PRELIMINARY
ARTRA GROUP INCORPORATED
500 Central Avenue
Northfield, Illinois 60093
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on August__, 1996
As a shareholder of ARTRA GROUP INCORPORATED (the "Company"), you are
invited to be present, or represented by proxy, at the Annual Meeting
of Shareholders, to be held at the Sheraton Northshore Hotel, 933
Skokie Boulevard, Northbrook, Illinois, on August__, 1996, at 11:00
a.m.
Chicago time, for the following purposes:
1. TO CONSIDER AND VOTE ON A PROPOSED AMENDMENT TO THE
COMPANY'S ARTICLES OF INCORPORATION TO ELIMINATE THE
STAGGERED ELECTION OF DIRECTORS EFFECTIVE AS OF THE
August__, 1996 MEETING.
2. To elect Peter R. Harvey, JOHN HARVEY, Gerard M. KENNY
Howard R. Conant, Maynard K. Louis AND Edward A. Celano
to the Board of Directors of the Company, for A term of
ONE (1) year.
3. To consider and vote on a proposed Amendment to the
Company's Articles of Incorporation to increase the
authorized common stock, without par value, of the
Company from 7,500,000 shares to 15,000,000 shares.
4. To consider and vote on the adoption of the Artra Group
Incorporated Stock Option Plan.
5. To consider and vote on the adoption of the Artra Group
Incorporated Disinterested Directors' Stock Option Plan.
6. To ratify the appointment of Coopers & Lybrand L.L.P. as
the Company's independent certified public accountants
for the fiscal years ended December 28, 1995 and ending
December 26, 1996. See "Selection of Auditors" in the
Proxy Statement.
7. To transact such other business as may properly be
brought before the meeting or any adjournment thereof.
<PAGE>
Shareholders of record at the close of business on July__, 1996
are entitled to vote at the Annual Meeting of Shareholders and all
adjournments thereof. Since a majority of the outstanding shares of the
Company's stock must be represented at the meeting in order to
constitute a quorum, all shareholders are urged either to attend the
meeting or to be represented by proxy.
If you do not expect to attend the meeting in person, please sign,
date and return the accompanying proxy in the enclosed reply envelope.
Your vote is important regardless of the number of shares you own. If
you later find that you can be present and you desire to vote in person
or, for any other reason, desire to revoke your proxy, you may do so at
any time before the voting.
By Order of the Board of Directors
Edwin G. Rymek, Secretary
July___, 1996
Have you moved? If so, please complete and return the change of address form on
the last page.
<PAGE>
ARTRA GROUP INCORPORATED
500 Central Avenue
Northfield, Illinois 60093
PROXY STATEMENT
This Proxy Statement and the Notice of Meeting and Form of Proxy accompanying
this Proxy Statement, which will be mailed on or about August__, 1996, are
furnished in connection with the solicitation by the Board of Directors of ARTRA
GROUP INCORPORATED ("ARTRA" or the "Company") of proxies to be voted at the
annual meeting of shareholders to be held at the Sheraton Northshore Hotel, 933
Skokie Boulevard, Northbrook, Illinois, on August__, 1996 at 11:00 a.m., Chicago
time, and any adjournments thereof.
Shareholders of record at the close of business on July__, 1996 (the "record
date") will be entitled to one vote at the meeting for each share then held. On
July__, 1996, the record date, there were ___________ shares of common stock of
ARTRA outstanding and 3,750 shares of Series A Preferred Stock of ARTRA
outstanding. On the matters presented to shareholders at this meeting, the
shares of Series A Preferred Stock are entitled to be voted on a combined basis
with the common stock and not on a class basis. Each preferred and common share
is entitled to one vote in person or by proxy, with the privilege of cumulative
voting in connection with the election of directors. All shares represented by
proxy will be voted in accordance with the instructions, if any, given in such
proxy. A shareholder may abstain from voting or may withhold authority to vote
for the nominees by marking the appropriate box on the accompanying proxy card,
or may withhold authority to vote for an individual nominee by drawing a line
through such nominee's name in the appropriate place on the accompanying proxy
card.
UNLESS INSTRUCTIONS TO THE CONTRARY ARE GIVEN, EACH PROPERLY EXECUTED
PROXY WILL BE VOTED, AS SPECIFIED BELOW:
(I) TO APPROVE AN AMENDMENT TO THE COMPANY'S ARTICLES OF
INCORPORATION TO ELIMINATE THE STAGGERED ELECTION OF DIRECTORS EFFECTIVE for
this August ___, 1996 MEETING.
(II) ELECT Peter R. Harvey, JOHN HARVEY, Gerard M. Kenny, Howard R.
Conant, Maynard K. Louis and Edward E. Celano AS DIRECTORS,
(III) Amend the Company's Articles of Incorporation to increase the
authorized common stock, without par value, of the Company from 7,500,000 shares
to 15,000,000 shares,
<PAGE>
(IV) To consider and vote on the adoption of the ARTRA GROUP
Incorporated Stock Option Plan.
(V) To consider and vote on the adoption of the ARTRA GROUP
Incorporated Disinterested Directors' Stock Option Plan, and
(VI) RATIFY THE APPOINTMENT OF COOPERS & LYBRAND L.L.P. AS THE
COMPANY'S INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS.
All proxies may be revoked and execution of the accompanying proxy will
not affect a shareholder's right to revoke it by giving written notice of
revocation to the Secretary at any time before the proxy is voted or by the
mailing of a later dated proxy. Any shareholder attending the meeting in person
may vote his or her shares even though he or she has executed and mailed a
proxy.
THIS PROXY STATEMENT IS BEING SOLICITED BY THE BOARD OF DIRECTORS OF
ARTRA. The expense of making this solicitation is being paid by the Company and
consists of the preparing, assembling and mailing of the Notice of Meeting,
Proxy Statement and Proxy, tabulating returns of proxies, and charges and
expenses of brokerage houses and other custodians, nominees or fiduciaries for
forwarding documents to shareholders. In addition to solicitation by mail,
officers and regular employees of the Company may solicit proxies by telephone,
telegram or in person without additional compensation therefor.
AMENDMENT TO THE ARTICLES OF INCORPORATION
TO ELIMINATE THE STAGGERED ELECTION OF THE
BOARD OF DIRECTORS
Currently, the Articles of Incorporation (Articles) provide that the
Board of Directors shall be elected for staggered terms, and, at its meetings,
ARTRA has typically elected 2 directors for three year terms during each annual
meeting period. ARTRA now proposes to amend the Articles to provide for the
election of all directors on an annual basis. The initial purpose of
establishing a staggered board of directors was premised on business factors
such as management's concern about unfriendly takeover, greenmail opportunities
due to a low number of common shares outstanding and other similar factors which
do not exist presently. Accordingly, the Company believes that it is in the best
interest of its shareholders that election of directors be changed as described
above, effective as of and for the election to be conducted at this meeting.
Upon acceptance by the ARTRA shareholders, a Company representative will then
present the previously executed Amended and Restated Articles of Incorporation
to the Department of State of the Commonwealth of Pennsylvania for filing and
acceptance, and the approval will then become effective on August__, 1996 prior
to the vote to elect directors.
In the event the shareholders do not approve the amendment as requested
in this Proxy Statement, the Board of Directors has identified the Nominees and
designated the expiration of their respective terms of office at the section of
this Proxy Statement entitled "Election of Directors" immediately following this
section.
<PAGE>
The Articles currently require that an 80% affirmative vote of the
Directors must approve the proposed action coupled with the affirmative vote of
a majority of the shareholders entitled to vote in order to satisfy the
requirements set forth in the current Articles and to effect the action to
eliminate the staggered election of directors, subject of course, to
shareholders' approval. On July __, 1996 the Board of Directors unanimously
adopted a resolution approving the deletion of the current Article SIXTH and the
substitution of Article SIXTH as set forth hereafter, and the deletion of the
current Article EIGHTH and the substitution of Article EIGHTH as also set forth
hereafter. (The Amended and Restated Articles of Incorporation with the
substituted Article SIXTH and Article EIGHTH are attached to this proxy
statement for the shareholders' reference.)
"SIXTH. The number of directors of the Corporation shall be
fixed, from time to time, in the manner provided in the
By-Laws. but in no event shall the number of directors be less
than six. No decrease in the number of directors shall shorten
the term of any incumbent director. Any vacancy occurring in
the Board of Directors caused by death, resignation, or
removal, and any newly created directorship resulting from an
increase in the number of directors, may be filled by a
majority of the directors in office, although less than a
quorum. Each director chosen to fill a vacancy or newly
created directorship shall hold office until the next election
for which such director shall have been chosen and until his
successor shall be duly elected and qualified."
"EIGHTH. The provisions of Article SEVENTH and this Article
EIGHTH may not be amended, altered, changed or repealed in any
respect unless such amendment, alteration, change or repeal is
approved by (i) the affirmative vote of the holders of shares
of Voting Stock of the Corporation representing at least 80%
of the votes entitled to be cast at a meeting of the
shareholders duly called for the consideration of such
amendment, alteration, change or repeal, or (ii) the
affirmative vote of at least 80% of the directors in office,
although less than a quorum, and the affirmative vote of the
holders of shares of Voting Stock of the Corporation
representing at least a majority of the votes entitled to be
cast at such meeting of shareholders."
The above amendments to the Articles also requires that the By-Laws be
amended to conform the election of directors requirement as stated above and the
elimination of the staggered election of directors. Attached to this proxy
statement is a copy of the amended By-Laws that have been approved by not less
than 80% of the members of the Board of Directors. The changes have been
highlighted in bold type at ARTICLE VII, AMENDMENTS. No other changes to the
By-Laws are required by the proposed actions.
<PAGE>
Series A Preferred Shareholders' Voting Rights
As of this time, ARTRA has outstanding 3,750 shares of its Series A
Preferred Stock (Series A) which have the right to cast one vote per share for
(i) election of directors, and (ii) for the proposed Amendment to the Articles.
The Statement establishing the Series A states: "...each share of the Series A
Stock shall entitle the holder thereof to one vote on all matters submitted to a
vote of ARTRA's shareholders, such voting rights to be indistinguishable with
the voting rights attributed to a share of ARTRA's common stock."
ELECTION OF DIRECTORS
ASSUMING THE APPROVAL OF THE PROPOSAL TO ELIMINATE THE ELECTION OF A
STAGGERED BOARD OF DIRECTORS, SIX directors are to be elected at the annual
meeting for a term of ONE (1) year expiring in 1997.
The Board of Directors has nominated Peter R. Harvey, JOHN HARVEY,
Gerard M. Kenny, Howard R. Conant, Maynard K. Louis AND Edward A. Celano for
election as directors for such terms. See "Information Concerning Directors and
Nominee" for a description of the business experience of, and other information
concerning Peter R. Harvey, JOHN HARVEY, Gerard M. Kenny, Howard R. Conant,
Maynard K. Louis AND Edward A. Celano. The By-laws of the Company require six
directors WHO ARE BEING nominated for election at this time.
Unless you indicate to the contrary, the persons named in the
accompanying proxy will vote it for the election of the nominees named below.
If, for any reason, a nominee should be unable to serve as a director
at the time of the meeting, a contingency which is not expected to occur, the
persons designated herein as proxies may not vote for the election of any other
person not named herein as a nominee for election to the Board of Directors.
INFORMATION CONCERNING DIRECTORS AND NOMINEE
The following table lists the name and age of each director and nominee
for director of ARTRA, his business experience during the past five (5) years,
his positions with ARTRA and certain directorships.
<PAGE>
NAME AGE POSITIONS AND EXPERIENCE
- - - ---- --- ------------------------
Term Expiring at Next Shareholders' Meeting at which Directors are Elected
John Harvey (1) 64 Chairman of the Board of Directors and Chief
Executive Officer of ARTRA; Director since
1968; Chairman of the Board of Directors,
1985 to the present, a Director from 1982 to
December 1995 and the Chief Executive
Officer from 1990 to November 1995 of
Comforce Corporation (temporary professional
employment, formerly The Lori
Corporation),("Comforce") an equity holding
of ARTRA representing 21% of Comforce
outstanding common stock; a Director of
Plastic Specialties and Technologies, Inc.
("PST") (textiles, hose and tubing); and
Director of Ozite Corporation ("Ozite"), the
majority parent of PST (textiles, hose and
tubing). Director of PureTec Corporation,
the successor by merger to Ozite.
Peter R. Harvey (2) 61 President and Chief Operating Officer and a
Director since 1968; Director of Comforce
(temporary professional employment, formerly
The Lori Corporation) from 1985 to December
1995 and a vice president through January
1996, an equity holding of ARTRA
representing 21% of Comforce outstanding
common stock; a former Director and Chief
Operating Officer of SoftNet Systems, Inc.
("SoftNet"). During 1995, Mr. Harvey
resigned from all of the Softnet offices,
formerly The Vader Group Inc. (image
processing and health care cost
containment); Vice President and Director of
Ozite Corporation, the majority parent of
PST (textiles, hose and tubing). Director of
PureTec Corporation, the successor by merger
to Ozite. Former Director of Rymer Foods
Inc., (portion control meat products and
seafood).
Gerard M. Kenny (3) 44 Director since 1988; Executive Vice
President and Director of Kenny Construction
Company since 1982 (diversified heavy
construction); General Partner of Clinton
Industries (investments), a limited
partnership since 1972.
<PAGE>
Edward A Celano(4) 57 Executive vice president of the Atlantic
Bank of New York since May 1, 1996, senior
vice president of National Westminster, USA
from 1984 through April 1996, corporate
finance.
Howard R. Conant (5) 71 Retired Chairman of the Board of Interstate
Steel Co., 1970 to 1990, and a consultant to
Interstate through 1992.
Maynard K. Louis (6) 66 Retired Chairman of the Board of Lord Label
(now known as Porter & Chatburn) from 1965
to 1989, VicePresident, 1989 to 1993, a
printing company, director of ARTRA from
1993 through 1995.
Directors are elected in three classes to serve for terms of three
years (or the balance of the term of the class) and until their successors have
been elected and qualified. The Articles of Incorporation require thatsix
persons serve on the Board of Directors for staggered terms, with two directors
elected annually. Three vacancies presently exist due to the failure of the
Company to identify persons qualified and willing to fill these vacancies. The
Company has been unable to identify candidates due to various factors, including
the severe financial difficulties the Company has experienced in recent years,
its inability to obtain directors liability insurance coverage and the risks of
personal liability that would be faced by any person serving on the Board.
In the event the shareholders do not approve the amendment to the Articles
eliminating the staggered expiration of the terms of the directors, the dates of
expiration of the directors currently to be elected are as follows::
(1) Term expires 1997
(2) Term expires 1998
(3) Term expires 1999
(4) Term expires 1997
(5) Term expires 1998
(6) Term expires 1999
John Harvey and Peter R. Harvey are brothers. Comforce was a 64.3%
owned subsidiary of ARTRA. ARTRA NOW OWNS 21% OF THAT COMPANY. See Footnote 6 to
the ARTRA consolidated financial statements for the year ended December 28, 1995
included in ARTRA's Form 10-K which is incorporated herein as though fully set
forth for a description of the transaction by and among ARTRA, Comforce and
others. See PureTec International, Inc., and PST are affiliates of ARTRA.
<PAGE>
Meetings of the Board of Directors
In 1995, the Board of Directors of the Company conducted no meetings.
The Board of Directors transacted business on 24 occasions by unanimous written
consent.
