<PAGE> 1
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SCHEDULE 14A
(RULE 14A)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14A-6(E)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
HUFFY CORPORATION
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
HUFFY CORPORATION
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of filing fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/X/ Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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<PAGE> 2
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 28, 1995
To our Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders of
Huffy Corporation which will be held this year on Friday, April 28, 1995, at
10:00 a.m., Eastern Daylight Time, at the Dayton Marriott Hotel, 1414 South
Patterson Boulevard, Dayton, Ohio.
Formal Notice of the Meeting and Proxy Statement accompany this letter.
Please sign and return the enclosed proxy card in the envelope provided as soon
as possible so that your shares will be represented at the meeting. We hope you
will be present at the meeting.
Very truly yours,
/s/ Richard L. Molen
--------------------------
Richard L. Molen
Chairman of the Board
<PAGE> 3
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 28, 1995
The Annual Meeting of Shareholders of Huffy Corporation (the "Company"), an
Ohio corporation, will be held at the Dayton Marriott Hotel, 1414 South
Patterson Boulevard, Dayton, Ohio, on Friday, April 28, 1995, at 10:00 a.m.,
Eastern Daylight Time, for the following purposes:
1. To elect three Directors to serve for terms of three years, and one
Director to serve for a term of one year.
2. To consider and act upon a proposal described at pages 20-21 in the
accompanying Proxy Statement to adopt Amended Articles of Incorporation
of the Company in order to adopt a new purpose clause; to relocate
within the Articles the Company's power to repurchase shares of its
Common Stock; and to eliminate the terms and provisions of the Series A
Preferred Stock which is no longer outstanding. The actual wording of
the changes in the proposed Amended Articles is contained in Appendix A
attached to the Proxy Statement and incorporated therein by reference.
3. To consider and act upon a proposal described at page 22 in the
accompanying Proxy Statement to adopt an amended Code of Regulations of
the Company in order to render the Code of Regulations gender neutral;
to make minor technical changes; to clarify the terms requiring a
classified Board of Directors; to increase the maximum number of
Directors from 13 to 14; to clarify the appointment of an Executive
Committee and description of its authority once appointed; and to
specify the correct fiscal year of the Company. The actual wording of
the changes in the amended Code of Regulations is contained in Appendix
B attached to the Proxy Statement and incorporated therein by reference.
4. To ratify the appointment of KPMG Peat Marwick as independent public
accountants for 1995.
5. To transact such other business as properly may be brought before the
Annual Meeting or any adjournment(s) thereof.
Shareholders of record at the close of business on March 1, 1995, are
entitled to vote at the meeting or any adjournment(s) thereof.
By Order of the Board of Directors
/s/ Nancy A. Michaud
-----------------------------------
Nancy A. Michaud
Secretary
Dayton, Ohio
March 14, 1995
ALL SHAREHOLDERS ARE INVITED TO ATTEND THE MEETING IN PERSON. WHETHER YOU
EXPECT TO ATTEND OR NOT, PLEASE DATE AND SIGN THE ENCLOSED PROXY CARD AND MAIL
IT PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE.
<PAGE> 4
HUFFY CORPORATION
P.O. BOX 1204
DAYTON, OHIO 45401
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 28, 1995
MARCH 14, 1995
GENERAL INFORMATION
PERSONS MAKING THE SOLICITATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Huffy Corporation (the "Company") to be
used at the Annual Meeting of Shareholders to be held on April 28, 1995, and any
adjournment(s) thereof. This Proxy Statement and the accompanying proxy card
were first mailed to Shareholders on or about March 14, 1995. The Company will
bear the cost of soliciting proxies and will, upon request, reimburse banks,
brokerage houses and other institutions for their expenses in forwarding proxy
materials to their principals. Directors, Officers and employees of the Company
may solicit proxies personally from some Shareholders if proxies are not
received promptly. In addition, the Company has retained Morrow & Co., Inc. to
assist in the solicitation of proxies, for which the Company will pay fees
estimated to total $6,000.
VOTING SECURITIES
The authorized capital stock of the Company carrying current voting rights
consists of 60,000,000 shares of Common Stock, $1.00 par value, of which there
were 13,392,963 shares issued and outstanding as of March 1, 1995. The close of
business on March 1, 1995, has been fixed as the record date for the
determination of the holders of Common Stock entitled to receive notice of and
to vote at the Annual Meeting. Each share of Common Stock entitles the holder
thereof to one vote.
ACTIONS TO BE TAKEN BY HOLDERS OF PROXIES
Unless otherwise directed by the person giving the proxy, all properly
executed proxies will be voted: (1) for the election of Linda B. Keene, Patrick
W. Rooney, Geoffrey W. Smith, and Thomas C. Sullivan as Directors of the
Company; (2) in favor of the proposal described at pages 20-21 herein to adopt
Amended Articles of Incorporation of the Company; (3) in favor of the proposal
described at page 22 herein to adopt an amended Code of Regulations of the
Company; (4) in favor of ratification of the appointment of KPMG Peat Marwick as
independent public accountants for the Company for 1995; and (5) at the
discretion of the holders of the proxies, in the transaction of such other
business as may properly come before the meeting or any adjournment(s) thereof.
The holders of the proxies may, in their discretion, vote for substitute
nominee(s) designated by the Board of Directors, or take action to reduce the
number of Directors, in the event that any nominee becomes unable to serve for
any reason presently unknown.
A proxy may be revoked at any time before exercise by written notice to the
Company bearing a later date than the proxy, by submission of a later dated
proxy, or by voting in person in open meeting (although presence at the Annual
Meeting will not in and of itself constitute revocation of the proxy). Any
written notice revoking a proxy should be sent to Huffy Corporation, P.O. Box
1204, Dayton, Ohio 45401, Attention: Nancy A. Michaud, Secretary.
1
<PAGE> 5
ELECTION OF DIRECTORS
The Company's Board of Directors is divided into three classes, and one
class is elected at each Annual Meeting. The Board of Directors of the Company
recommends that three Directors be elected each for a three year term expiring
in 1998 and that one Director be elected for a one year term expiring in 1996.
In 1994, due to the death of Mr. Harry A. Shaw III, Chairman Emeritus and a
Director, and in accordance with Ohio law and the Company's Code of Regulations,
the Board of Directors decreased the number of Directors constituting the full
Board to 12. The Board of Directors of the Company currently has 12 Directors:
four whose terms expire in 1995, three whose terms expire in 1996, and five
whose terms expire in 1997. Linda B. Keene and Geoffrey W. Smith, whose terms
expire in 1995, have each been recommended by the Nominating Committee of the
Board of Directors and nominated by the Board of Directors for election to the
Board of Directors for a three year term expiring in 1998. Thomas C. Sullivan
has also been recommended by the Nominating Committee of the Board of Directors
and nominated by the Board of Directors for election to the Board of Directors
for a three year term expiring in 1998. Patrick W. Rooney has also been
recommended by the Nominating Committee of the Board of Directors and nominated
by the Board of Directors for election to the Board of Directors for a one year
term expiring in 1996. Boake A. Sells and Robin B. Smith, whose terms expire in
1995, are both retiring from the Board of Directors in accordance with the
Company's Director Retirement Policy.
Under Ohio law, if a Shareholder gives written notice to the President, a
Vice President or the Secretary of the Company, not less than 48 hours before
the time fixed for the Annual Meeting, that such Shareholder desires the voting
at the election of Directors to be cumulative, and if an announcement of the
giving of such notice is made upon the convening of the meeting by the chairman
or secretary of the meeting or by or on behalf of the Shareholder giving such
notice, then the Directors will be elected by cumulative voting. In such event,
each Shareholder has the right to give one candidate a number of votes equal to
the number of Directors then being elected multiplied by the number of such
Shareholder's shares, or to distribute such Shareholder's votes on the same
principle among two or more candidates. In the event that Directors are elected
by cumulative voting and cumulated votes represented by proxies solicited hereby
are insufficient to elect all the nominees, then the holders of the proxies
intend to vote such proxies cumulatively for the election of as many of such
nominees as possible and in such order as the holders may determine. Votes will
be counted by Bank One, Indianapolis, National Association acting as the
inspector of elections.
UNDER OHIO LAW AND THE COMPANY'S CODE OF REGULATIONS, THE FOUR NOMINEES
RECEIVING THE GREATEST NUMBER OF VOTES SHALL BE ELECTED AS DIRECTORS. SHARES AS
TO WHICH AUTHORITY TO VOTE IS WITHHELD, ABSTENTIONS AND SHARES NOT VOTED BY
BROKERS AND OTHER ENTITIES HOLDING SHARES ON BEHALF OF BENEFICIAL OWNERS WILL
NOT BE COUNTED AND WILL HAVE NO EFFECT ON THE OUTCOME OF THE ELECTION.
2
<PAGE> 6
The following table sets forth certain information as to each nominee for
Director and each other person whose term of office as Director will continue
after this Annual Meeting of Shareholders:
<TABLE>
<CAPTION>
SERVED AS
NAME AND PRINCIPAL OCCUPATION DIRECTOR
FOR THE PAST FIVE YEARS(1) AGE SINCE
--------------------------------------------------------------------------- --- ---------
<S> <C> <C>
NOMINEES FOR TERMS EXPIRING IN 1998
Linda B. Keene, Vice President - Market Development of American Express 43 1993
Financial Advisors since 1994; prior thereto Vice President - Marketing
Services of The Pillsbury Company (multi-national food company) since
1992; prior thereto Vice President and General Manager, Desserts and
Specialty Products at such company since 1991; prior thereto Vice
President, Market Development and Strategic Planning, Baked Goods
Division of such company since 1990
Geoffrey W. Smith, Vice President of LTI Ventures Leasing Corporation 49 1986
(engaged in the financing of high-tech office automation equipment) since
1993; prior thereto Director of U.S. Multinational Division of The First
National Bank of Boston since 1991; prior thereto Director - New England
Credit Administration of such bank since 1990
Thomas C. Sullivan, Chairman and Chief Executive Officer of RPM, Inc. 57 --
(manufacturer of specialty chemicals and coatings) since 1971(2)
NOMINEE FOR TERM EXPIRING IN 1996
Patrick W. Rooney, Chairman of the Board, President and Chief Executive 59 --
Officer of Cooper Tire & Rubber Company (manufacturer of tires and inner
tubes for the automotive aftermarket, and engineered rubber products for
the O.E.M. automotive industry) since 1994; prior thereto President and
Chief Operating Officer of such company since 1991; prior thereto
President of the Tire Division of such company since 1990(3)
DIRECTORS WHOSE TERMS EXPIRE IN 1997
William K. Hall, President and Chief Executive Officer of Eagle Industries, 51 1980(5)
Inc. (manufacturer of building, electrical and transportation products)
since 1990(4)
Stephen P. Huffman, Vice President - Planning and Human Resources of Blue 55 1984
Diamond Growers (an agricultural cooperative) since 1993; prior thereto
Vice President - Administration of such company(6)
Donald K. Miller, Chairman of Greylock Financial Inc. (engaged in the 63 1988
financing of management and leveraged buyouts) since 1992 and also
President and Chief Executive Officer of PIMCO Advisors Inc. (a holding
company for certain ownership of PIMCO Advisors L.P. units) since 1994;
prior thereto Vice Chairman of Thomson Advisory Group L.P. (now PIMCO
Advisors L.P.) since 1993; prior thereto Managing Partner of Greylock
Financial Partnership (now Greylock Financial Inc.) since 1986 and
Chairman and Chief Executive Officer of Thomson Advisory Group L.P. since
1990(7)
Richard L. Molen, Chairman of the Board, President and Chief Executive 54 1985
Officer of the Company since 1994; prior thereto President and Chief
Executive Officer of the Company since 1993; prior thereto President and
Chief Operating Officer of the Company(8)
Fred G. Wall, Chairman of Madsen Wire Products, Inc. (manufacturer of 60 1978
fabricated wire products) since 1988; prior thereto and currently
consultant to various manufacturing companies
</TABLE>
3
<PAGE> 7
<TABLE>
<CAPTION>
SERVED AS
NAME AND PRINCIPAL OCCUPATION DIRECTOR
FOR THE PAST FIVE YEARS(1) AGE SINCE
--------------------------------------------------------------------------- --- ---------
<S> <C> <C>
DIRECTORS WHOSE TERMS EXPIRE IN 1996
Jack D. Michaels, President and Chief Executive Officer of HON INDUSTRIES 57 1993
Inc. (manufacturer of metal and wood office furniture, office products
and pre-fabricated fireplaces) since 1991; prior thereto President of
such company since 1990(9)
James F. Robeson, Consultant to various distribution companies since 1993; 58 1994
Senior Director of Coopers & Lybrand (national accounting firm) in 1993;
prior thereto Dean of the Richard T. Farmer School of Business
Administration at Miami University(10)
Thomas D. Gleason, Vice Chairman of Wolverine World Wide, Inc. 59 1980
(manufacturer of shoes and leather goods) since 1993; prior thereto
Chairman and Chief Executive Officer of such company(11)
<FN>
---------------
(1) Except as disclosed herein, no information is included in this Proxy
Statement for any portion of a period in which a Director did not hold
office as a Director of the Company.
(2) Mr. Sullivan is a Director of Pioneer-Standard Electronics, Inc. and RPM,
Inc.
(3) Mr. Rooney is a Director of Alltrista Corporation and Cooper Tire and
Rubber Company.
(4) Mr. Hall is a Director of A.M. Castle & Co., Great American Management and
Investment, Inc., and Falcon Building Products, Inc.
(5) Mr. Hall has served on the Company's Board of Directors from 1980 through
1989, and since 1991.
(6) Stephen P. Huffman and W. Anthony Huffman, Vice President - Corporate
Affairs of the Company, are brothers.
(7) Mr. Miller is a Director of RPM Inc. and PIMCO Advisors L.P.
(8) Mr. Molen is a Director of Alltrista Corporation and The Duriron Company,
Inc.
(9) Mr. Michaels is a Director of HON INDUSTRIES Inc.
(10) Mr. Robeson is a Director of Roberds, Inc.
(11) Mr. Gleason is a Director of Foremost Corp. of America and Wolverine World
Wide, Inc.
</TABLE>
MEETINGS BY, AND CERTAIN COMMITTEES OF, THE COMPANY'S BOARD OF DIRECTORS
Thomas D. Gleason (Chairman), James F. Robeson, and Boake A. Sells comprise
the Nominating Committee of the Board of Directors. The Nominating Committee
seeks out and reviews the qualifications of possible candidates for Board
membership. Shareholders may submit nominee recommendations, complete with
qualifications, to any member of the Nominating Committee at any time. The
Nominating Committee recommends to the Board of Directors candidates for
election as Directors at annual meetings, candidates to fill vacancies on the
Board, and candidates for Committees of the Board. During the last fiscal year,
the Nominating Committee met three times.
Donald K. Miller (Chairman), Stephen P. Huffman, Linda B. Keene, and
Geoffrey W. Smith comprise the Audit Committee of the Board of Directors. The
Audit Committee meets with the Company's independent public accountants,
internal auditors, and financial management executives. The Audit Committee
reviews the scope and results of audits as well as recommendations made by the
Company's auditors and executives with respect to internal accounting controls.
During the last fiscal year, the Audit Committee met two times.
Fred G. Wall (Chairman), Jack D. Michaels, Boake A. Sells and Robin B.
Smith comprise the Compensation Committee of the Board of Directors. The
Compensation Committee sets salary and benefits policy, and determines
compensation and benefit levels for the Company's Officers and certain other key
employees. During the last fiscal year, the Compensation Committee met five
times.
4
<PAGE> 8
The Board of Directors also has an Executive Committee comprised of William
K. Hall (Chairman), Thomas D. Gleason, Donald K. Miller, Richard L. Molen, and
Fred G. Wall. During the last fiscal year, the Executive Committee met three
times.
During the last fiscal year, the Board of Directors met nine times. No
Director attended fewer than 75 percent of the aggregate number of meetings of
the Board of Directors and meetings of Committees thereof during the time such
person was a Director and member of any such Committee.
COMPENSATION OF DIRECTORS
The Company has a standard arrangement with its non-employee Directors for
payment of an annual base compensation of $15,000, plus additional compensation
of $900 per Board meeting attended. The Chairman of the Executive Committee
receives additional compensation of $10,000 per year and $900 for each Executive
Committee meeting attended. The Chairman of the Compensation Committee receives
additional compensation of $3,000 per year. The Chairmen of the Audit and
Nominating Committees each receive additional compensation of $1,500 per year.
The members of the Executive Committee (excluding the Chairman) receive
additional compensation of $1,250 per year and $900 for each Executive Committee
meeting attended. Except for the Executive Committee, each Committee member
(including the Chairman of the Committee) receives $700 for each Committee
meeting attended. Additionally, Directors receive consulting fees of $500 for
each half day of service provided outside their normal duties as Directors when
such services are provided at the request of management of the Company and $500
for Board of Directors' visits to Company plant sites. Directors receive $2,500
for attendance at Board of Directors' retreat meetings but such fee is in lieu
of all meeting fees for Board and Committee meetings held during such retreat.
No Director who is an employee of the Company receives any compensation for
services as a Director.
DIRECTOR PLANS
Non-employee Directors who wish to do so may elect to defer payment of
Directors' fees or take part of their Directors' fees in the form of stock
options, pursuant to the Company's 1987 Director Stock Option Plan (the "1987
Plan"). The 1987 Plan provides for the automatic grant of options to purchase
5,625 shares (adjusted for stock splits) of the Company's Common Stock every
third year, commencing in 1988, on the second business day after the Annual
Meeting of Shareholders. Options are granted to members of the Board of
Directors of the Company who are not employees of the Company or any of its
subsidiaries ("Outside Directors"). The purchase price of the Common Stock is
100 percent of the fair market value of the Common Stock on the date of grant.
In addition to options granted automatically every three years, if an
Outside Director files an irrevocable election with the Secretary of the Company
at least six months prior to July 1 of any year electing not to receive all or a
portion of his or her annual base compensation, which is currently $15,000 per
year, to be earned in the following 12 month period beginning July 1 and ending
June 30, then the Company shall grant options automatically on July 1 or, if
July 1 is not a business day, on the next business day to such Outside Director.
