FORM 10-K/A
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the Fiscal Year ended November 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 0-6953
LILLY INDUSTRIES, INC.
(Exact name of Registrant as specified in its charter)
INDIANA 35-0471010
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
733 South West Street
Indianapolis, Indiana 46225
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
317-687-6700
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Class A Stock, without par value
Including Common Share Purchase Rights
(Title of class)
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 by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
The aggregate market value of the voting stock held by non-affiliates of the
Registrant as of June 30, 1997 was $454,450,000.
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of June 30, 1997.
22,735,075 shares of Class A Common Stock, without par value, including Common
Share Purchase Rights
312,456 shares of Class B Common Stock, without par value, including Common
Share Purchase Rights
DOCUMENTS INCORPORATED BY REFERENCE
Part II: Items 5 Annual Report to Shareholders for Fiscal
through 8 Year Ended November 30, 1996
Part III: Items 10 Proxy Statement for Annual Meeting of
through 13 Shareholders to be held April 24, 1997
Page 1 of Pages
Exhibit Index on Page
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K.
(a)-1 The following items, included in the Company's 1996 Annual Report
to Shareholders, are incorporated herein by reference and are
included herein in Exhibit 13.
Report of Independent Auditors
Consolidated Balance Sheets --
November 30, 1996 and 1995
Consolidated Statements of Income and Retained Earnings -- Years ended
November 30, 1996, 1995 and 1994
Consolidated Statements of Cash
Flows -- Years ended November 30, 1996,
1995 and 1994
Notes to Consolidated Financial
Statements -- November 30, 1996
(a)-2 The following financial statement schedule is filed as a
part of this report.
Schedule
Valuation and Qualifying Accounts
All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable, and therefore have been omitted.
1
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(a)-3 Exhibits.
Exhibits Incorporated by Reference
2 Merger Agreement, dated March 4, 1996, by and among Lilly
Industries, Inc., LP Acquisition Corporation and Guardsman
Products, Inc. This document is incorporated by reference
to Exhibit 2 to the Company's Form 8-K Current Report
filed with the SEC on April 22, 1996.
4(a) Rights Agreement, dated as of January 12, 1996, between
Lilly Industries, Inc. and KeyCorp Shareholder Services,
Inc. as Rights Agent. This Document is incorporated by
reference to Exhibit 4 to the Company's Form 8-A filed
with the SEC on January 23, 1996.
4(b) See Exhibit 10(h).
*10(b) Lilly Industries, Inc. Unfunded Supplemental Retirement
Plan (as in effect November 29, 1990). This exhibit is
incorporated by reference to Exhibit 10(b) to the
Company's Form 10-K Annual Report for the fiscal year
ended November 30, 1990.
*10(c) Lilly Industries, Inc. Unfunded Excess Benefit Plan. This
exhibit is incorporated by reference to Exhibit 10(c) to
the Company's Form 10-K Annual Report for the fiscal year
ended November 30, 1989.
*10(d) Lilly Industries, Inc. Second Unfunded Supplemental
Retirement Plan effective June 4, 1990. This exhibit is
incorporated by reference to Exhibit 10(f) to the
Company's Form 10-K Annual Report for the fiscal year
ended November 30, 1990.
*10(e) Lilly Industries, Inc. Termination Benefits Agreement
(form of agreement applicable to 2 officers). This exhibit
is incorporated by reference to Exhibit 10(g) to the
Company's Form 10-K Annual Report for the fiscal year
ended November 30, 1990.
2
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*10(f) Lilly Industries, Inc. 1991 Director Stock Option Plan.
This exhibit is incorporated by reference to Exhibit 10(i)
to the Company's Form 10-K Annual Report for the fiscal
year ended November 30, 1991.
*10(g) Lilly Industries, Inc. 1992 Stock Option Plan. This
exhibit is incorporated by reference to Exhibit 10(j) to
the Company's Form 10-K Annual Report for the fiscal year
ended November 30, 1991.
10(h) Credit Agreement, dated as of April 8, 1996, between Lilly
Industries, Inc., the Lenders Signatory thereto, NBD Bank,
N.A., as Agent and Harris Trust and Savings Bank, Comerica
Bank, Mercantile Bank of St. Louis and Bank One,
Indianapolis, N.A., Co-Agents. This document is
incorporated by reference to Exhibit 4 to the Company's
Form 8-K Current Report filed with the SEC on April 22,
1996.
-------------------
* Management contracts and compensatory plans
required to be filed pursuant to Item 14(c) of Form
10-K.
3
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Exhibits Filed with the Company's 10-K filed February 27, 1997 and
incorporated by reference thereto:
3(a) The Company's Amended and Restated Articles of
Incorporation.
*10(i) Lilly Industries, Inc. Executive Retirement Plan
(effective as of January 1, 1996).
*10(j) Lilly Industries, Inc. Replacement Plan (effective as of
January 1, 1996) and Trust Agreement for Lilly Industries,
Inc. Replacement Plan between Lilly Industries, Inc. and
Bankers Trust Company of Des Moines dated September 27,
1996.
11 Computation of Earnings Per Share.
13 Excerpts from the Lilly Industries, Inc. 1996
Annual Report.
21 List of Subsidiaries.
23 Consent of Ernst & Young LLP.
27 Financial Data Schedule.
- ----------
* Management contracts and compensatory plans required to be filed
pursuant to Item 14(c) of Form 10-K
4
<PAGE>
Exhibits filed herewith:
3(b) The Company's Code of By-Laws, as amended.
(b) No reports on Form 8-K were filed during the fourth quarter of fiscal year
1996.
(c) The response to this portion of this item is submitted as a separate
section of this report.
(d) The response to this portion of this item is submitted as a separate
section of this report.
23 Consent of Ernst & Young LLP.
5
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Date: July 21, 1997
LILLY INDUSTRIES, INC.
/s/ Douglas W. Huemme
--------------------------
Douglas W. Huemme,
Chairman, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the Company
and in the capacities and on the dates indicated.
Signature Date
- ---------------------------- ------------------
(1) Principal Executive
Officer and Director
/s/ Douglas W. Huemme July 21, 1997
- -----------------------
Douglas W. Huemme, Chairman, President
and Chief Executive Officer
(2) Principal Financial Officer
/s/ John C. Elbon July 21, 1997
- -----------------------
John C. Elbon, Vice President
and Chief Financial Officer
(3) Principal
Accounting Officer
/s/ Kenneth L. Mills July 21, 1997
- -----------------------
Kenneth L. Mills, Corporate Accounting Director
<PAGE>
(4) A majority of the
Board of Directors
/s/ James M. Cornelius July 21, 1997
- ----------------------
James M. Cornelius, Director
/s/ William C. Dorris July 21, 1997
- ----------------------
William C. Dorris, Director
- ----------------------
Paul K. Gaston, Director
/s/ Douglas W. Huemme July 21, 1997
- ----------------------
Douglas W. Huemme, Director
- ----------------------
Harry Morrison, Ph.D., Director
/s/ Norma J. Oman July 17, 1997
- ----------------------
Norma J. Oman, Director
/s/ John D. Peterson July 21, 1997
- ----------------------
John D. Peterson, Director
/s/ Thomas E. Reilly, Jr. July 16, 1997
- ----------------------
Thomas E. Reilly, Jr., Director
- ----------------------
Van P. Smith, Director
/s/ Robert A. Taylor July 18, 1997
- ----------------------
Robert A. Taylor, Director
CODE OF BY-LAWS
OF
Lilly Industries, Inc.
