<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
------- ------
COMMISSION FILE NUMBER: 333-4520
RACI HOLDING, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 51-0350929
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
870 REMINGTON DRIVE
P.O. BOX 700
MADISON, NORTH CAROLINA 27025-0700
(Address of principal executive offices)
(Zip Code)
(336) 548-8700
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class A Common Stock, par value $.01 per share, outstanding at November 11, 1999
768,132 shares
Class B Common Stock, par value $.01 per share, outstanding at November 11, 1999
0 shares
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
RACI HOLDING, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Dollars in Millions, Except Per Share Data)
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current Assets
Cash and Cash Equivalents $ 2.2 $ 4.9
Accounts Receivable Trade - net 96.8 63.0
Inventories 67.8 71.7
Supplies 10.2 10.6
Prepaid Expenses and Other Current Assets 9.8 9.6
Deferred Income Taxes 13.2 15.3
------ ------
Total Current Assets 200.0 175.1
Property, Plant and Equipment - net 84.3 86.3
Intangibles and Debt Issuance Costs - net 85.5 88.7
Deferred Income Taxes 1.5 2.0
Other Noncurrent Assets 1.5 2.4
------ ------
TOTAL ASSETS $372.8 $354.5
====== ======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts Payable $ 32.8 $ 28.2
Short-Term Debt 0.5 0.9
Current Portion of Long-Term Debt 27.9 24.9
Product and Environmental Liabilities 3.0 3.1
Income Taxes 1.2 --
Other Accrued Liabilities 34.7 26.9
------ ------
Total Current Liabilities 100.1 84.0
Long-Term Debt 97.9 122.0
Retiree Benefits 37.2 35.6
Product and Environmental Liabilities 10.3 9.4
Deferred Stock Payable 4.7 --
Commitments and Contingencies
Shareholders' Equity
Class A Common Stock, par value $.01; 1,250,000 shares
authorized, 768,132 and 760,000 issued and outstanding at
September 30, 1999 and December 31,1998, respectively -- --
Class B Common Stock, par value $.01; 1,250,000 shares
authorized, none issued and outstanding -- --
Paid in Capital 77.6 76.0
Due from Shareholders (0.5) --
Retained Earnings 45.5 27.5
------ ------
Total Shareholders' Equity 122.6 103.5
------ ------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $372.8 $354.5
====== ======
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
2
<PAGE> 3
RACI HOLDING, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Dollars in Millions, Except Per Share Data)
<TABLE>
<CAPTION>
----------------------------------------------------------
UNAUDITED
----------------------------------------------------------
QUARTER ENDED SEPTEMBER 30, YEAR-TO-DATE SEPTEMBER 30,
--------------------------- --------------------------
1999 1998 1999 1998
----------- ------------ ------------ -----------
<S> <C> <C> <C> <C>
Sales (1) $ 123.7 $ 114.9 $ 309.2 $ 294.8
Cost of Goods Sold 84.6 80.3 209.9 200.0
------- ------- ------- -------
Gross Profit 39.1 34.6 99.3 94.8
Selling, General and Administrative
Expenses 16.8 16.0 48.6 47.3
Research and Development Expense 1.7 2.0 5.5 5.9
Other Expense 0.2 0.4 4.3 1.6
Restructuring and Nonrecurring Items -- (0.2) -- (0.4)
------- ------- ------- -------
Operating Profit 20.4 16.4 40.9 40.4
Interest Expense 3.6 4.9 11.4 15.3
------- ------- ------- -------
Profit Before Income Taxes 16.8 11.5 29.5 25.1
Provision for Income Taxes 6.0 5.1 11.5 10.4
------- ------- ------- -------
Net Income $ 10.8 $ 6.4 $ 18.0 $ 14.7
======= ======= ======= =======
Per Share Data:
Basic Income Per Share $ 13.71 $ 8.42 $ 23.35 $ 19.34
======= ======= ======= =======
Diluted Income Per Share $ 13.38 $ 8.28 $ 22.78 $ 19.02
======= ======= ======= =======
Weighted Average Common Shares Outstanding (000's) 788 760 771 760
======= ======= ======= =======
Weighted Average Common Shares Outstanding and
Dilutive Potential Common Shares (000's) 807 773 790 773
======= ======= ======= =======
</TABLE>
(1) Sales are presented net of Federal Excise Taxes of $11.0 and $10.4 for the
quarter and $26.3 and $24.4 for the year-to-date periods ended September 30,
1999 and 1998, respectively.
The accompanying notes are an integral part of these condensed consolidated
financial statements.
3
<PAGE> 4
RACI HOLDING, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Dollars in Millions)
<TABLE>
<CAPTION>
----------------------------------
UNAUDITED
----------------------------------
YEAR-TO-DATE SEPTEMBER 30,
----------------------------------
1999 1998
------------- ------------
<S> <C> <C>
Operating Activities
Net Cash provided by Operating Activities $ 26.7 $ 16.5
------ ------
Investing Activities
Capital Expenditures (8.6) (3.7)
------ ------
Net Cash used in Investing Activities (8.6) (3.7)
------ ------
Financing Activities
Net Borrowings under Revolving Credit Facility 3.0 6.5
Repurchase of Senior Subordinated Notes (5.5) -
Proceeds from Issuance of Common Stock 0.7 -
Principal Payments on Other Long-Term Debt (18.6) (16.2)
Net Payments on Short-Term Debt (0.4) (0.8)
------ ------
Net Cash used in Financing Activities (20.8) (10.5)
------ ------
Increase (Decrease) in Cash and Cash Equivalents (2.7) 2.3
Cash and Cash Equivalents at Beginning of Period 4.9 0.6
====== ======
Cash and Cash Equivalents at End of Period $ 2.2 $ 2.9
====== ======
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
4
<PAGE> 5
RACI HOLDING, INC. AND SUBSIDIARIES
Condensed Consolidated Statement of Shareholders' Equity
(Dollars in Millions)
<TABLE>
<CAPTION>
TOTAL
PAID-IN DUE FROM RETAINED SHAREHOLDERS'
CAPITAL SHAREHOLDERS EARNINGS EQUITY
-------- ------------ -------- -------------
<S> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1998 $ 76.0 $ -- $ 27.5 $ 103.5
------ ------ ------ -------
Net Income (unaudited) -- -- 18.0 18.0
Issuance of 1,800 shares of Common
Stock under the 1994 Directors'
Stock Plan (unaudited) 0.4 -- -- 0.4
Purchase of 6,332 shares of Common
Stock under the 1999 Stock Incentive
Plan (unaudited) 1.2 (0.5) -- 0.7
------ ------ ------ -------
BALANCE, SEPTEMBER 30, 1999 (UNAUDITED) $ 77.6 $ (0.5) $ 45.5 $ 122.6
====== ====== ====== =======
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
5
<PAGE> 6
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Data)
NOTE 1 - BASIS OF PRESENTATION
The condensed consolidated financial statements of RACI Holding, Inc.
("Holding") include the accounts of its subsidiary, Remington Arms Company, Inc.
("Remington") and Remington's wholly owned subsidiary, Remington International,
Ltd. (together with Remington and Holding, the "Company"). Holding has no
material assets other than its investment in Remington. All intercompany
accounts and transactions have been eliminated in consolidation.
The accompanying unaudited interim condensed consolidated financial
statements of Holding have been prepared by the Company in accordance with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X, and accordingly,
they do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the opinion
of management, all adjustments (consisting of items of a normal recurring
nature) considered necessary for a fair presentation have been included.
Operating results for the nine month period ended September 30, 1999 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1999.
Pursuant to an asset purchase agreement (the "Asset Purchase
Agreement"), on December 1, 1993, the Company acquired certain assets and
assumed certain liabilities (the "Acquisition") of the sporting goods business
formerly operated by E. I. du Pont de Nemours and Company ("DuPont") and one of
DuPont's subsidiaries (together with DuPont, the "Sellers").
These condensed consolidated financial statements should be read in
conjunction with the audited consolidated financial statements of RACI Holding,
Inc. and Subsidiaries as of and for the year ended December 31, 1998.
Certain reclassifications were made to the prior period's financial
information to conform with the current presentation format.
NOTE 2 - INVENTORIES
Inventories consisted of the following at:
September 30, December 31,
1999 1998
------------- ------------
(Unaudited)
Raw Materials $ 14.8 $ 10.7
Semi-Finished Products 18.1 17.4
Finished Product 34.9 43.6
------ ------
Total $ 67.8 $ 71.7
====== ======
NOTE 3 - LONG-TERM DEBT
Long-term debt consisted of the following at:
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------- ------------
(Unaudited)
<S> <C> <C>
Credit Agreement:
Term Loans $ 32.9 $ 50.0
Revolving Credit Facility 3.0 --
9.5% Senior Subordinated Notes due 2003 87.4 92.9
Capital Lease Obligations 2.0 3.5
Other 0.5 0.5
------- -------
Subtotal 125.8 146.9
Less: Current Portion 27.9 24.9
------- -------
Total $ 97.9 $ 122.0
======= =======
</TABLE>
6
<PAGE> 7
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Data)
NOTE 4 - INCOME PER SHARE
The basic and diluted income per share was determined as follows:
<TABLE>
<CAPTION>
(Unaudited)
-----------
Three Months Ended Nine months Ended
------------------ -----------------
September 30, September 30,
------------- -------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Basic Income Per Share:
Net Income Available to Common Shareholders $10.8 $6.4 $18.0 $14.7
Weighted Average Common Shares 788,409 760,000 770,586 760,000
Basic Income Per Share $13.71 $8.42 $23.35 $19.34
Diluted Income Per Share:
Net Income Available to Common Shareholders $10.8 $6.4 $18.0 $14.7
Weighted Average Common Shares 788,409 760,000 770,586 760,000
Effect of Outstanding Options 18,740 12,655 18,901 12,655
Weighted Average Common Shares and Dilutive Potential
Common Stock 807,148 772,655 789,487 772,655
Diluted Income Per Share $13.38 $8.28 $22.78 $19.02
Options Outstanding at September 30 71,209 37,965 71,209 37,965
</TABLE>
NOTE 5 - DEFERRED STOCK PAYABLE
As of September 30, 1999, deferred stock payable consists of:
(1) 7,912 deferred shares of Class A Common Stock, par value $.01 per
share, of Holding ("Common Stock") priced at $200 per share and
issued to certain employees in lieu of 1998 incentive
compensation ($1.6),
(2) 14,560 matching deferred shares of Common Stock granted (or
likely to be granted) to certain employees ($2.9), and
(3) 1,250 matching deferred shares of Common Stock granted to a
Director ($0.2).
NOTE 6 - STOCK PURCHASE AND OPTION PLAN
On May 14, 1999, the board of directors of Holding adopted the RACI
Holding, Inc. Stock Incentive Plan (the "1999 Stock Incentive Plan"). Under the
1999 Stock Incentive Plan, the Company reserved 87,900 shares of Common Stock
for issuance. The 1999 Stock Incentive Plan provides for (1) stock purchase
rights to purchase up to 29,300 shares of Common Stock or deferred share awards,
(2) options to purchase up to 40,725 shares of Common Stock and (3) up to 17,875
additional deferred share awards.
During the nine months ended September 30, 1999, the Company:
(1) issued 6,332 shares of Common Stock to certain employees and a
Director at a price of $200 per share,
(2) granted 7,912 deferred shares to certain employees in lieu of
1998 incentive compensation priced at $200 per share, and
(3) granted (or will likely grant) 15,810 deferred share awards to
certain employees and a Director, at no cost, which resulted in a
charge of approximately $3.1,
7
<PAGE> 8
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Data)
(4) granted 15,773 options to purchase Common Stock to certain
employees at an exercise price of $200 per share. Of these
options, 3,079 options vest ratably on the third, fourth,
and fifth anniversaries of the options' grant date and
expire in 2009 and 12,694 options vest based on the
financial performance of the Company in 1999 and 2000, but
no later than 2008.
(5) granted 16,000 options to purchase Common Stock to certain
employees at an exercise price of $200 per share. These
options vest ratably on the third, fourth and fifth
anniversaries of the options' grant date and expire in
2009.
In addition, the Company issued 1,800 shares of Common Stock to
directors on April 27, 1999 under the 1994 Directors' Stock Plan.
NOTE 7 - SEGMENT INFORMATION
Information on Segments:
<TABLE>
<CAPTION>
(Unaudited)
----------------------------------------------------------
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------- ---------------------------
1999 1998 1999 1998
---------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Net Sales:
Hunting/Shooting Sports $ 111.0 $ 102.5 $ 269.5 $ 253.3
All Other 12.7 12.4 39.7 41.5
---------- ---------- ---------- ----------
Consolidated Net Sales $ 123.7 $ 114.9 $ 309.2 $ 294.8
========== ========== ========== ==========
EBITDA:
Hunting/Shooting Sports $ 23.2 $ 18.6 $ 49.8 $ 43.6
All Other 1.8 1.7 7.8 8.7
---------- ---------- ---------- ----------
Consolidated EBITDA $ 25.0 $ 20.3 $ 57.6 $ 52.3
========== ========== ========== ==========
September 30, December 31,
1999 1998
---------- ----------
(Unaudited)
Assets:
Hunting/Shooting Sports $ 224.3 $ 195.4
All Other 148.5 159.1
---------- ----------
Consolidated Assets $ 372.8 $ 354.5
========== ==========
</TABLE>
Reconciliation of Reportable Segments:
<TABLE>
<CAPTION>
(Unaudited)
-----------------------------------------
Three Months Ended Nine Months Ended
September 30, September 30,
---------------- ----------------
1999 1998 1999 1998
----- ----- ----- -----
<S> <C> <C> <C> <C>
Consolidated EBITDA $25.0 $20.3 $57.6 $52.3
Less: Interest Expense 3.6 4.9 11.4 15.3
Depreciation and Amortization (1) 4.1 4.0 11.9 11.8
Other Noncash Charges .5 0.1 4.8 0.5
Nonrecurring and Restructuring Items -- (0.2) -- (0.4)
----- ----- ----- -----
8.2 8.8 28.1 27.2
----- ----- ----- -----
Consolidated Income from Continuing
Operations Before Taxes $16.8 $11.5 $29.5 $25.1
===== ===== ===== =====
</TABLE>
(1) Excludes amortization of deferred financing costs of $0.4 and $0.4 for the
quarters ended September 30, 1999 and 1998, respectively, and $1.3 deferred
financing costs and $0.2 loss on early extinguishment of debt and $1.3 deferred
financing costs for the year-to-date periods ended September 30, 1999 and 1998,
respectively, which were included in interest expense.
8
<PAGE> 9
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Data)
NOTE 8 - FINANCIAL POSITION AND RESULTS OF OPERATIONS OF HOLDING AND REMINGTON
The following condensed consolidating financial data provides
information regarding the financial position and results of operations of
Holding and its wholly owned subsidiary, Remington, including Remington's wholly
owned subsidiary Remington International, Ltd. Separate financial statements of
Holding are not presented because management has determined that they would not
be material to holders of the Company's public securities, Remington's 9.5%
Senior Subordinated Notes due 2003, Series B (the "Notes"). Further, the Notes
are fully and unconditionally guaranteed by Holding.
RACI HOLDING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEETS
September 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
RACI Holding,
Inc. and
Holding Remington Eliminations Subsidiaries
------- --------- ------------ ------------
<S> <C> <C> <C> <C>
ASSETS
Current Assets $ -- $200.0 $ -- $200.0
Receivable from Remington 0.9 -- 0.9 --
Noncurrent Assets 120.7 172.8 120.7 172.8
------ ------ ------ ------
Total Assets $121.6 $372.8 $121.6 $372.8
====== ====== ====== ======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities $ -- $100.1 $ -- $100.1
Payable to RACI Holding, Inc. -- 0.9 0.9 --
Noncurrent Liabilities -- 150.1 -- 150.1
Shareholders' Equity 122.6 121.7 121.7 122.6
------ ------ ------ ------
Total Liabilities and
Shareholders' Equity $122.6 $372.8 $122.6 $372.8
====== ====== ====== ======
</TABLE>
RACI HOLDING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEETS
December 31, 1998
<TABLE>
<CAPTION>
RACI
Holding,
Inc. and
Holding Remington Eliminations Subsidiaries
------- --------- ------------ ------------
<S> <C> <C> <C> <C>
ASSETS
Current Assets $ -- $175.1 $ -- $175.1
Receivable from Remington 0.9 -- 0.9 --
Noncurrent Assets 102.6 179.4 102.6 179.4
------ ------ ------ ------
Total Assets $103.5 $354.5 $103.5 $354.5
====== ====== ====== ======
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current Liabilities $ -- $ 84.0 $ -- $ 84.0
Payable to RACI Holding, Inc. -- 0.9 0.9 --
Noncurrent Liabilities -- 167.0 -- 167.0
Shareholders' Equity 103.5 102.6 102.6 103.5
------ ------ ------ ------
Total Liabilities and
Shareholders' Equity $103.5 $354.5 $103.5 $354.5
====== ====== ====== ======
</TABLE>
9
<PAGE> 10
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Data)
RACI HOLDING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
RACI
Holding,
Inc. and
Holding Remington Eliminations Subsidiaries
------- --------- ------------ ------------
<S> <C> <C> <C> <C>
QUARTER ENDED
SEPTEMBER 30, 1999
Sales $ -- $123.7 $ -- $123.7
Gross Profit -- 39.1 -- 39.1
Equity in Earnings of Subsidiary 10.8 -- 10.8 --
Net Income 10.8 10.8 10.8 10.8
QUARTER ENDED
SEPTEMBER 30, 1998
Sales $ -- $114.9 $ -- $114.9
Gross Profit -- 34.6 -- 34.6
Equity in Earnings of Subsidiary 6.4 -- 6.4 --
Net Income 6.4 6.4 6.4 6.4
</TABLE>
RACI HOLDING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
RACI
Holding,
Inc. and
Holding Remington Eliminations Subsidiaries
------- --------- ------------ ------------
<S> <C> <C> <C> <C>
NINE MONTHS ENDED
SEPTEMBER 30, 1999
Sales $ -- $309.2 $ -- $309.2
Gross Profit -- 99.3 -- 99.3
Equity in Earnings of Subsidiary 18.0 -- 18.0 --
Net Income 18.0 18.0 18.0 18.0
NINE MONTHS ENDED
SEPTEMBER 30, 1998
Sales $ -- $294.8 $ -- $294.8
Gross Profit -- 94.8 -- 94.8
Equity in Earnings of Subsidiary 14.7 -- 14.7 --
Net Income 14.7 14.7 14.7 14.7
</TABLE>
NOTE 9 - COMMITMENTS AND CONTINGENCIES
The Company is subject to various lawsuits and claims with respect to
product liabilities, governmental regulations and other matters arising in the
normal course of business. Under the Asset Purchase Agreement, the Company
generally bears financial responsibility for all product liability cases and
claims relating to occurrences after the closing of the Acquisition, except that
the Sellers remain responsible for certain costs in connection with cases and
claims relating to certain shotguns, and for all cases and claims relating to
discontinued products. Although it is difficult to forecast the outcome of
litigation, the Company does not believe, in light of relevant circumstances
(including the current availability of insurance for personal injury and
property damage with respect
10
<PAGE> 11
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Data)
to cases and claims involving occurrences arising after the Acquisition, its
accruals for the uninsured costs of such cases and claims and the Sellers'
retention of liability or agreement to be responsible for certain product
liability costs), that the outcome of all pending product liability cases and
claims will be likely to have a material adverse effect upon the financial
condition or results of operations of the Company. Nonetheless, in part because
of the uncertainty as to the nature and extent of manufacturer liability for
personal injury due to alleged product defects, there can be no assurance that
the Company's resources will be adequate to cover future product liability
occurrences, cases or claims, in the aggregate, or that such a material adverse
effect will not result therefrom. Because of the nature of its products, the
Company anticipates that it will continue to be involved in product liability
litigation in the future.
