid thereon shall be stated. Except as provided in this Section
no new certificate for shares shall be issued in lieu of an old one unless
the latter is surrendered and canceled at the same time. The Board may,
however, in case any certificate for shares is alleged to have been lost,
stolen or destroyed, authorize the issuance of a new certificate in lieu
thereof, and the Corporation may require that the Corporation be given a bond
or other adequate security sufficient to indemnify it against any claim that
may be made against it (including expense or liability) on account of the
alleged loss, theft or destruction of such certificate or the issuance of
such new certificate.
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Section 4. REPRESENTATION OF SHARES OF OTHER CORPORATIONS. The
President or any other officer or officers authorized by the Board or the
President are authorized to vote, represent and exercise on behalf of the
Corporation the rights incident to any and all shares of any other
corporation or corporations standing in the name of the Corporation. The
authority herein granted may be exercised either by any such officer in
person or by any other person authorized so to do by proxy or power of
attorney duly executed by said officer.
Section 5. STOCK PURCHASE PLANS. The Corporation may adopt and carry
out a stock purchase plan or agreement or stock option plan or agreement
providing for the issue and sale for such consideration as may be fixed of
its unissued shares, or of issued shares acquired or to be acquired, to one
or more of the employees or Directors of the Corporation or of a subsidiary
or to a trustee on their behalf and for the payment of such shares in
installments or at one time, and may provide for aiding any such persons in
paying for such shares by compensation for services rendered, promissory
notes or otherwise. Any such stock purchase plan or agreement or stock option
plan or agreement may include, among other features, the fixing of
eligibility for participation therein, the class and price of shares to be
issued or sold under the plan or agreement, the number of shares which may be
subscribed for, the method of payment therefor, the reservation of title
until full payment therefor, the effect of the termination of employment, an
option or obligation on the part of the Corporation to repurchase the shares
upon termination of employment, restrictions upon transfer of the shares, the
time limits of and termination of the plan and any other matters, not in
violation of applicable law, as may be included in the plan as approved or
authorized by the Board of any committee of the Board.
Section 6. CONSTRUCTION AND DEFINITIONS. Unless the context
otherwise requires, the general provisions, rules of construction, and
definitions contained in the Delaware General Corporation Law shall govern
the construction of these Bylaws.
ARTICLE VI - INDEMNIFICATION
Section 1. DEFINITIONS. For the purpose of this Article, "agent"
includes any person who is or was a Director, officer, employee or other
agent of the Corporation, or is or was serving at the request of the
Corporation as a Director, officer, employee or agent of another foreign or
domestic corporation, partnership, joint venture, trust or other enterprise,
or was a director, officer, employee or agent of a foreign or domestic
corporation which was a predecessor corporation of the Corporation or of
another enterprise at the request of such predecessor corporation;
"proceeding" include any threatened, pending or completed action or
proceeding, whether civil, criminal, administrative or investigative; and
"expenses" include attorneys' fees and any expenses of establishing a right
to indemnification under Section 4 or Section 5(d).
Section 2. INDEMNIFICATION IN ACTIONS BY THIRD PARTIES. The
Corporation shall have the power to indemnify any person who was or is a
party or is threatened to be made a party to any proceeding (other than an
action by or in the right of the Corporation to procure a judgment in its
favor) by reason of the fact that such person is or was an agent of the
Corporation, against expenses, judgments, fines, settlements and other
amounts actually and reasonably incurred in connection with such proceeding
if such person acted in good faith and in a manner such person reasonably
believed to be in the best interests of the Corporation and, in the case of a
criminal proceeding, had no reasonable cause to believe the conduct of such
person was unlawful. The termination of any proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere or its equivalent
shall not, of itself, create a presumption that the person did not act in
good faith and in a manner which the person reasonably believed to be in the
best interests of the Corporation or that the person had reasonable cause to
believe that the person's conduct was unlawful.
Section 3. INDEMNIFICATION IN ACTIONS BY OR IN THE RIGHT OF THE
CORPORATION. The Corporation shall have power to indemnify any person who was
or is a party or is threatened to be made a party to any threatened, pending
or completed action by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that such person is or was an
agent of the Corporation, against expenses actually and reasonably incurred
by such person in connection with the defense or settlement of such action if
such person acted in good faith and in a manner such person believed to be in
the best interests of the Corporation and its stockholders. No
indemnification shall be made under this Section 3:
(a) In respect of any claim, issue or matter as to which
such person shall have been adjudged to be liable to the
Corporation in the performance of such person's duty to the
Corporation and its stockholders, unless and only to the extent
that the court in which such proceeding is or was pending shall
determine upon application that, in view of all the circumstances
of the case, such
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person is fairly and reasonably entitled to indemnity for expenses
and then only to the extent that the court shall determine;
(b) Of amounts paid in settling or otherwise disposing of a
pending action without court approval; or
(c) Of expenses incurred in defending a pending action
which is settled or otherwise disposed of without court approval.
