SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended September 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 1-7117
General Housewares Corp.
(Exact name of Registrant as specified in its Charter)
Delaware 41-0919772
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1536 Beech Street 47804
Terre Haute, Indiana (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code (812) 232-1000
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
and (2) has been subject to such filing requirements for the past
90 days.
Yes X No
Indicate the number of shares outstanding of each of the
Registrant's classes of Common Stock as of the latest practicable
date.
Class of Common Stock Outstanding at November 14, 1996
$.33-1/3 Par Value 4,054,610
PART I FINANCIAL INFORMATION
GENERAL HOUSEWARES CORP. & SUBSIDIARIES
(Dollars in thousands except per share amounts)
Consolidated Condensed Statement of Operations and Retained Earnings
(Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
For the three months For the nine months
ended September 30, ended September 30,
1996 1995 1996 1995
Net Sales $26,406 $30,529 $72,621 $83,383
Cost of goods sold 16,708 20,013 48,709 54,276
------- ------- ------- -------
Gross profit 9,698 10,516 23,912 29,107
Selling, general and
administrative
expenses 8,729 8,649 28,462 25,273
------- ------- ------- -------
Operating income
(loss) 969 1,867 (4,550) 3,834
Interest Expense,
net 692 842 2,050 2,226
------- ------- ------- -------
Income (loss) from
operations before
income taxes 277 1,025 (6,600) 1,608
Income taxes 217 420 (2,257) 664
------- ------- ------- -------
Net income (loss) for
the period 60 605 (4,343) 944
Retained earnings,
beginning
of period 26,115 29,770 31,119 30,029
Less: Dividends
($.08 quarterly
per common
share in 1996
and 1995) 302 299 903 897
-------- ------- ------- -------
Retained earnings,
end of period $25,873 $30,076 $25,873 $30,076
------- ------- ------- -------
------- ------- ------- -------
Earnings per common share:
Net income (loss) $0.02 $ 0.16 ($1.15) $ 0.25
------- ------ ------- ------
------- ------ ------- ------
</TABLE>
See notes to consolidated condensed financial statement.
CONSOLIDATED CONDENSED BALANCE SHEET
<TABLE>
<S> <C> <C>
As of
September 30, December 31,
1996 1995
(Unaudited)
----------- -----------
ASSETS
Current assets:
Cash $ 619 $ 3,414
Accounts receivable, less
allowances of $3,543
($4,029 in 1995) 14,231 16,152
Inventories 23,053 26,867
Deferred tax asset 2,705 2,743
Other current assets 1,432 661
Income taxes refundable 2,289 -
----------- ----------
Total current assets 44,329 49,837
Note receivable 3,000 -
Property, plant and equipment, net 13,849 14,613
Other assets 6,033 7,565
Patents and other intangible
assets 3,513 3,830
Cost in excess of net assets
acquired 27,750 28,765
----------- ----------
$ 98,474 $104,610
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short term debt and notes payable $ 10,000 $ 12,000
Current maturities of
long term debt 2,072 2,163
Accounts payable 3,946 3,579
Salaries, wages and related
benefits 2,553 2,487
Accrued liabilities 5,024 1,957
Income taxes payable - 1,312
----------- ----------
Total current liabilities 23,595 23,498
Long term debt 23,574 25,038
Deferred liabilities 4,423 4,226
Stockholders' equity:
Preferred stock - $1.00 par value:
Authorized - 1,000,000 shares
Common stock - $.33-1/3 par value:
Authorized - 10,000,000 shares
Outstanding - 1996 - 4,055,881
and 1995 - 4,036,334 shares. 1,446 1,347
Capital in excess of par value 23,728 23,528
Treasury stock at cost - 1996 and
1995 - 277,760 shares (3,649) (3,649)
Retained earnings 25,873 31,119
Cumulative translation adjustment (58) (39)
Minimum pension liability (458) (458)
----------- ----------
Total stockholders' equity 46,882 51,848
----------- ----------
$ 98,474 $104,610
=========== ==========
</TABLE>
See notes to consolidated condensed financial statements.
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<S> <C> <C>
For the nine months
ended September 30,
1996 1995
---------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ($ 4,343) $ 944
Adjustments to reconcile net income (loss)
to net cash provided by (used for)
operating activities -
Depreciation and amortization 3,903 3,168
Loss on sale of assets 2,292 -
Foreign exchange loss (7) 97
Compensation related to stock awards 81 95
Increase in deferred taxes 40 -
Decrease (increase) in operating assets:
Accounts receivable 1,919 (3,059)
Inventory 741 (13,054)
Other assets (161) 540
Increase (decrease) in operating liabilities:
Accounts payable 370 655
Salaries, wages and related benefits,
accrued and deferred liabilities 2,209 2,042
Income taxes payable (refundable) (3,600) (893)
-------- --------
Net cash provided by (used for)
operating activities: 3,444 (9,465)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant
and equipment (3,421) (2,654)
Proceeds from sale of asset 1,785 -
-------- --------
Net cash used for
investing activities (1,636) (2,654)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of deferred obligation - (2,811)
Increase in notes payable - 900
Issuance of note receivable (370) -
Debt borrowing (repayment) (3,554) 11,707
Proceeds from stock options and
employee purchases 218 262
Dividends paid ( 903) ( 896)
-------- --------
Net cash (used for) provided by
financing activities (4,609) 9,162
-------- --------
Net decrease in cash and
cash equivalents (2,801) (2,957)
Cash and cash equivalents at
beginning of period 3,414 2,993
Effect of exchange rate on cash 6 17
-------- --------
Cash and cash equivalents at end
of period $ 619 $ 53
======== ========
</TABLE>
See notes to consolidated condensed financial statements.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands)
NOTE 1 - GENERAL
The accompanying interim Consolidated Condensed Financial Statements 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.
In the opinion of management, the financial statements included herein reflect
all adjustments, consisting only of normal recurring adjustments, necessary to
present fairly the financial information for the periods presented. The
Consolidated Condensed Financial Statements should be read in conjunction with
the consolidated financial statements and notes thereto included in the
Company's 1995 Annual Report on Form 10-K.
NOTE 2 - INVENTORIES
<TABLE>
<S> <C> <C>
September 30, December 31,
1996 1995
Raw materials $ 3,705 $ 4,635
Work in process 1,938 2,884
Finished goods 18,436 21,417
------- -------
24,076 28,936
LIFO Reserve (1,026) (2,069)
------- -------
Total, net $23,050 $26,867
======= =======
</TABLE>
NOTE 3 - PROPERTIES
<TABLE>
<S> <C> <C>
September 30, December 31,
1996 1995
--------- ------------
Land $ 641 $ 684
Buildings 3,659 4,378
Equipment 27,198 30,795
--------- ------------
Total 31,498 35,857
Accumulated depreciation (17,649) (21,244)
--------- ------------
Total, net $13,849 $14,613
========= ============
</TABLE>
NOTE 4 - RESTRUCTURING AND OTHER SPECIAL CHARGES
During the first quarter of 1996, management decided to divest the Company's
cast iron and cast aluminum cookware businesses (Sidney Division) as well as
proceed with other restructuring efforts. Provisions for the restructuring
were made in the first quarter of 1996 based on facts available at that time.
Total first quarter provisions for restructuring and other pre-tax charges
were $1,188. A purchase agreement to sell the Sidney Division, subject to
certain conditions, was signed as of August 1, 1996. As a result of this
agreement, the Company was required to record an additional charge against
pre-tax earnings of $1,500 in the second quarter of 1996. An additional $150
charge against pre-tax earnings was required in the third quarter of 1996
based on the resolution of estimates made in the second quarter. In accordance
with the terms of the agreement, the Company received a cash payment of $450
and a long-term note receivable of $3,000 in exchange for the assets of the
Sidney division as well as associated brand names and trademarks.
Approximately $1,100 of the amount charged against income in the first three
quarters of 1996 covers future pension and warranty payments and remains as a
component of accrued liabilities.
Revenue generated by the Sidney Division was $317 for the three months ended
September 30, 1996 as compared to $3,255 for the same period in 1995. For the
nine-month period ended September 30, 1996, revenues were $4,128 as compared
to $10,451 for the nine months ended September 30, 1995. Net operating losses
(including advertising, warehousing and direct marketing expenses but prior to
restructuring charges and the allocation of corporate overhead) were $462 for
the three month period ended September 30, 1996 as compared to net operating
income of $371 for the same period in 1995. Operating losses for the first
nine months of 1996 were $1,471 as compared to operating income of $216 for
the first nine months of 1995. In addition to the foregoing, the Company has
closed three retail stores in 1996. The Company recorded a charge of $150
related to the closure of these stores in 1996. Revenues and operating losses
related to the three retail store closures were not significant to the overall
operations of the Company.
NOTE 5 - DEBT
Effective November 13, 1996, the Company entered into a new unsecured
financing agreement with three banks. Under the terms of the agreement, which
expires December 31, 1999 and may be renewed under certain circumstances for
two additional one year periods, the Company has a $45,000 unsecured revolving
loan commitment. Proceeds from the financing are available for general
corporate purposes. Related interest charges will be based on Prime or LIBOR
with spreads calculated on an incentive formula. The agreement contains
several financial covenants and provides limits on dividends and capital
expenditures. The agreement replaced a $30,000 revolving credit agreement
held with two of the three banks entering into the new unsecured agreement.
The agreement allows the Company to pre-pay $10,000 of Senior Notes
outstanding with institutional investors. The Company plans to make such
pre-payments in the fourth quarter of 1996 and will incur related penalties
and charges of approximately $800. These Senior Notes have been classified as
non-current as of September 30, 1996 as they will be refinanced by the new
unsecured financing agreement. The remaining Senior Notes totaling $10,000
will not be pre-paid. Terms of these Notes require that the Company maintain
certain minimum financial ratios. The Company was not in compliance with a
fixed charge coverage ratio and a restricted payment limitation as of
September 30, 1996. As a result the amount has been classified as current.
NOTE 6 - INCOME TAXES
Due to the Company's financial results for the first nine months of 1996, an
estimate of the full year effective tax benefit rate suggested a tax benefit
of approximately 35% should be recorded for the nine months ended September
30, 1996. This compares to a 1995 full year effective tax expense rate of
approximately 41%. An adjustment was made in the third quarter of 1996
lowering the year-to-date income tax benefit in accordance with the revised
estimate.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(In thousands)
Nine Months Ended September 30, 1996 versus 1995
Referring to the Company's financial condition as of September 30, 1996 as
contrasted with December 31, 1995, inventories, accounts receivable, other
assets and current liabilities all decreased. Despite sales below prior year
and planned levels, inventories decreased due to successful inventory
reduction initiatives resulting from the Company's continued emphasis on
supply chain management as well as the divestiture of the Company's Sidney
division. Inventory reduction initiatives include the development of timely
and accurate sales forecasts which enable more sophisticated management of
production and purchasing schedules as well as the proactive identification
and liquidation of excess and obsolete inventory. The decrease in accounts
receivable is reflective of the Company's seasonality and divestiture of
Sidney Division operations. Other assets were reduced by the first quarter
1996 sale of a non-operating facility that the Company retained as part of the
sale of its giftware division in 1989.
Net sales for the three-month period ended September 30, 1996 were $26,406, a
decrease of 13.5% as compared to net sales of $30,529 for the same period in
1995. Net sales for the nine-month period ended September 30, 1996 were
$72,621, a decrease of 12.9% as compared to net sales of $83,383 for the same
period in 1995. Contributing to the reduction in sales in the first nine
months of 1996 was weakness in the Sidney Division product lines due to
de-emphasis by major customers as well as some reduction related to
uncertainty surrounding the future of the product lines. The Sidney Division
was divested in the third quarter of 1996 resulting in a $2,938 reduction in
third quarter net sales. In addition, sales across most other product lines
were down in the first six months of 1996 due to lower than anticipated
sell-through at the retail level in the fourth quarter of 1995 (resulting in
higher than required inventory levels at retail) and the first quarter of
1996. Third quarter 1996 order levels in non-Sidney product lines exceeded
1995; however, renovation of the Company's warehouse and distribution facility
and related systems delayed shipments significantly in the third quarter of
1996 causing $3,500 of sales scheduled for September shipment to be delayed
until the fourth quarter (or, in a few, canceled). Third quarter 1996 gross
profit decreased $818 or 7.8% from the third quarter of 1995. Gross profit
for the first nine months of 1996 decreased $5,195 or 17.8% from the 1995
comparable period. Of the third quarter decrease, the entire amount was
attributable to the decreased sales volume; similarly, $3,226 of the decrease
from the first nine months of 1995 was attributable to sales volume. As a
result of the Company's emphasis on supply chain management as well as the
reduction in sales activity, unfavorable manufacturing variances contributed
to the reduction in gross margin dollars (approximately $2.5 million) in the
first nine months of 1996. Gross margin percentage for the first nine months
was also negatively impacted by the first quarter sale of excess and obsolete
inventory at little or no margin. Gross margin for the first nine months was
favorably impacted by a reversal of LIFO reserves resulting from the Company's
decision to dispose of the Sidney Division.