NOTE 10 - RECENT ACCOUNTING DEVELOPMENTS
During 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities." SFAS No. 133 requires all
entities to recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair value. In
June 1999, the FASB issued SFAS No. 137, "Accounting for Derivative Instruments
and Hedging Activities-Deferral of the Effective Date of FASB Statement No.
133-an amendment of FASB Statement No. 133", that revises SFAS No. 133 to become
effective in the first quarter of fiscal 2001. The Company is evaluating the
provisions of SFAS No. 133, but the impact, if any, of its adoption has not yet
been determined.
11
<PAGE> 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis should be read in conjunction
with the accompanying Condensed Consolidated Financial Statements and related
notes of Holding and its subsidiary, Remington and Remington's wholly owned
subsidiary, Remington International, Ltd., and with the Company's audited
consolidated financial statements as of and for the year ended December 31,
1998, on file with the Securities and Exchange Commission. The results of
operations for the nine month period ended September 30, 1999 are not
necessarily indicative of results that may be expected for the year ending
December 31, 1999, in part due to the seasonality of the Company's business.
BUSINESS TRENDS AND INITIATIVES
The markets in which the Company competes are highly competitive.
Product image, quality and innovation are the dominant competitive factors in
firearms products and price is the dominant factor in ammunition products. While
the Company intends to respond to competitive pressures, such responses may
affect quarterly results. The Company believes that the market for firearms and
ammunition is a mature market, which the Company expects will remain flat, at
least in the near term.
Although the Company believes that consumer concerns about regulation
have not had a significant influence on the market for its firearms and
ammunition products for the periods presented herein, there can be no assurance
that the regulation of firearms and ammunition will not become more restrictive
in the future and that any such development would not adversely affect these
markets or the Company. See "-Regulatory Developments" and "Legal Proceedings."
In light of market constraints on sales growth opportunities and its
liquidity and working capital needs, the Company continues to focus on
increasing profitability by increasing brand name awareness, introducing new
products and containing costs. The Company continues to review all aspects of
its operations with a view towards managing costs in response to competitive
pressures.
RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30,
1999 AS COMPARED TO THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 1998
Sales. Sales for the third quarter of 1999 were $123.7 million, an
increase of $8.8 million, or 7.7%, from 1998 third quarter sales.
Hunting/Shooting Sports sales were $111.0 million for the third quarter of 1999,
an increase of $8.5 million, or 8.3%, from 1998 third quarter sales. Sales for
the first nine months of 1999 were $309.2 million, an increase of $14.4 million,
or 4.9%, from the same period in 1998. Year-to-date Hunting/Shooting Sports
sales were $269.5 million for the first nine months of 1999, an increase of
$16.2 million, or 6.4%, from the same period in 1998.
Firearms sales decreased $1.4 million, or 3.4%, to $40.1 million for
the third quarter of 1999 from the third quarter of 1998, as a result of lower
sales volumes of rifles, partially offset by higher overall pricing of firearms
products. The lower sales volumes of rifles in the third quarter of 1999 was
primarily due to the Company's inability to satisfy certain supply obligations
due to a temporary reduction in inventory. Year-to-date firearms sales were
$133.3 million, an increase of $3.8 million, or 2.9%, from the same period in
1998, due to increased sales volumes of shotguns combined with higher overall
pricing, partially offset by an unfavorable mix of firearms products.
Ammunition sales for the third quarter of 1999 were $70.9 million, an
increase of $10.0 million, or 16.4%, from comparable 1998 sales, primarily as a
result of increased sales volumes in all product categories, partially offset by
price concessions due to competitive pressures in the marketplace and a shift in
mix toward lower-priced ammunition products. Sales for the first nine months of
1999 were $136.2 million, an increase of $12.4 million, or 10.0%, from the same
period in 1998, primarily due to the same factors underlying the third quarter
ammunition sales results.
Sales of all other products, including fishline, accessories, targets
and powder metal products, for the third quarter of 1999 increased $0.2 million,
or 1.6%, from the third quarter of 1998, primarily due to higher fishline sales
volumes, partially offset by a softening in demand for certain accessory
products. Year-to-date sales were
12
<PAGE> 13
$39.7 million, or 4.3%, lower than the comparable 1998 period sales, primarily
as a result of lower demand for certain fishline products.
Cost of Goods Sold. Cost of goods sold for the third quarter of 1999
was $84.6 million, an increase of $4.3 million, or 5.4%, from the third quarter
of 1998. For the first nine months of 1999, cost of goods sold increased $9.9
million, or 5.0%, to $209.9 million from $200.0 million for the same period in
1998. The increase in both the quarter and year-to-date periods principally was
due to increased sales volume in Hunting/Shooting Sports, offset by favorable
commodity prices. As a percentage of sales, cost of goods sold for the third
quarter of 1999 decreased to 68.4% from 69.9% as a result of reductions in other
manufacturing costs together with higher overall pricing in firearms, partially
offset by ammunition pricing concessions. Cost of goods sold increased as a
percentage of sales for the first nine months of 1999 to 67.9% from 67.8% for
the same period in 1998 due mainly to the combination of ammunition pricing
concessions and increased volumes of lower margin ammunition products, partially
offset by higher overall pricing of firearms products.
Operating Expenses. Operating expenses consist of selling, general and
administrative expense, research and development expense, restructuring and
nonrecurring items and other income and expense. Operating expenses for the
third quarter of 1999 were $18.7 million, an increase of $0.5 million, or 2.7%,
from $18.2 million for the third quarter of 1998. Year-to-date operating
expenses for 1999 were $58.4 million, an increase of $4.0 million, or 7.4%, from
$54.4 million for the same period of 1998, due primarily to the factors
discussed below.
Selling, general and administrative expenses for the third quarter of
1999 were $16.8 million, an increase of $0.8 million, or 5.0%, from the third
quarter of 1998, primarily as a result of increased distribution costs and sales
commissions relating to the increased sales volume of ammunition products
discussed above. Year-to-date selling, general and administrative expenses were
$48.6 million, a $1.3 million increase from $47.3 million in the prior
year-to-date period primarily due to the increased variable selling expenses
described above.
Restructuring and nonrecurring items include $0.2 million in the second
quarter of 1999 for nonrecurring professional fees related to a transaction that
was not consummated, and a reserve reduction of $0.2 million in the first
quarter of 1999 to eliminate estimated restructuring accruals not realized.
Other expense for the year-to-date period ended September 30, 1999
includes $3.1 million for the Company's portion of expenses incurred in
connection with the issuance of stock and the grant of options under the 1999
Stock Incentive Plan. See Note 7 of the Notes to Condensed Consolidated
Financial Statements herein.
Interest Expense. Interest expense for the quarter ended September 30,
1999 was $3.6 million, a decrease of $1.3 million, or 26.5%, from the third
quarter of 1998. Year-to-date interest expense was $11.4 million as compared to
$15.3 million in the prior year-to-date period. The decrease in interest expense
for the periods was primarily a result of a reduction in average outstanding
debt and, to a lesser extent, reductions in the interest rate charged under the
credit agreement, dated as of November 30, 1993, as amended, among Remington and
certain lending institutions (the "Credit Agreement"), related to improved
financial performance. See "-Liquidity and Capital Resources - Liquidity."
Provision for Income Taxes. The Company's effective tax rate was 39.0%
for year-to-date 1999 and 41.4% during the comparable prior year period. The
effective rates for 1999 and 1998 exceed the federal statutory rate of 35% due
primarily to the impact of state income taxes and nondeductible expenses.
Net Income. Net income for the third quarter of 1999 was $10.8 million,
an increase of $4.4 million from the third quarter of 1998. Net income for the
nine months ended September 30, 1999 was $18.0 million, an increase of $3.3
million from the 1998 net income of $14.7 million, due primarily to the factors
discussed above.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows. Net cash provided by operating activities was $26.7 million
and $16.5 million for the nine month periods ended September 30, 1999 and 1998,
respectively. The increase in cash provided by operating activities compared to
the same period in 1998 is primarily a result of improved earnings, non-cash
items mainly related to the issuance of deferred shares, together with a
decrease in working capital. Accounts receivable increased to $96.8 million at
September 30, 1999 from December 31, 1998 principally due to approximately $24.0
million of firearms and ammunition sales on extended payment terms. These terms
provide cash discount incentives
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<PAGE> 14
and required payment by October 1999. The terms are granted to customers
consistent with industry-wide programs and with the Company's prior years'
experience. The Company intends to apply the proceeds from these receivables to
the outstanding balance on its revolving credit facility. Net cash used in
investing activities consists of capital expenditures in the first nine months
of 1999 and 1998 of $8.6 million and $3.7 million, respectively. Net cash used
in financing activities during the first nine months of 1999 and 1998 was $20.8
million and $10.5 million, respectively. The increase in cash used in financing
activities is primarily a result of a decrease in net borrowings under the
revolving credit facility of $3.5 million, proceeds from issuance of Common
Stock of $0.7 million, partly offset by additional scheduled principal payments
on outstanding indebtedness of $2.4 million and the repurchase of approximately
$5.5 million of the Notes on the open market, at an average price of 99.8% of
the face value. From time to time, the Company may continue to repurchase
additional amounts of the Notes on the open market.
At present, the principal sources of liquidity for the Company's
business and operating needs are internally generated funds from its operations
and revolving credit borrowings under the Credit Agreement. The Credit Agreement
contains various default provisions and affirmative and negative covenants,
including a negative pledge with respect to the Company's unencumbered assets,
and certain financial covenants that require the Company to meet certain
financial ratios and tests. As of September 30, 1999, the Company was in
compliance in all material respects with the financial covenants under the
Credit Agreement. The Company believes that it will be able to meet its debt
service obligations and fund its operating requirements with cash flow from
operations and revolving credit borrowings prior to the maturity of the
revolving credit facility, although no assurance can be given in this regard. In
addition, the Company has implemented certain programs and initiatives in order
to improve cash flow from operations. The Company expects that it will have to
replace the revolving credit facility and refinance any outstanding amounts
thereunder upon its maturity on December 31, 2000. No assurance can be given
that the Company will be able to obtain such a replacement working capital
facility or refinance such amounts on terms acceptable to the Company.
Working Capital. Working capital increased to $99.9 million at
September 30, 1999 from $91.1 million at December 31, 1998, primarily as a
result of the increase in accounts receivable, partially offset by the decrease
in inventory and increases in accounts payable and other accrued liabilities.
See "-Cash Flows." The seasonality of the Company's business causes accounts
receivables generally to be higher in the first three quarters of the year. See
"-Seasonality." The Company continues to focus on working capital management,
including the collection of accounts receivable, maintaining inventory levels in
line with sales projections and management of accounts payable.
Capital Expenditures. Capital expenditures for the nine months ended
September 30, 1999 were $8.6 million, including approximately $6.2 million for
new equipment related to the manufacture of firearms, as well as replacement
equipment and improvement projects concentrated on enhancing the operating
efficiency throughout existing facilities.
Liquidity. As of September 30, 1999, the Company had outstanding $125.8
million of indebtedness, consisting of approximately $87.4 million ($87.7
million face amount) of the Notes, $32.9 million in term loan borrowings and
$3.0 million in revolving credit borrowings under the Credit Agreement, $2.0
million in capital lease obligations and $0.5 million of other long-term debt.
As of September 30, 1999, the Company also had aggregate letters of credit
outstanding of $4.0 million. The Company's revolving credit facility had $144.1
million available for borrowing as of September 30, 1999.
SEASONALITY
The Company produces and markets a broad range of firearms and
ammunition products used in various shooting sports. Several models of the
Company's shotguns and several types of ammunition are intended for target
shooting that generally occurs in the "off season." The majority of the
Company's firearms and ammunition products, however, are manufactured for
hunting use. As a result, sales of the Company's products are seasonal and
concentrated toward the fall hunting season. The Company follows the industry
practice of selling firearms pursuant to a "dating" plan allowing the customer
to buy the products commencing at the beginning of the Company's dating plan
year and pay for them on extended terms. The Company believes that this dating
plan has partially offset the seasonality of the Company's business by shifting
some firearms sales to the first quarter.
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<PAGE> 15
RECENT ACCOUNTING DEVELOPMENTS
During 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities." SFAS No. 133 requires all
entities to recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair value. In
June 1999, the FASB issued SFAS No. 137, "Accounting for Derivative Instruments
and Hedging Activities-Deferral of the Effective Date of FASB Statement No.
133-an amendment of FASB Statement No. 133", that revises SFAS No. 133 to become
effective in the first quarter of fiscal 2001. The Company is evaluating the
provisions of SFAS No. 133, but the impact, if any, of its adoption has not yet
been determined.
15
<PAGE> 16
YEAR 2000 COMPLIANCE
The year 2000 issue is the result of programming code that was written
to use only two digits to define calendar year dates. As a result, computers,
software and other equipment that include such programming code could fail to
operate or to produce correct results.
In 1995, the Company completed the first phase of replacing its
computer systems with an enterprise-wide, fully-integrated system from SAP
America, Inc., that, upon implementation, processes accounts payable, accounts
receivable, general ledger, fixed assets, sales and distribution, plant
maintenance and certain manufacturing systems. This system eliminated most
stand-alone legacy systems and resulted in all facilities operating within the
same application software package. The new system accommodates the dating
changes necessary to permit correct recording of dates for the year 2000 and
later years. Systems that will not be replaced with the SAP software include
human resources and payroll, which are already year 2000 compliant.
The Company has also commenced a year 2000 project to address the
Company's remaining systems, including both information technology and
non-information technology systems. The work plan developed by the Company has
four phases: site analysis, site assessment, testing and implementation. In the
site analysis phase, which has been completed, the Company identified primary
areas of concern such as software, networks, products, production equipment,
trucking, telecommunications, customers, vendors, and other third parties such
as banks and government agencies to be evaluated. Appropriate people at the
Company's various facilities were asked to rank these areas at their facility as
critical, (for example, a single source supplier), somewhat critical, (for
example, a preferred supplier), or not critical (for example, where several
alternatives are available).
The site assessment phase, which consisted of on-site visits to
determine which of the previously-identified areas of concern needed to be
addressed at each facility, has been completed. The Company identified 70
customers, representing approximately 80% of its 1998 sales, from whom it
requested information on their year 2000 compliant status. Based on responses
received from customers with whom the Company does business electronically, the
Company has conducted transaction tests utilizing electronic data interchange
for 90% of its customers. For the 10% of those customers that transmit orders
electronically that were not tested, the Company has order processing systems in
place to ensure continuing operations with our existing software.
The Company also contacted approximately 339 vendors, which supply
approximately 90% of the raw materials and finished goods used by the Company,
as well as banks, health care and service providers. As of September 30, 1999,
the Company has received positive responses from all of the vendors that are
critical to the Company's operations.
The Company has completed the testing for year 2000 compliant dates of
existing equipment at all of its facilities for both information technology
systems and non-information technology systems, including microcontrollers used
in plant operations. The Company believes that the existing equipment will be
able to perform all critical functions into the year 2000 on a basis comparable
to their current operation.
In the implementation phase, the Company replaced non-compliant
systems. The Company has completed the implementing of year 2000 compliant
information technology systems at all of its facilities related to manufacturing
operations. The Company estimates that, with respect to its information
technology systems and non-information technology systems that were not replaced
by the installation of the SAP software, it has completed approximately 98% of
the reprogramming or replacement necessary to upgrade these systems to be year
2000 compliant. The Company's telecommunications systems have been upgraded and
are year 2000 compliant.
Due to the implementation of the new computer system, costs related
specifically to year 2000 compliance, including allocation of internal salaries
and related costs, are estimated to be $0.5 million. Costs of this project have
been satisfied from the Company's cash flows and have been expensed as incurred
except for hardware, which has been capitalized. Accordingly, the Company does
not expect that the cost of year 2000 compliance will be material to its
financial condition, results of operations or cash flows.
While the Company currently believes its year 2000 project addresses
its material areas of concern, the failure to correct material year 2000
problems could result in an interruption in, or a failure of, certain normal
business activities or operations. Such failures could materially and adversely
affect the Company's results of
16
<PAGE> 17
operations, liquidity and financial condition. Due to the general uncertainty
inherent in the year 2000 problem, resulting in part from the uncertainty of the
year 2000 readiness of third-party suppliers and customers, the Company is
unable to determine at this time whether the consequences of year 2000 failures
could have a material impact on the Company's results of operations, liquidity
or financial condition. The Company believes that, with the implementation of
new business systems and completion of the project as scheduled, the possibility
of significant interruptions of normal operations should be reduced. Although
the Company recognizes that some risks still exist, it is not planning to adopt
any formal contingency plan. In the ensuing months, the Company will continue to
review and evaluate all known risks associated with the completion of the year
2000 project and take action as deemed appropriate.
The discussion of the Company's efforts and expectations relating to
year 2000 compliance are forward-looking statements and should be read in
conjunction with the Company's disclosures under the heading: "Information
Concerning Forward-Looking Statements." The Company's ability to achieve year
2000 compliance and the costs associated therewith could be adversely impacted
by, among other things, the availability of resources, the ability of customers,
vendors or third parties to achieve year 2000 compliance and unanticipated
problems in the testing and implementation phases of its year 2000 project.
REGULATORY DEVELOPMENTS
The Brady Handgun Violence Prevention Act of 1993 (the "Brady Bill")
was extended to shotguns and rifles in November 1998. The extension of the Brady
Bill mandates a new national system of instant background checks for all firearm
buyers, to be operated by the Federal Bureau of Investigation and state
governments, that replaces the system of checks on handgun buyers that has been
in place at the state and local level since February 1994.
In addition, certain federal, state and local governments have
considered, and certain such governments have adopted, various measures designed
to restrict the distribution of firearms, particularly handguns and so-called
"assault weapons." Although the Company does not produce "assault weapons" (as
defined in the federal law enacted in 1994) or handguns, there can be no
assurance that any such measures, if and where enacted, would not have a
material adverse effect on the financial condition or results of operations of
the Company.
The Company believes that recent federal, state and local legislation
relating to the regulation of firearms and ammunition has not had a material
adverse effect on its sale of these products or its financial condition, results
of operations or cash flows during the periods presented. However, there can be
no assurance that federal, state, local or foreign regulation of firearms and
ammunition will not become more restrictive in the future and that any such
development would not have a material adverse effect on the business of the
Company. See also "Legal Proceedings."
INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS
Certain of the statements contained in this report (other than the
financial statements and other statements of historical fact) are
forward-looking statements, including, without limitation, (i) the statements in
"-Business Trends and Initiatives" concerning (a) the Company's belief that the
market for firearms and ammunition will remain flat, at least in the near term
and (b) the Company's intention to respond to competitive pressure, which may
affect quarterly results; (ii) the statements in "-Liquidity and Capital
Resources - Cash Flows" concerning (a) the Company's intention to apply the
proceeds from receivables from sales on extended payment terms to the
outstanding balance on its revolving credit facility, (b) the Company's belief
that it will be able to meet its debt service obligations and fund its operating
requirements with cash flow from operations and revolving credit borrowings
prior to the maturity of the revolving credit facility, (c) the Company's
expectation that it will have to replace the revolving credit facility and
refinance any outstanding amounts thereunder upon its maturity on December 31,
2000 and (d) the Company's expectation that it may continue to repurchase the
Notes on the open market from time to time; (iii) the statements in "-Year 2000
Compliance" concerning (a) the functions that will be handled by the SAP
software upon implementation; (b) the Company's belief that its existing
equipment will be able to perform all critical functions into the year 2000 on a
basis comparable to their current operation; (c) the Company's expectation that
the cost of year 2000 compliance will not be material to its financial
condition, results of operations or cash flows, (d) the Company's belief that
its year 2000 project addresses its material areas of concern, but that failure
to correct material year 2000 problems could result in an interruption in, or
failure of,
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<PAGE> 18
certain normal business activities or operations (e) the Company's belief that
the implementation of new business systems and the completion of the year 2000
project will reduce the possibility of significant interruptions of normal
operations; (f) the Company's intention to continue to review and evaluate all
known risks associated with the completion of the year 2000 project and take
action as deemed appropriate; and (g) the Company's identification of the most
likely worst case scenario; (iv) other statements as to management's or the
Company's expectations and beliefs presented in this "Management's Discussion
and Analysis of Financial Condition and Results of Operations"; (v) the
statements in "Legal Proceedings" concerning (a) the Company's belief that the
outcome of all pending product liability cases and claims will not be likely to
have a material adverse effect upon the financial condition or results of
operations of the Company and (b) the Company's anticipation that because of the
nature of its products, it will continue to be involved in product liability
cases and claims in the future; and (vi) other statements as to management's or
the Company's expectations and beliefs presented in "Legal Proceedings."
Forward-looking statements are made based upon management's current
expectations and beliefs concerning future developments and their potential
effects upon the Company. There can be no assurance that future developments
will be in accordance with management's expectations or that the effect of
future developments on the Company will be those anticipated by management. The
important factors described in this report (including, without limitation, those
discussed in "-Business Trends and Initiatives", "-Results of Operations for the
Three and Nine Month Periods Ended September 30, 1999 as Compared to the Three
and Nine Month Periods Ended September 30, 1998", "-Liquidity and Capital
Resources", "-Year 2000 Compliance" and "Legal Proceedings"), in the Company's
Annual Report on Form 10-K for the period ended December 31, 1998, or in other
Securities and Exchange Commission filings (which factors are incorporated
herein by reference), could affect (and in some cases have affected) the
Company's actual results and could cause such results to differ materially from
estimates or expectations reflected in such forward-looking statements.
While the Company periodically reassesses material trends and
uncertainties affecting the operations and financial condition in connection
with its preparation of management's discussion and analysis of results of
operations and financial condition contained in its quarterly and annual
reports, the Company does not intend to review or revise any particular
forward-looking statement referenced in this report in light of future events.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Certain of the Company's financial instruments are subject to market
risks, including interest rate risk. The Company was not a party to any interest
rate cap or other protection arrangements with respect to its $35.9 million of
variable rate indebtedness as of September 30, 1999. The Company uses commodity
futures contracts to hedge against the risk of increased prices for lead, copper
and zinc to be used in the manufacture of the Company's products. At September
30, 1999, the market value of the Company's outstanding contracts relating to
firm commitments and anticipated purchases up to one year from the respective
balance sheet date was $1.3 million. The Company believes that a near-term
change in commodity prices will not materially impact the consolidated financial
position, results of operations, future earnings, fair value or cash flows of
the Company. Additionally, the Company believes it does not have a material
exposure to fluctuations in foreign currencies. The Company does not hold or
issue financial instruments for speculative or trading purposes.
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<PAGE> 19
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Pursuant to the Asset Purchase Agreement, the Sellers retained
liability for, and are required to indemnify the Company against, (1) all
product liability cases and claims (whenever they may arise) involving
discontinued products and (2) all product liability cases and claims involving
products that had not been discontinued as of the closing of the Acquisition
(the "Closing") and which relate to occurrences that took place prior to the
Closing. Except for all cases and claims relating to discontinued products and
for certain costs in connection with cases and claims relating to certain
shotguns, the Company generally bears financial responsibility for product
liability cases and claims relating to occurrences after the Closing.
The Company and the Sellers are engaged in the joint defense of product
liability litigation involving Remington brand firearms and Company ammunition
products. As of September 30, 1999, approximately 23 such cases were pending,
primarily alleging defective product design or manufacture, or failure to
provide adequate warnings, all of which are individual actions alleging personal
injury. Many of these cases seek punitive as well as compensatory damages. Of
these pending individual cases, approximately 2 involve either discontinued
products or pre-Closing occurrences, for which the Sellers retained liability
and are required to indemnify the Company. The remaining approximately 21 of the
pending cases involve post-Closing occurrences for which the Company bears
responsibility under the Asset Purchase Agreement; the Sellers have some
responsibility for the cost of one of these cases involving certain shotguns.
The Company has previously disposed of a number of other cases involving
post-Acquisition occurrences by settlement.
In addition, Remington has been named as a defendant in two of the
lawsuits recently brought against numerous firearms manufacturers. As of
November 1, 1999, approximately 22 municipalities and counties had filed actions
against various firearms manufacturers, distributors, sellers and trade
organizations seeking to recover health care, public safety and other costs
incurred in connection with the accidental or illegal use of firearms. Most of
these lawsuits, which allege strict liability, negligent manufacture and
distribution and nuisance theories, have focused on handgun manufacturers.
However, the Company and other long-gun manufacturers were named as defendants
in a lawsuit filed by the city of Boston, Massachusetts on June 3, 1999. The
Boston lawsuit seeks to recover health care, public safety and other costs
incurred in connection with the use of firearms, based on claims including
product liability, design defect, failure to warn and negligence. The case, City
of Boston v. Smith & Wesson, et al., was filed in state court, removed to
Federal district court and on October 7, 1999, remanded to state court. In
addition, on July 16, 1999, Remington was one of over 100 defendants named in a
lawsuit filed in Federal district court in Brooklyn, New York by the NAACP.
Remington was served in the NAACP case on October 25, 1999. This case seeks
injunctive relief in connection with the manufacture, sale and distribution of
handguns, which the Company does not manufacture, sell or distribute. There can
be no assurance that the Company, as a manufacturer of long-guns and ammunition,
will not be named in future lawsuits of this nature or that the outcome of such
litigation will not materially adversely affect the Company or its business,
financial condition and results of operations.
Although it is difficult to forecast the outcome of litigation, the
Company does not believe, in light of relevant circumstances (including the
current availability of insurance for personal injury and property damage with
respect to cases and claims involving occurrences arising after the Acquisition,
its accruals for the uninsured costs of such cases and claims and the Sellers'
retention of liability or agreement to be responsible for certain product
liability costs), that the outcome of all pending product liability cases and
claims will be likely to have a material adverse effect upon the financial
condition or results of operations of the Company. Nonetheless, in part because
of the uncertainty as to the nature and extent of manufacturer liability for
personal injury due to alleged product defects, there can be no assurance that
the Company's resources will be adequate to cover future product liability
occurrences, cases or claims, in the aggregate, or that such a material adverse
effect will not result therefrom. Because of the nature of its products, the
Company anticipates that it will continue to be involved in product liability
litigation in the future.
ITEM 5. OTHER INFORMATION
Dr. Ulrich Middlemann was elected to the boards of directors of Holding
and Remington at meetings of the boards of directors of Holding and Remington
held on July 27, 1999.
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.1 Amended and Restated By-Laws of RACI Holding, Inc., as in
effect on July 27, 1999.
3.2 Amended and Restated By-Laws of Remington Arms Company, Inc.,
as in effect on July 27, 1999.
27.1 Financial Data Schedule.
99.1 Reconciliation of Income from Operations to EBITDA.
(b) Reports on Form 8-K
During the quarter ended September 30, 1999, the Company filed no reports on
Form 8-K.
20
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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 thereunto duly authorized.
RACI HOLDING, INC.
/s/ Mark A. Little
------------------------------------------
Mark A. Little
Vice President and Chief Financial Officer
(Principal Financial Officer)
November 12, 1999
21
<PAGE> 22
INDEX TO EXHIBITS
Exhibit No. Description
- ----------- -----------
3.1 Amended and Restated By-Laws of RACI Holding, Inc., as in effect on
July 27, 1999.
3.2 Amended and Restated By-Laws of Remington Arms Company, Inc., as in
effect on July 27, 1999.
27.1 Financial Data Schedule.
99.1 Reconciliation of Income from Operations to EBITDA.
22
<PAGE> 1
RACI HOLDING, INC.
BY-LAWS
As amended and restated on July 27, 1999
<PAGE> 2
RACI HOLDING, INC.
BY-LAWS
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
<S> <C> <C>
ARTICLE I STOCKHOLDERS
1.01 Annual Meetings ............................................................... 1
1.02 Special Meetings............................................................... 1
1.03 Notice of Meetings; Waiver..................................................... 1
1.04 Quorum......................................................................... 2
1.05 Voting......................................................................... 2
1.06 Voting by Ballot............................................................... 2
1.07 Adjournment.................................................................... 3
1.08 Proxies........................................................................ 3
1.09 Organization; Procedure........................................................ 4
1.10 Consent of Stockholders in Lieu of Meeting..................................... 4
ARTICLE II BOARD OF DIRECTORS
2.01 General Powers................................................................. 5
2.02 Number and Term of Office...................................................... 5
2.03 Election of Directors.......................................................... 5
2.04 Annual and Regular Meetings.................................................... 5
2.05 Special Meetings; Notice....................................................... 6
2.06 Quorum; Voting................................................................. 6
2.07 Adjournment.................................................................... 6
2.08 Action Without a Meeting....................................................... 6
2.09 Regulations; Manner of Acting.................................................. 6
2.10 Action by Telephonic Communications............................................ 7
2.11 Resignations................................................................... 7
2.12 Removal of Directors........................................................... 7
2.13 Vacancies and Newly Created Directorships...................................... 7
2.14 Compensation................................................................... 7
2.15 Reliance on Accounts and Reports, etc.......................................... 8
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<S> <C> <C>
ARTICLE III EXECUTIVE COMMITTEE AND OTHER
COMMITTEES
3.01 How Constituted................................................................ 8
3.02 Powers......................................................................... 8
3.03 Proceedings.................................................................... 10
3.04 Quorum and Manner of Acting.................................................... 10
3.05 Action by Telephonic Communications............................................ 10
3.06 Absent or Disqualified Members................................................. 11
3.07 Resignations................................................................... 11
3.08 Removal........................................................................ 11
3.09 Vacancies...................................................................... 11
ARTICLE IV OFFICERS
4.01 Number......................................................................... 11
4.02 Election....................................................................... 11
4.03 Salaries....................................................................... 12
4.04 Removal and Resignation; Vacancies............................................. 12
4.05 Authority and Duties of Officers............................................... 12
4.06 The Chairman and Chief Executive Officer....................................... 12
4.07 The President and Chief Operating Officer...................................... 13
4.08 The Vice Presidents............................................................ 13
4.09 The Secretary.................................................................. 13
4.10 The Chief Financial Officer.................................................... 14
4.11 The Treasurer.................................................................. 15
4.12 Additional Officers............................................................ 15
4.13 Security....................................................................... 16
ARTICLE V CAPITAL STOCK
5.01 Certificates of Stock.......................................................... 16
5.02 Signatures; Facsimile.......................................................... 16
5.03 Lost, Stolen or Destroyed Certificates......................................... 16
5.04 Transfer of Stock.............................................................. 17
5.05 Record Date.................................................................... 17
5.06 Registered Stockholders........................................................ 18
5.07 Transfer Agent and Registrar................................................... 18
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<S> <C> <C>
ARTICLE VI INDEMNIFICATION
6.01 Nature of Indemnity............................................................ 19
6.02 Successful Defense............................................................. 20
6.03 Determination That Indemnification
Is Proper................................................................... 20
6.04 Advance Payment of Expenses.................................................... 20
6.05 Procedure for Indemnification
of Directors and Officers................................................ 20
6.06 Survival; Preservation of Other Rights......................................... 21
6.07 Insurance...................................................................... 22
6.08 Severability................................................................... 22
ARTICLE VII OFFICES
7.01 Registered Office.............................................................. 22
7.02 Other Offices.................................................................. 22
ARTICLE VIII GENERAL PROVISIONS
8.01 Dividends...................................................................... 22
8.02 Reserves....................................................................... 23
8.03 Execution of Instruments....................................................... 23
8.04 Corporate Indebtedness......................................................... 23
8.05 Deposits....................................................................... 24
8.06 Checks......................................................................... 24
8.07 Sale, Transfer, etc. of Securities............................................. 24
8.08 Voting as Stockholder.......................................................... 24
8.09 Fiscal Year.................................................................... 25
8.10 Seal........................................................................... 25
8.11 Books and Records; Inspection.................................................. 25
8.12 Definitions.................................................................... 25
ARTICLE IX AMENDMENT OF BY-LAWS
9.01 Amendment...................................................................... 25
ARTICLE X CONSTRUCTION
10.01 Construction......................................................................... 26
</TABLE>
iii
<PAGE> 5
RACI HOLDING, INC.
BY-LAWS
As amended and restated on July 27, 1999.
Certain defined terms used herein without definition shall
have the meanings set forth in Section 8.12.
ARTICLE I
STOCKHOLDERS
Section 1.01. Annual Meetings. The annual meeting of the
stockholders of the Corporation for the election of directors and for the
transaction of such other business as properly may come before such meeting
shall be held at such place, either within or without the State of Delaware,
and at such time as shall be designated for the first regularly-scheduled
meeting of the Board of Directors in each calendar year, or at such other date
and hour as may be fixed from time to time by resolution of the Board of
Directors and set forth in the Notice or Waiver of Notice of the meeting.
[Section 211(a), (b).](1)
Section 1.02. Special Meetings. Special meetings of the
stockholders may be called at any time by the Chairman and Chief Executive
Officer or by the Board of Directors. A special meeting shall be called by the
Chairman and Chief Executive Officer or by the Secretary, immediately upon
receipt of a written request therefor by stockholders holding in the aggregate
not less than a majority of the outstanding shares of the Corporation at the
time entitled to vote at any meeting of the stockholders. If such officers or
the Board of Directors shall fail to call such meeting within 20 days after
receipt of such request, any stockholder executing such request may call such
meeting. Such special meetings of the stockholders shall be held at such
places, within or without the State of Delaware, as shall be specified in the
respective notices or waivers of notice thereof. [Section 211(d).]
Section 1.03. Notice of Meetings; Waiver. The Secretary or
any Assistant Secretary shall cause written notice of the place, date and hour
of each meeting of the stockholders, and, in the case of a special meeting, the
- ----------------------------------
(1) Citations are to the General Corporation Law of the State of Delaware as in
effect on August 15, 1995 (the "DGCL"), and are inserted for reference only,
and do not constitute a part of the By-Laws.
1
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purpose or purposes for which such meeting is called, to be given personally or
by mail, not less than ten nor more than sixty days prior to the meeting, to
each stockholder of record entitled to vote at such meeting. If such notice is
mailed, it shall be deemed to have been given to a stockholder when deposited
in the United States mail, postage prepaid, directed to the stockholder at his
address as it appears on the record of stockholders of the Corporation, or, if
he shall have filed with the Secretary of the Corporation a written request
that notices to him be mailed to some other address, then directed to him at
such other address. Such further notice shall be given as may be required by
law.
No notice of any meeting of stockholders need be given to any
stockholder who submits a signed waiver of notice, whether before or after the
meeting. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders need be specified in a written
waiver of notice. The attendance of any stockholder at a meeting of
stockholders shall constitute a waiver of notice of such meeting, except when
the stockholder attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business on the ground that
the meeting is not lawfully called or convened. [Sections 222, 229.]
Section 1.04. Quorum. Except as otherwise required by law
or by the Certificate of Incorporation, the presence in person or by proxy of
the holders of record of a majority of the shares entitled to vote at a meeting
of stockholders shall constitute a quorum for the transaction of business at
such meeting. [Section 216.]
Section 1.05. Voting. If, pursuant to Section 5.05 of these
By-Laws, a record date has been fixed, every holder of record of shares
entitled to vote at a meeting of stockholders shall be entitled to one vote for
each share outstanding in his name on the books of the Corporation at the close
of business on such record date. If no record date has been fixed, then every
holder of record of shares entitled to vote at a meeting of stockholders shall
be entitled to one vote for each share of stock standing in his name on the
books of the Corporation at the close of business on the day next preceding the
day on which notice of the meeting 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. Except as otherwise required by law or by the Certificate of
Incorporation, the vote of a majority of the shares represented in person or by
proxy at any meeting at which a quorum is present shall be sufficient for the
transaction of any business at such meeting. [Sections 212(a), 216.]
Section 1.06. Voting by Ballot. No vote of the stockholders
need be taken by written ballot or conducted by Inspectors of Elections unless
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<PAGE> 7
otherwise required by law. Any vote which need not be taken by ballot may be
conducted in any manner approved by the meeting.
Section 1.07. Adjournment. If a quorum is not present at any
meeting of the stockholders, the stockholders present in person or by proxy
shall have the power to adjourn any such meeting from time to time until a
quorum is present. Notice of any adjourned meeting of the stockholders of the
Corporation need not be given if the place, date and hour thereof are announced
at the meeting at which the adjournment is taken, provided, however, that if
the adjournment is for more than thirty days, or if after the adjournment a new
record date for the adjourned meeting is fixed pursuant to Section 5.05 of
these By-Laws, a notice of the adjourned meeting, conforming to the
requirements of Section 1.03 hereof, shall be given to each stockholder of
record entitled to vote at such meeting. At any adjourned meeting at which a
quorum is present, any business may be transacted that might have been
transacted on the original date of the meeting. [Section 222(c).]
Section 1.08. Proxies. Any stockholder entitled to vote at
any meeting of the stockholders or to express consent to or dissent from
corporate action without a meeting may authorize another person or persons to
vote at any such meeting and express such consent or dissent for him by proxy.
A stockholder may authorize a valid proxy by executing a written instrument
signed by such stockholder, or by causing his or her signature to be affixed to
such writing by any reasonable means including, but not limited to, by
facsimile signature, or by transmitting or authorizing the transmission of a
telegram, cablegram or other means of electronic transmission to the person
designated as the holder of the proxy, a proxy solicitation firm or a like
authorized agent. No such proxy shall be voted or acted upon after the
expiration of three years from the date of such proxy, unless such proxy
provides for a longer period. Every proxy shall be revocable at the pleasure of
the stockholder executing it, except in those cases where applicable law
provides that a proxy shall be irrevocable. A stockholder may revoke any proxy
which is not irrevocable by attending the meeting and voting in person or by
filing an instrument in writing revoking the proxy or by filing another duly
executed proxy bearing a later date with the Secretary. Proxies by telegram,
cablegram or other electronic transmission must either set forth or be
submitted with information from which it can be determined that the telegram,
cablegram or other electronic transmission was authorized by the stockholder.