Section 4. INDEMNIFICATION AGAINST EXPENSES. To the extent that an
agent of the Corporation has been successful, on the merits in defense of any
proceeding referred to in Sections 2 or 3 or in defense of any claim, issue
or matter therein, the agent shall be indemnified against expenses actually
and reasonably incurred by the agent in connection therewith.
Section 5. REQUIRED DETERMINATIONS. Except as provided in Section 4,
any indemnification under this Article shall be made by the Corporation only
if authorized in the specific case, upon a determination that indemnification
of the agent is proper in the circumstances because the agent has met the
applicable standard of conduct set forth in Sections 2 or 3 by any of the
following:
(a) A majority vote of a quorum consisting of Directors who
are not parties to such proceeding;
(b) If such a quorum of Directors is not obtainable, by
independent legal counsel in a written opinion;
(c) Approval of the stockholders, with the shares owned by
the person to be indemnified not being entitled to vote thereon; or
(d) The court in which such proceeding is or was pending
upon application made by the Corporation or the agent or the
attorney or other person rendering services in connection with the
defense, whether or not such application by the agent, attorney or
other person is opposed by the Corporation.
Section 6. ADVANCE OF EXPENSES. Expenses incurred in defending any
proceeding may be advanced by the Corporation prior to the final disposition
of such proceeding upon receipt of an undertaking by or on behalf of the
agent to repay such amount if it shall be determined ultimately that the
agent is not entitled to be indemnified as authorized in this Article.
Section 7. OTHER INDEMNIFICATION. The indemnification provided by
this Article shall not be deemed exclusive of any other rights to which those
seeking indemnification may be entitled under any bylaw, agreement, vote of
stockholders or disinterested Directors or otherwise, both as to action in an
official capacity and as to action in another capacity while holding such
office, to the extent such additional rights to indemnification are
authorized in the Certificate of Incorporation. The rights to indemnity
hereunder shall continue as to a person who has ceased to be a Director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of the person. Nothing contained in this Article
shall affect any right to indemnification to which persons other than such
Directors and officers may be entitled by contract or otherwise.
Section 8. FORMS OF INDEMNIFICATION NOT PERMITTED. No
indemnification or advance shall be made under this Article, except as
provided in Section 4 or Section 5(d), in any circumstance where it appears:
(a) That it would be inconsistent with a provision of the
Certificate of Incorporation, Bylaws, a resolution of the
stockholders or an agreement in effect at the time of the accrual
of the alleged cause of action asserted in the proceeding in which
the expenses were incurred or other amounts were paid, which
prohibits or otherwise limits indemnification; or
(b) That it would be inconsistent with any condition
expressly imposed by a court in approving a settlement.
Section 9. INSURANCE. The Corporation shall have power to purchase
and maintain insurance on behalf of any agent of the Corporation against any
liability asserted against or incurred by the agent in such capacity or
arising out of the agent's status as such whether or not the Corporation
would have the power to indemnify the agent against such liability under the
provisions of this Article. In the event that any insurance maintained by the
Corporation does not provide full coverage, either by the requirement of a
deductible or co-payment or by the fact that the expenses actually and
reasonably incurred exceed the insurance limits or for any other reason, the
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Corporation shall have the power to indemnify that agent or person for the
amount not covered by the insurance; PROVIDED, HOWEVER, that the Corporation
shall have the power to indemnify the agent or person against such liability
notwithstanding any insurance and in accordance with the provisions of this
Article.
Section 10. NONAPPLICABILITY TO FIDUCIARIES OF EMPLOYEE BENEFIT
PLANS. This Article does not apply to any proceeding against any trustee,
investment manager or other fiduciary of an employee benefit plan in such
person's capacity as such, even though such person may also be an agent of
the Corporation as defined in Section 1. The Corporation shall have the power
to indemnify such a trustee, investment manager or other fiduciary to the
fullest extent permitted by the Delaware General Corporation Law.
