<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Thirteen Weeks Ended Commission File Number
August 25, 1996 0-13944
GoodMark Foods, Inc.
(Exact name of Registrant as specified in its charter)
North Carolina 56-1330788
(State of incorporation) (I.R.S. Employer
Identification No.)
6131 Falls of Neuse Road, Raleigh, North Carolina 27609
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (919) 790-9940
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months, and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
------ ------
Number of shares outstanding of Registrant's Common Stock,
$.01 par value, as of September 25, 1996 7,612,176
-Page 1 of 30-
<PAGE> 2
GoodMark Foods, Inc.
Form 10-Q Quarterly Report
Index
Page
PART I. Financial information
Item 1. Consolidated financial statements
Consolidated balance sheets 3
Consolidated statements of income 4
Consolidated statements of cash flows 5
Notes to consolidated financial statements 6
Item 2. Management's discussion and analysis of
financial condition and results of operations 8
PART II. Other information
Item 4. Submission of matters to a vote of security
holders 8
Item 5. Other information 9
Item 6. Exhibits and reports on Form 8-K 10
-Page 2 of 30-
<PAGE> 3
PART I - FINANCIAL INFORMATION
------------------------------
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------
GOODMARK FOODS, INC.
UNAUDITED CONSOLIDATED BALANCE SHEETS
AUGUST 25, 1996 AND MAY 26, 1996
--------------------------------
($000's)
<TABLE>
<CAPTION>
August 25, 1996 May 26, 1996
--------------- ------------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $22 $858
Accounts and notes receivable 9,534 9,323
Inventories 14,440 12,336
Prepaid expenses 5,577 4,543
Other assets 1,250 1,980
------- -------
Total current assets 30,823 29,040
Property and equipment, net 51,987 53,936
Other assets 2,107 2,231
------- -------
Total $84,917 $85,207
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $6,237 $6,021
Accrued expenses and other liabilities 6,177 7,671
------- -------
Total current liabilities 12,414 13,692
Long-term debt and other long-term obligations 17,000 17,800
Deferred income taxes 4,907 4,907
Commitments and contingencies
Shareholders' equity 50,596 48,808
------- -------
Total $84,917 $85,207
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
-Page 3 of 30-
<PAGE> 4
PART I, ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (Continued)
- --------------------------------------------------------------
GOODMARK FOODS, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
FOR THE 13 WEEK PERIODS ENDED
AUGUST 25, 1996 AND AUGUST 27, 1995
---------------------------------------
(000's)
<TABLE>
<CAPTION>
13 Weeks Ended
---------------------------------
August 26, 1996 August 27, 1995
--------------- ---------------
<S> <C> <C>
Net sales $46,382 $46,273
Cost of goods sold 28,103 28,683
------- -------
Gross profit 18,279 17,590
Selling, general, and administrative expenses 14,728 13,076
------- -------
Income from operations 3,551 4,514
Interest and other net expense (income) 245 250
------- -------
Income before income taxes 3,306 4,264
Income taxes 1,241 1,544
------- -------
Net income $2,065 $2,720
======= =======
Earnings per common share-primary and fully diluted $0.26 $0.34
======= =======
Average shares outstanding-primary 7,868 8,095
======= =======
Average shares outstanding-fully diluted 7,887 8,112
======= =======
Dividends per share $0.05 $0.04
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
-Page 4 of 30-
<PAGE> 5
PART I, ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (Continued)
- --------------------------------------------------------------
GOODMARK FOODS, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE 13 WEEK PERIODS ENDED
AUGUST 25, 1996 AND AUGUST 27, 1995
-----------------------------------
($000's)
<TABLE>
<CAPTION>
13 Weeks Ended
--------------------------------
August 25, 1996 August 27, 1995
--------------- ---------------
<S> <C> <C>
Cash flows from operating activities:
Net income $2,065 $2,720
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,464 1,492
Amortization of deferred expenses 25 -
Provision for deferred income taxes - 362
Gain on disposal of fixed assets (6) (1)
Changes in assets and liabilities:
Net increase in assets (2,619) (834)
Net decrease in liabilities (1,430) (4,276)
------ ------
NET CASH USED IN OPERATING ACTIVITIES (505) (537)
------ ------
Cash flows from (used in) investing activities:
Proceeds from disposal of fixed assets 1,406 8
Capital expenditures (673) (1,652)
(Increase) decrease in other assets 5 (7)
------ ------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 738 (1,651)
------ ------
Cash flows from (used in) financing activities:
Proceeds from issuance of long-term debt 6,500 5,600
Principal payments on long-term debt and
other long-term obligations (7,300) (4,100)
Common stock issued under dividend reinvestment plan 19 12
Repurchase of common stock (24) -
Stock options exercised 112 698
Cash dividends paid (380) (312)
------ ------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (1,073) 1,898
------ ------
Net decrease in cash and cash equivalents (840) (290)
Cash and cash equivalents at beginning of period 858 386
------ ------
Cash and cash equivalents at end of period $18 $96
====== ======
</TABLE>
See accompanying notes to consolidated financial statements.
-Page 5 of 30-
<PAGE> 6
PART I, ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (Continued)
- --------------------------------------------------------------
GOODMARK FOODS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000's)
1) The Notes to Consolidated Financial Statements included in
Registrant's annual report for the fiscal year ended May 26, 1996 as
incorporated in Form 10-K filed with the Securities and Exchange
Commission on August 23, 1996 should be read in conjunction with
these quarterly financial statements.
2) The financial information herein is unaudited. The information
reflects all normal recurring adjustments which are necessary in
management's opinion for a fair statement of results for the interim
periods presented. Certain reclassifications have been made to prior
year's financial statements to conform to the classifications used in
fiscal 1997.
3) Inventories are stated at the lower of last-in, first-out (LIFO)
cost or market. Inventories consisted of the following in
thousands of dollars:
<TABLE>
<CAPTION>
8/25/96 5/26/96
-------- -------
<S> <C> <C>
Raw materials $5,455 $4,862
Work-in-process 1,144 799
Finished goods 8,050 6,884
Less LIFO reserve (209) (209)
------- -------
Inventories, net $14,440 $12,336
======= =======
</TABLE>
4) Interest and other net expense (income) consisted of the
following in thousands of dollars:
<TABLE>
<CAPTION>
13 Weeks Ended
---------------------
8/25/96 8/27/95
------- -------
<S> <C> <C>
Interest expense $278 $330
Interest income (18) (20)
Other expense (income) (15) (60)
----- -----
Other expense (income), net $245 $250
===== =====
</TABLE>
-Page 6 of 30-
<PAGE> 7
PART I, ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (Continued)
- --------------------------------------------------------------
GOODMARK FOODS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
($000's)
5) The computation of earnings per common and common equivalent share is
based upon the weighted average number of common shares outstanding
during the period plus (in periods in which they have a dilutive
effect) the effect of common shares contingently issuable from stock
options using the treasury stock method. Weighted average shares
outstanding under the primary earnings per share calculation for the
first quarter of fiscal 1997 include 270,182 of equivalent shares
from options. Weighted average shares outstanding under the fully
diluted earnings per share calculation for the first quarter of
fiscal 1997 include 288,400 of equivalent shares from options.
