<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
Form 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________________ to ____________________
Commission File Number: 2-98277C
THE COLONEL'S INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Michigan 38-3262264
(State or other jurisdiction of incorporation (I.R.S. employer
or organization) identification no.)
620 SOUTH PLATT ROAD, MILAN, MICHIGAN 48160
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(313) 439-4200
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Securities registered pursuant to Section 12(g) of the Act: Common Stock,
$0.01 Par Value
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes __X__ No ______
Number of shares of the registrant's Common Stock, $0.01 par value,
outstanding as of May 9, 1997: 24,177,805
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
The financial statements required under Item 1 are set forth in
Appendix A to this Report on Form 10-Q and are herein incorporated by
reference.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
BACKGROUND
Effective December 31, 1995, Brainerd International, Inc. ("Brainerd")
merged (the "Merger") with and into The Colonel's International, Inc. (the
"Company"). The Company was the surviving corporation in the Merger.
Prior to the Merger, Brainerd had 677,830 shares of its common stock
outstanding and traded on the Nasdaq SmallCap Market (symbol BIRI).
Pursuant to the Merger, these shares were converted into the same number of
shares of common stock in the Company.
Also effective December 31, 1995, Brainerd Merger Corporation, a
Michigan corporation and a wholly owned subsidiary of Brainerd, merged with
and into The Colonel's, Inc. ("The Colonel's"). The Colonel's was the
surviving corporation in this merger. In consideration of this merger, the
Company issued 23,500,000 shares of its common stock to Donald J.
Williamson and Patsy L. Williamson, who at the time were the sole
shareholders in The Colonel's. In addition, Brainerd transferred all of
its operating assets to its newly formed subsidiary, Brainerd International
Raceway, Inc., a Minnesota corporation ("BIR").
For accounting purposes, the transaction was treated as a
recapitalization of the Company with the Company as the acquirer (a reverse
acquisition). The effective date of the Merger was December 31, 1995.
Beginning January 1, 1996, the incomes of both The Colonel's and BIR are
reflected and reported as combined income in the consolidated income
statement.
The truck accessory division of The Colonel's was incorporated under
Michigan law as The Colonel's Truck Accessories, Inc. ("CTA") in January
1997 and became a wholly owned subsidiary of the Company.
As a result of these transactions, the Company now has three wholly
owned subsidiaries: The Colonel's, CTA and BIR.
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<PAGE>
THE COLONEL'S, INC.
The Colonel's was organized in 1982 and began producing and selling
plastic bumpers and facias in 1983. Since that time, The Colonel's
has grown through acquisitions, joint ventures, and normal expansion to two
manufacturing plants, four distribution warehouses and a network of
independent distributors that sell The Colonel's products throughout the
United States, Canada, Mexico, Puerto Rico, the Bahamas and the District of
Columbia.
THE COLONEL'S TRUCK ACCESSORIES, INC.
CTA manufactures and sells pickup truck bedliners and tail gate covers
through a distributor network. In March 1997, CTA finalized its purchase
out of bankruptcy of the assets of Truckware, Inc., a truck accessories
warehouse and distributor located in California. Truckware was in the
business of selling truck accessories to wholesale subdistributors and
dealerships and also offering installation services and direct sales to
retail customers. CTA plans to continue these activities and also to sell
CTA's manufactured bedliners and other truck accessories.
BRAINERD INTERNATIONAL RACEWAY, INC.
BIR operates the Brainerd International Raceway, which is located
approximately six miles northwest of Brainerd, Minnesota. Substantially all
of BIR's revenues are obtained from motor sports racing events at the
raceway. BIR schedules racing and other events held at the raceway during
weekends in the months of May through September of each year.
COMBINED OPERATIONS
The Colonel's bumper manufacturing plant is a 350,000 square
foot facility (plus a 45,000 square foot covered crane bay) situated on a
62 acre site on the outskirts of Milan, Michigan. Milan is located
approximately 10 miles south of Ann Arbor, Michigan, 60 miles west of
Detroit, and 25 miles northwest of Toledo, Ohio. There is sufficient room
to expand the physical plant. The Milan plant manufactures aftermarket
bumper facias. This facility is leased from a company owned by Donald and
Patsy Williamson.
CTA's bedliner manufacturing facility occupies a 210,000 square foot
building located on 27 acres on the outskirts of Owosso, Michigan. Owosso
is located about 100 miles northwest of Milan, Michigan and about 30 miles
northeast of Lansing, Michigan. The building has power capacities
exceeding current use and would permit expansion if necessary. This plant
manufactures truck accessories. It is also leased from a company owned by
Donald and Patsy Williamson.
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<PAGE>
BIR owns and operates the Brainerd International Raceway, which includes
a one-quarter mile drag strip located approximately six miles northwest of
Brainerd, Minnesota. The terrain of BIR's 600 acre site is slightly rolling
hills and is partially wooded. The track and various roads are composed of
blacktop. BIR's premises features several buildings, including a four-story
tower with twelve executive viewing suites, a control tower, various single
story buildings containing concession stands and rest rooms, and storage and
service facilities located throughout the property. The buildings are
concrete or wood frame and are suitable for warm weather use only.
Grandstand bleachers for approximately 18,000 spectators are primarily
located along the drag strip.
LIQUIDITY AND CAPITAL RESOURCES
The Company's consolidated current assets slightly decreased from
$13,638,000 at December 31, 1996 to $13,628,000 at March 31, 1997. See
below for further discussion of the Company's assets at March 31, 1997.
Consolidated current liabilities decreased from $16,660,000 at
December 31, 1996 to $16,542,000 at the end of the first quarter of 1997.
The decrease in current liabilities is due to a $50,000 decrease in the
outstanding balance on the line of credit (described below), a $144,000
decrease in the current portion of long-term debt and a $588,000 decrease
in accounts payable, offset by a $456,000 increase in income taxes. See
"Outstanding Debt" below for further discussion of the Company's outstanding
debt at March 31, 1997.
Inventories increased by $300,000 at March 31, 1997 compared to
December 31, 1996, due to increased production at the bedliner facility and
the short winter season. The Colonel's routinely attempts to maintain a
60-day supply of each product available for immediate shipment. Inventory
levels historically decline during the second quarter of the year, but
increase by late summer for anticipated fall sales.
Prepaid expenses decreased due to the amortization of prepaid
insurance and property taxes.
Property, plant and equipment increased slightly from December 31,
1996 to March 31, 1997. New equipment purchases exceeded depreciation
costs by $90,000 during this period.
As a result of the Merger, the acquisition value of BIR exceeded the
value of the assets by $425,000. The associated amortization expense for
the twelve-month period ending December 31, 1997 will be $60,000. The
Company has chosen to expense $15,000 each quarter throughout the year
instead of taking a one-time charge in the first quarter, as it did during
the first quarter of 1996.
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<PAGE>
OUTSTANDING DEBT
The Colonel's has a $4,500,000 line of credit that is secured by
accounts receivable and inventory with a term that expires in May 1997.
The Colonel's expects to negotiate renewals as necessary with its current
lending institution. Interest is paid at prime on a monthly basis. The
outstanding balance on the line of credit was $4,400,000 at March 31, 1997.
BIR has a $300,000 line of credit which is secured by all of its assets;
however, there was no outstanding balance on this line of credit at March 31,
1997.
The Colonel's received $6,000,000 in April 1995, under a facility
which calls for payments of $200,000 in principal plus interest on a
monthly basis calculated at 0.5 percent over prime on the outstanding
balance. The loan is secured by machinery and equipment and had a balance
of $2,200,000 at March 31, 1997.
BIR has a mortgage in the amount of $468,000, which is secured by
property. This loan requires quarterly interest payments at 2 percent
above prime and a single $50,000 principal payment in the third quarter of
each year through 2004.
The balance on The Colonel's mortgage on its former Owosso facility
was $657,000 at the end of the first quarter of 1997.
The Company has applied to its primary lending institution for
additional financing of $7,000,000, which would pay off the current long
term debt and a land purchase of $1,000,000, as well as the mortgage of
$657,000, and would increase the Company's borrowing capacity by $3,250,000.
The Colonel's entered into three capital leases to finance equipment
for CTA. The Colonel's leased $6,435,000 worth of that equipment under a
six-year agreement with monthly payments of approximately $100,000. The
lease includes an option to purchase the equipment for $1.00 upon expiration
of the lease term. The leases are collateralized by the machinery.
The Company has also entered into a 24-month lease extension on the
semi-tractor trailers that it was already leasing from its lending
institution. Pursuant to the extension agreement, the Company continues to
lease the vehicles for an aggregate monthly payment of $15,987. Under the
extension agreement, the Company has an option to buy the trailers for
$1.00 upon completion of the extended term.
RESULTS OF OPERATIONS
Revenues for the Company were $10,937,000 for the quarter ending March
31, 1997, compared to $9,900,000 for the same period in 1996. The increase
in 1997 was primarily due to direct sales efforts and sales by CTA. CTA
had very limited sales during its start-up period in the first quarter of
1996.
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<PAGE>
Cost of sales decreased from 71 percent of sales for the three months
ending March 31, 1996 to 69 percent for the same three months in 1997, in
part because of start-up costs of CTA incurred in 1996. Cost of sales as a
percentage of sales was 70 percent for the fiscal year ended December 31,
1996.
Selling, general and administrative expenses as a percentage of sales
for the first quarter of 1997 increased over the same period of 1996 by
three percent. The three-month comparison shows an increase from 11 to 14
percent. However, it also shows a decrease from 17 percent at December 31,
1996 to 14 percent of sales during the first quarter of 1997. Although
more sales staff expenses were added in the first quarter, the increase in
sales associated with the costs of the additional staff continues to be
favorable. In addition, due to changes in management during the first
quarter of 1997, payroll expense has increased.
Interest expense decreased by $100,000 for the three months ending
March 31, 1997 over the same period in 1996, due to the normal retirement
of debt.
To date, the Company has accrued $532,000 for income taxes, which
reflects the Company's expected effective tax rate of 34 percent.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable.
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company was both a defendant and counter-plaintiff in a suit filed
December 5, 1991 in the United States District Court, Eastern District of
Michigan, in a private action seeking damages under the federal antitrust
statutes. On September 30, 1996, the Company settled this case for cash
and merchandise deliverable through December 1997. The Company has accrued
for the settlement.
During the first quarter of 1997, there were no other material
developments in legal proceedings involving the Company or its
subsidiaries. These proceedings were described in the Company's Annual
Report on Form 10-K for the year ended December 31, 1996.
ITEM 2. CHANGES IN SECURITIES.
Not applicable.
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<PAGE>
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS.
On April 22, 1997 the Company held its 1997 Annual Meeting
of Shareholders at its corporate offices in Milan, Michigan. The purposes
of the meeting were (1) to elect seven Directors to the Board of Directors,
(2) to consider and approve certain amendments to the Company's 1995 Long-
Term Incentive Plan, including increasing the number of shares of Common
Stock available for issuance under this plan from 3,000,000 to 4,000,000,
(3) to consider and approve the Company's 1997 Stock Option and Restricted
Stock Plan for Selected Non-Employees and (4) to confirm the appointment of
Deloitte & Touche LLP as the independent auditors of the Company for the
current fiscal year.
Seven candidates nominated by management were elected by the
shareholders to serve as Directors of the Company at the meeting. The
following sets forth the results of the voting with respect to each
candidate:
<TABLE>
<CAPTION>
NAME OF CANDIDATE SHARES VOTED
- ----------------- ------------
<S> <C> <C>
Patsy L. Williamson For 23,574,776
Authority Withheld 320
Broker Non-Votes 602,709
Michael J. McCloskey For 23,574,776
Authority Withheld 320
Broker Non-Votes 602,709
Mark D. Stevens For 23,574,776
Authority Withheld 320
Broker Non-Votes 602,709
Ben C. Parr For 23,574,776
Authority Withheld 320
Broker Non-Votes 602,709
John M. Darcy For 23,574,776
Authority Withheld 320
Broker Non-Votes 602,709
J. Daniel Frisina For 23,574,776
Authority Withheld 320
Broker Non-Votes 602,709
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<PAGE>
Donald R. Gorman For 23,574,776
Authority Withheld 320
Broker Non-Votes 602,709
</TABLE>
Ted M. Gans remained as a Director of the Company with a term
expiring in 1998. Thus, the expiration dates of the Directors' current
terms of office are as follows:
<TABLE>
<CAPTION>
Nominee Year Term Expires
------- -----------------
<S> <C> <C>
Michael J. McCloskey 2000
Mark D. Stevens 2000
John M. Darcy 2000
J. Daniel Frisina 1999
Ben C. Parr 1999
Patsy L. Williamson 1998
Donald R. Gorman 1998
Ted M. Gans 1998
</TABLE>
The shareholders also voted to approve certain amendments to the
Company's 1995 Long-Term Incentive Plan. The following sets forth the
results of the voting with respect to this matter:
<TABLE>
<CAPTION>
<S> <C> <C>
For 23,574,756
Against 320
Abstentions 20
Broker Non-votes 602,709
</TABLE>
The shareholders also voted to approve the Company's 1997 Stock Option
and Restricted Stock Plan for Selected Non-Employees. The following sets
forth the results of the voting with respect to this matter:
<TABLE>
<CAPTION>
<S> <C> <C>
For 23,574,656
Against 420
Abstentions 20
Broker Non-votes 602,709
</TABLE>
The shareholders also voted to approve the appointment of Deloitte &
Touche LLP by the Board of Directors as independent auditors of the Company
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<PAGE>
for the current fiscal year. The following sets forth the results of the
voting with respect to this matter:
<TABLE>
<CAPTION>
<S> <C> <C>
For 23,575,096
Against 0
Abstentions 0
Broker Non-votes 602,709
</TABLE>
ITEM 5. OTHER INFORMATION.
