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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c)
or Section 240.14a-12
SIMPSON MANUFACTURING CO., INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how
it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
(1) Amount Previously Paid:
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<PAGE>
SIMPSON MANUFACTURING CO., INC.
4637 Chabot Drive, Suite 200
Pleasanton, California 94588
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Our Shareholders:
The annual meeting of shareholders of Simpson Manufacturing Co., Inc.
(the "Company"), a California corporation, will be held at 3:00 p.m.,
Pacific Daylight Time, on May 20, 1999, at the Simpson Strong-Tie Company
Inc. training facility located at 1470 Doolittle Drive, San Leandro,
California, for the following purposes:
1. To elect seven directors to the Company's Board of Directors,
each to hold office until his or her successor is elected and qualifies or
until his or her earlier resignation or removal.
2. To consider and act upon a proposal to ratify the selection of
PricewaterhouseCoopers LLP as the Company's independent auditors for the
current fiscal year.
3. To consider and act upon a proposal for the Company to
reincorporate under Delaware law with new charter provisions:
A. Reincorporation under Delaware Law.
B. Classified Board of Directors.
C. No Shareholder Action by Written Consent.
4. To transact such other business as may properly come before the
meeting.
At the conclusion of the annual meeting of shareholders, a tour of the
Company's San Leandro facility will be conducted for interested shareholders.
Only shareholders of record as of March 22, 1999, are entitled to
notice of and will be entitled to vote at this meeting or any adjournment
thereof.
BY ORDER OF THE BOARD OF DIRECTORS
Stephen B. Lamson
Secretary
Pleasanton, California
April 13, 1999
TO ASSURE THAT YOUR SHARES ARE REPRESENTED AT THE MEETING, YOU ARE URGED TO
COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE
POSTAGE-PAID ENVELOPE PROVIDED, WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING. YOUR PROXY CAN BE REVOKED BY YOU AT ANY TIME BEFORE IT IS VOTED.
<PAGE>
SIMPSON MANUFACTURING CO., INC.
4637 Chabot Drive, Suite 200
Pleasanton, California 94588
April 13, 1999
PROXY STATEMENT
SOLICITATION AND VOTING OF PROXIES
The accompanying proxy is solicited on behalf of the Board of Directors
of Simpson Manufacturing Co., Inc., a California corporation (the
"Company"), for use at the Annual Meeting of Shareholders of the Company to
be held at the Simpson Strong-Tie Company Inc. ("Simpson Strong-Tie" or
"SST") training facility located at 1470 Doolittle Drive, San Leandro,
California, on May 20, 1999, at 3:00 p.m., Pacific Daylight Time, or any
adjournment (the "Meeting"). Only holders of record of the Company's Common
Stock at the close of business on March 22, 1999, will be entitled to vote
at the Meeting. At the close of business on that date, the Company had
11,584,567 shares of Common Stock outstanding and entitled to vote. A
majority, or 5,792,284, of these shares, present in person or by proxy at
the Meeting, will constitute a quorum for the transaction of business. This
Proxy Statement and the Company's Annual Report to Shareholders for the year
ended December 31, 1998, are being mailed to each shareholder on or about
April 13, 1999.
Revocability of Proxy
A shareholder who has given a proxy may revoke it at any time before it
is exercised at the Meeting, by (1) delivering to the Secretary of the
Company (by any means, including facsimile) a written notice stating that
the proxy is revoked, (2) signing and so delivering a proxy bearing a later
date or (3) attending the Meeting and voting in person (although attendance
at the Meeting will not, by itself, revoke a proxy). If, however, a
shareholder's shares are held of record by a broker, bank or other nominee
and that shareholder wishes to vote at the Meeting, the shareholder must
bring to the Meeting a letter from the broker, bank or other nominee
confirming the shareholder's beneficial ownership of the shares to be voted.
EXPENSES OF PROXY SOLICITATION
The expenses of this solicitation of proxies will be paid by the
Company. Following the original mailing of this Proxy Statement and other
soliciting materials, the Company or its agents may also solicit proxies by
mail, telephone or facsimile or in person.
VOTING RIGHTS
The holders of the Company's Common Stock are entitled to one vote per
share on any matter submitted to a vote of the shareholders, except that,
subject to certain conditions, shareholders may cumulate their votes in the
election of directors, and each shareholder may give one candidate a number
of votes equal to the number of directors to be elected multiplied by the
number of shares held by such shareholder or may distribute such
shareholder's votes on the same principle among as many candidates as such
shareholder thinks fit. No shareholder will be entitled, however, to
cumulate votes (that is, cast for any nominee a number of votes greater than
the number of votes that the shareholder normally is entitled to cast)
unless the nominees' names have been placed in nomination prior to the
voting and the shareholder gives notice at the Meeting prior to the voting
of the shareholder's intention to cumulate the shareholder's votes. If any
one shareholder gives such notice, all shareholders may cumulate their votes
for nominees. In the election of directors, the nominees receiving the
highest number of affirmative votes of the shares entitled to be voted for
them up to the number of directors to be elected by such shares are elected.
Votes against a nominee and votes withheld have no legal effect.
<PAGE>
The Board of Directors expects all nominees named below to be available
for election. In case any nominee is not available, the proxy holders may
vote for a substitute. The Company knows of no specific matter to be brought
before the Meeting that is not identified in the notice of the Meeting or
this Proxy Statement. If, however, proposals of shareholders that are not
included in this Proxy Statement are presented at the Meeting, the proxies
will be voted in the discretion of the proxy holders. Regulations of the
Securities and Exchange Commission permit the proxies solicited by this
Proxy Statement to confer discretionary authority with respect to matters of
which the Company is not aware a reasonable time before the Meeting.
Accordingly, the proxy holders may use their discretionary authority to vote
with respect to any such matter pursuant to the proxies solicited hereby.
Directors will be elected at the Meeting by a plurality of the votes
cast at the Meeting by the holders of shares represented in person or by
proxy. Approval of Proposal No. 2 and Proposal No. 3 will require the
affirmative vote of a majority of the votes cast at the Meeting by the
holders of shares represented in person or by proxy. Abstentions and broker
nonvotes are counted as shares present for determination of a quorum but are
not counted as affirmative or negative votes on any item to be voted upon
and are not counted in determining the number of shares voted on any item.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of March 1,
1999, unless otherwise indicated, with respect to the beneficial ownership
of the Company's Common Stock by (1) each shareholder known by the Company
to be the beneficial owner of more than 5% of the Company's Common Stock,
(2) each director nominee, (3) each person currently serving as an executive
officer of the Company named in the Summary Compensation Table (see
"Executive Compensation" below), and (4) all current executive officers and
directors of the Company as a group.
<TABLE>
<CAPTION>
Name and, for Each 5% Amount and Nature of Percent
Beneficial Owner, Address Beneficial Ownership (1) of Class
- - ------------------------------------- ------------------------ --------
<S> <C> <C>
Barclay Simpson (2) 3,708,047 32.0%
4637 Chabot Drive, Suite 200
Pleasanton, CA 94588
Royce & Associates, Inc. and
Royce Management Company (3) 795,900 6.9%
1414 Avenue of the Americas
New York, NY 10019
Thomas J Fitzmyers (4) 739,117 6.3%
4637 Chabot Drive, Suite 200
Pleasanton, CA 94588
Scudder Kemper Investments, Inc. (5) 703,500 6.1%
Two International Place
Boston, MA 02110-4103
Stephen B. Lamson (6) 255,375 2.2%
Donald M. Townsend (7) 123,322 1.1%
Earl F. Cheit (8) 3,500 *
Sunne Wright McPeak (8) 3,500 *
Barry Lawson Williams (9) 1,500 *
Peter N. Louras, Jr. 500 *
All current executive officers
and directors as a group (10) 4,529,361 38.0%
- - -------------------------
* Less than 1%
</TABLE>
(1) The information in this table is based upon information supplied by
officers and directors, and, with respect to principal shareholders,
statements on Schedule 13D or 13G filed with the Securities and
Exchange Commission. Unless otherwise indicated below, the persons
named in the table had sole voting and sole investment power with
respect to all shares beneficially owned, subject to community property
laws where applicable.
<PAGE>
(2) Includes 875 shares subject to options granted under the 1994 Stock
Option Plan that are exercisable within 60 days. Includes 152,500
shares owned by the Company's profit sharing trusts, of which Messrs.
Simpson, Fitzmyers and Lamson are the trustees and share voting and
dispositive power, as to which shares such trustees disclaim beneficial
ownership except to the extent of their participation as beneficiaries
of one of such trusts.
(3) Royce & Associates, Inc. ("RAI") and Royce Management Company ("RMC")
beneficially owned an aggregate of 795,900 shares as of December 31,
1998, of which RAI had sole power to vote or direct the vote and to
dispose or direct the disposition of 763,500 shares and RMC had sole
power to vote or direct the vote and to dispose or direct the
disposition of 32,400 shares. Charles M. Royce may be deemed to be a
controlling person of RAI and RMC. Mr. Royce disclaimed beneficial
ownership of the shares beneficially owned by RAI and RMC.
(4) Includes 214,985 shares subject to options granted under the 1994 Stock
Option Plan that are exercisable within 60 days. Includes 152,500
shares owned by the Company's profit sharing trusts, of which Messrs.
Simpson, Fitzmyers and Lamson are the trustees and share voting and
dispositive power, as to which shares such trustees disclaim beneficial
ownership except to the extent of their participation as beneficiaries
of one of such trusts.
(5) Scudder Kemper Investments, Inc. ("Scudder") beneficially owned
703,500 shares as of December 31, 1998, and had investment power with
respect to all 703,500 shares, sole power to vote or to direct the
vote of 226,200 shares and shared power to vote or direct the vote of
323,400 shares.
(6) Includes 56,423 shares subject to options granted under the 1994 Stock
Option Plan that are exercisable within 60 days. Includes 152,500
shares owned by the Company's profit sharing trusts, of which Messrs.
Simpson, Fitzmyers and Lamson are the trustees and share voting and
dispositive power, as to which shares such trustees disclaim beneficial
ownership except to the extent of their participation as beneficiaries
of one of such trusts.
(7) Includes 55,544 shares subject to options granted under the 1994 Stock
Option Plan that are exercisable within 60 days.
(8) Includes 3,500 shares subject to options granted under the Company's
1995 Independent Director Stock Option Plan that are exercisable within
60 days.
(9) Includes 1,500 shares subject to options granted under the Company's
1995 Independent Director Stock Option Plan that are exercisable within
60 days.
(10) Includes 336,327 shares subject to options exercisable within 60 days,
including the options described in the above notes, and 152,500 shares
owned by the Company's profit sharing trusts as described in notes 2,
4 and 6 above.
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Nominees
The names of the Company's directors, all of whom will be nominated for
re-election, and the name of the person nominated by the Board of Directors
to fill a vacancy, and certain information about them, are set forth below.
It is intended that shares represented by proxies in the accompanying form
will be voted for the election of the nominees listed below. Although the
Board of Directors does not know whether any nominations will be made at the
Meeting other than those set forth below, if any such nomination is made, or
if votes are cast for any candidates other than those nominated by the Board
of Directors, the persons authorized to vote shares represented by executed
proxies in the enclosed form (if authority to vote for the election of
directors or for any particular nominees is not withheld) will have full
discretion and authority to vote cumulatively and allocate votes among any
or all of the nominees of the Board of Directors in such order as they may
determine.
<TABLE>
<CAPTION>
Director
Name Age Since Position
- - ------------------------------------- ----- -------- ------------------------------------
<S> <C> <C> <C>
Barclay Simpson(1)(4) 77 1956 Chairman of the Board and Director
Thomas J Fitzmyers 58 1978 President, Chief Executive
Officer and Director
Stephen B. Lamson 46 1989 Chief Financial Officer, Treasurer,
Secretary and Director
Earl F. Cheit(2)(4) 72 1994 Director
Peter N. Louras, Jr. 49 - -
Sunne Wright McPeak(1)(3)(4) 50 1994 Director
Barry Lawson Williams(1)(2)(3)(4) 54 1994 Director
</TABLE>
(1) Member of the Compensation Committee
(2) Member of the Audit Committee
(3) Member of 1994 Stock Option Plan Committee
(4) Member of the Growth Committee
The Board of Directors has not established a nominating committee.
PROPOSED REINCORPORATION; CLASSIFIED BOARD OF DIRECTORS
The Company proposes to reincorporate under Delaware law with new
charter provisions in Proposal No. 3 of this Proxy Statement. If the
proposed reincorporation is approved by the shareholders, the Company would
adopt a classified board of directors, pursuant to Delaware corporation law.
If, at the annual meeting, the shareholders elect each of the seven nominees
listed above and the shareholders approve of the proposed reincorporation,
the seven nominees would serve on the Board of Directors of the Company,
after the reincorporation under Delaware law with new charter provisions, as
follows: Sunne Wright McPeak and Barclay Simpson would serve in Class I, for
a term of one year; Stephen B. Lamson and Peter M. Louras, Jr. would serve
in Class II, for a term of two years; and Earl F. Cheit, Thomas J Fitzmyers
and Barry Lawson Williams would serve in Class III, for a term of three
years. If the shareholders approve the proposed reincorporation and elect
any person to serve as a director of the Company who is not listed above as
a nominee, that director would serve in Class I, for a term of one year, and
the Board of Directors would assign each other director to a class and term
as similar as practicable to the class and term specified above. After such
approval, beginning with the annual meeting in the year 2000, each director
will serve a three-year term from his or her election or reelection. See
"Proposal No. 3-Delaware Reincorporation with New Charter Provisions,"
page 7.