Committees
The Audit Committee, presently consisting only of Gerard M. Kenny, did
not meet in 1995. The Company has no nominating committees or other committees
which perform similar functions. The Company has an Executive Committee,
consisting of John Harvey and Peter R. Harvey. The Executive Committee did not
meet in 1995. An Option and Compensation Committee was formed to consider and
award options under the 1985 Stock Option Plan. The only current member of the
Option and Compensation Committee is Gerard M. Kenny. The Option and
Compensation Committee did not meet during 1995.
INFORMATION CONCERNING EXECUTIVE OFFICERS
Officers are appointed annually by the board of directors of ARTRA and
serve, at the pleasure of the Board, until the appointment of their successors.
There are no arrangements or understandings between any officer and another
person pursuant to which he was appointed to office except as hereinafter
described.
Set forth below is information concerning the executive officers and
other key employees of ARTRA who were in office as of July__, 1996.
Name Age Position
----------------- --- ----------------
John Harvey 64 Chairman of the Board
and Chief Executive Officer
Peter R. Harvey 61 President and Chief Operating Officer
John G. Hamm 57 Executive Vice President
Robert S. Gruber 62 Vice President - Corporate Relations
James D. Doering 59 Vice President, Treasurer
and Chief Financial Officer
John Conroy 52 Vice President - Corporate Administration
Lawrence D. Levin 44 Controller
Edwin G. Rymek 66 Secretary
John Harvey, Chairman and Chief Executive Officer See "Information
Concerning Directors" above for a description of Mr. Harvey's relevant business
experience.
<PAGE>
Peter R. Harvey, President and Chief Operating Officer See "Information
Concerning Directors" above for a description of Mr. Harvey's relevant business
experience.
John G. Hamm, Executive Vice President. Mr. Hamm has served as
Executive Vice President, since February 1988, and Vice President - Finance,
from 1975 until 1988. Mr. Hamm has also served as Vice President - Finance, from
August 1990 until July 1995, and as a Director, from 1984 until July 1995, of
Ozite Corporation. Mr. Hamm also serves as a Director of SoftNet Systems, Inc.
since 1985 and of PST from 1987 until January 1996.
Robert S. Gruber, Vice President - Corporate Relations. Mr. Gruber has
served as Vice President - Corporate Relations of ARTRA since 1975 and Lori
Corporation from 1975 to 1995. Mr. Gruber has served as a consultant to Comforce
during 1996.
James D. Doering, Vice President, Treasurer and Chief Financial
Officer. Mr. Doering has served as Vice President, since 1980, Treasurer, since
1987, Chief Financial Officer, since February 1988, and Controller, from 1980 to
1987. Mr. Doering has also served as Vice President and Chief Financial Officer
of Comforce (formerly Lori) from February 1988 through January 1996.
John Conroy, Vice President - Corporate Administration. Mr. Conroy
has served as Vice President Corporate Administration since March 1990. Prior
thereto, he served as Vice President - Corporate Administration of Sargent-Welch
Scientific Company from September 1988 to December 1989. Mr. Conroy previously
served in various risk management positions with ARTRA from 1978 to September
1988, most recently as Corporate Risk Director.
Lawrence D. Levin, Controller of ARTRA. Mr. Levin has served as
Controller, since 1987, Assistant Treasurer and Assistant Secretary, since 1980,
and Assistant Controller, from 1980 to 1987. Mr. Levin has also served as
Controller of Comforce (formerly Lori) from December 1989 through January 1996
and as the Assistant Chief Financial Officer of Comforce from May 1993 through
January 1996.
Edwin G. Rymek, Secretary. Mr. Rymek has served as Secretary since 1987
and Secretary of Comforce from 1982 through 1995.
Officers are appointed by the board of directors of ARTRA and its
subsidiaries and serve at the pleasure of each respective board. Except for the
relationship of Peter R. Harvey (a director and executive officer) and John
Harvey (a director and executive officer), who are brothers, there are no family
relationships among the executive officers and/or directors, nor are there any
arrangements or understandings between any officer and another person pursuant
to which he was appointed to office except as may be hereinafter described.
COMPENSATION
DIRECTORS' COMPENSATION
Directors who are not employees of ARTRA ("Outside Directors") are
entitled to receive an annual retainer of $4,000 and $250 per meeting attended;
however, no fees were paid to Outside Directors in 1995. Each Outside Director
who sits on an established committee of ARTRA is entitled to receive $150 per
committee meeting attended. Employees of ARTRA who also serve as directors
receive no additional compensation for such service.
<PAGE>
EXECUTIVE OFFICER COMPENSATION
The following table shows all compensation paid by ARTRA and its
subsidiaries for the fiscal years ended December 28, 1995 and December 29, 1994
and December 30, 1993, to the chief executive officer of ARTRA and each of its
four other most highly compensated executive officers who were serving as
executive officers of ARTRA as of December 28, 1995 and whose compensation
exceeded $100,000 in 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation(1) Long Term Compensation(1)
---------------------- -------------------------
Securities All
Underlying(3) Other
Name and Salary Salary Options - Compen-
Principal Positions Year Paid Deferred(2) Bonus No. of Shares sation
------------------- ---- ---- ----------- ----- ------------- ------
<S> <C> <C> <C> <C> <C> <C>
John Harvey, 1995 $126,200 $ -0- $ -0- -0- $2,520(4)
Chairman and Chief 1994 126,200 -0- -0- -0- 2,520(5)
Executive Officer 1993 126,200 -0- -0- 4,000 2,431(5)
James D. Doering, 1995 49,900 83,500 -0- -0- 3,470(4)
V.P. and Chief 1994 111,333 22,267 -0- -0- 3,000(5)
Financial Officer 1993 111,133 22,267 -0- 31,000 3,054(5)
John G. Hamm, 1995 49,900 83,500 -0- -0- 3,470(4)
Executive 1994 111,133 22,267 -0- -0- 3,000(5)
Vice President 1993 55,667 22,267 -0- 13,200 2,210(5)
Robert S. Gruber, 1995 92,000 69,000 -0- -0- 2,868(4)
Vice President 1994 -0- 18,400 -0- -0- 3,000(5)
Corporate Relations 1993 62,753 110,400 -0- 12,000 4,831(5)
- - - -----------------------
<FN>
(1) No additional annual compensation was paid, no restrictive stock awards
or stock appreciation rights were granted, and no long term incentive
plan payouts were made to any of the officers listed in the table. Only
compensation earned in 1995 (irrespective of the year in which paid) is
considered in determining inclusion in this table.
(2) Salaries are shown as paid (or deferred) in the year earned. Any
deferred salaries paid in a year subsequent to the year earned are not
shown as paid in such subsequent year. All salary deferrals for the
years 1993, 1994 and 1995 have been paid as of the date hereof.
(3) All of the options shown in this column were granted under the
Company's 1985 Stock Option Plan at an exercise price of $3.75 per
share, being the closing price of the Company's common stock on the New
York Stock Exchange on the date of grant (January 8, 1993). These
options expire January 8, 2003.
(4) These amounts include the Company's contributions to the 401(k) plan
and amounts contributed to the ARTRA GROUP Incorporated Employee Stock
Ownership Plan (the "ESOP") during 1995. See note (5) below for a
further discussion of the ESOP.
(5) These amounts represent the closing price on the New York Stock
Exchange of Common Stock as of the date the named officers became
entitled to receive the stock (i.e., December 29, 1994 and December 30,
1993) pursuant to the ESOP. Annual contributions were made to the ESOP
at the discretion of the Board of Directors. During 1995, ARTRA
contributed 15,000 common shares to the Plan with a fair market value
of $71,250 ($4.75 per share) for the plan year ending December 29, 1994
and 65,000 common shares to the Plan with a fair market value of
$423,000 ($6.50 per share) for the plan year ending December 30, 1993.
Effective August 1, 1995, the Company terminated the ESOP and is
currently is the process of distributing the related Employee accounts
to participants.
</FN>
</TABLE>
<PAGE>
AGGREGATED OPTION EXERCISES IN 1995 AND
OPTION VALUES AS OF DECEMBER 28, 1995
OPTION GRANTS IN 1995
No options to purchase capital stock of the Company or other stock
appreciation rights were granted by the Company in 1995 to any other executive
officers of the Company named in the Summary Compensation Table.
The following table sets forth information concerning the aggregate
number and values of options held by the Chief Executive Officer and the other
executive officers of the Company listed in the Summary Compensation Table as of
December 28, 1995 which were granted to such officers in consideration of their
services as officers or directors of the Company. No options held by the Chief
Executive Officer or any other executive officers of the Company listed in the
Summary Compensation Table were exercised in 1995.
AGGREGATED OPTION EXERCISES IN 1995 AND
OPTION VALUES AS OF DECEMBER 28, 1995
<TABLE>
<CAPTION>
Number of Value of Unexercised
Unexercised In-the-Money
Options at 12-28-95 Options at 12-28-95
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise Realized Unexercisable(1) Unexercisable(2)
- - - ------------------ --------------- --------- ------------------- ------------------
<S> <C> <C> <C> <C>
John Harvey 0 $ 0 80,000/ $ 117,600/None
0
James D. Doering 0 0 62,000/ 88,350/None
0
John G. Hamm 0 0 39,200/ 56,500/None
0
Robert S. Gruber 0 0 21,000/ 29,775/None
0
- - - -------------------------------
<FN>
(1) See the notes under "Principal Shareholders" for a description of the
options (including exercise prices) granted to each of the executive
officers listed in this table.
(2) The listed options were issued at per share exercise prices of from
$3.65 per share to $3.75 per share. The market price of Common Stock as
of the close of trading on December 28, 1995 on the New York Stock
Exchange was $5.125 per share.
</FN>
</TABLE>
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS and INSIDER PARTICIPATION
Authority to determine the compensation of executive officers is
conferred upon the Company's Board of Directors or, in the case of officers paid
by Bagcraft Corporation of America ("Bagcraft"), by Bagcraft's Board of
Directors. The salary of Mr. John Harvey was paid by Bagcraft.
ARTRA's Board did not consider the compensation of its officers in
1995. The decisions concerning the cash compensation of these executive officers
(including of John Harvey, the Chairman and Chief Executive Officer of ARTRA,
who was compensated by Bagcraft for his services as its Chairman) were made by
Peter R. Harvey, the President and Chief Operating Officer of ARTRA. Although
ARTRA has an Option and Compensation Committee formed to consider and award
options under ARTRA's 1985 Stock Option Plan, this committee did not meet in
1995. In December, 1995, the ARTRA Board awarded options to the Chief Executive
Officer and to certain executive officers subject to approval by the
shareholders of the proposed 1996 Stock Option Plan. Peter R. Harvey, John
Harvey and Gerard Kenny executed the consent approving these awards. These
awards were granted as compensation for late salary payments during the period
1991 to 1995. See "Transactions with Management and Others" for a description of
various transactions and relationships between the Company and each of these
directors.
PERFORMANCE INFORMATION
Set forth below in tabular form is a comparison of the total
shareholder return (annual change in share price plus dividends paid, if any,
assuming reinvestment of dividends when paid) assuming an investment of $100 on
the starting date for the period shown for ARTRA, the Dow Jones Equity Market
Index (a broad equity market index which includes the stock of companies traded
on the New York Stock Exchange) and the Dow Jones Industrial Diversified Index
(an index including companies that are involved in two or more industries in the
industrial market sector or whose products are used in many industries). No
dividends were paid on ARTRA common stock during the period shown. The return
shown is based on the annual percentage change during each fiscal year in the
five year period ended Decmber 28, 1995.
<TABLE>
<CAPTION>
Value of $100 Invested on December 31, 1990
----------------------------------------------------------------------
12/31/90 12/31/91 12/31/92 12/30/93 12/29/94 12/28/95
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
ARTRA common stock $100.00 $130.77 $ 61.54 $100.00 $ 78.85 $ 78.85
Dow Jones Equity Market Index $100.00 $132.44 $143.83 $158.74 $159.93 $219.78
Dow Jones Industrial Sector
Container and Packaging Index $100.00 $156.67 $171.61 $164.82 $163.30 $174.12
</TABLE>
<PAGE>
Securities Ownership of Certain Beneficial Owners
As of July __, 1996, there were ________ shares of Common Stock issued
and outstanding. The following table sets forth the number and percentage of
Common Stock known by management of ARTRA to be beneficially owned as of July
__, 1996 by (i) all stockholders known by management of ARTRA to own 5% or more
of ARTRA's Common Stock, (ii) all directors of ARTRA, (iii) each executive
officer included in the Summary Compensation Table and (iv) all directors,
executive officers and other key employees of ARTRA as a group (9 persons).
Unless stated otherwise, each person so named exercises sole voting and
investment power as to the shares of Common Stock so indicated.
As of July __, 1996, 3,750 shares of Series A Preferred Stock of
ARTRA, par value $1,000 per share, were issued and outstanding. Each share of
this Series A Preferred Stock entitles the holder to one vote on an equal basis
with each share of Common Stock. Accordingly, for purposes of showing ownership
of Common Stock in the table below, the Series A Preferred Stock is treated as
Common Stock.
PRINCIPAL SHAREHOLDERS
Research Center of Kabbalah(1) 600,772 8.0%
Peter R. Harvey(2), Common 398,176 5.3%
Preferred 1,523 40.6%
John Harvey(3) 276,596 3.6%
Gerard M. Kenny(4) 240,048 3.2%
Maynard K. Louis(5) 88,000 1.2%
Howard R. Conant(6) 95,000 1.1%
John G. Hamm(7) 42,248 0.6%
Robert S. Gruber(8) 40,481 0.5%
James D. Doering(9) 66,620 0.9%
All directors and
executive officers as a
group (11 persons)(3) 1,472,355 16.4%
Ozite Corporation, an affiliate of ARTRA by reason of Peter R. Harvey and John
Harvey being directors of both companies is the record holder of 2,227 shares
(59.4%) of the ARTRA Preferred of the 3,750 shares outstanding and may cast one
vote on each issue presented to the shareholders at this meeting.
___________________________________________
(1) The address of Research Center of Kabbalah ("RCK") is 83-84 115th
Street, Richmond Hill, New York 11418. The shares beneficially owned by RCK
consist of 514,522 shares of Common Stock owned directly, 21,250 shares of
Common Stock issuable under a warrant which expires October 29, 1998 at an
exercise price of $6.00 per share, and 65,000 shares of Common Stock issuable
under a warrant which expires December 31, 1998 at an exercise price of $7.00
per share.
(2) Mr. Peter R. Harvey's business address is 500 Central Avenue,
Northfield, Illinois 60093. The shares beneficially owned by Mr. Harvey consist
of 331,548 shares held directly by him (of which 300,725 shares are Common Stock
and 1,523 are shares of Series A Preferred Stock), 23,001 shares held as trustee
for the benefit of his nieces, 800 shares owned by his wife and children, 634
shares held in his ESOP account, 7,193 shares held in his individual retirement
account, 20,000 shares issuable under an option which expires September 19, 2001
at an exercise price of $3.65 per share and 15,000 shares issuable under an
option which expires January 8, 2003 at an exercise price of $3.75 per share.
(3) Mr. John Harvey's business address is 500 Central Avenue, Northfield,
Illinois 60093. The shares of Common Stock beneficially owned by Mr. Harvey
consist of 123,100 shares held directly by him, 1,705 shares held in his ESOP
account, 5,746 shares held in his individual retirement account, 75,000 shares
issuable under an option which expires December 19, 2000 at an exercise price of
$3.65 per share, 1,000 shares issuable under an option which expires September
19, 2001 at an exercise price of $3.65 per share, 4,000 shares issuable under an
option which expires January 8, 2003 at an exercise price of $3.75 per share,
and an aggregate of 66,045 shares issuable under warrants expiring at various
dates in 2000 and 2001 received in 1995 and 1996 as additional compensation for
1995 and 1996 short-term loans at exercise prices of $3.75 per share to $6.125
per share.