ARTICLE VII - EMERGENCY BYLAWS
During any emergency resulting from an attack on the United States
or on a locality in which the Corporation conducts its business or
customarily holds meetings of the Board or its stockholders, or during any
nuclear or atomic disaster, or during the existence of any catastrophe or
other similar emergency condition as a result of which a quorum of the Board
or of the executive committee, if any, cannot readily be convened for action,
a meeting of the Board or of said committee may be called by any officer or
Director. Such notice may be given only to such of the Directors or members
of the committee, as the case may be, as it may be feasible to reach at the
time and by such means as may be feasible at the time including, without
limitation, publication or radio.
The Director or Directors in attendance at the meeting of the Board,
and the member or members of the executive committee, if any, in attendance
at the meeting of the committee, shall constitute a quorum. If none are in
attendance at the meeting, the officers or other persons designated on a list
approved by the Board before the emergency, all in such order of priority and
subject to such conditions and for such period of time (not longer than
reasonably necessary after termination of the emergency) as may be provided
in the resolution approving the list, shall to the extent required to provide
a quorum at any meeting of the Board or of the executive committee, be deemed
Directors or members of the committee, as the case may be, for such meeting.
The Board, either before or during any such emergency, may provide,
and from time to time modify, lines of succession in the event that during
such emergency any or all officers or agents of the Corporation shall for any
reason be rendered incapable of discharging their duties. The Board, either
before or during any such emergency, may, effective in the emergency, change
the principal executive office or designate several alternative offices or
authorize the officers so to do.
ARTICLE VIII - AMENDMENTS
These Bylaws may be amended or repealed either by approval of the
outstanding shares or by the approval of the Board; provided, however, that
after the issuance of shares, a Bylaw specifying or changing a fixed number
of Directors (except for a fixed number within a maximum or minimum range) or
the maximum or minimum number of a range, or changing from a fixed to a
variable Board or vice versa, may only be adopted by approval of the
outstanding shares.
SECRETARY'S CERTIFICATE OF ADOPTION OF BYLAWS
I hereby certify that I am the duly elected and acting Secretary of
WD-40 COMPANY, a Delaware corporation, and that the foregoing Bylaws
constitute the Bylaws of said Corporation as duly adopted on
_____________ __, 1999.
IN WITNESS WHEREOF, I have signed my name and affixed the seal of
said Corporation this ____ day of ___________, 1999.
----------------------------
Secretary
(CORPORATE SEAL)
C-10
<PAGE>
[INDEMNITEE'S NAME]
APPENDIX D
INDEMNITY AGREEMENT
THIS INDEMNITY AGREEMENT ("AGREEMENT"), effective as of
_________ __, 1999, is entered into by and between WD-40 COMPANY, a Delaware
corporation (the "CORPORATION"), and [INDEMNITEE'S NAME] (the "INDEMNITEE").
W I T N E S S E T H:
WHEREAS, Indemnitee is a member of the board of directors of the
Corporation or a subsidiary of the Corporation (the "BOARD OF DIRECTORS") or
is an officer of the Corporation or a subsidiary of the Corporation, and in
such capacity is performing a valuable service for the Corporation; and
WHEREAS, competent persons have become reluctant to serve
corporations as directors, officers or in other capacities unless they are
provided with protection from the risk of personal claims and actions against
them arising out of their service to and activities on behalf of such
corporations; and
WHEREAS, the Corporation has provided in the Certificate of
Incorporation of the Corporation (the "CERTIFICATE OF INCORPORATION") that a
director's liability to the Corporation's stockholders for monetary damages
shall be eliminated to the fullest extent permissible under Delaware law
(with certain limited exceptions), and further has provided in the
Certificate of Incorporation that the Corporation will indemnify its
directors and officers to the maximum extent permitted under applicable law;
and
WHEREAS, Indemnitee is willing to serve, continue to serve, and take
on additional service for or on behalf of the Corporation on the condition
that he or she be indemnified as herein provided; and
WHEREAS, it is intended that Indemnitee shall be paid promptly by
the Corporation all amounts necessary to effectuate in full the indemnity
provided herein;
NOW, THEREFORE, in consideration of the premises and the covenants
in this Agreement, and intending to be legally bound hereby, the parties
hereto agree as follows:
1. SERVICES BY INDEMNITEE. Indemnitee agrees to serve as a
director or officer of the Corporation or any subsidiary of the Corporation
so long as he or she is duly appointed or elected and qualified in accordance
with the applicable provisions of Certificate of Incorporation and Bylaws of
the Corporation or any subsidiary of the Corporation and until such time as
he or she resigns or fails to stand for election or is removed from his or
her position. Indemnitee may at any time and for any reason resign or be
removed from such position (subject to any other contractual obligation or
other obligation imposed by operation of law), without affecting the
indemnification agreed to hereunder, in which event the Corporation shall
have no obligation under this Agreement to continue Indemnitee in any such
position.
