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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934
Date of Report (Date of earliest event reported): October 2, 1998
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Clarion Technologies, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 0-24690 91-1407411
(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification No.)
incorporation)
1901 N. Roselle Road, Suite 1030, Schaumburg, Illinois 60195
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (847) 490-5977
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Clarion House, Inc.
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(Former name or former address, if changed since last report)
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
Not applicable.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On October 2, 1998, the Registrant changed its state of incorporation
from Nevada to Delaware and also changed its name to Clarion Technologies, Inc.,
through the merger of Clarion House, Inc., a Nevada corporation, with and into
the Registrant (the "Reincorporation"). The Registrant was formed as a
wholly-owned subsidiary of Clarion House, Inc. for purposes of the
Reincorporation. The Reincorporation was approved by a majority of the
stockholders by written consent on June 5, 1998. The merger exchange ratio was
one share of the Registrant's common stock, $.001 par value for each one share
of Clarion House, Inc.'s common stock, $.01 par value, outstanding at the
effective date of the Reincorporation. Notice of the Reincorporation was
provided to the Registrants' stockholders pursuant to a Notice of Action by
Written Consent and Information Statement, a copy of which has been filed as an
exhibit to this and is incorporated herein by this reference.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
Not applicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
Not applicable.
ITEM 5. OTHER EVENTS.
Not applicable.
ITEM 6. RESIGNATIONS OF REGISTRANT'S DIRECTORS.
Not applicable.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of businesses acquired.
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(b) Pro forma financial information.
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(c) Exhibits.
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2.1 Agreement of Merger (Reincorporation in Delaware) dated June 5th,
1998, by and between Clarion House, Inc., a Nevada corporation and Clarion
Technologies, Inc., a Delaware corporation.
3.1 Certificate of Incorporation of Clarion Technologies, Inc., a
Delaware corporation, dated February 23, 1998.
3.2 Bylaws of Clarion Technologies, Inc. dated February 23, 1998.
20.1 Notice to Shareholders and Information Statement dated October
20, 1998.
ITEM 8. CHANGE IN FISCAL YEAR.
Not applicable.
ITEM 9. SALES OF EQUITY SECURITIES PURSUANT TO REGULATION S.
Not applicable.
SIGNATURE
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 hereunto duly authorized.
Clarion Technologies, Inc.
(Registrant)
Date: October 20, 1998 By: /s/ Troy D. Wiseman
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Troy D. Wiseman, Chief Executive Officer
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Exhibit 3.1
State of Delaware
Page 1
Office of the Secretary of State
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I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF
DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT
COPY OF THE CERTIFICATE OF INCORPORATION OF "CLARION
TECHNOLOGIES, INC.", FILED IN THIS OFFICE ON THE TWENTY-THIRD
DAY OF FEBRUARY, A.D. 1998, AT 11 O'CLOCK A.M.
(Seal) /s/ Edward Freel
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Edward J. Freel, Secretary of State
AUTHENTICATION: 8935511
DATE: 02-23-98
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STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 11:00 AM 02/23/1998
981069292 - 2816858
CERTIFICATE OF INCORPORATION
OF
CLARION TECHNOLOGIES, INC.
ARTICLE I
Name of Corporation
The name of this corporation is Clarion Technologies, Inc.
ARTICLE II
Registered Office and Agent
The address of the registered office of the corporation in the State of
Delaware is 1013 Centre Road in the City of Wilmington, County of New Castle,
and the name of its registered agent at that address is Corporation Service
Company.
ARTICLE III
Purpose
The purpose of the corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of
Delaware.
ARTICLE IV
Authorized Capital Stock
This Corporation is authorized to issue one class of shares designated
"Common Stock". The total number of shares of Common Stock this Corporation is
authorized to issue is 20,000,000 and each such share shall have a par value of
$.001.
ARTICLE V
Incorporator
The incorporator is Marisa B. Iasenza, 500 Newport Center Drive, Suite 700,
Newport Beach, California 92660.
ARTICLE VI
Limitation of Director Liability
To the fullest extent permitted by the Delaware General Corporation Law as
the same exists or may hereafter be amended, a director of this corporation
shall not be liable to the corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director.
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ARTICLE VII
Perpetual Existence
The corporation is to have perpetual existence.
ARTICLE VIII
Stockholder Meetings
Meetings of stockholders may be held within or without the State of
Delaware, as the bylaws may 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 bylaws of the corporation.
ARTICLE IX
Bylaws
In furtherance and not in limitation of the powers conferred by statute,
the board of directors is expressly authorized to make, repeal, alter, amend and
rescind the bylaws of this corporation, subject to any limitations expressed in
such bylaws.
ARTICLE X
Amendment of Certificate of Incorporation
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 on stockholders herein
are granted subject to this reservation.
I, the undersigned, being the sole incorporator hereinbefore named, for the
purpose of forming a corporation pursuant to the General Corporation Law of the
State of Delaware, do make, file and record this Certificate, hereby declaring
and certifying under penalty of perjury that this is my act and deed and the
facts herein stated are true, and accordingly have hereunto set my hand.
Dated: February 20, 1998
/s/ Marisa Iasenza
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Marisa B. Iasenza, Incorporator
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Exhibit 3.2
BYLAWS
OF
CLARION TECHNOLOGIES, INC..
A Delaware Corporation
ARTICLE I
OFFICE
1.1 REGISTERED OFFICE. The registered office of Clarion Technologies,
Inc., a Delaware corporation (hereinafter called the "Corporation"), in the
State of Delaware shall be at 1013 Centre Road in the City of Wilmington, County
of New Castle, and the name of the registered agent in charge thereof shall be
Corporation Service Company.
1.2 PRINCIPAL OFFICE. The principal office for the transaction of the
business of the Corporation shall be 1901 N. Roselle Road, Suite 1030,
Schaumburg, Illinois 60195. The Board of Directors (hereinafter called the
"Board") is hereby granted full power and authority to change the principal
office from one location to another.
1.3 OTHER OFFICES. The Corporation may also have an office or offices
at such other place or places, either within or without the State of Delaware,
as the Board may from time to time determine or as the business of the
Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
2.1 ANNUAL MEETINGS. Annual meetings of the stockholders of the
Corporation for the purpose of electing directors and for the transaction of
such other business as may properly come before such meetings in accordance with
Section 2.11 of these Bylaws may be held at such time, date and place as the
Board shall determine by resolution.
2.2 SPECIAL MEETINGS. A special meeting of the stockholders for the
transaction of any proper business may be called at any time by the Board, the
Chairman of the Board, the Chief Executive Officer, the President or one or more
stockholders holding shares in the aggregate entitled to cast not less than ten
percent (10%) of the votes at that meeting.
2.3 PLACE OF MEETINGS. All meetings of the stockholders shall be held
at such places within or without the State of Delaware, as may from time to time
be designated by the person or persons calling the respective meeting and
specified in the respective notices or waivers of notice thereof.
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2.4 NOTICE OF MEETINGS.
(a) Except as otherwise required by law, written notice of each
meeting of the stockholders, whether annual or special, shall be given not less
than ten (10) nor more than sixty (60) days before the date of the meeting to
each stockholder of record entitled to vote at such meeting. If mailed, notice
is given when deposited in the United States mail, postage prepaid, directed to
the stockholder at his address as it appears on the records of the Corporation.
Except as otherwise expressly required by law, no publication of any notice of a
meeting of the stockholders shall be required. Every notice of a meeting of the
stockholders shall state the place, date and hour of the meeting, and in the
case of a special meeting, shall also state the purpose or purposes for which
the meeting is called. Notice of any meeting of stockholders shall not be
required to be given to any stockholder who shall have waived such notice and
such notice shall be deemed waived by any stockholder who shall attend such
meeting in person or by proxy, except as a stockholder who shall attend such
meeting 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. Except as otherwise expressly required by law, notice of any adjourned
meeting of the stockholders need not be given if the time and place thereof are
announced at the meeting at which the adjournment is taken.
(b) Whenever notice is required to be given to any stockholder to
whom (i) notice of two consecutive annual meetings, and all notices of meetings
or of the taking of action by written consent without a meeting to such person
during the period between such two consecutive annual meetings, or (ii) all, and
at least two, payments (if sent by first class mail) of dividends or interest on
securities during a twelve-month period, have been mailed addressed to such
person at his address as shown on the records of the Corporation and have been
returned undeliverable, the giving of such notice to such person shall not be
required. Any action or meeting which shall be taken or held without notice to
such person shall have the same force and effect as if such notice had been duly
given. If any person shall deliver to the Corporation a written notice setting
forth his then current address, the requirement that notice be given to such
person shall be reinstated. In the event that the action taken by the
Corporation is such as to require the filing of a certificate under any of the
other sections, the certificate need not state that notice was not given to
persons to whom notice was not required to be given pursuant to this section.
2.5 QUORUM. Except as provided by law, the holders of record of a
majority in voting interest of the shares of stock of the Corporation entitled
to be voted thereat, present in person or by proxy, shall constitute a quorum
for the transaction of business at any meeting of the stockholders of the
Corporation or any adjournment thereof. The stockholders present at a duly
called or held meeting at which a quorum is present may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum, if any action taken (other than
adjournment) is approved by at least a majority of the shares required to
constitute a quorum, and by any greater number of shares otherwise required to
take such action by applicable law or the Certificate of Incorporation. In the
absence of a quorum at any meeting or any adjournment thereof, a majority in
voting interest of the stockholders present in person or by proxy and entitled
to vote thereat or, in the absence therefrom of all the stockholders, any
officer entitled to preside at, or to act as secretary of, such meeting may
adjourn such meeting from time to time. At any such adjourned meeting at which a
quorum is present any business may be transacted which might have been
transacted at the meeting as originally called.
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2.6 VOTING.
(a) Each stockholder shall, at each meeting of the stockholders,
be entitled to vote in person or by proxy each share or fractional share of the
stock of the Corporation having voting rights on the matter in question and
which shall have been held by him and registered in his name on the books of the
Corporation:
(i) on the date fixed pursuant to Section 2.10 of these Bylaws
as the record date for the determination of stockholders entitled to notice of
and to vote at such meeting, or
(ii) if no such record date shall have been so fixed, then (A)
at the close of business on the day next preceding the day on which notice of
the meeting shall be given or (B) if notice of the meeting shall be waived, at
the close of business on the day next preceding the day on which the meeting
shall be held.
(b) Voting shall in all cases be subject to the provisions of the
Delaware General Corporation Law and to the following provisions:
(i) Subject to Section 2.6(b)(vii), shares held by an
administrator, executor, guardian, conservator, custodian or other fiduciary may
be voted by such holder either in person or by proxy, without a transfer of such
shares into the holder's name; and shares standing in the name of a trustee may
be voted by the trustee, either in person or by proxy, but no trustee shall be
entitled to vote shares held by such trustee without a transfer of such shares
into the trustee's name.
(ii) Shares standing in the name of a receiver may be voted by
such receiver; and shares held by or under the control of a receiver may be
voted by such receiver without the transfer thereof into the receiver's name if
authority to do so is contained in the order of the court by which such receiver
was appointed.
(iii) Subject to the provisions of the Delaware General
Corporation Law, and except where otherwise agreed in writing between the
parties, a stockholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
(iv) Shares standing in the name of a minor may be voted and
the Corporation may treat all rights incident thereto as exercisable by the
minor, in person or by proxy, whether or not the Corporation has notice, actual
or constructive, of the non-age, unless a guardian of the minor's property has
been appointed and written notice of such appointment given to the Corporation.
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(v) Shares standing in the name of another corporation,
domestic or foreign, may be voted by such officer, agent or proxyholder as the
bylaws of such other corporation may prescribe or, in the absence of such
provision, as the Board of Directors of such other corporation may determine or,
in the absence of such determination, by the chairman of the board, president or
any vice president of such other corporation, or by any other person authorized
to do so by the board, president or any vice president of such other
corporation. Shares which are purported to be executed in the name of a
corporation (whether or not any title of the person signing is indicated) shall
be presumed to be voted or the proxy executed in accordance with the provisions
of this subdivision, unless the contrary is shown.
(vi) Shares of its own stock belonging to the Corporation or
to another corporation, if a majority of the shares entitled to vote in the
election of directors in such other corporation is held, directly or indirectly,
by the Corporation, shall neither be entitled to vote nor be counted for quorum
purposes.
(vii) Shares held by the Corporation in a fiduciary capacity,
and shares of the Corporation held in a fiduciary capacity by any subsidiary,
shall not be entitled to vote on any matter, except to the extent that the
settlor or beneficial owner possesses and exercises a right to vote or to give
the Corporation binding instructions as to how to vote such shares.
(viii) If shares stand of record in the names of two or more
persons, whether fiduciaries, members of a partnership, joint tenants, tenants
in common, husband and wife as community property, tenants by the entirety,
voting trustees, persons entitled to vote under a stockholder voting agreement
or otherwise, or if two or more persons (including proxyholders) have the same
fiduciary relationship respecting the same shares, unless the Secretary of the
Corporation is given written notice to the contrary and is furnished with a copy
of the instrument or order appointing them or creating the relationship wherein
it is so provided, their acts with respect to voting shall have the following
effect:
(A) If only one votes, such act binds all;
(B) If more than one vote, the act of the majority so
voting binds all;
(C) If more than one vote, but the vote is evenly split
on any particular matter, each fraction may vote the securities in question
proportionately. If the instrument so filed or the registration of the shares
shows that any such tenancy is held in unequal interests, a majority or even
split for the purpose of this section shall be a majority or even split in
interest.
(c) Any such voting rights may be exercised by the stockholder
entitled thereto in person or by his proxy appointed by an instrument in
writing, subscribed by such stockholder or by his attorney thereunto authorized
and delivered to the secretary of the meeting. A validly executed proxy which
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does not state that it is irrevocable shall continue in full force and effect
unless revoked by the person executing it, prior to the vote pursuant thereto,
by a writing delivered to the Corporation stating that the proxy is revoked or
by a subsequent proxy executed by, or attendance at the meeting and voting in
person by the person executing the proxy; provided, however, that no such proxy
shall be valid after the expiration of three (3) years from the date of such
proxy, unless otherwise provided in the proxy. The revocability of a proxy that
states on its face that it is irrevocable shall be governed by the provisions of
the Delaware General Corporation Law.