Any copy, facsimile telecommunication or other reliable reproduction of a
writing or transmission created pursuant to this section may be substituted or
used in lieu of the original writing or transmission for any and all purposes
for which the original writing or transmission could be used, provided that
such copy, facsimile telecommunication or other reproduction shall be a
complete
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reproduction of the entire original writing or transmission. [Section 212(b),
(c), (d), (e).]
Section 1.09. Organization; Procedure. At every meeting of
stockholders the presiding officer shall be the Chairman and Chief Executive
Officer or, in the event of his absence or disability, a presiding officer
chosen by a majority of the stockholders present in person or by proxy. The
Secretary, or in the event of his absence or disability, the Assistant
Secretary, if any, or if there be no Assistant Secretary, in the absence of the
Secretary, an appointee of the presiding officer, shall act as Secretary of the
meeting. The order of business and all other matters of procedure at every
meeting of stockholders may be determined by such presiding officer.
Section 1.10. Consent of Stockholders in Lieu of Meeting. To
the fullest extent permitted by law, whenever the vote of stockholders at a
meeting thereof is required or permitted to be taken for or in connection with
any corporate action, such action may be taken without a meeting, without prior
notice and without a vote of stockholders, if a consent or consents in writing,
setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would
be necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted and 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.
Every written consent shall bear the date of signature of each
stockholder or member who signs the consent and no written consent shall be
effective to take the corporate action referred to therein unless, within sixty
days of the earliest dated consent delivered in the manner required by law 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 or members are recorded. Delivery made
to the Corporation's registered office shall be by hand or by certified or
registered mail, return receipt requested. [Section 228(a), (c).]
4
<PAGE> 9
ARTICLE II
BOARD OF DIRECTORS
Section 2.01. General Powers. Except as may otherwise be
provided by law, by the Certificate of Incorporation or by these By-Laws, the
property, affairs and business of the Corporation shall be managed by or under
the direction of the Board of Directors and the Board of Directors may exercise
all the powers of the Corporation. [Section 141(a).]
Section 2.02. Number and Term of Office. The number of
Directors constituting the entire Board of Directors shall be twelve (12) which
number may be modified from time to time by resolution of the Board of
Directors, but in no event shall the number of Directors be less than one(1).
Each Director (whenever elected) shall hold office until his successor has been
duly elected and qualified, or until his earlier death, resignation or removal.
[Section 141(b).]
Section 2.03. Election of Directors. Except as otherwise
provided in Sections 2.12 and 2.13 of these By-Laws, the Directors shall be
elected at each annual meeting of the stockholders. If the annual meeting for
the election of Directors is not held on the date designated therefor, the
Directors shall cause the meeting to be held as soon thereafter as convenient.
At each meeting of the stockholders for the election of Directors, provided a
quorum is present, the Directors shall be elected by a plurality of the votes
validly cast in such election. [Sections 211(b), (c), 216.]
Section 2.04. Annual and Regular Meetings. The annual meeting
of the Board of Directors for the purpose of electing officers and for the
transaction of such other business as may come before the meeting shall be held
as soon as possible following adjournment of the annual meeting of the
stockholders at the place of such annual meeting of the stockholders. Notice of
such annual meeting of the Board of Directors need not be given. The Board of
Directors from time to time may by resolution provide for the holding of
regular meetings and fix the place (which may be within or without the State of
Delaware) and the date and hour of such meetings. Notice of regular meetings
need not be given, provided, however, that if the Board of Directors shall fix
or change the time or place of any regular meeting, notice of such action shall
be mailed promptly, or sent by telegram, radio or cable, to each Director who
shall not have been present at the meeting at which such action was taken,
addressed to him at his usual place of business, or shall be delivered to him
personally. Notice of such action need not be given to any Director who
5
<PAGE> 10
attends the first regular meeting after such action is taken without protesting
the lack of notice to him, prior to or at the commencement of such meeting, or
to any Director who submits a signed waiver of notice, whether before or after
such meeting. [Sections 141(g), 229.]
Section 2.05. Special Meetings; Notice. Special meetings of
the Board of Directors shall be held whenever called by the Chairman and Chief
Executive Officer or by a majority of the Directors then in office, at such
place (within or without the State of Delaware), date and hour as may be
specified in the respective notices or waivers of notice of such meetings.
Special meetings of the Board of Directors may be called on 24 hours' notice,
if notice is given to each Director personally or by telephone or telegram, or
on five days' notice, if notice is mailed to each Director, addressed to him at
his usual place of business. Notice of any special meeting need not be given to
any Director who attends such meeting without protesting the lack of notice to
him, prior to or at the commencement of such meeting, or to any Director who
submits a signed waiver of notice, whether before or after such meeting, and
any business may be transacted thereat. [Sections 141(g), 229.]
Section 2.06. Quorum; Voting. At all meetings of the Board
of Directors, the presence of a majority of the total then authorized number of
Directors shall constitute a quorum for the transaction of business. Except as
otherwise required by law, the vote of a majority of the Directors present at
any meeting at which a quorum is present shall be the act of the Board of
Directors. [Section 141(b).]
Section 2.07. Adjournment. A majority of the Directors
present, whether or not a quorum is present, may adjourn any meeting of the
Board of Directors to another time or place. No notice need be given of any
adjourned meeting unless the time and place of the adjourned meeting are not
announced at the time of adjournment, in which case notice conforming to the
requirements of Section 2.05 shall be given to each Director.
Section 2.08. Action Without a Meeting. Any action required
or permitted to be taken at any meeting of the Board of Directors may be taken
without a meeting if all members of the Board of Directors consent thereto in
writing, and such writing or writings are filed with the minutes of proceedings
of the Board of Directors. [Section 141(f).]
Section 2.09. Regulations; Manner of Acting. To the extent
consistent with applicable law, the Certificate of Incorporation and these
By-Laws, the Board of Directors may adopt such rules and regulations for the
conduct of meetings of the Board of Directors and for the management of the
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property, affairs and business of the Corporation as the Board of Directors may
deem appropriate. The Directors shall act only as a Board, and the individual
Directors shall have no power as such.
Section 2.10. Action by Telephonic Communications. Members of
the Board of Directors may participate in a meeting of the Board of Directors
by means of conference telephone or similar communications equipment by means
of which all persons participating in the meeting can hear each other, and
participation in a meeting pursuant to this provision shall constitute presence
in person at such meeting. [Section 141(i).]
Section 2.11. Resignations. Any Director may resign at any
time by delivering a written notice of resignation, signed by such Director, to
the Chairman and Chief Executive Officer and a copy of such notice to the
Secretary. Unless otherwise specified therein, such resignation shall take
effect upon delivery. [Section 141(b).]
Section 2.12. Removal of Directors. Any Director may be
removed at any time, either for or without cause, upon the affirmative vote of
the holders of a majority of the outstanding shares of stock of the Corporation
entitled to vote for the election of such Director, cast at a special meeting
of stockholders called for the purpose. Any vacancy in the Board of Directors
caused by any such removal may be filled at such meeting by the stockholders
entitled to vote for the election of the Director so removed in accordance with
Section 2.13 hereof. If such stockholders do not fill such vacancy at such
meeting (or in the written instrument effecting such removal, if such removal
was effected by consent without a meeting), such vacancy may be filled in the
manner provided in Section 2.13 of these By-Laws. [Section 141(k).]
Section 2.13. Vacancies and Newly Created Directorships. If
any vacancies shall occur in the Board of Directors, by reason of death,
resignation, removal or otherwise, or if the authorized number of Directors
shall be increased, the Directors then in office shall continue to act, and
such vacancies and newly created directorships may be filled by a majority of
the Directors then in office, although less than a quorum. A Director elected
to fill a vacancy or a newly created directorship shall hold office until his
successor has been elected and qualified or until his earlier death,
resignation or removal. Any such vacancy or newly created directorship may also
be filled at any time by vote of the stockholders. [Sections 141(b), 223.]
Section 2.14. Compensation. The amount, if any, which each
Director shall be entitled to receive as compensation for his services as such
shall be fixed from time to time by resolution of the Board of Directors,
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provided that (a) no director who is an officer or employee of CDR at any time
that CDR is providing consulting services to the Corporation or one or more of
its subsidiaries and (b) no director who is an officer or employee of the
Corporation, shall be entitled to receive any compensation for his or her
services as a Director (although such Director shall be entitled to be
reimbursed for any reasonable out-of-pocket expenses incurred in connection
with his or her services as a Director). [Section 141(h).]
Section 2.15. Reliance on Accounts and Reports, etc. A
Director, or a member of any Committee designated by the Board of Directors
shall, in the performance of his duties, be fully protected in relying in good
faith upon the records of the Corporation and upon information, opinions,
reports or statements presented to the Corporation by any of the Corporation's
officers or employees, or Committees designated by the Board of Directors, or
by any other person as to the matters the member reasonably believes are within
such other person's professional or expert competence and who has been selected
with reasonable care by or on behalf of the Corporation. [Section 141(e).]
ARTICLE III
EXECUTIVE COMMITTEE AND OTHER COMMITTEES
Section 3.01. How Constituted. The Board of Directors may, by
resolution adopted by a majority of the whole Board, designate one or more
Committees, including an Executive Committee, each such Committee to consist of
such number of Directors as from time to time may be fixed by the Board of
Directors. Any Committee may be abolished or redesignated from time to time by
the Board of Directors. The Board of Directors may designate one or more
Directors as alternate members of any such Committee, who may replace any
absent or disqualified member or members at any meeting of such Committee.
Members (and alternate members, if any) of each such Committee may be
designated at the annual meeting of the Board of Directors. Each member (and
each alternate member) of any such Committee (whether designated at an annual
meeting of the Board of Directors or to fill a vacancy or otherwise) shall hold
office until his successor shall have been designated or until he shall cease
to be a Director, or until his earlier death, resignation or removal. [Section
141(b), (c).]
Section 3.02. Powers. During the intervals between the
meetings of the Board of Directors, the Executive Committee, except as
otherwise provided in this section, shall have and may exercise all the powers
and authority of the Board of Directors in the management of the property,
affairs and business of the Corporation. Each such other Committee, except as
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<PAGE> 13
otherwise provided in this section, shall have and may exercise such powers of
the Board of Directors as may be provided by resolution or resolutions of the
Board of Directors. Neither the Executive Committee nor any such other
Committee shall have the power or authority:
(a) to amend the Certificate of Incorporation (except that a
Committee may, to the extent authorized in the resolution or
resolutions providing for the issuance of shares of stock adopted by
the Board of Directors as provided in Section 151(a) of the DGCL, fix
the designations and any of the preferences or rights of such shares
relating to dividends, redemption, dissolution, any distribution of
assets of the Corporation or the conversion into, or the exchange of
such shares for, shares of any other class or classes or any other
series of the same or any other class or classes of stock of the
Corporation or fix the number of shares of any series of stock or
authorize the increase or decrease of the shares of any series);
(b) to adopt an agreement of merger or consolidation or a
certificate of ownership or merger;
(c) to recommend to the stockholders the sale, lease or
exchange of all or substantially all of the Corporation's property and
assets;
(d) to recommend to the stockholders a dissolution of the
Corporation or a revocation of a dissolution;
(e) to declare a dividend;
(f) to authorize the issuance of stock;
(g) to remove the President and Chief Operating Officer of
the Corporation or a Director;
(h) (i) to authorize the Corporation to enter into or amend
any agreement for the borrowing of funds which provides for additional
indebtedness in excess of $10 million or (ii) to authorize a material
modification of any existing facility, unless in the Executive
Committee's good faith judgment, such modification is not adverse to
the Corporation;
(i) to authorize the Corporation to enter into any guarantee
of indebtedness in excess of $10 million;
(j) to authorize any new compensation or benefit program;
9
<PAGE> 14
(k) to appoint or discharge the Corporation's independent
public accountants;
(l) to authorize the annual operating plan, annual capital
expenditure plan and strategic plan;
(m) to abolish or usurp the authority of the Board of
Directors; or
(n) to amend these By-Laws of the Corporation.
The Executive Committee shall have, and any such other Committee may be granted
by the Board of Directors, power to authorize the seal of the Corporation to be
affixed to any or all papers which may require it. [Section 141(c).]
Section 3.03. Proceedings. Each such Committee may fix its
own rules of procedure and may meet at such place (within or without the State
of Delaware), at such time and upon such notice, if any, as it shall determine
from time to time. Each such Committee shall keep minutes of its proceedings
and shall report such proceedings to the Board of Directors at the meeting of
the Board of Directors next following any such proceedings.
Section 3.04. Quorum and Manner of Acting. Except as may be
otherwise provided in the resolution creating such Committee, at all meetings
of any Committee the presence of members (or alternate members) constituting a
majority of the total then authorized membership of such Committee shall
constitute a quorum for the transaction of business. The act of the majority of
the members present at any meeting at which a quorum is present shall be the
act of such Committee. Any action required or permitted to be taken at any
meeting of any such Committee may be taken without a meeting, if all members of
such Committee shall consent to such action in writing and such writing or
writings are filed with the minutes of the proceedings of the Committee. The
members of any such Committee shall act only as a Committee, and the individual
members of such Committee shall have no power as such. [Section 141(b),
(c),(f).]
Section 3.05. Action by Telephonic Communications. Members of
any Committee designated by the Board of Directors may participate in a meeting
of such Committee by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in a meeting pursuant to this provision shall
constitute presence in person at such meeting. [Section 141(i).]
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<PAGE> 15
Section 3.06. Absent or Disqualified Members. In the absence
or disqualification of a member of any Committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the Board
of Directors to act at the meeting in the place of any such absent or
disqualified member. [Section 141(c).]
Section 3.07. Resignations. Any member (and any alternate
member) of any Committee may resign at any time by delivering a written notice
of resignation, signed by such member, to the Chairman and Chief Executive
Officer. Unless otherwise specified therein, such resignation shall take effect
upon delivery. [Section 141(b).]
Section 3.08. Removal. Any member (and any alternate member)
of any Committee may be removed at any time, either for or without cause, by
resolution adopted by a majority of the whole Board of Directors.
Section 3.09. Vacancies. If any vacancy shall occur in any
Committee, by reason of disqualification, death, resignation, removal or
otherwise, the remaining members (and any alternate members) shall continue to
act, and any such vacancy may be filled by the Board of Directors.
ARTICLE IV
OFFICERS
Section 4.01. Number. The officers of the Corporation shall
be chosen by the Board of Directors and shall be a Chairman and Chief Executive
Officer, a President and Chief Operating Officer, one or more Vice Presidents,
a Secretary and a Treasurer. The Board of Directors also may elect a Chief
Financial Officer and one or more Assistant Secretaries and Assistant
Treasurers in such numbers as the Board of Directors may determine. Any number
of offices may be held by the same person. No officer need be a Director of the
Corporation. [Section 142(a), (b).]
Section 4.02. Election. Unless otherwise determined by the
Board of Directors, the officers of the Corporation shall be elected by the
Board of Directors at the annual meeting of the Board of Directors, and shall
be elected to hold office until the next succeeding annual meeting of the Board
of Directors. In the event of the failure to elect officers at such annual
meeting, officers may be elected at any regular or special meeting of the Board
of Directors. Each officer shall hold office until his successor has been
elected
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<PAGE> 16
and qualified, or until his earlier death, resignation or removal. In the event
of a vacancy in the office of a Vice President, Secretary, Assistant Secretary,
Treasurer, or Assistant Treasurer, the Chairman and Chief Executive Officer may
appoint a replacement to serve until the next meeting of the Board of Directors
where a successor is elected and qualified. [Section 142(b).]
Section 4.03. Salaries. The salaries of all officers and
agents of the Corporation shall be fixed by the Board of Directors.
Section 4.04. Removal and Resignation; Vacancies. Any officer
may be removed for or without cause at any time by the Board of Directors. Any
officer may resign at any time by delivering a written notice of resignation,
signed by such officer, to the Board of Directors or the Chairman and Chief
Executive Officer. Unless otherwise specified therein, such resignation shall
take effect upon delivery. Any vacancy occurring in any office of the
Corporation by death, resignation, removal or otherwise, shall be filled by the
Board of Directors. [Section 142(b), (e).]
Section 4.05. Authority and Duties of Officers. The officers
of the Corporation shall have such authority and shall exercise such powers and
perform such duties as may be specified in these By-Laws, except that in any
event each officer shall exercise such powers and perform such duties as may be
required by law. [Section 142(a).]
Section 4.06. The Chairman and Chief Executive Officer. The
Chairman and Chief Executive Officer shall preside at all meetings of the
stockholders at which he is present, shall be the chief executive officer of
the Corporation, shall have, subject to the direction of, and pursuant to
resolutions approved by, the Board of Directors, general control and
supervision of the policies and operations of the Corporation, shall see that
all orders and resolutions of the Board of Directors are carried into effect
and shall report to the Board of Directors. He shall manage and administer the
Corporation's business and affairs and shall also perform all duties and
exercise all powers usually pertaining to the office of a chief executive
officer of a corporation. He shall have the authority to sign, subject to
general or specific resolutions approved by the Board of Directors, in the name
and on behalf of the Corporation, checks, orders, contracts, leases, notes,
drafts and other documents and instruments in connection with the business of
the Corporation, and together with the Secretary or an Assistant Secretary,
conveyances of real estate and other documents and instruments to which the
seal of the Corporation is affixed. He shall have the authority to cause the
employment or appointment of such employees and agents of the Corporation as
the conduct of the business of the Corporation may require, to fix their
compensation, and
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to remove or suspend any employee or agent elected or appointed by the Chairman
and Chief Executive Officer or the Board of Directors. The Chairman and Chief
Executive Officer shall perform such other duties and have such other powers as
the Board of Directors may from time to time prescribe.
Section 4.07. The President and Chief Operating Officer. The
President and Chief Operating Officer shall be the chief operating officer of
the Corporation and shall perform, in general, all duties incident to the
office of the President and Chief Operating Officer and shall be responsible
for the operations of the Corporation, including manufacturing, engineering,
marketing, distribution, sales, labor relations and administrative
responsibilities and such other duties as may be specified in these By-Laws or
as may be assigned to him from time to time by the Chairman and Chief Executive
Officer. The President and Chief Operating Officer shall report to the Chairman
and Chief Executive Officer. In the absence of the Chairman and Chief Executive
Officer, the duties of the Chairman and Chief Executive Officer shall be
performed and his powers may be exercised by the President and Chief Operating
Officer, subject in any case to review and superseding action by the Chairman
and Chief Executive Officer.
Section 4.08 The Vice Presidents. Each Vice President shall
perform such duties and exercise such powers as may be assigned to him from
time to time by the Chairman and Chief Executive Officer or by the President
and Chief Operating Officer.
Section 4.09. The Secretary. The Secretary shall have the
following powers and duties:
(a) He shall keep or cause to be kept a record of all the
proceedings of the meetings of the stockholders and of the Board of
Directors in books provided for that purpose. [Section 142(a).]
(b) He shall cause all notices to be duly given in accordance
with the provisions of these By-Laws and as required by law.
(c) Whenever any Committee shall be appointed pursuant to a
resolution of the Board of Directors, he shall furnish a copy of such
resolution to the members of such Committee.
