UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
--- OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
OR
--- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-511
COBRA ELECTRONICS CORPORATION
(Exact name of Registrant as specified in its Charter)
DELAWARE 36-2479991
(State of incorporation) (I.R.S. Employer Identification No.)
6500 WEST CORTLAND STREET
CHICAGO, ILLINOIS 60707
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:(773) 889-8870
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, Par Value $.33 1/3 Per Share
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
or for such shorter period that the Registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
----- -----
Number of shares of Common Stock of Registrant outstanding at
November 11, 1998: 6,065,916
<PAGE>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Cobra Electronics Corporation and Subsidiaries
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
For the Three For the Nine
Months Ended Months Ended
(Unaudited) (Unaudited)
-------------------- --------------------
<S> <C> <C> <C> <C>
Sept 30, Sept 30, Sept 30, Sept 30,
1998 1997 1998 1997
-------- -------- -------- --------
Net sales............$ 26,223 $ 31,353 $ 69,835 $ 78,740
Cost of sales........ 19,720 24,585 53,617 62,764
-------- -------- -------- -------
Gross profit....... 6,503 6,768 16,218 15,976
Selling, general and
administrative
expense............ 5,300 5,022 13,133 12,303
-------- -------- -------- -------
Operating income.... 1,203 1,746 3,085 3,673
Other income(expense):
Interest expense... (296) (357) (815) (928)
Gain on sale of bldng 1,132 1,132
Other, (net) (229) 104 (91) 90
-------- -------- -------- -------
Income before
taxes.............. 678 2,625 2,179 3,967
Provision
for taxes.......... --- --- --- ---
-------- -------- --------- --------
Net income...........$ 678 $ 2,625 $ 2,179 $ 3,967
======== ======== ========= ========
Net income per common share:
-Basic....... 0.11 $ 0.43 $ 0.35 $ 0.64
-Diluted..... 0.11 0.39 0.33 0.61
======== ========= ========= =========
Weighted average shares outstanding:
-Basic....... 6,210 6,170 6,219 6,218
-Diluted..... 6,383 6,652 6,520 6,499
========= ======== ========= =========
Cash dividends....... None None None None
========= ======== ========= =========
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
Cobra Electronics Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(Dollars in thousands)
<TABLE>
<CAPTION>
As of As of
Sept 30, December 31,
1998 1997
(Unaudited)
------------- ------------
<S> <C> <C>
ASSETS:
Current assets:
Cash.......................$ 426 $ 1,815
Receivables, less allowance
for doubtful accounts of
$866 at Sept 30, 1998,
and $958 at December 31,
1997...................... 22,947 15,685
Inventories, primarily
finished goods recorded at
lower of cost or market on
FIFO basis................ 20,485 19,830
Other current assets........ 1,337 1,337
------------ ------------
Total current assets........ 45,195 38,667
------------ ------------
Property, plant and equipment,
at cost:
Land........................ 330 330
Building and improvements... 3,600 3,553
Tooling and equipment....... 12,812 11,264
------------ ------------
16,742 15,147
Accumulated depreciation (11,585) (10,436)
------------- -------------
Net property, plant and
equipment................. 5,157 4,711
------------ ------------
Other assets.................. 5,297 4,901
------------ ------------
Total assets..................$ 55,649 $ 48,279
============ ============
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
Cobra Electronics Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(dollars in thousands)
<TABLE>
<CAPTION>
As of As of
Sept 30, December 31,
1998 1997
(Unaudited)
----------- -----------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS'
EQUITY:
Current liabilities:
Accounts payable............$ 2,516 $ 3,637
Accrued salaries and
Commissions.............. 735 1,307
Accrued advertising and
sales promotion costs.... 1,199 1,093
Accrued product warranty
costs.................... 2,389 4,173
Other accrued liabilities... 1,564 1,170
Short-term debt............. 19,772 10,995
----------- -----------
Total current liabilities... 28,175 22,375
----------- -----------
Long-term liability:
Deferred compensation....... 2,160 2,231
----------- ----------
Total liabilities............. 30,335 24,606
----------- ----------
Shareholders' equity:
Preferred stock, $1 par
value, shares authorized-
1,000,000; none issued.... --- ---
Common stock, $.33 1/3 par
value,12,000,000 shares
authorized; 7,039,100
issued and 6,064,166
outstanding at Sept 30,
1998 and 6,217,791
outstanding at December 31,
1997...................... 2,346 2,345
Paid-in capital............. 20,579 20,681
Retained earnings........... 8,452 6,272
----------- -----------
31,377 29,298
Treasury stock, at cost..... (6,063) (5,625)
------------ ------------
Total shareholders' equity.. 25,314 23,673
------------ ------------
Total liabilities and share-
holders' equity.............$ 55,649 $ 48,279
============ ============
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
Cobra Electronics Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(dollars in thousands)
<TABLE>
<CAPTION>
For the Nine Months Ended
(Unaudited)
--------------------------------
Sept 30, Sept 30,
1998 1997
-------------- -------------
<S> <C> <C>
Cash flows from operating
activities:
Net income $ 2,179 $ 3,967
Adjustments to reconcile net income
from operations to net
cash provided by (used for)
operating activities:
Depreciation and amortization 1,276 2,159
Gain on sale of building --- (1,132)
Changes in assets and
liabilities:
Receivables.................. (7,262) (8,938)
Inventories.................. (655) (3,712)
Other current assets......... 0 (401)
Other assets................. (513) (676)
Accounts payable............. (1,121) 3,244
Deferred compensation........ (71) ---
Accrued liabilities.......... (1,856) 3,209
-------- ---------
Net cash flows from
operating activities......... (8,023) (2,280)
--------- ---------
Cash flows from investing activities:
Capital expenditures........... (1,604) (1,029)
Proceeds from sale of building --- 1,999
--------- ---------
Net cash flows from investing
activities................... (1,604) 970
--------- ---------
Cash flows from financing activities:
Borrowings under the line-of
-credit agreement............ 70,329 74,321
Repayments under the line-of
-credit agreement............ (61,551) (74,994)
Transactions related to exercise
of options and treasury
stock (net).................. (540) 255
--------- ---------
Net cash flows from
financing activities......... 8,238 (418)
-------- ---------
Net (decrease) in cash........... (1,389) (1,728)
Cash at beginning of period...... 1,815 2,606
-------- ---------
Cash at end of period............ 426 $ 878
======== =========
Supplemental disclosure of cash flow information
Cash paid during the year for:
Interest $ 826 $ 908
Taxes 0 188
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
Cobra Electronics Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The condensed consolidated financial statements included herein
have been prepared by the Company, without audit, pursuant to the
rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations, although the Company
believes that the disclosures are adequate to make the
information presented not misleading. The Condensed Consolidated
Balance Sheet as of December 31, 1997 has been derived from the
audited consolidated balance sheet as of that date. It is
suggested that these financial statements be read in conjunction
with the financial statements and the notes thereto included in
the Company's latest annual report on Form 10-K. In the opinion
of management, the information contained herein reflects all
adjustments necessary to make the results of operations for the
interim periods a fair statement of such operations. All such
adjustments are of a normal recurring nature. The results of
operations of any interim period are not necessarily indicative
of the results that may be expected for a fiscal year.
(1) PURCHASE ORDERS AND COMMITMENTS:
At September 30, 1998,the Company had outstanding purchase orders
with suppliers totaling approximately $22.1 million compared to
$26.7 million as of September 30, 1997.
(2) NEW ACCOUNTING PRONOUNCEMENTS:
In 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standard (SFAS) No. 130,
"Reporting Comprehensive Income," and SFAS No. 131, "Disclosures
about Segments of an Enterprise and Related Information" and, in
1998 they issued SFAS No. 132, "Employers' Disclosures about
Pensions and Other Postretirement Benefits, and SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities."
SFAS No. 130, effective for fiscal years beginning after December
15, 1997, establishes standards for reporting and display of
comprehensive income and its components. This statement is not
applicable to the company since the company has no comprehensive
income items. SFAS No. 131, effective for fiscal years beginning
after December 15, 1997, establishes standards for reporting
information about operating segments and related disclosures
about products and services, geographic areas and major
customers. Management is currently assessing the impact of this
statement on the company's disclosures. SFAS No. 132, effective
for fiscal years beginning after December 15, 1997, revises
current disclosure requirements for employer's pensions and other
retiree benefits. This standard will not have a significant
impact on the company's reported financial position, and results
of operations and cash flows. SFAS No. 133, effective for all
fiscal quarters of all fiscal years beginning after June 15,
1999, revises current disclosure requirements for derivative
instruments and hedging transactions. The Company does not hold
derivative instruments or participate in hedging activities and
is not applicable to the company.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
ANALYSIS OF RESULTS OF OPERATIONS
Third Quarter 1998 vs. Third Quarter 1997:
- --------------------------------------------
For the third quarter ended September 30, 1998, net income was
$678,000 compared to $2.6 million in the third quarter of 1997,
which included a one time gain of $1.1 million on the sale of a
building that was not needed for operations. Diluted net income
per share for the current quarter was $0.11 versus $0.39 for the
third quarter of 1997, which included a $0.17 per diluted share
gain on the building sale.
Sales for the third quarter of 1998 decreased $5.1 million, or
16.3%, to $26.2 million from $31.3 million for the same period a
year ago, mainly because of lower Telecommunications product
sales. Telecommunications product sales decreased $5.9 million
because of declining 25-channel volume as the company shifts its
business to the new line of 900 MHz cordless telephones which it
began shipping in the third quarter of 1998. Partially offsetting
the lower Telecommunications sales was an $800,000 increase in
mobile electronics product sales. This increase was primarily
because of significantly increased placement of new microTalk
FRS two-way radios. Also contributing to this increase was higher
domestic sales of radar detectors due to strong demand for the
company's proprietary line of 6 Band radar detectors. Offsetting
these increases were lower sales of radar detectors to Russia,
which had been a significant contributor to the company's overall
revenues in 1997. This decrease in sales to Russia reflected that
country's ongoing severe economic problems.
Gross margin for the third quarter of 1998 increased from 21.6%
in the prior year's quarter to 24.8%, which is the highest
quarterly gross margin the company has achieved in the 1990s, and
marks the fifth consecutive quarter of gross margin improvement.