Weighted average shares outstanding under the primary earnings per
share calculation for the first quarter of fiscal 1996 include
316,709 of equivalent shares from options. Weighted average shares
outstanding under the fully diluted earnings per share calculation
for the first quarter of fiscal 1996 include 333,575 of equivalent
shares from options.
6) Interim results are not necessarily indicative of results for the
fiscal year.
-Page 7 of 30-
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
($000's)
Material Changes in Financial Condition from Fiscal Year End
There were no material changes in financial condition during the first
quarter. The current ratio at August 25, 1996 was 2.5 compared to 2.1 at
May 26, 1996. Long term debt and obligations were 25% of total
capitalization versus 27% at fiscal year end. Net cash provided by
investing activities increased $738 due to proceeds of $1,400 from the
sale/leaseback of the Company's condominium share of the office building
in which the Company maintains its headquarters.
Material Changes in Results of Operations for the First Fiscal Quarter
Sales for the first quarter of fiscal 1997 were slightly (less than 1%)
favorable to last year's first quarter. Snack sales were slightly less
than last year, but our core brand, Slim Jim and our our extruded grain
snack brand, Andy Capp's, experienced growth of 5% and 15%, respectively.
Private label snack sales were down 9%. Packaged meats sales (which
account for 12% of total sales) were up 5%.
First quarter gross profit margin rate was 39%, comparing favorably to
last year's 38%, due to lower meat costs and improved manufacturing
efficiencies.
Selling, general, and administrative expenses were 32% as a percentage of
sales for the first quarter compared to 28% for last year's first quarter.
The increase reflects our intensified level of promotional, advertising,
merchandising, and new product programs planned to enable us to regain
momentum in our branded snacks business.
Net income for the first quarter was $2,065, or $.26 per share, down from
$2,720, or $.34 per share for last year's first quarter.
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On September 19, 1996, the Company held its Annual Meeting of
Shareholders. At the Annual Meeting, the appointment of Deloitte & Touche,
LLP as independent auditors for the Company and its subsidiaries for the
fiscal year ending May 25, 1997, was ratified. Also, an amendment to the
Company's bylaws to increase the maximum number of Directors from seven to
nine members was approved and ratified. The only other proposal considered
by shareholders was the election of directors. The following seven
nominees were elected to the Board of Directors: Ron E. Doggett, Richard
C. Miller, Eric J. Lomas, Donald H. Grubb, Thomas W. D'Alonzo, Rollie
Tillman, Jr., and Robert B. Seidensticker. The number of votes cast for,
against or withheld, as well as the number of abstentions and broker
nonvotes, as to the election of directors, as to the ratification of
Deloitte & Touche, LLP, and as to the approval and ratification of an
amendment to increase the maximum number of Directors from seven to nine
were as follows:
-Page 8 of 30-
<PAGE> 9
A. Election of Directors
Director Votes Votes Broker
Nominee For Withheld Nonvotes
- ------- --- -------- --------
Ron E. Doggett 6,854,279 21,460 650,734
Richard C. Miller 6,854,579 21,160 650,734
Eric J. Lomas 6,864,429 11,310 650,734
Donald H. Grubb 6,853,417 22,321 650,734
Thomas W. D'Alonzo 6,864,529 11,210 650,734
Rollie Tillman, Jr. 6,861,123 14,616 650,734
Robert B. Seidensticker 6,864,172 11,566 650,734
B. Ratification of Appointment of Auditors
Votes Votes Absten- Broker
For Against tions Nonvotes
--- ------- ----- --------
Ratification of
Deloitte & Touche, LLP 6,869,060 4,494 2,184 650,734
C. Ratification of Amendment to Increase Maximum Number of Directors
from Seven to Nine
Votes Votes Absten- Broker
For Against tions Nonvotes
--- ------- ----- --------
Increase Directors 6,736,757 75,323 11,541 702,851
ITEM 5. OTHER INFORMATION
On June 5, 1996, the Company sold 18,616 sq. ft. of condominium office
space used for our corporate offices. The sales contract included a
five year leaseback agreement. Proceeds from the sale were used in
operating activities and to pay down long-term debt.
On July 9, 1996, the Board of Directors authorized the repurchase of up to
250,000 shares of the Company's common stock from time to time in open
market transactions during the current 1997 fiscal year. Since July 9,
1996, the Company has repurchased 53,500 shares of its common stock on the
open market at an average price of $16.438.
On September 19, 1996, the Board of Directors declared a regular quarterly
cash dividend of $.05 per share. The dividend is payable November 1, 1996,
to shareholders of record as of the close of business on October 17, 1996.
-Page 9 of 30-
<PAGE> 10
In connection with the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995, the Company is hereby filing cautionary
statements identifying important factors that could cause the Company's
actual results to differ materially from those projected in
forward-looking statements of the Company made by, or on behalf of, the
Company. The Company wishes to advise readers that the following important
factors, among others, in some cases have affected and in the future could
affect, the Company's actual results and could cause the Company's actual
results to differ materially from those expressed in any forward-looking
statements made by, or on behalf of, the Company:
a. Specific risks and uncertainties to the Company's financial
performance include all the macro and micro economic factors
that affect any business operating in competitive markets in a
competitive world economy.*
b. Risk factors most relevant to the Company's short term and longer term
financial performance are attainment of its assumptions concerning unit
volumes, pricing, raw material costs, operating costs, and operating
efficiencies.
c. The attainment of these assumptions is determined by the successful
execution of management's plans as well as external factors. External
factors include general economic conditions, snack market growth, meat snack
category growth, competitors actions, and customer acceptance of the
Company's products and promotions.
* The reader is urged to refer to FORM 10-K, PART I, ITEM 1., "Narrative
Description of the Business" to better understand the unique characteristics
of the Company's business.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
(3.1) Bylaws, as amended.
(27) Financial Data Schedule (for SEC use only).
(b) Reports on Form 8-K: No reports on Form 8-K were filed during the
quarter ended August 25, 1996.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GoodMark Foods, Inc.
(Registrant)
/s/ Ron E. Doggett
Date: October 9, 1996 -------------------------------
Ron E. Doggett
Chairman and
Chief Executive Officer
/s/ Paul L. Brunswick
Date: October 9, 1996 -------------------------------
Paul L. Brunswick
Vice President
Chief Financial Officer
-Page 10 of 30-
<PAGE> 1
EXHIBIT 3.1
(Revised as of December 11, 1995)
BYLAWS OF
GOODMARK FOODS, INC.
