<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended Commission File Number
JUNE 30, 1998 1-3574
HASTINGS MANUFACTURING COMPANY
(Exact name of registrant as specified in its charter)
MICHIGAN 38-0633740
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
325 NORTH HANOVER STREET
HASTINGS, MICHIGAN 49058
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code:
616-945-2491
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes __X__ No _____
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
OUTSTANDING AT
CLASS JULY 24, 1998
----- -------------
<S> <C> <C>
Common stock, $2 par value 783,926 shares
</TABLE>
<PAGE>
Hastings Manufacturing Company and Subsidiaries
Contents
===========================
PART I - FINANCIAL INFORMATION
PAGE
Item 1 - Financial Statements:
Report on Review by Independent Certified Public
Accountants 3
Condensed Consolidated Balance Sheets -
June 30, 1998 and December 31, 1997 4-5
Condensed Consolidated Statements of Operations -
Three Months and Six Months Ended
June 30, 1998 and 1997 6
Condensed Consolidated Statements of Cash Flows -
Six Months Ended June 30, 1998 and 1997 7-8
Notes to Condensed Consolidated Financial
Statements 9-11
Review by Independent Certified Public Accountants 12
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of
Operations 13-18
PART II - OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of
Security Holders 19
Item 6 - Exhibits and Reports on Form 8-K 20
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<PAGE>
Report on Review by Independent Certified Public Accountants
Board of Directors
Hastings Manufacturing Company
Hastings, Michigan
We have reviewed the accompanying condensed consolidated balance sheet of
Hastings Manufacturing Company and subsidiaries as of June 30, 1998, and
the related condensed consolidated statements of operations for the three-
month and six-month periods ended June 30, 1998 and 1997, and cash flows
for the six-month periods ended June 30, 1998 and 1997, included in the
accompanying Securities and Exchange Commission Form 10-Q for the period
ended June 30, 1998. These condensed consolidated financial statements are
the responsibility of the Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical
procedures to financial data and making inquiries of persons responsible
for financial and accounting matters. It is substantially less in scope
than an audit conducted in accordance with generally accepted auditing
standards, the objective of which is the expression of an opinion regarding
the financial statements taken as a whole. Accordingly, we do not express
such an opinion.
Based on our reviews, we are not aware of any material modifications that
should be made to the accompanying condensed consolidated financial
statements for them to be in conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of December 31, 1997, and the
related consolidated statements of operations, stockholders' equity and
cash flows for the year then ended (not presented herein). In our report
dated February 27, 1998, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set
forth in the accompanying condensed consolidated balance sheet as of
December 31, 1997, is fairly stated in all material respects in relation
to the consolidated balance sheet from which it has been derived.
/s/BDO Seidman, LLP
BDO Seidman, LLP
Grand Rapids, Michigan
July 24, 1998
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<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Hastings Manufacturing Company and Subsidiaries
Condensed Consolidated Balance Sheets
========================
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
ASSETS 1998 1997
----------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash $ 318,177 $ 558,172
Accounts receivable, less allowance
for possible losses of $150,000
and $215,000 6,515,431 5,148,906
Refundable income taxes 13,102 13,475
Inventories:
Finished products 7,361,952 7,460,534
Work in process 547,013 572,307
Raw materials 2,041,259 1,239,657
Prepaid expenses and other assets 60,743 75,669
Future income tax benefits 1,790,687 2,351,687
Other current assets 978,294 958,517
----------- -----------
TOTAL CURRENT ASSETS 19,626,658 18,378,924
----------- -----------
PROPERTY AND EQUIPMENT
Land and improvements 649,405 658,243
Buildings 4,731,211 4,633,937
Machinery and equipment 18,762,648 18,180,840
----------- -----------
24,143,264 23,473,020
Less accumulated depreciation 15,873,887 15,156,120
----------- -----------
NET PROPERTY AND EQUIPMENT 8,269,377 8,316,900
----------- -----------
INTANGIBLE PENSION ASSET 815,189 815,189
FUTURE INCOME TAX BENEFITS 5,833,812 5,828,923
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<PAGE>
OTHER ASSETS 24,866 50,395
----------- -----------
$34,569,902 $33,390,331
=========== ===========
</TABLE>
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<PAGE>
<TABLE>
Hastings Manufacturing Company and Subsidiaries
Condensed Consolidated Balance Sheets
===============================
<CAPTION>
JUNE 30, DECEMBER 31,
LIABILITIES AND STOCKHOLDERS' EQUITY 1998 1997
----------- -----------
<S> <C> <C>
CURRENT LIABILITIES
Notes payable to banks $ 4,600,000 $ 3,400,000
Accounts payable 1,324,480 1,475,098
Accruals:
Compensation 663,740 494,781
Pension plan contribution 643,479 608,786
Taxes other than income 222,443 172,854
Income taxes 81,779 -
Miscellaneous 358,598 217,731
Current portion of postretirement
benefit obligation 1,110,442 1,110,442
Current maturities of
long-term debt 1,296,875 1,462,500
----------- -----------
TOTAL CURRENT LIABILITIES 10,301,836 8,942,192
LONG-TERM DEBT,
less current maturities - 565,625
PENSION AND DEFERRED COMPENSATION
OBLIGATIONS, less current portion 3,230,006 3,243,618
POSTRETIREMENT BENEFIT OBLIGATION,
less current portion 14,883,069 15,318,770
----------- -----------
TOTAL LIABILITIES 28,414,911 28,070,205
----------- -----------
STOCKHOLDERS' EQUITY
Preferred stock, $2 par value,
authorized and unissued
500,000 shares - -
Common stock, $2 par value,
1,750,000 shares authorized;
783,926 and 780,626 shares
issued and outstanding 1,567,852 1,561,252
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<PAGE>
Additional paid-in capital 245,532 145,788
Retained earnings 6,611,701 5,793,219
Accumulated other comprehensive
income (Note 5):
Cumulative foreign currency
translation adjustment (840,616) (750,655)
Pension liability adjustment (1,429,478) (1,429,478)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 6,154,991 5,320,126
----------- -----------
$34,569,902 $33,390,331
=========== ===========
</TABLE>
See accompanying independent accountants' review report and notes to
condensed consolidated financial statements.
-7-
<PAGE>
<TABLE>
Hastings Manufacturing Company and Subsidiaries
Condensed Consolidated Statements of Operations
==============================
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------ ----------------
June 30, 1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
NET SALES $10,628,170 $9,602,232 $20,574,188 $18,354,389
COST OF SALES 7,263,221 6,599,540 14,035,201 12,528,797
----------- ---------- ----------- -----------
Gross profit 3,364,949 3,002,692 6,538,987 5,825,592
----------- ---------- ----------- -----------
OPERATING EXPENSES
Advertising 92,488 92,124 190,054 199,142
Selling 833,782 733,722 1,593,818 1,532,897
General and administrative 1,444,108 1,486,263 2,948,232 2,932,744
----------- ---------- ----------- -----------
2,370,378 2,312,109 4,732,104 4,664,783
----------- ---------- ----------- -----------
Operating income 994,571 690,583 1,806,883 1,160,809
----------- ---------- ----------- -----------
OTHER EXPENSE (INCOME)
Interest expense 113,440 134,020 222,570 257,123
Interest income (11,660) (13,658) (19,777) (22,779)
Other, net (1,225) (5,545) (201) (4,376)
----------- ---------- ----------- -----------
100,555 114,817 202,592 229,968
----------- ---------- ----------- -----------
Income before income tax expense 894,016 575,766 1,604,291 930,841
INCOME TAX EXPENSE 369,000 231,000 661,000 373,000
----------- ---------- ----------- -----------
NET INCOME $ 525,016 $ 344,766 $ 943,291 $ 557,841
=========== ========== =========== ===========
-8-
<PAGE>
BASIC AND DILUTED NET INCOME
PER SHARE OF COMMON STOCK
(Notes 4 and 6) $.68 $.45 $1.22 $.73
DIVIDENDS PER SHARE OF
COMMON STOCK (Note 6) $.08 $.05 $.155 $.10
</TABLE>
See accompanying independent accountants' review report and notes to
condensed consolidated financial statements.
-9-
<PAGE>
<TABLE>
Hastings Manufacturing Company and Subsidiaries
Condensed Consolidated Statements of Cash Flows
============================
<CAPTION>
Six months ended June 30, 1998 1997
----------- -----------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 943,291 $ 557,841
Adjustments to reconcile net
income to net cash from
operating activities:
Depreciation 760,888 678,194
Deferred income taxes 561,000 296,000
Gain on sale of property
and equipment (8,045) (5,003)
Change in postretirement
benefit obligation (435,701) (413,450)
Changes in operating
assets and liabilities:
Accounts receivable (1,384,485) (742,629)
Refundable income taxes - 19,435
Inventories (719,426) 406,925
Prepaid expenses and other
current assets (4,917) 68,313
Other assets 25,529 (62,199)
Accounts payable and accruals 422,160 (395,302)
----------- -----------
Net cash from operating activities 160,294 408,125
----------- -----------
INVESTING ACTIVITIES
Capital expenditures (757,948) (976,258)
Proceeds from sale of property
and equipment 18,268 6,316
----------- -----------
Net cash for investing activities (739,680) (969,942)
----------- -----------
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<PAGE>
FINANCING ACTIVITIES
Proceeds from issuance of notes
payable to banks 3,800,000 3,600,000
Principal payments on notes
payable to banks (2,600,000) (3,500,000)
Principal payments on long-term debt (731,250) (731,250)
Dividends paid (121,509) (78,122)
----------- -----------
Net cash from (for) financing activities 347,241 (709,372)
----------- -----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (7,850) (2,636)
----------- -----------
NET DECREASE IN CASH (239,995) (1,273,825)
CASH, beginning of period 558,172 1,457,783
----------- -----------
CASH, end of period $ 318,177 $ 183,958
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ 236,165 $ 261,647
Income taxes, net of refunds 11,068 14,268
</TABLE>
See accompanying independent accountants' review report and notes to
condensed consolidated financial statements.
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<PAGE>
Hastings Manufacturing Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
==========================
NOTE 1 In the opinion of the management of Hastings Manufacturing
Company and subsidiaries (the "Company"), the accompanying unaudited
condensed consolidated financial statements include all normal
recurring adjustments considered necessary to present fairly the
financial position as of June 30, 1998, and the results of
operations for the three months and six months ended June 30,
1998 and 1997, and cash flows for the six months ended June 30,
1998 and 1997.
NOTE 2 The results of operations for the six months June 30, 1998, are
not necessarily indicative of the results for all of 1998.
NOTE 3 The condensed consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiaries. All
significant intercompany balances, transactions and stockholdings
have been eliminated.
The accompanying consolidated financial statements are condensed
and do not contain all of the information and footnote
disclosures required by generally accepted accounting principles
in a complete set of financial statements.
NOTE 4 In February 1997, Statement of Financial Accounting Standards
(SFAS) No. 128, "Earnings Per Share," was issued. SFAS No. 128
simplifies the standards for computing earnings per share (EPS)
and makes them comparable to international EPS standards. It
requires the presentation of both "basic" and "diluted" EPS on
the face of the income statement with a supplementary
reconciliation of the numerators and denominators used in the
calculations. SFAS No. 128 was effective for financial
statements issued for periods after December 15, 1997, including
interim periods.
A reconciliation of the numerators and denominators used in the
"basic" and "diluted" EPS calculations follows:
-12-
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------ ----------------
June 30, 1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Numerator:
Net income used
for both "basic"
and "diluted"
EPS calculation $525,016 $344,766 $943,291 $557,841
======== ======== ======== ========
Denominator:
Weighted average shares
outstanding for the
period - used for
"basic" EPS calculation 771,496 768,516 771,496 768,516
Dilutive effect of stock
options 1,566 - 1,222 -
-------- -------- -------- --------
Weighted average shares
outstanding for the
period - used for
"diluted" EPS
calculation 773,062 768,516 772,718 768,516
======== ======== ======== ========
</TABLE>
NOTE 5 SFAS No. 128 had no effect on EPS for the three-month and six-
month periods ended June 30, 1997. All outstanding shares have
been adjusted for the two-for-one stock split discussed in Note
6.
SFAS No. 130, "Reporting Comprehensive Income," issued in June
1997, was adopted by the Company during the first quarter of
1998. SFAS No. 130 requires that all components of
comprehensive income and total comprehensive income be reported
in one of the following: a statement of income and comprehensive
income, a statement of comprehensive income or a statement of
stockholders' equity. The Company has elected to report
comprehensive income in its consolidated statement of
stockholders' income (which is not presented for interim
reporting purposes). Comprehensive income is comprised of net
income and all changes to stockholders' equity, except those due
to investments by owners and distributions to owners. For
interim reporting purposes, SFAS No. 130 requires disclosures of
total comprehensive income.
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<PAGE>
Comprehensive income and its components consist of the following:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------ ----------------
June 30, 1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net income $525,016 $344,766 $943,291 $557,841
Other comprehensive
income, net of tax:
Foreign currency
translation
adjustments (105,722) (2,992) (89,961) (28,114)
Minimum pension
liability adjustment - - - -
-------- -------- -------- --------
Other comprehensive
income (105,722) (2,992) (89,961) (28,114)
-------- -------- -------- --------
Comprehensive income $419,294 $341,774 $853,330 $529,727
======== ======== ======== ========
</TABLE>
Accumulated comprehensive income totaled $2,270,094 and
$2,180,133 at June 30, 1998 and December 31, 1997, respectively.
NOTE 6 On February 17, 1998, the Board of Directors authorized a two-
for-one stock split, effected in the form of a stock dividend,
effective March 23, 1998, payable to shareholders of record on
March 2, 1998. All references to number of common shares, except
shares authorized, and to all per share information have been
adjusted to reflect the stock split on a retroactive basis.
-14-
<PAGE>
Hastings Manufacturing Company and Subsidiaries
Review by Independent Certified Public Accountants
==========================
The June 30, 1998 and 1997, condensed consolidated financial statements
included in this filing on Form 10-Q have been reviewed by BDO Seidman,
LLP, Independent Certified Public Accountants, in accordance with
established professional standards and procedures for such a review.