The increase in margin is primarily due to a more favorable sales
mix of higher-margin Soundtracker CB radios, microTALK two-way
radios and 6 Band detectors.
Selling, general and administrative expenses increased $278,000
in the third quarter of 1998 from the same period a year ago as
the company continued to invest significantly in new product
development, retail account expansion and distribution channel
gains. Additionally, variable selling expenses as a percent of
sales did not drop proportionately with the significant drop in
international sales as very little variable selling expense is
associated with these sales.
Interest expense for the current quarter decreased $61,000
compared to the prior year's third quarter, primarily due to
lower borrowing costs because of a new credit agreement, which
the company entered into in February 1998.
Other expense for the third quarter of 1998 was $229,000 compared
to other income of $104,000 in the prior year. This expense
increase reflected interest income on the cash surrender value of
life insurance in 1997.
Nine Months 1998 vs. Nine Months 1997
- -----------------------------------
For the nine months ended September 30, 1998, the company's net
income was $2.2 million, or $0.33 per diluted share, compared to
net income of $4.0 million, or $0.61 per diluted share for the
year earlier period. The prior year contained a one-time gain of
$1.1 million, or $0.17 per diluted share, on the sale of a
building not needed for operations.
Sales for the nine months ended September 30, 1998 decreased $8.9
million, or 11.3%, to $69.8 million from $78.7 million for the
nine months ended September 30, 1997. Telecommunications sales
decreased by $5.5 million because of lower sales of 25-channel
phones as the company transitioned to new 900 MHz cordless
telephones. Mobile electronics sales decreased $3.4 million due
mainly to lower radar detector sales to Russia as discussed
above. Partially offsetting this decrease were significant
increases in domestic sales of radar detectors and sales of new
microTalk FRS two-way radios.
Gross margin increased to 23.2% for the nine months ended
September 30, 1998 from 20.2% in the prior year period primarily
due to a more favorable sales mix of higher-margin Soundtracker
CB radios, microTalk two-way radios and 6 Band radar detectors.
Selling, general and administrative expenses increased $830,000
for the first nine months of 1998 from the same period a year
ago, and, as a percentage of sales, increased to 18.8% from 15.6%
The increase was because of investments the company has made in
new product development, retail account expansion and
distribution channel gains. Additionally, variable selling
expenses as a percent of sales did not drop proportionately with
the significant drop in international sales as very little
variable selling expense is associated with these sales.
Interest expense for the nine month period decreased $113,000
compared to the prior year due to lower finance costs because of
a more favorable bank agreement.
Other expense was $91,000 for the nine months ended September 30,
1998 compared to other income of $90,000 in the prior year. This
expense increase reflected interest income on cash surrender
value of life insurance in 1997.
LIQUIDITY AND CAPITAL RESOURCES
Operating activities used cash of $8.0 million during the nine
months ended September 30, 1998. The increase in receivables is
seasonal, reflecting increased sales because of orders for the
holiday retail selling season. Accounts payable decreased because
of the timing of payments on letters of credit for inventory
received from vendors. Accrued liabilities decreased primarily
due to a decrease in warranty reserves. This reflected lower
return rates and lower sales volume in the warranty period of
1998 compared to the corresponding period in 1997.
Cash flow provided by financing activities primarily reflects
changes in the company's borrowing requirements under its line-of-credit
agreement. At September 30, 1998 the company had
approximately $9.4 million available on its line of credit. The
difference in depreciation and amortization between years was due
primarily to $861,000 in amortization of barter credits to reduce
the credits to their net realizable value in 1997.
In August 1998, the company announced a program to repurchase up
to $1 million of its common stock. At September 30, 1998, the
company had repurchased 179,500 shares at an average total cost
of approximately $3.81 per share.
During 1996, the company received notice from the Internal
Revenue Service asserting deficiencies in federal excise tax. The
excise tax relates to the use of ozone-depleting chemicals
("ODC'S"). The company had protested the deficiencies and had
filed an environmental excise tax protest. During the first
quarter of 1998, the company was notified by the Internal Revenue
Service that there are no deficiencies in the company's federal
excise tax returns and the contingency, footnoted in the 1997
10-K, has been eliminated.
Y2K
The company initiated the process of preparing its computer
systems and applications for the Year 2000 in 1997. This process
involves modifying or replacing certain hardware and software
maintained by the company. As of this writing, the necessary
modifications have been made by an outside consulting firm and
the company is currently testing the modified software.
Management expects to have substantially all of the system and
application changes completed by February of 1999 and believes
its level of preparedness is appropriate, making a contingency
plan unnecessary. The company has also queried all major
customers and vendors as to their preparedness. The responses
received to date have given the company an appropriate comfort
level as to the preparedness of major customers and vendors.
The total cost to the company of these Y2K compliance activities
will be approximately $1.1 million and is not expected to be
material to its financial position or results of operations in
any given year. To date, the company has incurred approximately
$450,000 in project costs. The costs and the date on which the
company plans to complete the Y2K modification are based on
management's best estimates, which were derived using numerous
assumptions of future events including the continued availability
of certain resources, third party modification plans and other
factors. However, there can be no guarantee that these estimates
will be achieved, and actual results could differ from those
plans.
<PAGE>
PART II
OTHER INFORMATION
Items 1, 2, 3, and 4 Not Applicable
- -------------------------------------
Item 5. Other Information
- -----------------------------------------------------------
The company's 1999 Annual Meeting of Shareholders is expected to
be held on May 11, 1999. Pursuant to rules of the Securities and
Exchange Commission ("SEC"), in order to be considered for
inclusion in the company's 1999 Proxy Statement, a shareholder
proposal must be received by the company no later then December
18, 1998. In addition, regardless of whether a shareholder
proposal is set forth in the company's 1999 Proxy Statement as a
matter to be considered by shareholders, the company's Bylaws
establish an advance notice procedure for shareholder proposals
to be brought before the annual meeting of shareholders,
including proposed nominations of persons for election to the
Board of Directors. Shareholders at the 1999 Annual Meeting may
consider a proposal or nomination brought by a shareholder of
record on the record date to be established for the 1999 Annual
Meeting and who has given the company timely written notice, in
proper form, of the shareholder's proposal and nomination. A
shareholder proposal or nomination intended to be brought before
the 1999 Annual Meeting must be received by the company on or
after February 1, 1999 and on or prior to February 26, 1999. If a
timely and proper shareholder proposal is received by the
company, the proposal is not included as an agenda item in the
1999 Proxy Statement, and the proposal is properly presented at
the 1999 Annual Meeting, the company may exercise discretionary
authority when voting on the proposal if in the 1999 Proxy
Statement the company advises shareholders on the nature of the
proposal and how the company intends to vote on the proposal,
unless the shareholder satisfies certain SEC requirements,
including mailing a separate proxy statement to the company's
shareholders. All proposals and nominations should be directed to
Gerald M. Laures, the company's Secretary, 6500 West Cortland
Street, Chicago, Illinois 60707.
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
a) Exhibits:
Exhibit No. Description
----------- ---------------------------------------
Exhibit 27 Financial data schedule required under
Article 5 of Regulation S-X
Exhibit 99.1 1998 Stock Option Plan, as amended ,
(incorporated by reference to Exhibit
99.1 of the Registration Statement On
Form S-8, File No, 333-63501)
Exhibit 10-36 Amended and restated by-laws
Exhibit 10-37 Restated certificate of incorporation
b) During the quarter, the Company filed no Current Reports
on Form 8-K.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
COBRA ELECTRONICS CORPORATION
By /s/ Gerald M. Laures
------------------------
Gerald M. Laures
Vice President - Finance,
and Corporate Secretary
Dated: November 13, 1998
<PAGE>
<PAGE>
EXHIBIT 10-36
As Amended and Restated October 28, 1998
BY-LAWS
OF
COBRA ELECTRONICS CORPORATION
ARTICLE I
Stockholders' Meetings
Section 1. Annual Meeting. The annual meeting of stockholders
for the election of directors and the transaction of such other
business as may properly come before it shall be held at 2:00
P.M., local time, on the last Tuesday of April of each year, or
on such other date or at such other time as shall be fixed by the
Board of Directors. If the day fixed for the annual meeting is a
legal holiday, such meeting shall be held on the next succeeding
business day.
Section 2. Special Meetings. Any action required or permitted
to be taken by the stockholders of the corporation must be
effected at a duly called annual or special meeting of
stockholders of the corporation and may not be effected by any
consent in writing by such stockholders. Special meetings of
stockholders of the corporation may be called only by the Board
of Directors pursuant to a resolution approved by a majority of
the entire Board of Directors, upon not less than 10 or more than
50 days' written notice. Notwithstanding anything contained in
these By-Laws to the contrary, the affirmative vote of the
holders of at least 67% of the shares of the corporation entitled
to vote for the election of directors shall be required to amend
or repeal, or to adopt any provision inconsistent with, this
section 2.
Section 3. Place of Meetings. Each meeting of stockholders for
the election of directors shall be held in the City of Chicago,
State of Illinois, at such place as may be fixed from time to
time by the Board of Directors. Meetings of stockholders for any
other purpose may be held at such time and place, within or
without the State of Delaware, as shall be determined pursuant to
Section 2 of Article I and stated in the notice of the meeting or
in a duly executed waiver of notice thereof.
Section 4. Notice of Meetings and Adjourned Meetings. Written
notice of every meeting of stockholders stating the place, date
and hour thereof, and, in the case of a special meeting, the
purpose or purposes for which the meeting is called, shall,
except when otherwise required by the laws of Delaware be given,
in the case of the annual meeting of stockholders, not less than
ten nor more than sixty days before the date of the meeting to
each stockholder of record entitled to vote thereat, and in the
case of special meetings, not less than ten nor more than fifty
days before the date of the meeting to each stockholder of record
entitled to vote thereat. Only such business shall be conducted
at a special meeting of stockholders as shall have been brought
before the meeting pursuant to the corporation's notice of
meeting. Any meeting at which a quorum of stockholders is
present, in person or by proxy, may adjourn from time to time
without notice other than announcement at such meeting until its
business is completed. At the adjourned meeting the corporation
may transact any business which might have been transacted at the
original meeting. If the adjournment is for more than thirty
days, or if after the adjournment a new record date is fixed for
the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the
meeting.