Selling, general and administrative expenses for the three-month period ended
September 30, 1996 were $8,729 as compared to $8,649 for the same period in
1995. While variable selling and cooperative advertising costs decreased due
to the reduction in sales volume, warehousing costs increased due to
additional labor required by the warehouse/distribution renovation. In
addition, general and administrative costs increased as a result of the
ultimate settlement of the Sidney divestiture. For the nine-month period
ended September 30, 1996, selling general and administrative costs increased
from $25,273 in 1995 to $28,462. The increase is primarily a result of 1996
strategic initiatives that have included a realignment of staff,
manufacturer's retail outlet store closings and divestiture of the Sidney
division.
Operating income for the three-month period ended September 30, 1996 was $969
as compared to operating income of $1,867 for the same period in 1995. The
operating loss for the first nine months of 1996 was $4,550 as compared to
operating income of $3,834 for the first nine months of 1995. Interest
expense for the third quarter of 1996 was $692 as compared to $842 for the
same period in 1995 while interest expense for the first nine months of 1996
was $2,050 as compared to $2,226 for the comparable 1995 period. An estimate
of the full year financial results and related effective tax benefit rate
resulted in a third quarter adjustment to reflect an effective tax benefit
rate of approximately 35%. This compares to a 1995 effective tax expense rate
of approximately 41%. An adjustment was made in the third quarter of 1996
lowering the year-to-date income tax benefit in accordance with the estimate.
Net income of $60 in the third quarter of 1996 and the net loss of $4,343 for
the first nine months of 1996 compare to net income of $605 and $944 for the
same periods in 1995. Related quarterly and year-to-date earnings (loss) per
share dropped from $0.16 and $0.25 in 1995 to $.02 and ($1.15) in 1996,
respectively.
During the third quarter of 1996, the Company disposed of the Leyse division
which sold a line of commercial quality cookware and also sold the remaining
Sidney related inventory which was distributed in Europe. These transactions
had little impact on the results of operations for the third quarter and will
not significantly impact future operational results.
Capital Resources and Liquidity
On November 13, 1996, the Company entered into a $45 million three year
revolving loan agreement to replace a $30 million revolving loan agreement
that would have expired on November 30, 1997. Proceeds from the new agreement
will be used to pre-pay $10 million of Senior Notes, replace $9 million
outstanding on the existing revolving agreement and provide funds for expected
working capital needs.
PART II - OTHER INFORMATION
Item 5. Other Information
The Company entered into a $45 million three year revolving loan agreement on
November 13, 1996. A report on Form 8-k containing the agreement will be
filed on or before November 27, 1996.
Item 6. Exhibits and Reports on Form 8-K
11a. Primary Earnings Per Share
Reports on Form 8-K - There were no reports on Form 8-K
filed for the three months ended September 30, 1996.
EXHIBITS
EX-11 Computation of Primary Earnings Per Share
EX-27 Financial Data Schedule
EX-99 Asset Purchase Agreement between General Housewares Corp. and
Wagnerware Corporation
EX-3.(ii) Amended By-Laws
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GENERAL HOUSEWARES CORP.
Dated: November 14, 1996 By /s/ Robert L. Gray
Robert L. Gray
Vice President Finance
and Treasurer
By /s/ Mark S. Scales
Mark S. Scales
Corporate Controller
Chief Accounting Officer
EXHIBIT 11
COMPUTATION OF PRIMARY EARNINGS PER SHARE
<TABLE>
<S> <C> <C>
For the nine months
ended September 30,
1996 1995
--------- ---------
Net (loss) income ($ 4,343) $ 944
Shares:
Weighted average number of shares of
common stock outstanding 3,769,777 3,743,106
Shares assumed issued (less shares
assumed purchased for treasury) on
stock option agreements 8,844 26,302
Rounding 379 (408)
--------- ---------
3,779,000 3,769,000
========= =========
Net (loss) income per Common Share ($ 1.15) $ 0.25
========= =========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000040643
<NAME> FINANCIAL DATA SCHEDULE
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JUN-30-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 619
<SECURITIES> 0
<RECEIVABLES> 17,774
<ALLOWANCES> 3,543
<INVENTORY> 23,053
<CURRENT-ASSETS> 44,329
<PP&E> 31,498
<DEPRECIATION> 17,649
<TOTAL-ASSETS> 98,474
<CURRENT-LIABILITIES> 23,595
<BONDS> 0
0
0
<COMMON> 1,446
<OTHER-SE> 45,436
<TOTAL-LIABILITY-AND-EQUITY> 98,474
<SALES> 21,613
<TOTAL-REVENUES> 21,613
<CGS> 15,038
<TOTAL-COSTS> 15,038
<OTHER-EXPENSES> 8,986
<LOSS-PROVISION> 21
<INTEREST-EXPENSE> 686
<INCOME-PRETAX> (3,097)
<INCOME-TAX> (923)
<INCOME-CONTINUING> (2,174)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,174)
<EPS-PRIMARY> (.57)
<EPS-DILUTED> (.57)
</TABLE>
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT dated as of August 1, 1996 (the
"Agreement"), by and between GENERAL HOUSEWARES CORP., a Delaware
corporation, with an address of 1536 Beech Street, Terre Haute,
Indiana 47804 ("Seller") and WAGNERWARE CORPORATION, an Ohio
corporation, with an address of 800 West Liberty Street, Medina,
Ohio 44256 ("Buyer").
W I T N E S S E T H:
WHEREAS, Seller is desirous of selling certain of the tangible
and intangible assets related to the manufacture and sale of cast
iron and cast aluminum cookware ("Business") and having Buyer
assume certain scheduled liabilities of the Business; and
WHEREAS, Buyer is desirous of purchasing such assets and assuming
such liabilities on the terms and subject to the conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and of the
representations and warranties, covenants and agreements
hereinafter made, the parties hereby agree as hereinafter set
forth:
1. PURCHASE AND SALE OF ASSETS:
1.1 Acquired Assets. Subject to the terms and conditions
hereof, at the Closing (as hereinafter defined), Seller shall
sell, transfer, assign, convey and deliver, or cause to be sold,
transferred, assigned, conveyed and delivered, to Buyer, and
Buyer shall purchase and accept all of the assets (excluding the
assets specifically set forth in Section 1.2 hereof) owned by
Seller and used in connection with or related to the Business
(collectively, such assets are referred to herein as the
"Acquired Assets"), including without limitation:
(a) Machinery, Equipment, Furniture and Fixtures. All of the
machinery, equipment, tooling, dies, patterns, molds, stampings,
computers, software, furniture, fixtures, supplies and all other
personal property not normally included in inventory, used or
held for use in connection with the Business, wherever located,
set forth on Schedule 1.1(a) hereto;
(b) Inventory. All of Seller's inventory used to produce cast
iron and cast aluminum cookware (including raw materials,
work-in-process, finished goods and parts) and supplies used or
held for use in connection with the Business, wherever located;
(c) Books, Records, Drawings and Similar Property. All operating
data, books and records of Seller which are necessary to the
operation of the Business, wherever located, including, without
limitation, customer lists, accounting and financial records,
employee records, credit information, invoices, correspondence,
engineering blueprints, drawings, designs, patterns, processes,
sales and marketing materials, formulae, trade secrets and
know-how, and other similar property and rights;
(d) Leases. All of Seller's right, title and interest in
certain leases and any improvements thereon as set forth on
Schedule 1.1(d) hereto;
(e) Contracts. All oral and written contracts, purchase
commitments and other agreements pertaining to the Business that
are set forth on Schedule 1.1(e) hereto;
(f) Real Property and Improvements. All of Seller's right,
title and interest in the real property and improvements listed
on Schedule 1.1(f);
(g) Permits, Licenses and Authorizations. All governmental
permits, licenses and authorizations of any kind whatsoever
associated with the Business set forth on Schedule 1.1 (g)
hereto; and
(h) Other Assets. All other assets owned by Seller, wherever
located (but excluding the assets identified in Section 1.2
hereof) relating to the Business, existing at the Closing, of
every kind and nature, whether or not carried on the books of
Seller, as set forth on Schedule 1.1(h).
1.2 Certain Excluded Assets. Notwithstanding Section 1.1
hereof, Seller shall not sell or transfer, and Buyer shall not
purchase or accept, the following assets of Seller (collectively,
the "Excluded Assets"):
(a) Cash;
(b) Any rights to receive refunds with respect to income taxes
paid by or with respect to Seller;
(c) All of Seller's accounts receivable associated with the
business;
(d) All right, title and interest to any employee benefit and
pension plan, contracts or agreements relating to employees or
former employees of Seller;
(e) All rights of Seller under this Agreement and the agreements
and instruments delivered by Buyer pursuant hereto;
(f) Minute books, stock certificates, stock ledger, general
ledger, check registers, sales journals, bank statements, payroll
records, tax returns and all rights of Seller in and to the
"Licensed Marks", the "Patent" and the "Products" (as such terms
are defined in the license agreement attached hereto as Exhibit
C);
(g) Motor vehicles;
(h) Any obligation, contract, commitment or other agreement
relating to the Business not set forth or described in Sections
1.1 hereof, including that certain Trademark License Agreement
dated November 22, 1993, by and between Seller and Innovation
Group Ltd., the lease on the Sidney warehouse described in the
Sublease attached hereto as Exhibit E and any agreement with the
stockholders of Seller; and
(i) Security deposits and any prepaid insurance to extent
policies are not assumed by Buyer.
2. ASSUMPTION OF CERTAIN LIABILITIES:
2.1 Assumed Liabilities. Buyer shall assume and thereafter pay,
perform or discharge when due the liabilities as described on the
Schedule of Assumed Liabilities attached hereto as Schedule 2(a)
(the "Assumed Liabilities") as of the Closing (except for any
liability arising out of Seller's failure to perform its
obligations thereunder to the extent such performance is due on
or prior to the Closing). Buyer shall acquire the Acquired
Assets free and clear of all liens, encumbrances, obligations and
liabilities, except to the extent expressly assumed by Buyer or
otherwise provided in or contemplated by this Agreement, as well
as any and all liabilities that may arise after the Closing.
2.2 Buyer's Responsibility. Buyer shall have all responsibility
to all creditors and all third parties and to Seller with respect
to, and shall pay, discharge and perform when due the Assumed
Liabilities. Buyer shall indemnify and hold Seller harmless from
and against any and all costs, loss, liability (including
reasonable attorneys' fees) arising from such obligations or
liabilities. Buyer shall also be responsible for all liabilities
and obligations incurred in connection with the operation of the
Business after the date hereof, including liability for taxes
relating to any period after the date hereof, and for any
liability arising out of an Occurrence (as defined in Section 2.3
(d) hereof) which takes place after the date hereof. Real estate
taxes on the real property included in the Acquired Assets (the
"Real Property") will be prorated to August 1, 1996.
2.3 Non-Assumed Liabilities. Seller shall remain liable and
responsible for the liabilities and obligations of the Business
not specifically assumed by Buyer hereunder (collectively, the
"Non-Assumed Liabilities"), including without limitation:
(a) The contracts, commitments and agreements which are Excluded
Assets under Section 1.2 (h) hereof;
(b) Liability for accrued vacation pay as of August 1, 1996;
(c) Post-retirement life, health and disability insurance
benefits, including but not limited to those specified in Section
7.3 hereof;
(d) Liability for all actions, suits, claims, proceedings or
investigations involving the Business which were either (i)
instituted or asserted prior to the date hereof, including
without limitation those listed on Schedules 5.4, 5.6 and 5.11
(a)(iii) and (iv) hereto, or (ii) arise out of any Occurrence
(defined as of the date of injury, death, damage, loss or
destruction of property giving rise to a claim) which takes place
prior to the date hereof, including in each case all workers'
compensation claims;
(e) Liability for severance pay;
(f) Responsibility or liability associated with the "employee
benefit plans" listed on Schedule 5.11(f); and
(g) All taxes relating to any period prior to the date hereof,
including but not limited to, (i) federal, state and local income
taxes and state or local income based franchise taxes, (ii) taxes
relating to the real property prorated to the date hereof and
(iii) FICA and other sate or federal payroll taxes and
withholding taxes.
3. PURCHASE PRICE FOR THE ACQUIRED ASSETS.
The Purchase Price for the Acquired Assets will be Four Million
Dollars ($4,000,000), payable by Buyer to Seller as follows: (a)
One Million Dollars ($1,000,000) cash payable by wire transfer in
immediately available funds delivered at the Closing to an
account designated by the Seller in Section 4.2 and (b) a
Promissory Note in the amount of Three Million Dollars
($3,000,000) delivered at the Closing, substantially in the form
of Exhibit A (the "Promissory Note"), secured by a mortgage on
the real property listed on Schedule 1.1(f) and a security
interest in all other Acquired Assets. The purchase price will
be reduced by an amount equal to the Book Value of any packaging
inventory returned to Seller by Buyer, which amount will be set
off against the final payment or payments due under the
Promissory Note as more fully provided therein.