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits. The following exhibits are filed as part of this
report.
EXHIBIT
NUMBER
2.1 Agreement and Plan of Merger between The Colonel's, Inc. and
Brainerd Merger Corporation and joined in by Brainerd
International, Inc. Incorporated by reference from Exhibit A to
the Proxy Statement of Brainerd International, Inc. for the
Annual Meeting of Shareholders of Brainerd International, Inc.
held on November 21, 1995.
2.2 Agreement and Plan of Reorganization among Brainerd
International, Inc. and The Colonel's Holdings, Inc. Incorporated
by reference from Exhibit D to the Proxy Statement of Brainerd
International, Inc. for the Annual Meeting of Shareholders of
Brainerd International, Inc. held on November 21, 1995.
3.1 Articles of Incorporation of the Company, as amended.
3.2 Bylaws, as amended.
4.1 Articles of Incorporation. See Exhibit 3.1 above.
11.1 Computation of Per Share Earnings.
27.1 Financial Data Schedule.
(b) REPORTS ON FORM 8-K. The Company filed two reports on Form
8-K during the quarter ended March 31, 1997. The first Form 8-K was filed
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<PAGE>
on February 20, 1997, and related to the Company's Press Release of the
same date announcing new Directors and Officers. The second Form 8-K was
filed on March 20, 1997, and related to the Company's Press Release of the
same date announcing the signing of a letter of intent relating to the
acquisition of the Patsy Lou Williamson group of automobile dealerships.
Neither report contained financial statements. In addition, on April 4,
1997, the Company filed a Form 8-K relating to a Press Release dated March
26, 1997, which announced a contract between Southeast Toyota Inc. and CTA.
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<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
THE COLONEL'S INTERNATIONAL, INC.
Dated: MAY 12, 1997 By: /S/ MICHAEL J. MCCLOSKEY
MICHAEL J. MCCLOSKEY
CHIEF EXECUTIVE OFFICER AND DIRECTOR
(DULY AUTHORIZED OFFICER OF THE REGISTRANT)
DATED: MAY 12, 1997 BY: /S/ RICHARD S. SCHOENFELDT
RICHARD S. SCHOENFELDT
VICE PRESIDENT-FINANCE AND CHIEF FINANCIAL
OFFICER
(PRINCIPAL FINANCIAL OFFICER OF THE
REGISTRANT)
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<PAGE>
APPENDIX A
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<PAGE>
<TABLE>
THE COLONEL'S INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
<CAPTION>
MARCH 31, DEC 31,
1997 1996
(UNAUDITED) (AUDITED)
----------- ---------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 211,562 $ 321,486
Accounts receivable - trade (net of allowance
for doubtful accounts of $689,600 and
$575,000 at March 31, 1997 and December
31, 1996, respectively) 3,490,347 3,605,281
Inventories (Note 2) 8,636,190 8,347,663
Prepaid expense 96,376 226,670
Deferred taxes - current 1,000,000 1,045,000
Current portion of deferred compensation 154,000 52,000
Other 40,000 40,000
------------ ------------
TOTAL CURRENT ASSETS 13,628,475 13,638,100
PROPERTY, PLANT, & EQUIPMENT - NET (NOTE 3) 27,119,558 27,028,350
OTHER ASSETS:
Long-term portion of deferred compensation 440,787 236,787
Deposits 1,467,165 1,156,868
Goodwill 351,297 366,497
Other 183,693 183,693
------------ ------------
Total other assets 2,442,942 1,943,845
TOTAL ASSETS $ 43,190,975 $ 42,610,295
============ ============
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
MARCH 31, DEC 31,
1997 1996
(UNAUDITED) (AUDITED)
----------- ---------
<S> <C> <C>
LIABILITIES & SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable $ 5,400,000 $ 5,450,000
Current portion of long-term obligations 3,725,225 3,868,733
Accounts payable - trade 2,944,942 3,532,752
Accrued expenses (note 4) 2,666,629 2,561,361
Current portion of deferred compensation 154,000 52,000
Income taxes payable 1,651,000 1,195,000
----------- ------------
Total current liabilities 16,541,796 16,659,846
LONG-TERM OBLIGATIONS, NET OF
CURRENT PORTION 5,667,577 6,321,175
LONG-TERM PORTION OF DEFERRED
COMPENSATION 440,787 236,787
DEFERRED TAXES - LONG-TERM 3,980,000 3,949,000
SHAREHOLDERS' EQUITY:
Common stock: 35,000,000 shares authorized
at $0.01 par value, 24,177,805 shares
issued and outstanding 241,778 241,778
Additional paid-in-capital 5,693,024 5,606,239
Retained earnings 10,626,013 9,595,470
----------- ------------
Total shareholders' equity 16,560,815 15,443,487
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $43,190,975 $ 42,610,295
=========== ============
</TABLE>
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<PAGE>
<TABLE>
THE COLONEL'S INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
THREE MONTHS ENDING
MARCH 31
--------------------------
1997 1996
(UNAUDITED) (UNAUDITED)
----------- -----------
<S> <C> <C>
SALES $ 10,937,133 $ 9,900,074
COST OF SALES 7,557,394 7,008,906
------------ -----------
GROSS PROFIT 3,379,739 2,891,168
SELLING, GENERAL & ADMINISTRATIVE
EXPENSES 1,522,712 1,089,226
------------ -----------
INCOME FROM OPERATIONS 1,857,027 1,801,942
Other income (expense):
Interest expense (349,165) (456,453)
Interest income 23,762 31,570
Rental income 15,000 10,000
Other 15,919 (4,257)
------------ -----------
Other income (expense), net (294,484) (419,140)
------------ -----------
NET INCOME BEFORE TAXES $ 1,562,543 $ 1,382,802
PROVISION FOR INCOME TAXES (Note 5) 532,000 481,000
------------ -----------
NET INCOME $ 1,030,543 $ 901,802
============ ===========
EARNINGS PER SHARE (Note 6) $ 0.04 $ 0.04
============ ===========
</TABLE>
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<PAGE>
<TABLE>
THE COLONEL'S INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
THREE MONTHS ENDING
MARCH 31
--------------------------
1997 1996
(UNAUDITED) (UNAUDITED)
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,030,543 $ 901,802
Adjustments to reconcile net income to net cash
provided by operations:
Depreciation and amortization 936,872 833,813
Deferred tax provision 76,000 (100,000)
(Gain) loss on sale of property (14,407) 5,255
Changes in assets & liabilities that provided (used) cash:
Accounts receivable 114,934 (783,477)
Inventories (288,527) 736,026
Prepaid expenses 130,294 (98,581)
Accounts payable (587,810) (1,352,612)
Accrued expenses 105,268 477,510
Income taxes payable 456,000
Net cash (used in) provided by investing activities 1,959,167 619,736
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for property, plant & equipment (641,354) (38,147)
Proceeds from sale of property, plant & equipment 17,000 19,500
Net change in deposits (684,417) (279,439)
Payments received on notes receivable- related party 60,000
Additions to notes receivable - other (770)
Payments received on notes receivable - other 290,502
Net cash (used in) provided by investing activities (1,308,771) 51,646
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (payments) under notes payable (50,000) (280,000)
Proceeds from long-term obligations 75,000
Principal payments on long-term debt (564,982) (560,435)
Principal payments on obligations under capital leases (232,123) (47,595)
Cash contribution from related party 86,785
Net cash (used in) financing activities (760,320) (813,030)
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<PAGE>
NET INCREASE (DECREASE) IN CASH $ (109,924) $ (141,648)
=========== ===========
CASH, BEGINNING OF PERIOD 321,486 634,290
CASH, END OF PERIOD $ 211,562 $ 492,642
=========== ===========
Supplemental Schedule of noncash investing activities:
Transfer of deposits to property, plant and equipment
relating to property placed in service $ 374,120 $ 194,800
=========== ===========
</TABLE>
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<PAGE>
THE COLONEL'S INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Note 1 BASIS OF PRESENTATION
The financial information included herein is unaudited; however such
information reflects all adjustments (consisting solely of normal
recurring adjustments) that are, in the opinion of management,
necessary for a fair presentation of the results of operations,
financial position and cash flows for the periods presented.
The results of operations for the three months ended March 31, 1997,
are not necessarily indicative of the results expected for the full
year.
Note 2 INVENTORIES
<TABLE>
<CAPTION>
Inventories are summarized as follows: MARCH 31, DEC 31,
1997 1996
--------- -------
<S> <C> <C> <C>
Finished products $ 8,019,725 $ 7,213,704
Raw materials 616,465 1,133,959
------------ ------------
Total inventories $ 8,636,190 $ 8,347,663
============ ============
</TABLE>
Note 3 PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is summarized by major classification
as follows:
<TABLE>
<CAPTION>
MARCH 31, DEC 31,
1997 1996
--------- -------
<S> <C> <C>
Land and improvements $ 3,619,717 $ 3,619,717
Track 1,533,760 1,533,760
Buildings 793,990 793,990
Leasehold improvements 986,076 707,076
Bleachers & fencing 731,886 731,886
Equipment (including equipment under capital lease) 14,363,310 14,316,710
Transportation equipment (including equipment 920,275 1,000,690
under capital lease)
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<PAGE>
Furniture & fixtures 620,855 611,510
Tooling 23,895,152 23,229,532
------------ ------------
TOTAL 47,465,021 46,544,871
LESS ACCUMULATED DEPRECIATION (20,345,463) (19,516,521)
------------ ------------
Net property, plant and equipment $ 27,119,558 $ 27,028,350
============ ============
</TABLE>
Note 4 ACCRUED EXPENSES
<TABLE>
<CAPTION>
Accrued expenses consist of the following: MARCH 31, DEC 31,
1997 1996
--------- -------
<S> <C> <C> <C>
Accrued legal $ 935,926 $ 1,136,516
Accrued compensation for NuPar (Note 7) 100,000
Accrued environmental costs 598,717 598,717
Accrued taxes 739,788 417,165
Other 392,198 308,963
----------- ------------
Total $ 2,666,629 $ 2,561,361
=========== ============
</TABLE>
Note 5 INCOME TAXES
The provision for income taxes reflects the Company's expected
estimated effective tax rate of approximately 34 percent.
Note 6 EARNINGS PER SHARE
The computation of earnings per share is based on the
weighted average number of shares of common stock outstanding
during the three-month period ended March 31, 1997.
In February 1997, the Financial Accounting Standards Board
issued Statement of Accounting Standards ("SFAS") No. 128,
"Earnings Per Share," effective for both interim and annual
periods ending after December 15, 1997. SFAS No. 128
specifies the computation, presentation and disclosure of
earnings per share for entities with publicly held common
stock or potential common stock (e.g., securities convertible
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<PAGE>
into common stock). The Company will provide the required
disclosures in its year-end report. The effect of SFAS No.
128 on the Company's earnings per share is not expected to be
material.
Note 7 LITIGATION
In connection with the acquisition of a facility in Florida
(known as "NuPar"), the Company signed employment agreements with
the former NuPar shareholders for the three-year period beginning
December 1991. In 1994, the former NuPar shareholders filed a
lawsuit against the Company for $1,800,000, claiming they had met
the conditions of the agreements and were therefore entitled to the
payments thereunder. In July 1995, the Company settled these actions
for $1.4 million, payable in installments through January 1997. In
January 1997, the Company made the final payment toward this
settlement.