AS COMPLETELY RESTATED ON JANUARY 31, 1992
As further amended on April 22, 1993,
As further amended on October 1, 1993,
As further amended on June 21, 1996
<PAGE>
TABLE OF CONTENTS
ARTICLE 1 - DEFINITION OF CERTAIN TERMS...................................... 1
Section 1.01. Act....................................... 1
Section 1.02. Articles of Incorporation................. 1
Section 1.03. Board..................................... 1
Section 1.04. By-Laws................................... 1
Section 1.05. Class A Stock............................. 1
Section 1.06. Class B Stock............................. 1
Section 1.07. Corporation............................... 1
Section 1.08. Director.................................. 1
Section 1.09. Officers.................................. 1
Section 1.10. Principal and Registered Office and
Registered Agent.......................... 2
Section 1.11. Shareholders.............................. 2
Section 1.12. Stock Register............................ 2
ARTICLE 2 - CAPITAL STOCK.................................................... 2
Section 2.01. Amount and Classes........................ 2
Section 2.02. Stock Register............................ 2
Section 2.03. Issuance and Transfer of Class A Stock,
Class B Stock and Escrow Receipts........ 2
Clause 2.031. Class A Stock.................... 2
Clause 2.032. Class B Stock.................... 3
Clause 2.033. Escrow Receipts.................. 3
Section 2.04. Lost, Stolen or Destroyed Certificates
and Escrow Receipts....................... 3
Section 2.05. Issue and Consideration for Shares........ 4
Section 2.06. Certificates for Class A Shares........... 4
Section 2.07. Certificates for Class B Shares........... 6
Section 2.08. Certificates for Escrow Receipts.......... 9
Section 2.09. Certificates Issued Prior to Payment...... 13
Section 2.10. Transfer Regulations...................... 13
ARTICLE 3 - THE SHAREHOLDERS................................................. 13
Section 3.01. Annual Meeting............................ 13
Section 3.02. Special Meetings.......................... 13
Section 3.03. Place of Meetings......................... 14
Section 3.04. Record Date............................... 14
Section 3.05. Notice of Meetings........................ 14
Section 3.06. Waiver of Notice.......................... 15
Section 3.07. Addresses of Shareholders................. 15
Section 3.08. Shareholders Lists........................ 15
Section 3.09. Proxies................................... 15
Section 3.10. Quorum.................................... 16
ARTICLE 4 - THE BOARD OF DIRECTORS.......................................... 16
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Section 4.01. Number of Members......................... 16
Section 4.02. Qualification of Members.................. 16
Section 4.03. Election of Members....................... 16
Section 4.04. Vacancies................................. 17
Section 4.05. Removal of Members........................ 17
Section 4.06. Resignation of Members.................... 17
Section 4.07. Annual Meeting............................ 17
Section 4.08. Regular Meetings.......................... 17
Section 4.09. Special Meetings.......................... 18
Section 4.10. Meeting by Telephone, Etc................. 18
Section 4.11. Quorum.................................... 18
Section 4.12. Action Without Meeting.................... 19
Section 4.13. Powers of Directors....................... 19
Section 4.14. Dividends................................. 19
Section 4.15. Compensation of Directors................. 19
ARTICLE 5 - COMMITTEES OF THE BOARD OF DIRECTORS............................. 19
Section 5.01. Creation of Committees.................... 19
Section 5.02. Powers of a Committee..................... 20
Section 5.03. Meetings; Procedure; Quorum; Etc.......... 20
ARTICLE 6 - THE OFFICERS..................................................... 20
Section 6.01. Number of Officers........................ 20
Section 6.02. Qualifications of Officers................ 20
Section 6.03. Election and Appointment of Officers...... 20
Section 6.04. Removal of Officers....................... 21
Section 6.05. Resignation of Officers................... 21
Section 6.06. Vacancies................................. 21
Section 6.07. The Chairman of the Board................. 21
Section 6.08. The Chairman of the Executive Committee... 21
Section 6.09. The President............................. 22
Section 6.10. The Vice-Presidents....................... 22
Section 6.11. Assistant Vice-Presidents................. 22
Section 6.12. The Secretary............................. 22
Section 6.13. Assistant Officers........................ 22
Section 6.14. Function of Offices....................... 23
Section 6.15. Delegation of Authority................... 23
Section 6.16. Compensation of Officers.................. 23
ARTICLE 7 - LIMITATION OF LIABILITY.......................................... 23
Section 7.01. General Limitation........................ 23
Section 7.02. Savings Clause............................ 23
ARTICLE 8 - INDEMNIFICATION.................................................. 24
Section 8.01. Indemnification of Officers and
Employees................................. 24
Section 8.02. Indemnification Procedure................. 24
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Section 8.03. Good Faith Defined........................ 25
Section 8.04. Payment of Expenses in Advance............ 25
Section 8.05. Rights Not Exclusive...................... 26
Section 8.06. Vested Right to Indemnification........... 26
Section 8.07. Additional Definitions.................... 26
Section 8.08. Payments as a Business Expense............ 27
ARTICLE 9 - MISCELLANEOUS MATTERS............................................ 27
Section 9.01. Fiscal Year............................... 27
Section 9.02. Place of Keeping Corporate Books and
Records................................... 27
Section 9.03. Seal...................................... 28
Section 9.04. Execution of Negotiable Instruments....... 28
Section 9.05. Execution of Deeds, Contracts, Etc........ 28
Section 9.06. Ordinary Contracts and Agreements......... 29
Section 9.07. Endorsement of Certificates for Shares.... 29
Section 9.08. Voting of Shares Owned by Corporation..... 29
ARTICLE 10 - AMENDMENTS...................................................... 29
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<PAGE>
CODE OF BY-LAWS
OF
Lilly Industries, Inc.
AS COMPLETELY RESTATED ON JANUARY 31, 1992
As further amended on April 22, 1993,
As further amended on October 1, 1993,
As further amended on June 21, 1996
ARTICLE 1
DEFINITION OF CERTAIN TERMS
Section 1.01. Act. The term "Act" means the Indiana Business
Corporation Law, as amended from time to time.
Section 1.02. Articles of Incorporation. The term "Articles" means the
Amended and Restated Articles of Incorporation of the Corporation, filed with
and certified by the Secretary of State of Indiana on April 21, 1988, as now in
force or hereafter amended.
Section 1.03. Board. The term "Board" means the Board of Directors of
the Corporation.
Section 1.04. By-Laws. The term "By-Laws" means this Code of By-Laws,
as now in force or hereafter amended.
Section 1.05. Class A Stock. The term "Class A Stock" means the shares
of Class A Common Stock of the Corporation which the Corporation is authorized
to issue pursuant to the Articles.
Section 1.06. Class B Stock. The term "Class B Stock" means the shares
of Class B Common Stock of the Corporation which the Corporation is authorized
to issue pursuant to the Articles.
Section 1.07. Corporation. The term "Corporation" means Lilly
Industries, Inc.
Section 1.08. Director. The term "Director" means a member of the
Board.
Section 1.09. Officers. The term "Officers" means the duly elected and
appointed officers of the Corporation. The terms "Chairman of the Board,"
"Chairman of the Executive Committee," "President," "Vice-President," "Assistant
Vice-President," "Secretary," "Assistant Secretary," and the titles of other
Officers chosen in accordance with Section 6.01 of the By-Laws mean,
respectively, the individuals serving as the duly elected, qualified and acting
officers of the Corporation, from time to time, in their respective capacities
as such.
Section 1.10. Principal and Registered Office and Registered Agent. The
terms "Principal Office," "Registered Office," and "Registered Agent" mean the
offices and agent of the Corporation stated in Article 4 of the Articles, or if
one or
<PAGE>
more statements of change indicating a change in the location of any such office
or the name of such agent has been filed in accordance with the Act, the office
or agent, respectively set forth in the most recently filed of such statements.
Section 1.11. Shareholders. The term "Shareholders" means the persons
shown by the records of the Corporation (or its Transfer Agent) to be the
holders of the duly authorized, issued and outstanding shares of Class A Stock
and Class B Stock, unless otherwise indicated.
Section 1.12. Stock Register. The term "Stock Register" means the Stock
Register of the Corporation to which reference is made in Section 2.02 hereof.
ARTICLE 2
CAPITAL STOCK
Section 2.01. Amount and Classes. The authorized capital stock of the
Corporation is divided into 48,500,000 shares of Class A Stock and 1,500,000
shares of Class B Stock. The designations, relative rights, preferences,
qualifications, limitations, and restrictions of the capital stock of the
Corporation are as set forth in the Articles.
Section 2.02. Stock Register. The Secretary shall maintain a Stock
Register in which shall be registered each transaction involving the issuance,
transfer and cancellation of shares of Class B Stock, and the issuance, split-up
and cancellation of Escrow Receipts.
Section 2.03. Issuance and Transfer of Class A Stock, Class B Stock and
Escrow Receipts. The Class A Stock, Class B Stock and Escrow Receipts of the
Corporation shall be issued and transferred as follows:
Clause 2.031. Class A Stock. Bank One, Indianapolis, N A., a
national banking association, is appointed the agent of the Corporation with the
title "Transfer Agent" (and Registrar for Class A Stock) and the authority to
effect the issue, transfer, and registration of the certificates representing
48,500,000 shares of Class A Stock when signed by the Chairman of the Board, the
President or a Vice-President, and the Secretary or an Assistant Secretary, with
the seal of the Corporation or a facsimile thereof thereunto affixed, stating
the name of the registered holder and the number of shares represented thereby.
If such certificate is countersigned by the written signature of the Transfer
Agent, the signatures of the officers of the Corporation may be facsimiles. If
the person who signed (either manually or in facsimile) a certificate no longer
holds office when the certificate is issued, the certificate is nevertheless
valid. All certificates presented for transfer shall be properly
2
<PAGE>
endorsed by the registered holder or by his duly authorized attorney (and
guaranteed as required by the Transfer Agent), and shall be accompanied by any
additional documents required by the Indiana Uniform Commercial Code, as now in
force or hereafter amended.