Section 5. Quorum. The holders of a majority of the shares of
stock issued and outstanding and entitled to vote, present in
person or by proxy, shall, except as otherwise provided by law or
the certificate of incorporation, constitute a quorum for the
transaction of business at all meetings Of stockholders. If at
any meeting a quorum is not present, the chairman of the meeting
or the holders of the majority of the shares of stock present or
represented may adjourn the meeting from time to time without
notice other than announcement at such meeting until a quorum is
present. At the adjourned meeting the corporation may transact
any business which might have been transacted at the original
meeting. If the adjournment is for more than thirty days, or if
after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned o each stockholder
of record entitled meeting shall be given t The stockholders
present or represented to vote at the meeting is present at a
duly called or held meeting at which a quorum may continue to
transact business until final adjournment notwithstanding the
withdrawal of enough stockholders to leave less than a quorum.
Section 6. Voting. Each holder of stock entitled to vote at a
stockholders meeting shall, as to all matters before such meeting
in respect of which such stock has voting rights, be entitled to
one vote in person or by written proxy for each share of stock
owned of record by him. No holder of stock shall have any
cumulative voting rights in respect of any share of Stock held by
him. No proxy shall be voted or acted upon after three years
from its date unless the proxy provides for a longer period. No
vote upon any matter need be by ballot unless demanded by the
holders of at least ten per cent of the shares represented and
entitled to vote at the meeting. All elections shall be decided
by a plurality of the votes cast and all other questions or
matters shall be decided by a majority of the votes cast, unless
otherwise required by the laws of Delaware or the certificate of
incorporation.
Section 7. List of Stockholders. At least ten days before every
meeting of stockholders, a complete list of the stockholders
entitled to vote at the meeting, arranged in alphabetical order,
and showing the address of each stockholder, and the number of
shares registered in the name of each stockholder, shall be
prepared by the Secretary. Such list shall be open to the
examination of any stockholder, for any purpose germane to the
meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city
where the meeting is to be held, which place shall be specified
in the notice of the meeting, or, if not specified, at the place
where the meeting is to be held. The list shall also be produced
and kept at the time and place of the meeting during the whole
time thereof, and may be inspected by any stockholder who is
present. The original or duplicate stock ledger shall be the
only evidence as to who are stockholders entitled to examine the
stock ledger, the list required by this section or the books of
the corporation, or to vote in person or by proxy at any meeting
of stockholders.
Section 8. Notice of Stockholder Business and Nominations.
(a) Annual Meetings of Stockholders. (1) Nominations of persons
for election to the Board of Directors of the corporation and the
proposal of business to be considered by the stockholders may be
made at an annual meeting of stockholders (i) pursuant to the
corporation's notice of meeting delivered pursuant to Article I,
Section 4 of these By-Laws, (ii) by or at the direction of the
Board of Directors or (iii) by any stockholder of the corporation
who is entitled to vote at the meeting, who complied with the
notice procedures set forth in clauses (2) and (3) of this
paragraph (a) of this Section 8 and who was a stockholder of
record at the time such notice was delivered to the Secretary of
the corporation.
(2) For nominations or other business to be properly brought
before an annual meeting by a stockholder pursuant to clause
(iii) of paragraph (a)(1) of this Section 8, the stockholder must
have given timely notice thereof in writing to the Secretary of
the corporation and such other business must otherwise be a
proper matter for stockholder action. To be timely, a
stockholder's notice shall be delivered to the Secretary at the
principal office of the corporation not earlier than the close of
business on the 100th calendar day nor later than the close of
business on the 75th calendar day prior to the date of the first
anniversary of the preceding year's annual meeting; provided,
however, that in the event that the date of an annual meeting is
more than 30 calendar days before or more than 30 calendar days
after the date of the first anniversary of the preceding year's
annual meeting, notice by the stockholder to be timely must be so
delivered not earlier than the close of business on the 100th
calendar day prior to such annual meeting and not later than the
close of business on the later of the 75th calendar day prior to
such annual meeting and the 10th calendar day after the day on
which public announcement of the date of such annual meeting is
first made by the corporation. Such stockholder's notice shall
set forth (i) as to each person whom the stockholder proposes to
nominate for election or reelection as a director all 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 (the "Exchange
Act"), and the regulations promulgated thereunder, including such
person's written consent to being named in the proxy statement as
a nominee and to serving as a director if elected; (ii) as to any
other business that the stockholder proposes to bring before the
meeting, a brief description of the business desired to be
brought before the meeting, the reasons for conducting such
business at the meeting and any material interest in such
business of such stockholder and the beneficial owner, if any, on
whose behalf the proposal is made; and (iii) as to the
stockholder giving the notice and the beneficial owner, if any,
on whose behalf the nomination or proposal is made, the name and
address of such stockholder, as they appear on the corporation's
stock transfer books, and of such beneficial owner and the class
and number of shares of the corporation which are owned
beneficially and of record by such stockholder and such
beneficial owner.
(3) Notwithstanding anything in the second sentence of paragraph
(a)(2) of this Section 8 to the contrary, in the event that the
number of directors to be elected to the Board of Directors of
the corporation is increased and there is no public announcement
by the corporation naming all of the nominees for director or
specifying the size of the increased Board of Directors made by
the corporation at least 80 calendar days prior to the date of
the first anniversary of the preceding year's annual meeting, a
stockholder's notice required by this Section 8 shall also be
considered timely, but only with respect to nominees for any new
positions created by such increase, if it shall be delivered to
the Secretary at the principal office of the corporation not
later than the close of business on the 10th calendar day after
the day on which such public announcement is first made by the
corporation.
(b) Special Meetings of Stockholders. Subject to the rights of
the holders of any Preferred Stock, only such business shall be
conducted at a special meeting of stockholders as shall have been
brought before the meeting pursuant to the corporation's notice
of meeting pursuant to Article I, Section 4 of these By-Laws.
(c) General. (1) Subject to the rights of the holders of any
Preferred Stock, only persons who are nominated in accordance
with the procedures set forth in this Section 8 shall be eligible
to serve as directors and only such business shall be conducted
at a meeting of stockholders as shall have been brought before
the meeting in accordance with the procedures set forth in this
Section 8. Except as otherwise provided by law, the Certificate
of Incorporation or these By-Laws, the chairman of the meeting
shall have the power and duty to determine whether a nomination
or any business proposed to be brought before the meeting was
made or proposed in accordance with the procedures set forth in
this Section 8 and, if any proposed nomination or business is not
in compliance with this Section 8, to declare that such defective
proposal or nomination shall be disregarded.
(2) For purposes of this Section 8, "public announcement" shall
mean disclosure in a press release reported by the Dow Jones News
Service, Associated Press or comparable national news service or
in a document publicly filed by the corporation with the
Securities and Exchange Commission pursuant to Section 13, 14 or
15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this Section 8,
a stockholder shall also comply with all applicable requirements
of the Exchange Act and the rules and regulations thereunder with
respect to the matters set forth in this Section 8. Nothing in
this Section 8 shall be deemed to affect any rights of
stockholders to request inclusion of proposals in the
corporation's proxy statement pursuant to Rule 14a-8 under the
Exchange Act.
ARTICLE II
Directors
Section l. Number, Election and Term of Office. The number of
directors which shall constitute the whole Board shall be not
less than five. The exact number of directors shall be fixed
from time to time by the Board of Directors pursuant to a
resolution adopted by a majority of the entire Board of
Directors. The Directors shall be divided into three classes, as
nearly equal in number as possible, with respect to the time for
which they shall severally hold office. Directors of the First
Class first chosen shall hold office for one year or until the
first annual election following their election; Directors of the
Second Class first chosen shall hold office until the second
annual election following their election; and Directors of the
Third Class shall hold office until the third annual election
following their election. In each annual election or adjournment
thereof, the successors to the Class of Directors whose terms
shall expire at that time shall be elected to hold office for
terms of three years so that the term of office or one class of
Directors shall expire in each year. Each Director elected shall
hold office until his successor shall be elected and shall
qualify. Notwithstanding anything contained in these By-Laws to
the contrary, the affirmative vote of the holders of at least 67%
of the shares of this corporation entitled to vote for the
election of directors shall be required to amend or repeal, or to
adopt any provision inconsistent with, this Section 1.
Section 2. Resignations and Vacancies.
(a) Resignations. Any director may resign at any time by giving
written notice to the Board of Directors or to the Chairman. Any
such resignation shall take effect at the date of the receipt of
such notice or at any later time specified therein; and, unless
otherwise specified therein, the acceptance of such resignation
shall not be necessary to make it effective.
(b) Newly Created Directorships and Vacancies. Subject to the
rights of the holders of any series of Preferred Stock then
outstanding, newly created directorships resulting from any
increase in the authorized number of directors or any vacancies
in the Board of Directors resulting from death, resignation,
retirement, disqualification, removal from office or other cause
shall be filled by a majority vote of the directors then in
office, and directors so chosen shall hold office for a term
expiring at the Annual Meeting of Stockholders at which the term
of the class to which they have been elected expires.
(c) Removal. Subject to the rights of the holders of any series
of Preferred Stock then outstanding, any director, or the entire
Board of Directors, may be removed from office at any time, but
only for cause and only by the affirmative vote of the holders of
at least 67% of the shares of this corporation entitled to vote
for the election of directors.
(d) Amendment, Repeal, etc. Notwithstanding anything contained
in these By-Laws to the contrary, the affirmative vote of the
holders of at least 67% of all of the shares of this corporation
entitled to vote for the election of directors shall be required
to amend or repeal, or to adopt any provision inconsistent with,
this Section 2 of Article II.
Section 3. Place of Meetings. Meetings of the Board of
Directors may be held at such places, within or without the State
of Delaware, as the Board of Directors may from time to time
determine or as shall be determined pursuant to Section 5 of
Article II.
Section 4. Regular Meetings. A regular annual meeting of the
Board of Directors shall be held without call or notice
immediately after and at the same general place as the annual
meeting of stockholders for the purpose of organizing the Board
of Directors, electing officers and transacting any other
business that may properly come before the meeting. In the event
such meeting is not held at such time and place, the meeting may
be held at such time and place as shall be specified in a notice
given as provided in Section 5 for special meetings or as shall
be specified in a written waiver signed by all of the directors.