(d) He shall be the custodian of the records and of the seal
of the Corporation and cause such seal (or a facsimile thereof) to be
affixed to all certificates representing shares of the Corporation
prior to the issuance thereof and to all instruments the execution of
which on behalf
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of the Corporation under its seal shall have been duly authorized in
accordance with these By-Laws, and when so affixed he may attest the
same.
(e) He shall properly maintain and file all books, reports,
statements, certificates and all other documents and records required
by law, the Certificate of Incorporation or these By-Laws.
(f) He shall have charge of the stock books and ledgers of
the Corporation and shall cause the stock and transfer books to be
kept in such manner as to show at any time the number of shares of
stock of the Corporation of each class issued and outstanding, the
names (alphabetically arranged) and the addresses of the holders of
record of such shares, the number of shares held by each holder and
the date as of which each became such holder of record.
(g) He shall sign (unless the Treasurer, an Assistant
Treasurer or Assistant Secretary shall have signed) certificates
representing shares of the Corporation the issuance of which shall
have been authorized by the Board of Directors.
(h) He shall perform, in general, all duties incident to the
office of secretary and such other duties as may be specified in these
By-Laws or as may be assigned to him from time to time by the Board of
Directors or the President and Chief Operating Officer.
Section 4.10. The Chief Financial Officer. The Chief
Financial Officer shall be the chief financial officer of the Corporation and
shall have the following powers and duties:
(a) He shall have charge and supervision over and be
responsible for the moneys, securities, receipts and disbursements of
the Corporation, and shall keep or cause to be kept full and accurate
records of all receipts of the Corporation.
(b) He shall render to the Board of Directors whenever
requested, a statement of the financial condition of the Corporation
and of all his transactions as Chief Financial Officer, and render a
full financial report at the annual meeting of the stockholders, if
called upon to do so.
(c) He shall be empowered from time to time to require from
all officers or agents of the Corporation reports or statements giving
such
14
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information as he may desire with respect to any and all financial
transactions of the Corporation.
(d) He shall perform, in general, all duties incident to the office of
chief financial officer and such other duties as may be specified in
these By-Laws or as may be assigned to him from time to time by the
Board of Directors or the President and Chief Operating Officer.
(e) The Chief Financial Officer shall report to the President
and Chief Operating Officer.
(f) The President and Chief Operating Officer shall carry out
all of the duties and responsibilities under this Section 4.10 if the
Corporation has no Chief Financial Officer.
Section 4.11. The Treasurer. The Treasurer shall be the
treasurer of the Corporation and shall have the following powers and duties:
(a) He shall cause the moneys and other valuable effects of
the Corporation to be deposited in the name and to the credit of the
Corporation in such banks or trust companies or with such bankers or
other depositories as shall be selected in accordance with Section
8.05 of these By-Laws.
(b) He shall cause the moneys of the Corporation to be
disbursed by checks or drafts (signed as provided in Section 8.06 of
these By-Laws) upon the authorized depositories of the Corporation and
cause to be taken and preserved proper vouchers for all moneys
disbursed.
(c) He may sign (unless an Assistant Treasurer or the
Secretary or an Assistant Secretary shall have signed) certificates
representing stock of the Corporation the issuance of which shall have
been authorized by the Board of Directors.
(d) He shall perform, in general, all duties incident to the
office of treasurer and such other duties as may be specified in these
By-Laws or as may be assigned to him from time to time by the Board of
Directors or the Chief Financial Officer, to whom he shall report.
Section 4.12. Additional Officers. The Board of Directors may
appoint such other officers and agents as it may deem appropriate, and such
other officers and agents shall hold their offices for such terms and shall
exercise such powers and perform such duties as may be determined from time
15
<PAGE> 20
to time by the Board of Directors. The Board of Directors from time to time may
delegate to any officer or agent the power to appoint subordinate officers or
agents and to prescribe their respective rights, terms of office, authorities
and duties. Any such officer or agent may remove any such subordinate officer
or agent appointed by him, for or without cause. [Section 142(a), (b).]
Section 4.13. Security. The Board of Directors may require
any officer, agent or employee of the Corporation to provide security for the
faithful performance of his duties, in such amount and of such character as may
be determined from time to time by the Board of Directors. [Section 142(c).]
ARTICLE V
CAPITAL STOCK
Section 5.01. Certificates of Stock. The shares of the
Corporation shall be represented by certificates, provided that the Board of
Directors may provide by resolution or resolutions that some or all of any or
all classes or series of the stock of the Corporation shall be uncertificated
shares. Any such resolution shall not apply to shares represented by a
certificate until each certificate is surrendered to the Corporation.
Notwithstanding the adoption of such a resolution by the Board of Directors,
every holder of stock in the Corporation represented by certificates and upon
request every holder of uncertificated shares shall be entitled to have a
certificate signed by, or in the name of the Corporation, by the Chairman and
Chief Executive Officer, the President and Chief Operating Officer or a Vice
President, and by the Treasurer or an Assistant Treasurer, or the Secretary or
an Assistant Secretary, representing the number of shares registered in
certificate form. Such certificate shall be in such form as the Board of
Directors may determine, to the extent consistent with applicable law, the
Certificate of Incorporation and these By-Laws. [Section 158.]
Section 5.02. Signatures; Facsimile. Any or all of such
signatures on the certificate may be a facsimile, engraved or printed, to the
extent permitted by law. In case any officer, transfer agent or registrar who
has signed, or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if he were such officer, transfer agent or registrar at the date of issue.
[Section 158.]
Section 5.03. Lost, Stolen or Destroyed Certificates. The
Board of Directors may direct that a new certificate be issued in place of any
certificate theretofore issued by the Corporation alleged to have been lost,
stolen or
16
<PAGE> 21
destroyed, upon delivery to the Board of Directors of an affidavit of the owner
or owners of such certificate, setting forth such allegation. The Board of
Directors may require the owner of such lost, stolen or destroyed certificate,
or his legal representative, to give the Corporation a bond sufficient to
indemnify it against any claim that may be made against it on account of the
alleged loss, theft or destruction of any such certificate or the issuance of
any such new certificate. [Section 167.]
Section 5.04. Transfer of Stock. Upon surrender to the
Corporation or the transfer agent of the Corporation of a certificate for
shares, duly endorsed or accompanied by appropriate evidence of succession,
assignment or authority to transfer, the Corporation shall issue a new
certificate to the person entitled thereto, cancel the old certificate and
record the transaction upon its books. Within a reasonable time after the
transfer of uncertificated stock, the Corporation shall send to the registered
owner thereof a written notice containing the information required to be set
forth or stated on certificates pursuant to Sections 151, 156, 202(a) or 218(a)
of the DGCL. Subject to the provisions of the Certificate of Incorporation and
these By-Laws, the Board of Directors may prescribe such additional rules and
regulations as it may deem appropriate relating to the issue, transfer and
registration of shares of the Corporation. [Section 151(f).]
Section 5.05. Record Date. In order that the Corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, the Board of Directors may fix a
record date, which record date shall not precede the date on which the
resolution fixing the record date is adopted by the Board of Directors, and
which shall not be more than sixty nor less than ten days before the date of
such meeting. A determination of stockholders of record entitled to notice of
or to vote at a meeting of stockholders shall apply to any adjournment of the
meeting, provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
In order that the Corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting, the Board
of Directors 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
of Directors, and which date shall not be more than ten days after the date
upon which the resolution fixing the record date is adopted by the Board of
Directors. If no record date has been fixed by the Board of Directors, the
record date for determining stockholders entitled to consent to corporate
action in writing without a meeting, when no prior action by the board of
directors is required by law, shall be the first date on which a signed written
consent setting forth the
17
<PAGE> 22
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 of Directors and prior action by the Board of Directors is required
by law, 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 of Directors adopts the resolution taking such
prior action.
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 of Directors 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 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 of Directors adopts the resolution relating thereto.
[Section 213.]
Section 5.06. Registered Stockholders. Prior to due surrender
of a certificate for registration of transfer, the Corporation may treat the
registered owner as the person exclusively entitled to receive dividends and
other distributions, to vote, to receive notice and otherwise to exercise all
the rights and powers of the owner of the shares represented by such
certificate, and the Corporation shall not be bound to recognize any equitable
or legal claim to or interest in such shares on the part of any other person,
whether or not the Corporation shall have notice of such claim or interests.
Whenever any transfer of shares shall be made for collateral security, and not
absolutely, it shall be so expressed in the entry of the transfer if, when the
certificates are presented to the Corporation for transfer or uncertificated
shares are requested to be transferred, both the transferor and transferee
request the Corporation to do so. [Section 159.]
Section 5.07. Transfer Agent and Registrar. The Board of
Directors may appoint one or more transfer agents and one or more registrars,
and may require all certificates representing shares to bear the signature of
any such transfer agents or registrars.
18
<PAGE> 23
ARTICLE VI
INDEMNIFICATION
Section 6.01. Nature of Indemnity. The Corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he is or
was or has agreed to become a director, officer, employee or agent of the
Corporation, or is or was serving or has agreed to serve at the request of the
Corporation as a director, officer, employee or agent, of another corporation,
partnership, joint venture, trust or other enterprise, or by reason of any
action alleged to have been taken or omitted in such capacity, and may
indemnify any person who was or is a party or is threatened to be made a party
to such an action, suit or proceeding by reason of the fact that he is or was
or has agreed to become an employee or agent of the Corporation, or is or was
serving or has agreed to serve at the request of the Corporation as an 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 or on his
behalf in connection with such action, suit or proceeding and any appeal
therefrom, if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Corporation, and, with
respect to any criminal action or proceeding had no reasonable cause to believe
his conduct was unlawful; except that in the case of an action or suit by or in
the right of the Corporation to procure a judgment in its favor (1) such
indemnification shall be limited to expenses (including attorneys' fees)
actually and reasonably incurred by such person in the defense or settlement of
such action or suit, and (2) no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the Corporation unless and only to the extent that the Delaware Court
of Chancery or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Delaware Court of Chancery or
such other court shall deem proper.
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
19
<PAGE> 24
criminal action or proceeding, had reasonable cause to believe that his conduct
was unlawful. [Section 145(a), (b).]
Section 6.02. Successful Defense. To the extent that a
director, officer, employee or agent of the Corporation has been successful on
the merits or otherwise in defense of any action, suit or proceeding referred
to in Section 6.01 hereof or in defense of any claim, issue or matter therein,
he shall be indemnified against expenses (including attorneys' fees) actually
and reasonably incurred by him in connection therewith. [Section 145(c).]
Section 6.03. Determination That Indemnification Is Proper.
Any indemnification under Section 6.01 hereof (unless ordered by a court) shall
be made by the Corporation unless a determination is made that indemnification
of the director, officer, employee or agent is not proper in the circumstances
because he has not met the applicable standard of conduct set forth in Section
6.01 hereof. Any such determination shall be made (1) by a majority vote of the
directors who are not parties to such action, suit or proceeding, even though
less than a quorum, or (2) if there are no such directors, or if such directors
so direct, by independent legal counsel in a written opinion, or (3) by the
stockholders. [Section 145(d).]
Section 6.04. Advance Payment of Expenses. Expenses
(including attorneys' fees) incurred by a director or officer in defending any
civil, criminal, administrative or investigative action, suit or proceeding
shall be paid by the Corporation in advance of the final disposition of such
action, suit or proceeding upon receipt of an undertaking by or on behalf of
the director or officer to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the Corporation as
authorized in this Article. Such expenses (including attorneys' fees) incurred
by other employees and agents may be so paid upon such terms and conditions, if
any, as the Board of Directors deems appropriate. The Board of Directors may
authorize the Corporation's counsel to represent such director, officer,
employee or agent in any action, suit or proceeding, whether or not the
Corporation is a party to such action, suit or proceeding. [Section 145(e).]
Section 6.05. Procedure for Indemnification of Directors and
Officers. Any indemnification of a person seeking indemnification of the
Corporation under Sections 6.01 and 6.02, or advance of costs, charges and
expenses to such person under Section 6.04 of this Article, shall be made
promptly, and in any event within 30 days, upon the written request of such
person. If a determination by the Corporation that such person is entitled to
indemnification pursuant to this Article is required, and the Corporation fails
to respond within sixty days to a written request for indemnity, the
Corporation
20
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shall be deemed to have approved such request. If the Corporation denies a
written request for indemnity or advancement of expenses, in whole or in part,
or if payment in full pursuant to such request is not made within 30 days, the
right to indemnification or advances as granted by this Article shall be
enforceable by the indemnified person in any court of competent jurisdiction.
Such person's costs and expenses incurred in connection with successfully
establishing his right to indemnification, in whole or in part, in any such
action shall also be indemnified by the Corporation. It shall be a defense to
any such action (other than an action brought to enforce a claim for the
advance of costs, charges and expenses under Section 6.04 of this Article where
the required undertaking, if any, has been received by the Corporation) that
the claimant has not met the standard of conduct set forth in Section 6.01 of
this Article, but the burden of proving such defense shall be on the
Corporation. Neither the failure of the Corporation (including its Board of
Directors, its independent legal counsel, and its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he has met the applicable
standard of conduct set forth in Section 6.01 of this Article, nor the fact
that there has been an actual determination by the Corporation (including its
Board of Directors, its independent legal counsel, and its stockholders) that
the claimant has not met such applicable standard of conduct, shall be a
defense to the action or create a presumption that the claimant has not met the
applicable standard of conduct.
Section 6.06. Survival; Preservation of Other Rights. The
foregoing indemnification provisions shall be deemed to be a contract between
the Corporation and each director, officer, employee and agent who serves in
any such capacity at any time while these provisions as well as the relevant
provisions of the Delaware Corporation Law are in effect and any repeal or
modification thereof shall not affect any right or obligation then existing
with respect to any state of facts then or previously existing or any action,
suit or proceeding previously or thereafter brought or threatened based in
whole or in part upon any such state of facts. Such a "contract right" may not
be modified retroactively without the consent of such director, officer,
employee or agent.
The indemnification and advancement of expenses provided by
this Article VI shall not be deemed exclusive of any other rights to which
those indemnified may be entitled under any by-law, 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, and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person. [Section 145(f), (j).]
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Section 6.07. Insurance. The Corporation shall purchase and
maintain insurance on behalf of any person who is or was or has agreed to
become a director or officer of the Corporation, or is or was serving at the
request of the Corporation as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him and incurred by him or on his behalf 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, provided that such insurance is available on acceptable terms, which
determination shall be made by a vote of a majority of the entire Board of
Directors. [Section 145(g).]
Section 6.08. Severability. If this Article or any portion
hereof shall be invalidated on any ground by any court of competent
jurisdiction, then the Corporation shall nevertheless indemnify each director
or officer and may indemnify each employee or agent of the Corporation as to
costs, charges and expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement with respect to any action, suit or proceeding,
whether civil, criminal, administrative or investigative, including an action
by or in the right of the Corporation, to the fullest extent permitted by any
applicable portion of this Article that shall not have been invalidated and to
the fullest extent permitted by applicable law.
ARTICLE VII
OFFICES
Section 7.01. Registered Office. The registered office of the
Corporation in the State of Delaware shall be located at Corporation Trust
Center, 1209 Orange Street in the City of Wilmington, County of New Castle.
Section 7.02. Other Offices. The Corporation may maintain
offices or places of business at such other locations within or without the
State of Delaware as the Board of Directors may from time to time determine or
as the business of the Corporation may require.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.01. Dividends. Subject to any applicable provisions
of law and the Certificate of Incorporation, dividends upon the shares of the
Corporation may be declared by the Board of Directors at any regular or special
22
<PAGE> 27
meeting of the Board of Directors and any such dividend may be paid in cash,
property, or shares of the Corporation's Capital Stock; provided that stock
dividends on the Corporation's Class A Common Stock shall be paid in shares of
Class A Common Stock and dividends on the Corporation's Class B Common Stock
shall be paid in shares of Class B Common Stock.
A member of the Board of Directors, or a member of any
Committee designated by the Board of Directors shall be fully protected in
relying in good faith upon the records of the Corporation and upon such
information, opinions, reports or statements presented to the Corporation by
any of its officers or employees, or Committees of the Board of Directors, or
by any other person as to matters the director reasonably believes are within
such other person's professional or expert competence and who has been selected
with reasonable care by or on behalf of the Corporation, as to the value and
amount of the assets, liabilities and/or net profits of the Corporation, or any
other facts pertinent to the existence and amount of surplus or other funds
from which dividends might properly be declared and paid. [Sections 170, 172,
173.]
Section 8.02. Reserves. There may be set aside out of any
funds of the Corporation available for dividends such sum or sums as the Board
of Directors from time to time, in its absolute discretion, thinks proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation or for such other
purpose as the Board of Directors shall think conducive to the interest of the
Corporation, and the Board of Directors may similarly modify or abolish any
such reserve. [Section 171.]
Section 8.03. Execution of Instruments. The Board of
Directors may authorize the Chairman and Chief Executive Officer or any other
officer or agent to enter into any contract or execute and deliver any
instrument in the name and on behalf of the Corporation. Any such authorization
may be general or limited to specific contracts or instruments.
Section 8.04. Corporate Indebtedness. No loan shall be
contracted on behalf of the Corporation, and no evidence of indebtedness shall
be issued in its name, unless authorized by the Board of Directors or, to the
extent the Executive Committee has the power to authorize such loan or evidence
of indebtedness, the Executive Committee. Such authorization may be general or
confined to specific instances. Loans so authorized may be effected at any time
for the Corporation from any bank, trust company or other institution, or from
any firm, corporation or individual. All bonds, debentures, notes and other
obligations or evidences of indebtedness of the Corporation
23
<PAGE> 28
issued for such loans shall be made, executed and delivered as the Board of
Directors or the Executive Committee, as the case may be, shall authorize. When
so authorized by the Board of Directors or the Executive Committee, as the case
may be, any part of or all the properties, including contract rights, assets,
business or good will of the Corporation, whether then owned or thereafter
acquired, may be mortgaged, pledged, hypothecated or conveyed or assigned in
trust as security for the payment of such bonds, debentures, notes and other
obligations or evidences of indebtedness of the Corporation, and of the
interest thereon, by instruments executed and delivered in the name of the
Corporation.
Section 8.05. Deposits. Any funds of the Corporation may be
deposited from time to time in such banks, trust companies or other
depositories as may be determined by the Board of Directors or the Chairman and
Chief Executive Officer or by such officers or agents as may be authorized by
the Board of Directors or the Chairman and Chief Executive Officer to make such
determination.
Section 8.06. Checks. All checks or demands for money and
notes of the Corporation shall be signed by such officer or officers or such
agent or agents of the Corporation, and in such manner, as the Board of
Directors, or the Chairman and Chief Executive Officer from time to time may
determine.
Section 8.07. Sale, Transfer, etc. of Securities. To the
extent authorized by the Board of Directors, the Chairman and Chief Executive
Officer or any other officers designated by the Board of Directors may sell,
transfer, endorse, and assign any shares of stock, bonds or other securities
owned by or held in the name of the Corporation, and may make, execute and
deliver in the name of the Corporation, under its corporate seal, any
instruments that may be appropriate to effect any such sale, transfer,
endorsement or assignment.