(d) At any meeting of the stockholders all matters, except as
otherwise provided in the Certificate of Incorporation, in these Bylaws or by
law, shall be decided by the vote of a majority in voting interest of the
stockholders present in person or by proxy and entitled to vote thereat and
thereon, a quorum being present.
(e) The vote at any meeting of the stockholders on any question
need not be by written ballot, unless so directed by the chairman of the
meeting; provided, however, that any election of directors at any meeting must
be conducted by written ballot upon demand made by any stockholder or
stockholders present at the meeting before the voting begins. On a vote by
ballot each ballot shall be signed by the stockholder voting, or by his proxy,
if there be such proxy, and it shall state the number of shares voted.
2.7 ACTION WITHOUT A MEETING. Any action which is required to be taken
or which may be taken at any annual or special meeting of stockholders may be
taken without a meeting, without prior notice and without a vote, if a consent
or consents in writing, setting forth the action so taken, is signed by the
holders of outstanding shares having not less than the minimum number of votes
that would be necessary to authorize or take that action at a meeting at which
all shares entitled to vote on that action were present and voted and shall be
delivered to the Corporation by delivery to its registered office in the State
of Delaware, its principal place of business, or an officer or agent of the
Corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to the Corporation's registered office
shall be by hand or by certified or registered mail, return receipt requested.
In the case of election of directors, such a consent shall be effective only if
signed by the holders of all outstanding shares entitled to vote for the
election of directors; provided, however, that a director may be elected at any
time to fill a vacancy on the Board that has not been filled by the directors,
by the written consent of the holders of a majority of the outstanding shares
entitled to vote for the election of directors. All such consents shall be filed
with the Secretary of the Corporation and shall be maintained in the corporate
records.
Every written consent shall bear the date of signature of each
stockholder who signs the consent and no written consent shall be effective to
take the corporate action referred to therein unless, within sixty (60) days of
the earliest dated consent delivered in the manner required by this section to
the Corporation, written consents signed by a sufficient number of holders or
members to take action are delivered to the Corporation by delivery to its
registered office in the State of Delaware, its principal place of business, or
an officer or agent of the Corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Delivery made to a
Corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested.
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Prompt notice of the taking of the corporate action without a meeting
by less than unanimous written consent shall be given to those stockholders who
have not consented in writing. In the event that the action which is consented
to is such as would have required the filing of a certificate under any other
section of this title, if such action had been voted on by stockholders at a
meeting thereof, the certificate filed under such other section shall state, in
lieu of any statement required by such section concerning any vote of
stockholders, that written consent has been given in accordance with this
section, and that written notice has been given as provided in this section.
2.8 LIST OF STOCKHOLDERS. The Secretary of the Corporation shall
prepare and make, at least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder 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 (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also 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.
2.9 JUDGES. If at any meeting of the stockholders a vote by written
ballot shall be taken on any question, the chairman of such meeting may appoint
a judge or judges to act with respect to such vote. Each judge so appointed
shall first subscribe an oath faithfully to execute the duties of a judge at
such meeting with strict impartiality and according to the best of his ability.
Such judges shall: (i) decide upon the qualification of the voters; (ii) report
the number of shares represented at the meeting and entitled to vote on such
question; (iii) conduct the voting and accept the votes; and (iv) when the
voting is completed, ascertain and report the number of shares voted
respectively for and against the question. Reports of judges shall be in writing
and subscribed and delivered by them to the Secretary of the Corporation. The
judges need not be stockholders of the Corporation, and any officer of the
Corporation may be a judge on any question other than a vote for or against a
proposal in which he shall have a material interest.
2.10 FIXING DATE FOR DETERMINATION OF STOCKHOLDERS OF RECORD.
(a) 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, a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board, and
which record date shall not be more than sixty (60) nor less than ten (10) days
before the date of such meeting.
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(b) In order that the Corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting, the Board
may fix a record date, which record date shall not precede the date upon which
the resolution fixing the record date is adopted by the Board, and which date
shall not be more than ten (10) days after the date upon which the resolution
fixing the record date is adopted by the Board. If no record date has been fixed
by the Board, the record date for determining stockholders entitled to consent
to corporate action in writing without a meeting, when no prior action by the
Board is required, shall be the first date on which a signed written consent
setting forth the action taken or proposed to be taken is delivered to the
Corporation by delivery to its registered office in the State of Delaware, its
principal place of business, or an officer or agent of the Corporation having
custody of the book in which proceedings of meetings of stockholders are
recorded. Delivery made to the Corporation's registered office shall be by hand
or by certified or registered mail, return receipt requested. If no record date
has been fixed by the Board and prior action by the Board is required, the
record date for determining stockholders entitled to consent to corporate action
in writing without a meeting shall be at the close of business on the day on
which the Board adopts the resolution taking such prior action.
(c) In order that the Corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights or the stockholders 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 may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted,
and which record date shall be not more than sixty (60) days prior to such
action. If no record date is fixed, the record date for determining stockholders
for any such purpose shall be at the close of business on the day on which the
Board adopts the resolution relating thereto.
If no record is fixed by the Board, the record date for
determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the day
on which notice is given, or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held. 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 may fix a new record date for the adjourned meeting.
2.11 STOCKHOLDER PROPOSALS AT ANNUAL MEETINGS.
(a) Business may be properly brought before an annual meeting by a
stockholder only upon the stockholder's timely notice thereof in writing to the
Secretary of the Corporation. To be timely, a stockholder's notice must be
delivered to or mailed and received at the principal executive offices of the
Corporation not less than thirty (30) days nor more than sixty (60) days prior
to the meeting as originally scheduled; provided, however, that in the event
that less than forty (40) days' notice or prior public disclosure of the date of
the meeting is given or made to stockholders, notice by the stockholder to be
timely must be so received not later than the close of business on the tenth
(10th) day following the day on which such notice of the date of the annual
meeting was mailed or such public disclosure was made. For purposes of this
Section 2.11, any adjournment(s) or postponement(s) of the original meeting
shall be deemed for purposes of notice to be a continuation of the original
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meeting and no business may be brought before any reconvened meeting unless such
timely notice of such business was given to the Secretary of the Corporation for
the meeting as originally scheduled. A stockholder's notice to the Secretary
shall set forth as to each matter the stockholder proposes to bring before the
annual meeting (i) a brief description of the business desired to be brought
before the annual meeting, (ii) the name and record address of the stockholder
proposing such business, (iii) the class and number of shares of the Corporation
which are beneficially owned by the stockholder, and (iv) any material interest
of the stockholder in such business. Notwithstanding the foregoing, nothing in
this Section 2.11 shall be interpreted or construed to require the inclusion of
information about any such proposal in any proxy statement distributed by, at
the direction of, or on behalf of the Board.
(b) The chairman of an annual 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 provisions of this Section 2.11, and
if the chairman should so determine, the chairman shall so declare to the
meeting and any such business not properly brought before the meeting shall not
be transacted.
2.12 NOTICE OF STOCKHOLDER NOMINEES.
(a) Nominations of persons for election to the Board of the
Corporation shall be made only at a meeting of stockholders and only (i) by or
at the direction of the Board or (ii) by any stockholder of the Corporation
entitled to vote for the election of directors at the meeting who complies with
the notice procedures set forth in this Section 2.12. Such nominations, other
than those made by or at the direction of the Board, shall be made pursuant to
timely notice in writing to the Secretary of the Corporation. To be timely, a
stockholder's notice shall be delivered to or mailed and received at the
principal executive offices of the Corporation not less than thirty (30) days
nor more than sixty (60) days prior to the meeting; provided, however, that in
the event that less than forty (40) days' notice or prior public disclosure of
the date of the meeting is given or made to stockholders, notice by the
stockholder to be timely must be received not later than the close of business
on the tenth (10th) day following the day on which such notice of the date of
the meeting was mailed or such public disclosure was made. For purposes of this
Section 2.12, any adjournment(s) or postponement(s) of the original meeting
shall be deemed for purposes of notice to be a continuation of the original
meeting and no nominations by a stockholder of persons to be elected directors
of the Corporation may be made at any such reconvened meeting unless pursuant to
a notice which was timely for the meeting on the date originally scheduled. Such
stockholder's notice shall set forth: (i) as to each person whom the stockholder
proposes to nominate for election or re-election as a director, all information
relating to such person that is required to be disclosed in solicitations of
proxies for election of directors, or is otherwise required, in each case
pursuant to the Securities Exchange Act of 1934, as amended, (including such
person's written consent to being named in the proxy statement as a nominee and
to serving as a director if elected); and (ii) as to the stockholder giving the
notice (A) the name and address, as they appear on the Corporation's books, of
such stockholder, and (B) the class and number of shares of the Corporation
which are beneficially owned by such stockholder. Notwithstanding the foregoing,
nothing in this Section 2.12 shall be interpreted or construed to require the
inclusion of information about any such nominee in any proxy statement
distributed by, at the discretion of, or on behalf of the Board.
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(b) The chairman of the meeting shall, if the facts warrant,
determine and declare to the meeting that a nomination was not made in
accordance with the procedures prescribed by this Section 2.12, and if the
chairman should so determine, the chairman shall so declare to the meeting and
the defective nomination shall be disregarded.
ARTICLE III
BOARD OF DIRECTORS
3.1 GENERAL POWERS. The property, business and affairs of the
Corporation shall be managed by or under the direction of the Board.
3.2 NUMBER AND TERM OF OFFICE. The number of directors shall be no less
than one (1) and no more than nine (9) or such other number as may be fixed by
the stockholders at any annual meeting or special meeting or by the Board at any
regular or special meeting, subject in either case to the provisions of the
Certificate of Incorporation. Directors need not be stockholders. The initial
number of directors shall be one (1). Each director shall hold office until the
next annual meeting and until a successor has been elected and qualified, or he
resigns, or he is removed in a manner consistent with these Bylaws.
3.3 ELECTION OF DIRECTORS. The directors shall be elected annually by
the stockholders of the Corporation and the persons receiving the greatest
number of votes in accordance with the system of voting established by these
Bylaws shall be the directors.
3.4 RESIGNATION AND REMOVAL OF DIRECTORS. Any director of the
Corporation may resign at any time by giving written notice to the Corporation.
Any such resignation shall take effect at the time specified therein, or, if the
time be not specified, it shall take effect immediately upon its receipt; and
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective. Any or all of the directors may be removed
with or without cause if such removal is approved by the affirmative vote of a
majority of the outstanding shares entitled to vote at an election of directors.
No reduction of the authorized number of directors shall have the effect of
removing any director before his term of office expires.
3.5 VACANCIES. Except as otherwise provided in the Certificate of
Incorporation, any vacancy in the Board, whether because of death, resignation,
disqualification, an increase in the number of directors or any other cause, may
be filled by a majority of the remaining directors, though less than a quorum.
Each director so chosen to fill a vacancy shall hold office until his successor
shall have been elected and qualified or until he shall resign or shall have
been removed in the manner hereinafter provided.
The stockholders may elect a director or directors at any time to fill
any vacancy or vacancies not filled by the directors, but any such election by
written consent shall require the consent of a majority of the outstanding
shares entitled to vote.
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3.6 PLACE OF MEETING, ETC. The Board may hold any of its meetings at
such place or places within or without the State of Delaware as the Board may
from time to time by resolution designate or as shall be designated by the
person or persons calling the meeting or in the notice or a waiver of notice of
any such meeting. Directors may participate in any regular or special meeting of
the Board by means of conference telephone or similar communications equipment
pursuant to which all persons participating in the meeting of the Board can hear
each other, and such participation shall constitute presence in person at such
meeting.
3.7 FIRST MEETING. The Board shall meet as soon as practicable after
each annual election of directors and notice of such first meeting shall not be
required.
3.8 REGULAR MEETINGS. Regular meetings of the Board may be held at such
times as the Board shall from time to time by resolution determine. If any day
fixed for a regular meeting shall be a legal holiday at the place where the
meeting is to be held, then the meeting shall be held at the same hour and place
on the next succeeding business day not a legal holiday. Except as may be
required by law or specified herein, notice of regular meetings need not be
given.
3.9 SPECIAL MEETINGS. Special meetings of the Board shall be held
whenever called by the Chairman of the Board, the President or any two or more
directors. Except as otherwise provided by law or by these Bylaws, notice of the
time and place of each such special meeting shall be mailed to each director,
addressed to him at his residence or usual place of business, at least five (5)
days before the day on which the meeting is to be held, or shall be sent to him
at such place by telegraph or cable or be delivered personally not less than
forty-eight (48) hours before the time at which the meeting is to be held.
Except where otherwise required by law or by these Bylaws, notice of the purpose
of a special meeting need not be given. Notice of any meeting of the Board shall
not be required to be given to any director who is present at such meeting,
except a director who shall attend such meeting 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.
3.10 QUORUM AND MANNER OF ACTING. Except as otherwise provided in these
Bylaws, in the Certificate of Incorporation or by law, the presence of a
majority of the authorized number of directors shall be required to constitute a
quorum for the transaction of business, at any meeting of the Board, and all
matters shall be decided at any such meeting, a quorum being present, by the
affirmative votes of a majority of the directors present. A meeting at which a
quorum is initially present may continue to transact business notwithstanding
the withdrawal of directors, provided any action taken is approved by at least a
majority of the required quorum for such meeting. In the absence of a quorum, a
majority of directors present at any meeting may adjourn the same from time to
time until a quorum shall be present. Notice of an adjourned meeting need not be
given. The directors shall act only as a Board, and the individual directors
shall have no power as such.
3.11 ACTION BY CONSENT. Any action required or permitted to be taken at
any meeting of the Board or of any committee thereof may be taken without a
meeting if 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 proceedings of the Board or committee.
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3.12 COMPENSATION. The directors shall receive only such compensation
for their services as directors as may be allowed by resolution of the Board.