2. Proceedings Other than Proceedings by or in the Right of the
Corporation.
(a) The Corporation shall indemnify Indemnitee against
Expenses and Liabilities incurred in connection with any Proceeding
arising out of acts or omissions of Indemnitee occurring during
Indemnitee's service as a director or as an officer of the
Corporation or any subsidiary of the Corporation, other than a
Proceeding by or in the right of the Corporation against
Indemnitee, to the fullest extent permitted by applicable law or
the Certificate of Incorporation (as such law or the Certificate of
Incorporation may be amended from time to time, but only to the
extent that any such amendment permits the Corporation to provide
broader indemnification rights than such law or the Certificate of
Incorporation permitted the Corporation to provide before such
amendment), so long as Indemnitee has acted in good faith and in a
manner Indemnitee reasonably believed to be in or not opposed to
the best interests of the Corporation and, with respect to any
criminal Proceeding, Indemnitee had no reasonable cause to believe
that Indemnitee's conduct was unlawful.
(b) Indemnitee shall be paid promptly by the Corporation
all amounts necessary to effectuate the foregoing indemnity.
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3. INDEMNIFICATION FOR PROCEEDINGS BY OR IN THE RIGHT OF THE
CORPORATION.
(a) The Corporation shall indemnify Indemnitee against
Expenses and Liabilities incurred in connection with any Proceeding
by or in the right of the Corporation against Indemnitee and
arising out of acts or omissions of Indemnitee occurring during
Indemnitee's service as a director or as an officer of the
Corporation or any subsidiary of the Corporation to the fullest
extent permitted by applicable law or the Certificate of
Incorporation (as such law or the Certificate of Incorporation may
be amended from time to time, but only to the extent that any such
amendment permits the Corporation to provide broader
indemnification rights than such law or the Certificate of
Incorporation permitted the Corporation to provide before such
amendment), so long as Indemnitee acted in good faith and in a
manner Indemnitee reasonably believed to be in or not opposed to
the best interests of the Corporation AND except that no
indemnification shall be made in respect of any claim, issue or
matter as to which Indemnitee shall have been adjudged to be liable
to the Corporation unless and only to the extent that the Delaware
Court of Chancery or the court in which such Proceeding was brought
shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case,
Indemnitee is fairly and reasonably entitled to indemnification for
Expenses and Liabilities incurred in connection with any such
claim, issue or matter (as the Delaware Court of Chancery or such
other court shall deem proper).
(b) Indemnitee shall be paid promptly by the Corporation
all amounts necessary to effectuate the foregoing indemnity.
4. INDEMNIFICATION UNDER CERTIFICATE OF INCORPORATION. The
right to indemnification provided for in the Certificate of Incorporation (as
the Certificate of Incorporation may be amended from time to time, but only
to the extent that any such amendment permits the Corporation to provide
broader indemnification rights than the Certificate of Incorporation
permitted the Corporation to provide before such amendment) shall be presumed
to have been relied upon by Indemnitee in serving or continuing to serve the
Corporation and shall be enforceable as a contract right.
5. INDEMNIFICATION FOR EXPENSES OF A PARTY WHO IS WHOLLY OR
PARTLY SUCCESSFUL. Notwithstanding any other provision of this Agreement, to
the extent that Indemnitee is a party to and is successful, on the merits or
otherwise, in any Proceeding arising out of acts or omissions of Indemnitee
occurring during Indemnitee's service as a director or officer of the
Corporation or any subsidiary of the Corporation, he or she shall be
indemnified against Expenses and Liabilities actually and reasonably incurred
by him or her or on his or her behalf in connection therewith. If Indemnitee
is not wholly successful in such Proceeding but is successful, on the merits
or otherwise, as to one or more but less than all claims, issues or matters
in such Proceeding, the Corporation shall indemnify Indemnitee against all
Expenses and Liabilities actually and reasonably incurred by him or her or on
his or her behalf in connection with each successfully resolved claim, issue
or matter. For the purposes of this Section and without limiting the
foregoing, the termination of any claim, issue or matter in any such
Proceeding by dismissal, with or without prejudice, shall be deemed to be a
successful result as to such claim, issue or matter.
6. ADVANCEMENT OF EXPENSES. All reasonable Expenses incurred by
or on behalf of Indemnitee shall be advanced from time to time by the
Corporation to Indemnitee within thirty (30) days after the Corporation's
receipt of a written request for an advance of Expenses, whether prior to or
after final disposition of a Proceeding (except to the extent that there has
been a Final Adverse Determination that Indemnitee is not entitled to be
indemnified for such Expenses). The written request for an advancement of any
and all Expenses under this paragraph shall contain reasonable detail of the
Expenses incurred by Indemnitee. Indemnitee hereby agrees to repay the
amounts advanced if it is ultimately determined that Indemnitee is not
entitled to be indemnified pursuant to the terms of this Agreement.