Section 8.08. Voting as Stockholder. As directed by
resolution of the Board of Directors or the Executive Committee, (a) the
President and Chief Operating Officer or any Vice President shall have full
power and authority on behalf of the Corporation to attend any meeting of
stockholders of any corporation in which the Corporation may hold stock, and to
act, vote (or execute proxies to vote) and exercise in person or by proxy all
other rights, powers and privileges incident to the ownership of such stock,
and (b) such officers acting on behalf of the Corporation shall have full power
and authority to execute any instrument expressing consent to or dissent from
any action of any such corporation without a meeting. The Board of Directors
may by resolution from time to time confer such power and authority upon any
other person or persons.
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Section 8.09. Fiscal Year. The fiscal year of the Corporation
shall commence on the first day of January of each year (except for the
Corporation's first fiscal year which shall commence on the date of
incorporation) and shall terminate in each case on the last day of December.
Section 8.10. Seal. The seal of the Corporation shall be
circular in form and shall contain the name of the Corporation, the year of its
incorporation and the words "Corporate Seal" and "Delaware". The form of such
seal shall be subject to alteration by the Board of Directors. The seal may be
used by causing it or a facsimile thereof to be impressed, affixed or
reproduced, or may be used in any other lawful manner.
Section 8.11. Books and Records; Inspection. Except to the
extent otherwise required by law, the books and records of the Corporation
shall be kept at such place or places within or without the State of Delaware
as may be determined from time to time by the Board of Directors.
Section 8.12. Definitions.
"CDR" means Clayton, Dubilier & Rice, Inc., a Delaware
corporation.
"Committee": See Section 3.01.
"Executive Committee": See Section 3.01.
ARTICLE IX
AMENDMENT OF BY-LAWS
Section 9.01. Amendment. These By-Laws may be
amended, altered or repealed
(a) by resolution adopted by a majority of the Board of
Directors at any special or regular meeting of the Board if, in the
case of such special meeting only, notice of such amendment,
alteration or repeal is contained in the notice or waiver of notice of
such meeting; or
(b) at any regular or special meeting of the stockholders if,
in the case of such special meeting only, notice of such amendment,
alteration or repeal is contained in the notice or waiver of notice of
such meeting. [Section 109(a).]
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ARTICLE X
CONSTRUCTION
Section 10.01. Construction. In the event of any conflict
between the provisions of these By-Laws as in effect from time to time and the
provisions of the certificate of incorporation of the Corporation as in effect
from time to time, the provisions of such certificate of incorporation shall be
controlling.
26
<PAGE> 1
REMINGTON ARMS COMPANY, INC.
(formerly RACI Acquisition Corporation)
BY-LAWS
As amended and restated on July 27, 1999
<PAGE> 2
REMINGTON ARMS COMPANY, INC.
(formerly RACI Acquisition Corporation)
BY-LAWS
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
<S> <C> <C>
ARTICLE I STOCKHOLDERS
1.01 Annual Meetings ............................................................... 1
1.02 Special Meetings............................................................... 1
1.03 Notice of Meetings; Waiver..................................................... 1
1.04 Quorum......................................................................... 2
1.05 Voting......................................................................... 2
1.06 Voting by Ballot............................................................... 2
1.07 Adjournment.................................................................... 3
1.08 Proxies........................................................................ 3
1.09 Organization; Procedure........................................................ 4
1.10 Consent of Stockholders in Lieu of Meeting..................................... 4
ARTICLE II BOARD OF DIRECTORS
2.01 General Powers................................................................. 5
2.02 Number and Term of Office...................................................... 5
2.03 Election of Directors.......................................................... 5
2.04 Annual and Regular Meetings.................................................... 5
2.05 Special Meetings; Notice....................................................... 6
2.06 Quorum; Voting................................................................. 6
2.07 Adjournment.................................................................... 6
2.08 Action Without a Meeting....................................................... 6
2.09 Regulations; Manner of Acting.................................................. 6
2.10 Action by Telephonic Communications............................................ 7
2.11 Resignations................................................................... 7
2.12 Removal of Directors........................................................... 7
2.13 Vacancies and Newly Created Directorships...................................... 7
2.14 Compensation................................................................... 7
2.15 Reliance on Accounts and Reports, etc.......................................... 8
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE III EXECUTIVE COMMITTEE AND OTHER
COMMITTEES
3.01 How Constituted................................................................ 8
3.02 Powers......................................................................... 8
3.03 Proceedings.................................................................... 10
3.04 Quorum and Manner of Acting.................................................... 10
3.05 Action by Telephonic Communications............................................ 10
3.06 Absent or Disqualified Members................................................. 11
3.07 Resignations................................................................... 11
3.08 Removal........................................................................ 11
3.09 Vacancies...................................................................... 11
ARTICLE IV OFFICERS
4.01 Number......................................................................... 11
4.02 Election....................................................................... 11
4.03 Salaries....................................................................... 12
4.04 Removal and Resignation; Vacancies............................................. 12
4.05 Authority and Duties of Officers............................................... 12
4.06 The Chairman and Chief Executive Officer....................................... 12
4.07 The President and Chief Operating Officer...................................... 13
4.08 The Vice Presidents ........................................................... 13
4.09 The Secretary.................................................................. 13
4.10 The Chief Financial Officer.................................................... 14
4.11 The Treasurer.................................................................. 15
4.12 Additional Officers............................................................ 16
4.13 Security....................................................................... 16
ARTICLE V CAPITAL STOCK
5.01 Certificates of Stock.......................................................... 16
5.02 Signatures; Facsimile.......................................................... 16
5.03 Lost, Stolen or Destroyed Certificates......................................... 16
5.04 Transfer of Stock.............................................................. 17
5.05 Record Date.................................................................... 17
5.06 Registered Stockholders........................................................ 18
5.07 Transfer Agent and Registrar................................................... 18
</TABLE>
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<PAGE> 4
<TABLE>
<S> <C> <C>
ARTICLE VI INDEMNIFICATION
6.01 Nature of Indemnity............................................................ 19
6.02 Successful Defense............................................................. 20
6.03 Determination That Indemnification
Is Proper................................................................... 20
6.04 Advance Payment of Expenses.................................................... 20
6.05 Procedure for Indemnification
of Directors and Officers................................................ 20
6.06 Survival; Preservation of Other Rights......................................... 21
6.07 Insurance...................................................................... 21
6.08 Severability................................................................... 21
ARTICLE VII OFFICES
7.01 Registered Office.............................................................. 22
7.02 Other Offices.................................................................. 22
ARTICLE VIII GENERAL PROVISIONS
8.01 Dividends...................................................................... 23
8.02 Reserves....................................................................... 23
8.03 Execution of Instruments....................................................... 23
8.04 Corporate Indebtedness......................................................... 23
8.05 Deposits....................................................................... 24
8.06 Checks......................................................................... 24
8.07 Sale, Transfer, etc. of Securities............................................. 24
8.08 Voting as Stockholder.......................................................... 24
8.09 Fiscal Year.................................................................... 25
8.10 Seal........................................................................... 25
8.11 Books and Records; Inspection.................................................. 25
8.12 Definitions ................................................................... 25
ARTICLE IX AMENDMENT OF BY-LAWS
9.01 Amendment...................................................................... 25
ARTICLE X CONSTRUCTION
10.01 Construction......................................................................... 26
</TABLE>
iii
<PAGE> 5
REMINGTON ARMS COMPANY, INC.
(formerly RACI Acquisition Corporation)
BY-LAWS
As amended and restated on July 27,1999.
Certain defined terms used herein without definition shall
have the meanings set forth in Section 8.12.
ARTICLE I
STOCKHOLDERS
Section 1.01. Annual Meetings. The annual meeting of the
stockholders of the Corporation for the election of directors and for the
transaction of such other business as properly may come before such meeting
shall be held at such place, either within or without the State of Delaware,
and at such time as shall be designated for the first regularly-scheduled
meeting of the Board of Directors in each calendar year, or at such other date
and hour as may be fixed from time to time by resolution of the Board of
Directors and set forth in the Notice or Waiver of Notice of the meeting.
[Section 211(a), (b).](1)
Section 1.02. Special Meetings. Special meetings of the
stockholders may be called at any time by the Chairman and Chief Executive
Officer or by the Board of Directors. A special meeting shall be called by the
Chairman and Chief Executive Officer or by the Secretary, immediately upon
receipt of a written request therefor by stockholders holding in the aggregate
not less than a majority of the outstanding shares of the Corporation at the
time entitled to vote at any meeting of the stockholders. If such officers or
the Board of Directors shall fail to call such meeting within 20 days after
receipt of such request, any stockholder executing such request may call such
meeting. Such special meetings of the stockholders shall be held at such
places, within or without the State of Delaware, as shall be specified in the
respective notices or waivers of notice thereof. [Section 211(d).]
Section 1.03. Notice of Meetings; Waiver. The Secretary or
any Assistant Secretary shall cause written notice of the place, date and hour
of each meeting of the stockholders, and, in the case of a special meeting, the
purpose or purposes for which such meeting is called, to be given personally or
- --------------------------------
(1) Citations are to the General Corporation Law of the State of Delaware as
in effect on August 15, 1995 (the "DGCL"), and are inserted for reference
only, and do not constitute a part of the By-Laws.
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<PAGE> 6
by mail, not less than ten nor more than sixty days prior to the meeting, to
each stockholder of record entitled to vote at such meeting. If such notice is
mailed, it shall be deemed to have been given to a stockholder when deposited
in the United States mail, postage prepaid, directed to the stockholder at his
address as it appears on the record of stockholders of the Corporation, or, if
he shall have filed with the Secretary of the Corporation a written request
that notices to him be mailed to some other address, then directed to him at
such other address. Such further notice shall be given as may be required by
law.
No notice of any meeting of stockholders need be given to any
stockholder who submits a signed waiver of notice, whether before or after the
meeting. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders need be specified in a written
waiver of notice. The attendance of any stockholder at a meeting of
stockholders shall constitute a waiver of notice of such meeting, except when
the stockholder attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business on the ground that
the meeting is not lawfully called or convened. [Sections 222, 229.]
Section 1.04. Quorum. Except as otherwise required by law or
by the Certificate of Incorporation, the presence in person or by proxy of the
holders of record of a majority of the shares entitled to vote at a meeting of
stockholders shall constitute a quorum for the transaction of business at such
meeting. [Section 216.]
Section 1.05. Voting. If, pursuant to Section 5.05 of these
By-Laws, a record date has been fixed, every holder of record of shares
entitled to vote at a meeting of stockholders shall be entitled to one vote for
each share outstanding in his name on the books of the Corporation at the close
of business on such record date. If no record date has been fixed, then every
holder of record of shares entitled to vote at a meeting of stockholders shall
be entitled to one vote for each share of stock standing in his name on the
books of the Corporation at the close of business on the day next preceding the
day on which notice of the meeting 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. Except as otherwise required by law or by the Certificate of
Incorporation, the vote of a majority of the shares represented in person or by
proxy at any meeting at which a quorum is present shall be sufficient for the
transaction of any business at such meeting. [Sections 212(a), 216.]
Section 1.06. Voting by Ballot. No vote of the stockholders
need be taken by written ballot or conducted by Inspectors of Elections unless
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otherwise required by law. Any vote which need not be taken by ballot may be
conducted in any manner approved by the meeting.
Section 1.07. Adjournment. If a quorum is not present at any
meeting of the stockholders, the stockholders present in person or by proxy
shall have the power to adjourn any such meeting from time to time until a
quorum is present. Notice of any adjourned meeting of the stockholders of the
Corporation need not be given if the place, date and hour thereof are announced
at the meeting at which the adjournment is taken, provided, however, that if
the adjournment is for more than thirty days, or if after the adjournment a new
record date for the adjourned meeting is fixed pursuant to Section 5.05 of
these By-Laws, a notice of the adjourned meeting, conforming to the
requirements of Section 1.03 hereof, shall be given to each stockholder of
record entitled to vote at such meeting. At any adjourned meeting at which a
quorum is present, any business may be transacted that might have been
transacted on the original date of the meeting. [Section 222(c).]
Section 1.08. Proxies. Any stockholder entitled to vote at
any meeting of the stockholders or to express consent to or dissent from
corporate action without a meeting may authorize another person or persons to
vote at any such meeting and express such consent or dissent for him by proxy.
A stockholder may authorize a valid proxy by executing a written instrument
signed by such stockholder, or by causing his or her signature to be affixed to
such writing by any reasonable means including, but not limited to, by
facsimile signature, or by transmitting or authorizing the transmission of a
telegram, cablegram or other means of electronic transmission to the person
designated as the holder of the proxy, a proxy solicitation firm or a like
authorized agent. No such proxy shall be voted or acted upon after the
expiration of three years from the date of such proxy, unless such proxy
provides for a longer period. Every proxy shall be revocable at the pleasure of
the stockholder executing it, except in those cases where applicable law
provides that a proxy shall be irrevocable. A stockholder may revoke any proxy
which is not irrevocable by attending the meeting and voting in person or by
filing an instrument in writing revoking the proxy or by filing another duly
executed proxy bearing a later date with the Secretary. Proxies by telegram,
cablegram or other electronic transmission must either set forth or be
submitted with information from which it can be determined that the telegram,
cablegram or other electronic transmission was authorized by the stockholder.
Any copy, facsimile telecommunication or other reliable reproduction of a
writing or transmission created pursuant to this section may be substituted or
used in lieu of the original writing or transmission for any and all purposes
for which the original writing or transmission could be used, provided that
such copy, facsimile telecommunication or other reproduction shall be a
complete
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<PAGE> 8
reproduction of the entire original writing or transmission. [Section 212(b),
(c),(d),(e).]
Section 1.09. Organization; Procedure. At every meeting of
stockholders the presiding officer shall be the Chairman and Chief Executive
Officer or, in the event of his absence or disability, a presiding officer
chosen by a majority of the stockholders present in person or by proxy. The
Secretary, or in the event of his absence or disability, the Assistant
Secretary, if any, or if there be no Assistant Secretary, in the absence of the
Secretary, an appointee of the presiding officer, shall act as Secretary of the
meeting. The order of business and all other matters of procedure at every
meeting of stockholders may be determined by such presiding officer.
Section 1.10. Consent of Stockholders in Lieu of Meeting. To
the fullest extent permitted by law, whenever the vote of stockholders at a
meeting thereof is required or permitted to be taken for or in connection with
any corporate action, such action may be taken without a meeting, without prior
notice and without a vote of stockholders, if a consent or consents in writing,
setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would
be necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted and 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.
Every written consent shall bear the date of signature of
each stockholder or member who signs the consent and no written consent shall
be effective to take the corporate action referred to therein unless, within
sixty days of the earliest dated consent delivered in the manner required by
law 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 or members are recorded.
Delivery made to the Corporation's registered office shall be by hand or by
certified or registered mail, return receipt requested. [Section 228(a),(c).]
4
<PAGE> 9
ARTICLE II
BOARD OF DIRECTORS
Section 2.01. General Powers. Except as may otherwise be
provided by law, by the Certificate of Incorporation or by these By-Laws, the
property, affairs and business of the Corporation shall be managed by or under
the direction of the Board of Directors and the Board of Directors may exercise
all the powers of the Corporation. [Section 141(a).]
Section 2.02. Number and Term of Office. The number of
Directors constituting the entire Board of Directors shall be twelve (12),
which number may be modified from time to time by resolution of the Board of
Directors, but in no event shall the number of Directors be less than one (1).
Each Director (whenever elected) shall hold office until his successor has been
duly elected and qualified, or until his earlier death, resignation or removal.
[Section 141(b).]
Section 2.03. Election of Directors. Except as otherwise
provided in Sections 2.12 and 2.13 of these By-Laws, the Directors shall be
elected at each annual meeting of the stockholders. If the annual meeting for
the election of Directors is not held on the date designated therefor, the
Directors shall cause the meeting to be held as soon thereafter as convenient.
At each meeting of the stockholders for the election of Directors, provided a
quorum is present, the Directors shall be elected by a plurality of the votes
validly cast in such election. [Sections 211(b),(c),216.]
Section 2.04. Annual and Regular Meetings. The annual meeting
of the Board of Directors for the purpose of electing officers and for the
transaction of such other business as may come before the meeting shall be held
as soon as possible following adjournment of the annual meeting of the
stockholders at the place of such annual meeting of the stockholders. Notice of
such annual meeting of the Board of Directors need not be given. The Board of
Directors from time to time may by resolution provide for the holding of
regular meetings and fix the place (which may be within or without the State of
Delaware) and the date and hour of such meetings. Notice of regular meetings
need not be given, provided, however, that if the Board of Directors shall fix
or change the time or place of any regular meeting, notice of such action shall
be mailed promptly, or sent by telegram, radio or cable, to each Director who
shall not have been present at the meeting at which such action was taken,
addressed to him at his usual place of business, or shall be delivered to him
personally. Notice of such action need not be given to any Director who
5
<PAGE> 10
attends the first regular meeting after such action is taken without protesting
the lack of notice to him, prior to or at the commencement of such meeting, or
to any Director who submits a signed waiver of notice, whether before or after
such meeting. [Sections 141(g), 229.]
Section 2.05. Special Meetings; Notice. Special meetings of
the Board of Directors shall be held whenever called by the Chairman and Chief
Executive Officer or by a majority of the Directors then in office, at such
place (within or without the State of Delaware), date and hour as may be
specified in the respective notices or waivers of notice of such meetings.
Special meetings of the Board of Directors may be called on 24 hours' notice,
if notice is given to each Director personally or by telephone or telegram, or
on five days' notice, if notice is mailed to each Director, addressed to him at
his usual place of business. Notice of any special meeting need not be given to
any Director who attends such meeting without protesting the lack of notice to
him, prior to or at the commencement of such meeting, or to any Director who
submits a signed waiver of notice, whether before or after such meeting, and
any business may be transacted thereat.
[Sections 141(g), 229.]
Section 2.06. Quorum; Voting. At all meetings of the Board of
Directors, the presence of a majority of the total then authorized number of
Directors shall constitute a quorum for the transaction of business. Except as
otherwise required by law, the vote of a majority of the Directors present at
any meeting at which a quorum is present shall be the act of the Board of
Directors. [Section 141(b).]
Section 2.07. Adjournment. A majority of the Directors
present, whether or not a quorum is present, may adjourn any meeting of the
Board of Directors to another time or place. No notice need be given of any
adjourned meeting unless the time and place of the adjourned meeting are not
announced at the time of adjournment, in which case notice conforming to the
requirements of Section 2.05 shall be given to each Director.
Section 2.08. Action Without a Meeting. Any action required
or permitted to be taken at any meeting of the Board of Directors may be taken
without a meeting if all members of the Board of Directors consent thereto in
writing, and such writing or writings are filed with the minutes of proceedings
of the Board of Directors. [Section 141(f).]
Section 2.09. Regulations; Manner of Acting. To the extent
consistent with applicable law, the Certificate of Incorporation and these
By-Laws, the Board of Directors may adopt such rules and regulations for the
conduct of meetings of the Board of Directors and for the management of the
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property, affairs and business of the Corporation as the Board of Directors may
deem appropriate. The Directors shall act only as a Board, and the individual
Directors shall have no power as such.
