<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C.
20549
-----------------------------------
FORM 10-Q
QUARTERLY REPORTS UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended November 30, 1999
Commission File No. 0-6936-3
WD-40 COMPANY
(Exact Name of Registrant as specified in its charter)
Delaware 95-1797918
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1061 Cudahy Place, San Diego, California 92110
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (619) 275-1400
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days:
Yes X No
------ ------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
<TABLE>
<S> <C>
Common Stock as of Jan 5, 1999 15,460,491
</TABLE>
<PAGE>
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
WD-40 COMPANY
CONSOLIDATED CONDENSED BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
(unaudited)
November 30, 1999 August 31, 1999
----------------- ---------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 8,129,000 $ 9,935,000
Trade accounts receivable, less allowance for
cash discounts and doubtful accounts
of $768,000 and $710,000 22,427,000 28,646,000
Product held at contract packagers 1,236,000 1,868,000
Inventories 6,290,000 6,104,000
Other current assets 4,314,000 5,594,000
----------------- ---------------
Total current assets 42,396,000 52,147,000
Property, plant, and equipment, net 4,447,000 3,861,000
Low income housing investments 3,295,000 3,312,000
Goodwill, net 30,205,000 30,792,000
Other assets 1,877,000 1,845,000
----------------- ---------------
$ 82,220,000 $ 91,957,000
================= ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 9,113,000 $ 11,262,000
Accrued payroll and related expenses 1,921,000 3,328,000
Income taxes payable 3,457,000 3,311,000
Current portion of long-term debt 2,461,000 2,461,000
----------------- ---------------
Total current liabilities 16,952,000 20,362,000
Long-term debt 10,660,000 14,065,000
Deferred employee benefits 1,395,000 1,356,000
----------------- ---------------
29,007,000 35,783,000
Shareholders' equity:
Common stock, no par value, 18,000,000 shares
authorized -- shares issued and outstanding
of 15,562,811 and 15,603,146 7,960,000 8,931,000
Paid-in capital 509,000 509,000
Retained earnings 44,493,000 46,420,000
Accumulated other comprehensive income 251,000 314,000
----------------- ---------------
Total shareholders' equity 53,213,000 56,174,000
----------------- ---------------
$ 82,220,000 $ 91,957,000
================= ===============
</TABLE>
(See accompanying notes to consolidated condensed financial statements.)
2
<PAGE>
WD-40 COMPANY
CONSOLIDATED CONDENSED STATEMENT OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
-------------------------------------------------
November 30,1999 November 30,1998
--------------------- -----------------------
<S> <C> <C>
Net sales $ 32,182,000 $ 29,617,000
Cost of product sold 14,735,000 13,116,000
------------------------ --------------------------
Gross profit 17,447,000 16,501,000
------------------------ --------------------------
Operating expenses:
Selling, general & administrative 8,354,000 7,573,000
Advertising & sales promotions 3,605,000 3,066,000
Amortization 599,000 269,000
------------------------ --------------------------
Income from operations 4,889,000 5,593,000
------------------------ --------------------------
Other income (expense)
Interest income (expense), net (205,000) 79,000
Other income (expense), net (56,000) 161,000
------------------------ --------------------------
Income before income taxes 4,628,000 5,833,000
Provision for income taxes 1,575,000 2,131,000
------------------------ --------------------------
Net Income $ 3,053,000 $ 3,702,000
======================== ==========================
Basic earnings per share $ 0.20 $ 0.24
======================== ==========================
Diluted earnings per share $ 0.20 $ 0.24
======================== ==========================
Basic common equivalent shares 15,570,449 15,596,751
======================== =======================
Diluted common equivalent shares 15,583,977 15,637,731
======================== =======================
</TABLE>
(See accompanying notes to consolidated condensed financial statements.)
