<PAGE>
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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
ACTION PRODUCTS INTERNATIONAL, INC.
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
ACTION PRODUCTS INTERNATIONAL, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 8, 1998
TO OUR SHAREHOLDERS:
Notice is hereby given that the Annual Meeting of the Shareholders of
Action Products International, Inc. (the "Company") will be held at the offices
of the Company at 344 Cypress Road, Ocala, Florida 34472-3108 on Monday, June 8,
1998, at 9:30 a.m., to consider and vote upon the following proposals, all of
which are more completely set forth in the accompanying Proxy Statement:
1. To consider and act upon a proposal to amend and restate the
Company's Articles of Incorporation to (i) increase the number of
authorized shares of Common Stock to 15 million; (ii) authorize 10
million shares of a new class of "Blank Check" Preferred Stock
(subject to limitations on the voting power of any series of Preferred
Stock); (iii) classify the Board of Directors into two classes, each
class elected for staggered two-year terms; (iv) provide that either
the shareholders or the Board of Directors has the power to alter,
amend and repeal the By-Laws; and (v) make other minor changes in the
interests of modernization, clarity and brevity.
2. If Proposal 1 is adopted, to elect four (4) directors as follows: two
directors to serve a one-year term, and two directors to serve a two-
year term .
If Proposal 1 is not approved, to elect four (4) directors to serve a
one-year term.
3. To transact such other business as may properly come before the
meeting.
Only shareholders of record at the close of business on April 9, 1998, will
be entitled to vote at the meeting.
The Board of Directors has fixed the close of business on April 9, 1998, as
the record date for the determination of shareholders entitled to notice of, and
to vote at, the Annual Meeting. A form of proxy and the Company's Annual Report
to Shareholders for the fiscal year ended December 31, 1997 are enclosed.
Whether or not you expect to attend the meeting, please read the
accompanying Proxy Statement and complete, sign, date and return the
accompanying proxy in the enclosed postage paid envelope at your earliest
convenience. You may revoke your proxy at any time before it is exercised by
following the instructions set forth on the first page of the accompanying Proxy
Statement.
BY ORDER OF THE BOARD OF DIRECTORS
ACTION PRODUCTS INTERNATIONAL, INC.
_/s/Delton G. de Armas______________
Delton G. de Armas
Secretary
Ocala, Florida
May 8, 1998
<PAGE>
ACTION PRODUCTS INTERNATIONAL, INC.
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement is furnished to shareholders of Action Products
International, Inc. (the "Company") in connection with the solicitation by the
Board of Directors of proxies to be used at the 1998 Annual Meeting of
Shareholders of the Company and any adjournment or postponement thereof (the
"Meeting"). The Meeting will be held on Monday, June 8, 1998, at 9:30 a.m.,
Eastern Standard Time, at the offices of the Company at 344 Cypress Road, Ocala,
Florida 34472-3108. This Proxy Statement and enclosed form of Proxy were first
sent to shareholders on or about May 8, 1998. The Company's Annual Report for
the year ended December 31, 1997, including certified financial statements, is
also enclosed herewith.
The Board of Directors of the Company is soliciting proxies so that each
shareholder is given an opportunity to vote. These proxies enable shareholders
to vote on all matters that are scheduled to come before the Meeting. When
proxies are returned properly executed, the shares represented thereby will be
voted by the Proxy Committee in accordance with the shareholders' directions.
Shareholders are urged to specify their choices by marking the enclosed proxy;
if no choice has been specified, the shares will be voted FOR the adoption of
the Restated and Amended Articles and FOR the election of the four nominees as
directors. The proxy also confers upon the Proxy Committee discretionary
authority to vote the shares represented thereby on any other matter that may
properly be presented for action at the Meeting.
Votes cast by proxy or in person at the Meeting, which will be tabulated by
an Inspector of Elections appointed for the Meeting, will determine whether or
not a quorum is present. The Inspector of Elections will treat abstentions as
shares that are present for purposes of determining the presence of a quorum but
as unvoted for purposes of determining the approval of any matter submitted to
the shareholders for a vote. If a broker indicates on the proxy that it does
not have discretionary authority as to certain shares to vote on a particular
matter, those shares will not be considered as present and entitled to vote with
respect to that matter.
The Proxy Committee is composed of Ronald Kaplan, Chairman and Chief
Executive Officer of the Company and Delton G. de Armas, Secretary and Chief
Financial Officer of the Company, who will vote all shares of common stock
represented by proxies. As stated above, voted shares will be tabulated by the
Inspector of Elections.
The principal offices of the Company are located at 344 Cypress Road,
Ocala, Florida 34472-3108 and its telephone number is (352) 687-2202.
Securities Outstanding and Voting Rights
Only holders of shares of the Company's common stock, par value $.001 per
share ("Common Stock"), of record at the close of business on April 9, 1998,
will be entitled to vote at the Meeting. On that date, 1,624,926 shares of the
Company's Common Stock were issued and outstanding.
Each share of Common Stock is entitled to one vote on all matters submitted
to a vote of shareholders, including the election of directors. Approval of
each of the matters to be acted upon at the Meeting will require a majority of
the votes cast at the meeting to be cast in favor of the matter, except that
directors will be elected by a plurality of the votes cast.
Revocability of Proxies
Any proxy may be revoked at any time before it is voted by written notice
mailed or delivered to the Secretary of the Company, by receipt of a proxy
properly signed and dated subsequent to an earlier proxy, and by revocation of a
written proxy request in person at the Meeting, but if not so revoked, the
shares represented by such proxy will be voted.
MANAGEMENT
The following table sets forth the names, ages, and positions with the
Company of all of the executive officers and directors of the Company. Also set
forth below is information as to the principal occupation and background for
each person in the table.
<PAGE>
<TABLE>
<CAPTION>
Name Age Position
<S> <C> <C>
Ronald S. Kaplan 32 Chair of the Board of
Directors, President,
Chief Executive Officer
David A. Carter Esq. 47 Director, Chair of Audit
Committee
Richard Gordon, Jr. 68 Director, Chair of Nominating
Committee
Judith H. Kaplan 59 Director, Company Founder,
Honorary Chair
Pablo C. Savetman 32 Vice President - Sales and
Marketing
Delton G. de Armas 27 Chief Financial Officer,
Secretary
Robert G. Zumbahlen 41 Treasurer, Purchasing and
Inventory Control Manager
</TABLE>
Ronald S. Kaplan, Director since 1991, was appointed Chair of the Board on
January 1, 1996. He was President ('93-present), Chief Executive Officer ('96-
present), Chief Operating Officer ('93-present), and Executive Vice President
('91-'93) of the Company.
David A. Carter, Esq., Director since February of 1998, Mr. Carter has
managed a legal practice under the name David A. Carter, P.A. since October of
1990. The firm's client base and expertise have emphasis in Securities, General
Corporate and Commercial Litigation. He holds a Bachelor of Arts degree in
Finance from the University of South Florida and a Juris Doctor from Drake
University and has more than 16 years experience in Banking and General
Corporate law. Mr. Carter chairs the Audit Committee.
Richard Gordon, Jr., Director since April 1996, is a former Apollo and
Gemini Astronaut and has served both as director and officer with other public
and non-public companies, including Executive Vice President of the National
Football League's New Orleans Saints, Board Director of Scott Science and
Technology, Inc., President/CEO of Astro Sciences Corporation, and President of
Space Age America, Inc. Mr. Gordon chairs the Nominating Committee
Judith H. Kaplan, Company Founder and Director since 1981, served as Chair
of the Board of Directors since its incorporation in 1981 until December 31,
1995. Ms. Kaplan was President ('81-'87), Secretary ('81-'97), Chief Executive
Officer ('81-'95), Chief Financial Officer ('81-'98) and Treasurer ('81-'91) of
the Company.
Pablo Savetman, Vice President of Sales and Marketing, earned an Associate
degree in Business Management from St. Johns University in New York. His
experience previous to the Company focused on the sales and distribution of
consumer products primarily in international markets and included his position
as International Sales Manager for Cowboy Brothers Trading Corp. from 1993 to
1994, and several years preceding as a sales manager for Juno Export Trading.
Mr. Savetman joined the Company in April of 1994, and is currently the Company's
Vice President of Sales.
Delton G. de Armas, Chief Financial Officer and Secretary, is a graduate of
the University of Central Florida in Orlando, Florida with Bachelor of Science
degrees in Accounting and Finance. Mr. de Armas joined the Company in September
of 1995. He was previously with the Certified Public Accounting firm of
Lovelace, Roby & Company, P.A.
Robert G. Zumbahlen has been Treasurer since 1991. He is a graduate of
Bentley College in Waltham, Massachusetts (1979) with a Bachelor of Science in
Accounting. Mr. Zumbahlen joined the Company in 1984 and is currently the
Company's Purchasing and Inventory Control Manager.
<PAGE>
Board Meetings and Compensation
The Board of Directors held five meetings during the last fiscal year. No
Director participated in fewer than 75% of the aggregate of the total number of
meetings of the Board of Directors (excluding Mr. Carter who first joined the
Board in February 1998 and subsequently attended all Board meetings.)
The Company has standing audit and nominating committees. The Audit
Committee is comprised of David A. Carter, Chair; Richard Gordon, Jr. and Judith
H. Kaplan. The Audit Committee reviews and approves the selection of and the
services performed by the Company's independent accountants, meets with and
receives reports from the Company's financing and accounting staff and
independent accountants, and reviews the scope of audit procedures, accounting
practices and internal controls. The Nominating Committee is comprised of
Richard Gordon, Jr., Chair, and Ronald S. Kaplan
Directors who are full-time employees of the Company receive no additional
compensation for services rendered as members of the Company's Board or any
committee thereof. Directors who are not full-time employees of the Company
receive $2,500 per year, $500 for each Board meeting attended in person, and
$250 for each Board meeting attended telephonically. In addition, the Company
grants incentive stock options with an exercise price greater than the market
value of the underlying stock to the directors for services rendered while
serving on the Board.
Family Relationships
Ronald S. Kaplan is the son of Judith H. Kaplan.
Compliance with Section 16(a) of the Securities Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent
(10%) of the Company's outstanding Common Stock to file with the Securities and
Exchange Commission (the "SEC") initial reports of ownership and reports of
changes in ownership of Common Stock. Such persons are required by the SEC
Regulations to furnish the Company with copies of all such reports they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, all Section 16(a) filing requirements applicable to
officers, directors and greater than ten percent (10%) beneficial owners have
been complied with.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth the aggregate compensation paid to Ronald S.
Kaplan (the "Named Executive Officer") by the Company. None of the other
executive officers of the Company were paid a total annual salary and bonuses
which was $100,000 or more for the year ended December 31, 1997.
<TABLE>
<CAPTION>
Summary Compensation Table
Long Term Compensation
<S> <C> <C> <C> <C>
Other
Name and Annual Restrict
Principal Salary Bonus Compensation
Position Year ($) ($) ($)1
Ronald Kaplan 1997 $75,000 $6,000
CEO 1996 $73,370 $6,000
1995 $54,218 $6,000
__________________________
1Includes value of use of automobile, vacation pay, sick pay.
</TABLE>
Ron Kaplan was promoted to Chief Executive Officer and Chairman of the
Board of Directors as of January 1, 1996 and continues to serve as President of
the Company. Mr. Kaplan's annual salary is $75,000 plus the use of an
automobile.