ARTICLE I
DEFINITIONS
In these bylaws, unless otherwise provided, the following terms shall
have the following meanings:
(1) "Act" shall mean the North Carolina Business
Corporation Act as codified in Chapter 55 of the North Carolina General
Statutes effective July 1, 1990, and as amended from time to time;
(2) "Articles of incorporation" shall mean the
Corporation's articles of incorporation, including amended and restated
articles of incorporation and articles of merger;
(3) "Corporation" shall mean GoodMark Foods, Inc.;
(4) "Distribution" shall mean a direct or indirect
transfer of money or other property (except the Corporation's own shares) or
incurrence of indebtedness by the Corporation to or for the benefit of its
shareholders in respect of any of its shares. A distribution may be in the form
of a declaration or payment a dividend, a purchase, redemption, or other
acquisition of shares, a distribution of indebtedness, or otherwise;
(5) "Emergency" shall mean a catastrophic event which
prevents a quorum of the board of directors from being readily assembled;
(6) "Shares" shall mean the units into which the
proprietary interests in the Corporation are divided; and
(7) "Voting group" shall mean all shares of one or more
classes or series that under the articles of incorporation or the Act are
entitled to vote and be counted together collectively on a matter at a meeting
of shareholders. All shares entitled by the articles of incorporation or the
Act to vote generally on a matter are for that purpose a single voting group.
ARTICLE II
OFFICES
SECTION 1. Principal Office. The principal office of the Corporation
shall be located at 6131 Falls of Neuse Road, Raleigh, Wake County, North
Carolina 27609, or at such other place as may be determined from time to time
by the directors.
-Page 11 of 30-
<PAGE> 2
SECTION 2. Registered Office. The registered office of the
Corporation required by law to be maintained in the State of North Carolina may
be, but need not be, identical with the principal office.
SECTION 3. Other Offices. The Corporation may have offices at such
other places, either within or without the State of North Carolina, as the
board of directors may from time to time determine, or as the affairs of the
Corporation may require.
ARTICLE III
MEETINGS OF SHAREHOLDERS
SECTION 1. Place of Meetings. All meetings of shareholders shall be
held at the principal office of the Corporation, or at such other place, either
within or without the State of North Carolina, as shall be designated in the
notice of the meeting or as may be agreed upon by a majority of the
shareholders entitled to vote at the meeting.
SECTION 2. Annual Meeting. The annual meeting of shareholders for the
election of directors and the transaction of other business shall be held
annually in any month on any day (except Saturday, Sunday or a legal holiday)
as fixed by the board of directors.
SECTION 3. Substitute Annual Meeting. If the annual meeting shall not
be held on the day designated by these bylaws, a substitute annual meeting may
be called in accordance with the provisions of SECTION 4 of this ARTICLE. A
meeting so called shall be designated and treated for all purposes as the
annual meeting.
SECTION 4. Special Meetings. Special meetings of the shareholders may
be called at any time by the chief executive officer, the president, the
chairman of the board, or the board of directors. In addition, special meetings
may be called at any time by the shareholders if the holders of at least ten
percent (10%) of all the votes entitled to be cast on any issue proposed to be
considered at the proposed special meeting sign, date, and deliver to the
secretary a written demand for the meeting describing the purpose or purposes
for which it is to be held. Provided, however, the call of a special meeting
pursuant to such written demand of the holders of at least ten percent (10%) of
all such votes shall not exist and the holders of at least twenty-five percent
(25%) of all such votes shall have the right to call a special meeting by such
written demand if the Corporation has a class of shares registered under
Section 12 of the Securities Exchange Act of 1934, as amended. Only business
within the purpose or purposes described in the meeting notice specified in
Section 5 of this Article may be conducted at a special meeting of
shareholders.
-2-
-Page 12 of 30-
<PAGE> 3
SECTION 5. Notice of Meeting. Written or printed notice stating the
time and place of the meeting shall be delivered not less than ten (10) nor
more than sixty (60) days before the date of any shareholders' meeting, either
personally, by mail, by telegraph, by teletype, or by facsimile transmission,
by or at the direction of the president, the secretary, or other person calling
the meeting to each shareholder of record entitled to vote at such meeting;
provided, that such notice must be given not less than twenty (20) days before
the date of any meeting at which a merger is to be considered. If mailed, such
notice shall be deemed to be delivered when deposited in the United States
mail, addressed to the shareholder at his address as it appears on the record
of the shareholders of the Corporation, with postage thereon prepaid.
In the case of a special meeting, the notice of meeting shall
specifically state the purpose or purposes for which the meeting is called. In
the case of an annual or substitute annual meeting, the notice of meeting need
not specifically state the business to be transacted unless such a statement is
required by the Act.
When a meeting is adjourned for thirty (30) days or more, notice of
the adjourned meeting shall be given as in the case of an original meeting.
When a meeting is adjourned for less than thirty (30) days in any one
adjournment, it is not necessary to give any notice of the adjourned meeting
other than by announcement at the meeting at which the adjournment is taken;
provided, however, that if a new record date for the adjourned meeting is set,
notice of the adjourned meeting must be given to persons who are shareholders
as of the new record date.
The record date for determining the shareholders entitled to notice of
and to vote at an annual or special meeting shall be fixed as provided in
SECTION 3 of ARTICLE VIII.
SECTION 6. Waiver of Notice. A shareholder may waive notice of any
meeting either before or after such meeting. Such waiver shall be in writing,
signed by the shareholder, and filed with the minutes or corporate records. A
shareholder's attendance at a meeting: (i) waives objection to lack of notice
or defective notice of the meeting, unless the shareholder at the beginning of
the meeting objects to holding the meeting or transacting business at the
meeting; and (ii) waives objection to consideration of a particular matter at
the meeting that is not within the purpose or purposes described in the meeting
notice, unless the shareholder objects to considering the matter before it is
voted upon.
SECTION 7. Shareholder List. Commencing two (2) business days after
notice of a meeting of shareholders is given and continuing through such
meeting, the secretary of the Corporation shall maintain at the principal
office of the Corporation an alphabetical list of the shareholders entitled to
vote at such meeting, arranged by voting group, with the address of and number
of shares held by
-3-
-Page 13 of 30-
<PAGE> 4
each. This list shall be subject to inspection by any shareholder or his agent
or attorney at any time during usual business hours and may be copied at the
shareholder's expense. This list shall also be subject to inspection by any
shareholder during the whole of the meeting.
SECTION 8. Quorum. A majority of the votes entitled to be cast on a
matter by any voting group, represented in person or by proxy, shall constitute
a quorum of that voting group for action on that matter, except that at a
substitute annual meeting of shareholders, the number of votes entitled to be
cast on a matter by any voting group there represented either in person or by
proxy, even though less than a majority, shall constitute a quorum of that
voting group for action on that matter at such meeting.
The shareholders present at a duly organized meeting may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum.
In the absence of a quorum at the opening of any meeting of
shareholders, such meeting may be adjourned from time to time by a majority of
the votes voting on the motion to adjourn; and at any adjourned meeting at
which a quorum is present, any business may be transacted which might have been
transacted at the original meeting.
SECTION 9. Proxies. Shares may be voted either in person or by one or
more agents authorized by a written proxy executed by the shareholder or by his
duly authorized attorney in fact. A proxy may take the form of a telegram,
telex, facsimile or other form of wire or wireless communication which appears
to have been transmitted by a shareholder. A proxy is effective when received
by the secretary or other officer or agent authorized to tabulate votes. A
proxy is not valid after the expiration of eleven (11) months from the date of
its execution, unless the person executing it specifies therein the length of
time for which it is to continue in force or limits its use to a particular
meeting.