Clause 2.032. Class B Stock. The Corporation is authorized to
effect the issue, transfer, and registration of the certificates representing
1,500,000 shares of Class B Stock when signed by the Chairman of the Board, the
President or a Vice- President, and the Secretary or an Assistant Secretary,
with the seal of the Corporation or a facsimile thereof thereunto affixed,
stating the name of the registered holder and the number of shares represented
thereby, subject, nevertheless, to compliance with the provisions of Sections
6.2, 6.3, and 6.4 of the Articles. All certificates presented for transfer shall
be properly endorsed by the registered holder or by his duly authorized
attorney, and shall be accompanied by any additional documents required by the
Indiana Uniform Commercial Code, as now in force or hereafter amended.
Clause 2.033. Escrow Receipts. The Corporation is authorized
to effect the issue, split-up and cancellation of the certificates representing
Escrow Receipts for Certificates Representing Class B Stock when signed by the
Chairman of the Board, the President or a Vice-President, and the Secretary or
an Assistant Secretary, with the seal of the Corporation or a facsimile thereof
thereunto affixed, stating the name of the registered holder and the number of
shares of Class B Stock covered by each Escrow Receipt, subject, nevertheless,
to compliance with the provisions of Section 6.2 of the Articles. All
certificates for Escrow Receipts presented for split-up shall be properly
endorsed by the registered holder or by his duly authorized attorney, and such
endorsement or endorsements shall be witnessed by one witness. The requirement
for such witnessing may be waived, in writing, upon the form of endorsement by
the Chairman of the Board, the President, a Vice-President, or the Secretary of
the Corporation.
Section 2.04. Lost, Stolen or Destroyed Certificates and Escrow
Receipts. Upon the presentation of a proper requisition conforming to the
requirements of the Transfer Agent, the Transfer Agent shall deliver a new
certificate representing Class A Stock in lieu of a lost, stolen or destroyed
certificate representing Class A Stock. The Corporation may, pursuant to a
resolution duly adopted by its Board, deliver in lieu of a lost, stolen or
destroyed certificate representing Class B Stock, or in lieu of a lost, stolen
or destroyed Escrow Receipt, a new certificate for Class B Stock or a new Escrow
Receipt (as the case may be).
Section 2.05. Issue and Consideration for Shares. The Board shall cause
the Corporation to issue shares of capital stock of the Corporation for such
consideration as shall have been fixed by the Board, subject to the provisions
of the
3
<PAGE>
Articles. The adequacy of the consideration is to be determined by the Board,
and that determination is conclusive insofar as the adequacy of the
consideration for the shares relates to whether the shares are validly issued,
fully paid, and nonassessable. Once the Corporation receives the consideration
for which the Board authorized the issuance of the shares, the shares are fully
paid and nonassessable. If the consideration for certain shares issued by the
Board is to be paid in installments, such shares may not be voted in any matter
if one or more of such installments is due and unpaid.
Section 2.06. Certificates for Class A Shares. Each holder of Class A
Stock shall be entitled to a certificate, signed by the Chairman of the Board,
the President or a Vice-President, and the Secretary or an Assistant Secretary,
with the seal of the Corporation, or a facsimile thereof, affixed to it. The
certificate shall state the name of the registered holder, the number of shares
represented by the certificate, and whether such shares have been fully paid and
are not liable to any further call or assessment. If such certificate is
countersigned by the written signature of the Transfer Agent, the signatures of
the Officers of the Corporation may be facsimiles. Such certificates shall be
substantially in the following form:
(Form for Face of Certificate)
INCORPORATED UNDER THE LAWS OF THE
STATE OF INDIANA
- ------------------------------ --------------------------------
Number Shares
{Lilly Logo}
Lilly Industries, Inc.
CLASS A STOCK WITHOUT PAR VALUE
Cusip Number
THIS CERTIFIES That ________________________________ is the
registered holder of _________________________________ SHARES OF
CLASS A STOCK, WITHOUT PAR VALUE, OF
Lilly Industries, Inc.
fully paid and not liable to any further call or assessment, and transferable
only on the books of the Corporation in person or by duly authorized attorney
upon surrender of this certificate properly endorsed. This certificate is not
valid unless countersigned and registered by the Transfer Agent and Registrar of
the Corporation.
4
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WITNESS the facsimile seal of the Corporation and the facsimile
signatures of its duly authorized officers.
Dated ____________________
-------------------------- -----------------------------
Secretary President
(FACSIMILE SEAL)
(Legend to appear on face of certificate.)
Countersigned and Registered:
Bank One, Indianapolis, N.A.
Indianapolis, Indiana
Transfer Agent and Registrar,
By ______________________________________________
Authorized Officer
(Form for Back of Certificate)
The Corporation will furnish the holder of record, upon written request
and without charge, a full statement of the designations, relative rights,
interests, preferences, limitations, and restrictions of the Class A Stock and
Class B Stock of the Corporation.
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM -- as tenants in common UNIF GIFT MIN ACT --
______Custodian______
TEN ENT -- as tenants by (Cust) (Minor)
entireties under Uniform Gifts to
Minors
JT TEN -- as joint tenants with
right of survivorship Act________________
and not as tenants in (State)
common
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, _____ HEREBY SELL, ASSIGN AND TRANSFER
UNTO ___________________________________________________________
- -----------------------------------------------------------------
(PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF
ASSIGNEE)
- -----------------------------------------------------------------
5
<PAGE>
- -----------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP
CODE OF ASSIGNEE)
- -----------------------------------------------------------------
___________________________________________________________SHARES
REPRESENTED BY THE WITHIN CERTIFICATE, AND DO HEREBY IRREVOCABLY
CONSTITUTE AND APPOINT __________________________________________,
ATTORNEY TO TRANSFER THE SAID SHARES ON THE BOOKS OF THE WITHIN
NAMED CORPORATION WITH FULL POWER OF SUBSTITUTION IN THE
PREMISES.
Dated ________________________
------------------------------
SIGNATURE OF REGISTERED HOLDER
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND
WITH THE NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE, IN
EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT, OR ANY
CHANGE WHATEVER.
Section 2.07. Certificates for Class B Shares. Each holder of the Class
B Stock shall be entitled to a certificate, signed by the Chairman of the Board,
the President or a Vice-President, and the Secretary or an Assistant Secretary,
with the seal of the Corporation, or a facsimile thereof, affixed to it. The
certificate shall state the name of the registered holder, the number of shares
represented by the certificate, and whether such shares have been fully paid and
are not liable to any further call or assessment. Such certificates shall be
substantially in the following form:
(Form for Face of Certificate)
INCORPORATED UNDER THE LAWS OF THE
STATE OF INDIANA
------------------------------ --------------------------------
Number Shares
Lilly Industries, Inc.
CLASS B STOCK
THIS CERTIFIES That ______________________ is the registered holder of
____________________________ shares of Class B Stock, without par value, of
6
<PAGE>
Lilly Industries, Inc.
fully paid and not liable to any further call or assessment, and transferable
only on the books of the Corporation in person or by duly authorized attorney
upon surrender of this certificate properly endorsed.
A statement of the designations, relative rights, interests,
preferences, qualifications, limitations or restrictions, and of the voting
rights, of the Class A Stock and Class B Stock of the Corporation, including,
particularly the limitations upon alienation of the title to the shares of Class
B Stock, will be furnished by the Corporation to the registered holder upon
written request without charge.
This certificate and the shares represented hereby are issued and shall
be held subject to all of the provisions of the Articles of Incorporation of the
Corporation, as the same may be now or hereafter amended. A copy of the complete
provisions of the Articles of Incorporation, as now or hereafter amended, will
be kept on file, and open for inspection by shareholders, in the office of the
Secretary of the Corporation; and the holder of this certificate by the
acceptance hereof assents to all such provisions.
WITNESS the seal of the Corporation and the signatures of its duly
authorized officers.
Dated ____________________
---------------------------
President
In the presence of
- -------------------------
Secretary
(SEAL)
(Form for Back of Certificate)
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
7
<PAGE>
TEN COM -- as tenants in common UNIF GIFT MIN ACT --
______Custodian______
TEN ENT -- as tenants by (Cust) (Minor)
entireties under Uniform Gifts to
Minors
JT TEN -- as joint tenants with
right of survivorship Act________________
and not as tenants in (State)
common
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, _______ HEREBY SELL, ASSIGN AND TRANSFER
UNTO ___________________________________________________________
- ----------------------------------------------------------------
(PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF
ASSIGNEE)
- ----------------------------------------------------------------
- ----------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP
CODE OF ASSIGNEE)
- ----------------------------------------------------------------
__________________________________________________________SHARES
REPRESENTED BY THE WITHIN CERTIFICATE, AND DO HEREBY IRREVOCABLY CONSTITUTE AND
APPOINT_______________________________, ATTORNEY TO TRANSFER THE SAID SHARES ON
THE BOOKS OF THE WITHIN NAMED CORPORATION WITH FULL POWER OF SUBSTITUTION IN THE
PREMISES.