<PAGE>
EXECUTIVE OFFICERS
Barclay Simpson, Thomas J Fitzmyers and Stephen B. Lamson are the
executive officers of the Company and are also directors and executive
officers of subsidiaries of the Company. Donald M. Townsend, age 52, a
director and the Chief Executive Officer of the Company's subsidiary,
Simpson Dura-Vent Company, Inc. ("Simpson Dura-Vent" or "SDV"), is also
regarded as an executive officer of the Company, because, by virtue of his
role in management of SDV, he performs policy-making functions for the
Company.
BIOGRAPHICAL INFORMATION
Barclay Simpson has been the Chairman of the Board of Directors and a
director of the Company since 1956. Since 1982, Mr. Simpson and his wife
have owned Barclay Simpson Fine Arts Gallery, a commercial art gallery in
Lafayette, California. Mr. Simpson is also a member of the Boards of
Directors of Civic Bancorp, Calender Robinson Insurance, the University Art
Museum of the University of California at Berkeley, the California College
of Arts and Crafts and other charitable and educational institutions.
Thomas J Fitzmyers has served as President and a director of the Company
since 1978, as the President and a director of Simpson Strong-Tie since 1983
and as a director of Simpson Dura-Vent since 1982. He was appointed as the
Company's Chief Executive Officer in 1994. Mr. Fitzmyers was employed by
Union Bank from 1971 to 1978. He was a Regional Vice President when he left
Union Bank to join the Company in 1978.
Stephen B. Lamson has served as the Company's, Simpson Strong-Tie's and
Simpson Dura-Vent's Chief Financial Officer and Treasurer since 1989, as the
Company's and SDV's Secretary since 1989, as SST's Secretary since 1992, as
a director of the Company since 1990, as a director of SST since 1992 and as
a director of SDV since 1989. From 1980 to 1989, Mr. Lamson was with Coopers
& Lybrand. He was an audit manager when he left that firm to join the
Company in 1989.
Earl F. Cheit has been a Senior Advisor to the Asia Foundation on Asia-
Pacific Economic Affairs since 1984 and became Dean Emeritus of the Haas
School of Business at the University of California, Berkeley, in 1992. He is
currently a director of The Shaklee Corporation and CNF Transportation, Inc.
and a Trustee of Mills College.
Peter N. Louras, Jr. joined The Clorox Company in 1980 and has been Group
Vice President since May 1992. In this position, he serves on Clorox's
Executive Committee with overall responsibility for the company's
international business activities. In addition, he has responsibility for
Clorox's business development function, which handles all acquisitions and
divestitures. Before joining Clorox, Mr. Louras worked at Price Waterhouse
in San Francisco and is a certified public accountant. Mr. Louras is a
member of the American Institute of CPAs and the Pennsylvania Institute of
CPAs.
Sunne Wright McPeak has served since 1996 as the President and Chief
Executive Officer of the Bay Area Council, a business sponsored organization
founded in 1945 that promotes economic activity and environmental quality in
the San Francisco Bay Area. Prior to this position, she was the President
and Chief Executive Officer of the Bay Area Economic Forum, a partnership of
government, business, academic and foundation sectors of the nine San
Francisco Bay Area counties. From 1979 through 1994, she served on the Board
of Supervisors of Contra Costa County, including several terms as Chair. Her
most recent term as Chair concluded in 1992. In addition, Ms. McPeak served
as President of the California State Association of Counties and has been a
member of the advisory boards of the Urban Land Institute and California
State University, Hayward. She is currently a director of the California
Foundation for the Environment and the Economy.
<PAGE>
Barry Lawson Williams has been President of Williams Pacific Ventures Inc.,
a venture capital and real estate consulting firm, since 1987. From 1989
until its sale in 1992, he was also Chief Executive Officer and owner of
C.N. Flagg Power Inc. He is a director of PG&E Corporation, CH2M HILL
Companies, Ltd., The U.S.A. Group, Inc., Newhall Land and Farming Co. Inc.,
Northwestern Mutual Life Insurance Co., CompUSA, Inc. and R.H. Donnelly.
Donald M. Townsend (who is not a director nominee) has been employed by the
Company since 1981 and has served as a director of Simpson Dura-Vent since
1984 and as its President and Chief Operating Officer since 1991. He was
appointed as SDV's Chief Executive Officer in 1994. From 1984 to 1991, he
was the Vice President and General Manager of SDV.
ATTENDANCE AT MEETINGS
The Board of Directors held five meetings and its committees held a
total of five meetings in 1998. Each director attended 100% of the meetings
of the Board of Directors and the committees on which he or she served in
1998.
THE BOARD RECOMMENDS A VOTE "FOR" ELECTION OF EACH OF THE SEVEN NOMINEES FOR
DIRECTOR.
PROPOSAL NO. 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected PricewaterhouseCoopers LLP as its
principal independent auditors to audit the Company's financial statements
for 1999, and the shareholders will be asked to ratify such selection.
PricewaterhouseCoopers LLP has audited the Company's financial statements
since prior to 1975. A representative from PricewaterhouseCoopers LLP will
be present at the Meeting, will be given an opportunity to make a statement
at the Meeting if he or she desires to do so, and will be available to
respond to appropriate questions.
THE BOARD RECOMMENDS A VOTE "FOR" RATIFICATION OF SELECTION OF
PRICEWATERHOUSECOOPERS LLP.
PROPOSAL NO. 3
DELAWARE REINCORPORATION WITH NEW CHARTER PROVISIONS
The Board of Directors has unanimously approved a proposal to change
the Company's state of incorporation from California to Delaware and adopt
new charter provisions permitted under Delaware law. The Board of Directors
believes that the Company and its shareholders would benefit from the
greater flexibility of the corporate law of the State of Delaware, and the
predictability afforded by the substantial body of case law interpreting
that law. The Board of Directors believes the proposed reincorporation will
also enhance its ability to negotiate effectively on behalf of the Company
and its shareholders, should a third party ever seek a change in control of
the Company. THE BOARD OF DIRECTORS URGES SHAREHOLDERS TO READ THIS SECTION
OF THE PROXY STATEMENT AND THE RELATED ANNEXES CAREFULLY BEFORE VOTING ON
THE PROPOSED REINCORPORATION.
Throughout this section of the Proxy Statement, the term "Simpson
California" refers to Simpson Manufacturing Co., Inc., the existing
California corporation, the term "Simpson Delaware" refers to the new
Delaware corporation of the same name, a wholly-owned subsidiary of Simpson
California which would be the successor to Simpson California in the
proposed reincorporation, and the term "Company" refers to Simpson
California or Simpson Delaware, as appropriate in the context.
<PAGE>
The Company proposes to accomplish the reincorporation and adoption of
new charter provisions by merging Simpson California into Simpson Delaware.
On completion of this merger, Simpson California would cease to exist.
Simpson Delaware would succeed to all of Simpson California's assets and
liabilities and would operate the business of the Company from that time
forward.
Pursuant to the Agreement and Plan of Merger (the "Merger Agreement"),
each outstanding share of common stock of Simpson California would
automatically convert into one share of common stock, par value $.01 per
share, of Simpson Delaware. After the proposed reincorporation, each stock
certificate representing issued and outstanding shares of Simpson California
common stock would represent the same number of shares of common stock of
Simpson Delaware. Shareholders would not need to exchange their existing
stock certificates for stock certificates of Simpson Delaware. The common
stock of the Company would continue to trade on the New York Stock Exchange,
without interruption, under the symbol, "SSD". The name of the Company would
not change as a result of the proposed reincorporation, nor would the
reincorporation result in any change in the Company's business, assets or
liabilities. The location of the Company's principal executive offices and
all of its operations would remain the same. In addition, each outstanding
option or right to acquire shares of common stock of Simpson California will
be converted into an option or right to acquire an equal number of shares of
common stock of Simpson Delaware, under the same terms and conditions as the
original options or rights. Simpson Delaware will adopt and continue all of
Simpson California's employee benefit plans, including the 1994 Employee
Stock Bonus Plan, the 1994 Stock Option Plan, the 1995 Independent Director
Stock Option Plan and the Employee Stock Purchase Plan.
California law requires the affirmative vote of a majority of the
outstanding shares of common stock for the approval of the proposed
reincorporation and adoption of new charter provisions. Federal proxy rules
require that shareholders also be permitted to vote on each of the principal
elements of this proposal. Accordingly, the Board of Directors requests
that shareholders vote "for" the proposal and also vote "for" each of the
principal elements: (A) the Company's proposed reincorporation under
Delaware law; (B) the proposed classification of the Company's Board of
Directors; and (C) the proposed elimination of the ability of shareholders
to take actions by written consent, without holding a shareholder meeting.
If a majority of the outstanding shares of common stock approve each of the
three principal elements of the proposal, and also approve the proposal
itself as required by California law, the proposal will have been duly
approved by the shareholders, and the Board of Directors anticipates that
the proposal will be implemented as soon as practicable following the annual
meeting of shareholders. If the shareholders do not approve the proposal and
each of its three principal elements, then the proposal will not be
implemented. The Merger Agreement allows the Company to abandon the
implementation of the proposal, even after the shareholders have approved
it, if the Board decides that implementation of the proposal will not serve
the best interests of the shareholders. The Board of Directors may not amend
the principal terms of the Merger Agreement without shareholder approval,
but may otherwise amend the Merger Agreement, before it becomes effective.
APPROVAL BY THE SHAREHOLDERS OF THE PROPOSAL AND EACH OF ITS PRINCIPAL
ELEMENTS WILL CONSTITUTE APPROVAL OF THE MERGER AGREEMENT AND THE
CERTIFICATE OF INCORPORATION AND BYLAWS OF SIMPSON DELAWARE, COPIES OF WHICH
ARE INCLUDED IN THIS PROXY STATEMENT AS ANNEXES A, B, AND C, AND THE
ADOPTION AND ASSUMPTION BY SIMPSON DELAWARE OF THE EMPLOYEE BENEFIT PLANS OF
SIMPSON CALIFORNIA.
The discussion below is qualified in its entirety by reference to the
Merger Agreement, the Articles of Incorporation and Bylaws of Simpson
California, the Certificate of Incorporation and Bylaws of Simpson Delaware,
the California General Corporation Law, and the Delaware General Corporation
Law.
<PAGE>
PRINCIPAL REASONS FOR THE PROPOSAL
A. Reincorporation under Delaware Law.
The Board of Directors believes that incorporation in a jurisdiction
with better-established principles of corporate governance will enhance the
ability of the Board of Directors and management of the Company to conduct
the Company's business and affairs decisively. The Board of Directors
believes that Delaware corporation law provides a more reliable foundation
on which the officers and directors can base corporate governance decisions
than does the California corporation law.
Delaware has followed a policy of encouraging corporations to
incorporate under its laws for many years and, in furtherance of that
policy, has become a leader among the states in adopting, construing and
implementing comprehensive, flexible corporation laws that are responsive to
the legal and business needs of corporations. Many corporations have
incorporated in Delaware or have eventually changed their corporate domicile
to Delaware. The legislature and courts in Delaware have demonstrated the
ability and willingness to act quickly and effectively to meet changing
business needs. The Delaware courts have developed considerable expertise in
dealing with corporate issues, and have developed a substantial body of case
law construing Delaware corporation law and establishing public policies
with respect to corporate legal affairs. The Delaware courts have developed
legal principles applicable to corporate action and the standards of conduct
expected of a board of directors. The combination of these factors provides
Delaware corporations with a more predictable and flexible foundation for
corporate decisionmaking than corporations organized under California law.
The Board of Directors believes that such an advantage may be particularly
beneficial in the event that the Board of Directors is required to respond
to a potential change in corporate control.
The Board of Directors believes the proposed reincorporation in
Delaware would enhance the ability of the Board of Directors to negotiate
effectively on behalf of the Company and its shareholders should a third
party ever seek a change in control of the Company. The Board of Directors
has not proposed the reincorporation in response to any identified takeover
proposal or to prevent a change in control. A hostile takeover could harm
the Company's shareholders, for example, by taking advantage of a
temporarily depressed stock price, by foreclosing the possibility that the
Board of Directors might negotiate a better deal, or by unfairly denying all
the Company's shareholders the opportunity to take advantage of a premium
paid for control of the Company. Differences between the corporation laws of
California and Delaware allow the Company to add provisions to its charter
that would protect stockholders against the dangers posed by a hostile
takeover.
In addition to the organic changes in the Company's charter discussed
below, the Board of Directors has considered the possibility of adopting a
shareholder rights plan as a further defense against potentially abusive
takeover tactics, and may adopt one after the reincorporation is approved. A
shareholder rights plan would provide for substantial dilution of the
percentage of stock held by any person who acquires enough stock to exercise
substantial control over the Company without previously obtaining the
approval of the Board of Directors. When used responsibly by a board of
directors, a stockholder rights plan can prevent abusive takeover tactics
and protect the long-term interests of stockholders. The Board of Directors
believes that the shareholders will benefit if a potential acquiror of the
Company must negotiate directly with the Board of Directors, which can
conduct negotiations with a full understanding of the Company's long-term
business plan and the long-term value of the Company's assets. The Delaware
courts have approved adoption of stockholder rights plans and the
responsible use of a stockholder rights plan by a board of directors to
protect the long-term interests of stockholders from dangers associated with
a hostile takeover attempt. The validity of stockholder rights plans remains
less certain under California law. The proposed reincorporation would
therefore allow the Board to adopt a stockholder rights plan, should it
elect to do so in the future, with confidence as to the validity of the
measure in the Company's state of domicile.