Additional regular meetings of the Board of Directors may be held
without call or notice at such place and at such time as shall be
fixed by resolution of the Board of Directors.
Section 5. Special Meetings. Special meetings of the Board of
Directors may be called and the location thereof designated by
the President and shall be called and the location thereof
designated by the President or Secretary at the written request
of two directors. Notice of special meetings either shall be
mailed by the Secretary to each director at least three days
before the meeting or shall be given personally or telegraphed to
each director by the Secretary at least forty-eight hours before
the meeting. Such notice shall set forth the time and place of
such meeting but need not, unless otherwise required by law,
state the purposes of the meeting.
Section 6. Quorum and Voting. A majority of the whole Board of
Directors as specified in the by-laws shall constitute a quorum
for the transaction of business at any meeting of the Board of
Directors. The act of the majority of the directors present at a
meeting at which a quorum is present shall be the act of the
Board of Directors unless otherwise provided by the laws of
Delaware, the certificate of incorporation or these by-laws. A
majority of the directors present at any meeting at which a
quorum is present may adjourn the meeting from time to time
without further notice other than announcement at the meeting.
If at any meeting a quorum is not present, a majority of the
directors present may adjourn the meeting from time to time
without notice other than announcement at the meeting until a
quorum is present.
Section 7. Committees of the Board of Directors. The Board of
Directors may, by resolution passed by a three-fourths majority
of the whole Board of Directors as specified in the by-laws,
designate one or more committees, each to consist of two or more
of the directors of the corporation, and may appoint chairmen of
any such committees. To the extent provided in the resolution
designating such committee, and to the extent permitted under
applicable Delaware law, each such committee shall have and may
exercise the powers of the Board of Directors in the management
of the business and affairs of the corporation, and may authorize
the seal of the corporation to be affixed to all papers which may
require it. The Board of Directors may designate one or more
directors as alternate members of any committee, who may replace
any absent or disqualified member at any meeting of the
committee. In the absence or disqualification of any member of
such committee or committees, the member or members thereof
present at any meeting and not disqualified from voting, whether
or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in
the place of such absent or disqualified member.
Section 8. Action Without Meeting. Any action required or
permitted to be taken at any meeting of the Board of Directors,
or of any committee thereof, may be taken without a meeting if
all members of the Board of Directors, or of such committee, as
the case may be, consent thereto in writing, and such written
consent is filed with the minutes of the proceedings of the Board
of Directors or of such committee.
Section 9. Compensation. The directors may be paid their
expenses, if any, of attendance at each meeting of the Board of
Directors and may be paid a fixed sum for attendance at each
meeting of the Board of Directors or a stated salary as director.
No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation
therefor. Members of special or standing committees may be
allowed like compensation for attending committee meetings.
Section 10. Telephonic Meetings. Members of the Board of
Directors, or any committee thereof, may participate in a meeting
of the Board of Directors, or of such committee, by means of
conference telephone or other similar communications equipment by
means of which all persons participating in the meeting can hear
each other, and participation in a meeting pursuant to this
section shall constitute presence in person at such meeting.
ARTICLE III
Officers
Section 1. Number. The officers of the Corporation shall be a
Chairman of the Board, a Vice Chairman of the Board, a President,
one or more Vice Presidents (the number thereof to be determined
by the Board of Directors), a Treasurer, a Secretary and such
Assistant Treasurers, Assistant Secretaries or other officers as
may be elected by the Board of Directors. Any two or more
offices may be held by the same person.
Section 2. Election and Term of Office. The officers of the
Corporation shall be elected annually by the Board of Directors
at the first meeting of the Board of Directors held after each
annual meeting of stockholders. If the election of officers
shall not be held at such meeting, such election shall be held as
soon thereafter as conveniently may be. New offices may be
created and filled at any meeting of the Board of Directors.
Each officer shall hold office until his successor is elected and
has qualified or until his earlier resignation or removal. Any
officer may resign at any time upon written notice to the
Corporation. Election of an officer shall not of itself create
contract rights.
Section 3. Removal. Any officer elected by the Board of
Directors may be removed by the Board of Directors whenever in
its judgment the best interests of the Corporation would be
served thereby, but such removal shall be without prejudice to
the contract rights, if any, of the person so removed.
Section 4. Vacancies. A vacancy in any office occurring because
of death, resignation, removal or otherwise, may be filled by the
Board of Directors.
Section 5. The Chairman of the Board and Vice Chairman of the
Board. The Chairman of the Board shall preside at all meetings
of the Stockholders and of the Board of Directors and shall
perform such other duties as may be described by the Board of
Directors from time to time. In the absence of the Chairman of
the Board, the Vice Chairman of the Board shall preside at
meetings of the Stockholders and of the Board of Directors. In
addition, the Vice Chairman of the Board shall perform such other
duties as may be described by the Board of Directors from time to
time.
Section 6. The President. The President shall be the Chief
Operating Officer and shall have such duties and responsibilities
as may be assigned to him from time to time by the Chairman of
the Board or the Board of Directors. In the absence of the
Chairman of the Board, the President shall assume the duties and
responsibilities of the Chairman of the Board.
Section 7. The Vice Presidents. Each of the Vice Presidents
shall report to the Chairman of the Board or such other officer
as may be determined by the Board of Directors or the Chairman of
the Board. Each Vice President shall have such duties and
responsibilities as from time to time may be assigned to him by
the Chairman of the Board or the Board of Directors.
Section 8. The Treasurer and Assistant Treasurer. The
Treasurer, or, in the event of his absence or inability or
refusal to act, the Assistant Treasurer, if any (or, if there be
more than one, the Assistant Treasurers in the order designated
by the Chairman of the Board, or, if he is unable to act, the
President, subject to revision by the Board of Directors, and,
absent such designation or revision, in the order of their first
election to that office), shall be responsible for (i) the
custody and safekeeping of all of the funds of the corporation,
(ii) the receipt and deposit of all moneys paid to the
corporation, (iii) where necessary or appropriate, the
endorsement for collection on behalf of the corporation of all
checks, drafts, notes, and other obligations payable to the
corporation, (iv) the disbursement of funds of the corporation
under such rules as the Board of Directors may from time to time
adopt, (v) keeping full and accurate records of all receipts and
disbursements, and (vi) the performance of such further duties as
are incident to the office of Treasurer or as may from time to
time be prescribed by the Board of Directors or by the Chairman
of the Board.
Section 9. The Secretary and Assistant Secretaries. The
Secretary, or in the event of his absence or inability or refusal
to act, the Assistant Secretary, if any (or, if there be more
than one, the Assistant Secretaries in the order designated by
the Chairman, and if the Chairman is unable to act, the President
shall assume the duties and responsibilities, subject to revision
by the Board of Directors, and, absent such designation or
revision, in the order of their first election to that office)
shall: (i) record all the proceedings of the meetings of the
stockholders and Board of Directors in one or more books kept for
that purpose; (ii) see that all notices are duly given in
accordance with the provisions of these By-Laws or as required by
law; (iii) be custodian of the corporate records and of the seal
of the Corporation and see that the seal of the Corporation is
affixed to all certificates for shares of capital stock prior to
the issue thereof and to all documents, the execution of which on
behalf of the Corporation under its seal is duly authorized in
accordance with the provisions of these By-Laws; (iv) keep a
register of the post office address of each stockholder which
shall be furnished to the Secretary by such stockholder; (v) have
general charge of the stock transfer books of the Corporation and
(vi) in general, perform all duties as from time to time may be
assigned to him by the Chairman of the Board or the Board of
Directors.
ARTICLE IV
Stock Certificates and Transfer Books
Section 1. Certificates. Every stockholder shall be entitled to
have a certificate, in such form as the Board of Directors shall
from time to time approve, signed by or in the name of the
corporation by the Chairman, President or any Vice President and
by the Treasurer, an Assistant Treasurer, the Secretary or an
Assistant Secretary, certifying the number of shares owned by
him.
Section 2. Facsimile Signatures. Any of or all the signatures
on the certificate may be a facsimile. In case any officer,
transfer agent or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to
be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the corporation with
the same effect as if he were such officer, transfer agent or
registrar at the date of issue.
Section 3. Record Ownership. A record of the name and address
of the holder of each certificate, the number of shares
represented thereby, and the date of issue thereof, shall be made
on the corporation's books. The corporation shall be entitled to
treat the holder of record of any share or shares of stock as the
holder in fact thereof, and accordingly, shall not be bound to
recognize any equitable or other claim to or interest in any
share on the part of any other person whether or not it shall
have express or other notice thereof, except as required by the
laws of Delaware.
Section 4. Lost Certificates. The Board of Directors may direct
a new certificate or certificates to be issued in place of any
certificate or certificates theretofore issued by the corporation
alleged to have been lost, stolen or destroyed, upon the making
of an affidavit by the person claiming the certificate to be
lost, stolen or destroyed as to his ownership of the certificate
and of the facts as to its loss, theft, or destruction. He shall
also, if required by the Board of Directors, advertise the
alleged loss, theft or destruction in such manner as the Board of
Directors shall require and/or give the corporation a bond, in
such form and amount as may be approved by the Board of
Directors, sufficient to indemnify the corporation against any
claim that may be made against it on account of the alleged loss,
theft or destruction of the certificate or the issuance of a new
certificate.
Section 5. Transfer Agent or Registrar. The corporation may
maintain one or more transfer offices or agencies where the
shares of stock of the corporation shall be transferable. The
corporation may also maintain one or more registry offices
wherein such shares of stock shall be registered.
Section 6. Transfer of Stock. Transfer of shares shall, except
as provided in Section 4 of this Article IV, be made on the books
of the corporation only by direction of the person named in the
certificate or his attorney, lawfully constituted in writing, and
only upon the surrender for cancellation of the certificate
therefor, duly endorsed or accompanied by a written assignment of
the shares evidenced thereby.