Section 2.10. Action by Telephonic Communications. Members of
the Board of Directors may participate in a meeting of the Board of Directors
by means of conference telephone or similar communications equipment by means
of which all persons participating in the meeting can hear each other, and
participation in a meeting pursuant to this provision shall constitute presence
in person at such meeting. [Section 141(i).]
Section 2.11. Resignations. Any Director may resign at any
time by delivering a written notice of resignation, signed by such Director, to
the Chairman and Chief Executive Officer and a copy of such notice to the
Secretary. Unless otherwise specified therein, such resignation shall take
effect upon delivery. [Section 141(b).]
Section 2.12. Removal of Directors. Any Director may be
removed at any time, either for or without cause, upon the affirmative vote of
the holders of a majority of the outstanding shares of stock of the Corporation
entitled to vote for the election of such Director, cast at a special meeting
of stockholders called for the purpose. Any vacancy in the Board of Directors
caused by any such removal may be filled at such meeting by the stockholders
entitled to vote for the election of the Director so removed in accordance with
Section 2.13 hereof. If such stockholders do not fill such vacancy at such
meeting (or in the written instrument effecting such removal, if such removal
was effected by consent without a meeting), such vacancy may be filled in the
manner provided in Section 2.13 of these By-Laws. [Section 141(k).]
Section 2.13. Vacancies and Newly Created Directorships. If
any vacancies shall occur in the Board of Directors, by reason of death,
resignation, removal or otherwise, or if the authorized number of Directors
shall be increased, the Directors then in office shall continue to act, and
such vacancies and newly created directorships may be filled by a majority of
the Directors then in office, although less than a quorum. A Director elected
to fill a vacancy or a newly created directorship shall hold office until his
successor has been elected and qualified or until his earlier death,
resignation or removal. Any such vacancy or newly created directorship may also
be filled at any time by vote of the stockholders. [Sections 141(b), 223.]
Section 2.14. Compensation. The amount, if any, which each
Director shall be entitled to receive as compensation for his services as such
shall be fixed from time to time by resolution of the Board of Directors,
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provided that (a) no director who is an officer or employee of CDR at any time
that CDR is providing consulting services to the Corporation or one or more of
its subsidiaries and (b) no director who is an officer or employee of the
Corporation, shall be entitled to receive any compensation for his or her
services as a Director (although such Director shall be entitled to be
reimbursed for any reasonable out-of-pocket expenses incurred in connection
with his or her services as a Director). [Section 141(h).]
Section 2.15. Reliance on Accounts and Reports, etc. A
Director, or a member of any Committee designated by the Board of Directors
shall, in the performance of his duties, be fully protected in relying in good
faith upon the records of the Corporation and upon information, opinions,
reports or statements presented to the Corporation by any of the Corporation's
officers or employees, or Committees designated by the Board of Directors, or
by any other person as to the matters the member reasonably believes are within
such other person's professional or expert competence and who has been selected
with reasonable care by or on behalf of the Corporation. [Section 141(e).]
ARTICLE III
EXECUTIVE COMMITTEE AND OTHER COMMITTEES
Section 3.01. How Constituted. The Board of Directors may, by
resolution adopted by a majority of the whole Board, designate one or more
Committees, including an Executive Committee, each such Committee to consist of
such number of Directors as from time to time may be fixed by the Board of
Directors. Any Committee may be abolished or redesignated from time to time by
the Board of Directors. The Board of Directors may designate one or more
Directors as alternate members of any such Committee, who may replace any
absent or disqualified member or members at any meeting of such Committee.
Members (and alternate members, if any) of each such Committee may be
designated at the annual meeting of the Board of Directors. Each member (and
each alternate member) of any such Committee (whether designated at an annual
meeting of the Board of Directors or to fill a vacancy or otherwise) shall hold
office until his successor shall have been designated or until he shall cease
to be a Director, or until his earlier death, resignation or removal. [Section
141 (b),(c).]
Section 3.02. Powers. During the intervals between the
meetings of the Board of Directors, the Executive Committee, except as
otherwise provided in this section, shall have and may exercise all the powers
and authority of the Board of Directors in the management of the property,
affairs and business of the Corporation. Each such other Committee, except as
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<PAGE> 13
otherwise provided in this section, shall have and may exercise such powers of
the Board of Directors as may be provided by resolution or resolutions of the
Board of Directors. Neither the Executive Committee nor any such other
Committee shall have the power or authority:
(a) to amend the Certificate of Incorporation (except that a
Committee may, to the extent authorized in the resolution or
resolutions providing for the issuance of shares of stock adopted by
the Board of Directors as provided in Section 151(a) of the DGCL, fix
the designations and any of the preferences or rights of such shares
relating to dividends, redemption, dissolution, any distribution of
assets of the Corporation or the conversion into, or the exchange of
such shares for, shares of any other class or classes or any other
series of the same or any other class or classes of stock of the
Corporation or fix the number of shares of any series of stock or
authorize the increase or decrease of the shares of any series);
(b) to adopt an agreement of merger or consolidation or a
certificate of ownership or merger;
(c) to recommend to the stockholders the sale, lease or
exchange of all or substantially all of the Corporation's property and
assets;
(d) to recommend to the stockholders a dissolution of the
Corporation or a revocation of a dissolution;
(e) to declare a dividend;
(f) to authorize the issuance of stock;
(g) to remove the President and Chief Operating Officer of
the Corporation or a Director;
(h) (i) to authorize the Corporation to enter into or amend
any agreement for the borrowing of funds which provides for additional
indebtedness in excess of $10 million or (ii) to authorize a material
modification of any existing facility, unless in the Executive
Committee's good faith judgment, such modification is not adverse to
the Corporation;
(i) to authorize the Corporation to enter into any guarantee
of indebtedness in excess of $10 million;
(j) to authorize any new compensation or benefit program;
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(k) to appoint or discharge the Corporation's independent
public accountants;
(l) to authorize the annual operating plan, annual capital
expenditure plan and strategic plan;
(m) to abolish or usurp the authority of the Board of
Directors; or
(n) to amend these By-Laws of the Corporation.
The Executive Committee shall have, and any such other Committee may be granted
by the Board of Directors, power to authorize the seal of the Corporation to be
affixed to any or all papers which may require it. [Section 141(c).]
Section 3.03. Proceedings. Each such Committee may fix its
own rules of procedure and may meet at such place (within or without the State
of Delaware), at such time and upon such notice, if any, as it shall determine
from time to time. Each such Committee shall keep minutes of its proceedings
and shall report such proceedings to the Board of Directors at the meeting of
the Board of Directors next following any such proceedings.
Section 3.04. Quorum and Manner of Acting. Except as may be
otherwise provided in the resolution creating such Committee, at all meetings
of any Committee the presence of members (or alternate members) constituting a
majority of the total then authorized membership of such Committee shall
constitute a quorum for the transaction of business. The act of the majority of
the members present at any meeting at which a quorum is present shall be the
act of such Committee. Any action required or permitted to be taken at any
meeting of any such Committee may be taken without a meeting, if all members of
such Committee shall consent to such action in writing and such writing or
writings are filed with the minutes of the proceedings of the Committee. The
members of any such Committee shall act only as a Committee, and the individual
members of such Committee shall have no power as such. [Section
141(b),(c),(f).]
Section 3.05. Action by Telephonic Communications. Members of
any Committee designated by the Board of Directors may participate in a meeting
of such Committee by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in a meeting pursuant to this provision shall
constitute presence in person at such meeting. [Section 141(i).]
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Section 3.06. Absent or Disqualified Members. In the absence
or disqualification of a member of any Committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the Board
of Directors to act at the meeting in the place of any such absent or
disqualified member. [Section 141(c).]
Section 3.07. Resignations. Any member (and any alternate
member) of any Committee may resign at any time by delivering a written notice
of resignation, signed by such member, to the Chairman and Chief Executive
Officer. Unless otherwise specified therein, such resignation shall take effect
upon delivery. [Section 141(b).]
Section 3.08. Removal. Any member (and any alternate member)
of any Committee may be removed at any time, either for or without cause, by
resolution adopted by a majority of the whole Board of Directors.
Section 3.09. Vacancies. If any vacancy shall occur in any
Committee, by reason of disqualification, death, resignation, removal or
otherwise, the remaining members (and any alternate members) shall continue to
act, and any such vacancy may be filled by the Board of Directors.
ARTICLE IV
OFFICERS
Section 4.01. Number. The officers of the Corporation shall
be chosen by the Board of Directors and shall be a Chairman and Chief Executive
Officer, a President and Chief Operating Officer, one or more Vice Presidents,
a Secretary and a Treasurer. The Board of Directors also may elect a Chief
Financial Officer and one or more Assistant Secretaries and Assistant
Treasurers in such numbers as the Board of Directors may determine. Any number
of offices may be held by the same person. No officer need be a Director of the
Corporation. [Section 142(a),(b).]
Section 4.02. Election. Unless otherwise determined by the
Board of Directors, the officers of the Corporation shall be elected by the
Board of Directors at the annual meeting of the Board of Directors, and shall
be elected to hold office until the next succeeding annual meeting of the Board
of Directors. In the event of the failure to elect officers at such annual
meeting, officers may be elected at any regular or special meeting of the Board
of Directors. Each officer shall hold office until his successor has been
elected
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and qualified, or until his earlier death, resignation or removal. In the event
of a vacancy in the office of a Vice President, Secretary, Assistant Secretary,
Treasurer, or Assistant Treasurer, the Chairman and Chief Executive Officer may
appoint a replacement to serve until the next meeting of the Board of Directors
where a successor is elected and qualified. [Section 142(b).]
Section 4.03. Salaries. The salaries of all officers and
agents of the Corporation shall be fixed by the Board of Directors.
Section 4.04. Removal and Resignation; Vacancies. Any officer
may be removed for or without cause at any time by the Board of Directors. Any
officer may resign at any time by delivering a written notice of resignation,
signed by such officer, to the Board of Directors or the Chairman and Chief
Executive Officer. Unless otherwise specified therein, such resignation shall
take effect upon delivery. Any vacancy occurring in any office of the
Corporation by death, resignation, removal or otherwise, shall be filled by the
Board of Directors. [Section 142(b),(e).]
Section 4.05. Authority and Duties of Officers. The officers
of the Corporation shall have such authority and shall exercise such powers and
perform such duties as may be specified in these By-Laws, except that in any
event each officer shall exercise such powers and perform such duties as may be
required by law. [Section 142(a).]
Section 4.06. The Chairman and Chief Executive Officer. The
Chairman and Chief Executive Officer shall preside at all meetings of the
stockholders at which he is present, shall be the chief executive officer of
the Corporation, shall have, subject to the direction of, and pursuant to
resolutions approved by, the Board of Directors, general control and
supervision of the policies and operations of the Corporation, shall see that
all orders and resolutions of the Board of Directors are carried into effect
and shall report to the Board of Directors. He shall manage and administer the
Corporation's business and affairs and shall also perform all duties and
exercise all powers usually pertaining to the office of a chief executive
officer of a corporation. He shall have the authority to sign, subject to
general or specific resolutions approved by the Board of Directors, in the name
and on behalf of the Corporation, checks, orders, contracts, leases, notes,
drafts and other documents and instruments in connection with the business of
the Corporation, and together with the Secretary or an Assistant Secretary,
conveyances of real estate and other documents and instruments to which the
seal of the Corporation is affixed. He shall have the authority to cause the
employment or appointment of such employees and agents of the Corporation as
the conduct of the business of the Corporation may require, to fix their
compensation, and
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to remove or suspend any employee or agent elected or appointed by the Chairman
and Chief Executive Officer or the Board of Directors. The Chairman and Chief
Executive Officer shall perform such other duties and have such other powers as
the Board of Directors may from time to time prescribe.
Section 4.07. The President and Chief Operating Officer. The
President and Chief Operating Officer shall be the chief operating officer of
the Corporation and shall perform, in general, all duties incident to the
office of President and Chief Operating Officer and shall be responsible for
the operations of the Corporation, including manufacturing, engineering,
marketing, distribution, sales, labor relations and administrative
responsibilities and such other duties as may be specified in these By-Laws or
as may be assigned to him from time to time by the Chairman and Chief Executive
Officer. The President and Chief Operating Officer shall report to the Chairman
and Chief Executive Officer. In the absence of the Chairman and Chief Executive
Officer, the duties of the Chairman and Chief Executive Officer shall be
performed and his powers may be exercised by the President and Chief Operating
Officer, subject in any case to review and superseding action by the Chairman
and Chief Executive Officer.
Section 4.08 The Vice Presidents. Each Vice President shall
perform such duties and exercise such powers as may be assigned to him from
time to time by the Chairman and Chief Executive Officer or by the President
and Chief Operating Officer.
Section 4.09. The Secretary. The Secretary shall have the
following powers and duties:
(a) He shall keep or cause to be kept a record of all the
proceedings of the meetings of the stockholders and of the Board of
Directors in books provided for that purpose. [Section 142(a).]
(b) He shall cause all notices to be duly given in accordance
with the provisions of these By-Laws and as required by law.
(c) Whenever any Committee shall be appointed pursuant to a
resolution of the Board of Directors, he shall furnish a copy of such
resolution to the members of such Committee.
(d) He shall be the custodian of the records and of the seal
of the Corporation and cause such seal (or a facsimile thereof) to be
affixed to all certificates representing shares of the Corporation
prior to the issuance thereof and to all instruments the execution of
which on behalf
13
<PAGE> 18
of the Corporation under its seal shall have been duly authorized in
accordance with these By-Laws, and when so affixed he may attest the
same.
(e) He shall properly maintain and file all books, reports,
statements, certificates and all other documents and records required
by law, the Certificate of Incorporation or these By-Laws.
(f) He shall have charge of the stock books and ledgers of
the Corporation and shall cause the stock and transfer books to be
kept in such manner as to show at any time the number of shares of
stock of the Corporation of each class issued and outstanding, the
names (alphabetically arranged) and the addresses of the holders of
record of such shares, the number of shares held by each holder and
the date as of which each became such holder of record.
(g) He shall sign (unless the Treasurer, an Assistant
Treasurer or Assistant Secretary shall have signed) certificates
representing shares of the Corporation the issuance of which shall
have been authorized by the Board of Directors.
(h) He shall perform, in general, all duties incident to the
office of secretary and such other duties as may be specified in these
By-Laws or as may be assigned to him from time to time by the Board of
Directors or the President and Chief Operating Officer.
Section 4.10. The Chief Financial Officer. The Chief
Financial Officer shall be the chief financial officer of the Corporation and
shall have the following powers and duties:
(a) He shall have charge and supervision over and be
responsible for the moneys, securities, receipts and disbursements of
the Corporation, and shall keep or cause to be kept full and accurate
records of all receipts of the Corporation.
(b) He shall render to the Board of Directors whenever
requested, a statement of the financial condition of the Corporation
and of all his transactions as Chief Financial Officer, and render a
full financial report at the annual meeting of the stockholders, if
called upon to do so.
(c) He shall be empowered from time to time to require from
all officers or agents of the Corporation reports or statements giving
such
14
<PAGE> 19
information as he may desire with respect to any and all financial
transactions of the Corporation.
(d) He shall perform, in general, all duties incident to the
office of chief financial officer and such other duties as may be
specified in these By-Laws or as may be assigned to him from time to
time by the Board of Directors or the President and Chief Operating
Officer.
(e) The Chief Financial Officer shall report to the President
and Chief Operating Officer.
(f) The President and Chief Operating Officer shall carry out
all of the duties and responsibilities under this Section 4.10 if the
Corporation has no Chief Financial Officer.
Section 4.11. The Treasurer. The Treasurer shall be the
treasurer of the Corporation and shall have the following powers and duties:
(a) He shall cause the moneys and other valuable effects of
the Corporation to be deposited in the name and to the credit of the
Corporation in such banks or trust companies or with such bankers or
other depositories as shall be selected in accordance with Section
8.05 of these By-Laws.
(b) He shall cause the moneys of the Corporation to be
disbursed by checks or drafts (signed as provided in Section 8.06 of
these By-Laws) upon the authorized depositories of the Corporation and
cause to be taken and preserved proper vouchers for all moneys
disbursed.
(c) He may sign (unless an Assistant Treasurer or the
Secretary or an Assistant Secretary shall have signed) certificates
representing stock of the Corporation the issuance of which shall have
been authorized by the Board of Directors.
(d) He shall perform, in general, all duties incident to the
office of treasurer and such other duties as may be specified in these
By-Laws or as may be assigned to him from time to time by the Board of
Directors or the Chief Financial Officer, to whom he shall report.
Section 4.12. Additional Officers. The Board of Directors may
appoint such other officers and agents as it may deem appropriate, and such
other officers and agents shall hold their offices for such terms and shall
exercise such powers and perform such duties as may be determined from time
15
<PAGE> 20
to time by the Board of Directors. The Board of Directors from time to time may
delegate to any officer or agent the power to appoint subordinate officers or
agents and to prescribe their respective rights, terms of office, authorities
and duties. Any such officer or agent may remove any such subordinate officer
or agent appointed by him, for or without cause. [Section 142(a),(b).]
Section 4.13. Security. The Board of Directors may require
any officer, agent or employee of the Corporation to provide security for the
faithful performance of his duties, in such amount and of such character as may
be determined from time to time by the Board of Directors. [Section 142(c).]
ARTICLE V
CAPITAL STOCK
Section 5.01. Certificates of Stock. The shares of the
Corporation shall be represented by certificates, provided that the Board of
Directors may provide by resolution or resolutions that some or all of any or
all classes or series of the stock of the Corporation shall be uncertificated
shares. Any such resolution shall not apply to shares represented by a
certificate until each certificate is surrendered to the Corporation.
Notwithstanding the adoption of such a resolution by the Board of Directors,
every holder of stock in the Corporation represented by certificates and upon
request every holder of uncertificated shares shall be entitled to have a
certificate signed by, or in the name of the Corporation, by the Chairman and
Chief Executive Officer, the President and Chief Operating Officer or a Vice
President, and by the Treasurer or an Assistant Treasurer, or the Secretary or
an Assistant Secretary, representing the number of shares registered in
certificate form. Such certificate shall be in such form as the Board of
Directors may determine, to the extent consistent with applicable law, the
Certificate of Incorporation and these By-Laws. [Section 158.]
Section 5.02. Signatures; Facsimile. Any or all of such
signatures on the certificate may be a facsimile, engraved or printed, to the
extent permitted by law. In case any officer, transfer agent or registrar who
has signed, or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if he were such officer, transfer agent or registrar at the date of issue.
[Section 158.]
Section 5.03. Lost, Stolen or Destroyed Certificates. The
Board of Directors may direct that a new certificate be issued in place of any
certificate theretofore issued by the Corporation alleged to have been lost,
stolen or
16
<PAGE> 21
destroyed, upon delivery to the Board of Directors of an affidavit of the owner
or owners of such certificate, setting forth such allegation. The Board of
Directors may require the owner of such lost, stolen or destroyed certificate,
or his legal representative, to give the Corporation a bond sufficient to
indemnify it against any claim that may be made against it on account of the
alleged loss, theft or destruction of any such certificate or the issuance of
any such new certificate. [Section 167.]
