<PAGE> 1
FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
OR
[ ] 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 1-7210
REPUBLIC GROUP INCORPORATED
---------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 75-1155922
-------- ----------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
811 East 30th Avenue, Hutchinson, Kansas 67502-4341
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip code)
Post Office Box 1307, Hutchinson, Kansas 67504-1307
- ---------------------------------------- ----------
(Mailing Address) (Zip code)
316-727-2700
------------
(Registrant's telephone number, including area code)
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 .
--- ---
On October 31, 1996, there were 10,617,372 shares of the registrant's Common
Stock, $ 1.00 par value outstanding.
<PAGE> 2
REPUBLIC GROUP INCORPORATED
FORM 10-Q
Quarterly Report
For the Quarter Ended September 30, 1996
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Reference is made to pages 2 through 6 hereof which set forth
certain consolidated financial statements of Registrant in
accordance with Part I of Form 10-Q.
The consolidated financial statements include the accounts of
Republic Group Incorporated and its wholly owned subsidiaries
(collectively referred to as the "Company").
<PAGE> 3
REPUBLIC GROUP INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME
Quarters Ended September 30, 1996 and 1995 (Unaudited)
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Gross sales . . . . . . . . . . . . . . . . . . . . . . . . . $ 33,880,000 $ 36,623,000
Less freight and discounts . . . . . . . . . . . . . . . . . 4,876,000 4,351,000
------------ ------------
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . 29,004,000 32,272,000
Costs and expenses:
Cost of sales . . . . . . . . . . . . . . . . . . . . . 17,611,000 23,422,000
Selling and administrative expenses . . . . . . . . . . . 3,149,000 3,335,000
------------ ------------
20,760,000 26,757,000
------------ ------------
Operating profit . . . . . . . . . . . . . . . . . . . . . 8,244,000 5,515,000
Other expense, net . . . . . . . . . . . . . . . . . . . . . (329,000) (415,000)
------------ ------------
Income before income taxes . . . . . . . . . . . . . . . . . 7,915,000 5,100,000
Provision for income taxes . . . . . . . . . . . . . . . . . 2,896,000 1,932,000
------------ ------------
Net income . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,019,000 $ 3,168,000
============ ============
Income per common and common equivalent share . . . . . . . . $ 0.47 $ 0.30
============ ============
Weighted average shares outstanding . . . . . . . . . . . . . 10,698,000 10,629,000
</TABLE>
See accompanying notes.
2
<PAGE> 4
REPUBLIC GROUP INCORPORATED
CONSOLIDATED BALANCE SHEETS
September 30, 1996 and June 30, 1996
<TABLE>
<CAPTION>
September 30, June 30,
ASSETS 1996 1996
-------------- -------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . $ 7,092,000 $ 2,243,000
Investments and marketable securities, at market . . . . . . . . . . . 13,040,000 12,325,000
Accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . 12,225,000 11,727,000
Income tax refunds receivable . . . . . . . . . . . . . . . . . . . . . 882,000 902,000
Inventories:
Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,846,000 2,095,000
Raw materials and supplies . . . . . . . . . . . . . . . . . . . . . 5,062,000 4,638,000
-------------- -------------
6,908,000 6,733,000
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 434,000 557,000
Net assets held for sale . . . . . . . . . . . . . . . . . . . . . . . 26,000 26,000
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . 790,000 790,000
-------------- -------------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . 41,397,000 35,303,000
Property, plant and equipment, at cost . . . . . . . . . . . . . . . . . 112,256,000 110,243,000
Less accumulated depreciation, amortization
and depletion . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,768,000 40,134,000
-------------- -------------
70,488,000 70,109,000
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 870,000 712,000
-------------- -------------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 112,755,000 $ 106,124,000
============== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,789,000 $ 5,114,000
Accrued payroll and employee benefits . . . . . . . . . . . . . . . . . 2,408,000 2,666,000
Income tax payable . . . . . . . . . . . . . . . . . . . . . . . . . . 2,442,000 --
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . 1,785,000 1,628,000
Current portion of long-term debt . . . . . . . . . . . . . . . . . . . 3,410,000 3,410,000
-------------- -------------
Total current liabilities . . . . . . . . . . . . . . . . . . . . . 14,834,000 12,818,000
Long-term debt due after one year . . . . . . . . . . . . . . . . . . . . 21,430,000 21,430,000
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 9,077,000 8,592,000
Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . 617,000 620,000
Stockholders' equity:
Common stock, $1 par value . . . . . . . . . . . . . . . . . . . . . . 10,618,000 10,607,000
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . 12,520,000 12,462,000
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,659,000 39,595,000
-------------- -------------
Total stockholders' equity . . . . . . . . . . . . . . . . . . . . . 66,797,000 62,664,000
-------------- -------------
Total liabilities and stockholders' equity . . . . . . . . . . . . . . . $ 112,755,000 $ 106,124,000
============== =============
</TABLE>
See accompanying notes.
3
<PAGE> 5
REPUBLIC GROUP INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
Quarters Ended September 30, 1996 and 1995 (Unaudited)
<TABLE>
<CAPTION>
1996 1995
------------- ------------
<S> <C> <C>
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,019,000 $ 3,168,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, amortization and depletion . . . . . . . . . . . . . . . 1,637,000 1,409,000
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . 485,000 --
Loss on sale of assets . . . . . . . . . . . . . . . . . . . . . . . . 20,000 4,000
Changes in current assets and liabilities:
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . (498,000) (3,246,000)
Income tax refunds receivable . . . . . . . . . . . . . . . . . . . 20,000 --
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . (175,000) 967,000
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 123,000 163,000
Accounts payable and accrued liabilities . . . . . . . . . . . . . . (426,000) 538,000
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . 2,442,000 1,932,000
Other assets and liabilities . . . . . . . . . . . . . . . . . . . . . (161,000) 10,000
------------- ------------
Net cash provided by operating activities . . . . . . . . . . . . . . . 8,486,000 4,945,000
Cash flows from investing activities:
Additions to property, plant and equipment . . . . . . . . . . . . . . (2,037,000) (1,728,000)
Proceeds from sale of property, plant and equipment . . . . . . . . . . 1,000 --
Purchases of investments . . . . . . . . . . . . . . . . . . . . . . . (7,915,000) (1,950,000)
Proceeds from sale of investments . . . . . . . . . . . . . . . . . . . 7,200,000 --
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 1,000
------------- ------------
Net cash used by investing activities . . . . . . . . . . . . . . . . . (2,751,000) (3,677,000)
Cash flows from financing activities:
Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . (955,000) (634,000)
Stock Options exercised . . . . . . . . . . . . . . . . . . . . . . . . 69,000 53,000
------------- ------------
Net cash used by financing
activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (886,000) (581,000)
------------- ------------
Net increase in cash and cash equivalents . . . . . . . . . . . . . . . . 4,849,000 687,000
Cash and cash equivalents at beginning of year . . . . . . . . . . . . . . 2,243,000 3,631,000
------------- ------------
Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . $ 7,092,000 $ 4,318,000
============= ============
</TABLE>
See accompanying notes.
4
<PAGE> 6
REPUBLIC GROUP INCORPORATED
Notes to Consolidated Financial Statements
September 30, 1996 and 1995 (Unaudited)
(1) In the opinion of management of the Company, the accompanying
unaudited consolidated financial statements reflect all adjustments, of a
normal recurring nature, to fairly present the Company's financial position as
of September 30, 1996, and the results of operations and cash flows for the
periods ended September 30, 1996 and 1995. The operating results for the
interim periods are not necessarily indicative of the results to be expected
for a full year. It is suggested that these consolidated financial statements
be read in conjunction with the consolidated financial statements and the notes
thereto included in the Company's Form 10-K as of June 30, 1996.
(2) Per share computations are based on the weighted average number of
common shares outstanding during each period. Net income per common and common
equivalent share, on a fully diluted basis, is substantially the same as
primary earnings per share as presented. The number of shares used in the per
share computations were 10,698,000 for the three month period ended September
30, 1996 and 10,629,000 for the comparable 1995 period.
(3) In connection with its preparations for a warehouse addition to its
paperboard mill located in Commerce City, Colorado, a suburb of Denver, the
Company discovered and has been investigating the presence of subsurface
petroleum hydrocarbons. The Company retained an environmental consultant who
concluded that fuel oil, jet fuel, and gasoline additives had migrated in the
subsurface of the Company's property from an adjacent property. The Company
has conducted its own investigations, and the adjacent property owner has
conducted its own investigations. Additionally, the Company and the adjacent
property owner have jointly sponsored investigations. Discussions between the
parties continue. The Company has completed the construction of the warehouse
addition under approval of the Colorado Department of Health. At this time,
the Company has not ascertained the future liability, if any, of the above
matter.
(4) Reclassification: Certain prior year balances have been reclassified
to conform with current year presentation.
(5) Subsequent Event: On October 24, 1996, the Company declared a
quarterly cash dividend of $.09 per share payable to the stockholders of record
on November 29, 1996 to be paid on December 16, 1996. Dividend payments of
approximately $955,000 will be paid from existing cash balances.
(6) Income Taxes: The provisions for income taxes are based on estimated
annual effective tax rates, which differ from the federal statutory rates
principally due to state income taxes and certain non-deductible expenses.
These estimates are updated quarterly.
5
<PAGE> 7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Quarters Ended September 30, 1996 and 1995. Consolidated net income
was $5,019,000 or $.47 per share on net sales of $29,004,000 for the first
quarter ended September 30, 1996. This compares to net income of $3,168,000 or
$.30 per share on net sales of $32,272,000 for the same quarter of 1995.
Operating profits were likewise up 49% to $8,244,000 from $5,515,000 recorded
in the September 1995 quarter.
Recycled paperboard shipments increased 2% and gypsum wallboard 6%
from the September 1995 quarter to the 1996 quarter. Increased shipments
coupled with improved operating margins caused the large increase in
consolidated net income. The increase in operating margins was primarily
attributable to a decrease in raw material costs in both operating segments.
However, the decrease in raw material costs, principally reclaimed paper fiber,
in the recycled paperboard segment also precipitated a downward drift in net
selling prices for the Company's products as is evident by the decline in net
sales from the 1995 quarter to the 1996 quarter. Additionally, raw material
costs in the gypsum wallboard segment were affected favorably by the decline in
the cost of recycled paperboard, a large cost component of gypsum wallboard.
Another factor which influenced margins was a 3.7% increase in the average
gross selling price of gypsum wallboard from the September 1995 quarter to the
September 1996 quarter.
The cost of old corrugated containers (OCC) and double-lined kraft
(DLK) rose $10 to $15 per ton in the month of September. These are two
principal grades of reclaimed paper fiber utilized in the manufacture of
recycled paperboard. Additionally, the cost of DLK and high-end white grades
rose slightly in the month of October. Due to this modest upward trend,
paperboard operating margins may decline from the September 1996 quarter to
December 1996 quarter.
Environmental Matters
In connection with the Company's preparation for a warehouse addition
to its paperboard mill located in Commerce City, Colorado, a suburb of Denver,
the Company discovered and has been investigating the presence of subsurface
petroleum hydrocarbons. The Company retained an environmental consultant who
concluded that fuel oil, jet fuel and gasoline additives had migrated in the
subsurface of the Company's property from an adjacent property. The Company has
conducted its own investigations, and the adjacent property owner has conducted
its own investigations. Additionally, the Company and the adjacent owner have
jointly sponsored investigations. Discussions between the parties continue. The
Company has completed the construction of the warehouse addition under approval
of the Colorado Department of Health. At this time, the Company has not
ascertained the future liability, if any, of the above matter.
6
<PAGE> 8
Liquidity and Capital Resources
The following is a summary of certain financial statistics related to
the liquidity of the Company at September 30, 1996, and at June 30, 1996.
<TABLE>
<CAPTION>
Sept. 30, 1996 June 30, 1996
-------------- --------------
<S> <C> <C>
Working Capital $26,563,000 $22,485,000
Current Ratio 2.8:1 2.8:1
Cash and investments $20,132,000 $14,568,000
Long-term debt (including current portion) $24,840,000 $24,840,000
</TABLE>
The Company obtained a $28,000,000 term loan from a commercial bank
for the purchase of Halltown Paperboard Company pursuant to a loan agreement
dated June 30, 1995. The term loan matures in June 2002. The Halltown facility
was used as collateral for the loan.
The Company also obtained a $ 7,000,000 line of credit from a
commercial bank pursuant to a loan agreement dated June 30, 1995. The revolving
credit facility is for two years, renewable every year for an additional year.
To date, no amounts have been borrowed against the revolving credit facility.
The revolving credit facility expires June 30, 1998. Management believes that
cash and investments, and internally generated funds, supplemented as needed by
advances under the working capital line of credit, will be sufficient to meet
the Company's short-term working capital requirements.
Outstanding principal amounts on both the term loan and revolving
credit facility bear interest at a variable rate equal to (i) the London
Interbank Offered Rate, plus an agreed margin (ranging from 75 to 175 basis
points for the term loan and 50 to 150 points for the revolving credit
facility), which is to be established annually based upon the Company's
coverage of fixed charges or (ii) the bank's corporate prime rate, less 0.5%
for the term loan and less 0.75% for the revolving credit facility. Under the
term loan and revolving credit facility, the Company is required to adhere to
several financial covenants some of which involve working capital, current
ratio, net worth and fixed charge coverage minimums.
The Board of Directors of the Company has approved new budgeted
capital expenditures of $8.6 million for fiscal 1997. Cash provided by
operations and existing cash balances should be sufficient to fund these
expenditures.
On October 24, 1996, the Board of Directors of the Company declared a
quarterly cash dividend of $.09 per share on its outstanding common stock to
be paid on December 16, 1996 to stockholders of record on November 29, 1996.
The dividend payment will amount to approximately $955,000 and will be paid
from existing cash balances.
7
<PAGE> 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
There are no material pending legal proceedings involving the Company
or any of its subsidiaries, other than ordinary routine litigation
incidental to the Company's business.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
The Company held its Annual Meeting of Stockholders on October 24,
1996. The votes cast on each item in order of the listing in the
Proxy was as follows:
1. Election of Directors
<TABLE>
<CAPTION>
Votes Votes To Broker
For Withhold Authority Non-Votes
--------- ------------------ ---------
<S> <C> <C> <C>
Steve L. Gagnon 8,741,709 753,353 0
Bert A. Nelson 8,743,309 751,753 0
Talbot Rain 8,732,040 763,022 0
Gerald L. Ray 8,737,783 757,279 0
Robert F. Sexton 8,742,046 753,016 0
David P. Simpson 8,719,460 775,602 0
Phil Simpson 8,743,309 751,753 0
L. L. Wallace 8,708,151 786,911 0
David B. Yarbrough 8,731,970 763,092 0
</TABLE>
2. Approval of an amendment to the Company's Restated Certificate of
Incorporation (the "Certificate") to add a "fair price" provision
requiring that certain transactions with interested 15%
stockholders of the Company or certain related parties (an
"Interested Person") be approved by the vote of the holders of not
less than 66-2/3% of the total voting power of all outstanding
shares of voting stock of the Company (excluding shares held by
such Interested Person) unless the transaction is approved by a
majority of the Continuing Directors (as defined in such amendment)
or certain procedural and fair price requirements are satisfied.
<TABLE>
<CAPTION>
For Against Abstain Broker Non-Votes
--- ------- ------- ----------------
<S> <C> <C> <C>
5,840,706 2,101,724 129,311 1,423,321
</TABLE>
8
<PAGE> 10
3. Approval of an amendment to the Certificate to add a requirement
that action by stockholders only be taken at an annual or special
meeting of stockholders and not by written consent.
<TABLE>
<CAPTION>
For Against Abstain Broker Non-Votes
--- ------- ----------------
<S> <C> <C> <C>
5,922,323 2,126,343 86,108 1,360,288
</TABLE>
4. Approval of an amendment to the Certificate to add a requirement
that amendment, alteration or repeal of the Amended and Restated
Bylaws of the Company by the stockholders requires the vote of the
holders of not less than 66-2/3% of the total voting power of all
outstanding shares of voting stock of the Company, and, if such
action has been proposed by an Interested Person, the additional
vote of the holders of not less than 66 2/3% of the total voting
power of all outstanding shares of voting stock not beneficially
owned by an Interested Person.
<TABLE>
<CAPTION>
For Against Abstain Broker Non-Votes
--- ------- ------- ----------------
<S> <C> <C> <C>
5,477,040 2,454,552 140,149 1,423,321
</TABLE>
5. Approval of an amendment to the Certificate to add a requirement
that amendment, alteration or repeal of the foregoing amendments to
the Certificate that are approved, as well as the amendment that
would be added by this proposal itself, requires the vote of the
holders of not less than 66-2/3% of the total voting power of all
outstanding shares of voting stock, and, if such action has been
proposed by an Interested Person, the additional vote of the
holders of not less than 66 2/3% of the total voting power of all
outstanding shares of voting stock not beneficially owned by an
Interested Person.
<TABLE>
<CAPTION>
For Against Abstain Broker Non-Votes
--- ------- ------- ----------------
<S> <C> <C> <C>
5,502,661 2,456,725 112,355 1,423,321
</TABLE>
6. Approval of an amendment to the Certificate to increase the total
number of authorized shares of Common Stock from 25,000,000 to
35,000,000.
<TABLE>
<CAPTION>
For Against Abstain Broker Non-Votes
--- ------- ------- ----------------
<S> <C> <C> <C>
7,747,546 1,639,451 108,065 0
</TABLE>
7. Approval of certain amendments to the Company's 1989 Long-Term
Incentive Plan (as more particularly described in the Proxy
Statement).
<TABLE>
<CAPTION>
For Against Abstain Broker Non-Votes
--- ------- ------- ----------------
<S> <C> <C> <C>
7,238,675 744,520 151,578 1,360,289
</TABLE>
8. Approval of certain amendments to the Company's Non-Employee
Director Stock Option Plan (as more particularly described in
the Proxy Statement).
<TABLE>
<CAPTION>
For Against Abstain Broker Non-Votes
--- ------- ------- ----------------
<S> <C> <C> <C>
7,373,650 606,159 154,964 1,360,289
</TABLE>
9
<PAGE> 11
9. In their discretion on any other matters as may properly come
before the meeting or any adjournment(s) thereof.
<TABLE>
<CAPTION>
For Against Abstain Broker Non-Votes
--- ------- ------- ----------------
<S> <C> <C> <C>
9,459,462 35,600 0 0
</TABLE>
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3(a) The Second Restated Certificate of Incorporation
of the Company.
3(b) Amended and Restated ByLaws of the Company.
10(a) Restated and Amended 1989 Long-Term Incentive Plan,
which is a "management contract or compensatory
plan or arrangement".
10(b) Amended Non-Employee Director Stock Option Plan,
which is a "management contract or compensatory
plan or arrangement".
27 Article 5 of Regulation S-X-Financial Data Schedule.
(b) Reports on Form 8-K
None.
10
<PAGE> 12
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.