3
<PAGE>
WD-40 COMPANY
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
-----------------------------------------------
November 30, 1999 November 30, 1998
----------------------- ----------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,053,000 $ 3,702,000
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 842,000 473,000
Gain on sale of equipment (6,000) (1,000)
Deferred income taxes (12,000) (3,000)
Changes in assets and liabilities:
Trade accounts receivable 6,198,000 5,706,000
Product held at contract packagers 632,000 622,000
Inventories (190,000) (349,000)
Other assets 1,252,000 551,000
Accounts payable and accrued expenses (3,554,000) (889,000)
Income taxes payable 150,000 741,000
Long-term deferred employee benefits 39,000 41,000
----------------------- --------------------
Net cash provided by operating activities 8,404,000 10,594,000
----------------------- --------------------
Cash flows from investing activities:
Decrease (increase) in short-term investments 157,000 (1,760,000)
Proceeds from sale of equipment 48,000 19,000
Capital expenditures (880,000) (374,000)
----------------------- --------------------
Net cash used in investing activities (675,000) (2,115,000)
----------------------- --------------------
Cash flows from financing activities:
Proceeds from issuance of common stock 47,000 359,000
Repurchase of common stock (1,019,000) (1,245,000)
Repayment of long-term debt (3,405,000) (5,000)
Dividends paid (4,980,000) (4,986,000)
----------------------- --------------------
Net cash used in financing activities (9,357,000) (5,877,000)
----------------------- --------------------
Effect of exchange rate changes on cash
and cash equivalents (22,000) (90,000)
----------------------- --------------------
Increase in cash and cash equivalents (1,650,000) 2,512,000
Cash and cash equivalents at beginning of period 9,741,000 8,572,000
----------------------- --------------------
Cash and cash equivalents at end of period $ 8,091,000 $ 11,084,000
======================= ====================
</TABLE>
(See accompanying notes to consolidated condensed financial statements.)
4
<PAGE>
WD-40 COMPANY
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
NOVEMBER 30, 1999
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries, WD-40 Manufacturing Company, WD-40 Company Ltd.
(U.K.), WD-40 Products (Canada) Ltd. and WD-40 Company (Australia) Pty. Ltd. All
significant intercompany transactions and balances have been eliminated.
The financial statements included herein have been prepared by the Company,
without audit, according to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations.
In the opinion of management, the unaudited financial information for the
interim periods shown reflects all adjustments (which include only normal,
recurring adjustments) necessary for a fair presentation thereof. These
financial statements should be read in conjunction with the financial statements
and notes thereto included in the Company's Annual Report on Form 10-K for the
year ended August 31, 1999.
USE OF ESTIMATES
The preparation of financial statements, in conformity with generally accepted
accounting principles, requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
EARNINGS PER SHARE
Common stock equivalents of 13,528 and 40,980 shares for the three months ended
November 30, 1999 and 1998 were used to calculate diluted earnings per share.
Common stock equivalents are comprised of options granted under the Company's
stock option plan. There were no reconciling items in calculating the numerator
for basic and diluted earnings per share for any of the periods presented. For
the three months ended November 30, 1999 and 1998, 339,784 and 135,600 options
outstanding were excluded from the calculation of diluted EPS, as their effect
would have been antidilutive.
5
<PAGE>
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(CONTINUED)
NEW PRONOUNCEMENT
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," as amended by
SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities -
Deferral of the Effective Date of FASB Statement No. 133, an Amendment of FASB
Statement No. 133." SFAS No. 133 standardizes the accounting for derivative
instruments by requiring that all derivatives be recognized as assets and
liabilities and measured at fair value. The Company will be required to adopt
this standard during the year ending August 31, 2001. The Company has not
determined what impact, if any, the adoption of SFAS No. 133 will have on the
Company's consolidated financial position or results of operations.
NOTE 2 - COMMITMENTS AND CONTINGENCIES
The Company is party to various claims, legal actions and complaints, including
product liability litigation, arising in the ordinary course of business. In the
opinion of management, all such matters are adequately covered by insurance or
will not have a material adverse effect on the Company's financial position or
results of operations.