The Board may also provide that the Corporation shall reimburse each such
director for any expense incurred by him on account of his attendance at any
meetings of the Board or Committees of the Board. Neither the payment of such
compensation nor the reimbursement of such expenses shall be construed to
preclude any director from serving the Corporation or its subsidiaries in any
other capacity and receiving compensation therefor.
3.13 COMMITTEES OF DIRECTORS.
(a) The Board 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. Any such committee, to the extent
provided in the resolution of the Board and except as otherwise limited by law,
shall have and may exercise all the powers and authority of the Board 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;
provided, however, that no such committee shall have the power or authority to
act on behalf of the Board with regard to:
(i) the approval of any action which, under the Delaware
General Corporation Law, also requires stockholders' approval or approval of the
outstanding shares;
(ii) the filling of vacancies on the Board of Directors or in
any committees;
(iii) the fixing of compensation of the directors for serving
on the Board or on any committee;
(iv) the amendment or repeal of Bylaws or the adoption of new
Bylaws;
(v) the amendment or repeal of any resolution of the Board of
Directors which by its express terms is not so amendable or repealable;
(vi) a distribution to the stockholders of the Corporation,
except at a rate or in a periodic amount or within a price range determined by
the Board of Directors; or
(vii) the appointment of any other committees of the Board of
Directors or the members thereof.
(b) Meetings and action of committees shall be governed by, and
held and taken in accordance with, the provisions of these Bylaws dealing with
the place of meetings, regular meetings, special meetings and notice, quorum,
waiver of notice, adjournment, notice of adjournment and action without meeting,
with such changes in the context of these Bylaws as are necessary to substitute
the committee and its members for the Board of Directors and its members, except
that the time or regular meetings of committees may be determined by resolutions
of the Board of Directors. Notice of special meetings of committees shall also
be given to all alternate members, who shall have the right to attend all
meetings of the committee. The Board of Directors or a committee may adopt rules
for the government of such committee not inconsistent with the provisions of
these Bylaws.
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Any such committee shall keep written minutes of its meetings and
report the same to the Board at the next regular meeting of the Board. In the
absence or disqualification of a member of a committee, the member or members
thereof present at any meeting and not disqualified from voting, whether or not
he or they constitute a quorum, may unanimously appoint another member of the
Board to act at the meeting in the place of any such absent or disqualified
member.
3.14 OTHER COMMITTEES. The Board may, by resolution passed by a
majority of the whole Board, designate one or more committees, each committee to
consist of one or more non-employee directors and one or more other
disinterested persons, who need not be directors, for the purpose of providing
advice to the Board regarding any matter, including but not limited to the
compensation of officers and other key employees. For the purposes of this
Section, a "disinterested person" means any person having no significant
interest in the actions of the committee, as determined by the Board. Any such
committee, to the extent provided in the resolution of the Board and except as
otherwise limited by law, shall assist the Board in exercising its powers and
authority in the management of the business and affairs of the Corporation, but
shall not itself exercise such powers and authority. Any such committee shall
keep written minutes of its meetings and report the same to the Board at the
next regular meeting of the Board. In the absence or disqualification of a
member of any such committee, the member or members thereof present at any
meeting and not disqualified from voting, whether or not he or they constitute a
quorum, may unanimously appoint any disinterested person to act at the meeting
in the place of any such absent or disqualified member. The compensation and
reimbursement of expenses of the members of any such committee shall be
determined by resolution passed by a majority of the whole Board. Neither the
payment of such compensation nor the reimbursement of such expenses shall be
construed to preclude any such member from serving the Corporation or its
subsidiaries in any other capacity and receiving compensation therefor.
3.15 CERTAIN TRANSACTIONS. In the absence of fraud, no contract or
other transaction between the Corporation and any other corporation, and no act
of the Corporation, shall in any way be affected or invalidated by the fact that
any of the directors of the Corporation are financially or otherwise interested
in, or are directors or officers of, such other corporations; and, in the
absence of fraud, any director, individually, or any firm of which any director
may be a member, may be a party to, or may be financially or otherwise
interested in, any contract or transaction of the Corporation; provided, in any
case, that the fact that he or such firm is so interested shall be disclosed or
shall have been known to the Board of Directors or committee. Any director of
the Corporation who is also a director or officer of any such other corporation
or who is so interested may be counted in determining the existence of a quorum
at any meeting of the Board of Directors of the Corporation that shall authorize
any such contract, act or transaction, and may vote thereat to authorize any
such contract, act or transaction, with full force and effect as if he were not
such director or officer of such other corporation or not so interested.
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ARTICLE IV
OFFICERS
4.1 CORPORATE OFFICERS.
(a) The officers of the Corporation shall be a Chief Executive
Officer, a Chairman of the Board, a President, one or more Vice Presidents (the
number thereof and their respective titles to be determined by the Board), a
Secretary, Chief Financial Officer (Treasurer) and such other officers as may be
appointed at the discretion of the Board in accordance with the provisions of
Section 4.1(b).
(b) In addition to the officers specified in Section 4.1(a), the
Board may appoint such other officers as the Board may deem necessary or
advisable, including one or more Assistant Secretaries and one or more Assistant
Treasurers, each of whom shall hold office for such period, have such authority
and perform such duties as the Board may from time to time determine. The Board
may delegate to any officer of the Corporation or any committee of the Board the
power to appoint, remove and prescribe the duties of any officer provided for in
this Section 4.1(b).
(c) Any number of offices may be held by the same person.
4.2 ELECTION, TERM OF OFFICE AND QUALIFICATIONS. The officers of the
Corporation, except such officers as may be appointed in accordance with
Sections 4.1(b) or 4.5, shall be appointed annually by the Board at the first
meeting thereof held after the election of the Board. Each officer shall hold
office until such officer shall resign or shall be removed by the Board (either
with or without cause) or otherwise disqualified to serve, or the officer's
successor shall be appointed and qualified.
4.3 REMOVAL. Any officer of the Corporation may be removed, with or
without cause, at any time at any regular or special meeting of the Board by a
majority of the directors of the Board at the time in office or, except in the
case of an officer appointed by the Board, by any officer of the Corporation or
committee of the Board upon whom or which such power of removal may be conferred
by the Board.
4.4 RESIGNATIONS. Any officer may resign at any time by giving written
notice of his resignation to the Board, the President or the Secretary of the
Corporation. Any such resignation shall take effect at the time specified
therein, or, if the time is not specified, upon receipt thereof by the Board,
President or Secretary, as the case may be; and, unless otherwise specified
therein, the acceptance of such resignation shall not be necessary to make it
effective.
4.5 VACANCIES. A vacancy in any office because of death, resignation,
removal, disqualification or other cause may be filled for the unexpired portion
of the term thereof in the manner prescribed in these Bylaws for regular
appointments or elections to such office.
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4.6 CHIEF EXECUTIVE OFFICER. The Chief Executive Officer of the
Corporation shall be the chief executive officer of the Corporation, unless
otherwise determined by the Board, and shall have, subject to the control of the
Board, general and active supervision and management over the business of the
Corporation and over its several subordinate officers, assistants, agents and
employees.
4.7 CHAIRMAN OF THE BOARD. The Chairman of the Board shall be the
chairman of the board of the Corporation, unless otherwise determined by the
Board, and shall have, subject to the control of the Board, general and active
supervision and management over the business of the Corporation and over its
several subordinate officers, assistants, agents and employees. The Chairman of
the Board shall preside at all meetings of the stockholders and at all meetings
of the Board.
4.8 PRESIDENT. The President shall have, subject to the control of the
Board, the Chief Executive Officer and/or the Chairman of the Board, general and
active supervision and management over the business of the Corporation and over
its several subordinate officers, assistants, agents and employees. The
President shall have such other powers and duties as may from time to time be
assigned to him by the Chief Executive Officer, the Chairman of the Board, the
Board or as prescribed by the Bylaws. At the request of the Chief Executive
Officer, the Chairman of the Board, or in the case of the absence or inability
to act of the Chief Executive Officer or the Chairman of the Board upon the
request of the Board, the President shall perform the duties of the Chief
Executive Officer or the Chairman of the Board and when so acting, shall have
all the powers of, and be subject to all the restrictions upon, the Chief
Executive Officer or the Chairman of the Board.
4.9 VICE PRESIDENTS. Each Vice President shall have such power and
perform such duties as the Board may from time to time prescribe. At the request
of the President, or in the case of the President's absence or inability to act
upon the request of the Board, a Vice President shall perform the duties of the
President and when so acting, shall have all the powers of, and be subject to
all the restrictions upon, the President.
4.10 CHIEF FINANCIAL OFFICER (TREASURER). The Chief Financial Officer
(Treasurer) shall supervise, have custody of, and be responsible for all funds
and securities of the Corporation. The Chief Financial Officer (Treasurer) shall
deposit all such funds in the name of the Corporation in such banks, trust
companies or other depositories as shall be selected by the Board or in
accordance with authority delegated by the Board. The Chief Financial Officer
(Treasurer) shall receive, and give receipts for, moneys due and payable to the
Corporation from any source whatsoever. The Chief Financial Officer (Treasurer)
shall exercise general supervision over expenditures and disbursements made by
officers, agents and employees of the Corporation and the preparation of such
records and reports in connection therewith as may be necessary or desirable.
The Chief Financial Officer (Treasurer) shall, in general, perform all other
duties incident to the office of Chief Financial Officer (Treasurer) and such
other duties as from time to time may be assigned to the Chief Financial Officer
(Treasurer) by the Board.
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4.11 SECRETARY. The Secretary shall have the duty to record the
proceedings of all meetings of the Board, of the stockholders, and of all
committees of which a secretary shall not have been appointed in one or more
books provided for that purpose. The Secretary shall see that all notices are
duly given in accordance with these Bylaws and as required by law; shall be
custodian of the seal of the Corporation and shall affix and attest the seal to
all documents to be executed on behalf of the Corporation under its seal; and,
in general, he shall perform all the duties incident to the office of Secretary
and such other duties as may from time to time be assigned to him by the Board.
4.12 COMPENSATION. The compensation of the officers of the Corporation
shall be fixed from time to time by the Board. None of such officers shall be
prevented from receiving such compensation by reason of the fact that he is also
a director of the Corporation. Nothing contained herein shall preclude any
officer from serving the Corporation, or any subsidiary corporation, in any
other capacity and receiving proper compensation therefor.
ARTICLE V
CONTRACTS, CHECKS, DRAFTS,
BANK ACCOUNTS, ETC.
5.1 EXECUTION OF CONTRACTS. The Board, except as in these Bylaws
otherwise provided, may authorize any officer or officers, agent or agents, to
enter into any contract or execute any instrument in the name of and on behalf
of the Corporation, and such authority may be general or confined to specific
instances; and unless so authorized by the Board or by these Bylaws, no officer,
agent or employee shall have any power or authority to bind the Corporation by
any contract or engagement or to pledge its credit or to render it liable for
any purpose or in any account.
5.2 CHECKS, DRAFTS, ETC. All checks, drafts or other orders for payment
of money, notes or other evidence of indebtedness, issued in the name of or
payable to the Corporation, shall be signed or endorsed by such person or
persons and in such manner as, from time to time, shall be determined by
resolution of the Board. Each such person shall give such bond, if any, as the
Board may require.
5.3 DEPOSITS. All funds of the Corporation not otherwise employed shall
be deposited from time to time to the credit of the Corporation in such banks,
trust companies or other depositories as the Board may select, or as may be
selected by any officer or officers, assistant or assistants, agent or agents,
or attorney or attorneys of the Corporation to whom such power shall have been
delegated by the Board. For the purpose of deposit and for the purpose of
collection for the account of the Corporation, the Chief Executive Officer,
President, any Vice President or the Chief Financial Officer, (or any other
officer or officers, assistant or assistants, agent or agents or attorney or
attorneys of the Corporation who shall from time to time be determined by the
Board), may endorse, assign and deliver checks, drafts and other orders for the
payment of money which are payable to the order of the Corporation.
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5.4 GENERAL AND SPECIAL BANK ACCOUNTS. The Board may from time to time
authorize the opening and keeping of general and special bank accounts with such
banks, trust companies or other depositories as the Board may select or as may
be selected by any officer or officers, assistant or assistants, agent or
agents, or attorney or attorneys of the Corporation to whom such power shall
have been delegated by the Board. The Board may make such special rules and
regulations with respect to such bank accounts, not inconsistent with the
provisions of these Bylaws, as it may deem expedient.
ARTICLE VI
SHARES AND THEIR TRANSFER
6.1 CERTIFICATES FOR STOCK.
(a) The shares of the Corporation shall be represented by
certificates, provided that the Board may provide by resolution or resolutions
that some or all of any or all classes or series of its stock shall be
uncertificated shares. Any such resolution shall not apply to shares represented
by a certificate until such certificate is surrendered to the Corporation.
Notwithstanding the adoption of such a resolution by the Board, every holder of
stock represented by certificates and upon request every holder of
uncertificated shares shall be entitled to have a certificate, in such form as
the Board shall prescribe, signed by, or in the name of, the Corporation by the
Chief Executive Officer, Chairman of the Board, or the President or Vice
President, and by the Chief Financial Officer (Treasurer) or an Assistant
Treasurer, or the Secretary or an Assistant Secretary of the Corporation
representing the number of shares registered in certificate form. Any of or all
of the signatures on the certificates may be a facsimile. In case any officer,
transfer agent or registrar who has signed, or whose facsimile signature has
been placed upon, any such certificates, shall have ceased to be such officer,
transfer agent or registrar before such certificate is issued, such certificate
may nevertheless be issued by the Corporation with the same effect as though the
person who signed such certificate, or whose facsimile signature shall have been
placed thereupon, were such officer, transfer agent or registrar at the date of
issue.
(b) A record shall be kept of the respective names of the persons,
firms or corporations owning the stock represented by such certificates, the
number and class of shares represented by such certificates, respectively, and
the respective dates thereof, and in case of cancellation, the respective dates
of cancellation. Every certificate surrendered to the Corporation for exchange
or transfer shall be cancelled, and no new certificate or certificates shall be
issued in exchange for any existing certificate until such existing certificate
shall have been so cancelled, except in cases provided for in Section 6.4.