The Company was both a defendant and counter-plaintiff in a
suit filed December 5, 1995, in the United States District
Court, Eastern District of Michigan, in a private action
seeking damages under the federal antitrust statutes. In
September 1996, the Company settled this case for cash and
merchandise deliverable through December 1997.
The Company has been served with various lawsuits pertaining
to a class action suit arising from the production of
bedliners. The suits allege that the liners insulate a gas
can when filled which may cause a static charge that could
result in a fire. The Company has formed a coalition with
other bedliner manufacturers to defend this class action
suit. Though the Company did not produce liners at the time
of the alleged incidents, the Company has elected to
participate in the class action suit.
The Company has been served with a lawsuit by a competitor
pertaining to a possible infringement of their patent
associated with their bedliner. The Company has recently
received its patent from the U.S. Patent office and believes
that the patent was issued after the office's strict due
diligence. In addition, the Company has filed a separate
suit alleging the same competitor is infringing on the
Company's bedliner patent.
The Company and its subsidiaries are involved in various
other legal proceedings which have arisen in the normal
course of their operations. The Company has accrued its best
estimate of the cost of litigation based on known facts. It
is possible that this estimate may change in the near term as
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the lawsuits progress. Although the final resolution of any
such matters could have a material effect on the Company's
operating results for the particular reporting period in
which an adjustment of the estimated liability is recorded,
the Company believes that any resulting liability should not
materially affect its financial position.
Note 8 ENVIRONMENTAL REMEDIATION
The Company is responsible for the remediation of hazardous
materials and ground contamination located at its former
manufacturing facility in Owosso, Michigan that was destroyed
by fire in June of 1993. In August 1993, the Michigan
Department of Natural Resources required that the Company
perform a complete hydrogeological study of the site to
determine the extent of the contamination. The Company has
engaged environmental consultants in the summer of 1997 to
determine the extent of the hazardous materials located at
this site, if any, and the cost of any remediation. The
Company has accrued its best estimate of the cost of
remediation based on known facts. It is possible that this
estimate may change in the near term as the project
progresses. Although the final resolution of any such
matters could have a material effect on the Company's
operating results for the particular reporting period in
which an adjustment of the estimated liability is recorded,
the Company believes that any resulting liability should not
materially affect its financial position.
As part of the lease agreement with a related party for the
Milan, Michigan facility, the Company is also responsible for
the remediation of hazardous material, if any, up to an
amount of $2,000,000, which existed at this site prior to The
Colonel's entering into the lease in June 1993. The Company
has accrued for estimated remediation costs based on an
environmental study of the site. The Company has accrued its
best estimate of the cost of remediation based on known
facts. It is possible that this estimate may change in the
near term as the project progresses. Although the final
resolution of any such matters could have a material effect
on the Company's operating results for the particular
reporting period in which an adjustment of the estimated
liability is recorded, the Company believes that any
resulting liability should not materially affect its
financial position.
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Note 9 LETTER OF INTENT
On March 20, 1997, the Company entered into a letter of
intent regarding the acquisition of four new and one used car
dealerships owned and controlled by Patsy Lou Williamson, a
Director and the Chairman of the Board of the Company, as
well as a major shareholder. As contemplated in the letter
of intent, the Company will purchase 100% of the stock of the
dealerships and certain related assets employed by the
dealerships, but owned by the seller and/or her affiliates,
for a purchase price equal to $60 million less any agreed
upon indebtedness or other liabilities assumed by the
Company. However, no definitive terms have been established
by the parties, and no party to the letter of intent is bound
to buy or sell the dealerships unless all appropriate parties
have executed and delivered a definitive agreement mutually
acceptable to each party and their counsel and, in the case
of the Company, to the independent members of its Board of
Directors.
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EXHIBIT INDEX
2.1 Agreement and Plan of Merger between The Colonel's, Inc. and
Brainerd Merger Corporation and joined in by Brainerd
International, Inc. Incorporated by reference from Exhibit A
to the Proxy Statement of Brainerd International, Inc. for the
Annual Meeting of Shareholders of Brainerd International, Inc.
held on November 21, 1995.
2.2 Agreement and Plan of Reorganization among Brainerd
International, Inc. and The Colonel's Holdings, Inc.
Incorporated by reference from Exhibit D to the Proxy Statement
of Brainerd International, Inc. for the Annual Meeting of
Shareholders of Brainerd International, Inc. held on November
21, 1995.
3.1 Articles of Incorporation of the Company, as amended.
3.2 Bylaws, as amended.
4.1 Articles of Incorporation. See Exhibit 3.1 above.
11.1 Computation of Per Share Earnings.
27.1 Financial Data Schedule.
<PAGE>
EXHIBIT 3.1
ARTICLES OF INCORPORATION
OF
THE COLONEL'S INTERNATIONAL, INC.
Pursuant to the Provisions of Act 284, Public Acts of 1972,
as amended, the undersigned corporation executes the following Articles:
ARTICLE I
NAME
The name of the corporation is The Colonel's International,
Inc.
ARTICLE II
REGISTERED OFFICE AND REGISTERED AGENT
The address of the Corporation's registered office in the
State of Michigan is 620 South Platt Road, Milan, Michigan 48160. The name
of its registered agent at such address is Richard S. Schoenfeldt.
ARTICLE III
PURPOSES
The nature of the business or purpose to be conducted or
promoted by the Corporation is to engage in any lawful act or activity for
which corporations may be organized under the Business Corporation Act of
Michigan.
ARTICLE IV
CAPITAL STOCK
The total number of shares of stock which the Corporation
shall have authority to issue is 35,000,000 shares of Common Stock, each
with a par value of $0.01, and 5,000,000 shares of Preferred Stock, each
with a par value of $0.01. Preferred Shares may be issued in series, each
series being composed of such number of shares and having such dividend,
liquidation, voting, conversion, redemption and other rights, if any, as
the Board of Directors may determine from time to time by resolution.
ARTICLE V
INCORPORATOR
The name and mailing address of the incorporator is Jeffrey
A. Chimovitz, 620 South Platt Road, Milan, Michigan 48160.
<PAGE>
ARTICLE VI
DURATION
The Corporation is to have perpetual existence.
ARTICLE VII
BOARD OF DIRECTORS; NUMBER; CLASSIFICATION; VACANCIES
(a) The number of directors constituting the entire
Board shall be not less than five (5) nor more than fifteen (15) as fixed
from time to time by vote of a majority of the entire Board, provided,
however, that the number of directors shall not be reduced so as to shorten
the term of any director at the time in office. Each director shall be the
record owner of one or more shares of Common Stock of the Corporation.
(b) The Board of Directors shall be divided into three
classes, as nearly equal in numbers as the then total number of directors
constituting the entire Board permits with the term of office of one class
expiring each year. At the annual meeting of shareholders in June, 1995,
or the adjournment thereof, directors of the first class shall be elected
to hold office for a term expiring at the next annual meeting, directors of
the second class shall be elected to hold office for a term expiring at the
second succeeding annual meeting, and directors of the third class shall be
elected to hold office for a term expiring at the third succeeding annual
meeting.
(c) Any vacancies in the Board or Directors for any
reason, and any directorships resulting from any increase in the number of
directors, may be filled only by the Board of Directors, acting by a
majority of the directors then in office, although less than a quorum, and
any directors so chosen shall hold office until the next election of the
class for which such directors shall have been chosen and until their
successors shall be elected and qualified. Subject to the foregoing, at
each annual meeting of shareholders the successors to the class of
directors whose term shall then expire shall be elected to hold office for
a term expiring at the third succeeding annual meeting. Notwithstanding
the foregoing, if the holders of any class or series of Preferred Stock are
entitled to elect one or more directors to the exclusion of other
shareholders, vacancies of that class or series may be filled only by
majority vote of the directors elected by that class or series then in
office, whether or not a quorum, or by the holders of that class or series.
ARTICLE VIII
BOARD AUTHORITY
In furtherance and not in limitation of the powers conferred
by statute, the Board of Directors is expressly authorized:
To make, alter or repeal the Bylaws of the Corporation.
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To adopt resolutions to issue shares of Preferred
Stock, in such amounts and series, and with such dividend, liquidation,
voting, conversion, redemption and other rights as shall be set forth in
the resolution, and to execute, acknowledge, and file a certificate setting
forth a copy of such resolution(s) and the number of shares of stock of
such class or series as to which the resolution(s) apply, pursuant to
Michigan law. Upon filings, the certificate shall constitute an amendment
to these Articles of Incorporation.
To authorize and cause to be executed mortgages and
liens upon the real property of the Corporation.
To set apart out of any of the funds of the Corporation
available for dividends a reserve or reserves for any proper purpose and to
abolish any such reserve in the manner in which it was created.
By a majority vote of the whole Board, to designate one
or more committees, each committee to consist of one or more directors of
the Corporation. The Board may designate one or more directors as
alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. The Bylaws may
provide that in the absence or disqualification of a member of a committee,
the member or members thereof present at any meeting and not disqualified
from voting, whether or not he or they constitute a quorum, may unanimously
appoint another member of the Board of Directors to act at the meeting in
the place of any such absent or disqualified member. Any such committee,
to the extent provided in the resolution of the Board of Directors, or in
the Bylaws of the Corporation, shall have and may exercise all of the
powers and authority of the Board of Directors in the management of the
business and affairs of the corporation, and may authorize the seal of the
Corporation to be affixed to all papers which may require it; but no such
committee shall have the power or authority in reference to amending the
Articles of Incorporation, adopting an agreement of merger or
consolidation, recommending to the shareholders the sale, lease or exchange
of all or substantially all of the Corporation's property and assets,
recommending to the shareholders a dissolution of the corporation or a
revocation of a dissolution, or amending the Bylaws of the Corporation;
and, unless the resolution or Bylaws expressly so provide, no such
committee shall have the power or authority to declare a dividend or
distribution or to authorize the issuance of stock.
When and as authorized by the shareholders in
accordance with law, to sell, lease or exchange all or substantially all of
the property and assets of the corporation, including its good will and its
corporate franchises, upon such terms and conditions and for such
consideration, which may consist in whole or in part of money or property
including shares of stock in, and/or securities of, any other corporation
or corporations, as its Board of Directors shall deem expedient or for the
best interest of the corporation.
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<PAGE>
ARTICLE IX
ELECTION OF DIRECTORS; LOCATION OF MEETINGS, BOOKS, AND OFFICES
Elections of the directors need not be by written ballot
unless the Bylaws of the Corporation shall so provide. If the Bylaws so
provide, the shareholders and directors shall have power to hold meetings,
to keep the books, documents and papers of the Corporation outside the
state of Michigan, and to have one or more offices within or without the
state of Michigan, at such places as may be from time to time designated by
the Bylaws or by resolution of the shareholders or directors, except as
otherwise required by the laws of Michigan. Notwithstanding the foregoing,
neither the directors nor the shareholders shall have power to keep the
original and duplicate stock ledger outside the state of Michigan.
ARTICLE X
REMOVAL
One or more directors may be removed by the shareholders,
with or without cause. Notwithstanding the foregoing if the holders of any
class or series of Preferred Stock are entitled to elect one or more
directors to the exclusion of the other shareholders, the directors elected
by that class or series may be removed only by the holders of that class or
series.
ARTICLE XI
CREDITOR ARRANGEMENTS
When a compromise or plan of reorganization of this
Corporation is proposed between this Corporation and its creditors or any
class of them or between this Corporation and its shareholders or any class
of them, a court of equity jurisdiction within the state, on application of
this Corporation or of a creditor or shareholder thereof, or on application
of a receiver appointed for the corporation may order a meeting of the
creditors or class of creditors or of the shareholders or class of
shareholders to be affected by the proposed compromise or arrangement or
reorganization to be summoned in such manner as the court directs. If a
majority in number representing three-fourths in value of the creditors or
class of creditors, or of the shareholders or class of shareholders to be
affected by the proposed compromise or arrangement or reorganization, agree
to a compromise or arrangement or a reorganization of this Corporation as
consequence of compromise or arrangement, the compromise or arrangement and
the reorganization, if sanctioned by the court to which the application has
been made, shall be binding on all the creditors or class of creditors, or
on all the shareholders or class of shareholders and also on this
Corporation.