-15-
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
As noted in the Company's 1997 Annual Report, 1997 reflected four quarters
of post-filter operating results. As such, no 1998 versus 1997 comparisons
are impacted by that event. Certain comparisons between 1997 and 1996,
however, continued to be impacted by the transition period following the
filter assets and operations sale. While most of the transition effects
were phased out by the third quarter of 1996, certain items, as detailed in
previous filings, carried through the 1996 year end.
RESULTS OF OPERATIONS
NET SALES
Net sales in the second quarter of 1998 increased $1,025,938, or 10.7%,
from $9,602,232 in the second quarter of 1997 to $10,628,170. Net sales
for the first half of 1998 have increased $2,219,799, or 12.1%, from
$18,354,389 in the first half of 1997 to $20,574,188. This growth was
fueled by increased piston ring sales volume in the domestic aftermarket,
private brand and export areas. The growth in the domestic aftermarket
reflects the continued success of the Company's increased focus in this
aspect of the piston ring market. The growth in the private brand area is
the result of increased volume to several major customers. The increase in
the export area is the result of the on-going development and growth of the
Company's direct export efforts, as detailed in previous reports.
Net sales in the second quarter of 1997 declined $1,175,391, or 10.9%, from
the second quarter of 1996. For the first half of 1997, net sales declined
$3,787,646, or 17.1%, from the first half of 1996. Filter operations
accounted for $2,178,000 in net sales volume for the second quarter of
1996, and $4,906,000 through the first half of that same year, whereas no
filter volume is included in the 1997 results. As such, net sales from the
remaining products in 1997 increased by $1,002,000, or 11.7%, and
$1,118,000, or 6.5%, for the comparative second quarter and first half
periods, respectively.
COST OF SALES AND GROSS PROFIT
Cost of sales in the second quarter of 1998 increased $663,681, or 10.1%,
from $6,599,540 in the second quarter of 1997, to $7,263,221. For the
first half of 1998, cost of sales increased $1,506,404, or 12.0%, from
$12,528,797 in the first half of 1997, to $14,035,201. The increased cost
of sales reflects the corresponding increase in net sales. The gross
profit margins increased slightly for the second quarter of 1998, from
31.3% for the second quarter of 1997, to 31.7%. For the first half of
1998, gross profit margins also increased, from 31.7% for the first half of
1997, to 31.8%. The increases in the gross profit margins are the result
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<PAGE>
of a sales mix change, with higher relative domestic aftermarket activity
for both the second quarter and the first half of 1998, in comparison to
the corresponding periods in 1997. In addition, there was a decrease in
certain product-driven distribution and support operating costs that are
included in cost of sales. The gross profit margin declined to 31.7% in the
second quarter of 1998 from 31.9% in the first quarter due to a sales mix
change, with a higher relative portion of private brand sales activity in
the second quarter. The private brand piston ring sales market has
traditionally generated a lower gross profit margin than domestic sales,
due to the lower level of operating expenses that are required to service
its sales volume. Through the first half of 1998, the individual product
cost factors (material, labor and overhead) have changed somewhat from
1997. While material costs have remained quite steady, labor rates
increased by 3% in early 1998. Overhead rates applied to these labor
rates, however, have declined, resulting in a minimal total cost per unit
change.
Cost of sales during the second quarter of 1997 decreased $1,354,421, or
17.0%, from the second quarter of 1996, to $6,599,540. For the first half
of 1997, cost of sales decreased $3,728,078, or 22.9%, from the first half
of 1996. The reduced cost of sales totals primarily reflect the absence of
any filter related activity in 1997. The gross profit margin for the first
half of 1997 improved to 31.7% from 26.6% in the first half of 1996. The
1996 results were affected by the transition agreement that the Company had
with the acquirer of the filter operations. This agreement resulted in
minimal gross profit being generated on filter products in 1996. In
addition to the specific filter production costs that are included in the
1996 results, certain product-driven distribution and support operating
costs are included in cost of sales. Following the 1996 relocation from
the Knoxville facility, these operating costs decreased from $2,144,000 in
the first half of 1996, to $1,413,000 in the first half of 1997.
OPERATING EXPENSES
Total operating expenses for the second quarter of 1998 increased $58,269,
or 2.5%, from $2,312,109 in the second quarter of 1997, to $2,370,378. For
the first half of 1998, these expenses increased by $67,321, or 1.4%, from
$4,664,783 in the first half of 1997, to $4,732,104. Advertising costs for
the second quarter of 1998 mirrored those of the second quarter of 1997.
For the first half or 1998 advertising costs declined slightly, reflecting
the inclusion of a biannual product catalog expense in 1997. Selling costs
for the second quarter of 1998 increased $100,060, of 13.6%, from the
second quarter of 1997. Selling costs for the first half of 1998 increased
$60,921, or 4.0%, from the first half of 1997. These increases are
primarily associated with volume-driven costs such as agency commissions
and various sales personnel expenses. There was also a moderate increase
in sales promotion expense in the second quarter of 1998. General and
administrative costs decreased $42,155, or 2.8%, from the second quarter of
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<PAGE>
1997. This decrease is due to cost savings attained in 1998 from the
amendment to the postretirement benefit plan in the second quarter of 1997,
combined with reduced employee education expenses. Education expenses
were unusually high in 1997, reflecting both internal and external costs
associated with the Company's successful QS9000 registration. For the
first half of 1998, the general and administrative expenses have increased
$15,488, or 0.5%, from the first half of 1997. This slight increase is the
result of the expense decreases noted above, offset by an increase in
various personnel support costs. The personnel costs include approximately
$50,000 of severance related to staffing reductions in early 1998.
Total operating expenses for both the second quarter and first half of 1997
decreased significantly from the comparative periods in 1996. These
reductions reflect the full elimination of any filter sensitive expenses by
the Company in 1997, as well as the favorable results of the restructuring
plan as reported in the Company's 1996 Annual Report.
OTHER EXPENSES (INCOME)
Other expenses netted to $100,555 for the second quarter of 1998, compared
to $114,817 for the second quarter of 1997. For the first half of 1998,
these expenses netted to $202,592, versus a net expense of $229,968 for the
first half of 1997. Short-term borrowings have increased for both periods
noted in 1998, reflecting increased working capital requirements as driven
by the net sales increase. Increased interest costs associated with these
short-term borrowings, however, were offset by the lower interest costs
realized from the declining long-term debt obligations. The net effect is
a reduction in interest expense in both the second quarter and first half
of 1998, in comparison to the corresponding periods in 1997. The 1998 and
1997 interest income amounts are derived from the funds generated by the
filter operations sale which are to be held in escrow through September of
this year.
Other expenses for both the second quarter and first half of 1997 increased
from the comparative periods in 1996. The net interest position reflects
both lower expense and income in the 1997 comparative periods. This
reflects a slight reduction in the Company's net borrowed position combined
with the elimination of interest income from funds that were previously
held for capital equipment acquisition.
TAXES ON INCOME
The 1998 and 1997 effective tax rates of 41.2% and 40.1%, respectively, are
higher than the domestic statutory rate, primarily due to the impact of
various state income taxes and the impact of a higher statutory rate
applicable to the Company's Canadian subsidiary.
As of June 30, 1998, the Company recorded net deferred income tax assets of
$7,624,499. The major components of those assets remain the tax effects of
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<PAGE>
net operating loss carryforwards and accrued retirement and postretirement
benefit obligations. The realization of this recorded benefit is dependent
upon the generation of future taxable income.
Management believes it is likely that adequate levels of future taxable income
will be generated to absorb the net operating loss carryforwards, the
deductible amounts related to the retirement and postretirement benefit
obligations and the remaining net deductible temporary differences.
YEAR 2000
During 1997, the Company utilized the services of an outside consultant to
assist in converting its computer systems to be Year 2000 compliant.
Management believes the Company's core mainframe operating
system and applications, its personal computer (PC) operating systems and
the majority of its PC applications are compliant. The remaining PC
applications are expected to be compliant in early 1999 with the next
software release or upgrade. Manufacturing equipment testing for Year 2000
compliance has been substantially completed, with the remainder to be
completed by year end. The Company's primary customers and vendors have
been contacted requesting assurances regarding their Year 2000 compliance.
Responses are in the process of being received and reviewed. Costs related
to the Year 2000 project during 1997, which approximated $110,000 for the
entire year, were expensed as incurred. Future costs to be incurred to
complete the Year 2000 project are not expected to be material.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary cash requirements continue to be for operating
expenses such as labor costs and raw materials, and for funding accounts
receivable, capital expenditures and long-term debt service. Historically,
the Company's primary sources of cash have been from operations and
bank borrowings. As a result of the full transition out of filter
operations, and the favorable impact of the subsequent restructuring
effort, the Company expects to generate sufficient future funds from
operations and bank borrowings to fund its growth and operating needs. The
short-term lines available to the Company as of June 30, 1998 totaled $7.2
million, of which $2.6 million was unused. This capacity was increased by
$1.0 million during the second quarter of 1998 to its current level. That
capacity is available to fund any additional inventory and accounts
receivable needs that result from the sales increase thus far this year.
During the first half of 1998, the Company generated $160,294 of net cash
for operating activities. The realized net income, depreciation, deferred
income taxes and increased accounts payable and accruals were largely
offset by increases in accounts receivable and inventories. The increased
accounts receivable and inventory totals reflect the additional working
capital requirements that are necessary to support the higher sales level.
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<PAGE>
The decline in the net deferred income tax asset is the result of the
partial utilization of the tax net operating loss carryforward, which
reflects the Company's favorable first half performance. The capital
expenditures for the first half of 1998 are at $757,948, which represents a
decrease in comparison to expenditures of $976,258 in the first half of
1997. While second quarter capital expenditures slowed to $304,180 from
$453,768 in the first quarter of 1998, total capital expenditures for
1998 may yet approach the yearly 1997 total of $1,770,302, as several
significant capital projects are currently under consideration. The financing
activities for the first half of 1998 reflect the continued amortization of
the Company's long-term debt obligations, as well as the increased reliance
upon short-term borrowings that have been necessary to satisfy increased
working capital needs. Dividends paid increased in the first half of 1998
as a result of the Company's March 23, 1998 two-for-one stock split effected
in the form of a stock dividend, which required an upward adjustment of
$0.005 dividend per share on the number of shares outstanding after the
stock split.
During the first half of 1997, the Company generated net cash from
operating activities of $408,125. The realized net income and absorbed
depreciation, combined with the reductions in the deferred income tax
asset, inventories and prepaid assets, generated enough cash to absorb the
net increase in accounts receivable and the net decline in accounts payable
and accruals. The investing activities were quite high for the first half
of 1997, reflecting the timing of several major capital expenditures. The
financing activities for the first half of 1997 reflect the normal
amortization of the Company's long-term debt obligation, as well as a
reduced reliance on the Company's short-term debt subsequent to the filter
operations transition.
As noted throughout the above discussion, the Company has realized
increased activity thus far in 1998. That growth has resulted in an
increased net income level combined with increased working capital demands.
The Company will continue to monitor its working capital needs to balance
its cash and growth demands. At this point, the Company anticipates that
operations (which should be subject to minimal current cash outflows for
U.S. income taxes due to the utilization of the net operating loss
carryforwards), in combination with the balancing of available short-term
lines with our operations, will generate cash flows that will be sufficient
to fund its working capital, capital outlays and dividend requirements
through 1998.
NEW ACCOUNTING STANDARDS
Statement of Financial Accounting Standards (SFAS) No. 131, "Disclosures
about Segments of an Enterprise and Related Information," which was issued
in June 1997 and supersedes SFAS No. 14, "Financial Reporting for
Segments of a Business Enterprise," establishes standards for the way that
-20-
<PAGE>
public companies report information about operating segments in annual
financial statements and requires reporting of selected information about
operating segments in interim financial statements issued to the public.
It also establishes standards for disclosures regarding products and services,
geographic areas and major customers. SFAS No. 131 defines operating
segments as components of a company about which separate financial
information is available that is evaluated regularly by the chief operating
decision maker in deciding how to allocate resources and in assessing
performance.
SFAS No. 132, "Employers' Disclosures about Pensions and Other
Postretirement Benefits," issued in February 1998, revises employers'
disclosures about pension and other postretirement benefit plans. It does
not change the measurement or recognition of those plans. SFAS No. 132
standardizes the disclosure requirements to the extent practicable,
requires additional information on changes in the benefit obligations and
fair values of plan assets that will facilitate financial analysis and
eliminates certain disclosures that are no longer as useful as when they
were first required to be presented.
SFAS No. 131 and 132 are effective for the Company's 1998 year-end
financial statements and require restatement of prior year comparative
information. The implementation of these new Statements will not affect
results of operations and financial position, but may have an impact on
future financial statement disclosures. With respect to SFAS No. 131, the
Company does not expect to change its operating segment groupings.
SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities," issued in June 1998, requires companies to recognize all
derivatives contracts as either assets or liabilities in the balance sheet
and to measure them at fair value. If certain conditions are met, a
derivative may be specifically designated as a hedge, the objective of
which is to match the timing of gain or loss recognition on the hedging
derivative with the recognition of (i) the changes in the fair value of the
hedged asset or liability that are attributable to the hedged risk or (ii)
the earnings effect of the hedged forecasted transaction. For a derivative
not designated as a hedging instrument, the gain or loss is recognized in
income in the period of change. SFAS No. 133 is effective for all fiscal
quarters of fiscal years beginning after June 15, 1999.
Historically, the Company has not entered into derivatives contracts for
speculative purposes. The Company does periodically enter into interest
rate swap and collar agreements to reduce the impact of changes in interest
rates on its floating rate borrowings. However, the fair value of such
derivatives are not significant. Accordingly, the Company does not expect
adoption of the new Statement on January 1, 2000 to materially affect its
financial statements.