4. CLOSING AND PAYMENT OF THE PURCHASE PRICE.
4.1 Closing. Subject to the satisfaction of the conditions
precedent of Buyer and Seller set forth in Article 10 and Article
11, the Closing of the transactions contemplated hereby (the
"Closing") shall be held at the offices of Vorys, Sater, Seymour
and Pease in Columbus, Ohio, on August 16, 1996, to be effective
as of August 1, 1996.
4.2 Payment of Purchase Price. At the Closing, Buyer shall
deliver to Seller, against transfer of title to the Acquired
Assets, the Purchase Price for the Acquired Assets by wire
transfer the sum of One Million Dollars ($1,000,000) to the
Seller's account at Harris Trust and Savings Bank, 111 West
Monroe Street, Chicago, IL 60690, GHC Account #268-5600, Routing
ABA #071 000 288 and delivery of the Promissory Note.
4.3 Transfer of Acquired Assets. At the Closing, Seller shall
transfer to Buyer all right, title and interest in and to the
Acquired Assets as provided herein. Said transfer shall be
effected by the delivery to Buyer of fully executed bills of
sale, endorsements, assignments and other good and sufficient
instruments of conveyance and transfer, all in form and substance
reasonably satisfactory to Buyer and its counsel.
4.4 Assumption of Liabilities. At the Closing, Buyer shall,
upon the request of Seller, execute and deliver assumption of
liabilities agreements, assuming and undertaking to perform and
pay when due the Assumed Liabilities, and instruments granting
security interests to Seller all in form and substance reasonably
satisfactory to Seller and its counsel.
5. REPRESENTATIONS AND WARRANTIES OF SELLER.
Seller represents and warrants as follows:
5.1 Organization and Qualification of Seller. Seller is duly
organized, validly existing and in good standing under the laws
of the State of Delaware and it is duly authorized to do business
in the State of Ohio. Seller has requisite corporate power and
authority to own or lease all of its properties and assets
relating to the Business and to conduct the Business in the
manner and in the places where such properties are owned or
leased or the Business is now conducted.
5.2 Authority of Seller. This Agreement and each of the
agreements and other documents and instruments delivered or to be
delivered to Buyer pursuant to, or as contemplated in this
Agreement will constitute, when so delivered, the valid and
binding obligations of Seller and shall be enforceable in
accordance with their respective terms except insofar as such
enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or similar laws affecting
creditor's rights generally and except as to the availability of
equitable remedies. Upon approval of this Agreement and the
transactions contemplated hereby by Seller's Board of Directors,
the execution, delivery and performance of this Agreement and
each of the agreements and other documents and instruments
delivered or to be delivered to Buyer by Seller will have been
duly authorized by all necessary action of Seller and will be
within Seller's corporate powers.
Upon approval of this Agreement and the transactions contemplated
hereby by Seller's Board of Directors, the execution, delivery
and performance of this Agreement or any other agreement,
document or instrument by Seller will not, with the passage of
time, or the giving of notice, or both:
(a) result in a breach of, or constitute a default, or result in
any right of termination, or other effect adverse to Seller or
the Acquired Assets, under any indenture or loan or credit
agreement of Seller, or any other agreement, lease or instrument
to which Seller is a party or by which any of the Acquired Assets
is bound or affected;
(b) result in, or require, the creation or imposition of any
mortgage, deed of trust, pledge, lien, security interest or other
charge or encumbrance or claim of any nature whatsoever on the
Acquired Assets;
(c) result in a violation of, or default under any law, rule, or
regulation, or any order, writ, judgment, injunction, decree,
determination or award now in effect having applicability to
Seller or to the Acquired Assets;
(d) violate any provisions of the Certificate of Incorporation
or By-Laws of Seller; or
(e) require any approval, consent or waiver of, or filing with,
any person or entity, private or governmental other than the
persons listed on Schedule 5.2(e) hereto.
5.3 Assets.
(a) Title. Seller owns all of the Acquired Assets, free and
clear of all liens, pledges, mortgages, leases, security
interests, options, or any other material encumbrances or
imperfections of title, except for those items listed on the
Schedule of Liens attached hereto as Schedule 5.3(a) and, as to
Real Property, current taxes and assessments not yet due and
payable and easements, conditions and restrictions contemplated
by Section 7.4 hereof.
(b) Inventory. Finished goods, work-in-process, raw materials
and component parts being acquired by Buyer will be usable and/or
salable in the ordinary course of business.
5.4 Litigation. There is no action, suit, investigation or
proceeding pending before any Court or governmental agency
against Seller, and, to Seller's knowledge, there is no
threatened action, suit, investigation or proceeding, including
any bankruptcy proceeding against Seller, except as set forth on
the Schedule of Litigation attached hereto as Schedule 5.4.
5.5 Leases. Attached hereto as Schedule 1.1(d) is a description
of each lease (whether oral or written) which shall be assigned
to and assumed by Buyer hereunder and under which Seller is the
lessee of personal or real property. A true, correct and
complete copy of each written lease identified in Schedule 1.1(d)
has been delivered to Buyer, and Buyer hereby acknowledges such
receipt. All rentals due under the leases have been paid and
there exists no default under the terms of any such lease, and no
event has occurred which, upon the passage of time or giving of
notice, or both, would result in any event of default or prevent
Seller from exercising and obtaining the benefits of any options
or other rights contained therein. Seller has all right, title
and interest of the lessee under the terms of each lease, free
and clear of all encumbrances, and all such leases are valid and
in full force and effect. None of the leases is terminable by
the Lessor as a result of the transactions contemplated by this
Agreement.
5.6 Contracts and Commitments. Schedule 1.1(e) hereto sets
forth a true, complete and correct list of all of Seller's
contracts which shall be assigned to and assumed by Buyer
hereunder ("Contract(s)"). All such Contracts were made at arms'
length and were not entered into with (a) any officer or director
of Seller or (b) any entity which Seller controls or in which
Seller has any direct or indirect interest. Each Contract is in
full force and effect, and Seller is not in material default
under any such Contract, nor has any event occurred which, with
the passage of time or the giving of notice, or both, would
constitute a material default thereunder, or cause the
acceleration of any obligation of Seller, or result in the
creation of any lien, charge or encumbrance whatsoever upon the
Acquired Assets. Except as set forth on Schedule 5.6 hereto, no
third party is in material default under any Contract made with
Seller or any obligation owed to Seller, nor has any event
occurred which, with the passage of time or giving of notice, or
both, would constitute a material default thereunder or cause the
acceleration of any obligation of Seller, or result in the
creation of any lien, charge or encumbrance whatsoever upon the
Acquired Assets.
5.7 Tax Matters. There are no tax liens upon or pending or, to
the best of Seller's knowledge, threatened against Seller with
respect to the Acquired Assets. Seller has made all withholdings
and deposits of tax as required by federal, state or local laws.
5.8 Undisclosed Liabilities. Seller does not have, and will not
have on the Closing, any liabilities or obligations of any kind
or amount secured by the Acquired Assets, whether accrued,
absolute, contingent or otherwise, except such as are being
discharged at the Closing or assumed by Buyer. To the best of
Seller's knowledge, except for the Assumed Liabilities or as
otherwise disclosed in this Agreement or in the Schedules hereto,
there are no liabilities of the Seller or any kind whatsoever,
whether or not accrued or fixed, absolute or contingent,
determined or determinable, nor is there any condition or
circumstance existing or which has existed, and no event shall
have occurred which could reasonably be expected to result in any
such liability which is or could be binding upon or become a
liability of the Buyer or upon the Acquired Assets.
5.9 Brokers or Finders. Seller shall be responsible for the
fees of any broker or finder in connection with the sale of the
Acquired Assets; provided, however, that such fees shall not
exceed, in the aggregate, Four Hundred Thousand Dollars
($400,000).
5.10 Outside Contractors and Vendors. Schedule 1.1(h) hereto
sets forth a true, complete and correct list of all persons other
than Seller who have possession of any assets of Seller used or
held for use in the Business, including vendors and contractors,
with the assets and their locations set forth thereon.
5.11 Labor Matters.
(a) With respect to the Business prior to the Closing:
(i) No present or former employee of Seller has any claim
against Seller (whether under federal or state law, under any
employee agreement or otherwise) on account of or for (A)
overtime pay, other than overtime pay for the current payroll
period, (B) wages or salaries (excluding wages or salaries for
the current payroll period), (C) vacations, time off or pay in
lieu of vacation or time off, or (D) any violation of any
statute, ordinance or regulation relating to minimum wages or
maximum hours of work, except as disclosed on Schedule 5.4;
(ii) No person or party (including, but not limited to,
governmental agencies of any kind) has any claim, and there is no
basis for any claim, against Seller arising out of any statute,
ordinance or regulation relating to discrimination of employees
or employment practices or occupational or safety and health
standards;
(iii) There is not pending or, to the best of Seller's
knowledge, threatened any labor dispute, strike or work stoppage
involving Seller's employees, except as set forth on Schedule
5.11(a)(iii);
(iv) There is not pending or, to the best of Seller's knowledge,
threatened any charge or complaint against Seller by or before
the National Labor Relations Board or any representative thereof,
or any comparable state agency or authority, except as set forth
on Schedule 5.11(a)(iv);
(v) Seller has no employment agreements or other agreements that
contain any severance or termination pay liabilities or
obligations, nor any bonus, vacation, deferred compensation,
profit-sharing, pension, retirement or other employee benefit
plans affecting persons employed or retained by Seller, except as
set forth on Schedule 5.11(a)(v) hereto;
(vi) Seller has made all required payments to the appropriate
governmental authorities with respect to applicable unemployment
compensation reserve accounts; and
(vii) Except as set forth on Schedule 5.11(a)(vii), no key
employee has notified Seller that he or she intends to terminate
his or her employment as a result of the transactions
contemplated by this Agreement.
(b) Schedule 5.11(b) is a list of union contracts of the Seller
with the employees of the business.
(c) Schedule 5.11(c) hereto is a list of all hourly paid
employees employed by Seller, which list identifies each such
person's primary responsibilities with the Business as of the
date hereof and the hourly rate of compensation for each such
employee.
(d) Schedule 5.11(d) hereto is a list of all salaried employees
employed by Seller, which list identifies the current position of
each such employee and the current rate of compensation for each
such employee.
(e) Schedule 5.11(e) hereto is a list of the accrued vacation
pay as of the date hereof for each employee of Seller.
(f) Each "employee benefit plan" (as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended
("ERISA") established or maintained by Seller and which covers
any of Seller's employees is listed on Schedule 5.11(f) hereto.
Copies of each such employee benefit plan and the summary plan
description thereof have been previously delivered to Buyer.
5.12 Environmental Matters. To the best of Seller's knowledge,
there is no material chemical contamination on the facility or
violation of applicable environmental laws other than as set
forth on Schedule 5.12(a) or in the Phase I Environmental Site
Assessment Report, dated June 1, 1989, and performed by Applied
Environmental Technologies Corporation, attached hereto and
incorporated herein as Schedule 5.12(b), except that Seller
acknowledges that hazardous waste had been disposed of in the
"on-site dump" referred to in the first paragraph of "6.0 Summary
of Key Findings" in the report. Seller is in the process of
performing a hazardous waste closure of the "on-site dump"
pursuant to a Closure Plan approved by the Ohio Environmental
Protection Agency.
5.13 Insurance. All insurance policies providing insurance
coverage with respect to the Business, the Acquired Assets and
employees of Seller are set forth on Schedule 5.13 hereto.
5.14 Financial Information. The financial information for the
business previously provided by Seller to Buyer is consistent
with the books and records of Seller with respect to the
Business.
5.15 Compliance with Laws. Except as disclosed in this
Agreement or the Schedules hereto, Seller has complied in all
material respects with all laws, regulations, rules and orders of
any governmental department or agency or any other commission,
board, agency or instrumentality, federal, state or local, or
other requirements of law affecting the Business and operations
thereof, and Seller is not in default in any material respect
under or in violation of any provision of any federal, state or
local law, regulation, rule or order applicable to the Business.
5.16 Licenses and Rights. Seller possesses all franchises,
licenses, easements, permits and other authorizations from
governmental or regulatory authorities and from all other persons
or entities that are necessary to permit it to engage in the
Business as presently conducted in and at all locations and
places where it is presently operating. Such franchises,
licenses, permits and other authorizations are listed on Schedule
1.1(g).
5.17 Conduct of Business. The Acquired Assets, together with
the rights granted or assigned by Seller to Buyer pursuant to
this Agreement, the license agreement attached hereto as Exhibit
C and the sublease attached hereto as Exhibit E constitute all of
the assets necessary to the operation of the Business as
presently conducted.