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<PAGE>
ARTICLE XII
AMENDMENT OF ARTICLES OF INCORPORATION
The Corporation reserves the right to amend, alter, change or
repeal any provision contained in these Articles of Incorporation in the
manner now or hereafter prescribed by the statutes of Michigan, and all
rights and powers conferred on directors and shareholders prescribed herein
are subject to this reservation; provided, however, that this Article XII, as
well as the following provisions of these Articles of Incorporation, may not
be amended, altered, changed or repealed, nor may any provision inconsistent
with the following provisions be adopted, without the approval of at least
66 2/3 percent of the total voting power of all shares of stock entitled to
vote, voting together as a single class at an annual or special meeting of
shareholders: (i) Article IX, relating to the election of directors, (ii)
Article X, relating to the removal of directors, (iii) Article XIII,
relating to the power of shareholders to alter the Corporation's Bylaws,
and (iv) Article XIV, relating to the right of the right of shareholders to
call a special shareholder meeting without approval of the Board of
Directors.
ARTICLE XIII
AMENDMENT OF BYLAWS
The Bylaws of the Corporation may be repealed, altered,
amended or rescinded at any time by the Board of Directors without
shareholder approval. The Bylaws of the Corporation may not be amended by
the shareholders of the Corporation except upon the affirmative vote of at
least 66 2/3 percent of the total voting power of all shares of stock
entitled to vote in the election of directors, voting together as a single
class at an annual or special meeting of shareholders.
ARTICLE XIV
SPECIAL SHAREHOLDER MEETINGS
Special Shareholder meetings may be called by the Board of
Directors or a committee of the Board authorized to call special
shareholder meetings. The shareholders of the Corporation shall not have
the power or ability to call a special shareholder meeting, except as
provided in the Bylaws or under the Michigan Business Corporation Act.
ARTICLE XV
SHAREHOLDER ACTION WITHOUT A MEETING
Any action required or permitted to be taken at an annual or
special meeting of shareholders may be taken without a meeting, without
notice, and without a vote, provided that (i) written consents setting
forth the action taken are signed by the holders of record of outstanding
stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted, and (ii) the Board of
Directors ratifies the action to be taken in advance.
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<PAGE>
ARTICLE XVI
OPTION OUT OF MICHIGAN BUSINESS COMBINATION STATUTE
The Corporation shall not be governed by Section 780 of the
Michigan Business Corporation Act.
ARTICLE XVII
OPTION OUT OF MICHIGAN
CONTROL SHARE ACQUISITION STATUTE
The corporation shall not be governed by Sections 790
through 799 of the Michigan Business Corporation Act.
ARTICLE XVIII
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Corporation shall indemnify any director of the
Corporation who was or is a party or is threatened to be made a party to
any threatened, pending, or completed action, suit, or proceeding by reason
of the fact that he or she is or was a director or is or was serving at the
request of the Corporation as a director, officer or employee of another
corporation, partnership, joint venture, trust or other enterprise, to the
fullest extent permitted by the Michigan Business Corporation Act in the
absence of rights granted under Articles of Incorporation, Bylaws, or a
contractual agreement. The Corporation may further indemnify directors,
and may indemnify persons who are not directors, as authorized by Bylaws,
resolution of the Board of Directors, or contractual agreement authorized
by the Board of Directors. Changes in these Articles or in the Bylaws
reducing the scope of indemnification shall not apply to actions or
omissions occurring before such change.
ARTICLE XIX
LIMITATION ON DIRECTOR LIABILITY
A director of the Corporation shall not be personally liable
to the Corporation or its shareholders for monetary damages for a breach of
fiduciary duty as a director, except that a director's liability is not
limited for:
(1) a breach of the director's duty of loyalty to the
Corporation or its shareholders;
(2) acts or omissions not in good faith or that involve
intentional misconduct or knowing violation of law;
(3) a violation of Section 551(1) of the Michigan Business
Corporation Act, which section relates to the making of
unauthorized dividends, distributions, or loans; or
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<PAGE>
(4) a transaction from which the director derived an
improper personal benefit.
If the Michigan Business Corporation Act is amended to
further eliminate or limit the liability of a director, then a director of
the Corporation (in addition to the circumstances in which a director is
not personally liable as set forth in the preceding paragraph) shall, to
the fullest extent permitted by the Michigan Business Corporation Act, as
so amended, not be liable to the Corporation or its shareholders. No
amendment to or modification or repeal of this Article shall increase the
liability of any director of the Corporation for or with respect to any
acts or omissions of such director occurring prior to such amendment,
modification or repeal.
This Article applies only to acts or omissions and to
breaches of fiduciary duty occurring after this Article became effective.
ARTICLE XX
DENIAL OF PREEMPTIVE RIGHTS
The holders of the Common Stock shall have no preemptive
rights to subscribe for any shares of any class of stock of the Corporation
whether now or hereafter authorized.
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<PAGE>
EXHIBIT 3.2
THE COLONEL'S INTERNATIONAL, INC.
(a Michigan Corporation)
BYLAWS
<PAGE>
THE COLONEL'S INTERNATIONAL, INC.
(a Michigan Corporation)
BYLAWS
TABLE OF CONTENTS
PAGE
ARTICLE I - OFFICES. . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Section 1. Registered Office and Registered Agent . . . . . . . .1
Section 2. Other Offices. . . . . . . . . . . . . . . . . . . . .1
ARTICLE II - MEETINGS OF SHAREHOLDERS. . . . . . . . . . . . . . . . . . .1
Section 1. Times and Places of Meetings . . . . . . . . . . . . .1
Section 2. Annual Meetings. . . . . . . . . . . . . . . . . . . .1
Section 3. Notice of Annual Meeting . . . . . . . . . . . . . . .1
Section 4. Business Conducted at Annual Meetings. . . . . . . . .2
Section 5. Shareholder List . . . . . . . . . . . . . . . . . . .2
Section 6. Special Meetings. . . . . . . . . . . . . . . . . . .3
Section 7. Notice of Special Meetings . . . . . . . . . . . . . .3
Section 8. Quorum . . . . . . . . . . . . . . . . . . . . . . . .3
Section 9. Vote Required. . . . . . . . . . . . . . . . . . . . .4
Section 10. Voting Rights. . . . . . . . . . . . . . . . . . . . .4
Section 11. Chairman and Secretary of the Meetings . . . . . . . .4
Section 12. Conduct of Meetings. . . . . . . . . . . . . . . . . .4
Section 13. Inspectors of Election . . . . . . . . . . . . . . . .5
Section 14. Shareholder Action Without Meeting . . . . . . . . . .5
ARTICLE III - DIRECTORS. . . . . . . . . . . . . . . . . . . . . . . . . .5
Section 1.(a) Number of Directors . . . . . . . . . . . . . . . . . .5
(b) Classification. . . . . . . . . . . . . . . . . . . . .6
(c) Nominations of Director Candidates. . . . . . . . . . .6
(d) Vacancies and Newly Created Directorships . . . . . . .7
(e) Removal . . . . . . . . . . . . . . . . . . . . . . . .7
Section 2. Powers . . . . . . . . . . . . . . . . . . . . . . . .7
Section 3. Compensation of Directors. . . . . . . . . . . . . . .7
Section 4. Places of Meetings . . . . . . . . . . . . . . . . . .8
Section 5. First Meeting of Newly Elected Board . . . . . . . . .8
Section 6. Regular Meetings . . . . . . . . . . . . . . . . . . .8
Section 7. Special Meetings . . . . . . . . . . . . . . . . . . .8
Section 8. Purpose Need Not be Stated . . . . . . . . . . . . . .8
Section 9. Quorum . . . . . . . . . . . . . . . . . . . . . . . .8
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Section 10. Action Without a Meeting . . . . . . . . . . . . . . .8
Section 11. Meeting by Telephone or Similar Equipment. . . . . . .8
Section 12. Written Notice . . . . . . . . . . . . . . . . . . . .9
Section 13. Waiver of Notice . . . . . . . . . . . . . . . . . . .9
ARTICLE IV - COMMITTEES OF DIRECTORS . . . . . . . . . . . . . . . . . . .9
Section 1. Executive Committee. . . . . . . . . . . . . . . . . .9
Section 2. Audit Committee. . . . . . . . . . . . . . . . . . . .9
Section 3. Organization/Compensation Committee. . . . . . . . . 10
Section 4. Nominating Committee . . . . . . . . . . . . . . . . 10
Section 5. Finance Committee. . . . . . . . . . . . . . . . . . 10
Section 6. Other Committees . . . . . . . . . . . . . . . . . . 10
Section 7. Committee Meetings . . . . . . . . . . . . . . . . . 10
ARTICLE V - ADVISORY DIRECTORS . . . . . . . . . . . . . . . . . . . . . 11
Section 1. Invitations to Non-Directors
to Attend Meetings of Board of Directors . . . . . 11
Section 2. Designation of Persons as Advisory Directors . . . . 11
Section 3. Role of Advisory Directors . . . . . . . . . . . . . 11
Section 4. Limitation of Liability of Advisory Directors. . . . 11
Section 5. Compensation . . . . . . . . . . . . . . . . . . . . 11
Section 6. Termination of Status as Advisory Director . . . . . 11
ARTICLE VI - OFFICERS. . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 1 (a) Central Staff.. . . . . . . . . . . . . . . . . . . . 12
(b) Divisional Officers . . . . . . . . . . . . . . . . . 12
Section 2. Chairman of the Board. . . . . . . . . . . . . . . . 12
Section 3. President. . . . . . . . . . . . . . . . . . . . . . 12
Section 4. Chief Executive Officer. . . . . . . . . . . . . . . 13
Section 5. Chief Operating Officer. . . . . . . . . . . . . . . 13
Section 6. Vice Presidents. . . . . . . . . . . . . . . . . . . 13
Section 7. Secretary. . . . . . . . . . . . . . . . . . . . . . 13
Section 8. Treasurer. . . . . . . . . . . . . . . . . . . . . . 13
Section 9. Assistant Secretary and Assistant Treasurer. . . . . 14
Section 10. Other Officers . . . . . . . . . . . . . . . . . . . 14
ARTICLE VII - INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . 14
Section 1. Indemnification in Action by Third Party . . . . . . 14
Section 2. Indemnification in Action by or in
Right of the Corporation. . . . . . . . . . . . . 14
Section 3. Expenses . . . . . . . . . . . . . . . . . . . . . . 15
Section 4. Authorization of Indemnification.. . . . . . . . . . 15
Section 5. Advances . . . . . . . . . . . . . . . . . . . . . . 16
Section 6. Other Indemnification Agreements . . . . . . . . . . 16
Section 7. Insurance. . . . . . . . . . . . . . . . . . . . . . 17
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<PAGE>
Section 8. Constituent Corporation. . . . . . . . . . . . . . . 17
Section 9. Partial Indemnification. . . . . . . . . . . . . . . 17
Section 10. Savings Clause . . . . . . . . . . . . . . . . . . . 17
Section 11. Definitions. . . . . . . . . . . . . . . . . . . . . 17
Section 12. Construction . . . . . . . . . . . . . . . . . . . . 18
ARTICLE VIII - SUBSIDIARIES. . . . . . . . . . . . . . . . . . . . . . . 18
Section 1. Subsidiaries . . . . . . . . . . . . . . . . . . . . 18
Section 2. Subsidiary Officers Not Executive Officers . . . . . 18
ARTICLE IX - CERTIFICATES OF STOCK . . . . . . . . . . . . . . . . . . . 19
Section 1. Form . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 2. Facsimile Signature. . . . . . . . . . . . . . . . . 19
Section 3. Lost Certificates. . . . . . . . . . . . . . . . . . 19
Section 4. Transfers of Stock . . . . . . . . . . . . . . . . . 19
Section 5. Fixing of Record Date by Board . . . . . . . . . . . 19
Section 6. Provision for Record Date in the Absence
of Board Action . . . . . . . . . . . . . . . . . 20
Section 7. Adjournments . . . . . . . . . . . . . . . . . . . . 20
Section 8. Registered Shareholders. . . . . . . . . . . . . . . 20
ARTICLE X - GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . 20
Section 1. Dividends. . . . . . . . . . . . . . . . . . . . . . 20
Section 2. Reserves . . . . . . . . . . . . . . . . . . . . . . 21
Section 3. Checks . . . . . . . . . . . . . . . . . . . . . . . 21
Section 4. Fiscal Year. . . . . . . . . . . . . . . . . . . . . 21
Section 5. Seal . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 6. Written Waiver of Notice . . . . . . . . . . . . . . 21
ARTICLE XI - AMENDMENTS. . . . . . . . . . . . . . . . . . . . . . . . . 21
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<PAGE>
BYLAWS
OF
THE COLONEL'S INTERNATIONAL, INC.
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE AND REGISTERED AGENT. The registered
office of the Corporation shall be in the County of Monroe, State of
Michigan. The name of its registered agent at such address is 620 South
Platt Road, Milan, Michigan 48160.