The number of shares of Common Stock for which options will be granted will be
the nearest number of whole shares of Common Stock determined in accordance with
the following formula:
<TABLE>
<C> <S>
Portion of Annual Base
Compensation Not Received = Number of Shares
-----------------------------
Fair Market
Value minus $1.00
</TABLE>
For the 12 month period beginning July 1, 1995, and ending June 30, 1996,
Outside Directors have elected not to receive, in the aggregate, $75,500 of
their annual base compensation and to have the Company grant options to them on
July 1, 1995, based on such elections in accordance with the 1987 Plan. The
option price per share of the Common Stock covered by such options will be
$1.00.
No options may be exercised before the second Annual Meeting of
Shareholders of the Company following the date they were granted, except upon a
change in control (as defined in the 1987 Plan), or due to retirement from the
Board of Directors because of total and perma-
5
<PAGE> 9
nent disability, expiration of a Director's term of office, or otherwise in
accordance with the current Board of Directors' policy or upon the death of the
option holder. A notice to exercise an option must be accompanied by full
payment of the purchase price for the Common Stock being purchased. The 1987
Plan, which is effective for ten years, is administered by a Committee
consisting of three Officers of the Company not entitled to participate in the
1987 Plan.
In 1990, the Company adopted a Directors' Retirement Plan whereby each
non-employee Director who has served as a member of the Board of Directors of
the Company five years or more and each former employee Director who has served
as a member of the Board of Directors of the Company five years or more after
retirement or termination as an employee of the Company will earn an annual
retirement benefit of $5,000 plus $1,000 for each year of service as a
non-employee Director (prorated for partial years) in excess of five years
service, not to exceed a maximum annual benefit of $10,000. Retirement benefits
will commence when specified by an eligible Director after retirement from the
Board of Directors, but not earlier than age 60 or later than age 70, and will
continue for a period equal to the number of full years of service as a
non-employee Director, not to exceed 12 years.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF MANAGEMENT
The following table shows the beneficial ownership of the Company's Common
Stock reported to the Company as of February 8, 1995, for each Director and
nominee and for each of the Executive Officers named in the Summary Compensation
Table (the "Named Executive Officers"), and as a group of Directors and all
Executive Officers. For purposes of the table, a person is considered to
"beneficially own" any shares of Common Stock (i) over which the person
exercises sole or shared voting or investment power or (ii) of which the person
has the right to acquire beneficial ownership at any time within 60 days after
February 8, 1995.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME OF BENEFICIAL BENEFICIAL
OWNER(1) OWNERSHIP(2)
---------------------------- ------------
<S> <C>
Thomas A. Frederick......... 5,119(3)
Thomas D. Gleason........... 15,241(4)
William K. Hall............. 7,218(5)
Timothy G. Howard........... 25,860(6)
Stephen P. Huffman.......... 81,555(7)
W. Anthony Huffman.......... 131,301(8)
Linda B. Keene.............. 400
Jack D. Michaels............ 200
Donald K. Miller............ 53,193(9)
Richard L. Molen............ 164,230(10)
Gary E. Morin............... 18,138(11)
James F. Robeson............ 500(12)
Patrick W. Rooney........... 0
Boake A. Sells.............. 5,000
Geoffrey W. Smith........... 47,158(13)
Robin B. Smith.............. 7,867(14)
Thomas C. Sullivan.......... 2,250
Fred G. Wall................ 15,608(15)
All Directors, Nominees and
Executive Officers
as a Group
(21 persons)................ 590,937(16)
<FN>
---------------
(1) All shares are held with sole voting and sole investment power unless
otherwise indicated in the footnotes below.
(2) Except for Richard L. Molen whose Common Stock ownership is 1.2 percent, no
such beneficial owner owns more than one percent of the issued and
outstanding shares of Common Stock of the Company. All Directors, Nominees
and Executive Officers as a group own 4.3 percent of the issued and
outstanding shares of Common Stock of the Company as of February 8, 1995.
(3) Mr. Frederick has shared voting and shared investment power with respect to
460 shares held jointly with his wife. The total amount also includes 3,094
shares as to which Mr. Frederick holds options exercisable within 60 days.
6
<PAGE> 10
(4) The total amount also includes 12,393 shares as to which Mr. Gleason holds
options exercisable within 60 days.
(5) Mr. Hall has shared voting and shared investment power with respect to 450
shares held jointly with his wife. The total amount also includes 5,625
shares as to which Mr. Hall holds options exercisable within 60 days.
(6) Mr. Howard has shared voting and shared investment power with respect to
5,545 shares held jointly with his wife. The total amount includes 17,207
shares as to which Mr. Howard holds options exercisable within 60 days.
(7) Mr. Stephen Huffman has sole voting and sole investment power with respect
to 63,918 shares held in trust for the benefit of himself and his family.
Mr. Huffman has shared voting and shared investment power with respect to
2,706 shares held jointly with his wife and with respect to 3,300 shares
held by his children. The total amount also includes 11,631 shares as to
which Mr. Huffman holds options exercisable within 60 days.
(8) Mr. W. Anthony Huffman has sole voting and sole investment power with
respect to 107,153 shares, of which 20,809 shares are held by him as
custodian for his children. Mr. Huffman has shared voting and shared
investment power with respect to 675 shares held by his wife. The total
amount also includes 23,473 shares as to which Mr. Huffman holds options
exercisable within 60 days.
(9) Mr. Miller has sole voting and sole investment power with respect to 45,450
shares, of which 16,000 are held by him as custodian for his children. Mr.
Miller has shared voting and shared investment power with respect to 975
shares held by his wife. The total amount also includes 6,768 shares as to
which Mr. Miller holds options exercisable within 60 days.
(10) Mr. Molen has shared voting and shared investment power with respect to
15,957 shares held jointly with his wife. The total amount includes 95,794
shares as to which Mr. Molen holds options exercisable within 60 days.
(11) Mr. Morin has shared voting and shared investment power with respect to 972
shares held jointly with his wife. The total amount includes 13,416 shares
as to which Mr. Morin holds options exercisable within 60 days.
(12) Mr. Robeson has shared voting and shared investment power with respect to
500 shares held by his wife.
(13) Mr. Smith has sole voting and sole investment power with respect to 35,527
shares, of which 4,785 shares are held in trust for the benefit of his
children and 1,789 shares are held by him as custodian for his children.
The total amount also includes 11,631 shares as to which Mr. Smith holds
options exercisable within 60 days.
(14) The total amount also includes 7,467 shares as to which Ms. Smith holds
options exercisable within 60 days.
(15) Mr. Wall has sole voting and sole investment power with respect to 2,598
shares, of which 2,000 shares are held in trust for his benefit. The total
amount also includes 13,010 shares as to which Mr. Wall holds options
exercisable within 60 days.
(16) The total amount includes 229,076 shares of Common Stock which are subject
to options exercisable within 60 days.
</TABLE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information with respect to Shareholders
known to the Company to be beneficial owners of more than five percent of the
Company's Common Stock.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS OF BENEFICIAL PERCENT OF
BENEFICIAL OWNER OWNERSHIP CLASS(2)
-------------------- ----------- ------------
<S> <C> <C>
David L. Babson &
Co., Inc.(1) 1,199,750 8.57%
<FN>
---------------
(1) This information is taken from the Schedule 13G, dated February 10, 1995,
filed by David L. Babson & Co., Inc. with the Securities and Exchange
Commission, which disclosed David L. Babson & Co., Inc. has sole voting
power with respect to 676,500 shares, shared voting power with respect to
523,250 shares, and sole investment power with respect to 1,199,750 shares.
7
<PAGE> 11
(2) Percentages listed are those disclosed in the referenced Schedule 13G and
are not verified by the Company.
</TABLE>
REPORT OF COMPENSATION COMMITTEE OF BOARD OF DIRECTORS
ON EXECUTIVE COMPENSATION
Decisions on compensation of the Company's executives are made by the
four-member Compensation Committee (the "Committee") of the Board of Directors.
Each member of the Committee is a non-employee Director. Set forth below is a
report submitted by Fred G. Wall (Chairman), Jack D. Michaels, Boake A. Sells,
and Robin B. Smith in their capacity as the Committee addressing the Company's
compensation policies for 1994 as they affected Richard L. Molen, the Chief
Executive Officer; Gary E. Morin, W. Anthony Huffman, Thomas A. Frederick, and
Timothy G. Howard, who are the four next most highly paid Executive Officers;
and the other three Executive Officers of the Company.
COMPENSATION POLICIES TOWARD EXECUTIVE OFFICERS
The Company's executive compensation program is designed to be closely
linked to corporate performance and returns to Shareholders. To this end, the
Company has developed an overall compensation strategy and specific compensation
plans that tie a significant portion of executive compensation to the Company's
success in meeting specified performance goals and to appreciation in the price
of the Company's Common Stock. The overall objectives of this strategy are to
attract and retain the best possible executive talent, to motivate these
executives to achieve the goals inherent in the Company's business strategy, to
link executive and Shareholder interests through equity based plans, and finally
to provide a compensation package that recognizes individual contributions as
well as overall business results.
Approximately every two years and most recently in early 1994, the
Committee retained an independent compensation consultant to review the
Company's executive compensation program. These reviews permit a regular
evaluation of the competitiveness of the Company's executive compensation
program and its conformance to established compensation strategies. The
Committee compares the Company's executive compensation structure against the
compensation structure in place at a core set of companies which are industrial
manufacturers and whose size is adjusted to that of the Company. The Committee
believes that industrial manufacturers generally represent the Company's most
direct competitors for executive talent. However, because the Company uses the
Standard & Poor's Composite Leisure Time Index, which is more representative of
the Company's lines of business than industrial manufacturers in general, a
majority of those industrial companies are not included in the Performance Graph
on page 16 herein. The Committee's policy is to establish midpoints of base
salary ranges and total compensation at the 50th percentile level of industrial
midpoints for comparable positions and to adjust such midpoints annually to
maintain that level. The Company's overall executive compensation levels are
below such 50th percentile midpoints.
The Committee determines the compensation of the 14 most highly compensated
corporate executives, including the Executive Officers whose compensation is
detailed in this Proxy Statement, and sets policy for the compensation awarded
to other management personnel. This is designed to ensure consistency in
compensation strategy throughout the Company's compensation program. In
reviewing the individual performance of the executives whose compensation is
detailed in this Proxy Statement (other than Mr. Molen), the Committee takes
into account the views of Mr. Molen.
The key elements of the Company's 1994 executive compensation program
consist of Base Salary, the Profit Sharing Bonus Plan, the Long-Term Incentive
Plan and Stock Options, as well as the 1993 CEO Long-Term Performance Plan (the
"CEO Plan") for Mr. Molen. In addition, while the elements of compensation
described below are considered separately, the Committee takes into account the
full compen-
8
<PAGE> 12
sation package afforded by the Company to the individual, including pension
benefits, supplemental retirement benefits, severance plans, insurance and other
benefits, as well as the programs described below. Section 162(m) of the
Internal Revenue Code of 1986, as amended, (the "Code") precludes the Company
from taking a deduction for certain compensation in excess of $1 million per
year paid or accrued with respect to the Chief Executive Officer and the four
other highest paid Executive Officers. As of the date of this Report, neither
the Committee nor the Company has taken any action to qualify compensation (not
otherwise qualified under the Code) for deduction by the Company. Based on
present levels of compensation, it is not anticipated that any of the named
Executive Officers' non-deductible compensation will exceed $1 million in 1995.
BASE SALARY
Base salary ranges for Executive Officers, as for all other management
personnel, are determined by periodic recommendations by an independent
compensation consultant (other than the consultant referred to above) who
evaluates the responsibilities of each such position, and compares the Company's
salary level for the position to comparable positions at other industrial
companies nationwide. The comparison is made against other industrial
corporations generally rather than just companies in the various industries in
which the Company does business because the Committee believes that industrial
corporations generally represent the Company's most direct competitors for
executive talent. The Company's policy is to establish midpoints of such base
salary ranges at the 50th percentile level of industrial midpoints for
comparable positions, and to adjust such midpoints annually to maintain that
level. Annual salary adjustments within such base salary ranges are determined
by evaluating both the performance of the Executive Officer and the Executive
Officer's current base salary as a percentage of his or her base salary range
midpoint, using a matrix which reflects the Company's overall annual salary
increase budget. Generally speaking, the higher the performance level and the
lower the percentage that current base salary represents of the base salary
range midpoint, the higher the percentage of base salary increase. Performance
of an employee is evaluated based upon the employee's accomplishment of duties
set forth in the job description for his or her position, objectives established
for the employee by his or her supervisor (in the case of Mr. Molen by the Board
of Directors), and general management abilities.
In April, 1994, Mr. Molen's annual base salary was increased from $360,000
to $393,000 to reflect his promotion to Chief Executive Officer and his ongoing
contribution to the Company's performance. Subsequently, in September, 1994, Mr.
Molen was elected Chairman of the Board. Effective November 1, 1994, Mr. Molen's
salary was increased to $425,000 to reflect his promotion and added
responsibilities. In each instance, the Committee considered the longevity of
Mr. Molen's service to the Company and the annual base salaries of other
similarly situated chief executive officers and chairmen of the board.
PROFIT SHARING BONUS PLAN
Bonus opportunity is extended to virtually all managerial employees of the
Company, including its Executive Officers. Individual and corporate performance
objectives are established at the beginning of each year. The corporate
performance measure for bonus payments in 1994 was based on return on average
net assets ("RONA"), and for 1994 the Committee determined that target level
bonus would be achieved when RONA was 9.7 percent, with threshold level bonus
and maximum level bonus being achieved when RONA was 7.7 percent and 12.7
percent, respectively. Individual performance is based on performance of
personal goals, which performance is evaluated by the Committee for Mr. Molen,
and is evaluated by Mr. Molen, subject to review by the Committee, for other
Executive Officers. The Executive Officers are eligible to earn maximum profit
sharing bonuses ranging from 60 percent to 100 percent, for Mr. Molen, of their
annual base salaries, depending on their position, with 80 percent of the bonus
based on corporate performance and 20 percent of the bonus based on individual
personal objectives. The nature of these objectives differs depending upon each
Executive Officer's specific job responsibilities. Goals are both qualitative,
such as certain business strategy development
9
<PAGE> 13
and/or implementation, improved customer satisfaction, management effectiveness
and personal development, and quantitative in nature, such as achieving cost
reduction, production and sales goals. At the end of the year, the extent to
which the specific goals applicable to each Executive Officer were attained is
measured.
In 1994, the Company earned a RONA of 8.9 percent. Based on these results,
Mr. Molen was awarded a bonus of $171,800, $69,850 of which was based on
personal objectives.
LONG-TERM INCENTIVE PLAN
Each of the Executive Officers participates in the Company's Long-Term
Incentive Plan which is based on the average return on equity ("ROE") achieved
by the Company over a three-year period. Under this plan, Executive Officers are
each eligible to earn maximum awards ranging from 35 percent to 100 percent, for
Mr. Molen, of their average annual base salary over the three-year award cycle,
depending on position. In 1994, the Company made awards for the three-year award
cycle ended December 31, 1993. Fifty percent of such award was based upon the
Company's average ROE over the three-year award cycle (excluding the impact of
the implementation of Statement of Financial Accounting Standards ("SFAS") No.
112, employers' accounting for post-employment benefits, and the effect of the
restructure at True Temper Hardware Company), compared to an ROE target of 14.4
percent established by the Committee prior to the beginning of such three-year
period. The other 50 percent of the award was based upon the Company's average
ROE over the three-year award cycle, compared to the average ROE of the STANDARD
& POOR'S 400 INDUSTRIALS over the same period, which was 10.5 percent. During
the three-year award cycle ended December 31, 1993, the Company's average ROE
was 12.9 percent (excluding the impact of the implementation of SFAS No. 112,
employers' accounting for post-employment benefits, and the effect of the
restructure at True Temper Hardware Company) and 8.8 percent, including SFAS No.
112 and such restructure. As a result, in 1994, Mr. Molen received a payment of
$85,192, which represented 30.1 percent of the maximum award for such three-year
award cycle.
Awards for the three-year award cycle ended December 31, 1994, will be
determined and, if results warrant, paid in the second half of 1995 after the
average ROE of the STANDARD & POOR'S 400 INDUSTRIALS becomes available.
STOCK OPTIONS
Under the Company's 1988 Stock Option Plan and Restricted Share Plan (the
"1988 Plan"), which was approved by Shareholders, stock options are granted to
the Company's Executive Officers and other key managers. The Committee sets
guidelines for the size and frequency of awards of stock option grants which are
based upon the employee's position and base salary. Under the Company's stock
option programs, Mr. Molen and all other Executive Officers are eligible to
receive an annual grant equal to approximately 85 percent of their base salary
divided by the fair market value of the Common Stock on the date of grant (i.e.,
the closing price of the Common Stock on the New York Stock Exchange on the date
of grant). All awards are made by the Committee, which has the discretion to
elect not to award option grants.
Stock options are designed to align the interests of Executive Officers
with those of the Shareholders. Stock options are granted to Executive Officers
with an exercise price equal to the closing market price of the Common Stock on
the date of grant and currently become exercisable one-third on or after three
years from the date of grant, another one-third on or after four years from the
date of grant, and the final one-third on or after five years from the date of
grant. This approach is designed to incent the creation of Shareholder value
over the long term since the full benefit of the compensation package cannot be
realized unless Common Stock price appreciation occurs over a number of years.
In 1994, Mr. Molen received options to purchase 25,351 shares of the Common
Stock with an exercise price of $14.375 per share. The options become
exercisable ratably over a three-year period beginning in December, 1997. As of
February 8, 1995, Mr. Molen beneficially owned 164,230 shares of Common Stock.
The Committee believes that increasing equity interests in the Company held by
the Company's management align the interests of
10
<PAGE> 14
Shareholders and management. To that end, in December, 1994, the Board of
Directors approved an Executive Stock Ownership program which will commence in
1995 and which sets guidelines for stock ownership for Executive Officers and
other key personnel. Pursuant to such guidelines, in order to be awarded
additional stock options, the Chief Executive Officer and all other Executive
Officers will be required to own Common Stock equal to 1.5 times and 1 to 0.5
times their salaries, respectively, with measured interim ownership goals to be
attained over a ten year period.