<PAGE>
(4) The shares beneficially owned by Mr. Kenny consist of 2,000 shares of
ARTRA's common stock issuable upon the exercise of an option at $10.00 per share
expiring November 28, 1996, 75,652 shares held by (or issuable to) Kenny
Construction Company, 14,411 shares held by Clinton Industries, and 75,001
shares issuable under a warrant held by Clinton Industries which expires
November 10, 1997 at an exercise price of $5.00 per share. Kenny Construction
Company holds put options to sell to ARTRA (i) 23,004 shares of Common Stock for
a put price of $56.76 per share plus an amount equal to 15% per annum for each
day from March 1, 1991 to the date of payment by ARTRA, which put option expires
December 31, 1997, and (ii) 49,980 shares of Common Stock for a put price of
$15.00 per share, subject to an annual increase of $2.25, which put option is
exercisable on the later of the date ARTRA's obligations to Bank of America are
repaid or the $2,500,000 note of ARTRA payable to Kenny Construction Company (as
described in paragraph 5 under "Transactions with Management and Others." If the
stock subject to the put is sold at a price less than the put price, the Company
would remain liable to the holder of the put for the amount by which the put
price of the shares exceeds the selling price. Mr. Kenny is Executive Vice
President, Director and beneficial owner of 16.66% of the issued and outstanding
stock of Kenny Construction Company. He is also the General Partner and a 14.28%
beneficial owner of Clinton Industries, a limited partnership. See paragraphs 4
and 5 under "Transactions with Management and Others."
(5) Mr. Louis is the holder of warrants to purchase 88,000 shares of ARTRA
common stock at prices of $4.50 to $7. which warrants expire on various dates
commencing in 1997 and ending October 1, 2000. Comforce is currently indebted to
Mr. Louis in the sum of $50,000. Mr. Louis owns 5,000 shares of Comforce common
stock and warrants to purchase 5,000 shares of Comforce common stock at $2. per
share expiring September 11, 2000.
(6) Mr. Conant holds 80,000 ARTRA common shares directly, Mrs. Howard
Conant holds 5,000 ARTRA common shares and Mr. Conant holds a warrant to acquire
10,000 shares of ARTRA common stock at $4.75 per share which warrant expires
Feb. 1, 2000. Mr. Conant owns 130,000 shares of Comforce and warrants to
purchase 30,000 shares of Comforce common stock at $2.00 per share expiring
September 11, 2000 and 50,000 shares Comforce at $3.375 per share which warrant
expires October 17, 2000. A. G. Holding Inc., a wholly-owned subsidiary of
ARTRA, is indebted to Mr. Conant in the sum of $200,000 and Comforce was
formerly indebted to Mr. Conant in the sum of $300,000 which was repaid in May
1996.
(7) The shares of Common Stock beneficially owned by Mr. Hamm consist of 50
shares held directly by him, 93 shares held by him and his wife jointly, 1,639
shares held in his 401(k) plan, 1,266 shares held in his ESOP account, 25,000
shares issuable under an option which expires December 19, 2000 at an exercise
price of $3.65 per share, 1,000 shares issuable under an option which expires
September 19, 2001 at an exercise price of $3.65 per share, and 13,200 shares
issuable under an option which expires January 8, 2003 at an exercise price of
$3.75 per share.
(8) The shares of Common Stock beneficially owned by Mr. Gruber consist of
17,317 shares held directly by him, 943 shares held in his ESOP account, 1,221
shares held in his individual retirement account, 8,000 shares issuable under an
option which expires December 19, 2000 at an exercise price of $3.65 per share,
1,000 shares issuable under an option which expires September 19, 2001 at an
exercise price of $3.65 per share, and 12,000 shares issuable under an option
which expires January 8, 2003 at an exercise price of $3.75 per share.
(9) The shares of Common Stock beneficially owned by Mr. Doering consist of
2,000 shares held by him in joint tenancy with his wife, 1,693 shares held in
his ESOP account, 1,118 shares held in his individual retirement account, 25,000
shares issuable under an option which expires December 19, 2000 at an exercise
price of $3.65 per share, 6,000 shares issuable under an option which expires
September 19, 2001 at an exercise price of $3.65 per share, and 31,000 shares
issuable under an option which expires January 8, 2003 at an exercise price of
$3.75 per share.
<PAGE>
Effective October 17, 1995, Comforce, formerly a 64% owned subsidiary of
ARTRA, acquired all of the capital stock of Comforce Global, Inc. ("Global"),
formerly Spectrum Global Services, Inc. d/b/a YIELD Global, for consideration of
approximately $6.4 million, net of cash acquired. This consideration consisted
of cash to the seller of approximately $5.1 million, fees of approximately
$700,000, including a fee of $500,000 to a related party, and 500,000 shares of
Comforce common stock to be issued as consideration for various fees and
guarantees associated with the transaction. The 500,000 shares issued by
Comforce consisted of (i) 100,000 shares were issued to an unrelated party for
guaranteeing the purchase price to the seller, (ii) 100,000 shares to be issued
to ARTRA in consideration of its guaranteeing the purchase price to the seller
and agreeing to enter into a liability assumption agreement as discussed below,
100,000 additional shares to be issued to ARTRA in exchange for Comforce
Preferred Shares owned by ARTRA; (iii) 150,000 shares issued to two unrelated
parties for advisory services in connection with the acquisition, and (iv)
150,000 shares to be issued to Peter R. Harvey, then a vice president and
director of Comforce, for guaranteeing the payment of the purchase price (and
pledging securities as collateral for the guaranty) to the seller and other
guarantees to facilitate the transaction. The shares to be issued to Peter R.
Harvey and ARTRA are subject to ratification by Comforce's stockholders. These
transactions have been approved by Comforce's Board of Directors and current
management personnel and ARTRA, which together own a majority of the outstanding
common shares of Comforce and, therefore, such ratification is expected.
Additionally, in conjunction with the Global acquisition, ARTRA agreed to assume
substantially all pre-existing Lori liabilities and indemnify Comforce in the
event any future liabilities arise concerning pre-existing environmental matters
and business related litigation.
In the fourth quarter of 1995, ARTRA exchanged its interest in the entire
issue of Comforce Series C cumulative preferred stock for 100,000 shares of
Comforce common stock. The issuance of these Comforce common shares to ARTRA are
subject to approval by the Comforce's shareholders. During 1995, ARTRA received
$399,000 of advances from Comforce. In 1996, Comforce advanced ARTRA an
additional $54,000. Through May 31, 1996 ARTRA repaid the above advances and
paid down, assumed or otherwise settled approximately $2,.300,000 of the
pre-existing Comforce liabilities it assumed in conjunction with the Comforce
Global acquisition.
John Harvey was the chief executive officer and the chairman of the board
of Comforce until November 1995. Peter R. Harvey was a vice president and a
director of Comforce through January 1, 1996. James D. Doering was the vice
president and chief financial officer of Comforce through January 1996. Lawrence
D. Levin was the controller and assistant chief financial officer of Comforce
through January 1996. Edwin Rymek was the secretary of Comforce through November
1995.
In January 1995, ARTRA borrowed $100,000 from John Harvey on a short-term
basis evidenced by a note due March 20, 1995 and bearing interest at 8% per
annum. This loan, as well as other short-term borrowings from John Harvey,
aggregating $175,000 at December 28, 1995, have been renewed as they matured
during 1995. In February 1996 ARTRA repaid $50,000 to Mr. Harvey. In May 1996
ARTRA repaid Mr. Harvey's loans and related accrued interest in their entirety.
As additional compensation the loans provided for the issuance of warrants to
purchase ARTRA common shares, as determined by the number of days the loans are
outstanding. John Harvey received warrants to purchase an aggregate of 66,045
shares of ARTRA common stock at prices ranging from $3.75 to $6.125 per share as
additional compensation for his loans to ARTRA.
<PAGE>
During 1990 and 1991, ARTRA made advances to Peter R. Harvey, of which
$820,000 (including $112,000 in accrued interest) remained outstanding at
December 30, 1993. The outstanding principal balance of these advances bears
interest at the prime rate plus 2%. ARTRA had previously borrowed funds from Mr.
Harvey evidenced by a $2,000,000 ARTRA note payable to him. Upon Mr. Harvey's
surrender of this note to ARTRA (which note had previously been pledged by him
to secure obligations he owed to another company), ARTRA applied the $2,000,000
to amounts due from him.
In addition to the advances made directly by ARTRA, certain advances were
previously made to Mr. Harvey by Bagcraft prior to its acquisition by ARTRA in
1990. In December 1993, $1,894,000, representing the total amount of these
advances (including accrued interest of $120,000) was transferred from ARTRA's
Bagcraft subsidiary to ARTRA as a dividend (a portion of which interest has been
reserved on ARTRA's books).
In February 1996, a bank agreed to discharge all amounts under its ARTRA
notes ($12,063,000 plus accrued interest) and certain obligations of ARTRA's
president, Peter R. Harvey for ARTRA's cash payment of $5,050,000, Mr. Harvey's
cash payment of $100,000 and Mr. Harvey's $850,000 note payable to the bank.
ARTRA recognized a gain on the discharge of this indebtedness in the first
quarter of 1996 in the sum of $9,424,000. Of the amount of the $5,050,000 cash
payment to the bank applicable to Peter R. Harvey, $1,089,000 was charged to
amounts due from Peter R. Harvey. As collateral for this advance and other
previous advances, Mr. Harvey provided ARTRA a $2,150,000 security interest in
certain real estate. See also the section in this Proxy Statement entitled
"Settlement of the Bank of America Illinois Debt" for additional information.
In May 1991, ARTRA's Fill-Mor subsidiary made advances to Peter R. Harvey.
The advances, made out of a portion of the proceeds of a short-term bank loan,
bear interest at the prime rate plus 2%. The amount of these advances at March
30, 1995 was $1,540,000 (including $398,000 of accrued interest). In April,
1995, these advances from ARTRA's Fill-Mor subsidiary to Peter R. Harvey were
transferred to ARTRA as a dividend.
The aggregate amount of all advances to Mr. Harvey which remained
outstanding as of May 28, 1996 was $3,704,953. ARTRA has accrued interest in the
sum of $1,395,434 on the principal owed to it by Mr. Harvey. Commencing January
1, 1993 to date, interest on these advances to Peter R. Harvey has been accrued
and fully reserved.
Peter R. Harvey has not received compensation for his services other than
nominal amounts as an officer or director of ARTRA or any of its subsidiaries
since October 1990. Additionally, Mr. Harvey has agreed not to accept any
compensation for his services as an officer or director of ARTRA or any of its
subsidiaries until his obligations to ARTRA, described above, are fully
satisfied. Additionally, since December 31, 1986, Peter R. Harvey has guaranteed
approximately $40,000,000 of ARTRA obligations to private and institutional
lenders (John Harvey also was a co-guarantor of a $26,700,000 loan included in
that total with Peter R. Harvey), and has also hypothecated personal assets as
security for the ARTRA obligations which are described in this proxy statement.
<PAGE>
Under Pennsylvania Business Corporation Law of 1988, ARTRA (a Pennsylvania
corporation) is permitted to make loans to officers and directors. Further,
under the Delaware General Corporation Law, Fill-Mor (a Delaware corporation) is
permitted to make loans to an officer (including any officer who is also a
director, as in the case of Peter R. Harvey), whenever, in the judgment of the
directors, the loan can reasonably be expected to benefit Fill-Mor. At the
September 19, 1991 meeting, ARTRA's Board of Directors discussed but did not act
on a proposal to ratify the advances made by ARTRA to Peter R. Harvey. The 1992
advances made by ARTRA to Peter R. Harvey were ratified by ARTRA's Board of
Directors. In the case of the loan made by Fill-Mor to Peter R. Harvey, the
Board of Directors of Fill-Mor approved the borrowing of funds from Fill-Mor's
bank loan agreement, a condition of which was the application of a portion of
the proceeds thereof to the payment of certain of Peter R. Harvey's loan
obligations to the bank. However, the resolutions did not acknowledge the use of
such proceeds for this purpose and the formal loan documents with the bank did
not set forth this condition (though in fact, the proceeds were so applied by
the bank).
Please see the section entitled "Artra Participation in Peter Harvey Note,
Collateral Provided to Artra" hereafter for a description of pledges, mortgage
and security interests granted to ARTRA on assets owned by Peter R. Harvey.
During 1986 and through August 10, 1988, ARTRA entered into a series of
short-term borrowing agreements with private investors. Each agreement granted
an investor a put option, principally due in one year, that required ARTRA to
repurchase any or all of the shares sold at a 15% to 20% premium during a
specified put period. Kenny Construction Company ("Kenny") entered into a put
option agreement with ARTRA, which has been extended from time to time, most
recently on November 11, 1992. At such time ARTRA and Kenny agreed to extend the
put option whereby Kenny received the right to sell to ARTRA 23,004 shares of
ARTRA common stock at a put price of $56.76 plus an amount equal to 15% per
annum for each day from March 1, 1991 to the date of payment by ARTRA, which
option expires December 31, 1997.
Gerard M. Kenny, a director of ARTRA, is the Executive vice-president and
Chief Executive Officer and a director of Kenny and beneficially owns 16.66% of
Kenny's capital stock.
On March 21, 1989, ARTRA borrowed $5,000,000 from its bank lender evidenced
by a promissory note. This note has been amended and extended from time to time.
The borrowings on this note were collateralized by, among other things, a
$2,500,000 personal guaranty by Kenny (see paragraph 4 above for a discussion of
Mr. Gerard M. Kenny's relationship with Kenny). Kenny received compensation in
the form of 833 shares of ARTRA common stock for each month that its guaranty
remained outstanding through March 31, 1994. Under this arrangement, Kenny
received 49,980 shares of ARTRA common stock as compensation for its guaranty.
<PAGE>
On March 31, 1994, ARTRA entered into a series of agreements with its bank
lender and with Kenny. Under the terms of these agreements, Kenny purchased a
$2,500,000 participation in the $5,000,000 note payable to ARTRA's bank lender.
Kenny's participation is evidenced by a $2,500,000 ARTRA note (the "Kenny Note")
bearing interest at the prime rate. As consideration for its purchase of this
participation, the bank lender released Kenny from its $2,500,000 loan guaranty.
As additional consideration, Kenny received an option to put back to ARTRA the
49,980 shares of ARTRA common stock received as compensation for its $2,500,000
ARTRA loan guaranty at a price of $15.00 per share. The put option is subject to
increase at the rate of $2.25 per share per annum ($19.50 at May 31, 1996). The
put option is exercisable on the later of the date the Kenny Note is repaid or
the date ARTRA's obligations to its bank lender are fully paid.
On September 27, 1989, ARTRA received a proposal to purchase Bagcraft from
Sage Group, Inc. ("Sage"), a privately-owned corporation. Effective March 3,
1990, a wholly-owned subsidiary of ARTRA indirectly acquired from Sage 100% of
the issued and outstanding common shares of BCA Holdings, Inc., which in turn
owned 100% of the stock of Bagcraft, for total consideration which was delivered
to Ozite as the successor by merger to Sage, upon approval of ARTRA's
shareholders. The consideration for the Bagcraft acquisition consisted of
772,000 shares of ARTRA's common stock and 3,750 shares of its $1,000 par value
junior non-convertible payment-in-kind preferred stock bearing a dividend rate
of 6%. The issuance of the ARTRA Common and Preferred Stock as consideration was
approved by ARTRA's shareholders at the December 1990 annual meeting of
shareholders. Upon the merger of Sage into Ozite on August 24, 1990, Ozite
became entitled to receive this consideration, which right Ozite assigned to its
PST subsidiary. Peter R. Harvey, ARTRA's President, and John Harvey, ARTRA's
Chairman of the Board of Directors, were the principal shareholders of Sage and
Ozite as of the times that the merger agreements were executed and the mergers
consummated.