SECTION 2. OTHER OFFICES. The Corporation may also have offices
at such places, both within and without the State of Michigan as the Board
of Directors may from time to time determine or the business of the
Corporation may require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
SECTION 1. TIMES AND PLACES OF MEETINGS. All meetings of the
shareholders shall be held, except as otherwise provided by statute or
these Bylaws, at such time and place as may be fixed from time to time by
the Board of Directors. Meetings of shareholders may be held within or
without the State of Michigan.
SECTION 2. ANNUAL MEETINGS. Annual meetings of the shareholders
shall be held at a time and place so designated by a majority vote of the
Board of Directors, for the purpose of electing directors and for the
transaction of such other business as may properly be brought before the
meeting.
SECTION 3. NOTICE OF ANNUAL MEETING. Written notice of the annual
meeting, specifying the date, time and location of the meeting, shall be
given personally or by mail at least ten (10) and not more than sixty (60)
days before the date of the meeting to each shareholder entitled to vote
thereat who shall have furnished a written address to the Secretary of the
Corporation for such purpose. Notice of any meeting need not be given to
any shareholder who signs a waiver of notice before or after the meeting.
Attendance of a shareholder at a meeting shall constitute a waiver of
notice, except when the shareholder attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the holding of
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the meeting or the transaction of any business because the meeting is not
lawfully called or convened.
SECTION 4. BUSINESS CONDUCTED AT ANNUAL MEETINGS. Notwithstanding
anything in these Bylaws to the contrary, no business shall be conducted at
an annual meeting of the shareholders except in accordance with the
procedures hereinafter set forth in this Section 4; PROVIDED, HOWEVER, that
nothing in this Section 4 shall be deemed to preclude discussion by any
shareholder of any business properly brought before the annual meeting in
accordance with said procedures.
At an annual meeting of the shareholders, only such business shall be
conducted as shall have been properly brought before the meeting. To be
properly brought before an annual meeting, business must be (1) specified
in the notice of meeting (or any supplement thereto) given by or at the
direction of the Board of Directors, (2) otherwise properly brought before
the meeting by or at the direction of the Board of Directors, or (3)
otherwise properly brought before the meeting by a shareholder. In
addition to any other applicable requirements, for business to be properly
brought before an annual meeting by a shareholder, the shareholder must
comply with all applicable requirements of Securities and Exchange
Commission Rule 14a-8 promulgated under the Securities Exchange Act of
1934, as amended from time to time. Any adjournment(s) or postponement(s)
of the original meeting whereby the meeting will reconvene within thirty
(30) days from the original date shall be deemed for purposes of notice to
be a continuation of the original meeting and no business may be brought
before any such reconvened meeting unless timely notice of such business
was given to the Secretary of the Corporation for the meeting as originally
scheduled.
A shareholder's notice to the Secretary shall set forth as to each
matter the shareholder proposes to bring before the annual meeting (i) a
brief description of the business desired to be brought before the annual
meeting and the reasons for conducting such business at the annual meeting,
(ii) the name and record address of the shareholder proposing such
business, (iii) the class and/or series and number of shares of the
Corporation that are beneficially owned by the shareholder, (iv) any
material interest of the shareholder in such business, and (v) any other
information as may be required by Rule 14a-8.
For purposes of these Bylaws, notice of any shareholder meeting shall
be deemed to first be given to shareholders when disclosure of such date is
first made in a press release reported by the Dow Jones News Services,
Associated Press or comparable national news service or in a document
publicly filed by the Corporation with the Securities and Exchange
Commission pursuant to Sections 13, 14, or 15(d) of the Securities Exchange
Act of 1934, as amended.
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SECTION 5. SHAREHOLDER LIST. The officer or agent who has charge
of the stock ledger or stock transfer books of the Corporation shall make
and certify a complete list of the shareholders entitled to vote at a
shareholders' meeting, arranged by class or series in alphabetical order,
showing the address of and the number of shares registered in the name of
each shareholder. Such list shall be produced at the meeting and be open to
the examination of any shareholder, for any purpose germane to the meeting,
during the whole time of the meeting.
SECTION 6. SPECIAL MEETINGS.
(a) Special meetings of the shareholders for any purpose or
purposes may be called by the Board of Directors, or a committee of the
Board of Directors empowered to call special meetings. Special meetings
shall not be called by shareholders, except: (i) in accordance with Section
403 of the Michigan Business Corporation Act, or (ii) upon the approval of
the Board of Directors after a shareholder has submitted a written request
for a special meeting in accordance with (b), immediately below.
(b) A shareholder may submit a written request to the Secretary
of the Corporation to call a special meeting of shareholders, which written
request shall contain (i) a brief description of the business desired to be
brought before such special meeting and the reasons for conducting such
business at a special meeting, (ii) the name and record address of the
shareholder proposing such business, (iii) the class and/or series and
number of shares of the Corporation that are beneficially owned by the
shareholder, and (iv) any material interest to the shareholder in such
business.
SECTION 7. NOTICE OF SPECIAL MEETINGS. Written notice of a special
meeting of shareholders, stating the date, time, place, and object thereof,
shall be given personally or by mail to each shareholder entitled to vote
thereat who shall have furnished a written address to the Secretary of the
Corporation for such purpose, not less than ten (10) nor more than sixty
(60) days before the date fixed for the meeting. Business transacted at any
special meeting shall be limited to the purpose or purposes stated in the
notice.
SECTION 8. QUORUM. The holders of a majority of the stock issued
and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
shareholders for the transaction of business, except as otherwise provided
by statute or by the Articles of Incorporation. The shareholders present
in person or by proxy at such meeting may continue to do business until
adjournment, notwithstanding the withdrawal of enough shareholders to leave
less than a quorum. Whether or not a quorum is present, the meeting may be
adjourned by a vote of the shares present. No notice of the date, time and
place of adjourned meetings need be given, provided that the time and place
to which the meeting is adjourned is announced at the meeting and at the
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adjourned meeting only business is transacted as might have been transacted
at the original meeting.
Except when the holders of a class or series of shares are entitled to
vote separately on an item of business, shares of all classes and series
entitled to vote shall be combined as a single class and series for the
purpose of determining a quorum. When the holders of a class or series of
shares are entitled to vote separately on an item of business, shares of
that class or series entitled to cast a majority of the votes of that class
or series at a meeting constitute a quorum of that class or series at that
meeting, unless a greater or lesser quorum is provided by statute or the
Articles of Incorporation.
SECTION 9. VOTE REQUIRED. When a quorum is present at any meeting,
the vote of the holders of a majority of the stock having voting power
present in person or represented by proxy shall decide any question other
than the election of directors brought before such meeting, or the
amendment of the Articles of Incorporation or these Bylaws, unless the
question is one upon which by express provision of statute or of the
Articles of Incorporation a different vote is required, in which case such
express provision shall govern and control the decision of such question.
Election of directors shall be by ballot, and directors shall be elected by
a plurality of the shares present in person or represented by proxy and
entitled to vote on the election of directors.
SECTION 10. VOTING RIGHTS. Except as otherwise provided by the
Articles of Incorporation or the resolution or resolutions of the Board of
Directors creating any class or series of stock, each shareholder shall at
every meeting of shareholders be entitled to one (1) vote in person or by
proxy for each share of the capital stock having voting power held by such
shareholder. A proxy shall be valid only with respect to the particular
meeting, or any adjournment or adjournments thereof, to which it
specifically pertains. No proxy shall be voted or acted upon after three
(3) years from its date, unless the proxy provides for a longer period. A
duly executed proxy shall be irrevocable if it states that it is
irrevocable and if, and only as long as, it is coupled with an interest
sufficient in law to support an irrevocable power. A shareholder may
revoke any proxy which is not irrevocable by attending the meeting and
voting in person or by filing an instrument in writing revoking the proxy
or another duly executed proxy bearing a later date with the Secretary of
the Corporation.
SECTION 11. CHAIRMAN AND SECRETARY OF THE MEETINGS. Meetings of the
shareholders shall be presided over by the Chairman of the Board or such
executive officer of the Corporation that he may designate, or in his
absence, by the President, or in his absence, by such officer as has been
designated by the Board of Directors, or if none of the foregoing officers
is present, by a chairman to be chosen at the meeting. The Secretary of the
Corporation, or in his absence, such officer as has been designated by the
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Board of Directors, or if none of the foregoing officers is present, such
person as is chosen at the meeting by the person presiding thereat, shall
act as Secretary of the meeting.
SECTION 12. CONDUCT OF MEETINGS. Meetings of shareholders generally
shall follow accepted rules of parliamentary procedure, subject to the
following:
(a) The chairman of the meeting shall have absolute authority
over matters of procedure, and there shall be no appeal from the
ruling of the chairman. If, in his absolute discretion, the chairman
deems it advisable to dispense with the rules of parliamentary
procedure as to any one (1) meeting of shareholders or part thereof,
he shall so state and shall clearly state the rules under which the
meeting or appropriate part thereof shall be conducted.
(b) If disorder should arise which prevents the continuation of
the legitimate business of the meeting, the chairman may quit the
chair and announce the adjournment of the meeting. Upon his so doing,
the meeting is immediately adjourned.
(c) The chairman may ask or require that anyone not a bona fide
shareholder or proxy leave the meeting.
(d) A resolution or motion shall be considered for vote only if
proposed by a shareholder or a duly authorized proxy in accordance
with these Bylaws and seconded by an individual who is a shareholder
or a duly authorized proxy other than the individual who proposed the
resolution or motion.
SECTION 13. INSPECTORS OF ELECTION. The Board of Directors or, if
they shall not have so acted, the chairman of the meeting, may appoint, at
or prior to any meeting of shareholders, two (2) persons (who may be
employees of the Corporation other than directors or candidates for the
office of director) to serve as inspectors of election. Such inspectors
shall first take and subscribe an oath or affirmation faithfully to execute
the duties of inspector at such meeting with strict impartiality and
according to the best of their ability. The inspectors shall determine the
number of shares outstanding and the voting power of each, the shares
represented at the meeting, the existence of a quorum, the validity and
effect of proxies, and shall receive votes or ballots, hear and determine
challenges and questions arising in connection with the right to vote,
count and tabulate votes or ballots, determine the result, and do such acts
as are proper to conduct the election or vote with fairness to all
shareholders.
SECTION 14. SHAREHOLDER ACTION WITHOUT MEETING. Any action
required or permitted to be taken at an annual or special meeting of
shareholders may be taken without a meeting, without notice, and without
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vote, provided that: (i) written consents setting forth the action to be
taken are signed by the holders of record of outstanding stock having not
less than the minimum number of votes that would be necessary to authorize
or take such action at a meeting at which all shares entitled to vote
thereon were present and voted, and (ii) such action is ratified in advance
by the Board of Directors.
ARTICLE III
DIRECTORS
SECTION 1. Members of the Board of Directors of the Corporation
shall be selected, replaced, and removed as follows:
(a) NUMBER OF DIRECTORS. The number of the directors of the
Corporation shall be fixed from time to time by resolution adopted by
the affirmative vote of at least fifty percent (50%) of the entire
Board of Directors but shall not be less than five (5), nor more than
fifteen (15).
(b) CLASSIFICATION. The Board of Directors, other than those who
may be elected by the holders of any class or series of stock having a
preference over the common stock as to dividend or upon liquidation,
shall be divided into three (3) classes as nearly equal in number as
possible, with the term of office of one class expiring each year. At
each annual meeting of the shareholders, the successors of the class
of directors whose term expires at that meeting shall be elected to
hold office for a term expiring at the annual meeting of shareholders
held in the third year following the year of their election.
(c) NOMINATIONS OF DIRECTOR CANDIDATES.
(i) Nominations of candidates for election for directors of
the Corporation at any meeting of shareholders called for
election of directors (an "Election Meeting") may be made by the
Board of Directors or by any shareholder entitled to vote at such
Election Meeting, as provided in (ii) and (iii), immediately
below.
(ii) Nominations made by the Board of Directors shall be
made at a meeting of the Board of Directors, or by written
consent of directors in lieu of a meeting, not less than thirty
(30) days prior to the date of the Election Meeting, and such
nominations shall be reflected in the minute books of the
Corporation as of the date made. At the request of the Secretary
of the Corporation, each proposed nominee shall provide the
Corporation with such information concerning himself as is
required under the rules of the Securities and Exchange
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Commissions, to be included in the Corporation's proxy statements
soliciting proxies for his election as a director.