NOTE 3 - COMPREHENSIVE INCOME
WD-40 Company's total comprehensive income was as follows:
<TABLE>
<CAPTION>
Three months ended November 30,
1999 1998
--------------- --------------
<S> <C> <C>
Net income $ 3,053,000 $ 3,702,000
Other comprehensive income (loss) net of related tax effects:
Foreign currency translation adjustments (63,000) (105,000)
--------------- --------------
Total comprehensive income $ 2,990,000 $ 3,597,000
=============== ==============
</TABLE>
NOTE 4 - SELECTED FINANCIAL STATEMENT INFORMATION
<TABLE>
<CAPTION>
November 30, 1999 August 31, 1999
----------------- ---------------
<S> <C> <C>
Inventories
Raw Materials $ 715,000 $ 520,000
Finished Goods 5,575,000 5,584,000
----------------- ---------------
$ 6,290,000 $ 6,104,000
================= ===============
</TABLE>
6
<PAGE>
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(CONTINUED)
<TABLE>
<CAPTION>
November 30, 1999 August 31, 1999
----------------- ---------------
<S> <C> <C>
Property, plant and equipment $ 8,469,000 $ 7,744,000
Accumulated depreciation (4,022,000) (3,883,000)
----------------- ---------------
$ 4,447,000 $ 3,861,000
================= ===============
Goodwill 34,991,000 34,991,000
Accumulated amortization (4,786,000) (4,199,000)
----------------- ---------------
$ 30,205,000 $ 30,792,000
================= ===============
</TABLE>
NOTE 5 - SUBSEQUENT EVENTS
On December 14, 1999, the Company's Board of Directors declared a cash dividend
of $.32 per share payable on January 28, 2000 to shareholders of record on
January 7, 2000.
From December 21, 1999 through January 3, 2000, the Company repurchased 102,320
shares of its common stock on the open market for a total cost of approximately
$1,996,500. These purchases were made pursuant to a plan authorized by the Board
of Directors for management to acquire up to five percent of the Company's
outstanding shares from time to time in the open market subject to available
cash flow and market conditions.
At the Company's Annual Meeting of Shareholders held on December 14, 1999,
shareholders approved a change in the Company's state of incorporation from
California to Delaware and an increase in the number of authorized shares of
common stock from 18 million to 36 million. The reincorporation was accomplished
on December 15, 1999.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Net sales were $32.2 million in the first quarter ended November 30, 1999, an
increase of 8.7% from net sales of $29.6 million in the comparable prior year
period. Sales for the Company's three trading blocs are broken down as follows
(in millions):
7
<PAGE>
<TABLE>
<CAPTION>
-------------------------------------------------
Three months ended November 30,
1999 1998
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Americas $ 21.0 65% $ 18.0 61%
Europe 7.9 25% 9.1 31%
Asia Pacific 3.3 10% 2.5 8%
- -----------------------------------------------------------------------------
TOTAL $ 32.2 100% $ 29.6 100%
- -----------------------------------------------------------------------------
</TABLE>
In the Americas region, sales for the first quarter ended November 30, 1999 were
up 17% over the prior year period, with increases in the U.S., Canada and Latin
America of 18%, 13% and 9% respectively. For the region, 82% of the sales in the
first quarter came from the U.S., and 18% came from Canada and Latin America.
This distribution reflects a slight change from the first quarter of fiscal 1999
in which 81% of the sales came from the U.S., and 19% came from Canada and Latin
America. A major reason for the increase in U.S. sales was the inclusion of
sales of the Lava brand of heavy-duty hand cleaners acquired in April 1999. Lava
sales were $2.1 million in the quarter, all in the U.S. In addition, sales of
WD-40 in the U.S. were up by $1.1 million due to the timing of promotions in the
quarter. Because of the high market penetration enjoyed by the WD-40 product
line as well as the extremely high percentage of WD-40 product sales to total
Company sales, the timing of promotions in the U.S. can have a material impact
on sales in any given quarter. Further, the ability to run a promotion is
somewhat outside the Company's control, as the retailer's own promotion schedule
is a major factor.
In Europe, first quarter sales were 14% lower than sales in the comparable
period of fiscal 1999, primarily due to lower sales volume in France and the
U.K. and the timing of purchases by distributors in the Middle East.
In the Asia/Pacific region, total sales were up 30% over the prior year period.
While the economic troubles continue to affect the economies of several of the
countries in the region, sales for the first quarter of the fiscal year were
strong. Sales in the region for the full year are expected to achieve the levels
recorded before the economic problems hit the region two years ago.