-21-
<PAGE>
FORWARD LOOKING STATEMENTS
With the exception of historical matters, the matters discussed in this
commentary include certain predictions and projections that may be
considered forward-looking statements under securities laws, including, but
not limited to, those statements under the captions "Results of Operations"
and "Liquidity and Capital Resources." These statements are subject to a
number of important risks and uncertainties that could cause actual results
to differ materially, including but not limited to economic, competitive,
governmental and technological factors affecting the Company's operations,
markets, products, services and prices. The Company undertakes no
obligation to update, amend or clarify forward-looking statements, whether
as a result of new information, future events or otherwise.
-22-
<PAGE>
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The annual meeting of shareholders of Hastings Manufacturing
Company was held on May 5, 1998. The purposes of the meeting were
to elect directors, to approve the Hastings Manufacturing Company
Stock Option and Restricted Stock Plan of 1997 and to transact any
other business that may have properly come before the meeting.
The name of each director elected at the meeting (along with
the number of votes cast for, against or authority withheld and
broker non-votes) and the name of each other director whose term
of office as a director continued after the meeting follows:
<TABLE>
<CAPTION>
AUTHORITY BROKER
ELECTED DIRECTOR FOR AGAINST WITHHELD NON-VOTES
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Neil A. Gardner 383,077 -- 120 --
</TABLE>
DIRECTORS WHO CONTINUE TO SERVE
Mark R.S. Johnson
Andrew F. Johnson
Dale W. Koop
Monty C. Bennett
Douglas A. DeCamp
William R. Cook
Richard L. Foster
The number of votes cast for, against or authority withheld and broker
non-votes for approval of the Hastings Manufacturing Company Stock
Option and Restricted Stock Plan of 1997 follows:
<TABLE>
<CAPTION>
AUTHORITY BROKER
FOR AGAINST WITHHELD NON-VOTES
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Approval of the 381,776 3,924 420 --
Hastings
Manufacturing Company
Stock Option and
and Restricted
Stock Plan of 1997
</TABLE>
-23-
<PAGE>
The numbers of shares set forth above do not take into account the
two-for-one stock split discussed in Note 6 to the financial statements
contained in this Form 10-Q, as the record date for determining the
shareholders entitled to vote at the meeting was prior to the payment date of
the stock split.
Item 6. Exhibits and Reports on Form 8-K
(a) EXHIBITS. The following documents are filed as exhibits to
this report on Form 10-Q:
EXHIBIT
NUMBER DOCUMENT
3(a) Articles of Incorporation of Hastings Manufacturing Company, as
amended to date.
3(b) Bylaws of Hastings Manufacturing Company, as amended to date.
4(a) Articles of Incorporation of Hastings Manufacturing Company, as
amended to date. See Exhibit 3(a).
4(b) Bylaws of Hastings Manufacturing Company, as amended to date.
See Exhibit 3(b).
4(c) Instruments defining the rights of security holders, including
indentures filed as an exhibit to the Form 10-K Annual Report
for the year ended December 31, 1983, are incorporated herein by
reference.
4(d) NBD Bank, N.A. $3,312,500 Term Loan Agreement and Term Note,
filed as an exhibit to the Form 10-K Annual Report for the
year-ended December 31, 1993, is incorporated herein by reference.
4(e) NBD Bank, N.A. $4,000,000 Term Loan Agreement and Term Note,
filed as an exhibit to the Form 10-K Annual Report for the
year-ended December 31, 1994, is incorporated herein by reference.
4(f) NBD Bank, N.A. $6,000,000 Credit Authorization and Master
Promissory Note, dated May 31, 1994, filed as an exhibit to the
Form 10-K Annual Report for the year-ended December 31, 1994, is
incorporated herein by reference.
4(g) First Amendment, dated May 2, 1995, to the NBD Bank, N.A.
$6,000,000 Credit Authorization and Master Promissory Note,
dated May 31, 1994, filed as an exhibit to the Form 10-K Annual
Report for the year-ended December 31, 1995, is incorporated herein
by reference.
-24-
<PAGE>
EXHIBIT
NUMBER DOCUMENT
4(h) Second Amendment, dated September 30, 1995, to the NBD Bank, N.A.
$6,000,000 Credit Authorization and Master Promissory Note, dated
May 31, 1994, filed as an exhibit to the Form 10-K Annual Report
for the year-ended December 31, 1995, is incorporated herein by
reference.
4(i) Third Amendment, dated as of May 31, 1996, to the NBD Bank, N.A.
$6,000,000 Credit Authorization and Master Promissory Note, dated
May 31, 1994, filed as an exhibit to the Form 10-K Annual Report
for the year-ended December 31, 1996, is incorporated herein by
reference.
4(j) Fourth Amendment, dated as of May 31, 1997, to the NBD Bank, N.A.,
$4,000,000 Credit Authorization and Master Promissory Note, dated
May 31, 1994, filed as an exhibit to the Form 10-Q Quarterly Report
for the period ended June 30, 1997, is incorporated herein by
reference.
4(k) Fifth Amendment, dated as of May 31, 1998, to the NBD Bank, N.A.,
$5,000,000 Credit Authorization and Master Promissory Note, dated
May 31, 1994.
4(l) Preferred Stock Purchase Rights, filed as an exhibit to Form 8-K
filed with the Securities and Exchange Commission on February 15,
1996, is incorporated herein by reference.
4(m) Confirmation, dated as of March 12, 1996, regarding an interest
rate collar transaction between Hastings Manufacturing Company
and NBD Bank, filed as an exhibit to the Form 10-K Annual Report
for the year-ended December 31, 1996, is incorporated herein by
reference.
4(n) Commercial Line of Credit Agreement and Note, dated as of January
23, 1998, between Hastings Manufacturing Company and Hastings City
Bank.
10(a) Hastings Manufacturing Company Stock Option and Restricted Stock
Plan of 1997, filed as Appendix A to the Company's Definitive
Proxy Statement with respect to the Company's Annual Meeting of
Shareholders held on May 5, 1998, is here incorporated by reference.
27 Financial Data Schedule
(b) REPORTS ON FORM 8-K. No reports on Form 8-K have been filed
during the quarter for which this report is filed.
-25-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on his behalf by the
undersigned thereunto duly authorized.
HASTINGS MANUFACTURING COMPANY
Date: August 14, 1998 /S/MONTY C. BENNETT
Monty C. Bennett
Its Vice-President, Employee
Relations, Secretary and Director
Date: August 14, 1998 /S/THOMAS J. BELLGRAPH
Thomas J. Bellgraph
Its Vice-President, Finance
-26-
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DOCUMENT
3(a) Articles of Incorporation of Hastings Manufacturing Company, as
amended to date.
3(b) Bylaws of Hastings Manufacturing Company, as amended to date.
4(a) Articles of Incorporation of Hastings Manufacturing Company, as
amended to date. See Exhibit 3(a).
4(b) Bylaws of Hastings Manufacturing Company, as amended to date.
See Exhibit 3(b).
4(c) Instruments defining the rights of security holders, including
indentures filed as an exhibit to the Form 10-K Annual Report
for the year ended December 31, 1983, are incorporated herein by
reference.
4(d) NBD Bank, N.A. $3,312,500 Term Loan Agreement and Term Note,
filed as an exhibit to the Form 10-K Annual Report for the
year-ended December 31, 1993, is incorporated herein by reference.
4(e) NBD Bank, N.A. $4,000,000 Term Loan Agreement and Term Note,
filed as an exhibit to the Form 10-K Annual Report for the
year-ended December 31, 1994, is incorporated herein by reference.
4(f) NBD Bank, N.A. $6,000,000 Credit Authorization and Master
Promissory Note, dated May 31, 1994, filed as an exhibit to the
Form 10-K Annual Report for the year-ended December 31, 1994, is
incorporated herein by reference.
4(g) First Amendment, dated May 2, 1995, to the NBD Bank, N.A.
$6,000,000 Credit Authorization and Master Promissory Note,
dated May 31, 1994, filed as an exhibit to the Form 10-K Annual
Report for the year-ended December 31, 1995, is incorporated herein
by reference.
<PAGE>
EXHIBIT
NUMBER DOCUMENT
4(h) Second Amendment, dated September 30, 1995, to the NBD Bank, N.A.
$6,000,000 Credit Authorization and Master Promissory Note, dated
May 31, 1994, filed as an exhibit to the Form 10-K Annual Report
for the year-ended December 31, 1995, is incorporated herein by
reference.
4(i) Third Amendment, dated as of May 31, 1996, to the NBD Bank, N.A.
$6,000,000 Credit Authorization and Master Promissory Note, dated
May 31, 1994, filed as an exhibit to the Form 10-K Annual Report
for the year-ended December 31, 1996, is incorporated herein by
reference.
4(j) Fourth Amendment, dated as of May 31, 1997, to the NBD Bank, N.A.,
$4,000,000 Credit Authorization and Master Promissory Note, dated
May 31, 1994, filed as an exhibit to the Form 10-Q Quarterly Report
for the period ended June 30, 1997, is incorporated herein by
reference.
4(k) Fifth Amendment, dated as of May 31, 1998, to the NBD Bank, N.A.,
$5,000,000 Credit Authorization and Master Promissory Note, dated
May 31, 1994.
4(l) Preferred Stock Purchase Rights, filed as an exhibit to Form 8-K
filed with the Securities and Exchange Commission on February 15,
1996, is incorporated herein by reference.
4(m) Confirmation, dated as of March 12, 1996, regarding an interest
rate collar transaction between Hastings Manufacturing Company
and NBD Bank, filed as an exhibit to the Form 10-K Annual Report
for the year-ended December 31, 1996, is incorporated herein by
reference.
4(n) Commercial Line of Credit Agreement and Note, dated as of January
23, 1998, between Hastings Manufacturing Company and Hastings City
Bank.
10(a) Hastings Manufacturing Company Stock Option and Restricted Stock
Plan of 1997, filed as Appendix A to the Company's Definitive
Proxy Statement with respect to the Company's Annual Meeting of
Shareholders held on May 5, 1998, is here incorporated by reference.
27 Financial Data Schedule
<PAGE>
EXHIBIT 3(a)
RESTATED ARTICLES OF INCORPORATION
OF
HASTINGS MANUFACTURING COMPANY
ARTICLE I
The name assumed by this corporation and by which it shall be known in
law is
HASTINGS MANUFACTURING COMPANY
ARTICLE II
This corporation intends to proceed under Sec. 1, Chapter 1, Part 1,
of the above act.
ARTICLE III
The purpose or purposes of this corporation are as follows: The
manufacture, purchase, distribution, sale, dealing with and dealing in
machinery, mechanical appliances, devices, equipment, parts, tools and
accessories.
ARTICLE IV
Principal place where company will operate is Hastings, in the County
of Barry, State of Michigan.
Address of main office in Michigan is Hastings.
Address of main office outside of Michigan is none.
ARTICLE V
1. The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 2,250,000 shares, of which
500,000 shares Preferred Stock issuable in series, par value $2 per share,
are to be of a class to be designated "Series Preferred Stock", and
1,750,000 shares of Common Stock, par value $2 per share, are to be
designated "Common Stock".
The designations, preferences and relative, participating,
optional or other special rights of each class of stock of the Corporation
and the qualifications, limitations, or restrictions thereon are as
follows:
The shares of Series Preferred Stock may from time to time be
divided into one or more series, each such series to be so designated as to
<PAGE>
distinguish the shares thereof from the shares of other series and classes
as shall hereafter be determined in the resolution or resolutions providing
for the issue of such Series Preferred Stock from time to time adopted by
the Board of Directors pursuant to authority so to do which is hereby
vested by the Board of Directors.
(a) Each series of Series Preferred Stock
(i) may have such number of shares;
(ii) may have such voting powers, full or limited, or may be
without voting powers;
(iii) may be subject to redemption at the option of the
Corporation at such time or times and at such prices;
(iv) may be entitled to receive dividends (which may be
cumulative or non-cumulative) at such rate or rates, or such
conditions, and at such times, and payable in preference to,
or in such relation to, the dividends payable on any other
class or classes or series of stock;
(v) may have such rights upon voluntary or involuntary
liquidation, dissolution or winding-up of, or upon any
distribution of the assets, of the Corporation;
(vi) may be made convertible into, or exchangeable for, shares of
any other class or classes or of any other series of the
same or any other class or classes of stock of the
Corporation;
(vii) may be entitled to the benefit of a sinking fund or purchase
fund to be applied to the purchase or redemption of shares
of such series in such amount or amounts;
(viii) may be entitled to the benefit of conditions and
restrictions upon the creation of indebtedness of the
Corporation or any subsidiary, upon the issue of any
additional stock (including additional shares of such series
or of any other series) and upon the payment of dividends or
the making of other distributions on, and the purchase,
redemption or other acquisitions by the Corporation or any
subsidiary of any outstanding stock of the Corporation; and
(ix) may have such other relative, participating, optional or
other special rights and qualifications, limitations or
restrictions thereof:
<PAGE>
as shall be stated in said resolution or resolutions providing for the
issue of such Series Preferred Stock and any such series may vary from
any other series with respect to one or more of the above matters.
Except where otherwise set forth in the resolution or resolutions
adopted by the Board of Directors providing for the issue of any
series of Series Preferred Stock, the number of shares comprising such
series may be increased or decreased (but not below the number of
shares then outstanding) from time to time by like action of the Board
of Directors and by the filing of a certificate as required by
statute.
(b) Shares of any series of Series Preferred Stock which have been
redeemed (whether through the operation of a sinking fund or otherwise) or
purchased by the Corporation, or which, if convertible or exchangeable,
have been converted into or exchanged for shares of stock of any other
class or classes shall have the status of authorized and unissued shares of
Series Preferred Stock and may be reissued as a part of the series of which
they were originally a part or may be reclassified and reissued as part of
a new series of Preferred Stock to be created by resolution or resolutions
of the Board of Directors or as part of any other series of Series
Preferred Stock, all subject to the conditions or restrictions on issuance
set forth in the resolution or resolutions adopted by the Board of
Directors providing for the issue of any series of Series Preferred Stock
and to any filing required by law.
2. The Board of Directors is authorized to issue bonds or shares
convertible into shares of the Corporation and the Board of Directors may
amend the Articles of Incorporation to increase the authorized shares of
any class or series to such number as will be sufficient, when added to the
previously authorized but unissued shares of such class or series, to
satisfy the conversion privileges of any such bonds or shares convertible
into shares of such class or series.