Ozite subsequently repurchased the 3,750 shares of preferred stock in
February 1992, 1,523 of which shares were subsequently assigned to Peter Harvey
in consideration of his discharge of certain indebtedness of Ozite to him in
April 1992. Mr. Harvey pledged these 1,523 preferred shares to ARTRA. The
$4,750,000 price of the 772,000 shares of common stock and 3,750 shares of
preferred stock was equal to the fair market value thereof as of January 31,
1991 as determined by an independent investment banking firm engaged by PST to
make such determination.
Peter R. Harvey and John Harvey are significant stockholders of PST's
parent, PureTec, as described in Note 1 to the table under "Principal
Shareholders." Peter R. Harvey is a Vice President and a director of PST and a
director of PureTec. John Harvey is a director of PST and PureTec.
<PAGE>
In 1987, the predecessor of PST acquired a $5,000,000 subordinated note
bearing interest at a rate of 13.5% per annum and 50,000 shares of 13-1/2%
cumulative redeemable preferred stock of Bagcraft with a liquidation preference
of $5,000,000 with $10,000,000 of the net proceeds of the PST public offering in
May 1987. Interest accrued on the note at a rate of 13.5% per annum. No cash
payments of interest were made during the term of the note. However, during
1992, per agreement with PST, the interest payments for 1992 were remitted by
Bagcraft to ARTRA and the noteholder received Series A preferred stock of
Bagcraft's parent, BCA Holdings, Inc. ("BCA") having a liquidation value of
$675,000. In December 1993, the principal outstanding under this note was repaid
in full in cash from proceeds of Bagcraft's new credit facility with an
institutional lender and PST accepted additional BCA preferred stock having a
liquidation value of $3,000,000 in satisfaction of all unpaid accrued interest
thereon.
The BCA preferred stock provides a $1,000 per share liquidation preference
and annual cumulative cash dividends of $60.00 per share when and if declared by
BCA. The Bagcraft redeemable preferred stock remains outstanding as of the date
hereof. As of May 30, 1996, dividends in the amount of $ 560,000 had cumulated
thereon.
Settlement of the Bank of America Illinois Debt
As of February 26, 1996, Artra was indebted to Bank of America Illinois,
formerly known as Continental Bank N.A. ("BA") in the sum of $14,563,639.59
including accrued interest and fees (the "Prior Indebtedness"). As of February
26, 1996, Peter R. Harvey, an officer and director of Artra, was indebted to BA
in the sum of $7,496,830 including accrued interest (the "Prior Harvey
Indebtedness"), (the Prior Indebtedness and the Prior Harvey Indebtedness are
collectively referred to as the "Debt", or "Prior Notes").
On February 26, 1996, for an aggregate purchase price of $5,150,000.00 (the
"Purchase Price") a private lender (the "Lender") purchased from BA (the "Debt
Purchase") all of BA's interest in the Debt and was assigned all related
documents and collateral. The Purchase Price was structured as follows:
$1,900,000 was loaned to Artra and $100,000 was loaned to Peter R. Harvey
(collectively, the $1,900,000 and $100,000 loans are hereinafter referred to as
the "Loan") by the Lender. The balance of the Purchase Price was comprised of
(i) $4,135,000 obtained by Artra as a dividend from Bagcraft Corporation which
originated from the net proceeds of the sale of Arcar Graphics, Inc. ("Arcar")
and the transactions described in the preceding section, and (ii) funds obtained
through other private lenders.
In connection with the Debt Purchase, the Lender required that BCA be
substituted as the primary debtor and required BCA to execute a new Note (the
"BCA Note") which replaced the Prior Notes. Accordingly, BCA executed and
delivered to the Lender the BCA Note, dated as February 26, 1996 in the original
principal amount of $1,900,000.00 with a maturity date of May 26, 1996. In
addition to the BCA Note, BCA was required to execute and deliver various
agreements and documents in connection with the Debt Purchase and the Loan,
including an option to purchase up to 40% of the outstanding common stock of
Bagcraft if BCA defaults on the Loan, and which option may be repurchased by BCA
if the Loan is repaid in a timely manner. As a further condition required by the
Lender in connection with the Debt Purchase, Artra was required to execute and
deliver various agreements and documents, including a guaranty of BCA's
obligations to the Lender, and swap the BCA Preferred stock for the Bagcraft
Preferred stock as described in the preceding section. This loan was refinanced
in April 1996 and therefore the option to purchase Bagcraft common stock was
repurchased and is no longer outstanding.
<PAGE>
In order to obtain access to the $4,135,000 which was initially derived
from Bagcraft's sale of the assets of Arcar, but which was borrowed from
Bagcraft's line of credit, a series of actual and potential stock exchanges and
transactions occurred. A description of these various exchanges follows.
BCA / Bagcraft / PST
Bagcraft purchased from BCA all of the authorized shares of a newly created
BCA Class B Redeemable Preferred stock (the "BCA B Pref") consisting of 8,135
shares, a $1,000 per share liquidation preference and annual cumulative cash
dividends of $135 per share. In exchange for the BCA B Pref, BCA received
$4,135,000 from Bagcraft. The BCA B Pref shares were exchangeable for a like
number of shares of newly created Artra Class D Exchangeable Preferred stock
(the "Artra Class D Stock") in the event of a default on the Loan which has
since been repaid.
Bagcraft then exchanged the BCA B Pref for 82.7% of the outstanding shares
of Bagcraft preferred stock (the "Bagcraft Preferred") which were owned by Ozite
Corporation, a wholly owned subsidiary of PureTec. Following this exchange,
Ozite held all of the outstanding BCA B Pref (which as described above, was
exchangeable for Artra Class D Stock in the event of a BCA default under the
Loan). Bagcraft then held 82.7% of the outstanding shares of its Preferred which
was canceled. There are 8,650 shares of Bagcraft Preferred remaining outstanding
held by PST. (see the Section above entitled "Exchange of BCA Holdings Preferred
Stock for Bagcraft Corporation of America Preferred Stock".)
BCA / ARTRA / PST
Default under the Loan would have also triggered an exchange of all of the
outstanding shares of BCA Class A Preferred Stock consisting of 3,675 shares of
$1,000 liquidation value, bearing a $60 per annum dividend (the "BCA Pref A")
for a like number of newly created Artra Class C Preferred Stock (the "Artra
Class C Stock").
All outstanding shares of BCA Pref A are owned by PST. However, pursuant to
the terms of the merger between PST and Ozite Corporation, certain former
preferred stockholders of Ozite are entitled to the BCA Pref A and all have
consented to the exchange of such shares for Artra Class C Stock in the event of
a default under the Loan. (See the Section above entitled "Exchange of BCA
Holdings Preferred Stock for Bagcraft Corporation of America Preferred Stock".)
<PAGE>
BCA / Lender
A third class of BCA preferred stock, BCA Class C Preferred Stock ("BCA C Pref")
was created in connection with the Debt Purchase. All of the authorized shares
of the BCA C Pref were issued to the Lender in connection with the Debt Purchase
and such shares give the Lender the right to cause a sale of Bagcraft if the
Loan is not repaid in a timely manner. These BCA C Pref were surrendered to BCA
upon repayment of the Loan in April 1996.
Artra Participation in Peter Harvey Note, Collateral Provided to Artra
As part of the Debt Purchase, Artra and BA entered into that certain
Last-Out Participation Agreement dated as of February 26, 1996 (the
"Participation Agreement") whereby Artra purchased from BA a $2,150,000 interest
and participation in the indebtedness represented by a $3,000,000 note made by
Peter Harvey to BA and, through BA, an interest and participation in all of the
rights, benefits and security given to BA in connection with the indebtedness
represented by such Note.
As partial collateral for amounts due from Peter R. Harvey, the Company has
received the pledge of 1,523 shares of ARTRA redeemable preferred stock (face
value of $1,523,000) which are owned by Mr. Harvey. In addition, Mr. Harvey has
pledged a 25% interest in Industrial Communication Company (a private company).
Such interest is valued by Mr. Harvey at $800,000 to $1,000,000. During 1995,
Peter R. Harvey entered into a pledge agreement with ARTRA whereby Mr. Harvey
pledged additional collateral consisting of 42,067 shares of ARTRA common stock
and 707,281 shares of common stock of PureTec Corporation, a publicly traded
corporation. ARTRA has a first mortgage on real estate owned by Mr. Harvey with
a value in excess of $2,500,000. In connection with the swap of BCA preferred
stock for the Bagcraft preferred stock, Peter R. Harvey, who was entitled to
receive 57% of the Bagcraft preferred, was instrumental in arranging the
transactions whereby the debt was settled with BA. Additionally, without the
intervention of Mr. Harvey and John Harvey who collectively owned 74% of the
Bagcraft preferred to initiate and shepherd the exchange, ARTRA could not have
complied with the requirements of the lenders providing the cash to fund the BA
settlement, and therefore, the ARTRA Debt to BA would not have been settled. BA
had previously initiated litigation to foreclose on the ARTRA Debt, and the
consequences of a successful foreclosure would have been severe and adverse to
ARTRA ultimately resulting in the probable loss of major assets pledged to BA
and the consequent failure of ARTRA to survive.
Other Transactions
On March 9, 1990, Maynard K. Louis, a former member of the Board of
Directors, made a loan to ARTRA in the principal amount of $500,000 bearing
interest at the rate of 10% per annum. This loan was repaid in 1992 through the
issuance to Mr. Louis of 68,198 shares of ARTRA's common stock. On April 2,
1992, Mr. Louis made a loan to ARTRA in the principal amount of $100,000 bearing
interest at the rate of 9% per annum, which loan, due April 1, 1994, has been
extended. On October 1, 1993, Mr. Louis made a short term loan in the principal
amount of $75,000 bearing interest at the rate of 8% per annum to ARTRA's BCA
Holdings Inc. and A G Holding Corp. subsidiaries due October 22, 1993, which
loan had not been repaid as of November 2, 1994. As consideration for making or
agreeing to extend these loans, Mr. Louis received the warrants to purchase
ARTRA's common stock described in note 5 to the table under "Principal
Shareholders."
<PAGE>
During 1993, The Research Center of Kabbalah ("RCK"), which holds
approximately 8% of ARTRA's outstanding Common Stock (including the stock
issuable upon the exercise of warrants) as of December 28, 1995, made certain
short-term loans to the Company of which $2,000,000, with interest at 10%, was
outstanding at December 31, 1993. As additional compensation, RCK received
warrants to purchase an aggregate of 86,250 ARTRA common shares at prices
ranging from $6.00 to $7.00 per share based upon the market of ARTRA's common
stock at the date of issuance. The warrants expire five years from the date of
issuance. In January 1994, Kabbalah made an additional $1,000,000 short-term
loan to the Company, also with interest at 10%. The proceeds of this loan were
used to pay down various ARTRA short-term loans and other debt obligations. In
December, RCK received 126,222 shares of ARTRA common in payment of past due
interest through October 31, 1995.
AMENDMENT OF THE ARTICLES OF INCORPORATION
The Board of Directors, by resolution, recommends that the Articles of
Incorporation of ARTRA be amended to increase the authorized Common Stock to
15,000,000 shares.
The Articles of Incorporation presently authorize 7,500,000 shares of
common stock, without par value and authorize a preferred stock, $1,000 par
value, of 2,000,000 shares.
The Board of Directors resolved that it would be in the best interest of
the Company to amend the Articles of Incorporation to reflect the changes
described herein to make additional common shares available for general
corporate purposes. Except for 1,430,769 shares of common stock that may be
issued and are presently subject to warrants that ARTRA has issued to various
investors in connection with financing ARTRA from time to time in the recent
past, ARTRA has no other formal plans, arrangements, understandings or
definitive commitments for the issuance of any additional common stock or
additional preferred stock. There are no pre-emptive rights authorized by the
Articles of Incorporation. The Amended and Restated Articles of Incorporation of
ARTRA is attached hereto as Appendix A.
The following is a restatement of that portion of Article FIFTH of ARTRA's
Articles of Incorporation after giving effect to the proposed amendment:
"FIFTH. The number of shares which the Corporation has authority to issue
is 15,000,000 shares of common stock, without par value and 200,000 shares of
preferred stock, par value $1,000.00 per share. The Board of Directors shall
have the authority to authorize the issuance, from time to time without any vote
or other action by the shareholders of any or all shares of stock of the
Corporation of any class at any time authorized.
<PAGE>
(a) Each share of common stock shall have equal voting powers
and each such share shall be entitled to one (1) vote in all proceedings in
which shareholders shall be entitled to vote. In each election for Directors
every shareholder entitled to vote shall have the right, in person or by proxy,
to multiply the number of votes to which he may be entitled by the total number
of Directors to be elected in the same election, and he may cast the whole
number of such votes for on candidate or he may distribute them among any two or
more candidates. The candidates receiving the highest number of votes shall be
elected.
(b) The Corporation shall not issue any shares of non-voting
common stock.
(c) The preferred stock may be issued from time to time in one
or more series. The designations, preferences, qualifications, privileges,
limitations, options, conversion rights, and other special rights shall be as
stated and expressed in this Article FIFTH and, to the extent not so stated and
expressed, shall be fixed by resolution or resolutions providing for the
issuance of such shares duly adopted by the Board of Directors (authority to do
so being hereby expressly granted). Such resolution or resolutions shall: (a)
fix the dividend rights of holders of shares of each such series; (b) fix the
terms on which stock of each such series may be redeemed if the shares of such
series are to be redeemable; (c) fix the rights of the holders of stock of each
such series upon dissolution or any distribution of assets; (d) fix the terms or
amount of the sinking fund, if any, to be provided for the purchase or
redemption of stock of each such series; (e) fix the terms upon which the stock
of each such series may be converted into or exchanged for stock of any other
class or classes of any one or more series of preferred stock if the share of
such series are to be convertible or exchangeable; (f) fix the voting rights, if
any, of the shares of each such series; and (g) fix such other designations,
preferences and relative, participating, optional or other special rights, and
qualifications, limitations or restrictions thereof desired to be so fixed.
All shares of any one series of preferred stock shall be identical with
each other in all respects except that shares of any one series issued at
different times may differ as to the dates from which dividends thereon shall
accumulate thereon, and all series of preferred stock shall rank equally and be
identical in all respects except as specified in the respective resolutions of
the Board of Directors providing for the initial issue thereof.
Subject to the prior and superior rights of the preferred stock as set
forth in any resolution or resolutions of the Board of Directors providing for
the initial issue of a particular issue of preferred stock, such dividends
(payable in cash, stock or otherwise) as may be determined by the Board of
Directors may be declared and paid on the common stock from time to time out of
any funds legally available therefore and the preferred stock shall not be
entitled to participate in any such dividend. No interest shall accrue or be
payable on dividends on preferred stock not paid when due.
No holder of stock of the Corporation shall be entitled as such to any
right, preemptive or otherwise to subscribe for, purchase or receive any part of
the shares of stock of the Corporation at any time held in its treasury or of
the unissued shares of stock of the Corporation either authorized at present or
which may at any time hereafter be authorized, or of any issue of notes, bonds
or debentures, whether or not convertible into any class of stock of the
Corporation, or of any issue of warrants, options or rights to subscribe for
shares of any class of stock of the Corporation."