5.18 Product Safety.
(a) To Seller's current actual knowledge, without investigation,
Seller has not been required to file any notification or other
report with, or provide information to, the United States
Consumer Product Safety Commission, or any product safety agency,
commission, board or other body of any jurisdiction, concerning
actual or potential hazards with respect to any product
manufactured, distributed or sold by Seller as part of the
Business being acquired by Buyer; and
(b) Seller has not made any knowing misrepresentation or
knowingly furnished any information containing any material
omission to any product safety testing laboratory or similar
organization with respect to any product manufactured,
distributed or sold by Seller as part of the Business being
acquired by Buyer.
5.19 Real Property. To Seller's current actual knowledge,
without investigation, with respect to the Real Property:
(a) Seller has adequate permanent rights of ingress to and
egress from the Real Property;
(b) All water, sewer, gas, electric, telephone, drainage and
other utility equipment, facilities and services required by law
or necessary for the operation of the Real Property as it is now
being operated are installed and connected pursuant to valid
permits, are adequate to service the Real Property and are in
operating condition; and no fact or condition exists which would
result in the termination or impairment of the furnishing of
service to the Real Property of water, sewer, gas, electric,
telephone, drainage and other such utility services; and
(c) Seller has received no notice from any insurance carrier,
nor does Seller have knowledge of, defects or inadequacies in the
Real Property which, if not corrected, would result in
termination of insurance coverage or increase in the costs
thereof.
6. REPRESENTATIONS AND WARRANTIES OF BUYER.
As of the date hereof and as of the Closing, Buyer represents and
warrants as follows:
6.1 Organization of Buyer. Buyer is duly organized, validly
existing and in good standing under the laws of the State of
Ohio.
6.2 Authority of Buyer. This Agreement and each of the
agreements and other documents and instruments delivered or to be
delivered to Seller pursuant to or as contemplated in this
Agreement will constitute, when so delivered, the valid and
binding obligation of Buyer and shall be enforceable in
accordance with their respective terms except insofar as such
enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or similar laws affecting
creditor's rights generally and except as to the availability of
equitable remedies. The execution, delivery and performance of
this Agreement and each of the agreements, documents and
instruments delivered or to be delivered to Seller by Buyer, have
been duly authorized by all necessary corporate action of Buyer
and are within Buyer's corporate powers. The execution, delivery
and performance of this Agreement or any other agreement,
document or instrument by Buyer does not and will not, with the
passage of time, or the giving of notice, or both:
(a) result in a breach of, or constitute a default, or result in
any right of termination, or other effect adverse to Buyer or the
Acquired Assets, under any indenture or loan or credit agreement
of Buyer or any other agreement, lease or instrument to which
Buyer is a party;
(b) result in a violation of, or default under any law, rule, or
regulation, or any order, writ, judgment, injunction, decree,
determination or award now in effect having applicability to
Buyer or to the Acquired Assets;
(c) violate any provisions of the Certificate of Incorporation
or By-Laws of Buyer; or
(d) require any approval, consent or waiver of, or filing with,
any person or entity, private or governmental.
6.3 Brokers or Finders. Buyer has not retained, employed or
used any broker or finder in connection with the purchase of the
Acquired Assets or in connection with the negotiation thereof.
7. COVENANTS OF SELLER AND BUYER.
7.1 Management Prior to Closing. On the date hereof, Seller and
Buyer will execute and deliver a Management Agreement in the form
of Exhibit B hereto pursuant to which Buyer will manage the
Business until the Closing. During such period, Buyer shall
advise Seller of all material developments related to Buyer's
management. Seller shall fully cooperate with Buyer in
connection therewith. If this Agreement is terminated pursuant
to Section 12.1, Seller shall reimburse Buyer for (i) preapproved
capital expenditures as specified in the Management Agreement and
(ii) unreimbursed payments by Buyer in respect of any liability
of Buyer which is not an Assumed Liability.
7.2 Pension Plans - Union Employees. Seller will continue to
accrue pension benefits under its existing defined benefit
pension plans under the agreements with the unions listed on
Schedule 5.11(b) until December 31, 1996, and then shall freeze
the benefits for the employees covered by such union contracts as
if the defined benefit pension plans were terminated on that
date.
7.3 Post-Retirement Life, Health and Disability Insurance
Benefits. Seller shall be liable for any post-retirement life,
health and disability benefits for all employees who have left
employment prior to the date hereof and who have met Seller's
eligibility requirements for such benefits.
7.4 Title Insurance. Seller shall furnish, and Buyer shall pay
for, an owner's title insurance commitment and policy in the
amount of One Million Dollars ($1,000,000). The title evidence
shall be certified within 30 days prior to Closing with
endorsement as of 8:00 A.M. on the business day prior to the date
of Closing, all in accordance with the standards of the Columbus
Bar Association, and shall show in Seller marketable title in fee
simple free and clear of all liens and encumbrances except; (a)
those created by or assumed by Buyer; (b) those specifically set
forth in this contract; (c) zoning ordinances; (d) legal
highways; and (e) covenants, restrictions, conditions and
easements of record which do not unreasonably interfere with
present lawful use. Buyer shall pay any additional costs
incurred in connection with mortgage insurance issued for the
protection of Buyer's lender. If Buyer desires a survey, Buyer
shall pay the cost thereof.
7.5 Notice of Breach by Seller. Seller covenants and agrees
that, during the period from the date hereof through and
including the Closing, to the extent Seller obtains knowledge
that any of the representations or warranties contained in
Article 5 hereof would be incorrect in any respect were those
representations or warranties made immediately after such
knowledge was obtained, Seller shall notify Buyer in writing
promptly of such fact and exercise its best efforts to remedy
same.
7.6 Consummation of Agreement by Seller. Seller shall use its
best efforts to satisfy all conditions to the Closing that are
within its control to enable the transactions contemplated by
this Agreement to be fully carried out.
7.7 Notice of Breach by Buyer. Buyer covenants and agrees that,
during the period from the date hereof through and including the
Closing, to the extent Buyer obtains knowledge that any of the
representations or warranties contained in Articles 5 and 6
hereof would be incorrect in any respect were those
representations or warranties made immediately after such
knowledge was obtained, Buyer shall notify Seller in writing
promptly of such fact and exercise its best efforts to remedy
same.
7.8 Consummation of Agreement by Buyer. Buyer shall use its
best efforts to satisfy all conditions to the Closing that are
within its control to enable the transactions contemplated by
this Agreement to be fully carried out.
7.9 Payment of Obligations Retained by Seller. Subject to its
right to contest any debt or claim in good faith, Seller shall
pay all obligations of the Business retained by it in accordance
with reasonable business practice.
8. INDEMNIFICATION.
8.1 Indemnification by Seller. Subject to Section 8.5, Seller
hereby agrees to defend, indemnify and hold Buyer and its
officers, directors, shareholders, employees, and agents harmless
from and against any damages, liabilities, losses and expenses
(including, without limitation, reasonable attorneys' fees) of
any kind or nature whatsoever which may be sustained or suffered
by Buyer or its officers, directors, shareholders, employees and
agents, arising out of, based upon or by reason of: (a) the
operation of the Business prior to the date hereof; (b) the
Non-Assumed Liabilities; (c) a breach of any representation or
warranty, or a failure to perform any agreement or covenant, made
by Seller in this Agreement or in any Exhibit, Schedule,
certificate or other document delivered hereunder, or (d) any
claim, action or proceeding asserted or instituted growing out of
any matter or thing covered by such breached representations,
warranties, agreements or covenants.
8.2 Indemnification by Buyer. Subject to Section 8.5, Buyer
hereby agrees to defend, indemnify and hold Seller and its
officers, directors, shareholders, employees and agents, harmless
from and against any damages, liabilities, losses and expenses
(including, without limitation, reasonable attorneys' fees) of
any kind or nature whatsoever which may be sustained or suffered
by Seller or its officers, directors, shareholders, employees and
agents, arising out of, based upon, or by reason of: (a) the
operation of the Business from and after the date hereof; (b) the
Assumed Liabilities; (c) a breach of any representation or
warranty, or a failure to perform any agreement or covenant, made
by Buyer in this Agreement or in any Exhibit, Schedule,
certificate or other document delivered hereunder, or (d) any
claim, action or proceeding asserted or instituted growing out of
any matter or thing covered by such breached representations,
warranties, agreements or covenants.
8.3 Limitation on Claims. All claims pursuant to Section 8.1
for damages, liabilities, losses and expenses in the aggregate
shall not exceed the sum of the Purchase Price payable pursuant
hereto and the amounts payable pursuant to the License Agreement
referred to in Section 9.5 hereof, it must be brought no later
than one (1) year from Closing.
8.4 Notice Defense of Claims. Each party to this Agreement
shall give prompt written notice to the other party of each claim
for indemnification hereunder specifying the amount and nature of
the claim, and of any matter which is likely to give rise to an
indemnification claim. The indemnifying party has the right to
control, at its expense, the defense of any such matter or its
settlement. The indemnifying party will use its reasonable
efforts to reach an expeditious resolution of any such matter.
Failure to give timely notice of a matter which may give rise to
an indemnification claim shall not affect the rights of the
indemnified party to collect such claims from the indemnifying
party so long as such failure to so notify does not materially
adversely affect the indemnifying party's ability to defend such
claim against a third party. No indemnifying party, in the
defense of any claim or litigation, shall, except with the
consent of an indemnified party, which consent shall not be
unreasonably withheld or delayed, consent to entry of any
judgment or enter into any settlement by which such indemnified
party is to be bound and which judgment or settlement does not
include, as an unconditional term thereof, the giving by the
claimant or plaintiff to such indemnified party of a release from
all liability in respect to such claim or litigation.
8.5 Additional Indemnification for Environmental Remediation.
Notwithstanding the limitations set forth in Section 8.3, Seller
shall indemnify and hold harmless Buyer from and against any and
all claims, actions, causes of action, costs, expenses, damages
and other charges which Buyer incurs or is required to expend in
relation to the cleanup or reduction or securing of contamination
that existed on the real property being acquired as part of the
Acquired Assets (the "Premises") on the day of Closing, including
all lawful storage, treatment and/or disposal of removed
contamination, Premises restoration following such activities,
payment of natural resource and other damages (all of such
activities being called "Remediation"), and all third party and
professional costs, including engineering, consultant and
attorneys' fees associated with or necessary in order to carry
out such Remediation; PROVIDED, HOWEVER, that this
indemnification shall be enforceable only with respect to
expenditures incurred by Buyer as a result of Buyer being ordered
to conduct such Remediation either by an agency or court of
competent jurisdiction of either the State of Ohio or of the
United States of America, or by both, and Seller shall not be
required to indemnify Buyer for any expenditures made for any
Remediation or partial Remediation conducted other than pursuant
to such an order or orders. Buyer shall give Seller written
notice of any written threat or proposal to issue an order for
Remediation by any such governmental entity as soon as
practicable but in any event within 30 days of Buyer's receipt of
such order or threat or proposal for such order of Remediation
(or such lesser period as shall be necessary to provide Seller an
adequate opportunity to respond thereto) and at least 30 days
before Buyer agrees to any such order. Buyer shall not be
required to negotiate, contest, challenge or appeal any such
order or proposed order, or part thereof, by any such
governmental entity. However, if Seller wishes to negotiate,
contest, challenge or appeal any such order or threat or proposal
for such order of Remediation, it may do so at its sole risk and
cost, and Buyer agrees to be named as a party and to sign
whatever documents and take whatever actions are reasonable and
necessary to assist Seller in such negotiation, contest,
challenge or appeal, but Buyer shall be free without imperiling
its right to enforce this indemnification to perform all lawful
orders that have not been properly stayed. Seller's obligation
to indemnify Buyer under this Section 8.5 shall terminate and be
unenforceable from and after the tenth anniversary of the
Closing, and from and after said tenth anniversary, Buyer shall
indemnify Seller from and against all liability for such
Remediation.
9. MISCELLANEOUS COVENANTS AND AGREEMENTS OF SELLER AND OF
BUYER.
9.1 Consents of Third Parties. To the extent that any transfer
or assignment of any contract, license, permit, or right to be
transferred and assigned to Buyer as provided herein, shall
require the consent of the other party thereto, or of any other
person or governmental or other authority, this Agreement shall
not constitute an agreement to assign the same if any attempted
assignment would constitute a breach thereof or have any other
adverse effect thereon. Seller agrees that it will use
reasonable efforts before and after the Closing to obtain and
deliver the consent of the other parties and the approvals of
other persons or authorities, to the extent necessary, to the
assignment of all such contracts, leases, licenses, permits,
commitments or rights to Buyer. If such consent or approval is
not obtained at the Closing and the Buyer elects to proceed with
the Closing, Seller shall act as Buyer's agent, to the extent
permissible under the applicable document, in order to obtain for
Buyer the benefits thereunder, and Seller will cooperate with
Buyer in any reasonable arrangement designed to provide for Buyer
all benefits under any such contracts, licenses, leases,
commitments or rights. Nothing herein shall be deemed a waiver
by Buyer of its right to receive at the Closing an effective
assignment of all of the Acquired Assets unless it elects to
proceed with the Closing.