Gross profit was $17.4 million, or 54.2% of sales in the first quarter, up from
$16.5 million, or 55.7% of sales in the comparable period last year. Changes in
gross profit percentage from quarter to quarter are due primarily to changes in
average selling prices arising from both the mix of products sold and the mix of
customers and trade channels in which the products are sold. In addition, during
the first quarter, the Company incurred increased transportation costs related
to establishing Lava in the supply chain, as well as a higher level of price
discounting in response to competitive pressures in Latin America in advance of
moving to local manufacturing in the region. The Company expects continued
pressure on gross profit due to changes in its customer mix, as an increasing
portion of the Company's sales are made to fewer, but larger, customers with
greater purchasing power, negatively impacting selling prices and margins. The
Company has announced plans to raise the price of WD-40 in the U.S. effective
2/1/00 and this action should ease some of the pressure on gross profit.
8
<PAGE>
A breakdown of gross profit by trading bloc by period follows (in millions):
<TABLE>
<CAPTION>
--------------------------------------------------
Three months ended November 30,
1999 1998
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Americas $11.2 53.5% $9.9 55.2%
Europe 4.6 58.7% 5.3 58.5%
Asia/Pacific 1.6 48.1% 1.3 49.6%
- -------------------------------------------------------------------------------
Total $17.4 54.2% $16.5 55.7%
- -------------------------------------------------------------------------------
</TABLE>
Selling, general, & administrative expenses for the quarter ended November 30,
1999 increased to $8.4 million from $7.6 million for the comparable prior year
period. As a percentage of sales, SG&A increased slightly to 26.0% in the first
quarter from 25.6% last year. The increase in SG&A is due to an increased
investment in supply chain and information systems, restructuring of the sales
force, and increased freight costs on shipments to customers.
Advertising and sales promotion expense increased to $3.6 million for the first
quarter from $3.1 million for the first quarter last year. Advertising and sales
promotion as a percentage of sales increased to 11.2% in the first quarter from
10.4% in the comparable prior year period. The increase over the prior year is
primarily due to the timing of certain expenditures and promotions as well as
expenses related to the new Lava products. For the year the Company expects
advertising and sales promotion to be in the historical range of 10% of sales.
Amortization expense was $.6 million for the first quarter compared to $.3
million in the comparable period last year. The increased expense is due to the
amortization of goodwill associated with the Lava acquisition.
Income from operations was $4.9 million, or 15.2% of sales in the first quarter,
compared to $5.6 million, or 18.9% of sales in the first quarter of fiscal 1999.
The decline in income from operations as a percentage of sales was due to the
items discussed above, namely the lower gross profit percentage and increases in
SG&A, advertising and sales promotion and amortization costs.
The components of other income (expense) are shown below:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
For the three months ended
November 30,
1999 1998
- ------------------------------------------------------------------------------
<S> <C> <C>
Interest Income (Expense), net ($205,000) $79,000
Foreign Currency Gains (Losses) (64,000) 137,000
Loss on Disposal of PP&E 6,000 1,000
Other Income 2,000 23,000
-------------------------------------
TOTAL ($261,000) $240,000
- -------------------------------------------------------------------------------
</TABLE>
The change in interest income (expense) net from $79,000 of income for the
quarter ended November 30, 1998 to $205,000 of expense for the quarter ended
November 30, 1999 is due to the
9
<PAGE>
interest costs associated with the Lava acquisition. To finance this
acquisition, the Company obtained a $16.0 million term loan from a bank. Foreign
currency exchange produced losses of $64,000 for the first quarter compared to
gains of $137,000 for the comparable prior year period.
The Company's effective tax rate for fiscal 2000 is 34% compared to 36.5% for
the year ended August 31, 1999. The difference in the effective tax rates is
due to different allocations of taxable income between taxing jurisdictions
from year to year primarily as a result of operational changes within the U.S.
Net income was $3.1 million, or $.20 per share on a fully diluted basis in the
first quarter of the fiscal year, versus $3.7 million, or $.24 in the comparable
period last year.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents decreased by $1.8 million from $9.9 million at the end
of fiscal 1999 to $8.1 million at November 30, 1999. Accounts receivable
decreased by $6.2 million from $28.6 million to $22.4 million. Accounts
receivable was higher at the end of fiscal 1999 due to increased sales volumes
during the last two months of the year.