Section 7. Fixing Date for Determination of Stockholders of
Record. (a) In order that the corporation may determine the
stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, to express consent to
corporate action in writing without a meeting, or entitled to
receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange or stock or for the
purpose of any other lawful action, the Board of Directors may
fix, in advance, a record date, which shall not be more than
sixty nor less than ten days before the date of such meeting, nor
more than sixty days prior to any other action.
(b) if no record date is fixed:
(1) The record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at the
close of business on the day next preceding the day on which
notice is given, or, if notice is waived, at the close of
business on the day next preceding the day on which the meeting
is held.
(2) The record date for determining stockholders entitled to
express consent to corporation action in writing without meeting,
when no prior action by the Board of Directors is necessary,
shall be the day on which the first written consent is expressed.
(3) The record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the
Board of Directors adopts the resolution relating thereto.
(c) a determination of stockholders of record entitled to notice
of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board of
Directors may fix a new record date for the adjourned meeting.
ARTICLE V
General Provisions
Section 1. Offices. The registered office of the corporation in
Delaware shall be in the City of Dover, County of Kent. The
corporation may also have other offices both within or without
the State of Delaware. The books of the corporation may be kept
outside the State of Delaware.
Section 2. Seal. The corporation's seal shall have inscribed
thereon the name of the corporation, the year of its organization
and the words corporate seal - Delaware.
Section 3. Fiscal Year. The fiscal year of the corporation
shall be fixed by resolution of the Board of Directors.
Section 4. Inspection of Books. Subject to laws of the State of
Delaware, the directors shall determine from time to time
whether, and, if allowed, when and under what conditions and
regulations the accounts and books of the corporation (except
such as may by statute be specifically open to inspection), or
any of them, shall be open to the inspection of the stockholders,
and the stockholders' rights in this respect are and shall be
restricted and limited accordingly.
Section 5. Reliance on Records. Each director and officer shall
in the performance of his duties be fully protected in relying in
good faith upon the books of account or reports made to the
corporation by any of its officers, or by an independent
certified public accountant, or by an appraiser selected with
reasonable care by the Board of Directors, or in relying in good
faith upon other records of the corporation.
Section 6. Voting of Stock. Unless otherwise ordered by the
Board of Directors, the Chairman shall have full power and
authority, in the name and on behalf of the corporation, to
attend, act and vote at any meeting of stockholders of any
company in which the corporation may hold shares of stock, and at
any meeting shall possess and may exercise any and all rights and
powers incident to the ownership of such shares and which, as the
holder thereof, the corporation might possess and exercise if
personally present, and may exercise such power and authority
through the execution of proxies or of written consents in lieu
of meeting pursuant to applicable law or may delegate such power
and authority to any other officer, agent or employee of the
corporation.
Section 7. Notices; Waiver or Notice. Notice by mail or
telegraph shall be deemed to be given at the time when the same
shall be deposited in the mails or delivered to the telegraph
company for transmission. Whenever any notice is required to be
given, a waiver thereof in writing, signed by the person or
persons entitled to the notice, whether before or after the time
stated therein, shall be deemed equivalent thereto.
Section 8. Indemnification. Each person who at any time is or
shall have been a director, officer, employee or agent of this
corporation or is or shall have been serving at the request of
the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise, and his heirs, executors and administrators, shall be
indemnified by this corporation in accordance with and to the
full extent permitted by the Delaware General Corporation Law as
in effect at the time of adoption of this by-law or as amended
from time to time. The foregoing right of indemnification shall
not be deemed exclusive of any other rights to which a person
seeking indemnification may be entitled under any by-law,
agreement, vote of stockholders or disinterested directors or
otherwise. If authorized by the Board of Directors, the
corporation may purchase and maintain insurance on behalf of any
person to the full extent permitted by the Delaware General
Corporation Law as in effect at the time of the adoption of this
by-law or as amended from time to time.
Section 9. Amendments to By-Laws. Except as provided in Section
2 of Article 1, Section 1 of Article II and Section 2 of Article
II of these By-Laws, any provision of these By-Laws may be
altered, amended or repealed from time to time by the affirmative
vote of a majority of the directors then qualified and acting at
any regular meeting of the Board at which a quorum is present, or
at any special meeting of the Board at which a quorum is present
if notice of the proposed alteration, amendment or repeal be
contained in the notice of such special meeting; provided,
however, that no reduction in the number of directors shall have
the effect of removing any director prior to the expiration of
his term.
<PAGE>
EXHIBIT 10-37
RESTATED CERTIFICATE OF INCORPORATION
OF
COBRA ELECTRONICS CORPORATION
Cobra Electronics Corporation, a Delaware corporation, the
original Certificate of Incorporation of which was filed with the
Secretary of State of the State of Delaware on November 27, 1961
under the name DYNASCAN CORPORATION, HEREBY CERTIFIES that this
Restated Certificate of Incorporation only restates and
integrates its Certificate of Incorporation and does not further
amend the provisions of the corporation's Certificate of
Incorporation as heretofore amended or supplemented, and there is
no discrepancy between such provisions and the provisions of this
Restated Certificate of Incorporation. This Restated Certificate
of Incorporation was duly adopted by its Board of Directors in
accordance with Section 245 of the General Corporation Law of the
State of Delaware.
CERTIFICATE OF INCORPORATION
OF
COBRA ELECTRONICS CORPORATION
FIRST. The name of the corporation is COBRA ELECTRONICS
CORPORATION.
SECOND. Its principal office in the State of Delaware is
located at 30 Dover Green, in the City of Dover, County of Kent.
The name and address of its resident agent is The Corporation
Trust Company, 30 Dover Green, Dover, Delaware.
THIRD. The nature of the business, or objects or purposes to be
transacted, promoted or carried on are:
To manufacture, assemble, fabricate, purchase or otherwise
acquire, to design, invent or develop, to import or export, to
lease (as lessor or lessee), to service or repair, to sell,
assign, transfer or otherwise dispose of, at wholesale, retail or
otherwise, and to generally deal in, all kinds, varieties and
combinations of electronic, electrical, magnetic and mechanical
instruments, devices and systems, including but not limited to
antennas of every kind and character and to automatic,
automotive, communication, transmission, receiving, analyzing,
testing, detecting, measuring and control instruments, devices
and systems, and products of every other description; to deal in
all kinds of raw materials, semi-finished or finished materials,
parts, supplies, and products; to conduct research, experiments
or investigations for development or improvement of materials,
products or processes or for general purposes; to lease, own,
operate, equip and maintain factories, plants and other
facilities; and to lease or own all other real estate and
personal property necessary or advisable to carry on the business
of the corporation.
To manufacture, assemble, fabricate, purchase or otherwise
acquire, own, mortgage, pledge, sell, assign, transfer or
otherwise dispose of, to invest, trade, deal in and deal with,
goods, wares and merchandise and real and personal property of
every class and description.
To acquire, and pay for in cash, stock or bonds of the
corporation or otherwise, the good will, rights, assets and
property, and to undertake or assume the whole or any part of the
obligations or liabilities of any person, firm, association or
corporation, domestic or foreign.
To acquire, hold, use, sell, assign, lease, grant licenses in
respect of, mortgage or otherwise dispose of letters patent of
the United States or any foreign country, patent rights, licenses
and privileges, inventions, improvements and processes,
copyrights, trademarks and trade names, relating to or useful in
connection with any business of the corporation.
To acquire by purchase, subscription or otherwise, and to
receive, hold, own, guarantee, sell, assign, exchange, transfer,
mortgage, pledge or otherwise dispose of or deal in and with any
shares of the capital stock, voting trust certificates in respect
of the shares of capital stock, scrip, warrants, rights, bonds,
debentures, notes, trust receipts, and other securities,
obligations, choses in action and evidences of indebtedness or
interest, issued or created by any corporations, joint stock
companies, syndicates, associations, firms, trusts or persons,
public or private, or by the government of the United States of
America, or by any foreign government, or by any state,
territory, province, municipality or other political subdivision
or by any governmental agency, and as owner thereof to possess
and exercise all the rights, powers and privileges of ownership,
including the right to execute consents and vote thereon, and to
do any and all acts and things necessary or advisable for the
preservation, protection, improvement and enhancement in value
thereof.
To enter into, make and perform contracts of every kind and
description with any person, firm, association, corporation,
municipality, county, state, body politic or government or colony
or dependency thereof.
To borrow or raise moneys for any of the purposes of the
corporation and, from time to time without limit as to amount, to
draw, make, accept, endorse, execute and issue promissory notes,
drafts, bills of exchange, warrants, bonds, debentures and other
negotiable or non-negotiable instruments and evidences of
indebtedness, and to secure the payment of any thereof and of the
interest thereon by mortgage upon or pledge, conveyance or
assignment in trust of the whole or any part of the property of
the corporation, whether at the time owned or thereafter
acquired, and to sell, pledge or otherwise dispose of such bonds
or other obligations of the corporation for its corporate
purposes.
To loan to any person, firm or corporation any of its surplus
funds, either with or without security.
To issue, purchase, hold, sell and transfer the shares of its own
capital stock; provided that shares of its own capital stock
belonging to it shall not be voted upon directly or indirectly.
To have one or more offices, to carry on all or any of its
operations and business and, without restriction or limit as to
amount, to purchase or otherwise acquire, hold, own, mortgage,
sell, convey or otherwise dispose of, real and personal property
of every class and description in any of the states, districts,
territories or colonies of the United States, and in any and all
foreign countries, subject to the laws of such state, district,
territory, colony or country.
In general, to carry on any other business in connection with the
foregoing, and to have and exercise all the powers conferred by
the laws of Delaware upon corporations formed under the General
Corporation Law of the State of Delaware, and to do any or all of
the things hereinbefore set forth to the same extent as natural
persons might or could do.
The foregoing clauses shall be liberally construed, both as
objects and powers; and the objects and purposes specified
therein shall, except where otherwise expressed, be in nowise
limited or restricted by reference to, or inference from, the
terms of any other clause in this Certificate of Incorporation,
but the objects and purposes specified in each of the foregoing
clauses of this Article shall be regarded as independent objects
and purposes.
FOURTH. The total number of shares of stock which the
corporation shall have authority to issue is thirteen million
(13,000,000), divided into two classes as follows:
(a) One million (1,000,000) shares shall be of the par value of
One Dollar ($1.00) per share and shall be designated as Preferred
Stock; and
(b) Twelve million (12,000,000) shares shall be of the par value
of Thirty-Three and One Third Cents ($.33 ) per share and shall
be designated as Common Stock.