(iii) Any shareholder who intends to make a nomination at
the Election Meeting shall deliver a timely notice to the
Secretary of the Corporation setting forth (A) the name, age,
business address, and residence address of each nominee proposed
in such notice; (B) the principal occupation or employment of
each such nominee; (C) the number of shares of capital stock of
the Corporation which are beneficially owned by each such
nominee; (D) a statement that the nominee is willing to be
nominated; and (E) such other information concerning each such
nominee as would be required under the rules of the Securities
and Exchange Commission in a proxy statement soliciting proxies
for the election of such nominees. To be timely, a shareholder's
notice must be delivered to or mailed and received at the
principal executive offices of the Corporation not less than
forty (40) days nor more than sixty (60) days prior to the
Election Meeting as originally scheduled; PROVIDED HOWEVER, that
in the event that less than fifty (50) days' notice or prior
public disclosures of the date of the Election Meeting is given
or made to shareholders, notice by the shareholder to be timely
must be so received not later than the close of business on the
tenth (10th) day following the day on which such notice of the
date of the Election Meeting was mailed or such public disclosure
was made.
(iv) If the chairman of the Election Meeting determines that
a nomination was not made in accordance with the foregoing
procedures, such nomination shall be void.
(d) VACANCIES AND NEWLY CREATED DIRECTORSHIPS. Subject to the
rights of the holders of any series of Serial Preferred Stock then
outstanding, any vacancy occurring in the Board of Directors caused by
resignation, removal, death, disqualification, or other incapacity,
and any newly created directorships resulting from an increase in the
number of directors, shall be filled by a majority vote of directors
then in office, whether or not a quorum. Each director chosen to fill
a newly created directorship shall hold office until the next election
of directors by the shareholders. Each director chosen to fill a
vacancy shall hold office for the unexpired term of the director whose
place he is taking. When the number of directors is changed, any newly
created or eliminated directorships shall be so apportioned among the
classes as to make all classes as nearly equal in number as possible.
No decrease in the number of directors constituting the Board of
Directors shall shorten the term of any incumbent director.
Notwithstanding the foregoing, if the holders of any class or
series of Preferred Stock are entitled to elect one or more directors
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to the exclusion of other shareholders, vacancies of that class or
series may be filled only by one of the following: (i) by a majority
vote of the directors elected by the holders of that class or series
then in office, whether or not those directors constitute a quorum of
the Board of Directors, or (ii) by the holders of shares of that class
or series.
(e) REMOVAL. Subject to the rights of the holders of any class
or series of Preferred Stock, the holders of a majority of the shares
entitled to vote for the election of directors may remove one or more
of the directors with or without cause. Notwithstanding the
foregoing, if the holders of any class or series of Preferred Stock
are entitled to elect directors to the exclusion of the other
shareholders, directors elected by such class or series shall only be
removed by a majority of the shares of such class or series.
SECTION 2. POWERS. The business of the Corporation shall be
managed by its Board of Directors, which may exercise all such powers of
the Corporation and do all such lawful acts and things as are not by
statute or by the Articles of Incorporation or by these Bylaws directed or
required to be exercised or done by the shareholders.
SECTION 3. COMPENSATION OF DIRECTORS. Each director who is not a
salaried officer of the Corporation may receive as compensation for his
services in that capacity such sums and such benefits as shall from time to
time be determined by the Board of Directors, plus traveling expenses and
other expenses necessary for attendance at regular or special meetings of
the Board of Directors and committees of the board. Members of special or
standing committees may be allowed like compensation for attending
committee meetings. Nothing herein shall be construed to preclude any
director from serving the Corporation in any other capacity and receiving
compensation therefor.
SECTION 4. PLACES OF MEETINGS. The Board of Directors of the
Corporation may hold meetings, both regular and special, either within or
without the State of Michigan.
SECTION 5. FIRST MEETING OF NEWLY ELECTED BOARD. The first meeting
of each Board of Directors having a newly elected class of directors shall
be held following the annual meeting of shareholders, and no notice of such
meeting shall be necessary to the newly elected directors in order to
legally constitute the meeting, provided a quorum shall be present. In the
event such meeting is not held immediately following the annual meeting of
shareholders, the meeting may be held at such time and place as shall be
specified in a notice given as hereinafter provided for special meetings of
the Board of Directors, or as shall be specified in a written waiver signed
by all of the directors.
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SECTION 6. REGULAR MEETINGS. Regular meetings of the Board of
Directors may be held without notice at such time and at such place as
shall from time to time be determined by the board.
SECTION 7. SPECIAL MEETINGS. Subject to the provisions of Section
12 of this Article III, special meetings of the Board of Directors may be
called by the Chairman, Chief Executive Officer, or Secretary or by any two
(2) directors on one (1) day's notice to each director.
SECTION 8. PURPOSE NEED NOT BE STATED. Neither the business to be
transacted at nor the purpose of any regular or special meeting of the
Board of Directors need be specified in the notice of such meeting.
SECTION 9. QUORUM. At all meetings of the board a majority of the
directors shall constitute a quorum for the transaction of business, and
the acts of a majority of the directors present at any meeting at which
there is a quorum shall be acts of the Board of Directors except as may be
otherwise specifically provided by statute or by the Articles of
Incorporation. If a quorum shall not be present at any meeting of the Board
of Directors, the directors present thereat may adjourn the meeting from
time to time, without notice other than announcement at the meeting, until
a quorum shall be present.
SECTION 10. ACTION WITHOUT A MEETING. Unless otherwise restricted
by the Articles of Incorporation or these Bylaws, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting if, before or after the
action, all members of the board or of such committee, as the case may be,
consent thereto in writing and such written consent is filed with the
minutes or proceedings of the board or committee.
SECTION 11. MEETING BY TELEPHONE OR SIMILAR EQUIPMENT. The Board of
Directors or any committee designated by the Board of Directors may
participate in a meeting of such board or committee, by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a
meeting pursuant to this section shall constitute presence in person at
such meeting.
SECTION 12. WRITTEN NOTICE. Notices to directors shall be in
writing and delivered personally or mailed to the directors at their
addresses appearing on the books of the Corporation. Notice by mail shall
be deemed to be given at the time when the same shall be mailed. Notice to
directors may also be given by telegram or telecopy. Notwithstanding the
foregoing, notice shall also be given by telegram or telecopy if the date
of the meeting to which such notice relates is within three (3) days of the
date that such notice is given.
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SECTION 13. WAIVER OF NOTICE. The attendance of a director at a
meeting shall constitute a waiver of notice of such meeting, except where a
director attends a meeting for the express purpose of objecting to the
transaction of any business because the meeting has not been lawfully
called or convened.
ARTICLE IV
COMMITTEES OF DIRECTORS
SECTION 1. EXECUTIVE COMMITTEE. The Board of Directors may appoint
an Executive Committee whose membership shall consist of the Chairman
and/or President and such number of other directors (not less than four
(4)) as a majority of the entire Board of Directors may deem advisable from
time to time to serve during the pleasure of the board. One of the members
of the committee shall be designated the chairman thereof by the Board of
Directors. The Board of Directors may also appoint directors to serve as
alternates for members of the committee in the absence or disability of
regular members. The Executive Committee shall have and may exercise the
powers of the board in the management of the business and affairs of the
Corporation, except the power to change the membership or to fill vacancies
in the board or the Committee, the power to amend, add to, rescind, or
repeal the Bylaws of the Corporation and any other powers that, under
Michigan law, may not be delegated to it by the Board of Directors. The
board shall have the power at any time to change the membership of the
Executive Committee (subject to the requirement that the Chairman and/or
the President of the Corporation be a member thereof) and to fill vacancies
in it. The Executive Committee may make rules for the conduct of its
business and may appoint such committees and assistants as it shall from
time to time deem necessary. A majority of the members of the committee
shall constitute a quorum.
SECTION 2. AUDIT COMMITTEE. The Audit Committee, if there be one,
shall cause a suitable examination of the financial records and operations
of the Corporation and its subsidiaries to be made by the Corporation. The
Audit Committee shall also recommend to the Board of Directors the
employment of independent certified public accountants to examine the
financial statements of the Corporation and its subsidiaries; and report to
the Board of Directors at least once each calendar year.
SECTION 3. ORGANIZATION/COMPENSATION COMMITTEE. The
Organization/Compensation Committee, if there be one, shall review the
organizational structure and the personnel policies, plans, and programs of
the Corporation, including individual salaries of executive officers, and
submit recommendations to the Chief Executive Officer and Board of
Directors. The Organization/ Compensation Committee shall also recommend to
the Board of Directors the retainer and attendance fee for non employee
directors.
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SECTION 4. NOMINATING COMMITTEE. The Nominating Committee, if
there be one, shall develop and recommend to the Board of Directors
criteria for the selection of candidates for director, to seek out and
receive suggestions concerning possible candidates, to review and evaluate
the qualifications of possible candidates and to recommend to the Board of
Directors candidates for vacancies occurring from time to time and for the
slate of directors to be proposed on behalf of the Board of Directors at
the annual meeting of shareholders. The Nominating Committee will consider
nominees recommended by the shareholders, as properly submitted to the
Secretary of the Corporation.
SECTION 5. FINANCE COMMITTEE. The Finance Committee, if there be
one, shall review the capital structure and needs of the Corporation and
shall examine acquisition data and submit recommendations to the Board of
Directors. The Finance Committee shall also review the Corporation's
employee benefit plans and insurance program.
SECTION 6. OTHER COMMITTEES. The Board of Directors may designate
such other committees as it may deem appropriate, and such committees shall
exercise the authority delegated to them. Unless the Board shall otherwise
provide, a majority of any such Committee may determine its action and fix
the time and place of its meetings. The board shall have power at anytime
to change the members of any such Committee, to fill vacancies, and to
discharge any such Committee.
SECTION 7. COMMITTEE MEETINGS. Each committee provided for above
shall meet as often as its business may require and may fix a day and time
each week or at other intervals for regular meetings, notice of which shall
not be required. Whenever the day fixed for a meeting shall fall on a
holiday, the meeting shall be held on the business day following or on such
other day as the committee may determine. Special meetings of the
committees may be called by the chairman of the committee or any two (2)
members other than the chairman, and notice thereof may be given to the
members by telephone, telegram, telecopy or letter. A majority of its
members shall constitute a quorum for the transaction of the business of
any of the committees. A record of the proceedings of each committee shall
be kept and presented to the Board of Directors.
ARTICLE V
ADVISORY DIRECTORS
SECTION 1. INVITATIONS TO NON-DIRECTORS TO ATTEND MEETINGS OF
BOARD OF DIRECTORS. The President or the Chairman of the Board, if any,
may from time to time invite one or more non-directors to attend meetings
of the Board of Directors for the purpose of (i) consulting with the
officers and directors of the Corporation; and (ii) providing guidance (but
not direction) concerning the management and operation of the business of
the Corporation.
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SECTION 2. DESIGNATION OF PERSONS AS ADVISORY DIRECTORS. To the
extent that the Board of Directors desires one or more persons to regularly
attend meetings of the Board of Directors, the Board of Directors may
confer upon any such person the honorary title of "advisory director." Any
person designated as an advisory director may be invited to attend any
meeting of the Board of Directors of this Corporation or any Committee
meeting of this Board of Directors by the President or the Chairman of the
Board, if any, without further action by this Board of Directors.
SECTION 3. ROLE OF ADVISORY DIRECTORS. The business of the
Corporation shall remain solely under the direction of the Board of
Directors, and any persons designated as advisory directors shall not by
virtue of their designation as advisory directors or by virtue of their
willingness to provide consultation to the Corporation be deemed to have
undertaken any duty to the Corporation or its shareholders.
SECTION 4. LIMITATION OF LIABILITY OF ADVISORY DIRECTORS. Any
person designated as an advisory director by the Board of Directors shall
be wholly immune from liability to the Corporation and its shareholders by
reason of his service as an advisory director. If, notwithstanding the
foregoing, a claim should ever be asserted against any such advisory
director by or on behalf of the Corporation or any shareholders or
otherwise, the advisory director shall, in addition to the foregoing
limitation of liability, also be entitled to the protection of Section 18
of the Corporation's Certificate of Incorporation, Article VII of the
bylaws of this Corporation, and to the protection of any other
indemnification or limitation of liability provisions that may exist from
time to time with respect to members of the Board of Directors, either in
the Certificate of Incorporation, Bylaws, minutes, agreements, or other
documents of the Corporation or applicable law.
SECTION 5. COMPENSATION. Advisory directors shall be compensated
in such manner and in such amounts as the Board of Directors shall
determine.