B. Classified Board of Directors.
Delaware law permits a corporation to adopt a number of measures in its
certificate of incorporation or bylaws which may reduce the corporation's
vulnerability to unsolicited takeover attempts. One of these measures, which
the Board of Directors has determined to be in the best interests of the
Company, is a provision for a classified board of directors. Because
directors on a classified board serve a term of more than one year, a
classified board may make it more difficult for a hostile acquiror that has
<PAGE>
accumulated a large block of stock to assert control over the Company's
affairs by replacing a number of directors with its own nominees. Simpson
California does not have a classified board of directors. California law
would permit the Company to adopt a classified board of directors, but only
if the Company were to increase the authorized number of directors. A
classified board with three classes is not permitted under California law
without at least nine directors. Delaware law permits a corporation to adopt
a classified board of directors without regard to the size of the board.
The Bylaws of Simpson California provide for the election of all of the
directors at each annual meeting of the shareholders. Each director serves a
term of one year, ending at each annual meeting. In contrast, the Simpson
Delaware Certificate of Incorporation and Bylaws provide for three classes
of directors, designated Class I, Class II, and Class III. If, at the annual
meeting, the shareholders of Simpson California elect each of the seven
nominees listed in Proposal No. 1 of this Proxy Statement to serve as
directors of Simpson California, and the shareholders approve of the
proposed reincorporation, the seven nominees would serve on the Board of
Directors of Simpson Delaware as follows: Sunne Wright McPeak and Barclay
Simpson would serve in Class I, for a term of one year; Stephen B. Lamson
and Peter M. Louras, Jr. would serve in Class II, for a term of two years;
and Earl F. Cheit, Thomas J Fitzmyers and Barry Lawson Williams would serve
in Class III, for a term of three years. If the shareholders of Simpson
California elect any person to serve as a director of Simpson California who
is not listed as a nominee in Proposal No. 1 of this Proxy Statement, that
director would serve in Class I, for a term of one year, on the Board of
Directors of Simpson Delaware, and the Board of Directors would assign each
other director to a class and term as similar as practicable to the class
and term specified above. Beginning with the directors elected at the annual
meeting in 2000, each director of Simpson Delaware would serve a term of
three years. At each annual meeting of Simpson Delaware, the stockholders
would elect directors to one class.
In a corporation with three classes of directors, such as Simpson
Delaware, unless directors are removed, at least two annual meetings of
shareholders are required before holders of a majority of the shares may
assert control over the board of directors, because only a portion of the
directors are elected at each annual meeting, and directors may not be
removed, except for cause. A classified board of directors may deter hostile
takeover attempts, because a hostile acquiror would experience delay in
replacing a majority of the directors. On the other hand, a classified board
of directors makes it more difficult for all shareholders to effect a change
in control of the board of directors, even if such a change in control is
sought due to dissatisfaction with the performance of the incumbent
directors. See "Differences between the Corporation Laws of California and
Delaware-Classified Board of Directors," below.
C. No Shareholder Action by Written Consent.
Delaware law also permits a corporation to protect itself against
certain stockholder initiatives being used in a disruptive way in connection
with unsolicited takeover attempts. A Delaware corporation may deny
stockholders the right to take action by written consent and not permit them
to call a special stockholders' meeting. California law permits a
corporation to deny shareholders the right to act by written consent, but
shareholders owning ten percent or more of the shares are always entitled to
call a special meeting of the shareholders, and a simple majority of the
shares, without action by the board of directors, can cause the corporation
to dissolve and wind up its business. As permitted by Delaware law, the
Certificate of Incorporation of Simpson Delaware specifically denies
stockholders the power to act by written consent, and does not enable them
to call a special stockholders' meeting. The Board of Directors believes
that these measures will enhance its ability to negotiate effectively in the
event of a hostile takeover attempt. Without the ability to act by written
consent, a holder or group of holders controlling a majority of Simpson
Delaware's outstanding shares cannot amend the Bylaws or change directors
pursuant to a written consent. Stockholders must wait to act until all of
the stockholders have had an opportunity to vote on the measure at an annual
stockholders' meeting.
DIFFERENCES BETWEEN THE CORPORATION LAWS OF CALIFORNIA AND DELAWARE
Classified Board of Directors. California law generally requires that
directors be elected annually but permits a classified board of directors if
(a) the corporation is listed on a national stock exchange or (b) the
corporation's shares are quoted on the Nasdaq National Market and are held
by at least 800 shareholders. Under California law, with the approval of its
shareholders, a listed corporation may divide its board of directors into
two or three classes by adopting amendments to its articles of incorporation
<PAGE>
or bylaws. California law requires that a corporation that adopts a
classified board of directors must have at least six directors authorized if
it divides its board of directors into two classes, and must have at least
nine directors authorized if it divides its board of directors into three
classes. Delaware law permits a corporation to have a classified board of
directors, but unlike California law, does not prescribe a minimum number of
directors.
Removal of Directors. Under California law, shareholders may remove a
director, with or without cause, by the affirmative vote of a majority of
the outstanding shares, unless the corporation has a classified board of
directors. If the corporation has a classified board of directors,
shareholders cannot remove a director if other shareholders cast votes
against the removal in a number sufficient to elect the director under
cumulative voting. Under Delaware law, stockholders can remove a director on
a classified board only for cause, unless the certificate of incorporation
provides otherwise. Simpson Delaware's Certificate of Incorporation provides
that stockholders may remove directors only for cause.
Indemnification and Limitation of Personal Monetary Liability of
Directors. The Certificate of Incorporation of Simpson Delaware eliminates
the liability of directors to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director to the fullest
extent permissible under Delaware law, as it exists currently and as it may
be amended in the future. Similarly, the Articles of Incorporation of
Simpson California eliminate the liability of directors to the corporation
to the fullest extent permissible under California law. The provision
eliminating monetary liability of directors in the Simpson Delaware
Certificate of Incorporation is potentially more expansive than the
corresponding provision in the Simpson California Articles of Incorporation,
because it incorporates future amendments to Delaware law with respect to
the elimination of such liability. However, no such future amendments are
contemplated, and the Board of Directors does not consider the difference to
be material. California and Delaware have similar laws allowing a
corporation to indemnify its officers, directors, employees and other
agents. With certain exceptions, the laws of both states also permit a
corporation to adopt charter provisions eliminating the liability of a
director to the corporation or its shareholders for monetary damages for
breach of the director's fiduciary duty. This section describes the
differences between the laws of the two states with regard to
indemnification and limitation of director liability.
Under Delaware law, a corporation may not eliminate or limit director
monetary liability for: (a) breaches of the director's duty of loyalty to
the corporation or its stockholders; (b) acts or omissions not in good faith
or involving intentional misconduct or knowing violations of law; (c) the
payment of unlawful dividends or unlawful stock repurchases or redemptions;
or (d) transactions in which the director receives an improper personal
benefit. Delaware law also prohibits a corporation from limiting a
director's liability for violations of federal or state securities laws, and
does not allow the corporation to affect the availability of non-monetary
remedies, such as injunctive relief or rescission, in actions against its
directors. California law prohibits the elimination of monetary liability
where such liability is based on: (a) intentional misconduct or knowing and
culpable violation of law; (b) acts or omissions that a director believes to
be contrary to the best interests of the corporation or its shareholders or
that involve the absence of good faith on the part of the director; (c)
receipt of an improper personal benefit; (d) acts or omissions that show
reckless disregard for the director's duty to the corporation or its
shareholders, where the director, in the ordinary course of performing a
director's duties, should be aware of a risk of serious injury to the
corporation or its shareholders; (e) acts or omissions that constitute an
unexcused pattern of inattention that amounts to an abdication of the
director's duty to the corporation and its shareholders; (f) transactions
between the corporation and a director who has a material financial interest
in such transaction; and (g) liability for improper distributions, loans or
guarantees.
California law requires indemnification when an individual director
successfully defends an action on the merits, while Delaware law requires
indemnification whether the defense is successful or, under circumstances
described below, unsuccessful, on the merits or otherwise. Delaware law
generally permits indemnification of expenses, including attorneys' fees,
which a director actually and reasonably incurs in the defense or settlement
of a derivative or third-party action, if a majority of a disinterested
quorum of the directors, independent legal counsel or a majority of a quorum
of the stockholders determines that the person seeking indemnification acted
in good faith and in a manner reasonably believed to be in best interests of
the corporation. Without court approval, however, a corporation may not
indemnify a director in a derivative action in which the director is
adjudged liable for negligence or misconduct in the performance of his or
her duty to the corporation. Delaware law requires indemnification of
expenses when the indemnified individual has successfully defended any
action, claim, issue or matter therein, on the merits or otherwise. Under
<PAGE>
Delaware law and California law, a corporation may advance expenses that the
officer or director will incur in defending an action, if the officer or
director undertakes to reimburse the corporation if he or she is ultimately
not entitled to indemnification. In addition, the laws of both states
authorize a corporation to purchase insurance for the benefit of its
officers, directors, employees and agents, whether or not the corporation
would have the power to indemnify against the liability covered by the
policy. California law also permits a California corporation to provide
rights to indemnification beyond those provided by law. Accordingly, Simpson
California's Articles of Incorporation permit indemnification beyond that
expressly mandated by California law, in addition to limiting director
monetary liability to the extent permitted by California law. Delaware law
also permits a Delaware corporation to provide indemnification in excess of
that provided by statute. In contrast to California law, however, Delaware
law does not require provisions in the certificate of incorporation
authorizing additional indemnification, and does not contain express
prohibitions on indemnification in certain circumstances. The Delaware
courts may limit indemnification, based on principles of public policy.
Shareholder Derivative Suits. California law provides that a
shareholder bringing a derivative action on behalf of a corporation need not
have held shares at the time of the transaction in question, if the
shareholder meets certain requirements. Under Delaware law, on the other
hand, a stockholder may bring a derivative action on behalf of the
corporation only if the stockholder was a stockholder of the corporation at
the time of the transaction in question or if he or she later received the
stock by operation of law. California law also provides that the corporation
or the defendant in a derivative suit may make a motion to the court for an
order requiring the plaintiff shareholder to furnish a security bond.
Delaware does not have a similar bonding requirement.
Dividends and Repurchases of Shares. Under California law, any
dividends or other distributions to shareholders, such as redemptions, are
limited to the greater of (a) retained earnings or (b) an amount that would
leave the corporation with assets (excluding certain intangible assets)
equal to at least 125% of its liabilities (excluding certain deferred items)
and current assets equal to at least 100% (or, in certain circumstances,
125%) of its current liabilities. Delaware law allows the payment of
dividends and redemption of stock out of surplus (including paid-in and
earned surplus) or out of net profits for the current and immediately
preceding fiscal years.
Inspection of Shareholder Lists. Both California and Delaware law allow
any shareholder to inspect the shareholder list for a purpose reasonably
related to such person's interest as a shareholder. California law provides,
in addition, for an absolute right to inspect and copy the corporation's
shareholder list by persons holding an aggregate of five percent or more of
the corporation's voting shares, or shareholders holding an aggregate of one
percent or more of such shares who are contesting an election of directors.
Delaware law also provides to stockholders the right to inspect a list of
stockholders entitled to vote at a meeting, within a ten-day period
preceding the meeting, for any purpose germane to the meeting. Delaware law
contains no provisions comparable to the absolute right of inspection
provided to certain shareholders by California law.
Stockholder Approval of Certain Business Combinations. Section 203 of
the Delaware General Corporation Law prohibits a Delaware corporation from
engaging in a business combination with an interested stockholder for three
years after the person or entity becomes an interested stockholder. With
certain exceptions, an interested stockholder is a person or entity that
owns, individually or with or through certain other persons or entities,
fifteen percent or more of the corporation's outstanding voting stock,
including any rights to acquire stock pursuant to an option, warrant,
agreement, arrangement or understanding, or on the exercise of conversion or
exchange rights, and stock with respect to which the person has voting
rights only. The three-year moratorium imposed on business combinations by
section 203 does not apply if (a) the board of directors of the subject
corporation approves either the business combination or the transaction that
resulted in the person or entity becoming an interested stockholder before
<PAGE>
the stockholder becomes an interested stockholder; (b) on consummation of
the transaction that makes him or her an interested stockholder, the
interested stockholder owns at least eighty-five percent of the
corporation's voting stock outstanding at the time the transaction
commenced, excluding from the eighty-five percent calculation shares owned
by directors who are also officers of the subject corporation and shares
held by employee stock plans that do not give employee participants the
right to decide confidentially whether to accept a tender or exchange offer;
or (c) on or after the date the person or entity becomes an interested
stockholder, the board of directors approves the business combination and
the business combination is also approved at a stockholder meeting by two-
thirds of the outstanding voting stock not owned by the interested
stockholder. Although a Delaware corporation to which section 203 applies
may elect not to be governed by section 203, the Board of Directors intends
that the provisions of section 203 will apply to Simpson Delaware. The Board
of Directors also believes that most Delaware corporations have availed
themselves of this statute and have not opted out of section 203. The Board
of Directors believes that section 203 will encourage any potential acquiror
to negotiate with the Board of Directors. Section 203 might also limit the
ability of a potential acquiror to make a two-tiered bid for Simpson
Delaware that does not treat all stockholders equally. The application of
section 203 to Simpson Delaware will confer on the Board of Directors the
power to reject a proposed business combination in certain circumstances,
even though a potential acquiror may be offering a substantial premium over
the market price for Simpson Delaware's shares. Section 203 would also
discourage certain potential acquirors unwilling to comply with its
provisions.