<PAGE>
Approval of the Amendment to the Articles of Incorporation to conform
to the Pennsylvania Business Corporation Law of 1988, as amended, requires an
affirmative vote by the holders of a majority of the stock present in person or
represented by proxy and entitled to vote thereon at a meeting of the
shareholders (assuming a quorum exists). Management intends to cast properly
executed proxies in favor of the increase of the common shares and the grant of
the authority to the Board of Directors for future issuances of such stock.
Proxies solicited by management will be voted in favor of this proposal unless a
contrary vote or authority withheld is specified.
ARTRA GROUP INCORPORATED
1996 STOCK OPTION PLAN
There is hereby established a 1996 Stock Option Plan (the "Plan"). The
Plan provides for the grant to certain employees and others who render services
to Artra or its subsidiaries of options ("Options") to purchase shares of common
stock of the Company ("Common Stock").
Purpose: The purpose of the Plan is to provide additional incentive to
the officers, employees, and others who render services to the Company, who are
responsible for the management and growth of the Company, or otherwise
contribute to the conduct and direction of its business, operations and affairs.
It is intended that Options granted under the Plan strengthen the desire of such
persons to join and remain in the employ of the Company and stimulate their
efforts on behalf of the Company.
The Stock: The aggregate number of shares of Common Stock which may be
subject to Options shall not exceed 2,000,000. Such shares may be either
authorized and unissued shares, or treasury shares. If any Option granted under
the Plan shall expire, terminate or be canceled for any reason without having
been exercised in full, the corresponding number of unpurchased shares shall
again be available for the purposes of the Plan.
Types of Options. Options granted under the Plan shall be in the form
of (i) incentive stock options ("ISOs"), as defined in Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code") or (ii) non-statutory
options which do not qualify under such Section ("NSOs"), or both, in the
discretion of the Board of Directors or any committee appointed by the Board
(each, the "Committee"). The status of each Option shall be identified in the
Option Agreement.
Eligibility:
ISOs may be granted to such employees (including officers and directors
who are employees) of the Company as the Committee shall select from time to
time.
<PAGE>
NSOs may be granted to such employees (including officers and directors) of the
Company, and to other persons who render services to the Company, as the
Committee shall select from time to time.
General Terms of Options:
Option Price. The price or prices per share of Common Stock to be sold
pursuant to an Option (the "exercise price") shall be such as shall be fixed by
the Committee but shall in any case not be less than: the fair market value per
share for such Common Stock on the date of grant in the case of ISOs other than
to a 10% Shareholder, 110% of the fair market value per share for such Common
Stock on the date of grant in the case of ISOs to a 10% Shareholder, and the
fair market value per share on the date of grant in the case of NSOs. A "10%
Shareholder" means an individual who within the meaning of Section 422(b)(6) of
the Code owns stock possessing 10 percent or more of the total combined voting
power of all classes of stock of the Company or of its parent or any subsidiary
corporation.
Period of Option Vesting. The Committee shall determine for each Option
the period during which such Option shall be exercisable in whole or in part,
provided that no ISO to a 10% Shareholder shall be exercisable more than five
years after the date of grant.
Special Rule for ISOs. The aggregate fair market value (determined at
the time the ISO is granted) of the stock with respect to which ISOs are
exercisable for the first time by an Optionee during any calendar year (under
all such plans of the Company, its parent or subsidiary) shall not exceed
$100,000, and any excess shall be considered an NSO.
Effect of Termination of Employment.
The Committee shall determine for each Option the extent, if any, to
which such Option shall be exercisable in the event of the termination of the
Optionee's employment with or rendering of other services to the Company.
However, any such Option which is an ISO shall in all events lapse
unless exercised by the Optionee: prior to the 89th day after the date on which
employment terminated, if termination was other than by reason of death; and
within the twelve-month period next succeeding the death of the Optionee, if
termination is by reason of death.
The Committee shall have the right, at any time, and from time to time,
with the consent of the Optionee, to modify the lapse date of an Option and to
convert an ISO into an NSO to the extent that such modification in lapse date
increases the life of the ISO beyond the dates set forth above or beyond dates
otherwise permissible for an ISO.
Payment for Shares of Common Stock. Upon exercise of an Option, the
Optionee shall make full payment of the Option Price: in cash, or, with the
consent of the Committee and to the extent permitted by it: with Common Stock of
the Company valued at fair market value on date of exercise, but only if held by
the Optionee for a period of time sufficient to prevent a pyramid exercise that
would create a charge to the Company's earnings, with a full recourse interest
bearing promissory note of the Optionee, secured by a pledge of the shares of
Common Stock received upon exercise of such Option, and having such other terms
and conditions as determined by the Committee, by delivering a properly executed
exercise notice together with irrevocable instructions to a broker to sell
shares acquired upon exercise of the Option and promptly to deliver to the
Company a portion of the proceeds thereof equal to the exercise price, or any
combination of any of the foregoing.
<PAGE>
Option Exercises. Options shall be exercised by submitting to the
Company a signed copy of notice of exercise in a form to be supplied by the
Company. The exercise of an Option shall be effective on the date on which the
Company receives such notice at its principal corporate offices. The Company may
cancel such exercise in the event that payment is not effected in full, subject
to the terms of Section 1(e) above.
Non-Transferability of Option. No Option shall be transferable by the
Optionee or otherwise than by will or by the laws of descent and distribution.
During the Optionee's lifetime, such Option shall be exercisable only by such
Optionee. If an Optionee should die while in the employ of the Company, the
Option theretofore granted to the Optionee, to the extent then otherwise
exercisable, shall be exercisable only by the estate of the Optionee or by a
person who acquired the right to exercise such Option by bequest or inheritance
or otherwise by reason of the death of the Optionee.
Other Plan Terms.
Number of Options which may be Granted to, and Number of Shares of
Common Stock which may be Acquired by Employees.
The Committee may grant more than one Option to an individual, and,
subject to the requirements of Section 422 of the Code, with respect to ISOs,
such Option may be in addition to, in tandem with, or in substitution for,
Options previously granted under the Plan or of another corporation and assumed
by the Company.
The Committee may permit the voluntary surrender of all or a portion of
any Option granted under the Plan or otherwise to be conditioned upon the
granting to the employee of a new Option for the same or a different number of
shares of Common Stock as the Option surrendered, or may require such voluntary
surrender as a condition precedent to a grant of a new Option to such employee.
Such new Option shall be exercisable at the price, during the period, and in
accordance with any other terms or conditions specified by the Committee at the
time the new Option is granted, all determined in accordance with the provisions
of the Plan without regard to the price, period of exercise, or any other terms
or conditions of the Option surrendered.
<PAGE>
Period of Grant of Options. Options under the Plan may be granted at
any time after the Plan has been approved by the shareholders of the Company.
However, no Option shall be granted under the Plan after July 31, 2006.
Effect of Change in Common Stock. In the event of a reorganization,
recapitalization, liquidation, stock split, stock dividend, combination of
shares, merger or consolidation, or the sale, conveyance, lease or other
transfer by the Company of all or substantially all of its property, or any
change in the corporate structure or shares of common stock of the Company,
pursuant to any of which events the then outstanding shares of the common stock
are split up or combined or changed into, become exchangeable at the holder's
election for, or entitle the holder thereof to other shares of common stock, or
in the case of any other transaction described in Section 424(a) of the Code,
the Committee may change the number and kind of shares of Common Stock available
under the Plan and any outstanding Option (including substitution of shares of
common stock of another corporation) and the price of any Option and the fair
market value determined under this Plan in such manner as it shall deem
equitable in its sole discretion.
Optionees not Shareholders. An Optionee or a legal representative
thereof shall have none of the rights of a stockholder with respect to shares of
Common Stock subject to Options until such shares shall be issued or transferred
upon exercise of the Option.
Option Agreement. The Company shall effect the grant of Options under
the Plan, in accordance with determinations made by the Committee, by execution
of instruments in writing in a form approved by the Committee. Each Option shall
contain such terms and conditions (which need not be the same for all Options,
whether granted at the time or at different times) as the Committee shall deem
to be appropriate and not inconsistent with the provisions of the Plan, and such
terms and conditions shall be agreed to in writing by the Optionee.
Certain Definitions.
Fair Market Value. As used in the Plan, the term "fair market value"
shall mean as of any date:
if the Common Stock is not traded on any over-the-counter market
or on a national securities exchange, the value determined by the Committee
using the best available facts and circumstances,
if the Common Stock is traded in the over-the-counter market,
based on most recent closing prices for the Common Stock on the date the
calculation thereof shall be made, or
if the Common Stock is listed on a national securities exchange,
based on the most recent closing prices for the Common Stock of the Company on
such exchange.
<PAGE>
Subsidiary and Parent. The term "subsidiary" and "parent" as used
in the Plan shall have the respective meanings set forth in Sections 424(f) and
(e) of the Internal Revenue Code.
Not an Employment Contract. Nothing in the Plan or in any Option
or stock option agreement shall confer on any Optionee any right to continue in
the service of the Company or any parent or subsidiary of the company or
interfere with the right of the Company to terminate such Optionee's employment
or other services at any time.
Withholding Taxes:
(a) Whenever the Company proposes or is required to issue or
transfer shares of Common Stock under the Plan, the Company shall have the right
to require the Optionee to remit to the Company an amount sufficient to satisfy
any Federal, state and/or local withholding tax requirements prior to the
delivery of any certificate or certificates for such shares. Alternatively, the
Company may, in its sole discretion from time to time, issue or transfer such
shares of Common Stock net of the number of shares sufficient to satisfy the
withholding tax requirements. For withholding tax purposes, the shares of Common
Stock shall be valued on the date the withholding obligation is incurred.
(b) In the case of shares of Common Stock that an Optionee
receives pursuant to his exercise of an Option which is an ISO, if such Optionee
disposes of such shares of Common Stock within two years from the date of the
granting of the ISO or within one year after the transfer of such shares of
Common Stock to him, the Company shall have the right to withhold from any
salary, wages, or other compensation for services payable by the Company to such
Optionee, amounts sufficient to satisfy any withholding tax obligation
attributable to such disposition.
(c) In the case of a disposition described in Section (b), the
Optionee shall give written notice to the Company of such disposition within 30
days following the disposition, which notice shall include such information as
the Company may reasonably request to effectuate the provisions hereof.
Agreements and Representations of Optionees:
As a condition to the exercise of an Option, unless counsel to
the Company opines that it is not necessary under the Securities Act of 1933, as
amended, and the pertinent rules thereunder, as the same are then in effect, the
Optionee shall represent in writing that the shares of Common Stock being
purchased are being purchased only for investment and without any present intent
at the time of the acquisition of such shares of Common Stock to sell or
otherwise dispose of the same.
<PAGE>
Administration of the Plan:
The Plan shall be administered by the Committee. Subject to the
express provisions of the Plan, the Committee shall have authority, in its
discretion, to determine the individuals to receive Options, the times when they
shall receive them and the number of shares of Common Stock to be subject to
each Option, and other terms relating to the grant of Options. Directors,
including those that may be members of the Committee, shall be eligible to
receive Options under the Plan.
Subject to the express provisions of the Plan, the Committee
shall have authority to construe the respective option agreements and the Plan,
to prescribe, amend and rescind rules and regulations relating to the Plan, to
determine the terms and provisions of the respective option agreements (which
need not be identical) and, as specified in this Plan, the fair market value of
the common stock, and to make all other determinations necessary or advisable
for administering the Plan. The Committee may correct any defect or supply any
omission or reconcile any inconsistency in the Plan or in any option agreement
in the manner and to the extent it shall deem expedient to carry it into effect,
and it shall be the sole and final judge of such expediency. The determinations
of the Committee on the matters referred to in this section shall be conclusive.
The Committee may, in its sole discretion, and subject to such
terms and conditions as it may adopt, accelerate the date or dates on which some
or all outstanding Options may be exercised.
The Committee may require that any Option Shares issued be
legended as necessary to comply with applicable federal and state securities
laws.
Amendment and Discontinuance of the Plan:
The Board of Directors of the Company may at any time alter,
suspend or terminate the Plan, but no change shall be made which will have a
material adverse effect upon any Option previously granted, unless the consent
of the Optionee is obtained; provided, however, that the Board of Directors may
not without further approval of the shareholders, (i) increase the maximum
number of shares of Common Stock for which Options may be granted under the Plan
or which may be purchased by an individual Optionee, (ii) decrease the minimum
option price provided in the Plan, or (iii) change the class of persons eligible
to receive Options.
The Company intends that Options designated by the Committee as
ISOs shall constitute ISOs under Section 422 of the Code. Should any provision
in this Plan for ISOs not be necessary in order to so comply or should any
additional provisions be required, the Board of Directors of the Company may
amend the Plan accordingly without the necessity of obtaining the approval of
the shareholders of the Company.
Other Conditions: If at any time counsel to the Company shall be
of the opinion that any sale or delivery of shares of Common Stock pursuant to
an Option granted under the Plan is or may in the circumstances be unlawful
under the statutes, rules or regulations of any applicable jurisdiction, the
Company shall have no obligation to make such sale or delivery, and the Company
shall not be required to make any application or to effect or to maintain any
qualification or registration under the Securities Act of 1933 or otherwise with
respect to shares of Common Stock or Options under the Plan, and the right to
exercise any such Option may be suspended until, in the opinion of said counsel,
such sale or delivery shall be lawful.
<PAGE>
At the time of any grant or exercise of any Option, the Company
may, if it shall deem it necessary or desirable for any reason connected with
any law or regulation of any governmental authority relative to the regulation
of securities, condition the grant and/or exercise of such Option upon the
Optionee making certain representations to the Company and the satisfaction of
the Company with the correctness of such representations.
Approval; Effective Date; Governing Law. The Plan was adopted by
the Board of Directors on ________, 1996. This Plan shall be interpreted in
accordance with the internal laws of the State of Pennsylvania.
Approval of the Amendment to approve the adoption of the stock option
plans requires an affirmative vote by the holders of a majority of the stock
present in person or represented by proxy and entitled to vote thereon at a
meeting of the shareholders (assuming a quorum exists). Management intends to
cast properly executed proxies in favor of the establishment of the ARTRA stock
option plan and Proxies solicited by management will be voted in favor of this
proposal unless a contrary vote or authority withheld is specified.
ARTRA GROUP INCORPORATED
1996 DISINTERESTED DIRECTORS STOCK OPTION PLAN
There is hereby established a 1996 Disinterested Directors Stock Option
Plan (the "Plan"). The Plan provides for the grant to certain directors of Artra
of options ("Options") to purchase shares of common stock of the Company
("Common Stock").
Purpose: The purpose of the Plan is to provide incentive to directors
of the Company who are not employees or officers to receive options or awards
which will disqualify them from serving as disinterested persons (within the
meaning of Rule 16b-3 under the Securities Exchange Act of 1934) in the
administration of the Company's stock option plans.
The Stock: The aggregate number of shares of Common Stock which may be
subject to Options shall not exceed 200,000. Such shares may be either
authorized and unissued shares, or treasury shares. If any Option granted under
the Plan shall expire, terminate or be cancelled for any reason without having
been exercised in full, the corresponding number of unpurchased shares shall
again be available for the purposes of the Plan.
Type of Options:
Options granted under the Plan shall be in the form of
non-statutory options.
<PAGE>
Eligibility:
The Company will grant to each director who participates in this
Plan an Option to purchase a maximum of 10,000 shares of Common Stock if such
person first became a director concurrently with or after the adoption of this
Plan, and an Option to purchase 2,500 shares of Common Stock on each February 1
thereafter so long as such person on such May 1 continues to serve as a
disinterested director in the administration of the Company's stock option
plans, and so long as such February 1 is at least six months after the initial
date upon which such person became a director.