REPUBLIC GROUP INCORPORATED
November 11, 1996 /s/ DOYLE R. RAMSEY
--------------------------------------
Doyle R. Ramsey
Vice President and Chief
Financial Officer
November 11, 1996 /s/ JOHN W. MCCRACKEN
--------------------------------------
John W. McCracken
Controller and Principal
Accounting Officer
11
<PAGE> 13
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Description
- --------- -----------
<S> <C>
3(a) The Second Restated Certificate of Incorporation
3(b) Amended and Restated ByLaws of the Company
10(a) Restated and Amended 1989 Long-Term Incentive Plan
10(b) Amended Non-Employee Director Stock Option Plan
27 Article 5 of Regulation S-X-Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 3(a)
SECOND RESTATED
CERTIFICATE OF INCORPORATION
OF
REPUBLIC GROUP INCORPORATED
* * * *
REPUBLIC GROUP INCORPORATED, a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), DOES HEREBY CERTIFY:
1. That the Certificate of Incorporation of the Corporation was filed with the
Secretary of State of the State of Delaware on August 28, 1961 under the name
Republic Gypsum Company;
2. That, in accordance with the requirements of Section 245 of the General
Corporation Law of the State of Delaware, the Board of Directors of the
Corporation duly adopted resolutions authorizing the restatement and
integration of the Corporation's Certificate of Incorporation, as amended;
3. That the following Restated Certificate of Incorporation restates and
integrates the provisions of the Corporation's Certificate of Incorporation, as
amended, that are operative and in effect as of the date hereof, and does not
further amend such provisions, and there is no discrepancy between such
provisions and the following Restated Certificate of Incorporation;
4. That the text of the Certificate of Incorporation, as amended, is restated
and integrated in its entirety as follows:
FIRST. The name of the corporation is
REPUBLIC GROUP INCORPORATED
SECOND. Its principal office in the State of Delaware is located at No.
100 West Tenth Street, in the City of Wilmington, County of New Castle. The
name and address of its resident agent is The Corporation Trust Company, No.
100 West Tenth Street, Wilmington 99, Delaware.
THIRD. The nature of the business, or objects or purposes to be
transacted, promoted or carried on are:
To conduct and carry on the business of mining, buying, transporting,
processing, selling and dealing in gypsum and manufacturing, selling and
dealing in gypsum wallboard and other gypsum products.
<PAGE> 2
To conduct and carry on the business of general contractors and builders;
to design, plan, erect, construct, equip, alter, rebuild, remodel, improve and
repair all kinds of houses, buildings and other structures or parts thereof and
works and excavations therefor; to employ mechanics, laborers, artisans and
workmen, and to make contracts and sub-contracts for work and materials; to
manufacture, buy, sell and deal in lumber and other building materials of all
kinds; to own, manage, operate, lease, purchase and sell buildings of all kinds
and generally to transact all business of a similar nature necessary or
incidental to that purpose, and to do all things necessary or incidental or
connected with the business of contractors and builders.
To lend money, without banking privileges, and generally to engage in the
mortgage, finance and credit business.
To engage in and carry on the business of buying, leasing and otherwise
acquiring lands and interests in lands of every kind and description and
wheresoever situated; buying, leasing and otherwise acquiring and constructing
and erecting, or contracting for the construction and erection of buildings and
structures in and on such lands for any uses or purposes; holding, owning,
improving, developing, maintaining, operating, letting, leasing, mortgaging,
selling or otherwise disposing of such property or any part thereof; equipping,
furnishing and operating apartments, apartment houses, hotels, apartment
hotels, restaurants, residences, office buildings, shopping centers, industrial
complexes, industrial plants, warehouses, or any other buildings or structures
of whatsoever kind.
To build, buy, sell, lease, own and operate grain and commodity elevators
and warehouses for the storage, handling and forwarding of all kinds of grain,
produce, commodities and provisions and the by-products thereof.
To buy and sell and otherwise deal in and with grain, provisions and other
commodities.
To search, mine, prospect and explore for petroleum and other oils, gas and
any other useful or valuable minerals and substances or products, either for
its own account or for others; to drill for, remove, produce, acquire by
purchase or otherwise, own, use, store, transport, refine, distill,
manufacture, process, prepare for market, sell and otherwise dispose of
petroleum and other oils, bitumens, bituminous substances of all kinds,
vegetable substances, minerals and gases and all products, by-products and
residual products thereof or therefrom; to drill for, purchase, take, lease as
lessee and otherwise acquire, to own, use, maintain, develop, improve and
operate, and to sell, convey, mortgage, pledge, lease as lessor and otherwise
dispose of and deal in oil, gas and other wells and leases, royalties and other
mineral interests and any articles, materials, machinery, equipment, structures
or property uses therefor or in connection therewith; and to engage in any
trades, businesses and occupations necessary or convenient in connection with
any business of the corporation or incidental, related or contributory thereto.
To transport, ship, manufacture, purchase or otherwise acquire, invest in,
own, mortgage, pledge, sell, assign and transfer or otherwise dispose of,
trade, deal in and deal with goods, wares and merchandise and personal property
of every class and description.
To acquire, and pay for in cash, stock or bonds of this corporation or
otherwise, the good will, rights, assets and property, and to undertake or
assume the whole or any part of the obligations or liabilities of any person,
firm, association or corporation.
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To acquire, hold, use, sell, assign, lease, grant licenses in respect of,
mortgage or otherwise dispose of letters patent of the United States or any
foreign country, patent rights, licenses and privileges, inventions,
improvements and processes, copyrights, trade-marks and trade names, relating
to or useful in connection with any business of this corporation.
To acquire by purchase, subscription or otherwise, and to receive, hold,
own, guarantee, sell, assign, exchange, transfer, mortgage, pledge or otherwise
dispose of or deal in and with any of the shares of the capital stock, or any
voting trust certificates in respect of the shares of capital stock, scrip,
warrants, rights, bonds, debentures, notes, trust receipts, and other
securities, obligations, choses in action and evidences of indebtedness or
interest issued or created by any corporations, joint stock companies,
syndicates, associations, firms, trusts or persons, public or private, or by
the government of the United States of America, or by any foreign government,
or by any state, territory, province, municipality or other political
subdivision or by any governmental agency, and as owner thereof to possess and
exercise all the rights, powers and privileges of ownership, including the
right to execute consents and vote thereon, and to do any and all acts and
things necessary or advisable for the preservation, protection, improvement and
enhancement in value thereof.
To enter into, make and perform contracts of every kind and description
with any person, firm, association, corporation, municipality, county, state,
body politic or government or colony or dependency thereof.
To borrow or raise moneys for any of the purposes of the corporation and,
from time to time without limit as to amount, to draw, make, accept, endorse,
execute and issue promissory notes, drafts, bills of exchange, warrants, bonds,
debentures and other negotiable or non-negotiable instruments and evidences of
indebtedness, and to secure the payment of any thereof and of the interest
thereon by mortgage upon or pledge, conveyance or assignment in trust of the
whole or any part of the property of the corporation, whether at the time owned
or thereafter acquired, and to sell, pledge or otherwise dispose of such bonds
or other obligations of the corporation for its corporate purposes.
To loan to any person, firm or corporation any of its surplus funds, either
with or without security.
To purchase, hold, sell and transfer the shares of its own capital stock;
provided it shall not use its funds or property for the purchase of its own
shares of capital stock when such use would cause any impairment of its capital
except as otherwise permitted by law, and provided further that shares of its
own capital stock belonging to it shall not be voted upon directly or
indirectly.
To have one or more offices, to carry on all or any of its operations and
business and without restriction or limit as to amount to purchase or otherwise
acquire, hold, own, mortgage, sell, convey or otherwise dispose of, real and
personal property of every class and description in any of the states,
districts, territories or colonies of the United States, and in any and all
foreign countries, subject to the laws of such state, district, territory,
colony or country.
In general, to carry on any other business in connection with the
foregoing, and to have and exercise all the powers conferred by the laws of
Delaware upon corporations formed under the General Corporation Law of the
State of Delaware, and to do any or all of the things hereinbefore set forth to
the same extent as natural persons might or could do.
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The objects and purposes specified in the foregoing clauses shall, except
where otherwise expressed, be in nowise limited or restricted by reference to,
or inference from, the terms of any other clause in this certificate of
incorporation, but the objects and purposes specified in each of the foregoing
clauses of this article shall be regarded as independent objects and purposes.
FOURTH. The total number of shares of Capital Stock which the Corporation
shall have authority to issue is Thirty-Five Million Four Hundred Eighty-Seven
Thousand Four Hundred Ten (35,487,410) shares, divided into Four Hundred
Eighty-Seven Thousand Four Hundred Ten (487,410) shares of Preferred Stock,
without par value, issuable in series, hereinafter called "Preferred Stock
Issuable in Series", and Thirty-Five Million (35,000,000) shares of Common
Stock of the par value of $1.00 each.
Shares of the Preferred Stock Issuable in Series may be issued from time to
time in one or more series, the shares of each series to have such voting
powers, full or limited, or no voting powers, and such designations,
preferences and relative, participating, optional or other special rights, and
qualifications, limitations or restrictions thereof, as shall be stated and
expressed herein and in a resolution or resolutions providing for the issue of
such series adopted by the Board of Directors of the Corporation. The Board of
Directors of the Corporation is hereby expressly authorized, subject to the
limitations provided by law, to establish and designate series of the Preferred
Stock Issuable in Series, to fix the number of shares constituting each series,
and to fix the designations and the relative powers, rights, preferences and
limitations of the shares of each series and the variations in the relative
powers, rights, preferences and limitations as between series, and to increase
and to decrease the number of shares constituting each series. The authority
of the Board of Directors of the Corporation with respect to each series shall
include but shall not be limited to the authority to determine the following:
(a) The designation of such series;
(b) The number of shares initially constituting such series;
(c) The increase, and the decrease to a number not less than the number of
the outstanding shares of such series, of the number of shares
constituting such series theretofore fixed;
(d) The rate or rates and the times at which dividends on the shares of
such series shall be paid, and whether or not such dividends shall be
cumulative, and, if such dividends shall be cumulative, the date or
dates from and after which they shall accumulate;
(e) Whether or not the shares of such series shall be redeemable, and, if
such shares shall be redeemable, the terms and conditions of such
redemption, including but not limited to the date or dates upon or
after which such shares shall be redeemable and the amount per share
which shall be payable upon such redemption, which amount may vary
under different conditions and at different redemption dates;
(f) The amount payable on the shares of such series in the event of the
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation. A liquidation, dissolution or winding up of the
Corporation, as such terms are used in this subparagraph (f), shall
not be deemed to be occasioned by or to include any consolidation or
merger of the Corporation with or into any other corporation or
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corporations or a sale, lease or conveyance of all or a part of the
assets of the Corporation;
(g) Whether or not the shares of such series shall have voting rights, in
addition to the voting rights provided by law, and, if such shares
shall have such voting rights, the terms and conditions thereof,
including but not limited to the right of the holders of such shares
to vote as a separate class either alone or with the holders of shares
of one or more other series of Preferred Stock Issuable in Series and
the right to have more (or less) than one vote per share;
(h) Whether or not a sinking fund shall be provided for the redemption of
the shares of such series, and, if such a sinking fund shall be
provided, the terms and conditions thereof;
(i) Whether or not a purchase fund shall be provided for the shares of
such series, and, if such a purchase fund shall be provided, the terms
and conditions thereof;
(j) Whether or not the shares of such series shall have conversion
privileges, and, if such shares shall have conversion privileges, the
terms and conditions of conversion, including but not limited to any
provision for the adjustment of the conversion rate or the conversion
price; and
(k) Any other powers, preferences and relative, participating, optional,
or other special rights, or qualifications, limitations or
restrictions thereof, as shall not be inconsistent with the provisions
of this Article Fourth or the limitations provided by law.
No stockholder of this Corporation shall by reason of his holding shares of
any class or a series of any class, have any preemptive or preferential right
to purchase or subscribe to any shares of any class, or a series of any class,
of this Corporation, now or hereafter to be authorized, or any notes,
debentures, bonds or other securities convertible into or carrying options or
warrants to purchase shares of any class, or a series of any class, now or
hereafter to be authorized, whether or not the issuance of any such shares, or
such notes, debentures, bonds or other securities, would adversely affect the
dividend or voting rights of such stockholder, other than such rights, if any,
as the Board of Directors in its discretion from time to time may grant and at
such price as the Board of Directors in its discretion may fix; and the Board
of Directors may issue shares of any class or a series of any class of this
Corporation, or any notes, debentures, bonds, or other securities convertible
into or carrying options or warrants to purchase shares of any class, or a
series of any class, without offering any such shares, either in whole or in
part, to the existing stockholders of any class or a series of any class.
FIFTH. The minimum amount of capital with which the corporation will
commence business is One Thousand Dollars ($1,000.00).
SIXTH. The corporation is to have perpetual existence.
SEVENTH. The private property of the stockholders shall not be subject to
the payment of corporate debts to any extent whatever.
EIGHTH. In furtherance and not in limitation of the powers conferred by
statute, the board
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of directors is expressly authorized:
To make, alter or repeal the by-laws of the corporation.
To authorize and cause to be executed mortgages and liens upon the real and
personal 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 resolution passed by a majority of the whole board, to designate one or
more committees, each committee to consist of two or more of the directors of
the corporation, which, to the extent provided in the resolution or in the
by-laws of the corporation, shall have and may exercise the powers 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. Such committee or committees shall have such name or names as
may be stated in the by-laws of the corporation or as may be determined from
time to time by resolution adopted by the board of directors.
When and as authorized by the affirmative vote of the holders of a majority
of the stock issued and outstanding having voting power given at a
stockholders' meeting duly called for that purpose, or when authorized by the
written consent of the holders of a majority of the voting stock issued and
outstanding, to sell, lease or exchange 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 be in whole or in
part shares of stock in, and/or other securities of, any other corporation or
corporations, as its board of directors shall deem expedient and for the best
interests of the corporation.
NINTH. Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof, or on the
application of any receiver or receivers appointed for this corporation under
the provisions of section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers
appointed for this corporation under the provisions of section 279 of Title 8
of the Delaware Code order a meeting of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of this corporation, as the
case may be, to be summoned in such manner as the said court directs. If a
majority in number representing three-fourths in value of the creditors or
class of creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this corporation, as the case may be,
and also on this corporation.
TENTH. The corporation shall indemnify any and all of its directors or
officers or former directors or officers or any person who may have served at
its request as a director or officer of another corporation in which it owns
shares of capital stock or of which it is a creditor against expenses actually
and necessarily incurred by them in connection with the defense of any action,
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suit proceeding in which they, or any of them, are made parties, or a party, by
reason of being or having been directors or officers or a director or officer
of the corporation, or of such other corporation, except in relation to matters
as to which any such director or officer or former director or officer or
person shall be adjudged in such action, suit or proceeding to be liable for
negligence or misconduct in the performance of duty. Such indemnification
shall not be deemed exclusive of any other rights to which those indemnified
may be entitled, under any by-laws, agreement, vote of stockholders, or
otherwise.
ELEVENTH. Meetings of stockholders may be held outside the State of
Delaware, if the bylaws so provide. The books of the corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
board of directors or in the by-laws of the corporation. Elections of
directors need not be by ballot unless the by-laws of the corporation shall so
provide.
TWELFTH. Any action required or permitted to be taken by the stockholders
of the Corporation must be effected at a duly called annual or special meeting
of such holders and may not be effected by any consent in writing by such
holders. At any annual meeting or special meeting of stockholders of the
Corporation, only such business shall be conducted as shall have been brought
before such meeting in the manner provided by the Bylaws of the Corporation.
THIRTEENTH. A. (1) In addition to any affirmative vote required by law,
by this Certificate of Incorporation or by any Preferred Stock Designation, and
except as otherwise expressly provided in Section B of this Article THIRTEENTH:
(i) any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with or into (a) any
Interested Stockholder (as hereinafter defined) or (b) any other
corporation (whether or not itself an Interested Stockholder)
which is, or after such merger or consolidation would be, an
Affiliate or Associate (as such terms are hereinafter defined) of
an Interested Stockholder; or
(ii) any sale, lease, exchange, mortgage, pledge, transfer
or other disposition (in one transaction or a series of
transactions) to or with any Interested Stockholder or any
Affiliate or Associate of any Interested Stockholder of any assets
of the Corporation or any Subsidiary having an aggregate Fair
Market Value (as hereinafter defined) of $1 million or more; or
(iii) the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of transactions) of any
securities of the Corporation or any Subsidiary to any Interested
Stockholder or any Affiliate or Associate of any Interested
Stockholder in exchange for cash, securities or other property (or
a combination thereof) having an aggregate Fair Market Value of $1
million or more; or
(iv) the adoption of any plan or proposal for the
liquidation or dissolution of the Corporation proposed by or on
behalf of any Interested Stockholder or any Affiliate or Associate
of any Interested Stockholder; or
(v) any reclassification of securities (including any
reverse stock
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<PAGE> 8
split), or recapitalization of the Corporation, or any merger or
consolidation of the Corporation with any of its Subsidiaries or
any other transaction (whether or not with or into or otherwise
involving any Interested Stockholder or any Affiliate or Associate
of any Interested Stockholder) which has the effect, directly or
indirectly, of increasing the proportionate share of the
outstanding shares of any class of equity or convertible
securities of the Corporation or any Subsidiary which is
"beneficially owned" (as hereinafter defined) by any Interested
Stockholder or any Affiliate or Associate of any Interested
Stockholder;
shall require the affirmative vote of not less than two-thirds
(66-2/3%) of the total voting power of all outstanding Voting Shares
that are not beneficially owned by the Interested Stockholder referred
to in clauses (i) through (v) above or the Affiliates or Associates of
such Interested Stockholder voting together as a single class. Such
affirmative vote shall be required notwithstanding any other
provisions of this Certificate of Incorporation or any provision of
law or of any agreement with any national securities exchange or
otherwise which might otherwise permit a lesser vote or no vote.
(2) The term "Business Combination" as used in this Article
THIRTEENTH shall mean any transaction which is referred to in any one
or more of subparagraphs (i) through (v) of paragraph (1) of this
Section A. Notwithstanding any of the foregoing, the term Business
Combination shall not include any transaction between the Corporation
or any Subsidiary and another corporation fifty percent (50%) or more
of the voting stock of which is owned by the Corporation or any
Subsidiary and none of which is owned by an Interested Stockholder or
any Affiliate or Associate of any Interested Stockholder if each
holder of common stock of the Corporation or any Subsidiary receives
the same type of consideration in proportion to his holdings.
B. The provisions of Section A of this Article THIRTEENTH shall not
be applicable to any particular Business Combination in which a particular
Interested Stockholder or any Affiliate or Associate of such Interested
Stockholder has an interest of the type contemplated by Section A(1) of
this Article THIRTEENTH, and such Business Combination shall require only
such affirmative vote as is required by law, any other provision of this
Certificate of Incorporation and any Preferred Stock Designation, if, in
the case of a Business Combination that does not involve any cash or other
consideration being received by the stockholders of the Corporation, solely
in their respective capacities as stockholders of the Corporation, the
condition specified in the following paragraph (1) is met, or, in the case
of any other Business Combination, the conditions specified in either of
the following paragraph (1) or paragraph (2) are met:
(1) The Business Combination shall have been approved by a
majority of the Continuing Directors (as hereinafter defined);
provided however, that this condition shall not be capable of
satisfaction unless there are at least three Continuing Directors.