7. LIMITATIONS. The foregoing indemnity and advancement of
Expenses shall apply only to the extent that Indemnitee has not been
indemnified and reimbursed pursuant to such insurance as the Corporation may
maintain for Indemnitee's benefit, or otherwise; provided, however, that
notwithstanding the availability of such other indemnification and
reimbursement, Indemnitee may claim indemnification and advancement of
Expenses pursuant to this Agreement by assigning to the Corporation, at its
request, Indemnitee's claims under such insurance to the extent Indemnitee
has been paid by the Corporation.
8. INSURANCE AND FUNDING. The Corporation may purchase and
maintain insurance to protect itself and/or Indemnitee against any Expenses
and Liabilities in connection with any Proceeding to the fullest extent
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permitted by applicable laws. The Corporation may create a trust fund, grant
an interest or use other means (including, without limitation, a letter of
credit) to ensure the payment of such amounts as may be necessary to effect
indemnification or advancement of Expenses as provided in this Agreement.
9. PROCEDURE FOR DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION.
(a) Whenever Indemnitee believes that he or she is entitled
to indemnification pursuant to this Agreement, Indemnitee shall
submit a written request for indemnification to the Corporation.
Any request for indemnification shall include sufficient
documentation or information reasonably available to Indemnitee to
support his or her claim for indemnification. Indemnitee shall
submit such claim for indemnification within a reasonable time not
to exceed five years after any judgment, order, settlement,
dismissal, arbitration award, conviction, acceptance of a plea of
nolo contendere or its equivalent, final termination or other
disposition or partial disposition of any Proceeding, whichever is
the later date for which Indemnitee requests indemnification. The
President or the Secretary or other appropriate officer shall,
promptly upon receipt of Indemnitee's request for indemnification,
advise the Board of Directors in writing that Indemnitee has made
such request. Determination of Indemnitee's entitlement to
indemnification shall be made not later than ninety (90) days after
the Corporation's receipt of his or her written request for such
indemnification.
(b) The Indemnitee shall be entitled to select the forum in
which Indemnitee's request for indemnification will be heard, which
selection shall be included in the written request for
indemnification required in Section 9(a). The forum shall be any
one of the following:
(i) The stockholders of the Corporation;
(ii) A quorum of the Board of Directors consisting of
Disinterested Directors; or
(iii) Independent Legal Counsel, who shall make the
determination in a written opinion.
If Indemnitee fails to make such designation, his or her claim shall
be determined by an appropriate court of the State of Delaware.
(c) Indemnitee shall cooperate with the person, persons or
entity making such determination with respect to Indemnitee's
entitlement to indemnification, including providing to such person,
persons or entity upon reasonable advance request any documentation
or information which is not privileged or otherwise protected from
disclosure and which is reasonably available to Indemnitee and
reasonably necessary to such determination. Any costs or expenses
(including attorneys' fees and disbursements) incurred by
Indemnitee in so cooperating with the person, persons or entity
making such determination shall be borne by the Corporation
(irrespective of the determination as to Indemnitee's entitlement
to indemnification) and the Corporation hereby indemnifies and
agrees to hold Indemnitee harmless therefrom.
10. PRESUMPTION AND EFFECTS OF CERTAIN PROCEEDINGS.
(a) In making a determination with respect to entitlement
to indemnification hereunder, the person, persons or entity making
such determination shall presume that Indemnitee is entitled to
indemnification under this Agreement if Indemnitee has submitted a
request for indemnification in accordance with Section 9(a) of this
Agreement, and the Corporation shall have the burden of proof to
overcome that presumption in connection with the making by any
person, persons or entity of any determination contrary to that
presumption.
(b) If the person, persons or entity empowered or selected
under Section 9(b) of this Agreement to determine whether
Indemnitee is entitled to indemnification shall not have made a
determination within ninety (90) days after receipt by the
Corporation of the request therefor, the requisite determination of
entitlement to indemnification shall be deemed to have been made
and Indemnitee shall be entitled to such indemnification, absent
(i) a misstatement by Indemnitee of a material fact, or an omission
of a material fact necessary to make Indemnitee's statement not
materially misleading, in connection with the request for
indemnification, or (ii) prohibition of such indemnification under
applicable law; provided, however, that such ninety (90) day period
may be extended for a reasonable time, not to exceed an additional
ninety (90) days, if the person, persons
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or entity making the determination with respect to entitlement to
indemnification in good faith require(s) such additional time for
the obtaining or evaluating of documentation and/or information
relating thereto.