Section 5.04. Transfer of Stock. Upon surrender to the
Corporation or the transfer agent of the Corporation of a certificate for
shares, duly endorsed or accompanied by appropriate evidence of succession,
assignment or authority to transfer, the Corporation shall issue a new
certificate to the person entitled thereto, cancel the old certificate and
record the transaction upon its books. Within a reasonable time after the
transfer of uncertificated stock, the Corporation shall send to the registered
owner thereof a written notice containing the information required to be set
forth or stated on certificates pursuant to Sections 151, 156, 202(a) or 218(a)
of the DGCL. Subject to the provisions of the Certificate of Incorporation and
these By-Laws, the Board of Directors may prescribe such additional rules and
regulations as it may deem appropriate relating to the issue, transfer and
registration of shares of the Corporation. [Section 151(f).]
Section 5.05. Record Date. In order that the Corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, the Board of Directors may fix, a
record date, which record date shall not precede the date on which the
resolution fixing the record date is adopted by the Board of Directors, and
which shall not be more than sixty nor less than ten days before the date of
such meeting. A determination of stockholders of record entitled to notice of
or to vote at a meeting of stockholders shall apply to any adjournment of the
meeting, provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
In order that the Corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting, the Board
of Directors 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
of Directors, and which date shall not be more than ten days after the date
upon which the resolution fixing the record date is adopted by the Board of
Directors. If no record date has been fixed by the Board of Directors, the
record date for determining stockholders entitled to consent to corporate
action in writing without a meeting, when no prior action by the board of
directors is required by law, shall be the first date on which a signed written
consent setting forth the
17
<PAGE> 22
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 of Directors and prior action by the Board of Directors is required
by law, 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 of Directors adopts the resolution taking such
prior action.
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 of Directors 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 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 of Directors adopts the resolution relating thereto.
[Section 213.]
Section 5.06. Registered Stockholders. Prior to due surrender
of a certificate for registration of transfer, the Corporation may treat the
registered owner as the person exclusively entitled to receive dividends and
other distributions, to vote, to receive notice and otherwise to exercise all
the rights and powers of the owner of the shares represented by such
certificate, and the Corporation shall not be bound to recognize any equitable
or legal claim to or interest in such shares on the part of any other person,
whether or not the Corporation shall have notice of such claim or interests.
Whenever any transfer of shares shall be made for collateral security, and not
absolutely, it shall be so expressed in the entry of the transfer if, when the
certificates are presented to the Corporation for transfer or uncertificated
shares are requested to be transferred, both the transferor and transferee
request the Corporation to do so. [Section 159.]
Section 5.07. Transfer Agent and Registrar. The Board of
Directors may appoint one or more transfer agents and one or more registrars,
and may require all certificates representing shares to bear the signature of
any such transfer agents or registrars.
18
<PAGE> 23
ARTICLE VI
INDEMNIFICATION
Section 6.01. Nature of Indemnity. The Corporation shall
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact that he
is or was or has agreed to become a director, officer, employee or agent of the
Corporation, or is or was serving or has agreed to serve at the request of the
Corporation as a director, officer, employee or agent, of another corporation,
partnership, joint venture, trust or other enterprise, or by reason of any
action alleged to have been taken or omitted in such capacity, and may
indemnify any person who was or is a party or is threatened to be made a party
to such an action, suit or proceeding by reason of the fact that he is or was
or has agreed to become an employee or agent of the Corporation, or is or was
serving or has agreed to serve at the request of the Corporation as an 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 or on his
behalf in connection with such action, suit or proceeding and any appeal
therefrom, if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Corporation, and, with
respect to any criminal action or proceeding had no reasonable cause to believe
his conduct was unlawful; except that in the case of an action or suit by or in
the right of the Corporation to procure a judgment in its favor (1) such
indemnification shall be limited to expenses (including attorneys' fees)
actually and reasonably incurred by such person in the defense or settlement of
such action or suit, and (2) no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the Corporation unless and only to the extent that the Delaware Court
of Chancery or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Delaware Court of Chancery or
such other court shall deem proper.
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
19
<PAGE> 24
criminal action or proceeding, had reasonable cause to believe that his conduct
was unlawful. [Section 145(a),(b).]
Section 6.02. Successful Defense. To the extent that a
director, officer, employee or agent of the Corporation has been successful on
the merits or otherwise in defense of any action, suit or proceeding referred
to in Section 6.01 hereof or in defense of any claim, issue or matter therein,
he shall be indemnified against expenses (including attorneys' fees) actually
and reasonably incurred by him in connection therewith. [Section 145(c).]
Section 6.03. Determination That Indemnification Is Proper.
Any indemnification under Section 6.01 hereof (unless ordered by a court) shall
be made by the Corporation unless a determination is made that indemnification
of the director, officer, employee or agent is not proper in the circumstances
because he has not met the applicable standard of conduct set forth in Section
6.01 hereof. Any such determination shall be made (1) by a majority vote of the
directors who are not parties to such action, suit or proceeding, even though
less than a quorum, or (2) if there are no such directors, or, if such
directors so direct, by independent legal counsel in a written opinion, or (3)
by the stockholders. [Section 145(d).]
Section 6.04. Advance Payment of Expenses. Expenses
(including attorneys' fees) incurred by a director or officer in defending any
civil, criminal, administrative or investigative action, suit or proceeding
shall be paid by the Corporation in advance of the final disposition of such
action, suit or proceeding upon receipt of an undertaking by or on behalf of
the director or officer to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the Corporation as
authorized in this Article. Such expenses (including attorneys' fees) incurred
by other employees and agents may be so paid upon such terms and conditions, if
any, as the Board of Directors deems appropriate. The Board of Directors may
authorize the Corporation's counsel to represent such director, officer,
employee or agent in any action, suit or proceeding, whether or not the
Corporation is a party to such action, suit or proceeding. [Section 145(e).]
Section 6.05. Procedure for Indemnification of Directors and
Officers. Any indemnification of a person seeking indemnification of the
Corporation under Sections 6.01 and 6.02, or advance of costs, charges and
expenses to such person under Section 6.04 of this Article, shall be made
promptly, and in any event within 30 days, upon the written request of such
person. If a determination by the Corporation that such person is entitled to
indemnification pursuant to this Article is required, and the Corporation fails
to respond within sixty days to a written request for indemnity, the
Corporation
20
<PAGE> 25
shall be deemed to have approved such request. If the Corporation denies a
written request for indemnity or advancement of expenses, in whole or in part,
or if payment in full pursuant to such request is not made within 30 days, the
right to indemnification or advances as granted by this Article shall be
enforceable by the indemnified person in any court of competent jurisdiction.
Such person's costs and expenses incurred in connection with successfully
establishing his right to indemnification, in whole or in part, in any such
action shall also be indemnified by the Corporation. It shall be a defense to
any such action (other than an action brought to enforce a claim for the
advance of costs, charges and expenses under Section 6.04 of this Article where
the required undertaking, if any, has been received by the Corporation) that
the claimant has not met the standard of conduct set forth in Section 6.01 of
this Article, but the burden of proving such defense shall be on the
Corporation. Neither the failure of the Corporation (including its Board of
Directors, its independent legal counsel, and its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he has met the applicable
standard of conduct set forth in Section 6.01 of this Article, nor the fact
that there has been an actual determination by the Corporation (including its
Board of Directors, its independent legal counsel, and its stockholders) that
the claimant has not met such applicable standard of conduct, shall be a
defense to the action or create a presumption that the claimant has not met the
applicable standard of conduct.
Section 6.06. Survival; Preservation of Other Rights. The
foregoing indemnification provisions shall be deemed to be a contract between
the Corporation and each director, officer, employee and agent who serves in
any such capacity at any time while these provisions as well as the relevant
provisions of the Delaware Corporation Law are in effect and any repeal or
modification thereof shall not affect any right or obligation then existing
with respect to any state of facts then or previously existing or any action,
suit or proceeding previously or thereafter brought or threatened based in
whole or in part upon any such state of facts. Such a "contract right" may not
be modified retroactively without the consent of such director, officer,
employee or agent.
The indemnification and advancement of expenses provided by
this Article VI shall not be deemed exclusive of any other rights to which
those indemnified may be entitled under any by-law, 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, and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person. [Section 145(f),(j).]
21
<PAGE> 26
Section 6.07. Insurance. The Corporation shall purchase and
maintain insurance on behalf of any person who is or was or has agreed to
become a director or officer of the Corporation, or is or was serving at the
request of the Corporation as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him and incurred by him or on his behalf 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, provided that such insurance is available on acceptable terms, which
determination shall be made by a vote of a majority of the entire Board of
Directors. [Section 145(g).]
Section 6.08. Severability. If this Article or any portion
hereof shall be invalidated on any ground by any court of competent
jurisdiction, then the Corporation shall nevertheless indemnify each director
or officer and may indemnify each employee or agent of the Corporation as to
costs, charges and expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement with respect to any action, suit or proceeding,
whether civil, criminal, administrative or investigative, including an action
by or in the right of the Corporation, to the fullest extent permitted by any
applicable portion of this Article that shall not have been invalidated and to
the fullest extent permitted by applicable law.
ARTICLE VII
OFFICES
Section 7.01. Registered Office. The registered office of the
Corporation in the State of Delaware shall be located at Corporation Trust
Center, 1209 Orange Street in the City of Wilmington, County of New Castle.
Section 7.02. Other Offices. The Corporation may maintain
offices or places of business at such other locations within or without the
State of Delaware as the Board of Directors may from time to time determine or
as the business of the Corporation may require.
22
<PAGE> 27
ARTICLE VIII
GENERAL PROVISIONS
Section 8.01. Dividends. Subject to any applicable provisions
of law and the Certificate of Incorporation, dividends upon the shares of the
Corporation may be declared by the Board of Directors at any regular or special
meeting of the Board of Directors and any such dividend may be paid in cash,
property, or shares of the Corporation's Capital Stock.
A member of the Board of Directors, or a member of any
Committee designated by the Board of Directors shall be fully protected in
relying in good faith upon the records of the Corporation and upon such
information, opinions, reports or statements presented to the Corporation by
any of its officers or employees, or Committees of the Board of Directors, or
by any other person as to matters the director reasonably believes are within
such other person's professional or expert competence and who has been selected
with reasonable care by or on behalf of the Corporation, as to the value and
amount of the assets, liabilities and/or net profits of the Corporation, or any
other facts pertinent to the existence and amount of surplus or other funds
from which dividends might properly be declared and paid. [Sections 170, 172,
173.]
Section 8.02. Reserves. There may be set aside out of any
funds of the Corporation available for dividends such sum or sums as the Board
of Directors from time to time, in its absolute discretion, thinks proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation or for such other
purpose as the Board of Directors shall think conducive to the interest of the
Corporation, and the Board of Directors may similarly modify or abolish any
such reserve. [Section 171.]
Section 8.03. Execution of Instruments. The Board of
Directors may authorize the Chairman and Chief Executive Officer or any other
officer or agent to enter into any contract or execute and deliver any
instrument in the name and on behalf of the Corporation. Any such authorization
may be general or limited to specific contracts or instruments.
Section 8.04. Corporate Indebtedness. No loan shall be
contracted on behalf of the Corporation, and no evidence of indebtedness shall
be issued in its name, unless authorized by the Board of Directors or, to the
extent the Executive Committee has the power to authorize such loan or evidence
of indebtedness, the Executive Committee. Such authorization may
23
<PAGE> 28
be general or confined to specific instances. Loans so authorized may be
effected at any time for the Corporation from any bank, trust company or other
institution, or from any firm, corporation or individual. All bonds,
debentures, notes and other obligations or evidences of indebtedness of the
Corporation issued for such loans shall be made, executed and delivered as the
Board of Directors or the Executive Committee, as the case may be, shall
authorize. When so authorized by the Board of Directors or the Executive
Committee, as the case may be, any part of or all the properties, including
contract rights, assets, business or good will of the Corporation, whether then
owned or thereafter acquired, may be mortgaged, pledged, hypothecated or
conveyed or assigned in trust as security for the payment of such bonds,
debentures, notes and other obligations or evidences of indebtedness of the
Corporation, and of the interest thereon, by instruments executed and delivered
in the name of the Corporation.
Section 8.05. Deposits. Any funds of the Corporation may be
deposited from time to time in such banks, trust companies or other
depositories as may be determined by the Board of Directors or the Chairman and
Chief Executive Officer or by such officers or agents as may be authorized by
the Board of Directors or the Chairman and Chief Executive Officer to make such
determination.
Section 8.06. Checks. All checks or demands for money and
notes of the Corporation shall be signed by such officer or officers or such
agent or agents of the Corporation, and in such manner, as the Board of
Directors or the Chairman and Chief Executive Officer from time to time may
determine.
Section 8.07. Sale, Transfer, etc. of Securities. To the
extent authorized by the Board of Directors, the Chairman and Chief Executive
Officer or any other officers designated by the Board of Directors may sell,
transfer, endorse, and assign any shares of stock, bonds or other securities
owned by or held in the name of the Corporation, and may make, execute and
deliver in the name of the Corporation, under its corporate seal, any
instruments that may be appropriate to effect any such sale, transfer,
endorsement or assignment.
Section 8.08. Voting as Stockholder. As directed by
resolution of the Board of Directors or the Executive Committee, (a) the
President and Chief Operating Officer or any Vice President shall have full
power and authority on behalf of the Corporation to attend any meeting of
stockholders of any corporation in which the Corporation may hold stock, and to
act, vote (or execute proxies to vote) and exercise in person or by proxy all
other rights, powers and privileges incident to the ownership of such stock,
and (b) such officers acting on behalf of the Corporation shall have full power
and authority
24
<PAGE> 29
to execute any instrument expressing consent to or dissent from any action of
any such corporation without a meeting. The Board of Directors may by
resolution from time to time confer such power and authority upon any other
person or persons.
Section 8.09. Fiscal Year. The fiscal year of the Corporation
shall commence on the first day of January of each year (except for the
Corporation's first fiscal year which shall commence on the date of
incorporation) and shall terminate in each case on the last day of December.
Section 8.10. Seal. The seal of the Corporation shall be
circular in form and shall contain the name of the Corporation, the year of its
incorporation and the words "Corporate Seal" and "Delaware". The form of such
seal shall be subject to alteration by the Board of Directors. The seal may be
used by causing it or a facsimile thereof to be impressed, affixed or
reproduced, or may be used in any other lawful manner.
Section 8.11. Books and Records; Inspection. Except to the
extent otherwise required by law, the books and records of the Corporation
shall be kept at such place or places within or without the State of Delaware
as may be determined from time to time by the Board of Directors.
Section 8.12. Definitions.
"CDR" means Clayton, Dubilier & Rice, Inc., a Delaware
corporation.
"Committee": See Section 3.01.
"Executive Committee": See Section 3.01.
ARTICLE IX
AMENDMENT OF BY-LAWS
Section 9.01. Amendment. These By-Laws may be amended,
altered or repealed
(a) by resolution adopted by a majority of the Board of
Directors at any special or regular meeting of the Board if, in the
case of such special meeting only, notice of such amendment,
alteration or repeal is contained in the notice or waiver of notice of
such meeting; or
25
<PAGE> 30
(b) at any regular or special meeting of the stockholders if,
in the case of such special meeting only, notice of such amendment,
alteration or repeal is contained in the notice or waiver of notice of
such meeting. [Section 109(a).]
ARTICLE X
CONSTRUCTION
Section 10.01. Construction. In the event of any conflict
between the provisions of these By-Laws as in effect from time to time and the
provisions of the certificate of incorporation of the Corporation as in effect
from time to time, the provisions of such certificate of incorporation shall be
controlling.
26
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF RACI HOLDING, INC. FOR THE YEAR-TO-DATE ENDED SEPTEMBER
30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 2,200
<SECURITIES> 0
<RECEIVABLES> 100,300
<ALLOWANCES> 3,500
<INVENTORY> 67,800
<CURRENT-ASSETS> 200,000
<PP&E> 147,400
<DEPRECIATION> 63,100
<TOTAL-ASSETS> 372,800
<CURRENT-LIABILITIES> 100,100
<BONDS> 97,900
0
0
<COMMON> 0
<OTHER-SE> 122,600
<TOTAL-LIABILITY-AND-EQUITY> 372,800
<SALES> 309,200
<TOTAL-REVENUES> 309,200
<CGS> 209,900
<TOTAL-COSTS> 209,900
<OTHER-EXPENSES> 58,400
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,400
<INCOME-PRETAX> 29,500
<INCOME-TAX> 11,500
<INCOME-CONTINUING> 18,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,000
<EPS-BASIC> 23.35
<EPS-DILUTED> 22.78
</TABLE>
<PAGE> 1
EXHIBIT 99.1
RACI HOLDING, INC. AND SUBSIDIARIES
RECONCILIATION OF INCOME FROM OPERATIONS TO EBITDA (A)
(Dollars in Millions)
<TABLE>
<CAPTION>
--------------------------------------------------------------
UNAUDITED
--------------------------------------------------------------
QUARTER ENDED SEPTEMBER 30, YEAR-TO-DATE SEPTEMBER 30,
---------------------------- -----------------------------
1999 1998 1999 1998
------------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Net Income from Operations (A) $ 10.8 $ 6.4 $ 18.0 $ 14.7
Interest Expense 3.6 4.9 11.4 15.3
Provision for Income Taxes 6.0 5.1 11.5 10.4
Depreciation and Amortization (B) 4.1 4.0 11.9 11.8
Other Noncash Charges (C) 0.5 0.1 4.8 0.5
Nonrecurring and Restructuring Expense (D) - (0.2) - (0.4)
------------- ------------- ------------ -------------
Total 14.2 13.9 39.6 37.6
------------- ------------- ------------ -------------
EBITDA $ 25.0 $ 20.3 $ 57.6 $ 52.3
============= ============= ============ =============
</TABLE>
Notes:
(A) EBITDA as presented may not be comparable to similar measures reported by
other companies. Generally, EBITDA is defined to consist of net income
(loss), adjusted to exclude cash interest expense, income tax expense,
depreciation, amortization, noncash expenses and charges, gain or loss on
sale or write-off of assets and extraordinary, unusual or nonrecurring
gains, losses, charges or credits. EBITDA is presented to facilitate a more
complete analysis of the Company's financial performance, by adding back
non- cash and nonrecurring items to operating income, as an indicator of
the Company's ability to generate cash to service debt and other fixed
obligations. Investors should not rely on EBITDA as an alternative to
operating income or cash flows, as determined in accordance with generally
accepted accounting principles, as an indicator of the Company's operating
performance, liquidity or ability to meet cash needs. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
for further discussion of the Company's operating income and cash flows.
(B) Excludes amortization of deferred financing costs of $1.3 and loss on early
extinquishment of debt of $0.2 for the year-to-date period ended September
30, 1999 and $1.3 amortization of deferred financing costs for the
comparable year-to-date period, which is included in interest expense.
(C) Noncash charges consist of a $3.1 stock subscription accrual, $1.3 pension
accrual and $0.4 for loss on disposal of assets for the nine months ended
September 30, 1999 and a $0.3 pension accrual and $0.2 for loss on disposal
of assets in 1998.
(D) Nonrecurring and restructuring expenses excluded in calculating EBITDA
consist of $0.2 nonrecurring professional fee, related to a proposed
transaction that was not consummated, offset by $0.2 write-down of
restructuring accrual for the year-to-date period ended September 30, 1999
and a $0.8 write-down of restructuring accrual and $0.4 accrual for
nonrecurring legal in the same period for 1998.