General Terms of Options:
Option Price. The price or prices per share of Common Stock to be
sold pursuant to an Option (the "exercise price") shall be the fair market value
on the date of grant.
Period of Option Vesting. All Options shall vest immediately,
provided that Optionee must retain ownership of shares acquired upon exercise of
an Option until six months has elapsed from the date of grant of the Option.
Effect of Termination of Director Status.
Each Optionee must exercise his or her Option within 10 days
after such Optionee ceases to be a director of the Company, unless such
termination is the result of permanent disability or upon retirement after
having attained age 65, in which event such exercise shall be valid if made
within one year after such termination. However, if the Optionee should die
while a director, the Option shall be exercisable only by the estate of the
Optionee or by a person who acquired the right to exercise such Option by
bequest or inheritance or otherwise by reason of the death of the Optionee, and
only within the one-year period next succeeding the death of the Optionee.
Payment for Shares of Common Stock. Upon exercise of an Option,
the Optionee shall make full payment of the Option Price: in cash, with Common
Stock of the Company valued at fair market value on date of exercise, but only
if held by the Optionee for a period of time sufficient to prevent a pyramid
exercise that would create a charge to the Company's earnings, with a full
recourse interest bearing promissory note of the Optionee, secured by a pledge
of the shares of Common Stock received upon exercise of such Option, and having
such other terms and conditions as determined by the Board of Directors or any
committee appointed by the Board (each, the "Committee"), by delivering a
properly executed exercise notice together with irrevocable instructions to a
broker to sell shares acquired upon exercise of the Option and promptly to
deliver to the Company a portion of the proceeds thereof equal to the exercise
price, or any combination of any of the foregoing.
Option Exercises. Options shall be exercised by submitting to the
Company a signed copy of notice of exercise in a form to be supplied by the
Company. The exercise of an Option shall be effective on the date on which the
Company receives such notice at its principal corporate offices. The Company may
cancel such exercise in the event that payment is not effected in full, subject
to the terms stated above.
<PAGE>
Non-Transferability of Option. No Option shall be transferable by
the Optionee or otherwise than by will or by the laws of descent and
distribution. During the Optionee's lifetime, such Option shall be exercisable
only by such Optionee. Upon an Optionee's death, the Option theretofore granted
to the Optionee, to the extent then otherwise exercisable, shall be exercisable
only by the estate of the Optionee or by a person who acquired the right to
exercise such Option by bequest or inheritance or otherwise by reason of the
death of the Optionee.
Other Plan Terms.
Period of Grant of Options. No Option shall be granted under the
Plan after July____, 2006.
Effect of Change in Common Stock. In the event of a
reorganization, recapitalization, liquidation, stock split, stock dividend,
combination of shares, merger or consolidation, or the sale, conveyance, lease
or other transfer by the Company of all or substantially all of its property, or
any change in the corporate structure or shares of common stock of the Company,
pursuant to any of which events the then outstanding shares of the common stock
are split up or combined or changed into, become exchangeable at the holder's
election for, or entitle the holder thereof to other shares of common stock, or
in the case of any other transaction described in Section 424(a) of the Code,
the number and kind of shares of Common Stock available under the Plan and any
outstanding Option (including substitution of shares of common stock of another
corporation) and the price of any Option and the fair market value determined
under this Plan shall be appropriately adjusted.
Optionees not Shareholders. An Optionee or a legal representative
thereof shall have none of the rights of a stockholder with respect to shares of
Common Stock subject to Options until such shares shall be issued or transferred
upon exercise of the Option.
Option Agreement. The Company shall effect the grant of Options
under the Plan by execution of an instrument consistent with the terms and
conditions set forth in this Plan. The execution of such instrument shall be a
pre-condition to participation in the Plan.
Certain Definitions.
Fair Market Value. As used in the Plan, the term "fair market
value" shall mean as of any date:
if the Common Stock is not traded on any over-the-counter
market or on a national securities exchange, the value determined by the
Committee using the best available facts and circumstances,
<PAGE>
if the Common Stock is traded in the over-the-counter market,
based on most recent closing prices for the Common Stock on the date the
calculation thereof shall be made, or
if the Common Stock is listed on a national securities
exchange, based on the most recent closing prices for the Common Stock of the
Company on such exchange.
Subsidiary and Parent. The term "subsidiary" and "parent" as
used in the Plan shall have the respective meanings set forth in Sections 424(f)
and (e) of the Internal Revenue Code.
Agreements and Representations of Optionees:
As a condition to the exercise of an Option, unless counsel to the
Company opines that it is not necessary under the Securities Act of 1933, as
amended, and the pertinent rules thereunder, as the same are then in effect, the
Optionee shall represent in writing that the shares of Common Stock being
purchased are being purchased only for investment and without any present intent
at the time of the acquisition of such shares of Common Stock to sell or
otherwise dispose of the same.
Administration of the Plan:
The Plan shall be administered, to the extent required, by the
Committee.
Subject to the express provisions of the Plan, the Committee shall
have authority to construe the respective option agreements and the Plan, to
prescribe, amend and rescind rules and regulations relating to the Plan, and to
make all other determinations necessary or advisable for administering the Plan.
The Committee may correct any defect or supply any omission or reconcile any
inconsistency in the Plan or in any option agreement in the manner and to the
extent it shall deem expedient to carry it into effect, and it shall be the sole
and final judge of such expediency. The determinations of the Committee on the
matters referred to in this section shall be conclusive.
The Committee may require that any Option Shares issued be
legended as necessary to comply with applicable federal and state securities
laws.
Amendment and Discontinuance of the Plan:
The Board of Directors of the Company may at any time alter,
suspend or terminate the Plan, but no change shall be made which will have a
material adverse effect upon any Option previously granted, unless the consent
of the Optionee is obtained; provided, however, that the Board of Directors may
not without further approval of the shareholders: increase the maximum number of
shares of Common Stock for which Options may be granted under the Plan or which
may be purchased by an individual Optionee; cause shares to be granted at less
than fair market value or change such price once a grant has been made; or
change the class of persons eligible to receive Options; and provided, further,
that Plan provisions referred to in Rule 16b-3(c)(2)(ii)(A) under the Securities
Exchange Act of 1934 may in no event be amended more than once every six months,
other than to comport with changes in the Internal Revenue Code, the Employee
Retirement Income Security Act, or the rules thereunder.
<PAGE>
Other Conditions: If at any time counsel to the Company shall be
of the opinion that any sale or delivery of shares of Common Stock pursuant to
an Option granted under the Plan is or may in the circumstances be unlawful
under the statutes, rules or regulations of any applicable jurisdiction, the
Company shall have no obligation to make such sale or delivery, and the Company
shall not be required to make any application or to effect or to maintain any
qualification or registration under the Securities Act of 1933 or otherwise with
respect to shares of Common Stock or Options under the Plan, and the right to
exercise any such Option may be suspended until, in the opinion of said counsel,
such sale or delivery shall be lawful.
At the time of any grant or exercise of any Option, the Company
may, if it shall deem it necessary or desirable for any reason connected with
any law or regulation of any governmental authority relative to the regulation
of securities, condition the grant and/or exercise of such Option upon the
Optionee making certain representations to the Company and the satisfaction of
the Company with the correctness of such representations.
Approval; Effective Date; Governing Law. The Plan was adopted
by the Board of Directors on ______, 1996. This Plan shall be interpreted in
accordance with the internal laws of the State of Pennsylvania.
Approval of the Amendment to approve the adoption of the ARTRA 1996
DISINTERESTED DIRECTORS STOCK OPTION PLAN requires an affirmative vote by the
holders of a majority of the stock present in person or represented by proxy and
entitled to vote thereon at a meeting of the shareholders (assuming a quorum
exists). Management intends to cast properly executed proxies in favor of the
establishment of the ARTRA 1996 DISINTERESTED DIRECTORS STOCK OPTION PLAN unless
a contrary vote or authority withheld is specified.
SELECTION OF AUDITORS
The Board of Directors appointed Coopers & Lybrand L.L.P., independent
certified public accountants, to audit the financial statements of the Company
and its wholly-owned subsidiaries for the fiscal years ended December 31, 1995
and ending December 1996. Coopers & Lybrand L.L.P. has served as principal
auditors for the Company since 1962.
This appointment is being presented to shareholders for ratification of
the appointment for the year ended in 1995 and approval for the audit to be
conducted for the year ending 1996. The favorable vote of the holders of a
majority of the shares represented in person or by proxy at the Meeting and
entitled to vote (assuming a quorum is present) is required to ratify the
appointment.
<PAGE>
A representative of Coopers & Lybrand L.L.P. is expected to attend the
meeting and will be afforded an opportunity to make a statement if he desires to
do so. He is also expected to be available to respond to appropriate questions.
The Board of Directors recommends that the shareholders vote FOR the
proposal. Proxies solicited by the Board of Directors will be voted in favor of
this proposal unless a contrary vote or authority withheld is specified.
SHAREHOLDERS' PROPOSALS
Any shareholder may notify management of his intention to present a
proposal for action at the next annual meeting by delivery of a notice to be
reviewed by management not less than 120 calendar days in advance of the
solicitation date of ARTRA's next annual meeting or for action at any other
meeting at a reasonable time before solicitation is made, and any proposal
received by April 30, 1997 will be considered for action at the next annual
meeting notwithstanding that it is received less than 120 days prior to the next
solicitation date. Such notices should be submitted to ARTRA GROUP Incorporated,
500 Central Avenue, Northfield, Illinois 60093, Attention: Corporate Secretary.
GENERAL AND OTHER MATTERS
Management knows of no matters, other than those referred to in this
proxy statement, which will be presented to the meeting. However, if any other
matters properly come before the meeting or any adjournment, the persons named
in the accompanying proxy will vote it in accordance with their best judgment on
such matters.
The Company will bear the expense of preparing, printing and mailing
this proxy material, as well as the cost of any required solicitation. In
addition to the solicitation of proxies by use of the mails, the Company may use
regular employees, without additional compensation, to request, by telephone or
otherwise, attendance or proxies previously solicited. You are urged to sign and
return your proxy promptly.
____________________
Edwin G. Rymek
Secretary
July___, 1996
<PAGE>
HAVE YOU MOVED?
ARTRA GROUP Incorporated
500 Central Avenue
Northfield, Illinois 60093
Please change my address on the books of ARTRA GROUP Incorporated.
Name of Owner
_____________________________________________________
Print Name exactly as it appears on Stock Certificate
From (Old Address)_________________________________________________
(Please print)
To (New Address)
___________________________________________________________________________
Street Address City or Town State Zip Code
Date___________
Signature _________________________________________________
Owner(s) should sign name(s) exactly as appears on Stock Certificate. If this
form is signed by a representative, evidence of authority should be supplied.
MAY BE ENCLOSED IN ENVELOPE WITH PROXY CARD
<PAGE>
ARTRA GROUP INCORPORATED PROXY VOTING CARD
500 Central Avenue
Northfield, IL 60093
Instructions
Complete this form, sign and indicate the date. If you do not date and sign the
form, your vote may be declared invalid. Instructions for completing are on the
reverse side. After completing, tear along the perforated line and insert in the
envelope provided. Be sure the address shows.
Please mark all choices early. Example: x
--
Mark here if you wish to attend and
vote your shares at the meeting. --
Annual Meeting of Shares
to be held on: August __,1996
# of Shares: __________
DIRECTORS RECOMMEND A VOTE FOR PROPOSALS 1, 2, 3, 4, 5 and 6.
Vote for all nominees, withhold (vote against) all
nominees or withhold for individual nominees.
Proposal 1: Approval of proposed amendment to Company's Articles of
Incorporation to eliminate the staggered election of Directors.
1. __ FOR __ AGAINST __ ABSTAIN
Proposal 2: Election of Directors
2.__ Vote for all nominees
__ Withhold for all nominees
OR withhold only those nominees marked below:
Edward C. Celano John Harvey Gerard M. Kenny
Howard R. Conant Peter R. Harvey Maynard K. Lewis
__Edward C. Celano __John Harvey __Gerard M. Kenny
__Howard R. Conant __Peter R. Harvey __Maynard K.Lewis
Proposal 3: Approval of proposed amendment to Company's Articles of
Incorporation to increase the authorized common stock, without par
value, of the Company from 7,500,000 Shares to 15,000,000 Shares.
3. __ FOR __ AGAINST __ ABSTAIN
Proposal 4: Approval of the ARTRA GROUP Incorporated Stock Option Plan.
4. __ FOR __ AGAINST __ ABSTAIN
Proposal 5: Approval of the ARTRA GROUP Incorporated Stock Option Plan.
5. __ FOR __ AGAINST __ ABSTAIN
Proposal 6: Coopers & Lybrand L.L.P. as the independent public accountants.
6. __ FOR __ AGAINST __ ABSTAIN
Shareholder
Address: ____________________________
____________________________ Date: August , 1996.
Important: Sign below
Signature _____________________________________________________
Signature if held jointly _____________________________________
<PAGE>
Marking Instructions
Please follow the instructions below to insure that your Proxy will be processed
correctly and without delay.
1. Read the instructions and be sure of your choice before marking your
selection.
2. Use a pencil, or pen (black or blue only) to complete the form.
3. Mark dark, heavy marks within the appropriate area to indicate your
selection.
4. Erase all unwanted marks completely.
5. Do not make any stray marks on the form.
PROPER MARK x IMPROPER MARK X
___ ___
Meeting Attendance __ Mark here if you wish to attend and vote your shares at
the meeting.
Mark this box ONLY if you plan to attend and vote
your shares at the meeting.
Directors Voting Instructions Complete only one - "A" "B" or "C"
A) If you wish to vote FOR all nominees, mark
the box labeled "FOR ALL NOMINEES" as ___ FOR ALL NOMINEES
as shown to the right.
B) If you wish to vote to WITHHOLD (vote against)
all nominees, mark the box labeled "WITHHOLD ALL ___ WITHHOLD FOR ALL
NOMINEES" as shown to the right. NOMINEES
C) If you wish to WITHHOLD authority for any INDIVIDUAL nominee or nominees
(vote AGAINST specific persons), mark the box (boxes) next to the name(s)
of the individual(s) of those you wish to WITHHOLD authority for (Mark
those you do NOT want) as shown below. Unused boxes should be left blank,
Example: To withhold for nominees J. Smith and W. Lee mark as shown:
__ E. Celano __ J. Harvey __ G. Kenny
__ H. Conant __ P. Harvey __ M. Lewis
Proposals Voting Instructions __ FOR __ AGAINST __ ABSTAIN
Mark either "FOR", "AGAINST" or "ABSTAIN" for each of the proposals listed. Mark
your response for each proposal in the spaces directly opposite the proposal.
CHOOSE ONLY ONE RESPONSE FOR EACH RESOLUTION. There may be response boxes left
unused. Unused boxes should be left blank. The example above is marked for an
"ABSTAIN" vote.
Signature ___________________________________________ Date: August , 1996
Failure to sign and date the form may result
in your proxy being declared invalid.
PLEASE TEAR ALONG THE DOTTED LINE
AND RETURN ONLY THIS PORTION
BE SURE THE ADDRESS SHOWS THROUGH THE WINDOW
OF THE RETURN ENVELOPE
ARTRA GROUP INCORPORATED
500 CENTRAL AVENUE
NORTHFIELD, IL 60093
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
ARTRA GROUP INCORPORATED
Pursuant to the Business Corporation Law
of 1988 of the Commonwealth of Pennsylvania
The original Articles of Incorporation of ARTRA GROUP Incorporated (the
present name of the corporation) were filed with the Department of State of the
Commonwealth of Pennsylvania on November 3, 1933 pursuant to the Business
Corporation Law of the Commonwealth of Pennsylvania (Act 106 of May 5, 1933).