3. (a) Except as otherwise provided by law or by the resolution or
resolutions of the Board of Directors providing for the issue of any series
of the Preferred Stock, the Common Stock shall have the exclusive right to
vote for the election of Directors and for all other purposes, each holder
of the Common Stock being entitled to one vote for each share held.
(b) Subject to all of the rights of the Preferred Stock or any
series thereof, the holders of the Common Stock shall be entitled to
receive, when, as and if declared by the Board of Directors, out of funds
legally available therefor, dividends payable in cash, stock or otherwise.
4. Upon any liquidation, dissolution or winding-up of the
Corporation, whether voluntary or involuntary, and after the holders of the
Preferred Stock of each series shall have been paid in full the amounts to
which they respectively shall be entitled, or a sum sufficient for such
payment in full shall have been set aside, the remaining net assets of the
<PAGE>
Corporation shall be distributed pro rata to the holders of the Common
Stock in accordance with their respective rights and interests, to the
exclusion of the holders of the Preferred Stock.
ARTICLE VI
The term of existence of this corporation shall be perpetual.
ARTICLE VII
The names of the stockholders, their respective residences and the
number of shares of the several classes of stock of this corporation
subscribed by each are as follows:
<TABLE>
<CAPTION>
NAME RESIDENCE NO. OF SHARES
CLASS A CLASS B CLASS C
STOCK STOCK STOCK
<S> <C> <C> <C> <C>
Emil Tyden 301 S. Park Street 3,500 1,040 3,750
Hastings, Michigan
A.K. Johnson 309 S. Park Street 2,500 5,800 3,750
Hastings, Michigan
W.R. Cook 525 W. Green Street 1,000 1,560 1,250
Hastings, Michigan
H.W. Frost 435 W. Grand Street 1,000 320 1,250
Hastings, Michigan
L.H. Taffee 314 W. State Road 1,000 320 1,250
Hastings, Michigan
C.W. Dolan 429 S. Park Street 1,000 320 1,250
Hastings, Michigan
Oscar Tyden 427 S. Broadway 500 320 1,250
Hastings, Michigan
Evelyn Thomas 418 S. Market Street 500 320 1,250
Hastings, Michigan
J. W. Redford 426 W. Walnut Street 1,000
Hastings, Michigan
<PAGE>
C.W. Crawford 429 S. Washington St. 1,000
Hastings, Michigan
C. Jacobson 310 S. Hanover Street 1,000
Hastings, Michigan
Hubert D. Cook 118 S. Hanover Street 1,000
Hastings, Michigan
M.L. Cook 127 S. Hanover Street 250
Hastings, Michigan
H.J. Newton 811 S. Jefferson St. 1,000
Hastings, Michigan
George Crakes 630 W. Michigan Ave. 500
Hastings, Michigan
Maybelle Hart Shultz, Michigan 250
James A. Batson 417 W. Mill Street 500
Hastings, Michigan
Swan Anderson 227 E. High Street 500
Hastings, Michigan
Roy J. Taffee 303 W. Church Street 500
Hastings, Michigan
Fred'k K. Hill 126 W. Walnut Street 500
Hastings, Michigan
John K. Tyden 425 W. Center Street 500
Hastings, Michigan
M.A. Lambie 528 S. Park Street 500
Hastings, Michigan ------ ------ ------
Total 20,000 10,000 15,000
</TABLE>
ARTICLE VIII
The names and addresses of the officers and directors (or an attorney
in fact) for the first year of the corporation's existence are as follows:
<PAGE>
<TABLE>
<CAPTION>
NAME OFFICE ADDRESS
<S> <C> <C>
E. Tyden President and director Hastings, Michigan
A.E. Johnson Vice-president and director Hastings, Michigan
C.W. Dolan Secretary and director Hastings, Michigan
A.K. Johnson Treasurer and director Hastings, Michigan
C.W. Crawford Director Hastings, Michigan
H.D. Cook Director Hastings, Michigan
</TABLE>
ARTICLE IX
The holders of shares of Preferred Stock or of Common Stock shall have
as preemptive rights to subscribe for or purchase any additional number of
shares of the capital stock of the Company of any class now or hereafter
authorized or any Preferred Stock, bonds, debentures, or other obligations
or rights or options convertible into or exchangeable for, or entitling the
holder or owner to subscribe for or purchase any shares of capital stock,
or any rights to exchange shares issued for shares to be issued.
ARTICLE X
A director of the corporation shall not be personally liable to the
corporation or its shareholders for monetary damages for a breach of
fiduciary duty as a director, except for liability:
(1) For any breach of the director's duty of loyalty to the
corporation or its shareholders;
(2) For acts or omissions not in good faith or that involve
intentional misconduct or knowing violation of law;
(3) For a violation of Section 551(1) of the Michigan Business
Corporation Act; and
(4) For any transaction from which the director derived an improper
personal benefit.
<PAGE>
If, after the effective date of this Article, the Michigan Business
Corporation Act is amended to further eliminate or limit the liability of a
director, then a director of the corporation (in addition to the
circumstances in which a director is not personally liable as set forth in
the preceding paragraph) shall not be liable to the corporation or its
shareholders to the fullest extent permitted by the Michigan Business
Corporation Act, as so amended. No amendment to or alteration,
modification or repeal of this Article shall apply to or have any effect on
the liability or alleged liability of any director of the corporation for
or with respect to any acts or omissions of such director occurring prior
to such amendment, alteration, modification or repeal.
<PAGE>
EXHIBIT 3(b)
HASTINGS MANUFACTURING COMPANY
(A Michigan Corporation)
BYLAWS
<PAGE>
HASTINGS MANUFACTURING COMPANY
(A Michigan Corporation)
BYLAWS
TABLE OF CONTENTS
PAGE
ARTICLE I - OFFICES. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II - MEETINGS OF SHAREHOLDERS. . . . . . . . . . . . . . . . . . 1
Section 1. Times and Places of Meetings. . . . . . . . . . . . . 1
Section 2. Annual Meetings . . . . . . . . . . . . . . . . . . . 1
Section 3. Notice of Annual Meeting. . . . . . . . . . . . . . . 1
Section 4. Shareholder List. . . . . . . . . . . . . . . . . . . 1
Section 5. Special Meetings. . . . . . . . . . . . . . . . . . . 2
Section 6. Notice of Special Meetings. . . . . . . . . . . . . . 2
Section 7. Quorum. . . . . . . . . . . . . . . . . . . . . . . . 2
Section 8. Vote Required . . . . . . . . . . . . . . . . . . . . 2
Section 9. Voting Rights . . . . . . . . . . . . . . . . . . . . 2
Section 10. Conduct of Meetings . . . . . . . . . . . . . . . . . 3
Section 11. Inspectors of Election . . . . . . . . . . . . . . . 3
ARTICLE III - DIRECTORS. . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1. Number and Term of Directors. . . . . . . . . . . . . 4
(a) Number of Directors . . . . . . . . . . . . . . . . . 4
(b) Classification. . . . . . . . . . . . . . . . . . . . 4
(c) Vacancies and Newly Created
Directorships . . . . . . . . . . . . . . . . . . . . 4
(d) Amendment . . . . . . . . . . . . . . . . . . . . . . 4
Section 2. Qualifications of Directors . . . . . . . . . . . . . 5
Section 3. Powers. . . . . . . . . . . . . . . . . . . . . . . . 5
Section 4. Resignation . . . . . . . . . . . . . . . . . . . . . 5
Section 5. Removal . . . . . . . . . . . . . . . . . . . . . . . 5
Section 6. Nominations of Director Candidates. . . . . . . . . . 6
Section 7. Compensation of Directors . . . . . . . . . . . . . . 7
Section 8. Places of Meetings. . . . . . . . . . . . . . . . . . 7
Section 9. First Meeting of Newly Elected Board. . . . . . . . . 7
Section 10. Regular Meetings. . . . . . . . . . . . . . . . . . . 7
Section 11. Special Meetings. . . . . . . . . . . . . . . . . . . 7
Section 12. Purpose Need Not be Stated. . . . . . . . . . . . . . 8
Section 13. Quorum. . . . . . . . . . . . . . . . . . . . . . . . 8
Section 14. Action Without a Meeting. . . . . . . . . . . . . . . 8
Section 15. Meeting by Telephone or Similar
Equipment . . . . . . . . . . . . . . . . . . . . . . 8
-i-
<PAGE>
PAGE
Section 16. Written Notice. . . . . . . . . . . . . . . . . . . . 8
Section 17. Waiver of Notice. . . . . . . . . . . . . . . . . . . 8
ARTICLE IV - COMMITTEES OF DIRECTORS . . . . . . . . . . . . . . . . . . 9
Section 1. Executive Committee . . . . . . . . . . . . . . . . . 8
Section 2. Audit Committee . . . . . . . . . . . . . . . . . . . 9
Section 3. Compensation Committee. . . . . . . . . . . . . . . . 9
Section 4. Nominating Committee. . . . . . . . . . . . . . . . . 9
Section 5. Other Committees. . . . . . . . . . . . . . . . . . . 9
Section 6. Committee Meetings. . . . . . . . . . . . . . . . . . 10
ARTICLE V - OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 1.(a) Central Staff . . . . . . . . . . . . . . . . . . . . 10
(b) Divisional Officers . . . . . . . . . . . . . . . . . 10
Section 2. Qualifications of Officers. . . . . . . . . . . . . . 11
Section 3. Chairman of the Board . . . . . . . . . . . . . . . . 11
Section 4. President or Presidents . . . . . . . . . . . . . . . 11
Section 5. Chief Executive Officer or Officers . . . . . . . . . 11
Section 6. Chief Operating Officer . . . . . . . . . . . . . . . 12
Section 7. Vice Presidents . . . . . . . . . . . . . . . . . . . 12
Section 8. Secretary . . . . . . . . . . . . . . . . . . . . . . 12
Section 9. Treasurer . . . . . . . . . . . . . . . . . . . . . . 13
Section 10. Assistant Secretary and Assistant
Treasurer . . . . . . . . . . . . . . . . . . . . . . 13
Section 11. Other Officers. . . . . . . . . . . . . . . . . . . . 13
ARTICLE VI - INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . 13
Section 1. Indemnification Other Than in Actions
by or in the Right of the
Corporation . . . . . . . . . . . . . . . . . . . . . 13
Section 2. Indemnification in Actions by or in
the Right of the Corporation. . . . . . . . . . . . . 14
Section 3. Expenses. . . . . . . . . . . . . . . . . . . . . . . 15
Section 4. Authorization of Indemnification. . . . . . . . . . . 15
Section 5. Advancing of Expenses . . . . . . . . . . . . . . . . 15
Section 6. Partial Indemnification . . . . . . . . . . . . . . . 16
Section 7. Indemnification Hereunder Not
Exclusive . . . . . . . . . . . . . . . . . . . . . . 16
Section 8. Insurance . . . . . . . . . . . . . . . . . . . . . . 17
Section 9. Mergers . . . . . . . . . . . . . . . . . . . . . . . 17
Section 10. Savings Clause. . . . . . . . . . . . . . . . . . . . 17
Section 11. Definitions . . . . . . . . . . . . . . . . . . . . . 17
Section 12. Construction. . . . . . . . . . . . . . . . . . . . . 18
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PAGE
ARTICLE VII - SUBSIDIARIES . . . . . . . . . . . . . . . . . . . . . . . 18
Section 1. Subsidiaries. . . . . . . . . . . . . . . . . . . . . 18
Section 2. Subsidiary Officers Not Executive
Officers. . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE VIII - CERTIFICATES OF STOCK . . . . . . . . . . . . . . . . . . 19
Section 1. Form. . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 2. Facsimile Signature . . . . . . . . . . . . . . . . . 19
Section 3. Lost Certificates . . . . . . . . . . . . . . . . . . 19
Section 4. Transfers of Stock. . . . . . . . . . . . . . . . . . 19
Section 5. Fixing of Record Date by Board. . . . . . . . . . . . 20
Section 6. Provision for Record Date in the
Absence of Board Action . . . . . . . . . . . . . . . 20
Section 7. Adjournments. . . . . . . . . . . . . . . . . . . . . 20
Section 8. Registered Shareholders . . . . . . . . . . . . . . . 20
ARTICLE IX - GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . 21
Section 1. Dividends . . . . . . . . . . . . . . . . . . . . . . 21
Section 2. Reserves. . . . . . . . . . . . . . . . . . . . . . . 21
Section 3. Checks. . . . . . . . . . . . . . . . . . . . . . . . 21
Section 4. Fiscal Year . . . . . . . . . . . . . . . . . . . . . 21
Section 5. Seal. . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 6. Written Waiver of Notice. . . . . . . . . . . . . . . 21
ARTICLE X - AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . 21
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B Y L A W S
OF
HASTINGS MANUFACTURING COMPANY
ARTICLE I
OFFICES
The corporation may have offices at such places, both within and
without the State of Michigan as the Board of Directors may from time to
time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
SECTION 1. TIMES AND PLACES OF MEETINGS. All meetings of the
shareholders shall be held, except as otherwise provided by statute or
these Bylaws, at such time and place as may be fixed from time to time by
the Board of Directors.
SECTION 2. ANNUAL MEETINGS. Annual meetings of the shareholders
shall be held at the principal office of the corporation in the City of
Hastings, State of Michigan, at a date designated by the Board of Directors
from time to time, between February 1 and June 1 of each year.
SECTION 3. NOTICE OF ANNUAL MEETING. Written notice of the annual
meeting shall be given personally or by mail to each shareholder entitled
to vote thereat at least twenty (20) days before the date of the meeting.
Attendance of a shareholder at a meeting shall constitute a waiver of
notice, except when the shareholder attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction
of any business because the meeting is not lawfully called or convened.
SECTION 4. SHAREHOLDER LIST. The officer or agent who has charge of
the stock ledger of the corporation shall prepare and make before every
meeting of shareholders, a complete list of the shareholders entitled to
vote at the meeting, arranged by class or series in alphabetical order,
showing the address of and the number of shares registered in the name of
each shareholder. Such list shall be open to the examination of any
shareholder, for any purpose germane to the meeting, during the whole time
thereof, and may be inspected by any shareholder who is present.