Dated ________________________
--------------------------------
SIGNATURE OF REGISTERED HOLDER
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE, IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT, OR ANY CHANGE WHATEVER.
Section 2.08. Certificates for Escrow Receipts. Each holder of the
Class B Stock shall be entitled to an "Escrow Receipt for Certificates
Representing Class B Stock" of the Corporation signed by the Chairman of the
Board, the President or a Vice President, and the Secretary or an Assistant
Secretary, with the seal of the Corporation, or facsimile thereof, affixed
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to it. The Escrow Receipt shall state the name of the registered holder and the
number of shares of Class B Stock covered by the Escrow Receipt; subject,
nevertheless, to compliance with the provisions of Section 6.2 of the Articles.
Such certificates for Escrow Receipts shall be substantially in the following
form:
(Form for Face of Escrow Receipt)
INCORPORATED UNDER THE LAWS OF THE
STATE OF INDIANA
Number __________ __________ Shares
Lilly Industries, Inc.
ESCROW RECEIPT
FOR CERTIFICATES REPRESENTING CLASS B STOCK
THIS IS TO CERTIFY THAT ___________________________, who is the
registered holder of shares of Class B Stock, without par value (hereinafter
referred to as the "Subject Shares"), of Lilly Industries, Inc. (hereinafter
referred to as the "Corporation"), represented by certificate(s) No(s). ________
(hereinafter referred to as the "Subject Certificate"), has duly endorsed the
Subject Certificate in blank and has delivered the same to the Corporation as
Escrow Agent for Key Person Holders of Shares of Class B Stock, for deposit by
it in the Safety Deposit Box for Certificates Representing Class B Stock
maintained for the purpose under the name "Lilly Industries, Inc., Escrow Agent
for Key Person Holders of Shares of Class B Stock," at the Principal Office of
the Corporation or at a bank duly designated by the Board of Directors of the
Corporation; and that such registered holder has been issued this Escrow Receipt
to evidence such endorsement, delivery and deposit.
Upon the happening of any one or more of the following events:
i. The death of the registered holder, and the conclusion of
administration of his estate;
ii. The discharge of the registered holder, if an employee, by
the Corporation or one of its Subsidiaries;
iii. The retirement of the registered holder, if an employee,
from the active service of the Corporation or one of its Subsidiaries,
whether pursuant to a retirement plan or not;
iv. The termination by the registered holder, if an employee,
of his employment by the Corporation or one of its Subsidiaries;
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v. The decision of the registered holder to sell or
otherwise dispose of the above shares of Class B Stock registered in
his name; or the decision of a pledgee or other transferee of this
"Escrow Receipt for Certificates Representing Class B Stock" to sell or
otherwise dispose of the shares of Class B Stock represented by this
Escrow Receipt
(hereinafter referred to as the "Events of Exchange"), the Corporation
shall be entitled and obligated to issue and deliver, and the holder of
this Escrow Receipt (including the registered holder, pledgee or other
transferee) shall be entitled and obligated to receive a certificate
representing the same number of shares of Class A Stock of the
Corporation in lieu of the Subject Shares represented by the Subject
Certificate; and the Corporation shall upon the happening of any one or
more of such Events of Exchange be entitled to remove the Subject
Certificate from the Safety Deposit Box for Certificates Representing
Class B Stock and transfer the same into a new certificate for Class B
Stock standing in the name of the Corporation.
A statement of the designations, relative rights, interests,
preferences, qualifications, limitations or restrictions, and of the voting
rights, of the Class A Stock and Class B Stock of the Corporation, including
particularly the limitations upon alienation of the title to the shares of Class
B Stock represented by this Escrow Receipt, will be furnished by the Corporation
to the registered holder upon written request without charge.
This Escrow Receipt and the Subject Shares and Subject Certificate
represented hereby are issued and shall be held subject to all of the provisions
of the Articles of Incorporation of the Corporation and Code of By-Laws of the
Corporation, as the same may be now or hereafter amended. A copy of the complete
provisions of the Articles of Incorporation, as now or hereafter amended, as
well as a copy of the Code of By-Laws of the Corporation, as now or hereafter
amended, will be kept on file, and open for inspection by holders of Escrow
Receipts, in the office of the Secretary of the Corporation; and the holder of
this Escrow Receipt, (including the registered holder, pledgee or other
transferee), by the acceptance hereof, assents to all such provisions.
This Escrow Receipt is negotiable by endorsement upon the back hereof,
and, except as otherwise provided in the Articles of Incorporation, any such
negotiation shall vest any holder of this Escrow Receipt with the same rights,
and subject him to the same obligations, as the registered holder; but no holder
(including the registered holder, pledgee or other transferee hereof) shall be
entitled to re-registration hereof.
IN WITNESS WHEREOF, the Corporation has caused this Escrow Receipt to
be executed for and on its behalf as Escrow Agent for
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Key Person Holders of Shares of Class B Stock by its President and its seal to
be affixed hereto and attested by its Secretary, this ____ day of ____________,
19_____
Lilly Industries, Inc.
(SEAL) Escrow Agent for Key Person
Holders of Shares of Class B Stock
By _______________________________
President
Attest:
- -------------------------
Secretary
(Form for Back of Certificate)
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM -- as tenants in common UNIF GIFT MIN ACT --
______Custodian______
TEN ENT -- as tenants by (Cust) (Minor)
entireties under Uniform Gifts to
Minors
JT TEN -- as joint tenants with
right of survivorship Act________________
and not as tenants in (State)
common
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, ______ HEREBY SELL, ASSIGN AND TRANSFER
UNTO __________________________________________________________
- ----------------------------------------------------------------
(PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF
ASSIGNEE)
- ----------------------------------------------------------------
- ----------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP
CODE OF ASSIGNEE)
- ----------------------------------------------------------------
- ----------------------------------------------------------------
11
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__________________________________________________________SHARES
REPRESENTED BY THE WITHIN CERTIFICATE, AND DO HEREBY IRREVOCABLY CONSTITUTE AND
APPOINT _______________________________, ATTORNEY TO TRANSFER THE SAID SHARES ON
THE BOOKS OF THE WITHIN NAMED CORPORATION WITH FULL POWER OF SUBSTITUTION IN THE
PREMISES.
Dated ___________________
-----------------------------------
SIGNATURE OF REGISTERED HOLDER
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE, IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT, OR ANY CHANGE WHATEVER.
Section 2.09. Certificates Issued Prior to Payment. If any certificate
representing shares of the capital stock of the Corporation is issued but the
shares represented thereby are not fully paid up, such certificate shall be
legibly stamped to indicate the per centum which has been paid up, and as
further payments are made thereon, the certificate shall be stamped accordingly.
Section 2.10. Transfer Regulations. The Board shall have the power,
without the assent or vote of the Shareholders, to adopt "Regulations Respecting
Issue, Transfer and Registration of the Capital stock of Lilly Industries,
Inc.," which may also include regulations respecting Escrow Receipts (the
"Transfer Regulations"). The Board shall also have the power to alter, amend or
repeal the Transfer Regulations from time to time.
ARTICLE 3
THE SHAREHOLDERS
Section 3.01. Annual Meeting. The annual meeting of Shareholders shall
be held in April of each year. Failure to hold the annual meeting at the
designated time or designated place does not affect the validity of any
corporate action. The annual meeting shall be held for the purposes of electing
individuals to each position upon the Board and acting upon such other questions
and matters as may properly come before the meeting. The annual meeting shall be
called by the Board.
Section 3.02. Special Meetings. Special meetings, for any purpose or
purposes (unless otherwise prescribed by law), may be called by the Board, the
Chairman of the Board or the President, and shall be called by the Chairman of
the Board, the President or any Vice-President at (a) the request, in writing,
of a
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majority of the Board, or (b) at the written demand, delivered to the Secretary,
of Shareholders holding of record not less than 25% of the voting power of all
the shares of the Corporation issued and outstanding and entitled by the
Articles to vote on the business proposed to be transacted thereat. All requests
or demands for special meetings shall state the purpose or purposes thereof, and
the business transacted at such meeting shall be confined to the purposes stated
in the call and matters germane thereto.
Section 3.03. Place of Meetings. All meetings of Shareholders shall be
held at such place, within or without the State of Indiana, as may be specified
in the respective notices or waivers of notice thereof, or proxies to represent
Shareholders thereat.