<PAGE>
Option Grants to Executive Officers During 1997
No options were granted during 1997 to the Named Executive Officer listed
in the Summary Compensation Table.
Aggregated Fiscal Year Ended Option Value Table
The following table sets forth the aggregate of options exercised in the
year ended December 31, 1997 and the value of options held at December 31,
1997.
<TABLE>
<CAPTION>
Option Exercises/Option Values
<S> <C> <C> <C> <C>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-money
Options Options
at Fiscal at Fiscal
Shares Year End Year End
Acquired on Value Exercisable/ Exercisable/
Name Exercise (#) Realized($) Unexercisable Unexercisable
Ronald S. Kaplan - - 343,000/0 $212,625/0(1)
(1) The dollar value was calculated by determining the
difference between the fair market value at fiscal year-end
of the Common Stock underlying the options and the exercise
prices of the options. The last sale price of a share of
the Company's Common Stock on December 31, 1997 as reported
by Nasdaq was $2.375.
</TABLE>
Employee Stock Ownership Plan
On April 23, 1984, the Company adopted an Employee Stock Ownership Plan
("ESOP"). The ESOP qualifies for special tax benefits under the Internal
Revenue Code. Under the ESOP, the Company, at the discretion of its Board of
Directors, may make an annual contribution to a trust that purchases the
Company's stock from the Company for the benefit of the Company's employees who
have completed at least 1,000 hours of work during the fiscal year. Employer
contributions under the ESOP are allocated to each employee's account on a pro-
rata basis according to the total compensation paid to, and the number of years
of service by, all eligible employees. An employee becomes 100% vested in the
ESOP following five years of plan eligibility. As of December 31, 1997, there
were 28,215 shares of Common Stock held by the Company's ESOP trust.
401(k) Plan
Effective October 3, 1986, the Company adopted a Voluntary 401(k) Plan.
All employees are eligible for the plan. Employees who have worked for the
Company 18 months are currently eligible for a 34% match of their subsequent
contributions. Benefits are determined annually. The lowest 66% of paid
employees may contribute the lesser of 15% of their salary or $9,500. The top
1/3 of employees cannot contribute a percentage greater than 15% of their
compensation or 150% the of average contribution of the lowest 66% of paid
employees to a maximum of $9,500 or the applicable maximum allowed by the
Internal Revenue Code. Employer contributions vest within three months and all
contributions are held in individual employee accounts with an outside financial
institution.
Stock Option Plan
To increase the officers', key employees' and consultants' interest in the
Company and to align more closely their interests with the interests of the
Company's shareholders, the Board of Directors adopted a stock option plan
called the "1996 Stock Option Plan" (the "Plan") on May 28, 1996. The Board of
Directors has determined that the Plan will work and believes that the Plan is
in the Company's best interests.
Under the Plan, the Company has reserved an aggregate of 900,000 shares of
Common Stock for issuance pursuant to options granted under the Plan ("Plan
Options"). Plan Options are either options qualifying as incentive stock
options ("Incentive Options") or options that do not qualify ("Non-Qualified
Options"). Any Incentive Option granted under the Plan must provide for an
exercise price of not less than 100% of the fair market value of the underlying
shares on the date of such grant. The exercise price of Non-Qualified Options
shall be determined by the Board of Directors or the Committee but shall in no
event be less than 5% of the fair market value of the underlying shares on the
date of the grant. As of December 31, 1997, there were 509,000 options existing
under the plan.
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As of December 31, 1997, the Company owed $600,000 to Ronald S. Kaplan and
Elissa Kaplan in the amounts of $480,000 and $120,000, respectively, on five-
year convertible promissory notes. These notes bear interest at 9% per annum,
payable monthly, and are convertible into an aggregate of approximately
1,036,300 shares of the Company's Common Stock.
In connection with stock options exercised during the year, there were
stock subscriptions receivable from related parties of $113,200 as of December
31, 1997.
PRINCIPAL SECURITY HOLDERS
AND SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information as of April 9, 1998, with
respect to the beneficial ownership of Common Stock by all shareholders known by
the Company to be the beneficial owners of more than 5% of its outstanding
Common Stock, all directors, and all directors and officers of the Company as a
group. Except as noted below, each person has sole voting and investment power
with respect to the shares shown. On the above date the Company had 1,624,926
shares of Common Stock outstanding.
<TABLE>
<CAPTION>
Table of Beneficial Ownership
<S> <C> <C> <C>
Amount and
Title Nature of Percent
of Beneficial of
Name Class Ownership Class
Ronald S. Kaplan Common 364,127 (1) 18.5%
Judith Kaplan Common 1,026,302 (2) 52.9%
Warren Kaplan Common 1,026,302 (3) 52.9%
David A. Carter Common 1,000 0.1%
Richard Gordon, Jr. Common 20,000 (4) 0.6%
All Directors and
Officers as a
Group (8 persons,
Directors and 5%
owners shown
above) Common 1,510,912 (5) 63.1%
1 Includes immediately exercisable options to purchase 243,000 shares at
$1.38 per share and 100,000 shares at $3.50 per share. Does not include
approximately 1,036,300 shares of Common Stock which may be issued upon
conversion of certain convertible promissory notes held by Ronald S. Kaplan
and Elissa Kaplan.
2 Includes 28,215 shares held as Trustee of the Company's Employee Stock
Ownership Plan Trust and immediately exercisable options to purchase 58,000
shares at $1.38 per share and 100,000 shares at $3.50 per share. Also
includes 338,875 shares held by her husband, and of which Ms. Kaplan disclaims
beneficial ownership.
3 Includes immediately exercisable options to purchase 58,000 share at $1.38
per share and 100,000 shares at $3.50 per share. Also includes 28,215 shares
held as Trustee of the Company's Employee Stock Ownership Plan Trust and
343,212 shares owned by his wife, and of which Mr. Kaplan disclaims
beneficial ownership.
4 Includes immediately exercisable options to purchase 20,000 shares at $3.50
per share.
5 The 1,026,302 shares of Common Stock owned by Judith Kaplan and Warren
Kaplan referred to in footnotes 2 and 3 are counted only once in calculating
the total in order to avoid a misleading total.
</TABLE>
PROPOSALS TO THE SHAREHOLDERS
PROPOSAL 1. ADOPTION OF RESTATED ARTICLES OF INCORPORATION
Introduction
The Board of Directors has approved and recommends that the shareholders
approve a proposal to adopt amended and restated articles of incorporation for
the Company in the form attached to this proxy statement as Exhibit A (the
"Restated Articles"). The description set forth below of the Restated Articles
is qualified in its entirety by the text of Exhibit A, which is incorporated
herein by reference. As discussed below, the Restated Articles would amend the
existing Articles of Incorporation (the "Current Articles") by: (i) increasing
the number of authorized shares of Common Stock to 15 million shares and
authorizing 10 million shares of a new class of "Blank Check" Preferred Stock
(subject to limitations on the voting power of any series of Preferred Stock);
(ii) classifying the Board of Directors into two classes, each class elected for
staggered two-year terms and (iii) providing that either the shareholders or the
Board of Directors has the power to alter, amend or repeal the By-Laws.
The Restated Articles, which are included as Exhibit A, are being presented
to the shareholders for their adoption as a single proposal. As more fully
described below, the Board of Directors believes that the proposed amendments
("Proposed Amendments"), taken together, would, if adopted, (i) enable the
Company to pursue acquisitions and enter into transactions which management
believes would provide the potential for growth and profit and (ii) discourage
attempts by others to acquire control of the Company without negotiation with
the Board. Shareholders are urged to read and consider carefully the Proposed
Amendments.
<PAGE>
Purposes and Effects of the Proposed Amendments
A. Acquisition Strategy
Management believes that the Proposed Amendments will provide several long-
term advantages to the Company and its shareholders. The passage of the
Proposed Amendments will enable the Company to pursue acquisitions or enter into
transactions which management believes provide the potential for growth and
profit. With additional authorized shares of Common Stock and a new class of
Preferred Stock, the Company will be able to evaluate or seek to consummate
business combinations or other transactions which, if they could be
accomplished, might enhance stockholder value. Additional authorized shares
could be used to raise cash assets through sales of stock to public and private
investors. If additional authorized shares are available, transactions
dependent upon the issuance of additional shares would be less likely to be
undermined by delays and uncertainties occasioned by the need to obtain
stockholder authorization prior to consummation of such transactions. The
ability to issue shares, as deemed in the Company's best interest by the Board,
will also permit the Company to avoid the expenses which are incurred in holding
special shareholders' meetings.
B. Anti-Takeover Measures
Another purpose of the Proposed Amendments is to supplement and strengthen
existing provisions of the Articles of Incorporation and By-Laws which are
designed to discourage certain types of transactions that involve an actual or
threatened unwelcome or unsolicited change of control of the Company. More
specifically, the Proposed Amendments relate to increasing the authorized common
stock, authorizing a class of preferred stock, and classifying the board into
two classes may be deemed to be anti-takeover measures.
The Proposed Amendments are intended to encourage persons seeking to
acquire control of the Company to initiate such efforts through negotiations
with the Company's Board of Directors. The Board of Directors believes that the
Proposed Amendments will help give the Board the time necessary to evaluate
unsolicited offers, as well as appropriate alternatives, in a manner which
assures fair treatment of the Company's shareholders. The Proposed Amendments
are also intended to increase the bargaining leverage of the Board of Directors,
on behalf of the Company's shareholders, in any negotiations concerning a
potential change of control of the Company. The Proposed Amendments will,
however, make more difficult or discourage a proxy contest or the assumption of
control by a substantial shareholder and thus could increase the likelihood that
incumbent directors will retain their positions. The Proposed Amendments, if
they are adopted, could also have the effect of discouraging a third party from
making a tender offer or otherwise attempting to obtain control of the Company
even though such attempt might be beneficial to the Company's shareholders.
The Proposed Amendments are permitted under Florida law and are consistent
with the rules of the NASDAQ Small Cap Market on which the Company's Common
Stock is currently traded. The Proposed Amendments are not the result of
management's knowledge of any specific effort to accumulate the Company's
securities or to obtain control of the Company by means of a merger, tender
offer, proxy solicitation in opposition to managment or otherwise. Except for
the Proposed Amendments and the adoption of a new set of By-Laws (as described
herein), the Board does not intend to propose other anti-takeover measures in
any future proxy solicitation.
Existing Anti-Takeover Measures in the Company's Charter Documents and Florida
Law
The Company's Current Articles and By-Laws contain provisions which like
the Proposed Amendments may be deemed to have an anti-takeover effect. The
Current Articles do not authorize cumulative voting. Under Florida law, if
cumulative voting is to exist, it must be authorized in a company's articles of
incorporation. The Current Articles authorize the issuance of 5,000,000 shares
of Common Stock, not all of which have been issued or reserved. As of April 9,
1998, 1,624,926 shares of the Company's Common Stock were issued and outstanding
and 897,000 shares were reserved for the issuance of outstanding options and
warrants. Consequently, the Company has 2,478,074 shares of Common Stock
available for issuance. The authorized and available Common Stock could (within
the limits imposed by applicable law and the rules of the NASDAQ Small Cap
Market Listing Rules) be issued by the Company and used to discourage a change
in control of the Company. For example, the Company could privately place
shares with purchasers who might side with the Board of Directors in opposing a
hostile takeover bid.