11. FEES AND EXPENSES OF INDEPENDENT LEGAL COUNSEL. The Corporation
agrees to pay the reasonable fees and expenses of Independent Legal Counsel
should such Counsel be retained to make a determination of Indemnitee's
entitlement to indemnification pursuant to Section 9 of this Agreement, and
to fully indemnify such Counsel against any and all expenses and losses
incurred by any of them arising out of or relating to this Agreement or their
engagement pursuant hereto.
12. REMEDIES OF INDEMNITEE.
(a) In the event that (i) a determination pursuant to
Section 9 hereof is made that Indemnitee is not entitled to
indemnification, (ii) advances of Expenses are not made pursuant to
this Agreement, (iii) payment has not been timely made following a
determination of entitlement to indemnification pursuant to this
Agreement, or (iv) Indemnitee otherwise seeks enforcement of this
Agreement, Indemnitee shall be entitled to a final adjudication in
an appropriate court of the State of Delaware of his or her rights.
The Corporation shall not oppose Indemnitee's right to seek any
such adjudication.
(b) In the event that a determination that Indemnitee is
not entitled to indemnification, in whole or in part, has been made
pursuant to Section 9 hereof, the decision in the judicial
proceeding provided in paragraph (a) of this Section 12 shall be
made de novo and Indemnitee shall not be prejudiced by reason of a
determination that he or she is not entitled to indemnification.
(c) If a determination that Indemnitee is entitled to
indemnification has been made pursuant to Section 9 or 10 hereof or
otherwise pursuant to the terms of this Agreement, the Corporation
shall be bound by such determination in the absence of (i) a
misrepresentation of a material fact by Indemnitee or (ii) a
specific finding (which has become final) by an appropriate court
of the State of Delaware that all or any part of such
indemnification is expressly prohibited by law.
(d) In any court proceeding pursuant to this Section 12,
the Corporation shall be precluded from asserting that the
procedures and presumptions of this Agreement are not valid,
binding and enforceable. The Corporation shall stipulate in any
such court that the Corporation is bound by all the provisions of
this Agreement and is precluded from making any assertion to the
contrary.
(e) Expenses reasonably incurred by Indemnitee in
connection with his or her request for indemnification under this
Agreement, seeking enforcement of this Agreement or to recover
damages for breach of this Agreement shall be borne by the
Corporation.
13. MODIFICATION, WAIVER, TERMINATION AND CANCELLATION. No
supplement, modification, termination, cancellation or amendment of this
Agreement shall be binding unless executed in writing by both of the parties
hereto. No waiver of any of the provisions of this Agreement shall be deemed
or shall constitute a waiver of any other provisions hereof (whether or not
similar), nor shall such waiver constitute a continuing waiver.
14. NOTICE BY INDEMNITEE AND DEFENSE OF CLAIM. Indemnitee shall
promptly notify the Corporation in writing upon being served with any
summons, citation, subpoena, complaint, indictment, information or other
document relating to any matter, whether civil, criminal, administrative or
investigative, but the omission so to notify the Corporation will not relieve
it from any liability which it may have to Indemnitee if such omission does
not prejudice the Corporation's rights. If such omission does prejudice the
Corporation's rights, the Corporation will be relieved from liability only to
the extent of such prejudice; nor will such omission relieve the Corporation
from any liability which it may have to Indemnitee otherwise than under this
Agreement. With respect to any Proceeding as to which Indemnitee notifies the
Corporation of the commencement thereof:
(a) The Corporation will be entitled to participate therein
at its own expense; and
(b) The Corporation jointly with any other indemnifying
party similarly notified will be entitled to assume the defense
thereof, with counsel reasonably satisfactory to Indemnitee;
PROVIDED, HOWEVER, that the Corporation shall not be entitled to
assume the defense of any Proceeding if Indemnitee shall have
reasonably concluded that there may be a conflict of interest
between the Corporation and Indemnitee with respect to such
Proceeding. After notice from the Corporation to Indemnitee of
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its election to assume the defense thereof, the Corporation will
not be liable to Indemnitee under this Agreement for any Expenses
subsequently incurred by Indemnitee in connection with the defense
thereof, other than reasonable costs of investigation or as
otherwise provided below. Indemnitee shall have the right to employ
his or her own counsel in such Proceeding but the fees and expenses
of such counsel incurred after notice from the Corporation of its
assumption of the defense thereof shall be at the expense of
Indemnitee unless:
(i) The employment of counsel by Indemnitee has been
authorized by the Corporation;
(ii) Indemnitee shall have reasonably concluded that
counsel engaged by the Corporation may not adequately represent
Indemnitee; or
(iii) The Corporation shall not in fact have employed
counsel to assume the defense in such Proceeding or shall not in
fact have assumed such defense and be acting in connection
therewith with reasonable diligence; in each of which cases the
fees and expenses of such counsel shall be at the expense of the
Corporation.