California law requires that holders of common stock receive common
stock in a merger of the corporation with (a) the holder of more than 50%
but less than 90% of the target's common stock or (b) its affiliate, unless
all of the target company's shareholders consent to the transaction. This
provision of California law may render a "cash-out" merger by a majority
shareholder more difficult to accomplish. Although Delaware law does not
parallel California law in this respect, under some circumstances section
203 provides similar protection to stockholders against coercive two-tiered
bids for a corporation in which the stockholders are not treated equally.
Appraisal Rights. Under both California and Delaware laws, a
shareholder of a corporation participating in certain major corporate
transactions may, under varying circumstances, be entitled to appraisal
rights pursuant to which the shareholder may receive in cash the fair market
value of his or her shares in lieu of the consideration he or she would
otherwise receive in the transaction. The limitations on the availability of
appraisal rights under California law differ from those under Delaware law.
Under Delaware law, fair market value is determined exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, and such appraisal rights are not available: (a) with
respect to the sale, lease or exchange of all or substantially all of the
assets of a corporation; (b) with respect to a merger or consolidation by a
corporation the shares of which are either listed on a national securities
exchange or are held of record by more than 2,000 holders if such
stockholders receive only shares of the surviving corporation or shares of
any other corporation that are either listed on a national securities
exchange or held of record by more than 2,000 holders, plus cash in lieu of
fractional shares of such corporations; or (c) to stockholders of a
corporation surviving a merger if no vote of the stockholders of the
surviving corporation is required to approve the merger under Delaware law.
In contrast, shareholders of a California corporation whose shares are
listed on a national securities exchange generally have appraisal rights if
the holders of at least five percent of the class of outstanding shares
claim the right, or the corporation or any law restricts the transfer of
such shares. Appraisal rights are unavailable if the shareholders of a
California corporation or the corporation itself, or both, immediately prior
to the reorganization will own immediately after the reorganization equity
securities constituting more than five-sixths of the voting power of the
surviving or acquiring corporation or its parent entity. Unlike Delaware
law, California law generally affords appraisal rights in sale of assets
reorganizations.
Class Vote for Certain Reorganizations. With certain exceptions,
California law requires a majority vote of each class of shares outstanding
to approve mergers, reorganizations, certain sales of assets and similar
transactions. Delaware law generally does not require class voting for such
transactions, except in certain situations involving an amendment of the
certificate of incorporation that adversely affects a specific class of
shares.
Supermajority Charter Provisions. California law provides that any
provision in a corporation's articles of incorporation requiring approval by
a proportion of the outstanding shares larger than a majority will expire in
two years. The specified supermajority of shareholders must therefore re-
approve supermajority requirements every two years. Delaware law contains no
such provision for the expiration of supermajority requirements.
<PAGE>
Dissolution. Under California law, shareholders holding 50% or more of
the total voting power may authorize a corporation's dissolution, with or
without the approval of the corporation's board of directors. California
corporations may not modify this right in their articles of incorporation.
Under Delaware law, unless the board of directors approves the proposal to
dissolve, all of the stockholders entitled to vote on the dissolution must
unanimously approve the dissolution. If the board of directors initially
approves the dissolution, a simple majority of the outstanding shares of the
corporation's stock entitled to vote may vote to dissolve the corporation.
In the event of such a board-initiated dissolution, Delaware law allows a
Delaware corporation to include in its certificate of incorporation a
supermajority voting requirement. Simpson Delaware's Certificate of
Incorporation contains no such supermajority voting requirement.
Application of the General Corporation Law of California after the
Proposed Reincorporation. Section 2115 of the California General Corporation
Law subjects certain corporations organized under other states' laws, but
which have specified significant contacts with California, to a number of
provisions of the California General Corporation Law. California law
provides an exemption from section 2115 for corporations whose shares are
listed on a national securities exchange, such as the New York Stock
Exchange. Because the common stock of Simpson Delaware would be listed on
the New York Stock Exchange following the proposed reincorporation, the
Board of Directors expects that section 2115 will not apply to Simpson
Delaware.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE PROPOSED REINCORPORATION
The reincorporation pursuant to the Merger Agreement is intended to be
a tax-free reorganization under section 368(a) of the Internal Revenue Code
of 1986, as amended. Assuming the reincorporation qualifies as a
reorganization, neither Simpson California nor Simpson Delaware nor their
stockholders would recognize gain or loss as a result of the proposed
reincorporation. Stockholders would have the same basis in their capital
stock of Simpson Delaware as they have in their Simpson California stock.
Each stockholder's holding period with respect to Simpson Delaware's capital
stock would include the period during which such holder held the
corresponding Simpson California capital stock, if the shareholder held the
Simpson California stock as a capital asset at the time of consummation of
the reincorporation. Neither Simpson California nor Simpson Delaware has
obtained or intends to request a ruling from the Internal Revenue Service or
an opinion of legal or tax counsel with respect to the consequences of the
reincorporation. The foregoing is only a summary of certain federal income
tax consequences. Shareholders should consult their own tax advisers
regarding the specific tax consequences to them of the merger, including the
applicability of the laws of any state or other jurisdiction.
THE BOARD RECOMMENDS A VOTE "FOR" THE PROPOSAL TO REINCORPORATE UNDER
DELAWARE LAW WITH THE NEW CHARTER PROVISIONS. THE BOARD RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" EACH OF THE PRINCIPAL ELEMENTS OF THIS PROPOSAL.
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The table below provides information relating to compensation for the
years ended December 31, 1998, 1997 and 1996, for the Chief Executive Officer
and the other three most highly compensated executive officers of the Company
and the Chief Executive Officer of SDV (determined as of the end of 1998)
(collectively, the "Named Executive Officers"). The amounts shown include
compensation for services in all capacities that were provided to the
Company and its subsidiaries.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term Compensation
-------------------------------
Annual Compensation Awards(1) Payouts
------------------------------- ---------------------- -------
Other Securities
Annual Restricted Underlying LTIP All Other
Name and Compen- Stock Options/ Pay- Compen-
Principal Position Year Salary($) Bonus($) sation($) Awards($) SARs(#)(1) outs($) sation($)(2)
- - ---------------------- ---- --------- --------- --------- ---------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Thomas J Fitzmyers, 1998 257,544 1,057,071 - - 4,500 - 24,000
President and Chief 1997 248,832 871,575 - - 4,500 - 24,000
Executive Officer of 1996 230,818 664,180 12,782 - 4,500 - 22,500
the Company
Barclay Simpson, 1998 150,000 592,119 - - 500 - 22,500
Chairman of the Board 1997 150,000 480,650 - - 500 - 22,500
of the Company 1996 150,000 334,502 - - 500 - 22,500
Stephen B. Lamson, 1998 113,532 626,339 - - 2,500 - 17,030
Chief Financial 1997 109,692 516,428 - - 2,500 - 16,454
Officer and Secretary 1996 105,984 393,541 2,568 - 2,500 - 16,283
of the Company
Donald M. Townsend, 1998 172,128 328,463 12,642 - - - 24,000
President and Chief 1997 166,308 422,168 4,836 - 2,500 - 24,000
Executive Officer 1996 160,680 198,940 12,462 - 7,500 - 22,500
of SDV
</TABLE>
(1) Shares subject to outstanding stock options, which have exercise
prices of $23.00 to $41.18 per share.
(2) Represents contributions to the Company's profit sharing plan trusts
for the accounts of the Named Executive Officers.
<PAGE>
Employee Stock Options
The tables below provide information regarding options to purchase shares of
Common Stock granted and to be granted to the Named Executive Officers for
the year ended December 31, 1998, under the Company's 1994 Stock Option
Plan.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Potential
Realizable Value at
Number of % of Total Assumed Annual Rates of
Securities Options/SARs Exercise Stock Price Appreciation
Underlying Granted to or Base Expir- for Option Term
Options/SARs Employees in Price ($/ ation --------------------------
Name Granted(#) Fiscal Year share)(1) Date(2) 0%($) 5%($) 10%($)
- - -------------------- ------------ ------------- --------- --------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Thomas J Fitzmyers 4,500 3.8% 37.44 1/1/06 - 68,584 159,829
Barclay Simpson 500 0.4% 41.18 1/1/04 - 5,689 12,571
Stephen B. Lamson 2,500 2.1% 37.44 1/1/06 - 38,102 88,794
</TABLE>
(1) The exercise price of each of these options is based on the market
price of the Company's Common Stock on December 31, 1998.
(2) The date of grant is to be determined by the Committee. Each option has
a term of seven years from the date of grant except for Barclay
Simpson's, which has a term of five years from the date of grant.
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
DECEMBER 31, 1997, OPTION/SAR VALUES
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
Shares at December 31, at December 31,
Acquired on Value 1997,(#) Exercisable/ 1997,($) Exercisable/
Name Exercise(#) Realized($) Unexercisable Unexercisable
- - -------------------- ------------- ------------- ----------------------- -----------------------
<S> <C> <C> <C> <C>
Thomas J Fitzmyers - - 213,860/11,250 5,500,798/76,992
Stephen B. Lamson - - 55,798/6,250 1,669,187/42,773
Donald M. Townsend - - 53,669/7,500 1,403,417/112,852
Barclay Simpson - - 750/1,250 12,943/6,602
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Boards of Directors of the Company
comprises Barclay Simpson, the Chairman of the Board of the Company, and
Sunne Wright McPeak and Barry Lawson Williams, both independent directors of
the Company. Ms. McPeak and Mr. Williams have no relationships with the
Company or any of its subsidiaries other than as members of the Company's
Board of Directors and certain committees of the Company's Board of
Directors. Certain transactions to which Mr. Simpson, his affiliates and
members of his family have been parties are described below.
<PAGE>
Real Estate Transactions
The Company, directly and through its subsidiaries, leases certain of
its facilities from general partnerships (the "Partnerships") wholly or
partly comprising current or former directors, officers, employees and
shareholders of the Company and its subsidiaries. The Partnerships, their
partners, the percentage interests of such partners in the Partnerships and
the properties that the Partnerships lease, or previously leased and sold,
to the Company or a subsidiary, are as follows:
<TABLE>
<CAPTION>
Partnership Partners (percentage interests) Property Location
- - --------------------- ----------------------------------------------- -----------------
<S> <C> <C>
Simpson Investment Barclay Simpson (77%), John B. Simpson (5%), San Leandro,
Company ("SIC") Anne Simpson Gattis (5%), Jean D. Simpson California
(5%), Jeffrey P. Gainsborough (2%), Julie
Marie Simpson (2%), Elizabeth Simpson Murray
(2%) and Amy Simpson (2%)
Doolittle Investors Everett H. Johnston Family Trust (23.13%), San Leandro,
Barclay and Sharon Simpson (25.51%), Thomas J California
Fitzmyers (5.24%), Judy F. Oliphant, Successor
Trustee of the Oliphant Family Revocable
Trust Agreement Dated January 27, 1993
(Survivors Trust) ("Oliphant Trust") (20.61%),
and SIC (25.51%)
Columbus-Westbelt Everett H. Johnston Family Trust (5.54%), Columbus, Ohio
Investment Co. Thomas J Fitzmyers (1.10%), Oliphant Trust
(5.54%), Barclay and Sharon Simpson (13.31%),
Richard C. Perkins Trust (5.48%), Stephen
B. Lamson (3.32%), Tyrell T. Gilb Trust
(5.54%), Doyle E. Norman (5.54%), Stephen P.
Eberhard (5.05%), Robert J. Phelan (5.54%),
Jeffrey P. Gainsborough (11.01%), Julie Marie
Simpson (11.01%), Elizabeth Simpson Murray
(11.01%) and Amy Simpson (11.01%)
Vacaville Investors Everett H. Johnston Family Trust (49.90%), Vacaville,
Thomas J Fitzmyers (1.13%), Oliphant Trust California
(12.47%), Barclay and Sharon Simpson (4.57%),
SIC (27.50%), Richard C. Perkins Trust (4.43%)
Vicksburg Investors Everett H. Johnston Family Trust (41.17%), Vicksburg,
Thomas J Fitzmyers (6.02%), Oliphant Trust Mississippi
(12.61%), Barclay and Sharon Simpson (33.92%)
and Richard C. Perkins Trust (6.28%)
</TABLE>
Barclay Simpson is the managing partner of SIC, a general partnership
of Mr. Simpson and his seven children. Everett H. Johnston, formerly a
director and executive officer of the Company (now retired), is the managing
partner of each Partnership other than SIC. Richard C. Perkins, Stephen P.
Eberhard and Robert J. Phelan are officers of SST and Doyle E. Norman and
Tyrell T. Gilb (both now retired) are consultants to the Company. Sharon
Simpson is Barclay Simpson's wife; and John B. Simpson, Anne Simpson Gattis,
Jean D. Simpson, Jeffrey P. Gainsborough, Julie Marie Simpson, Elizabeth
Simpson Murray and Amy Simpson are his children.
<PAGE>
Aggregate lease payments by the Company and its subsidiaries to the
Partnerships in 1998, 1997 and 1996 were, and the terms of the leases will
expire, as follows:
<TABLE>
<CAPTION>
Lease Payments Lease
---------------------------------- Expiration
Partnership 1997 1996 1995 Date
- - --------------------------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
SIC $ 185,100 $ 185,100 $ 185,100 12/31/01
Doolittle Investors 239,400 239,400 231,096 12/31/01
Columbus Westbelt Investment Co. 581,064 581,064 581,064 9/30/05
Vacaville Investors 437,640 437,640 437,640 11/30/07
Vicksburg Investors 353,411 334,279 329,017 11/30/03
</TABLE>
The leases with the Partnerships are expected to continue until the
expiration of the respective terms of the leases, and they may hereafter be
renewed. The Company's future rent obligations under the continuing leases
are expected to be consistent with the rents paid in 1998, subject to
adjustments as provided in certain of the leases.