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SECTION 5. SPECIAL MEETINGS. Special meetings of the shareholders
may be called by an executive officer whenever directed by the Board of
Directors, or by the Chief Executive Officer. Such request shall state the
purpose of the proposed meeting. Special meetings of shareholders may be
held within or without the State of Michigan as shall be stated in the
notice of the meeting or in a duly executed waiver of notice thereof.
SECTION 6. NOTICE OF SPECIAL MEETINGS. Written notice of a special
meeting of shareholders, stating the time, place and object thereof, shall
be given personally or by mail to each shareholder entitled to vote
thereat, at least ten (10) days before the date fixed for the meeting.
SECTION 7. QUORUM. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented
by proxy, shall constitute a quorum at all meetings of the shareholders for
the transaction of business, except as otherwise provided by statute or by
the Articles of Incorporation. The shareholders present in person or by
proxy at such meeting may continue to do business until adjournment,
notwithstanding the withdrawal of enough shareholders to leave less than a
quorum. Whether or not a quorum is present, the meeting may be adjourned
by a vote of the shares present.
Except when the holders of a class or series of shares are
entitled to vote separately on an item of business, shares of all classes
and series entitled to vote shall be combined as a single class and series
for the purpose of determining a quorum. When the holders of a class or
series of shares are entitled to vote separately on an item of business,
shares of that class or series entitled to cast a majority of the votes of
that class or series at a meeting constitute a quorum of that class or
series at that meeting, unless a greater or lesser quorum is provided by
statute or the Articles of Incorporation.
SECTION 8. VOTE REQUIRED. When a quorum is present at any meeting,
the vote of the holders of a majority of the stock having voting power
present in person or represented by proxy shall decide any question brought
before such meeting, unless the question is one upon which by express
provision of the statutes or of the Articles of Incorporation, a different
vote is required, in which case such express provision shall govern and
control the decision of such question.
SECTION 9. VOTING RIGHTS. Except as otherwise provided by the
Articles of Incorporation or the resolution or resolutions of the Board of
Directors creating any class of stock, each shareholder shall at every
meeting of shareholders be entitled to one (1) vote in person or by proxy
for each share of the capital stock having voting power held by such
shareholder. In all elections for directors the vote shall be taken by
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ballot. A proxy shall be valid only with respect to the particular
meeting, or any adjournment or adjournments thereof, to which it
specifically pertains.
SECTION 10. CONDUCT OF MEETINGS. Meetings of shareholders generally
shall follow accepted rules of parliamentary procedure, subject to the
following:
(a) The chairman of the meeting shall have absolute
authority over matters of procedure, and there shall be no appeal
from the ruling of the chairman. If, in his absolute discretion,
the chairman deems it advisable to dispense with the rules of
parliamentary procedure as to any one (1) meeting of shareholders
or part thereof, he shall so state and shall clearly state the
rules under which the meeting or appropriate part thereof shall
be conducted.
(b) If disorder should arise which prevents the
continuation of the legitimate business of the meeting, the
chairman may quit the chair and announce the adjournment of the
meeting; and upon his so doing, the meeting is immediately
adjourned.
(c) The chairman may ask or require that anyone not a bona
fide shareholder or proxy leave the meeting.
(d) A resolution or motion shall be considered for vote
only if proposed by a shareholder or a duly authorized proxy and
seconded by an individual who is a shareholder or a duly
authorized proxy other than the individual who proposed the
resolution or motion.
SECTION 11. INSPECTORS OF ELECTION. The Board of Directors or, if
they shall not have so acted, the Chief Executive Officer, may appoint, at
or prior to any meeting of shareholders, one or more persons (who may be
employees of the corporation) to serve as inspectors of election. The
inspectors so appointed shall determine the number of shares outstanding
and the voting power of each, the shares represented at the meeting, the
existence of a quorum, the validity and effect of proxies, and shall
receive votes or ballots, hear and determine challenges and questions
arising in connection with the right to vote, count and tabulate votes or
ballots, determine the result, and do such acts as are proper to conduct
the election or vote with fairness to all shareholders.
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ARTICLE III
DIRECTORS
SECTION 1. NUMBER AND TERM OF DIRECTORS. Members of the Board of
Directors of the corporation shall be selected, replaced and removed as
follows:
(a) NUMBER OF DIRECTORS. The number of the directors of
the corporation shall be fixed from time to time by resolution
adopted by the affirmative vote of at least eighty percent (80%)
of the entire Board of Directors but shall not be less than nine
(9) nor more than twelve (12).
(b) CLASSIFICATION. The Board of Directors, other than
those who may be elected by the holders of any class or series of
stock having a preference over the common stock as to dividend or
upon liquidation, shall be divided into three classes as nearly
equal in number as possible, with the term of office of one class
expiring each year. At each annual meeting of the shareholders,
the successors of the class of directors whose term expires at
that meeting shall be elected to hold office for a term expiring
at the annual meeting of shareholders held in the third year
following the year of their election.
(c) VACANCIES AND NEWLY CREATED DIRECTORSHIPS. Subject to
the rights of the holders of any series of preferred stock then
outstanding, any vacancy occurring in the Board of Directors
caused by resignation, removal, death, disqualification or other
incapacity, and any newly created directorships resulting from an
increase in the number of directors, shall be filled by a
majority vote of directors then in office, whether or not a
quorum. Each director chosen to fill a vacancy or a newly
created directorship shall hold office until the next election of
directors by the shareholders. When the number of directors is
changed, any newly created or eliminated directorships shall be
so apportioned among the classes as to make all classes as nearly
equal in number as possible. No decrease in the number of
directors constituting the Board of Directors shall shorten the
term of any incumbent director.
(d) AMENDMENT. Notwithstanding Article X or any other
provision of these Bylaws, the provisions of this Section 1 of
Article III of the Bylaws of this corporation shall not be
amended, altered, modified or repealed except upon the
affirmative vote of a majority of the outstanding shares of stock
of the corporation entitled to vote in elections of directors;
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provided, however, that the foregoing provisions regarding
shareholder approval of any amendment to or alteration,
modification or repeal of this Section 1 of Article III of the
Bylaws shall not apply to any amendment, alteration, modification
or repeal which has been approved by the affirmative vote of
eighty percent (80%) of the entire Board of Directors, which
shall include the affirmative vote of at least one (1) director
of each class of the Board of Directors.
SECTION 2. QUALIFICATIONS OF DIRECTORS. All directors of this
corporation shall be and remain at all times shareholders thereof. A
director shall cease to be qualified as such upon sale or transfer of all
of his holdings in the corporation.
SECTION 3. POWERS. The business of the corporation shall be managed
by its Board of Directors, which may exercise all such powers of the
corporation and do all such lawful acts and things as are not by statute or
by the Articles of Incorporation or by these Bylaws directed or required to
be exercised or done by the shareholders.
SECTION 4. RESIGNATION. Any director may resign at any time and such
resignation shall take effect upon receipt of written notice thereof by the
corporation, or at such subsequent time as set forth in the notice of
resignation.
SECTION 5. REMOVAL. Any director may be removed from office at any
time, but only for cause, and only if removal is approved as set forth
below.
Except as may be provided otherwise by law, cause for removal
shall be construed to exist only if: (i) the director whose removal is
proposed has been convicted of a felony by a court of competent
jurisdiction and such conviction is no longer subject to direct appeal;
(ii) such director has been adjudicated by a court of competent
jurisdiction to be liable for negligence, or misconduct, in the performance
of his duty to the corporation in a matter of substantial importance to the
corporation and such adjudication is no longer subject to a direct appeal;
(iii) such director has become mentally incompetent, whether or not so
adjudicated, which mental incompetency directly affects his ability as a
director of the corporation; or (iv) the director's actions or failure to
act are deemed by the Board of Directors to be in derogation of the
director's duties.
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Removal for cause, as cause is defined in (i) and (ii) above,
must be approved by at least a majority of the total number of directors or
by at least a majority vote of the shares of the corporation then entitled
to be voted at an election for that director, and the action for removal
must be brought within one year of such conviction or adjudication.
Removal for cause, as cause is defined in (iii) and (iv) above, must be
approved by at least two-thirds (2/3) of the total number of directors.
For purposes of this paragraph, the total number of directors will not
include the director who is the subject of the removal determination, nor
will such director be entitled to vote thereon.
SECTION 6. NOMINATIONS OF DIRECTOR CANDIDATES.
(a) Nominations of candidates for election for directors of
the corporation at any meeting of shareholders called for
election of directors (an "Election Meeting") may be made by the
Board of Directors or by any shareholders entitled to vote at
such Election Meeting.
(b) Nominations made by the Board of Directors shall be
made at a meeting of the Board of Directors, or by written
consent of directors in lieu of a meeting, not less than thirty
(30) days prior to the date of the Election Meeting, and such
nominations shall be reflected in the minute books of the
corporation as of the date made. At the request of the Secretary
of the corporation, each proposed nominee shall provide the
corporation with such information concerning himself as is
required under the rules of the Securities and Exchange
Commission, to be included in the corporation's proxy statements
soliciting proxies for his election as a director.
(c) Any shareholder who intends to make a nomination at the
Election Meeting shall deliver, not less than one hundred twenty
(120) days prior to the date of notice of the Election Meeting in
the case of an annual meeting, and not more than seven (7) days
following the date of notice of the meeting in the case of a
special meeting, a notice to the Secretary of the corporation
setting forth: (i) the name, age, business address and residence
address of each nominee proposed in such notice; (ii) the
principal occupation or employment of each such nominee; (iii)
the number of shares of capital stock of the corporation which
are beneficially owned by each such nominee; (iv) a statement
that the nominee is willing to be nominated; and (v) such other
information concerning each such nominee as would be required
under the rules of the Securities and Exchange Commission in a
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proxy statement soliciting proxies for the election of such
nominees.
(d) If the chairman of the Election Meeting determines that
a nomination was not made in accordance with the foregoing
procedures, such nomination shall be void.
SECTION 7. COMPENSATION OF DIRECTORS. Each director who is not a
salaried officer of the corporation may receive as compensation for his
services in that capacity such sums and such benefits as shall from time to
time be determined by the Board of Directors, plus traveling expenses and
other expenses necessary for attendance at regular or special meetings of
the Board of Directors and committees of the board. Members of special or
standing committees may be allowed like compensation for attending
committee meetings. Nothing herein shall be construed to preclude any
director from serving the corporation in any other capacity and receiving
compensation therefor.
SECTION 8. PLACES OF MEETINGS. The Board of Directors of the
corporation may hold meetings, both regular and special, either within or
without the State of Michigan.
SECTION 9. FIRST MEETING OF NEWLY ELECTED BOARD. The first meeting
of each newly elected Board of Directors shall be held following the annual
meeting of shareholders, and no notice of such meeting shall be necessary
to the newly elected directors in order to legally constitute the meeting,
provided a quorum shall be present. In the event such meeting is not held
immediately following the annual meeting of shareholders, the meeting may
be held at such time and place as shall be specified in a notice given as
hereinafter provided for special meetings of the Board of Directors, or as
shall be specified in a written waiver signed by all of the directors.
SECTION 10. REGULAR MEETINGS. Regular meetings of the Board of
Directors may be held without notice at such time and at such place as
shall from time to time be determined by the board.
SECTION 11. SPECIAL MEETINGS. Subject to the provisions of Section
16 of this Article III, special meetings of the Board of Directors may be
called by the Chairman, Chief Executive Officer, or Secretary or by any two
(2) directors on one (1) days' notice to each director.
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SECTION 12. PURPOSE NEED NOT BE STATED. Neither the business to be
transacted at nor the purpose of any regular or special meeting of the
Board of Directors need be specified in the notice of such meeting.
SECTION 13. QUORUM. At all meetings of the board a majority of the
directors shall constitute a quorum for the transaction of business, and
the acts of a majority of the directors present at any meeting at which
there is a quorum shall be acts of the Board of Directors except as may be
otherwise specifically provided by statute or by the Articles of
Incorporation. If a quorum shall not be present at any meeting of the
Board of Directors, the directors present thereat may adjourn the meeting
from time to time, without notice other than announcement at the meeting,
until a quorum shall be present.
SECTION 14. ACTION WITHOUT A MEETING. Unless otherwise restricted by
the Articles of Incorporation or these Bylaws, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting if, before or after the
action, all members of the board or of such committee, as the case may be,
consent thereto in writing and such written consent is filed with the
minutes or proceedings of the board or committee.
SECTION 15. MEETING BY TELEPHONE OR SIMILAR EQUIPMENT. The Board of
Directors or any committee designated by the Board of Directors may
participate in a meeting of such board or committee, by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a
meeting pursuant to this section shall constitute presence in person at
such meeting.
SECTION 16. WRITTEN NOTICE. Notices to directors shall be in writing
and delivered personally or mailed to the directors at their addresses
appearing on the books of the corporation. Notice by mail shall be deemed
to be given at the time when the same shall be mailed. Notice to directors
may also be given by telegram. Notwithstanding the foregoing, notice shall
also be given by telegram if the date of the meeting to which such notice
relates is within three (3) days of the date that such notice is given.
SECTION 17. WAIVER OF NOTICE. The attendance of a director at a
meeting shall constitute a waiver of notice of such meeting, except where a
director attends a meeting for the express purpose of objecting to the
transaction of any business because the meeting has not been lawfully
called or convened.
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ARTICLE IV
COMMITTEES OF DIRECTORS
SECTION 1. EXECUTIVE COMMITTEE. The Board of Directors may appoint
an Executive Committee whose membership shall consist of such members of
the Board of Directors as it may deem advisable from time to time to serve
during the pleasure of the board. The Board of Directors may also appoint
directors to serve as alternates for members of the committee in the
absence or disability of regular members. The Board of Directors may fill
any vacancies as they occur. The Executive Committee shall have and may
exercise the powers of the Board of Directors in the management of the
business affairs and property of the corporation during the intervals
between meetings of the Board of Directors, subject to law and to such
limitations and control as the Board of Directors may impose from time to
time.