SECTION 10. Voting of Shares. Subject to the provisions of SECTION 4
of ARTICLE IV, the articles of incorporation, and the Act, each outstanding
share, regardless of class, shall be entitled to one vote on each matter
submitted to a vote at a meeting of shareholders.
Except for the election of directors, which is governed by the
provisions of SECTION 3 of ARTICLE IV, if a quorum is present, action on a
matter by a voting group is approved if the votes cast within the voting group
favoring the action exceed the votes cast against the action, unless the vote
of a greater number is required by the Act, the articles of incorporation, or
these bylaws.
-4-
-Page 14 of 30-
<PAGE> 5
Shares of the Corporation are not entitled to vote if: (i) they are
owned, directly or indirectly, by the Corporation, unless they are held by it
in a fiduciary capacity; (ii) they are owned, directly or indirectly, by a
second corporation in which the Corporation owns a majority of the shares
entitled to vote for directors of the second corporation; or (iii) they are
redeemable shares and (x) notice of redemption has been given and (y) a sum
sufficient to redeem the shares has been deposited with a bank, trust company,
or other financial institution under an irrevocable obligation to pay the
holders the redemption price upon surrender of the shares.
SECTION 11. Informal Action by Shareholders. Any action which may be
taken at a meeting of the shareholders may be taken without a meeting if a
consent in writing, setting forth the action so taken, is signed by all of the
persons who would be entitled to vote upon such action at a meeting and is
delivered to the Corporation to be included in the minutes or to be kept as
part of the corporate records.
SECTION 12. Corporation's Acceptance of Votes. If the name signed on a
vote, consent, waiver, or proxy appointment corresponds to the name of a
shareholder, the Corporation is entitled to accept the vote, consent, waiver,
or proxy appointment and to give it effect as the act of the shareholder.
If the name signed on a vote, consent, waiver, or proxy appointment
does not correspond to the name of its shareholder, the Corporation is
nevertheless entitled to accept the vote, consent, waiver, or proxy appointment
and to give it effect as the act of the shareholder if: (i) the shareholder is
an entity and the name signed purports to be that of an officer or agent of the
entity; (ii) the name signed purports to be that of an administrator, executor,
guardian, or conservator representing the shareholder and, if the Corporation
requests, evidence of fiduciary status acceptable to the Corporation has been
presented with respect to the vote, consent, waiver, or proxy appointment;
(iii) the name signed purports to be that of a receiver or trustee in
bankruptcy of the shareholder and, if the Corporation requests, evidence of its
status acceptable to the Corporation has been presented with respect to the
vote, consent, waiver, or proxy appointment; (iv) the name signed purports to
be that of a beneficial owner or attorney-in-fact of the shareholder and, if
the Corporation requests, evidence acceptable to the Corporation of the
signatory's authority to sign for the shareholder has been presented with
respect to the vote, consent, waiver, or proxy appointment; or (v) two or more
persons are the shareholder as Co-tenants or fiduciaries and the name signed
purports to be the name of at least one of the co-owners and the person signing
appears to be acting on behalf of all the co-owners.
-5-
-Page 15 of 30-
<PAGE> 6
The Corporation is entitled to reject a vote, consent, waiver, or
proxy appointment if the secretary or other officer or agent authorized to
tabulate votes has a reasonable basis for doubt about the validity of the
signature on it or about the signatory's authority to sign for the shareholder.
ARTICLE IV
BOARD OF DIRECTORS
SECTION 1. General Powers. All corporate powers shall be exercised by
or under the authority of, and the business and affairs of the Corporation
shall be managed under the direction of, its board of directors.
SECTION 2. Number, Term and Qualifications. The number constituting
the board of directors shall be not less than three (3) nor more than nine (9).
The number of directors within this variable range may be fixed or changed from
time to time by the shareholders or the board of directors. Each director shall
hold office until his death, resignation, retirement, removal,
disqualification, or until his successor is elected and qualified. Directors
need not be residents of the State of North Carolina or shareholders of the
Corporation. [Revised as of December 11, 1995, ratified by Shareholder action
on September 19, 1996.]
SECTION 3. Nomination and Election of Directors. Nominations to the
board of directors may be made by the board of directors or by a committee of
the board to which such duty is delegated. No nominations to the board of
directors may be made from the floor of the annual meeting of shareholders.
Except as provided in SECTION 6 of this ARTICLE IV, the directors
shall be elected at the annual meeting of shareholders; and those persons who
receive the highest number of votes shall be deemed to have been elected.
SECTION 4. Cumulative Voting. (a) So long as the Corporation has
shares of any class or series listed on a national securities exchange or held
of record by more than two thousand (2,000) shareholders, shareholders shall
not have the right to cumulate their votes for directors. In addition, the
right to vote cumulatively may be denied or limited by the articles of
incorporation. In the event cumulative voting rights exist, they shall be
exercised as provided in subsection (b) below.
(b) If cumulative voting rights exist, every shareholder
entitled to vote at an election of directors shall have the right to vote the
number of shares standing of record in his name for as many persons as there
are directors to be elected and for whose election he has a right to vote, or
to cumulate his votes by giving one candidate as many votes as the number of
such directors
-6-
-Page 16 of 30-
<PAGE> 7
multiplied by the number of his shares shall equal, or by distributing such
votes on the same principle among any of such candidates. This right of
cumulative voting shall not be exercised unless either (i) the meeting notice
or proxy statement accompanying the notice states conspicuously that cumulative
voting is authorized, or (ii) some shareholder or proxy holder announces in
open meeting, before the voting for the directors starts, his intention so to
vote cumulatively; and if such announcement is made, the chair shall declare
that all shares entitled to vote have the right to vote cumulatively and shall
announce the number of shares present in person and by proxy and shall
thereupon grant a recess of not less than one nor more than four hours as he
shall determine, or of such other period of time as is unanimously then agreed
upon.
SECTION 5. Removal. Any director, or the entire board of directors,
may be removed from office at any time, with or without cause, but only by the
affirmative vote of the holders of at least sixty-six and two-thirds percent
(66-2/3%) of the voting power of all shares then entitled to vote generally in
the election of directors; provided, further, that if cumulative voting exists
pursuant to SECTION 4 of this ARTICLE, an individual director shall not be
removed if the number of shares voting against the proposal for removal would
be sufficient to elect a director if such shares were voted cumulatively at an
annual election. If a director is elected by a voting group of shareholders,
only members of that voting group may participate in the vote to remove him. A
director may not be removed by the shareholders at a meeting unless the notice
of the meeting specifies such removal as one of its purposes. If any directors
are removed, new directors may be elected at the same meeting.
SECTION 6. Vacancies. Any vacancy occurring in the board of directors,
including, without limitation, a vacancy resulting from an increase in the
number of directors or from the failure by the shareholders to elect the full
authorized number of directors, shall be filled by the shareholders or the
board of directors. If such vacancy is to be filled by the board of directors,
and if the directors remaining in office constitute fewer than a quorum of the
board, such vacancy may be filled by the affirmative vote of a majority of the
remaining directors or by the same remaining director. If the vacant office was
held by a director elected by a voting group of shareholders, only the
remaining director or directors elected by that voting group or the holders of
shares of that voting group are entitled to fill the vacancy. A director
elected to fill a vacancy shall be elected for the unexpired term of his
predecessor in office.