The Preferred Stock may be issued from time to time in one or
more series, which series may have such voting powers, full or
limited, or no voting powers, and such designations, preferences
and relative, participating, optional or other special rights,
and qualifications, limitations or restrictions thereof, as shall
be stated and expressed in the resolution or resolutions
providing for the issue of such stock adopted by the board of
directors pursuant to the authority which is hereby expressly
vested in the board of directors.
The authority of the board of directors with respect to each
series shall include, but not be limited to, determination of the
following:
(a) The distinctive designation of such series and the number of
shares which shall constitute such series, which number may be
increased (except where otherwise provided by the board of
directors) or decreased (but not below the number of shares
thereof then outstanding) from time to time by like action of the
board of directors;
(b) The rate of dividends, if any, payable on the shares of such
series, the conditions upon which and the dates when such
dividends shall be payable, whether such dividends shall be
cumulative (and, if so, from which date or dates), and whether
payable in preference to dividends payable on any other class or
classes or any other series of stock;
(c) Whether or not the shares of such series shall have voting
powers, and if voting powers are granted, the extent of such
voting powers;
(d) Whether or not the shares of such series shall be redeemable
and, if so, the terms and conditions of such redemption,
including the date or dates upon or after which they shall be
redeemable, and the amount per share payable in case of
redemption, which amount may vary under different conditions and
at different redemption dates;
(e) Whether or not the shares of such series shall be entitled
to the benefit of a retirement fund or sinking fund, and if so,
the terms and conditions of such fund;
(f) Whether or not the shares of such series shall be
convertible into or exchangeable for shares of any other class or
classes of stock of the corporation or of any series thereof,
and, if made convertible or exchangeable, the conversion price or
prices or the rate or rates of exchange and the adjustments
thereof, if any, at which such conversion or exchange may be
made, and any other terms and conditions of such conversion or
exchange;
(g) The rights of the holders of the shares of such series upon
the voluntary or involuntary liquidation, dissolution or winding-up, or merger,
consolidation or distribution or sale of assets of
the corporation;
(h) The conditions and restrictions, if any, on the payment of
dividends or on the making of other distributions on, or the
purchase, redemption or other acquisition by the corporation of
the Common Stock or of any other class or series of stock of the
corporation ranking junior to the shares of such series as to
dividends or upon liquidation;
(i) The conditions and restrictions, if any, on the creation of
indebtedness of the corporation or any subsidiary, or on the
authorization or issue of any additional stock of the corporation
ranking on a parity with or prior to the shares of such series as
to dividends or upon liquidation; and
(j) Any other preferences and relative, participating, optional
or other special rights, and qualifications, limitations or
restrictions thereof.
Each share of Common Stock shall entitle the holder thereof to
one vote, in person or by proxy, at any and all meetings of the
stockholders of the corporation, on all propositions before such
meetings, including the election of directors. No stockholder
shall have any cumulative voting rights in respect of any share
of Common Stock held by such stockholder.
Except as otherwise provided by the resolution or resolutions
providing for the issue of any series of Preferred Stock, the
number of authorized shares of any class or classes of stock may
be increased or decreased by the affirmative vote of the holders
of a majority of the stock of the corporation entitled to vote.
No stockholder, as such, shall have any preemptive right to
subscribe for or purchase any additional shares of stock or
securities convertible into or carrying warrants or options to
acquire shares of stock of the corporation.
Any and all right, title, interest and claim in or to any
dividends declared by the corporation, whether in cash, stock or
otherwise, which are unclaimed by the stockholder entitled
thereto for a period of six years after the close of business on
the payment date, shall be and be deemed to be extinguished and
abandoned; and such unclaimed dividends in the possession of the
corporation, its transfer agents or other agents or depositaries,
shall at such time become the absolute property of the
corporation, free and clear of any and all claims of any persons
whatsoever.
FIFTH. The minimum amount of capital with which the corporation
will commence business is One Thousand Dollars ($1,000).
SIXTH. The names and places of residence of the incorporators
are as follows:
Name Residence
S. H. Livesay Wilmington, Delaware
J. F. Cook Wilmington, Delaware
L. A. Kyritsis Wilmington, Delaware
SEVENTH. The corporation is to have perpetual existence.
EIGHTH. The private property of the stockholders shall not be
subject to the payment of corporate debts to any extent whatever.
NINTH. In furtherance and not in limitation of the powers
conferred by statute, the board of directors is expressly
authorized:
Subject to the requirement that the affirmative vote of the
holders of at least 67% of the shares of the corporation entitled
to vote for the election of directors shall be required to amend
or repeal, or to adopt any provision inconsistent with Section 2
of Article I, Section 1 of Article II and Section 2 of Article II
of the By-Laws, to make, alter, amend or repeal the By-Laws of
the corporation; to issue, sell, grant options to purchase and
dispose of shares of the authorized and previously unissued stock
of any class of the corporation and shares of its outstanding
stock of any class held in its treasury; to issue, sell and
dispose of the bonds, debentures, notes and other obligations or
evidences of indebtedness of the corporation, including bonds,
debentures, notes and other obligations or evidences of
indebtedness of the corporation convertible into stock of any
class of the corporation; to authorize and cause to be executed
mortgages and liens upon the real and personal property of the
corporation including after-acquired property; to declare and pay
dividends on the stock of any class of the corporation; to set
apart out of any of the funds of the corporation available for
dividends or otherwise a reserve or reserves for any proper
purpose and to abolish any such reserve in the manner in which it
was created.
To designate one or more committees, by resolution passed by a
three-fourths majority of the whole board, each committee to
consist of two or more of the directors of the corporation,
which, to the extent provided in the resolution or in the By-Laws
of the corporation, shall have and may exercise the powers of the
board of directors in the management of the business and affairs
of the corporation, and may authorize the seal of the corporation
to be affixed to all papers which may require it, and each
committee shall have such name as may be stated in the By-Laws of
the corporation or as may be determined from time to time by
resolution adopted by the board of directors.
Subject to the provisions of Article FIFTEENTH of this
Certificate of Incorporation, when and as authorized by the
affirmative vote of the holders of a majority of the stock issued
and outstanding having voting power given at a stockholders'
meeting duly called for that purpose or when authorized by the
written consent of the holders of a majority of the voting stock
issued and outstanding, to sell, lease or exchange all of the
property and assets of the corporation, including its good will
and its corporate franchises, upon such terms and conditions and
for such consideration, which may be in whole or in part shares
of stock in, and/or other securities of, any other corporation or
corporations, as the board of directors shall deem expedient and
for the best interests of the corporation.
To exercise all other corporate powers and to do all other acts
and things as may be exercised or done by the corporation,
subject, however, to the provisions of the statutes of the State
of Delaware and of this Certificate of Incorporation and the By-laws of the
corporation.
The number of directors which shall constitute the whole Board
shall be not less than five. The exact number of directors shall
be fixed from time to time by the Board of Directors pursuant to
a resolution adopted by a majority of the entire Board of
Directors. The Directors shall be divided into three classes, as
nearly equal in number as possible, with respect to the time for
which they shall severally hold office. Directors of the First
Class first chosen shall hold office until the first annual
selection of directors after their election; Directors of the
Second Class first chosen shall hold office until the second
annual election of directors after their election; and Directors
of the Third Class shall hold office until the third annual
election of directors after their election. In each annual
election or adjournment thereof, the successors to the Class of
Directors whose terms shall expire at that time shall be elected
to hold office for terms of three years so that the term of
office of one class of Directors shall expire in each year. Each
Director elected shall hold office until his successor shall be
elected and shall qualify.
Subject to the rights of the holders of any series of Preferred
Stock then outstanding, newly created directorships resulting
from any increase in the authorized number of directors or any
vacancies in the Board of Directors resulting from death,
resignation, retirement, disqualification, removal from office or
other cause shall be filled by a majority vote of the directors
then in office, and directors so chosen shall hold office for a
term expiring at the Annual Meeting of Stockholders at which the
term of the class to which they have been elected expires.
Subject to the rights of the holders of any series of Preferred
Stock then outstanding, any director, or the entire Board of
Directors, may be removed from office at any time but only for
cause and only by the affirmative vote of the holders of at least
67% of all of the shares of the corporation entitled to vote for
the election of directors.
Notwithstanding anything contained in this Certificate of
Incorporation to the contrary, the affirmative vote of the
holders of at least 67% of the shares of the corporation entitled
to vote for the election of directors shall be required to amend
or repeal, or to adopt any provision inconsistent with, the
provisions of this Article NINTH requiring the affirmative vote
of 67% of such shares to take various actions.
TENTH. The corporation may enter into contracts or transact
business with one or more of its directors, or with any firm of
which one or more of its directors are members or with any trust,
firm, corporation or association in which any one or more of its
directors is a stockholder, director or officer or otherwise
interested, and any such contract or transaction shall not be
invalidated in the absence of fraud because such director or
directors have or may have interests therein which are or might
be adverse to the interest of the corporation, even though the
presence and/or vote of the director or directors having such
adverse interest shall have been necessary to constitute a quorum
and/or to obligate the corporation upon such contract or
transaction; and no director having such adverse interest shall
be liable to this corporation or to any stockholder or creditor
thereof, or to any other person, for any loss incurred by it
under or by reason of any such contract or transaction; nor shall
any such director or directors be accountable for any gains or
profits realized thereon, except as may be otherwise provided by
law, provided, however, that such contract or transaction shall,
at the time at which it was entered into, have been a reasonable
one to have been entered into and shall have been upon terms that
at that time were fair.
ELEVENTH. A. Elimination of Certain Liability of Directors. A
director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director, except for liability (i) for any
breach of the director's duty of loyalty to the Corporation or
its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the General Corporation Law of
the State of Delaware, or (iv) for any transaction from which the
director derived an improper personal benefit. If the General
Corporation Law of the State of Delaware is amended after
approval by the stockholders of this Article Eleventh to
authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director
of the Corporation shall be eliminated or limited to the fullest
extent permitted by the General Corporation Law of the State of
Delaware, as so amended. Any repeal or modification of this
Section A by the stockholders of the Corporation shall not
adversely affect any right or protection of a director of the
Corporation existing at the time of such repeal or modification.