(2) All of the following conditions shall have been met:
(i) The aggregate amount of (x) cash and (y) Fair Market Value
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as of the date of the consummation of the Business Combination of
consideration other than cash to be received per share by holders of
Common Stock in such Business Combination shall be at least equal to
the highest amount determined under subparagraphs (a), (b), (c) and
(d) below:
(a) the highest per share price (including any brokerage
commissions, transfer taxes and soliciting dealers' fees) paid
by the Interested Stockholder or any of its Affiliates or
Associates for any share of Common Stock acquired by it or
them;
(b) the higher of: (I) the highest Fair Market Value per
share of Common Stock during the three-month period ending on
the day after the date of the first public announcement of the
proposal of the Business Combination (the "Announcement Date")
or (II) (if applicable) the Fair Market Value per share of
Common Stock on the date on which the Interested Stockholder
became an Interested Stockholder (such latter date is referred
to in this Article THIRTEENTH as the "Determination Date"),
provided that the Determination Date is not more than two
years prior to the Announcement Date;
(c) (if applicable) the price per share equal to the Fair
Market Value per share of Common Stock determined pursuant to
subparagraph B(i)(b)(I) above, multiplied by the ratio of (I)
the highest per share price (including any brokerage
commissions, transfer taxes and soliciting dealers' fees) paid
by the Interested Stockholder or any of its Affiliates or
Associates for any shares of Common Stock acquired by it or
them within the two-year period immediately prior to the
Announcement Date to (II) the Fair Market Value per share of
Common Stock on the first day in such two-year period on which
the Interested Stockholder or any of its Affiliates or
Associates acquired any shares of Common Stock; and
(d) the earnings per share of Common Stock for the four
full consecutive fiscal quarters immediately preceding the
record date for determining the holders of record of Common
Stock entitled to vote on the Business Combination (or if no
such record date is set, then the Announcement Date),
multiplied by the then price/earnings multiple (if any) of
such Interested Stockholder as customarily computed and
reported in the financial community; provided, however that if
the common stock of the Interested Person is not at such time
and has not been continuously over the preceding twelve (12)
month period registered under Section 12 of the Securities
Exchange Act of 1934, as amended (or any comparable provision
of any superseding statute), and such Interested Stockholder
is a direct or indirect subsidiary of another person the
common stock of which is and has been so registered, the
price/earnings multiple shall be that of such other person.
(ii) The aggregate amount of (x) cash and (y) Fair Market
Value
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as of the date of the consummation of the Business Combination of
consideration other than cash to be received per share by holders
of shares of any class of outstanding Preferred Stock shall be at
least equal to the highest amount determined under subparagraphs
(a), (b), (c) and (d) below:
(a) the highest per share price (including any brokerage
commissions, transfer taxes and soliciting dealers' fees) paid
by the Interested Stockholder or any of its Affiliates or
Associates for any shares of such class of Preferred Stock
acquired by it or them;
(b) the highest preferential amount per share to which
the holders of shares of such class of Preferred Stock would
be entitled in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the
Corporation, regardless of whether the Business Combination to
be consummated constitutes such an event;
(c) the higher of: (I) the highest Fair Market Value per
share of Preferred Stock during the three-month period ending
on the day after the Announcement Date, or (II) (if
applicable) the Fair Market Value per share of such class of
Preferred Stock on the Determination Date, provided the
Determination Date is not more than two years prior to the
Announcement Date; and
(d) (if applicable) the price per share equal to the Fair
Market Value per share of such Class of Preferred Stock
determined pursuant to subparagraph (B)(ii)(c)(I) above,
multiplied by the ratio of (I) the highest per share price
(including any brokerage commissions, transfer taxes and
soliciting dealers' fees) paid by the Interested Stockholder
or any of its Affiliates or Associates for any shares of such
class of Preferred Stock acquired by it or them within the
two-year period immediately prior to the Announcement Date to
(II) the Fair Market Value per share of such class of
Preferred Stock on the first day in such two-year period upon
which the Interested Stockholder or any of its Affiliates or
Associates acquired any shares of such class of Preferred
Stock.
The provisions of this subparagraph (B)(2)(ii) shall be required
to be met with respect to every class of outstanding Preferred
Stock, whether or not the Interested Stockholder has previously
acquired any shares of a particular class of Preferred Stock.
(iii) If the Interested Stockholder or any of its
Affiliates or Associates have paid for shares of any class or
series of Capital Stock with varying forms of consideration, the
form of consideration to be received per share by holders of
shares of that class or series of Capital Stock shall be either
cash or the form used to acquire the largest number of shares of
such class or series of Capital Stock previously acquired by the
Interested Stockholder or any of its Affiliates or Associates.
The price determined in accordance with subparagraphs B(2)(i) and
(ii) of this Article
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THIRTEENTH shall be subject to appropriate adjustment in the event
of any stock dividend, stock split, combination of shares or
similar event.
(iv) After becoming an Interested Stockholder and prior to
the consummation of such Business Combination (a) such Interested
Stockholder or any of its Affiliates or Associates shall not have
acquired any newly issued shares of Capital Stock, directly or
indirectly, from the Corporation or any Subsidiary (except upon
conversion of convertible securities acquired by it prior to
becoming an Interested Stockholder or upon compliance with the
provisions of this Article THIRTEENTH or as a result of a pro rata
stock dividend or stock split); (b) except as approved by a
majority of the Continuing Directors, there shall have been (I) no
failure to declare and pay at the regular date thereof any full
quarterly or semi-annual dividends (whether or not cumulative) on
the outstanding Preferred Stock, (II) no reduction in the annual
rate of dividends paid on the Common Stock (except as necessary to
reflect any subdivision of the Common Stock), and (III) an
increase in such annual rate of dividends as necessary to reflect
any reclassification (including any reverse stock split),
recapitalization, reorganization or any similar transaction which
has the effect of reducing the number of outstanding shares of
Common Stock; and (c) such Interested Stockholder or any of its
Affiliates or Associates shall not have received the benefit,
directly or indirectly (except proportionately as a stockholder),
of any loans, advances, guarantees, pledges or other financial
assistance or tax credits or other tax advantages provided by the
Corporation or any Subsidiary, or made any major changes in the
Corporation's or any Subsidiary's business or equity capital
structure; and
(v) A proxy statement describing the proposed Business
Combination and complying with the requirements of the Securities
Exchange Act of 1934, as amended, and the rules and regulations
thereunder (or any subsequent provisions replacing such Act, rules
or regulations), whether or not the Corporation is then subject to
such requirements, shall be mailed to the stockholders of the
Corporation at least thirty (30) days prior to the consummation of
such Business Combination for the purpose of soliciting
stockholder approval of such Business Combination. The proxy
statement shall contain on the first page thereof, in a prominent
place, any recommendation as to the advisability (or
inadvisability) of the Business Combination that the Continuing
Directors, or any of them, may choose to state and, if deemed
advisable by a majority of the Continuing Directors, the opinion
of an investment banking firm selected by a majority of the
Continuing Directors, as to the fairness (or not) of the terms of
the Business Combination, from a financial point of view to the
holders of the outstanding shares of capital stock of the
Corporation other than the Interested Stockholder and its
Affiliates or Associates (such investment banking firm to be paid
a reasonable fee for its services by the Corporation).
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C. For the purposes of this Article THIRTEENTH:
(1) A "person" means any individual, limited partnership, limited
liability partnership, general partnership, corporation, limited
liability company, business trust or other firm or entity.
(2) "Interested Stockholder" means any person (other than the
Corporation or any Subsidiary), who or which together with their
Affiliates or Associates:
(i) is the beneficial owner, directly or indirectly, of
fifteen percent (15%) or more of the total voting power of the
outstanding Capital Stock with respect to the election of
directors of the Corporation; or
(ii) is an Affiliate or an Associate of the Corporation or
any Subsidiary and at any time within the two-year period
immediately prior to the date in question was the beneficial
owner, directly or indirectly, of fifteen percent (15%) or more of
the total voting power of the then outstanding Capital Stock with
respect to the election of directors of the Corporation; or
(iii) is an assignee of or has otherwise succeeded to any
shares of Capital Stock which were at any time within the two-year
period immediately prior to the date in question beneficially
owned by any Interested Stockholder, if such assignment or
succession shall have occurred in the course of a transaction or
series of transactions not involving a public offering within the
meaning of the Securities Act of 1933, as amended.
(3) A person shall be a "beneficial owner" of, or shall
"beneficially own", any Capital Stock:
(i) which such person or any of its Affiliates or Associates
beneficially owns, directly or indirectly within the meaning of
Rule 13d-3 under the Securities Exchange Act of 1934, as in effect
on September 1, 1996; or
(ii) which such person or any of its Affiliates or
Associates has (a) the right to acquire (whether such right is
exercisable immediately or only after the passage of time),
pursuant to any agreement, arrangement or understanding or upon
the exercise of conversion rights, exchange rights, warrants or
options, or otherwise, or (b) the right to vote pursuant to any
agreement, arrangement or understanding (but neither such person
nor any such Affiliate or Associate shall be deemed to be the
beneficial owner of any shares of Capital Stock solely by reason
of a revocable proxy granted for a particular meeting of
stockholders, pursuant to a public solicitation of proxies for
such meeting, and with respect to which shares neither such person
nor any such Affiliate or Associate is otherwise deemed to
beneficially own); or
(iii) which are beneficially owned, directly or indirectly,
within
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the meaning of Rule 13d-3 under the Securities Exchange Act of
1934, as in effect on September 1, 1996, by any other person with
which such person or any of its Affiliates or Associates has any
agreement, arrangement or understanding for the purpose of
acquiring, holding, voting (other than solely by reason of a
revocable proxy as described in subparagraph (ii) of this
paragraph (3)) or disposing of any shares of Capital Stock;
provided, however, that in the case of any employee stock ownership or
similar plan of the Corporation or of any Subsidiary in which the
beneficiaries thereof possess the right to vote any shares of Capital
Stock held by such plan, no such plan nor any trustee with respect
thereto (nor any Affiliate or Associate of such trustee), solely by
reason of such capacity of such trustee, shall be deemed for any
purposes hereof, to beneficially own any shares of Capital Stock held
under any such plan.
(4) For the purposes of determining whether a person is an
Interested Stockholder pursuant to paragraph (2) of this Section C,
the number of shares of Capital Stock deemed to be outstanding shall
include shares deemed owned through application of paragraph (3) of
this Section C but shall not include any other unissued shares of
Capital Stock which may be issuable pursuant to any agreement,
arrangement or understanding, or upon exercise of conversion rights,
warrants or options, or otherwise.
(5) "Affiliate" or "Associate" shall have the respective meaning
ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as in effect on
September 1, 1996.
(6) "Subsidiary" means a corporation of which a majority of any
class of equity securities is owned directly or indirectly, by the
Corporation; provided, however, that for the purposes of the
definition of Interested Stockholder set forth in paragraph (2) of
this Section C, the term "Subsidiary" shall mean only a corporation of
which a majority of each class of equity security is owned directly or
indirectly by the Corporation.
(7) "Continuing Director" means (i) any member of the Board of
Directors of the Corporation who is unaffiliated with the Interested
Stockholder and was either a member of the Board of Directors on the
effective date of this Article THIRTEENTH or a member of the Board of
Directors prior to the time that the Interested Stockholder in
question became an Interested Stockholder, and (ii) any director who
is thereafter chosen to fill any vacancy on the Board of Directors or
who is elected and who, in either event, is unaffiliated with the
Interested Stockholder and in connection with his or her initial
assumption of office is recommended for appointment or election by a
majority of Continuing Directors.
(8) "Fair Market Value" means (i) in the case of stock, the
highest closing sale price during the 30-day period immediately
preceding the date in question of a share of such stock on the
Composite Tape for New York Stock Exchange-Listed Stock, or if such
stock is not quoted on the Composite Tape, on the New York Stock
Exchange, or, if such stock is not listed on such Exchange, on the
principal United States securities exchange registered under the
Securities Exchange Act of 1934, as amended, on which such stock is
listed, or, if such stock
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<PAGE> 14
is not listed on any such exchange, the highest closing bid quotation
during the 30-day period immediately preceding the date in question in
the over-the-counter market, as reported by the NASDAQ National Market
or such other system then in use, or, if no such quotations are
available, the fair market value on the date in question as determined
in good faith by a majority of the Continuing Directors and (ii) in
the case of property other than cash or stock, the fair market value
of such property on the date in question as determined in good faith
by a majority of the Continuing Directors.
(9) In the event of any Business Combination in which the
Corporation survives, the phrase "consideration other than cash to be
received" as used in subparagraphs B(2)(i) and B(2)(ii) of this
Article THIRTEENTH shall include the shares of Common Stock and/or the
shares of any other class (or series) of outstanding capital stock
retained by the holders of such shares.
(10) "Whole Board" means the total number of directors which
this Corporation would have if there were no vacancies.
(11) "Voting Shares" shall mean (i) the Common Stock of the
Corporation and (ii) any shares of Preferred Stock of the Corporation
that (a) by the terms of this Certificate of Incorporation or any
Preferred Stock Designation are entitled to vote on matters presented
to a vote of stockholders under this Article THIRTEENTH (or, if
applicable, Article FOURTEENTH), and (b) were issued by the
Corporation prior to the date any Person who is at the time of the
vote an Interested Stockholder became an Interested Stockholder or, if
issued thereafter, the issuance thereof was approved by a majority of
the Continuing Directors; provided, however, that this condition shall
not be capable of satisfaction unless there are at least three
Continuing Directors.
(12) "Preferred Stock Designation" shall mean a certificate
filed with the Secretary of State of the State of Delaware to evidence
the designation of any series of the Preferred Stock of the
Corporation established by resolution of the Board of Directors
pursuant to authority granted in this Certificate of Incorporation.
D. A majority of the Whole Board, but only if a majority of the Whole
Board shall then consist of Continuing Directors or, if a majority of the
Whole Board shall not then consist of Continuing Directors, a majority of
the then Continuing Directors, shall have the power and duty to determine,
on the basis of information known to them after reasonable inquiry, all
facts necessary to determine compliance with this Article THIRTEENTH,
including, without limitation, (1) whether a person is an Interested
Stockholder, (2) the number of shares of Capital Stock beneficially owned
by any person, and whether any shares are "Voting Shares" under paragraph
(11) of Section C of this Article THIRTEENTH, (3) whether a person is an
Affiliate or Associate of another, (4) whether the applicable conditions
set forth in paragraph (2) of Section B have been met with respect to any
Business Combination, (5) the Fair Market Value of stock or other property
in accordance with paragraph (8) of Section C of this Article THIRTEENTH,
and (6) whether the assets which are the subject of any Business
Combination referred to in paragraph (1)(ii) of Section A have, or the
consideration to be received for the issuance or transfer of securities by
the Corporation or any Subsidiary in any Business Combination referred to
in paragraph (1)(iii) of Section A has, an aggregate Fair Market Value of
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<PAGE> 15
$1 million or more. A majority of the Whole Board, but only if a majority
of the Whole Board shall then consist of Continuing Directors, or, if a
majority of the Whole Board shall not then consist of Continuing Directors,
a majority of the then Continuing Directors shall have the further power to
interpret all of the terms and provisions of this Article THIRTEENTH.
E. A majority of the Whole Board shall have the right to demand, but
only if a majority of the Whole Board shall then consist of Continuing
Directors, or, if a majority of the Whole Board shall not then consist of
Continuing Directors, a majority of the then Continuing Directors shall
have the right to demand that any person who it is reasonably believed is
an Interested Stockholder or Affiliate or Associate thereof (or holds of
record shares of Capital Stock Beneficially Owned by any Interested
Stockholder or Affiliate or Associate thereof) supply the Corporation with
complete information as to (1) the record owner(s) of all shares
Beneficially Owned by such person who it is reasonably believed is an
Interested Stockholder or Affiliate or Associate thereof, (2) the number
of, and class or series of, shares Beneficially Owned by such person who it
is reasonably believed is an Interested Stockholder or Affiliate or
Associate thereof and held of record by each such record owner and the
number(s) of the stock certificate(s) evidencing such shares, and (3) any
other factual matter relating to the applicability or effect of this
Article THIRTEENTH, as may be reasonably requested of such person, and such
person shall furnish such information within 10 days after receipt of such
demand.
F. Nothing contained in this Article THIRTEENTH shall be construed to
relieve any Interested Stockholder or any Affiliate or Associate of any
Interested Stockholder from any fiduciary obligation imposed by law.
FOURTEENTH. The Board of Directors may adopt, repeal, alter or amend the
Bylaws of the Corporation by the vote of a majority of the Whole Board (as
defined in Subparagraph C(10) of Article THIRTEENTH). Notwithstanding any
other provisions of this Certificate of Incorporation or any Preferred Stock
Designation or any provision of law, which might otherwise permit a lesser vote
or no vote, but in addition to any requirements of law and any other provisions
of this Certificate of Incorporation or any Preferred Stock Designation (as
defined in Subparagraph C(12) of Article THIRTEENTH, the stockholders may not
adopt, amend, alter or repeal any provision of the Bylaws of the Corporation,
except by the affirmative vote of (i) the holders of at least two-thirds
(66-2/3%) of the voting power of the then outstanding Voting Shares (as defined
in Subparagraph C(11) of Article THIRTEENTH) voting together as a single class,
and (ii) if such amendment has been proposed, directly or indirectly, by or on
behalf of any Interested Stockholder (as defined in Subparagraph C(2) of
Article THIRTEENTH), it must also be approved by the affirmative vote of not
less than two-thirds (66-2/3%) of the total voting power of all outstanding
Voting Shares that are not beneficially owned by such Interested Stockholder or
the Affiliates or Associates (as defined in Subparagraph C(5) of Article
THIRTEENTH) of such Interested Stockholder, voting together as a single class.
FIFTEENTH. Notwithstanding any other provisions of this Certificate of
Incorporation, any Preferred Stock Designation (as defined in subparagraph
C(12) of Article THIRTEENTH), or any provision of law, which might otherwise
permit a lesser vote or no vote, but in addition to any requirements of law,
any other provisions of this Certificate of Incorporation or any Preferred
Stock Designation, the affirmative vote of not less than two-thirds (66-2/3%)
of the total voting power of all outstanding Voting Shares (as defined in
subparagraph C(11) of Article THIRTEENTH) voting together as a single class,
shall be required to alter, amend or repeal Article TWELFTH, Article
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<PAGE> 16
THIRTEENTH, Article FOURTEENTH or this Article FIFTEENTH; provided, however,
that if such action has been proposed, directly or indirectly, by or on behalf
of any Interested Stockholder (as defined in subparagraph C(2) of Article
THIRTEENTH), it must also be approved by the affirmative vote of not less than
two-thirds (66-2/3%) of the total voting power of all outstanding Voting Shares
(as defined in subparagraph C(11) of Article THIRTEENTH) that are not
beneficially owned by such Interested Stockholder or the Affiliates or
Associates (as defined in subparagraph C(5) of Article THIRTEENTH) of such
Interested Stockholder, voting together as a single class.
SIXTEENTH. The corporation reserves the right to amend, alter, change or
repeal any provision contained in this certificate of incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
IN WITNESS WHEREOF, REPUBLIC GROUP INCORPORATED has caused this restated
Certificate of Incorporation to be executed in its corporate name by its
Chairman of the Board, President and Chief Executive Officer this _______ day
of November, 1996.
REPUBLIC GROUP INCORPORATED
By:
----------------------------------------------
Phil Simpson
Chairman of the Board, President
and Chief Executive Officer
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<PAGE> 1
EXHIBIT 3(b)
REPUBLIC GROUP INCORPORATED
AMENDED AND RESTATED BYLAWS
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office in the State
of Delaware shall be in the City of Wilmington, County of New Castle, State of
Delaware.