Florida has enacted legislation that may deter or frustrate takeovers of
Florida corporations. The Florida Control Share Act generally provides that
shares acquired in excess of certain specified thresholds will not possess any
voting rights unless voting rights are approved by a majority of a corporation's
disinterested shareholders. The Florida Affiliated Transactions Act generally
requires supermajority approval by disinterested shareholders of certain
specified transactions between a public corporation and holders of more than 10%
of the outstanding voting shares of the corporation (or their affiliates).
<PAGE>
Advantages and Disadvantages of the Proposed Amendments
While the Board believes that the Proposed Amendments are in the best
interests of the Company and its shareholders, each amendment does present
scenarios which might be considered disadvantageous to the Company and/or its
shareholders. To the extent that any third party potential acquirees are
deterred by the Proposed Amendments, such amendments may have the effect of
preserving the incumbent management in office. The Proposed Amendments may also
serve to benefit incumbent management by making it more difficult to remove
management, even when the only reason for the proposed change of control of the
shareholder action may be the unsatisfactory performance of the present
directors.
Takeovers or changes in the board of directors of a company that are
proposed and effected without prior consultation and negotiation with the
company are not necessarily detrimental to the company and it shareholders.
However, the Board of Directors feels that the benefits seeking to protect the
ability of the Company to negotiate effectively through directors who have
previously been elected by the shareholders and who are familiar with the
Company outweigh any disadvantage of discouraging such unsolicited proxies.
Increasing the Authorized Common Stock and Authorizing a New Class of Preferred
Stock (subject to limitations on the voting power of any series of Preferred
Stock)
The current Articles authorize 5 million shares of Common Stock. The
Proposed Amendment to Article 4 would (i) increase the number of authorized
shares of common stock to 15 million and (ii) authorize 10 million shares of a
new class of "Blank Check" Preferred Stock. The Proposed Amendments, however,
contain limitations on the voting power of any series of Preferred Stock that
may be issued.
The Board of Directors believes that the authorization of the increase in
the number of shares of Common Stock and the creation of a new class of
Preferred Stock are in the best interests of the Company and its shareholders.
The Board of Directors believes that it is desirable to have additional
authorized shares of Common Stock and Preferred Stock available for possible
future financings, acquisition transactions and other general corporate
purposes. Having such additional authorized shares of Common Stock and
Preferred Stock available for issuance in the future will give the Company
greater flexibility and may allow such shares to be issued without the expense
and delay of a special shareholders meeting. Although such issuances of
additional shares in respect of future acquisitions and financings would dilute
existing shareholders, management believes it can attract and execute such
transactions that would increase the value of the Company to its shareholders.
The Board of Directors also believes that the Proposed Amendments are in
the best interests of its shareholders and the Company because the Proposed
Amendment does not disproportionately affect the voting power of existing
shareholders and is consistent with sound corporate governance policies.
The term "Blank Check" Preferred Stock refers to stock for which the
designations, preferences, or other rights, including voting rights,
qualifications, limitations or restrictions thereof, are to be determined by the
board of directors of a company prior to issuance, if any. However, pursuant to
existing NASDAQ stock exchange listing rules, a company can not issue any shares
of common stock or preferred stock which have greater voting rights than a
company's previously issued stock. Accordingly, the Board of Directors will be
limited in the voting rights that it can assign to the Preferred Stock. Such
voting rights will be limited to one vote per share or lesser voting rights per
share (e.g., 1/2 vote or 1/4 vote per share).
The Board of Directors is required by Florida law to make any determination
to issue shares of Common Stock or Preferred Stock based on its judgment as to
the best interests of the shareholders and the Company. Although the Board of
Directors has no present intention of doing so, it could issue shares of Common
Stock or Preferred Stock (within the limit imposed by applicable law) that
could, depending on the terms of such series, make more difficult or discourage
an attempt to obtain control of the Company by means of an acquisition, tender
offer, proxy contest or other hostile means. When in the judgment of the Board
of Directors, such action would be in the best interest of the shareholders and
the Company, such shares could be used to create voting or other impediments or
to discourage persons seeking to gain control of the Company. Such shares could
be privately placed with purchasers favorable to the Board of Directors in
opposing such action. In addition, the Board of Directors could authorize
holders of Common or Preferred Stock to vote as separate classes on any merger,
sale or exchange of assets by the Company or any other extraordinary corporate
transaction. The existence of the additional authorized shares could have the
effect of discouraging unsolicited takeover attempts. The issuance of new
shares also could be used to dilute the stock ownership of a person or entity
seeking to obtain unsolicited or unwelcome control of the Company should the
Board of Directors consider the action of such entity or person not to be in the
best interest of the shareholders and the Company.
The authorization of additional shares of Common Stock of the Company will
not by itself have an effect on the rights of the holders of existing Common
Stock. However, any issuance of additional shares of Common Stock could affect
the existing holders of shares of Common Stock by diluting the per share
earnings and voting power of the Common Stock. The issuance of Preferred Stock
could also affect the rights of holders of the Common Stock. Dividends on
Preferred Stock may be required to be paid prior to any dividends on Common
Stock. Preferred stockholders may be given priority in the event of a
liquidation, dissolution or winding up of the Company. Preferred Stock may also
be convertible into shares of Common Stock at a conversion rate set by the Board
of Directors. Such conversion could have a dilutive effect on the holders of
Common Stock.
While the Company may consider effecting an equity offering of Common or
Preferred Stock in the proximate future for purposes of raising additional
working capital or otherwise, the Company, as of this date, has no agreements or
understandings with any third party to effect any such offering, to purchase any
shares offered in connection therewith, or to vote any such shares, and no
assurances are given that any offering will in fact be effected. Therefore,
whether such shares of Common Stock or Preferred Stock will be issued and the
terms of any Preferred Stock, described in this Proposed Amendment, cannot be
stated or estimated at this time. The Board of Directors does not anticipate
that the approval of the shareholders of the Company will be solicited for any
future issuances of any of the additional authorized shares, unless such
solicitation is otherwise required by law or the NASDAQ Small Cap Market. Under
the NASDAQ Small Cap Market Listing Rules, a company's shareholders must approve
any issuance of common stock (or securities exercisable or convertible into
common stock) if such common stock has or will have upon issuance voting power
equal to or in excess of 20% of the voting power outstanding before issuance of
such common stock (or securities exercisable or convertible into such stock).
<PAGE>
Classified Board
The By-Laws of the Company currently provide that the directors will be
elected for one-year terms at the annual meeting of shareholders. The Proposed
Amendment to Article 7 of the Current Articles would provide for the Board to be
divided into two classes of directors serving staggered two-year terms. As a
result, approximately one-half of the Board will be elected each year.
Initially, members of both classes will be elected at the Meeting, as described
in ITEM 2. ELECTION OF DIRECTORS. Directors elected to Class I positions will
serve until the 1999 Annual Meeting of Shareholders, and Directors elected to
Class II position will serve until the 2000 Annual Meeting of Shareholders.
After a transitional arrangement, the Directors will serve for two years, with
one class being elected each year.
At the Meeting, it is anticipated that Judith H. Kaplan and Richard Gordan,
Jr. will be elected as Class I Directors, and Ronald S. Kaplan and David A.
Carter will be elected as Class II Directors. When the Board adds additional
directors, such directors will be added in a manner such that ultimately each
class of directors will have an equal number of members or as near thereto as
possible.
Commencing with the re-election of directors to Class I positions at the
1999 Annual Meeting of Shareholders, directors elected at an annual meeting will
be elected to a two year term. This Proposed Amendment gives the Board a
greater likelihood of continuity and experience since at any one time
approximately one-half of the Board will be in its first year of service and
approximately one-half will be in its second year of service. Members elected
within the most recent year will comprise approximately one-half of the
membership of the Board. Although the Board is not aware of any problems
experienced by the Company in the past with respect to continuity and stability
of leadership and policy, the Board believes that a classified Board will
decrease the likelihood of problems of continuity and stability arising in the
future.
A classified Board with staggered two-year terms will also make the Company
less attractive to tender offers since, if the Board was comprised of four
members as at present, a majority shareholder will, under the Proposed
Amendment, probably need at least two annual meetings to obtain control of the
Board, as opposed to one meeting. The Board believes that the Proposed
Amendment will lead a well financed bidder into direct negotiation with the
Board and therefore discourages potential hostile takeovers of the Company.
Procedure for Amending the By-Laws
Under present Florida law, amending the By-Laws is a power that may be
exercised by either the Board of Directors or the shareholders. However, a
company's articles of incorporation or a shareholder's action may expressly
reserve the authority to amend some or all of the By-Laws to the shareholders.
The Company's Current Articles expressly provide that only the shareholders can
approve amendments to the By-Laws.
The Proposed Amendment would permit either the Board of Directors or the
shareholders to amend the By-Laws. The Board of Directors believes that it is
in the best interests of the Company to adopt this provision, because it will
give the Board greater flexibility to govern the daily affairs of the Company.
The Proposed Amendment will also ease administrative matters. The Company has a
large number of shareholders, so it is difficult to obtain shareholder approval
on every minor change to the By-Laws. It should also be noted that the Proposed
Amendment does not take away the shareholders authority to amend the By-Laws; it
merely provides that both the directors and the shareholders have the power to
alter, amend or repeal the By-Laws.
If the Proposed Amendment is approved by the shareholders, the Board plans
on adopting new By-Laws (the "Proposed By-Laws"), a copy of which is attached
hereto as Exhibit B. Certain provisions in the Proposed By-Laws may have anti-
takeover effects. These provisions include advance notice requirements for
stockholder nominations to the Board of Directors and stockholder proposals.
The notice provisions contained in Article XII of the Proposed By-Laws
require that shareholders proposing to nominate one or more persons for election
as directors or proposing other shareholder action at a shareholder's meeting
(whether an annual or special meeting) provide the Company with advance written
notice of at least 60 days prior to the scheduled shareholders meeting. The
written notice must contain certain information regarding the shareholder,
including the shareholder's name and address, the name of any person to be
nominated by the shareholder as directors, any arrangements between the
shareholder and each such nominee, and any other information regarding such
nominees or each matter of business proposed by the shareholder that would be
required in a proxy statement filed under the proxy rules of the Securities and
Exchange Commission.
The notice provisions increase the likelihood that the Company and all of
its shareholders are given an opportunity to carefully consider and respond to
important shareholder proposals. However, such provisions also prevent
shareholders from making such proposals at the Annual Meeting without giving
prior notice to the Company and may have the effect of precluding or
discouraging an attempt to alter or amend By-laws or take other action due to a
failure to comply, or a perceived difficulty in complying, with the specified
procedures. Additionally, such notice provision could have the effect of
deterring persons from initiating hostile takeover attempts against the Company.
If a bidder is required to provide advance notice of shareholder measures
intended to further a hostile takeover attempt, the bidder loses an element of
surprise. As a result, the Board of Directors has more of an opportunity to
devise and employ methods to fend off such an attack, should it determine that
the bid is not in the best interests of the Company and its shareholders.
Taking all these factors into consideration, however, the Board of
Directors believes that these measures should increase the likelihood that all
the Company shareholder will be treated equally and fairly when shareholder
action is taken, and should enhance the ability of the company and its
shareholder to carefully consider shareholder proposals.
<PAGE>
Other Changes
In addition to eliminating the provisions outlined above, the Restated
Articles would make other minor, technical changes to the Current Articles by
consolidating the Current Articles, including all existing amendments, and the
Proposed Amendments into a single document and eliminating from that document
obsolete and unnecessary provisions. These additional changes are summarized
briefly as follows:
(a) Updating the current street address of the Company;
(b) Updating information about the Company's registered agent and its
address;
(c) Eliminating provisions which specify the name and address of the
Company's intial director and incorporator;
(d) Reordering, renumbering and captioning Articles and Sections for
purposes of clarity and enhanced readability.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THIS PROPOSAL TO RESTATE AND AMEND
THE COMPANY'S ARTICLES OF INCORPORATION.