SECTION 6. TERMINATION OF STATUS AS ADVISORY DIRECTOR. The Board
of Directors may terminate the status as an advisory director of any person
so designated at any time without any liability or obligation to such
person whatsoever; PROVIDED, HOWEVER, that the obligation of the
Corporation to indemnify the advisory director as provided in Section 4
above and as provided in any indemnification agreement between the
Corporation and the advisory director, and the obligation of the
Corporation to pay the advisory director the full amount of compensation
earned by such advisory director through the date of termination as
provided in Section 5 above, shall continue notwithstanding any termination
of status as an advisory director.
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ARTICLE VI
OFFICERS
SECTION 1.
(a) CENTRAL STAFF. The executive officers of the Corporation
shall be a President, one or more Vice Presidents, a Secretary, and a
Treasurer who shall be appointed by the Board of Directors at its
first meeting after each regular annual meeting of shareholders. The
Board of Directors may also appoint such other officers as they may
deem necessary. The dismissal of an officer, the appointment of an
officer to fill the place of one who has been dismissed or has ceased
for any reason to be an officer, the appointment of any additional
officers, and the change of an officer to a different office may be
made by the Board of Directors at any later meeting. The board may
remove any officer from any office at any time with or without cause.
Unless removed by the board, each officer shall hold office for one
(1) year and until their respective successor shall have been elected
and qualified. Any two (2) of the above offices, except those of the
President and Vice President may be held by the same person.
(b) DIVISIONAL OFFICERS. The Board of Directors or the Chief
Executive Officer may, as they shall deem necessary, designate certain
individuals as divisional officers. Any titles so given to divisional
officers may be withdrawn at any time with or without cause by the
Board of Directors or the Chief Executive Officer.
SECTION 2. CHAIRMAN OF THE BOARD. There shall be elected a
Chairman of the Board, who shall be chosen from among the directors. The
Chairman of the Board shall preside at all meetings of the Board of
Directors and shareholder meetings, and shall have such other duties and
powers as may be imposed or given by the Board of Directors.
SECTION 3. PRESIDENT. The President shall, subject to the
direction of the Board of Directors, see that all orders and resolutions of
the Board of Directors are carried into effect, and shall perform all other
duties necessary or appropriate to his office, subject, however, to his
right and the right of the directors to delegate any specific powers to any
other officer or officers of the Corporation. In the absence of the
Chairman of the Board or his designee or if no Chairman is elected, the
President shall preside at all meetings of the shareholders and at all
meetings of the Board of Directors. The President shall be an ex officio
voting member of all standing committees designated by the Board of
Directors except the Audit Committee.
SECTION 4. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer,
in addition to his duties as Chairman of the Board or President as the case
may be, shall have final authority, subject to the control of the Board of
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Directors, over the general policy and business of the Corporation and
shall have the general control and management of the business and affairs
of the Corporation. The Chief Executive Officer shall have the power,
subject to the control of the Board of Directors, to appoint, suspend, or
discharge and to prescribe the duties and to fix the compensation of such
agents and employees of the Corporation, other than the officers appointed
by the board, as he may deem necessary.
SECTION 5. CHIEF OPERATING OFFICER. There may be elected a Chief
Operating Officer who shall, if elected, have general charge, control, and
supervision over the administration and operations of the Corporation and
shall have such other duties and powers as may be imposed or given by the
Board of Directors. If no Chief Operating Officer is elected, the duties
and powers of the Chief Operating Officer shall be performed by the Chief
Executive Officer.
SECTION 6. VICE PRESIDENTS. The Vice President or Vice Presidents
shall perform such duties and have such powers as the Chief Executive
Officer or the Board of Directors may from time to time prescribe. The
Board of Directors may at its discretion designate one or more of the Vice
Presidents as Executive Vice Presidents or Senior Vice Presidents. Any Vice
President so designated shall have such duties and responsibilities as the
board shall prescribe.
SECTION 7. SECRETARY. The Secretary shall attend all meetings of
the shareholders, and of the Board of Directors and of the Executive
Committee, and shall preserve in the books of the Corporation true minutes
of the proceedings of all such meetings. He shall safely keep in his
custody the seal of the Corporation, if any, and shall have authority to
affix the same to all instruments where its use is required or appropriate.
He shall give all notices required or appropriate pursuant to statute,
bylaws, or resolution. He shall perform such other duties as may be
delegated to him by the Board of Directors or by the Executive Committee.
SECTION 8. TREASURER. The Treasurer shall have custody of all
corporate funds and securities and shall keep in books belonging to the
Corporation full and accurate accounts of all receipts and disbursements;
he shall deposit all moneys, securities, and other valuable effects in the
name of the Corporation in depositories as may be designated for that
purpose by the Board of Directors. He shall disburse the funds of the
Corporation as may be ordered by the Board of Directors, taking proper
vouchers for such disbursements, and shall render to the Chief Executive
Officer and directors at the regular meetings of the board, and whenever
requested by them, an account of all his transactions as Treasurer and of
the financial condition of the Corporation. If required by the Board of
Directors, he shall deliver to the Chief Executive Officer of the
Corporation, and shall keep in force, a bond in form, amount, and with a
surety or sureties satisfactory to the Board of Directors, conditioned for
faithful performance of the duties of his office, and for restoration to
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the Corporation in case of his death, resignation, retirement, or removal
from office, of all books, papers, vouchers, money, and property of
whatever kind in his possession or under his control belonging to the
Corporation.
SECTION 9. ASSISTANT SECRETARY AND ASSISTANT TREASURER. There may
be elected an Assistant Secretary and Assistant Treasurer who shall, in the
absence, disability, or nonfeasance of the Secretary or Treasurer, perform
the duties and exercise the powers of such persons respectively.
SECTION 10. OTHER OFFICERS. All other officers, as may from time to
time be appointed by the Board of Directors pursuant to Paragraph (a) of
Section 1 of this Article V, shall perform such duties and exercise such
authority as the Board of Directors shall prescribe. All divisional
officers, as may from time to time be appointed by the Board of Directors
or the Chief Executive Officer pursuant to Paragraph (b) of Section 1 of
this Article V, shall perform such duties and exercise such authority as
the Board of Directors or the Chief Executive Officer shall prescribe.
ARTICLE VII
INDEMNIFICATION
SECTION 1. INDEMNIFICATION IN ACTION BY THIRD PARTY. The
corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending, or completed
action, suit or proceeding, whether civil, criminal, administrative, or
investigative and whether formal or informal (other than an action by or in
the right of the corporation) by reason of the fact that the person is or
was a director or officer of the corporation, or, is or was serving at the
request of the corporation as a director, officer, employee, agent, or
trustee of another foreign or domestic corporation, partnership, joint
venture, trust, or other enterprise, whether for profit or not for profit,
against expenses (including attorneys' fees), judgments, penalties, fines,
and amounts paid in settlement actually and reasonably incurred by the
person in connection with such action, suit, or proceeding if the person
acted in good faith and in a manner the person reasonably believed to be in
or not opposed to the best interests of the corporation or its
shareholders, and with respect to a criminal action or proceeding, the
person had no reasonable cause to believe his or her conduct was unlawful.
The termination of any action, suit, or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent, does not, of itself, create a presumption that the person did
not act in good faith and in a manner that the person reasonably believed
to be in or not opposed to the best interests of the corporation or its
shareholders, and with respect to a criminal action or proceeding, had
reasonable cause to believe that his or her conduct was unlawful.
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SECTION 2. INDEMNIFICATION IN ACTION BY OR IN RIGHT OF THE
CORPORATION. The corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending, or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that the person is or was a
director or officer of the corporation, or, is or was serving at the
request of the corporation as a director, officer, employee, agent, or
trustee of another foreign or domestic corporation, partnership, joint
venture, trust, or other enterprise, whether for profit or not for profit,
against expenses including attorneys' fees and amounts paid in settlement
actually and reasonably incurred by the person in connection with the
action or suit, if the person acted in good faith and in a manner the
person reasonably believed to be in or not opposed to the best interests of
the corporation or its shareholders. Indemnification shall not be made for
a claim, issue, or matter in which the person shall have been found liable
to the corporation except to the extent authorized by statute.
SECTION 3. EXPENSES. To the extent that a person has been
successful on the merits or otherwise in defense of an action, suit, or
proceeding referred to in Section 1 or 2 of this Article, or in defense of
a claim, issue, or matter in the action, suit, or proceeding, the
corporation shall indemnify that person against actual and reasonable
expenses, including attorneys' fees incurred by him or her in connection
with the action, suit, or proceeding and an action, suit, or proceeding
brought to enforce the mandatory indemnification provided in this Section.
SECTION 4. AUTHORIZATION OF INDEMNIFICATION.
(a) An indemnification under Sections 1 or 2 of this Article,
unless ordered by a court, shall be made by the corporation only as
authorized in the specific case upon a determination that
indemnification of the director, officer, employee, or agent is proper
in the circumstances because he or she has met the applicable standard
of conduct set forth in Sections 1 or 2 of this Article and upon an
evaluation of the reasonableness of expenses and amounts paid in
settlement. This determination and evaluation shall be made in any of
the following ways:
(1) By a majority vote of a quorum of the Board of Directors
consisting of directors who are not parties or threatened to be
made parties to the action, suit, or proceeding.
(2) If a quorum cannot be obtained under Subsection (1) above,
by majority vote of a committee duly designated by the Board and
consisting solely of two or more directors not at the time
parties or threatened to be made parties to the action, suit, or
proceeding.
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(3) By independent legal counsel in a written opinion, which
counsel shall be selected in one of the following ways:
(A) By the Board or its committee in the manner prescribed
in Subsections (1) or (2) above.
(B) If a quorum of the Board cannot be obtained under
Subsection (1) above and a committee cannot be
designated under Subsection (2) above, by the Board.
(4) By all independent directors who are not parties or
threatened to be made parties to the action, suit, or proceeding.
(5) By the shareholders, but shares held by directors, officers,
employees, or agents who are parties or threatened to be made
parties to the action, suit, or proceeding may not be voted.
(b) In the designation of a committee under Subsection (a)(2) or
in the selection of independent legal counsel under Subsection
(a)(3)(B), all directors may participate.
(c) If a person is entitled to indemnification under Sections 1
or 2 for a portion of expenses, including reasonable attorneys' fees,
judgments, penalties, fines, and amounts paid in settlement, but not
for the total amount, the corporation may indemnify the person for the
portion of the expenses, judgments, penalties, fines, or amounts paid
in settlement for which the person is entitled to be indemnified.
SECTION 5. ADVANCES. The corporation may pay or reimburse the
reasonable expenses incurred by a director, officer, employee, or agent who
is a party or threatened to be made a party to an action, suit, or
proceeding before final disposition of the proceeding if all of the
following apply:
(a) The person furnishes the corporation a written affirmation
of the person's good faith belief that he or she has met the
applicable standard of conduct set forth in Sections 1 and 2 of this
Article.
(b) The person furnishes the corporation a written undertaking,
executed personally or on the person's behalf, to repay the advance if
it is ultimately determined that the person did not meet the standard
of conduct.
(c) A determination is made that the facts then known to those
making the determination would not preclude indemnification under this
Article.
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The undertaking required by Subsection (b) above must be an unlimited
general obligation of the person but need not be secured. Determinations
of payments under this Section shall be made in the manner specified in
Section 4 of this Article.
SECTION 6. OTHER INDEMNIFICATION AGREEMENTS. The indemnification
or advancement of expenses provided by this Article is not exclusive of any
other rights to which a person seeking indemnification or advancement of
expenses may be entitled under any bylaw, agreement, vote of shareholders
or directors, or otherwise. The indemnification provided in Sections 1 to
6 of this Article continues as to a person who ceases to be a director,
officer, employee, or agent and shall inure to the benefit of the heirs,
executors, and administrators of the person.
SECTION 7. INSURANCE. The corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer,
employee, or agent of the corporation, or is or was serving at the request
of the corporation as a director, officer, partner, trustee, employee, or
agent of another corporation, partnership, joint venture, trust, or other
enterprise against any liability asserted against the person and incurred
by the person in any such capacity or arising out of the person's status as
such whether or not the corporation would have power to indemnify the
person against the liability under Sections 1 to 6 of this Article.
SECTION 8. CONSTITUENT CORPORATION. For the purposes of this
Article, references to the corporation include all constituent corporations
absorbed in a consolidation or merger and the resulting or surviving
corporation, so that a person who is or was a director or officer of such
constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer, partner, trustee, employee,
or agent of another corporation, partnership, joint venture, trust, or
other enterprise shall stand in the same position under the provisions of
this Article with respect to the resulting or surviving corporation as he
or she would if he or she had served the resulting or surviving corporation
in the same capacity.