6.2 TRANSFERS OF STOCK. Transfers of shares of stock of the Corporation
shall be made only on the books of the Corporation by the registered holder
thereof, or by such holder's attorney thereunto authorized by power of attorney
duly executed and filed with the Secretary, or with a transfer clerk or a
transfer agent appointed as provided in Section 6.3, and upon surrender of the
certificate or certificates for such shares properly endorsed and the payment of
all taxes thereon. The person in whose name shares of stock stand on the books
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of the Corporation shall be deemed the owner thereof for all purposes as regards
the Corporation. Whenever any transfer of shares shall be made for collateral
security, and not absolutely, such fact shall be so expressed in the entry of
transfer if, when the certificate or certificates shall be presented to the
Corporation for transfer, both the transferor and the transferee request the
Corporation to do so.
6.3 REGULATIONS. The Board may make such rules and regulations as it
may deem expedient, not inconsistent with these Bylaws, concerning the issue,
transfer and registration of certificates for shares of the stock of the
Corporation. It may appoint, or authorize any officer or officers to appoint,
one or more transfer clerks or one or more transfer agents and one or more
registrars, and may require all certificates for stock to bear the signature or
signatures of any of them.
6.4 LOST, STOLEN, DESTROYED AND MUTILATED CERTIFICATES. In any case of
loss, theft, destruction or mutilation of any certificate of stock, another may
be issued in its place upon proof of such loss, theft, destruction or mutilation
and upon the giving of a bond of indemnity to the Corporation in such form and
in such sum as the Board may direct; provided, however, that a new certificate
may be issued without requiring any bond when, in the judgment of the Board, it
is proper to do so.
6.5 PAYMENT FOR SHARES. Certificates for shares may be issued prior to
full payment under such restrictions and for such purposes as the Board may
provide; provided, however, that on any certificate issued to represent any
partly paid shares, the total amount of the consideration to be paid therefor
and the amount paid thereon shall be stated.
ARTICLE VII
INDEMNIFICATION
7.1 AUTHORIZATION FOR INDEMNIFICATION. The Corporation shall indemnify,
in the manner and to the full extent permitted by law, any person (or the
estate, heirs, executors, or administrators of any person) who was or is a party
to, or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation), by
reason of the fact that such person is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding 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 believe 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, of
itself, create a presumption that the person did not act in good faith and in a
manner which 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, that he had reasonable cause to believe that his conduct was
unlawful.
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7.2 ADVANCE OF EXPENSES. Costs and expenses (including attorneys' fees)
incurred by or on behalf of a director or officer in defending or investigating
any action, suit, proceeding or investigation shall be paid by the Corporation
in advance of the final disposition of such matter, if such director or officer
shall undertake in writing to repay any such advances in the event that it is
ultimately determined that he is not entitled to indemnification. Such expenses
incurred by other employees and agents may be so paid upon such terms and
conditions, if any, as the Board deems appropriate. Notwithstanding the
foregoing, no advance shall be made by the Corporation if a determination is
reasonably and promptly made by the Board by a majority vote of a quorum of
disinterested directors, or (if such a quorum is not obtainable or, even if
obtainable, a quorum of disinterested directors so directs) by independent legal
counsel in a written opinion, or by the stockholders, that, based upon the facts
known to the Board or counsel at the time such determination is made, (a) the
director, officer, employee or agent acted in bad faith or deliberately breached
his duty to the Corporation or its stockholders, and (b) as a result of such
actions by the director, officer, employee or agent, it is more likely than not
that it will ultimately be determined that such director, officer, employee or
agent is not entitled to indemnification.
7.3 INSURANCE. The Corporation shall purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise or as a member of any committee or similar
body against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the Corporation
would have the power to indemnify him against such liability under the
provisions of this Article or applicable law.
7.4 NON-EXCLUSIVITY. The right of indemnity and advancement of expenses
provided herein shall not be deemed exclusive of any other rights to which any
person seeking indemnification or advancement of expenses from the Corporation
may be entitled under any agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office. Any agreement for
indemnification of or advancement of expenses to any director, officer, employee
or other person may provide rights of indemnification or advancement of expenses
which are broader or otherwise different from those set forth herein.
ARTICLE VIII
MISCELLANEOUS
8.1 SEAL. The Board shall provide a corporate seal, which shall be in
the form of a circle and shall bear the name of the Corporation and words and
figures showing that the Corporation was incorporated in the State of Delaware
and the year of incorporation.
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8.2 WAIVER OF NOTICES. Whenever notice is required to be given by these
Bylaws or the Certificate of Incorporation or by law, the person entitled to
said notice may waive such notice in writing, either before or after the time
stated therein, and such waiver shall be deemed equivalent to notice. Attendance
of a person at a meeting (whether in person or by proxy in the case of a meeting
of stockholders) shall constitute a waiver of notice of such meeting, except
when the person attends a meeting 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. Neither the business to be transacted at,
nor the purpose of any regular or special meeting of the stockholders, directors
or members of a committee of directors need be specified in any written waiver
of notice.
8.3 AMENDMENTS. The original or other Bylaws of the Corporation may be
adopted, amended or repealed by the incorporators, by the initial directors if
they were named in the Certificate of Incorporation, or, before the Corporation
has received any payment for any of its stock, by its Board. After the
Corporation has received any payment for any of its stock, the power to adopt,
amend or repeal Bylaws shall be in the stockholders entitled to vote; provided,
however, the Corporation may, in its Certificate of Incorporation, confer the
power to adopt, amend or repeal Bylaws upon the directors. The fact that such
power has been so conferred upon the directors shall not divest the stockholders
of the power, nor limit their power to adopt, amend or repeal Bylaws.
8.4 REPRESENTATION OF OTHER CORPORATIONS. The Chief Executive Officer,
Chairman of the Board, President, any Vice President or the Secretary of this
Corporation is authorized to vote, represent and exercise on behalf of this
Corporation all rights incident to any and all shares of any other corporation
or corporations standing in the name of this Corporation. The authority herein
granted to said officers to vote or represent on behalf of this Corporation any
and all shares held by this Corporation in any other corporation or corporations
may be exercised either by such officers in person or by any person authorized
to do so by proxy or power of attorney duly executed by said officers.
8.5 STOCK PURCHASE PLANS. The Corporation may adopt and carry out a
stock purchase plan or agreement or stock option plan or agreement providing for
the issue and sale for such consideration as may be fixed of its unissued
shares, or of issued shares acquired or to be acquired, to one or more of the
employees or directors of the Corporation or of a subsidiary or to a trustee on
their behalf and for the payment for such shares in installments or at one time,
and may provide for aiding any such persons in paying for such shares by
compensation for services rendered, promissory notes, or otherwise.
Any stock purchase plan or agreement or stock option plan or agreement
may include, among other features, the fixing of eligibility for participation
therein, the class and price of shares to be issued or sold under the plan or
agreement, the number of shares which may be subscribed for, the method of
payment therefor, the reservation of title until full payment therefor, the
effect of the termination of employment and option or obligation on the part of
the Corporation to repurchase the shares, the time limits of and termination of
the plan and any other matters, not in violation of applicable law, as may be
included in the plan as approved or authorized by the Board or any committee of
the Board.
-19-
<PAGE>
8.6 CONSTRUCTION AND DEFINITIONS. Unless the context requires
otherwise, the general provisions, rules of construction and definitions in the
Delaware General Corporation Law shall govern the construction of these Bylaws.
Without limiting the generality of this provision, the singular number includes
the plural, the plural number includes the singular, and the term "person"
includes both a corporation and a natural person.
-20-
<PAGE>
CERTIFICATE OF SECRETARY
I, the undersigned, do hereby certify:
1. That I am the duly elected and acting Secretary of Clarion
Technologies, Inc., a Delaware corporation; and
2. That the foregoing Bylaws, comprising twenty (20) pages,
constitute the Bylaws of said Corporation as duly adopted and approved by the
sole director of said Corporation by written consent effective as of February
23, 1998.
IN WITNESS WHEREOF, I have hereunto subscribed my name and
affixed the seal of said Corporation effective as of February 23, 1998.
--------------------------------
R. Townley Rose, Jr., Secretary
-21-
<PAGE>
Exhibit 20.1
CLARION HOUSE, INC.
1901 N. ROSELLE ROAD, SUITE 1030
SCHAUMBURG, ILLINOIS 60195
OCTOBER 20, 1998
--------------------
NOTICE OF ACTION BY WRITTEN CONSENT AND
INFORMATION STATEMENT
--------------------
INTRODUCTION
This Information Statement is being furnished to the holders (the
"Stockholders") of the common stock, $.01 par value (the "Common Stock"), of
Clarion House, Inc., a Nevada corporation, (the "Company") in connection with
(i) the approval of the Clarion House, Inc. 1998 Stock Option Plan; and (ii) the
reincorporation of the Company in the State of Delaware (collectively, the
"Actions").
On June 5, 1998, of the 5,999,500 shares of Common Stock then
outstanding, 4,310,195 shares (or 71.8%) delivered written consents to the
Company adopting the Actions. Since the Actions were approved by the holders of
the required majority of the Common Stock, no proxies were solicited.
The Board of Directors fixed the close of business on June 5, 1998 as
the record date for the determination of Stockholders entitled to receive this
Notice of Action by Written Consent and Information Statement.
-------------------------------------------------
WE ARE NOT ASKING YOU FOR A PROXY AND YOU
ARE REQUESTED NOT TO SEND US A PROXY
-------------------------------------------------
The date of this Information Statement is October 20, 1998.
<PAGE>
COMMON STOCK OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information, as of October 20, 1998,
with respect to the beneficial ownership of the Company's Common Stock by: (i)
each person known by the Company to own more than 5% of the Company's Common
Stock; (ii) each director and nominee for director; (iii) each officer of the
Company named in the Executive Compensation section below; and (iv) all officers
and directors of the Company as a group. Except as otherwise indicated, each
stockholder listed below has sole voting and investment power with respect to
the shares beneficially owned by such person.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP CLASS (4)
----------------------------------------- -------------------------------- ---------------
<S> <C> <C>
Troy D. Wiseman (1) 2,033,029 18.9%
Brian C. Manoogian 950,000 8.8%
R. Townley Rose, Jr. 1,200,000 11.2%
Robert C. Copple (2) 145,000 1.3%
Bryan C. Cressey 1,000,000 9.3%
Terence M. Graunke 1,000,000 9.3%
Harrington Bischof 200,000 1.9%
Frank T. Steck 150,000 1.4%
Jack D. Rutherford 250,000 2.3%
Robert J. Skandalaris (3) 1,524,255 14.2%
All Directors and Officers
as a group (9 persons) 6,928,029 64.5%
- ---------------
</TABLE>
(1) Includes 974,444 shares held by Invest L'Inc. Bridge Fund, LLC, a private
investment fund for which Mr. Wiseman acts as Manager and holds an equity
interest; 116,000 shares held by Apportum Consulting Corp., an entity of which
Mr. Wiseman is an officer, director and the sole shareholder; 874,255 held by
Mr. Wiseman's family trust; 20,000 shares held as custodian for Mr. Wiseman's
children and 48,330 held by Invest L'Inc., an entity of which Mr. Wiseman is an
officer, director and sole shareholder.
(2) Includes 50,000 shares held in escrow pending satisfaction of certain
earnings conditions pursuant to Mr. Copple's employment agreement with the
Company.
(3) Includes 250,000 shares held as custodian for Mr. Skandalaris' children and
974,444 shares held by Invest L'Inc. Bridge Fund, LLC, a private investment fund
in which Mr. Skandalaris holds an equity interest.
(4) Between June 5, 1998 and October 20, 1998, the Company made the following
issues: (i) 803,500 shares issued in a private offering of the Company's common
stock at a price of $2.00 per share; (ii) 100,000 shares for cash at a price of
$1.75 per share pursuant to warrants granted in consideration for consulting
services; (iii) 38,594 shares as consideration for the purchase of computer
equipment; (iv) 950,000 shares issued in exchange for 100% of the outstanding
shares of Rose & Associates; and (v) 2,845,563 shares for cash at a price of
$1.00 per share upon the exercise of outstanding options.
<PAGE>
I. MANAGEMENT
DIRECTORS AND OFFICERS
Effective upon the Reincorporation, the Company's Board of Directors
was expanded by the addition of six (6) directors. The Bylaws of
Clarion-Delaware give the Board the power to set the number of directors at no
less than one (1) and not more than nine (9). The size of the Company's Board is
currently set at nine (9). The directors so elected will serve one (1) year
terms.
The following table sets forth certain information regarding the
director nominees.
<TABLE>
<CAPTION>
NAME AGE POSITIONS HELD
-------------------------- -------- -----------------------------------------------
<S> <C> <C>
Troy D. Wiseman 32 Chairman, Chief Executive Officer and Director
Brian C. Manoogian 49 Director
R. Townley Rose, Jr. 44 Executive Vice President and Director
Robert C. Copple 44 Vice President - Finance
Harrington Bischof 63 Director
Bryan C. Cressey 48 Director
Terence M. Graunke 39 Director
Michael J. Moore 41 Director
Jack D. Rutherford 64 Director
Frank T. Steck 60 Director
</TABLE>
BACKGROUND OF INCUMBENT OFFICERS AND DIRECTORS
TROY D. WISEMAN has been the Chairman and a Director of Clarion-Nevada since
February 1998 and Chief Executive Officer since April 1998. Mr. Wiseman is the
principle founder and President of Invest L'Inc. a company specializing in
providing financial and consulting services and bridge financing to emerging
growth companies preparing for an initial public offering. Mr. Wiseman also
serves as the Manager of Invest L'Inc. Bridge Fund, LLC, a privately held
investment fund which provides short term financing to both privately and
publicly held companies. Mr. Wiseman is founder and President of Apportum
Consulting Corp., a New York based business consulting firm currently
specializing in assisting micro-cap companies in "going public" through reverse
mergers. Mr. Wiseman was co-founder of CAMI'Z Inc., a publicly traded retail
company where he served as a member of the Board of Directors and held various
executive officer positions including Vice President, Chief Operating Officer,
Chief Financial Officer and Secretary from 1987 to 1994. In 1994, CAMI'Z Inc.
acquired Chauvin International, Ltd. by merger and became B.U.M. International,
Inc.