Section 3.04. Record Date. For the purpose of determining the
Shareholders entitled to notice of, or to vote at, any meeting of the
Shareholders, for the purpose of determining the Shareholders entitled to
receive payment of any dividend or other distribution, for the purpose of
demanding a special meeting of the Shareholders, or in order to make a
determination of the Shareholders for any other corporate purpose, the Board may
fix in advance a record date. A record date determining the Shareholders
entitled to notice of a meeting of the Shareholders, to vote, to demand a
special meeting, or to take other action may not be more than 70 days before the
meeting or action requiring the determination of Shareholders. If no record date
is fixed for the determination of the Shareholders entitled to notice of, or to
vote at, a meeting of the Shareholders, then the date 45 days before the date of
the meeting shall be the record date of the meeting. A new record date must be
fixed if a meeting of Shareholders is adjourned to a date more than 120 days
after the date fixed for the original meeting. If no record date is fixed for
the determination of the Shareholders entitled to receive payment of a dividend
or other distribution, then the date upon which the resolution of the Board
declaring the dividend or other distribution is adopted shall be the record date
for the determination of the Shareholders. The Shareholders upon any record date
shall be the Shareholders as of the close of business on that record date.
Section 3.05. Notice of Meetings. A written or printed notice, stating
the place, day and hour of each annual and special meeting of Shareholders, and,
in the case of a special meeting or when otherwise required by any provision of
the Act, the Articles or these By-Laws, the purpose or purposes for which the
meeting is called, shall be delivered or mailed by the Secretary or by the
persons calling the meeting to each Shareholder at the time entitled to vote, at
such address as appears on the records of the Corporation, at least 10 and not
more than 60 days before the date of the meeting. Notice of any special meeting
called at the written demand of Shareholders shall be delivered or mailed within
60 days of the Secretary's receipt of such demand. Notice given in accordance
with these
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By-Laws is effective when mailed. Each Shareholder who has in the manner
provided in Section 3.06 of these By-Laws waived notice of a meeting of
Shareholders, or who personally attends a meeting of Shareholders, or is
represented thereat by a duly authorized proxy complying with the requirements
hereinafter set forth, shall be conclusively presumed to have been given due
notice of such meeting.
Section 3.06. Waiver of Notice. Notice of any annual or special meeting
of Shareholders may be waived in writing by any Shareholder before or after the
date and time of the meeting specified in the notice thereof by a written waiver
delivered to the Corporation for inclusion in the minutes or filing with the
corporate records. A Shareholder's attendance at any meeting in person or by
proxy shall constitute a waiver of (a) notice of such meeting, unless the
Shareholder at the beginning of the meeting objects to the holding of or the
transaction of business at the meeting, and (b) consideration at such meeting of
any business that is not within the purpose or purposes described in the meeting
notice, unless the Shareholder objects to considering the matter when it is
presented.
Section 3.07. Addresses of Shareholders. The address of each holder of
Class A Stock shall be deemed to be the same address as the latest address of
such Shareholder appearing on the records maintained by the Transfer Agent. The
address of each holder of Class B Stock shall be deemed to be the same address
as the latest address of such Shareholder appearing on the records maintained by
the Secretary of the Corporation.
Section 3.08. Shareholders Lists. Before each meeting of Shareholders,
a complete list of the Shareholders entitled to notice of such meeting, arranged
in alphabetical order by class of shares, and showing the address of, and the
number of shares entitled to vote held by, each Shareholder (the "Shareholders
Lists"), shall be prepared. Beginning five business days before the meeting and
continuing throughout the meeting, the Shareholders Lists shall be on file at
the Principal Office or at the place identified in the meeting notice in the
city where the meeting will be held, and shall be available for inspection by
any Shareholders entitled to vote at the meeting. On written demand, made in
good faith and for a proper purpose and describing with reasonable particularity
the Shareholder's purpose, and if the Shareholders Lists are directly connected
with the Shareholder's purpose, a Shareholder (or such Shareholder's agent or
attorney authorized in writing) shall be entitled to inspect and to copy the
Shareholders Lists, during regular business hours and at the Shareholder's
expense, during the period the Shareholders Lists are available for inspection.
The Shareholders Lists shall be the only evidence as to the Shareholders
entitled to examine the Shareholders Lists or to vote at any meeting of the
Shareholders.
Section 3.09. Proxies. A Shareholder entitled to vote at any meeting
may vote either in person or by proxy executed in
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writing by the Shareholder or a duly authorized attorney-in-fact of such
Shareholder. For purposes of this Section, a proxy granted by telegram, telex,
telecopy or other document transmitted electronically for or by a Shareholder
shall be deemed "executed in writing by the Shareholder." The general proxy of a
fiduciary shall be given the same effect as the general proxy of any other
Shareholder. No proxy shall be valid after eleven months from the date of its
execution unless a longer or shorter time is expressly provided therein. An
appointment of a proxy is revocable by a Shareholder unless the appointment form
conspicuously states that it is irrevocable and the appointment is coupled with
an interest.
Section 3.10. Quorum. At any meeting of Shareholders, the holders of a
majority of the outstanding shares which may be voted on the business to be
transacted, represented thereat in person or by proxy, shall constitute a
quorum, and a majority vote of such quorum shall be necessary for the
transaction of such business at the meeting, unless a greater number is required
by the Articles, these By-Laws, the Act, or any other applicable laws. In case a
quorum of a voting group shall not be present at any meeting, the holders of
record of a majority of such shares of that group so present in person or by
proxy may adjourn the meeting from time to time, without notice, other than
announcement at the meeting, unless the date of the adjourned meeting requires
that the Board fix a new record date therefor, in which case notice of the
adjourned meeting shall be given. At any such adjourned meeting at which a
quorum shall be present or represented, any business may be transacted which
might have been transacted at the meeting as originally scheduled. If the matter
to be voted on at a meeting requires the affirmative vote of holders of both
Class A Stock and Class B Stock voting separately as two groups, action on that
matter is taken only when voted upon by each group. A matter may be voted on by
one voting group at a meeting even though no vote is taken by the other voting
group.
ARTICLE 4
THE BOARD OF DIRECTORS
Section 4.01. Number of Members. The business and affairs of the
Corporation shall be managed under the direction of a Board of 11 Directors.
Section 4.02. Qualification of Members. Each Director shall be an adult
individual. Members of the Board need not be Shareholders and need not be
residents of the State of Indiana. At least a majority of the Directors shall be
citizens of the United States.
Section 4.03. Election of Members. At each annual meeting of the
Shareholders, the Shareholders shall elect Directors in
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accordance with the Articles. Each Director shall be elected for a term of one
year and shall hold office until the next ensuing annual meeting of the
Shareholders or until his successor shall have been duly elected and qualified.
Each Director shall be deemed to have qualified as such upon his election. No
decrease in the number of Directors at any time provided for by these ByLaws
shall have the effect of shortening the term of any incumbent Director.
Section 4.04. Vacancies. Any vacancy occurring in the Board, including
a vacancy resulting from an increase in the number of Directors, may be filled
by the Board, or if the Directors remaining in office constitute fewer than a
quorum of the Board, they may fill the vacancy by the affirmative vote of a
majority of all the Directors remaining in office. Each Director so chosen shall
hold office until the expiration of the term of the Director, if any, whom he
has been chosen to succeed, or, if none, until the expiration of the term
designated by the Board for the directorship to which he has been elected, or
until his earlier removal, resignation, death, or other incapacity.
Section 4.05. Removal of Members. Any Director may be removed, with or
without cause, at any meeting of the Shareholders by the affirmative vote of a
majority in number of shares of the Shareholders of record present in person or
by proxy and entitled to vote for the election of such Director, if notice of
the intention to act upon such matter shall have been given in the notice
calling such meeting. If the notice calling such meeting shall so provide, the
vacancy caused by the removal may be filled at the meeting by vote of a majority
of the Shareholders present and entitled to vote for such Director.
Section 4.06. Resignation of Members. Any Director may resign at any
time by delivering written notice of his resignation to the Board, the Chairman
of the Board, or the Secretary. The resignation shall take effect at the time
specified in the written notice or when it is delivered, and, unless otherwise
specified in the written notice, the acceptance of the resignation shall not be
necessary to make it effective.
Section 4.07. Annual Meeting. The Board shall meet each year
immediately after the annual meeting of the Shareholders for the purpose of
electing officers and considering any other business that may properly be
brought before the meeting. No notice of any kind shall be necessary for the
holding of this annual meeting. If such meeting is not held as provided, the
election of Officers may be held at any subsequent duly constituted meeting of
the Board.
Section 4.08. Regular Meetings. Regular quarterly meetings of the Board
may be held with notice by letter, telegram or cable, or without any notice
whatever, and at such places and times as may be fixed from time to time by the
Board.
