SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended June 30, 1999
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 August 15, 1999
4,031,364
$.33-1/3 Par Value
GENERAL HOUSEWARES CORP.
INDEX
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
Page Number
Consolidated Condensed Statements of Operations
and Retained Earnings
Three months and six months ended
June 30, 1999 and 1998 2
Consolidated Condensed Statements of
Comprehensive Income (Loss)
Three months and six months ended
June 30, 1999 and 1998 3
Consolidated Condensed Balance Sheets
June 30, 1999 and December 31, 1998 4
Consolidated Condensed Statements of Cash Flows
Six months ended June 30, 1999 and 1998 5
Notes to Consolidated Condensed Financial Statements 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 11
PART II OTHER INFORMATION 16
ITEM 1. LEGAL PROCEEDINGS 16
item 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS 16
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 17
SIGNATURES 17
PART I FINANCIAL INFORMATION
GENERAL HOUSEWARES CORP. & SUBSIDIARIES
(Dollars in thousands except per share amounts)
Consolidated Condensed Statements of Operations and Retained Earnings
(Unaudited)
<TABLE>
<CAPTION>
For the three months For the six months
ended June 30, ended June 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Net sales $21,831 $20,900 $46,705 $41,944
Cost of goods sold 12,085 12,307 26,623 25,281
------- ------- ------- -------
Gross profit 9,746 8,593 20,082 16,663
Non-recurring charges - - 1,980 1,500
Selling, general and
administrative expenses 9,707 8,314 18,848 18,284
------- ------- ------ -------
Operating income (loss) 39 279 (746) (3,121)
Interest expense, net 338 582 679 1,208
------- ------- ------- -------
Loss from operations
before income tax benefit (299) (303) (1,425) (4,329)
Income tax benefit (126) (102) (599) (1,427)
------- ------- ------- -------
Net loss for the period (173) (201) (826) (2,902)
Retained earnings,
beginning of period 24,885 23,716 25,538 26,722
Less: Dividends ($.08 per
quarter per common share
in 1998) - 304 - 609
------- ------- ------- -------
Retained earnings,
end of period $24,712 $23,211 $24,712 $23,211
Basic and diluted loss per common share:
Net loss ($0.04) ($0.05) ($0.21) ($0.76)
Weighted average shares
outstanding (basic and
diluted) 3,875,000 3,813,000 3,867,000 3,813,000
See notes to consolidated condensed financial statements.
</TABLE>
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
<TABLE>
<CAPTION>
For the three months For the six months
ended June 30, ended June 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Net loss $ (173) $ (201) $ (826) $ (2,902)
Other comprehensive income (loss)
net of tax:
Foreign currency translation
adjustment 195 (177) 366 (171)
------ ------ ------ --------
Comprehensive income (loss) $ 22 $ (378) $ (460) $ (3,073)
====== ======= ======= =========
See notes to consolidated condensed financial statements.
</TABLE>
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
As of
June 30, December 31,
1999 1998
(Unaudited)
ASSETS
Current Assets:
<S> <C> <C>
Cash $ 150 $ 1,598
Accounts receivable, less allowance of
$1,588 ($3,242 in 1998) 13,508 16,158
Inventories 24,951 19,122
Deferred tax asset 3,016 3,016
Other current assets 852 1,453
Income taxes refundable 930 -
------- -------
Total current assets 43,407 41,347
Notes receivable 941 2,578
Property, plant and equipment, net 9,638 9,492
Other assets 1,026 1,744
Patents and other intangible assets 2,453 2,307
Cost in excess of net assets acquired 22,415 22,766
------- -------
Total Assets $79,880 $80,234
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current maturities of long-term debt $ 1,616 $ 1,616
Notes payable - 600
Accounts payable 1,802 2,116
Salaries, wages and related benefits 1,949 1,696
Accrued liabilities 2,923 3,386
Income taxes payable - 1,122
------- -------
Total current liabilities 8,290 10,536
Long-term debt 23,143 21,143
Deferred liabilities 1,339 1,266
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 - 1999 - 4,308,172
and 1998- 4,097,379 shares 1,436 1,434
Capital in excess of par value 25,038 24,761
Treasury stock at cost - 1999 and
1998 - 277,760 shares (3,649) (3,649)
Retained earnings 24,712 25,538
Cumulative transition adjustment (429) (795)
-------- -------
Total stockholders' equity 47,108 47,289
-------- -------
Total Liabilities and Stockholders' Equity $ 79,880 $80,234
======== =======
See notes to consolidated condensed financial statements.
</TABLE>
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
For the six months
ended June 30,
1999 1998
OPERATING ACTIVITIES:
<S> <C> <C>
Net loss ($826) ($2,902)
Adjustments to reconcile net loss to net
cash(used for)provided by operating
activities -
Depreciation and amortization 2,322 3,026
Loss on sale of assets - 1,500
Note receivable write off 1,500 -
Compensation related to stock awards 266 -
Decrease (increase) in operating assets:
Accounts receivable 2,650 409
Inventory (5,808) (314)
Other assets 638 395
(Decrease) increase in operating liabilities:
Accounts payable (314) (131)
Salaries, wages and related benefits,
accrued and deferred liabilities (137) 80
Income taxes payable (refundable) (2,052) (1,975)
------ --------
Net cash(used for)provided by
operating activities: (1,761) 88
------ --------
INVESTING ACTIVITIES:
Additions to property, plant
and equipment (1,799) (2,436)
Proceeds from sale of assets 158 5,375
Additions to cost in excess of net
assets acquired - (10)
Note receivable activity 349 387
------- -------
Net cash (used for)provided by
investing activities (1,292) 3,316
------- -------
FINANCING ACTIVITIES:
Debt borrowing (repayment) 1,400 (4,472)
Proceeds from stock options and
employee purchases 13 33
Dividends paid - (609)
Net cash provided by(used for) ------- -------
financing activities 1,413 (5,048)
Net decrease in cash and ------- -------
cash equivalents (1,640) (1,644)
Cash and cash equivalents at beginning
of period 1,598 2,363
Effect of exchange rate on cash 192 (104)
------- -------
Cash and cash equivalents at
end of period $150 $615
======= =======
See notes to consolidated condensed financial statements.
</TABLE>
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. However, in
the opinion of management, the financial statements included herein reflect
all 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 1998 Annual Report on Form
10-K.
NOTE 2 - INVENTORIES
June 30, December 31,
1999 1998
Raw materials $ 2,293 $ 2,277
Work in process 1,001 842
Finished goods 20,570 15,027
------- -------
$23,864 $18,146
LIFO Reserve 1,087 976
------- -------
Total, net $24,951 $19,122
======= =======
NOTE 3 - PROPERTIES
June 30, December 31,
1999 1998
Land $ 387 $ 397
Buildings 3,441 3,545
Equipment 19,648 17,940
------- -------
Total $23,476 $21,872
Accumulated depreciation (13,838) (12,380)
------- -------
Total, net $ 9,638 $ 9,492
======= =======
NOTE 4 - NON-RECURRING CHARGES
Effective March 31, 1998, the Company sold its enamelware cookware
business. While the Company received consideration in excess of the book
value of tangible assets sold, non-cash charges related to the sale
included a write-off of goodwill and defined benefit pension plan
curtailment. As a result of the sale, the Company recorded a non-recurring
charge of $1,500 in the first quarter of 1998. In the first quarter of
1999, the Company recorded a $1,500 charge against earnings for the
write-off of the entire remaining balance of a note receivable related to
the 1996 sale of its aluminum and cast iron cookware division. The Company
also recorded $480 of severance in the first quarter of 1999 related to two
officer positions that were eliminated June 30, 1999.
NOTE 5 - SEGMENT INFORMATION
The Company is organized based on product lines which have distinct brand
names and are managed as autonomous marketing units. The Company evaluates
performance and allocates resources to segments based on divisional
operating income. Divisional operating income is calculated by deducting
direct operating expenses from gross profit. Direct operating expenses
include certain marketing, warehousing, cooperative advertising and
administrative charges (intangible amortization and royalty charges) that
are structured for divisional tracking or are consistently allocated to the
divisional level. General marketing overhead expenses, selling costs and
general corporate overhead expenses are allocated to the divisional level
from time to time, but, in general, are not used to make operating
decisions and assess performance. These costs are excluded from divisional
operating income. Assets that are identifiable for segment reporting
purposes include inventories, property, plant and equipment, patents and
other intangible assets and cost in excess of net assets acquired.
The Company has identified the following segments as reportable segments
for purposes of segment reporting: Kitchen and Household Tools (K&HT),
Precision Cutting Tools (PCT), Kitchen Cutlery (CUT), Cookware (COOK),
Retail Outlet Stores (RET) and Other Housewares-Related Products (Other).