SECTION 9. PARTIAL INDEMNIFICATION. If a person is entitled to
indemnification under Sections 1 or 2 of this Article for a portion of
expenses, including attorneys' fees, judgments, penalties, fines, and
amounts paid in settlement, but not for the total amount thereof, the
Corporation may indemnify the person for the portion of the expenses,
judgments, penalties, fines, or amounts paid in settlement for which the
person is entitled to be indemnified.
SECTION 10. SAVINGS CLAUSE. If this Article or any portion thereof
shall be invalidated on any ground by any court of competent jurisdiction,
the Corporation shall nevertheless indemnify each director, executive
officer, or other person whose indemnification is authorized by the Board
of Directors as to expenses, including attorneys' fees, judgments, fines,
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and amounts paid in settlement with respect to any action, suit, or
proceeding, whether civil, criminal, administrative, or investigative,
including a grand jury proceeding and an action by the Corporation, to the
full extent permitted by any applicable portion of this Article that shall
not have been invalidated or by any other applicable law.
SECTION 11. DEFINITIONS. For the purposes of this Article, "other
enterprises" shall include employee benefit plans; "fines" shall include
any excise taxes assessed on a person with respect to an employee benefit
plan; and "serving at the request of the Corporation" shall include any
service as a director, officer, partner, trustee, employee, or agent of the
Corporation, which imposes duties on, or involves services by the director,
officer, employee, or agent with respect to any employee benefit plan, its
participants or beneficiaries; and a person who acted in good faith and in
a manner he reasonably believed to be in the interest of the participants
and beneficiaries of an employee benefit plan shall be considered to have
acted in a manner "not opposed to the best interest of the Corporation or
its shareholders" as referred to in Sections 1 and 2 of this Article.
SECTION 12. CONSTRUCTION. It is the intent of this Article VI to
grant to the directors and executive officers of the Corporation (and such
other persons as the Board of Directors may designate) the broadest
indemnification permitted under the laws of the State of Michigan, as the
same may be amended from time to time, and this Article shall be liberally
construed to give effect to such intent. The Corporation further intends,
acknowledges, and agrees that all of the Corporation's directors and
executive officers have undertaken and will undertake the performance of
their duties and obligations in reliance upon the indemnification provided
for in this Article VI, and accordingly, such rights of indemnification may
not be retroactively reduced or abolished as to any such director or
executive officer with the written consent of such person.
ARTICLE VIII
SUBSIDIARIES
SECTION 1. SUBSIDIARIES. The Board of Directors, the Chief
Executive Officer, or any executive officer designated by the Board of
Directors may vote the shares of stock owned by the Corporation in any
subsidiary, whether wholly or partly owned by the Corporation, in such
manner as they may deem in the best interests of the Corporation,
including, without limitation, for the election of directors of any
subsidiary Corporation, or for any amendments to the charter or bylaws of
any such subsidiary Corporation, or for the liquidation, merger, or sale of
assets of any such subsidiary Corporation. The Board of Directors, the
Chief Executive Officer, or any executive officer designated by the Board
of Directors may cause to be elected to the Board of Directors of any such
subsidiary Corporation such persons as they shall designate, any of whom
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may, but need not be, directors, executive officers, or other employees or
agents of the Corporation. The Board of Directors, the Chief Executive
Officer, or any executive officer designated by the Board of Directors may
instruct the directors of any such subsidiary Corporation as to the manner
in which they are to vote upon any issue properly coming before them as the
directors of such subsidiary Corporation, and such directors shall have no
liability to the Corporation as the result of any action taken in
accordance with such instructions.
SECTION 2. SUBSIDIARY OFFICERS NOT EXECUTIVE OFFICERS. The
officers of any subsidiary Corporation, shall not, by virtue of holding
such title and position, be deemed to be executive officers of the
Corporation, nor shall any such officer of a subsidiary Corporation, unless
he shall also be a director or executive officer of the Corporation, be
entitled to have access to any files, records, or other information
relating or pertaining to the Corporation, its business and finances, or to
attend or receive the minutes of any meetings of the Board of Directors or
any committee of the Corporation, except as and to the extent expressly
authorized and permitted by the Board of Directors or the Chief Executive
Officer.
ARTICLE IX
CERTIFICATES OF STOCK
SECTION 1. FORM. Every holder of stock in the Corporation shall be
entitled to have a certificate in the name of the Corporation, signed by
the Chairman of the Board or the President or a Vice President and the
Treasurer or an Assistant Treasurer, or the Secretary or an Assistant
Secretary of the Corporation, certifying the number of shares owned by him
in the Corporation.
SECTION 2. FACSIMILE SIGNATURE. Where a certificate is signed (1)
by a transfer agent or an assistant transfer agent, or (2) by a transfer
clerk acting on behalf of the Corporation and a registrar, the signature of
any such Chairman, President, Vice President, Treasurer, Assistant
Treasurer, Secretary, or Assistant Secretary may be a facsimile. In case
any officer, transfer agent, or registrar who has signed, or whose
facsimile signature has been placed upon a certificate shall have ceased to
be such officer, transfer agent, or registrar before such certificate is
issued, it may be issued by the Corporation with the same effect as if he
were such officer, transfer agent, or registrar at the date of issue.
SECTION 3. LOST CERTIFICATES. The Board of Directors may direct a
new certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation alleged to have been
lost or destroyed, upon the making of an affidavit of that fact by the
person claiming the certificate of stock to be lost or destroyed. When
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<PAGE>
authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost or destroyed certificate
or certificates, or his legal representative, to give the Corporation a
bond in such sum as it may direct as indemnity against any claim that may
be made against the Corporation with respect to the certificate alleged to
have been lost or destroyed.
SECTION 4. TRANSFERS OF STOCK. Upon surrender to the Corporation
or the transfer agent of the Corporation of a certificate for shares duly
endorsed or accompanied by proper evidence of succession, assignment, or
authority to transfer, it shall be the duty of the Corporation to issue a
new certificate to the person entitled thereto, cancel the old certificate
and record the transaction upon its books.
SECTION 5. FIXING OF RECORD DATE BY BOARD. For the purpose of
determining the shareholders entitled to notice of or to vote at any
meeting of shareholders, or any adjournment thereof, or to express consent
to or dissent from any corporate action in writing without a meeting, or
for the purpose of determining shareholders entitled to receive payments of
any dividend or the distribution or allotment of any rights or evidences of
interests arising out of any change, conversion, or exchange of capital
stock, or for the purpose of any other action, the Board of Directors may
fix, in advance, a date as the record date for any such determination of
shareholders. The record date for determining the shareholders entitled to
notice of or to vote at any meeting of shareholders shall not precede the
date upon which the resolution fixing the record date is adopted, and shall
not be more than sixty (60) nor less than ten (10) days before the date of
such meeting. The record date for determining the shareholders entitled to
consent to corporate action in writing without a meeting shall not precede
the date upon which the resolution fixing the record date is adopted, and
shall not be more than ten (10) days after the date upon which the
resolution fixing the record date is adopted. The record date for
determining the shareholders entitled to receive payment of any dividend or
other distribution or allotment of any rights or the shareholders entitled
to exercise any rights in respect of any changes, conversion, or exchange
of stock, or for the purpose of any other lawful action shall not precede
the date upon which the resolution fixing the record date is adopted, and
shall not be more than sixty (60) days prior to such action. Only
shareholders of record on a record date so fixed shall be entitled to
notice of, and to vote at, such meeting or to receive payment of any
dividend or the distribution or allotment of any rights or evidences of
interests arising out of any change, conversion, or exchange of capital
stock.
SECTION 6. PROVISION FOR RECORD DATE IN THE ABSENCE OF BOARD
ACTION. If a record date is not fixed by the Board of Directors: (a) the
record date for determination of shareholders entitled to notice of or to
vote at a meeting of shareholders shall be the close of business on the day
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next preceding the day on which notice is given, or, if notice is waived,
the close of business on the day next preceding the day on which the
meeting is held; and (b) the record date for determining shareholders
entitled to express consent to corporate action in writing, without a
meeting, when no prior action by the Board of Directors is necessary, shall
be the first date on which a signed written consent is delivered to the
Corporation; and (c) the record date for determining shareholders for any
other purpose shall be the close of business on the day on which the
resolution of the board relating thereto is adopted.
SECTION 7. ADJOURNMENTS. When a determination of shareholders of
record entitled to notice of or to vote at a meeting of shareholders has
been made as provided in this Article, the determination applies to any
adjournment of the meeting, unless the board fixes a new record date for
the adjourned meeting.
SECTION 8. REGISTERED SHAREHOLDERS. The Corporation shall be
entitled to recognize the exclusive rights of a person registered on its
books as the owner of shares to receive dividends, and to vote as such
owner, and shall not be bound to recognize any equitable or other claim to
or interest in such share or shares on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise provided by the laws of Michigan.
ARTICLE X
GENERAL PROVISIONS
SECTION 1. DIVIDENDS. Dividends upon the capital stock of the
Corporation, subject to the provisions of the Articles of Incorporation, if
any, may be declared by the Board of Directors at any regular or special
meeting pursuant to law. Dividends may be paid in cash, in property, or in
shares of capital stock, subject to the provisions of the Certificate of
Incorporation.
SECTION 2. RESERVES. Before payment of any dividends, there may be
set aside out of any funds of the Corporation available for dividends such
sum or sums as the directors from time to time, in their absolute
discretion, think proper as reserve or reserves to meet contingencies, or
for equalizing dividends, or for repairing or maintaining any property of
the Corporation, or for such other purpose as the directors shall think
conducive to the interest of the Corporation, and the directors may modify
or abolish any such reserve in the manner in which it was created.
SECTION 3. CHECKS. All checks or demands for money and notes of
the Corporation shall be signed by such officer or officers or such other
person or persons as the Board of Directors may from time to time
designate.
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SECTION 4. FISCAL YEAR. The fiscal year of the Corporation shall
be fixed by resolution of the Board of Directors.
SECTION 5. SEAL. The corporate seal shall have inscribed thereon
the name of the Corporation, and the words "Corporate Seal, Michigan." The
seal may be used by causing it or a facsimile thereof to be impressed or
affixed or reproduced or otherwise.
SECTION 6. WRITTEN WAIVER OF NOTICE. Whenever any notice is
required to be given under the provisions of the statutes or of the
Certificate of Incorporation or of these Bylaws, a waiver thereof in
writing, signed by the person or persons entitled to said notice, whether
before or after the time stated therein, shall be deemed equivalent
thereto.
ARTICLE XI
AMENDMENTS
These Bylaws may be altered, amended, or repealed, in whole or in
part, or new Bylaws may be adopted by, the Board of Directors, PROVIDED,
HOWEVER, that notice of such alteration, amendment, repeal, or adoption of
new Bylaws, be contained in the notice of such meeting of the Board of
Directors. Except as otherwise required by statute, the Articles of
Incorporation, or these Bylaws, these Bylaws may be altered, amended, or
repealed, in whole or in part, or new Bylaws may be adopted by, the
Shareholders upon the affirmative vote of at least 66 2/3 percent of the
total voting power of all shares of stock entitled to vote, voting together
as a single class.
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<PAGE>
EXHIBIT 11.1
COMPUTATION OF PER-SHARE EARNINGS
A statement of computation of per-share earnings can be found
in Note 6 to the financial statements contained in Appendix A to this
Report on Form 10-Q.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE CONSOLIDATED STATEMENT OF INCOME, BALANCE SHEETS, AND
STATEMENT OF CASH FLOWS OF THE COLONEL'S INTERNATIONAL, INC. AND
ITS SUBSIDIARIES AS OF AND FOR THE QUARTER ENDED MARCH 31,
1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 211,562
<SECURITIES> 0
<RECEIVABLES> 3,490,347
<ALLOWANCES> 575,000
<INVENTORY> 8,636,190
<CURRENT-ASSETS> 13,628,475
<PP&E> 47,465,021
<DEPRECIATION> 20,345,463
<TOTAL-ASSETS> 43,190,975
<CURRENT-LIABILITIES> 16,541,796
<BONDS> 0
<COMMON> 241,778
0
0
<OTHER-SE> 16,319,037
<TOTAL-LIABILITY-AND-EQUITY> 43,190,975
<SALES> 10,937,133
<TOTAL-REVENUES> 10,937,133
<CGS> 7,557,394
<TOTAL-COSTS> 7,557,394
<OTHER-EXPENSES> 1,522,712
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 349,165
<INCOME-PRETAX> 1,562,543
<INCOME-TAX> 532,000
<INCOME-CONTINUING> 1,030,543
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,030,543
<EPS-PRIMARY> 0.04
<EPS-DILUTED> 0
</TABLE>