The name under which the Corporation was originally incorporated was Campbell
Teletector Corp. of Penna. The following Amended and Restated Articles of
Incorporation not only restate and integrate the original Articles of
Incorporation and all amendments filed with the Department of State prior to
March ___, 1996, but also include further amendments adopted by the shareholders
of the Corporation at an annual meeting held on that date. The registered office
of the Corporation is as set forth in Article SECOND. The original Articles of
Incorporation and all amendments previously made thereto are superseded and are
amended and restated in their entirety to read as follows:
FIRST. The name of the Corporation is ARTRA GROUP Incorporated.
SECOND. The location and post office address of the Corporation's
registered office in the Commonwealth of Pennsylvania is 100 Pine Street,
Harrisburg, Pennsylvania 17108.
THIRD. (a) The Corporation shall have unlimited power to engage in and
to do any lawful act concerning any or all lawful business for which
corporations may be incorporated under the Business Corporation Law of 1988 of
the Commonwealth of Pennsylvania.
(b) Without limiting the generality of paragraph (a) of this
Article, the Corporation is authorized to manufacture, construct, improve,
process, buy, acquire, own, hold, sell, trade, dispose of, encumber and
generally deal in property, real and personal, tangible and intangible,
products, goods, wares, merchandise, commodities and services of any and every
class and description.
FOURTH. The term of the Corporation's existence is perpetual.
FIFTH. The number of shares which the Corporation has authority to
issue is 7,500,000 shares of common stock, without par value, and 2,000,000
shares of preferred stock, par value $1,000.00 per share. The Board of Directors
shall have the authority to authorize the issuance, from time to time without
any vote or other action by the shareholders of any or all shares of stock of
the Corporation of any class at any time authorized.
<PAGE>
(a) Each share of common stock shall have equal voting powers and each
such share shall be entitled to one (1) vote in all proceedings in which
shareholders shall be entitled to vote. In each election for Directors every
shareholder entitled to vote shall have the right, in person or by proxy, to
multiply the number of votes to which he may be entitled by the total number of
Directors to be elected in the same election, and he may cast the whole number
of such votes for one candidate or he may distribute them among any two or more
candidates. The candidates receiving the highest number of votes shall be
elected.
(b) The Corporation shall not issue any shares of non-voting common
stock.
(c) The preferred stock may be issued from time to time in one or more
series. The designations, preferences, qualifications, privileges, limitations,
options, conversion rights, and other special rights shall be as stated and
expressed in this Article FIFTH and, to the extent not so stated and expressed,
shall be fixed by resolution or resolutions providing for the issuance of such
shares duly adopted by the Board of Directors (authority to do so being hereby
expressly granted). Such resolution or resolutions shall (a) fix the dividend
rights of holders of shares of each such series, (b) fix the terms on which
stock of each such series may be redeemed if the shares of such series are to be
redeemable, (c) fix the rights of the holders of stock of each such series upon
dissolution or any distribution of assets, (d) fix the terms or amount of the
sinking fund, if any, to be provided for the purchase or redemption of stock of
each such series, (e) fix the terms upon which the stock of each such series may
be converted into or exchanged for stock of any other class or classes of any
one or more series of preferred stock if the share of such series are to be
convertible or exchangeable, (f) fix the voting rights, if any, of the shares of
each such series and (g) fix such other designations, preferences and relative,
participating, operational or other special rights, and qualifications,
limitations or restrictions thereof desired to be so fixed.
All shares of any one series of preferred stock shall be identical with
each other in all respects except that shares of any one series issued at
different times may differ as to the dates from which dividends thereon shall
accumulate thereon, and all series of preferred stock shall rank equally and be
identical in all respects except as specified in the respective resolutions of
the Board of Directors providing for the initial issue thereof.
Subject to the prior and superior rights of the preferred stock as set
forth in any resolution or resolutions of the Board of Directors providing for
the initial issue of a particular issue of preferred stock, such dividends
(payable in cash, stock or otherwise) as may be determined by the Board of
Directors may be declared and paid on the common stock from time to time out of
any funds legally available therefore and the preferred stock shall not be
entitled to participate in any such dividend. No interest shall accrue or be
payable on dividends on preferred stock not paid when due.
No holder of stock of the Corporation shall be entitled as such to any
right, preemptive or otherwise to subscribe for, purchase or receive any part of
the shares of stock of the Corporation at any time held in its treasury or of
the unissued shares of stock of the Corporation either authorized at present or
which may at any time hereafter be authorized, or of any issue of notes, bonds
or debentures, whether or not convertible into any class of stock of the
Corporation, or of any issue of warrants, options or rights to subscribe for
shares of any class of stock of the Corporation.
<PAGE>
SIXTH. The number of Directors of the Corporation shall be fixed, from
time to time, in the manner provided in the By-laws, but in no event shall the
number of directors be less than six [THE FOLLOWING LANGUAGE IN BRACKETS IS
BEING DELETED WITH THIS AMENDMENT AND IS NOT PART OF THE AMENDED BY-LAWS; THIS
LINED OUT LANGUANGE WILL APPEAR IN THE FINAL PROXY: and, in any case, such
number shall be sufficient to be divided into three classes, to be designated,
respectively, Class I, Class II and Class III. Each class shall consist, as
nearly as possible, of one-third of the whole number of the Board of Directors.
At the annual meeting of shareholders for the fiscal year 1977, the Class I
directors shall be elected to hold office for a term to expire at the annual
meeting of shareholders next ensuing, the Class II directors shall be elected to
hold office for a term to expire one year thereafter, the Class III directors
shall be elected to hold office for a term to expire two years thereafter and,
in the case of each class, until their respective successors are duly elected
and qualified. At each annual meeting held after the initial election of
directors according to classes, the directors elected to succeed those whose
terms have expired shall be identified as being of the same class as the
directors they succeed and shall be elected to hold office for a term to expire
at the third succeeding annual meeting after their election, and until their
respective successors are duly elected and qualified. If the number of directors
is changed, any increase or decrease in directors shall be apportioned among the
classes so as to maintain all classes as equal in number as possible, and any
additional director elected to any class shall hold office for a term which
shall coincide with the terms of the other directors in such class.] No decrease
in the number of directors shall shorten the term of any incumbent director. Any
vacancy occurring in the Board of Directors caused by death, resignation, or
removal, and any newly created directorship resulting from an increase in the
number of directors, may be filled by a majority of the directors in office,
although less than quorum. Each director chosen to fill a vacancy or newly
created directorship shall hold office until the next election for which such
director shall have been chosen and until his successor shall be duly elected
and qualified.
SEVENTH. At a meetings of the shareholders, the holders of 50% of the
stock issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum requisite for the transaction of
business, except as otherwise provided by law.
No action required to be taken, or which may be taken at any annual or
special meeting of shareholders of the Corporation, may be taken without a
meeting and the power of shareholders to consent in writing to the taking of any
action is specifically denied.
In the event that the holders of the stock of the Corporation issued
and outstanding and entitled to vote at a meeting with respect to a particular
matter (such stock is hereafter referred to as "Voting Stock" and references
thereto shall mean each class of Voting Stock to the extent the holders of stock
of any class are entitled to vote as a class on any matter) are entitled to vote
on
<PAGE>
(i) a proposal that this Corporation enter into a merger or
consolidation with any Person (as hereinafter defined), or
that this Corporation sell, lease or exchange substantially
all of its assets and property, with or without the good will
of the Corporation, to any such Person, and such Person and
his or its affiliates, singly or in the aggregate, own or
control, directly or indirectly, 5% or more of the Voting
Stock at the record date for determining shareholders entitled
to vote, or
(ii) a proposal to reclassify securities, recapitalize or
other transaction (except redemptions permitted by the terms
of the security to be redeemed or repurchased by this
Corporation of its securities for cancellation or for its
treasury) designed to decrease the number of holders of the
Voting Stock remaining after any Person has acquired 5% of
such Voting Stock,
the affirmative vote of the holders of shares of Voting Stock of the Corporation
representing at least 80% of the votes entitled to be cast at a meeting of the
shareholders duly called for the consideration of any such proposal shall be
required for the approval of such proposal; provided, however, that the
foregoing requirements shall not apply to any such merger, consolidation or sale
of assets and property, with or without the good will of the Corporation (i)
which shall have been approved by a resolution duly adopted by a majority of the
directors in office, although less than a quorum, and the affirmative vote of
the holders of shares of Voting Stock of the Corporation representing at least a
majority of the votes entitled to be cast at a meeting of shareholders called
for such purpose, or (ii) between the Corporation and another corporation, 50%
or more of the Voting Stock of which is owned by the Corporation, if the
Corporation and another corporation, 50% or more of the Voting Stock of which is
owned by the Corporation, if the Corporation is the survivor or purchaser.
For the purposes hereof, a "Person" shall mean any corporation,
partnership, association, trust (other than any trust holding stock of the
employees of the Corporation pursuant to any stock purchase, ownership or
employee benefit plan of the Corporation), business entity, estate or individual
or any Affiliate (as hereinafter defined) of any of the foregoing. As
"Affiliate" shall mean any corporation, partnership, association, trust,
business entity, estate or individual who, directly or indirectly, through one
or more intermediaries, controls, or is controlled by, or is under common
control with, a Person. "Control" shall mean the possession, directly or
indirectly, of power to direct or cause the direction of the management and
policies of a Person through the ownership of voting securities, by contract, or
otherwise.
EIGHTH. The provisions of Article [THE FOLLOWING LANGUAGE IN BRACKETS
IS BEING DELETED WITH THIS AMENDMENT AND IS NOT PART OF THE AMENDED BY-LAWS;
THIS LINED OUT LANGUANGE WILL APPEAR IN THE FINAL PROXY: SIXTH and] SEVENTH and
this Article EIGHTH may not be amended, altered, changed or repealed in any
respect unless such amendment, alteration, change or repeal is approved by (i)
the affirmative vote of the holders of shares of Voting Stock of the Corporation
representing at least 80% of the votes entitled to be cast at a meeting of the
shareholders duly called for the consideration of such amendment, alteration,
change or repeal, or (ii) the affirmative vote of at least 80% of the directors
in office, although less than a quorum, and the affirmative vote of the holders
of shares of Voting Stock of the Corporation representing at least a majority of
the votes entitled to be cast at such meeting of shareholders.
<PAGE>
[THE FOLLOWING LANGUAGE IN BRACKETS IS BEING DELETED WITH THIS
AMENDMENT AND IS NOT PART OF THE AMENDED BY-LAWS; THIS LINED OUT LANGUANGE WILL
APPEAR IN THE FINAL PROXY: No By-law of the Corporation affecting the number of
directors, their election or removal, or the filling of any vacancy in the Board
of Directors, or any newly created directorship, shall be amended, altered,
changed or repealed, except by a resolution duly adopted by 80% of the directors
in office, although less than a quorum, or by holders of shares of Voting Stock
of the Corporation representing at least 80% of the votes entitled to be cast at
a meeting of the shareholders duly called for the consideration of such
amendment, alteration, change or repeal.]
Executed this ____ day of August, 1996.
ARTRA GROUP Incorporated
By: ______________________________
Peter R. Harvey, President
BY-LAWS
OF
ARTRA GROUP INCORPORATED
(As amended July ___, 1996)
ARTICLE I
SHAREHOLDERS
Section 1. Annual Meeting of Shareholders. The annual meeting of
shareholders shall be held at such time and on such date during the months of
May or June or at the discretion of the Board of Directors, in each year, as
shall be fixed by the Board of Directors, for the purpose of electing directors
and for the transaction of such other business as may properly come before the
meeting.
Section 2. Place of Meeting. Each meeting of the shareholders shall be
held at such place within or without the Commonwealth of Pennsylvania as the
Board of Directors shall designate.
Section 3. Organization. At every meeting of the shareholders, the
Chairman of the board, or in his absence, the President, shall act as Chairman
of the meeting. The Secretary of the Corporation, or in his absence, an
Assistant Secretary, shall act as Secretary of the meeting. In case none of the
officers above designated to act shall be present, a Chairman or a Secretary of
the meeting, as the case may be, shall be chosen by a majority in voting power
of the shareholders present in person or by proxy and entitled to vote at the
meeting.
Section 4. Election of Directors. Directors shall be elected by the
shareholders by ballot by cumulative voting as provided in Section 505 of the
Pennsylvania Business Corporation Law, as amended, at the annual meeting of
shareholders of the Corporation.
ARTICLE II
DIRECTORS
Section 1. General Powers. The business and affairs of the Corporation
shall be managed by its Board of Directors.
Section 2. Number and Qualifications. The number of Directors of the
Corporation shall be a minimum of six and a maximum of nine, who need not be
residents of the Commonwealth of Pennsylvania or shareholders in the
Corporation. The Directors, from time to time, by a majority vote of the
Directors in office, although less than a quorum, shall fix the number of
Directors constituting the Board, within the limits prescribed above.
Section 3. Election and Term of Office. Directors shall be elected, and
shall hold office, as provided in Article 6th of the Amended and Restated
Articles of Incorporation of the Corporation. Any vacancy in the Board of
Directors, occurring by reason of death, resignation, removal, or increase
<PAGE>
in the number of directors or otherwise, shall be filled as provided in Article
6th of the Amended and Restated Articles of Incorporation of the Corporation.
Section 4. Organization. The Board of Directors, by a vote of a
majority of its membership, shall appoint one of its members Chairman of the
Board who shall be the chief executive officer of the Corporation. The Chairman,
or if no Chairman has been elected or if he is absent from any meeting, a person
selected by a majority of the directors present, shall preside at meetings of
the Board.
Section 5. Place of Meeting. The Board of Directors may hold its
meetings within or without the Commonwealth of Pennsylvania, at such place or
places as it may from time to time determine.
Section 6. Regular Meetings. A meeting of the Board of Directors shall
be held, on the same day if possible, or in any event as soon as practicable,
after each annual meeting of shareholders. Additional regular meetings of the
Board may be held at such times as may be fixed by resolution of the Board.
Section 7. Special Meetings. Special meetings of the Board of Directors
may be called by the Chairman of the Board or the President, or on the written
request of two directors, on at least two days' notice to each member of the
Board, either personally, by mail or telegram.
Section 8. Quorum. A majority of the Board of directors in office shall
constitute a quorum for the transaction of business and the act of a majority of
the directors in office at a meeting at which a quorum is present shall be the
act of the Board of Directors, except as otherwise provided in Article 7th of
the Amended and Restated Articles of Incorporated of the Corporation or in these
By-laws.
Section 9. Action Without a Meeting. Any action which may be taken at a
meeting of the directors may be taken without a meeting if a consent in writing
setting forth the action so taken shall be signed by all of the directors and
filed with the Secretary of the Corporation.
Section 10. Compensation. Members of the Board of Directors shall be
paid their expenses, if any, of attendance at each meeting of the Board and,
subject to the determination of the board, may be paid either a fixed sum for
attendance at each meeting of the Board or a stated salary as director. No such
payment shall preclude any director from serving the corporation in any other
capacity and receiving compensation therefor. Members of special or standing
committees may be allowed like compensation for attending committee meetings.
Section 11. Conference Telephone Meeting. One or more directors may
participate in a meeting of the Board, or of a Committee of the Board, by
conference telephone, or similar communications equipment, by means of which all
persons participating in the meeting can hear each other.