BRIAN C. MANOOGIAN has been a Director of Clarion-Nevada since November 1997.
From November 1997 to July 1998, Mr. Manoogian also served as President of
Clarion-Nevada. Prior to joining Clarion-Nevada, Mr. Manoogian practiced
corporate and business law for over 20 years in Michigan. Mr. Manoogian began
his legal career as the Assistant Corporate Counsel of Masco Corporation, a
position he held for three years, and has been a partner in small and medium
size law firms. Mr. Manoogian received a Bachelors degree from the University of
Michigan and a Juris Doctor from the Detroit College of Law.
R. TOWNLEY ROSE, JR. has been a Director of Clarion-Nevada since February 1998
and Executive Vice President since April 1998. Mr. Rose has over 26 years of
experience as a sales representative in plastics and metal fabrication in
numerous industries, with specialization in the heavy duty truck market.
ROBERT C. COPPLE has been the Vice President - Finance of Clarion-Nevada since
December 1997. Mr. Copple has also been serving as Chief Financial Officer of
Clarion Plastics Technologies, Inc., a wholly-owned subsidiary of
Clarion-Nevada, since December 1997. From May 1992 to December 1997, Mr. Copple
was the Division Controller for the plastics Division of Plastech (formerly
Bryan Custom Plastics, a division of United Screw & Bolt Corporation). Prior to
joining Plastech in 1992, Mr. Copple was the Diversified Products Controller for
Aeroquip-Vickers (formerly Trinova Corporation). Mr. Copple began his career as
a Certified Public Accountant with a firm located in Elkhart, Indiana. Mr.
Copple has sixteen years of experience in the plastics industry.
<PAGE>
BACKGROUND OF ADDITIONAL CLARION-DELAWARE DIRECTORS
HARRINGTON BISCHOF currently serves as President of Pandora Capital Corporation,
a solely owned private investment company. Mr. Bischof has more than 30 years of
investment banking experience, including 11 years with White, Weld & Co., where
he became Senior Vice President and head of its investment banking activities in
the Midwest. Following the merger of White, Weld & Co. with Merrill Lynch & Co.,
Mr. Bischof headed that firm's Investment Banking Group in the Midwest for eight
years, serving on several of the firm's investment banking management committees
and as a Director of Merrill Lynch International Bank in London. In 1991, Mr.
Bischof became a Managing Director and Senior Advisor to Prudential Securities,
Inc. Mr. Bischof currently serves as a Chairman and Director of Peerless
Industrial Group, Inc., as well as Director of Utilities, Inc. and Old Republic
International Corporation, a public company listed on the New York Stock
Exchange. Mr. Bischof received a B.S. in Engineering from Princeton University.
BRYAN C. CRESSEY is the co-founder of Golder, Thoma, Cressey, Rauner, Inc. and
its successor Thoma Cressey Equity Partners, a firm engaged in the private
equity investment business since the late 1970s which manages over $1 billion of
private equity funds. Utilizing an industry consolidation investment strategy
they pioneered, Mr. Cressey's firm has led over 40 industry consolidation
investments focusing primarily on the service sector, producing the world's
largest paging company, second largest networking cable company, fourth largest
funeral home company and sixth largest propane distribution company. Mr. Cressey
currently serves as Chairman of Cable Design Technologies, a public company
listed on the New York Stock Exchange, and as a director of several other
entities. Mr. Cressey was inducted into the Chicago Entrepreneurial Hall of Fame
in 1998. Mr. Cressey holds an M.B.A. from Harvard Business School, a J.D. from
Harvard Law School and a B.A. from the University of Washington.
TERENCE M. GRAUNKE is the founder and Chairman of Lake Creek Research, a private
investment management company specializing in the buyout and consolidation of
business services companies in fragmented industries into single, integrated
platforms. Prior to establishing Lake Creek Research, Mr. Graunke served as
Chairman and Chief Executive Officer of Mastering, Inc., a publicly traded
information technology training company which was sold to Platinum Technology in
early 1998. Mr. Graunke founded Eagle River Interactive, Inc., a publicly traded
interactive development company, in May 1994 where he served as Chairman,
President and Chief Executive Officer until 1997 when it was sold to Omnicom
Group. From December 1992 to May 1994, Mr. Graunke was President and Chief
Executive Officer of Rapp Collins Communications, a direct response advertising
agency, and of DDB Needham--FOCUS GTE, a full service agency dedicated to GTE.
From December 1990 to December 1992, Mr. Graunke served as Chairman and Chief
Executive Officer of U.S. Communications Corporation, a marketing communications
agency which was sold in 1992 to Omnicom. Throughout the 1980s, Mr. Graunke
managed Unispond, a direct marketing agency, where he served as Chief Executive
Officer from 1986 to 1989. In 1990, he acquired Unispond, which later merged
operations with U.S. Communications. The combined entity was renamed U.S.
Communications. Mr. Graunke served as a Director of U.S. Robotics, a publicly
traded company, prior to its sale to 3Com.
MICHAEL J. MOORE has served as Chairman of Clarion Plastics Technologies, Inc.
since April 1998, as Director of Clarion Plastics since December 1997 and served
as President of Clarion Plastics from December 1997 to April 1998. Prior to
joining Clarion Plastics, Mr. Moore was president and sole shareholder of
Triangle Plastics, Inc., the predecessor of Clarion Plastics. Mr. Moore founded
Triangle Plastics in 1984. Mr. Moore began his career as a production supervisor
and has over twenty years of experience in the plastics industry.
JACK D. RUTHERFORD is the co-founder, Chairman and Chief Executive Officer of
ICM Industries, Inc., a private holding company of turn-around manufacturing
businesses. From 1978 to 1985, Mr. Rutherford served in various executive
officer positions at International Harvester (Navistar International), including
Vice Chairman from 1984 to 1985 and President and Chief Operating Officer from
1983 to 1984. Prior to joining International Harvester, Mr. Rutherford was
employed by Ford Motor Company for approximately 25 years. Mr. Rutherford
currently serves as a Director of Code Alarm, Inc., a publicly traded
manufacturer of security systems, and The Gradall Company, a privately held
manufacturer of off-highway excavators and material handlers.
FRANK T. STECK has over 35 years of experience in retail, wholesale and
manufacturing with strong emphasis in heavy duty industries, including
agriculture, automotive, truck and construction. Mr. Steck is currently employed
in the executive search industry. Prior thereto, Mr. Steck served as Senior Vice
President and General Manager-North America of Fleetguard, Inc., a subsidiary of
Cummins Engine Co., as Vice President-Worldwide Parts Marketing and Sales of
J.I. Case, a subsidiary of Tenneco, Inc., as Vice-President and General
Manager-Corporate Parts Operations of International Harvester, and as Director
of Marketing-Automotive Products of Sears, Roebuck and Company.
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
EXECUTIVE COMPENSATION
None of the Company's officers received compensation in excess of
$100,000 during the fiscal years ended December 31, 1997 and 1996. Prior to
becoming the Company's President in November 1997, Brian C. Manoogian received a
restricted stock grant as founder's shares valued at $35,000 during the fiscal
year ended December 31, 1997. In addition, Mr. Manoogian received options to
purchase 150,000 shares of the Company Common Stock at an exercise price of
$0.25 per share. Mr. Manoogian exercised his options in January 1998.
DIRECTOR COMPENSATION
Directors who are employees of the Company receive no compensation, as
such for their service as directors. The Company has adopted a policy providing
for the issuance to non-employee directors joining the Board in 1998 of 10,000
shares of Company Common Stock as compensation for their services as such. In
addition, non-employee directors shall received options to purchase 5,000 shares
of Common Stock at a 15% discount from market during each year of service as a
director.
EMPLOYMENT AGREEMENTS
The Company has entered into an Employment Agreement, dated December
31, 1997, with Robert C. Copple. Pursuant to the terms of this Employment
Agreement, the Company has agreed to pay Mr. Copple a salary of $70,000 per
year. Mr. Copple has also received options to purchase 50,000 shares of Company
Common Stock at an exercise price of $1.00 per share. Mr. Copple exercised these
options in 1998. Mr. Copple also received a stock grant of 20,000 shares valued
at $0.25 per share as a signing bonus. Mr. Copple shall also receive, as an
incentive bonus, a stock grant of 50,000 shares of Company Common Stock. These
shares have been issued and are currently held in an escrow account. The shares
shall be released from the escrow account upon the achievement by the Company of
certain pre-established income targets.
II. CLARION HOUSE, INC. 1998 STOCK OPTION PLAN
On June 5, 1998, the Board of Directors of the Company unanimously
approved for submission to the Stockholders a proposal to approve the Clarion
House, Inc. 1998 Stock Option Plan (the "Stock Option Plan"). This discussion is
qualified in its entirety by reference to the Stock Option Plan, a copy of which
is available upon request to the Company. On June 5, 1998, of the 5,999,500
shares of Common Stock outstanding, 4,310,195 shares (or 71.8%) delivered
written consents to the Company adopting this Action. The Stock Option Plan
provides for the grant to employees, officers, directors, consultants and
independent contractors of non-qualified stock options as well as for the grant
of stock options to employees that qualify as incentive stock options under
Section 422 of the Internal Revenue Code of 1986 (the "Code"). Although all
employees of the Company and its subsidiaries are technically eligible to
participate in the Stock Option Plan, it is anticipated the stock options will
be granted only to a limited number of management level personnel. The Stock
Option Plan terminates on June 5, 2008. The purpose of the Stock Option Plan is
to enable the Company to attract and retain qualified persons as employees,
officers and directors and others whose services are required by the Company,
and to motivate such persons by providing them with an equity participation in
the Company. The Stock Option Plan reserved 750,000 shares of the Company's
Common Stock for issuance, subject to adjustment upon occurrence of certain
events affecting the capitalization of the Company.
The Stock Option Plan is administered by the Compensation Committee of
the Board of Directors (the "Committee"), which has, subject to specified
limitations, the full authority to grant options and establish the terms and
conditions for vesting and exercise thereof. The exercise price of incentive
stock options granted under the Stock Option Plan is required to be no less than
the fair market value of the Company Common Stock on the date of grant (110% in
the case of a greater than 10% stockholder). The exercise price of non-qualified
stock options is required to be no less than 85% of the fair market value of the
Company Common Stock on the date of grant. Options may be granted for terms of
up to 10 years (5 years in the case of incentive stock options granted to
greater than 10% stockholders). No optionee may be granted incentive stock
options such that the fair market value of the options which first become
exercisable in any one calendar year exceeds $100,000. If an optionee ceases to
be employed by, or ceases to have a relationship with the Company, such
optionee's options expire six (6) months after termination of the employment or
consulting relationship by reason of death, one (1) year after termination by
reason of permanent disability, immediately upon termination for cause and three
(3) months after termination for any other reason.
<PAGE>
In order to exercise an option granted under the Stock Option Plan, the
optionee must pay the full exercise price of the shares being purchased. Payment
may be made either: (i) in cash; (ii) at the discretion of the Committee, by
delivering shares of Company Common Stock already owned by the optionee that
have a fair market value equal to the applicable exercise price; or (iii) in the
form of such other consideration as may be determined by the Committee and
permitted by applicable law.
Subject to the foregoing, the Committee has broad discretion to
describe the terms and conditions applicable to options granted under the Stock
Option Plan. The Committee may at any time discontinue granting options under
the Stock Option Plan or otherwise suspend, amend or terminate the Stock Option
Plan and may, with the consent of an optionee, make such modification of the
terms and conditions of such optionee's option as the Committee shall deem
advisable. However, the Committee has no authority to make any amendment or
modifications to the Stock Option Plan or any outstanding option which would:
(i) increase the maximum number of shares which may be purchased pursuant to
options granted under the Stock Option Plan, either in the aggregate or by an
optionee, except in connection with certain antidilution adjustments; (ii)
change the designation of the class of employees eligible to receive qualified
options; (iii) extend the term of the Stock Option Plan or the maximum option
period thereunder; (iv) decrease the minimum qualified option price or permit
reductions of the price at which shares may be purchased for qualified options
granted under the Stock Option Plan, except in connection with certain
antidilution adjustments; or (v) cause qualified stock options issued under the
Stock Option Plan to fail to meet the requirements of incentive stock options
under Section 422 of the Code. Any such amendment or modification shall be
effective immediately, subject to shareholder approval thereof within twelve
(12) months before or after the effective date. No option may be granted during
any suspension or after termination of the Stock Option Plan.
The Stock Option Plan is designed to meet the requirements of an
incentive stock option plan as defined in Code Section 422. As a result, an
optionee will realize no taxable income, for federal income tax purposes, upon
either the grant of an incentive stock option under the Stock Option Plan or its
exercise, except that the difference between the fair market value of the stock
on the date of exercise and the exercise price is included as income for
purposes of calculating Alternative Minimum Tax. If no disposition of the shares
acquired upon exercise is made by the optionee within two (2) years from the
date of grant or within one (1) year from the date the shares are transferred to
the optionee, any gain realized upon the subsequent sale of the shares will be
taxable as a capital gain. In such case, the Company will be entitled to no
deduction for federal income tax purposes in connection with either the grant or
the exercise of the option. If, however, the optionee disposes of the shares
within either of the periods mentioned above, the optionee will realize earned
income in an amount equal to the excess of the fair market value of the shares
on the date of exercise (or the amount realized on disposition if less) over the
exercise price, and the Company will be allowed a deduction for a corresponding
amount.
As of the date of this Information Statement, the Company has not
granted any stock options to purchase shares of Company Common Stock.
III. REINCORPORATION
On June 5, 1998, the Board of Directors declared it advisable and in
the best interests of the Company and directed that there be submitted to the
Stockholders a proposal to reincorporate the Company in the State of Delaware.