The table below presents information about reported segments for the
quarters ended June 30,
1999 K&HT PCT CUT
Net sales $ 10,632 $ 4,522 $ 3,879
Divisional operating income $ 3,822 $ 1,545 $ 642
Depreciation and
amortization expense $ 217 $ 123 $ 450
Total identifiable assets $ 17,065 $ 12,135 $ 26,772
Identifiable capital
expenditures $ 730 $ 48 $ 234
1999 RET OTHER TOTAL
Net sales $ 1,469 $ 1,329 $ 21,831
Divisional operating income $ 340 $ 344 $ 6,693
Depreciation and
amortization expense $ 57 $ 15 $ 862
Total identifiable assets $ 1,768 $ 613 $ 58,353
Identifiable capital
expenditures $ - $ 14 $ 1,026
1998 K&HT PCT CUT
Net sales $ 8,225 $ 5,312 $ 5,053
Divisional operating income $ 2,372 $ 1,951 $ 750
Depreciation and
amortization expense $ 231 $ 110 $ 430
Total identifiable assets $ 12,334 $ 9,980 $ 28,517
Identifiable capital
expenditures $ 576 $ 38 $ 217
1998 RET OTHER TOTAL
Net sales $ 1,349 $ 961 $ 20,900
Divisional operating income $ 291 $ (133)$ 5,231
Depreciation and
amortization expense $ 73 $ 6 $ 850
Total identifiable assets $ 2,089 $ 1,039 $ 53,959
Identifiable capital
expenditures $ 11 $ 34 $ 876
A reconciliation of total segment information to total consolidated
financial information for the three months ended June 30, 1999 and 1998 is
as follows:
1999 1998
Divisional operating income $ 6,693 $ 5,231
Unallocated corporate S, G & A 6,654 4,952
------- --------
Loss before interest and taxes 39 279
Unallocated interest expense 338 582
------- --------
Loss before income taxes $ (299) $ (303)
1999 1998
Identified depreciation and amortization $ 862 $ 850
Unallocated information systems and corporate
facility depreciation 237 370
------- --------
Total consolidated depreciation and
amortization $ 1,099 $ 1,220
1999 1998
Identifiable assets $58,353 $ 53,959
Accounts receivable 13,508 16,158
Other unallocated assets 8,019 10,117
------- --------
Total consolidated assets $79,880 $ 80,234
1999 1998
Identifiable capital expenditures $ 1,026 $ 876
Unallocated corporate capital expenditures 50 79
------- --------
Total consolidated capital expenditures $ 1,076 $ 955
The table below presents financial information about reported segments for
the six months ended June 30,
1999 K&HT PCT CUT
Net sales $ 22,553 $ 9,715 $ 8,700
Divisional operating income $ 8,259 $ 3,430 $ 1,326
Depreciation and
amortization expense $ 566 $ 241 $ 882
Identifiable capital
expenditures $ 1,138 $ 85 $ 402
1999 RET OTHER TOTAL
Net sales $ 2,747 $ 2,990 $ 46,705
Divisional operating income $ 524 $ 536 $ 14,075
Depreciation and
amortization expense $ 117 $ 30 $ 1,836
Identifiable capital $ - $ 37 $ 1,662
Expenditures
1998 K&HT PCT CUT COOK
Net sales $ 15,591 $ 9,866 $ 9,914 $2,362
Divisional operating income $ 4,097 $ 3,650 $ 1,359 $ 191
Depreciation and
amortization expense $ 740 $ 219 $ 1,025 $ 193
Identifiable capital
expenditures $ 1,473 $ 119 $ 635 $ 10
1998 RET OTHER TOTAL
Net sales $ 2,792 $ 1,419 $ 41,944
Divisional operating income $ 372 $ (239)$ 9,430
Depreciation and
amortization expense $ 164 $ 29 $ 2,370
Identifiable capital
Expenditures $ 11 $ 83 $ 2,331
A reconciliation of total segment information to total consolidated
financial information for the six months ended June 30, 1999 and 1998 is as
follows:
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Divisional operating income $ 14,075 $ 9,430
Non-recurring charges 1,980 1,500
Unallocated corporate S, G & A 12,841 11,051
-------- --------
Loss before interest and taxes (746) (3,121)
Unallocated interest expense 679 1,208
-------- --------
Loss before income taxes $ (1,425) $ (4,329)
1999 1998
Identified depreciation and amortization $ 1,836 $ 2,370
Unallocated information systems and corporate
facility depreciation 486 656
-------- --------
Total consolidated depreciation and
amortization $ 2,322 $ 3,026
1999 1998
Identifiable capital expenditures $ 1,662 $ 2,331
Unallocated corporate capital expenditures 137 105
------- --------
Total consolidated capital expenditures $ 1,799 $ 2,436
</TABLE>
The Company allocates distribution center expense, including related
depreciation expense, to segments based on shipping and storage volumes.
Related capital expenditures are allocated to identified segments in the
same manner.
Of the total Precision Cutting Tools Segment revenues, second quarter 1999
and 1998 revenues of $2,059 and $2,010, respectively, were
generated by a division operating in Canada. Related divisional operating
income for that same division was $697 and $740, respectively. For the
first six months of 1999 and 1998, revenues of $3,866 and $3,835 were
generated by the same division. Related divisional operating income was
$1,292 and $1,487, respectively.
NOTE 6 - Contingencies
In the second quarter of 1999, the Company and its Board
of Directors were named as defendants in four related complaints filed on
behalf of all shareholders. In the opinion of management, the costs related
to these complaints will not have a material impact on operating results of
the Company.
NOTE 7 - Shareholder Rights Plan
In the second quarter of 1999, the Company amended its Shareholder Rights
Plan to reduce the triggering threshold from 21% to 15%. As amended, if a
person, together with such person's Affiliates and Associates (as defined),
becomes the beneficial owner of 15% or more of the outstanding common stock
of General Housewares, the outstanding Rights (other than those held by the
acquiror) become exercisable for common stock of General Housewares having
a value of two times the exercise price of the Right. Holders of 15% or
more of General Housewares common stock at the time the amendment was
adopted will not trigger the Rights unless they subsequently acquire
additional shares. The Rights may be redeemed by the Board of Directors of
the Company at a redemption price of $.01 per Right.
On August 1, 1999, the Company entered into the Second Amendment to the
Rights Agreement providing that (i) neither Corning Consumer Products
Company nor its affiliates will be considered "Beneficial Owners" (as
defined in the Rights Agreement) and (ii) the rights will expire
immediately prior to the consummation of the merger as described in Note 8.
NOTE 8 - Subsequent Events
On August 2, 1999, General Housewares Corp. and Corning Consumer Products
Company announced the signing of a definitive merger agreement with CCPC
Acquisition Corp. (the parent of Corning Consumer Products), pursuant to
which the Company's shareholders will be entitled to receive $28.75 per
share in cash. The transaction was approved by the Board of Directors of
General Housewares Corp. and is subject to the approval of the Company's
shareholders at a special meeting. The completion of the merger, which is
expected to occur in the fourth quarter of 1999, is also subject to
government filings and other closing conditions.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(In thousands)
The following table sets forth the operating data of the Company as a
percentage of net sales for the following periods:
Three months ended June 30, Six months ended June 30,
1999 1998 1999 1998
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 55.4 58.9 57.0 60.3
----- ----- ----- -----
Gross profit 44.6 41.1 43.0 39.7
Non-recurring
charges -- -- 4.2 3.6
Selling, general
and administra-
tive expenses 44.5 39.8 40.4 43.6
----- ----- ----- -----
Operating income
(loss) 0.1 1.3 (1.6) (7.5)
Interest expense 1.5 2.8 1.5 2.9
----- ----- ----- -----
Loss before income
taxes (1.4) (1.5) (3.1) (10.4)
Income taxes (0.6) (0.5) (1.3) (3.4)
----- ----- ----- -----
Net loss (0.8) (1.0) (1.8) (7.0)
SALES OF ASSETS
On March 31, 1998, the Company completed the sale of certain assets related
to its enamelware cookware business (Enamelware Division). The transaction
had a material impact on the financial position of the Company as of March
31, 1998 and results of operations for the three months then ended and the
six months ended June 30, 1998. The following discussion considers those
impacts.
FINANCIAL POSITION
Referring to the Company's financial position as of June 30, 1999, as
contrasted with December 31, 1998, current assets increased by $2,060 while
current liabilities decreased by $2,246. Offsetting a $1,448 drop in cash,
which resulted from the timing of cash payments and receipts and a $2,650
drop in accounts receivable due largely to the seasonality of the Company's
sales, was a $5,829 increase in inventories. The increase in inventories is
reflective of continued sales growth in the Company's import businesses.
Higher levels of inventory are needed to support the sales growth and are
magnified by relatively longer lead times of the import supply chain. In
addition, inventory levels in the import businesses were impacted by
planned increases in inventory purchases in the second quarter to ensure
adequate stock levels in light of expected container shortages which were
predicted for the second half of 1999. The reduction in current liabilities
relates primarily to payment of $600 of short-term debt and payment of
income taxes, reducing income taxes payable by $1,122.
RESULTS OF OPERATIONS
Net sales for the three month period ended June 30, 1999 were $21,831, an
increase of 4.5% over net sales of $20,900 for the three months ended June
30, 1998. Net sales for the six-month period ended June 30, 1999 were
$46,705, an 11.4% increase over reported net sales of $41,944 for the same
period of 1998 and an 18.0% increase over comparative net sales (excluding
first quarter 1998 net sales of the divested Enamelware Division) in the
first six months of 1998. Gross margin dollars for the quarter ended June
30, 1999 were $9,746, an increase of $1,153 when compared to gross margin
dollars of $8,593 for the same period in 1998. Gross margin dollars for the
six month period ended June 30, 1999 were $20,082, an increase of $3,419
when compared to gross margin dollars of $16,663 for the same period in
1998. On a comparative basis, excluding first quarter 1998 gross margin
dollars of the divested Enamelware Division, first half 1999 gross
margin dollars improved $3,840. As a percentage of net sales, gross margin
improved from 41.1% for the three months ended June 30, 1998 to 44.6% in
the second quarter of 1999. On a year-to-date basis, gross margin as a
percentage of reported net sales increased from 39.7% in 1998 to 43.0% in
1999. The following details reported net sales, gross margins and
divisional operating income by reporting segment:
Kitchen and Household Tools - Net sales of the kitchen and household tools
segment for the three months ended June 30, 1999 were $10,632, an increase
of $2,407 or 29.3% as compared to net sales of $8,225 for the second
quarter of 1998. For the first six months of 1999, kitchen and household
tools net sales were $22,553, an increase of $6,962 or 44.7% over net sales
of $15,591 for the same period in 1998. Incremental sales were primarily
related to new product introductions. Gross margin as a percent of net
sales for the second quarter of 1999 improved approximately 2.5% from the
second quarter of 1998. The improvement is primarily a result of a
reduction in customer chargebacks and deductions (classified as adjustments
between gross and net sales)driven by improvements in the Company's
distribution activities. For the six-month period ended June 30, 1999,
gross margin as a percent of sales improved approximately 1.1% for the same
reasons. The increased sales volume and gross margin percentage improvement
increased gross margin dollars by $1,447 and $3,698 for the three and six
months ended June 30, 1999, respectively, over the comparable periods in
1998. Divisional operating income for the three months ended June 30, 1999
was $3,822, an increase of $1,450 over divisional operating income of
$2,372 for the same period in 1998. For the six months ended June 30, 1999,
divisional operating income was $8,259, an increase of $4,162 over the
first six months of 1998. The divisional operating income increases were
primarily a result of increased sales volume, improved shipping performance
(lowering customer chargebacks and deductions) and reduced warehouse
expense.
Precision Cutting Tools - Net sales of the precision cutting tools segment
for the three months ended June 30, 1999 were $4,522, a decrease of $790 or
14.9% as compared to net sales of $5,312 for the second quarter of 1998.
For the first six months of 1999, precision cutting tools net sales were
$9,715, a decrease of $151 or 1.5% as compared to the same period in 1998.
The decrease in the second quarter of 1999 when compared to the second
quarter of 1998 was driven primarily by the timing of shipments between the
first and second quarters. Gross margin dollars for the three months ended
June 30, 1999 were $2,110, a decline of $242 when compared to gross margin
dollars of $2,352 for the same period in 1998. Gross margin dollars for the
six months ended June 30, 1999 were $4,465, an increase of $56 when
compared to gross margin dollars of $4,409 for the six months ended June
30, 1998. As a percent of net sales, gross margin increased 2.4% and 1.3%
for the three and six-month periods ended June 30, 1999, respectively. The
improvement was primarily a result of a reduction in customer chargebacks
and deductions (classified as adjustments between gross and net sales)
driven by improvements in the Company's distribution activities. Divisional
operating income for the three months ended June 30, 1999 was $1,545, a
decrease of $406 from divisional operating income of $1,951 for the same
period in 1998. For the six months ended June 30, 1999, divisional
operating income was $3,430, a decrease of $220 from divisional operating
income of $3,650 for the first six months of 1998. The decline in
divisional operating income for the second quarter reflects the sales
volume shortfall. The decline in divisional operating income for the six
months ended June 30, 1999 was primarily a result of increased spending
related to marketing initiatives aimed at increasing market share in the
United States.