1993 CEO LONG-TERM PERFORMANCE PLAN
Under the CEO Plan, performance awards have been established by the Company
whereby Mr. Molen may earn a cash payment if, and only if, the Company achieves
the requisite Total Shareholder Return (as defined in the CEO Plan to include
the annual rate of growth of the Common Stock and dividends paid on such stock)
on a Beginning Share Price (as defined in the CEO Plan) during the applicable
performance period. Five performance periods were established, three of which
began January 1, 1993, and end December 31, 1995, 1996, and 1997, respectively.
The fourth and fifth performance periods begin January 1, 1994, and 1995,
respectively, and end December 31, 1998, and 1999, respectively. For the
performance periods beginning January 1, 1993, the Beginning Share Price is
$16.25. If the Total Shareholder Return for any performance period beginning
January 1, 1993, is 15 percent at the end of the performance period, Mr. Molen
will receive a performance award, in cash, in the amount of $30,000 for the
performance period ending December 31, 1995; $40,000 for the performance period
ending December 31, 1996; or $50,000 for the performance period ending December
31, 1997. If the Total Shareholder Return for any such performance period is 19
percent at the end of the performance period, Mr. Molen will receive a
performance award, in cash, in the amount of $60,000 for the performance period
ending December 31, 1995; $80,000 for the performance period ending December 31,
1996; or $100,000 for the performance period ending December 31, 1997. If the
Total Shareholder Return for any such performance period is 27 percent at the
end of the performance period, Mr. Molen will receive a performance award, in
cash, in the amount of $300,000 for the performance period ending December 31,
1995; $400,000 for the performance period ending December 31, 1996; or $500,000
for the performance period ending December 31, 1997. For the performance period
beginning January 1, 1994, and ending December 31, 1998, the Beginning Share
Price is $18.78; the threshold, target and maximum performance awards, based on
a Total Shareholder Return of 15, 19 and 27 percent, respectively, for such
period are $55,000, $110,000 and $550,000, respectively. For the performance
period beginning January 1, 1995, and ending December 31, 1999, the Beginning
Share Price is $14.78. If the Total Shareholder Return for the performance
period beginning January 1, 1995, and ending December 31, 1999, is 10 percent,
13 percent or 20 percent at the end of such performance period, Mr. Molen will
receive either a threshold, target or maximum performance award, in cash, in the
amount of $67,500, $135,000 or $675,000, respectively. If the Total Shareholder
Return over any such performance period is less than 10 or 15 percent, as
applicable, at the end of the performance period, Mr. Molen will earn no
performance award. Similarly, if the Total Shareholder Return over any such
performance period is greater than 20 or 27 percent, as applicable, at the end
of the performance period, Mr. Molen will receive no greater amount than that
stated above. The cash amount of a performance award earned shall be determined
by linear interpolation if the Total Shareholder Return is greater than 10 or 15
percent, as applicable, but less than 20 or 27 percent, as applicable.
CONCLUSION
Through the programs described above, a very significant portion of the
Company's executive compensation is linked directly to individual and corporate
performance and Common Stock price appreciation. In 1991, a record performance
year for the Company, the majority of the Company's executive compensation
resulted from these performance-based variable plans. In 1992, when corporate
performance deteriorated, performance-based variable compensation was
significantly reduced, and a significant portion of the performance-based
variable compensation that was actually paid in
11
<PAGE> 15
1992 related to performance over a three to five-year period. In 1993 and 1994,
when corporate performance improved over 1992, again a significant portion of
the performance-based variable compensation that was paid related to performance
over the prior three to five-year period. The Committee intends to continue the
policy of linking executive compensation to corporate performance and returns to
Shareholders, recognizing that the ups and downs of the business cycle from time
to time may result in an imbalance for a particular period.
SUBMITTED BY THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS(1)
Jack D. Michaels, Boake A. Sells, Robin B. Smith, and Fred G. Wall
---------------
(1) Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, that might incorporate future
filings, including this Proxy Statement, in whole or in part, this report
and the graph set forth on page 16 shall not be incorporated by reference
into any such filings.
CERTAIN RELATIONSHIPS AND OTHER RELATED TRANSACTIONS
The Company, in the ordinary course of business, selected Columbus Circle
Investors in 1991 as one of its four investment advisors for Company pension
funds. Mr. Donald K. Miller, a Director of the Company, is a Director of PIMCO
Advisors L.P., of which Columbus Circle Investors is a sub-partnership. Fees
paid to Columbus Circle for services rendered in 1994 aggregated $91,326, which
fees were generally competitive with those offered by other investment advisors
providing similar services.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee for 1994 were Fred G. Wall
(Chairman), Jack D. Michaels, Boake A. Sells and Robin B. Smith, none of whom is
or was a current or former officer or employee of the Company or any of its
subsidiaries. In addition, no Executive Officer of the Company serves as a
Director or as a member of a Committee of any company of which members of the
Company's Compensation Committee are executive officers.
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER INFORMATION
The following table shows, for the fiscal years ended December 31, 1992,
1993, and 1994, the cash compensation paid by the Company as well as certain
other compensation paid or accrued for those years, to each of the five most
highly compensated Executive Officers, including Richard L. Molen, the current
Chairman, President and Chief Executive Officer of the Company, in all
capacities in which they served:
12
<PAGE> 16
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
LONG-TERM COMPENSATION
-------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
--------------------------------- ----------------------- ----------
OTHER NUMBER PAYOUTS
ANNUAL RESTRICTED OF ---------- ALL OTHER
NAME AND COMPENSA- STOCK OPTIONS/ LTIP COMPENSA-
PRINCIPAL POSITION YEAR SALARY(1) BONUS(1) TION(2) AWARD(S) SARS(3) PAYOUTS(4) TION(5)
---------------------------- ---- --------- -------- --------- ---------- -------- ---------- ---------
<S> <C> <C> <C>
Richard L. Molen 1994 $387,762 $171,800 $1,550 $0 25,351 $ (4) $94,507
Chairman of the Board, 1993 341,076 99,275 2,486 0 16,767 85,192 90,516
President and Chief 1992 292,747 49,375 1,002 0 17,499 179,060 61,296
Executive Officer
Gary E. Morin(6) 1994 238,862 86,200 1,314 0 14,376 (4) 9,236
Executive Vice President 1993 222,547 69,000 3,334 0 8,088 17,588 8,941
and Chief Operating 1992 192,369 47,825 96,343 0 6,130 34,614 7,618
Officer
W. Anthony Huffman 1994 149,685 44,850 2,376 0 8,996 (4) 49,408
Vice President - 1993 143,500 27,575 2,188 0 3,575 13,517 45,597
Corporate Affairs 1992 135,815 11,975 1,425 0 4,258 28,328 27,883
Thomas A. Frederick(6) 1994 131,117 60,000 3,286 0 10,379 (4) 14,145
Vice President - Finance 1993 118,374 49,450 2,375 0 2,831 0 3,425
and Chief Financial 1992 91,427 2,175 1,747 0 3,197 0 2,891
Officer
Timothy G. Howard 1994 133,236 36,650 913 0 8,471 (4) 19,297
Vice President - 1993 123,819 23,250 929 0 3,090 11,666 19,989
Controller 1992 116,777 11,125 1,433 0 3,672 24,481 7,344
<FN>
---------------
(1) "Salary" and "Bonus" include amounts that would have been payable currently, but were deferred at an election of an Executive
Officer, such as through the Company's 401(k) Savings Plan.
(2) The compensation listed represents the amounts reimbursed to the Named Executive Officers for the payment of taxes. No
perquisites were provided or other personal benefits paid to a Named Executive Officer in 1994 which exceeded the lesser
of $50,000 or ten percent of the total annual salary and bonus reported for such Named Executive Officer.
(3) These numbers represent options for shares of the Company's Common Stock granted pursuant to the Company's 1988 Stock Option
Plan and Restricted Share Plan. See the next table labeled "Option Grants in Last Fiscal Year" for more detailed information
on such options.
(4) Long Term Incentive Pay also consists of amounts to be paid to each of the Named Executive Officers under the Company's
Long-Term Incentive Plan discussed later in this Proxy Statement under the table labeled "Long Term Incentive Plans."
Awards for the three-year award cycle ended December 31, 1994, will be determined and paid in the second half of 1995 after
the average return on equity of the Standard & Poor's 400 Industrials becomes available and will be disclosed in the
subsequent fiscal year for the year in which earned.
(5) "All Other Compensation" includes (i) Company contributions to the Company's 401(k) Savings Plan in the amount of $3,079 each
for Richard L. Molen, Gary E. Morin, W. Anthony Huffman, Thomas A. Frederick, and Timothy G. Howard to match 1994 pre-tax
elective deferral contributions (included under "Salary" and "Bonus") made by each Named Executive Officer to such plan;
(ii) amounts distributed of $65,000, $35,000, $6,000, and $11,000, under the Company's Capital Accumulation Plan to Richard L.
Molen, W. Anthony Huffman, Thomas A. Frederick, and Timothy G. Howard, respectively, and accrued interest of $16,786, $7,784,
$1,563, and $2,110 (being interest earned in excess of 120 percent of the applicable federal long term rate provided under
Section 1274(d) of the Internal Revenue Code of 1986, as amended), by Richard L. Molen, W. Anthony Huffman, Thomas A.
Frederick, and Timothy G. Howard on the Company's Capital Accumulation Plan (Richard L. Molen, W. Anthony Huffman, and
Timothy G. Howard deferred salary in 1985 and 1986 and Thomas A. Frederick deferred salary in 1986 pursuant to such plan); and
(iii) the principal amounts of $9,642, $6,157, $3,545, $3,503, and $3,108 credited by the Company for Richard L. Molen,
Gary E. Morin, W. Anthony Huffman, Thomas A. Frederick, and Timothy G. Howard, respectively, pursuant to the Company's
Special Deferred Compensation Agreements. Refer to "Employment Contracts and Termination of Employment and Change-in-Control
Arrangements" later in this Proxy Statement for descriptions of such special deferred compensation agreements.
(6) Mr. Morin was President and General Manager of Washington Inventory Service, a wholly owned subsidiary of the Company, in 1991
prior to being named President of Huffy Bicycle Company, a division of the Company, in 1992. Mr. Morin was named Executive
Vice President of the Company in 1993, and Executive Vice President and Chief Operating Officer of the Company in 1995.
Mr. Frederick was elected Vice President - Finance and Chief Financial Officer in December, 1994. Prior to that, Mr. Frederick
was President and General Manager of Huffy Service First, Inc., a wholly owned subsidiary of the Company.
</TABLE>
13
<PAGE> 17
<TABLE>
STOCK OPTIONS
The following table contains information concerning the grant of stock
options under the Company's 1988 Stock Option Plan and Restricted Share Plan
("1988 Plan") to the Named Executive Officers for the year ended December 31,
1994, all of which are reflected in the Company's Summary Compensation Table:
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------------- POTENTIAL
% OF REALIZABLE VALUE
NUMBER TOTAL AT ASSUMED ANNUAL
OF OPTIONS RATES OF STOCK
SECURITIES GRANTED TO EXERCISE PRICE APPRECIATION
UNDERLYING EMPLOYEES OR BASE FOR OPTION TERM(3)
OPTIONS IN FISCAL PRICE PER EXPIRATION --------------------------
NAME GRANTED(1) YEAR SHARE(2) DATE 5% 10%
----------------------- ---------- ---------- --------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Richard L. Molen....... 25,351 10.74% $14.375 12/08/04 $ 229,182 $ 580,793
Gary E. Morin.......... 14,376 6.09% 14.375 12/08/04 129,964 329,355
W. Anthony Huffman..... 8,996 3.81% 14.375 12/08/04 81,327 206,099
Thomas A. Frederick.... 10,379 4.40% 14.375 12/08/04 93,830 237,783
Timothy G. Howard...... 8,351 3.54% 14.375 12/08/04 75,496 191,322
<FN>
---------------
(1) The options were granted pursuant to the Company's 1988 Plan which was
approved by the Shareholders. All options granted under the 1988 Plan in
1994 are non-qualified stock options. No stock appreciation rights were
granted and no restricted shares were awarded under the 1988 Plan in 1994.
(2) The Common Stock closing market price on date of grant, December 8, 1994,
was $14.375. The exercise price may be paid in cash or in shares of Common
Stock valued at fair market value on the date of delivery or by a
combination of cash and Common Stock. The options become exercisable ratably
over a three-year period beginning in 1997. Upon a change in control (as
defined in the 1988 Plan), all options then outstanding become fully and
immediately exercisable and the then outstanding option of an employee whose
employment is terminated, except for cause, within three months of such
change in control shall remain exercisable for three months from the date of
such termination, but not after the expiration of the exercise period. Those
employees who terminate employment due to disability or retirement may
exercise non-qualified stock options after such termination of employment
until the latter of (a) one year after the first exercise date for the last
shares to become exercisable under the terms of the option grant, or (b)
three years after the date of the employee's termination of employment.
Under the 1988 Plan, upon the death of an employee or a retired or disabled
former employee, all options under the 1988 Plan shall remain exercisable
for six months following the date of death. Except as set forth above, upon
termination of employment, all options terminate.
(3) Calculated on option terms of ten years beginning December 8, 1994, through
December 8, 2004, with annual compounding. The dollar amounts under these
columns are the result of calculations at the five percent and ten percent
rates set by the Securities and Exchange Commission and therefore are not
intended to forecast possible future appreciation of the Company's Common
Stock. The Company did not use an alternative formula for a grant date
valuation, as the Company is not aware of any formula which will determine
with reasonable accuracy a present value based on future unknown or volatile
factors.
</TABLE>
14
<PAGE> 18
<TABLE>
OPTION EXERCISES AND HOLDINGS
The following table sets forth information with respect to the Named
Executive Officers concerning the exercise of options during the year ended
December 31, 1994, and unexercised options held as of December 31, 1994:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
NUMBER OF VALUE REALIZED OPTIONS AT FISCAL IN-THE-MONEY OPTIONS
SHARES (MARKET PRICE AT YEAR-END(1) AT FISCAL YEAR-END(1)(2)
ACQUIRED EXERCISE LESS ---------------------------- ----------------------------
NAME ON EXERCISE EXERCISE PRICE) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
--------------------------- ----------- ---------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Richard L. Molen........... 0 $ 0 95,794 75,793 $ 584,762 $50,317
Gary E. Morin.............. 0 0 13,416 33,310 45,353 19,109
W. Anthony Huffman......... 0 0 23,473 20,793 139,461 14,286
Thomas A. Frederick........ 985 8,551 3,094 17,532 22,942 10,613
Timothy G. Howard.......... 0 0 17,207 18,640 92,548 12,786
<FN>
---------------
(1) The number of unexercised options includes options granted under the
Company's 1984 Stock Option Plan ("1984 Plan") (after December, 1987, no
further options or stock appreciation rights ("SARs") were granted under the
1984 Plan); and the 1988 Plan. No SARs were issued or outstanding as of
December 31, 1994, under the 1984 Plan or 1988 Plan.
(2) The value of "in the money" options is calculated on a per share basis as
the amount, by which the fair market value of a share of the underlying
Common Stock represented by an option exceeds, as of December 31, 1994, the
per share exercise price of the option.
</TABLE>
<TABLE>
LONG-TERM INCENTIVE PLANS
The following table provides information concerning awards made to the
Named Executive Officers during the last fiscal year under the Company's 1993
CEO Long-Term Performance Plan ("CEO Plan") and the Long-Term Incentive Plan
("LTIP"). Payments made under the LTIP for the year ended December 31, 1994, are
reported in the Summary Compensation Table.
LONG TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
<CAPTION>
ESTIMATED FUTURE PAYOUTS UNDER
NUMBER OF SHARES, PERFORMANCE OR NON-STOCK PRICE BASED PLAN(3)
UNITS OTHER PERIOD UNTIL ----------------------------------
NAME OR OTHER RIGHTS MATURATION OR PAYOUT THRESHOLD TARGET MAXIMUM
----------------------- ----------------- ------------------------ --------- --------- --------
<S> <C> <C> <C> <C> <C>
Richard L. Molen....... (1) 5 years ending 12/31/98 $55,000 $ 110,000 $550,000
(2) 3 years ending 12/31/96 82,137 212,028 615,072
Gary E. Morin.......... (2) 3 years ending 12/31/96 51,815 133,755 388,010
W. Anthony Huffman..... (2) 3 years ending 12/31/96 10,407 26,809 77,738
Thomas A. Frederick.... (2) 3 years ending 12/31/96 11,618 29,929 86,786
Timothy G. Howard...... (2) 3 years ending 12/31/96 10,040 25,863 74,996
<FN>
---------------
(1) Pursuant to the terms of the Company's CEO Plan, performance awards are paid
in cash. In order for such awards to be earned, the Total Shareholder Return
(as defined in the CEO Plan) on a Beginning Share Price (as defined in such
plan) of $18.78 for the performance period must equal at least 15 percent
for the threshold payment; 19 percent for the target payment; and 27 percent
for the maximum payment. Additional discussion of the CEO Plan is contained
under the heading "Employment Contracts and Termination of Employment and
Changes-in-Control Arrangements" later in this Proxy Statement.
(2) Awards under the Company's LTIP are payable during the year following the
end of a three-year award cycle. Under the LTIP, awards, if any, are made to
Executive Officers based on the following criteria: 50 percent on the
average return on equity performance of the Company over the award cycle as
compared to a targeted average return on equity level established by the
Compensation Committee of the Board of Directors and 50 percent based on the
Company's average return on equity performance as compared to the Standard &
Poor's 400 Industrials average return on equity over the same three-year
period.
(3) The amounts calculated assume six percent annual base salary increases.
</TABLE>
15
<PAGE> 19
<TABLE>
PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in
the Company's cumulative total Shareholder return on its Common Stock with the
Standard & Poor's 500 Composite Stock Index ("S&P 500") and the Standard &
Poor's Composite Leisure Time Index ("Leisure Index") for the five-year period
ended December 31, 1994:
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
HUFFY CORPORATION, S&P 500 AND LEISURE INDEX*
<CAPTION>
MEASUREMENT PERIOD LEISURE IN-
(FISCAL YEAR COVERED) HUFFY S&P 500 DEX
<S> <C> <C> <C>
1989 100 100 100
1990 85 98 53
1991 180 125 75
1992 140 140 97
1993 155 149 104
1994 135 150 101
<FN>
* Assumes $100 invested on December 31, 1989 in Company Common Stock, the S&P
500 and the Leisure Index and the reinvestment of dividends.