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Section 4.09. Special Meetings. Special meetings of the Board may be
called at any time, or from time to time, and shall be called on the written
request of at least two Directors, the Chairman of the Board, or the President,
by causing the Secretary or any Assistant Secretary to give to each Director,
either personally or by mail, telephone, telegraph, teletype or other form of
wire or wireless communication at least two days notice of the date, time and
place of such meeting. Special meetings shall be held at the Principal Office or
at such other place, within or without the State of Indiana, as shall be
specified in the respective notices or waivers of notice thereof. A Director may
waive notice of any special meeting of the Board before or after the date and
time stated in the notice by a written waiver signed by the Director and filed
with the minutes or corporate records. A Director's attendance at or
participation in a special meeting waives any required notice to the Director of
the meeting unless the Director at the beginning of the meeting (or promptly
upon the Director's arrival) objects to holding the meeting or transacting
business at the meeting and does not thereafter vote for or assent to action
taken at the meeting.
Section 4.10. Meeting by Telephone, Etc. Any or all of the members of
the Board may participate in a meeting of the Board, or conduct a meeting
through the use of, any means of communication by which all persons
participating may simultaneously hear each other during the meeting, and
participation in a meeting using these means constitutes presence in person at
the meeting.
Section 4.11. Quorum. At all meetings of the Board, a majority of the
number of Directors designated for the full Board shall be necessary to
constitute a quorum for the transaction of any business, except (a) that for the
purpose of filling of vacancies of the Board a majority of Directors then in
office shall constitute a quorum, and (b) that a lesser number may adjourn the
meeting from time to time until a quorum is present. The affirmative vote of a
majority of the Directors present at a meeting at which a quorum is present
shall be the act of the Board, unless the act of a greater number is required by
the Articles, these By-Laws, the Act, or any other applicable laws. A Director
who is present at a meeting of the Board at which action on any corporate matter
is taken shall be deemed to have assented to the action taken unless (a) his
dissent shall be affirmatively stated by him at and before the adjournment of
such meeting (in which event the fact of such dissent shall be entered by the
Secretary of the meeting in the minutes of the meeting), or (b) he delivers
written notice of his dissent or abstention to the chairman of the meeting
before its adjournment or to the Secretary of the Corporation immediately after
adjournment of the meeting. The right of dissent or abstention provided for by
either Clause (a) or Clause (b) of the immediately preceding sentence shall not
be available, in respect of any matter acted upon at any meeting, to a Director
who voted at the meeting in favor of such matter and did not change his vote
prior to the time that the result of the vote on such matter was announced by
the chairman of the meeting.
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Section 4.12. Action Without Meeting. Any action required or permitted
to be taken at any meeting of the Board may be taken without a meeting if the
action is taken by all members of the Board. The action must be evidenced by one
or more written consents describing the action taken, signed by each member of
the Board, and included in the minutes or filed with the corporate records
reflecting the action taken. Action taken under this section is effective when
the last member of the Board signs a written consent, unless the consent
specifies a different prior or subsequent effective date.
Section 4.13. Powers of Directors. The Board shall exercise all the
powers of the Corporation, subject to the restrictions imposed by the Articles,
these By-Laws, the Act or any other applicable laws.
Section 4.14. Dividends. The Board shall have power, subject to any
restrictions contained in the Articles, the Act, or any other applicable laws,
to declare and pay dividends upon Class A Stock and Class B Stock. Before the
payment of any dividend, or the distribution of any profits, there may be set
aside out of the net profits of the Corporation such sum or sums as the
Directors, from time to time, in their absolute discretion, think proper as a
reserve fund to meet contingencies or for equalizing dividends, or for such
other purpose as the Directors think conducive to the interests of the
Corporation.
Section 4.15. Compensation of Directors. The Board is empowered and
authorized to fix and determine the compensation of Directors for attendance at
meetings of the Board and for any additional services any of the Directors may
perform for the Corporation.
ARTICLE 5
COMMITTEES OF THE BOARD OF DIRECTORS
Section 5.01. Creation of Committees. The Board may create one or more
committees (including an executive committee) and appoint members of the Board
to serve on them. Each committee may have one or more members, who serve at the
pleasure of the Board. The creation of a committee and appointment of members to
it must be approved by the greater of: (a) a majority of all the Directors in
office when the action is taken; or (b) the number of Directors required by the
Articles or these By-Laws to take action under the Act.
Section 5.02. Powers of a Committee. To the extent specified by the
Board, each committee may exercise the authority of the Board. A committee may
not, however (a) authorize distributions, except a committee (or an executive
officer of the Corporation designated by the Board) may authorize or approve a
reacquisition of shares or other distribution if done according
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to a formula or method, or within a range, prescribed by the Board; (b) approve
or propose to Shareholders action that the Act requires to be approved by
Shareholders; (c) fill vacancies on the Board or on any of its committees; (d)
adopt, amend, or repeal any of these By-Laws; (e) approve a plan of merger not
requiring Shareholder approval; or (f) authorize or approve the issuance or
sale, or a contract for sale, of shares, or determine the designation and
relative rights, preferences, and limitations of a class or series of shares,
except that the Board may authorize a committee of the Board (or executive
officer designated by the Board) to take the action described in this Clause (f)
within limits prescribed by the Board.
Section 5.03. Meetings; Procedure; Quorum; Etc. The principles set
forth in Sections 4.08 through 4.12 of these ByLaws dealing with meetings,
action without a meeting, notice and waiver of notice, and quorum and voting
requirements of the Board apply to the committees and their members as well.
ARTICLE 6
THE OFFICERS
Section 6.01. Number of Officers. The Officers of the Corporation shall
consist of the Chairman of the Board, the President, one or more
Vice-Presidents, a Secretary, and such other Officers as may be chosen by the
Board or by an Officer duly authorized by the Board to choose other Officers, at
such time and in such manner and for such terms as the Board or such duly
authorized Officer may determine. Any two or more offices may be held by the
same person. The Officers of the Corporation may also include a Chairman of the
Executive Committee, if there be such a Committee.
Section 6.02. Qualifications of Officers. Each Officer of the
Corporation shall be an adult individual. The Chairman of the Board, the
Chairman of the Executive Committee, if there be such a Committee, and the
President shall each be a duly elected and qualified member of the Board. The
officers of the Corporation need not be Shareholders and need not be residents
of the State of Indiana or citizens of the United States of America.
Section 6.03. Election and Appointment of Officers. The Officers shall
be chosen by the Board or by an Officer duly elected or appointed and duly
authorized by the Board. Each Officer shall hold office until his successor is
chosen, until his death, until he shall have resigned, or until he shall have
been removed in the manner hereinafter provided. Each Officer shall be deemed to
have qualified as such upon his election or appointment.
Section 6.04. Removal of Officers. Any Officer may be removed at any
time, with or without cause, by the Board by vote
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of a majority of the actual number of Directors elected and qualified, from time
to time (or by the Officer who appointed him if he was appointed by an Officer),
whenever in its or his judgment the best interests of the Corporation will be
served thereby, but such removal shall be without prejudice to the contract
rights, if any, of the person so removed.
Section 6.05. Resignation of Officers. Any Officer of the Corporation
may resign at any time by delivering written notice of his resignation to the
Board, the Chairman of the Board, the Secretary, or to the Officer who appointed
him if he was appointed by an Officer. The resignation shall take effect when
delivered, unless the notice specifies a later effective date. If a resignation
is made effective at a later date and the Corporation accepts the future
effective date, the Board (or the Officer who appointed the resigning Officer,
if he was appointed by an Officer) may fill the pending vacancy before the
effective date if the successor does not take office until the effective date.
Unless otherwise specified in the written notice, the acceptance of the
resignation shall not be necessary to make it effective.
Section 6.06. Vacancies. Any vacancy in any office, for any cause,
shall be filled for the unexpired portion of the term in the manner prescribed
in these By-Laws for election or appointment to such office.
Section 6.07. The Chairman of the Board. The Chairman of the Board
shall be a Director. He shall preside at all meetings of the Board and the
Shareholders and shall have general supervision and direction over the business
and affairs of the Corporation, subject to the control of the Board. He shall,
in general, discharge all the duties which devolve upon a presiding officer and
perform all duties incident to the office of Chairman of the Board. The Chairman
of the Board is hereby authorized to choose Vice-Presidents, Assistant Vice
Presidents and Assistant Secretaries, in addition to those elected by the Board.
He shall also perform such other duties as, from time to time, may be assigned
to him by the Board.
Section 6.08. The Chairman of the Executive Committee. The Chairman of
the Executive Committee, if any, shall be chosen from among the Directors. He
shall have general supervision and direction over the business and affairs of
the Executive Committee, subject, however, to the control of the Board and the
Executive Committee. He shall, in general, perform all duties incident to the
office of the Chairman of the Executive Committee and such other duties as, from
time to time, may be assigned to him by the Board or the Executive Committee.