Cutlery - Net sales of the cutlery segment for the three months ended June
30, 1999 were $3,879, a decrease of $1,174 or 23.2% as compared to net
sales of $5,053 for the three months ended June 30, 1998. Net sales of the
cutlery segment for the six months ended June 30, 1999 were $8,700, a
decrease of $1,214 or 12.2% as compared to net sales of $9,914 for the six
months ended June 30, 1998. The decrease in sales from the second quarter
of 1998 was primarily a result of (1) lost distribution/SKU reduction in
the cutlery segment's domestically-produced mass line; (2) a second quarter
1998 load in of a new product line at a major retailer; and (3) retailers'
reaction to uncertainty surrounding plans for the line given the publicly
announced strategic review of the cutlery business. As a result of the
sales volume decline, gross margin dollars of $1,256 for the three months
ended June 30, 1999 reflect a drop of $460 from second quarter 1998 gross
margin dollars of $1,716. For the six months ended June 30, 1999, gross
margin dollars dropped to $2,615 from gross margin dollars of $3,404 for
the same period in 1998. This gross margin decline lead to a drop in second
quarter divisional operating income from $750 in 1998 to $652 in 1999. For
the six months ended June 30, 1999, divisional operating income was $1,326
as compared to $1,359 in the first six months of 1998.
Cookware - Cookware segment net sales for the six-month period ended June 30,
1998 were $2,362. Divisional operating income was not material for that
period. There were no cookware segment sales in the first six months of
1999 due to the sale of the Enamelware Division.
Retail Outlet Stores - Net sales for the three-month period ended June 30,
1999 at the Company's chain of outlet stores were $1,469, an increase of
$120 when compared to net sales of $1,349 for the three months ended June
30, 1998. For the six month period ended June 30, 1999, net sales at the
outlet stores were $2,747, a decrease of $45 when compared to net sales of
$2,792 in the same period of the prior year. The 1999 results reflect
same-store sales increases of 15% through the first six months as the
number of stores has dropped from 1998 levels. Gross margin increased over
1998 due to a shift in sales mix. As a result of the gross margin increase,
divisional operating income for the three months ended June 30, 1999
increased from $291 to $340 when compared to the prior year. For the six
months ended June 30, 1999, divisional operating income increased from $372
to $524 when compared to the prior year.
Other - Net sales of the "Other" segment (which consists primarily of the
Company's barbecue tool and outdoor accessories line) for the three months
ended June 30, 1999 were $1,329, an increase of 38.3% over net sales of
$961 for the same period in 1998. Net sales in the first six months of 1999
were $2,990, an increase of 110.7% over net sales of $1,419 for the same
period of 1998. The increased sales volume, which was primarily related to
distribution gains, added $389 of gross margin dollars for the three months
ended June 30, 1999 and added $791 of gross margin dollars for the six
months ended June 30, 1999. Divisional operating income for the three-month
period ended June 30, 1999 was $344 compared to a loss of $133 for the
three months ended June 30, 1998. Divisional operating income for the six
months ended June 30, 1999 was $536 compared to a loss of $239 for the six
months ended June 30, 1998.
Selling, general and administrative (S, G & A) expenses for the three month
period ended June 30, 1999 were $9,707 as compared to $8,314 for the same
period in 1998. The increase includes expenses related to Y2K enablement
(approximately $800), increased selling and royalty expense associated with
a shift in sales to the kitchen and household tools division (approximately
$250) and fees related to defending the Company against shareholder
complaints and review of strategic alternatives (approximately $300). S, G
& A expenses for the six months ended June 30, 1999 were $20,828, an
increase of $1,044 when compared to the first six months of 1998. Included
in the 1998 expense was $1,500 related to the sale of the Enamelware
Division in addition to approximately $875 of expense related to the first
quarter 1998 relocation of the majority of the Company's distribution
activities. Included in the 1999 expense was $1,500 related to the
write-off of a note receivable and $480 related to severance. After
excluding these non-recurring expenses and the impact of Y2K enablement in
both periods, S, G & A expense for the first six months of 1999 increased
approximately $489 over the first six months of 1998. This increase is
reflective of the increased sales volume during the period.
Operating income for the three months ended June 30, 1999 was $39 as
compared to operating income of $279 for the three months ended June 30,
1998. The operating loss for the first six months of 1999 was $746 compared
to an operating loss of $3,121 for the same period in 1998. Interest
expense for the three and six month periods ended June 30, 1999 decreased
$244 and $529, respectively. The decline was due primarily to lower
borrowing levels resulting from cash received as part of the sale of the
Enamelware Division. The net loss for the quarter ended June 30, 1999 was
$173 or $0.04 per diluted share. This compares to a net loss of $201 or
$0.05 per diluted share for the three months ended June 30, 1998. The net
loss for the six months ended June 30, 1999 was $826 or $0.21 per diluted
share. This compares to a net loss of $2,902 or $0.76 per diluted share for
the six months ended June 30, 1998.
Year 2000
The Year 2000 ("Y2K") computer software compliance issues affect the
Company and most companies throughout the world. Historically, many
computer programs were developed using just the last two digits (rather
than all four) to define the applicable year. Accordingly, these programs,
unless modified to perform otherwise, may recognize a date using the two
digits "00" as the year 1900 rather than the year 2000. Computer programs
that do not recognize the proper date could generate erroneous data or
cause systems to fail.
The Company has developed a program to address the Y2K issues. This program
is divided into four major sections - Business Administration, Business
Applications, Facilities/Information Technology Infrastructure and the
Customer Fulfillment Process. The general phases of the program common to
all sections are (1) inventorying Y2K items; (2) assigning priorities to
identified items; (3) assessing the Y2K status of items that, if failed,
would have a material impact on the Company; (4) remediating critical items
that are not Y2K compliant; (5) testing critical items; and (6) designing
and implementing contingency and business continuation plans.
As of June 30, 1999, the Company had inventoried, prioritized and assessed
critical Y2K items and was substantially complete with the inventory for
all other Y2K items. Remediation efforts were essentially completed in the
Business Applications, Facilities/Information Technology Infrastructure and
Customer Fulfillment Process sections of the Y2K program. The testing of
items was also essentially completed and Y2K contingency planning was in
process as of June 30, 1999. Final remediation and testing are currently
planned to be completed, no later than August 31, 1999, for all four
sections of the Y2K program.
The Company is utilizing internal personnel, contract programmers and
vendors to identify Y2K non-compliance problems, modify code and test the
modifications. In some cases, non-compliant software and hardware may be
replaced.
The Company relies on third-party suppliers for finished goods, raw
materials, water, utilities, communications, transportation and other key
services. Interruption of vendor and supplier operations due to Y2K issues
would affect Company operations in a material way. The Company has
undertaken initiatives to evaluate the efforts of its vendors and
suppliers, in order to mitigate Y2K risks and determine alternatives and
contingency plan requirements. While approaches to reducing risks of
interruption due to vendor and supplier failures may vary, options include
identification of alternate suppliers and accumulation of inventory where
feasible or warranted. These activities are intended to provide a means of
managing risk but cannot eliminate the potential for disruption due to
third-party failure.
The Company is also dependent upon its retailer customers for sales and
cash flow. Y2K interruptions in the operations of the Company's customers
could result in reduced sales, increased inventory or receivable levels and
cash flow reductions. While these events are possible, the Company believes
that its customer base is broad enough to minimize the consequences of a
single occurrence. The Company is, however, taking steps to monitor the
status of customers' efforts to become Y2K compliant as a means of
identifying risks and the need for contingency plans.
In addition to the Y2K program activities described above, the Company is
developing contingency plans intended to mitigate the possible disruption
in business operations that may result from Y2K non-compliance problems and
is developing cost estimates for such plans. Contingency plans will
primarily address issues surrounding the Company's internal software
systems and the reliance it places on critical vendors and suppliers.
Contingency plans may include the identification of alternative software
processing capabilities and the stock-piling of raw and packaging
materials, increasing finished good inventory levels, securing alternate
sources of supply and other appropriate measures. Once developed,
contingency plans and related cost will be refined on an ongoing basis, as
additional information becomes available.
External and internal costs specifically associated with modifying internal
software for Y2K compliance are expensed as incurred. The Company does not
separately track the internal costs incurred for its Y2K program. Such
costs are principally the related payroll costs for the Company's
information systems group. Total external costs related to the Company's
Y2K program incurred as of June 30, 1999, aggregated $2,000. The future
incremental external costs of completing the Company's Y2K program are
presently estimated to be approximately $100. These amounts do not include
any costs associated with the implementation of contingency plans, which
are in the process of being developed. All costs related to the Company's
Y2K program are being funded through operating cash flow.
The failure to correct a material Y2K problem could result in an
interruption in, or failure of, certain normal business activities or
operations. Such failures could materially and adversely affect the
Company's results of operations, liquidity and financial condition. Due to
the general uncertainty inherent in the Y2K problem resulting, in part,
from the uncertainty of the Y2K readiness of third-party suppliers and
customers, the Company is unable to determine at this time whether the
consequences of any Y2K failures will have a material impact on the
Company's results of operations, liquidity or financial condition. The
Company's Y2K program is expected to significantly reduce the Company's
level of uncertainty about the Y2K problem and, in particular, about the
Y2K compliance and readiness of its business partners. The Company believes
that, with the completion of it's Y2K program, the possibility of
significant interruptions of normal operations should be reduced.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
On June 2, 1999 a shareholder filed suit against the Company and
its directors challenging the board of directors' decision that it would
not pursue an April 12, 1999 non-binding preliminary proposal from a third
party to acquire the Company. Two additional shareholder lawsuits raising
the same allegations were filed on June 3 and June 7, 1999. These lawsuits
were filed in the Court of Chancery of the State of Delaware and are
captioned: Goldstein v. Saxton, et al., Del.Ch., C.A. No. 17192NC (filed
June 2, 1999) (the "Goldstein Action"), Great Neck Capital Appreciation
Investment Partnership v. Saxon [sic], et al., Del. Ch., C.A. No. 17196,
and The Barry Family Limited Partnership of California v. General
Housewares Corp., et al., Del. Ch., C.A. No. 17196 . The Company and the
directors have moved to dismiss the Goldstein action, and the complaints in
the other two suits have net yet been served upon the Company or the
directors. One month after the Delaware lawsuits were filed, two other
shareholders filed suit in the Vigo County Superior Court for the State of
Indiana: Bloom v. Saxton, Vigo Superior Ct., C. No. 84D01-9908-CP-1104 (the
"Indiana Action"). The Indiana action, like the Delaware lawsuits,
challenges the board of directors' decision not to pursue the April 12,
1999 non-binding preliminary proposal from a third party. The Company and
the directors have received an extension of time to respond to the
complaint in the Indiana action. The Company and the directors intend to
vigorously defend each of these lawsuits.