Section 2. Other Offices. The corporation may also have offices at
such other places both within and without the State of Delaware as the Board of
Directors may from time to time determine or the business of the corporation
may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. All meetings of the stockholders for
the election of directors or for any other purpose shall be held at such place
either within or without the State of Delaware as the Board of Directors may
from time to time designate as stated in the notice of the meeting or in a duly
executed waiver of notice thereof.
Section 2. Advance Notice Requirements for Directors Nominations.
(a) Subject to Article III, Section 2 of these Bylaws, only
persons who are nominated in accordance with the procedures set forth in
these Bylaws shall be eligible to serve as directors. Nominations of
persons for election to the Board of Directors of the corporation may be
made at a meeting of stockholders (1) by or at the direction of the
Board of Directors or by any nominating committee or person appointed by
the Board of Directors and (2) by any stockholder of the corporation
entitled to vote for the election of directors at the meeting, who is a
stockholder of record at the time of giving the notice provided for in
these Bylaws and who complies with the notice procedures set forth in
these Bylaws.
(b) In addition to any other applicable requirements, and
subject to any limitations on business which may be proposed or
transacted at such meeting, including, without limitation, Article II,
Section 5 of these Bylaws, nominations for directors, other than
nominations made by or at the direction of the Board of Directors or by
any nominating committee or person appointed by the Board of Directors,
shall be made pursuant to timely notice in writing to the Secretary of
the corporation. To be timely with respect to an annual meeting of
stockholders, a stockholder's notice must be received at the principal
executive offices of the corporation not less than sixty (60) days nor
more than one hundred twenty days (120) prior to the date of the annual
meeting of stockholders; provided, however, that in the event that the
first public disclosure (whether by mailing of a notice to stockholders
or the exchange on which the common stock of the corporation is listed
or to the Nasdaq National Market, by press release or otherwise) of the
date of the annual meeting of the stockholders is made less than sixty-
five (65) days prior to the date of
<PAGE> 2
such meeting, notice by a stockholder will be timely if received at the
principal executive offices of the corporation not later than the close
of business on the tenth (10) day following the day on which such public
disclosure is first made. To be timely with respect to a special
meeting of stockholders at which directors are to be elected, a
stockholder's notice must be received at the principal executive offices
of the corporation not later than the close of business on the tenth
(10th) day following the day on which the first public disclosure
(whether by mailing of a notice to stockholders or the exchange on which
the common stock of the corporation is listed or to the Nasdaq National
Market, by press release or otherwise) of the date of the special
meeting is made.
(c) A stockholder's notice of a director nominee shall set
forth (1) as to each person whom the stockholder proposes to nominate
for election or re-election as a director, (a) the name, age, business
address and residence address of the person; (b) the principal
occupation or employment of the person; (c) the class and number of
shares of capital stock of the corporation which are beneficially owned
by the person; and (d) such other information relating to the person, as
would be required under the rules of the Securities and Exchange
Commission in a proxy statement soliciting proxies for the election of
such person whether or not such proxies are in fact solicited for the
election of such person; and (2) as to the stockholder giving the notice
(a) the name and address, as they appear on the corporation's stock
register, of the stockholder; (b) the class and number of shares of
capital stock of the corporation which are beneficially owned by the
stockholder; and (c) such other information relating to the stockholder
or the nomination as is required to be disclosed under the rules of the
Securities and Exchange Commission governing the solicitation of proxies
whether or not such proxies are in fact solicited by the stockholder.
Such notice must also include a signed consent of each such nominee to
serve as a director of the corporation, if elected or re-elected. The
corporation may require any proposed nominee to furnish such other
information as may reasonably be required by the corporation to
determine the eligibility for election of such nominee as a director of
the corporation. The chairman of the meeting shall, if the facts
warrant, determine and declare to the meeting that a director nomination
was not made in accordance with the foregoing procedure, and if he
should so determine, the defective nomination shall be disregarded.
(d) Notwithstanding the foregoing provisions of these Bylaws,
a stockholder shall also comply with all applicable requirements of the
Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder with respect to the matters set forth in this
Article II, Section 2.
Section 3. Annual Meeting. Annual meetings of stockholders shall
be held on the fourth Thursday in October of each year if not a legal holiday
under laws of the state where such meeting is to be held, and if a legal
holiday under the laws of said state, then on the succeeding business day not a
legal holiday under the laws of said state, or at such other date and at such
time as shall be designated from time to time by the Board of Directors and
stated in the notice of the meeting, at which the stockholders shall elect by a
plurality vote a Board of Directors and transact such other business as may
properly be brought before the meeting.
Section 4. Advance Notice Requirements for Business Conducted at
Stockholder Meetings.
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<PAGE> 3
(a) At an annual or special meeting of the stockholders, only
such business shall be conducted as shall have been properly brought
before the meeting. To be properly brought before an annual or special
meeting of stockholders, 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 any stockholder of the corporation who is
entitled to vote at such meeting, who is a stockholder of record at the
time of giving of the notice provided for in these Bylaws and who
complies with the notice procedures set forth in these Bylaws.
(b) In addition to any other applicable requirements, and
subject to any limitations on business which may be proposed or
transacted at such meeting, including, without limitation, Article II,
Section 5 of these Bylaws, for business to be properly brought before an
annual or special meeting by a stockholder pursuant to clause (3) of
paragraph (a) above, the stockholder must have given timely notice
thereof in writing to the Secretary of the corporation. To be timely
with respect to an annual meeting of stockholders, a stockholder's
notice must be received at the principal executive offices of the
corporation not less than sixty (60) days nor more than one hundred
twenty days (120) prior to the date of the annual meeting; provided,
however, that in the event that the first public disclosure (whether by
mailing of a notice to stockholders or the exchange on which the common
stock of the corporation is listed or to the Nasdaq National Market, by
press release or otherwise) of the date of the annual meeting is made
less than sixty-five (65) days prior to the date of the meeting, notice
by a stockholder will be timely if received not later than the close of
business on the tenth (10) day following the day on which such public
disclosure is first made. To be timely with respect to a special
meeting of stockholders, a stockholder's notice must be received at the
principal executive offices of the corporation not later than the close
of business on the tenth (10th) day following the day on which the first
public disclosure (whether by mailing of a notice to stockholders or the
exchange on which the stock of the corporation is listed or to the
Nasdaq National Market, by press release or otherwise), of the date of
the special meeting is made.
(c) A stockholder's notice to the Secretary shall set forth as
to each matter the stockholder proposes to bring before the meeting (1)
a reasonably detailed description of the business desired to be brought
before the meeting and the reasons for conducting such business at the
meeting, (2) the name and address, as they appear on the corporation's
books, of the stockholder proposing such business, and the name and
address of the beneficial owner, if any, on whose behalf the proposal is
made, (3) the class and number of shares of the corporation which are
owned beneficially and of record by such stockholder of record and by
the beneficial owner, if any, on whose behalf the proposal is made, (4)
any material interest of such stockholder of record and the beneficial
owner, if any, on whose behalf the proposal is made in such business,
and (5) such other information relating to the stockholder or the
business proposed to be brought before the meeting as is required to be
disclosed under the rules of the Securities and Exchange Commission
governing the solicitation of proxies whether or not such proxies are in
fact solicited by the stockholder. Notwithstanding anything in these
Bylaws to the contrary, no business shall be conducted at an annual or
special meeting of stockholders except in accordance with the procedures
set
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<PAGE> 4
forth in this Article II, Section 4 (or to the extent applicable,
Article II, Section 2); provided, however, that nothing in this Article
II, Section 4 shall be deemed to preclude discussion by any stockholder
of any business properly bought before the annual or special meeting of
stockholders in accordance with said procedures.
(d) The chairman of the meeting shall, if the facts warrant,
determine and declare to the meeting that business was not properly
brought before the meeting in accordance with the procedures prescribed
by these Bylaws, and if he should so determine, he shall so declare to
the meeting and any such business not properly brought before the
meeting shall not be transacted. Notwithstanding the foregoing
provisions of these Bylaws, a stockholder shall also comply with all
applicable requirements of the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder with respect to the
matters set forth in this Article II, Section 4.
(e) Notwithstanding anything in this Section 4, or these
Bylaws, should an annual or special meeting be convened and subsequently
adjourned, no business may be brought before any reconvened annual or
special meeting that was not, pursuant to these Bylaws, properly brought
before the annual or special meeting that was previously adjourned.
Section 5. Special Meetings. Special meetings of the stockholders,
for any purpose or purposes, unless otherwise prescribed by statute or by the
certificate of incorporation, may be called by the Chairman of the Board, or,
in the event of his absence or unavailability, the President, and shall be
called by the President or Secretary at the request in writing of a majority of
the Board of Directors, or at the request in writing of stockholders owning at
least sixty percent (60%) of the common stock of the corporation issued and
outstanding and entitled to vote. Such request shall state the purpose or
purposes of the proposed meeting.
Section 6. Notice of Meetings. Except as otherwise expressly required
by statute, written notice of each annual meeting of stockholders stating the
date, place and hour of the meeting, and, in the case of a special meeting, the
purpose or purposes for which the meeting is called, shall be given to each
stockholder of record entitled to vote at such meeting not less than ten nor
more than sixty days before the date of the meeting. Notice shall be given
personally or by mail and, if by mail, shall be sent in a postage prepaid
envelope, addressed to the stockholder at the address appearing on the records
of the corporation. Notice by mail shall be deemed given at the time when the
same shall be deposited in the United States mail, postage prepaid. Notice of
any meeting shall not be required to be given to any person who attends such
meeting, except when such person attends the meeting by person or by proxy for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened, or who, either before or after the meeting, shall submit a signed
written waiver of notice, in person or by proxy. Neither the business to be
transacted at, nor the purpose of, an annual or special meeting of stockholders
need be specified in any written waiver of notice.
Section 7. Business Transacted at Special Meetings. Business
transacted at any special meeting of stockholders shall be limited to the
purposes stated in the notice.
Section 8. List of Stockholders. The officer who has charge of the
stock ledger of the
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<PAGE> 5
corporation shall prepare and make, at least ten days before each meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, showing the address of, and the number
of shares registered in the name of each stockholder. Such list shall be open
to the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city, town or village where the meeting
is to be held and which place shall be specified in the notice of the meeting,
or, if not specified, at the place where the meeting is to be held. The list
shall be produced and kept at the time and place of the meeting during the
whole time thereof, and may be inspected by any stockholder who is present.
Section 9. Quorum; Adjournments. The holders of a majority of shares
entitled to vote at a meeting of stockholders, present in person or represented
by proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
certificate of incorporation, as amended from time to time. A quorum, once
established, shall not be broken by the withdrawal of enough votes to leave
less than a quorum, and the votes present may continue to transact business
until adjournment. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement
at the meeting, until a quorum shall be present or represented. At such
adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally notified. If the adjournment is for more than thirty days, or, if
after adjournment a new record date is set, then a notice of the adjourned
meeting shall be given to each stockholder of record entitled to vote at the
meeting.
Section 10. Order of Business. The order of business at all meetings
of the stockholders shall be as determined by the chairman of the meeting.
Section 11. Voting. Except as otherwise provided by statute or the
corporation's certificate of incorporation, each stockholder of the corporation
shall be entitled at each meeting of stockholders to one vote for each share of
capital stock of the corporation standing in his or her name on the record of
the stockholders of the corporation:
(a) on the date fixed pursuant to the provisions of Section 5
of Article 5 of these Bylaws as the record date for the determination of
the stockholders who shall be entitled to notice of and to vote at such
meeting; or
(b) if no such record date shall have been so fixed, then at
the close of business on the day next preceding the day on which notice
thereof shall be given, or, if notice is waived, at the close of
business on the date next preceding the day on which the meeting is
held.
Each stockholder entitled to vote at any meeting of stockholders may authorize
another person or persons to act for him or her by a proxy signed by such
stockholder or the stockholder's attorney-in-fact, but no proxy shall be voted
after three years from its date, unless the proxy provides for a longer period.
Any such proxy shall be delivered to the secretary of the meeting at or prior
to the time designated in the order of business for so delivering such proxies.
When a quorum is present
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<PAGE> 6
at any meeting, the vote of the holders of a majority of the voting power of
the issued and outstanding stock of the corporation entitled to vote thereon,
present in person or represented by proxy, shall decide any matter brought
before such meeting, unless the matter is one upon which by express provision
of statute or of the certificate of incorporation or of these bylaws, a
different vote is required, in which case such express provision shall govern
and control the decision of such matter. Unless required by statute, or
determined by the chairman of the meeting to be advisable, the vote on any
matter need not be by written ballot. On a vote by written ballot, each
written ballot shall be signed by the stockholder voting, or by his or her
proxy, and shall state the number of shares voted.
Section 12. Inspectors. The Board of Directors shall, in advance of
any meeting of stockholders, appoint one or more inspectors to act at such
meeting or any adjournment thereof and make a written report thereof. If any
of the inspectors so appointed shall fail to appear or shall be unable to act,
the chairman of the meeting shall appoint one or more inspectors. Each
inspector, before entering upon the discharge of his or her duties, shall take
and sign an oath faithfully to execute the duties of inspector at such meeting
with strict impartiality and according to the best of his or her ability. The
inspectors shall ascertain the numbers of shares of capital stock of the
corporation outstanding and the voting power of each, determine the number of
shares represented at the meeting and the validity of proxies and ballots,
count all votes and ballots, determine and retain for a reasonable period a
record of the disposition of any challenges made to any determination by the
inspectors and certify their determination of the number of shares represented
at the meeting and their count of all votes and ballots. The inspectors may
appoint or retain other persons or entities to assist the inspectors in the
performance of their duties. No director or candidate for the office of
director shall act as an inspector of an election of directors. Inspectors
need not be stockholders or employees of the corporation.
ARTICLE III
DIRECTORS
Section 1. Number. The number of directors which shall constitute
the whole Board of Directors shall be determined from time to time by
resolution of the Board of Directors. The directors shall be elected at the
annual meeting of stockholders, except as provided in Section 2 of this
article; and each director elected shall hold office until his successor is
elected and qualified. Directors need not be stockholders.
Section 2. Vacancies. Vacancies and newly-created directorships
resulting from any increase in the authorized number of directors, and
vacancies whether because of death, resignation, disqualification, or any other
cause, may be filled by a majority of the directors then in office, though less
than a quorum, or by a sole remaining director, and the directors so chosen
shall hold office until the next annual election and until their successors are
duly elected and shall qualify, unless sooner displaced.
Section 3. Authority of Board. 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 certificate of incorporation or by these bylaws directed or required to be
exercised or done by the stockholders.
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Section 4. Meetings. The Board of Directors of the corporation shall
hold meetings, both regular and special, at such place or places, either within
or without the State of Delaware, as the Board of Directors may determine from
time to time or as shall be specified in the notice of any such meeting.
Section 5. Annual Meetings. The Board of Directors shall meet for
the purpose of organization, the election of officers and the transaction of
other business, as soon as practicable after each annual meeting of
stockholders, on the same day and at the same place where such annual meeting
shall be held. Notice of such meeting need not be given. If such annual
meeting is not so held, then the annual meeting of the Board of Directors may
be held at such other time or place (within or without the State of Delaware)
as shall be specified in a notice thereof (or written waiver thereof) given as
hereinafter provided in Section 8 of this Article 3.
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. Special meetings of the board may be
called by the Chairman of the Board, or, in the event of his absence or
unavailability, the President, on twenty-four hours' notice to each director in
the manner provided pursuant to Section 8 of this Article 3; special meetings
shall be called by the President or Secretary in like manner and on like notice
on the written request of two directors.
Section 8. Notice of Meetings. Notice of each special meeting of
the board (and of each regular or annual meeting for which notice shall be
required) shall be given by the Secretary as hereinafter provided in this
Section 8, in which notice shall be stated the time and place of the meeting.
Except as otherwise required by these bylaws, such notice need not state the
purposes of such meeting. Notice of each such meeting shall be sent to each
director, addressed to such director at his or her residence or usual place of
business, by telegraph, cable, telex, telecopier or other similar means, or
delivered to him or her personally or given to him or her by telephone or other
similar means, at least twenty-four hours before the time at which such meeting
is to be held. Notice of any such meeting need not be given to any director
who shall, either before or after the meeting, submit a signed wavier of notice
or who shall attend such meeting, except when he or she shall attend for the
express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened.
Section 9. Quorum; Adjournments. A majority of the entire Board of
Directors shall constitute a quorum for the transaction of business at any
meeting of the Board of Directors, and, except as otherwise expressly required
by statute, the certificate of incorporation or these bylaws, the act of a
majority of the directors present at any meeting at which a quorum is present
shall be the act of the Board of Directors. A quorum, once established, shall
not be broken by the withdrawal of enough directors to leave less than a
quorum, and the directors present may continue to transact business until
adjournment. In the absence of a quorum at any meeting of the Board of
Directors, a majority of the directors present at such meeting may adjourn such
meeting to another time and place. Notice of the time and place of any such
adjourned meeting shall be given to all of the directors unless such time and
place were announced at the meeting at which the adjournment was taken, in
which case such notice shall only be given to the directors who were not
present at such meeting. At any adjourned meeting at which a quorum is
present, any business may be
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transacted that might have been transacted at the meeting as originally called.
Section 10. Action by Consent. Unless otherwise restricted by the
certificate 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 prior to such action a written
consent thereto is signed by all members of the board or of such committee, as
the case may be, and such written consent is filed with the minutes of the
proceedings of the board or committee.
Section 11. Telephonic Meetings. Unless restricted by the certificate
of incorporation, any one or more members of the Board of Directors or any
committee thereof may participate in a meeting of the Board of Directors or
such committee by means of a conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other. Participation by such means shall constitute presence in person at
a meeting.
Section 12. Committees. The Board of Directors may, by resolution
passed by a majority of the whole board, designate one or more committees, each
committee to consist of one or more of the directors of the corporation, which,
to the extent provided in the resolution, shall have and may exercise the
powers 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. Such committee or committees shall have
such name or names as may be determined from time to time by resolution adopted
by the Board of Directors.
Section 13. Record of Committee Meetings. Each committee shall keep
regular minutes of its meetings and report the same to the Board of Directors
when required.
Section 14. Compensation. The directors may be paid their expenses,
if any, of attendance at each meeting of the Board of Directors and may be paid
a fixed sum for attendance at each meeting of the Board of Directors or a
stated salary as director. No such payment shall preclude any director from
serving the corporation in any other capacity and receiving compensation
therefor. Members of special or standing committees may be allowed like
compensation for attending committee meetings.
Section 15. Resignation. Any director of the corporation may resign
at any time by giving written notice of his or her resignation to the
corporation. Any such resignation shall take effect at the time specified
therein or, if the time when it shall become effective shall not be specified
therein, immediately upon its receipt by the corporation. Unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
ARTICLE IV
OFFICERS
Section 1. Number of Officers. The officers of the corporation shall
be chosen by the Board of Directors and shall be a Chairman of the Board, a
President, a Vice President, a Secretary, a Treasurer and a Controller. The
Board of Directors may also choose additional Vice Presidents, and one or more
Assistant Secretaries and Assistant Treasurers. Two or more offices may be
held
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by the same person.