9.2 Taxes, Assessments, and Charges. Each of Seller and Buyer
shall be responsible for, and shall pay when due, any sales, use,
transfer or stamp taxes which may be imposed on the sale of the
Acquired Assets by a seller or buyer, respectively, as is
customary in such transactions.
9.3 Warranty Program. Products manufactured by Seller as part
of the Business being acquired by Buyer are subject to certain
express and implied warranties. Buyer shall assume and pay,
perform and discharge all warranty obligations of Seller;
provided, however, that for a period of 18 months from and after
the date hereof, Seller shall, upon receipt of evidence
satisfactory to it of return of a product and shipment of a
replacement product and Buyer's costs, reimburse Buyer the actual
costs incurred by Buyer in satisfying the warranty. From and
after the end of such 18 month period, Buyer shall be solely
responsible for discharging all warranty claims arising out of
the Business, regardless of the date of manufacture or sale of
the product which is the subject of a warranty claim.
9.4 Settlement of Claims. Seller and Buyer agree that
notwithstanding the responsibility of Seller therefor, it is
advantageous to both of them to settle claims (other than
warranty claims covered by Section 9.3 hereof) presented by trade
customers within twelve (12) months after the date hereof arising
out of products sold or services rendered prior to the date
hereof in a manner satisfactory to the trade customers, and, in
order to facilitate settlement of any claim, Buyer, upon
providing written notice to Seller and if Seller does not object
for valid reasons within five (5) business days after such notice
is given, may use its best efforts to repay, replace or grant
credit in respect of products sold or services rendered prior to
the date hereof, and Seller will reimburse Buyer, within thirty
(30) days of demand upon Seller, for its incremental costs of
producing such replacement products, and any reasonable
out-of-pocket expenses incurred in making any such repairs or
replacement or in granting any such credit. Claims presented by
trade customers after 12 months shall be the sole responsibility
of Buyer.
9.5 Sales Orders and Purchase Orders. At the Closing, Seller
will furnish Buyer with a Schedule identified as Schedule 9.5 of
the purchase orders and sales orders which are to be assigned to
and paid or performed by Buyer after the Closing.
9.6 License Agreement. At the Closing, Seller and Buyer shall
execute and deliver a License Agreement, in the form of Exhibit C
hereto.
9.7 Purchase of Products from Buyer. Seller shall cause its
subsidiary Chicago Cutlery etc., Inc., an Indiana corporation, to
purchase, for a period of three years from and after the date of
Closing, not less than One Million Dollars ($1,000,000) of
products from Buyer at a purchase price equal to the lower of (a)
Buyer's cost plus 30% or (b) Buyer's price, net of all
allowances, to its lowest net-priced customer. Seller shall have
the right to request and receive information establishing Buyer's
cost or price to its lowest priced customer and shall have the
right to audit Buyer's books and records to verify such
information.
9.8 Support Services Agreement. At the Closing, Seller and
Buyer will execute and deliver a Support Services Agreement in
the form of Exhibit D hereto.
9.9 Sidney Warehouse Sublease. At the Closing, Seller and Buyer
will execute and deliver a Sublease in the form of Exhibit E
hereto.
9.10 Allocation of Purchase Price to Acquired Assets. The
purchase price shall be allocated to the Acquired Assets as
determined by Buyer, subject to the consent of Seller which shall
not be unreasonably withheld.
9.11 Non-Exclusive License. Seller hereby grants to Buyer the
non-exclusive right to use Seller's name and logo (Trademark
Registration No. 1,140,402) in sales and marketing materials and
invoices and other forms sold pursuant to Section 1.1(c),
packaging sold pursuant to Section 1.1(b) and cast iron and cast
aluminum cookware sold pursuant to Section 1.1(b) or manufactured
and sold by Buyer from and after the Closing for the period of
one year from the date of the Closing. From and after the first
anniversary of the Closing, Buyer shall not use Seller's name or
logo in any manner whatsoever.
9.12 Covenant Not to Compete. Except as provided in Section
9.7, Seller agrees that, for a period of five years from and
after the Closing, it will not engage in the manufacture or sale
of heavy gauge cast aluminum cookware, heavy gauge anodized
aluminum cookware or cast iron cookware. For purpose of this
section, "heavy gauge" means ten gauge or heavier.
10. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER TO CLOSE.
The obligation of Buyer to purchase the Acquired Assets as
contemplated hereby and to perform its other obligations
hereunder to be performed on or after the Closing, shall be
subject to the fulfillment, on or prior to the Closing, unless
otherwise waived in writing by Buyer, of the following
conditions:
10.1 Financing. Buyer shall have obtained financing of the
transaction contemplated by this Agreement on commercially
reasonable terms customary for such transactions.
10.2 Representations and Warranties. The representations and
warranties of Seller set forth in Sections 5.1 and 5.2 hereof
shall be true and correct in all material respects at the Closing
as if made on and as of such date, and Buyer shall have received
a certificate to such effect, executed by the President or any
Vice President of Seller, dated as of the date of Closing, in
form reasonably satisfactory to Buyer and its counsel.
10.3 Performance of Covenants. Seller shall have performed all
of its obligations contained in this Agreement to be performed on
or prior to the Closing, and Buyer shall have received a
certificate to such effect, executed by the President or any Vice
President of Seller, dated as of the Closing, in form reasonably
satisfactory to Buyer and its counsel.
10.4 Threatened or Pending Proceedings. No proceedings shall
have been initiated or threatened by any governmental department,
commission, bureau, board, agency or instrumentality or any other
bona fide third party seeking to enjoin or otherwise restrain or
to obtain an award for damages in connection with the
consummation of the transactions contemplated hereby.
10.5 Corporate Action. All corporate action necessary to
authorize (a) the execution, delivery and performance by Seller
of this Agreement and any other agreements or instruments
contemplated hereby to which Seller is a party and (b) the
consummation of the transactions and performance of Seller's
other obligations contemplated hereby and thereby, shall have
been duly and validly taken by the Board of Directors of Seller,
and Buyer shall have been furnished with copies of all applicable
resolutions, certified by the Secretary or Assistant Secretary of
Seller.
10.6 Delivery of Certificates and Documents to Buyer. Seller
shall have delivered, or caused to be delivered, to Buyer the
certificates as to the legal existence and good standing of
Seller issued by the Secretary of State of the State of Delaware.
10.7 Additional Agreements. Seller shall have executed and
delivered to Buyer the License Agreement, in the form of Exhibit
C hereto, the Support Services Agreement in the form of Exhibit D
hereto and the Sublease in the form of Exhibit E hereto.
10.8 Deed. Seller shall convey to Buyer marketable title in fee
simple to the Real Property by transferable and recordable
general warranty deed, free and clear of all liens and
encumbrances not excepted by this contract.
10.9 Legal Opinion. Buyer shall have received the written
opinion of Raymond J. Kulla, Esq., counsel to Seller, dated as of
the Closing, in substantially the form of Exhibit F hereto.
10.10 Consents. Seller shall have received the approvals,
consents and authorizations of all third persons and governmental
agencies necessary for the sale and transfer of the Acquired
Assets to Buyer.
10.11 Releases. Seller shall have received and delivered to
Buyer releases of all liens on the Acquired Assets.
11. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER TO CLOSE.
The obligation of Seller to sell the Acquired Assets as
contemplated hereby, and to perform its other obligations
hereunder to be performed on or after the Closing, shall be
subject to the fulfillment, on or prior to the Closing, unless
otherwise waived in writing by Seller, of the following
conditions:
11.1 Representations and Warranties. The representations and
warranties of Buyer set forth in Article 6 hereof shall be true
and correct in all material respects on the Closing as if made on
and as of such date, and Seller shall have received a certificate
to such effect, executed by the President or any Vice President
of Buyer, dated as of the Closing, in form reasonably
satisfactory to Seller and its counsel.
11.2 Performance of Covenants. Buyer shall have performed all
of its obligations contained in this Agreement to be performed on
or prior to the Closing, and Seller shall have received a
certificate to such effect, executed by the President or any Vice
President of Buyer, dated as of the Closing, in form reasonably
satisfactory to Seller and its counsel.
11.3 Threatened or Pending Proceedings. No proceedings shall
have been initiated or threatened by any governmental department,
commission, bureau, board, agency or instrumentality or any other
bona fide third party seeking to enjoin or otherwise restrain or
to obtain an award for damages in connection with the
consummation of the transactions contemplated hereby.
11.4 Corporate Action. All corporate action, necessary to
authorize (a) the execution, delivery and performance by Buyer or
Seller of this Agreement and any other agreements or instruments
contemplated hereby to which Buyer or Seller is a party and (b)
the consummation of the transactions and performance of Buyer's
and Seller's other obligations contemplated hereby and thereby,
shall have been duly and validly taken by Buyer and Seller, and
Seller shall have been furnished with copies of all applicable
resolutions adopted by the Board of Directors or the Executive
Committee of Buyer, certified by the Secretary or Assistant
Secretary of Buyer.
11.5 Delivery of Certificates and Documents to Seller. Buyer
shall have delivered, or caused to be delivered, to Seller
certificates as to the legal existence and good standing of Buyer
issued by the Secretary of State of the State of Ohio.
11.6 Additional Agreements. Buyer and its affiliated purchaser,
if any, under Section 13.11 hereof shall have executed and
delivered to Seller the License Agreement, in the form of Exhibit
C hereto, the Support Services Agreement in the form of Exhibit D
hereto, the Sublease in the form of Exhibit E hereto and
instruments evidencing the liens, mortgages and security
interests securing the Promissory Note.
11.7 Legal Opinion. Seller shall have received the written
opinion of Persky, Shapiro, Salim, Esper, Arnoff & Nolfi Co. LPA,
counsel to Buyer, dated as of the Closing, in form and substance
reasonably acceptable to Seller and its counsel.
11.8 Consents. Buyer shall have received the approvals,
consents and authorizations of all third parties and governmental
agencies necessary for the purchase and transfer of the Acquired
Assets to Buyer.
12. TERMINATION OF AGREEMENT.
12.1 Termination. At any time prior to the Closing, this
Agreement may be terminated (a) by the written consent of Buyer
and Seller, (b) by Seller if there has been a material
misrepresentation, breach of warranty or breach of covenant by
Buyer in its representations, warranties and covenants set forth
herein, (c) by Buyer, after giving Seller written notice thereof
and providing Seller with thirty (30) days within which to cure
such matter, if there has been a material misrepresentation,
breach of warranty or breach of covenant by Seller in its
representations, warranties and covenants set forth herein, (d)
by Seller if the conditions stated in Article 11 have not been
satisfied at or prior to the Closing or (e) by Buyer if the
conditions stated in Article 10 have not been satisfied at or
prior to the Closing.
12.2 Effect of Termination. If this Agreement shall be
terminated as provided in Section 12.1, or as provided in Section
12.4 below, all obligations of the parties hereunder shall
terminate without liability of any party to the other; provided,
however, such termination shall not affect the rights and
obligations of the parties under the Management Agreement
attached hereto as Exhibit B.
12.3 Right to Proceed. Anything in this Agreement to the
contrary notwithstanding, if any of the conditions specified in
Article 10 hereof have not been satisfied at or prior to the
Closing, Buyer shall have the right to proceed with the
transactions contemplated hereby without waiving any of its
rights hereunder; and if any of the conditions specified in
Article 11 hereof have not been satisfied at or prior to the
Closing, Seller shall have the right to proceed with the
transactions contemplated hereby without waiving any of its
rights hereunder.
12.4 Automatic Termination. This Agreement and the transactions
contemplated hereby shall automatically terminate on August 16,
1996 if the Closing does not occur on or prior to that date;
provided, however, nothing herein shall be deemed to limit or
otherwise affect the liability of any party hereto whose default
hereunder has caused the Closing not to have occurred by such
date.
13. MISCELLANEOUS.
13.1 Expenses. Buyer and Seller shall each pay the fees and
expenses of their respective representatives and legal counsel
incurred in connection with the transactions contemplated by this
Agreement.
13.2 Risk of Loss. All risk of loss with respect to the
Acquired Assets between the date hereof and the Closing shall be
upon Buyer.
13.3 Notices. Any demand, notice or other communication
required or permitted under or in connection with the
transactions contemplated by this Agreement shall be in writing
and shall be deemed to be effective when delivered in person, by
facsimile transmission, overnight carrier or deposited in the
United States mail and sent by certified or registered mail,
return receipt requested, postage prepaid, addressed as follows
(or to such other address as may be provided by the party to be
notified on ten days prior written notice to the other party
hereto):
To Seller: General Housewares Corp.
1536 Beech Street
P. O. Box 4066
Terre Haute, IN 47804
Attn: Paul A. Saxton, President
With a copy to:
Raymond J. Kulla, Esq.
General Housewares Corp.