Item 4. Submission of Matters to a Vote of Security Holders
General Housewares' annual meeting of stockholders was held on May
11, 1999. Proxies for the meeting were solicited by General Housewares
pursuant to Regulation 14A under the Securities Exchange Act of 1934.
All of management's nominees for election to the Board of Directors
as listed in General Housewares Proxy Statement for the meeting were
elected.
Director Votes For Votes Withheld
- -------- --------- --------------
Charles E. Bradley 2,833,756 366,826
Thomas L. Francis 2,833,256 367,326
Phillip A. Ranney 2,833,757 366,826
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits
DESIGNATION DESCRIPTION
3(ii) Bylaws
10.1 1997 Key Employees Incentive Stock Plan
10.2 First Amendment to 1997 Key Employees
Incentive Stock Plan
10.3 Form of Employment Agreement between
General Housewares Corp and 1)Alex Lee,
2)Bradley Kelsheimer, 3) Ray Kulla,
4)Teresa Mager and 5) Mark Scales
11 Computation of Earnings Per Share
27 Financial Data Schedule
B. Reports on Form 8-K
May 28, 1999 Resignation of John A. Bricker, Jr. as
director.
June 25, 1999 First Amendment to Rights Agreement between
General Housewares Corp. and First Chicago
Trust Company of New York.
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: August 15, 1999 /s/ Mark S. Scales
Mark S. Scales
Vice President Chief Financial
Officer and Treasurer
/s/ Bradley A. Kelsheimer
Bradley A. Kelsheimer
Corporate Controller
GENERAL HOUSEWARES CORP.
BYLAWS
As Amended November 12, 1996
ARTICLE I
Offices
Section 1. 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.
Section 2. 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.
ARTICLE II
STOCKHOLDERS
Section 1. 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.
Section 2. 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.
Section 3. 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.
Section 4. 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.
Section 5. 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.
Section 6. 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.
Section 7. 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.
Section 8. 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.
Section 9. 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.
Section 10. 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 that would
be 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).
Section 11. 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, a written consent or consents signed by a sufficient number of
holders to take such action are delivered to the Corporation in the manner
prescribed in Section 9 of this Article II.
Section 12. 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.
Section 13. 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
adjourned meeting shall be given to each stockholder of record entitled to
notice of or to vote at the meeting.
Section 14. 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.
Section 15. 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.
Section 16. 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.
ARTICLE III
BOARD OF DIRECTORS
Section 1. General Powers. The business, property and affairs
of the Corporation shall be conducted and managed under the supervision 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.
Section 2. 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.
Section 3. 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.
Section 4. 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.
Section 5. 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.
Section 6. 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.
Section 7. 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.
Section 8. 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.
Section 9. 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.
Section 10. 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.
ARTICLE IV
OFFICERS
Section 1. 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.
Section 2. 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.
Section 3. 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.
Section 4. 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.
Section 5. 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.
ARTICLE V
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.
ARTICLE VI
CAPITAL STOCK
Section 1. 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.
Section 2. 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.
Section 3. 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.
Section 4. 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.
ARTICLE VII
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.
ARTICLE VIII
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.
ARTICLE IX
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.
ARTICLE X
INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHERS
Section 1. 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.
Section 2. 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.
Section 3. 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.
Section 4. 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.
Section 5. 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.
Section 6. 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.
Section 7. 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.
Section 8. 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.
Section 9. 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.
Section 10. 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.
ARTICLE XI
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.
1997 KEY EMPLOYEES INCENTIVE STOCK PLAN OF
GENERAL HOUSEWARES CORP. AND SUBSIDIARIES
1. PURPOSE OF PLAN
The purpose of the Plan is to aid General Housewares Corp. (the
"Company") and its subsidiaries, as defined in section 424(f) of the
Internal Revenue Code of 1996, as amended (the "Code"), in securing and
retaining key employees of outstanding ability and to motivate such
employees to exert their best efforts on behalf of the Company and its
subsidiaries. In addition, the Plan is designed to associate the interests
of management with the stockholders by reinforcing the relationship between
participants' rewards and stockholder gains.
2. STOCK SUBJECT TO THE PLAN
Subject to Paragraph 10 hereof, the maximum number of shares of common
stork of the Company ("Common Stock") that may be awarded or subject to
option under the Plan is 300,000. The maximum number of shares underlying
awards to any one participant in any 12-month period shall not exceed
100,000 shares. Shares awarded under the Plan may consist, in whole or in
part, of unissued shares or treasury shares. In the event of the exercise
or termination (by reason of forfeiture, expiration, cancellation,
surrender or otherwise) of any award under the Plan, that number of shares
of Common Stock subject to the award but not delivered shall again be
available for awards under the Plan (whether or not cash or other
consideration is paid to a participant in respect of such shares).
Restricted stock awarded under the Plan and later forfeited pursuant to the
Plan shall again become available for awards or options under the Plan.
3. ADMINISTRATION
The Plan shall be administered by the Compensation Committee of the
Board of Directors of the Company, or a subcommittee of the Board (the
"Committee"), which shall consist of at least two members of such Board,
all of whom shall be "non-employee directors" within the meaning of Rule
l6b-3 of the General Rules and Regulations under the Securities Exchange
Act of 1934, as amended (hereinafter referred to as the "Exchange Act"),
and "outside directors" within the meaning of section 162(m) of the Code.
The Committee's interpretation and construction of any provision of the
Plan or any agreement with a participant under the Plan and all
determinations made by it shall be final and conclusive.
The Committee's determinations under the Plan (including without
limitation determinations as to the persons to receive awards, the form,
amount and timing of such awards, the terms and conditions of such awards
and the agreements evidencing the same) need not be uniform and may be made
by it selectively among persons who receive, or are eligible to receive,
awards under the Plan, whether or not such persons are similarly situated.
The Committee shall have absolute discretion in establishing or amending
the terms of any award under the Plan, which discretion may be exercised
either at the time an award is granted or thereafter, provided, however,
that no amendment to an outstanding award that would adversely affect the
rights previously granted under such award may be made without the
participant's consent.
No member of the Committee shall be liable for any action taken or
decision made in good faith relating to the Plan or any award hereunder.
4. ELIGIBILITY
Key employees, including officers of the Company and its subsidiaries
(but, subject to Section 19, excluding members of the Committee and any
person who serves only as a director), who are from time to time
responsible for the management, growth and protection of the business of
the Company and its subsidiaries, are eligible to participate in the Plan.
The participants under the Plan shall be selected from time to time by the
Committee, in its sole discretion, from among those eligible, and the
Committee shall determine, in its sole discretion, the price and amount of
securities to be awarded under the Plan including without limitation the
number of shares to be covered by stock options, any related stock
appreciation rights and the amount of awards of restricted stock granted to
each participant.
5. GRANT OF STOCK OPTIONS, STOCK APPRECIATION RIGHTS AND AWARDS OF
RESTRICTED STOCK
No stock option, no related stock appreciation right and no award of
restricted stock may be granted under the Plan after February 1, 2007 but
options, related stock appreciation rights and awards of restricted stock
theretofore granted may extend beyond that date.
6. TERMS AND CONDITIONS OF STOCK OPTIONS.
The grant of a stock option shall be evidenced by a written stock
option agreement ("Agreement") executed by the Company and the participant,
stating the number of shares of Common Stock subject to the stock option
evidenced thereby and in such form as the Committee may from time to time
determine. All options granted under the Plan may be either incentive
stock options as defined in section 422 of the Code or options other than
incentive stock options (referred to as "nonqualified stock options").
Each option shall state whether or not it is intended to be treated as an
incentive stock option. To the extent that an option is designated as an
incentive stock option but fails to satisfy the requirements of section 422
of the Code, it shall be treated as a nonqualified stock option.
Except as otherwise provided under the terms of any option agreement,
all options granted under the Plan shall be subject to the foregoing, to
the following terms and conditions, and to such other terms and conditions
as the Committee shall determine:
(a) The option price per share shall be determined by the Committee,
but shall not be less than 100% of the fair market value of a share of
Common Stock on the date the option is granted.
"Fair market value" as of any date and in respect of any share of
Common Stock means the closing price on such date or on the next business
day, if such date is not a business day, of a share of Common Stock as
reported in the consolidated trading tables of The Wall Street Journal
(presently, the NYSE-Composite Transactions).
(b) Each option shall be exercisable during and over such period
ending not later than ten years from the date it was granted, as may be
determined by the Committee and stated in the option.
(c) No option shall be exercisable during the year ending on the
first anniversary date of the granting of the option except as provided in
Paragraphs 10 and 11 of the Plan. Exercise of any option granted hereunder
shall be conditional upon the prior approval of the listing on the
appropriate national securities exchange or exchanges of the shares of
Common Stock called for by such option.
(d) Payment in full (including applicable taxes, if any) shall be
made for all shares purchased either (i) in cash (including check, bank
draft or money order), (ii) at the discretion of the Committee, by
delivering shares of Common Stock of the Company already owned by the
participant having a fair market value equivalent to or greater than the
amount of cash otherwise required, (iii) at the discretion of the
Committee, by a combination of (i) and (ii) above, or (iv) under any other
method as may be permitted by the Committee from time to time. No option
shall be exercised for less than the lesser of 50 shares or the full number
of shares for which the option is then exercisable. No option exercise
shall be effective until the participant has given written notice of the
exercise of his option, paid in full for such shares and, if requested,
given the representation described in Paragraph 6(i) of the Plan; provided,
however, the Committee shall have discretion to permit minor post-exercise
adjustments in cases where shares of Common Stock have been delivered in
payment for the shares to avoid fractional shares and to deal with trading
variations on the day of exercise. Payment of taxes, if any, shall be in
cash at time of exercise; provided, however, tax withholding obligations
may be met by the withholding of shares of Common Stock otherwise
deliverable to the participant pursuant to procedures approved by the
Committee. In no event shall shares of Common Stock be delivered to any
participant until he has paid to the Company in cash the amount of tax
required to be withheld by the Company or has elected to have his tax
withholding obligations met by the withholding of shares of Common Stock in
accordance with the procedures approved by the Committee.
(e) Subject to Paragraph 6 (g) of the Plan, if a participant's
employment by the Company or a subsidiary terminates by reason of his
death, his option may thereafter be exercised only to the extent to which
it was exercisable at the time of his death and may not be exercised after
the expiration of the period of fifteen months from the date of his death
or the expiration of the stated period of the option, whichever period is
the shorter.