Section 2. Annual Appointment of Officers. The Board of Directors,
at its first meeting after each annual meeting of stockholders shall choose a
Chairman of the Board, a President, one or more Vice Presidents, a Secretary
and a Treasurer.
Section 3. Regular Appointment of Officers. The Board of Directors
may appoint such other officers (including a Chief Executive Officer) and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board.
Section 4. Compensation of Officers. The salaries of all officers
and agents of the corporation shall be fixed by the Board of Directors.
Section 5. Removal; Vacancies. The officers of the corporation shall
hold office until their successors are chosen and qualify. Any officer elected
or appointed by the Board of Directors may be removed, either with or without
cause, at any time by the affirmative vote of a majority of the Board of
Directors. Any vacancy occurring in any office of the corporation shall be
filled by the Board of Directors.
Section 6. Resignation. Any officer of the corporation may resign at
any time by giving written notice of his resignation to the corporation. Any
such resignation shall take effect at the time specified therein or, if the
time when it shall become effective shall not be specified therein, immediately
upon receipt by the corporation. Unless otherwise specified therein, the
acceptance of any such resignation shall not be necessary to make it effective.
Section 7. Chairman of the Board. The Chairman of the Board shall be
elected from among the members of the Board of Directors and shall preside at
all meetings of the stockholders and the Board of Directors unless he shall, at
his option, designate the President to preside in his stead at some particular
meeting and shall perform such other duties and have such other powers as the
Board of Directors shall from time to time prescribe.
Section 8. President. The President shall preside at the meetings of
the Board of Directors and stockholders in the absence of the Chairman of the
Board. Subject to the supervision, approval and review of his action by the
Board of Directors, the President shall have the authority to execute bonds,
mortgages, instruments, contracts, agreements and stock certificates in the
name of and on behalf of the corporation, except where the signing and
execution thereof shall be expressly delegated by the Board of Directors to
some other officer or agent of the corporation. The President shall put into
operation the business policies of the corporation as determined by the Board
of Directors and as communicated to him by such body. In carrying out such
business policies, the President shall, subject to the supervision of the Board
of Directors, have general management and control of the day to day business
operations of the corporation. The President shall be subject only to the
authority of the Chairman of the Board and the Board of Directors in carrying
out his duties. He shall make recommendations to the Chairman of the Board on
all matters which would normally be reserved for the final executive
responsibility of the Chairman of the Board. In the absence or disability of
the President, his duties shall be performed and his powers may be exercised by
the Executive Vice Presidents in order of their seniority (or if there
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should be no Executive Vice Presidents then by the Vice Presidents in the order
if their seniority), unless otherwise determined by the President, the Chairman
of the Board or the Board of Directors.
Section 9. Executive Vice Presidents. The Executive Vice Presidents
shall generally assist the Chairman of the Board and the President and, subject
to the supervision, approval and review of their actions by the Chairman of the
Board, the President and the Board of Directors, shall have authority to
execute bonds, mortgages, instruments, contracts, agreements and stock
certificates in the name of and on behalf of the corporation, except where the
signing and execution thereof shall be expressly delegated by the Board of
Directors to some other officer or agent of the corporation. The Executive
Vice Presidents shall have and exercise such powers and have and perform such
duties as shall be assigned to them from time to time by the President, the
Chairman of the Board and the Board of Directors.
Section 10. Vice Presidents. The Vice Presidents (who shall have such
descriptive titles, if any, as the Board of Directors shall deem appropriate)
shall generally assist the Chairman of the Board, the President, and the
Executive Vice Presidents and, subject to supervision, approval and review of
their actions by the Chairman of the Board, the President, the Executive Vice
Presidents and the Board of Directors, shall have authority to execute bonds,
mortgages, instruments, contracts, agreements and stock certificates in the
name of and on behalf of the corporation, except where the signing and
execution thereof shall be expressly delegated by the Board of Directors to
some other officer or agent of the corporation. The Vice Presidents shall have
and exercise such powers and have and perform such duties as shall be assigned
to each of them from time to time by the Executive Vice Presidents, the
President, the Chairman of the Board and the Board of Directors.
Section 11. Assistant Vice Presidents. The Assistant Vice Presidents
shall generally assist the Chairman of the Board, the President, the Executive
Vice Presidents and the Vice Presidents and shall have and exercise such power
and have and perform such duties as shall be assigned to each of them from time
to time by the Vice Presidents, the Executive Vice Presidents, the President
and the Chairman of the Board.
Section 12. Secretary. The Secretary shall attend all meetings of the
Board of Directors when required and all meetings of the stockholders and
record all the proceedings of the meeting of the corporation and of the Board
of Directors in a book to be kept for that purpose and shall perform like
duties for the standing committees when required. The Secretary shall give, or
cause to be given, all notices required by the provisions of these bylaws or as
required by law, and shall perform such other duties as may be prescribed by
the Board of Directors or President, under whose supervision the Secretary
shall be. The Secretary shall keep in safe custody the records and the seal of
the corporation and, when authorized by the Board of Directors, affix the seal
to any instrument requiring it and when so affixed it shall be attested by the
Secretary's signature or by the signature of an assistant secretary. The
Secretary shall see that the books, reports, statements, and certificates
required by statutes or laws applicable to the corporation are properly kept,
made and filed according to law.
Section 13. Assistant Secretary. The Assistant Secretary, or, if
there be more than one, the Assistant Secretaries in the order determined by
the Board of Directors, shall, in the absence or disability of the Secretary,
perform the duties and exercise the powers of the Secretary and shall
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perform such other duties and have such other powers as the Board of Directors
may from time to time prescribe.
Section 14. Treasurer. The Treasurer shall have the custody of the
corporate funds and securities, shall keep full and accurate accounts of
receipts and disbursements in books belonging to the corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the corporation in such depositories as may be designated by the Board of
Directors.
Section 15. Disbursement of Funds; Corporate Accounting. The
Treasurer shall disburse the funds of the corporation as may be ordered by the
Board of Directors, taking proper voucher for such disbursements, shall receive
and give receipts for monies due and payable to the corporation from any source
whatsoever and shall render to the President and the Board of Directors, at its
regular meetings, or when the Board of Directors so requires, an account of all
transactions as Treasurer and of the financial condition of the corporation.
Section 16. Treasurer's Bond. If required by the Board of Directors,
the Treasurer shall give the corporation a bond (which shall be renewed every
six years) in such sum and with such surety or sureties as shall be
satisfactory to the Board of Directors for the faithful performance of the
duties of such office and for the restoration to the corporation, in case of
the death, resignation, retirement or removal of the Treasurer from office, of
all books, papers, vouchers, money and other property belonging to the
corporation of whatever kind in the possession or under the control of the
Treasurer.
Section 17. Assistant Treasurer. The Assistant Treasurer, or if there
shall be more than one, the Assistant Treasurers in the order determined by the
Board of Directors, shall, in the absence or disability of the Treasurer,
perform the duties and exercise the powers of the Treasurer and shall perform
such other duties and have such other powers as the Board of Directors may from
time to time prescribe.
ARTICLE V
CERTIFICATES OF STOCK
Section 1. Stock Certificates. Every holder of stock in the
corporation shall be entitled to have a certificate signed by, or in the name
of the corporation by, the Chairman of the Board, the President or a Vice
President and by the Treasurer or an Assistant Treasurer or the Secretary or an
Assistant Secretary of the corporation, certifying the number of shares owned
by him or her in the corporation. If the corporation shall be authorized to
issue more than one class of stock or more than one series of any class, the
designations, preferences and relative, participating, optional or other
special rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights shall be set
forth in full or summarized on the face or back of the certificate that the
corporation shall issue to represent such class or series of stock; provided
that, except as otherwise provided in Section 202 of the General Corporation
Law of the State of Delaware, in lieu of the foregoing requirements, there may
be set forth on the face or back of the certificate which the corporation shall
issue to represent such class or series of stock, a statement that the
corporation will furnish without charge to each stockholder who so requests the
designations, preferences and relative, participating, optional or other
special rights of each class of stock or series thereof and the qualifications,
limitations or restrictions or such preferences and/or rights.
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Section 2. Facsimile Signatures. Any or all of the signatures on a
certificate 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 cease to be such officer, transfer agent or registrar whether
because of death, resignation or otherwise, before such certificate has been
issued by the corporation, such certificate may nevertheless be adopted by the
corporation and issued with the same effect as if he or she 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 person claiming the
certificate of stock to be lost or destroyed. When authorizing such issue of a
new certificate or certificates, the Board of Directors may, in its discretion
and as a condition precedent to the issuance thereof, require the owner of such
lost or destroyed certificate or certificates, or his legal representative, to
advertise the same in such manner as it shall require and/or 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 its books; provided, however, that the corporation shall be
entitled to recognize and enforce any lawful restriction on transfer. Whenever
any transfer of stock shall be made for collateral security, and not
absolutely, it shall be so expressed in the entry of transfer if, when the
certificates are presented to the corporation for transfer, both the transferor
and the transferee request the corporation to do so.
Section 5. Fixing the Record Date. In order that the corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock
or for the purpose of any other lawful action, the Board of Directors may fix,
in advance, a record date, which shall not be more than sixty nor less than ten
days before the date of such meeting, nor more than sixty days prior to any
other action. A determination of stockholders of record entitled to notice of
or to vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may, in its discretion,
fix a new record date for the adjourned meeting. Only such stockholders as
shall be stockholders of record on the date so fixed shall be entitled to
notice of or to vote at any meeting of stockholders or any adjournment thereof
or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock, as the case may be, notwithstanding
any transfer of any stock on the books of the corporation after any such record
date fixed as aforesaid.
Section 6. Registered Stockholders. The corporation shall be
entitled to recognize the exclusive right of a person registered on its books
as the owner of shares to receive dividends, and to vote as such owner, and to
hold liable for calls and assessments a person registered on its books
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as the owner of shares, 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 Delaware.
ARTICLE VI
INDEMNIFICATION
Section 1. Actions, Suits, or Proceedings Other Than by or in the
Right of the Corporation.
(a) 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, arbitrate or investigative (other than an action by or
in the right of the corporation) by reason of the fact that he is or was
or has or had agreed to become a director or officer of the corporation,
or (while a director or officer of the corporation) is or was serving or
has or had agreed to serve at the request of the corporation as an
employee or agent of the corporation, or as a director, officer,
partner, venturer, proprietor, trustee, committee member, administrator,
employee or agent of another corporation, partnership, joint venture,
sole proprietorship, trust or other enterprise, or by reason of any
action alleged to have been taken or omitted in any such capacity
against costs, charges, expenses (including attorneys' fees), judgments,
fines, penalties and amounts paid in settlement incurred by him or on
his behalf in connection with such action, suit, or proceeding and any
appeal therefrom, if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal action or proceeding, had
no reasonable cause to be his conduct was unlawful. The termination of
any action, suit, or proceeding by judgment, order settlement,
conviction, or upon a plea of NOLO CONTENDERE or its equivalent, shall
not create a presumption that the person did not act in good faith and
in a manner that he reasonably believed to be in or not opposed to the
best interests of the corporation and, with respect to any criminal
action or proceeding, had reasonable cause to believe that his conduct
was unlawful.
(b) 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, suit, or proceeding, whether civil, criminal,
administrative, arbitrative, or investigative (other than an action by
or in the right of the corporation) by reason of the fact that he is or
was or has or had agreed to become an employee or agent of the
corporation, or (while an employee or agent of the corporation) is or
was serving or has or had agreed to serve at the request of the
corporation as a director, officer, partner, venturer, proprietor,
trustee, committee member, administrator, employee or agent of another
corporation, partnership, joint venture, sole proprietorship, trust or
other enterprise, or by reason of any action alleged to have been taken
or omitted in any such capacity against costs, charges, expenses
(including attorneys' fees), judgments, fines, penalties and amounts
paid in settlement incurred by him or on his behalf in connection with
such action, suit, or proceeding and any appeal therefrom, if he acted
in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation and, with respect to
any criminal action or proceeding, had
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no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit, or proceeding by judgment, order
settlement, citation, or upon a plea of NOLO CONTENDERE or its
equivalent, shall not create a presumption that the person did not act
in good faith and in a manner that he really believed to be in or not
opposed to the best interests of the corporation and, with respect to
any criminal action or proceeding, had reasonable cause to believe that
his conduct was unlawful.
Section 2. Actions or Suits by or in the Right of the Corporation.
(a) 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 or suit by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that he is or was
or has or had agreed to be a director or officer of the corporation, or
(while a director or officer of the corporation) is or was serving or
has or had agreed to serve at the request of the corporation as an
employee or agent of the corporation or as a director, officer, partner,
venturer, proprietor, trustee, committee member, administrator, employee
or agent of another corporation, partnership, joint venture, sole
proprietorship, trust or other enterprise, or by reason of any action
alleged to have been taken or omitted in any such capacity, against
costs, charges, and expenses (including attorneys' fees) incurred by him
or on his behalf in connection with such action or suit, and any appeal
therefrom, if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the
corporation, except that no indemnification shall be made in respect of
any claim, issue, or matter as to which such person shall have been
adjudged to be liable to the corporation unless and only to the extent
that the Court of Chancery of Delaware or the court in which such action
or suit was brought shall determine upon application that, despite the
adjudication of such liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity for
such costs, charges, and expenses that the Court of Chancery or such
other court shall deem proper.
(b) 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 or suit by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that he is or was
or has or had agreed to become an employee or agent of the corporation,
or (while an employee or agent of the corporation) is or was serving or
has had agreed to serve at the request of the corporation as a director,
officer, partner, venturer, proprietor, trustee, committee member,
administrator, employee or agent of another corporation, partnership,
joint venture, sole proprietorship, trust or other enterprise, or by
reason of any action alleged to have been taken or omitted in any such
capacity, against costs, charges, and expenses (including attorneys'
fees) incurred by him or on his behalf in connection with such action or
suit, and any appeal therefrom, if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best
interests of the corporation, except that no indemnification shall be
made in respect of any claim, issue, or matter as to which such person
shall have been adjudged to be liable to the corporation unless and only
to the extent that the Court of Chancery of Delaware or the court in
which such action or suit was brought shall determine upon application
that, despite the adjudication of such liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled
to indemnity for such costs, charges, and expenses that the Court of
Chancery or such other
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court shall deem proper.
Section 3. Indemnification for Costs, Charges, and Expenses of
Successful Party. Notwithstanding the other provisions of this Article, to the
extent that a director, officer, employee or agent of the corporation has been
successful on the merits or otherwise, including, without limitation, the
dismissal of an action without prejudice, in defense of any action, suit, or
proceeding referred to in Sections 1 and 2 of this Article, or in defense of
any claim, issue, or matter therein, he shall be indemnified against any and
all costs, charges, and expenses (including attorneys' fees) incurred by him or
on his behalf in connection therewith.
Section 4. Determination of Right to Indemnification.
(a) Any indemnification under Sections 1(a) or 2(a) 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 or officer is proper in the
circumstances because he has met the applicable standard of conduct set
forth in Section 1(a) or 2(a) of this Article. Such determination shall
be made (i) by a majority vote of the directors who are not parties to
such action, suit or proceeding, even though less than a quorum, or (ii)
if there are no such directors, or if such directors so direct, by
independent legal counsel (which may be outside counsel regularly
employed by the corporation) in a written opinion, or (iii) by the
stockholders; provided, however, that the manner in which (and, if
applicable, the counsel by which) the right to indemnification is to be
determined shall be approved in advance in writing by both the
corporation and the director or officer seeking indemnification. In the
event that the parties are unable to agree on the manner in which the
determination of the right to indemnity is to be made, such
determination hall be made by independent legal counsel retained by the
corporation especially for such purpose; provided, however, that such
counsel be approved in advance in writing by both the Board of Directors
and the director or officer seeking indemnification, such approval not
to be unreasonably withheld by either; and provided, further, that such
counsel shall not be the outside counsel regularly employed by the
corporation. The fees and expenses of counsel in connection with making
the determinations contemplated by this Section 4(a) shall be paid by
the corporation, and, if requested by such counsel, the corporation
shall give such counsel appropriate written agreement with respect to
the payment of their fees and expenses and such other matters as may be
reasonably requested by counsel. Notwithstanding the foregoing, any
director or officer seeking indemnification by the corporation pursuant
to this Section 4(a) may, either before or after a determination has
been made as provided above, petition the Delaware Court of Chancery to
determine whether the standard of Section 4(a) or 2(a) above has been
satisfied, which court shall have the exclusive authority to make such
determination unless and until such court dismisses or otherwise
terminates such action without having made such determination. The
court shall make an independent determination of whether the standard of
Section 1(a) or 2(a) above has been met, irrespective of any prior
determination made by the Board of Directors, the stockholders or
counsel. In such proceeding the burden of proof that the applicable
standard of conduct has not been met shall be upon the corporation.
Neither the failure by the corporation (including its Board of
Directors, its independent legal counsel and its stockholders) to have
made a determination prior to the commencement of such action that
indemnification of the person is proper in the circumstances because
such person has met
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the standard of conduct set forth in Section 1(a) or 2(a) of this
Article, nor the fact that there has been an actual determination by the
corporation (including its Board of Directors, its independent legal
counsel and its stockholders) that such person has not met such
applicable standard of conduct, shall be a defense to the action or
create a presumption that such person has not met the applicable
standard of conduct. If the court shall determine that the standard of
conduct of Section 1(a) or 2(a) above has been met as to any claim,
issue or matter involved in the action, suit or proceeding with respect
to which there has been no prior determination pursuant to this Section
4(a) or with respect to which there has been a prior determination
pursuant to the Section 4(a) that the standard of conduct in Section
1(a) or Section 2(a) has not been met, the corporation shall pay all
expenses (including attorneys' fees) actually incurred by such director
in connection with such judicial determination.
(b) Any indemnification under Sections 1(b) or 2(b) 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 person specified in such Section is proper in the
circumstances because he has met the applicable standard of conduct set
forth in Section 1(b) or 2(b) of this Article. Such determination shall
be made (i) by a majority vote of the directors who are not parties to
such action, suit or proceeding, even though less than a quorum, or (ii)
if there are no such directors, or if such directors so direct, by
independent legal counsel (which may be outside counsel regularly
employed by the corporation) in a written opinion, or (iii) by the
stockholders. The Board of Directors shall have the sole power to
determine the manner in which such determination shall be made.
Section 5. Advancement of Costs, Charges, and Expenses.
(a) Costs, charges, and expenses (including attorneys' fees)
incurred by a person referred to in Sections 1(a) or 2(a) of this
Article in defending, investigating or appealing a civil, criminal,
administrative, arbitrative or investigative action, suit, or proceeding
shall be paid by the corporation in advance of the final disposition of
such action, suit, or proceeding upon receipt of an undertaking by or on
behalf of such person to repay all amounts so advanced if it shall
ultimately be determined that such person is not entitled to be
indemnified by the corporation as authorized in this Article. Such
undertaking shall not be required to be secured and shall be accepted by
the corporation, without reference to financial ability to make
repayment.