SECTION 2. AUDIT COMMITTEE. The Audit Committee, if there be one,
shall cause a suitable examination of the financial records and operations
of the corporation and its subsidiaries to be made by the corporation. The
Audit Committee shall also recommend to the Board of Directors the
employment of independent certified public accountants to examine the
financial statements of the corporation and its subsidiaries; and report to
the Board of Directors at least once each calendar year.
SECTION 3. COMPENSATION COMMITTEE. The Compensation Committee, if
there be one, shall review the personnel policies, plans and programs of
the corporation, including individual salaries of executive officers, and
submit recommendations to the Board of Directors. The Compensation
Committee shall also recommend to the Board of Directors the retainer and
attendance fee for nonemployee directors.
SECTION 4. NOMINATING COMMITTEE. The Nominating Committee, if there
be one, shall develop and recommend to the Board of Directors criteria for
the selection of candidates for director, to seek out and receive
suggestions concerning possible candidates, to review and evaluate the
qualifications of possible candidates and to recommend to the Board of
Directors candidates for vacancies occurring from time to time and for the
slate of directors to be proposed on behalf of the Board of Directors at
the annual meeting of shareholders. The Nominating Committee will consider
nominees recommended by the shareholders, as properly submitted to the
Secretary of the corporation.
SECTION 5. OTHER COMMITTEES. The Board of Directors may designate
such other committees as it may deem appropriate, and such committees shall
exercise the authority delegated to them.
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SECTION 6. COMMITTEE MEETINGS. Each committee provided for above
shall meet as often as its business may require and may fix a day and time
each week or at other intervals for regular meetings, notice of which shall
not be required. Whenever the day fixed for a meeting shall fall on a
holiday, the meeting shall be held on the business day following or on such
other day as the committee may determine. Special meetings of the
committees may be called by the chairman of the committee or any two (2)
members other than the chairman, and notice thereof may be given to the
members by telephone, telegram or letter. A majority of its members shall
constitute a quorum for the transaction of the business of any of the
committees. A record of the proceedings of each committee shall be kept
and presented to the Board of Directors.
ARTICLE V
OFFICERS
SECTION 1.
(a) CENTRAL STAFF. The executive officers of the
corporation shall be a President, one or more Vice Presidents, a
Secretary and a Treasurer who shall be appointed by the Board of
Directors at its first meeting after each regular annual meeting
of shareholders. The Board of Directors may also appoint such
other officers as they may deem necessary. The dismissal of an
officer, the appointment of an officer to fill the place of one
who has been dismissed or has ceased for any reason to be an
officer, the appointment of any additional officers, and the
change of an officer to a different office may be made by the
Board of Directors at any later meeting. Each officer shall hold
office for one year and until their respective successor shall
have been elected and qualified. Any two (2) of the above
offices, except those of the President and Vice President may be
held by the same person.
(b) DIVISIONAL OFFICERS. The Board of Directors or the
Chief Executive Officer may, as they shall deem necessary,
designate certain individuals as divisional officers. Any titles
so given to divisional officers may be withdrawn at any time with
or without cause by the Board of Directors or the Chief Executive
Officer.
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SECTION 2. QUALIFICATIONS OF OFFICERS. All officers shall be and
remain at all times shareholders of the corporation. An officer shall
cease to be qualified as such upon sale or transfer of all of his holdings
in the corporation.
SECTION 3. CHAIRMAN OF THE BOARD. There may be elected a Chairman of
the Board, who shall be chosen from among the directors, but who need not
be an officer or an executive employee of the corporation. The Chairman of
the Board shall preside at all meetings of the shareholders and at all
meetings of the Board of Directors, and shall have such other duties and
powers as may be imposed or given by the Board of Directors.
SECTION 4. PRESIDENT OR PRESIDENTS. The Board of Directors shall
elect one or not more than two Presidents of the corporation. Each
President shall have the power to see that all orders and resolutions of
the Board of Directors are carried into effect, and shall perform all other
duties necessary or appropriate to his office, subject, however, to his
right and the right of the directors to delegate any specific powers to any
other officer or officers of the corporation. If two Presidents shall be
elected, the Board of Directors at any time may delegate specific powers of
the office of President to each President to be exercised individually as
the Board of Directors may deem appropriate or the Board of Directors may
delegate all powers of the office of President to both Presidents to be
exercised jointly. If ever two Presidents shall be elected and shall
disagree as to any matter concerning the corporation or subject to the
exercise of joint powers, then such matter shall be finally determined by
the Board of Directors. In the absence of the Chairman of the Board or if
no Chairman is elected, the President or Presidents shall preside at all
meetings of the shareholders and at all meetings of the Board of Directors,
unless otherwise directed by the Board of Directors. The President or
Presidents shall be ex officio voting members of all standing committees
designated by the Board of Directors except the Audit Committee, unless
otherwise directed by the Board of Directors.
SECTION 5. CHIEF EXECUTIVE OFFICER OR OFFICERS. The Board of
Directors may appoint one or not more than two Chief Executive Officers of
the corporation. The Chief Executive Officer or Officers shall be the
Chairman of the Board, the President or Presidents of the corporation, or
any combination thereof as appointed by the Board of Directors. The Chief
Executive Officer or Officers, in addition to duties as Chairman of the
Board or President as the case may be, shall have final authority, subject
to the control of the Board of Directors, over the general policy and
business of the corporation and shall have the general control and
management of the business and affairs of the corporation. The Chief
Executive Officer or Officers shall have the power, subject to the control
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of the Board of Directors, to appoint, suspend, or discharge and prescribe
the duties and to fix the compensation of such agents and employees of the
corporation, other than the officers appointed by the Board of Directors,
as the Chief Executive Officer or Officers may deem necessary. If two
Chief Executive Officers shall be appointed, the Board of Directors at any
time may delegate specific powers of the position of Chief Executive
Officer to each Chief Executive Officer to be exercised individually as the
Board of Directors may deem appropriate or the Board of Directors may
delegate all powers of the position of Chief Executive Officer to both
Chief Executive Officers to be exercised jointly. If ever two Chief
Executive Officers shall be appointed and shall disagree as to any matter
concerning the corporation or subject to the exercise of joint powers, then
such matter shall be finally determined by the Board of Directors.
SECTION 6. CHIEF OPERATING OFFICER. There may be elected a Chief
Operating Officer who shall, if elected, have general charge, control and
supervision over the administration and operations of the corporation and
shall have such other duties and powers as may be imposed or given by the
Board of Directors. If no Chief Operating Officer is elected, the duties
and powers of the Chief Operating Officer shall be performed by the Chief
Executive Officer.
SECTION 7. VICE PRESIDENTS. The Vice President or Vice Presidents
shall perform such duties and have such powers as the Chief Executive
Officer or the Board of Directors may from time to time prescribe. The
Vice President shall perform all duties of the President in case of the
absence or disqualification of the President. There may be not more than
six (6) Vice Presidents who shall act in the order of their appointment.
The Board of Directors may at its discretion designate one or more of the
Vice Presidents as Executive Vice Presidents or Senior Vice Presidents.
Any Vice President so designated shall have such duties and
responsibilities as the board shall prescribe.
SECTION 8. SECRETARY. The Secretary shall attend all meetings of the
shareholders, and of the Board of Directors and of the Executive Committee,
and shall preserve in the books of the corporation true minutes of the
proceedings of all such meetings. He shall safely keep in his custody the
seal of the corporation and shall have authority to affix the same to all
instruments where its use is required or appropriate. He shall give all
notices required or appropriate pursuant to statute, bylaws, or resolution.
He shall perform such other duties as may be delegated to him by the Board
of Directors or by the Executive Committee.
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SECTION 9. TREASURER. The Treasurer shall have custody of all
corporate funds and securities and shall keep in books belonging to the
corporation full and accurate accounts of all receipts and disbursements;
he shall deposit all moneys, securities and other valuable effects in the
name of the corporation in depositories as may be designated for that
purpose by the Board of Directors. He shall disburse the funds of the
corporation as may be ordered by the Board of Directors, taking proper
vouchers for such disbursements, and shall render to the Chief Executive
Officer and directors at the regular meetings of the board, and whenever
requested by them, an account of all his transactions as Treasurer and of
the financial condition of the corporation. If required by the Board of
Directors he shall deliver to the Chief Executive Officer of the
corporation, and shall keep in force a bond in form, amount and with a
surety or sureties satisfactory to the Board of Directors, conditioned for
faithful performance of the duties of his office, and for restoration to
the corporation in case of his death, resignation, retirement or removal
from office, of all books, papers, vouchers, money and property of whatever
kind in his possession or under his control belonging to the corporation.
SECTION 10. ASSISTANT SECRETARY AND ASSISTANT TREASURER. There may
be elected an Assistant Secretary and Assistant Treasurer who shall, in the
absence, disability or nonfeasance of the Secretary or Treasurer, perform
the duties and exercise the powers of such persons respectively.
SECTION 11. OTHER OFFICERS. All other officers, as may from time to
time be appointed by the Board of Directors pursuant to Paragraph (a) of
Section 1 of this Article V, shall perform such duties and exercise such
authority as the Board of Directors shall prescribe. All divisional
officers, as may from time to time be appointed by the Board of Directors
or the Chief Executive Officer pursuant to Paragraph (b) of Section 1 of
this Article V, shall perform such duties and exercise such authority as
the Board of Directors or the Chief Executive Officer shall prescribe.
ARTICLE VI
INDEMNIFICATION
SECTION 1. INDEMNIFICATION OTHER THAN IN ACTIONS BY OR IN THE RIGHT
OF THE CORPORATION. Any person who was or is a party or is threatened to
be made a party to any threatened, pending, or completed action, suit, or
proceeding, whether civil, criminal, administrative, or investigative, and
whether formal or informal, other than an action by or in the right of the
corporation, by reason of the fact that he is or was a director or
executive officer of the corporation, or, while serving as such a director
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or executive officer, is or was serving at the request of the corporation
as a director, officer, partner, trustee, employee, or agent of another
foreign or domestic corporation, partnership, joint venture, trust, or
other enterprise, whether for profit or not, shall be indemnified by the
corporation against expenses, including attorneys' fees, judgments,
penalties, fines, and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit, or proceeding if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interest of the corporation or its shareholders, and,
with respect to any criminal action or proceeding, had no reasonable cause
to believe his conduct was unlawful. The termination of any action, suit,
or proceeding by judgment, order, settlement, conviction or upon a plea of
nolo contendere or its equivalent, shall not, of itself, create any
presumption that the person did not act in good faith and in a manner which
he reasonably believed to be in or not opposed to the best interests of the
corporation or its shareholders, or, with respect to any criminal action or
proceeding, that he had reasonable cause to believe that his conduct was
unlawful. Persons who are not directors or executive officers of the
corporation may be indemnified in respect of such service to the extent
authorized at any time by the Board of Directors, except as otherwise
provided by statute or the Articles of Incorporation.
SECTION 2. INDEMNIFICATION IN ACTIONS BY OR IN THE RIGHT OF THE
CORPORATION. Any person who was or is a party or is threatened to be made
a party to any threatened, pending, or completed action, suit, or
proceeding by or in the right of the corporation to procure a judgment in
its favor by reason of the fact that he is or was a director or executive
officer of the corporation, or, while serving as such a director or
executive officer, is or was serving at the request of the corporation as a
director, officer, partner, trustee, employee, or agent of another foreign
or domestic corporation, partnership, joint venture, trust, or other
enterprise, whether for profit or not, shall be indemnified by the
corporation against expenses, including actual and reasonable attorneys'
fees and amounts paid in settlement incurred by him in connection with the
defense or settlement of such action, suit, or proceeding if he acted in
good faith and in a manner he reasonably believed to be in or not opposed
to the best interests of the corporation, or its shareholders, except that
no indemnification shall be made in respect of any claim, issue, or matter
as to which such person shall have been found liable to the corporation
unless and only to the extent that the court in which such action, suit, or
proceeding was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such
expenses which such court shall deem proper. Persons who are not directors
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or executive officers of the corporation may be indemnified in respect of
such service to the extent authorized at any time by the Board of
Directors, except as otherwise provided by statute or the Articles of
Incorporation.
SECTION 3. EXPENSES. To the extent that a director, executive
officer, or other person whose indemnification is authorized by the Board
of Directors, has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in Sections 1 and 2 of this
Article, or in defense of any claim, issue, or matter in the action, suit,
or proceeding, he shall be indemnified against expenses, including actual
and reasonable attorneys' fees incurred by him in connection with the
action, suit, or proceeding and in any action, suit or proceeding brought
to enforce the mandatory indemnification provided in this Section 3.
SECTION 4. AUTHORIZATION OF INDEMNIFICATION. Any indemnification of
a director, executive officer, or other person under Sections 1 or 2 of
this Article, unless ordered by a court, shall be made by the corporation
promptly, and in any event within ninety days, upon the written request of
the director, executive officer, or other person, unless with respect to
such application a determination is reasonably made that the director,
executive officer, or other person failed to satisfy the applicable
standard of conduct set forth in such Sections. Such determination shall
be made (1) by the Board of Directors by a majority vote of a quorum
consisting of directors who were not parties to such action, suit, or
proceeding, or (2) if such a quorum is not obtainable, or, even if
obtainable, if a quorum of disinterested directors so directs, by a
majority vote of a committee designated by the Board of Directors
consisting of two or more directors not parties to the action, suit or
proceeding, or (3) by independent legal counsel (who may be the regular
counsel of the corporation) in a written opinion, or (4) by the
shareholders. The right to indemnification or advances granted by this
Article shall be enforceable by the director, executive officer, or other
person in any court of competent jurisdiction, if the Board or independent
legal counsel denies the claim, in whole or in part, or if no disposition
of such claim is made within ninety days. His expenses incurred in
connection with successfully establishing his right to indemnification, in
whole or in part, in any such proceeding shall also be indemnified by the
corporation.