PROPOSAL II. ELECTION OF DIRECTORS
If Proposal I is approved, the nominees for election to each of the two
classes of directors are as follows: directors with terms expiring at the 1999
Annual Meeting of Shareholders are Judith H. Kaplan and Richard Gordon, Jr. and
directors with terms expiring at the 2000 Annual Meeting of Shareholders are
Ronald S. Kaplan and David A. Carter. For biographical information regarding
the nominees, see "Management."
If Proposal 1 is adopted, two directors who are elected shall hold office
for a term of one-year and two directors shall hold office for a term of two-
years. If Proposal 1 is not adopted, four directors will be elected for a one-
year term.
Each of the nominees for director is presently a director of the Company.
Each has consented to being named a nominee in this Proxy Statement and has
agreed to serve as a director if elected at the Meeting. In the event that any
nominee is unable to serve, the persons named in the proxy have discretion to
vote for other persons if such other persons are designated by the Board of
Directors. The Board of Directors has no reason to believe that any of the
nominees will be unavailable for election.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE NOMINEES LISTED
ABOVE.
OTHER MATTERS
As of the date of this Proxy Statement, there are no other matters to be
brought before the Meeting. Should any other matters come before the Meeting,
action may be taken thereon pursuant to the proxies in the form enclosed, which
confer discretionary authority on the persons named therein or their substitutes
with respect to such matters.
SHAREHOLDER PROPOSALS
Any proposal by a shareholder of the Company intended to be presented for
consideration at the 1999 Annual Meeting of Shareholders must be received by the
Company at its corporate offices no later than January 15, 1999.
INDEPENDENT PUBLIC ACCOUNTANTS
Moore Stephens Lovelace, P.L., formerly Lovelace, Roby & Company, P.A.,
acted as the principal accountants for the Company for the fiscal year most
recently completed. It is anticipated that Moore Stephens Lovelace, P.L. will
be selected as the Company's principal accountant for the current year. The
Company expects representatives of Moore Stephens Lovelace, P.L. to be present
at the Meeting. It is also expected that the Moore Stephens Lovelace
representative will serve as the Inspector of Elections.
EXPENSES OF SOLICITATION
The cost of this solicitation of proxies will be borne by the Company,
including expenses in connection with preparing, assembling and mailing the
proxy solicitation materials and the charges and expense of brokerage houses and
other custodians, nominees and fiduciaries for forwarding solicitation materials
to beneficial owners. In addition to solicitation by mail, proxies may be
solicited personally or by telephone or telegraph by directors, officers or
employees of the Company, who will receive no additional compensation for such
services.
SHAREHOLDERS ARE URGED TO SPECIFY THEIR CHOICES, DATE, SIGN AND RETURN THE
ENCLOSED PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE WHETHER OR NOT THEY PLAN TO
ATTEND THE MEETING. SHAREHOLDERS PRESENT AT THE MEETING MAY REVOKE THEIR
PROXIES AND VOTE IN PERSON. PROMPT RESPONSE IS HELPFUL, AND YOUR COOPERATION
WILL BE APPRECIATED.
Dated: May 8, 1998
<PAGE>
Exhibit A
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
ACTION PRODUCTS INTERNATIONAL, INC.
Pursuant to the provisions of Sections 607.1003, 607.1006 and 607.1007 of
the Florida Business Corporation Act, the undersigned corporation hereby adopts
the following Amended and Restated Articles of Incorporation:
1. The name of the Corporation is ACTION PRODUCTS INTERNATIONAL, INC., a
Florida corporation (the "Corporation").
2. The text of the Corporation's Amended and Restated Articles of
Incorporation is as follows:
FIRST: The name of the Corporation is:
ACTION PRODUCTS INTERNATIONAL, INC.
SECOND: The period of the duration of the corporation is perpetual.
Article THIRD is hereby amended to read as follows:
THIRD: The Corporation is organized for the purpose of transacting any
and all lawful business for which corporations may be formed under the Florida
Business Corporation Act, and all amendments and supplements thereto, or any law
enacted to take the place thereof.
Article FOURTH is hereby amended to read as follows:
FOURTH: The total number of shares which the Corporation shall have the
authority to issue shall be 25 million (25,000,000) shares which shall be
divided into two classes as follows: (a) 15,000,000 shares of common stock with
a par value of one mil ($.001) per share; and (b) 10,000,000 shares of preferred
stock, with a par value of one mil ($.001) per share, in such series and
variations in the relative rights and preferences, if any, between such series
as the Board of Directors shall determine.
A. COMMON STOCK. Subject to the preferential dividend rights
applicable to shares of any series of Preferred Stock, the holders of shares of
Common Stock shall be entitled to receive such dividends as may be declared by
the Board of Directors. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, after distribution in
full of the preferential amounts to be distributed to the holders of shares of
the Preferred Stock, the holders of shares of the Common Stock shall be entitled
to receive all of the remaining assets of the Corporation available for
distribution to its shareholders, ratably in proportion to the number of shares
of the Common Stock held by them. Each holder of record of the Common Stock
shall have one vote for such share of Common Stock standing in such holder's
name on the books of the Corporation and entitled to vote.
B. PREFERRED STOCK. The Board of Directors may issue Preferred
Stock, from time to time, in one or more series. Authority is hereby vested
solely in the Board of Directors of the Corporation to provide, from time to
time, for the issuance of Preferred Stock in one or more series and in
connection therewith to determine without shareholder approval the number of
shares to be included and such of the designations, powers, preferences, and
relative rights and the qualifications, limitations, and restrictions of any
such series, including, without limiting the generality of the foregoing any of
the following provisions with respect to which the Board of Directors shall
determine to make affirmative provision:
<PAGE>
(1) The extent of the voting powers, full or limited, if any, of the shares
of such series, provided that the holder of shares of such series (i) will not
be entitled to more than one vote per share and (ii) will not be entitled to
vote on any matter separately as a class, except (i) to the extent provided by
Florida law and (b) to the extend specified in the Preferred Stock Designation
with respect to such series;
(2) The designation and name of such series and the number of shares that
shall constitute such series;
(3) The annual dividend rate or rates payable on shares of such series, the
date or dates from which such dividends shall commence to accrue, and the
dividend payment dates for such dividends;
(4) Whether dividends on such series are to be cumulative or noncumulative,
and the participating or other special rights, if any, with respect to the
payment of dividends;
(5) Whether such series shall be subject to redemption and, if so, the
manner of redemption, the redemption price or prices and the terms and
conditions on which shares of such series may be redeemed;
(6) Whether such series shall have a sinking fund or other retirement
provisions for the redemption or purchase of shares of such series, and, if
so, the terms and amount of such sinking fund or other retirement provision
and the extent to which the charges therefor are to have priority over the
payment of dividends on or the making of sinking fund or other like retirement
provisions for shares of any other series or over the payment of dividends on
the Common Stock;
(7) The amounts payable on shares of such series on voluntary or involuntary
dissolution, liquidation, or winding up of the affairs of the Corporation and
extent to which such payment shall have priority over the payment of any
amount on voluntary or involuntary dissolution, liquidation, or winding up of
the affairs of the Corporation on shares of any other series or on the Common
Stock;
(8) The terms and conditions, if any, on which shares of such series may be
converted into, or exchanged for, shares of any other series or of Common
Stock;
(9) The stated value, if any, for the shares of such series, the
consideration for which shares of such series may be issued and amount of such
consideration that shall be credited to the capital account; and
(10) Any other preferences and relative, participating, optional, or other
special rights, and qualifications, limitations or restrictions thereof, or
any other term or provision of shares of such series as the Board of Directors
may deemed appropriate or desirable.
The Board of Directors is expressly authorized to vary the provisions relating
to the foregoing matters between the various series of Preferred Stock.
All shares of Preferred Stock of any one series shall be identical in all
respects with all other shares of such series, except that shares of any one
series issued at different times may differ as to the dates from which dividends
thereon shall be payable, and if cumulative, shall cumulate.
Shares of any series of Preferred Stock that shall be issued and thereafter
acquired by the Corporation through purchase, redemption (whether through the
operation of a sinking fund or otherwise), conversion, exchange, or otherwise,
shall, upon appropriate filing and recording to the extent required by law, have
the status of authorized and unissued shares of Preferred Stock and may be
reissued as part of such series or as part of any other series of Preferred
Stock. Unless otherwise provided in the resolution or resolutions of the Board
of Directors providing for the issuance thereof, the number of authorized shares
of stock of any series of Preferred Stock may be increased or decreased (but not
below the number of shares thereof then outstanding) by resolution or
resolutions of the Board of Directors and appropriate filing and recording to
the extent required by law. In case the number of shares of any such series of
Preferred Stock shall be decreased, the shares representing such decrease shall,
unless otherwise provided in the resolution or resolutions of the Board of
Directors providing for the issuance thereof, resume the status of authorized
but unissued shares of Preferred Stock, undesignated as to series.
<PAGE>
Article FIFTH is hereby amended to read as follows:
FIFTH: The street address of the registered office of the Corporation is
344 Cypress Road, Ocala, Florida 34472 and the name of the registered agent at
such address is Ronald S. Kaplan.
Article SIXTH, SEVENTH, EIGHTH and TENTH are hereby deleted in their
entirety and the following new Articles SIXTH and SEVENTH are hereby added and
shall read as follows:
SIXTH: At the 1998 Annual Meeting of Shareholders, the directors shall
be classified into two classes, as nearly equal in number as possible, with the
term of office for the first class to expire at the 1999 Annual Meeting of
Shareholders and the term of office of the second class to expire at the 2000
Annual Meeting of Shareholders. At each Annual Meeting of Shareholders
following such initial classification and election, directors elected to succeed
those directors whose terms expire shall be elected for a term of office to
expire at the second succeeding Annual Meeting of Shareholders after their
election.
SEVENTH: The street address of the principal office of the Corporation is
344 Cypress Road, Ocala, Florida 34472.
Article NINTH is now EIGHTH and is hereby amended to read as follows:
EIGHTH: The By-Laws of the Corporation may be altered, amended, or
repealed, and new By-Laws may be adopted, by action of the Board of Directors,
subject to the limitations of F.S. 607.1020(1) or any successor statute thereto.
The shareholders of the Corporation may alter, amend, or repeal these By-Laws or
adopt new By-Laws even though these By-Laws may also be amended or repealed by
the Board of Directors.
IN WITNESS WHEREOF, the undersigned has executed these Amended and Restated
Articles of Incorporation by its duly authorized officer this 8 day of May
, 1998.
ACTION PRODUCTS INTERNATIONAL, INC.
By:__/s/Ronald S. Kaplan____________________
Ronald S. Kaplan, President
Chief Executive Officer and President
<PAGE>
Exhibit B
AMENDED AND RESTATED
B Y - L A W S
OF
ACTION PRODUCTS INTERNATIONAL, INC.
ARTICLE I
Offices
In addition to the office of the corporation registered with the Secretary
of State of Florida, the corporation may also have offices at such places, both
within and without the State of Florida, as the Board of Directors may from time
to time determine or the business of the corporation may require.