At November 30, 1999 working capital was $25.4 million, a decrease of $6.4
million from $31.8 million at the end of fiscal 1999. The current ratio of 2.5
at November 30, 1999 is slightly lower than the 2.6 at the end of fiscal 1999
primarily due to the Company's use of cash to repurchase shares of its common
stock. On September 30, 1998, the Company announced that its board of directors
had authorized the Company to repurchase up to five percent of its then
outstanding common shares. In fiscal 1999, the Company repurchased 53,620 shares
of the Company's common stock. During the first quarter of fiscal 2000, the
Company repurchased 43,279 shares of the Company's common stock at a cost of
$1.0 million. During the first quarter, current liabilities decreased by $3.4
million to $17.0 million at November 30, 1999.
The Company has an unsecured $20.0 million credit facility with Union Bank of
California. The line is comprised of a $16.0 million term loan which matures on
May 1, 2006 and a $4.0 million revolving line of credit facility which matures
on April 30, 2001. At November 30, 1999, $12.2 million remained due under the
term loan, and no borrowings were outstanding under the revolving line of
credit. This represents a decrease of $3.4 million in long-term debt from $15.6
million at August 31, 1999.
The Company's primary source of funds is cash flow from operations, which is
expected to provide sufficient funds to meet both short and long-term operating
needs, as well as future dividends. In an effort to augment the growth of the
business by leveraging its core competencies, the Company has announced that it
is seeking to make an acquisition of one or more branded products in related
markets. If the Company is successful in doing so, existing cash flow may not be
sufficient and additional outside financing may be required to support the
acquisition.
The Company spent $0.9 million for new capital assets during the first quarter,
primarily in the area of computer hardware and software and vehicle
replacements. In fiscal 2000, the Company
10
<PAGE>
expects to spend approximately $2.2 million for new capital assets, primarily
for computer hardware and software in support of sales and operations,
production molds for new products, and vehicle replacements in Europe.
YEAR 2000 ISSUE
In 1997, the Company established a project team, reporting to the Year 2000
Compliance Committee of the board of directors, to ensure an uninterrupted
transition to the year 2000. The project encompassed software, hardware, EDI,
supply chain systems, third party contract packagers, environmental and safety
systems, facilities, utilities, supplier readiness and other outside agencies.
The project team assessed all internal systems and acquired the necessary
computer hardware and software to assure compliance of its internal systems.
The Company also contacted all key service suppliers, subcontractors, electronic
commerce customers, and other customers to assess their compliance. The team
determined that these key third parties had also taken appropriate steps to
ensure compliance with year 2000 requirements.
The Company also had developed contingency plans in the event that either
internal systems or systems of key outside parties were not compliant. Costs
related to the year 2000 issue were expensed as incurred except for certain
hardware and software acquisition costs which were considered capital
expenditures. All costs related to the year 2000 issue have been funded through
operating cash flows, and have not been material.
The Company has not experienced any business disruption due to year 2000 issues
in the period from January 1, 2000 to date.
MARKET RISK
The Company is exposed to a variety of risks, including foreign currency
fluctuations and changes in the market value of its investments. In the normal
course of its business, the Company employs established policies and procedures
to manage its exposure to fluctuations in foreign currency values and changes in
the market value of its investments.
The Company's objective in managing its exposure to foreign currency exchange
rate fluctuations is to reduce the impact of adverse fluctuations in earnings
and cash flows associated with foreign currency exchange rate changes.
Accordingly, the Company's U.K. subsidiary utilizes forward contracts to hedge
its exposure on converting cash balances maintained in French francs, German
marks, Italian lira and Spanish pesetas into sterling. The Company regularly
monitors its foreign exchange exposures to ensure the overall effectiveness of
its foreign currency hedge positions. However, there can be no assurance the
Company's foreign currency hedging activities will substantially offset the
impact of fluctuations in currency exchange rates on its results of operations
and financial position.
11
<PAGE>
FORWARD LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for certain forward-looking statements. This report contains forward-looking
statements, which reflect the Company's current views with respect to future
events and financial performance.
These forward-looking statements are subject to certain risks and uncertainties.
The words "aim," "believe," "expect," "anticipate," "intend," "estimate" and
other expressions that indicate future events and trends identify
forward-looking statements.