SECTION 5. ADVANCING OF EXPENSES. Expenses incurred in defending a
civil or criminal action, suit, or proceeding described in Sections 1 or 2
of this Article shall be paid by the corporation in advance of the final
disposition of such action, suit, or proceeding as authorized by the Board
of Directors pursuant to these Bylaws upon receipt of an undertaking by or
on behalf of the director, executive officer, or other person to repay such
amount unless it shall ultimately be determined that he is entitled to be
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indemnified by the corporation as authorized in this Article. The
undertaking shall be by unlimited general obligation of the person on whose
behalf advances are made but need not be secured. Notwithstanding the
foregoing, no advance shall be made by the corporation if a determination
is reasonably and promptly made by the Board of Directors by a majority
vote of a quorum of disinterested directors, or, if such a quorum is not
obtainable or, even if obtainable, a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, that, based
upon the facts known to the Board or counsel at the time such determination
is made, such person acted in bad faith and in a manner that he did not
believe to be in or not opposed to the best interest of the corporation,
or, with respect to any criminal proceeding, that he believed or had
reasonable cause to believe his conduct was unlawful. In no event shall
any advance be made in instances where the Board or independent legal
counsel reasonably determines that such person deliberately breached his
duty to the corporation or its shareholders.
SECTION 6. PARTIAL INDEMNIFICATION. If a person is entitled to
indemnification under Sections 1 or 2 of this Article for a portion of
expenses, including attorneys' fees, judgments, penalties, fines, and
amounts paid in settlement, but not for the total amount thereof, the
corporation may indemnify the person for the portion of the expenses,
judgments, penalties, fines, or amounts paid in settlement for which the
person is entitled to be indemnified.
SECTION 7. INDEMNIFICATION HEREUNDER NOT EXCLUSIVE. The
indemnification provided by this Article shall not be deemed exclusive of
any other rights to which those seeking indemnification may be entitled
under any bylaw, agreement, vote of shareholders or disinterested
directors, or otherwise. The indemnification provided in this Article
shall continue as to a person who ceases to be a director or executive
officer or service in any other capacity, and shall inure to the benefit of
the heirs, executors, and administrators of such a person. All rights to
indemnification under this Article shall be deemed to be provided by a
contract between the corporation and the director, executive officer, or
other person whose indemnification is authorized by the Board of Directors
who serve in such capacities at any time while these Bylaws and other
relevant provisions of the Michigan Business Corporation Act and other
applicable law, if any, are in effect. Any repeal or modification thereof
shall not affect any rights or obligations then existing. Notwithstanding
the foregoing, the total amount of actual expenses advanced or indemnified
from all sources combined shall not exceed the amount of actual expenses
incurred by the person seeking indemnification or advancement of expenses.
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SECTION 8. INSURANCE. The corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request
of the corporation as a director, officer, partner, trustee, employee or
agent of another foreign or domestic corporation, partnership, joint
venture, trust, or other enterprise, whether for profit or not, against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his other status as such, whether or not the corporation
would have the power to indemnify him against such liability under the
provisions of this Article.
SECTION 9. MERGERS. For the purposes of this Article, references to
the "corporation" include all constituent corporations absorbed in a
consolidation or merger, as well as the resulting or surviving corporation,
so that any person who is or was a director, officer, employee, or agent of
such constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer, partner, trustee, employee,
or agent of another foreign or domestic corporation, partnership, joint
venture, trust, or other enterprise, whether for profit or not, shall stand
in the same position under the provisions of this Article with respect to
the resulting or surviving corporation in the same capacity.
SECTION 10. SAVINGS CLAUSE. If this Article or any portion thereof
shall be invalidated on any ground by any court of competent jurisdiction,
the corporation shall nevertheless indemnify each director, executive
officer or other person whose indemnification is authorized by the Board of
Directors as to expenses, including attorneys' fees, judgments, fines and
amounts paid in settlement with respect to any action, suit or proceeding,
whether civil, criminal, administrative or investigative, including a grand
jury proceeding and an action by the corporation, to the full extent
permitted by any applicable portion of this Article that shall not have
been invalidated or by any other applicable law.
SECTION 11. DEFINITIONS. For the purposes of this Article, "other
enterprises" shall include employee benefit plans; "fines" shall include
any excise taxes assessed on a person with respect to an employee benefit
plan; and "serving at the request of the corporation" shall include any
service as a director, officer, partner, trustee, employee, or agent of the
corporation, which imposes duties on, or involves services by the director,
officer, employee, or agent with respect to any employee benefit plan, its
participants or beneficiaries; and a person who acted in good faith and in
a manner he reasonably believed to be in the interest of the participants
and beneficiaries of an employee benefit plan shall be considered to have
acted in a manner "not opposed to the best interest of the corporation or
its shareholders" as referred to in Sections 1 and 2 of this Article.
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SECTION 12. CONSTRUCTION. It is the intent of this Article VI to
grant to the directors and executive officers of the corporation (and such
other persons as the Board of Directors may designate) the broadest
indemnification permitted under the laws of the State of Michigan, as the
same may be amended from time to time, and this Article shall be liberally
construed to give effect to such intent. The corporation further intends,
acknowledges, and agrees that all of the corporation's directors and
executive officers have undertaken and will undertake the performance of
their duties and obligations in reliance upon the indemnification provided
for in this Article VI, and accordingly, such rights of indemnification may
not be retroactively reduced or abolished as to any such director or
executive officer with the written consent of such person.
ARTICLE VII
SUBSIDIARIES
SECTION 1. SUBSIDIARIES. The Board of Directors, the Chief Executive
Officer, or any executive officer designated by the Board of Directors may
vote the shares of stock owned by the corporation in any subsidiary,
whether wholly or partly owned by the corporation, in such manner as they
may deem in the best interests of the corporation, including, without
limitation, for the election of directors of any subsidiary corporation, or
for any amendments to the charter or bylaws of any such subsidiary
corporation, or for the liquidation, merger, or sale of assets of any such
subsidiary corporation. The Board of Directors, the Chief Executive
Officer or any executive officer designated by the Board of Directors may
cause to be elected to the Board of Directors of any such subsidiary
corporation such persons as they shall designate, any of whom may, but need
not be, directors, executive officers, or other employees or agents of the
corporation. The Board of Directors, the Chief Executive Officer, or any
executive officer designated by the Board of Directors may instruct the
directors of any such subsidiary corporation as to the manner in which they
are to vote upon any issue properly coming before them as the directors of
such subsidiary corporation, and such directors shall have no liability to
the corporation as the result of any action taken in accordance with such
instructions.
SECTION 2. SUBSIDIARY OFFICERS NOT EXECUTIVE OFFICERS. The officers
of any subsidiary corporation, shall not, by virtue of holding such title
and position, be deemed to be executive officers of the corporation, nor
shall any such officer of a subsidiary corporation, unless he shall also be
a director or executive officer of the corporation, be entitled to have
access to any files, records or other information relating or pertaining to
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the corporation, its business and finances, or to attend or receive the
minutes of any meetings of the Board of Directors or any committee of the
corporation, except as and to the extent expressly authorized and permitted
by the Board of Directors or the Chief Executive Officer.
ARTICLE VIII
CERTIFICATES OF STOCK
SECTION 1. FORM. Every holder of stock in the corporation shall be
entitled to have a certificate in the name of the corporation, signed by
the Chairman of the Board or the President or a Vice President and the
Treasurer or an Assistant Treasurer, or the Secretary or an Assistant
Secretary of the corporation, certifying the number of shares owned by him
in the corporation.
SECTION 2. FACSIMILE SIGNATURE. Where a certificate is signed (1) by
a transfer agent or an assistant transfer agent, or (2) by a transfer clerk
acting on behalf of the corporation and a registrar, the signature of any
such Chairman, President, Vice President, Treasurer, Assistant Treasurer,
Secretary or Assistant Secretary may be a facsimile. In case any officer,
transfer agent, or registrar who has signed, or whose facsimile signature
has been placed upon a certificate shall have ceased to be such officer,
transfer agent or registrar before such certificate is issued, it may be
issued by the corporation with the same effect as if he were such officer,
transfer agent or registrar at the date of issue.
SECTION 3. LOST CERTIFICATES. The Board of Directors may direct a
new certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the corporation alleged to have been
lost or destroyed, upon the making of an affidavit of that fact by the
person claiming the certificate of stock to be lost or destroyed. When
authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost or destroyed certificate
or certificates, or his legal representative, to give the corporation a
bond in such sum as it may direct as indemnity against any claim that may
be made against the corporation with respect to the certificate alleged to
have been lost or destroyed.
SECTION 4. TRANSFERS OF STOCK. Upon surrender to the corporation or
the transfer agent of the corporation of a certificate for shares duly
endorsed or accompanied by proper evidence of succession, assignment or
authority to transfer, it shall be the duty of the corporation to issue a
new certificate to the person entitled thereto, cancel the old certificate
and record the transaction upon its books.
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SECTION 5. FIXING OF RECORD DATE BY BOARD. For the purpose of
determining the shareholders entitled to notice of or to vote at any
meeting of shareholders, or any adjournment thereof, or to express consent
to or dissent from any corporate action in writing without a meeting, or
for the purpose of determining shareholders entitled to receive payments of
any dividend or the distribution or allotment of any rights or evidences of
interests arising out of any change, conversion or exchange of capital
stock, or for the purpose of any other action, the Board of Directors may
fix, in advance, a date as the record date for any such determination of
shareholders. Such date shall not be more than sixty (60) days nor less
than ten (10) days before the date of any such meeting, nor more than sixty
(60) days prior to any other action. Only shareholders of record on a
record date so fixed shall be entitled to notice of, and to vote at, such
meeting or to receive payment of any dividend or the distribution or
allotment of any rights or evidences of interests arising out of any
change, conversion or exchange of capital stock.
SECTION 6. PROVISION FOR RECORD DATE IN THE ABSENCE OF BOARD ACTION.
If a record date is not fixed by the Board of Directors: (a) the record
date for determination of shareholders entitled to notice of or to vote at
a meeting of shareholders shall be the close of business on the day next
preceding the day on which notice is given, or, if no notice is given, the
day next preceding the day on which the meeting is held; and (b) the record
date for determining shareholders entitled to express consent to corporate
action in writing, without a meeting, when no prior action by the Board of
Directors is necessary, shall be the day on which the first written consent
is expressed; and (c) the record date for determining shareholders for any
other purpose shall be the close of business on the day on which the
resolution of the board relating thereto is adopted.
SECTION 7. ADJOURNMENTS. When a determination of shareholders of
record entitled to notice of or to vote at a meeting of shareholders has
been made as provided in this Article, the determination applies to any
adjournment of the meeting, unless the board fixes a new record date for
the adjourned meeting.
SECTION 8. REGISTERED SHAREHOLDERS. The corporation shall be
entitled to recognize the exclusive rights of a person registered on its
books as the owner of shares to receive dividends, and to vote as such
owner, and shall not be bound to recognize any equitable or other claim to
or interest in such share or shares on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise provided by the laws of Michigan.
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ARTICLE IX
GENERAL PROVISIONS
SECTION 1. DIVIDENDS. Dividends upon the capital stock of the
corporation, subject to the provisions of the Articles of Incorporation, if
any, may be declared by the Board of Directors at any regular or special
meeting pursuant to law. Dividends may be paid in cash, in property, or in
shares of capital stock, subject to the provisions of the Articles of
Incorporation.
SECTION 2. RESERVES. Before payment of any dividends, there may be
set aside out of any funds of the corporation available for dividends such
sum or sums as the directors from time to time, in their absolute
discretion, think proper as reserve or reserves to meet contingencies, or
for equalizing dividends, or for repairing or maintaining any property of
the corporation, or for such other purpose as the directors shall think
conducive to the interest of the corporation, and the directors may modify
or abolish any such reserve in the manner in which it was created.
SECTION 3. CHECKS. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other
person or persons as the Board of Directors may from time to time
designate.
SECTION 4. FISCAL YEAR. The fiscal year of the corporation shall end
on the 31st day of December in each year, unless otherwise fixed by
resolution of the Board of Directors.
SECTION 5. SEAL. The corporate seal shall have inscribed thereon the
name of the corporation, and the words "Corporate Seal, Michigan". The
seal may be used by causing it or a facsimile thereof to be impressed or
affixed or reproduced or otherwise.
SECTION 6. WRITTEN WAIVER OF NOTICE. Whenever any notice is required
to be given under the provisions of the statutes or of the Articles of
Incorporation or of these Bylaws, a waiver thereof in writing, signed by
the person or persons entitled to said notice, whether before or after the
time stated therein, shall be deemed equivalent thereto.
ARTICLE X
AMENDMENTS
These Bylaws may be altered or repealed at any regular or special
meeting of the shareholders or of the Board of Directors, provided that the
Board of Directors shall not make or alter any bylaws fixing their number,
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qualifications, classifications, or terms of office. Except as otherwise
required by law or the Articles of Incorporation, the vote of a majority of
the shares present or represented by proxy and entitled to vote at a
meeting of shareholders or the vote of not less than a majority of the
members of the Board of Directors then in office shall be required to amend
or repeal the Bylaws or to adopt new Bylaws.
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EXHIBIT 4(k)
FIFTH AMENDMENT TO LETTER AGREEMENT
THIS FIFTH AMENDMENT TO LETTER AGREEMENT, dated as of May 31, 1998
(this "Amendment"), is between HASTINGS MANUFACTURING COMPANY, a Michigan
corporation (the "Company"), and NBD BANK, a Michigan banking corporation,
formerly known as NBD Bank, N.A. (the "Bank").
RECITALS
A. The Company and the Bank are parties to a letter agreement dated
May 31, 1994, as amended by a First Amendment to Letter Agreement dated as
of May 2, 1995, a Second Amendment to Letter Agreement dated as of
September 30, 1995, a Third Amendment to Letter Agreement dated as of May
31, 1994 and a Fourth Amendment to Credit Agreement dated as of May 31,
1997 (as amended, the "Letter Agreement") pursuant to which the Bank
agreed, subject to the terms and conditions thereof, to extend credit to
the Company in a maximum principal amount of $4,000,000.
B. The parties now desire to amend certain terms and provisions of
the Letter Agreement as set forth herein.