ARTICLE II
Shareholders
Section 1. ANNUAL MEETING. A meeting of shareholders shall be held
annually between the third and sixth month, inclusive, of each fiscal year of
the corporation for the purpose of electing directors, and for transacting any
other business coming before the meeting. If the election of directors is not
held on the day so determined for any annual meeting of the shareholders, or at
any adjournment thereof, the Board of Directors shall cause the election to be
held at a special meeting of the shareholders as soon thereafter as convenient.
Section 2. SPECIAL MEETINGS. Special meetings of the shareholders, for
any purpose or purposes, unless otherwise prescribed by law or by the Articles
of Incorporation, may be called by the Chairman of the Board, if any, the
President or by the Board of Directors, and shall be called by the President or
Secretary at the written request of a majority of the Board of Directors then in
office or at the written request of the holders of not less than one-tenth
(1/10th) of all the votes entitled to be cast on any issue proposed for
consideration at the meeting. Such request shall state the purpose or purposes
of the proposed meeting. Business transacted at any special meeting shall be
limited to the purposes described in the special meeting notice required by
Section 4 of this Article.
Section 3. PLACE OF MEETING. The Board of Directors may designate any
place, either within or without the State of Florida, as the place of meeting
for any annual or special meeting of the shareholders. If no designation is
made, the meeting place shall be the principal office of the corporation unless
the notice of the meeting specifies otherwise.
Section 4. NOTICE OF MEETING. Written or printed notice stating the date,
time and place of the meeting and, in the case of a special meeting, a
description of the purpose or purposes for which the meeting is called, shall be
delivered to the shareholders entitled to vote thereat, not less than ten (10)
days nor more than sixty (60) days before the date of the meeting, either
personally or by first class mail, by or at the direction of the President or
the Secretary, or, in the case of a special meeting, by the officers and or
persons designated to call such special meeting in accordance with Section 2 of
this Article II. If the notice is mailed at least thirty (30) days before the
date of the meeting, it may be done by a class of United States mail other than
first class. If mailed, such notice shall be deemed to be delivered when
deposited in the United States mail, addressed to the shareholder at his address
as it appears on the stock transfer books of the corporation, with postage
thereon prepaid.
If an annual or special meeting of shareholders is adjourned to a different
date, time or place, notice of the new date, time or place need not be given if
same is announced at the meeting before an adjournment is taken, and any
business may be transacted at the adjourned meeting that might have been
transacted on the original date of the meeting. If a new record date for the
adjourned meeting is or must be fixed under Section 2 of Article X of these By-
laws, notice of the adjourned meeting must be given to persons who are
shareholders as of the new record date who are entitled to notice of the
meeting.
<PAGE>
Notwithstanding the foregoing, no notice of a shareholders' meeting need be
given to a shareholder if:
(a) An annual report and proxy statements for two consecutive annual
meetings of shareholders or
(b) All, and at least two checks in payment of dividends or interest on
securities during a 12-month period,
have been sent by first-class United Sates mail, addressed to the shareholder at
his address as it appears on the share transfer books of the corporation, and
returned undeliverable. The obligation of the corporation to give notice of a
shareholders' meeting to any such shareholder shall be reinstated once the
corporation has received a new address for such shareholder for entry on its
share transfer books.
Section 5. WAIVER OF NOTICE OF SHAREHOLDERS' MEETING. (a) Whenever any
notice is required to be given to any shareholder of the corporation under the
provisions of law, the Articles of Incorporation or these By-laws, a written
waiver thereof signed by the person or persons entitled to such notice and
delivered to the corporation, before or after the date and time stated therein,
shall be equivalent to the giving of such notice. Unless otherwise provided in
the Articles of Incorporation, neither the business to be transacted at, nor the
purpose of, any regular or special meeting of the shareholders need be specified
in any written waiver of notice.
(b) Attendance of a shareholder at a meeting waives objection to: (1) lack
of notice or defective notice of the meeting, unless the shareholder objects at
the beginning of the meeting to holding the meeting or transacting business at
the meeting; or (2) the consideration of a particular matter at the meeting 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 6. SHAREHOLDERS' LIST. (a) After fixing a record date for a
meeting of the shareholders, the officer or agent having charge of the stock
transfer books for shares of the corporation shall prepare, at least ten (10)
days before such meeting of share-holders, an alphabetical list of the names of
the shareholders entitled to notice of such meeting, arranged by voting group,
with the address of, and the number and class and series, if any, of shares held
by each.
(b) For a period of ten (10) days prior to the meeting, or such shorter
time as exists between the record date and the meeting (and continuing through
the meeting), the shareholders' list shall be available for inspection by any
shareholder during regular business hours at the corpora-tion's principal
office, at a place identified in the meeting notice in the city where the
meeting is to be held, or at the office of the corporation's transfer agent or
registrar. A shareholder or the shareholder's agent or attorney is entitled on
written demand to inspect and copy the list during regular business hours at his
expense, during the period it is available for inspection; provided, that (i)
the shareholder's demand is made in good faith and for a proper purpose, (ii)
the shareholder describes with reasonable particularity his purpose and the
records he desires to inspect; and (iii) the records are directly connected with
the shareholder's purpose. Such list shall also be available at the meeting and
shall be subject to inspection by any shareholder, or the shareholder's agent or
attorney, at any time during the meeting or any adjournment thereof. The
shareholders' list shall be prima facie evidence of the identity of shareholders
entitled to examine such list or to vote at a meeting of shareholders. A
shareholder may not sell or otherwise distribute any information or records
inspected under this Section, except as otherwise permitted by law.
Section 7. SHAREHOLDER QUORUM AND VOTING. (a) Unless otherwise provided
in the Articles of Incorporation, a majority of the shares entitled to vote,
represented in person or by proxy, shall constitute a quorum at a meeting of
shareholders, but in no event shall a quorum consist of less than one-third
(1/3) of the shares entitled to vote at the meeting. When a specified item of
business is required to be voted on by a class or series of stock, a majority of
the shares of such class or series shall constitute a quorum for the transaction
of such item of business by that class or series.
(b) If a quorum exists, action on a matter, other than the election of
directors, is approved if the votes cast by the holders of the shares
represented at the meeting (and entitled to vote on the subject matter) favoring
the action exceed the votes cast opposing the action, unless a greater number of
affirmative votes or voting by classes is required by law or the Articles of
Incorporation.
(c) Unless otherwise provided in the Articles of Incorporation, directors
shall be elected by a plurality of the votes cast by the shares entitled to vote
in the election at a meeting at which a quorum is present. Each shareholder who
is entitled to vote at an election of directors may vote (in person or by proxy)
the number of shares owned by him for as many persons as there are directors to
be elected at that time and for whose election he has a right to vote.
Shareholders shall not have a right to cumulate their votes for directors unless
the Articles of Incorporation so provide.
(d) After a quorum has been established at a shareholders' meeting, the
subsequent withdrawal of shareholders, so as to reduce the number of shares
entitled to vote at the meeting below the number required for a quorum, shall
not affect the validity of any action taken at the meeting or any adjournment
thereof.
<PAGE>
Section 8. VOTING ENTITLEMENT OF SHARES. (a) Except as provided in
Section 8(b) of this Article or unless otherwise provided by law or the Articles
of Incorporation, each outstanding share, regardless of class, shall be entitled
to one vote on each matter submitted to a vote at a meeting of shareholders.
Only shares are entitled to vote. If the Articles of Incorporation provide for
more or less than one vote for any share on any matter, each reference in these
By-laws to a majority or other proportion of shares shall refer to such a
majority or other proportion of votes entitled to be cast.
(b) Shares which have been reacquired or redeemed by the corporation shall
not be voted, directly or indirectly, at any meeting, and shall not be counted
in determining the total number of outstanding shares at any given time. Shares
of this corporation's own stock are not entitled to vote if they are owned
(directly or indirectly) by another corporation and this corporation owns
(directly or indirectly) a majority of the shares entitled to vote for directors
of that other corporation. This shall not limit the power of the corporation to
vote any shares, including its own shares, held by it in a fiduciary capacity.
Section 9. PROXIES. A shareholder, those persons entitled to vote on
behalf of a shareholder pursuant to law, or a shareholder's attorney-in-fact may
vote a shareholder's shares in person or by proxy. A shareholder may appoint a
proxy to vote or otherwise act for him by signing an appointment form, either
personally or by his attorney-in-fact. An appointment of a proxy shall be
effective when received by the Secretary or other officer of the corporation
authorized to tabulate votes and shall be valid for up to eleven (11) months
unless a longer period is expressly provided in the appointment form. A proxy
holder may appoint, in writing, a substitute to act in his place, if the
appointment form expressly so permits.
Section 10. INSPECTORS OF ELECTIONS. Prior to each shareholders' meeting,
the Board of Directors or the President shall appoint one or more Inspectors of
Elections. Upon his appointment, each such Inspector shall take and sign an
oath to faithfully execute the duties of Inspector at such meeting with strict
impartiality and to the best of his ability. Such Inspectors shall determine
the number of shares outstanding, the number of shares present at the meeting
and whether a quorum is present at such meeting. The Inspectors shall receive
votes and ballots and shall determine all challenges and questions as to the
right to vote and shall thereafter count and tabulate all votes and ballots and
determine the result. Such Inspectors shall do such further acts as are proper
to conduct the elections of directors and the vote on other matters with
fairness to all shareholders. The Inspectors shall make a certificate of the
results of the elections of directors and the vote on other matters. No
candidate for election as a director of the corporation shall be appointed as an
Inspector.
Section 11. ACTION BY SHAREHOLDERS WITHOUT A MEETING. (a) Unless
otherwise provided in the Articles of Incorporation, any action required or
permitted by law to be taken at an annual or special meeting of shareholders may
be taken without a meeting, without prior notice and without a vote, if the
action is taken by the holders of outstanding stock of each voting group
entitled to vote thereon having not less than the minimum number of votes with
respect to each voting group that would be necessary to authorize or take such
action at a meeting at which all voting groups and shares entitled to vote
thereon were present and voted.
(b) In order to be effective, the action must be evidenced by one or more
written consents describing the action taken, dated and signed by approving
shareholders having the requisite number of votes of each voting group entitled
to vote thereon, and delivered to the corporation within sixty (60) days of the
date of the written consent.
(c) Any written consent may be revoked prior to the date the corporation
receives the required number of consents to authorize the proposed action. No
revocation is effective unless in writing and received by the corporation.
(d) Within ten (10) days after obtaining such authorization by written
consent, notice must be given to those shareholders who have not consented in
writing or who are not entitled to vote on the action. The notice shall fairly
summarize the material features of the authorized action and, if the action is a
merger, consolidation, sale or exchange of assets, or other action for which
dissenter's rights are provided by law, the notice shall contain a clear
statement of the right of dissenting share-holders to be paid the fair value of
their shares upon compliance with further provisions of law regarding the rights
of dissenting shareholders.
Section 12. VOTING TRUSTS. Any number of shareholders of this corporation
may create a voting trust in the manner provided by law for the purpose of
conferring upon the trustee or trustees the right to vote or otherwise represent
their shares. When the counterpart of a voting trust agreement and a copy of
the record of the holders of voting trust certificates are deposited with the
corporation as provided by law, those documents shall be subject to the same
right of examination by a shareholder of the corporation, in person or by agent
or attorney, as are the books and records of the corporation, and the
counterpart and the copy of the record shall be subject to examination by any
holder of record of voting trust certificates, either in person or by agent or
attorney, at any reasonable time for any proper purpose.