(c) The Corporation shall not settle any Proceeding in any
manner which would impose any penalty or limitation on Indemnitee
without Indemnitee's written consent; PROVIDED, HOWEVER, that
Indemnitee will not unreasonably withhold his or her consent to any
proposed settlement.
15. NOTICES. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if (i) delivered by hand and receipted for by the party to whom
said notice or other communication shall have been directed, or (ii) mailed
by certified or registered mail with postage prepaid, on the third business
day after the date on which it is so mailed:
(a) If to Indemnitee, to:
[INDEMNITEE'S NAME]
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(b) If to the Corporation, to:
WD-40 Company
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Attention: President
or to such other address as may have been furnished to Indemnitee by the
Corporation or to the Corporation by Indemnitee, as the case may be.
16. NONEXCLUSIVITY. The rights of Indemnitee hereunder shall
not be deemed exclusive of any other rights to which Indemnitee may now or in
the future be entitled under the Delaware General Corporation Law, the
Certificate of Incorporation or the Bylaws of the Corporation, or any
agreements, vote of stockholders, resolution of the Board of Directors or
otherwise.
17. CERTAIN DEFINITIONS.
(a) "Disinterested Director" shall mean a director of the
Corporation who is not or was not a party to the Proceeding in
respect of which indemnification is being sought by Indemnitee.
(b) "Expenses" shall include all direct and indirect costs
(including, without limitation, attorneys' fees, retainers, court
costs, transcripts, fees of experts, witness fees, travel expenses,
duplicating costs, printing and binding costs, telephone charges,
postage, delivery service fees, all other disbursements or
out-of-pocket expenses and reasonable compensation for time spent
by Indemnitee for which he or she is otherwise not compensated by
the Corporation) actually and reasonably incurred in connection
with a Proceeding or establishing or enforcing a right to
indemnification under this Agreement, applicable law or otherwise;
provided, however, that
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"Expenses" shall not include any Liabilities.
(c) "Final Adverse Determination" shall mean that a
determination that Indemnitee is not entitled to indemnification
shall have been made pursuant to Section 9 hereof and either (1) a
final adjudication in a Delaware court pursuant to Section 12(a)
hereof shall have denied Indemnitee's right to indemnification
hereunder, or (2) Indemnitee shall have failed to file a complaint
in a Delaware court pursuant to Section 12(a) for a period of one
hundred twenty (120) days after the determination made pursuant to
Section 9 hereof.
(d) "Indemnification Period" shall mean the period of time
during which Indemnitee shall continue to serve as a director or as
an officer of the Corporation or any subsidiary of the Corporation,
and thereafter so long as Indemnitee shall be subject to any
possible Proceeding arising out of acts or omissions of Indemnitee
as a director or as an officer of the Corporation or any subsidiary
of the Corporation.
(e) "Independent Legal Counsel" shall mean a law firm or a
member of a law firm selected by the Corporation and approved by
Indemnitee (which approval shall not be unreasonably withheld) and
that neither is presently nor in the past five years has been
retained to represent: (i) the Corporation or any subsidiary of the
Corporation, in any material matter, or (ii) any other party to the
Proceeding giving rise to a claim for indemnification hereunder.
Notwithstanding the foregoing, the term "Independent Legal Counsel"
shall not include any person who, under the applicable standards of
professional conduct then prevailing, would have a conflict of
interest in representing either the Corporation or Indemnitee in an
action to determine Indemnitee's right to indemnification under
this Agreement.
(f) "Liabilities" shall mean liabilities of any type
whatsoever including, but not limited to, any judgments, fines,
ERISA excise taxes and penalties, penalties and amounts paid in
settlement (including all interest assessments and other charges
paid or payable in connection with or in respect of such judgments,
fines, penalties or amounts paid in settlement) of any Proceeding.
(g) "Proceeding" shall mean any threatened, pending or
completed action, claim, suit, arbitration, alternate dispute
resolution mechanism, investigation, administrative hearing or any
other proceeding whether civil, criminal, administrative or
investigative, including any appeal therefrom.