<PAGE>
ARTICLE III
OFFICERS
Section 1. Number. The officers of the Corporation shall be a
President, one or more Vice Presidents, a Treasurer, and a Secretary, all to be
elected by the Board of Directors, and such other officers, including a Chairman
of the Board, as may be appointed in accordance with the provisions of these
By-laws. Two or more offices, except those of Chairman of the Board or President
and Vice President and those of President and Secretary, may be held by the same
person, but no officer shall execute, acknowledge or verify any instrument in
more than one capacity.
Section 2. Election, Term of Office, Qualifications. The officers of
the Corporation shall be chosen annually by the Board of Directors as soon as
practical after the election of the Board of Directors. Each officer shall hold
his office until his successor shall have been duly chosen and qualified, or
until his successor shall have been duly chosen and qualified, or until his
death, or until he shall resign or shall have been removed in the manner
provided in Section 407 of the Pennsylvania Business Corporation Law. It shall
not be necessary for any officer, with the exception of the Chairman of the
Board, to be a director.
Section 3. Subordinate Officers. The Board of Directors may appoint
such other officers, or agent as the business of the Corporation may require,
including Assistant Treasurers and Assistant Secretaries, each of whom shall
hold office for such period, have such authority and perform such duties as are
provided in these By-laws or as the Board of Directors, or the President may
from time to time determine and prescribe. The Board of Directors may, from time
to time, authorize any other officer to appoint and remove any of such
subordinate officers.
Section 4. Resignations. Any officer may resign at any time by giving
notice to the Board of Directors or to the President or to the Secretary of the
Corporation. Any such resignation shall take effect at the 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 shall be filled for the
unexpired portion of the term by the Board of Directors at any regular or
special meeting, but in the event of a vacancy in any of the subordinate offices
appointed by an officer to whom such power of appointment shall have been
deleted as hereinabove provided, such vacancy may be filled, for the unexpired
portion of the term, by the officer to whom the power of appointment shall have
been delegated as aforesaid.
Section 6. The President. The President shall be the chief operating
officer of the Corporation and subject to the control of the Board of Directors,
shall have general supervision over the business of the Corporation and over its
several officers. He may sign, with the Secretary, or any other proper officer
of the Corporation thereunto duly authorized by the Board of Directors,
certificates for shares of stock of the Corporation. Except in cases where the
signing and execution thereof shall be expressly delegated by the Board of
Directors or by these By-laws to some other officer or agent of the Corporation,
the President may sign and execute in the name of the Corporation all deeds,
leases, mortgages, bonds, contracts, or other instruments, with such
countersignature as the Board of Directors may from time to time determine; and,
in general, the President shall perform all duties incident to the office of
President and such other duties as from time to time may be assigned to him by
the Board of Directors.
<PAGE>
Section 7. Vice Presidents. The Vice President may perform all the
duties of the President, at the request of the President or in his absence or
disability, and, when so acting, shall have the powers of and be subject to all
the restrictions upon the President. In the event that there is more than one
Vice President, the Vice Presidents in the order designated at the time of their
election, or in the absence of any designation, then in order of their election,
shall perform the duties of the President as aforesaid. Any Vice President may
also sign with the Treasurer, or Secretary, or an Assistant Treasurer, or an
Assistant Secretary, or any other proper officer of the Corporation thereunto
duly authorized by the Board of Directors, certificates for shares of stock of
the Corporation. Except in cases where the signing and execution thereof shall
be expressly delegated by the Board of Directors or these By-laws to some other
officer or agent of the Corporation, any Vice President may sign and execute in
the name of the Corporation all deeds, leases, mortgages, bonds, contracts, or
other instruments, with such countersignature as the Board of Directors may from
time to time determine; and any Vice President shall perform such other duties
as from time to time may be assigned to him by the Board of Directors or by the
President, or by these By-laws.
Section 8. The Treasurer. The Treasurer shall have custody of, and be
responsible for, all funds and securities of the Corporation; he may endorse on
behalf of the Corporation for collection all checks, notes and other obligations
and shall deposit same to the credit of the Corporation in such banks or
depositaries as the Board of Directors may designate. Whenever required by the
Board of Directors or by the President, he shall render a statement of his
accounts. He shall enter regularly in the books of the Corporation, to be kept
by him for that purpose, full and accurate accounts of all monies received and
disbursed by him on account of the Corporation, and be responsible for the case
and custody of such books and accounts.
Section 9. The Secretary. The Secretary shall keep the minutes of the
proceedings of the shareholders and of the Board of Directors, shall see that
all notices are duly given in accordance with the provisions of these By-laws or
as required by law, shall be custodian of the corporate records and of the seal
of the Corporation and see that the seal of the Corporation is affixed to all
documents the execution of which on behalf of the Corporation under its seal is
duly authorized, shall keep a register of the post office address of each
shareholder which shall be furnished to the Secretary by such shareholder, shall
sign with the President, or a Vice President, certificates for shares of the
Corporation, the issuance of which shall have been authorized by resolution of
the Board of Directors, and shall have general charge of the stock transfer
books of the Corporation. In general, he shall perform all duties incident to
the office of Secretary and such other duties as from time to time may be
assigned to him by the President or by the board of Directors.
<PAGE>
Section 10. Assistant Treasurers and Assistant Secretaries. Assistant
Treasurers and Assistant Secretaries shall perform such duties of the Treasurer
or the Secretary, respectively, as shall be assigned to them by the Treasurer or
the Secretary, respectively, or by the Board of Directors or by the President.
Section 11. Compensation. The salaries of all officers who as herein
provided, may be elected only by the Board of Directors, shall be fixed from
time to time by the Board of Directors. The salaries of all other officers and
employees of the Corporation shall be fixed by the President. Any payments made
to an officer or director of the Corporation such as a salary, commission,
bonus, interest, or entertainment expense incurred by him, which shall be
disallowed in whole or in part as a deductible expense by the Internal Revenue
Service, shall be reimbursable by such officer to the Corporation to the full
extent of such disallowance. It shall be the duty of the Board of Directors, to
enforce payment of any such amount disallowed. In lieu of payment by the officer
or director, subject to the determination of the directors, proportionate
amounts may be withheld from his future compensation payments until the amount
owed to the Corporation has been recovered.
ARTICLE IV
INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS
Section 1. This Corporation shall indemnify any director or officer,
and may indemnify any other employee or agent, who was or is a party to, or is
threatened to be made a party to or who is called as a witness in connection
with any threatened, pending, or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, including an action by or in
the right of the Corporation, by reason of the fact that he is or was a
director, officer, employee or agent of this Corporation, or is or was serving
at the request of this Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses, including attorneys' fees, judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding unless the act or failure to act giving rise to the
claim for indemnification is determined by a court to have constituted willful
misconduct or recklessness.
Section 2. The indemnification and advancement of expenses provided by,
or granted pursuant to, this Article IV shall not be deemed exclusive of any
other rights to which those seeking indemnification or advancement of expenses
may be entitled under any By-law, agreement, contract, vote of shareholders or
disinterested directors or pursuant to the discretion, howsoever embodied, of
any court of competent jurisdiction or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office. It is the policy of this Corporation that indemnification of, and
advancement of expenses to, directors and officers of this Corporation shall be
made to the fullest extent permitted by law. To this end, the provisions of this
Article IV shall be deemed to have been amended for the benefit of directors and
officers of this Corporation effective immediately upon any modification of the
Business Corporation Law of the Commonwealth of Pennsylvania (the "BCL") or the
Directors' Liability Act of the Commonwealth of Pennsylvania (the "DLA") which
expands or enlarges the power or obligation of corporations organized under the
BCL or subject to the DLA to indemnify, or advance expenses to, directors and
officers of this Corporation.
<PAGE>
Section 3. The Corporation shall pay expenses incurred by an officer or
director, and may pay expenses incurred by any other employee or agent, in
defending a civil or criminal action, suit or proceeding in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of such person to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by this Corporation.
Section 4. The indemnification and advancement of expenses provided by,
or granted pursuant to, this Article IV shall, unless otherwise provided when
authorized or ratified, 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 such person.
Section 5. This Corporation shall have the authority to create a fund
of any nature, which may, but need not be, under the control of a trustee, or
otherwise secure or insure in any manner, its indemnification obligations,
whether arising under these By-laws or otherwise. This authority shall include,
without limitation, the authority to (i) deposit funds in trust or in escrow,
(ii) establish any form of self insurance, (iii) secure its indemnify obligation
by grant of a security interest, mortgage or other lien on the assets of this
Corporation or (iv) establish a letter of credit, guaranty or surety arrangement
for the benefit of such persons in connection with the anticipated
indemnification or advancement of expenses contemplated by this Article IV. The
provisions of this Article IV shall not be deemed to preclude the
indemnification of, or advancement of expenses to, any person who is not
specified in Section 1 of this Article IV but whom this Corporation has the
power or obligation to indemnify, or to advance expenses for, under the
provisions of the BCL or the DLA or otherwise. The authority granted by this
Section 5 shall be exercised by the Board of Directors of this Corporation.
ARTICLE V
CONTRACTS, LOANS, BANK ACCOUNTS, ETC.
Section 1. Contracts. The Board of Directors may authorize any officer
or agent to enter into contracts or to execute and deliver instruments in the
name of and on behalf of the Corporation, and such authority may be general or
confined to specific instances.
Section 2. Loans. No loans or guarantees of indebtedness of any
subsidiary shall be contracted on behalf of the Corporation and no evidence of
indebtedness shall be issued in its name unless authorized by the Board of
Directors. Such authorization may be general or confined to specific instance.
<PAGE>
Section 3. Checks, Drafts, Etc. All checks, drafts or other orders for
the payment of money, notes or other evidence of indebtedness of the Corporation
shall be signed on behalf of the Corporation by the persons and in such manner
as shall from time to time be determined by the Board of Directors.
Section 4. Deposits. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the Corporation
in such banks, trust companies or other depositaries as the Board of Directors,
or officers or agents authorized by it, may select.
ARTICLE VI
SHARES AND DIVIDENDS
Section 1. Certificates for Shares. The Corporation's certificates of
capital stock shall be in such form as the Board of Directors may from time to
time prescribe and shall be signed by the President or a Vice President and by
the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant
Secretary. If certificates are signed by a Transfer Agent, on behalf of the
Corporation, and a Registrar, the signatures of the corporate officers may be
facsimile.
Section 2. Transfer of Shares. Shares of capital stock shall be
transferable on the books of the Corporation only by the holder of record
thereof in person or by a duly authorized attorney, upon surrender and
cancellation of certificates for a like number of shares.
Section 3. Dividends. The Board of Directors, from time to time, may
declare, and the Corporation may pay, dividends on its outstanding shares in the
manner and upon the terms and conditions provided by law and its Articles of
Incorporation.
ARTICLE VII
AMENDMENTS
The Board of Directors, by vote of a majority of the number of
directors in office, shall have power to make, alter, amend, and rescind these
By-laws, (i) except such By-laws as may hereafter be adopted by the shareholders
and (ii) except as hereinafter provided.
[THE FOLLOWING LANGUAGE IN BRACKETS IS BEING DELETED WITH THIS
AMENDMENT AND IS NOT PART OF THE AMENDED BY-LAWS; THIS LINED OUT LANGUANGE WILL
APPEAR IN THE FINAL PROXY: Except as hereinafter provided,] The shareholders may
adopt, alter, amend and rescind any By-laws or By-law, and any By-laws made by
the Board of Directors may be altered, amended, or rescinded by the shareholders
at any annual meeting or at any special meeting of shareholders, provided that
notice of any proposed By-laws or the proposed alteration, amendment, or
rescission be contained in the notice of the shareholders' meeting. The annual
report to shareholders or any proxy statement in connection with any annual
meeting, shall include a concise statement of all changes in the By-laws by the
Board of Directors since the preceding annual meeting.
<PAGE>
[THE FOLLOWING LANGUAGE IN BRACKETS IS BEING DELETED WITH THIS
AMENDMENT AND IS NOT PART OF THE AMENDED BY-LAWS; THIS LINED OUT LANGUANGE WILL
APPEAR IN THE FINAL PROXY: No By-law of the Corporation affecting the number of
directors, their election or removal, or the filling of any vacancy in the Board
of Directors, or any newly created directorship, shall be amended, altered,
changed or repealed, except by a resolution duly adopted by 80% of the directors
in office, although less than a quorum, or by holders of shares of stock of the
Corporation representing at least 80% of the votes entitled to be cast at a
meeting of the shareholders duly called for the consideration of such amendment,
alteration, change or repeal.]
ARTICLE VIII
LIMITATION OF LIABILITY OF DIRECTORS
Section 1. A director of this Corporation shall stand in a fiduciary
relation to this Corporation and shall perform his duties as a director
including his duties as a member of any committee of the Board of Directors upon
which he may serve, in good faith, in a manner he reasonably believes to be in
the best interests of this Corporation, and with such care, including reasonable
inquiry, skill and diligence, as a person of ordinary prudence would use under
similar circumstances. In performing his duties, a director shall be entitled to
rely in good faith on information, opinions, reports or statements, including
financial statements and other financial data, in each case prepared or
presented by any of the following:
(1) One or more officers or employees of this Corporation whom the
director reasonably believes to be reliable and competent in
the matters presented.
(2) Counsel, public accountants or other persons as to matters
which the director reasonably believes to be within the
professional or expert competence of such persons.
(3) A committee of the Board of Directors upon which he does not
serve, duly designated in accordance with law, as to matters
within its designated authority, which committee the director
reasonably believes to merit confidence.
A director shall not be considered to be acting in good faith if he has
knowledge concerning the matter in question that would cause his reliance to be
unwarranted.
Section 2. In discharging the duties of their respective positions, the
Board of Directors, committees of the Board of Directors and individual
directors may, in considering the best interests of this Corporation, consider
the effects of any action upon employees, upon suppliers and customers of this
Corporation and upon communities in which officers or other establishments of
this Corporation are located, and all other pertinent factors. The consideration
of these factors shall not constitute a violation of Section 1 hereof.
<PAGE>
Section 3. Absent breach of fiduciary duty, lack of good faith or
self-dealing, actions taken as a director or any failure to take any action
shall be presumed to be in the best interests of this Corporation.
Section 4. A director of this Corporation shall not be personally
liable for monetary damages as such for any action taken, or any failure to take
any action, unless:
(1) the director has breached or failed to perform the duties of
his office under Sections 1 through 3 hereof; and
(2) the breach or failure to perform constitutes self-dealing,
willful misconduct or recklessness.
Section 5. The provisions of Section 4 hereof shall not apply to:
(1) the responsibility or liability of a director pursuant to any
criminal statute; or
(2) the liability of a director for the payment of taxes pursuant
to local, state or federal law.
Section 6. Notwithstanding any other provision of these By-laws, the
approval of shareholders shall be required to amend, alter, change, repeal or
adopt any provision as a part of these By-laws which is inconsistent with the
purpose or intent of Sections 1, 2, 3, 4, 5 or 6 of this Article IX.
ARTICLE IX
NO RIGHT OF SHAREHOLDERS TO RECEIVE PAYMENT FOR SHARES
FOLLOWING A CONTROL TRANSACTION AS DEFINED IN THE
PENNSYLVANIA BUSINESS CORPORATION LAW
Section 910 of the Pennsylvania Business Corporation entitled "Right of
Shareholders to Receive Payment for Shares Following a Control Transaction"
shall not be applicable to this Corporation. Therefore, no shareholder of this
Corporation, that may become the subject of a control transaction described in
Subsection B of Section 910 of the Pennsylvania Business Corporation, who
objects to the control transaction shall be entitled to receive payment for his
shares nor be entitled to the rights and remedies under Section 910 of the
Pennsylvania Business Corporation.