Section 13. SHAREHOLDERS' AGREEMENTS. Two or more shareholders of this
corporation may enter into an agreement providing for the exercise of voting
rights in the manner provided in the agreement or relating to any phase of the
affairs of the corporation, in the manner and to the extent provided by law. The
agreement shall not impair the right of this corporation to treat a shareholder
of record as entitled to vote the shares as standing in his name.
<PAGE>
ARTICLE III
Board of Directors
Section 1. GENERAL POWERS. All corporate powers shall be exercised by or
under the authority of, and the business and affairs of the corporation shall be
managed under the direction of, the Board of Directors except as may be
otherwise provided by law or in the Articles of Incorporation.
Section 2. NUMBER, TENURE AND QUALIFICATIONS. The corporation shall
have five (5) director(s) initially. The number of directors may be increased
or decreased from time to time by (a) a majority vote of the entire board of
directors, or (b) a vote of the holders of a majority of the outstanding shares
of the corporation at any regular or special meeting of the shareholders;
however, no decrease shall have the effect of shortening the term of an
incumbent director (unless the shareholders remove the director pursuant to
Section 15 hereof.
At the 1998 Annual Meeting of Shareholders, the directors shall be classified
into two classes, as nearly equal in number as possible, with the term of office
for the first class to expire at the 1999 Annual Meeting of Shareholders and the
term of office of the second class to expire at the 2000 Annual Meeting of
Shareholders. At each Annual Meeting of Shareholders following such initial
classification and election, directors elected to succeed those directors whose
terms expire shall be elected for a term of office to expire at the second
succeeding Annual Meeting of Shareholders after their election.
Section 3. ANNUAL MEETING. The Board of Directors shall hold its annual
meeting at the same place as, and immediately following, each annual meeting of
shareholders for the purpose of electing officers and the transaction of such
other business as may come before the meeting. If a majority of the directors
is present at such place and time, prior notice of the meeting need not be given
to the directors. Alternatively, the place and time of such meeting may be
fixed by written consent of the directors.
Section 4. REGULAR MEETINGS. Regular meetings of the Board of Directors
may be held without notice at such time and at such place as shall be determined
from time to time by the Board of Directors.
Section 5. SPECIAL MEETINGS. Special meetings of the Board of Directors
may be called by the Chairman of the Board, if any, the President or any two (2)
directors. The person or persons authorized to call special meetings of the
Board of Directors may fix the place for holding any special meetings that are
called by them.
Section 6. NOTICE. Notice of any special meeting shall be given at least
two (2) days prior thereto by written notice delivered personally, by mail,
telegraph, cablegraph or overnight courier, to the business address of the
director. Notice shall be effective at the earlier of: (a) personal receipt by
the director; (b) five (5) days after its deposit in the United States mail, as
evidenced by the postmark, if mailed postpaid; (c) the date shown on the return
receipt, if sent by registered or certified mail, return receipt requested, and
the receipt is signed by or on behalf of the addressee; (d) the date of delivery
of notice by telegraph or cablegraph, if confirmation of delivery is provided by
the telegraph or cablegraph company; or (e) the first business day following the
date on which the notice is sent by Federal Express or similar overnight courier
service.
Section 7. WAIVER OF NOTICE OF DIRECTORS' MEETINGS. Whenever any notice
of meeting is required to be given to any director under the provisions of law,
the Articles of Incorporation or these By-laws, a written waiver thereof signed
by the director either before or after the meeting shall be equivalent to the
giving of such notice. Neither the business to be transacted at, nor the
purpose of, any regular or special meeting of the directors need be specified in
any written waiver of notice. The attendance of a director at a meeting shall
constitute a waiver of notice of such meeting, except where a director states,
at the beginning of the meeting or promptly upon arrival at the meeting, any
objection to the transaction of business because the meeting is not lawfully
called or convened.
Section 8. QUORUM. A majority of the required number of directors, as
specified in the Articles of Incorporation or specified in accordance with these
By-laws, shall constitute a quorum for the transaction of business unless a
greater number is required by the Articles of Incorporation for a quorum.
Section 9. MANNER OF ACTING. The act of a majority of the directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors, unless the act of a greater number is required by the Articles of
Incorporation.
Section 10. VACANCIES. Any vacancy occurring in the Board of Directors,
including any vacancy created by reason of an increase in the number of
directors, may be filled by the affirmative vote of a majority of the remaining
directors though less than a quorum of the Board of Directors, or by the
shareholders, unless the Articles of Incorporation provide otherwise and subject
to statutory restrictions regarding directors who were elected by a voting
group. A director elected to fill a vacancy shall hold office only until the
next election of directors by the shareholders.
<PAGE>
Section 11. COMPENSATION. By resolution of the Board of Directors, any
director may be paid expenses, if any, of attendance at any meeting of the Board
of Directors, and may be paid a fixed sum for attendance at any meeting of the
Board of Directors, or a stated salary as a director. No payment shall preclude
a director from serving the corporation in any other capacity and receiving
compensation therefor.
Section 12. DUTIES OF DIRECTORS. A director shall perform his duties as a
director, including his duties as a member of any committee of the board upon
which he serves, in good faith, in a manner he reasonably believes to be in the
best interests of the corporation, and with such care as an ordinarily prudent
person in a similar position would use under similar circumstances.
In performing his duties, a director may rely on information, opinions,
reports, or statements, including financial statements and other financial data,
prepared or presented by the following:
(a) one or more officers or employees of the corporation whom the
director reasonably believes to be reliable and competent in the matters
presented;
(b) legal counsel, public accountants, or other persons as to matters
that the director reasonably believes to be within that person's professional or
expert competence; or
(c) a committee of the board of directors upon which he does not serve
and which he reasonably believes to merit confidence, as to matters within the
authority designated by it by the articles of incorporation or the by-laws.
In performing his duties, a director may consider such factors as the
director deems relevant, including the long-term prospects and interests of the
corporation and its shareholders, and the social, economic, legal or other
effects of any action on the employees, suppliers, customers of the corporation
or its subsidiaries, the communities and society in which the corporation or its
subsidiaries operate, and the economy of the state and the nation.
A director shall not be considered as acting in good faith if he has
knowledge concerning the matter in question that would cause the reliance
described above to be unwarranted. A person who performs his duties in
compliance with this Section shall have no liability because of his being or
having been a director of the corporation.
Section 12. PRESUMPTION OF ASSENT. A director of the corporation who is
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless:
(a) he objects at the beginning of the meeting (or promptly upon his arrival) to
the holding of the meeting or transacting specified business at the meeting; or
(b) he votes against such action or abstains from the action taken. To evidence
his abstention or vote against any action, a director shall file his written
dissent or abstention from such action with the person acting as the secretary
of the meeting before the adjournment thereof, or shall forward such dissent or
abstention by registered or certified mail, return receipt re-quested, to the
Secretary of the corporation immediately following the adjournment of the
meeting. Such right to dissent or abstain shall not apply to a director who
voted in favor of such action.
Section 13. ACTION BY THE BOARD WITHOUT A MEETING. Unless otherwise
provided in the Articles of Incorporation, any action required by law or these
By-laws to be taken at a meeting of the directors of the corporation, or any
action which may be taken at a meeting of the directors or a committee thereof,
may be taken without a meeting if a consent in writing, setting forth the action
taken, signed by all of the directors or all the members of the committee, as
the case may be, is filed in the minutes of the proceedings of the Board or of
the committee. Such consent shall have the same effect as a unanimous vote at a
meeting, and shall be effective when the last director signs the consent, unless
the consent specifies a different effective date.
Section 14. TELEPHONE MEETINGS. Except as otherwise provided in the
Articles of Incorporation, members of the Board of Directors may participate in
a regular or special meeting of the Board by means of a conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can simultaneously hear each other during the meeting.
Participation by such means shall constitute presence in person at a meeting.
Section 15. REMOVAL AND RESIGNATION OF DIRECTORS. (a) Unless the Articles
of Incorporation otherwise provide, one or more directors may be removed in the
manner provided in this Section at a meeting of shareholders, provided the
notice of the meeting states that the purpose, or one of the purposes, of the
meeting is the removal of the director(s). Any director or the entire Board of
Directors may be removed, with or without cause, by a vote of the holders of a
majority of the shares then entitled to vote at an election of directors,
subject to statutory restrictions relating to directors who were elected by
voting groups or cumulative voting. The removal of a director shall not
prejudice the contract rights, if any, of the person removed. Election or
appointment of a director shall not of itself create contract rights.
(b) A director may resign at any time by delivering written notice to the
corporation's Board of Directors, its Chairman, if any, or to the corporation.
A resignation is effective when the notice is delivered, unless the notice
specifies a later effective date.
<PAGE>
Section 16. DIRECTOR CONFLICTS OF INTEREST. (a) No contract or other
transaction between this corporation and one or more of its directors or any
other corporation, firm, association or entity in which one or more of the
directors are directors or officers or are financially interested, shall be
either void or voidable because of that relationship or interest or because the
director or directors are present at the meeting of the board of directors or a
committee that authorizes, approves, or ratifies the contract or transaction or
because his or their votes are counted for that purpose, if:
(i) The existence of the relationship or interest is disclosed or
known to the board of directors or committee that authorizes, approves, or
ratifies the contract or transaction by a vote or consent sufficient for the
purpose, without counting the votes and consents of the interested directors; or
(ii) The existence of the relationship or interest is disclosed or
known to the shareholders entitled to vote and they authorize, approve, or
ratify the contract or transaction by vote or written consent; or
(iii) The contract or transaction is fair and reasonable to the
corporation at the time it is authorized by the board, a committee, or the
shareholders.
(b) For purposes of subsection (i) only, a conflict of interest transaction
is authorized, approved or ratified if it receives the affirmative vote of a
majority of the directors on the board of directors, or on the committee, who
have no relationship or interest in the transaction described in Section 16(a)
hereof, but a transaction may not be authorized, approved or ratified under this
Section by a single director. If a majority of the directors who have no such
relationship or interest in the transaction vote to authorize, approve or ratify
the transaction, a quorum is present for the purpose of taking action under this
Section. The presence of, or a vote cast by a director with such relationship
or interest in the transaction does not affect the validity of any action taken
under subsection (i) if the transaction is otherwise authorized, approved or
ratified as provided in that subsection, but such presence or vote of those
directors may be counted for purposes of determining whether the transaction is
approved under other sections of these by-laws or as provided by law.
ARTICLE IV
Officers
Section 1. NUMBER. The corporation's officers shall include a President,
a Secretary and a Treasurer, each of whom shall be elected by the Board of
Directors. The Board of Directors may also elect a Chairman of the Board, one
or more Vice Presidents, one or more Assistant Secretaries and Assistant
Treasurers and such other officers, as the Board of Directors shall deem
appropriate. Two or more offices may be held simultaneously by the same person.
Section 2. ELECTION AND TERM OF OFFICE. The officers of the corporation
shall be elected annually by the Board of Directors at its first meeting and
after each annual meeting of the shareholders. If the election of officers is
not held at such meeting, such election shall be held as soon thereafter as
convenient. Each officer shall hold office until his successor is duly elected
and qualified, or until his death, resignation or removal.
Section 3. REMOVAL. Any officer or agent elected or appointed by the
Board of Directors may be removed by the Board whenever in its judgment the best
interests of the corporation will be served thereby. Any such removal shall be
without prejudice to the contract rights, if any, of the person so removed.