A. Indemnification and Insurance.
1. Right to Indemnification. Each person who was or is made a
party or is threatened to be made a party to or is involved in
any action, suit or proceeding, whether civil, criminal,
administrative or investigative (hereinafter a "proceeding"), by
reason of the fact that he or she, or a person of whom he or she
is the legal representative, is or was a director, officer or
employee of the Corporation or is or was serving at the request
of the Corporation as a director, officer, employee or agent of
another corporation or of a partnership, joint venture, trust or
other enterprise, including service with respect to employee
benefit plans, whether the basis of such proceeding is alleged
action in an official capacity as a director, officer, employee
or agent or in any other capacity while serving as a director,
officer, employee or agent, shall be indemnified and held
harmless by the Corporation to the fullest extent authorized by
the General Corporation Law of the State of Delaware 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), against all expense, liability and loss (including
attorneys' fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid or to be paid in settlement)
reasonably incurred or suffered by such person in connection
therewith, and such indemnification shall continue as to a person
who has ceased to be a director, officer, employee or agent and
shall inure to the benefit of his or her heirs, executors and
administrators; provided, however, that except as provided in
paragraph (2) of this Section B with respect to proceedings
seeking to enforce rights to indemnification, the Corporation
shall indemnify any such person seeking indemnification in
connection with a proceeding (or part thereof) initiated by such
person only if such proceeding (or part thereof) was authorized
by the Board of Directors of the Corporation. The right to
indemnification conferred in this Section B shall be a contract
right and shall include the right to be paid by the Corporation
the expenses incurred in defending any such proceeding in advance
of its final disposition; provided, however, that if the General
Corporation Law of the State of Delaware requires, the payment of
such expenses incurred by a director, officer or employee in his
or her capacity as a director, officer or employee (and not in
any other capacity in which service was or is rendered by such
person while a director, officer or employee, including, without
limitation, service to an employee benefit plan) in advance of
the final disposition of a proceeding, shall be made only upon
delivery to the Corporation of an undertaking by or on behalf of
such director, officer or employee, to repay all amounts so
advanced if it shall ultimately be determined that such director,
officer or employee is not entitled to be indemnified under this
Section B or otherwise.
2. Right of Claimant to Bring Suit. If a claim under paragraph
(1) of this Section B is not paid in full by the Corporation
within thirty days after a written claim has been received by the
Corporation, the claimant may at any time thereafter bring suit
against the Corporation to recover the unpaid amount of the claim
and, if successful in whole or in part, the claimant shall be
entitled to be paid also the expense of prosecuting such claim.
It shall be a defense to any such action (other than an action
brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required
undertaking, if any is required, has been tendered to the
Corporation) that the claimant has not met the standards of
conduct which make it permissible under the General Corporation
Law of the State of Delaware for the Corporation to indemnify the
claimant for the amount claimed, but the burden of proving such
defense shall be on the Corporation. Neither the failure of the
Corporation (including its Board of Directors, independent legal
counsel or stockholders) to have made a determination prior to
the commencement of such action that indemnification of the
claimant is proper in the circumstances because he or she has met
the applicable standard of conduct set forth in the General
Corporation Law of the State of Delaware, nor an actual
determination by the Corporation (including its Board of
Directors, independent legal counsel or stockholders) that the
claimant has not met such applicable code of conduct, shall be a
defense to the action or create a presumption that the claimant
has not met the applicable standard of conduct.
3. Non-Exclusivity of Rights. The right to indemnification and
the payment of expenses incurred in defending a proceeding in
advance of its final disposition conferred in this Section B
shall not be exclusive of any other right which any person may
have or hereafter acquire under any statute, provision of the
Certificate of Incorporation, By-Law, agreement, vote of
stockholders or disinterested directors or otherwise.
4. Insurance. The Corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or
agent of the Corporation or another corporation, partnership,
joint venture, trust or other enterprise against any expense,
liability or loss, whether or not the Corporation would have the
power to indemnify such person against such expense, liability or
loss under the General Corporation Law of the State of Delaware.
5. Indemnification of Agent.. The Corporation may, to the extent
authorized from time to time by the Board of Directors, grant
rights to indemnification, and rights to be paid by the
Corporation the expenses incurred in defending any proceeding in
advance of its final disposition, to any agent of the Corporation
to the fullest extent of the provisions of this Section B with
respect to the indemnification and advancement of expenses of
directors, officers and employees of the Corporation.
TWELFTH. Whenever a compromise or arrangement is proposed
between this corporation and its creditors or any class of them
and/or between this corporation and its stockholders or any class
of them, any court of equitable jurisdiction within the State of
Delaware may, on the application in a summary way of this
corporation or of any creditor or stockholder thereof, or on the
application of any receiver or receivers appointed for this
corporation under the provisions of Section 291 of Title 8 of the
Delaware Code or on the application of trustees in dissolution or
of any receiver or receivers appointed for this corporation under
the provisions of Section 279 of Title 8 of the Delaware Code
order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this corporation, as
the case may be, to be summoned in such manner as the said court
directs. If a majority in number representing three-fourths in
value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this corporation, as the
case may be, agree to any compromise or arrangement and to any
reorganization of this corporation as consequence of such
compromise or arrangement, the said compromise or arrangement and
the said reorganization shall, if sanctioned by the court to
which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders
or class of stockholders, of this corporation, as the case may
be, and also on this corporation.
THIRTEENTH. Meetings of stockholders may be held outside the
State of Delaware, if the By-laws so provide. The books of the
corporation may be kept (subject to any provision contained in
the statutes) outside the State of Delaware at such place or
places as may be designated from time to time by the board of
directors or in the By-laws of this corporation. Elections of
directors need not be by ballot unless the By-laws of the
corporation shall so provide.
Any action required or permitted to be taken by the stockholders
of the corporation must be effected at a duly called annual or
special meeting of stockholders of the corporation and may not be
effected by any consent in writing by such stockholders. Special
meetings of stockholders of the corporation may be called only by
the Board of Directors pursuant to a resolution approved by a
majority of the entire Board of Directors, upon not less than 10
nor more than 50 days' written notice. Notwithstanding anything
contained in this Certificate of Incorporation to the contrary,
the affirmative vote of the holders of at least 67% of all of the
shares of the corporation entitled to vote for the election of
directors shall be required to amend or repeal, or to adopt any
provision inconsistent with, this second paragraph of this
Article THIRTEENTH.
FOURTEENTH. The corporation reserves, subject to the provisions
of this Certificate of Incorporation and the requirement of a
concurring vote of 67% of all shares of the corporation entitled
to vote for the election of directors to amend certain
provisions hereof, the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in
the manner now or hereafter prescribed by statute, and all rights
conferred upon stockholders herein are granted subject to this
reservation.
FIFTEENTH. 1. Vote Required for Certain Business
Combinations.
A. Higher Vote for Certain Business Combinations. In addition to
any affirmative vote required by law or this Certificate of
Incorporation, notwithstanding any provision of Article NINTH of
this Certificate of Incorporation and except as otherwise
expressly provided in Section 2 of this Article FIFTEENTH:
(i) Any merger or consolidation of the corporation or any
Subsidiary (as hereinafter defined) with or into (a) any
Interested Stockholder (as hereinafter defined) or (b) any other
corporation (whether or not itself an Interested Stockholder)
which is, or after such merger or consolidation would be, an
Affiliate (as hereinafter defined) of an Interested Stockholder;
(ii) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of
transactions) to or with any Interested Stockholder or any
Affiliate of any Interested Stockholder of any assets of the
corporation or any Subsidiary having an aggregate Fair Market
Value of $1,000,000 or more:
(iii) the issuance or transfer by the corporation or any
Subsidiary (in one transaction or a series of transactions) of
any securities of the corporation or any Subsidiary to any
Interested Stockholder or any Affiliate of any Interested
Stockholder in exchange for cash, securities or other property
(or a combination thereof) having an aggregate Fair Market Value
of $1,000,000 or more;
(iv) the adoption of any plan or proposal for the liquidation or
dissolution of the corporation proposed by or on behalf of an
Interested Stockholder or any Affiliate of any Interested
Stockholder; or
(v)any reclassification of securities (including any reverse
stock split), or recapitalization of the corporation, or any
merger or consolidation of the corporation with any of its
Subsidiaries or any other transaction (whether or not with or
into or otherwise involving an Interested Stockholder) which has
the effect, directly or indirectly, of increasing the
proportionate share of the outstanding shares of any class of
equity or convertible securities of the corporation or any
Subsidiary which is directly or indirectly owned by any
Interested Stockholder or any Affiliate of any Interested
Stockholder;
shall require the affirmative vote of the holders of at least 67%
of the then outstanding shares of capital stock of the
corporation entitled to vote generally in the election of
directors (the "Voting Stock"), voting together as a single class
(it being understood that, for the purposes of this Article
FIFTEENTH, each share of the Voting Stock shall have the number
of votes granted to it pursuant to Article FOURTH of this
Certificate of Incorporation). Such affirmative vote shall be
required notwithstanding the fact that no vote may be required,
or that a lesser percentage may be specified, by law or in any
agreement with any national securities exchange or otherwise.
B. Definition of "Business Combination." The term "Business
Combination" as used in this Article FIFTEENTH shall mean any
transaction which is referred to in any one or more of clauses
(i) through (v) of paragraph A of this Section 1.
2. When Higher Vote Is Not Required. The provisions of Section 1
of this Article FIFTEENTH shall not be applicable to any
particular Business Combination, and such Business Combination
shall require only such affirmative vote as is required by law
and any other provision of this Certificate of Incorporation, if
all of the conditions specified in either of the following
paragraphs A and B are met:
A. Approval by Continuing Directors. The Business Combination
shall have been approved by two-thirds of the Continuing
Directors (as hereinafter defined).