SECTION 7. Chairman of the Board. There may be a chairman of the board
of directors elected by the directors from their number at any meeting of the
board. The chairman shall preside at all
-7-
-Page 17 of 30-
<PAGE> 8
meetings of the board of directors and perform such other duties as may be
directed by the board.
SECTION 8. Compensation. The board of directors may compensate
directors for their services as such and may provide for the payment of all
expenses incurred by directors in attending regular and special meetings of the
board.
SECTION 9. Committees. The board of directors may create an executive
committee and other committees of the board, each of which shall have at least
three (3) members, all of whom shall be directors. The creation of a committee
and the appointment of members to it must be approved by a majority of all the
directors in office when the action is taken. Each committee may, as specified
by the board of directors, exercise some or all of the authority of the board
except that a committee may not: (i) authorize distributions; (ii) approve or
propose to shareholders action that the Act requires be approved by
shareholders; (iii) fill vacancies on the board of directors or on any of its
committees; (iv) amend the articles of incorporation pursuant to N.C. Gen.
Stat. Section 55-10-02 or its successor; (v) adopt, amend, or repeal bylaws;
(vi) approve a plan of merger not requiring shareholder approval; (vii)
authorize or approve a reacquisition of shares, except according to a formula
or method prescribed by the board of directors; or (viii) authorize or approve
the issuance or sale or contract for sale of shares, or determine the
designation and relative rights, preferences, and limitations of a class or
series of shares, except that the board of directors may authorize a committee
to do so within limits specifically prescribed by the board of directors. The
provisions of ARTICLE V, which govern meetings of the board of directors, shall
likewise apply to meetings of any committee of the board.
ARTICLE V
MEETINGS OF DIRECTORS
SECTION 1. Regular Meetings. A regular meeting of the board of
directors shall be held immediately after, and at the same place as, the annual
meeting of the shareholders. In addition, the board of directors may provide,
by resolution, the time and place, either within or without the State of North
Carolina, for the holding of additional regular meetings.
SECTION 2. Special Meetings. Special meetings of the board of
directors may be called by or at the request of the chairman, president or any
two (2) directors. Such meetings may be held either within or without the State
of North Carolina, as fixed by the person or persons calling the meeting.
SECTION 3. Notice of Meetings. Regular meetings of the board of
directors may be held without notice. The person or persons
-8-
-Page 18 of 30-
<PAGE> 9
calling a special meeting of the board of directors shall, at least two (2)
days before the meeting, give notice of the meeting by any usual means of
communication, including by telephone, telegraph, teletype, mail, private
carrier, facsimile transmission, or other form of wire or wireless
communication. Such notice need not specify the purpose for which the meeting
is called.
SECTION 4. Waiver of Notice. Any director may waive notice of any
meeting either before or after such meeting. Such waiver shall be in writing,
signed by the director, and filed with the minutes or corporate records;
provided, however, that a director's attendance at or participation in a
meeting waives any required notice to him unless the director at the beginning
of the meeting (or promptly upon his arrival) objects to holding the meeting or
transacting business at the meeting and does not thereafter vote for or assent
to action taken at the meeting.
SECTION 5. Quorum. A majority of the directors fixed by these bylaws
shall constitute a quorum for the transaction of business at any meeting of the
board of directors.
SECTION 6. Manner of Acting. Except as otherwise provided in this
Section, and unless a greater number is required by the articles of
incorporation or these bylaws, the act of the majority of the directors present
at a meeting at which a quorum is present shall be the act of the Board of
Directors. In the event the Board of Directors becomes deadlocked, the question
on which no majority can be reached will be submitted to the Deadlock
Resolution Committee which shall have been elected as hereinafter set forth in
SECTION 9 of ARTICLE IV. The Deadlock Resolution Committee shall consist of
"three directors, such directors to serve until they are replaced by a majority
vote of the Board of Directors." The Deadlock Resolution Committee shall have
the authority to act for the Board of Directors by a majority vote of the
Deadlock Resolution Committee on all questions regarding which the Board of
Directors is deadlocked except for those matters specifically proscribed by
applicable law. Should the Board of Directors become deadlocked on an issue
regarding which applicable law prohibits the Deadlock Resolution Committee from
acting for the Board of Directors, the Deadlock Resolution Committee shall have
the authority to act for the Board of Directors in deciding whether to call a
special meeting of shareholders requesting that the Deadlock Resolution
Committee be given the authority to decide the matter or requesting that the
shareholders directly consider the matter regarding which the Board is
deadlocked. If the Board is deadlocked regarding the amendment or repeal of any
prior resolution adopted by the Board, the Deadlock Resolution Committee shall
have the authority to amend or repeal the resolution regarding which the
deadlock exists. The act of the Deadlock Resolution Committee shall be the act
of the Board of Directors. It is the intent of the Board of Directors that the
Deadlock Resolution Committee have authority act for the Board to resolve
deadlocks to the fullest extent
-9-
-Page 19 of 30-
<PAGE> 10
permitted by applicable law in existence at the time of the deadlock.
SECTION 7. Presumption of Assent. A director of the Corporation who is
present at a meeting of the board of directors or a committee of the board of
directors when corporate action is taken is deemed to have assented to the
action taken unless: (i) he objects at the beginning of the meeting (or
promptly upon his arrival) to holding it or transacting business at the
meeting; (ii) his dissent or abstention L.rom the action taken is entered in
the minutes of the meeting; or (iii) he gives written notice of his dissent or
abstention with the presiding officer of the meeting before its adjournment or
with the Corporation immediately after adjournment of the meeting. This right
of dissent or abstention is not available to a director who votes in favor of
the action taken.
SECTION 8. Participation in Meetings. Any or all of the directors may
participate in a regular or special meeting by, or conduct the meeting through
the use of, any means of communication by which all directors participating may
simultaneously hear each other during the meeting.
SECTION 9. Action Without Meeting. Action which may be taken at a
board of directors meeting may be taken without a meeting if the action is
taken by all members of the board and is evidenced by one or more written
consents signed by each director before or after such action, which describes
the action taken and is included in the minutes or filed with the corporate
records. Such action is effective when the last director signs the consent,
unless the consent specifies a different effective date.
ARTICLE VI
OFFICERS
SECTION 1. Officers of the Corporation: The officers of the
Corporation shall consist of a chief executive officer, president, secretary,
treasurer, and such vice presidents, assistant secretaries, assistant
treasurers, and other officers as the board of directors may from time to time
appoint. Any two or more offices may be held by the same person, except the
offices of president and secretary, but in no event may any officer act in more
than one capacity where action of two or more officers is required. The other
officers as the board of directors may from time to time elect shall have the
duties as determined by the board of directors. Duties assigned by the board
of directors to other officers may include duties otherwise assigned by these
bylaws.