(b) Costs, charges, and expenses (including attorneys' fees)
incurred by a person referred to in Sections 1(b) or 2(b) of this
Article in defending, investigating or appealing a civil, criminal,
administrative, arbitrative or investigative action, suit, or proceeding
may be paid by the corporation in advance of the final disposition of
such action, suit, or proceeding upon receipt of an undertaking by or on
behalf of such person to repay all amounts so advanced if it shall
ultimately be determined that such person is not entitled to be
indemnified by the corporation as authorized in this Article. Such
undertaking shall not be required to be secured and shall be accepted by
the corporation, without reference to financial ability to make
repayment.
(c) A person whose costs, charges and expenses have been paid
in advance of the final disposition of an action, suit or proceeding
pursuant to this Section 5 shall be
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required to repay the amounts so advanced only if it shall ultimately be
determined that such person is not entitled to be indemnified by the
corporation as authorized in this Article.
Section 6. Witness Expenses. The corporation shall reimburse any
person who was or is or has or had agreed to become a director or officer of
the corporation, and may indemnify any person who was or is or has or had
agreed to become an agent or employee of the corporation for all costs, charges
and expenses (including attorneys' fees) incurred by such person in connection
with (i) such person's having been called or subpoenaed to become a witness, or
to produce materials pursuant to discovery, in any civil, criminal,
administrative, arbitrative or investigative action, suit or proceeding to
which the corporation or any corporation, partnership, joint venture, sole
proprietorship, trust or other enterprise, in which such person or any other
director, officer, employee or agent of the corporation is or was serving as a
director, officer, partner, venturer, proprietor, trustee, committee member,
administrator, employee or agent at the request of the corporation, or in which
the corporation holds an equity interest, is or was or is threatened to be made
a party, or (ii) such person's serving as a witness in, or producing materials
in connection with, any such action, suit or proceeding. The reimbursement of
such costs, charges and expenses shall be governed by this Section 6 unless
(and then only for the period that) such person becomes, is made or remains a
party to any such action, suit or proceeding to which Section 1 or 2 of this
Article applies.
Section 7. Procedure for Indemnification. Any indemnification under
Sections 1(a), 2(a), and 3, or advancement or reimbursement of costs, charges,
and expenses under Sections 5(a) and 6 of this Article, shall be made promptly
upon the written request of the director or officer, and in any event within
ninety (90) days after delivery of such written request to the corporation in
the case of a request pursuant to Sections 1(a) or 2(a) of this Article, and
within ten (10) days after delivery of such written request in the case of a
request pursuant to Section 5(a) or 6 of this Article. The costs, charges and
expenses which a person entitled to indemnification or advancement or
reimbursement of expenses under Sections 1(a), 2(a), 5(a) or 6 of this Article
shall be entitled to receive shall be deemed to include interest calculated on
a daily basis at a rate per annum equal to the lesser of (i) a rate which is
two (2) percentage points above the rate of interest per annum publicly
announced by Citibank, N.A. from time to time in New York as its "prime rate"
(or similar reference rate) or (ii) the maximum rate of interest per annum
permitted by applicable law, from the date such written request is made through
the date the same is paid in full. Such interest shall be compounded
quarterly. The rights to indemnification under Sections 1(a), 2(a) and 3, and
advancement or reimbursement of costs, charges and expenses under Sections 5(a)
and 6 of this Article shall be enforceable by the director, officer, employee
or agent, as applicable, in the Delaware Chancery Court if the corporation
denies such request, in whole or in part, or if no disposition thereof is made
within such (90) day period or ten (10) day period, as applicable. The costs,
charges and expenses incurred by a person in connection with successfully
establishing his right to indemnification under Sections 1(a), 2(a) and 3 or
advancement or reimbursement of costs, charges and expenses under Section 5(a)
and 6 of this Article and in collecting the same shall be promptly paid by the
corporation, though in any event within thirty (30) days of such person's
request therefor.
Section 8. Notice of Claims; Selection of Counsel, Conduct of
Proceedings; Approval of Settlements, Subrogation. Any person entitled to
indemnification or advancement or reimbursement of expenses under Sections 1,
2, 5 or 6 of this Article with respect to any action, suit
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<PAGE> 18
or proceeding shall give the corporation written notice of such action, suit or
proceeding promptly after having become a party thereto or having been called
as a witness or subpoenaed to produce materials in connection therewith;
provided, however, that the failure to give such notice shall not excuse the
corporation from its obligations hereunder except to the extent it is actually
harmed by the failure to receive such notice. In connection with any civil or
criminal action, suit, or proceeding referred to in Sections 1, 2, 5 and 6 of
this Article, a person referred to in such Sections shall have the right to
select counsel with respect to his defense thereof; but, in any action, suit or
proceeding other than one to which Section 2(a) or 2(b) hereof is applicable,
the corporation shall have the right to select counsel with respect to his
defense thereof; but, in any action, suit or proceeding other than one to which
Section 2(a) or 2(e) hereof is applicable, the corporation shall have the right
to approve such counsel, such approval not to be unreasonable withheld. The
Board of Directors may, with the written approval of such person, authorize the
outside counsel regularly employed by the corporation, to represent such person
in any action, suit or proceeding, whether or not the corporation is a party to
such action, suit, or proceeding. The corporation shall have the right to
participate in such action, suit or proceeding and be represented therein by
its own counsel, but counsel for the person entitled to indemnification or
advancement or reimbursement of expenses hereunder shall have the right to
control the defense of such action, suit or proceeding to which Sections 1, 2
or 5 hereof are applicable. Any settlement of such action, suit, or proceeding
to which Sections 1, 2 or 5 hereof are applicable must be approved by such
person and the corporation; provided, however, that the corporation's approval
thereof shall not be unreasonably withheld, and such approval by the
corporation shall be assumed if the corporation has not provided written notice
to such person to the contrary during the thirty (30) day period commencing
upon delivery to the corporation of written notice of such proposed settlement.
The corporation and the person seeking indemnification or advancement or
reimbursement of expenses hereunder shall cooperate in the defense of such
action, suit or proceeding and shall furnish such records, information and
testimony, and attend such conferences, discovery proceedings, hearings, trials
and appeals, as may be reasonably requested by the corporation or such person.
If the corporation indemnifies a person hereunder, the corporation shall be
subrogated to the rights of such person to the extent of such indemnification.
Section 9. Partial Indemnification and Advancement.
(a) If any action, suit or proceeding involves both (i) claims
by or in the right of the corporation and (ii) claims other than claims
by or in the right of the corporation, then indemnification with respect
to each type of claim shall be determined separately, with the former
claims being determined on the basis of the standard of conduct set
forth in Section 2 above and the latter claims being determined on the
basis of the standard of conduct set forth in Section 1 above.
(b) If the person (including the Board of Directors,
independent legal counsel, the stockholders or a court) making the
determination under Section 4(a) shall determine that a person seeking
indemnification under Sections 1 or 2 hereof has met the applicable
standard of conduct as to some claims, issues or matters involved in the
action, suit or proceeding but not as to others, such person making the
determination shall reasonably pro rate the amounts (costs, charges,
expenses (including attorneys' fees), judgments, fines, penalties and
amounts paid in settlement) with respect to which indemnification is
sought by such person among such claims, issues or matters. This
Section 9(b) is intended to
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provide for proration not only pursuant to Section 9(a) above, but also
as between claims, issues and matters that are involved in any
particular action, suit or proceeding (or portion thereof) by or in the
right of the corporation or in any particular action, suit or proceeding
(or portion thereof) other than by or in the right of the corporation.
(c) In the event that it should be determined that an officer
or director of the corporation is entitled to partial, but not full,
indemnification under Sections 1, 2, and 3 of this Article, the
corporation shall make such indemnification to the fullest extent
permitted by such determination.
Section 10. Other Rights; Continuation of Right to Indemnification;
Funding; Certain Limitations.
(a) The indemnification and advancement and reimbursement of
expenses provided by this Article shall not be deemed exclusive of any
other rights to which a person seeking indemnification or advancement or
reimbursement of expenses may be entitled under any law (common or
statutory), bylaw, agreement, vote of stockholders or directors,
determination of a court, or otherwise, both as to action in his
official capacity and as to action in another capacity while holding
such office, shall apply to claims, issues, matters or states of facts
occurring, accruing or existing prior to the adoption of this Article,
and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the estate,
heirs, executors, and administrators of such person.
(b) In consideration of the continued service by each
director, officer, employee and agent of the corporation and other good
and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by the corporation, the corporation agrees that the
rights to indemnification and advancement and reimbursement of expenses
provided in these Bylaws and the right to indemnification and
advancement and reimbursement of expenses provided in the corporation's
Certificate of Incorporation shall constitute a contract between the
corporation and each such director, officer, employee and agent;
provided, however, that nothing contained herein shall prevent or
restrict the corporation's amending, altering or repealing these Bylaws
or the Certificate of Incorporation so as to change the provisions
thereof dealing with indemnification and advancement and reimbursement
of expenses or any other provisions thereof without the consent of the
directors, officers, employees and agents of the corporation.
Notwithstanding the foregoing, any such amendment shall have only
prospective effect, and each director, officer, employee or agent
entitled to indemnification or advancement or reimbursement of expenses
under these Bylaws or under the Certificate of Incorporation shall have
a fully vested right to indemnification and advancement or reimbursement
of expenses under the provisions of these Bylaws and the Certificate of
Incorporation as then in effect as to any claim, issue, matter or state
of facts occurring, accruing or existing while such provisions are in
effect or prior thereto (even if an action, suit or proceeding based on
such claim, issue or matter is brought after the amendment, alteration
or repeal of any such provision), irrespective of any subsequent
amendment, alteration or repeal thereof.
(c) Notwithstanding any other provision of this Article, the
corporation shall indemnify the directors and officers of the
corporation to the fullest extent permitted by law,
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notwithstanding that such indemnification may not be specifically
authorized by the provisions of this Article, by the corporation's
Certificate of Incorporation, or by statute. In the event of any
changes, after the date of adoption of this Article, in any applicable
law, statute, or rule that expand the right of a Delaware corporation to
indemnify its directors and/or officers, such changes shall be, ipso
facto, within the purview of the rights of the corporation's directors
and officers, and the obligations of the corporation, under the
preceding sentence.
(d) The Board of Directors may also elect, by a majority vote
of a quorum of the Board of Directors, to fund its obligations hereunder
to provide indemnification or advancement or reimbursement of expenses
by any means, including, without limitation, maintenance of a letter of
credit or surety bond with respect thereto, assignment of corporate
assets for such purpose, establishment of a trust or escrow therefor.
(e) Notwithstanding Section 1(a), Section 2(a) or Section 5(a)
hereof, the corporation shall not be required to, but may in its
discretion, indemnify or advance or reimburse any expenses to, any
person under this Article in respect of any action, suit or proceeding
(i) brought, instituted or initiated by such person as plaintiff or
claimant, or (ii) brought, instituted or initiated against such person
in his or her capacity as a director or officer of the corporation or a
Subsidiary by any other person who is a director of the corporation or a
Subsidiary and in which the corporation or a Subsidiary is not a party
plaintiff. This provision shall not apply to (i) the filing of an
answer, response, counterclaim, cross-claim or similar pleading by a
person who would be entitled to indemnification or advancement or
reimbursement of expenses under this Article but for the preceding
sentence, in any action, suit or proceeding brought, instituted or
initiated by or on behalf of the corporation or a Subsidiary or (ii) an
action, suit or proceeding to enforce a person's rights under this
Article.
Section 11. Insurance. The corporation may purchase and/or maintain
insurance on behalf of any person who is or was or has or had agreed to become
a director or officer of the corporation, or (while a director or officer of
the corporation) is or was serving or has or had agreed to serve at the request
of the corporation as an employee or agent of the corporation or as a director,
officer, partner, venturer, proprietor, trustee, committee, administrator,
employee or agent of another corporation, partnership, joint venture, sole
proprietorship, trust or other enterprise, against any and all liability
asserted against him an incurred by him or on his behalf in any such capacity,
or arising out of his status as such, or otherwise, whether or not the
corporation would have the power to indemnify him against such liability under
the provisions of this Article, the Certificate of Incorporation or under any
statute, law or rule. Any such insurance to be maintained may provide
different terms with respect to the protection afforded thereunder to the class
of directors of the corporation and the class of officers of the corporation.
Section 12. Meaning of Terms. For purposes of this Article references
to "the corporation" shall include, in addition to the resulting corporation,
any constituent corporation (including any constituent of a constituent)
absorbed in a consolidation or merger that, if its separate existence had
continued, would have had power and authority to indemnify its directors and/or
officers, so that any person who is or was a director of such constituent
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corporation, or (while a director or officer of the corporation) is or was
serving at the request of such constituent corporation as an employee or agent
of the corporation or as a director, officer, partner, venturer, proprietor,
trustee, committee member, administrator, employee or agent of another
corporation, partnership, joint venture, sole proprietorship, 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 would have
with respect to such constituent corporation if its separate existence had
continued. For purposes of this Article, references to "other enterprises"
shall include employee benefit plans, reference to "fines" shall include any
excise taxes assessed to a person with respect to an employee benefit plan, and
references to "serving at the request of the corporation" shall include any
service by a director, officer, employee or agent of the corporation that
imposes duties upon, or involves services by, such director, officer, employee
or agent with respect to any employee benefit plan maintained in whole or in
part for employees of the corporation and/or its subsidiaries, its
participants, or beneficiaries. For purposes of this Article, a person who
acted in good faith in a manner he reasonably believed to be in the best
interests of the participants and beneficiaries of an employee benefit plan
shall be deemed to have acted in a manner "not opposed to the best interests of
the corporation" as referred to in this Article.
Section 13. Savings Clause. If this Article or any portion hereof
shall be invalidated on any ground by any court of competent jurisdiction, the
corporation shall nevertheless indemnify each director or officer of the
corporation as to costs, charges, and expenses (including attorneys' fees),
judgments, fines, and amounts paid in settlement with respect to any action,
suit, or proceeding, whether civil, criminal, administrative, or investigative,
including an action by or in the right of the corporation, to the fullest
extent permitted by any applicable portion of this Article that shall not have
been so invalidated, and to the fullest extent permitted by applicable law. If
any provision hereof should be held, by a court of competent jurisdiction, to
be invalid, such provision shall be limited only to the extent necessary to
make such provision enforceable, it being the intent of the Bylaws to indemnify
each individual who serves or has served or who has or had agreed to serve as a
director or officer of the corporation to the maximum extent permitted by law.
ARTICLE VIII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the
corporation, subject to the provisions, if any, of statute and the certificate
of incorporation may be declared by the Board of Directors at any regular or
special meeting. Dividends may be paid in cash, in property, or in shares of
the capital stock, subject to the provisions of statute and the certificate of
incorporation.
Section 2. Reserves. Before payment of any dividend, 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 a 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. Annual Statement. The Board of Directors shall present at
each annual meeting, and at any special meeting of the stockholders when called
for by vote of the stockholders, a full and clear statement of the business and
condition of the corporation.
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Section 4. Checks. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.
Section 5. Fiscal Year. The fiscal year of the corporation shall be
fixed by resolution of the Board of Directors.
Section 6. Seal. The corporate seal shall have inscribed thereon the
name of the corporation, the year of its organization and the word "Seal". The
seal may be used by causing it or a facsimile thereof to be impressed or
affixed or reproduced or otherwise.
ARTICLE IX
AMENDMENTS
Section 1. These bylaws may be altered or repealed at any regular
meeting of the stockholders or of the Board of Directors or any special meeting
of the stockholders or of the Board of Directors if notice of such alteration
or repeal be contained in the notice of such special meeting.
* * * * *
The foregoing Amended and Restated Bylaws were adopted by the Board of
Directors as of June __, 1996.
_____________________________________
Janey D. Rife
Secretary
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EXHIBIT 10(a)
REPUBLIC GROUP INCORPORATED
1989 LONG-TERM INCENTIVE PLAN
(As Restated and Amended Effective August 16, 1996)
I. GENERAL
1. Purpose. The REPUBLIC GROUP INCORPORATED 1989 Long-Term
Incentive Plan (the "1989 Plan") has been established by REPUBLIC GROUP
INCORPORATED (the "Company") to:
(a) attract and retain key executive and managerial
employees;
(b) motivate participating employees, by means of
appropriate incentive, to achieve long-range goals;
(c) provide incentive compensation opportunities which
are competitive with those of other major
corporations; and
(d) further identify Participants' interests with those
of the Company's other shareholders through
compensation alternatives based on the Company's
common stock;
and thereby promote the long-term financial interest of the Company and its
Subsidiaries, including the growth in value of the Company's equity and
enhancement of long-term shareholder return.
2. Effective Date. Subject to the approval of the holders of a
majority of the Stock of the Company present, or represented, and entitled to
vote at the Company's 1989 annual meeting of its stockholders, the 1989 Plan
shall be effective as of July 1, 1989, provided, however, that awards made
under the 1989 Plan prior to such approval of the 1989 Plan by stockholders of
the Company are contingent on such approval of the 1989 Plan by the
stockholders of the Company and shall be null and void if such approval of the
stockholders of the Company is withheld. The 1989 Plan shall be unlimited in
duration and, in the event of plan termination, shall remain in effect as long
as any awards under it are outstanding. Effective August 16, 1996, it is the
intent of the Company for the Plan to comply with new Rule 16b-3, issued by the
Securities and Exchange Commission on May 31, 1996.
3. Definitions. The following definitions are applicable to the
1989 Plan.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means the Compensation Committee of the Board.
"Disabled" means the inability of a Participant, by reason of a
physical or mental impairment, to engage in any substantial gainful activity,
of which the Board shall be the sole judge.
"Fair Market Value" of any Stock means, as of any date, the closing
market composite price for such Stock as reported for the New York Stock
Exchange-Composite Transactions on the date or, if Stock is not traded on that
date, on the next preceding date on which Stock was traded.
"Option Date" means, with respect to any Stock Option, the date on
which the Stock Option
<PAGE> 2
is awarded under the 1989 Plan.
"Participant" means any employee of the Company or any Subsidiary who
is selected by the Board to participate in the 1989 Plan.
"Performance Unit" shall have the meaning ascribed to it in Part VI.
"Permitted Transferees" means a member of an optionee's immediate
family, trusts for the benefit of such immediate family members, and
partnerships in which such immediate family members are the only partners,
provided that no consideration is provided for the transfer. Immediate family
members shall include an optionee's descendants (children, grandchildren and
more remote descendants), and shall include step-children and relationships
arising from legal adoption.
"Related Company" means any corporation during any period in which it
is a Subsidiary, or during any period in which it directly or indirectly owns
50% or more of the total combined voting power of all classes of stock of the
Company that are entitled to vote.
"Restricted Period" has the meaning ascribed to it in Part V.
"Restricted Stock" has the meaning ascribed to it in Part V.
"Retirement" means (i) termination of employment in accordance with
the retirement procedures set by the Company from time to time; (ii)
termination of employment because a participant becomes Disabled; or (iii)
termination of employment voluntarily with the consent of the Company (of which
the Board shall be the sole judge).
"Stock" means REPUBLIC GROUP INCORPORATED common stock.
"Stock Appreciation Right" means the right of a holder of a Stock
Option to receive Stock or cash as described in Part IV.
"Stock Option" means the right of a Participant to purchase Stock
pursuant to an Incentive Stock Option or Non-Qualified Option awarded pursuant
to the provisions of the 1989 Plan.
"Subsidiary" means any corporation during any period of which 50% or
more of the total combined voting power of all classes of stock entitled to
vote is owned, directly or indirectly, by the Company.