B. Price and Procedure Requirements. All of the following
conditions shall have been met:
(i) The aggregate amount of the cash and the Fair Market Value
(as hereinafter defined) as of the date of the consummation of
the Business Combination of consideration other than cash to be
received per share by holders of Common Stock in such Business
Combination shall be at least equal to the highest of the
following:
(a) (if applicable) the highest per share price (including any
brokerage commissions, transfer taxes and soliciting dealers'
fees) paid by the Interested Stockholder for any shares of Common
Stock acquired by it (1) within the two-year period immediately
prior to the first public announcement of the proposal of the
Business Combination (the "Announcement Date") or (2) in the
transaction in which it became an Interested Stockholder,
whichever is higher; and
(b) the Fair Market Value per share of Common Stock on the first
trading date after the Announcement Date or on the first trading
date after the date of the first public announcement that the
Interested Stockholder became an Interested Stockholder (the
"Determination Date"), whichever is higher.
(ii) The aggregate amount of the cash and the Fair Market Value
as of the date of the consummation of the Business Combination of
consideration other than cash to be received per share by holders
of shares of any other class of outstanding Voting Stock (other
than Institutional Voting Stock, as hereinafter defined) shall be
at least equal to the highest of the following (it being intended
that the requirements of this paragraph B(ii) shall be required
to be met with respect to every class (or, if applicable, series
within a class) of outstanding Voting Stock (other than
Institutional Voting Stock), whether or not the Interested
Stockholder has previously acquired any shares of a particular
class (or, if applicable, series within a class) of Voting Stock:
(a) (if applicable) the highest per share price (including any
brokerage commissions, transfer taxes and soliciting dealers'
fees) paid by the Interested Stockholder for any shares of such
class of Voting Stock acquired by it (1) within the two-year
period immediately prior to the Announcement Date or (2) in the
transaction in which it became an Interested Stockholder,
whichever is higher;
(b) (if applicable) the preferential amount per share to which
the holders of shares of such class (or, if applicable, series
within a class) of Voting Stock are entitled in the event of any
voluntary or involuntary liquidation, dissolution or winding up
of the corporation; and
(c) the Fair Market Value per share of such class (or, if
applicable, series within a class) of Voting Stock on the first
trading date after the Announcement Date or on the Determination
Date, whichever is higher.
(iii) The consideration to be received by holders of a particular
class (or, if applicable, series within a class) of outstanding
Voting Stock (including Common Stock) shall be in cash or in the
same form as the Interested Stockholder has previously paid for
shares of such class (or, if applicable, series within a class)
of Voting Stock. If the Interested Stockholder has paid for
shares of any class (or, if applicable, series within a class) of
Voting Stock with varying forms of consideration, the form of
consideration for such class (or, if applicable, series within a
class) of Voting Stock shall be either cash or the form used to
acquire the largest number of shares of such class (or, if
applicable, series within a class) of Voting Stock previously
acquired by it.
(iv) After such Interested Stockholder has become an Interested
Stockholder and prior to the consummation of such Business
Combination: (a) except as approved by two-thirds of the
Continuing Directors, there shall have been no failure to declare
and pay at the regular date therefor any full quarterly dividends
(whether or not cumulative) on any outstanding Preferred Stock or
other capital stock of the Company other than the Common Stock;
(b) there shall have been (1) no reduction in the annual rate of
dividends paid on the Common Stock (except as necessary to
reflect any subdivision of the Common Stock), except as approved
by two-thirds of the Continuing Directors, and (2) an increase in
such annual rate of dividends as necessary to reflect any
reclassification (including any reverse stock split),
recapitalization, reorganization or any similar transaction which
has the effect of reducing the number of outstanding shares of
the Common Stock, unless the failure to increase such annual rate
is approved by two-thirds of the Continuing Directors; and (c)
such Interested Stockholder shall have not become the beneficial
owner of any additional shares of Voting Stock except as part of
the transaction which results in such Interested Stockholder
becoming an Interested Stockholder.
(v) After such Interested Stockholder has become an Interested
Stockholder, such Interested Stockholder shall not have received
the benefit, directly or indirectly (except proportionately as a
stockholder), of any loans, advances, guarantees, pledges or
other financial assistance or any tax credits or other tax
advantages provided by the corporation, whether in anticipation
of or in connection with such Business Combination or otherwise.
(vi) A proxy or information statement describing the proposed
Business Combination and complying with the requirements of the
Securities Exchange Act of 1934 and the rules and regulations
thereunder (or any subsequent provisions replacing such Act,
rules or regulations) shall be mailed to public stockholders of
the corporation at least 30 days prior to the consummation of
such Business Combination (whether or not such proxy or
information statement is required to be mailed pursuant to such
Act or subsequent provisions).
3. Certain Definitions. For the purpose of this Article
FIFTEENTH:
A. A "person" shall mean any individual, firm, corporation or
other entity.
B. "Interested Stockholder" shall mean any person (other than the
corporation or any Subsidiary) who or which:
(i) is the beneficial owner, directly or indirectly, of more
than 10% of the outstanding Voting Stock;
(ii) is an Affiliate of the corporation and at any time within
the two-year period immediately prior to the date in question was
the beneficial owner, directly or indirectly, of 10% or more of
the then outstanding Voting Stock; or
(iii) is an assignee of or has otherwise succeeded to any
shares of Voting Stock which were at any time within the two-year
period immediately prior to the date in question beneficially
owned by any Interested Stockholder, if such assignment or
succession shall have occurred in the course of a transaction or
series of transactions not involving a public offering within the
meaning of the Securities Act of 1933.
C. A person shall be a "beneficial owner" of any Voting Stock:
(i) which such person or any of its Affiliates or Associates
(as hereinafter defined) beneficially owns, directly or
indirectly;
(ii) which such person or any of its Affiliates or Associates
has (a) the right to acquire (whether such right is exercisable
or only after the passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of conversion
rights, exchange rights, warrants or options, or otherwise, or
(b) the right to vote pursuant to any agreement, arrangement or
understanding; or
(iii) which are beneficially owned, directly or indirectly, by
any other person with which such person or any of its Affiliates
or Associates has any agreement, arrangement or understanding for
the purpose of acquiring, holding, voting or disposing of any
shares of Voting Stock.
D. For the purposes of determining whether a person is an
Interested Stockholder pursuant to paragraph B of this Section 3,
the number of shares of Voting Stock deemed to be outstanding
shall include shares deemed owned through application of
paragraph C of this Section 3 but shall not include any other
shares of Voting Stock which may be issuable pursuant to any
agreement, arrangement or understanding, or upon exercise of
conversion rights, warrants or options, or otherwise.
E. "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as in
effect on April 1, 1983.
F. "Subsidiary" means any corporation of which a majority of any
class of equity security is owned, directly or indirectly, by the
corporation; provided, however, that for the purposes of the
definition of Interested Stockholder set forth in paragraph B of
this Section 3, the term "Subsidiary" shall mean only a
corporation of which a majority of each class of equity security
is owned, directly or indirectly, by the corporation.
G. "Continuing Director" means any member of the Board of
Directors of the corporation (the "Board") who is unaffiliated
with the Interested Stockholder and was a member of the Board
prior to the time that the Interested Stockholder became an
Interested Stockholder, and any successor of a Continuing
Director who is unaffiliated with the Interested Stockholder and
is recommended to succeed a Continuing Director by a majority of
Continuing Directors then on the Board.
H. "Fair Market Value" means: (i) in the case of stock, the
highest closing sale price during the 30-day period immediately
preceding the date in question of a share of such stock on the
Composite Tape for New York Stock Exchange-Listed Stocks, or, if
such stock is not quoted on the Composite Tape, on the New York
Stock Exchange, or, if such stock is not listed on such Exchange,
on the principal United States securities exchange registered
under the Securities Exchange Act of 1934 on which such stock is
listed, or, if such stock is not listed on any such exchange, the
highest closing bid quotation with respect to a share of such
stock during the 30-day period preceding the date in question on
the National Association of Securities Dealers, Inc. Automated
Quotations System or any system then in use, or if no such
quotations are available, the fair market value on the date in
question of a share of such stock as determined by the Board in
good faith; and (ii) in the case of property other than cash or
stock, the fair market value of such property on the date in
question as determined by the Board in good faith.
I. "Institutional Voting Stock" shall mean any class or series of
Voting Stock which was issued to and continues to be held solely
by one or more insurance companies, pension funds, commercial
banks, savings banks or similar financial institutions or
institutional investors.
J. In the event of any Business Combination in which the
corporation survives, the phrase "other consideration to be
received" as used in paragraphs B(i) and (ii) of Section 2 of
this Article FIFTEENTH shall include the shares of Common Stock
and/or the shares of any other class or series of outstanding
Voting Stock retained by the holders of such shares.
K. A majority of the Continuing Directors shall have the power
and duty to determine for the purposes of this Article FIFTEENTH,
on the basis of information known to them after reasonable
inquiry, (A) whether a person is an Interested Stockholder, (B)
the number of shares of Voting Stock beneficially owned by any
person, (C) whether a person is an Affiliate or Associate of
another, (D) whether a class or series of Voting Stock is
Institutional Voting Stock and (E) whether the assets which are
the subject of any Business Combination have, or the
consideration to be received for the issuance or transfer of
securities by the corporation or any Subsidiary in any Business
Combination, has, an aggregate Fair Market Value of $1,000,000 or
more.
4. No Effect on Fiduciary Obligations of Interested Stockholder.
Nothing contained in this Article FIFTEENTH shall be construed to
relieve any Stockholder from any fiduciary obligation imposed by
law.
5. Amendment, Repeal, etc.. Notwithstanding any other provisions
of this Certificate of Incorporation or the By-Laws of the
corporation (and notwithstanding the fact that a lesser
percentage may be specified by law, this Certificate of
Incorporation or the By-Laws of the corporation), the affirmative
vote of the holders of 67% or more of the shares of the then
outstanding Voting Stock, voting together as a single class,
shall be required to amend, or repeal, or to adopt any provision
inconsistent with, this Article FIFTEENTH.
IN WITNESS WHEREOF, Cobra Electronics Corporation has caused this
Restated Certificate of Incorporation to be signed on this 28th
day of October 1998 in its name and attested by duly authorized
officers.
COBRA ELECTRONICS CORPORATION
By:_______________________________________
Jerry Kalov
President and Chief Executive Officer
ATTEST:
By:_______________________
Gerald M. Laures
Secretary
<PAGE>
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