1536 Beech Street
Terre Haute, IN 47804
To Buyer: Peter J. Slyman, President
Wagnerware Corporation
800 West Liberty Street
Medina, OH 44256
With a copy to:
Thomas Esper
Persky, Shapiro, Salim, Esper, Arnoff & Nolfi
Co. LPA
1410 Terminal Tower
Cleveland, OH 44113
13.4 Governing Law. This Agreement shall in all respects be
enforced, interpreted and construed in accordance with and
governed by the laws of the State of Ohio.
13.5 Waiver. Except as set forth in Section 8.3, the failure of
any party hereto at any time or times hereafter to exercise any
right, power, privilege or remedy hereunder or to require strict
performance by the other or another party of any of the
provisions, terms or conditions contained in this Agreement or in
any other document, instrument or agreement contemplated hereby
or delivered in connection herewith shall not waive, affect, or
diminish any right, power, privilege or remedy of such party at
any time or times thereafter to demand strict performance
thereof; and no rights of any party hereto shall be deemed to
have been waived by any act or knowledge of such party, or any of
its agents, officers or employees, unless such waiver is
contained in an instrument in writing, signed by such party. No
waiver by any party hereto of any of its rights on any one
occasion shall operate as a waiver of any other of its rights or
any of its rights on a future occasion.
13.6 Section Headings. The section headings in this Agreement
are for convenience of reference only and shall not be deemed to
be a part of this Agreement or to alter or affect any provisions,
terms or conditions contained herein.
13.7 Exhibits and Schedules. Any Exhibits and/or Schedules
referenced herein shall be deemed to be attached hereto and made
a part hereof. All references herein to this Agreement shall
include all Schedules, Exhibits, certificates and other documents
required to be delivered hereunder.
13.8 Severability. Wherever possible, each provision of this
Agreement shall be interpreted in such a manner as to be
effective and valid under applicable law. If any portion of this
Agreement is declared invalid for any reason in any jurisdiction,
such declaration shall have no effect upon the remaining portions
of this Agreement which shall continue in full force and effect
as if this Agreement had been executed with the invalid portions
thereof deleted. Furthermore, the entirety of this Agreement
shall continue in full force and effect in all other
jurisdictions.
13.9 Entire Understanding. This Agreement contains the entire
understanding between the parties hereto with respect to the
transactions contemplated hereby, and such understanding shall
not be modified except in writing signed by or on behalf of the
parties hereto.
13.10 Binding Effect. This Agreement shall be binding upon and
shall inure to the exclusive benefit of the parties hereto and
their respective successors and assigns. This Agreement is not
intended to, nor shall it, create any rights in any other party.
13.11 Assignability. Neither this Agreement nor any rights or
obligations hereunder are assignable by Seller or Buyer except
Buyer may assign its right to purchase the real property
identified on Schedule 1.1(f) to an affiliate of Buyer, provided
the affiliate unconditionally guarantees and secures the
obligations of Buyer under this Agreement.
13.12 Remedies. Neither Seller nor Buyer waives any right or
remedy available to it to enforce this Agreement or to seek
damages for the breach of the representations and warranties
contained herein except to the extent that such right or remedy
is specifically waived or limited in this Agreement.
13.13 Best Knowledge of Seller. The term "best of Seller's
knowledge" means knowledge of the Executive Officers of Seller of
such circumstances as would ordinarily lead on investigation, in
the exercise of reasonable diligence, to a knowledge of the
actual facts.
13.14 Access to Records. Subsequent to Closing, Seller shall
maintain in its possession, and intact, all records not delivered
to Buyer pursuant hereto and relating to the Business created at
or prior to the Closing for a period of five (5) years. After
the Closing, Buyer shall have access during normal business hours
to all such records, upon reasonable request therefore, and may
from time to time copy any such records as Buyer sees fit.
Seller may, at its option, during such five (5) year period,
deliver any of such records to Buyer. For a period of five (5)
years after Closing, Seller shall have reasonable access to
records delivered to Buyer hereunder after having identified a
business necessity for such access, such as the preparation of
tax returns.
13.15 Counterparts. This Agreement may be signed in any number
of counterparts each of which shall be deemed to be an original
and all of which together shall constitute but one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective duly authorized officers as of
the day and year first written above.
SELLER:
GENERAL HOUSEWARES CORP.
By:/s/ Paul A. Saxton
Name: Paul A. Saxton
Title: President
BUYER:
WAGNERWARE CORPORATION
By:/s/ Peter J. Slyman
Name: Peter J. Slyman
Title: President
GENERAL HOUSEWARES CORP.
BYLAWS
As Amended November 12, 1996
1. Offices
Principal Office. The principal office or place of business of the
Corporation in the State shall be the Corporation's registered office in the
City of Wilmington, County of New Castle, State of Delaware.
Other Offices. The Corporation may also have offices at such other places
both within and without the State of Delaware as the Board of Directors may
from time to time determine or as the business of the Corporation may from
time to time require.
Stockholders
Place of Meeting. All meetings of the stockholders shall be held at the
registered office of the Corporation in the State of Delaware or at such other
place within or without the State of Delaware as may from time to time be
designated by the Board of Directors or as stated in the notice of such
meeting.
Annual Meetings. The annual meeting of the stockholders of the Corporation
shall be held on such date and at such time each year as may be designated by
resolution of the Board of Directors from time to time for the purpose of
electing directors for the ensuing year and for the transaction of such other
proper business, notice of which is given in the notice of such meeting.
Notice of Stockholder Nominations of Directors. Only persons who are
nominated in accordance with the following procedures shall be eligible for
election as directors of the Corporation, except as may be otherwise provided
in the Certificate of Incorporation of the Corporation. Nominations of
persons for election to the Board of Directors may be made at any annual
meeting of stockholders (a) by or at the direction of the Board of Directors
(or any duly authorized committee thereof) or (b) by any stockholder of the
Corporation (i) who is a stockholder of record on the date of such
stockholder's giving of the notice provided for in this Section 3 and on the
record date for the determination of stockholders entitled to vote at such
annual meeting and (ii) who complies with the applicable requirements of this
Section 3, including the giving of timely notice in proper written form to the
Secretary of the Corporation.
To be timely, a stockholder's notice to the Secretary must be delivered to or
mailed and received at the principal executive offices of the Corporation not
less than 90 days nor more than 130 days prior to the anniversary date of the
immediately preceding annual meeting of stockholders; provided, however, that
in the event that the annual meeting is called for a date that is not within
30 days before or after such anniversary date, the notice must be so received
not later than the close of business on the 10th day following the day on
which notice of the date of the annual meeting was mailed or public disclosure
of the date of the annual meeting was made, whichever first occurs. In no
event shall the public disclosure of an adjournment of an annual meeting
commence a new time period for the giving of a stockholder's notice.
To be in proper written form, a stockholder's notice to the Secretary must set
forth (a) as to each person whom the stockholder proposes to nominate for
election as a director (i) the name, age, business address and residence
address of the person, (ii) the principal occupation or employment of the
person, (iii) the class or series and number of shares of capital stock of the
Corporation which are owned beneficially or of record by the person and (iv)
any other information relating to the person that would be required to be
disclosed in a proxy statement or other filing required to be made in
connection with solicitations of proxies for election of directors pursuant to
Section 14 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations promulgated thereunder; and (b) as to the
stockholder giving the notice (i) the name and record address of such
stockholder, (ii) the class or series and number of shares of capital stock of
the Corporation which are owned beneficially or of record by such stockholder,
(iii) a description of all arrangements or understandings between such
stockholder and each proposed nominee and any other person or persons
(including their names) pursuant to which the nomination(s) are to be made by
such stockholder, (iv) a representation that such stockholder intends to
appear in person or by proxy at the meeting to nominate the persons named in
its notice and (v) any other information relating to such stockholder that
would be required to be disclosed in a proxy statement or other filing
required to be made in connection with solicitations of proxies for election
of directors pursuant to Section 14 of the Exchange Act and the rules and
regulations promulgated thereunder. Such notice must be accompanied by a
written consent of each proposed nominee to being named as a nominee and to
serve as a director if elected.
No person nominated by a stockholder shall be eligible for election as a
director of the Corporation unless nominated in accordance with the procedures
set forth in this Section 3. If the Chairman of the meeting determines that a
nomination was not made in accordance with this Section 3, the Chairman shall
declare to the meeting that the nomination was defective and it shall be
disregarded.
Notwithstanding anything in this Section 3 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 disclosure by the Corporation
naming all of the nominees for director or specifying the size of the
increased Board of Directors at least 100 days prior to the first anniversary
of the preceding year's annual meeting, a stockholder's notice required by
this Bylaw shall 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 executive offices of the Corporation not later than
the close of business on the 10th day following the day on which such public
disclosure is first made by the Corporation.
Notice of Stockholder Proposals of Business. No business may be transacted at
an annual meeting of stockholders, other than business that is either (a)
specified in the notice of meeting (or any supplement thereto) given by or at
the direction of the Board of Directors (or any duly authorized committee
thereof), (b) otherwise properly brought before the annual meeting by or at
the direction of the Board of Directors (or any duly authorized committee
thereof) or (c) otherwise properly brought before the annual meeting by any
stockholder of the Corporation (i) who is a stockholder of record on the date
of such stockholder's giving of the notice provided for in this Section 4 and
on the record date for the determination of stockholders entitled to vote at
such annual meeting and (ii) who complies with the applicable requirements of
this Section 4, including the giving of timely notice in proper written form
to the Secretary of the Corporation.
To be timely, a stockholder's notice to the Secretary must be delivered to or
mailed and received at the principal executive offices of the Corporation not
less than 90 days nor more than 130 days prior to the anniversary date of the
immediately preceding annual meeting of stockholders; provided, however, that
in the event that the annual meeting is called for a date that is not within
30 days before or after such anniversary date, the notice must be so received
not later than the close of business on the 10th day following the day on
which notice of the date of the annual meeting was mailed or public disclosure
of the date of the annual meeting was made, whichever first occurs. In no
event shall the public disclosure of an adjournment of an annual meeting
commence a new time period for the giving of a stockholder's notice.
To be in proper written form, a stockholder's notice to the Secretary must set
forth as to each matter (i) a brief description of the business desired to be
brought before the annual meeting and the reasons for conducting such business
at the annual meeting, (ii) the name and record address of such stockholder,
(iii) the class or series and number of shares of capital stock of the
Corporation which are owned beneficially or of record by such stockholder,
(iv) a description of all arrangements or understandings between such
stockholder and any other person or persons (including their names) in
connection with the proposal of such business by such stockholder and any
material interest of such stockholder in such business and (v) a
representation that such stockholder intends to appear in person or by proxy
at the annual meeting to bring such business before the meeting.
No business shall be conducted at the annual meeting of stockholders except
business brought before the annual meeting in accordance with this Section 4;
provided, however, that, once business has been properly brought before the
annual meeting, nothing in this Section 4 shall be deemed to preclude
discussion by any stockholder of any such business. If the Chairman of the
meeting determines that business was not properly brought before the meeting,
the Chairman shall declare to the meeting that the business was not properly
brought before the meeting and such business shall not be transacted.
Definition. For purposes of Sections 3 and 4 of this Article II, "public
disclosure" 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.
Special Meetings. Special meetings of the stockholders for any purpose or
purposes may be called by the Board of Directors, the Chairman of the Board or
the President, and shall be called by the Chairman of the Board, the President
or Secretary upon receipt of a request in writing signed by a majority of the
Board of Directors. Such request shall state the purpose or purposes of the
proposed meeting and the matters proposed to be acted upon thereat.
Notice of Meetings. Not less than 10 days nor more than 60 days written or
printed notice of every meeting of stockholders, stating the place, date and
time thereof, and, in the case of a special meeting (and the annual meeting,
if so required by law), the purpose or purposes for which the meeting is
called, shall be given to each stockholder entitled to vote thereat by leaving
the same with him or at his residence or usual place of business or by mailing
it, postage prepaid, and addressed to him at his address as it appears on the
records of the Corporation.
No notice of the time, date, place or purpose of any meeting of stockholders
need be given to any stockholder entitled to such notice who attends in person
or is represented by proxy (except when the stockholder attends a meeting for
the express purpose of objecting at the beginning of the meeting to the
transaction of any business on the grounds that the meeting is not lawfully
called or convened), or to any stockholder entitled to such notice who, in
writing executed and filed with the records of the meeting either before or
after the time thereof, waives such notice. Neither the business to be
transacted at, nor the purpose of, any annual or special meeting of
stockholders need be specified in any such written waiver of notice.
Any previously scheduled meeting of the stockholders may be postponed, and any
special meeting of the stockholders may be cancelled, by resolution of the
Board of Directors upon public notice given prior to the date scheduled for
such meeting of stockholders.