</TABLE>
16
<PAGE> 20
<TABLE>
PENSION PLAN TABLE
The Company's Salaried Employees' Retirement Plan (the "Retirement Plan")
is a defined benefit pension plan which provides benefits to salaried employees
not otherwise covered under another pension plan of the Company. The following
table shows the estimated annual benefits (assuming payments made on the normal
life annuity with 12 months certain) payable upon retirement at age 65 to an
employee in specified compensation and years of service classifications.(1)
<CAPTION>
YEARS OF SERVICE
-----------------------------------------------------------------
COMPENSATION 15 20 25 30 35
----------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
$ 100,000 $ 21,403 27,704 34,005 40,306 40,306
250,000 55,153 72,704 90,255 107,806 107,806
500,000 111,403 147,704 184,005 220,306 220,306
750,000 167,653 222,704 277,755 332,806 332,806
1,000,000 223,903 297,704 371,505 445,306 445,306
1,250,000 280,153 372,704 465,255 557,806 557,806
<FN>
---------------
(1) The Internal Revenue Code of 1986, as amended (the "Code"), places certain
limitations on the annual pension benefits which can be paid from the
Retirement Plan. Such limitations are not reflected in the table. This table
reflects the total aggregate benefits payable annually upon retirement under
both the Retirement Plan and the Company's Supplemental/Excess Benefit Plan
(the "Benefit Plan"), which is discussed below. The Benefit Plan requires an
offset of one-half of the Social Security primary insurance amount ("PIA"),
and such amount has been deducted from the figures in the table. The PIA
amount used in developing the above figures is $14,388. Thus, the offset is
$7,194 for a person with 30 or more years of service.
</TABLE>
Monthly benefits upon normal retirement (age 65) are the sum of (i) 0.9
percent of final average monthly compensation (as defined under the Retirement
Plan to include salary, incentive compensation, commissions and overtime pay and
based upon the highest three consecutive years in the last ten) up to the
monthly Social Security Covered Compensation Amount, plus 1.3 percent of the
amount by which final average monthly compensation exceeds the monthly Social
Security Covered Compensation Amount, times years of service (to a maximum of 30
years) and (ii) .075 percent of final average monthly compensation (to a maximum
of $4,166.67) times years of service (to a maximum of 20 years). Additional
provisions for early retirement are included. Mr. Molen has 26 years of credited
service, Mr. Morin has 5 years of credited service, Mr. Huffman has 20 years of
credited service, Mr. Frederick has 8 years of credited service, and Mr. Howard
has 21 years of credited service. The 1994 compensation covered under the
Retirement Plan and Benefit Plan for each of the Named Executive Officers does
not differ by more than 10 percent from that set forth in the Summary
Compensation Table.
The Company has established the Benefit Plan which provides additional
benefits to participants in the Retirement Plan whose benefits are reduced by
limitations imposed under Sections 415 and 401(a)(17) of the Code and Section
2004 of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"). Under the Benefit Plan, Executive Officers and certain key employees
will receive at the same time and in the same form as benefits paid under the
Retirement Plan, additional benefits in a monthly amount which, when added to
the benefits paid to the participant under the Retirement Plan, will equal the
benefit amount such participant would have earned but for the limitations
imposed by the Code and ERISA to the extent such limitations apply, and the
amount by which the sum of 45 percent of final average monthly compensation (as
defined under the Benefit Plan to include salary and bonus and based upon the
highest three years in the last ten) less 50 percent of the monthly PIA payable
under Social Security, with the difference prorated for less than 30
17
<PAGE> 21
years of service, plus $2,500 per year, exceeds benefits payable only under the
Retirement Plan. The Benefit Plan also provides that Executive Officers and
certain key employees will be provided benefits beginning at age 58, in an
amount equal to such participants' then accrued benefits without actuarial
reduction for early commencement in the event of (i) a "change-in-control" of
the Company, as defined in the Benefit Plan, and (ii) subsequent termination of
employment. Except as noted in the preceding sentence, benefits under the
Benefit Plan will be reduced to an actuarial equivalent to reflect early
distribution in the same manner as benefits under the Retirement Plan.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
There are no employment contracts between the Company and any Executive
Officers of the Company.
The Named Executive Officers and certain other key employees of the Company
each have a Special Deferred Compensation Agreement pursuant to which on each
January 1 the Company credits to an account for such employee an amount equal to
two percent of the aggregate of the base salary paid in the preceding calendar
year and bonus paid or credited to such employee under the Profit Sharing Bonus
Plan for preceding calendar year results. The aggregate amount in such account
is to be paid to the employee, subject to certain forfeitures, following
termination of employment. Such amounts for calendar year 1994 have been
included in the Summary Compensation Table.
Named Executive Officers, except for Gary E. Morin, have deferred
compensation and receive benefits under the Company's Capital Accumulation Plan
(the "Capital Accumulation Plan") adopted in 1985. No current compensation is
being deferred by Executive Officers under the Capital Accumulation Plan at the
present time. Based upon the amount of such compensation deferred in 1985 and
1986, the Company has agreed to pay certain annual amounts (i) on the first day
of each of the eighth through eleventh years following the deferral to each such
participant and (ii) generally beginning at age 65 or upon retirement, whichever
occurs later, to each such participant or to designated beneficiaries upon such
participant's death after retirement, until such participant reaches (or would
have reached) age 80. These annual amortized amounts will be calculated on the
basis of attributing from 19 to 24 percent per annum interest to the deferrals,
with each payment under clause (i) above equalling the amount of the original
deferral. A lump sum benefit equal to any remaining balance of deferred amounts,
with annual interest at the rate noted below, will be paid in lieu of any annual
benefits if (i) a participant terminates employment with the Company other than
by death or disability prior to retirement (10 percent interest) or the Company
terminates the participant's employment for certain reasons other than cause or
competing with the Company (20 percent interest); (ii) a participant dies prior
to retirement (20 percent interest); or (iii) the Capital Accumulation Plan is
terminated by the Company because a change in federal or state laws, or judicial
or administrative interpretation thereof, has materially affected its cost to
the Company (20 percent interest). The Company will make supplemental pension
payments to persons participating in the Capital Accumulation Plan to the extent
pension benefits are reduced due to participation in such plan. Distributions
made and interest accrued in excess of 120 percent of the applicable federal
long term interest rate provided under Section 1274(d) of the Code for the
benefit of the Named Executive Officers has been included in the Summary
Compensation Table.
Richard L. Molen, Gary E. Morin and Thomas A. Frederick have each entered
into a severance agreement with the Company pursuant to which the Company has
agreed to provide an irrevocable letter of credit from a commercial bank (or to
fund an escrow account if such letter of credit cannot be promptly issued) in
the event a change-in-control (as defined in the agreements) of the Company is
threatened. The letter of credit is to be for an amount equal to three times the
sum of each such person's current annual salary, bonus award for the most
recently completed fiscal year, and Long-Term Incentive Compensation Plan award
for the most recently completed period, plus two times the Company's cost of
18
<PAGE> 22
current benefits for three years (unless the Company agrees to provide the same)
and a gross up amount for applicable excise taxes, if any. If the employment of
said person terminates, for any reason other than disability, retirement or
death, within two years after a change-in-control of the Company occurs, the
person or the person's beneficiaries shall be entitled to the above described
amount in a lump sum payment. If proper demand for such payment is not made
within two years from the date of the change-in-control event, the Company may
terminate the letter of credit or withdraw the funds in the escrow account. If
such person's employment is terminated prior to the occurrence of a
change-in-control of the Company, payment under the severance agreement is
forfeited.
W. Anthony Huffman and Timothy G. Howard have entered into a severance
agreement with the Company which would require the Company to immediately fund
an escrow account for each of them in the event a change-in-control (as defined
in the agreement) of the Company is threatened. In such event, the Company must
deposit into such account for the benefit of such employee an amount equal to
two times the sum of his current annual salary, bonus award for the most
recently completed year, and the Long-Term Incentive Compensation Plan payment
awarded, or to be awarded, on the January 1 nearest to the date of the
occurrence requiring the escrow deposit. If such employee's employment
terminates, for any reason other than disability, retirement, or death, within
two years after a change-in-control of the Company occurs, then such employee
shall be entitled to benefit payments from such escrow in the aggregate amount
described above. Payment of such escrow fund amount shall be made in 24 monthly
installments. The escrow account shall terminate and all funds therein shall be
returned to the Company two years following deposit of said funds in the escrow
account if proper demand for said funds is not made by such employee under the
terms of the severance agreement. If such employee's employment is terminated
prior to the occurrence of a change-in-control of the Company, escrow payments
are forfeited.
Mr. Molen receives benefits under a Restricted Stock Unit Program (the "COO
Program") dated January 1, 1987, whereby he received grants of 11,250 restricted
units (adjusted to reflect subsequent stock splits) on January 1, 1987, 1988,
1989, 1990, and 1991. A restricted unit is equivalent when earned to a share of
the Company's Common Stock valued at fair market value (as defined in the COO
Program). The restricted units will fully vest on January 1, 1997, 1998, 1999,
2000, and 2001, respectively, subject to (i) earlier vesting due to, among other
things, a change-in-control of the Company (as described in the COO Program),
and (ii) forfeiture due to, among other things, termination for cause. Upon
grant, the restricted units will accumulate additional restricted units equal to
dividends paid on the Company's Common Stock. Once vested, the then actual value
of each restricted unit will be paid in cash. The COO Program requires Mr. Molen
not to compete with the Company for a period of five years following termination
of his employment.
Mr. Molen also receives benefits under the 1993 CEO Long-Term Performance
Plan ("CEO Plan"), effective January 1, 1993. Under the CEO Plan, performance
awards have been established by the Company whereby Mr. Molen may earn a cash
payment if, and only if, the Company achieves the requisite Total Shareholder
Return (as defined in the CEO Plan to include the annual rate of growth of the
Common Stock and the dividends paid on such stock) on a Beginning Share Price
(as defined in the CEO Plan) during the applicable performance period. Five
performance periods were established, three of which began January 1, 1993, and
end December 31, 1995, 1996, and 1997, respectively. The fourth and fifth
performance periods began January 1, 1994, and 1995, respectively, and end
December 31, 1998, and 1999, respectively. For the performance periods beginning
January 1, 1993, the Beginning Share Price is $16.25. If the Total Shareholder
Return for any performance period beginning January 1, 1993, is 15 percent at
the end of the performance period, Mr. Molen will receive a performance award,
in cash, in the amount of $30,000 for the performance period ending December 31,
1995; $40,000 for the performance period ending December 31, 1996; or $50,000
for the performance period ending December 31, 1997. If the Total Shareholder
Return for any
19
<PAGE> 23
such performance period is 19 percent at the end of the performance period, Mr.
Molen will receive a performance award, in cash, in the amount of $60,000 for
the performance period ending December 31, 1995; $80,000 for the performance
period ending December 31, 1996; or $100,000 for the performance period ending
December 31, 1997. If the Total Shareholder Return for any such performance
period is 27 percent at the end of the performance period, Mr. Molen will
receive a performance award, in cash, in the amount of $300,000 for the
performance period ending December 31, 1995; $400,000 for the performance period
ending December 31, 1996; or $500,000 for the performance period ending December
31, 1997. For the performance period beginning January 1, 1994, and ending
December 31, 1998, the Beginning Share Price is $18.78; the threshold, target
and maximum performance awards, based on a Total Shareholder Return of 15, 19
and 27 percent, respectively, for such period are $55,000, $110,000 and
$550,000, respectively. For the performance period beginning January 1, 1995,
and ending December 31, 1999, the Beginning Share Price is $14.78. If the Total
Shareholder Return for the performance period beginning January 1, 1995 and
ending December 31, 1999, is 10 percent, 13 percent or 20 percent at the end of
such performance period, Mr. Molen will receive either a threshold, target or
maximum performance award, in cash, in the amount of $67,500, $135,000 or
$675,000, respectively. If the Total Shareholder Return over any such
performance period is less than 10 or 15 percent, as applicable, at the end of
the performance period, Mr. Molen will earn no performance award. Similarly, if
the Total Shareholder Return over any such performance period is greater than 20
or 27 percent, as applicable, at the end of the performance period, Mr. Molen
will receive no greater amount than that stated above. The cash amount of a
performance award earned shall be determined by linear interpolation if the
Total Shareholder Return is greater than 10 or 15 percent, as applicable, but
less than 20 or 27 percent, as applicable.
The Compensation Committee of the Board of Directors administers the CEO
Plan. In the event Mr. Molen ceases to be employed by the Company for any reason
other than death, permanent disability or change of control (as defined in the
CEO Plan) prior to completion of a performance period, the performance award
will be forfeited, and no payment with respect thereto shall be made to Mr.
Molen unless determined otherwise by the Compensation Committee. In the event of
(a) death or permanent disability, or (b) a change of control, subsequent to
which Mr. Molen's employment is terminated, Mr. Molen, or his estate, as the
case may be, will be entitled to receive payment with respect to the performance
award(s) for the performance period(s) ending the last day of the calendar year
in which the death, disability or change of control occurs.
Generally, a "change-of-control" or "change-in-control", with respect to
the above-referenced plans and agreements, is the acquisition by another person
or persons other than directly from the Company of more than 20 percent of the
Company's outstanding shares of Common Stock; a merger, consolidation or other
combination of the Company with one or more corporations as a result of which
more than 49 percent of the voting stock of the merged, consolidated or combined
corporation is held by former shareholders of the corporations other than the
Company; a tender offer for, or a request for invitations for the tender of,
shares of Common Stock of the Company by any person; or the election to the
Board of Directors of the Company by the shareholders of two or more persons not
nominated as candidates for the Board of Directors in proxy statements furnished
during such period on behalf of the Board of Directors of the Company.
PROPOSAL TO ADOPT AMENDED ARTICLES OF INCORPORATION
On December 9, 1994, the Board of Directors unanimously approved for
submission to the shareholders a proposal to adopt Amended Articles of
Incorporation as set forth in Appendix A to this Proxy Statement. There are a
number of minor changes being recommended to the Amended Articles. The proposed
changes as well as past amendments to the Amended Articles of Incorporation are
consolidated in Appendix A to provide a comprehen-
20
<PAGE> 24
sive understanding of the text of the proposed new Amended Articles. The
resolution which will be introduced seeking approval of this proposal by the
Shareholders is as follows:
RESOLVED, that the Amended Articles of Incorporation of Huffy
Corporation set forth in Appendix A to the Proxy Statement for this meeting
are hereby adopted to supersede the existing Amended Articles of
Incorporation, and the Board of Directors and appropriate Officers of the
Company are authorized and directed to make such Amended Articles effective
by filing the appropriate documents with the Ohio Secretary of State.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO ADOPT
AMENDED ARTICLES OF INCORPORATION.
The actual wording of the changes for the Amended Articles if adopted is
set forth in Appendix A hereto, with the language to be changed or added
indicated by underlining to distinguish it from current provisions and with
existing language to be deleted lined out.
Adoption of this proposal would accomplish three changes in the Company's
present Amended Articles. First, Article THIRD would be amended to delete the
current purposes of the Corporation and to insert in its place the more
generally accepted language that the purpose of the Company would be to engage
in any lawful act or activity for which corporations may be formed in Ohio. Ohio
law has allowed this general "all-purpose" clause since 1970. With the inclusion
of this type of purpose clause, any lawful act or activity of the Company will
be within its corporate purposes. This change is not proposed because a new area
of business is currently being contemplated. However, the proposed "all-purpose"
clause would permit the Company's business to expand into promising new areas
without the delay and possible competitive detriment involved in seeking
Shareholder approval to broaden the Company's purposes by adding additional
specific purposes.
The second change accomplished by the adoption of the Amended Articles is
to relocate the Company's power to repurchase its shares of Common Stock from
the existing purpose clause contained in Article THIRD to the terms and
conditions of the Common Stock contained in current Section 5(f) (to be
renumbered Section 4(f)) to Article FOURTH. Under Ohio law a corporation's
ability to repurchase its own shares is very limited, unless it is expressly
authorized to do so by its articles. The Company's present power to purchase
shares of its own capital stock is contained in Article THIRD. In addition,
Article FOURTH, Section 2(j) contains this same power to purchase, but it is
limited to shares of its Preferred Stock. Since the general power to repurchase
Preferred Stock is already contained in the Articles, the proposed change has
been limited to the Company's Common Stock.
The third change effected by the adoption of the Amended Articles is to
eliminate Article FOURTH, Section 3 which contains the express terms of the
50,000 shares of Series A Preferred Stock which are no longer issued or
outstanding. The Series A shares were completely redeemed by September 24, 1984,
and there is no longer any legal or business reason to continue to state the
express terms of these shares in the Amended Articles.
In addition to these three changes, the Company's correct address has been
inserted into Article SECOND. Changes have been made to Section 2 and to Section
5(c) (to be renumbered Section 4(c)) of Article FOURTH to render the Amended
Articles gender neutral. Article SIXTH contains the statement required by Ohio
law that the proposed Amended Articles would supersede the current Amended
Articles of Incorporation, as amended.
ADOPTION OF THE PROPOSED RESOLUTION REQUIRES THE AFFIRMATIVE VOTE OF THE
HOLDERS OF AT LEAST TWO-THIRDS OF THE COMPANY'S OUTSTANDING SHARES OF COMMON
STOCK. PROXIES RECEIVED IN RESPONSE TO THIS SOLICITATION WILL BE VOTED IN FAVOR
OF THE PROPOSAL UNLESS THE SHAREHOLDER OTHERWISE INSTRUCTS. ABSTENTIONS AND
SHARES NOT VOTED BY BROKERS AND OTHER ENTITIES HOLDING SHARES ON BEHALF OF
BENEFICIAL OWNERS WILL HAVE THE SAME EFFECT AS VOTES CAST AGAINST THE
RESOLUTION.