Election or appointment of an officer or agent shall not of itself create
contract rights.
Section 4. VACANCIES. Any vacancy, however occurring, in any office may
be filled by the Board of Directors.
Section 5. PRESIDENT. Unless otherwise provided by resolution of the
Board of Directors, the President shall be the chief executive officer of the
corporation, shall preside at all meetings of the shareholders and the board of
directors (if he shall be a member of the board), shall have general and active
management of the business and affairs of the corporation and shall see that all
orders and resolutions of the Board of Directors are carried into effect. The
President shall execute on behalf of the corporation, and may affix or cause the
seal to be affixed to, all instruments requiring such execution except to the
extent the signing and execution thereof shall be expressly delegated by the
Board of Directors to some other officer or agent of the corporation.
Section 6. VICE PRESIDENTS. The Vice Presidents, if any, shall act under
the direction of the President and in the absence or disability of the President
shall perform such other duties and have such other powers as the President or
the Board of Directors may from time to time prescribe. The Board of Directors
may designate one or more Executive Vice Presidents or may otherwise specify the
order and seniority of the Vice Presidents. The duties and powers of the
President shall descend to the Vice Presidents in such specified order of
seniority.
Section 7. SECRETARY. The Secretary shall act under the direction of the
President. Subject to the direction of the President, the Secretary shall
attend all meetings of the Board of Directors and all meetings of the
shareholders and record the proceedings. The Secretary shall perform like
duties for the standing committees when required; shall give, or cause to be
given, notice of all meetings of the shareholders and special meetings of the
Board of Directors; and shall perform such other duties as may be prescribed by
the President or the Board of Directors. The Secretary shall keep in safe
custody the seal of the corporation and, when authorized by the President or the
Board of Directors, cause it to be affixed to any instrument requiring it. The
Secretary shall be responsible for maintaining the stock transfer book and
minute book of the corporation and shall be responsible for their updating.
<PAGE>
Section 8. ASSISTANT SECRETARIES. The Assistant Secretaries, if any,
shall act under the direction of the President in the order of their seniority
in office, unless otherwise determined by the President or the Board of
Directors. They shall, in the absence or disability of the Secretary, perform
the duties and exercise the powers of the Secretary. They shall perform such
other duties and have such other powers as the President or the Board of
Directors may from time to time prescribe.
Section 9. TREASURER. The Treasurer shall act under the direction of the
President. Subject to the direction of the President, the Treasurer shall have
the custody of the corporate funds and securities, shall keep full and accurate
accounts of receipts and disbursements in books belonging to the corporation,
and shall deposit all monies and other valuable effects in the name, and to the
credit of, the corporation in such depositories as may be designated by the
Board of Directors. The Treasurer shall disburse the funds of the corporation
as may be ordered by the President or the Board of Directors, taking proper
vouchers for such disbursements, and shall render to the President and the Board
of Directors at its regular meetings, or when the Board of Directors so
requires, an account of all his transactions as Treasurer and of the financial
condition of the corporation. The Treasurer may affix or cause to be affixed
the seal of the corporation to documents so requiring the seal.
Section 10. ASSISTANT TREASURERS. The Assistant Treasurers, if any, in the
order of their seniority of office, unless otherwise determined by the President
or the Board of Directors shall, in the absence or disability of the Treasurer,
perform the duties and exercise the powers of the Treasurer. They shall perform
such other duties and have such other powers as the President or the Board of
Directors may from time to time prescribe.
Section 11. DELEGATION OF DUTIES. Whenever an officer is absent or
whenever for any reason the Board of Directors may deem it desirable, the Board
of Directors may delegate the powers and duties of an officer to any other
officer or officers or to any director or directors.
Section 12. ADDITIONAL POWERS. To the extent the powers and duties of the
several officers are not provided from time to time by resolution or other
directive of the Board of Directors or by the President (with respect to other
officers), the officers shall have all powers and shall discharge the duties
customarily and usually held and performed by like officers of the corporations
similar in organization and business purposes to this corporation.
Section 13. SALARIES. The salaries of the officers shall be as fixed from
time to time by the Board of Directors.
ARTICLE V
Executive and Other Committees of the Board
Section 1. CREATION OF COMMITTEES. By resolution passed by a majority of
the full Board, the Board of Directors may designate an Executive Committee and
one or more other committees. Each committee of the Board shall consist of two
(2) or more members who shall serve at the pleasure of the Board of Directors.
Section 2. EXECUTIVE COMMITTEE. The Executive Committee, if there is one,
shall consult with and advise the officers of the corporation in the management
of its business. The Executive Committee shall have, and may exercise to the
extent provided in the Board resolution creating such Executive Committee, only
such powers of the Board of Directors as can be lawfully delegated by the Board.
Section 3. OTHER COMMITTEES. Other committees shall have only such
functions as can be lawfully delegated and may exercise the powers of the Board
of Directors to the extent provided in the resolution or resolutions creating
such committee or committees.
Section 4. MEETINGS OF COMMITTEES. Regular meetings of the Executive
Committee and any other committees may be held without notice at such time and
place as shall from time to time be determined by each committee. Special
meetings of the Executive Committee or other committees may be called by any
member thereof upon two (2) days notice to each of the other members of the
committee, or upon such shorter notice as may be agreed to in writing by each of
the other members of the committee, given either personally or in the manner
provided in Section 6 of Article III of these By-laws (pertaining to notice for
directors' meetings). Members of the Executive Commit-tee shall be deemed
present at a meeting of such Committee if a conference telephone or similar
communications equipment, by means of which all persons participating in the
meeting can hear each other, is used.
Section 5. VACANCIES ON COMMITTEES. Vacancies on the Executive Committee
or on other committees may be filled by the Board of Directors at any regular or
special meeting.
Section 6. QUORUM OF COMMITTEES. At all meetings of the Executive
Committee or any other committee, a majority of the committee's members then in
office shall constitute a quorum for the transaction of business.
<PAGE>
Section 7. MANNER OF ACTING OF COMMITTEES. The act of a majority of the
members of the Executive Committee, or any other committee, who are present at a
meeting at which a quorum is present shall be the act of such committee.
Section 8. MINUTES OF COMMITTEES. The Executive Committee, if there is
one, and all other committees shall keep regular minutes of their proceedings
and shall report to the Board of Directors when required.
Section 9. COMPENSATION. Members of the Executive Committee or another
committee may be paid compensation in accordance with the provisions of Section
11 of Article III of these By-laws.
ARTICLE VI
Indemnification of Officers
Directors, Employees and Agents
Section 1. INDEMNIFICATION. Any person, or his heirs, or personal
representative who is made or threatened to be made a party to any threatened,
pending,or completed action or proceeding, whether civil, criminal,
administrative, or investigative, because he or his testator or intestate is or
was a director, officer, employee, or agent of this corporation or serves or
served any other corporation or enterprise in any capacity at the request of
this corporation, shall be indemnified by this corporation, and this corporation
may advance his related expenses, to the full extent permitted by law. The
foregoing right of indemnification or reimbursement shall not be exclusive of
other rights to which the person or his heirs, or personal representative may be
entitled. The corporation may, upon the affirmative vote of a majority of its
board of directors, purchase insurance for the purpose of indemnifying these
persons. The insurance may be for the benefit of all directors, officers, or
employees.
Section 2. INSURANCE. The corporation shall have power to 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, employee, or agent of another corporation,
partner-ship, joint venture, trust, or other enterprise against any liability
asserted against him and incurred by him in any such capacity or arising out of
his status as such, whether or not the corporation would have the power to
indemnify him against such liability under the provisions of this Article.
ARTICLE VII
Issuance of Shares
Section 1. AUTHORIZATION. Unless the power to authorize the issuance of
shares is reserved to the shareholders in the Articles of Incorporation, the
Board of Directors may authorize issuances of one or more shares of the
corporation's authorized capital stock.
Section 2. CONSIDERATION FOR SHARES. (a) The Board of Directors may
authorize shares to be issued for a consideration consisting of any tangible or
intangible property or benefit to the corporation, including cash, promissory
notes, services performed, promises to perform services evidenced by a written
contract, or other securities of the corporation.
(b) Before the corporation issues shares, the Board of Directors must
determine in good faith that the consideration received or to be received for
shares to be issued is adequate. That determination by the Board of Directors
is conclusive insofar as the adequacy of consideration for the issuance of
shares relates to whether the shares are validly issued, fully paid, and
nonassessable.
(c) When the corporation receives the consideration for which the Board of
Directors authorized the issuance of shares, the shares issued therefor are
fully paid and nonassessable. Consideration in the form of a promise to pay
money or a promise to perform services is deemed received by the corporation at
the time of the making of the promise, unless the agreement specifically
provides otherwise.
(d) The corporation may place in escrow shares issued for a contract for
future services or benefits or a promissory note, or make other arrangements to
restrict the transfer of the shares, and may credit distributions in respect of
the shares against their purchase price, until the services are performed, the
notice paid, or the benefits received. If the services are not performed, the
shares escrowed or restricted and the distributions credited may be canceled in
whole or in part.
<PAGE>
ARTICLE VIII
Certificates Representing Shares
Section 1. CERTIFICATES. Any certificate representing shares in the
corporation shall be signed by the President or a Vice President and the
Secretary or an Assistant Secretary of the corporation, shall state on its face
the name of the corporation and indicate that it is incorporated under the laws
of the State of Florida, shall state the name of the person to whom it is
issued, shall state the number and class of shares and the designation of the
series, if any, that the certificate represents, and may be sealed with the seal
of the corporation or a facsimile thereof. The certificates shall be numbered
and entered in the books of the corporation as they are issued. If an officer
who signed (or whose facsimile signature was placed on) a stock certificate no
longer holds office when the certificate is issued, the certificate is
nevertheless valid.
Section 2. RIGHTS OF DIFFERENT CLASSES. If the corporation is authorized
to issue different classes of shares or different series within a class, the
designations, relative rights, preferences and limitations applicable to each
class and the variations and rights, preferences and limitations determined for
each series (and the authority of the Board of Directors to determine variations
for future series) shall be summarized on the front or back of each certificate.
Alternatively, each certificate may state conspicuously on its front or back
that the corporation will furnish the shareholder a full statement of the
foregoing information on request and without charge.
Section 3. FACSIMILE SIGNATURES. The signatures of the President or Vice
President and the Secretary or Assistant Secretary may be facsimiles if the
certificate is manually signed on behalf of a transfer agent or a registrar
(other than the corporation itself or an employee of the corporation).
Section 4. TRANSFER OF SHARES. Transfers of shares of the corporation
shall be made upon the corporation's books by the holder of the shares, in
person or by his lawfully constituted representative, upon surrender of the
certificate representing shares for cancellation. The person in whose name
shares stand on the books of the corporation shall be deemed by the corporation
to be the owner thereof for all purposes. The corporation shall not be bound to
recognize any equitable or other claim to, or interest in, shares on the part of
any person other than the owner of record, regardless of whether the corporation
has express or other notice of such claim or interest, except as otherwise
provided by law.
ARTICLE IX
Shares Without Certificates
Section 1. AUTHORIZATION OF SHARES WITHOUT CERTIFICATES. Unless the
Articles of Incorporation provide otherwise, the Board of Directors of the
corporation may authorize the issue of some or all of the shares of any or all
of its classes or series without certificates. Such authorization does not
affect any shares already represented by certificates until they are duly
surrendered to the corporation. Unless expressly provided otherwise by law, the
rights and obligations of shareholders shall be identical whether or not their
shares are represented by certificates.