Record Dates. The Board of Directors may fix in advance a date, not exceeding
60 days preceding the date of any meeting of stockholders, any dividend
payment date, any date of any other distribution, any date for the allotment
of any rights, or any date for the exercise of any rights in respect of any
change, conversion or exchange of stock or for the purpose of any other lawful
action, and, in the case of any meeting of stockholders, not less than 10
days, as a record date for the determination of the stockholders entitled to
notice of or to vote at such meeting, or entitled to receive such dividends or
other distributions or rights, or to exercise such rights in respect of any
change, conversion or exchange of stock, or for the purpose of any other
lawful action, as the case may be; and only stockholders of record on such
dates shall be entitled to notice of and to vote at such meeting, or to
receive such dividends or other distributions or rights, or to exercise such
rights in respect of any change, conversion or exchange of stock, as the case
may be. Nothing in this Section 8 shall in any way be construed to change the
procedure for setting the record date and for determining the effectiveness of
stockholder action by written consent as set forth in Sections 9 and 11 of
this Article II.
Record Date for Action by Written Consent. In order that the Corporation may
determine the stockholders entitled to consent to corporate action in writing
without a meeting, the Board of Directors may fix a record date, which record
date shall not precede the date upon which the resolution fixing the record
date is adopted by the Board of Directors, and which date shall not be more
than 10 days after the date upon which the resolution fixing the record date
is adopted by the Board of Directors. Any stockholder of record seeking to
have the stockholders authorize or take corporate action by written consent
shall, by written notice to the Secretary, request the Board of Directors to
fix a record date. The Board of Directors shall promptly, but in all events
within 10 days after the date on which such a request is received, adopt a
resolution fixing the record date. If no record date has been fixed by the
Board of Directors within 10 days of the date on which such a request is
received, the record date for determining stockholders entitled to consent to
corporate action in writing without a meeting, when no prior action by the
Board of Directors is required by applicable law, shall be the first date on
which a signed written consent setting forth the action taken or proposed to
be taken is delivered to the Corporation by delivery to its registered office
in Delaware, its principal place of business or to any officer or agent of the
Corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to the Corporation's registered
office shall be by hand or by certified or registered mail, return receipt
requested. If no record date has been fixed by the Board of Directors and
prior action by the Board of Directors for corporate action to be authorized
or taken by stockholders' written consent is required by applicable law, the
record date for determining stockholders entitled to consent to corporate
action in writing without a meeting shall be at the close of business on the
date on which the Board of Directors adopts the resolution taking such prior
action.
Inspectors of Written Consent. In the event of the delivery, in the manner
provided by Section 9 of this Article II, to the Corporation of the requisite
written consent or consents to take corporate action and/or any related
revocation or revocations, the Corporation shall engage independent inspectors
of elections for the purpose of promptly performing a ministerial review of
the validity of the consents and revocations. For the purpose of permitting
the inspectors to perform such review, no action by written consent without a
meeting shall be effective until such date as the independent inspectors
certify to the Corporation that the consents represent at least the minimum
number of votes necessary to take the corporate action. Nothing contained in
this Section 10 shall in any way be construed to suggest or imply that the
Board of Directors or any stockholder shall not be entitled to contest the
validity of any consent or revocation thereof, whether before or after
certification by the independent inspectors, or to take any other action
(including, without limitation, the commencement, prosecution or defense of
any litigation with respect thereto, and the seeking of injunctive relief in
such litigation).
Effectiveness of Written Consent. Every written consent shall bear the date
of signature of each stockholder who signs the consent and no written consent
shall be effective to take the corporate action referred to therein unless,
within 60 days of the date the earliest dated written consent was received in
accordance with Section 9 of this Article II, written consents signed by a
sufficient number of holders to take such action are delivered to the Corpora
tion in the manner prescribed in Section 9 of this Article II.
List of Stockholders Entitled to Vote. The officer who has charge of the
stock ledger of the Corporation shall prepare and make, or cause to be
prepared and made, at least 10 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 and number of shares registered in
the name of each stockholder. 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 10 days prior to the meeting, either
at a place within the city where the meeting is to be held or, if such place
is not specified in the notice of such meeting, at the place where the meeting
is to be held; and such 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.
Quorum, Adjournment of Meetings. The presence in person or by proxy of the
holders of record of a majority of the shares of stock of the Corporation
issued and outstanding and entitled to be voted thereat shall constitute a
quorum at all meetings of stockholders, except as otherwise may be required by
law. The Chairman of the meeting or the holders of record of a majority of
the shares of stock present in person or by proxy and entitled to be voted
thereat shall have power to adjourn the meeting from time to time, without
notice other than an announcement at the meeting, whether or not there is such
a quorum. No notice of the time and place of adjourned meetings need be given
except as required by law. At any such adjourned meeting at which the
requisite number of shares of stock entitled to be voted thereat shall be
present in person or by proxy, any business may be transacted which might have
been transacted at the meeting as originally called and notified.
A determination of stockholders of record entitled to notice of or to vote at
a meeting of stockholders shall apply to any adjournment of such meeting
unless the Board of Directors fixes a new record date for the adjourned
meeting. If an adjournment of any meeting of stockholders shall be for more
than 30 days, or if after adjournment a new record date is fixed by the Board
of Directors for the adjourned meeting, a notice of the adjourned meeting
shall be given to each stockholder of record entitled to notice of or to vote
at the meeting.
Conduct of Meetings. The meetings of stockholders shall be presided over by
the Chairman of the Board or the President, or if neither be present, by a
Vice President, or if none of them is present, by a chairman to be elected at
the meeting. The Secretary of the Corporation, if present, shall act as
secretary of such meeting, or if he is not present, an Assistant Secretary
shall so act, or if neither the Secretary nor an Assistant Secretary is
present, then the meeting shall elect its secretary.
Voting and Inspectors. Each stockholder entitled to vote at a meeting of
stockholders or to consent or dissent to corporate action in writing without a
meeting may vote, consent or dissent in person or by proxy, but no proxy need
be sealed, witnessed or acknowledged. No proxy may be voted upon or acted
upon after three years from its date unless such proxy shall provide for a
longer period.
All elections shall be had and all questions decided by a majority of the
votes cast at a duly constituted meeting, except as otherwise required by the
Certificate of Incorporation, these Bylaws or by specific statutory provision
superseding requirements contained in the Certificate of Incorporation or in
these Bylaws.
The Board of Directors shall, in advance of any meeting of the stockholders,
appoint one or more inspectors of election as required by, and who shall act
pursuant to, applicable law. No candidate for the office of director shall be
appointed such inspector or judge.
All elections of directors shall be by written ballot. The chairman of the
meeting may cause the vote to be taken on any other matters to be by written
ballot.
Validity of Proxies and Ballots. At every meeting of the stockholders, all
proxies shall be received and taken in charge of, and all ballots, if any,
shall be received and canvassed by, the inspectors of election, who shall
decide all questions touching the qualification of voters, the validity of the
proxies, and the acceptance or rejection of votes.
Board of Directors
General Powers. The business, property and affairs of the Corporation shall
be conducted and managed under the direction of a Board of Directors. The
Board of Directors shall have and exercise, or cause to be exercised, in the
name and on behalf of the Corporation all the powers of the Corporation,
except those conferred upon or reserved to stockholders expressly by statute,
the Certificate of Incorporation or these Bylaws.
Number and Tenure of Office. The number of directors which shall constitute
the whole Board shall be such as from time to time may be fixed by resolution
of the Board of Directors at a duly held regular or special meeting, but in no
case shall the number be less than three. The directors shall be classified
with respect to the time for which they shall severally hold office by
dividing them into three classes, each class to consist of such number of
directors as the directors may determine, provided that the whole number of
directors of any class shall not exceed the whole number of directors of any
other class by more than one. At each annual meeting, the successors to the
directors of the class whose terms shall expire in that year shall be elected
to hold office for a term of three years from the date of their election and
until the election and qualification of their successors, so that the term of
office of one class of directors shall expire in each year. Notwithstanding
the provisions of this Section 2 of Article III, whenever the holders of any
series of nonvoting Preferred Stock shall be entitled, voting separately as a
class, to elect directors, the terms of all directors elected by such holders
shall expire on the next succeeding annual meeting of stockholders. Directors
need not be stockholders.
Vacancies. In case of any vacancy in the Board of Directors through death,
resignation, removal, increase in the number of directors, or other cause,
such vacancy may be filled by the vote of a majority of the remaining
directors, although such majority shall not constitute a quorum. Any
successor director so elected shall hold office for the unexpired term of the
director whose office has been vacated.
Removal of Directors. Any director may be removed from office for cause, at
any time, by the vote of at least two-thirds of the whole Board of Directors
or by the vote at a special meeting, called for such purpose, of the holders
of at least two-thirds of all shares outstanding and entitled to vote for the
election of directors.
Place of Meeting; Maintenance of Books and Records. The directors may hold
their meetings, whether regular or special, and keep the books, records of
account and stock ledgers of the Corporation either within or without the
State of Delaware, at any office or offices of the Corporation or at any place
as they may from time to time by resolution determine, or, in the case of
meetings, as shall be specified or fixed in the respective notices, waivers of
notice, or consents with respect thereto.
Regular Meetings. Regular meetings of the Board of Directors shall be held at
such times and at such places either within or without the State of Delaware
as the directors may from time to time determine. No notice of any regular
meeting need be given to any director, except as otherwise provided in Article
XI hereof.
The annual meeting of the Board of Directors shall be held as soon as
practicable after the annual meeting of the stockholders for the election of
directors, and no notice of such meeting shall be necessary if held at the
same place as the annual meeting of stockholders following such meeting,
except as otherwise provided in Article XI hereof.
Special Meetings. Special meetings of the Board of Directors may be held from
time to time at such places either within or without the State of Delaware
upon call of the Chairman of the Board, the President or by a quorum of the
Board. Notice of each special meeting of the Board shall be given to each
director personally or by telephone, electronic or facsimile transmission or
by written notice sent or mailed, postage prepaid, to each director at his
address as it appears on the records of the Corporation, not less than 48
hours before such meeting or such shorter period before such meeting as the
person or persons calling such meeting deem appropriate in the circumstances.
No notice need be given to any director who attends the meeting in person or
to any director who, in writing executed and filed with the records of the
meeting either before or after the holding thereof, waives such notice. Such
notice or waiver of notice may but need not state the business to be
transacted at, or the purpose or purposes of, such meeting.
Quorum. One-third of the total number of directors shall constitute a quorum
for the transaction of any and all business, provided that a quorum shall in
no case be less than two directors. If at any meeting of the Board there
shall be less than a quorum present, a majority of those present shall have
power to adjourn the meeting from time to time, without notice other than
announcement at the meeting of the time and place of such adjourned meeting,
until a quorum shall have been obtained. The act of the majority of the
directors present at any meeting at which there is a quorum shall be the act
of the Board, except as may be otherwise specifically provided by applicable
law, by the Certificate of Incorporation or by these Bylaws.
Committees. The Board of Directors may at any time, by the affirmative vote
of a majority of the whole Board, appoint from among its members an Executive
Committee composed of two or more directors, and may delegate by resolution to
such Executive Committee, in the intervals between meetings of the Board of
Directors, any or all of the powers of the Board of Directors respecting the
business, affairs and property of the Corporation, and the power to authorize
the seal of the Corporation to be affixed to all papers which may require it;
provided, however, that nothing herein shall be deemed to prohibit the
designation of additional committees for limited and appropriate purposes with
such memberships as may be provided in the resolution of the Board of
Directors designating any such committee. In the absence or disqualification
of any member of any such committee at a meeting thereof, the member or
members thereof present at such meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint a
member of the Board of Directors to act at such meeting in the place of any
such absent or disqualified member. All such committees shall report the
action taken or principal matters considered to the Board of Directors at the
next succeeding regular or special meeting, and any action by the committees
which in all cases shall be by a majority of those present at a meeting at
which there is a quorum shall be subject to revision and alteration by the
Board of Directors, provided that no rights of third persons shall be affected
by any such revision or alteration. The Board of Directors may at any time,
by the affirmative vote of a majority of the whole Board, remove, with or
without cause, any member of any such committee and fill vacancies therein.
Compensation. Directors and members of any committee of the Corporation
contemplated by these Bylaws or otherwise provided for by resolution of the
Board of Directors who are not salaried officers of the Corporation shall, in
consideration of their serving as such, receive from the Corporation such
amount per annum or such fees for attendance at meetings of the Board of
Directors or of such committee, or both, as the Board may from time to time
determine. All directors and members of any such committee shall receive
reimbursement for the reasonable expenses incurred by them in connection with
their attendance at meetings or the performance of their duties. Nothing
contained herein shall preclude any director or any member of such committee
from serving the Corporation in any other capacity and receiving compensation
therefor.