21
<PAGE> 25
PROPOSAL TO ADOPT AMENDED CODE OF REGULATIONS
On December 9, 1994, the Board of Directors unanimously approved a proposal
to amend the Company's Code of Regulations, in the form set forth in Appendix B,
and directed that the following resolution be submitted to the Shareholders for
their approval:
RESOLVED, that the amended Code of Regulations of Huffy Corporation
set forth in Appendix B to the Proxy Statement for this meeting is hereby
adopted to supersede the existing Code of Regulations in its entirety.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO ADOPT AN
AMENDED CODE OF REGULATIONS.
The proposed changes to the Code of Regulations are set forth in Appendix B
hereto, with the language to be changed or added indicated by underlining and
with existing language to be deleted lined out.
Adoption of this proposal would accomplish six changes. First, the Code
would be rendered gender neutral throughout. Second, two minor technical changes
are proposed -- a deletion to the reference in Article I, Section G(1) to the
consent of a proposed director nominee to being named in the Proxy Statement,
since this is inappropriate in the context of the paragraph, and a change in
Article II, Section D(2) from the word "telegraphed" to "faxed".
The third change recommended is an addition to Article II, Section C(1) of
one sentence with regard to the election of a classified board of directors.
Ohio law allows the Code of Regulations to provide for the classification of
directors into three different classes, each serving a three-year term. The
terms of each class need not be uniform. Ohio law does not mandate that any
specific language be used in the Code of Regulations to provide for a classified
board of directors and the Company has elected a classified board for many years
based on the current language in Article II, Section C of its Regulations. The
addition of the one sentence proposed for Section C(1) merely clarifies what
Ohio law permits.
The fourth change is to increase the maximum number of directors from
thirteen to fourteen. Current Article II, Section B requires not less than nine
nor more than thirteen directors. The Board of Directors has proposed to
increase the maximum number by one to fourteen. The Board of Directors believes
it is in the best interests of the Company and the Shareholders that well
qualified persons be selected for service on the Board of Directors. Therefore,
it is necessary that there be appropriate positions available so that candidates
can be elected to the Board of Directors when identified.
The fifth change in Article II, Section F expressly states that "an
Executive Committee" may be appointed by the Board of Directors together with
"other" committees of Directors. The proposed change is designed to make clear
that an Executive Committee is expressly contemplated in this paragraph since
Ohio law requires that the authority to appoint an Executive Committee must be
granted in the Regulations. Although this authority is implied by the current
language, the addition removes any ambiguity. In addition, the language proposed
to be deleted from Section F(3) is considered to be an unnecessary limitation on
the authority of the Executive Committee and inconsistent with the role of the
Committee.
The sixth and last change proposed is to insert the Company's current
fiscal year, which is the calendar year, in Article II, Section H.
ADOPTION OF THE PROPOSED RESOLUTION REQUIRES THE AFFIRMATIVE VOTE OF THE
HOLDERS OF AT LEAST TWO-THIRDS OF THE COMPANY'S OUTSTANDING SHARES OF COMMON
STOCK. PROXIES RECEIVED IN RESPONSE TO THIS SOLICITATION WILL BE VOTED IN FAVOR
OF THE PROPOSAL UNLESS THE SHAREHOLDER OTHERWISE INSTRUCTS. ABSTENTIONS AND
SHARES NOT VOTED BY BROKERS AND OTHER ENTITIES HOLDING SHARES ON BEHALF OF
BENEFICIAL OWNERS WILL HAVE THE SAME EFFECT AS VOTES CAST AGAINST THE
RESOLUTION.
22
<PAGE> 26
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, upon recommendation of its Audit Committee, has
appointed the firm of KPMG Peat Marwick as independent public accountants for
the Company for calendar year 1995, subject to ratification by the Shareholders.
The firm of KPMG Peat Marwick has served as independent public accountants for
the Company since 1962. The Board of Directors recommends ratification of this
appointment. One or more members of KPMG Peat Marwick will attend the Annual
Meeting with an opportunity to make a statement if they desire to do so and to
respond to such appropriate questions as may be asked by Shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
THE PROPOSAL TO RATIFY THE APPOINTMENT OF KPMG PEAT MARWICK REQUIRES THE
AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE SHARES OF COMMON STOCK
PRESENT IN PERSON OR REPRESENTED BY PROXY AT THE MEETING. ABSTENTIONS AND SHARES
NOT VOTED BY BROKERS AND OTHER ENTITIES HOLDING SHARES ON BEHALF OF BENEFICIAL
OWNERS WILL HAVE THE SAME EFFECT AS VOTES CAST AGAINST THE RESOLUTION, PROVIDED
SUCH SHARES ARE PROPERLY PRESENT AT THE MEETING IN PERSON OR BY PROXY.
SHAREHOLDER PROPOSALS
Proposals of Shareholders intended to be presented at the 1996 Annual
Meeting of Shareholders must be received by the Company by November 10, 1995,
for inclusion in the Company's Proxy Statement and proxy relating to the 1996
Annual Meeting of Shareholders.
OTHER MATTERS
The Board of Directors does not intend to present to the meeting any
matters other than those hereinbefore mentioned. It does not know of anything
that will be presented by other parties. However, if any other matters shall
properly come before the meeting, it is the intention of the persons named in
the enclosed form of proxy to vote thereon according to their discretion and
best judgment.
By order of the Board of Directors
/s/ Nancy A. Michaud
-----------------------------------
Nancy A. Michaud
Secretary
Dayton, Ohio
March 14, 1995
23
<PAGE> 27
APPENDIX A
AMENDED ARTICLES OF INCORPORATION
OF
HUFFY CORPORATION
FIRST: The name of the corporation is HUFFY CORPORATION.
SECOND: The principal office of the corporation in Ohio is located at [7701]
{225} Byers Road, Miamisburg, Ohio 45342.
THIRD: The [purposes] {purpose} of the corporation {is to engage in any lawful
act or activity for which corporations may be formed under Sections 1701.01 to
1701.98, inclusive, of the Ohio Revised Code} [are as follows: To manufacture,
process, sell, assign and transfer, exchange or otherwise dispose of bicycles,
lawn mowers, gasoline service station equipment, lawn sweepers and accessories
and attachments thereto; to manufacture, process, purchase or otherwise acquire,
sell, assign and transfer, exchange or otherwise dispose of and to invest,
trade, deal in or deal with, goods, wares and merchandise and personal property
of every class and description, to purchase, acquire, hold, mortgage, pledge,
hypothecate, loan money upon, exchange, sell and otherwise deal in, personal
property and real property of every kind, character and description whatsoever
and wheresoever situated, and any interest therein; to purchase, hold, sell and
transfer shares of its own capital stock from time to time to such an extent and
in such manner and upon such terms as the Board of Directors may determine, and
to use the funds of the corporation for such purpose, provided that the
corporation shall not use any of its funds or property for the purchase of its
own capital stock when there is reasonable ground for believing that the
corporation is unable, or by such purchase, may be rendered unable, to satisfy
its obligations and liabilities; and provided further, that shares of its own
capital stock belonging to the corporation shall not be voted directly or
indirectly by it].
FOURTH: SECTION 1. NUMBER, CLASSES AND DESIGNATION OF SHARES.
The corporation shall have authority to issue Cumulative Preferred Stock,
with a par value of $1.00 ("Preferred Stock") and Common Stock, with a par value
of $1.00 ("Common Stock") as follows:
(a) The maximum number of shares of Preferred Stock which the
corporation is authorized to issue is 1,000,000 shares.
(b) The maximum number of shares of Common Stock which the corporation
is authorized to issue is 60,000,000 shares.
SECTION 2. TERMS AND PROVISIONS OF PREFERRED STOCK.
The express terms of Preferred Stock are as follows:
(a) The Preferred Stock may be issued from time to time in one or more
series as determined by the Board of Directors. All shares of Preferred
Stock shall be of equal rank and shall be identical, except in respect of
the particulars that may be fixed and determined by the Board of Directors
as hereinafter provided, and each share of each series shall be identical
in all respects with all other shares of such series, except as to the date
from which dividends are cumulative. Subject to the provisions of clauses
(b) to (1), inclusive, of this Section, which provisions shall apply to all
Preferred Stock, the Board of Directors is hereby empowered to cause the
Preferred Stock to be issued in one or more series and with respect to each
such series prior to the issuance thereof to fix and determine:
i) the designation of the series, which may be by distinguishing
number, letter or title;
ii) the number of shares of the series, which (except as
otherwise provided by the Board of Directors in creating the series)
may be increased or decreased (but not below the num-
1
Language indicated as being shown by strike out in the typeset document is
enclosed in brackets "[" and "]" in the electronic format.
Language indicated as being shown with an underline in the typeset document is
enclosed in braces "{" and "}" in the electronic format.
<PAGE> 28
ber of shares thereof outstanding) by like action of the Board of
Directors;
iii) the annual dividend rate of the series;
iv) the dates on which dividends, if declared, shall be payable,
and the dates from which such dividends shall be cumulative;
v) the redemption rights and price or prices, if any, for shares
of the series;
vi) the amounts payable on shares of the series in the event of
any voluntary or involuntary liquidation, dissolution or winding up of
the affairs of the corporation;
vii) the terms and amount of any sinking fund provided for the
purchase or redemption of shares of the series;
viii) whether the shares of the series shall be convertible into
Common Stock or other securities and, if so, the conversion price or
prices and the adjustments thereof, if any, and all other terms and
conditions upon which such conversion may be made;
ix) restrictions (in addition to those set forth in this Section)
on the issuance of shares of the same series or of any other class or
series;
x) voting rights which may be full, limited or denied, except as
otherwise required by law or the provisions of this Section 2.
The Board of Directors is authorized to adopt from time to time amendments
to the Amended Articles of Incorporation of the corporation fixing and
determining with respect to each such series the matters specified in
subclauses (i) to (x), inclusive, of this clause (a).
(b) The holders of Preferred Stock of each series shall be entitled to
receive, and the corporation shall be bound to pay thereon, but only as and
when declared by the Board of Directors, out of funds legally available for
the payment thereof, cumulative cash dividends at the annual rate fixed by
the Board of Directors for such series as herein authorized, and no more,
payable quarterly on the dates fixed by the Board of Directors for such
series as herein authorized. Such dividends shall be cumulative and shall
be deemed to accrue from day to day regardless of whether or not the
corporation shall have funds legally available for the payment of such
dividends. Such dividends shall be cumulative and shall commence to accrue
on each share of each particular series:
i) from such date, if any, as may be fixed for such series by the
Board of Directors as herein authorized; or
ii) if no such date is fixed and if such share was issued in the
period following a dividend record date fixed for the series of which
it is a part and up to and including the dividend payment date for
which such record was taken, then from such last mentioned date; or
iii) otherwise from the dividend payment date next preceding the
date of issue of such share, or if such share was issued on a dividend
payment date, from such last mentioned date.
Dividends may not be paid on the Preferred Stock of any one series for any
dividend period unless dividends have been paid, or declared and set apart
for payment, on the Preferred Stock of all series for all dividend periods
terminating on the same or an earlier date.
In no event, so long as any Preferred Stock remains outstanding, shall any
dividend, except a dividend payable in Common Stock or other shares ranking
junior to the Preferred Stock, be declared or paid upon, nor shall any
distribution be made or ordered except as aforesaid in respect of, the
Common Stock or any other shares ranking junior to the Preferred Stock, nor
shall any moneys be set aside for or applied to the purchase or redemption
(through a sinking fund or otherwise) of shares of Common Stock or of any
other shares ranking junior to the Preferred Stock, unless (i) all
dividends on the Preferred Stock of all series for all past quar-
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<PAGE> 29
terly dividend periods shall have been paid and the full dividend on all
outstanding shares of Preferred Stock of all series for the then
quarterly dividend period shall have been paid or declared and set
apart for payment, and (ii) the corporation shall have set aside all
amounts, if any, theretofore required to be set aside as and for sinking
funds, if any, for the Preferred Stock of all series for the then current
year, and all defaults, if any, in complying with any such sinking fund
requirement in respect of previous years shall have been made good.
(c) The corporation, at the option of the Board of Directors, may at
any time redeem the whole, or from time to time may redeem any part, of the
Preferred Stock or any series (one or more) thereof at such time or times,
or within such periods, as may be fixed by the Board of Directors for the
particular series as herein authorized, by paying therefor in cash the
amount fixed by the Board of Directors for such series as herein
authorized, such sum being hereinafter in this clause (c) referred to as
the "redemption price"; provided, however, that less than all of the
Preferred Stock may be redeemed only after full cumulative dividends upon
the Preferred Stock then outstanding shall have been paid for all past
quarterly dividend periods and after or concurrently with making payment
of, or declaring or setting apart for payment, the full dividend on all
outstanding shares of Preferred Stock for the then current quarterly
dividend period. If less than all of the outstanding shares of Preferred
Stock are to be called for redemption, redemption may be made of the whole
or any part of the outstanding shares of any one or more series thereof, in
the discretion of the Board of Directors, and if less than all of the
outstanding shares of any series of the Preferred Stock are to be redeemed,
the shares of such series to be redeemed shall be selected by whichever of
the following methods the Board of Directors shall choose: by lot or pro
rata in such manner as may be prescribed by resolution of the Board of
Directors. Not more than sixty (60) days and not less than thirty (30) days
prior to the redemption date, notice of the proposed redemption shall be
mailed to the holders of record of the Preferred Stock to be redeemed, such
notice to be addressed to each such stockholder at his {or her} last
known post office address shown on the records of the corporation, and the
time of mailing such notice shall be deemed to be the time of the giving
thereof. On or after the date of redemption stated in such notice
(sometimes referred to in this clause (c) as the "redemption date"), each
holder of Preferred Stock called for redemption shall surrender his {or
her} certificates for such stock to the corporation at the place
designated in such notice and shall thereupon be entitled to receive
payment of the redemption price. In case less than all the shares
represented by any such surrendered certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares. If such
notice of redemption shall have been given as aforesaid, and if on or
before the redemption date funds necessary for the redemption shall have
been set aside so as to be and continue available therefor, then,
notwithstanding that the certificates representing any shares of
Preferred Stock so called for redemption shall not have been surrendered,
the dividends thereon shall cease to accrue after the redemption date, and
all rights with respect to the shares so called for redemption shall
forthwith after such redemption date cease and determine, except only the
right of the holders to receive the redemption price without interest. If
such notice of redemption of all or any part of the Preferred Stock shall
have been mailed as aforesaid and the corporation shall thereafter deposit
money for the payment of the redemption price pursuant thereto with any
bank or trust company (referred to in this clause (c) as the "depository")
in the Borough of Manhattan, City and State of New York, having a combined
capital and surplus of not less than $5,000,000, selected by the Board of
Directors for that purpose, to be applied to such redemption, then from
and after the making of such deposit, such shares shall not be deemed to
be outstanding for any purpose, and the rights of the holders thereof
shall be
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limited to the right to receive payment of the redemption price
(without interest but including accrued dividends to the redemption date)
from the depository upon endorsement, if required, and surrender of the
certificates thereof, provided, however, that no then existing right of
conversion, if any, with respect to such shares shall be impaired by such
deposit until the redemption date. Any moneys so deposited which shall not
be required for such redemption because of the exercise of any such right
of conversion subsequent to the date of deposit shall be returned to the
corporation forthwith. The corporation shall be entitled to receive, from
time to time, from the depository the interest, if any, allowed on such
moneys deposited with it, and the holders of any shares so redeemed shall
have no claim to any such interest. Any moneys so deposited and remaining
unclaimed at the end of six (6) years from the redemption date shall, if
thereafter requested by resolution of the Board of Directors, be repaid to
the corporation, and in the event of such repayment to the corporation,
such holders of record of the shares so called for redemption as shall not
have made claim against such moneys prior to such repayment to the
corporation shall be deemed to be unsecured creditors of the corporation
for an amount equivalent to the amount deposited as above stated for the
redemption of such shares and so repaid to the corporation, but shall in
no event be entitled to any interest.
Subject to the provisions hereof, the Board of Directors shall have
authority to prescribe from time to time the manner in which Preferred
Stock shall be redeemed.
Nothing herein contained shall limit any legal right of the corporation to
purchase any shares of the Preferred Stock; provided, however, that, except
in accordance with an offer (which may vary with respect to shares of
different series) made to all holders of Preferred Stock, the corporation
shall not purchase or otherwise acquire for a consideration (or permit any
subsidiary to purchase or otherwise acquire for a consideration) any shares
of the Preferred Stock unless full dividends shall have been paid or
declared and set apart for payment on the Preferred Stock for all past
quarterly dividend periods.
Shares of Preferred Stock of any particular series may also be subject to
redemption through operation of any sinking fund created therefor, at the
prices and upon the terms and provisions fixed for such sinking fund by the
Board of Directors as herein authorized.
(d) Upon any liquidation, dissolution or winding up of the
corporation, the holders of Preferred Stock of each series shall be
entitled, before any distribution shall be made to the holders of Common
Stock or of any other class of stock junior to the Preferred Stock, to be
paid the full preferential amount or amounts fixed by the Board of
Directors for such series as herein authorized, but the holders of
Preferred Stock shall not be entitled to any further payment. If, upon such
liquidation, dissolution or winding up of the corporation, the net assets
of the corporation shall be insufficient to permit the payment to the
holders of all outstanding shares of Preferred Stock of all series of the
full preferential amounts to which they are respectively entitled, then the
entire net assets of the corporation shall be distributed ratably in
respect of all outstanding shares of Preferred Stock in proportion to the
full preferential amount to which each such share is entitled.
(e) The holders of Preferred Stock shall, except as otherwise provided
by law or by the provisions of this Section, have only such voting rights
as shall be fixed and determined by the Board of Directors pursuant to
clause (a) of this Section 2, provided, however, that if dividends on the
Preferred Stock shall be in arrears in an amount equal to 150% of the
annual dividends thereon, the holders of the Preferred Stock shall have the
special right, voting as a class, to elect two additional directors to the
Board of Directors. Whenever the special voting right of the holders of
Preferred Stock shall have vested, such special right may be exercised at
any annual meeting of shareholders held for the purpose of electing
directors. The special
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<PAGE> 31
right of the holders of Preferred Stock, voting as a class, to elect
two additional directors as provided herein, shall continue until such
times as all dividends accumulated on the Preferred Stock shall have been
paid in full, at which time the right of the holders of Preferred Stock to
exercise such special voting right shall terminate, subject to revesting
in the event of each and every subsequent arrearage in dividends as
described above. The Board of Directors shall have the right to fix a
record date for the determination of the holders of Preferred Stock
entitled to notice of and vote at any annual meeting when, and during the
period, that special voting rights shall have vested. Upon any termination
of the special voting right of the holders of Preferred Stock provided
herein, the term of the two additional directors elected by the holders of
the Preferred Stock, voting as a class, shall terminate at the next
succeeding annual meeting of shareholders held for the purpose of electing
directors.