Actual future results and trends may differ materially from historical results
or those anticipated depending upon factors including, but not limited to, the
rate of sales growth in Latin America, The Middle East, the Asia/Pacific region
and direct European countries, the impact of customer mix on gross margins, the
effect of increasing WD-40 selling prices on gross margins, the amount of future
advertising and promotional expenses, the effect of future income tax
provisions, the impact of one or more acquisitions, the amount of future capital
expenditures, foreign exchange rates and fluctuations in those rates, the
effects of, and changes in, worldwide economic conditions, particularly in the
Asia/Pacific region, the impact of the year 2000 issue, and legal proceedings.
Readers also should be aware that while the Company does, from time to time,
communicate with securities analysts, it is against the Company's policy to
disclose to them any material non-public information or other confidential
commercial information. Accordingly, shareholders should not assume that the
Company agrees with any statement or report issued by any analyst irrespective
of the content of the statement or report. Further, the Company has a policy
against issuing or confirming financial forecasts or projections issued by
others. Accordingly, to the extent that reports issued by securities analysts
contain any projections, forecasts or opinions, such reports are not the
responsibility of the Company.
12
<PAGE>
PART II OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
Certificate of Incorporation and Bylaws
3 (a) Certificate of Incorporation of WD-40 Company.
3 (b) Bylaws of WD-40 Company.
Material Contracts
10 The form of Indemnity Agreement between the
registrant and its executive officers and directors
is incorporated herein by reference from the
registrant's Proxy Statement filed by the registrant
with the SEC on November 9, 1999 (Appendix D
thereto.)
27 Financial Data Schedule (electronic filing only)
</TABLE>
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter
ended November 30, 1999.
SIGNATURES
- ----------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WD-40 COMPANY
Registrant
/s/ Thomas J. Tranchina
Date: January 14, 2000 -----------------------------
Thomas J. Tranchina
Chief Financial Officer
(Principal Financial Officer)
13
<PAGE>
Exhibit 3(a)
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
<PAGE>
(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:
(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
<PAGE>
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 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
3
<PAGE>
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
4
<PAGE>
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.
(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
5
<PAGE>
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.
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
6
<PAGE>
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: October 22, 1999 /s/
------------------------------------
Thomas J. Tranchina
7
<PAGE>
Exhibit 3(b)
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
<PAGE>
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.
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
-2-
<PAGE>
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:
(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.
-3-
<PAGE>
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
-4-
<PAGE>
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 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.
-5-
<PAGE>
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.
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.
-6-
<PAGE>
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.
-7-
<PAGE>
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.
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
-8-
<PAGE>
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.
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
-9-
<PAGE>
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.
-10-
<PAGE>
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.
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.
-11-
<PAGE>
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 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.
-12-
<PAGE>
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
-13-
<PAGE>
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 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
-14-
<PAGE>
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 October 22, 1999.
IN WITNESS WHEREOF, I have signed my name and affixed the seal of said
Corporation this 22nd day of October, 1999.
/s/
------------------------------
Thomas J. Tranchina
Secretary
(CORPORATE SEAL)
-15-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-31-2000
<PERIOD-START> SEP-01-1999
<PERIOD-END> NOV-30-1999
<CASH> 8,129,000
<SECURITIES> 0
<RECEIVABLES> 23,195,000
<ALLOWANCES> 768,000
<INVENTORY> 7,526,000
<CURRENT-ASSETS> 42,396,000
<PP&E> 8,469,000
<DEPRECIATION> 4,022,000
<TOTAL-ASSETS> 82,220,000
<CURRENT-LIABILITIES> 16,952,000
<BONDS> 0
0
0
<COMMON> 7,960,000
<OTHER-SE> 45,253,000
<TOTAL-LIABILITY-AND-EQUITY> 82,220,000
<SALES> 32,182,000
<TOTAL-REVENUES> 32,182,000
<CGS> 14,735,000
<TOTAL-COSTS> 8,953,000
<OTHER-EXPENSES> 56,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (79,000)
<INCOME-PRETAX> 4,628,000
<INCOME-TAX> 1,575,000
<INCOME-CONTINUING> 3,053,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,053,000
<EPS-BASIC> 0.20
<EPS-DILUTED> 0.20
</TABLE>