If and when any lease is proposed to be amended or renewed or any
property subject to any lease is proposed to be purchased by the Company,
the Company will enter into such transaction only with the approval of a
majority of the directors of the Company who are not employees or officers
of the Company and who are not partners of any of the Partnerships and only
after such directors satisfy themselves that such transaction will be fair,
just and reasonable as to the Company, beneficial to the Company and on
terms reasonably consistent with the terms available from unrelated parties
in similar transactions negotiated at arm's length.
The Company does not intend in the future to lease from any of the
Partnerships or any other entities controlled by any of its directors,
officers or employees any facilities that are not on or adjacent to the
property subject to the existing leases.
Cash Profit Sharing Bonus Plan
The Company maintains a cash profit sharing bonus plan for the benefit
of employees of the Company and its subsidiaries. The Company may change,
amend or terminate its bonus plan at any time. Under the bonus plan as
currently in effect, the Compensation Committee of the Board of Directors
determines a "qualifying level" for the coming fiscal year for the Company,
SDV and each branch of SST. The qualifying level is equal to the value of
the net operating assets (as defined) of the Company, SDV or the respective
branch of SST, multiplied by a rate of return on those assets. If profits
exceed the qualifying level in any fiscal quarter, a portion of such excess
profits is distributed to the eligible employees as cash bonuses. The
percentage of excess profits distributed and the rates used to calculate the
amounts to be distributed to the Named Executive Officers are determined by
the Compensation Committee of the Board of Directors, while the percentage
of excess profits distributed and the rates used to calculate the amounts to
be distributed to all other participants are determined by the executive
officers. The failure to earn a cash bonus in any given quarter does not
affect the ability to earn a cash bonus in any other quarter. Amounts paid
under these programs aggregated $14.6 million, $12.5 million and $9.3
million in 1998, 1997 and 1996, respectively, the amounts of which paid to
Named Executive Officers in 1998, 1997 and 1996 are shown in the Summary
Compensation Table above.
1994 Stock Option Plan
By affording selected employees and directors of and consultants to the
Company and its subsidiaries the opportunity to buy shares of Common Stock
of the Company, the 1994 Stock Option Plan (the "Option Plan") is intended
to enhance the ability of the Company and its subsidiaries to retain the
services of persons who are now employees, directors or consultants, to
secure and retain the services of new employees, directors and consultants,
and to provide incentives for such persons to exert maximum efforts for the
success of the Company and its subsidiaries. The Option Plan was adopted by
<PAGE>
the Company's Board of Directors and approved by the Company's shareholders
prior to the Company's initial public offering in 1994. It was amended in
1997 with shareholder approval. No more than 1,500,000 shares of Common
Stock may be sold pursuant to all options granted under the Option Plan.
Common Stock sold on exercise of options granted under the Option Plan may
be previously unissued shares or reacquired shares, bought on the market or
otherwise. Options to purchase 120,750 and 117,750 shares of Common Stock
were granted pursuant to commitments made related to the preceding fiscal
years under the Option Plan in 1998 and 1997, respectively, and options to
purchase 117,250 shares of Common Stock were committed to be granted in
1998. Options committed to be granted under the Option Plan to Named
Executive Officers in 1998 and 1997 are shown in the Summary Compensation
Table above.
Profit Sharing Plans
The Company's subsidiaries maintain defined contribution profit sharing
plans for their U.S. based salaried employees (the "Salaried Plan") and for
U.S. based nonunion hourly employees (the "Hourly Plan"). An employee is
eligible for participation in a given year if he or she is an employee on
the first and last days of that calendar year and completes at least 1,000
hours or service during that calendar year for the Salaried Plan or 750
hours of service during that calendar year for the Hourly Plan. As of
December 31, 1998, there were 315 employees participating in the Salaried
Plan and 434 employees participating in the Hourly Plan. Under the Salaried
Plan and the Hourly Plan, the Board of Directors may authorize contributions
to the plan trusts in their exclusive discretion. Contributions to the plan
trusts by the Company's subsidiaries are limited to the amount deductible
for federal income tax purposes under section 404(a) of the Internal Revenue
Code. Barclay Simpson, Thomas J Fitzmyers and Stephen B. Lamson, who are
Named Executive Officers of the Company, are the trustees of the plan trusts
and are also participants in the Salaried Plan. The amounts contributed by
the Company for their accounts in 1998, 1997 and 1996 are shown in the
Summary Compensation Table above. Certain of the Company's foreign
subsidiaries maintain similar plans for their employees.
Compensation of Directors
The Company's directors who do not receive compensation as officers or
employees of the Company are each paid an annual retainer of $10,000 and a
fee of $1,000 for attending in person each meeting of the Board of Directors
and for attending in person each meeting of any committee held on a day when
the Board of Directors does not meet. Each outside director is also paid
$500 for each committee meeting he or she attends in person on the same day
as a Board of Directors meeting and for Board of Directors meetings attended
by telephone conference. Directors are also reimbursed for expenses incurred
in connection with their attendance at Board of Directors and committee
meetings.
1995 Independent Director Stock Option Plan
The Simpson Manufacturing Co., Inc. 1995 Independent Director Stock
Option Plan (the "Independent Director Plan") was adopted by the Board of
Directors and approved by the shareholders in 1995 and was amended by the
Board of Directors in 1997. The purpose of the Independent Director Plan is
to give independent directors of the Company an opportunity to buy shares of
Common Stock of the Company, to encourage independent directors in their
efforts on behalf of the Company and to secure their continued service to
the Company. Options to purchase 1,500 shares of Common Stock were committed
to be granted under the Independent Director Plan in 1998.
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE, 1994 STOCK OPTION PLAN COMMITTEE AND
BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
The Compensation Committee and the 1994 Stock Option Plan Committee of
the Board of Directors are responsible for the development and review of the
Company's compensation policy for all the salaried employees. The overall
philosophy of the Company's compensation program is to provide a high degree
of incentive to employees by creating programs that reward achievement of
specific profit goals. The Company believes that these incentive programs
based on profit targets are best suited to align the interests of employees
and shareholders. In addition, the Company does not have any special plans
for the Chief Executive Officer or other executive officers of the Company.
The absence of special plans for the executive officers is intended to
create a sense of unity and cooperation among the Company's employees. The
four elements of the Company's compensation plan for most salaried employees
and all officers are base salary, a profit sharing retirement plan, a cash
profit sharing bonus plan and the Option Plan.
The Compensation Committee has not performed any recent salary surveys,
but based on surveys in prior years and recent raises, it believes the base
salaries for the Chief Executive Officer and other executive officers are
about average as compared to similar companies. Raises for the officers in
1998 were 3.5% for each of Thomas J Fitzmyers, President and Chief Executive
Officer, Stephen B. Lamson, Chief Financial Officer and Secretary, and
Donald M. Townsend, President and Chief Executive Officer of SDV. Barclay
Simpson, Chairman, did not receive an increase in salary in 1998.
All U.S. based salaried employees, including the Chief Executive
Officer and other executive officers, participate in the profit sharing plan
in proportion to their salary. For 1998, 15% of all U.S. based salaried
employees' base pay will be contributed to the profit sharing plan subject
to the limitations of applicable law. In 1998, Thomas J Fitzmyers, President
and Chief Executive Officer, and Donald M. Townsend, President and Chief
Executive Officer of SDV, were subject to a contribution limit under
applicable law; the Company's contribution to the profit sharing plan for
their accounts is $24,000 each.
All salaried employees except those on commission programs, participate
in the Company's quarterly cash profit sharing bonus plan. Annually, the
Compensation Committee establishes an acceptable range of participation in
the profits in excess of the qualifying level to be distributed as cash
bonuses for each profit center. The Compensation Committee also approves the
specific percentages to be distributed to the Chief Executive Officer and
other executive officers. The executive officers determine the specific
percentages for distributions to all other participating employees.
Historically, the percentage of profits in excess of the qualifying level
distributed under these plans has not changed substantially from year to
year. Employees with higher levels of responsibility typically receive
higher proportions of the cash profit sharing for their profit center.
Barclay Simpson's participation rate decreased in 1995, Thomas J Fitzmyers'
and Stephen B. Lamson's participation rates decreased slightly in 1996 and
were decreased by approximately 10% in 1997 and Donald M. Townsend's
participation rate has not changed for over ten years. In 1998, the Chief
Executive Officer received 410% of his base salary in cash profit sharing
bonuses. Because the cash profit sharing bonus plan is based upon a return
on net operating assets, and not subjectively determined, the Compensation
Committee believes the plan provides substantial incentive to all
participating employees, not only the Company's officers.
The 1994 Stock Option Plan Committee believes an option plan is most
effective if options are granted to all participants on an objective rather
than subjective basis. Therefore, under the Option Plan, participants are
granted options if Company-wide and profit center operating goals are met.
The Compensation Committee establishes these goals at the beginning of the
year. The 1994 Stock Option Plan Committee also believes that option plans
with broad based participation are most effective. The 1994 Stock Option
Plan Committee determines each year the employees who are eligible to
participate in the Option Plan, based on job responsibilities and
contributions made to the Company. At present, over one quarter of the
Company's salaried employees participate in the Option Plan. The 1994 Stock
Option Plan Committee determines the number of options to be granted under
the Option Plan. In determining the potential grants, the 1994 Stock Option
Plan Committee considers previous stock and option awards, current options
owned, job responsibilities and contributions to the Company. These same
considerations apply to option grants to the Chief Executive Officer and
<PAGE>
other executive officers. Because of the responsibilities of the Chief
Executive Officer and the other executive officers, their stock option
grants are higher than those of other participants who also achieve their
goals.
In 1995, the Company adopted the Independent Director Plan to give the
outside members of the Board of Directors an opportunity to buy shares of
Common Stock of the Company. The Independent Director Plan is administered
by the Board of Directors (as its manager and not as its trustee) and
determines which persons are eligible to be granted options. The Board of
Directors believes this kind of option plan is most effective if options are
granted to outside directors on an objective basis. Therefore, the Board of
Directors determines the number of shares subject to options that they
believe will be an appropriate incentive to be granted when an outside
director becomes a member of the Board of Directors and if Company-wide
operating goals, established by the Compensation Committee at the beginning
of the year, are met. These operating goals were met in 1998 and
accordingly, an option to purchase 500 shares was committed to be granted to
each outside director.
1994 Stock
Compensation Committee Option Plan Committee
---------------------------- ---------------------------
Barclay Simpson, Chair Sunne Wright McPeak, Chair
Sunne Wright McPeak Barry Lawson Williams
Barry Lawson Williams
<PAGE>
COMPANY STOCK PRICE PERFORMANCE
The graph below compares the cumulative total shareholder return on the
Company's Common Stock from May 31, 1994, through December 31, 1998, with
the cumulative total return on the S & P 500 Index and the Dow Jones
Building Materials Index over the same period (assuming the investment of
$100 in the Company's Common Stock and in each of the indices on May 31,
1994, and reinvestment of all dividends).
SIMPSON MANUFACTURING CO., INC.
Comparison of Cumulative Total Return
May 31, 1994, to December 31, 1998
<TABLE>
<CAPTION>
Dow Jones
Simpson Building
Manufacturing S & P 500 Materials
Co., Inc. Index Index
------------- ------------- -------------
<S> <C> <C> <C>
May-1994 $100 $100 $100
Dec-1994 89 102 95
Dec-1995 111 141 130
Dec-1996 190 173 155
Dec-1997 275 231 189
Dec-1998 309 296 219
</TABLE>
The Company's initial public offering commenced on May 26, 1994. Data is
shown beginning May 31, 1994, because data for cumulative returns on the
S & P 500 Index and the Dow Jones Building Materials Index are available
only at month end.
Historical returns are not necessarily indicative of future performance.
<PAGE>
OTHER BUSINESS
The Board of Directors does not presently intend to bring any other
business before the Meeting and, so far as is known to the Board of
Directors, no matters are to be brought before the Meeting except as
specified in the notice of the Meeting. As to any business that may properly
come before the Meeting, however, it is intended that proxies, in the form
enclosed, will be voted in respect thereof in accordance with the judgment
of the persons voting such proxies.
DISCLAIMER REGARDING INCORPORATION BY REFERENCE OF THE REPORT OF THE
COMPENSATION COMMITTEE AND THE STOCK PRICE PERFORMANCE GRAPH
THE INFORMATION SHOWN IN THE SECTIONS ENTITLED "REPORT OF THE
COMPENSATION COMMITTEE, THE 1994 STOCK OPTION PLAN COMMITTEE AND BOARD OF
DIRECTORS ON EXECUTIVE COMPENSATION" AND "COMPANY STOCK PRICE PERFORMANCE"
SHALL NOT BE DEEMED TO BE INCORPORATED BY REFERENCE BY ANY GENERAL STATEMENT
INCORPORATING BY REFERENCE THIS PROXY STATEMENT INTO ANY FILING BY THE
COMPANY WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED,
EXCEPT TO THE EXTENT THAT THE COMPANY INCORPORATES THIS INFORMATION BY
SPECIFIC REFERENCE, AND SUCH INFORMATION SHALL NOT OTHERWISE BE DEEMED FILED
UNDER SUCH ACTS.
SHAREHOLDER PROPOSALS
Shareholder proposals for inclusion in the proxy statement and form of
proxy relating to the Company's 2000 Annual Meeting of Shareholders must be
received by the Company a reasonable time before the Company's solicitation
is made, and in any event not later than December 14, 1999.