(f) So long as any Preferred Stock remains outstanding, the
corporation shall not, without the affirmative vote at a meeting (the
notice of which shall state the general character of the matters to be
submitted thereat), or the written consent with or without a meeting, of
the holders of at least 66 2/3% of the then outstanding shares of Preferred
Stock:
i) authorize or create, or increase the authorized amount of, any
additional class of stock ranking prior to the Preferred Stock; or
authorize or create, or increase the authorized amount of, any class
of stock or obligations convertible into or evidencing the right to
purchase any class of stock ranking prior to the Preferred Stock; or
ii) amend, alter or repeal any of the provisions of the Amended
Articles of Incorporation, as the same may at any time be amended by
the Board of Directors as authorized in clause (a) of this Section, or
otherwise, or of the Code of Regulations of the corporation, so as
adversely to affect the rights, preferences or powers of the holders
of Preferred Stock; provided, however, that if any such amendment,
alteration or repeal would adversely affect the rights, preferences or
powers of outstanding shares of Preferred Stock of any particular
series without correspondingly affecting the rights, preferences or
powers of the outstanding shares of all series, then like vote or
consent by the holders of at least 66 2/3% of the Preferred Stock of
that particular series at the time outstanding shall also be necessary
for effecting or validating any such amendment, alteration or repeal;
or
iii) merge or consolidate with or into any other corporation or
corporations, unless the corporation resulting from such merger or
consolidation will have after such merger or consolidation no class of
stock either authorized or outstanding ranking prior to the Preferred
Stock except the same number of shares of stock with the same rights,
preferences and powers as the stock of the corporation authorized and
outstanding immediately preceding such merger or consolidation, and
unless each holder of Preferred Stock immediately preceding such
merger or consolidation shall receive the same number of shares, with
the same rights, preferences and powers, of such resulting
corporation; provided, however, that no vote of the holders of
outstanding shares of Preferred Stock shall be required for the merger
or consolidation of the corporation on a basis which provides for the
payment, or deposit with a bank or trust company (which shall meet the
requirements specified for a "depository" in clause (c) of this
Section) of funds sufficient for the payment (not later than the
effective date of such merger or consolidation) to the holders of such
outstanding Preferred Stock of an amount equal to the amount which
would have been payable to the holders of such shares if there had
been a liquidation, dissolution or winding up of the corporation as of
said date.
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(g) So long as any Preferred Stock remains outstanding, the
corporation shall not, without the affirmative vote at a meeting
(the notice of which shall state the general character of the matters
to be submitted thereat), or the written consent with or without a meeting,
of the holders of at least a majority of the then outstanding shares of
Preferred Stock:
i) increase the authorized amount of Preferred Stock; or
authorize or create, or increase the authorized amount of, any
additional class of stock ranking on a parity with the Preferred
Stock; or authorize or create, or increase the authorized amount of,
any class of stock or obligations convertible into or evidencing the
right to purchase any class of stock ranking on a parity with the
Preferred Stock; or
ii) sell, lease or convey (which terms shall not be deemed to
include mortgage) all or substantially all, of its property or
business; or voluntarily liquidate, dissolve or wind up its business;
provided, however, that no vote of the holders of outstanding shares
of Preferred Stock shall be required for the sale, lease or conveyance
of all, or substantially all, of the property or business of the
corporation on a basis which provides for the payment, or deposit with
a bank or trust company (which shall meet the requirements specified
for a "depository" in clause (c) of this Section) of funds sufficient
for the payment (not later than the effective date of such sale, lease
or conveyance) to the holders of such outstanding Preferred Stock of
an amount equal to the amount which would have been payable to the
holders of such shares if there had been a liquidation, dissolution or
winding up of the corporation as of said date.
(h) All shares of Preferred Stock redeemed at the option of the
corporation or pursuant to any sinking fund, or purchased and surrendered
to any sinking fund, or converted into Common Stock or other securities,
shall be permanently retired in the manner provided by law and shall not be
reissued.
(i) The holders of Preferred Stock shall have no preemptive rights,
and no holders of Preferred Stock shall be entitled as a matter of right to
subscribe for or purchase shares of any class now or hereafter authorized,
or to subscribe for or purchase securities convertible into or exchangeable
for shares of any class or to which shall be attached or appertain any
warrants or rights entitling the holder thereof to subscribe for or
purchase shares of any class, except such rights of subscription or
purchase, if any, at such price or prices and upon such terms and
conditions as the Board of Directors in its discretion may from time to
time determine.
(j) Subject to limitations imposed in these Amended Articles of
Incorporation, the corporation may purchase, redeem and sell shares of its
Preferred Stock from time to time to such extent, in such manner, and upon
such terms as its Board of Directors may determine; provided, however, that
the corporation shall not use any of its funds for any such purchase or
redemption when there is reasonable ground to believe that the corporation
is or by such purchase or redemption would be rendered insolvent.
(k) The term "accrued dividends" or "dividends accrued", wherever used
with reference to the Preferred Stock or any series thereof, in the Amended
Articles of Incorporation, shall be deemed to mean an amount which shall be
equal to dividends thereon at the rate per annum fixed by the Board of
Directors as hereinbefore authorized for the particular series, computed
from the date on which such dividends began to accrue on such shares to the
date to which dividends are stated to accrue, less the aggregate amount of
dividends theretofore paid thereon.
(l) Any reference in the Amended Articles of Incorporation to a class
of stock ranking prior to or on a parity with the Preferred Stock shall be
deemed to refer to such classes of stock, respectively, ranking prior to or
on a parity with the
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<PAGE> 33
Preferred Stock in respect of dividends or distribution of assets
on liquidation.
[SECTION 3. ADDITIONAL TERMS AND PROVISIONS OF SERIES A PREFERRED STOCK.
In addition to the express terms set forth in Section 2 of this Article
Fourth which are applicable to all series of Preferred Stock, additional express
terms of the Series A Preferred Stock are as follows:
(a) The designation of such series shall be Series A Cumulative
Preferred Stock (Series A Preferred Stock) and such series shall consist of
50,000 shares.
(b) The holders of shares of Series A Preferred Stock shall be
entitled to receive cumulative cash dividends, as and when declared by the
Board of Directors, out of funds legally available for the payment thereof,
at the rate of $9.00 per share per annum and no more, payable quarterly on
the fifteenth (15th) day of March, June, September and December in each
year, such dividends to accrue and to cumulate, in the case of each share,
from the date of issuance of such share.
(c) As a mandatory sinking fund for the retirement of the Series A
Preferred Stock (so long as any of the shares of Series A Preferred Stock
are outstanding) on June 30, 1985 and on each June 30 thereafter to and
including June 30, 1989 (each such date being hereinafter referred to as a
Sinking Fund Payment Date, the corporation shall redeem (provided such
redemption shall not violate any applicable provision of the laws of the
State of Ohio) 10,000 shares of the Series A Preferred Stock (or the number
of shares of the Series A preferred Stock then outstanding, if less than
10,000) at a redemption price of One Hundred Dollars ($100.00) per share,
plus, in each case, an amount equal to all dividends thereon accrued and
unpaid to the date of redemption, whether or not earned or declared. No
shares of Series A Preferred Stock redeemed pursuant to clauses (d) or (e)
of this Section 3 or otherwise purchased or acquired by the corporation may
be credited to, or relieve the corporation to any extent from, the sinking
fund requirements set forth herein. If the above stated sinking fund
requirements are not met in any year, the requirements for the next
succeeding year shall be increased by the amount of the deficiency. Nothing
in this Section 3 shall be deemed to preclude the holders of the Series A
Preferred Stock from pursuing any and all remedies which may be available
to them under applicable law in the event that any such sinking fund
requirements are not met.
(d) The corporation, at the option of the Board of Directors, may
redeem, on each Sinking Fund Payment Date, as defined in clause (c) of this
Section 3, such additional number of shares of the Series A Preferred Stock
then outstanding as shall be designated by the Board of Directors at a
redemption price of One Hundred Dollars ($100.00) per share plus, in each
case, an amount equal to all dividends thereon accrued and unpaid to the
date of redemption, whether or not earned or declared; provided, however,
that the maximum number of additional shares of the Series A Preferred
Stock which may be redeemed pursuant to this clause (d) on any Sinking Fund
Payment Date shall not exceed the number of shares of Series A Preferred
Stock redeemed on such date pursuant to clause (c) of this Section 3 and,
further provided, that the aggregate number of additional shares of the
Series A Preferred Stock which may be redeemed pursuant to this clause (d)
on all Sinking Fund Payment Dates shall not exceed 12,500 shares.
(e) The corporation, at the option of the Board of Directors, may also
redeem the whole, or from time to time may redeem any part, of the Series A
Preferred Stock at any time after June 30, 1984 at the following redemption
prices, together in each case with an amount equal to all dividends thereon
accrued and unpaid to the date of redemption, whether or not earned or
declared:
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If redeemed Redemption
prior to price
June 30 per share
----------- ----------
1985 $104.50
1986 103.00
1987 101.50
1988 100.00
(f) Notwithstanding the provisions of clauses (d) and (e) of this
Section 3, less than all of the Series A Preferred Stock may be redeemed
pursuant to clauses (d) and (e) of this Section 3 only after full
cumulative dividends upon the Preferred Stock then outstanding shall have
been paid for all past quarterly dividend periods and after or concurrently
with making payment of, or declaring or setting apart for payment, the full
dividend on all outstanding shares of Preferred Stock for the then current
quarterly dividend period.
(g) All redemptions of less than all of the outstanding shares of
Series A Preferred Stock pursuant to clauses (c), (d) and (e) of this
Section 3 shall be pro rata as nearly as possible to the nearest whole
share, among the holders of the then outstanding shares of Series A
Preferred Stock according to the number of shares held by each holder.
(h) Upon any liquidation, dissolution or winding up of the
corporation, the holders of Series A Preferred Stock shall be entitled,
before any distribution shall be made to the holders of Common Stock or of
any other class of stock junior to the Series A Preferred Stock, to be
paid, whether from capital, surplus or otherwise, One Hundred Dollars
($100.00) per share, plus in each such case an amount equal to all
dividends thereon accrued and unpaid whether or not earned or declared;
provided, however, that in the event any such liquidation, dissolution or
winding up of the corporation is voluntary, the holders of Series A
Preferred Stock shall be entitled to be paid, instead of One Hundred
Dollars ($100.00) per share, the then prevailing optional redemption price
set forth in the schedule contained in clause (e) of this Section 3, plus
accrued and unpaid dividends. Any merger or consolidation of the
corporation which does not require the vote of the holders of outstanding
shares of Series A Preferred Stock by reason of the payment or deposit of
funds described in clause (f)(iii) of Section 2 of this Article Fourth, and
any sale, lease or conveyance of all, or substantially all, of the property
or business of the corporation which does not require the vote of the
holders of the outstanding shares of Series A Preferred Stock by reason of
the payment or deposit of funds described in clause (g)(ii) of Section 2
of this Article Fourth shall be deemed to be a voluntary liquidation,
dissolution or winding up of the corporation within the meaning of this
clause (h).
(i) Subject to the provision for adjustment hereinafter set forth,
each share of Series A Preferred Stock shall entitle the holder thereof to
100 votes on all matters submitted to a vote of the shareholders of the
corporation. In the event the corporation shall at any time declare or pay
any dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by payment of
a dividend in shares of Common Stock) into a greater or lesser number of
shares of Common Stock, then in each such case the number of votes per
share to which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event shall be adjusted by multiplying such
number by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator
of which is the number of shares of Common Stock that were outstanding
immediately prior to such event. Except as otherwise provided herein or by
law, the holders of shares of Series A Preferred Stock and the holders of
shares of Common Stock having general voting rights shall vote together as
one class on all matters submitted to a vote of shareholders of the
corporation.]
SECTION [4]{3}. ADDITIONAL TERMS AND PROVISIONS OF SERIES C PREFERRED STOCK.
In addition to the express terms set forth in Section 2 of this Article Fourth
which are appli-
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enclosed in braces "{" and "}" in the electronic format.
<PAGE> 35
cable to all series of Preferred Stock, additional express terms of the
Series C Preferred Stock are as follows:
(a) The designation of such series shall be Series C Cumulative
Preferred Stock ("Series C Preferred Stock") and such series shall
consist of 200,000 shares. Such number of shares may be increased or
decreased by resolution of the Board of Directors; provided, that no
decrease shall reduce the number of shares of Series C Preferred Stock to
a number less than the number of shares then outstanding plus the number
of shares reserved for issuance upon the exercise of outstanding options,
rights or warrants or upon the conversion of any outstanding securities
issued by the corporation convertible into Series C Preferred Stock.
(b) The holders of shares of Series C Preferred Stock shall be
entitled to receive, as and when declared by the Board of Directors, out of
funds legally available for the payment thereof, quarterly dividends
payable in cash on the 1st day of February, May, August and November in
each year (each such date being referred to herein as a "Quarterly Dividend
Payment Date"), commencing on the first Quarterly Dividend Payment Date
after the first issuance of a share or fraction of a share of Series C
Preferred Stock, in an amount per share (rounded to the nearest cent) equal
to the greater of (a) Ten Dollars ($10.00) or (b) subject to the provision
for adjustment hereinafter set forth, 100 times the aggregate per share
amount of all cash dividends, and 100 times the aggregate per share amount
(payable in kind) of all non-cash dividends or other distributions, other
than a dividend payable in shares of Common Stock or a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise),
declared on the Common Stock since the immediately preceding Quarterly
Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a share
of Series C Preferred Stock. In the event the corporation shall at any time
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in shares of Common Stock) into a greater or
lesser number of shares of Common Stock, then in each such case the amount
to which holders of shares of Series C Preferred Stock were entitled
immediately prior to such event under clause (b) of the preceding sentence
shall be adjusted by multiplying such amount by a fraction, the numerator
of which is the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of shares of
Common Stock that were outstanding immediately prior to such event.
(c) The corporation shall declare a dividend or distribution on the
Series C Preferred Stock as provided in paragraph (b) of this Section
immediately after it declares a dividend or distribution on the Common
Stock (other than a dividend payable in shares of Common Stock); provided
that, in the event no dividend or distribution shall have been declared on
the Common Stock during the period between any Quarterly Dividend Payment
Date and the next subsequent Quarterly Dividend Payment Date, a dividend of
Ten Dollars ($10.00) per share on the Series C Preferred Stock shall
nevertheless be accrued and payable on such subsequent Quarterly Dividend
Payment Date.
(d) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series C Preferred Stock from the Quarterly Dividend Payment Date
next preceding the date of issue of such shares, unless the date of issue
of such shares is prior to the record date for the first Quarterly Dividend
Payment Date, in which case dividends on such shares shall begin to accrue
from the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series C Preferred Stock entitled to
receive a quarterly dividend and before such Quarterly Dividend Payment
Date, in either of which
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events such dividends shall begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not
bear interest. Dividends paid on the shares of Series C Preferred Stock in
an amount less than the total amount of such dividends at the time accrued
and payable on such shares shall be allocated pro rata on a share-by-share
basis among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders of shares
of Series C Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be not more than 60
days prior to the date fixed for the payment thereof.
(e) Whenever quarterly dividends or other dividends or distributions
payable on the Series C Preferred Stock as provided in Section [4]{3}(b)
of this Article Fourth are in arrears, thereafter and until all accrued
and unpaid dividends and distributions, whether or not declared, on shares
of Series C Preferred Stock outstanding shall have been paid in full, the
corporation shall not:
(i) declare or pay dividends, or make any other distributions, on
any shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series C Preferred
Stock;
(ii) declare or pay dividends, or make any other distributions,
on any shares of stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series C
Preferred Stock, except dividends paid ratably on the Series C
Preferred Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which the
holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series C Preferred
Stock, provided that the corporation may at any time redeem, purchase
or otherwise acquire shares of any such junior stock in exchange for
shares of any stock of the corporation ranking junior (either as to
dividends or upon dissolution, liquidation or winding up) to the
Series C Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration
any shares of Series C Preferred Stock, or any shares of stock ranking
on a parity with the Series C Preferred Stock, except in accordance
with a purchase offer made in writing or by publication (as determined
by the Board of Directors) to all holders of such shares upon such
terms as the Board of Directors, after consideration of the respective
annual dividend rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith will
result in fair and equitable treatment among the respective series or
classes.
(f) The corporation shall not permit any subsidiary of the corporation
to purchase or otherwise acquire for consideration any shares of Series C
Preferred Stock, or any shares of stock ranking on a parity with the Series
C Preferred Stock, unless the corporation could, under Section 3(e) of this
Article Fourth purchase or otherwise acquire such shares at such time and
in such manner.
(g) Any shares of Series C Preferred Stock purchased or otherwise
acquired by the corporation in any manner whatsoever shall be retired and
cancelled promptly after the acquisition thereof. Except as contemplated
herein in this Article Fourth, all such shares shall upon their
cancellation become authorized but unissued shares of Preferred Stock and
may be reissued as part of a new series of Preferred Stock subject to the
conditions and restrictions on issuance set forth herein or as otherwise
required by law.