On June 5, 1998, of the 5,999,500 shares of Common Stock outstanding, 4,310,195
(or 71.8%) delivered written consents to the Company adopting this Action. The
following discussion summarizes certain aspects of the reincorporation of the
Company in Delaware (the "Reincorporation"). This summary is not intended to be
complete and is subject to, and qualified in its entirety by, reference to the
Agreement of Merger (the "Merger Agreement"), between the Company and Clarion
Technologies, Inc., a Delaware corporation ("Clarion-Delaware"); and the
Certificate of Incorporation of Clarion-Delaware (the "Delaware Certificate").
Copies of the Articles of Incorporation and the Bylaws of the Company (the
"Nevada Articles" and the "Nevada Bylaws", respectively) and the Bylaws of
Clarion-Delaware (the "Delaware Bylaws") are available for inspection at the
principal office of the Company and copies will be sent to Stockholders on
request.
PRINCIPAL FEATURES OF THE REINCORPORATION
The Reincorporation was effected by the merger (the "Merger") of the
Company, a Nevada corporation, with and into Clarion-Delaware, a wholly-owned
subsidiary of the Company which was incorporated under the General Corporation
Law of the State of Delaware (the "Delaware GCL") for the sole purpose of
effecting the Reincorporation. The Reincorporation became effective upon the
filing of the requisite merger documents in Delaware and Nevada. Following the
Reincorporation, Clarion-Delaware was the surviving corporation in the Merger
and now operates under the name of Clarion Technologies, Inc.
<PAGE>
The Company will now be governed by the Delaware Certificate, the
Delaware Bylaws and the Delaware GCL which include a number of provisions which
do not exist in the former Nevada Articles, Nevada Bylaws or the Nevada General
Corporation Law (the "Nevada GCL"). Accordingly, the Reincorporation effected a
number of important changes in the structure of corporate governance under which
the Company has previously operated including: (1) providing that stockholders
may remove directors with or without cause by the affirmative vote of a majority
of the outstanding shares; (2) providing that stockholders holding 10% of the
voting shares may call special meetings of stockholders; and (3) creating
certain requirements concerning advance notice of (i) nominations by
stockholders of persons for election to the Board of Directors and (ii) business
matters proposed to be introduced by stockholders at annual meetings. See
"Certain Significant Differences Between the Charter Documents of the Company
and Clarion-Delaware" and "Certain Significant Differences Between the
Corporation Laws of Nevada and Delaware."
In addition, the Delaware Certificate also provides for the elimination
of directors' liability for monetary damages for a breach of certain fiduciary
duties as permitted by the Delaware GCL. See "Certain Significant Differences
Between the Charter Documents of the Company and Clarion-Delaware -Personal
Liability of Directors."
As a result of the Merger, each outstanding share of Company common
stock, $.01 par value ("Company Common Stock") was automatically converted into
one share of Clarion-Delaware common stock, $.001 par value (the
"Clarion-Delaware Common Stock"). Each outstanding certificate representing
shares of Company Common Stock will continue to represent the same number of
shares of Clarion-Delaware Common Stock until submitted for transfer to
Clarion-Delaware. THUS, IT WILL NOT BE NECESSARY FOR STOCKHOLDERS OF THE COMPANY
TO EXCHANGE THEIR EXISTING STOCK CERTIFICATES FOR STOCK CERTIFICATES OF
CLARION-DELAWARE. Clarion-Delaware Common Stock continues to be traded in the
over-the-counter market and brokers will consider the delivery of existing stock
certificates of the Company as constituting "good delivery" of shares of
Clarion-Delaware.
The daily business operations of the Company have continued as it had
before the Merger, with its principal executive offices at the same location in
Schaumburg, Illinois. The consolidated financial condition and results of
operations of Clarion-Delaware immediately after consummation of the
Reincorporation will be substantially identical to those of the Company
immediately prior to the consummation of the Reincorporation.
Pursuant to the Merger Agreement, each right to purchase a share of
Company Common Stock outstanding immediately prior to the effective time of the
Merger under the Company's stock option and other employee benefit plans became
a right to purchase a share of Clarion-Delaware Common Stock upon the same terms
and conditions as existed immediately prior to the effective time of the Merger.
Future options and rights granted under such plans will be for shares of
Clarion-Delaware Common Stock.
DISSENTERS' RIGHTS ARE AVAILABLE TO STOCKHOLDERS OF THE COMPANY WITH RESPECT TO
THE REINCORPORATION. See "Description of Dissenters' Rights".
The Reincorporation became effective on October 2, 1998.
PRINCIPAL REASONS FOR THE REINCORPORATION
The Board of Directors believes the change in domicile to be in the
best interests of the Company and the Stockholders for several reasons.
Principally, the Board of Directors believes that Reincorporation will enhance
the Company's ability to attract and retain qualified members of the Company's
Board of Directors as well as encourage directors to continue to make
independent decisions in good faith on behalf of the Company. The Company
believes that the more favorable corporate environment afforded by Delaware will
enable it to compete more effectively with other public companies, most of which
are incorporated in Delaware, to attract new directors and to retain its current
directors. Reincorporation in Delaware will allow the Company the increased
flexibility and predictability afforded by Delaware law.
In recent years, a number of major public companies have obtained the
approval of their stockholders to reincorporate in Delaware. For the reasons
explained below, the Company believes it is beneficial and important that the
Company likewise avail itself of Delaware law.
<PAGE>
For many years Delaware has followed a policy of encouraging
incorporation in that state and, in furtherance of that policy, has adopted
comprehensive, modern and flexible corporate laws which are periodically updated
and revised to meet changing business needs. The Delaware legislature is
particularly sensitive to issues regarding corporate law and is especially
responsive to developments in modern corporate law. As a result of these
factors, it is anticipated that Delaware law will provide greater predictability
in the Company's legal affairs than is presently available under Nevada law. As
a result, many major corporations have initially chosen Delaware for their
domicile or have subsequently reincorporated in Delaware in a manner similar to
that of the Company.
Because of Delaware's long standing policy of encouraging incorporation
in that state, and consequently, its preeminence as the state of incorporation
for many major corporations, the Delaware courts have developed considerable
expertise in dealing with corporate issues and a substantial body of case law
has developed construing Delaware law and establishing public policies with
respect to Delaware corporations. This is especially true in the area of
contests for corporate control and related issues of the scope of a board of
directors' fiduciary duties in the context of responding to unsolicited tender
offers, aggressive market buying programs, proxy contests and other types of
efforts to precipitate a rapid change in corporate control.
Another example of the responsiveness of Delaware law is represented by
recently enacted legislation authorizing a Delaware corporation to eliminate or
limit the personal liability of a director to the corporation and its
stockholders for monetary damages for breach of certain other duties discussed
below. The Board of Directors of the Company believes that such a provision is
beneficial in attracting and retaining qualified directors, and accordingly the
Delaware Certificate includes a provision eliminating such personal liability.
See "Certain Significant Differences Between the Charter Documents of the
Company and Clarion-Delaware - Personal Liability of Directors" below.
The Company believes that the Reincorporation will also allow the
Company to make use of the increased flexibility and certain other features
afforded by Delaware law which the Board of Directors believes will encourage
potential acquirors in any takeover attempts to negotiate directly with the
Board of Directors. Takeover attempts have become increasingly common in recent
years. Takeover attempts which have not been negotiated with and approved by the
board of directors can seriously disrupt the business and management of a
company and cause such company to suffer great expense. Such attempts may also
take place at inopportune times and may involve terms which may be less
favorable to all of the stockholders than would be available in a transaction
negotiated and approved by the board of directors. On the other hand,
transactions approved by the board of directors can be carefully planned and
undertaken at an opportune time in order to obtain maximum value for the company
and all of its stockholders. In addition, in the case of a proposal which is
presented to the board of directors, there is greater opportunity for the board
of directors to analyze the proposal thoroughly and to present that analysis to
the stockholders in the most effective manner.
Unsolicited or hostile takeover attempts are frequently structured in
ways which the Board of Directors believes may not be in the best interests of
all of the stockholders. Although a takeover attempt may be made at a price
substantially above then current market prices, such offers are sometimes made
for less than all of the outstanding shares of a target company. As a result,
stockholders may be presented with the alternatives of either partially
liquidating their investment at a time which may be disadvantageous or retaining
their investment as minority stockholders in an enterprise which is controlled
by persons whose objectives may be different from those of the remaining
minority stockholders. A takeover attempt may take the form of a two-tier offer
in which cash is offered for a portion of the target company's outstanding
shares and thereafter securities that are or may be worth less than the cash
portion are offered for the remaining shares. Furthermore, hostile takeover
attempts are sometimes timed and designed to foreclose or minimize the
possibility of more favorable competing bids, which frequently may result in
stockholders losing the opportunity to receive and consider alternative and
possibly more attractive proposals.
The Board of Directors recognizes that takeover attempts which have not
been negotiated with and approved by a target company's board of directors do
not always have the unfavorable consequences or effects described above. See
"Possible Negative Considerations" below. However, the Board of Directors
believes that the potential disadvantages of unapproved takeover attempts are
sufficiently great that prudent steps to reduce the likelihood of such takeover
attempts are in the best interests of the Company and all of its stockholders.
Accordingly, the Board of Directors believes that it is in the best interests of
the Company and its stockholders to encourage potential acquirors to negotiate
directly with the Board of Directors and that certain of the changes resulting
from the Reincorporation will encourage such negotiations and may discourage
hostile takeover attempts. It is also the Board of Directors' view that the
existence of these provisions should not discourage anyone from proposing a
merger or other transaction at a price reflective of the true value of
Clarion-Delaware and which is in the best interests of all of its stockholders.
No aspect of the Reincorporation would prevent any person from making a tender
offer to Clarion-Delaware stockholders or prevent any stockholder from accepting
such an offer.
<PAGE>
The Reincorporation does not reflect knowledge on the part of the Board
of Directors or management of any proposed or threatened takeover or other
attempt to acquire control of the Company. The Board of Directors is not aware
of any tender offer, leveraged buyout, proxy contest or other similar
transaction involving a change in control of the Company that is now pending or
under consideration. Management does not currently have under consideration, and
does not have any current intention to propose or adopt, any other measures
which might discourage takeovers apart from those proposed in this information
statement. However, the Board of Directors may adopt such measures at some time
in the future, which may or may not require stockholder approval.
POSSIBLE NEGATIVE CONSIDERATIONS
Notwithstanding the belief of the Board of Directors as to the benefits
to the Stockholders of the Reincorporation, the Stockholders should recognize
that one of the effects of the Reincorporation may be to discourage a future
attempt to acquire control of Clarion-Delaware which is not presented to and
approved by the Board of Directors, but which a substantial number and perhaps
even a majority of the Clarion-Delaware stockholders might believe to be in
their best interests or in which the Stockholders might receive a substantial
premium for their shares over then current market prices. As a result, the
Stockholders who might desire to participate in such a transaction may not have
an opportunity to do so. In addition, unapproved tender offers and takeover
attempts may be made at times and in circumstances which are beneficial to and
in the interest of the Stockholders. Tender offers or takeover attempts do not
all have features of the type described above which may be to the disadvantage
of the Stockholders. Furthermore, it is not always the case that an unsolicited
offer will be less advantageous than a company-negotiated transaction. Such
transactions can provide the Stockholders with considerable value for their
shares and can be in the interests of all the Stockholders.
The Board of Directors has considered these potential disadvantages and
has unanimously concluded that the potential benefits of the Reincorporation
significantly outweigh its possible disadvantages.
CERTAIN SIGNIFICANT DIFFERENCES BETWEEN THE CHARTER DOCUMENTS OF THE COMPANY AND
CLARION-DELAWARE
The most significant differences between the provisions of the Nevada
Articles and the Nevada Bylaws and the provisions of the Delaware Certificate
and the Delaware Bylaws, and the reasons for, and certain possible effects of,
the implementation of certain of these provisions, are summarized below.
AUTHORIZED CAPITAL STOCK. Clarion-Delaware is authorized to issue
20,000,000 shares of common stock, $.001 par value per share. The Company is
currently authorized to issue 10,000,000 shares of common stock, $.01 par value
per share.
LIMITATIONS ON CALL OF MEETINGS AND ACTION BY WRITTEN CONSENT OF
STOCKHOLDERS. The Nevada Bylaws provided, in accordance with the Nevada GCL,
that a special meeting of stockholders may be called by the board of directors
or the holders of shares entitled to cast not less than 20% of the votes at such
meeting. The Delaware Bylaws provide that a special meeting of stockholders may
be called by the board of directors, the Chairman of the Board, the Chief
Executive Officer, the President or one or more stockholders holding shares in
the aggregate entitled to cast not less than 10% of the votes at that meeting.
Decreasing the percentage of shares required to call a special meeting of
stockholders from 20% to 10% may make it easier for the stockholders of
Clarion-Delaware to take action opposed by the Clarion-Delaware Board of
Directors other than at the annual meeting of stockholders. However, the advance
notice provisions described below make it more difficult for stockholders to
bring any business before an annual meeting or to nominate persons for election
to the Board of Directors of Clarion-Delaware.
Both the Delaware GCL and the Nevada GCL permit stockholders, unless
specifically prohibited by the certificate or articles of incorporation, to take
action without a meeting by the written consent of the holders of at least the
number of shares necessary to authorize or take such action at a meeting at
which all shares entitled to vote thereon were present and voted. Action by
written consent may, in some circumstances, permit the taking of stockholder
action opposed by the board of directors more rapidly than would be possible if
a meeting of stockholders were required. The Nevada Bylaws provided and the
Delaware Bylaws currently provide for such stockholder action by written
consent. However, the Delaware Bylaws provide that in the case of election of
directors, such a consent shall be effective only if signed by the holders of
all outstanding shares entitled to vote for the election of directors unless
filling a vacancy on the Board, in which case the consent may be signed by the
holders of a majority of the outstanding shares entitled to vote. The Nevada
Bylaws required action by written consent to be taken by the unanimous consent
of all stockholders entitled to vote.
NUMBER OF DIRECTORS. The Nevada Bylaws provided that the number of
directors of the Company should not be less than three (3) or such other number
as may be determined by the Board of Directors. The exact number of directors
could be changed by an amendment of the Nevada Bylaws adopted by the Board of
Directors. See "Amendment of Bylaws" below.