SECTION 2. Appointment and Term: The officers of the Corporation
shall be appointed by the board of directors. A duly appointed officer may
appoint one or more officers or assistant officers if authorized by the board
of directors. Each officer
-10-
-Page 20 of 30-
<PAGE> 11
shall hold office until his death, resignation, retirement, removal,
disqualification or until his successor is appointed and qualifies. The
appointment of an officer does not itself create contract rights for either the
officer or the Corporation.
SECTION 3. Compensation of Officers: The compensation of officers of
the Corporation shall be fixed by the board of directors. No officer shall
receive compensation for serving the Corporation in any other capacity unless
such additional compensation be authorized by the board of directors.
SECTION 4. Resignation and Removal: An officer may resign at any
time by communicating his resignation to the Corporation. A resignation is
effective when it is communicated unless it specifies in writing a later date.
If a resignation is made effective as of a later date and the Corporation
accepts the future effective date, the board of directors may fill the pending
vacancy before the effective date if the board provides that the successor does
not take office until the effective date. An officer's resignation does not
affect the Corporation's contract rights, if any, with the officer. Any
officer or agent appointed by the board of directors may be removed by the
board at any time, with or without cause, but such removal shall be without
prejudice to the contract rights, if any, of the person so removed.
SECTION 5. Bonds: The board of directors may by resolution require
any officer, agent, or employee of the corporation to give bond to the
Corporation, with sufficient sureties, conditioned on the faithful performance
of the duties of his respective office or position, and to comply with such
other conditions as may from time to time be required by the board of
directors.
SECTION 6. Chief Executive Officer: The chief executive officer shall
be the principal executive officer of the Corporation and may exercise all of
the powers customarily exercised by the chief executive officer of a
corporation by whatever name called.
All officers of the Corporation shall report to the chief executive
officer to the extent that he may at any time require. Any agents or employees
necessary for the operation of the Corporation may be employed by the chief
executive officer or his designate, and the salaries of all such agents and
employees of the Corporation, other than officers, shall be fixed by the chief
executive officer or by a committee appointed by him.
The chief executive officer shall have the power to execute all
contracts or instruments of every character relating to real and personal
property and necessarily arising in the ordinary course of the Corporation's
business without express authority of the board of directors unless such
authority is expressly limited by the board of directors. The chief executive
officer also shall have the power to sign certificates for shares of the
Corporation,
-11-
-Page 21 of 30-
<PAGE> 12
any deeds, mortgages, bond contracts or other instruments which the board of
directors has authorized to be executed, except in cases where the signing and
execution thereof shall be expressly delegated by the board of directors or by
these bylaws to some other officer or agent of the Corporation, or shall be
required by the Act to be otherwise signed or executed.
It shall be the duty of the chief executive officer to make a report
of the Corporation's condition to the shareholders at the annual meeting and to
the board of directors at their regular meetings, embracing therein such
recommendations as to the policy and conduct of the business as he may deem
advisable.
SECTION 7. President: The president shall exercise general
supervision over all of the business and affairs of the Corporation. The
president shall have the power to execute all contracts or instruments of every
character relating to real and personal property and necessarily arising in the
ordinary course of the Corporation's business without express authority of the
board of directors unless such authority is expressly limited by the board of
directors. The president shall have the power to sign certificates for shares
of the Corporation, any deeds, mortgages; bond contracts, or other instruments
which the board of directors has authorized to be executed, except in cases
where the signing and execution thereof shall be expressly delegated by the
board of directors or by these bylaws to some other officer or agent of the
Corporation, or shall be required by the Act to be otherwise signed or
executed. In general, the president shall perform all duties incident to the
office of the president and such other duties as may be prescribed by the chief
executive officer or the board of directors from time to time.
SECTION 8. Vice Presidents: In the absence of the president or in the
event of his death, inability, or refusal to act, the vice presidents in the
order of their length of service as vice presidents, unless otherwise
determined by the board of directors, shall perform the duties of the
president, and when so acting shall have all the powers of and be subject to
all the restrictions upon that office. Any vice president may sign
certificates for shares, as well-as any deeds, mortgages, contracts, or other
instruments which the board of directors has authorized to be executed, except
in cases where the signing and execution of such documents or instruments shall
be expressly delegated by the board of directors or these bylaws to some other
officer or agent of the Corporation or shall be required by the Act to be
otherwise signed or executed. A vice president shall perform such other duties
as from time to time may be assigned to him by the chief executive officer, the
president, or the board of directors.
SECTION 9. Secretary: The secretary shall; (i) keep the minutes of
the meetings of shareholders, of the board of directors, and of all committees
of the board in one or more books provided
-12-
-Page 22 of 30-
<PAGE> 13
for that purpose; (ii) see that all notices are duly given in accordance with
the provisions of these bylaws or as required by law; (iii) be custodian of the
corporate records and of the seal of the corporation and see that the seal of
the corporation is affixed to all documents the execution of which on behalf of
the corporation under its seal is duly authorized; (iv) keep a register of the
mailing address of each shareholder which shall be furnished to the secretary
by such shareholder; (v) sign, with the chief executive officer, the president,
or a vice president, certificates for shares, the issuance of which shall have
been authorized by resolution of the board of directors; (vi) have general
charge of the stock transfer books of the Corporation; (vii) keep or cause to
be kept in the State of North Carolina at the Corporation's principal office a
record of the Corporation's shareholders, giving the names and addresses of all
shareholders and the number and class of shares held by each, and prepare or
cause to be prepared a shareholder list prior to each meeting of shareholders
as required by the Act; (viii) maintain and authenticate the books and records
of the Corporation; (ix) with the assistance of the treasurer and other
officers, prepare and deliver to the Corporation's shareholders such financial
statements, notices, and reports as may be required by N.C. Gen. Stat. Sections
55-16-20 and 55-16-21 (or their successors); (x) prepare and file with the
North Carolina Secretary of State the annual report required by N.C. Gen. Stat.
Section 55-16-22 (or its successor); and (xi) in general perform all duties
incident to the office oL. secretary and such other duties as from time to time
may be assigned to him by the chief executive officer, the president, or the
board of directors.
SECTION 10. Assistant Secretaries: In the absence of the secretary or
in the event of his death, inability, or refusal to act, the assistant
secretaries in the order of their length of service as assistant secretary,
unless otherwise determined by the board of directors, shall perform the duties
of the secretary, and when so acting shall have all the powers of and be
subject to all the restrictions upon the secretary. They shall perform such
other duties as may be assigned to them by the secretary, the chief executive
officer, the president, or the board of directors. Any assistant secretary may
sign, with the president or a vice president, certificates for shares.
SECTION 11. Treasurer: The treasurer shall: (i) have charge and
custody of and be responsible for all funds and securities of the Corporation;
(ii) receive and give receipts or monies due and payable to the Corporation
from any source whatsoever, and deposit all such monies in accordance with the
provisions of SECTION 4 of ARTICLE VII; (iii) prepare, or cause to be prepared,
an annual financial statement in accordance with SECTION 3 of ARTICLE IX; and
(iv) in general, perform all of the duties incident to the office of treasurer
and such other duties as from time to time may be assigned to him by the chief
executive officer, the president, or the board of directors.