18. BINDING EFFECT, DURATION AND SCOPE OF AGREEMENT. This
Agreement shall be binding upon and inure to the benefit of and be
enforceable by the parties hereto and their respective successors and assigns
(including any direct or indirect successor by purchase, merger,
consolidation or otherwise to all or substantially all of the business or
assets of the Corporation), spouses, heirs and personal and legal
representatives. This Agreement shall continue in effect during the
Indemnification Period, regardless of whether Indemnitee continues to serve
as a director or as an officer of the Corporation or any subsidiary of the
Corporation.
19. SEVERABILITY. If any provision or provisions of this
Agreement (or any portion thereof) shall be held to be invalid, illegal or
unenforceable for any reason whatsoever:
(a) the validity, legality and enforceability of the
remaining provisions of this Agreement shall not in any way be
affected or impaired thereby; and
(b) to the fullest extent legally possible, the provisions
of this Agreement shall be construed so as to give effect to the
intent of any provision held invalid, illegal or unenforceable.
20. GOVERNING LAW AND INTERPRETATION OF AGREEMENT. This
Agreement shall be governed by and construed and enforced in accordance with
the laws of the State of Delaware, as applied to contracts between Delaware
residents entered into and to be performed entirely within Delaware. If the
laws of the State of Delaware are hereafter amended to permit the Corporation
to provide broader indemnification rights than said laws permitted the
Corporation to provide prior to such amendment, the rights of indemnification
and advancement of expenses conferred by this Agreement shall automatically
be broadened to the fullest extent permitted by the laws of the State of
Delaware, as so amended.
21. CONSENT TO JURISDICTION. The Corporation and Indemnitee
each irrevocably consent to the jurisdiction of the courts of the State of
Delaware for all purposes in connection with any action or proceeding which
arises out of or relates to this Agreement and agree that any action
instituted under this Agreement shall be brought only in the state courts of
the State of Delaware.
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22. ENTIRE AGREEMENT. This Agreement represents the entire
agreement between the parties hereto, and there are no other agreements,
contracts or understandings between the parties hereto with respect to the
subject matter of this Agreement, except as specifically referred to herein
or as provided in Section 16 hereof.
23. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an
original but all of which together shall constitute one and the same
Agreement.
IN WITNESS WHEREOF, this Agreement is executed and delivered as of
the date first set forth above.
WD-40 COMPANY
By:
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Title:
-------------------------------------
INDEMNITEE
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[INDEMNITEE'S NAME]
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PROXY WD-40 COMPANY PROXY
1061 Cudahy Place
San Diego, CA 92110
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, revoking previous proxies for such stock, hereby appoints John
S. Barry and Harlan F. Harmsen, and each of them, proxies of the undersigned,
with power of substitution to each, to vote all stock of WD-40 Company which the
undersigned is entitled to vote at the Annual Meeting of Shareholders of the
Company to be held at the Mission Valley Doubletree Hotel, Grand Ballroom, 901
Camino del Rio South, San Diego, California 92108, on Tuesday, December 14, 1999
at 2:00 p.m. and at any adjournments thereof.
Please mark, sign, date
and return the proxy card
promptly using the
enclosed envelope
<PAGE>
MANAGEMENT RECOMMENDS A VOTE FOR THE FOLLOWING ITEMS:
<TABLE>
<CAPTION>
WITHHOLD FOR ALL
FOR ALL FOR ALL EXCEPT
<S> <C> <C> <C>
1. ELECTION OF DIRECTORS: Nominees:
01-J.S. Barry, 02-M.L. Crivello, 03-D.W. Derbes,
04-H.F. Harmsen, 05-J.L. Heckel, 06-G.O. Ridge,
07-M.L. Roulette, 08-G.C. Schleif, 09-C.F. Sehnert,
10-E.J. Walsh
(INSTRUCTIONS: To withhold authority to vote for
any nominee(s), write that nominee's name on the
space provided below.)
---------------------------------------
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
2. To change the state of incorporation of
the Company from California to Delaware. / / / / / /
3. To increase the number of authorized shares
of common stock of the Company from
18,000,000 to 36,000,000. / / / / / /
4. To ratify the selection of
PricewaterhouseCoopers LLP as the Company's
independent accountants for fiscal year 2000. / / / / / /
</TABLE>
Dated: , 1999
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Signature:
--------------------
Title:
-------------------------
Important: Please sign exactly as name appears on this proxy.
When signing as attorney, executor, guardian, corporate officer, etc.,
please indicate full title.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1, 2, 3 AND 4.