Officers
Election; Appointment; Vacancies. The executive officers of the Corporation
shall be chosen by the Board of Directors as soon as may be practicable after
the annual meeting of stockholders. Such executive officers may include a
Chairman of the Board, a Vice Chairman of the Board and one or more Vice
Presidents, and shall include a President, a Secretary and a Treasurer. The
Board of Directors may also in its discretion appoint Assistant Secretaries,
Assistant Treasurers, a Controller, Assistant Controllers, and other officers,
agents and employees, or may, by resolution, delegate this authority to the
Chairman of the Board or President of the Corporation. The Board of
Directors, or the Chairman of the Board or President if authorized as
aforesaid, may fill any vacancy which may occur in any office, except that
vacancies in executive offices shall be filled by the Board of Directors. Any
number of offices, except those of President and Vice President and those of
Treasurer and Controller, may be held by the same person, but no officer shall
execute, acknowledge or verify any instrument in more than one capacity, if
such instrument is required by law, these Bylaws or otherwise to be executed,
acknowledged or verified by two or more officers.
Tenure of Office; Removal. Executive officers, and other officers if to be
elected by the Board, shall be elected at the first meeting of the Board of
Directors, or as soon thereafter as practicable, after the annual meeting of
stockholders to hold office until their successors are chosen and qualified.
Other officers, if appointed by the Chairman of the Board or President as
provided in Section 1 of this Article IV, shall have a tenure in office until
their successors be chosen and qualified. Executive officers and any other
officers, agents, or employees elected by the Board may be removed from office
at any time with or without cause by the Board of Directors, and officers,
agents or employees appointed by the Chairman of the Board or President, as
aforesaid, may be removed from office at any time with or without cause by
such officers or by the Board of Directors, but any such removal shall be
without prejudice to contractual rights with the Corporation, if any, of the
officers, agents or employees so removed.
Powers and Duties. Officers, agents and employees shall have such powers and
duties in the management of the business, property and affairs of the
Corporation as are provided by statute, the Certificate of Incorporation and
these Bylaws, as well as such powers and duties as generally pertain to their
respective offices and such powers and duties as may from time to time be
conferred by resolution of the Board of Directors.
Salaries. The salaries of all officers, agents and employees of the
Corporation shall be fixed by or pursuant to the authority of the Board of
Directors.
Fidelity Bonds. The Board of Directors may require any officer, agent or
employee of the Corporation to give bond for the faithful discharge of his
duties, in such sum and of such character as the Board of Directors may from
time to time prescribe.
Checks, Notes, Etc.
All checks and drafts on the Corporation's bank accounts and all bills of
exchange and promissory notes, and all acceptances, guarantees, obligations,
evidences of indebtedness and other instruments for the payment of money, and
all certificates or other instruments representing the Corporation's stock or
other securities, and any indentures, mortgages or agreements with respect
thereto, shall be signed by such officer or officers, agent or agents, as
shall be thereunto authorized from time to time by the Board of Directors.
Capital Stock
Certificate of Shares. The interest of each stockholder of the Corporation
shall be evidenced by certificates for shares of stock in such form as the
Board of Directors may from time to time prescribe, except insofar as provided
by law. No certificate shall be valid unless it is signed by the Chairman of
the Board, or the President or a Vice President, and by the Secretary or an
Assistant Secretary or the Treasurer or an Assistant Treasurer of the
Corporation and sealed with its seal (which seal may be in facsimile), and if
such certificate is countersigned by a transfer agent or registered by a
registrar (in each case other than the Corporation or its employees), the
signatures of the aforesaid officers of the Corporation may be by facsimile.
In the event that any such officer so signing a certificate manually or by
facsimile is no longer an officer of the Corporation or holds a different
office at the time the certificate is issued, such certificate may
nevertheless be issued and, if so issued, shall have the same force and effect
as if such officer held at such time the office held by him when so signing,
whether manually or by facsimile, the certificate.
Transfer of Shares. Shares of the Corporation shall be transferable on the
books of the Corporation by the holder thereof in person or by his duly
authorized attorney or legal representative, upon surrender and cancellation
of certificates for the same number of shares of the same class or series,
duly endorsed or accompanied by proper instruments of assignment and transfer,
with such proof of the authenticity of the signature as the Corporation or its
agents may reasonably require. The Board of Directors shall designate an
officer of the Corporation to act as transfer clerk in the absence of the
appointment of a transfer agent.
Stock Ledgers. The stock ledgers of the Corporation, containing the names and
addresses of the stockholders and the number of shares held by them
respectively, shall be kept at the office of the Secretary of the Corporation,
whether within or without the State of Delaware, in the custody of the
transfer clerk or, if the Corporation employs a transfer agent, at the offices
of such transfer agent, and shall during the usual business hours of every
business day be open for inspection and for copying for any proper purpose by
any person authorized by the laws of the State of Delaware and the Certificate
of Incorporation to do so.
Lost, Stolen or Destroyed Certificates. The Board of Directors may determine
the conditions upon which a new certificate representing shares of any class
or series may be issued in place of a certificate which is alleged to have
been lost, stolen or destroyed; and may, in their discretion, require the
owner of such certificate or his legal representative to give bond, with
sufficient surety to the Corporation and the transfer agent, if any, to
indemnify it and such transfer agent against any and all loss or claims which
may arise by reason of the issue of a new certificate in the place of the one
so lost, stolen or destroyed.
Corporate Seal
The corporate seal shall have inscribed thereon the name of the Corporation,
the year of its organization, the words "Corporate Seal, Delaware," and such
other inscriptions, if any, as the Board of Directors may from time to time
determine. The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
Fiscal Year
The fiscal year of the Corporation shall cover such period of 12 calendar
months as the Board of Directors may determine. In the absence of any such
determination, the accounts of the Corporation shall be kept on a
calendar-year basis.
Voting the Stock of Other Corporations
Any stock or other securities of other corporations, which may from time to
time be held by the Corporation, may be represented and voted at any meeting
of stockholders or security holders of such other corporations by the Chairman
of the Board, the President, or any Vice President of the Corporation, or by
proxy or proxies appointed by any such person, or otherwise pursuant to
authorization thereunto given by resolution of the Board of Directors.
Indemnification of Directors, Officers and Others
Indemnification of Directors and Officers. The Corporation shall, to the
fullest extent permitted by applicable law, indemnify any person (and the
heirs, executors and administrators thereof) who was or is made, or threatened
to be made, a party to or otherwise required to appear in an action, suit,
matter or proceeding, or was or is otherwise involved with any agency or body,
whether civil, criminal, administrative, arbitrative, or investigative,
whether formal or informal, whether involving any actual or alleged breach of
duty, neglect or error, any accountability, or any actual or alleged
misstatement, misleading statement or other act or omission, whether involving
conduct in any capacity or the person's status arising from any capacity, and
whether brought or threatened in any court or administrative or legislative
body or agency, including an action by or in the right of the Corporation to
procure a judgment in its favor and an action by or in the right of any other
corporation of any type or kind, domestic or foreign, or any partnership,
joint venture, trust, employee benefit plan or other enterprise, which any
director or officer of the Corporation is serving or served in any capacity at
the request of the Corporation (individually and collectively, a
"proceeding"), by reason of the fact that such person, his or her testator,
intestate or other successor in interest is or was a director or officer of
the Corporation, or is serving or served such other corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise in any
capacity, against judgments, fines, amounts paid in settlement, and costs,
charges and expenses, including attorneys' fees, incurred therein or in any
appeal thereof.
Indemnification of Others. The Corporation shall indemnify other persons and
reimburse the expenses thereof, to the extent required by applicable law, and
may indemnify any other person to whom the Corporation is permitted to provide
indemnification or the advancement of expenses, whether pursuant to rights
granted pursuant to, or provided by, the Delaware General Corporation Law or
other rights created by (i) a resolution of stockholders, (ii) a resolution of
the Board of Directors, or (iii) an agreement providing for such
indemnification, it being expressly intended that these Bylaws authorize the
creation of other rights in any such manner.
Advances or Reimbursement of Expenses. The Corporation shall, from time to
time, reimburse or advance to any person referred to in Section 1, upon his or
her good faith written request, the funds necessary for payment of expenses,
including attorneys' fees, incurred in connection with any action, suit or
proceeding referred to in Section 1, upon receipt of a written undertaking by
or on behalf of such person to repay such amount(s) if a judgment or other
final adjudication adverse to the director or officer establishes that (i) his
or her acts were committed in bad faith or were the result of active and
deliberate dishonesty and, in either case, were material to the cause of
action so adjudicated, (ii) such person personally gained in fact a financial
profit or other advantage to which he or she was not legally entitled, or
(iii) his or her conduct was otherwise of a character such that Delaware law
would require that such amount(s) be repaid. In connection with any request
for advancement or reimbursement, the amount of expenses shall be presumed to
be reasonable and necessarily incurred. Solely for purposes of the
advancement or reimbursement of expenses that may be incurred, in connection
with his or her appearance as a witness in a proceeding at a time when not a
party, a person referred to in Section 1 of this Article X shall be deemed to
be threatened to be made such a party.
Service of Certain Entities Deemed Requested. Any director or officer of the
Corporation serving (i) another corporation, of which a majority of the shares
entitled to vote in the election of its directors is held , directly or
indirectly, by the Corporation, or (ii) any employee benefit plan of the
Corporation or any corporation referred to in clause (i), in any capacity
shall be deemed to be doing so at the request of the Corporation. Referring
to clause (i) of the preceding sentence, the provisions of this Article X
shall apply only if and to the extent that, after the exertion of such efforts
as shall be reasonable in the circumstances, the claimant is unable to obtain
indemnification from such other corporation, or any other enterprise served by
the claimant at the Corporation's request, or reimbursement from its insurer.
Interpretation. Any person entitled to be indemnified or to the reimbursement
or advancement of expenses as a matter of right pursuant to this Article X may
elect, to the extent permitted by applicable law, to have the right to
indemnification (or advancement of expenses) interpreted on the basis of the
applicable corporate indemnification provisions or the applicable law in
effect at the time of the occurrence of the event or events giving rise to the
action, suit or proceeding, or on the basis of the applicable corporate
indemnification provisions or the applicable law in effect at the time
indemnification is sought. The rights referred to in the preceding sentence
shall include any applicable provisions of the Certificate of Incorporation or
these Bylaws.
Indemnification Right. The right to be indemnified or to the reimbursement or
advancement of expenses pursuant to this Article X (i) is a contract right
pursuant to which the person entitled thereto may bring suit as if the
provisions hereof were set forth in a separate written contract between the
Corporation and the director or officer, (ii) is intended to be retroactive
and shall be available with respect to events occurring prior to the adoption
hereof, and (iii) shall continue to exist after the rescission or restrictive
modification hereof with respect to events occurring prior thereto.
Indemnification Procedure. Consistent with Section 1 of this Article X, the
Corporation shall, promptly upon the submission of a request to be
indemnified, take whatever steps may be prescribed by law, or otherwise may be
necessary or appropriate, in order to authorize the requested indemnification.
In connection therewith, it shall be presumed that the requester is entitled
to be indemnified and that presumption shall be overcome only if
indemnification is forbidden by an adverse judgement or other final
adjudication directly establishing that the requester engaged in a form of
improper conduct as specified in Section 1 of this Article X.
Indemnification Claims. If a request to be indemnified or for the
reimbursement or advancement of expenses pursuant hereto is not paid in full
by the Corporation within 30 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 also to be paid the
expenses of prosecuting such claim. Neither the failure of the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of or reimbursement or advancement of expenses to
the claimant is proper -- or cannot be provided -- in the circumstances, nor
an actual determination by the Corporation (including its Board of Directors,
independent legal counsel, or its stockholders) that the claimant is not
entitled to indemnification or to the reimbursement or advancement of
expenses, shall be a defense to the action or create a presumption that the
claimant is not so entitled.
Limitation on Indemnification. Notwithstanding anything contained in this
Article X to the contrary, except for proceedings to enforce rights to
indemnification (which shall be governed by Section 8 of this Article X), the
Corporation shall not be obligated to indemnify any director or officer in
connection with a proceeding (or part thereof) initiated by such person unless
such proceeding (or part thereof) was authorized or consented to by the Board
of Directors.
Severability. If this Article X or any portion hereof shall be invalidated on
any ground by any court of competent jurisdiction, then the Corporation shall
nevertheless indemnify each director or officer of the Corporation as to
liabilities incurred in connection with any proceeding, including an action by
or in the right of the Corporation, to the full extent permitted by any
applicable portion of this Article X that shall not have been invalidated.
Amendments
The Bylaws of the Corporation may be altered, amended, added to or repealed at
any annual or special meeting of stockholders at which a quorum is present or
represented, provided notice of the proposed alteration, amendment, addition
or repeal is set forth in the notice of such meeting, by the affirmative vote
of a majority of the shares of stock present or represented at such meeting
and entitled to vote thereat, or by the Board of Directors at any regular or
special meeting of the Board if notice of the proposed alteration, amendment,
addition or repeal is contained in the notice of any such meeting or in the
waivers or consents with respect thereto. Any action of the Board of
Directors of the Corporation taken under this Article XI may be altered,
amended, added to or repealed by the stockholders at such meeting or at any
other meeting. In no event shall the Board of Directors of the Corporation
have power to alter, amend, add to or repeal this Article XI.