-13-
-Page 23 of 30-
<PAGE> 14
SECTION 12. Assistant Treasurer. In the absence of the treasurer or in
the event of his death, inability, or refusal to act, the assistant treasurers,
in the order of their length of service as assistant treasurer, unless
otherwise determined by the board of directors, shall perform the duties of the
treasurer, and when so acting shall have all the powers of and be subject to
all the restrictions upon the treasurer. They shall perform such other duties
as may be assigned to them by the treasurer, the chief executive officer, the
president, or the board of directors.
ARTICLE VII
CONTRACTS, LOANS, CHECKS AND DEPOSITS
SECTION 1. Contracts. The board of directors may authorize any officer
or officers, agent or agents to enter into any contract or to execute and
deliver any instrument on behalf of the Corporation, and such authority may be
general or confined to specific instances.
SECTION 2. Loans. No loans shall be contracted on behalf the
Corporation and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the board of directors. Such authority may be
general or confined to specific instances.
SECTION 3. Checks and Drafts. All checks, drafts, or other orders for
payment of money issued in the name of the Corporation shall be signed by such
officer or officers, agent or agents of the Corporation and in such manner as
shall from time to time be determined by resolution of the board of directors.
SECTION 4. Deposits. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the Corporation
in such depositories as the board of directors shall direct.
ARTICLE VIII
CERTIFICATES FOR SHARES AND THEIR TRANSFER
SECTION 1. Certificates for Shares. Shares may, but need not, be
represented by certificates. If certificates are issued, they shall be in such
form as the board of directors shall determine; provided that, at a minimum,
each certificate shall state on its face: (i) the name of the Corporation and
that it is organized under the laws of North Carolina; (ii) the name of the
person to whom issued; and (iii) the number and class of shares and the
designation of the series, if any, the certificate represents. If the
Corporation issues certificates for shares of preferred stock, the
designations, relative rights, preferences, and limitations applicable to that
class, and the variations in rights, preferences, and limitations for each
series within that class (and
-14-
-Page 24 of 30-
<PAGE> 15
the authority of the board of directors to determine variations for future
series) must be summarized on the front or back of each certificate;
alternatively, each certificate may state conspicuously on its front or back
that the Corporation will furnish the shareholder this information in writing
and without charge. These certificates shall be signed, either manually or in
facsimile, by the president, or any vice president, and the secretary or any
assistant secretary, the treasurer or any assistant treasurer. They shall be
consecutively numbered or otherwise identified and the name and address of the
persons to whom they are issued, with the number of shares and date of issue,
shall be entered on the stock transfer books of the Corporation.
SECTION 2. Transfer of Shares. Transfer of shares of the Corporation
shall be made only on the stock transfer books of the Corporation by the holder
of record, by his legal representative (who shall furnish proper evidence of
authority to transfer) or by his attorney (whose authority shall be evidenced
by a power of attorney duly executed and filed with the secretary), and only
upon surrender for cancellation of the certificates for such shares.
SECTION 3. Fixing Record Date. For the purpose of determining
shareholders entitled to receive notice of a meeting of shareholders, to demand
a special meeting, to vote, to take any other action, or to receive payment, or
for any other purpose, the board of directors may fix in advance a date as the
record date for any such determination of shareholders, such record date in any
case to be not more than seventy (70) days, and, in case of a meeting of
shareholders, not less than ten (10) days, before the date on which the
particular action requiring such determination of shareholders is to be taken.
When a determination of shareholders entitled to notice of or to vote
at any meeting of shareholders has been made as provided in this section, such
determination shall apply to any adjournment of such meeting unless the board
of directors fixes a new record date, which it must do if the meeting is
adjourned to a date more than 120 days after the date fixed for the original
meeting.
SECTION 4. Lost Certificates. The board of directors may authorize the
issuance of a new share certificate in place of a certificate claimed to have
been lost or destroyed, upon receipt of an affidavit of such fact from the
person claiming the loss or destruction. When authorizing the issuance of a new
certificate, the board of directors may require the claimant to give the
Corporation a bond in such sum as it may direct to indemnify the Corporation
against loss from any claim with respect to the certificate claimed to have
been lost or destroyed; or the board of directors may, by resolution reciting
that the circumstances justify such action, authorize the issuance of the new
certificate without requiring such a bond.
-15-
-Page 25 of 30-
<PAGE> 16
SECTION 5. Reacquired Shares. A corporation may acquire its own shares
and shares so acquired constitute authorized but unissued shares.
ARTICLE IX
GENERAL PROVISIONS
SECTION 1. Distributions. The board of directors may from time to time
declare, and the Corporation may make, distributions on its outstanding shares
in the manner and subject to the terms and conditions provided by the Act and
by the articles of incorporation.
SECTION 2. Seal. The corporate seal of the Corporation shall consist
of two concentric circles between which is the name of the Corporation and in
the center of which is inscribed "CORPORATE SEAL" or "SEAL," and which shall
have such other characteristics as the board of directors may determine.
SECTION 3. Records and Reports. All of the Corporation's records shall
be maintained in written form or in another form capable of conversion into
written form within a reasonable time.
The Corporation shall keep as permanent records minutes of a meetings
of its incorporators, shareholders, and board of directors, a record of all
actions taken by the shareholders or board of directors without a meeting, and
a record of all actions taken by a committee of the board of directors in place
of the board of directors.
The Corporation shall keep a copy of the following records at its
principal office: (i) the articles of incorporation and all amendments to them
currently in effect; (ii) these bylaws and all amendments to them currently in
effect; (iii) resolutions adopted by its board of directors creating one or
more classes or series of shares and fixing their relative rights, preferences,
and limitations (if shares issued pursuant to those resolutions are
outstanding); (iv) the minutes of all meetings of shareholders and records of
all actions taken by shareholders without a meeting during the past three
years; (v) all written communications to shareholders generally within the past
three years; (vi) the annual financial statements described below, prepared
during the past three years; (vii) a list of the names and business addresses
of its current directors and officers; and (viii) its most recent annual report
delivered to the North Carolina Secretary of State.
The Corporation shall prepare and make available to its shareholders
annual financial statements for the Corporation and its subsidiaries that: (i)
includes a balance sheet as of the end of the fiscal year, an income statement
for that year, and a statement of cash flows for the year; and (ii) is
accompanied by
-16-
-Page 26 of 30-
<PAGE> 17
either (x) a report of a public accountant on the annual financial statements,
or (y) a statement by the treasurer stating his reasonable belief whether the
annual financial statements were prepared on the basis of generally accepted
accounting principles (and, if not, describing the basis of preparation) and
describing any respects in which the statements were not prepared on a basis of
accounting consistent with the statements prepared for the preceding year.
These annual financial statements, or a written notice of their availability,
shall be mailed to each shareholder within 120 days after the close of each
fiscal year of the Corporation. On written request from a shareholder who was
not mailed the annual financial statements, the Corporation shall mail to him
the latest such statements.
The Corporation shall also prepare and file with the North Carolina
Secretary of State an annual report in such form as required by N.C. Gen. Stat.
55-16-22, or its successor.