BY ORDER OF THE BOARD
Stephen B. Lamson
Secretary
TO ASSURE THAT YOUR SHARES ARE REPRESENTED AT THE MEETING, YOU ARE URGED TO
COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE
POSTAGE-PAID ENVELOPE PROVIDED, WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING. YOUR PROXY CAN BE REVOKED BY YOU AT ANY TIME BEFORE IT IS VOTED.
<PAGE>
ANNEX A
-------
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
_________, 1999, by and between Simpson Manufacturing Co., Inc., a
California corporation (the "California Company") and Simpson Manufacturing
Co., Inc., a Delaware corporation (the "Delaware Company"),
W I T N E S E T H:
WHEREAS, the California Company is a corporation duly organized,
validly existing, and in good standing under the laws of the State of
California and, on the date of this Agreement, has authority to issue
twenty-five million (25,000,000) shares, including twenty million
(20,000,000) shares of common stock, no par value ("California Common
Stock"), and five million (5,000,000) shares of preferred stock, no par
value ("California Preferred Stock"); and
WHEREAS, on the date of this Agreement the California Company had
issued and outstanding: 11,579,957 shares of California Common Stock and no
shares of California Preferred Stock; and
WHEREAS, the Delaware Company is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware and,
on the date of this Agreement, has authority to issue twenty-five million
(25,000,000) shares, including twenty million (20,000,000) share of common
stock, $.01 par value per share ("Delaware Common Stock"), and five million
shares of preferred stock, $.01 par value per share ("Delaware Preferred
Stock"); and
WHEREAS, the Delaware Company currently has one hundred (100) shares of
its common stock issued and outstanding, all of which are owned by the
California Company, and no shares of its preferred stock issued and
outstanding; and
WHEREAS, the respective Boards of Directors of the California Company
and the Delaware Company have determined that it is advisable and in the
best interests of each such corporation that the California Company be
merged with and into the Delaware Company upon the terms and subject to the
conditions provided in this Agreement for the purpose of effecting a
reincorporation of the California Company in the State of Delaware and have,
by resolutions duly adopted, approved this Agreement and directed that it be
submitted to a vote of their respective shareholders and executed by the
undersigned officers;
NOW THEREFORE, the parties agree as follows:
ARTICLE 1
Definitions
When used in this Agreement (and any Exhibit in which such terms are
not otherwise defined) the following terms shall have the following
meanings, respectively:
1.1 "California Law" shall mean the California Corporations Code as
currently in effect on the date of this Agreement.
1.2. "Delaware Law" shall mean the Delaware General Corporation Law as
currently in effect on the date of this Agreement.
1.3 "Effective Time" shall mean the date and time when the Merger
shall have become effective, in accordance with Section 2.2.
<PAGE>
1.4 "Merger" shall mean the merger of the California Company with and
into the Delaware Company.
1.5 "Surviving Corporation" shall mean the Delaware Company from and
after the Effective Time.
ARTICLE 2
Merger
2.1 Filings and Effectiveness. The Merger shall become effective when
the following actions shall have been completed:
(i) This Agreement and the Merger shall have been adopted and
approved by the sole stockholder of the Delaware Company and the
shareholders of the California Company;
(ii) All of the conditions precedent to the consummation of the
Merger specified in this Agreement shall have been satisfied or duly
waived by the party entitled to satisfaction thereof;
(iii) An executed Certificate of Merger shall have been filed
with the Secretary of State of the State of Delaware; and
(iv) An executed counterpart of this Agreement, along with a
certificate of a duly authorized officer of both the California Company
and the Delaware Company, each meeting the requirements of California
Law, shall have been submitted for filing with the Secretary of State
of the State of California.
2.2 Merger. The Merger shall become effective for all purposes of
Delaware law when proper documentation has been filed with the Secretary of
State of the State of Delaware in accordance with Section 2.1. The Merger
shall become effective for purposes of California law as of the time the
Merger becomes effective in Delaware, once proper documentation has been
filed with the Secretary of State of the State of California in accordance
with Section 2.1. When the Merger becomes effective, the California Company
shall merge with and into the Delaware Company, the separate existence of
the California Company shall cease, and the Delaware Company shall continue
in existence under Delaware Law.
2.3 Effects. At the Effective Time:
(i) the California Company shall be merged with and into the
Delaware Company and the separate existence of the California Company
shall cease;
(ii) the Certificate of Incorporation of the Delaware Company in
effect at the Effective Time shall continue as the Certificate of
Incorporation of the Surviving Corporation;
(iii) the Bylaws of the Delaware Company in effect at the
Effective Time shall continue as the Bylaws of the Surviving
Corporation;
(iv) each director of the California Company immediately prior to
the Effective Time shall become a director of the Surviving
Corporation, each to serve in such class, and for such term, as shall
be indicated in the proxy statement to be submitted to the shareholders
of the California Company in connection with the 1999 annual meeting of
shareholders of the California Company;
(v) each officer of the Delaware Company in office immediately
prior to the Effective Time shall remain as an officer in the same
capacity of the Surviving Corporation;
(vi) each share of California Common Stock outstanding
immediately prior to the Effective Time shall be converted into one
share of Delaware Common Stock pursuant to Article 3 below, with an
amount equal to the par value of the Delaware Common Stock to be
allocated to the stated capital account of the Delaware Company, and
all amounts in excess of such amount shown on the books of the
California Company to be allocated to retained earnings or the capital
surplus account, in accordance with good accounting practice;
(vii) without further transfer, act or deed, the separate
existence of the California Company shall cease and the Surviving
Corporation shall possess all of the rights, privileges, powers and
franchises of a public as well as of a private nature, and shall be
subject to all the restrictions, disabilities and duties of the
California Company; and each and all of the rights, privileges, powers
and franchises of the California Company, and all property, real,
personal and mixed, and all debts due to the California Company on
whatever account, stock subscriptions and other things in action or
belonging to the California Company shall be vested in the Surviving
Corporation; and all property, rights, privileges, powers and
franchises, and each and every other interest of the California Company
shall be thereafter as effectually the property of the Surviving
Corporation as they were of the California Company, and the title to
any real estate vested by deed or otherwise, under the laws of the
State of Delaware, in the California Company shall not revert or be in
any way impaired by reason of the Merger; and all rights of creditors
of the California Company and all liens upon any property of the
California Company shall be preserved unimpaired and all debts,
liabilities and duties of the California Company shall thenceforth
attach to the Surviving Corporation and may be enforced against it to
the same extent as if such debts, liabilities and duties had been
incurred or contracted by it.
2.4 Further Assurances. The California Company agrees that if, at any
time after the Effective Time, the Surviving Corporation shall consider or
be advised that any further deeds, assignments or assurances are necessary
or desirable to vest, perfect or confirm in the Surviving Corporation title
to any property or rights of the California Company, the Surviving
Corporation and its proper officers and directors may execute and deliver
all such proper deeds, assignments and assurances and do all other things
necessary or desirable to vest, perfect or confirm title to such property or
rights in the Surviving Corporation and otherwise to carry out the purposes
of this Agreement, in the name of the California Company or otherwise.
ARTICLE 3
Conversion of Shares
3.1 Conversion of Shares. At the Effective Time:
(i) each share of California Common Stock issued and outstanding
immediately prior to the Effective Time shall, by virtue of the Merger
and without any action on the part of the holder thereof, be converted
into one share of Delaware Common Stock; and
(ii) each share of Delaware Common Stock issued and outstanding
immediately prior to the Effective Time shall be canceled and retired
and no shares shall be issued in the Merger in respect thereof.
3.2 Stock Certificates. At and after the Effective Time, all of the
outstanding certificates which immediately prior to the Effective Time
represent shares of California Common Stock shall be deemed for all purposes
to evidence ownership of, and to represent, the shares of Delaware Common
Stock into which the shares of California Common Stock formerly represented
by such certificates have been converted as provided in this Agreement. The
registered owner on the books and records of the Delaware Company or its
transfer agents of any such outstanding stock certificate shall, until such
certificate shall have been surrendered for transfer or otherwise accounted
for to the Delaware Company or its transfer agents, have and be entitled to
exercise any voting and other rights with respect to, and to receive any
dividends and other distributions upon, the shares of Delaware Common Stock
evidenced by such outstanding certificate as above provided.
3.3 Stock Options. Each right or option to purchase shares of
California Common Stock granted under the 1994 Employee Stock Bonus Plan,
the 1994 Stock Option Plan, the 1995 Independent Director Stock Option Plan
or the Employee Stock Purchase Plan (collectively, the "Plans") of the
California Company or granted irrespective and not in connection with either
of the Plans, which is outstanding immediately prior to the Effective Time,
shall, by virtue of the Merger and without any action on the part of the
holder thereof, be converted into and become an option to purchase the same
number of shares of Delaware Common Stock at the same option price per
share, and upon the same terms and subject to the same conditions as set
forth in the Plans, as in effect at the Effective Time. The same number of
shares of Delaware Common Stock shall be reserved for purposes of the Plans
as is equal to the number of shares of California Common Stock so reserved
as of the Effective Time. As of the Effective Time, the Delaware Company
hereby assumes the Plans and any and all obligations of the California
Company under such Plans, including the outstanding options granted pursuant
to the Plans.
3.4 Validity of Delaware Common Stock. All shares of Delaware Common
Stock into which California Common Stock is to be converted pursuant to the
Merger shall not be subject to any statutory or contractual preemptive
rights, shall be validly issued, fully paid and nonassessable and shall be
issued in full satisfaction of all rights pertaining to such California
Common Stock.
3.5 Rights of Former Holders. From and after the Effective Time, no
holder of certificates which evidenced California Common Stock immediately
prior to the Effective Time shall have any rights with respect to the shares
formerly evidenced by those certificates, other than to receive the shares
of Delaware Common Stock into which such California Common Stock shall have
been converted pursuant to the Merger.
ARTICLE 4
Covenants To Be Performed Prior to Closing Date
4.1 Consents. Each of the California Company and the Delaware Company
shall use its best efforts to obtain the consent and approval of each person
(other than shareholders of the California Company in their capacities as
such) whose consent or approval shall be required in order to permit
consummation of the Merger.
4.2 Governmental Authorizations. Each of the California Company and
the Delaware Company shall cooperate in filing any necessary reports or
other documents with any federal, state, local or foreign authorities having
jurisdiction with respect to the Merger.
ARTICLE 5
Conditions
5.1 Conditions to Obligations of the California Company and the
Delaware Company. The obligations of the California Company and the
Delaware Company to consummate the Merger are subject to satisfaction of the
following conditions:
5.1.1 Authorization. The holders of a majority of the California
Common Stock shall have approved and adopted this Agreement and the
Merger in accordance with California Law. All necessary action shall
have been taken to authorize the execution, delivery and performance of
this Agreement by the California Company and the Delaware Company. The
California Company and the Delaware Company shall have full power and
authority to consummate the Merger.
5.1.2 Consents and Approvals. All authorizations, consents and
approvals (contractual or otherwise) of any state, federal, local or
foreign government agency, regulatory body or official or any person
(other than the California Company or the Delaware Company) necessary
for the valid consummation of the Merger in accordance with this
Agreement shall have been obtained and shall be in full force and
effect.
ARTICLE 6
Miscellaneous
6.1 Waiver and Amendment. This Agreement may be amended by action of
the respective Boards of Directors of the California Company and the
Delaware Company without action by the respective shareholders and
stockholder of the parties, except that (i) any amendments to Section 3.1,
(ii) any amendment changing the terms, rights, powers or preferences of
Delaware Common Stock or Delaware Preferred Stock, or (iii) any amendment
altering any terms of this Agreement if such alteration would adversely
affect the holders of any class or series of the capital stock of the
California Company or the Delaware Company must be approved by the holders
of a majority of the California Common Stock.
6.2 Termination. This Agreement may be terminated and the Merger and
other transactions provided for by this Agreement abandoned at any time
prior to the Effective Time, whether before or after adoption and approval
of this Agreement by the shareholders of the California Company, by action
of the Board of Directors of the California Company if the Board determines
that the consummation of the transactions contemplated by this Agreement
would not, for any reason, be in the best interests of the California
Company and its shareholders.
6.3 Entire Agreement. This Agreement contains the entire agreement
among the parties with respect to the Merger and supersedes all prior and
concurrent arrangements, letters of intent or understandings relating to the
Merger.
6.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be an original, but all of which when
taken together shall constitute one and the same agreement. This Agreement
shall become effective when one or more counterparts has been signed by each
of the parties and delivered to each of the parties.
6.5 Headings. The article, section and paragraph headings in this
Agreement are intended principally for convenience and shall not, by
themselves, determine rights and obligations of the parties to this
Agreement.
6.6 No Waiver. No waiver by any part of any condition, or the breach
of any term or covenant contained in this Agreement, whether by conduct or
otherwise, in any one or more instances, shall be deemed to be a further or
continuing waiver of any such condition or breach or a waiver of any other
condition or breach of any other term or covenant contained in this
Agreement.
6.7 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, and so far as
applicable, the merger provisions of the California General Corporations
Code.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first above written.
SIMPSON MANUFACTURING CO., INC.,
a California corporation
By: ---------------------------------------
Thomas J Fitzmyers
President and Chief Executive Officer
By: ---------------------------------------
Stephen B. Lamson
Chief Financial Officer,
Secretary and Treasurer
SIMPSON MANUFACTURING CO., INC.,
a Delaware corporation
By: ---------------------------------------
Thomas J Fitzmyers
President and Chief Executive Officer
By: ---------------------------------------
Stephen B. Lamson
Chief Financial Officer,
Secretary and Treasurer
<PAGE>
ANNEX B
-------
CERTIFICATE OF INCORPORATION
OF
SIMPSON MANUFACTURING CO., INC.