4. Administration. The authority to manage and control the
operation and administration of the 1989 Plan shall be vested in the Board.
Subject to the provisions of the 1989 Plan, the Board will have authority to
select employees to receive awards of Stock Options with or without tandem
Stock Appreciation Rights, Restricted Stock and/or Performance Units, to
determine the time or times of receipt, to determine the types of awards and
the number of shares covered by the awards, to establish the terms, conditions,
performance criteria, restrictions, and other provisions of such awards, to
determine the number and value of Performance Units awarded and earned, and to
cancel or suspend awards. In making such award determinations, the Board may
take into account the nature of services rendered by the respective employee,
his or her present and potential contribution to the Company's success and such
other factors as the Board deems relevant. The Board is authorized to
interpret the 1989 Plan, to establish, amend, and rescind any rules and
regulations relating to the 1989 Plan, to determine the terms and provisions of
any agreements made pursuant to the 1989 Plan, and to make all other
determinations that may be necessary or advisable for the administration of the
1989 Plan.
The Board, in its discretion, may delegate any or all of its
authority, powers and discretion under this Plan to the Committee, which shall
consist of two or more "outside directors," as such
2
<PAGE> 3
term is defined under the Treasury Regulations under Code section 162(m), each
of whom shall serve at the pleasure of the Board; and the Board in its
discretion may revest any or all such authority, powers and discretion in
itself at any time. If appointed, the Committee shall function as follows: A
majority of the Committee shall constitute a quorum, and the acts of a majority
of the members present at any meeting at which a quorum is present, or acts
approved in writing by all members of the Committee, shall be the acts of the
Committee, unless provisions to the contrary are embodied in the Company's
Bylaws or resolutions duly adopted by the Board. All actions taken and
decisions and determinations made by the Board or the Committee pursuant to the
Plan shall be binding and conclusive on all persons interested in the Plan. No
member of the Board or the Committee shall be liable for any action or
determination taken or made in good faith with respect to the Plan.
5. Participation. Subject to the terms and conditions of the
1989 Plan, the Board shall determine and designate, from time to time, the key
executives and managerial employees of the Company and/or its Subsidiaries who
will participate in the 1989 Plan. In the discretion of the Board, an eligible
employee may be awarded Stock Options with or without tandem Stock Appreciation
Rights, Restricted Stock or Performance Units or any combination thereof, and
more than one award may be granted to a Participant. Except as otherwise
agreed to by the Company and the Participant, any award under the 1989 Plan
shall not affect any previous award to the Participant under the 1989 Plan or
any other plan maintained by the Company or its Subsidiaries.
6. Shares Subject to the 1989 Plan. The shares of Stock with
respect to which awards may be made under the 1989 Plan shall be either
authorized and unissued shares or issued and outstanding shares (including, in
the discretion of the Board, shares purchased in the market). Subject to the
provisions of paragraph I.10, the number of shares of Stock available under the
1989 Plan for the grant of Stock Options with or without tandem Stock
Appreciation Rights, Performance Units and Restricted Stock shall not exceed
1,150,000 shares in the aggregate. Subject to the provisions of paragraph
I.10, the number of shares of Stock which may be available for grant with
respect to Non-Qualified Stock Options, Stock Appreciation Rights, Restricted
Stock or Performance Units under the 1989 Plan shall be increased, as of the
first day of each subsequent fiscal year for which the 1989 Plan is in effect,
by five percent (5%) of the number of shares of Stock issued by the Company
during the preceding fiscal year (exclusive of shares of Stock issued pursuant
to awards made under the 1989 Plan and reissuances of treasury stock by the
Company). If, for any reason, any award under the 1989 Plan otherwise
distributable in shares of Stock, or any portion of the award, shall expire,
terminate or be forfeited or cancelled, or be settled in cash pursuant to the
terms of the 1989 Plan and, therefore, any such shares are no longer
distributable under the award, such shares of Stock shall again be available
for award under the 1989 Plan. The maximum number of shares of Stock with
respect to which options or rights may be granted each calendar year to each
employee shall be 500,000.
7. Compliance With Applicable Laws and Withholding of Taxes.
Notwithstanding any other provision of the 1989 Plan, the Company shall have no
liability to issue any shares of Stock under the 1989 Plan unless such issuance
would comply with all applicable laws and the applicable requirements of any
securities exchange or similar entity. Prior to the issuance of any shares of
Stock under the 1989 Plan, the Company may require a written statement that the
recipient is acquiring the shares for investment and not for the purpose or
with the intention of distributing the shares. All awards and payments under
the 1989 Plan are subject to withholding of all applicable taxes, which
withholding obligations may be satisfied, with the consent of the Board,
through the surrender of shares of Stock which the Participant already owns, or
to which a Participant is otherwise entitled under the 1989 Plan. The Company
shall have the right to deduct from all amounts paid in cash in consequence of
the exercise of a Stock Option or Stock Appreciation Right or in connection
with an award of Restricted Stock or Performance Units under the 1989 Plan any
taxes required by law to be withheld with respect to such cash payments. Where
an employee or other person is entitled to receive shares of Stock pursuant to
the exercise of a Stock Option or a Stock Appreciation Right or with respect to
an award of Performance Units
3
<PAGE> 4
pursuant to the 1989 Plan, the Company shall have the right to require the
employee or such other person to pay to the Company the amount of any taxes
that the Company is required to withhold with respect to such shares, or, in
lieu thereof, to retain, or sell without notice, a sufficient number of such
shares to cover the amount required to be withheld. Upon the disposition
(within the meaning of Code Section 424(c)) of shares of Stock acquired
pursuant to the exercise of an Incentive Stock Option prior to the expiration
of the holding period requirements of Code Section 422(a)(1), the employee
shall be required to give notice to the Company of such disposition and the
Company shall have the right to require the employee to pay to the Company the
amount of any taxes that are required by law to be withheld with respect to
such disposition. Upon termination of the Restricted Period with respect to an
award of Restricted Stock (or such earlier time, if any, as an election is made
by the employee under Code Section 83(b), or any successor provisions thereto,
to include the value of such shares in taxable income), the Company shall have
the right to require the employee or other person receiving shares of Stock in
respect of such Restricted Stock award to pay to the Company the amount of
taxes that the Company is required to withhold with respect to such shares of
Stock or, in lieu thereof, to retain or sell without notice a sufficient number
of shares of Stock held by it to cover the amount required to be withheld. The
Company shall have the right to deduct from all dividends paid with respect to
Restricted Stock the amount of taxes that the Company is required to withhold
with respect to such dividend payments.
8. Transferability. Incentive Stock Options with or without
tandem Stock Appreciation Rights, Performance Units, and, during the period of
restriction, Restricted Stock awarded under the 1989 Plan are not transferable
except as designated by the Participant by will or by the laws of descent and
distribution. Incentive Stock Options with or without tandem Stock
Appreciation Rights may be exercised during the lifetime of the Participant
only by the Participant or his guardian or legal representative. Non-Qualified
Stock Options with or without tandem Stock Appreciation Rights may be
transferred to Permitted Transferees, and may be exercised either by the
Participant, his guardian or legal representative, or by a Permitted
Transferee.
9. Employment and Stockholder Status. The 1989 Plan does not
constitute a contract of employment, and selection as a Participant will not
give any employee the right to be retained in the employ of the Company or any
Subsidiary. Subject to the provisions of paragraph V.3(a), no award under the
1989 Plan shall confer upon the holder thereof any right as a stockholder of
the Company prior to the date on which he fulfills all service requirements and
other conditions for receipt of shares of Stock. If the redistribution of
shares is restricted pursuant to paragraph 1.7, certificates representing such
shares may bear a legend referring to such restrictions.
10. Adjustments to Number of Shares Subject to the 1989 Plan.
Subject to the following provisions of this paragraph 10 in the event of any
change in the outstanding shares of Stock of the Company by reason of any stock
dividend, split, spinoff, recapitalization, merger, consolidation, combination,
exchange of shares or other similar change, the aggregate number of shares of
Stock with respect to which awards may be made under the 1989 Plan, the terms
and the number of shares of any outstanding Stock Options, Stock Appreciation
Rights, Performance Units, or Restricted Stock, and the purchase price of a
share of Stock under Stock Options, may be equitably adjusted by the Board in
its sole discretion.
11. Change in Control. Notwithstanding any other provision of the
1989 Plan, in the event of a change in control, (i) all outstanding Stock
Options which have been outstanding for at least six months, with or without
tandem Stock Appreciation Rights, and Restricted Stock, and (ii) effective for
all awards made under the 1989 Plan on or after August 16, 1996, all
outstanding Stock Options, with or without tandem Stock Appreciation Rights,
and Restricted Stock, will automatically become fully exercisable and/or
vested, and Performance Units may be paid out in such manner and amounts as
determined by the Board. For purposes of this paragraph 11, the term "change
in control" means a change in the beneficial ownership of the Company's voting
stock or a change in the composition of the Board which occurs as follows:
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(a) any "person" (as such term is used in Section 13(d)
and 14(d)(2) of the Securities Exchange Act of 1934),
other than the Company, a wholly-owned subsidiary of
the Company, any employee benefit plan of the Company
or of a Subsidiary or any trustee of such a plan, is
or becomes a beneficial owner, directly or
indirectly, of stock of the Company representing 35
percent or more of the total voting power of the
Company's then outstanding voting stock.
(b) a tender offer (for which a filing has been made with
the Securities Exchange Commission ("SEC") which
purports to comply with the requirements of Section
14(d) of the Securities Exchange Act of 1934 and the
corresponding SEC rules) is made for the stock of the
Company, which has not been negotiated and approved
by the Board, provided that in case of a tender offer
described in this paragraph (b), the change in
control will be deemed to have occurred upon the
first to occur of (i) any time during the offer when
the person (using the definition in (a) above) making
the offer owns or has accepted for payment stock of
the Company with 35 percent of the total voting power
of the Company's stock or (ii) three business days
before the offer is to terminate unless the offer is
withdrawn first, if the person making the offer could
own, by the terms of the offer plus any shares owned
by this person, stock with 35 percent or more of the
total voting power of the Company's stock when the
offer terminates; or
(c) individuals who were the Board's nominees for
election as directors of the Company immediately
prior to a meeting of the stockholders of the Company
involving a contest for the election of directors
shall not constitute a majority of the Board
following the election.
For purposes hereof, a person will be deemed to be the beneficial owner of any
voting securities of the Company which it would be considered to beneficially
own under Securities and Exchange Commission Rule 13d-3 (or any similar or
superseding statute or rule) from time to time in effect.
12. Agreement With Company. At the time of any awards under the
1989 Plan, the Board will require a Participant to enter into an agreement with
the Company in a form specified by the Board, agreeing to the terms and
conditions of the 1989 Plan and to such additional terms and conditions, not
inconsistent with the 1989 Plan, as the Board may, in its sole discretion,
prescribe.
13. Amendment and Termination of 1989 Plan. Subject to the
following provisions of this paragraph 13, the Board may at any time and in any
way amend, suspend or terminate the 1989 Plan. No amendment of the 1989 Plan
and, except as provided in paragraph 10, no action by the Board shall, without
further approval of the stockholders of the Company, increase the total number
of shares of Stock with respect to which awards may be made under the 1989
Plan, materially increase the benefits accruing to Participants under the 1989
Plan or materially modify the requirements as to eligibility for participation
in the 1989 Plan, if stockholder approval of such amendment is a condition of
Securities and Exchange Commission Rule 16b-3 or the Code at the time such
amendment is adopted. No amendment, suspension or termination of the 1989 Plan
shall alter or impair any Stock Option with or without tandem Stock
Appreciation Right, share of Restricted Stock or Performance Unit previously
awarded under the 1989 Plan without the consent of the holder thereof.
II. INCENTIVE STOCK OPTIONS
1. Definition. The award of an Incentive Stock Option under the
1989 Plan entitles the Participant to purchase shares of Stock at a price fixed
at the time the option is awarded, subject to
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the following terms of this Part II.
2. Eligibility. The Board shall designate the Participants to
whom Incentive Stock Options, as described in section 422(b) of the Code or any
successor section thereto, are to be awarded under the 1989 Plan and shall
determine the number of option shares to be offered to each of them. In no
event shall the aggregate Fair Market Value (determined at the time the option
is awarded) of Stock with respect to which Incentive Stock Options are
exercisable for the first time by an individual during any calendar year (under
all plans of the Company and all Related Companies) exceed $100,000.
3. Price. The purchase price of a share of Stock under each
Incentive Stock Option shall be determined by the Board, provided, however,
that in no event shall such price be less than the greater of (a) 100% of the
Fair Market Value of a share of Stock as of the Option Date (or 110% of such
Fair Market Value if the holder of the option owns stock possessing more than
10% of the combined voting power of all classes of stock of the Company or any
Subsidiary) or (b) the par value of a share of Stock on such date. To the
extent provided by the Board, the full purchase price of each share of Stock
purchased upon the exercise of any Incentive Stock Option shall be paid in cash
or in shares of Stock (valued at Fair Market Value as of the day of exercise),
or in any combination thereof, at the time of such exercise and, as soon as
practicable thereafter, a certificate representing the shares so purchased
shall be delivered to the person entitled thereto. In addition, effective for
all awards of Incentive Stock Options under the 1989 Plan on or after August
16, 1996, unless restricted by the Board, Participants may elect to pay the
purchase price of shares of Stock purchased upon the exercise of Incentive
Stock Options in cash or through the constructive delivery at the time of such
exercise of shares of Stock (valued at Fair Market Value as of the day of
exercise) already owned by the Participant, or any combination thereof,
equivalent to the purchase price of such Incentive Stock Options, and, as soon
as practicable thereafter, a certificate representing the net number of shares
so purchased shall be delivered to the person entitled thereto. Participants
also may elect to pay, unless restricted by the Board, the purchase price, in
whole or in part, of shares of Stock purchased upon the exercise of Incentive
Stock Options through the Company's withholding of shares of Stock (valued at
Fair Market Value as of the day of exercise) that would otherwise be issuable
upon exercise of such options equivalent to the purchase price of such
Incentive Stock Options and, as soon as practicable thereafter, a certificate
representing the net number of shares so purchased shall be delivered to the
person entitled thereto. A Participant's payment of the purchase price in
connection with the exercise of an Incentive Stock Option through the Company's
withholding of shares of Stock that would otherwise be issuable under such
Incentive Stock Option may constitute a disposition of the withheld Stock
within the meaning of Code Section 424(c), resulting in the disqualification of
the withheld Stock from treatment as an incentive stock option under Code
Section 422 and the Participant's recognition of ordinary income in the year of
the disposition. Furthermore, a Participant's payment of the purchase price in
connection with the exercise of an Incentive Stock Option through actual or
constructive delivery of shares of Stock (the "ISO Stock") that were acquired
through the exercise of an Incentive Stock Option and that have not been held
for more than one year will be considered a disposition (within the meaning of
Code Section 424(c)) of the ISO Stock, resulting in the disqualification of the
ISO Stock from treatment as an incentive stock option under Code Section 422,
and the Participant's recognition of ordinary income. Participants should
consult with their tax advisors prior to electing to exercise an Incentive
Stock Option by either of these methods.
4. Exercise. No Incentive Stock Option may be exercised by a
Participant (a) prior to the date on which he completes six continuous months
of employment with the Company or any Related Company after the date of the
award thereof, or (b) after the Expiration Date applicable to that option.
Provided, however, that the six-month requirement shall not apply if the
Participant's employment terminates by reason of death or because the
Participant becomes Disabled. Each Option shall become and be exercisable at
such time or times and during such period or periods, in full or in such
installments as may be determined by the Board at the Option Date. The
exercise of an Incentive Stock Option will result in the surrender of the
related Stock Appreciation Right, if any.
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5. Option Expiration Date. The "Expiration Date" with respect to
an Incentive Stock Option or any portion thereof awarded to a Participant under
the 1989 Plan means the earliest of:
(a) the date that is 10 years after the date on
which the Incentive Stock Option is awarded
(or, if the Participant owns stock possessing
more than 10% of the combined voting power of
all classes of stock of the Company or any
Subsidiary, the date that is 5 years after
the date on which the Incentive Stock Option
is awarded);
(b) the date established by the Board at the time
of the award;
(c) the date that is one year after the
Participant's employment with the Company and
all Related Companies is terminated by reason
of the Participant becoming Disabled or by
reason of the Participant's death.
(d) the date the Participant's employment with
the Company and all Related Companies is
terminated for reasons other than Retirement
or death; or
(e) the date that is three months after the date
the Participant's employment with the Company
and all Related Companies is terminated by
reason of Retirement.
All rights to purchase shares of Stock pursuant to an
Incentive Stock Option shall cease as of such option's
Expiration Date.
III. NON-QUALIFIED STOCK OPTIONS
1. Definition. The award of a Non-Qualified Stock Option under
the 1989 Plan entitles the Participant to purchase shares of Stock at a price
fixed at the time the option is awarded, subject to the following terms of this
Part III.
2. Eligibility. The Board shall designate the Participants to
whom Non-Qualified Stock Options are to be awarded under the 1989 Plan and
shall determine the number of option shares to be offered to each of them.
3. Price. The purchase price of a share of Stock under each
Non-Qualified Stock Option shall be determined by the Board; provided, however,
that in no event shall such price be less than the greater of (a) fifty percent
(50%) of the Fair Market Value of a share of Stock as of the Option Date or (b)
the par value of a share of such Stock on such date. To the extent provided by
the Board, the full purchase price of each share of Stock purchased upon the
exercise of any Non-Qualified Stock Option shall be paid in cash or in shares
of Stock (valued at Fair Market Value as of the day of exercise), or in any
combination thereof, at the time of such exercise and, as soon as practicable
thereafter, a certificate representing the shares so purchased shall be
delivered to the person entitled thereto. In addition, unless restricted by
the Board, Participants may elect to pay the purchase price of shares of Stock
purchased upon the exercise of Non-Qualified Stock Options in cash or through
the constructive delivery at the time of such exercise of shares of Stock
(valued at Fair Market Value as of the day of exercise) already owned by the
Participant, or any combination thereof, equivalent to the purchase price of
such Non-Qualified Stock Options, and, as soon as practicable thereafter, a
certificate representing the net number of shares so purchased shall be
delivered to the person entitled thereto. Participants also may elect to pay,
unless restricted by
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<PAGE> 8
the Board, the purchase price, in whole or in part, of shares of Stock
purchased upon the exercise of Non-Qualified Options through the Company's
withholding of shares of Stock (valued at Fair Market Value as of the day of
exercise) that would otherwise by issuable upon exercise of such options
equivalent to the purchase price of such Non-Qualified Stock Options and, as
soon as practicable thereafter, a certificate representing the net number of
shares so purchased shall be delivered to the person entitled thereto.
4. Exercise. No Non-Qualified Stock Option may be exercised by a
participant: (a) prior to the date on which the Participant completes six
continuous months of employment with the Company or any Related Company after
the date of the award thereof; or (b) after the Expiration Date applicable to
that option. Provided, however, that the six-month requirement shall not apply
if the Participant's employment terminates by reason of death or because the
Participant becomes Disabled. Each Option shall become and be exercisable at
such time or times and during such period or periods, in full or in such
installments as may be determined by the Board at the Option Date. The
exercise of a Non-Qualified Stock Option will result in the surrender of the
related Stock Appreciation Right, if any.