SECTION 4. Indemnification. Any person who at any time serves or has
served as a director or officer of the Corporation, or at the request of the
Corporation is or was serving as an officer, director, agent, partner, trustee,
administrator, or employee for any other foreign or domestic corporation,
partnership, joint venture, trust, employee benefit plan, or other enterprise,
shall be indemnified by the Corporation to the fullest extent from time to time
permitted by law in the event he is made, or is threatened to be made, a party
to any threatened, pending or completed civil, criminal, administrative,
investigative or arbitrative action, suit or proceeding and any appeal therein
(and any inquiry or investigation that could lead to such action, suit or
proceeding), whether or not brought by or on behalf of the Corporation, seeking
to hold him liable by reason of the fact that he is or was acting in such
capacity. In addition, the board may provide such indemnification for the
employees and agents of the Corporation as it deems appropriate.
The rights of those receiving indemnification hereunder shall, to the
fullest extent from time to time permitted by law, cover (i) reasonable
expenses, including without limitation all attorneys' fees actually and
necessarily incurred by him in connection with any such action, suit or
proceeding, (ii) all reasonable payments made by him in satisfaction of any
judgment, money decree, fine (including an excise tax assessed with respect to
an employee benefit plan), penalty, or settlement for which he may have become
liable in such action, suit or proceeding; and (iii) all reasonable expenses
incurred in enforcing the indemnification rights provided herein.
Expenses incurred by anyone entitled to receive indemnification under
this section in defending a proceeding may be paid by the Corporation in
advance of the final disposition of such proceeding as authorized by the board
of directors in the specific
-17-
-Page 27 of 30-
<PAGE> 18
case or as authorized or required under any provisions in the bylaws or by any
applicable resolution or contract upon receipt of an undertaking by or on
behalf of the director to repay such amount unless it shall ultimately be
determined that he is entitled to be indemnified by the Corporation against
such expenses.
The board of directors of the Corporation shall take all such action
as may be necessary and appropriate to authorize the Corporation to pay the
indemnification required by this bylaw, including without limitation, to the
extent needed, making a good faith evaluation of the manner in which the
claimant for indemnity acted and of the reasonable amount of indemnity due him.
Any person who at any time serves or has served in any of the
aforesaid capacities for or on behalf of the Corporation shall be deemed to be
doing or to have done so in reliance upon, and as consideration for, the right
of indemnification provided herein. Any repeal or modification of these
indemnification provisions shall not affect any rights or obligations existing
at the time of such repeal or modification. The rights provided for herein
shall inure to the benefit of the legal representatives of any such person and
shall not be exclusive of any other rights to which such person may be entitled
apart from the provisions of this bylaw.
The rights granted herein shall not be limited by the provisions
contained in N.C. Gen. Stat. 55-8-51, or its successor.
SECTION 5. Fiscal Year. The fiscal year of the Corporation shall be
fixed by the board of directors.
SECTION 6. Amendments. (a) The board of directors may amend or repeal
these bylaws, except to the extent otherwise provided in the articles of
incorporation, a bylaw adopted by the shareholders, or the Act, and except that
a bylaw adopted, amended or repealed by the shareholders may not be readopted,
amended or repealed by the board of directors if neither of the articles of
incorporation nor a bylaw adopted by the shareholders authorizes the board of
directors to adopt, amend, or repeal that particular bylaw or the bylaws
generally.
(b) The Corporation's shareholders may adopt, amend, alter,
change, or repeal any of these bylaws consistent with the provisions of Section
10 of Article III.
(c) A bylaw that fixes a greater quorum or voting
requirement for the board of directors may be amended or repealed: (i) if
originally adopted by the shareholders, only by the shareholders, unless the
bylaw permits amendment or repeal by the board of directors; or (ii) if
originally adopted by the board of directors, either by the shareholders or by
the board of directors.
-18-
-Page 28 of 30-
<PAGE> 19
(d) A bylaw referred to in Subsection (c) above: (i) may
not be adopted by the board of directors by a vote of less than a majority of
the directors then in office; and (ii) may not itself be amended by a quorum or
vote of the directors less than the quorum or vote therein prescribed or
prescribed by a bylaw adopted or amended by the shareholders.
(e) A bylaw adopted or amended by the shareholders that
fixes a greater voting or quorum requirement for the board of directors may
provide that it may be amended or repealed only by a specified vote of either
the shareholders or the board of directors.
SECTION 7. Emergencies. In anticipation of or during an emergency, the
board of directors may: (i) modify lines of succession to accommodate the
incapacity of any director, officer, employee, or agent; and (ii) relocate the
principal office or - designate alternative principal or regional offices, or
authorize the officers to do so.
During an emergency: (i) notice of a meeting of the board of directors
need be given ony to those directors whom it is practicable to reach and may be
given in any practicable manner, including by publication and radio; and (ii)
one or more officers present at a meeting of the board of directors may be
deemed to be directors for the meeting, in order of rank and within the same
rank in order of seniority, as necessary to achieve a quorum.
SECTION 8. Opt-Out of North Carolina Shareholder Protection Act: The
provisions of the North Carolina Shareholder Protection Act, N.C.Gen.Stat.
Sections 55-9-01 to -05, as presently enacted or hereinafter amended, shall not
apply to or govern the Corporation. Provided, however, this Bylaw may be
amended or repealed by the affirmative vote of a majority of the directors then
holding office at any regular or special meeting of the board of directors.
SECTION 9. Opt-Out of North Carolina Control Share Acquisition Act:
The provisions of the North Carolina Control Share Acquisition Act,
N.C.Gen.Stat. Sections 55-9A-01 to -09, as presenting enacted or hereinafter
amended, shall not apply to or govern the corporation. Provided, however, this
Bylaw may be amended or repealed by the affirmative vote of a majority of the
-19-
-Page 29 of 30-
<PAGE> 20
directors then holding office at ay regular or special meeting of the board of
directors.
ATTESTED:
/s/ Alvin C. Blalock Date: December 11, 1995
- -------------------- -----------------
Secretary
-20-
-Page 30 of 30-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FIRST
QUARTER ENDED AUGUST 25, 1996 FOR GOODMARK FOODS, INC.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-25-1997
<PERIOD-START> MAY-27-1996
<PERIOD-END> AUG-25-1996
<CASH> 22
<SECURITIES> 0
<RECEIVABLES> 9,534
<ALLOWANCES> 0
<INVENTORY> 14,440
<CURRENT-ASSETS> 30,823
<PP&E> 51,987
<DEPRECIATION> 0
<TOTAL-ASSETS> 84,917
<CURRENT-LIABILITIES> 12,414
<BONDS> 17,000
76
0
<COMMON> 0
<OTHER-SE> 50,520
<TOTAL-LIABILITY-AND-EQUITY> 84,917
<SALES> 46,382
<TOTAL-REVENUES> 46,382
<CGS> 28,103
<TOTAL-COSTS> 28,103
<OTHER-EXPENSES> (15)
<LOSS-PROVISION> 33
<INTEREST-EXPENSE> 278
<INCOME-PRETAX> 3,306
<INCOME-TAX> 1,241
<INCOME-CONTINUING> 2,065
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,065
<EPS-PRIMARY> .26
<EPS-DILUTED> .26
</TABLE>