ARTICLE I
The name of the corporation (the "Corporation") is:
SIMPSON MANUFACTURING CO., INC.
ARTICLE II
The address of the Corporation's registered office in the State
of Delaware is 1209 Orange Street, in the City of Wilmington, County
of New Castle. The name of the Corporation's registered agent at
such address is The Corporation Trust Company.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General
Corporation Law of Delaware.
ARTICLE IV
1. The total number of shares of all classes of stock which the
Corporation shall have authority to issue is twenty-five million
(25,000,000), of which five million (5,000,000) shares shall be Preferred
Stock of the par value of one cent per share ($0.01), and twenty million
(20,000,000) shares shall be Common Stock of the par value of one cent per
share ($0.01).
2. The Board of Directors is authorized, subject to limitations
prescribed by law and the provisions of this Article IV, to provide for the
issuance of shares of Preferred Stock in series, and by filing a certificate
pursuant to the applicable law of the State of Delaware, to establish from
time to time the number of shares to be included in each such series, and to
fix the designation, powers, preferences, and rights of the shares of each
such series and the qualifications, limitations and restrictions thereof.
The authority of the Board with respect to each series shall
include, but not be limited to, determination of the following:
(a) the number of shares constituting that series and the
distinctive designation of that series;
(b) the dividend rate on the shares of that series, whether
dividends shall be cumulative, and, if so, from which date or dates,
and the relative rights of priority, if any, of payment of dividends on
shares of that series;
(c) whether that series shall have voting rights, in addition to
the voting rights provided by law, and, if so, the terms of such voting
rights;
(d) whether that series shall have conversion privileges, and, if
so, the terms and conditions of such conversion, including provision
for adjustment of the conversion rate in such events as the Board of
Directors shall determine;
<PAGE>
(e) whether or not the shares of that series shall be redeemable,
and, if so, the terms and conditions of such redemption, including the
date or dates upon or after which they shall be redeemable, and the
amount per share payable in case of redemption, which amount may vary
under different conditions and at different redemption dates;
(f) whether that series shall have a sinking fund for the
redemption or purchase of shares of that series, and, if so, the terms
and amount of such sinking fund;
(g) the rights of the shares of that series in the event of
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, and the relative rights of priority, if any, of payment of
shares of that series; and
(h) any other relative rights, preferences and limitations of
that series.
3. In furtherance of the foregoing authority and not in limitation
of it, the Board of Directors is expressly authorized, in the resolution or
resolutions providing for the issue of a series of Preferred Stock,
(a) to subject the shares of such series, without the consent of
the holders of such shares, to being converted into or exchanged for
shares of another class or classes of stock of the Corporation, or to
being redeemed for cash, property or rights, including securities, all
on such conditions and on such terms as may be stated in such
resolution or resolutions, and
(b) to make any of the voting powers, designations, preferences,
rights and qualifications, limitations or restrictions of the shares of
the series dependent upon facts ascertainable outside this Certificate
of Incorporation.
4. Whenever the Board of Directors shall have adopted a resolution or
resolutions to provide for
(a) the issue of a series of Preferred Stock,
(b) a change in the number of authorized shares of a series of
Preferred Stock, or
(c) the elimination from this Certificate of Incorporation of all
references to a previously authorized series of Preferred Stock by
stating that none of the authorized shares of a series of Preferred
Stock are outstanding and that none will be issued,
the officers of the Corporation shall cause a certificate, setting forth a
copy of such resolution or resolutions and, if applicable, the number of
shares of stock of such series, to be executed, acknowledged, filed and
recorded, in order that the certificate may become effective in accordance
with the provisions of the General Corporation Law of the State of Delaware,
as from time to time amended. When any such certificate becomes effective,
it shall have the effect of amending this Certificate of Incorporation, and
wherever such term is used in this Certificate of Incorporation, it shall be
deemed to include the effect of the provisions of any such certificate.
5. Any holder of shares of Common Stock, or of shares of any series
of Preferred Stock which is entitled to vote with the holders of Common
Stock in the election of directors of the Corporation, shall be entitled at
all elections of directors to as many votes as shall equal the number of
votes which (except for this provision as to cumulative voting) he would be
entitled to cast for the election of directors with respect to his shares of
stock multiplied by the number of directors to be elected, and such holder
may cast all of such votes for a single candidate or may distribute them
among the number to be voted for, or for any two or more of them as he may
see fit. However, no stockholder shall be entitled to cumulate votes (i.e.,
cast for any candidate a number of votes greater than the number of votes
which such stockholder normally is entitled to cast) unless such candidate
or candidates' names have been placed in nomination prior to the meeting in
accordance with the Bylaws of the Corporation, and the stockholder has given
notice of the stockholder's intention to cumulate his votes in accordance
with the Bylaws of the Corporation. If any one stockholder has given such
notice, all stockholders may cumulate their votes for any candidate duly
nominated in accordance with the procedure as set forth in the Bylaws.
<PAGE>
ARTICLE V
1. The authorized number of directors of the Corporation shall be
fixed from time to time by resolution of the Board of Directors.
2. The Board of Directors (other than those directors elected by the
holders of any series of Preferred Stock voting separately from the holders
of Common Stock in any election of directors, as may be provided for or
fixed pursuant to the provisions of Article IV of this Certificate of
Incorporation) shall be divided into three classes, designated Class I,
Class II, and Class III, as nearly equal in number as possible, and the term
of office of directors of one class shall expire at each annual meeting of
stockholders, and in all cases as to each director until his successor shall
be elected and shall qualify or until his earlier resignation, removal from
office, death or incapacity. Additional directorships resulting from an
increase in number of directors shall be apportioned among the classes as
equally as possible. One class of directors shall be initially elected for
a term expiring at the annual meeting of stockholders to be held in the year
2000, another class shall be initially elected for a term expiring at the
annual meeting of stockholders to be held in the year 2001, and another
class shall be initially elected for a term expiring at the annual meeting
of stockholders to be held in the year 2002. At each succeeding annual
meeting of stockholders, a number of directors equal to the number of
directors of the class whose term expires at the time of such meeting shall
be elected to hold office until the third succeeding annual meeting of
stockholders after their election.
3. Except as otherwise provided for or fixed pursuant to the
provisions of Article IV of this Certificate of Incorporation relating to
the rights of the holders of any series of Preferred Stock to elect
additional directors, and subject to the provisions hereof, newly-created
directorships resulting from any increase in the authorized number of
directors, and any vacancies on the Board resulting from death, resignation,
disqualification, removal, or other cause, may be filled only by the
affirmative vote of a majority of the remaining directors then in office,
even though less than a quorum of the Board. Any director elected in
accordance with the preceding sentence shall hold office for the remainder
of the full term of the class of directors in which the new directorship was
created or in which the vacancy occurred, and until such director's
successor shall have been duly elected and qualified, subject to his earlier
death, resignation or removal. Subject to the provisions of this
Certificate of Incorporation, no decrease in the number of directors
constituting the Board shall shorten the term of any incumbent director.
ARTICLE VI
The Board of Directors is expressly authorized to make and alter the
Bylaws of the Corporation, without any action on the part of the
stockholders.
ARTICLE VII
Any action which may be taken by stockholders of the Corporation at an
annual or special meeting and which requires the approval of at least a
majority of
(a) the voting power of the securities of the Corporation present
at such meeting and entitled to vote on such action, or
(b) the shares of the Common Stock of the Corporation present at
such meeting,
may not be effected except at such an annual or special meeting by the vote
required for the taking of such action. The power of stockholders to
consent in writing, without a meeting, to the taking of any action is
specifically denied.
<PAGE>
ARTICLE VIII
A director of the Corporation shall not be liable to the Corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director, except to the extent such exemption from liability or limitation
thereof is not permitted under the General Corporation Law of the State of
Delaware as the same exists or may hereafter be amended. Any amendment,
modification or repeal of the foregoing sentence shall not adversely affect
any right or protection of a director of the Corporation hereunder in
respect of any act or omission occurring prior to the time of such
amendment, modification or repeal.
ARTICLE IX
The Corporation is authorized to indemnify the directors and officers
of the Corporation to the fullest extent permissible under Delaware Law.
Any amendment, modification or repeal of the foregoing sentence shall not
adversely affect any right or protection of a director or officer of the
Corporation hereunder in respect of any act of omission occurring prior to
the time of such amendment, modification or repeal.
ARTICLE X
The name and mailing address of the incorporator is:
Stephen B. Lamson
Simpson Manufacturing Co., Inc.
4637 Chabot Drive, Suite 200
Pleasanton, CA 94588
IN WITNESS WHEREOF the incorporator has signed this certificate as of
this 23rd day of February, 1999.
By /s/Stephen B. Lamson
----------------------------
Name: Stephen B. Lamson
----------------------------
<PAGE>
ANNEX C
-------
BYLAWS
OF
SIMPSON MANUFACTURING CO., INC.
ARTICLE I
Registered Office
The initial registered office of the Corporation in Delaware shall
be The Corporation Trust Company, 1209 Orange Street, in the City of
Wilmington, County of New Castle, 19801.
Additional Offices
The Corporation may also have offices at such other places, either
within or without the State of Delaware, as the Board of Directors (the
"Board") may from time to time designate or the business of the Corporation
may require.
ARTICLE II
Stockholders
Section 1. Place of Meetings.
Meetings of the stockholders may be held at any place within or
without the State of Delaware which may be designated by the Board of
Directors. In the absence of any such designation, stockholders' meetings
shall be held at the principal executive office of the Corporation in
California.
Section 2. Annual Meeting.
The annual meeting of the stockholders shall be held at a place
and time designated by the Board of Directors. At each such annual meeting,
the stockholders shall elect the successors to the class of directors whose
term expires at such meeting, and any other business properly brought before
the meeting, in accordance with the provisions of the Certificate of
Incorporation and these Bylaws, may be transacted.
Section 3. Special Meetings.
Special meetings of the stockholders for any purpose or purposes
may be called at any time by the Board of Directors.
Section 4. Notice of Meetings.
Whenever stockholders are required or permitted to take any
action at a meeting, a written notice of the meeting shall be given not less
than ten nor more than sixty days before the date of the meeting to each
stockholder entitled to vote thereat. Such notice shall state the place,
date and hour of the meeting. In the case of a special meeting, such notice
shall specify the general nature of the business to be transacted and no
other business may be transacted at such meeting. In the case of the annual
meeting, the notice shall specify those matters which the Board of
Directors, at the time of the mailing of the notice, intends to present for
action by the stockholders. The notice of any meeting at which directors
are to be elected shall include the names of the nominees intended at the
time of the notice to be presented by the Board for election. Any such
notice shall also state any other matters required by statute.
<PAGE>
Notice of a stockholders' meeting or any report shall be given
either personally or by mail or other means of written communication (which
includes, without limitation and wherever used in these Bylaws, telegraphic
and facsimile communication), postage or fees prepaid, addressed to each
stockholder at the address of such stockholder appearing on the books of the
Corporation or given by such stockholder to the Corporation for the purpose
of notice, or, if no such address appears or is given, at the place where
the principal executive office of the Corporation is located, if any, or, if
none, at the place where the principal business office of the Corporation is
located, or by publication at least once in a newspaper of general
circulation in the county in which such office is located. The notice or
report shall be deemed to have been given at the time when delivered
personally or deposited in the mail or sent by other means of written
communication. If any notice or report addressed to a stockholder at the
address of such stockholder appearing on the books of the Corporation is
returned to the Corporation by the United States Postal Service marked to
indicate that the United States Postal Service is unable to deliver the
notice or report to such stockholder at such address, all future notices or
reports shall be deemed to have been duly given without further mailing,
until such stockholder shall have notified the Corporation in writing of
such stockholder's address for the purpose of notice, if the same shall be
available for such stockholder on written demand at such office for a period
of one year from the date of the giving of the notice or report to all other
stockholders.
When a stockholders' meeting is adjourned to another time or
place, notice need not be given of the adjourned meeting if the time and
place thereof are announced at the meeting at which the adjournment is
taken. If the adjournment is for more than forty-five days or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice
of the adjourned meeting shall be given to each stockholder of record
entitled to vote at the meeting. At the adjourned meeting the Corporation
may transact any business which might have been transacted at the original
meeting.
Section 5. Advance Notice of Stockholder Business and Stockholder Nominees.
At an annual meeting of the stockholders, only such business
shall be conducted as shall have been properly brought before the meeting.
Commencing with the annual meeting in the year 2000, to be properly brought
before an annual meeting, business must be (a) specified in the notice of
meeting (or any supplement thereto) given by or at the direction of the
Board of Directors, (b) otherwise properly brought before the meeting by or
at the direction of the Board of Directors, or (c) otherwise properly
brought before the meeting by a stockholder. For business to be properly
brought before an annual meeting by a stockholder, the stockholder must have
given timely notice thereof in writing to the Secretary of the Corporation.