(f) Subject to Paragraph 6(g) of the Plan, if a participant's
employment by the Company or a subsidiary terminates by reason of
retirement his option may thereafter be exercised only to the extent to
which it was exercisable at the time of such termination of employment and
may not be exercised after the expiration of the period of three months
from the date of such termination of employment or of the stated period of
the option, whichever period is shorter; provided, however, that if the
participant dies within such three-month period, any unexercised stock
option, to the extent to which it was exercisable at the time of his death,
shall thereafter be exercisable for a period not exceeding fifteen months
from the date of his death or for the stated period of the option,
whichever period is the shorter. Notwithstanding the above, if a
participant's employment by the Company or a subsidiary terminates by
reason of retirement on or after attaining age 65 under the Company's
Pension Plan for Non-Bargaining Unit Employees, his options may thereafter
be exercised in full for a period of five years from the date of such
termination of employment or the stated period of the option, whichever
period is shorter.
(g) If a participant's employment terminates by death or retirement
after the first anniversary date of the granting of the option and prior to
an installment of his option (other than the first installment) becoming
exercisable and if there are not conditions to the next succeeding
installment becoming exercisable other than the passage of time, his option
thereupon shall become exercisable with respect to a number of shares (in
addition to shares covered by installments theretofore matured) equal to a
pro rata portion of the shares for which it would become exercisable upon
the maturity of the next succeeding installment, such pro rata portion to
be based upon the proportion which the number of full months in the period
beginning with the maturity date of the next preceding installment and
ending such termination of his employment bears to the total number of full
months in the period beginning with the maturity date of the next preceding
installment and ending the maturity date of the next succeeding installment.
(h) If any participant's employment by the Company or a subsidiary
terminates for any reason other than death or retirement, his option may
thereafter be exercised only to the extent to which it was exercisable at
the time of such termination of employment and may not be exercised after
the expiration of the period of 30 days from the date of such termination
of employment or of the stated period of the option, whichever period is
shorter.
(i) The Committee may require each person purchasing shares pursuant
to the option to represent to and agree with the Company in writing that he
is acquiring the shares without a view to distribution thereof. The
certificates for such shares may include a legend which the Committee deems
appropriate to reflect any restrictions on transfers.
(j) A stock option shall not be assigned, alienated, pledged,
attached, sold, transferred or encumbered by a participant other than by
will or by the laws of descent and distribution, or, in the case of a
nonqualified stock option,
(i) pursuant to a "domestic relations order" as defined in
section 206 of ERISA, or
(ii) by transfer without consideration by a participant, subject
to such rules as the Committee may adopt to preserve the purposes of
the Plan, to
(A) a member of his or her Immediate Family,
(B) a trust solely for the benefit of the participant and
his or her Immediate Family, or
(C) a partnership or limited liability company whose only
partners or shareholders are the participant and his or her
Immediate Family members (each transferee described in clauses
(i) and (ii) next above is hereafter referred to as a "Permitted
Transferee"); provided the Committee is notified in advance in
writing of the terms and conditions of any proposed transfer
intended to be described in (i) or (ii) next above and it
determines that the proposed transfer complies with the
requirements of the Plan and the applicable option agreement.
Any purported assignment, alienation, pledge, attachment, sale,
transfer or encumbrance that does not qualify under (i) or (ii)
shall be void and unenforceable against the Company. For this
purpose "Immediate Family" means, with respect to a participant,
the participant's spouse, children or grandchildren (including
adopted and stepchildren and grandchildren).
The terms of the stock option shall apply to the beneficiaries,
executors and administrators of the participant and of the Permitted
Transferees of the participant (including the beneficiaries, executors and
administrators of the Permitted Transferees), including the right to agree
to any amendment of the applicable option agreement, except that Permitted
Transferees shall not transfer any stock option other than by will or by
the laws of descent and distribution.
A stock option shall be exercised only by the participant (or his or
her attorney in fact or guardian) (including, in the case of a transferred
option, by a Permitted Transferee), or, in the case of the participant's
death, by the participant's executor or administrator (including, in the
case of a transferred option, by the executor or administrator of the
Permitted Transferee), and no shares shall be issued by the Company unless
the exercise of a stock option is accompanied by sufficient payment, as
determined by the Company, to meet its withholding obligations on such
exercise or by other arrangements satisfactory to the Committee to provide
for such payment.
(k) An option may be granted to an employee conditional upon the
rescission or cancellation of an option or options held by such employee
covering the same number of shares and outstanding under the Plan, or any
other plan. The grant of any such option shall not constitute, for
purposes of the Plan, the amendment of the option rescinded or cancelled.
(l) The exercise of any stock option granted with related stock
appreciation rights shall cancel that number of related stock appreciation
rights which is equal to the number of shares of Common Stock Purchased
pursuant to the exercise of the stock option.
7. TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS
A stock appreciation right is the right of a participant, without any
payment to the Company (except for applicable withholding taxes), to
receive the excess of the fair market value per share of the Common Stock
on the date on which a stock appreciation right is exercised over the
exercise price per share as provided in the related underlying stock
option.
The Committee may grant a related stock appreciation right in
connection with all or any part of an option granted under the Plan at the
time the related option is granted on such terms and conditions as the
Committee shall determine with respect to the related underlying option.
The participant with a related stock appreciation right shall, subject to
the terms of the Plan and the Agreement with the participant, have the
right to surrender to the Company for cancellation all or a portion of the
related option granted under the Plan (but only to the same extent that
such option is then exercisable) and to be paid therefor an amount equal to
the excess of the aggregate fair market value of the shares of Common Stock
subject to the options being surrendered (determined as of the date of
exercise of such stock appreciation right) over the aggregate option
exercise price of the share of Common Stock subject to the options being
surrendered, less applicable withholding taxes.
A stock appreciation right with an underlying incentive stock option
(a) will expire no later than the expiration of the underlying incentive
stock option; (b) may be for no more than 100% of the spread (i.e., the
difference between the exercise price of the underlying option and the fair
market value of the Common Stock subject to the underlying option at the
time the stock appreciation right is exercised); (c) is transferable only
when the underlying incentive stock option is transferable, and under the
same conditions; (d) may be exercised only when the underlying incentive
stock option is eligible to be exercised; and (e) may be exercised only
where there is a positive spread (i.e., when the fair market value of the
Common Stock subject to the option exceeds the exercise price of the
option).
Stock appreciation rights shall be evidenced by written agreements in
such form as the Committee may from time to time determine.
8. TERMS AND CONDITIONS OF AWARDS OF RESTRICTED STOCK
All shares of Common Stock awarded as restricted stock to participants
under the Plan shall be subject to the following terms and conditions, and
to such other terms and conditions not inconsistent herewith, as the
Committee shall determine:
(a) At the time of the award the Committee shall establish for each
participant a "Restricted Period", which may be divided into installments
having staggered termination dates. Shares of restricted stock awarded to
participants may not be sold, assigned, transferred, pledged or otherwise
encumbered, except as hereinafter provided, during the Restricted Period.
Except for such restrictions on transfer, the participant as owner of such
shares shall have all the rights of a stockholder including but not limited
to the right to receive all dividends paid on such shares (subject to the
provisions of Paragraph 10) and the right to vote such shares.
(b) Unless determined otherwise by the Committee at the time the
restricted stock is awarded or thereafter, if a participant ceases to be an
employee of the Company or its subsidiaries for any reason other than (i)
death, (ii) disability, or (iii), if the award shall so state, retirement
on or after a participant's attaining age 65 or some later specified date,
all shares of restricted stock theretofore awarded to such participant
which are still subject to the restrictions imposed by Paragraph 8 (a)
shall upon such termination of employment be forfeited and returned to the
Company.
(c) If a participant ceases to be an employee of the Company or its
subsidiaries by reason of death, disability, or, if applicable, retirement
on or after attaining age 65 (or some later specified date), the
restrictions imposed by Paragraph 8 (a) shall lapse with respect to the
shares awarded when employment ceases.
(d) Each certificate issued in respect of shares of restricted stock
awarded under the Plan shall be registered in the name of the participant
and deposited by such participant, together with a stock power endorsed in
blank, with the Company and shall bear the following legend:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) contained in the 1997 Key Employees' Incentive Stock Plan of
General Housewares Corp. and subsidiaries and an Agreement entered into
between the registered owner and General Housewares Corp. Copies of such
Plan and Agreement are on file in the office of the Secretary of General
Housewares Corp."
(e) The participant shall enter into an agreement with the Company in
a form specified by the Committee agreeing to the terms and conditions of
the award and such other matters, including compliance with applicable
federal, state and other laws, and methods of withholding required taxes as
the Committee shall in its sole discretion determine.
(f) Unless forfeited prior to such date pursuant to Paragraph 8(b)
above, at the expiration of the restrictions imposed by Paragraph 8 (a),
the Company shall re-deliver to the participant, or the participant's legal
representatives, the shares deposited with it pursuant to Paragraph 8 (d).
9. TRANSFER, LEAVE OF ABSENCE, ETC.
For the purpose of the Plan: (a) a transfer of an employee from the
Company to a subsidiary or affiliate, whether or not incorporated, or vice
versa, or from one subsidiary or affiliate to another, (b) a leave of
absence, duly authorized in writing by the Company, for military service or
sickness or for any other purpose approved by the Company if the period of
such leave does not exceed 90 days, and (c) a leave of absence in excess of
90 days, duly authorized in writing by the Company, provided the employee's
right to re-employment is guaranteed by statute or by contract, shall not
be deemed a termination of employment.
10. CHANGES IN CAPITAL
If the outstanding Common Stock of the Company, shares of which are
eligible for the granting of options, the granting of related stock
appreciation rights or the award of restricted stock hereunder or subject
to options theretofore granted, either with or without related stock
appreciation rights, and awards of restricted stock still subject to the
restrictions imposed by Paragraph 8 (a), shall at any time be changed or
exchanged by a stock dividend, split-up, combination or exchange of shares,
recapitalization, merger, consolidation or other corporate reorganization
in which the Company is the surviving corporation, the number and kind of
shares subject to the Plan or subject to any outstanding options or awards
of restricted stock still subject to the restrictions imposed by Paragraph
8 (a), the exercise prices and the number of shares subject to said options
and the number of shares of restricted stock shall be appropriately and
equitably adjusted by the Committee so as to maintain the proportionate
number of shares, and with respect to the outstanding options, without
changing the aggregate option price. Any shares of stock or other
securities received as a result of any change in capital by a participant
with respect to shares of restricted stock still subject to the
restrictions imposed by Paragraph 8 (a) will be subject to the same
restrictions and shall be deposited with the Company.