Section 6.09. The President. The President shall be a Director. He
shall have active executive management of the operation of the Corporation,
subject, however, to the control of the Board, the Chairman of the Board, the
Executive Committee, if any, and the Chairman of the Executive Committee, if
any. He
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shall, in general, perform all duties incident to the office of President and
such other duties as, from time to time, may be assigned to him by the Board,
the Chairman of the Board, the Executive Committee, if any, or the Chairman of
the Executive Committee, if any.
Section 6.10. The Vice-Presidents. Each of the Vice- Presidents shall
have such powers and perform such duties as are implicit in the portfolio to
which he is elected and as the Board or the Chairman of the Board may, from time
to time, prescribe or as the President may, from time to time, delegate to him.
Section 6.11. Assistant Vice-Presidents. One or more Assistant
Vice-Presidents may be appointed by the Chairman of the Board or the President
and shall perform such duties as are from time to time delegated to him or them
by the Chairman of the Board, the President or the Board.
Section 6.12. The Secretary. The Secretary shall attend all meetings of
the Shareholders and of the Board, and shall keep or cause to be kept in a book
provided for the purpose a true and complete record of the proceedings of such
meetings, and shall perform a like duty, when required, for all committees
created by the Board. The Secretary shall authenticate the records of the
Corporation when necessary and shall exercise and perform such other powers and
duties as these By-Laws, the Board, the Chairman of the Board, or the President
may prescribe. The Secretary shall give all notices of the Corporation and, in
case of the Secretary's absence, negligence, or refusal so to do, any notice may
be given by a person so directed by the Chairman of the Board or the President
or by the requisite number of Directors or Shareholders upon whose request the
meeting is called as provided by these By-Laws.
Section 6.13. Assistant Officers. The Board or an Officer duly
appointed by the Board may from time to time designate assistant Officers who
shall exercise and perform such powers and duties as the Officers whom they are
elected to assist shall specify and delegate to them, and such other powers and
duties as these By-Laws, the Board, its Chairman, or the President may
prescribe. An Assistant Secretary may, in the absence or disability of the
Secretary, attest the execution of all documents by the Corporation.
Section 6.14. Function of Offices. The offices of the Corporation are
established in order to facilitate the day to day administration of the affairs
of the Corporation in the ordinary course of its business and to provide an
organization capable of executing and carrying out the decisions and directions
of the Board of Directors. The officers of the Corporation shall have such
powers and perform such duties as may be necessary or desirable to conduct and
effect all transactions in the ordinary course of the business of the
Corporation without further authorization by the Board of Directors and such
further powers
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as are granted by these By-Laws or are otherwise granted by the Board of
Directors.
Section 6.15. Delegation of Authority. In case of the absence of any
Officer of the Corporation, or for any other reason that the Board may deem
sufficient, the Board may delegate the powers or duties of such Officer to any
other Officer or to any Director, for the time being.
Section 6.16. Compensation of Officers. The salaries or other
compensation of the Officers of the Corporation shall be fixed from time to time
by the Board, by a committee of Board members duly designated by the Board, or
in the case of an Officer appointed by a duly designated Officer, by such
Officer.
ARTICLE 7
LIMITATION OF LIABILITY
Section 7.01. General Limitation. No Officer or General Manager shall
be liable for any loss or damage suffered by the Corporation because of any
action taken or not taken by such Officer or General Manager, as such, if, in
taking or omitting to take any action causing such loss or damage, either (a)
such Officer or General Manager acted (1) in good faith, (2) with the care an
ordinarily prudent person in a like position would have exercised under similar
circumstances, and (3) in a manner such Officer or General Manager reasonably
believed was in the best interests of the Corporation, or (b) such Officer's or
General Manager's breach of or failure to act in accordance with the standards
of conduct set forth in Clause (a) hereof did not constitute willful misconduct
or recklessness.
Section 7.02. Savings Clause. This Article 7 shall not be construed to
subject any person to liability to the Corporation for loss or damage suffered
by the Corporation because of any action taken or not taken by such person for
which such person would not otherwise be liable to the Corporation under
applicable common and statutory law.
ARTICLE 8
INDEMNIFICATION
Section 8.01. Indemnification of Officers and Employees. The
Corporation shall, to the extent to which it is empowered to do so by the Act,
or any other applicable laws, as from time to time in effect, indemnify any
Officer or employee of the Corporation 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
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investigative and whether formal or informal (an "Action"), by reason of the
fact that he is or was an Officer or employee of the Corporation or who, while
serving as such Officer or employee of the Corporation, is or was serving at the
request of the Corporation as a director, officer, partner, trustee, employee or
agent (an "Authorized Capacity") of another corporation, partnership, joint
venture, trust, employee benefit plan, or other enterprise, whether for profit
or not (individually, "Another Entity"), against expenses, including attorney's
fees ("Expenses"), judgments, penalties, fines (including excise taxes assessed
with respect to employee benefit plans) and amounts paid in settlement actually
and reasonably incurred by him in connection with such Action if such person
acted in good faith and in a manner he reasonably believed, in the case of
conduct in his official capacity, was in the best interests of the Corporation,
and in all other cases, was not opposed to the best interests of the
Corporation, and, with respect to any criminal Action, he either had reasonable
cause to believe his conduct was lawful or no reasonable cause to believe his
conduct was unlawful. The termination of any Action by judgment, order,
settlement or conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not meet the
prescribed standards of conduct.
Section 8.02. Indemnification Procedure. Unless ordered by a court, any
indemnification of any person under Section 8.01 shall be made by the
Corporation only as authorized in the specific case upon a determination that
indemnification of such person is proper in the circumstances because he met the
applicable standards of conduct. Such determination shall be made (a) by the
Board, by a majority vote of a quorum consisting of Directors who are not at the
time parties to the Action involved ("Parties"), or (b) if a quorum cannot be
obtained under Clause (a), by a majority vote of a committee duly designated by
the Board (in which designation Directors who are Parties may participate),
consisting solely of two or more Directors who are not at the time Parties, or
(c) by written opinion of special legal counsel (1) selected by the Board or a
committee composed of Directors duly designated by the Board as such (a
"Committee") in the manner prescribed in Clauses (a) or (b), respectively, or
(2) if a quorum cannot be obtained and a Committee cannot be designated under
Clauses (a) and (b), respectively, selected by a majority of the full Board, in
which selection Directors who are Parties may participate, or (d) by the
Shareholders who are not at the times Parties, voting together as a single
class; and provided, further, that shares owned by or voted under the control of
Directors who are at the time Parties may not be voted on the determination.
Authorization of indemnification and evaluation as to the reasonableness of
Expenses shall be made in the same manner as the determination that
indemnification is permissible, except that if the determination is made by
special legal counsel, authorization of indemnification and evaluation as to
reasonableness of Expenses shall be made by those entitled under Clause (c) to
select counsel.
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Section 8.03. Good Faith Defined. For purposes of any determination
under Section 8.01, an Officer or employee of the Corporation shall be deemed to
have acted in good faith and to have otherwise met the applicable standard of
conduct set forth in Section 8.01 if his action is based on information,
opinions, reports, or statements, including financial statements and other
financial data, prepared or presented by (a) one or more Officers, employees, or
agents of the Corporation or another enterprise whom he reasonably believes to
be reliable and competent in the matters presented; (b) legal counsel, public
accountants, appraisers or other persons as to matters he reasonably believes
are within the person's professional or expert competence; or (c) a Committee,
or a committee of the board of directors of another enterprise, of which the
person is not a member, if he reasonably believes the Committee or committee,
respectively, merits confidence. The term "another enterprise" as used in this
Section 8.03 shall mean Another Entity of which such Officer or employee of the
Corporation is or was serving at the request of the Corporation in an Authorized
Capacity. The provisions of this Section 8.03 shall not be deemed to be
exclusive or to limit in any way the circumstances in which an Officer or
employee of the Corporation may be deemed to have met the applicable standards
of conduct set forth in Section 8.01.
Section 8.04. Payment of Expenses in Advance. Expenses reasonably
incurred in connection with any Action by any Officer or employee of the
Corporation may be paid or reimbursed by the Corporation in advance of the final
disposition of such Action as authorized in the specific case in the same manner
described in Section 8.03 upon receipt of a written affirmation of such
Officer's or employee's good faith belief that he has met the standards of
conduct described in Section 8.01 and upon receipt of a written undertaking by
or on behalf of such Officer or employee to repay such amount if it shall
ultimately be determined that he did not meet the applicable standards of
conduct and a determination is made under the procedure set forth in Section
8.03 that the facts then known to those making the determination would not
preclude indemnification under this Article 8. Such an undertaking must be an
unlimited general obligation of the person making it, but need not be secured
and may be accepted by the Corporation without reference to such person's
financial ability to make repayment.