TERMS
In consideration of the premises and of the mutual agreements herein
contained, the parties agree as follows:
ARTICLE I. AMENDMENTS. Upon fulfillment of the conditions set forth in
Article III hereof, the Letter Agreement shall be amended as follows:
1.1 The reference to "$4,000,000 Credit Authorization" in the heading
of the Letter Agreement shall be deemed a reference to "$5,000,000 Credit
Authorization".
1.2 The definition of "Maximum Amount" in Section 1 of the Letter
Agreement shall be amended by deleting the reference to "$4,000,000, as
such amount may be amended from time to time" and inserting "$5,000,000, as
such amount may be amended from time to time" in place thereof.
1.3 The reference to "May 31, 1998" in the definition of "Termination
Date" in Section 1 of the Letter Agreement shall be deemed to refer to "May
31, 1999".
1.4 The reference to "May 31, 1998" in Section 2 of the Letter
Agreement shall be deemed to refer to "May 31, 1999".
<PAGE>
1.5 Exhibit A to the Letter Agreement is hereby deleted in its
entirety and Exhibit A attached hereto is hereby substituted in place of
Exhibit A thereof.
ARTICLE II. REPRESENTATIONS. The Company represents and warrants to the
Bank that:
2.1 The execution, delivery and performance of this Amendment are
within its powers, have been duly authorized and are not in contravention
with any law, of the terms of its Articles of Incorporation or By-laws, or
any material undertaking to which it is a party or by which it is bound.
2.2 This Amendment is the legal, valid and binding obligations of the
Company enforceable against it in accordance with the respective terms
hereof.
2.3 After giving effect to the amendments herein contained, the
representations and warranties contained in Section 11 of the Letter
Agreement are true on and as of the date hereof with the same force and
effect as if made on and as of the date hereof, PROVIDED, THAT, the
representations and warranties contained in Section 11(f) of the Letter
Agreement shall be deemed to have been made with respect to the financial
statements most recently delivered pursuant to Section 9(d) of the Letter
Agreement.
2.4 No Event of Default or event or condition which, with notice or
lapse of time or both could become such an Event of Default exists or has
occurred and is continuing on the date hereof
ARTICLE III. CONDITIONS OF EFFECTIVENESS. This Amendment shall not become
effective until each of the following has been satisfied:
3.1 Copies of resolutions adopted by the Board of Directors of the
Company, certified by an officer of the Company, as being true and correct
and in full force and effect without amendment as of the date hereof,
authorizing the Company to enter into this Amendment and any other
documents or agreements executed pursuant hereto, if any, shall have been
delivered to the Bank.
3.2 This Amendment shall be signed by the Company and the Bank.
3.3 The Company shall deliver a duly executed copy of a new
promissory note in the principal amount of $5,000,000 in the form of
Exhibit A attached hereto.
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ARTICLE IV. MISCELLANEOUS.
4.1 References in the Letter Agreement to "this Agreement" and
references in any note, certificate, instrument or other document to the
"Letter Agreement" or "Authorization Agreement" shall be deemed to be
references to the Letter Agreement as amended hereby and as further amended
from time to time.
4.2 The Company agrees to pay and to save the Bank harmless for the
payment of all costs and expenses arising in connection with this
Amendment, including the reasonable fees of counsel to the Bank in
connection with preparing this Amendment and the related documents.
4.3 The Company acknowledges and agrees that the Bank has fully
performed all of its obligations under all documents executed in connection
with the Letter Agreement and all actions taken by the Bank is reasonable
and appropriate under the circumstances and within its rights under the
Letter Agreement and all other documents executed in connection therewith
and otherwise available. The Company represents and warrants that it is
not aware of any claims or causes of action against the Bank, or any of its
successors or assigns. Notwithstanding this representation and as further
consideration for the agreements and understandings herein, the Company and
its heirs, successors and assigns, hereby release the Bank and its heirs,
successors and assigns from any liability, claim, right or cause of action
which now exists or hereafter arises, whether known or unknown, arising
from or in any way related to facts in existence as of the date hereof to
any agreements or transactions between the Bank and the Company or to any
acts or omissions of the Bank in connection therewith or otherwise.
4.4. Except as expressly amended hereby, the Company agrees that the
Letter Agreement, the promissory note and all other documents and
agreements executed by the Company in connection with the Letter Agreement
in favor of the Bank are ratified and confirmed and shall remain in full
force and effect and that it has no set off, counterclaim or defense with
respect to any of the foregoing. Terms used but not defined herein shall
have the respective meanings ascribed thereto in the Letter Agreement.
4.5 This Amendment shall be governed by and construed in accordance
with the laws of the State of Michigan.
4.6 This Amendment may be signed upon any number of counterparts with
the same effect as if the signatures thereto and hereto were upon the same
instrument.
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IN WITNESS WHEREOF, the parties signing this Amendment have caused
this Amendment to be executed and delivered as of the date first above
written.
HASTINGS MANUFACTURING COMPANY
By: /S/ THOMAS J. BELLGRAPH
Its: V.P. - FINANCE
NBD BANK
By: /S/ THOMAS A. GAMM
Its: VICE PRESIDENT
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EXHIBIT A
MASTER PROMISSORY NOTE
$5,000,000.00 Detroit, Michigan
May 31, 1998
For value received, and in any event no later than May 31, 1999,
HASTINGS MANUFACTURING COMPANY (the "Borrower") promises to pay to the
order of NBD BANK (the "Bank"), at the Bank's principal office in the State
of Michigan, in lawful money of the United States of America and in
immediately available funds, the principal sum of Five Million and 00/100
Dollars ($5,000,000.00), or such lesser amount as is indicated on the
Bank's records, together with interest computed on the balance from time to
time unpaid on the basis of the actual number of days elapsed in a year of
360 days at the rate(s) per annum determined from time to time pursuant to
the "Letter Agreement", as defined below, and reflected on the Bank's
records, which interest shall be payable in accordance with the terms set
forth in the Letter Agreement, and to pay interest on overdue principal
from the date of demand or default until paid at the Overdue Rate (as
defined in the Letter Agreement).
In no event shall the interest rate exceed the maximum rate allowed by
law. Any interest which would for any reason be deemed unlawful under
applicable law shall be applied to principal.
WAIVER: The Borrower and each endorser of this note and any other
party liable for the debt evidenced by this note severally waives demand,
presentment, notice of dishonor and protest of this note, and consents to
any extension or postponement of time of its payment without limit as to
number or period, to the addition of any party, and to the release,
discharge, or suspension of any rights and remedies against any person who
may be liable for the payment of this note. No delay on the part of the
holder in the exercise of any right or remedy shall operate as a waiver.
No single or partial exercise by the holder of any right or remedy shall
preclude any future exercise of that right or remedy or the exercise of any
other right or remedy. No waiver or indulgence by the holder of any
default shall be effective unless it is in writing and signed by the
holder, nor shall a waiver on one occasion be construed as a bar to or
waiver of any right on any future occasion.
This note is issued in substitution for and replacement of, but not in
satisfaction of, a Master Promissory Note dated May 31, 1997, in the
maximum principal amount of $4,000,000 and evidences a debt under the terms
of a certain letter agreement between the Bank and the Borrower dated May
31, 1994, as amended by a First Amendment to Letter Agreement dated as of
May 2, 1995, by a Second Amendment to Letter Agreement dated as of
<PAGE>
September 30, 1995, by a Third Amendment to Letter Agreement dated as of
May 31, 1996, by a Fourth Amendment to Letter Agreement dated as of May 31,
1997, and by a Fifth Amendment to Letter Agreement dated as of May 31,
1998, and as further amended from time to time (the "Letter Agreement"),
which is incorporated by reference for additional terms and conditions,
including default and acceleration provisions.
WAIVER OF JURY TRIAL: The Bank and the Borrower, after consulting or
having had the opportunity to consult with counsel, knowingly, voluntarily
and intentionally waive any right either of them may have to a trial by
jury in any litigation based upon or arising out of this note, or any
related instrument or agreement or any of the transactions contemplated by
this note, or any course of conduct, dealing, statements (whether oral or
written), or actions of either of them. Neither the Bank nor the Borrower
shall seek to consolidate, by counterclaim or otherwise, any such action in
which a jury trial has been waived with any other action in which a jury
trial cannot be or has not been waived. These provisions shall not be
deemed to have been modified in any respect or relinquished by either the
Bank or the Borrower except by a written instrument executed by both of
them.
Address:
HASTINGS MANUFACTURING COMPANY
325 North Hanover
Hastings, Michigan 49058
Attention: Treasurer By: /S/ THOMAS J. BELLGRAPH
Its: V.P. - FINANCE
-2-
<PAGE>
EXHIBIT 4(n)
COMMERCIAL LINE OF CREDIT AGREEMENT AND NOTE
- ------------------------------------------------------------------------------
NAME(S)/ADDRESS(ES) OF BORROWER(S) NAME/ADDRESS OF LENDER (CREDITOR)
("Borrower, I, My, or Me") ("Lender, You, or Your")
Hastings Manufacturing Company, Hastings City Bank
325 N. Hanover 150 W. Court St.
Hastings, MI 49058 Hastings, MI 49058
- ------------------------------------------------------------------------------
NOTE NUMBER DATE OF TRANSACTION MATURITY DATE OFFICE
1-23-98 1-23-99 001
- ------------------------------------------------------------------------------
For value received, on or before the Maturity Date, the undersigned
Borrower promises to pay the principal amount or such lesser sum as shall
have been advanced by Lender to Borrower under the line of credit
hereinafter described, together with interest, and any other charges,
including service charges, to the order of Lender at its address noted
above or holder, all in lawful money of the United States of America. The
undersigned further agrees to the terms below and on page two of this Note.
Words, numbers or phrases preceded by a box are applicable only if box is
checked.
- ------------------------------------------------------------------------------
LINE OF CREDIT AMOUNT
One Million Five Hundred Thousand and 00/100 DOLLARS $1,500,000.00
- ------------------------------------------------------------------------------
PAYMENT SCHEDULE:
Payments on this Line of Credit will be due as follows:
[ x ] interest only starting and payable [ x ] monthly [ ] quarterly
[ ]
[ x ] interest, principal and other charges due on Maturity Date.
[ ] other payment schedule
INTEREST RATE:
This Line of Credit is subject to [ ] A fixed interest rate of % per annum.
[ x ] A variable simple interest rate, which is
[ ] % greater than: [ ] equal to: [ x ] 1/2 % less than: the following
Index: Wall Street Journal Prime Rate
<PAGE>
==============================================================================
Initial Simple Interest Rate Present Variable Index Rate
8.00% 8.5%
Minimum Interest Rate Maximum Interest Rate
N/A 25.00%
Interest Rate Changes May Occur Every:
As Index Changes
==============================================================================
INTEREST CALCULATED: [ x ] on a 365 Day Basis, [ ] on a 360 Day Basis, on
the unpaid principal balance for the actual days outstanding.
DEFAULT RATE: If in default the interest rate shall be: [ ] % per annum
[ x ] 1 1/2 % in excess of the Index.
LATE CHARGE: If Borrower is more than 10 days late in making any
payment, in addition to such payment, Borrower will pay a late charge of:
[ ] the lesser of [ ] the greater of [ x ] an amount equal to
[ x ] $25.00 or [ ] % of the payment in default
PAYABLE ON DEMAND: [ ] Payment is due upon demand
[ ] Payment is due upon demand, but in any event, not
later than Maturity Date.
- ------------------------------------------------------------------------------
TERMS/ADVANCES: This Line of Credit is:
[ x ] OBLIGATORY: Lender will continue to make advances under
this Line of Credit unless: (a) the maximum amount on
this Line of Credit is outstanding; (b) the undersigned
has breached any of the promises contained in this
agreement or any other agreement noted below; (c) the
undersigned makes a request for an advance after the
Maturity Date noted above; (d) other:
[ ] DISCRETIONARY: Lender may refuse to make additional advances under
this Line of Credit for the following reasons: (a) the aggregated
advances under this Line of Credit exceeds $ (b) other
- ------------------------------------------------------------------------------
[ x ] ADDITIONAL NOTE PROVISIONS:
Annual Report Due Within 105 Days of Year-End
<PAGE>
- ------------------------------------------------------------------------------
Security for this Line of Credit Agreement and Note, if any, By Way of
Description but not By Way of Limitation, is as follows:
Unsecured
- ------------------------------------------------------------------------------
The Borrower expressly agrees to all the provisions hereof and signifies
assent thereto by the signature below.
IN WITNESS WHEREOF, THE BORROWER HAS EXECUTED THIS AGREEMENT ON THE DATE
AND YEAR SHOWN BELOW.
By: x /S/THOMAS J. BELLGRAPH Date: 1-23-98 By: x_____________ Date:________
Thomas J. Bellgraph
Its V.P. & Treasurer Its
By: x________________________ Date:_______ By: x_____________ Date:________
Its Its
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE HASTINGS MANUFACTURING COMPANY AND SUBSIDIARIES
FORM 10-Q FOR THE SIX MONTHS ENDED JUNE 30, 1998, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 318,177
<SECURITIES> 0
<RECEIVABLES> 6,515,431
<ALLOWANCES> 150,000
<INVENTORY> 9,950,224
<CURRENT-ASSETS> 19,626,658
<PP&E> 24,143,264
<DEPRECIATION> (15,873,887)
<TOTAL-ASSETS> 34,569,902
<CURRENT-LIABILITIES> 10,301,836
<BONDS> 1,296,875
<COMMON> 1,567,852
0
0
<OTHER-SE> 4,587,139
<TOTAL-LIABILITY-AND-EQUITY> 34,569,902
<SALES> 20,574,188
<TOTAL-REVENUES> 20,574,188
<CGS> 14,035,201
<TOTAL-COSTS> 14,035,201
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 75,000
<INTEREST-EXPENSE> 222,570
<INCOME-PRETAX> 1,604,291
<INCOME-TAX> 661,000
<INCOME-CONTINUING> 943,291
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 943,291
<EPS-PRIMARY> 1.22
<EPS-DILUTED> 1.22
</TABLE>