11. CHANGE OF CONTROL
For purposes of this Plan, a "Change of Control" shall be deemed to
have occurred if any one of the following has occurred:
(a) If any person is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 30% or more of the
combined voting power of the Company's then outstanding securities,
excluding any person who becomes such a beneficial owner in connection with
a transaction described in subparagraph (c) (i) below; or
(b) the following individuals cease for any reason to constitute a
majority of the number of directors then serving: individuals who, on the
effective date hereof, constitute the Board and any new director (other
than a director whose initial assumption of office is in connection with an
actual or threatened election contest, including but not limited to a
consent solicitation, relating to the election of directors of the Company)
whose appointment or election by the Board or nomination for election by
the Company's stockholders was approved or recommended by a vote of at
least two-thirds of the directors then still in office who either were
directors on the effective date hereof or whose appointment, election or
nomination for election was previously so approved or recommended; or
(c) there is consummated a merger or consolidation of the Company
with any other corporation, other than a (i) merger or consolidation which
would result in the voting securities of the Company outstanding
immediately prior to such merger or consolidation continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity or any parent thereof), in combination
with the ownership of any trustee or other fiduciary holding securities
under an employee benefit plan of the Company or any subsidiary of the
Company, at least 70% of the combined voting power of the securities of the
Company or such surviving entity or any parent thereof outstanding
immediately after such merger or consolidation, or (ii) a merger or
consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no person is or becomes the beneficial owner,
directly or indirectly, of securities of the Company (not including in the
securities beneficially owned by such person any securities acquired
directly from the Company or its affiliates other than in connection with
the acquisition by the Company or its affiliates of a business)
representing 30% or more of the combined voting power of the Company's then
outstanding securities; or
(d) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or there is consummated an
agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets, other than a sale or disposition
by the Company of all or substantially all of the Company's assets to an
entity, at least 70% of the combined voting power of the voting securities
of which are owned by stockholders of the Company in substantially the same
proportions as their ownership of the Company immediately prior to such
sale.
Notwithstanding the foregoing, a "Change of Control" shall not be
deemed to have occurred by virtue of the consummation of any transaction or
series of integrated transactions immediately following which the record
holder of the common stock of the Company immediately prior to such
transactions or series of transactions continue to have substantially the
same proportionate ownership in an entity which owns all or substantially
all of the assets of the Company immediately following such transaction or
series of transactions.
In the event of a Change of Control, if a participant has an
employment agreement with the Company which becomes effective upon a Change
of Control, and if that participant's employment is terminated during the
term of the agreement for Good Reason (as defined in the employment
agreement) or by the Company for reasons other than Just Cause (as defined
in the employment agreement), upon such termination (a) all restrictions on
restricted stock previously awarded to participants under the Plan shall be
canceled, the shares awarded thereupon to become fully vested, and (b) all
stock options and related stock appreciation rights which are outstanding
shall become immediately exercisable in full without regard to any
limitations of time or amount otherwise contained in the Plan or in any
agreement. In the alternative, the Board of Directors shall have the power
to cancel all outstanding options or any outstanding related stock
appreciation fights, upon or after the effectiveness of any Change in
Control resulting in a merger or consolidation and, in connection
therewith, to determine the amount, if any, that each participant shall be
entitled to receive in settlement of the outstanding options or any
outstanding related stock appreciation rights held by him on the date of
such cancellation; provided, however, that the value of the cash or
property received with respect to each optioned share or with respect to
each related stock appreciation right shall not exceed the per share value
received or to be received by the holders of the outstanding Common Stock
of the Company as the result of such merger or consolidation and shall not
be less than the difference between the per share value of the outstanding
Common Stock of the Company and the exercise price for each optioned share
or related stock appreciation right.
In the event that an offer (governed by Section 14(d) of the Exchange
Act) is made to the holders of the outstanding Common Stock of the Company
to purchase or exchange such Common Stock for capital stock or other
securities (or any combination thereof) of another corporation, partnership
or other legal entity, or for cash, and such offer, if accepted, would
result in the offeror becoming the owner of:
(a) at least 50% of the outstanding Common Stock of the Company, or
(b) such lesser percentage of the outstanding Common Stock of the
Company as the Committee in its sole discretion determines may adversely
affect the market value of the Company's outstanding Common Stock after the
tender or exchange offer, the Committee shall, prior to the expiration date
(without extensions) of the tender or exchange offer, as the case may be,
(i) cancel all restrictions on restricted stock previously awarded to
participants under the Plan (the shares awarded thereupon to become fully
vested), (ii) accelerate the time of exercise so that all outstanding
options and related stock appreciation rights shall become immediately
exercisable in full without regard to any limitations of time or amount
otherwise contained in the Plan, including without limitation the first
sentence of Paragraph 6 (c), or in any agreement and/or (iii) determine
that the options shall be adjusted by substituting, for the shares then
subject to options, (A) stock or other securities of the surviving
corporation or offeror if such stock or other securities are publicly
traded, or (B) if such stock or other securities are not publicly traded,
in which event the aggregate option price shall remain the same and the
amount of shares or other securities subject to option shall be the amount
of shares or other securities which could have been purchased on the actual
expiration date of the offer with the proceeds that would have been
received by the participant if the option had been exercised in full prior
to such expiration date and the participant had exchanged all of such
shares pursuant to the tender or exchange offer, or (C) the same
consideration that would have been received by the participant if the
option had been exercised in full prior to such expiration date and the
participant had exchanged all of such shares pursuant to the tender or
exchange offer and, if such consideration is cash, the Committee may make
the adjustment by payment to the participant of the difference between the
exercise price and the offer price. In the event such tender or exchange
offer is abandoned or the offeror does not purchase a significant number of
shares pursuant to the offer, the Committee may again, without the consent
of the participant adjust unexercised options and related stock
appreciation rights to substitute the original terms of exercisability. No
participant shall have the right to prevent or compel the implementation of
any of the foregoing actions by the Committee affecting the securities or
other consideration available to the participant.
12. USE OF PROCEEDS
Proceeds from the sale of shares of Common Stock pursuant to options
granted under the Plan shall constitute general funds of the Company.
13. SECURITIES LAW COMPLIANCE
Each award under the Plan shall be subject to the requirement that, if
at any time the Committee shall determine that (a) the listing,
registration or qualification of the shares of Common Stock subject or
related thereto upon any securities exchange or under any state or federal
law, or (b) the consent or approval of any government regulatory body, or
(c) an agreement by the grantee of any award with respect to the
disposition of shares of Common Stock, is necessary or desirable as a
condition of, or in connection with, the granting of such award or the
issue or purchase of shares of Common Stock hereunder, such award may not
be consummated in whole or in part unless such listing, registration,
qualification, consent, approval or agreement shall have been affected.
14. NO RIGHT OF EMPLOYMENT
Nothing in the Plan or in any agreement entered into pursuant to the
Plan shall confer upon any participant the right to continue in the
employment of the Company or any subsidiary or affect any right which the
Company or any subsidiary may have to terminate the employment of such
participant.
15. MISCELLANEOUS PROVISIONS
Except as provided in Paragraph 6(j), no award under the Plan,
including any stock option, stock appreciation right, or award of
restricted stock shall be transferable by the participant other than by
will or the laws of descent and distribution.
Except as otherwise provided in the Plan, no award under the Plan
shall confer upon the holder thereof any right as a stockholder of the
Company prior to the date on which he fulfills all service requirements and
other conditions for receipt of such rights and shares of Common Stock are
registered in his name.
The use of the masculine gender herein shall automatically convert to
the feminine gender in connection with participation in the Plan by female
key employees.
16. DIRECTOR AWARDS
Notwithstanding any provision of the Plan to the contrary, the
directors of the Company who are not key employees of the Company or any of
its subsidiaries in office at the close of the Company's 1997 Annual
Meeting of Stockholders (the "1997 Annual Meeting") shall be awarded 1,500
shares of Common Stock (or, in the case of a director assuming office after
such 1997 Annual Meeting, such different number of shares as shall give
proportionate effect to the reduced period of time) as Restricted Stock
under the Plan, subject to the terms and conditions of the Plan and to the
further condition that the Restricted Period relating to said shares shall
end with respect to one-third thereof (or, in the case of a director
assuming office after the 1997 Annual Meeting, such different number of
shares as shall give proportionate effect to the reduced period of time) on
the respective dates on which the Company's Annual Meeting of Stockholders
shall be held in 1998, 1999 and 2000.
17. EFFECTIVE DATE
The Plan has been adopted and approved by the Board of Directors of
the Company by action taken on February 14, 1997; provided, however, that
the effectiveness of the Plan is expressly conditioned upon ratification
and approval of the Plan by the affirmative votes of the holders of a
majority of the Company's securities present, or represented, and entitled
to vote at the Annual Meeting of the Company's stockholders in 1997.
Options and related stock appreciation rights granted and restricted stock
awarded under the Plan prior to such meeting shall be subject to, and the
exercise thereof shall be expressly conditioned upon, such stockholder
approval of the Plan and if said stockholder approval shall for any reason
not be forthcoming at such meeting, the options and any related stock
appreciation rights shall be null and void and the restricted stock shall
be forfeited and returned to the Company.
18. AMENDMENTS
The Board of Directors of the Company may from time to time amend,
alter or discontinue the Plan, but no amendment, alteration or
discontinuation shall be made which would adversely affect the rights of
any participant under any option or award of restricted stock theretofore
granted, without his consent, or which, without the approval of the
stockholders, would:
(a) Except as is provided in Paragraph 10 of the Plan, increase the
total number of shares reserved for the purposes of the Plan.
(b) Change the standards of eligibility of employers (or class of
employees) eligible to receive incentive stock options under the Plan.
WITHHOLDINGS
The Committee shall have the right to require participants or their
agents to remit to the Company amounts sufficient to satisfy any federal,
state or local income, employment, or other tax withholding requirements
(or make other arrangements satisfactory to the Company with regard to such
taxes) at such times as the Company deems necessary or appropriate for
compliance with such laws.
FIRST AMENDMENT
TO THE
1997 KEY EMPLOYEES INCENTIVE STOCK PLAN
OF
GENERAL HOUSEWARES CORP AND SUBSIDIARIES
WHEREAS, General Housewares Corp. (the "Company") maintains the 1997 Key
Employees Incentive Stock Plan of General Housewares Corp. and Subsidiaries
(the "Plan"); and
WHEREAS, Section 18 of the Plan provides that the Board of Directors of the
Company may amend the Plan from time to time, subject to the limitations
therein; and
WHEREAS, the Company desires to amend the Plan as provided herein.
NOW, THEREFORE, the Plan is hereby amended as follows:
1. The third paragraph of Section 11 of the Plan is hereby amended to read
in its entirety as follows:
"In the event of a Change of Control (a) all restrictions on
restricted stock previously awarded to participants under the Plan
shall be cancelled, the shares awarded thereupon to become fully
vested, and (b) all stock options and related stock appreciation
rights which are outstanding shall become immediately exercisable
in full without regard to any limitations of time or amount
otherwise contained in the Plan or in any agreement. In the
alternative, the Board of Directors shall have the power to cancel
all outstanding options or any outstanding related stock
appreciation rights, upon or after the effectiveness of any Change
in Control and, in connection with therewith, to determine the
amount, if any, that each participant shall be entitled to receive
in settlement of the outstanding options or any outstanding
related stock appreciation rights held by him on the date of such
cancellation; provided, however, that the value of the cash or
property received with respect to each optioned share or with
respect to each related stock appreciation right shall not exceed
the per share value received or to be received by the holders of
the outstanding Common Stock of the Company as the result of such
merger or consolidation and shall not be less than the difference
between the per share value of the outstanding Common Stock of the
Company and the exercise price for each optioned share or related
stock appreciation right."