Section 2. REQUIREMENTS. Within a reasonable time after the issue or
transfer of shares without certificates, the corporation shall send the holder
of such shares a written statement of the name of the corporation, a statement
that it is incorporated under the laws of the State of Florida, the name of the
person to whom the shares are issued, the number and class of shares and the
designation of the series, if any, represented by the shares. If the
corporation is authorized to issue different classes of shares or different
series within a class, the written statement shall summarize the designations,
relative rights, preferences and limitations applicable to each class and the
variations and rights, preferences, and limitations determined for each series
(and the authority of the Board of Directors to determine variations for future
series). Alternatively, the written statement shall specify that the
corporation will furnish the shareholder, on request and without charge, a full
statement of the information specified in the preceding sentence.
ARTICLE X
Transfer Books
Section 1. CLOSING OF TRANSFER BOOKS. To determine which share-holders
shall be entitled to notice of or to vote at a meeting of shareholders, or shall
be entitled to receive a dividend, the Board of Directors of the corporation may
provide that the stock transfer books shall be closed for a stated period not to
exceed, in any case, seventy (70) days. If the stock transfer books are closed
for the purpose of determining shareholders entitled to notice of or to vote at
a meeting of shareholders, such books shall be closed for at least ten (10) days
immediately preceding such meeting.
Section 2. FIXING RECORD DATE. In lieu of closing the stock transfer
books, the Board of Directors may fix a date as the record date for any such
determination of shareholders. The record date may not be more than seventy
(70) days and, in the case of a meeting of shareholders, not less than ten (10)
days prior to the date on which the particular action requiring the
determination of shareholders is to be taken.
Section 3. NO RECORD DATE FIXED. If the stock transfer books are not
closed and no record date is fixed, then the date on which notice of the meeting
is mailed, or the date on which the resolution of the Board of Directors
declaring such dividend is adopted, as the case may be, shall be the record date
for the determination of shareholders.
Section 4. ADJOURNMENTS. When a determination of shareholders entitled to
vote at any meeting of shareholders has been made as provided in this Article,
such determination shall apply to any adjournment thereof, unless: (a) the
meeting is adjourned to a date more than 120 days after the date fixed for the
original meeting; or (b) the Board of Directors fixes a new record date pursuant
to this Article for the adjourned meeting.
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ARTICLE XI
Dividends
The Board of Directors may from time to time declare, and the corporation
may pay, dividends on its outstanding shares of capital stock in the manner, and
upon the terms and conditions, provided by law, the Articles of Incorporation,
and these By-laws. Dividends may be paid in cash, in property, or in the
corporation's own shares, sub-ject to the provisions of law and the Articles of
Incorporation.
ARTICLE XII
Fiscal Year
The fiscal year of the corporation shall be the twelve-month period ending
December 31, or such other twelve month period as may be selected by the Board
of Directors as the taxable year of the corporation for federal income tax pur-
poses.
ARTICLE XIII
Corporate Records
Section 1. RETENTION OF CORPORATE RECORDS. The corporation shall keep the
following corporate records permanently:
(a) its Articles of Incorporation or restated Articles of Incorporation and
all amendments to same;
(b) its By-laws or restated By-laws and all amendments to same; and
(c) minutes of all meetings of its shareholders and Board of Directors, a
record of all actions taken by the shareholders or Board of Directors without a
meeting, and a record of all actions taken by each committee (if any) of the
Board of Directors in place of the Board of Directors.
Section 2. LIST OF SHAREHOLDERS. The corporation (or its agent) shall
maintain a permanent record of its shareholders in a form that permits the
preparation of a list of the names and addresses of all shareholders in
alphabetical order by class of shares, showing the number and series of shares
held by each.
Section 3. OTHER RECORDS. In addition to the foregoing, the corporation
shall maintain copies of the following corporate records:
(a) all written communications to all shareholders generally or all
shareholders of a class or series within the past three (3) years, including the
financial statements furnished for the past three (3) years pursuant to law or
Article XIV of these By-laws;
(b) a list of the names and business street addresses of the corporation's
current directors and officers; and
(c) its most recent annual report delivered to the Florida Department of
State.
ARTICLE XIV
Financial Statements to Shareholders
Section 1. DELIVERY TO SHAREHOLDERS. Unless modified by resolution of the
shareholders within 120 days of the close of each fiscal year, the corporation
shall furnish its shareholders with annual financial statements, which may be
consolidated or combined statements of the corporation and one or more of its
subsidiaries, as appropriate. Such financial statements shall include a balance
sheet as of the end of the fiscal year, an income statement for that year, and a
statement of cash flows for that year. If financial statements are prepared for
the corporation on the basis of generally accepted accounting principles, the
annual financial statements must also be prepared on that basis.
Section 2. REPORT ON FINANCIAL STATEMENTS. If the annual financial
statements are reported upon by a public accountant, the accountant's report
must accompany them. If not, the statements must be accompanied by a statement
of the corporation's President or the person responsible for the corporation's
accounting records:
(a) stating his or her reasonable belief as to whether the statements were
prepared on the basis of generally accepted accounting principles and, if not,
describing the basis of preparation; and
(b) describing any respects in which the statements were not prepared on a
basis of accounting consistent with the statements prepared for the preceding
year.
Section 3. PROCEDURE FOR DELIVERY. The corporation shall mail the annual
financial statements to each shareholder within 120 days after the close of each
fiscal year, or within such additional time thereafter as is reasonably
necessary to enable the corporation to prepare its financial statements if, for
reasons beyond the corporation's control, it is unable to prepare its financial
statements within the prescribed period.
Section 4. DELIVERY UPON REQUEST. Upon the written request of a
shareholder to whom the statements were not mailed, the corporation shall mail
the latest annual financial statements to such shareholder. The corporation
shall comply with requests made pursuant to this Section within thirty (30) days
of the delivery of such a request to the corporation.
ARTICLE XV
Seal
The corporate seal shall bear the name of the corporation and the words
"Corporate Seal, Florida".
<PAGE>
ARTICLE XVI
Shares in Other Corporations
Shares in other corporations which are held by this corporation shall be
voted by such officer or officers of this corporation as the Board of Directors
shall from time to time designate for such purpose or by a proxy thereunto duly
authorized by the Board.
ARTICLE XVII
Board of Directors
Section 1. NOTIFICATIONS OF NOMINATIONS AND PROPOSED BUSINESS. Subject to
the rights of holder of any class or series of stock having a preference over
the Common Stock as to dividends or upon liquidation, (a) nominations for
election of directors, and (b) business proposed to be brought before any
shareholder meeting, may be made by the Board of Directors or proxy committee
appointed by the Board of Directors or by any shareholder entitled to vote in
the election of directors generally. However, any such shareholder may nominate
one or more persons for election as directors at a meeting or propose business
to be brought before a meeting, or both, only if such shareholder has given
timely notice in proper written form of his intent to make such nomination or
nominations or to propose such business. To be timely, a shareholder's notice
must be delivered to or mailed and received by the Secretary of the corporation
not later than sixty (60) days prior to such meeting. To be in proper written
form, a shareholder's notice to the Secretary shall set forth:
(i) the name and address of the shareholder who intends to make the
nominations or propose the business and, as the case may be, of the person
or persons to be nominated or of the business to be proposed;
(ii) a representation that the shareholder is a holder of record of stock
of the corporation entitled to vote at such meeting and, if applicable,
intends to appear in person or by proxy at the meeting to nominate the
person or persons specified in the notice;
(iii) if applicable, a description of all arrangements or understandings
between the shareholder and each nominee and any other person or persons (
naming such person or persons) pursuant to which the nomination or
nominations are to be made by the shareholder;
(iv) such other information regarding each nominee or each matter of
business to be proposed by such shareholder as would be required to be
included in a proxy statement filed pursuant to the proxy rules of the
Securities and Exchange Commission had the nominee been nominated, or
intended to be nominated, or the matter been proposed, or intended to be
proposed by the Board of Directors, and
(v) if applicable, the consent of each nominee to serve as director of the
corporation, if so elected.
The chairman of the meeting may refuse to acknowledge the nomination of any
person or the proposal of any business not made in compliance with the
foregoing procedure.
ARTICLE XVIII
Amendments
The By-Laws of the corporation may be altered, amended, or repealed, and
new By-Laws may be adopted, by action of the board of directors, subject to
the limitations of F.S. 607.1020(1) or any successor statute thereto. The
shareholders of the Corporation may alter, amend, or repeal these By-Laws
or adopt new By-Laws even though these By-Laws may also be amended or
repealed by the Board of Directors.
<PAGE>
ACTION PRODUCTS INTERNATIONAL, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
MAY 8, 1998
The undersigned hereby constitutes and appoints Ronald S. Kaplan and Delton
G. de Armas the undersigned's true and lawful attorneys and proxies (with full
power of substitution in each) (the "Proxy Agents"), to vote all of the shares
of Action Products International, Inc. owned by the undersigned on April 9,
1998, at the Annual Meeting of Shareholders of Action Products International,
Inc. to be held at the offices of the Company located at 344 Cypress Road,
Ocala, Florida 34472-3108 on June 8, 1998, at 9:30 a.m., Eastern Daylight Time
(including adjournments), with all powers that the undersigned would possess if
personally present.
THE BOARD RECOMMENDS A VOTE FOR EACH NOMINEE AND PROPOSAL.
I. PROPOSAL TO AMEND AND RESTATE THE COMPANY'S ARTICLES OF INCORPORATION.
FOR AGAINST ABSTAIN
II. ELECTION OF DIRECTORS
A. If Proposal I is adopted, to elect four directors as follows:
Judith H. Kaplan and Richard Gordan, Jr. as Class 1 Directors for
a one-year term and Ronald S. Kaplan and David A. Carter as Class
II Directors for a two-year term.
FOR (nominees listed above) WITHOUT AUTHORITY
(INSTRUCTION: To withhold authority to vote for an individual
nominee, write that nominee's name in the space provided above).
OR
B. If Proposal I is not approved, to elect David A. Carter, Richard
Gordan, Jr., Judith H. Kaplan and Ronald S. Kaplan as directors
to serve for a one-year term.
FOR (nominees listed above) WITHOUT AUTHORITY
(INSTRUCTION: To withhold authority to vote for an individual
nominee, write that nominee's name in the space provided above).
Should any other matter requiring a vote of the Shareholders arise, the
above-named Proxy agents, and each of them, are authorized to vote the shares
represented by this Proxy as their judgment indicates is in the best interest of
Action Products International, Inc.
This Proxy is solicited on behalf of the Management of Action Products
International, Inc. This Proxy, when properly executed, will be voted in the
manner directed herein by the undersigned Shareholder. If no direction is made,
this Proxy will be voted FOR the proposals described above.
IMPORTANT: Please date this Proxy and sign exactly as your name or names
appear hereon. If shares are held jointly, both owners must sign. Executors,
administrators, trustees, guardians and others signing in a representative
capacity should give their full titles.
Signature of Shareholder
Signature of Joint Shareholder
Dated: , 1998
PLEASE RETURN THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE.
To Our Shareholders:
Whether or not you are able to attend our 1998 Annual Meeting of
Shareholder, it is important that your shares be represented, no matter how many
shares you own. Accordingly, please complete and sign the Proxy provided above
and mail it in the enclosed postage paid envelope.
We look forward to receiving your voted Proxy at your earliest convenience.
<PAGE>