<PAGE>
The Delaware Bylaws provide that the number of directors of
Clarion-Delaware shall not be less than one (1) and not more than nine (9). The
Delaware Bylaws also provide that the number of directors will be fixed within
the foregoing limits from time to time by resolution duly adopted by the Board
of Directors or stockholders. The number of directors may be changed outside of
the foregoing limits only by an amendment to the Delaware Bylaws. See "Amendment
of Bylaws" below.
REMOVAL OF DIRECTORS. The Nevada Bylaws provided that a director may
be removed with or without cause by the vote of the holders representing not
less than two-thirds of the securities entitled to vote. The Nevada Bylaws
further provided, as permitted by the Nevada GCL, that a vacancy created by the
removal of a director may be filled by the vote of a majority of the
stockholders entitled to vote or by the remaining members on the board of
directors.
The Delaware Bylaws provide, as permitted by the Delaware GCL, that
directors may be removed with or without cause only by the affirmative vote of
the holders of a majority of the outstanding securities of Clarion-Delaware then
entitled to vote. Any vacancy created by the removal of a director for cause
could be filled either by the vote of a majority of the stockholders or by the
Board of Directors.
NOMINATION OF DIRECTORS. The Delaware Bylaws provide that nominations
of persons for election to the Board of Directors of Clarion-Delaware shall be
made only at a meeting of stockholders and only (i) by or at the direction of
the Board of Directors, or (ii) by any stockholder of Clarion-Delaware entitled
to vote for the election of directors at the meeting who timely complies with
the notice procedures therein set forth. To be timely, a stockholder's notice
must be delivered to or mailed to and received at the principal executive
offices of Clarion-Delaware not less than thirty (30) days nor more than sixty
(60) days prior to the meeting; provided, however, that in the event that less
than forty (40) days notice or prior public disclosure of the date of the
meeting is given or made to stockholders, notice by the stockholder to be timely
must be received not later than the close of business on the tenth day following
the day on which such notice of the date of the meeting was mailed or such
public disclosure was made.
The Board of Directors believes that advance notice of nominations by
stockholders will afford a meaningful opportunity to consider the qualifications
of the proposed nominees and, to the extent deemed necessary or desirable by the
Board of Directors, will provide an opportunity to inform stockholders about
such qualifications. Although this nomination procedure does not give the Board
of Directors any power to approve or disapprove of stockholder nominations for
the election of directors, this nomination procedure may have the effect of
precluding a nomination for the election of directors at a particular annual
meeting if the proper procedures are not followed and may discourage or deter a
stockholder from conducting a solicitation of proxies to elect its own directors
or otherwise attempting to obtain control of Clarion-Delaware.
There are no comparable notice requirements in the Nevada Articles or
Nevada Bylaws.
VOTING BY BALLOT. The Delaware Bylaws grant to each stockholder the
right to demand a vote by written ballot for the election of directors at a
stockholder meeting. It may be easier for a stockholder to contest the outcome
of a vote which has been conducted by written ballot.
There are no comparable provisions in the Nevada Articles or Nevada
Bylaws.
BUSINESS INTRODUCED BY STOCKHOLDERS AT ANNUAL MEETINGS. The Delaware
Bylaws provide that, where business introduced by a stockholder is not specified
in the notice of annual meeting, then in addition to any other applicable
requirements, for business to be properly introduced by a stockholder at an
annual meeting of the stockholders, the stockholder must have given timely
notice thereof in writing to the Secretary of Clarion-Delaware. To be timely, a
stockholder's notice must be delivered to or mailed and received by the
Secretary of Clarion-Delaware in the same manner and subject to the same time
requirements provided for stockholder notice of nominations to the Board of
Directors. See "Certain Significant Differences Between the Charter Documents of
the Company and Clarion-Delaware - Nominations of Directors" above. A
stockholder's notice must set forth as to each matter the stockholder proposes
to bring before the meeting (i) a brief description of the business desired to
be brought before the annual meeting, (ii) the name and record address of the
stockholder proposing such business; (iii) the class and number of shares of
Clarion-Delaware Common Stock which are beneficially owned by the stockholder,
and (iv) any material interest of the stockholder in such business.
<PAGE>
The purpose of requiring advance notice of business to be brought by a
stockholder before an annual meeting is to enable the Board of Directors to give
advance notice of such business to the stockholders generally, and to afford the
Board of Directors a meaningful opportunity to consider the merits of the matter
to be raised by stockholders. Although this procedure does not give the Board of
Directors any power to approve or disapprove such matters, this procedure may
have the effect of precluding the consideration of matters at a particular
annual meeting if the proper procedures are not followed, even if approval of
such matters may be deemed by some stockholders to be beneficial to
Clarion-Delaware and its stockholders.
There are no comparable requirements in the Nevada Articles or Nevada
Bylaws.
ELECTION OF OFFICERS. The Nevada Bylaws provided that officers may be
elected or appointed by the Board of Directors, served at the pleasure of the
Board of Directors and held office until their resignation, removal or other
disqualification from service or until their respective successors were elected.
The Delaware Bylaws provide that the officers shall be appointed annually by the
Board of Directors at the first meeting held after the election of the Board of
Directors, and each officer shall hold office until such officer shall resign or
shall be removed by the Board of Directors (either with or without cause) or
otherwise disqualified to serve, or the officer's successor shall be appointed
and qualified. Any limitation on the foregoing powers of the Board of Directors
of Clarion-Delaware with regard to the election and removal of officers may
therefore only be effected by an amendment to the Delaware Bylaws. See
"Amendment of Bylaws".
AMENDMENT OF CHARTER. Pursuant to Delaware and Nevada law, the Delaware
Certificate and the Nevada Articles may be amended if the Board of Directors
adopts a resolution setting forth the proposed amendment, declares its
advisability and calls a special meeting of stockholders for the consideration
of such amendment or directing that the amendment proposed be considered at the
next annual meeting of the stockholders. At the meeting, the amendment must be
approved by a majority of the outstanding shares entitled to vote thereon.
AMENDMENTS OF BYLAWS. The Nevada Articles provided that the Nevada
Bylaws could be amended, altered or repealed by the Board of Directors, subject
to the power of the stockholders to amend, alter or repeal the Nevada Bylaws.
Pursuant to the Delaware Certificate, the Delaware Bylaws may be
altered, amended or repealed by the Board of Directors. Accordingly, the
Delaware Bylaws currently in effect may be altered, amended or repealed in the
future by the Board of Directors without the requirement of stockholder
approval. However, the Delaware Bylaws do provide that a majority of
stockholders may alter, amend or repeal the Delaware Bylaws. The power of the
Board of Directors to alter, amend or repeal a bylaw which may be expressly
adopted or amended by the stockholders is unclear under the Delaware GCL.
INDEMNIFICATION. The Nevada GCL and the Delaware GCL have similar
provisions and limitations regarding indemnification by a corporation of its
officers, directors, employees and other agents. Each provides that
indemnification is mandatory under certain circumstances (generally in respect
of expenses incurred by an indemnified party who is successful on the merits in
the proceeding giving rise to the claim for indemnification) and permissive in
others, subject to authorization. The standard of conduct required of a person
seeking indemnification from a corporation is generally the same under Nevada
and Delaware law and requires that a person seeking indemnification shall have
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, in the case of a criminal
proceeding, have no reasonable cause to believe his conduct was illegal.
The Nevada GCL and the Delaware GCL state expressly that the
indemnification provided for therein shall not be deemed exclusive of any other
rights under any other bylaw, agreement, vote of stockholders or disinterested
directors, or otherwise.
See "Approval of Indemnification Agreements for Officers and Directors" below.
The Nevada GCL and the Delaware GCL provide that expenses may be
advanced to officers and directors in a specific case upon receipt of an
undertaking to repay such amount if it is ultimately determined that such
indemnified party is not entitled to be indemnified. In addition, both Delaware
and Nevada law permit the determination as to whether an officer or director has
met the applicable standard of conduct to be made in certain circumstances by
independent legal counsel.
The Nevada Articles and Nevada Bylaws imposed and the Delaware
Certificate and Delaware Bylaws currently impose mandatory obligations upon the
Company and Clarion-Delaware to indemnify any director or officer to the fullest
extent authorized or permitted by law (as now or hereafter in effect).
The Delaware Bylaws also provide that Clarion-Delaware shall purchase
and maintain directors' and officers' liability insurance.
<PAGE>
PERSONAL LIABILITY OF DIRECTORS. Directors of public companies may be
subject to substantial personal liability for actions taken or omitted to be
taken by them as directors, as well as to significant expense in defending their
conduct. For some time, Delaware has recognized the need to provide meaningful
protection against the risk to directors of having to pay potentially very large
amounts of their personal resources with respect to such liability. Accordingly,
the Delaware GCL has provided for indemnification of directors (and officers) in
certain situations. Moreover, under the Delaware GCL a corporation may obtain
insurance to protect directors and officers from certain liabilities from which
the corporation could not indemnify its directors and officers. Recently,
however, the market for directors' and officers' liability insurance has changed
significantly. Many companies are experiencing difficulty in obtaining liability
insurance for their directors providing adequate coverage (both in the scope of
coverage and the dollar amount of insurance) and in many cases the cost of such
insurance, even if available, has become prohibitive.
In response to these circumstances, the Delaware legislature recently
enacted amendments to the Delaware GCL to permit Delaware corporations to
provide directors additional protection from personal liability. To implement
such added protection, stockholders must approve the Reincorporation, which will
also constitute approval of the Delaware Certificate.
Article VI of the Delaware Certificate gives effect to the recently
enacted amendment to the Delaware GCL and is intended to give Clarion-Delaware's
directors the full protection against personal liability that is permitted under
the new law. It provides that Clarion-Delaware directors would not have personal
liability to Clarion-Delaware or its stockholders for monetary damages for any
breach of fiduciary duty as a director, to the fullest extent permitted by the
Delaware GCL. The new law does not affect the availability of equitable
remedies, such as an injunction or rescission, for breach of fiduciary duty.
Article VI of the Delaware Certificate would not eliminate the personal
liability of directors in connection with any actions taken prior to its
adoption.
Delaware law provides that the board of directors has the ultimate
responsibility for managing the business and affairs of a corporation. In
discharging this function, the law holds directors to fiduciary duties of care
and loyalty to the corporation and its stockholders.
The Delaware Supreme Court has held that the duty of care requires the
exercise of an informed business judgment. An informed business judgment means
that directors have informed themselves of all material information reasonably
available to them. Having become so informed, they then must act with requisite
care in the discharge of their duties. Liability of directors of a Delaware
corporation to the corporation or its stockholders for breach of the duty of
care in some circumstances requires a finding by a court that the directors were
grossly negligent. Adoption of Article VI of the Delaware Certificate would not
change the standard of care required of directors. However, as authorized by
statute, Article VI of the Delaware Certificate would eliminate the liability of
each director of Clarion-Delaware for breach of his or her fiduciary duties,
subject to the exceptions set forth in the Delaware GCL. Thus, it would
eliminate liability arising out of actions involving negligence or gross
negligence, including actions in response to acquisition proposals.
Directors also have a duty of loyalty to the corporation and its
stockholders. The duty of loyalty requires that, in making a business decision,
directors act in good faith and in the honest belief that the action taken was
in the best interests of the corporation. Article VI of the Delaware Certificate
would not insulate directors of Clarion-Delaware from liability for breach of
their duty of loyalty, nor would it limit the liability of directors for claims
arising under the Federal securities laws. Furthermore, Article VI of the
Delaware Certificate would have no effect on currently pending or prior
litigation involving the Company and its directors or on any liability by virtue
of any act or omission by a director which occurred prior to the effective date
of the Reincorporation.
The Nevada Bylaws permitted indemnification of directors and officers
and any person who may have served at the request of the Company as a director
or officer of another corporation in which the Company owned shares of capital
stock or of which the Company was a creditor, to the fullest extent permitted by
Nevada law. Following the Reincorporation, directors are in effect relieved of
liability with respect to the foregoing actions to the extent such actions were
based on breach of their fiduciary duty of care. Consequently, adoption of the
Delaware Certificate may reduce the likelihood of derivative litigation against
directors and may discourage or deter stockholders or management from bringing a
lawsuit against directors for breaches of their fiduciary duties, even though
such an action, if successful, might otherwise have benefited Clarion-Delaware
and its stockholders.
The Company's primary purpose for eliminating liability of directors
for certain breaches of fiduciary duty is to provide directors with the greatest
protection possible from personal liability while still insuring that directors'
actions shall be taken in the best interests of Clarion-Delaware and its
stockholders. The Board of Directors agrees with the Delaware legislature that a
proper balance is achieved by preserving only the bases for directors' liability
discussed above, including the directors' fiduciary duty of loyalty to
Clarion-Delaware. This allows directors to act in the best interests of
Clarion-Delaware without undue fear of financial penalties wholly
disproportionate to their remuneration for services as directors while still
preserving proper disincentives for actions not taken in the best interests of
Clarion-Delaware and its stockholders. It should be noted that the directors of
the Company might personally benefit from Article VI at the potential expense of
stockholders.
<PAGE>
CERTAIN SIGNIFICANT DIFFERENCES BETWEEN THE CORPORATION LAWS OF NEVADA AND
DELAWARE
The Nevada GCL and the Delaware GCL differ in many respects, and
consequently it is not practical to summarize all of such differences. The
following is a summary of certain significant differences which may affect the
rights and interests of stockholders.
CHANGE IN NUMBER OF DIRECTORS. The Nevada GCL provides that the number
of directors of a corporation may be increased or decreased in such manner as
provided in the articles of incorporation, or by an amendment thereto, or by the
bylaws of the corporation.
The Delaware GCL permits the board of directors of a corporation to
change the authorized number of directors by amendment to the bylaws or in the
manner provided in the bylaws, unless the certificate of incorporation fixes the
number of directors, in which case a change in the number of directors may be
made only by an amendment of such certificate.