This First Amendment shall be effective as of August 2, 1999, the date of
its adoption by the Committee.
GENERAL HOUSEWARES CORP.
By /s/ Raymond J. Kulla
_____________________________
Name: Raymond J. Kulla
Title: Vice President, General
Counsel and Secretary
This Employment Agreement (this "Agreement") made this 12th day of
August, 1999, by and between General Housewares Corp., a Delaware
corporation ("GHC"), and Mark S. Scales, an individual ("Scales"). Certain
capitalized terms used herein are defined in paragraph 23
W I T N E S S E T H:
WHEREAS, Scales has been an employee of GHC since July 10, 1995,
and he is currently Vice President, Chief Financial Officer and Treasurer
of GHC; and
WHEREAS, in recognition of the importance of Scales' services to
the continuity of management of GHC in the event of the potentially
disruptive circumstances of a Change of Control, GHC desires to provide for
Scales' continued employment with GHC, following a Change of Control, upon
the terms and conditions herein set forth; and
WHEREAS, Scales desires to accept the terms and conditions of this
Agreement so that he can continue his service to GHC without fear of
disruption in the event of a Change of Control;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements set forth hereinafter, the parties hereto agree as follows:
1. Employment. During the Employment Period, GHC shall continue to
employ Scales (if he is in GHC's employ on the date a Change of Control
shall be deemed to have occurred) and Scales shall continue his employment
with GHC, upon the terms and conditions set forth hereinafter.
2. Term. The term of this Agreement shall commence on the date
hereof and shall expire on the date Scales' at-will employment shall end
prior to the date a Change of Control shall be deemed to have occurred;
otherwise it shall expire on the third anniversary of the date of the
Change of Control, subject to paragraphs 7, 8(a) and 9 hereof, unless
sooner terminated in accordance with paragraph 6 hereof.
3. Compensation and Benefits. Subject to the express provisions of
Sections 8 and 9 below, as applicable, GHC shall continue to pay Base
Salary and to provide Benefits to Scales during the Employment Period.
4. Duties. During the Employment Period, Scales shall continue to
serve in the position or positions held at the commencement of the
Employment Period.
5. Extent of Services. Scales shall devote his best efforts to the
performance of his duties hereunder, and shall not allow any other
activities to interfere in a material fashion with his performance of such
duties.
6. Termination Upon Death or Disability.
(a) This Agreement shall automatically terminate upon
Scales' death. Upon such termination, Scales' estate or beneficiaries shall
not be entitled to receive any compensation or benefits hereunder except
Base Salary and Benefits earned and accrued prior to the date of Scales'
death. Notwithstanding the foregoing, in the event Scales is receiving
benefits under Section 8 or 9 hereof at the time of his death, Scales'
estate or beneficiaries shall continue to receive such benefits after his
death.
(b) If Scales is unable to perform his duties hereunder
by reason of a Long Term Disability, GHC, by action of its Board of
Directors, may terminate this Agreement upon written notice to Scales. Upon
such termination, Scales shall not be entitled to any compensation or
benefits hereunder, but rather shall be entitled to such benefits as may be
provided under any GHC disability policy then in effect.
7. Termination by GHC for Just Cause. GHC, by action of its Board
of Directors, may terminate this Agreement at any time during the
Employment Period for Just Cause upon written notice to Scales. Upon such
termination, Scales shall not be entitled to receive any compensation or
benefits hereunder except Base Salary and Benefits earned and accrued prior
to the date of termination.
8. Other Termination by GHC.
(a) If, during the first twelve (12) months of the
Employment Period, GHC terminates Scales' employment hereunder for any
reason other than Disability or Just Cause, GHC shall pay Scales a lump sum
equal to three (3) years times Base Salary within seven (7) days of said
termination and provide Benefits to Scales for three (3) years following
said termination. If such termination of Scales' employment occurs during
the final twenty-four (24) month period of the Employment Period, GHC shall
pay Scales a lump sum equal to two (2) years times Base Salary within seven
(7) days of said termination and provide Benefits to Scales until the
second anniversary of the date of such termination. Payments and benefits
to Scales in accordance with this paragraph 8(a) shall constitute fair and
reasonable liquidated damages for termination of Scales' employment.
(b) If GHC terminates Scales' employment prior to and at
the request of any third party in connection with a Change of Control
(other than for Disability or Just Cause), GHC shall within seven (7) days
of such termination pay Scales a lump sum equal to three (3) times his Base
Salary and to provide Benefits to Scales through the third anniversary of
the date of such termination, and such payments and benefits shall
constitute fair and reasonable liquidated damages for termination of
Scales' employment. Accordingly, Scales shall not be entitled to any other
compensation, benefits or damages on account of such termination.
9. Termination by Scales for Good Reason. If, during the first
twelve (12) months of the Employment Period, Scales terminates his
employment with GHC for Good Reason, provided he has given GHC at least
thirty (30) days' prior written notice of such termination, GHC shall pay
Scales a lump sum equal to three (3) years Base Salary within seven (7)
days of said termination and provide Benefits until the third anniversary
of such termination. If Scales terminates his employment for Good Reason
during the final twenty-four (24) month period of the Employment Period,
provided he has given GHC at least thirty (30) days prior written notice of
such termination, GHC shall pay Scales a lump sum equal to two (2) years
Base Salary within seven (7) days of such termination and provide Benefits
to Scales until the second anniversary of such termination.
10. Certain Reductions. Notwithstanding any other provisions of
this Agreement, in the event that any payment or benefit received or to be
received by Scales pursuant to this Agreement would not be deductible (in
whole or in part) by GHC or any affiliate or person making such payment or
providing such benefit, as a result of Section 280G of the Code, then, to the
extent necessary to make any such payment or benefit deductible, the cash
payments or benefits shall first be reduced (if necessary, to zero), and
all other payments and benefits shall thereafter be reduced (if necessary,
to zero); provided, however, that Scales may elect to have the noncash
payments and benefits reduced (or eliminated) prior to any reduction of the
cash payments and benefits. 11.
Payments; Mitigation.
Following termination of Scales' employment, Scales shall
not be required to mitigate the amount of any payment provided for in this
Agreement by seeking other employment or otherwise. Further, the amount of
any payment or Benefit provided for in this Agreement shall not be reduced
by any compensation earned by Scales as the result of employment by another
employer, by retirement benefits, by offset against any amount claimed to
be owed by Scales to GHC, or otherwise; provided, however, Benefits
otherwise receivable by Scales hereunder shall be reduced to the extent
benefits of the same type are received by or made available to Scales by a
new employer during the period that he is entitled to Benefits under this
Agreement and any such Benefits received by or made available to Scales
shall be reported to GHC by Scales; provided further, that GHC shall
reimburse Scales for the excess, if any, of the cost of such Benefits to
Scales during the applicable period over such cost immediately prior to the
date of termination.
12. Successors; Binding Agreement.
(a) GHC shall require any successor to all or
substantially all of the business and/or assets of GHC (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to assume and
agree to perform this Agreement in the same manner and to the same extent
that GHC would be required to perform it if no such succession had taken
place. Subject thereto, this Agreement may not be assigned by GHC without
the prior written consent of Scales.
(b) This Agreement is a personal contract and the rights
and interests of Scales hereunder may not be sold, transferred, assigned,
pledged, encumbered, or hypothecated by him, except as otherwise expressly
permitted by the provisions of this Agreement. This Agreement shall inure
to the benefit of and be enforceable by Scales and his personal or legal
representatives, executors, administrators, heirs, distributees, devisees
and legatees.
13. Amendment; Waiver. No provision of this Agreement may be
amended or waived, unless in writing signed by the party against whom
enforcement may be made.
14. Severability. If, for any reason, any provision of this
Agreement is held to be invalid, such invalidity shall not affect the other
provisions of this Agreement not held to be invalid, and each such other
provision shall, to the full extent consistent with applicable law,
continue in full force and effect.
15. Headings. The headings of the paragraphs herein are included
solely for convenience of reference and shall not control the meaning or
interpretation of any of the provisions of this Agreement.
16. Governing Law. This Agreement has been executed and delivered
in the State of Indiana and its validity, interpretation, performance, and
enforcement shall be governed by the laws of the State of Indiana without
regard to any such laws relating to choice or conflict of laws.
17. No Other Rights; Prior Agreements. Nothing in this Agreement
shall be construed or interpreted to create any rights or obligations
between the parties except those rights and obligations expressly set forth
in this Agreement. This Agreement contains the entire understanding between
the parties hereto and supersedes all agreements previously entered into
with respect to the matters referred to herein, except that letter
agreement dated September 23, 1998 between the parties shall continue in
full force and effect in the respect and to the extent that any provision
therein is not inconsistent with or covered by this Agreement. The
Severance Compensation Plan dated September 27, 1985 is hereby superseded
by this Agreement, and accordingly, insofar as Scales may be concerned, is
of no further force and effect. Further, it is expressly recognized and
agreed that prior to the Employment Period, except as set forth in this
Agreement and subject to the terms of the letter agreement dated September
23, 1998 between the parties, Scales' employment is "at will" and either
GHC or Scales can terminate the relationship at will, with or without cause
at any time.
18. Notices. Any notice or other communication in writing that is
required or permitted pursuant to this Agreement shall be deemed delivered
if delivered personally or by facsimile transmission or deposited in the
United States mail, postage prepaid, by certified mail, addressed as
follows:
To Scales: Mark S. Scales
7413 S. Westwood Lane
Terre Haute, IN 47802
Telephone: 812-299-4585
To GHC: General Housewares Corp.
1536 Beech Street
Terre Haute, IN 47804
Attention: Paul A. Saxton
Telephone: 812-232-1000
Facsimile: 812-232-7016
With a copy to: Raymond J. Kulla
General Counsel
General Housewares Corp.
1536 Beech Street
Terre Haute, IN 47804
Telephone: 812-232-1000
Facsimile: 812-232-7016
19. Miscellaneous. All references to sections of the Code shall be
deemed also to refer to any successor provisions to such sections. GHC
shall withhold from the payments provided for hereunder any and all amounts
required to be withheld under applicable federal, state or local law.
20. Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be conclusively settled by arbitration
in Chicago, Illinois, by a panel of three arbitrators (selected in
accordance with this paragraph 20) in accordance with the rules of the
American Arbitration Association then in effect. The panel of arbitrators
shall be selected as follows: each of GHC and Scales shall select one (1)
arbitrator and the two (2) arbitrators selected by the parties shall select
the third arbitrator. GHC shall pay all fees and expenses of the panel of
arbitrators. If the arbitrators determine that Scales has prevailed, GHC
shall reimburse Scales for all legal fees and costs incurred in pursuing
such arbitration. Judgment may be entered on the arbitrators' award in any
court having jurisdiction.
21. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
22. Source of Benefits. It is expressly understood and agreed that
any and all payments and benefits which become payable or due under this
Agreement directly by GHC shall be satisfied exclusively from the general
assets of GHC. No separate trust fund or other segregated account under
which Scales is the beneficiary shall be required to be established or
procured by GHC for purposes of funding any such payments or benefits
hereunder.
23. Definitions.
(a) "Base Salary" shall mean Scales' annual salary at the
rate in effect on the day immediately prior to the effective date of the
Change of Control or Scales' annual salary at the rate in effect on the day
immediately prior to the date of termination of his employment, whichever
is greater.
(b) "Benefits" shall mean life, disability, accident and
health insurance, 401(k) plan, retirement benefits (including Scales' SERP
Benefit) and other benefits substantially similar to those which Scales is
receiving on the day immediately prior to the effective date of the Change
of Control or date of termination of Scales' employment, whichever is more
beneficial to Scales. For purposes of determining Scales' benefit under the
SERP, he will be deemed to have received his Base Salary and to have earned
Pension Years under the SERP (subject to the limitation on the maximum
number of years specified in the SERP) during the period in which his
Benefits are continued. If Scales is precluded from participating in a
benefit plan because he is no longer an employee of GHC, GHC shall provide
a substantially similar benefit outside the plan.
(c) "Change of Control" shall mean any one of the
following events:
(i) if any person becomes the
beneficial owner, directly or
indirectly, of securities of GHC
representing 30% or more of the
combined voting power of GHC's then
outstanding securities, excluding any
person who becomes such a beneficial
owner in connection with a transaction
described in clause (iii) (A) below;
(ii) if the following
individuals cease for any reason to
constitute a majority of the number of
individuals then serving as directors
of GHC: individuals who, on the date
hereof, are serving as directors and
any new director (other than a director
whose initial assumption of office is
in connection with an actual or
threatened election contest, including
but not limited to a consent
solicitation, relating to the election
of directors of GHC) whose appointment
or election by the Board or nomination
for election by GHC's stockholders was
approved or recommended by a vote of at
least two-thirds of the directors then
still in office who either were
directors on the date hereof or whose
appointment, election or nomination for
election was previously so approved or
recommended;
(iii) if there is consummated a
merger or consolidation of GHC with any
other corporation, other than (A) a
merger or consolidation which would
result in the voting securities of GHC
outstanding immediately prior to such
merger or consolidation continuing to
represent (either by remaining
outstanding or by being converted into
voting securities of the surviving
entity or any parent thereof), in
combination with the ownership of any
trustee or other fiduciary holding
securities under an employee benefit
plan of GHC or any subsidiary of GHC,
at least 70% of the combined voting
power of the securities of GHC or such
surviving entity or any parent thereof
outstanding immediately after such
merger or consolidation, or (B) a
merger or consolidation effected to
implement a recapitalization of GHC (or
similar transaction) in which no person
is or becomes the beneficial owner,
directly or indirectly, of securities
of GHC (not including in the securities
beneficially owned by such person any
securities acquired directly from GHC
or its affiliates other than in
connection with the acquisition by GHC
or its affiliates of a business)
representing 30% or more of the
combined voting power of GHC's then
outstanding securities; or
(iv) if the stockholders of GHC
approve a plan of complete liquidation
or dissolution of GHC or there is
consummated an agreement for the sale
or disposition by GHC of all or
substantially all of GHC's assets,
other than a sale or disposition by GHC
of all or substantially all of GHC's
assets to an entity, at least 70% of
the combined voting power of the voting
securities of which are owned by
stockholders of GHC in substantially
the same proportions as their ownership
of GHC immediately prior to such sale.
Notwithstanding the foregoing, a "Change of Control" shall not be
deemed to have occurred by virtue of the consummation of a transaction or
series of integrated transactions immediately following which the record
holders of the common stock of GHC immediately prior to such transaction or
series of transactions continue to have substantially the same
proportionate ownership in an entity which owns all or substantially all of
the assets of GHC immediately following such transaction or series of
transactions.
(d) "Code" shall mean the Internal Revenue Code of 1986
as amended from time to time. (e) "Long Term Disability" shall have the
meaning set forth in GHC's Long Term Disability Plan as in effect on the
date of this Agreement.
(f) "Good Reason" shall mean the occurrence (without
Scales' express written consent) after the Change of Control of any one of
the following acts by GHC, or failure by GHC to act, unless such act or
failure is corrected within ten (10) days immediately following the date of
the notice of termination given pursuant to paragraph 9 in respect thereof:
(i) the relocation of Scales'
principal place of employment to a
location more than thirty (30) miles
from Scales' principal place of
employment immediately prior to the
Change of Control or GHC's requiring
Scales to be based anywhere other than
such principal place of employment or
permitted relocation thereof, except
for required travel on GHC's business
to an extent substantially consistent
with Scales' present business travel
obligations;
(ii) a reduction in Scales'
Base Salary or the failure by GHC to
continue in effect any incentive
compensation plan in which Scales
participates immediately prior to the
Change in Control which is material to
Scales' total compensation unless an
equitable arrangement (embodied in an
ongoing substitute or alternative plan)
has been made with respect to such
plan, or the failure by GHC to continue
Scales' participation therein (or in
such substitute or alternative plan) on
a basis not materially less favorable,
both in terms of the amount and timing
of payment of benefits provided and the
level of Scales' participation relative
to other participants, as existed
immediately prior to the Change in
Control;
(iii) a reduction by GHC in
Scales' Benefits; or
(iv) removal by GHC of Scales
from any position in which he is
serving on the effective date of the
Change of Control to a subordinate
position, the assignment to Scales of
any duties inconsistent with Scales'
status as a senior executive officer of
GHC or a substantial adverse alteration
in the nature or status of Scales'
duties, responsibilities or reporting
relationships from those in effect
immediately prior to the Change in
Control.
Scales' continued employment shall not constitute consent to, or a waiver
of rights with respect to, any act or failure constituting Good Reason
hereunder.
(g) "Just Cause" shall mean:
(i) the willful and continued
failure by Scales to perform
substantially his duties to GHC (other
than any such failure resulting from
Scales' incapacity due to physical or
mental illness) after a written demand
for substantial performance is
delivered to Scales by GHC's Board of
Directors, which demand shall
specifically identify the manner in
which the Board believes that Scales
has not substantially performed his
duties;
(ii) the willful engaging by
Scales in conduct which is demonstrably
and materially injurious to GHC or its
subsidiaries, monetarily or otherwise;
or
(iii) the conviction of Scales
of, or a plea of nolo contendere by
Scales to, a felony.
For the purposes of clauses (i) and (ii) of this subparagraph, no act, or
failure to act, on Scales' part shall be deemed "willful" unless done, or
omitted to be done, by Scales not in good faith and without reasonable
belief that his act, or failure to act, was in the best interests of GHC.
Further, Scales shall not be deemed to have been terminated for Just Cause
unless there shall have delivered to him a copy of a resolution duly
adopted by the affirmative vote of not less than three-quarters (3/4) of
the entire membership of the Board at a meeting of the Board which was
called and held for the purpose of considering such termination (after
reasonable notice to Scales and an opportunity for Scales, together with
Scales' counsel, to be heard before the Board) finding that, in the good
faith opinion of the Board, Scales was guilty of conduct set forth in
clause (i) (ii) or (iii) above, and specifying the particulars thereof in
detail. If Scales shall dispute the allegations, the issues shall be
submitted promptly to arbitration in accordance with the provisions of
paragraph 20.
(h) "Pension Plan" shall mean General Housewares Corp.
Pension Plan for Non-Bargaining Unit Employees.
(i) "Employment Period" shall mean the period which
commences on the date a Change of Control shall be deemed to have occurred
and, subject to paragraphs 7, 8(a) and 9 hereof, shall end on the third
anniversary date of the Change of Control unless sooner terminated in
accordance with paragraph 6 hereof.
IN WITNESS WHEREOF, GHC, by its duly authorized officer, and
Scales have signed this Agreement on the date and year first above written.
Attest: GENERAL HOUSEWARES CORP.
___________________________ By: __________________________________
Its: _________________________________
Attest:
___________________________ ______________________________________
Mark S. Scales
EXHIBIT 11
COMPUTATION OF EARNINGS PER SHARE
(Dollars in thousands except per share amounts)
<TABLE>
<CAPTION>
For six months ended June 30,
1999 1998
Basic Diluted Basic Diluted
<S> <C> <C> <C> <C>
Net loss ($826) ($826) ($2,902) ($2,902)
Shares:
Weighted average number of
shares of common stock
outstanding 3,866,557 3,866,557 3,812,478 3,812,478
Shares assumed issued (less shares
assumed purchased for treasury) on
stock option agreements - - - -
Rounding 443 443 522 522
3,867,000 3,867,000 3,813,000 3,813,000
Net loss per common share ($0.21) ($0.21) ($0.76) ($0.76)
For three months ended June 30,
1999 1998
Basic Diluted Basic Diluted
Net loss ($ 173) ($ 173) ($ 201) ($ 201)
Shares:
Weighted average number of
shares of common stock
outstanding 3,875,435 3,875,435 3,813,251 3,813,251
Shares assumed issued (less shares
assumed purchased for treasury) on
stock option agreements - - - -
Rounding (435) (435) (251) (251)
3,875,000 3,875,000 3,813,000 3,813,000
Net loss per common share ($0.04) ($0.04) ($0.05) ($0.05)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CURRENCY> U.S. DOLLARS
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> APR-01-1999
<PERIOD-END> JUN-30-1999
<EXCHANGE-RATE> 1
<CASH> 150
<SECURITIES> 0
<RECEIVABLES> 15,096
<ALLOWANCES> 1,588
<INVENTORY> 24,951
<CURRENT-ASSETS> 43,407
<PP&E> 23,476
<DEPRECIATION> 13,938
<CURRENT-LIABILITIES> 8,290
<BONDS> 0
0
0
<COMMON> 1,436
<OTHER-SE> 45,671
<TOTAL-LIABILITY-AND-EQUITY> 78,880
<SALES> 21,831
<TOTAL-REVENUES> 21,831
<CGS> 12,085
<TOTAL-COSTS> 4,707
<TOTAL-ASSETS> 79,880
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 56
<INTEREST-EXPENSE> 338
<INCOME-PRETAX> (299)
<INCOME-TAX> (126)
<INCOME-CONTINUING> (173)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (173)
<EPS-BASIC> (.04)
<EPS-DILUTED> (.04)
</TABLE>