5. Option Expiration Date. The "Expiration Date" with respect to
a Non-Qualified Stock Option or any portion thereof awarded to a Participant
under the 1989 Plan means the earliest of:
(a) the date established by the Board at the time of the
award;
(b) the date the Participant's employment with the
Company and all Related Companies is terminated for
reasons other than Retirement or death; or
(c) the date that is three years after the date the
Participant's employment with the Company and all
Related Companies is terminated by reason of
Retirement or death.
All rights to purchase shares of Stock pursuant to a Non-Qualified Stock Option
shall cease as of such option's Expiration Date.
IV. STOCK APPRECIATION RIGHTS
1. Definition. A Stock Appreciation Right is an award that may
be granted in tandem with a Non-Qualified Stock Option or Incentive Stock
Option, and entitles the holder to receive an amount equal to the difference
between the Fair Market Value of the shares of option Stock at the time of
exercise of the Stock Appreciation Right and the option price, subject to the
applicable terms and conditions of the tandem options and the following
provisions of this Part IV.
2. Eligibility. The Board may, in its discretion, award the
holders of any Incentive Stock Options or Non-Qualified Stock Options awarded
under the 1989 Plan a Stock Appreciation Right under this Part IV concurrent
with, or subsequent to, the award of the option.
3. Exercise. A Stock Appreciation Right may be exercised under
the applicable terms and conditions of the Incentive Stock Option or
Non-Qualified Stock Option with respect to which the Stock Appreciation Right
is awarded. A Stock Appreciation Right shall entitle the holder of a Stock
Option to receive, upon the exercise of the Stock Appreciation Right, shares of
Stock (valued at their Fair Market Value at the time of exercise), cash or a
combination thereof, in the discretion of the Board, in an amount equal in
value to the excess of the Fair Market Value of the shares of Stock subject to
the Stock Appreciation Right as of the date of such exercise over the purchase
price of the Stock Option. The exercise of a Stock Appreciation Right will
result in the surrender of the related Incentive Stock Option or Non-Qualified
Stock Option.
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4. Expiration Date. The "Expiration Date" with respect to a
Stock Appreciation Right shall be determined by the Board, and shall be not
later than the Expiration Date for the related Stock Option.
V. RESTRICTED STOCK
1. Definition. Restricted Stock awards are grants of Stock to
Participants, the vesting of which is subject to a required period of
employment and any other conditions established by the Board.
2. Eligibility. The Board shall designate the Participants to
whom Restricted Stock is to be awarded and the number of shares of Stock that
are subject to the award.
3. Terms and Conditions of Awards. All shares of Restricted
Stock awarded to Participants under the 1989 Plan shall be subject to the
following terms and conditions and to such other terms and conditions, not
inconsistent with the 1989 Plan, as shall be prescribed by the Board in its
sole discretion and as shall be contained in the Agreement referred to in Part
I, paragraph 12.
(a) Restricted Stock awarded to Participants may not be
sold, assigned, transferred, pledged or otherwise
encumbered, except as hereinafter provided, for a
period of five years or such shorter period as the
Board may determine, but not less than one year,
after the time of the award of such stock (the
"Restricted Period"). Except for such restrictions,
the Participant as owner of such shares shall have
all the rights of a shareholder, including but not
limited to the right to vote such shares and, except
as otherwise provided by the Board, the right to
receive all dividends paid on such shares.
(b) The Board may in its discretion, at any time after
the date of the award of Restricted Stock, adjust the
length of the Restricted Period to account for
individual circumstances of a Participant or group of
Participants, but in no case shall the length of the
Restricted Period be less than one year.
(c) Except as otherwise determined by the Board in its
sole discretion, a Participant whose employment with
the Company and all Related Companies terminates
prior to the end of the Restricted Period for any
reason shall forfeit all shares of Restricted Stock
remaining subject to any outstanding Restricted Stock
Award.
(d) Each certificate issued in respect of shares of
Restricted Stock awarded under the 1989 Plan shall be
registered in the name of the Participant and, at the
discretion of the Board, each such certificate may be
deposited in a bank designated by the Board. Each
such certificate shall bear the following (or a
similar) legend: "The transferability of this
certificate and the shares of stock represented
hereby are subject to the terms and conditions
(including forfeiture) contained in the REPUBLIC
GROUP INCORPORATED 1989 Long-Term Incentive Plan and
an agreement entered into between the registered
owner and REPUBLIC GROUP INCORPORATED. A copy of
such plan and agreement is on file in the office of
the Secretary of REPUBLIC GROUP INCORPORATED, 311
East 30th Avenue, Hutchinson, Kansas 67502-4341.
(e) At the end of the Restricted Period for Restricted
Stock, such Restricted Stock will be transferred free
of all restrictions to a Participant (or his or her
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<PAGE> 10
legal representative, beneficiary or heir).
4. Substitution of Cash. The Board may, in its discretion,
substitute cash equal to the Fair Market Value (determined as of the date of
distribution) of Stock otherwise required to be distributed to a Participant in
accordance with Part V, paragraph 3.
VI. PERFORMANCE UNITS
1. Definition. Performance Units are awards to Participants who
may receive value for the units at the end of a Performance Period. The number
of units earned, and value received for them, will be contingent on the degree
to which the performance measures established at the time of the initial award
are met.
2. Eligibility. The Board shall designate the Participants to
whom Performance Units are to be awarded, and the number of units to be the
subject of such awards.
3. Terms and Conditions of Awards. For each Participant, the
Board will determine the timing of awards; the number of units awarded; the
value of units, which may be stated either in cash or in shares of Stock; the
performance measures used for determining whether the Performance Units are
earned; the performance period during which the performance measures will
apply; the relationship between the level of achievement of the performance
measures and the degree to which Performance Units are earned; whether, during
or after the performance period, any revision to the performance measures or
performance period should be made to reflect significant events or changes that
occur during the performance period; and the number of earned Performance Units
that will be paid in cash and/or shares of Stock.
4. Payment. The Board will compare the actual performance to the
performance measures established for the performance period and determine the
number of units to be paid and their value. Payment for units earned shall be
wholly in cash, wholly in Stock or in a combination of the two, in a lump sum
or installments, and subject to vesting requirements and such other conditions
as the Board shall provide. The Board will determine the number of earned
units to be paid in cash and the number to be paid in Stock. For Performance
Units valued when awarded in shares of Stock, one share of Stock will be paid
for each unit earned, or cash will be paid for each unit earned equal to either
(a) the Fair Market Value of a share of Stock at the end of the Performance
Period or (b) the Fair Market Value of the Stock averaged for a number of days
determined by the Board. For Performance Units valued when awarded in cash,
the value of each unit earned will be paid in its initial cash value, or shares
of Stock will be distributed based on the cash value of the units earned
divided by (a) the Fair Market Value of a share of Stock at the end of the
Performance Period or (b) the Fair Market Value of a share of Stock averaged
for a number of days determined by the Board.
5. Retirement, Death or Termination. A Participant whose
employment with the Company and Related Companies terminates during a
performance period because of Retirement or death shall be entitled to the
prorated value of earned Performance Units, issued with respect to that
performance period, at the conclusion of the performance period based on the
ratio of the months employed during the period to the total months of the
performance period. If the Participant's employment with the Company and
Related Companies terminates during a performance period for any reason other
than Retirement or death, the Performance Units issued with respect to that
performance period will be forfeited on the date his employment with the
Company and Related Companies terminates. Notwithstanding the foregoing
provisions of this Part VI, if a Participant's employment with the Company and
Related Companies terminates before the end of the Performance Period with
respect to any Performance Units awarded to him, the Board may determine that
the Participant will be entitled to receive all or any portion of the units
that he or she would otherwise receive, and may accelerate the determination
and payment of the value of such units or make such other adjustments as the
Board, in its sole discretion, deems desirable.
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EXHIBIT 10(b)
REPUBLIC GROUP INCORPORATED
NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
AS AMENDED EFFECTIVE AUGUST 16, 1996
This is a plan pursuant to which options to purchase the Common Stock,
par value $1.00 per share (the "Common Stock"), of Republic Group Incorporated,
a Delaware corporation formerly known as Republic Gypsum Company (the
"Company"), are granted to non-employee directors of the Company. This plan is
known as the Non-Employee Director Stock Option Plan (the "Plan"), and was
originally effective August 7, 1989. The purpose of the Plan is to obtain and
retain the services of qualified persons who are not full-time employees of the
Company to serve as directors of the Company, and to demonstrate the Company's
appreciation for their service upon its Board of Directors.
Section 1. Administration. The Plan shall be administered by
the Board of Directors of the Company (the "Board of Directors"). The Board of
Directors, in its discretion, may delegate any or all of its authority, powers
and discretion under the Plan to a committee (the "Committee") of the Board of
Directors; and the Board of Directors in its discretion may revest any or all
such authority, powers and discretion in itself at any time. The Board of
Directors, subject to the provisions of the Plan and Sections 2 and 4 in
particular, shall have the power to construe the Plan, to determine all
questions thereunder, and to adopt and amend such rules and regulations for the
administration of the Plan as it may deem desirable.
Section 2. Number of Shares; Eligibility and Grants of Options.
There is no maximum number of shares of Common Stock for which options may be
granted under the Plan. The number of shares for which options may be granted
shall be as determined by resolution of the Board of Directors from time to
time. In the event that an option granted under the Plan expires or is
terminated unexercised as to any shares covered thereby, such shares shall
thereafter again be available for the purposes of this Plan. Each member of
the Board of Directors serving on the effective date of the restated and
amended Plan, who is not a full-time employee of the Company ("non-employee
director"), shall be granted without further action by the Board of Directors
or the Committee an option to purchase 2,000 shares of the Company's Common
Stock on the effective date of the restated and amended Plan. Thereafter, on
the first business day following each annual meeting of stockholders of the
Company, each non-employee director shall be granted without further action by
the Board of Directors or the Committee an option to purchase 2,000 shares of
the Company's Common Stock. As soon as practicable after the grant of an
option under the Plan, the Company and the non-employee director shall enter
into a Stock Option Agreement evidencing the option so granted. Such agreement
shall be in such form, consistent with the Plan, as the Board of Directors
shall deem appropriate.
Section 3. Adjustment of Number of Shares. In the event that a
dividend or stock split hereinafter shall be declared upon the Common Stock of
the Company payable in shares of Common Stock of the Company, the number of
shares of Common Stock then subject to any outstanding option under the Plan
and the number of shares as to which an option is to be granted to any
non-employee director under Section 2 of the Plan shall be adjusted by adding
to each such share the number of shares which would be distributable thereon if
such share had been outstanding on the date fixed for determining the
stockholders entitled to receive such stock dividend or stock split. In the
event that the outstanding shares of the Common Stock of the Company shall be
changed into or exchanged for a different number or kind of shares of stock or
other securities of the Company whether through reorganization,
recapitalization or reclassification, then there shall be substituted for each
share of Common Stock subject to or to be subject to any such option under
Section 2, the number and kind of shares of stock or other securities into
which each outstanding share of Common Stock shall be so changed or for which
each such share shall be exchanged.
<PAGE> 2
In the event there shall be any change, other than as specified above
in this Section 3, in the number or kind of outstanding shares of Common Stock
of the Company or of any stock or other securities into which such Common Stock
shall have been changed or for which it shall have been exchanged, then the
Board of Directors shall make such adjustment, if any, as it deems equitable in
the number and/or kind of shares or other securities subject to outstanding
options or subject to options to be granted under Section 2 hereof. In the
case of any such substitution or adjustment as provided for in this Section,
the option price for each share covered thereby prior to such substitution or
adjustment shall be the option price for all shares of stock or other
securities which shall have been substituted for such share or to which such
share shall have been adjusted pursuant to this Section. No adjustment or
substitution provided for in this Section 3 shall require the Company to sell a
fractional share, and the total substitution or adjustment with respect to each
option shall be limited accordingly.
Section 4. Exercise and Termination of Options.
(a) Subject to the provisions of Section 6 hereof, each
option granted under the Plan shall be exercisable in full one (1)
year following the grant of such option; provided, that the
non-employee director has served as a non-employee director throughout
such one-year period. If the non-employee director should cease to
serve as a director during the one-year period by reason of death or
permanent disability (of which the Board of Directors shall be the
sole judge), each option granted under the Plan shall be exercisable
in full on or after the date that the non-employee director ceases to
serve as a director.
(b) The option price per share of the shares of Common
Stock subject to an option granted under the Plan shall be 100% of the
fair market value of a share of the Common Stock on the day the option
is granted. The option price per share will be subject to adjustment
in accordance with the provisions of Section 3 of the Plan. Any
adjustment or determination made by the Board of Directors shall be
conclusive. For purposes of the Plan, if the Common Stock is listed
on a national securities exchange, the fair market value of a share of
the Common Stock on any date shall be the closing sale price of such a
share on such date on such exchange, or, if there is no closing sale
price on such date, the closing sale price of such a share on such
exchange on the last preceding date on which there was such a closing
sale price.
(c) Each option shall automatically terminate upon the
occurrence of the following events: (i) twelve months after the
non-employee director ceases to be a director of the Company by reason
of the non- employee director's death or permanent disability (of
which the Board of Directors shall be the sole judge); or (ii) six
months after the non-employee director ceases to be a director of the
Company for any reason, other than as set forth in (i) above.
(d) Options granted under the Plan shall not be
transferable by the nonemployee director other than to Permitted
Transferees, as defined herein, or other than by will or, if he dies
intestate, by the laws of descent and distribution of the state of
domicile at the time of his death, and such options shall be
exercisable during his lifetime only by such non-employee director, a
Permitted Transferee, or by his guardian or legal representative.
"Permitted Transferee" means a member of the non-employee director's
immediate family, trusts for the benefit of such immediate family
members, and partnerships in which such immediate family members are
the only partners, provided that no consideration is provided for the
transfer. Immediate family members shall include a non-employee
director's descendants (children, grandchildren and more remote
descendants), and shall include step-children and relationships
arising from legal adoption.
<PAGE> 3
Section 5. Manner of Exercise of Option. Options granted
hereunder shall be exercised by delivering to the Secretary of the Company,
from time to time within the time limits specified in Section 4 hereof, a
written notice specifying the number of shares the option holder then desires
to purchase together with (a) a check payable in United States currency to the
order of the Company for an amount equal to the option price for such number of
shares, or (b) shares of Common Stock owned by the option holder duly endorsed
to the order of the Company, with a fair market value equal to the option price
for such number of shares, as of the close of business on the immediately
preceding business day (determined in accordance with Section 4 hereof), or (c)
any combination of the foregoing, and such other instruments or agreements duly
signed by the option holder as in the opinion of counsel for the Company may be
necessary or advisable in order that the issuance of such number of shares
comply with the applicable rules and regulations under the Securities Act of
1933, any appropriate state securities laws or any requirement of any national
securities exchange on which such stock may be traded. As soon as practical
after any such exercise of an option in whole or in part, the Company will
deliver to the option holder at the principal executive offices of the Company,
a certificate for the number of shares with respect to which the option shall
have been so exercised, issued in the option holder's name. Such stock
certificate shall carry such appropriate legends, and such written instructions
shall be given to the Company's transfer agent, as may be deemed necessary or
advisable by counsel to the Company in order to comply with the requirements of
the Securities Act of 1933 or any state securities laws. In addition, unless
restricted by the Board of Directors, option holders may elect to pay the
purchase price of shares of Common Stock purchased upon the exercise of Options
in cash or through the constructive delivery at the time of such exercise of
shares of Common Stock (valued at fair market value as of the date of exercise)
already owned by the option holders, or any combination thereof, equivalent to
the purchase price of such Options, and, as soon as practicable thereafter, a
certificate representing the net number of shares so purchased shall be
delivered to the person entitled thereto. Option holders also may elect to
pay, unless restricted by the Board of Directors, the purchase price, in whole
or in part, of shares of Common Stock purchased upon the exercise of Options
through the Company's withholding of shares of Common Stock (valued at fair
market value as of the date of exercise) that would otherwise be issuable upon
exercise of such options equivalent to the purchase price of such Options and,
as soon as practicable thereafter, a certificate representing the net number of
shares so purchased shall be delivered to the person entitled thereto.
Section 6. Change in Control. Notwithstanding any other
provision of the Plan, in the event of a change in control, all outstanding
stock options will automatically become fully exercisable. For purposes of
this paragraph 6, the term "change in control" means a change in the beneficial
ownership of the Company's voting stock or a change in the composition of the
Board which occurs as follows:
(a) any "person" (as such term is used in Section 13(d)
and 14(d)(2) of the Securities Exchange Act of 1934),
other than the Company, a wholly-owned subsidiary of
the Company, any employee benefit plan of the Company
or of a Subsidiary or any trustee of such a plan, is
or becomes a beneficial owner, directly or
indirectly, of stock of the Company representing 35
percent or more of the total voting power of the
Company's then outstanding voting stock.
(b) a tender offer (for which a filing has been made with
the Securities Exchange Commission ("SEC") which
purports to comply with the requirements of Section
14(d) of the Securities Exchange Act of 1934 and the
corresponding SEC rules) is made for the stock of the
Company, which has not been negotiated and approved
by the Board, provided that in case of a tender offer
described in this paragraph (b), the change in
control will be
<PAGE> 4
deemed to have occurred upon the first to occur of
(i) any time during the offer when the person (using
the definition in (a) above) making the offer owns or
has accepted for payment stock of the Company with 35
percent of the total voting power of the Company's
stock or (ii) three business days before the offer is
to terminate unless the offer is withdrawn first, if
the person making the offer could own, by the terms
of the offer plus any shares owned by this person,
stock with 35 percent or more of the total voting
power of the Company's stock when the offer
terminates; or
(c) individuals who were the Board's nominees for
election as directors of the Company immediately
prior to a meeting of the stockholders of the Company
involving a contest for the election of directors
shall not constitute a majority of the Board
following the election.
For purposes hereof, a person will be deemed to be the beneficial owner of any
voting securities of the Company which it would be considered to beneficially
own under Securities and Exchange Commission Rule 13d-3 (or any similar or
superseding statute or rule) from time to time in effect.
Section 7. Effective Date of Restated Plan. The effective date
of the restated and amended Plan shall be August 16, 1996. It is the intent of
the Company that the restated and amended Plan comply with new Rule 16b-3,
issued by the Securities and Exchange Commission on May 31, 1996.
Section 8. Amendment of the Plan. The Board of Directors shall
have the right to amend, suspend or terminate this Plan at any time, and make
modifications or amendments to such Plan; provided, however, that the approval
by the affirmative vote of holders of a majority of the shares of Common Stock
present or represented by proxy at a meeting of stockholders of the Company
shall be required for any amendment if such approval is a condition of
Securities and Exchange Commission Rule 16b-3 as it is applicable to the Plan
at the time such amendment becomes effective. Termination or any modification
or amendment of the Plan shall not, without the consent of a non-employee
director, affect his rights under an option previously granted to him.
Section 9. Limitation of Rights.
(a) Neither the Plan, nor the granting of an option nor
any other action taken pursuant to the Plan shall constitute or be
evidence of any agreement or understanding, expressed or implied, that
the Company will retain a director for any period of time.
(b) An option holder shall have no rights as a
stockholder with respect to the shares covered by his option until the
date of the issuance to him of a stock certificate therefor, and no
adjustment will be made for dividends or other rights for which the
record date is prior to the date such certificate is issued.
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