(h) Upon any liquidation, dissolution or winding up of the
corporation, no distribution shall be made (1) to the holders of shares of
stock ranking junior (either as to
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dividends or upon liquidation, dissolution or winding up) to the Series
C Preferred Stock unless, prior thereto, the holders of shares of Series C
Preferred Stock shall have received One Hundred Dollars ($100.00) per
share, plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such
payment, provided that the holders of shares of Series C Preferred Stock
shall be entitled to receive an aggregate amount per share, subject to the
provision for adjustment hereinafter set forth, equal to 100 times the
aggregate amount to be distributed per share to holders of shares of
Common Stock or (2) to the holders of shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up)
with the Series C Preferred Stock, except distributions made ratably on
the Series C Preferred Stock and all such parity stock in proportion to
the total amounts to which the holders of all such shares are entitled
upon such liquidation, dissolution or winding up. In the event the
corporation shall at any time declare or pay any dividend on the Common
Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of
Common Stock) into a greater or lesser number of shares of Common Stock,
then in each such case the aggregate amount to which holders of shares of
Series C Preferred Stock were entitled immediately prior to such event
under the proviso in clause (1) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction, the numerator of which
is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
(i) In case the corporation shall enter into any consolidation,
merger, combination or other transaction in which the shares of Common
Stock are exchanged for or changed into other stock or securities, cash
and/or any other property, then in any such case each share of Series C
Preferred Stock shall at the same time be similarly exchanged or changed
into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case
may be, into which or for which each share of Common Stock is changed or
exchanged. In the event the corporation shall at any time declare or pay
any dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by payment of
a dividend in shares of Common Stock) into a greater or lesser number of
shares of Common Stock, then in each such case the amount set forth in the
preceding sentence with respect to the exchange or change of shares of
Series C Preferred Stock shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately
prior to such event.
(j) The shares of Series C Preferred Stock shall not be redeemable.
(k) The Series C Preferred Stock shall rank, with respect to the
payment of dividends and the distribution of assets, pari passu to all
series of any other class of the corporation's Preferred Stock.
SECTION [5]{4}. TERMS AND PROVISIONS OF COMMON STOCK.
(a) The rights and preferences of the Common Stock shall be subject in all
respects to the rights and preferences of the Preferred Stock, in the manner and
to the extent provided in Sections 2[, ]and 3[, and 4 ]of this Article Fourth.
(b) The Common Stock shall rank junior to the Preferred Stock with respect
to the payment of dividends. When and as declared by the Board of Directors out
of the funds of the
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corporation legally available therefor, after there shall have been paid or
declared or set apart for payment full dividends on all the Preferred Stock and
subject to the restrictions or limitations contained in the express terms and
provisions of the Preferred Stock with respect to the payment of dividends, the
holders of Common Stock shall be entitled to receive dividends.
(c) Each holder of record of Common Stock shall be entitled to one vote for
each share standing in his {or her} name on the books of the corporation. The
Board of Directors shall have the right to fix a record date of the
determination of the holders of Common Stock entitled to notice of and to vote
at any meeting.
(d) The Common Stock shall rank junior to the Preferred Stock with respect
to payment upon the dissolution, liquidation or sale of assets of the
corporation. Upon the dissolution, liquidation or winding up of the corporation,
after there shall be paid or set apart for holders of Preferred Stock the full
preferential amounts to which they are entitled, the holders of Common Stock
shall be entitled to receive pro rata all of the remaining assets of the
corporation available for distribution to its shareholders.
(e) The holders of Common Stock shall have no preemptive rights, and no
holder of Common Stock shall be entitled as a matter of right to subscribe for
or purchase shares of a class now or hereafter authorized, or to subscribe for
or purchase any securities convertible into or exchangeable for shares of any
class or to which shall be attached or appertain any warrants or rights
entitling the holder thereof to subscribe for or purchase shares of any class.
{(f) The corporation may purchase, hold, sell, and reissue any of its
shares of Common Stock and to the extent that the authority to do the same may
be granted under these Amended Articles, the Board of Directors shall have the
power to do all said acts, without any action by shareholders.}
FIFTH: SECTION 1. The affirmative vote or consent of the holders of eighty
percent (80%) of all shares of stock of the corporation entitled to vote in the
general elections of directors, considered for the purposes of this Article
Fifth as one class, shall be required for the adoption or authorization of a
business combination, as hereinafter defined, with any other entity, as
hereinafter defined, if, as of the record date for the determination of holders
of shares entitled to notice thereof and to vote thereon or consent thereto,
such other entity is the beneficial owner, directly or indirectly, of more than
ten percent (10%) of the outstanding shares of stock of the corporation entitled
to vote in the general elections of directors, considered for the purposes of
this Article Fifth as one class. The voting requirement specified above shall
not be applicable if the definitive agreement or other arrangements to
effectuate the business combination with the other entity that is a party
thereto is approved by a majority of the directors of the corporation at a time
when such other entity does not beneficially own, directly or indirectly, such a
ten percent (10%) voting interest. In addition, the voting requirements
specified above shall not be applicable if all of the following conditions are
satisfied:
(a) The cash, or fair market value of other consideration, to be
received per share by holders of Common Stock of the corporation in such
business combination bears the same or a greater percentage relationship to
the market price of the corporation's Common Stock immediately prior to the
announcement of such business combination as the highest per share price
(including brokerage commissions and soliciting dealers' fees) which such
other entity has theretofore paid for any of the shares of the
corporation's Common Stock already owned by it bears to the market price of
the Common Stock of the corporation immediately prior to the commencement
of acquisition of the corporation's Common Stock by such other entity; and
(b) The cash, or fair market value of other consideration, to be
received per share by holders of the Common Stock of the corporation in
such business combination (i) is not less than the highest per share price
(including brokerage commissions and soliciting dealers' fees) paid by such
other entity in acquiring any of its holdings of the corporation's Common
Stock, and (ii) is not less than the earnings per share of Common Stock of
the corporation for the four full consecutive
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<PAGE> 39
fiscal quarters immediately preceding the record date for solicitation
of votes on such business combination, multiplied by the then
price/earnings multiple (if any) of such other entity as customarily
computed and reported in the financial community; and
(c) After such other entity has acquired ten percent (10%) of the
shares of stock of the corporation entitled to vote in the general election
of directors and prior to the consummation of such business combination:
(i) such other entity shall not have acquired any newly issued shares of
stock, directly or indirectly, from the corporation (except upon conversion
of convertible securities acquired by it prior to obtaining ten percent
(10%) of the shares of the corporation entitled to vote in the general
election of directors or as a result of a pro rata stock dividend or stock
split); and (ii) such other entity shall not have acquired any additional
shares of the corporation's outstanding Common Stock or securities
convertible into Common Stock except as a part of the transaction which
results in such other entity acquiring its ten percent (10%) or greater
interest; and
(d) Such other entity shall not have (i) received the benefit,
directly or indirectly (except proportionately as a shareholder), of any
loans, advances, guarantees, pledges or other financial assistance or tax
credits provided by the corporation, or (ii) made any major change in the
corporation's business or equity capital structure prior to the
consummation of such business combination.
The provisions of this Article Fifth shall also apply to a business
combination with any other entity which at any time has been the beneficial
owner, directly or indirectly, of more than ten percent (10%) of the
outstanding shares of stock of the corporation entitled to vote in the
general elections of directors considered for the purposes of this Article
Fifth as one class, notwithstanding the fact that such other entity has
reduced its shareholdings below ten percent (10%) if at the time the
definitive agreement was entered into it was the direct or indirect
beneficial owner of such a ten percent (10%) interest or if, as of the
record date for the determination of shareholders entitled to notice of and
to vote on or consent to the business combination, such other entity is an
"affiliate" of the corporation, as hereinafter defined.
SECTION 2. As used in this Article Fifth, (a) the term "other entity"
shall include any corporation, person or other entity and any other entity with
which it or its "affiliate" or "associate", as defined below, has any agreement,
arrangement or understanding, directly or indirectly, for the purpose of
acquiring, holding, voting or disposing of shares of stock of the corporation,
or which is its "affiliate" or "associate" as those terms are defined in Rule
12b-2 of the General Rules and Regulations under the Securities Exchange Act of
1934; (b) an other entity shall be deemed to be the "beneficial owner" of any
shares of stock of the corporation which the other entity, as defined above, has
the right to acquire pursuant to any agreement, or upon exercise of conversion
rights, warrants or options, or otherwise in addition to shares otherwise
beneficially owned; (c) the term "outstanding shares of any class of stock of
the corporation" shall include shares deemed owned through application of clause
(b) above but shall not include any other shares which may be issuable pursuant
to any agreement, or upon exercise of conversion rights, warrants or options, or
otherwise; (d) the term "business combination" shall include any merger or
consolidation of the corporation with or into any other corporation, or the sale
or lease of all or substantially all of the assets of the corporation to, or any
sale or lease to the corporation or any subsidiary thereof in exchange for
securities of the corporation of any assets (except assets having an aggregate
fair market value of less than $5,000,000) of any other entity, or any
reclassification or recapitalization of the outstanding shares of any class of
stock of the corporation if at the time there is any other entity which has
acquired ten percent (10%) of the stock of the corporation entitled to vote in
the election of directors and the effect of such transaction is to increase the
relative voting power of such other entity; and (e) for the purposes of
subparagraphs (a) and (b) of Section 1 of this Article Fifth the term "other
consideration to be received" shall mean, in the event of a business combination
with such
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<PAGE> 40
other entity in which the corporation is the surviving corporation, Common
Stock of the corporation retained by its existing public shareholders.
SECTION 3. A majority of the directors shall have the power and duty,
consistent with their fiduciary obligations, to determine for the purposes of
this Article Fifth on the basis of information known to them whether (a) such
other entity beneficially owns more than ten percent (10%) of the outstanding
shares of stock of the corporation entitled to vote in the general elections of
directors, (b) an other entity is an "affiliate" or "associate" of another, (c)
an other entity has an agreement, arrangement or understanding with another, or
(d) the assets being acquired by the corporation, or any subsidiary thereof,
have an aggregate fair market value of less than $5,000,000.
SECTION 4. No amendment to the Amended Articles of Incorporation of the
corporation shall amend, alter, change or repeal any of the provisions of this
Article Fifth, unless the amendment affecting such amendment, alteration, change
or repeal shall receive the affirmative vote or consent of the holders of eighty
percent (80%) of all shares of stock of the corporation entitled to vote in the
general elections of directors, considered for the purposes of this Article
Fifth as one class. Notwithstanding the foregoing, this Section 4 shall not
apply to, and such requirements of vote or consent shall not be required for,
any amendment, alteration, change or repeal recommended to the shareholders by
the Board of Directors of the corporation if, as of the record date for the
determination of shareholders entitled to notice thereof and to vote thereon or
consent thereto, no other entity is the beneficial owner, directly or
indirectly, of more than ten percent (10%) of the outstanding shares of the
stock of the corporation entitled to vote in the general elections of directors,
considered for the purpose of this provision as one class.
SIXTH: These Amended Articles of Incorporation supersede and take the place of
the existing Amended Articles of Incorporation dated February [8, 1989] {15,
1993,} as amended.
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<PAGE> 41
APPENDIX B
CODE OF REGULATIONS
OF
HUFFY CORPORATION
{INDEX}
<TABLE>
<S> <C> <C>
ARTICLE I SHAREHOLDERS
Section A. Annual Meeting
B. Special Meetings
C. Notice of Meetings
D. Proxies
E. Quorum -- Adjournment
F. Financial Statements
G. Notice of Shareholder Nominees
H. Approval and Ratification of Acts of Officers and Board of Directors
I. Certificates for Shares of Stock
ARTICLE II BOARD OF DIRECTORS
Section A. Powers of the Board
B. Number of Directors
C. Term of Office, Removal and Vacancies
D. Meetings of the Board
E. Action Without a Meeting
F. Committees
G. Compensation
H. Fiscal Year
I. Retirement
ARTICLE III OFFICERS
Section A. Designation, Election and Term of Office
B. Chairman of the Board
C. President
D. Vice Presidents
E. Secretary
F. Treasurer
G. Other Officers
H. Compensation -- Officers and Employees
ARTICLE IV MISCELLANEOUS
Section A. Seal
B. Indemnification of Directors and Officers
C. Amendments
</TABLE>
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CODE OF REGULATIONS
OF
HUFFY CORPORATION
ARTICLE I -- SHAREHOLDERS
SECTION A. ANNUAL MEETING
1. The annual meeting of the shareholders of the Corporation for the
election of directors and the transaction of such other business as may be
specified in the notice shall be held within 120 days following the close of the
Corporation's Fiscal Year.
2. The date, hour, place and city, either within or without the State of
Ohio, will be designated by the Board of Directors and will be set forth in the
notice of the meeting.
3. Either the Chairman, Vice Chairman or President shall preside at all
meetings of the shareholders, depending on individual availability in that
order.
SECTION B. SPECIAL MEETINGS
1. Special meetings of the shareholders may be called by:
a. The Chairman of the Board, or
b. The President, or
c. The Vice President authorized to exercise the authority of the
President, in case of the latter's absence, death, or disability, or
d. The Board of Directors acting at a meeting, or
e. Not less than 50% of the Directors acting without a meeting, or
f. The shareholders holding of record 50% or more of all the shares
outstanding and entitled to vote thereat.
2. Any such request for a special meeting of shareholders shall state the
purpose or purposes of the meeting.
3. Upon request in writing delivered either in person or by registered mail
to the President or the Secretary by any person or persons entitled to call a
meeting of shareholders, such officer shall forthwith cause to be given to the
shareholders entitled thereto notice of a meeting to be held on a date not more
than sixty days nor less than ten days after the receipt of such request, as
such officer may fix.
4. Special meetings of the shareholders may be held at such time and place,
either within or without the State of Ohio, as may be designated in the notice
thereof.
SECTION C. NOTICE OF MEETINGS
1. Unless waived as provided by law, a written or printed notice of each
annual or special meeting stating the time and place and the purpose or purposes
thereof shall be directed to each shareholder of record entitled to vote
thereat.
2. Such notice shall be given by personal delivery or shall be mailed
postage prepaid not more than sixty days nor less than ten days before any
meeting. It shall be addressed to the shareholder at his {or her} address as it
appears upon the records of the Corporation.
3. Notice of adjournment of a meeting need not be given if the time and
place to which it is adjourned are fixed and announced at such meeting.
SECTION D. PROXIES
1. Persons entitled to vote, share or to act with respect to shares at a
meeting of shareholders may be represented and vote or act thereat by proxy
appointed thru an instrument in writing and submitted to the Secretary at or
before any shareholders' meeting.
2. The person appointed as proxy need not be a shareholder.
3. Notice to the Corporation, in writing or in open meeting, by the person
having appointed a proxy, of the revocation of the appointment of a proxy shall
not affect any vote or act previously taken or authorized at a meeting.
SECTION E. QUORUM -- ADJOURNMENT
1. The holders of record of shares entitled to exercise not less than fifty
percent (50%) of
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the voting power of the Corporation present in person or by proxy at any meeting
of shareholders shall constitute a quorum.
2. The holders of a majority of the voting shares present in person or by
proxy at any meeting of shareholders, whether or not a quorum is present, may
adjourn such meeting from time to time.
SECTION F. FINANCIAL REPORTS
1. The financial statement shall be presented at annual shareholders'
meetings or to individual shareholders, as required by law.
2. The financial statement shall have appended thereto a certificate, as
required by law.
SECTION G. NOTICE OF SHAREHOLDER NOMINEES
1. Nominations of persons for election to the Board of Directors of the
Corporation may be made at a meeting of shareholders by or at the direction of
the Board of Directors or by any shareholder of the Corporation entitled to vote
for the election of Directors at the meeting who complies with the notice
procedures set forth in this Section. Such nominations, other than those made by
or at the direction of the Board of Directors, shall be made pursuant to timely
notice in writing to the Secretary of the Corporation. To be timely, a
shareholder's notice shall be delivered to or mailed and received at the
principal executive offices of the Corporation not less than fifty (50) days nor
more than ninety (90) days prior to the meeting; provided, however, that in the
event that less than sixty (60) days' notice or prior public disclosure of the
date of the meeting is given or made to shareholders, notice by the shareholder
to be timely must be so received not later than the close of business on the
tenth (10th) day following the day on which such notice of the date of the
meeting was mailed or such public disclosure was made. Such shareholder's notice
shall set forth (a) as to each person whom the shareholder proposes to nominate
for election or re-election as a Director, (i) the name, age, business address
and residence address of such person, (ii) the principal occupation or
employment of such person, (iii) the class and number of shares of the
Corporation which are beneficially owned by such person and (iv) any other
information relating to such person that is required to be disclosed in
solicitations of proxies for election of Directors, or is otherwise required, in
each case pursuant to Regulation 14A under the Securities Exchange Act of 1934,
as amended (including without limitation such person's written consent to [being
named in the proxy statement as a nominee and to] serving as a Director if
elected); and (b) as to the shareholder giving notice (i) the name and address,
as they appear on the Corporation's books, of such shareholder and (ii) the
class and number of shares of the Corporation which are beneficially owned by
such shareholder. At the request of the Board of Directors any person nominated
by the Board of Directors for election as a Director shall furnish to the
Secretary of the Corporation that information required to be set forth in a
shareholder's notice of nomination which pertains to the nominee. No person
shall be eligible for election as a Director of the Corporation unless nominated
in accordance with the procedures set forth in this Section. The Chairman of the
meeting shall, if the facts warrant, determine and declare to the meeting that a
nomination was not made in accordance with the procedures prescribed in this
Section, and if he {or she} should so determine, he {or she} shall so declare
to the meeting and the defective nomination shall be disregarded.
SECTION H. APPROVAL AND RATIFICATION OF ACTS OF BOARD OF DIRECTORS AND OF
OFFICERS
1. Except as otherwise provided by law, any contract, act, or transaction,
prospective or past, of the Corporation, or of the Board of Directors, or of the
Officers may be approved or ratified by the affirmative vote at a meeting of the
shareholders, or by the written consent, with or without a meeting, of the
holders of record of shares entitling them to exercise a majority of the voting
power of the Corporation, and such approval or ratification shall be as valid
and binding as though affirmatively voted for or consented to by every
shareholder of the Corporation.
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SECTION I. CERTIFICATES FOR SHARES OF STOCK
1. The interest of each shareholder of the Corporation shall be evidenced
by a certificate or certificates for shares in such form as the Board of
Directors may from time to time prescribe.
2. Each certificate shall bear:
a. A distinguishing number, and
b. The signature of the President and Secretary, and
c. The seal of the Corporation, and
d. Such recitals as may be required by law.
3. The certificates shall be issued in numerical order and a record kept
for that purpose as required by law.