REMOVAL OF DIRECTORS. Under the Nevada GCL, a director or the entire
board of directors may be removed with or without cause, by the affirmative vote
of the holders of at least two-thirds of the shares then entitled to vote.
Under the Delaware GCL, a director or the entire board of directors of
a corporation can be removed with or without cause by the holders of a majority
of shares then entitled to vote in an election of directors. The term "cause" is
not defined in the Delaware GCL. Consequently, questions concerning the legal
standard for "cause" may have to be judicially determined, which determination
could be difficult, expensive and time-consuming.
CALL OF SPECIAL MEETINGS OF STOCKHOLDERS. Under the Nevada GCL, a
special meeting of stockholders may be called by the board of directors, the
chairman of the board, the president, the holders of shares entitled to cast not
less than 10% of the votes at the special meeting, or such additional persons as
may be provided in the articles of incorporation or bylaws.
Under the Delaware GCL, special meetings of stockholders may be called
by the board of directors or by such other person or persons as may be
authorized by the certificate of incorporation or by the bylaws. The Delaware
Bylaws currently provide that such meetings may be called by the Board of
Directors, the Chairman of the Board, the Chief Executive Officer, the President
or one or more stockholders holding shares in the aggregate entitled to cast not
less than 10% of the votes at that meeting. See "Certain Significant Differences
Between the Charter Documents of the Company and Clarion-Delaware - Limitations
on Call of Meetings and Action by Written Consent of Stockholders."
INDEMNIFICATION OF OFFICERS AND DIRECTORS. Nevada and Delaware law have
similar provisions and limitations regarding indemnification by a corporation of
its officers, directors, employees, and agents. The Nevada and Delaware laws
state expressly that the indemnification provided for therein shall not be
deemed exclusive of any other rights under any other bylaws, agreement, vote of
stockholders or disinterested directors or otherwise. In addition, Delaware and
Nevada law permit court approval of such indemnification under certain
conditions and permit determination regarding indemnification to be made by
independent legal counsel, among others. See "Certain Significant Differences
Between the Charter Documents of the Company and Clarion-Delaware -
Indemnification."
PERSONAL LIABILITY OF DIRECTORS. A discussion of the Delaware law
provision with respect to the personal liability of directors is included above
under "Certain Significant Differences Between the Charter Documents of the
Company and Clarion-Delaware - Personal Liability of Directors." No comparable
provision exists under Nevada law.
VOTE REQUIRED FOR CERTAIN MERGERS AND CONSOLIDATIONS. Delaware law
relating to mergers and other corporate reorganizations is substantially the
same as Nevada law in a number of respects. Both Nevada and Delaware law provide
for stockholder votes (except as indicated below and for certain mergers between
a parent company and its 90% owned subsidiary) of both the acquiring and
acquired corporation to approve mergers and of the selling corporation for the
sale by a corporation of substantially all of its assets. Both Nevada and
Delaware law provide for a stockholder vote to approve the dissolution of a
corporation.
Both Delaware and Nevada law do not require a stockholder vote of the
surviving corporation in a merger if (i) the merger agreement does not amend the
existing certificate of incorporation, (ii) each outstanding or treasury share
of the surviving corporation before the merger is unchanged after the merger,
and (iii) the number of shares to be issued by the surviving corporation in the
merger does not exceed 20% of the shares outstanding immediately prior to such
issuance.
<PAGE>
INSPECTION OF STOCKHOLDER LISTS. The Nevada GCL provides for an
absolute right of inspection of the stockholder list upon five (5) days written
demand for any stockholder holding 5% or more of a corporation's outstanding
shares or any stockholder who has been a stockholder of record for at least six
(6) months immediately preceding his demand.
The Delaware GCL does not provide for any similar absolute right of
inspection, but does permit any stockholder of record to inspect the stockholder
list for any purpose reasonably related to such person's interest as a
stockholder and, for a ten (10) day period preceding a stockholder meeting for
any purpose germane to the meeting.
APPRAISAL RIGHTS IN MERGERS. Under both Nevada and Delaware law, a
dissenting stockholder of a corporation participating in certain transactions
may, under varying circumstances, receive cash in the amount of the fair market
value of his shares (as determined by a court), in lieu of the consideration he
would otherwise receive in any such transaction. Unless a corporation's
certificate or articles of incorporation provide otherwise, Delaware and Nevada
law do not provide for dissenters' rights of appraisal with respect to (i) a
merger or consolidation by a corporation, the shares of which are either listed
on a national securities exchange or widely held (by more than 2,000
stockholders), if such stockholders receive shares of the surviving corporation
or of such a listed or widely-held corporation; or (ii) stockholders of a
corporation surviving a merger if no vote of the stockholders of the surviving
corporation is required if the number of shares to be issued in the merger does
not exceed 20% of the shares of the surviving corporation outstanding
immediately prior to the merger and certain other conditions are met.
VOTING BY BALLOT. Delaware law grants to each stockholder the right to
require a vote by written ballot for the election of directors at a stockholder
meeting. It may be easier for a stockholder to contest the outcome of a vote
which has been conducted by written ballot.
Nevada law has no comparable provision.
TENDER OFFER STATUTE. Nevada's "Acquisition of Controlling Interest
Statute" applies to Nevada corporations that have at least 200 stockholders,
with at least 100 stockholders of record being Nevada residents, and that do
business directly or indirectly in Nevada. As of October 2, 1998, the Company
had less than 100 stockholders of record who were Nevada residents. The Company
also believes that it was not "doing business" in Nevada (a term that is not
defined in the statute). Accordingly, the statute was not applicable to the
Company at the effective date of the Reincorporation. Where applicable, the
statute prohibits an acquiror from voting shares of a target company's stock
after exceeding certain threshold ownership percentages, until the acquiror
provides certain information to the company and a majority of the disinterested
stockholders vote to restore the voting rights of the acquiror's shares at a
meeting called at the request and expense of the acquiror. If the voting rights
of such shares are restored, stockholders voting against such restoration may
demand payment for the "fair value" of their shares (which is generally equal to
the highest price paid in the transaction subjecting the stockholder to the
statute).
Delaware law has been widely viewed to permit a corporation greater
flexibility in governing its internal affairs and its relationships with
stockholders and other parties than do the laws of many other states, including
Nevada. In particular, Delaware law permits a corporation to adopt a number of
measures designed to reduce a corporation's vulnerability to hostile takeover
attempts. Such measures are either not currently permitted or are more narrowly
drawn under Nevada law. In addition, certain types of "poison pill" defenses
(such as stockholder rights plans) have been upheld by Delaware courts, while
Nevada courts have yet to decide on the validity of such defenses, thus
rendering their effectiveness in Nevada less certain.
As discussed above, numerous differences between Nevada and Delaware
law, effective without additional action by Clarion-Delaware, could have a
bearing on unapproved takeover attempts. One such difference is the existence of
a Delaware statute regulating tender offers, which statute is intended to limit
coercive takeovers of companies incorporated in that state. Delaware law
provides that a corporation may not engage in any business combination with any
interested stockholder for a period of three (3) years following the date that
such stockholder became an interested stockholder, unless (i) prior to the date
the stockholder became an interested stockholder the Board of Directors approved
the business combination or the transaction which resulted in the stockholder
becoming an interested stockholder, or (ii) upon consummation of the transaction
which resulted in the stockholder becoming an interested stockholder, the
interested stockholder owned at least 85% of the voting stock, or (iii) the
business combination is approved by the Board of Directors and authorized by
two-thirds of the outstanding voting stock which is not owned by the interested
stockholder. An interested stockholder means any person that is the owner of 15%
or more of the outstanding voting stock, however, the statute provides for
certain exceptions to parties who otherwise would be designated interested
stockholders, including an exception for parties that held 15% or more of the
outstanding voting stock as of December 23, 1987. Any corporation may decide to
opt out of the statute in its original certificate of incorporation or, at any
time, by action of its stockholders. Clarion-Delaware has no present intention
of opting out of the statute.
<PAGE>
There can be no assurance that the Board of Directors would not adopt
any further anti-takeover measures available under Delaware law (some of which
may not require stockholder approval). Moreover, the availability of such
measures under Delaware law, whether or not implemented, may have the effect of
discouraging a future takeover attempt which a majority of Clarion-Delaware's
stockholders may deem to be in their best interests or in which stockholders may
receive a premium for their shares over then current market prices. As a result,
stockholders who might desire to participate in such transactions may not have
the opportunity to do so. Stockholders should recognize that, if adopted, the
effect of such measures, along with the possibility of discouraging takeover
attempts, may be to limit in certain respects the rights of stockholders of
Clarion-Delaware compared with the rights of stockholders of the Company.
The Board of Directors recognizes that hostile takeover attempts do not
always have the unfavorable consequences or effects described above and may
frequently be beneficial to the stockholders, providing all of the stockholders
with considerable value for their shares. However, the Board of Directors
believes that the potential disadvantages of unapproved takeover attempts (such
as disruption of the Company's business and the possibility of terms which may
be less than favorable to all of the stockholders than would be available in a
Board-approved transaction) are sufficiently great such that prudent steps to
reduce the likelihood of such takeover attempts and to enable the Board of
Directors to fully consider the proposed takeover attempt and actively negotiate
its terms in the best interests of the Company and its stockholders.
In addition to the various anti-takeover measures that are now
available to Clarion-Delaware following the Reincorporation due to the
application of Delaware law, Clarion-Delaware also retains the rights currently
available to the Company under Nevada law to issue shares of its authorized but
unissued capital stock. Following the Reincorporation, shares of authorized and
unissued Common Stock of Clarion-Delaware could (within the limits imposed by
applicable law), be issued in one or more transactions. Any such issuance of
additional stock could have the effect of diluting the earnings per share and
book value per share of existing shares of Common Stock, and such additional
shares could be used to dilute the stock ownership of persons seeking to obtain
control of Clarion-Delaware.
It is not the present intention of the Board of Directors to seek
stockholder approval prior to any issuance of the Common Stock of
Clarion-Delaware, except as required by law or regulation. Frequently,
opportunities arise that require prompt action, and it is the belief of the
Board of Directors that the delay necessary for stockholder approval of a
specific issuance would be a detriment to Clarion-Delaware and its stockholders.
FEDERAL INCOME TAX CONSEQUENCES OF THE REINCORPORATION
The Company believes that, for Federal income tax purposes, the Merger
constituted a reorganization under the Internal Revenue Code of 1986, as
amended, and that no gain or loss was recognized by holders of Company Common
Stock as a result of the Merger. Each stockholder of the Company will have the
same tax basis in his Clarion-Delaware Common Stock as he had in the Company
Common Stock held by him immediately prior to the effective time of the Merger,
and his holding period of the Clarion-Delaware Common Stock will include the
period during which he held the corresponding Company Common Stock, provided
that such corresponding Company Common Stock was held by him as a capital asset
at the effective time of the Merger.
Although it is not anticipated that state and local income tax
consequences to stockholders will vary from the Federal income tax consequences
described above, stockholders should consult their own tax advisors as to the
effect of the Merger under state, local or foreign income tax laws.
The Company also believes that it did not recognize gain, loss or
income for Federal income tax purposes as a result of the Merger, and that
Clarion-Delaware generally has succeeded, without adjustment, to the tax
attributes of the Company.
<PAGE>
APPRAISAL RIGHTS OF DISSENTING STOCKHOLDERS
INTRODUCTION
Stockholders of the Company who object to the terms of the Merger are
entitled to certain rights under the provisions of the Nevada GCL. A PERSON
HAVING A BENEFICIAL INTEREST IN THE SHARES OF THE COMPANY WHICH, HOWEVER, ARE
HELD OF RECORD IN THE NAME OF ANOTHER PERSON, SUCH AS A BROKER OR NOMINEE, MUST
ACT PROMPTLY TO CAUSE THE RECORD STOCKHOLDER TIMELY AND PROPERLY TO FOLLOW THE
STEPS SET FORTH BELOW.
SUMMARY
Any stockholder who desires to exercise his statutory dissenters'
rights must submit within twenty (20) days of this Notice, a written demand for
the payment for his shares. (Such a written demand should be directed to the
Corporate Secretary of the Company at the Company's executive offices.)
Stockholders who voted in favor of the Reincorporation may not exercise
dissenters' rights.
DISSENTING SHARES LOSE THEIR STATUS AS SUCH IF THE FOLLOWING OCCURS:
THE STOCKHOLDER FAILS TO TIMELY DEMAND WRITTEN PAYMENT FOR HIS SHARES.
FAIR CASH VALUE
The stockholders of the Company who elect to exercise their statutory
dissenters' rights under Nevada law and who properly and timely perfect them, by
following the steps summarized above, are entitled to receive for their Company
Common Stock the fair cash value of such shares within sixty (60) days after the
written demand for payment for their shares is served on the Company. Such fair
cash value is to be determined as of the date before the vote on the Merger
Agreement, excluding any element of value arising from the expectation or the
accomplishment of the Merger. Such dissenting stockholders also lose their
status as stockholders and become creditors of the Company. Upon payment of the
fair cash value such stockholders must transfer their shares to the Company.
If the Company and a dissenting stockholder do not agree within sixty
(60) days of the receipt of the dissenting stockholder's written demand for
payment for his shares as to the fair cash value for the shares, the stockholder
may petition the district court of Clark County, Nevada to appoint appraisers to
appraise the fair cash value of the dissenting stockholder's shares. The
appraisers, or a majority of them, shall submit a report within the time period
fixed by the court. Such report is conclusive unless opposed within ten (10)
days after being filed. If opposed, the opposition shall be tried summarily and
judgment will be rendered by the court. If the appraisers fail to file a report
within ten (10) days or such longer period as the court may allow, the court
shall determine the fair cash value.
The costs of the action, including reasonable compensation to the
appraisers is to be apportioned as the court considers fair, but if the
appraised value of the shares exceeds the price offered by the Company, then the
Company must pay the costs of the action. Any party may appeal the decision of
the court if an appeal is made within ten (10) days after a judgment is signed.
BY ORDER OF THE BOARD OF DIRECTORS
R. TOWNLEY ROSE, JR., Secretary