Section 8.05. Rights Not Exclusive. The indemnification provided in
this Article 8 (a) shall not be deemed exclusive of any other rights to which a
person seeking indemnification may be entitled under (1) any law, (2) the
Articles, (3) any resolution of the Board or of the Shareholders, (4) any other
authorization, whenever adopted, after notice, by a majority vote of all shares
entitled to vote thereon, (5) any contract, or (6) the articles of
incorporation, code of by-laws or other governing documents, or any resolution
of or other authorization by the directors, shareholders, partners, trustees,
members, owners or governing body, of Another Entity; (b) shall inure to the
benefit of the
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heirs, executors and administrators of such a person; and (c) shall continue as
to any such person who has ceased to be an Officer or employee of the
Corporation or to be serving in an Authorized Capacity for Another Entity.
Section 8.06. Vested Right to Indemnification. The right of any person
to indemnification under this Article 8 shall vest at the time of occurrence or
performance of any event, act or omission giving rise to the Action for which
indemnification is sought, and, once vested, shall not later be impaired as a
result of any amendment, repeal, alteration or other modification of any or all
of these provisions. Notwithstanding the foregoing, the indemnification afforded
under this Article 8 shall be applicable to all alleged prior acts or omissions
of any person seeking indemnification hereunder, regardless of the fact that
such alleged prior acts or omissions may have occurred prior to the adoption of
this Article 8. To the extent such prior acts or omissions cannot be deemed to
be covered by this Article 8, the right of any individual to indemnification
shall be governed by the indemnification provisions in effect at the time of
such prior acts or omissions.
Section 8.07. Additional Definitions. For purposes of this Article 8,
references to the "Corporation" shall include any domestic or foreign
predecessor entity of the Corporation in a merger or other transaction in which
the predecessor's existence ceased upon consummation of the transaction.
For purposes of this Article 8, serving an employee benefit plan at the
request of the Corporation shall include any service as an Officer or employee
of the Corporation which imposes duties on, or involves services by such Officer
or employee with respect to an employee benefit plan, its participants, or
beneficiaries. A person who acted in good faith and in a manner be reasonably
believed to be in the best interests of the participants and beneficiaries of an
employee benefit plan shall be deemed to have acted in a manner "not opposed to
the best interest of the Corporation" referred to in this Article 8.
For purposes of this Article 8, "party" includes any individual who is
or was a plaintiff, defendant or respondent in any action, suit or proceeding,
or who is threatened to be made a named defendant or respondent in any action,
suit or proceeding.
For purposes of this Article 8, "official capacity," when used with
respect to an Officer, employee of the Corporation, or agent of the Corporation,
shall mean the office in the Corporation held by the Officer or the employment
or agency relationship undertaken by the employee or agent on behalf of the
Corporation. "Official Capacity" does not include service for any other foreign
or domestic corporation or any partnership, joint venture, trust, employee
benefit plan, or other enterprise, whether for profit or not.
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Section 8.08. Payments as a Business Expense. Any payments made to any
indemnified party under this Article 8 or under any other right to
indemnification shall be deemed to be an ordinary and necessary business expense
of the Corporation, and payment thereof shall not subject any person responsible
for the payment, or the Board, to any action for corporate waste or to any
similar action.
ARTICLE 9
MISCELLANEOUS MATTERS
Section 9.01. Fiscal Year. The fiscal year of the Corporation shall
begin on the first day of December of each year and shall end on the last day of
November next ensuing.
Section 9.02. Place of Keeping Corporate Books and Records. The
Corporation shall keep at its Principal Office a copy of (a) the Articles and
all amendments thereto currently in effect; (b) the By-Laws and all amendments
thereto currently in effect; (c) resolutions adopted by the Board with respect
to the shares of the Corporation and fixing their relative rights, preferences,
and limitations, if shares issued pursuant to these resolutions are outstanding;
(d) minutes of all meetings of the Shareholders and records of all actions taken
by the Shareholders without a meeting (collectively, "Shareholders Minutes") for
the prior three years; (e) all written communications by the Corporation to the
Shareholders, including the financial statements furnished by the Corporation to
the Shareholders for the prior three years; (f) a list of the names and business
addresses of the current Directors of the Corporation; and (g) the most recent
Annual Report of the Corporation as filed with the Secretary of State of
Indiana. The Corporation shall also keep and maintain at its Principal Office,
or at such other place or places within or without the State of Indiana as may
be provided, from time to time, in these By-Laws, (a) minutes of all meetings of
the Board and of each committee, and records of all actions taken by the Board
and by each committee without a meeting; (b) Shareholders Minutes; (c)
appropriate accounting records of the Corporation; and (d) a record of the
Shareholders in a form that permits preparation of a list of the names and
addresses of all the Shareholders, in alphabetical order by class of shares,
stating the number and class of shares held by each Shareholder. All of the
records of the Corporation described in this Section shall be maintained in
written form or in another form capable of conversion into written form within a
reasonable time.
Section 9.03. Seal. The seal of the Corporation shall be circular in
form and mounted upon a metal die, suitable for impressing the same upon paper.
About the upper periphery of the seal shall appear the words "Lilly Industries,
Inc." and about the lower periphery thereof the word "Indianapolis." In the
center of the seal shall appear the words and figures "Lilly," encircled with an
ellipse, and "Since 1865."
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Section 9.04. Execution of Negotiable Instruments. All checks, drafts,
bills of exchange and orders for the payment of money by the Corporation shall,
unless otherwise directed by the Board, or unless otherwise required by law, be
signed by any two of the following Officers: The Chairman of the Board, the
President, any Vice-President or the Secretary. The Board may, however,
authorize any one or more of the Officers to sign checks, drafts, bills of
exchange and orders for the payment of money by the Corporation singly and
without necessity of countersignature; and the Board may designate any other
employee or employees of the Corporation, who may, in the name of the
Corporation, execute checks, drafts, bills of exchange and orders for the
payment of money by the Corporation or in its behalf.
Section 9.05. Execution of Deeds, Contracts, Etc. All deeds, notes,
bonds and mortgages made by the Corporation and all other written contracts and
agreements, other than those executed in the ordinary course of business, to
which the Corporation shall be a party shall be executed in its name by the
Chairman of the Board, the President, a Vice-President or by any other Officer
so authorized by the Board, acting by resolution; and, the Secretary, or
Assistant Secretary, when necessary or required, shall attest the execution
thereof.
Section 9.06. Ordinary Contracts and Agreements. All written contracts
and agreements (including checks) into which the Corporation enters in the
ordinary course of business operations shall be executed by any Officer or by
any other employee of the Corporation designated by the Board, the Chairman of
the Board, the President, or any Vice-President to execute such contracts and
agreements.
Section 9.07. Endorsement of Certificates for Shares. Unless otherwise
directed by the Board, any share or shares issued by any corporation and owned
by the Corporation (including reacquired shares of the Corporation) may, for
sale or transfer, be endorsed in the name of the Corporation by the Chairman of
the Board, the President or a Vice-President, and the Secretary or an Assistant
Secretary, when necessary or required, shall attest such endorsement.
Section 9.08. Voting of Shares Owned by Corporation. Unless otherwise
directed by the Board, any share or shares issued by any other corporation and
owned or controlled by the Corporation may be voted at any shareholders' meeting
of such other corporation by the Chairman of the Board, the President, or in
their absence by a Vice-President or the Secretary. Whenever, in the judgment of
the Chairman of the Board or the President, it is desirable for the Corporation
to execute a proxy or give a Shareholder's consent in respect to any share or
shares issued by any other corporation and owned by the Corporation, such proxy
or consent shall be executed in the name of the Corporation by the Chairman of
the Board, the President, a Vice-President, or the Secretary. Any person or
person designated in the manner above stated as the proxy or proxies of the
Corporation shall have full
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right, power and authority to vote the share or shares issued by such other
corporation and owned by the Corporation in the same manner as such share or
shares might be voted by the Corporation.
ARTICLE 10
AMENDMENTS
The power to make, alter, amend or repeal these By-Laws is vested in
the Board, but the affirmative vote of a number of Directors equal to a majority
of the number who would constitute a full Board at the time of such action shall
be necessary to take any action for the making, alteration, amendment or repeal
of these By-Laws.
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Exhibit 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the use of our report dated January 13, 1997, included in the
Annual Report on Form 10-K of Lilly Industries, Inc. for the year ended November
30, 1996, with respect to the consolidated financial statements, as amended,
included in this Form 10-K/A.
/s/Ernst & Young LLP
Indianapolis, Indiana
July 23, 1997