4. Shares of the Corporation shall be transferable on the books of the
Corporation by the holder thereof in person or by his {or her} attorney, upon
surrender for cancellation of a certificate or certificates for the same number
of shares, with an assignment and power of transfer endorsed thereon or attached
thereto, duly executed, and with such proof of the authenticity of the signature
as the Corporation or its agent may reasonably require.
5. The Corporation may issue a new certificate for shares in place of any
certificate theretofore issued by it and alleged to have been lost, stolen, or
destroyed, and the Board of Directors may, in its discretion require the owner,
or his {or her} legal representatives, to give the Corporation a bond containing
such terms as the Board of Directors may require to protect the Corporation or
any person injured by the execution and delivery of a new certificate.
6. Upon the taking of a record date of shareholders for the purposes of
declaring dividends, for the purposes of determining those shareholders entitled
to vote at any meeting or for any other purposes, the stock transfer books of
the Corporation shall not be closed, but shall remain open for the purposes of
recording the issuing, transfer or other transactions in connection with the
stock of the Corporation.
ARTICLE II -- BOARD OF DIRECTORS
SECTION A. POWERS OF THE BOARD
1. Except as otherwise provided by law, all the capacity of the Corporation
shall be vested in and all its authority shall be exercised by the Board of
Directors.
SECTION B. NUMBER OF DIRECTORS
1. There shall be such number of Directors, not less than nine nor more
than [thirteen] {fourteen} as may be fixed or changed from time to time (a) by
the shareholders at a meeting called for such purpose at which a quorum is
present, by the affirmative votes of the holders of a majority of the shares
which are present, in person or by proxy, at the meeting and entitled to vote
on such proposal or (b) by the Directors at a meeting at which a quorum is
present, by the affirmative vote of a majority of the Directors which are
present at the meeting, or by action taken without a meeting in a writing or
writings signed by all of the Directors. No reduction in the number of
Directors shall of itself have the effect of shortening the term of any
incumbent Director.
SECTION C. TERM OF OFFICE, REMOVAL AND VACANCIES
1. A Director's term of office shall be three (3) years, except that, in
order to provide for rotation of members, initially or whenever necessary a
Director may be elected for a shorter term. {The Board of Directors shall be
divided into three classes of not less than three Directors each, with the term
of office of one class expiring each year.} A Director shall hold office until
the annual shareholders' meeting next succeeding the termination of the term for
which he {or she} was elected and until his {or her} successor is elected and
qualified.
2. A vacancy or vacancies (including without limitation any vacancy or
vacancies created by action of the Directors increasing the number of Directors)
may be filled by a majority vote of the remaining Directors for that period of
time to the next shareholders' meeting at which meeting the shareholders will
elect a Director to fill the unexpired portion of any term of office.
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SECTION D. MEETINGS OF THE BOARD
1. The regular meetings of the Board of Directors shall be held immediately
after the annual meeting of the shareholders and at such other times as may be
fixed by the Board of Directors, and such meetings may be held without further
notice.
2. Special meetings of the Board of Directors may be held at any time upon
call of:
a. The Chairman of the Board, or
b. The President, or
c. The Vice-President authorized to exercise the authority of the
President in case of latter's absence, death or disability, or
d. Two of the duly elected or appointed and qualified Directors.
Notice of the time and place of special meetings shall be served upon or
telephoned to each Director at least twenty-four hours, or mailed or
[telegraphed] {faxed} to each Director at his {or her} address as shown by the
books of the Corporation at least forty-eight hours, prior to the time of the
meeting, which notice need not specify the purposes of the meeting. Such
notice may be waived as provided by law.
3. Meetings of the Board of Directors, whether regular or special, may be
held at any place either within or without the State of Ohio.
4. Not less than 50% of the duly elected or appointed and qualified
Directors of the Corporation shall constitute a quorum for the transaction of
business. The act of a majority of Directors present at a meeting, at which a
quorum is present shall be the act of Directors.
5. The majority of the Directors present at any meeting, whether or not a
quorum is present, may adjourn the meeting from time to time without notice
other than announcement at the meeting, until a quorum shall attend.
SECTION E. ACTION WITHOUT A MEETING
1. Any action which may be authorized or taken at a meeting of the Board of
Directors may be authorized or taken without a meeting in a writing or writings
signed by all of the Directors, which writing or writings shall be filed with or
entered upon the records of the Corporation.
SECTION F. COMMITTEES
1. The Board of Directors may from time to time appoint three or more
Directors to constitute {an Executive Committee and} one or more {other}
committees of Directors. The resolution establishing each such committee shall
specify a designation by which it shall be known and shall fix its powers
and authority. The Board of Directors may delegate to any such committee any of
the authority of the Board of Directors, however, conferred, other than that of
filling vacancies among the Directors or in any committee of the Directors.
2. The Board of Directors may likewise appoint one or more Directors as
alternate members of any such committee, who may take the place of any absent
member or members at any meeting of such committee.
3. Each such committee shall serve at the pleasure of the Board of
Directors, shall act only at the intervals between meetings of the Board of
Directors, and shall be subject to the control and direction of the Board of
Directors. [All actions by any such committee shall be subject to revision and
alteration by the Board of Directors, provided that no rights of third persons
shall be adversely affected by any such revision or alteration.]
4. An act or authorization of an act by any such committee within the
authority delegated to it by the resolution establishing it shall be effective
for all purposes as the act or authorization of the Board of Directors.
5. In every case the affirmative vote of a majority in meeting or the
consent in writing of all the members of any such committee shall be necessary
for the approval of any action.
6. Each committee shall keep written records of all meetings and actions.
SECTION G. COMPENSATION
1. The Board of Directors is empowered to fix the amount of and authorize
the payment of compensation to the Directors and of the Executive Committee and
other committees for services rendered to the Corporation and of reimbursement
for traveling expenses incurred in attending meetings.
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enclosed in brackets "[" and "]" in the electronic format.
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enclosed in braces "{" and "}" in the electronic format.
<PAGE> 46
SECTION H. FISCAL YEAR
1. The fiscal year of the Corporation shall end on the last [Saturday of
June] {day of December} in each year, or on such other day as may be fixed from
time to time by the Board of Directors.
SECTION I. RETIREMENT OF DIRECTORS
1. Non-Employee Directors
a. A non-employee Director who reaches the age of seventy (70) years
during his {or her} term of office as a Director, shall retire from the
board, effective the next quarterly Directors' meeting following the date
on which he {or she} attained the age of seventy (70) years. Thereafter
such Director shall, during his {or her} lifetime, have the title of
Director Emeritus.
2. Employee Directors
a. A Director, other than the President or Chairman of the Board, who
is an employee of the Corporation shall retire as a Director as of the date
he {or she} terminates his {or her} active employment with the Corporation
and shall thereafter, during his {or her} lifetime, have the title of
Director Emeritus.
b. A Director who has served the Corporation as President and/or
Chairman of the Board at the time of his {or her} retirement from active
employment shall not be nominated for a term of office as Director, the
election for which would be held after he {or she} has attained the age of
seventy (70). A Director who is not re-nominated for office by virtue of
this covenant shall thereafter, during his {or her} lifetime, have the
title of Director Emeritus.
3. If the Board of Directors shall be confronted with an unusual situation
that to it seems to require relaxation of any of the foregoing rules, the Board
of Directors shall have power, by resolution, to establish or re-establish the
retirement age, or otherwise waive the age limitation of any Director or former
Director, so as to qualify him {or her} to serve longer, or again, as a
Director.
ARTICLE III -- OFFICERS
SECTION A. DESIGNATION, ELECTION AND TERM OF OFFICE
1. The Corporation may have a Chairman of the Board, and shall have a
President, one or more Vice Presidents, a Secretary, a Treasurer, and such other
officers as the Board of Directors may from time to time determine.
2. The Chairman of the Board and the President shall be Directors, but no
one of the other officers need be a Director.
3. Any two or more offices may be held by one person. However, no officer
shall execute, acknowledge, or verify any instrument in more than one capacity
if such instrument is required by law or by these regulations to be executed,
acknowledged, or verified by two or more officers.
4. If there be more than one Vice President, the Board of Directors may
designate their seniority through the method it selects and/or the particular
department or function of the Corporation over which they shall have charge.
5. All officers of the Corporation shall be elected by the Board of
Directors.
6. Each officer shall hold office until his {or her} successor is chosen
and qualified, unless otherwise specified by the Board of Directors.
7. The Board of Directors may fill any vacancy in any office occurring from
whatever reason.
SECTION B. CHAIRMAN OF THE BOARD
1. The Chairman of the Board shall preside at all meetings of the Board of
Directors and shall have such other authority and duties as may be delegated by
the Board of Directors.
SECTION C. PRESIDENT
1. The President shall preside at all meetings of Board of Directors,
except for meetings of the Board of Directors at which the Chairman of the Board
presides in accordance with the preceding Section.
2. Subject to the direction of the Board of Directors, the President shall
have the general
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enclosed in brackets "[" and "]" in the electronic format.
Language indicated as being shown with an underline in the typeset document is
enclosed in braces "{" and "}" in the electronic format.
<PAGE> 47
executive supervision over the property, business, and affairs of the
Corporation.
3. The President shall have such other duties and powers as may be assigned
to or invested in him {or her} by the Board of Directors.
SECTION D. VICE PRESIDENTS
1. The Vice Presidents, in the order of their seniority by designation
shall perform the duties of the President in his {or her} absence or during his
{or her} disability to act. The Vice Presidents shall have such other duties and
powers as may be assigned to or invested in them by the Board of Directors or by
the President.
SECTION E. SECRETARY
1. The Secretary shall issue notices of all meetings for which notices
require to be given, shall keep the minutes of the meetings, shall have charge
of the corporate seal and corporate record books and shall have other duties and
powers as may be assigned to or invested in him {or her} by the Board of
Directors or by the President.
SECTION F. TREASURER
1. The Treasurer shall have charge of all moneys and securities of the
Corporation.
2. [He] {The Treasurer} shall cause to be kept adequate and correct
account of the Corporation's business transactions and shall have general
charge and supervision of financial reports.
3. The Treasurer shall have such other duties and powers as may be assigned
to or invested in him {or her} by the Board of Directors or by the President.
SECTION G. OTHER OFFICERS
1. Other officers of the Corporation shall have such duties and powers as
may be assigned to or invested in them by the Board of Directors or by the
President.
SECTION H. COMPENSATION -- OFFICERS AND EMPLOYEES
1. The compensation of officers and employees of the Corporation, or the
method of fixing such compensation, shall be determined by or pursuant to
authority conferred by the Board of Directors or any committee of the Board of
Directors.
2. Such compensation may include retirement, disability, and death
benefits, and may be by way of fixed salary, or on the basis of earnings of the
Corporation, or any combination thereof, or otherwise, as may be determined or
authorized from time to time by the Board of Directors or any committee of the
Board of Directors.
ARTICLE IV -- MISCELLANEOUS
SECTION A. SEAL
1. The seal of the Corporation shall be circular with the words "HUFFY
CORPORATION" and "DAYTON, O." surrounding the word "SEAL" .
SECTION B. INDEMNIFICATION OF DIRECTORS AND OFFICERS
1. The Corporation shall, and hereby agrees to, indemnify any person who
served or serves as a director, officer, employee or agent of the Corporation,
or who served or serves at the request of the Corporation as a director,
trustee, officer, employee or agent of another Corporation, domestic or foreign,
non-profit or for profit, partnership, joint venture, trust, or other
enterprise, against any and all losses, liabilities, damages, and expenses,
including attorney's fees, judgments, fines, Employee Retirement Income Security
Act excise taxes or penalties and amounts paid in settlement, incurred by such
person, in connection with any claim, action, suit, or proceeding, including any
action or suit by or in the right of the Corporation (whether threatened,
pending or completed and whether civil, criminal, administrative, or
investigative, including appeals), by reason of any act or omission to act as
such director, trustee, officer, employee or agent, to the full extent permitted
by Ohio law including, without limitation, the provisions of Section 1701.13 of
the Ohio Revised Code, as the same exists or may hereafter be amended (but, in
the case of any such amendment, only to the extent that such amendment permits
the Corporation to provide broader indemnification rights than said law
permitted the Corporation to provide prior to such amendment).
Further, unless at the time of a Director's act or omission to act that is the
subject of an action, suit, or proceeding referred to in this Section B of
Article IV, the Articles of Incorporation or the Code of Regulations of this
Corporation state by specific reference to Section
7
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enclosed in brackets "[" and "]" in the electronic format.
Language indicated as being shown with an underline in the typeset document is
enclosed in braces "{" and "}" in the electronic format.
<PAGE> 48
1701.13(E)(5)(a) of the Ohio Revised Code that the provisions of Section
1701.13(E)(5)(a) do not apply to the Corporation, and unless the only liability
asserted against a Director in an action, suit or proceeding referred to in this
Section B of Article IV is pursuant to Section 1701.95 of the Ohio Revised Code,
then all expenses, including attorney's fees, incurred by a Director in
defending the action, suit or proceeding shall be paid by the Corporation as
they are incurred, in advance of the final disposition of the action, suit, or
proceeding upon receipt of an undertaking by or on behalf of the Director in
which he {or she} agrees to do both of the following:
a. Repay such amount if it is proved by clear and convincing evidence
in a court of competent jurisdiction that his {or her} action or failure to
act involved an act or omission undertaken with deliberate intent to cause
injury to the Corporation or undertaken with reckless disregard for the
best interests of the Corporation;
b. Reasonably cooperate with the Corporation concerning the action,
suit, or proceeding.
The indemnification authorized by this Article IV shall not be exclusive of, and
shall be in addition to, any other rights granted to any person seeking
indemnification under the Articles of Incorporation, this Code of Regulations or
any agreement, vote of shareholders or disinterested Directors, or otherwise,
both as to action in such person's official capacity and as to action in another
capacity while holding such office, and shall continue as to a person who has
ceased to be a director, trustee, officer, employee or agent and shall inure to
the benefit of the heirs, executors, and administrators of such a person.
The Corporation may purchase and maintain insurance, or furnish similar
protection, including but not limited to trust funds, letters of credit or self
insurance, on behalf of or for any person who is or was a director, officer,
employee, or agent of the Corporation, or is or was serving at the request of
the Corporation as a director, trustee, officer, employee, or agent of another
corporation, domestic or foreign, non-profit or for profit, partnership, joint
venture, trust, or other enterprise, against any liability asserted against him
{or her} and incurred by him {or her} in any such capacity, or arising out of
his {or her} status as such, whether or not the Corporation would have the
power to indemnify him or her against such liability under Ohio law. Insurance
may be purchased from or maintained with a person in which the Corporation has a
financial interest.
SECTION C. AMENDMENTS
1. This Code of Regulations may be amended or repealed only by the
affirmative vote of the holders of shares entitling them to exercise two-thirds
of the voting power of the Corporation, at a meeting of the shareholders held
for such purpose, or without a meeting by the unanimous written consent of all
of the shareholders of the Corporation.
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<PAGE> 49
HUFFY CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS, APRIL 28, 1995
The undersigned hereby appoints Thomas D. Gleason, Jack D. Michaels, and James
F. Robeson, and each of them, his proxies, with power of substitution, to vote
all shares of Common Stock of HUFFY CORPORATION, an Ohio corporation, which he
or she may be entitled to vote at the Annual Meeting of Shareholders of said
corporation to be held April 28, 1995, and at any adjournment(s) thereof, on the
following matters, all of which are described in the Proxy Statement, receipt of
which is hereby acknowledged:
1. ELECTION OF DIRECTORS
<TABLE>
<S> <C>
/ / FOR the election of Linda B. Keene, Geoffrey W. / / WITHHOLD AUTHORITY for the election of Linda B. Keene,
Smith, and Thomas C. Sullivan, each for a term Geoffrey W. Smith, and Thomas C. Sullivan, each for a term
of three years, and Patrick W. Rooney for a term of three years, and Patrick W. Rooney for a term of one
of one year (except as indicated below). year.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
WRITE THAT NOMINEE'S NAME IN THE SPACE BELOW)
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</TABLE>
2. PROPOSAL TO ADOPT AMENDED ARTICLES OF INCORPORATION.
FOR / / AGAINST / / ABSTAIN / /
3. PROPOSAL TO ADOPT AMENDED CODE OF REGULATIONS.
FOR / / AGAINST / / ABSTAIN / /
4. RATIFICATION OF APPOINTMENT OF KPMG PEAT MARWICK AS INDEPENDENT PUBLIC
ACCOUNTANTS FOR CALENDAR YEAR 1995
FOR / / AGAINST / / ABSTAIN / /
(Continued and to be dated and signed on other side)
THIS PROXY WILL BE VOTED AS DIRECTED. IN THE ABSENCE OF ANY SPECIFICATIONS TO
THE CONTRARY, THIS PROXY WILL BE VOTED FOR THE ELECTION OF ALL LISTED NOMINEES
AND FOR ALL THE OTHER MATTERS LISTED ON THE REVERSE SIDE OF THIS CARD. EXCEPT
FOR THE MATTERS LISTED ON THE REVERSE SIDE OF THIS CARD, THE BOARD OF DIRECTORS
AT PRESENT KNOWS OF NO BUSINESS OTHER THAN OF A ROUTINE NATURE TO BE BROUGHT
BEFORE THE MEETING. IF ANY OTHER BUSINESS IS BROUGHT BEFORE THE MEETING, THIS
PROXY WILL BE VOTED ACCORDING TO THE APPOINTED PROXIES' DISCRETION AND BEST
JUDGMENT. IF CUMULATIVE VOTING IS ELECTED FOR THE ELECTION OF DIRECTORS, VOTES
CAST PURSUANT TO THIS PROXY WILL BE DISTRIBUTED AMONG THE ABOVE NOMINEES AT THE
DISCRETION OF SAID PROXIES.
The Undersigned ratifies all that said proxies, or any of them, or their
substitute or substitutes, may lawfully do by virtue hereof, and revokes any
proxies heretofore given by the undersigned to vote at said Annual Meeting or
adjournment(s) thereof.
Dated , 1995
--------------------------------
--------------------------------
(Please sign exactly as name
appears opposite. If signing in
fiduciary or representative
capacity, please give full title
as such. If shares are
registered in more than one
name, all holders must sign. If
signature is for a corporation,
the handwritten signature and
title of an authorized officer
is required, together with the
full corporate name.)
Proxy Card