To be timely, a stockholder's notice must be delivered to or mailed and
received at the principal executive offices of the Corporation, not less
than 75 days nor more than 90 days prior to the meeting; provided, however,
that in the event that less than 85 days' notice or prior public disclosure
of the date of the meeting is given or made to stockholders, notice by the
stockholder to be timely must be so received not later than the close of
business on the 10th day following the day on which such notice of the date
of the annual meeting was mailed or such public disclosure was made. A
stockholder's notice to the Secretary shall set forth as to each matter the
stockholder proposes to bring before the annual meeting (a) a brief
description of the business desired to be brought before the annual meeting
and the reasons for conducting such business at the annual meeting, (b) the
name and address, as they appear on the Corporation's books, of the
stockholder proposing such business, (c) the class and number of shares of
the Corporation which are beneficially owned by the stockholder, and (d) any
material interest of the stockholder in such business. Notwithstanding
anything in the Bylaws to the contrary, no business shall be conducted at
any annual meeting except in accordance with the procedures set forth in
this Section 5. The Chairman of the annual meeting shall, if the facts
warrant, determine and declare to the meeting that business was not properly
brought before the meeting and in accordance with the provisions of this
Section 5, and if he should so determine, he shall so declare to the meeting
and any such business not properly brought before the meeting shall not be
transacted.
<PAGE>
Commencing with the annual meeting in the year 2000, only
persons who are nominated in accordance with the procedures set forth in
this Section 5 shall be eligible for election as Directors. Nominations of
persons for election to the Board of Directors of the Corporation may be
made at a meeting of stockholders by or at the direction of the Board of
Directors or by any stockholder of the Corporation entitled to vote for the
election of Directors at the meeting who complies with the notice procedures
set forth in this Section 5. Such nominations, other than those made by or
at the direction of the Board of Directors, shall be made pursuant to timely
notice in writing to the Secretary of the Corporation. To be timely, a
stockholder's notice shall be delivered to or mailed and received at the
principal executive offices of the Corporation not less than 75 days nor
more than 90 days prior to the meeting provided, however, that in the event
that less than 85 days' notice or prior public disclosure of the date of the
meeting is given or made to stockholders, notice by the stockholder to be
timely must be so received not later than the close of business on the 10th
day following the day on which such notice of the date of the meeting was
mailed or such public disclosure was made. Such stockholder's notice shall
set forth (a) as to each person whom the stockholder proposed to nominate
for election or re-election a Director, (i) the name, age, business address
and residence address of such person, (ii) the principal occupation or
employment of such person, (iii) the class and number of shares of the
Corporation which are beneficially owned by such person, and (iv) any other
information relating to such person that is required to be disclosed in
solicitations of proxies for election of Directors, or is otherwise
required, in each case pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended (including without limitation such persons'
written consent to being named in the proxy statement as a nominee and to
serving as a Director if elected); and (b) as to the stockholder giving the
notice (i) the name and address, as they appear on the Corporation's books,
of such stockholder and (ii) the class and number of shares of the
Corporation which are beneficially owned by such stockholder. At the
request of the Board of Directors any person nominated by the Board of
Directors for election as a Director shall furnish to the Secretary of the
Corporation that information required to be set forth in a stockholder's
notice of nomination which pertains to the nominee. No person shall be
eligible for election as a Director of the Corporation unless nominated in
accordance with the procedures set forth in this Section 5. The Chairman of
the meeting shall, if the facts warrant, determine and declare to the
meeting that a nomination was not made in accordance with the procedures
prescribed by the Bylaws, and if he should so determine, he shall so declare
to the meeting and the defective nomination shall be disregarded.
Section 6. Quorum.
The presence of holders of the shares of stock having a majority
of the votes which could be cast by the holders of all outstanding shares of
stock entitled to vote at any meeting, represented in person or by proxy,
shall be necessary and sufficient to constitute a quorum. If a quorum is
present, the affirmative vote of the majority of the votes entitled to be
cast at such meeting, or such greater number of votes as may be required by
these Bylaws or the Certificate of Incorporation (which shares voting
affirmatively also constitute at least a majority of the required quorum),
shall be the act of the stockholders.
The stockholders present at a duly called or held meeting at
which a quorum is present may continue to transact business until
adjournment notwithstanding the withdrawal of enough stockholders to leave
less than a quorum, if any action taken (other than adjournment) is approved
by at least a majority of the shares required to constitute a quorum.
In the absence of a quorum, any meeting of stockholders may be
adjourned from time to time by a majority of the votes entitled to be cast
at such meeting represented either in person or by proxy.
Section 7. Voting Rights.
Except as otherwise provided by law, the Certificate of
Incorporation or these Bylaws, each outstanding share, regardless of class,
shall be entitled to one vote on each matter submitted to a vote of
stockholders. Any holder of shares entitled to vote on any matter, other
than elections to office, may vote part of the shares in favor of the
proposal and refrain from voting the remaining shares or vote them against
the proposal, but, if any stockholder fails to specify the number of shares
such stockholder is voting affirmatively, it will be conclusively presumed
that such stockholder's approving vote is with respect to all shares such
stockholder is entitled to vote.
<PAGE>
Every person entitled to vote shares may authorize another
person or persons to act by proxy with respect to such shares. No proxy
shall be valid after the expiration of one year from the date thereof unless
otherwise provided in the proxy. A proxy shall be irrevocable if it states
that it is irrevocable and if and only so long as, it is coupled with an
interest sufficient in law to support an irrevocable proxy. Subject to the
foregoing and to the express terms and conditions of any proxy, every proxy
shall continue in full force and effect until revoked by the person
executing it, which revocation must be prior to the vote. Such revocation
may be effected by a writing delivered to the Corporation stating that the
proxy is revoked or by a subsequent proxy executed by the person executing
the prior proxy and presented to the meeting or, as to any meeting, by
attendance at such meeting and voting in person by the person executing the
proxy. A proxy is not revoked by the death or incapacity of the maker
unless, before the vote is counted, written notice of such death or
incapacity is received by the Corporation.
In any election of Directors, any form of proxy in which the
Directors to be voted on are named therein as candidates and which is marked
by a stockholder "withhold," or otherwise marked in a manner indicating that
the authority to vote for the election of Directors is withheld, shall not
be voted for the election of a Director.
Every stockholder entitled to vote at any election of directors
may cumulate such stockholder's votes and give one candidate a number of
votes equal to the number of directors to be elected multiplied by the
number of votes to which such stockholder's shares are normally entitled, or
distribute such stockholder's votes on the same principle among as many
candidates as such stockholder thinks fit; provided, that no stockholder
shall be entitled so to cumulate votes or cast for any candidate a number of
votes greater than the number of votes which such stockholder normally is
entitled to cast unless such candidate's or candidates' name(s) have been
placed in nomination in accordance with these Bylaws and such stockholder
has given notice in writing to the Secretary of the Corporation of his
intention to cumulate his votes not less than 65 days prior to the meeting.
If proper notice of an intent to cumulate votes has been received by the
Secretary and not withdrawn by the stockholder by the sixtieth (60th) day
preceding the meeting date, the Corporation shall so indicate in the
notice of meeting sent to all stockholders pursuant to Section 4 of this
Article II. If any one stockholder has given such notice, all stockholders
may cumulate their votes for any candidate duly nominated in accordance with
these Bylaws. In any election of directors, the candidates receiving the
highest number of affirmative votes of the shares entitled to be voted for
them up to the number of directors to be elected by such shares are elected;
votes against the directors and votes withheld shall have no legal effect.
Section 8. Determination of Stockholders of Record.
So that the Corporation may determine the stockholders entitled
to notice of or to vote at any meeting or entitled to receive payment of any
dividend or other distribution or allotment of any rights or entitled to
exercise any rights in respect of any other lawful action, the Board of
Directors may fix, in advance, a record date, which shall not precede the
date upon which the resolution fixing the record date is adopted by the
Board of Directors and which record date: (1) in the case of determination
of stockholders entitled to vote at any meeting of stockholders or
adjournment thereof, shall, unless otherwise required by law, not be more
than sixty nor less than ten days before the date of such meeting; and (2)
in the case of any other action, shall not be more than sixty days prior to
such other action.
If no record date is fixed, the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders
shall be at the close of business on the business day next preceding the day
on which notice is given or, if notice is waived, at the close of business
on the business day next preceding the day on which the meeting is held.
The record date for determining stockholders for any other purpose shall be
at the close of business on the day on which the Board of Directors adopts
the resolution relating thereto, or the sixtieth day prior to the date of
such other action, whichever is later.
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 unless the Board of Directors fixes a new record date for the
adjourned meeting, but the Board of Directors shall fix a new record date if
the meeting is adjourned for more than forty-five days from the date set for
the original meeting.
<PAGE>
Stockholders at the close of business on the record date are
entitled to notice and to vote or to receive the dividend, distribution or
allotment of rights or to exercise the rights, as the case may be,
notwithstanding any transfer of any shares on the books of the Corporation
after the record date, except as otherwise provided in the Certificate of
Incorporation or by agreement.
ARTICLE III
Board of Directors
Section 1. Powers and Duties.
Subject to the Delaware General Corporations Law and any
limitations in the Certificate of Incorporation and these Bylaws as to
action to be authorized or approved by the stockholders, the business
affairs of the Corporation shall be managed and all corporate powers shall
be exercised by or under the direction of the Board of Directors.
A director shall perform the duties of a director, including
duties as a member of any committee of the Board of Directors on which a
director may serve, in good faith, in a manner such director believes to be
in the best interests of the Corporation and with such care, including
reasonable inquiry, as an ordinarily prudent person in a like position would
use under similar circumstances.
Section 2. Number.
The authorized number of directors shall be fixed from time to
time by resolution of the Board of Directors, approved by at least a
majority of the Directors then in office.
Section 3. Election and Term.
The Board of Directors (other than those directors elected by
the holders of any series of Preferred Stock voting separately from the
holders of Common Stock in any election of Directors, as may be provided for
or fixed pursuant to the Certificate of Incorporation) shall be divided into
three classes, designated Class I, Class II, and Class III, as nearly equal
in number as possible, and the term of office of directors of one class
shall expire at each annual meeting of stockholders, and in all cases as to
each director until his successor shall be elected or until his earlier
resignation, removal from office, death or incapacity. Additional
directorships resulting from an increase in number of directors shall be
apportioned among the classes as equally as possible. One class of
directors shall be initially elected for a term expiring at the annual
meeting of stockholders to be held in 2000, another class shall be initially
elected for a term expiring at the annual meeting of stockholders to be held
in 2001, and another class shall be initially elected for a term expiring at
the annual meeting of stockholders to be held in 2002. At each succeeding
annual meeting of stockholders, a number of directors equal to the number of
directors of the class whose term expires at the time of such meeting shall
be elected to hold office until the third succeeding annual meeting of
stockholders after their election. Directors, including directors elected
to fill vacancies, shall be elected by the holders of shares empowered to
vote therefor pursuant to the provisions of the Delaware General
Corporations Code and the Certificate of Incorporation.
Section 4. Vacancies.
A vacancy or vacancies in the Board of Directors shall be deemed
to exist in the event of the death, resignation or removal of any director
or in the event of an increase in the authorized number of directors.
Unless otherwise provided in the Certificate of Incorporation or
these Bylaws and except for a vacancy created by the removal of a director,
vacancies on the Board of Directors may be filled by a majority of the
Directors then in office, whether or not less than a quorum, or by a sole
remaining director.
<PAGE>
Section 5. Removal of Directors.
Directors may not be removed, except for cause.
Section 6. Meetings.
Immediately following each annual meeting of the stockholders, a
regular meeting of the Board of Directors of the Corporation shall be held
at the place of said annual meeting or such other place as shall have been
designated by the Board of Directors for the purpose of organization,
appointment of officers and the transaction of other business. Other
regular meetings of the Board of Directors shall be held without call on
such date and time and in such place, within or without the State of
Delaware as may be fixed by the Board of Directors; provided, however, that
should any such day fall on a legal holiday, then said meeting shall be held
at the same time on the next day thereafter ensuing which is not a legal
holiday. No notice of regular meetings of the Board of Directors need be
given; provided, that notice of any change in the time or place of any such
regular meeting shall be given to all of the Directors in the same manner as
notice for special meetings of the Board of Directors.
Special meetings of the Board of Directors for any purpose or
purposes may be called at any time by the Chairman of the Board or President
or, if both the Chairman of the Board and the President are absent or are
unable or refuse to act, by any Vice President or by any two directors.
Notice of the time and place of special meetings shall be delivered
personally or by telephone to each Director or sent by first-class mail or
telegram or facsimile transmission, charges prepaid, addressed to such
Director's address as it appears on the records of the Corporation or, if it
is not so shown on the records and is not readily ascertainable, at the
place at which the meetings of the Directors are regularly held. In case
such notice is mailed, it shall be deposited in the United States mail at
least four days prior to the time of the holding of the meeting. In case
such notice is telegraphed or sent by facsimile transmission, it shall be
delivered to a common carrier for transmission to the Director or actually
transmitted by the person giving the notice by electronic means to the
Director at least forty-eight hours prior to the time of the holding of the
meeting. In case such notice is delivered personally or by telephone as
above provided, it shall be so delivered at least twenty-four hours prior to
the time of the holding of the meeting. Any notice given personally or by
telephone may be communicated either to the Director or to a person at the
office of the Director whom the person giving the notice has reason to
believe will promptly communicate it to the Director. Such deposit in the
mail, delivery to a common carrier, transmission by electronic means or
delivery, personally or by telephone, as above provided, shall be due, legal
and personal notice to such Director. The notice need not specify the place
of the meeting if the meeting is to be held at the principal executive
office of the Corporation, if any, or, if none, at the principal business
office of the Corporation in California, and need not specify the purpose of
the meeting.
Notice of a meeting need not be given to any director who signs
a waiver of notice or a consent to holding the meeting or an approval of the
minutes thereof, whether before or after the meeting, or who attends the
meeting without protesting, prior thereto or at its commencement, the lack
of notice to such director. All such waivers, consents and approvals shall
be filed with the corporate records or made a part of the minutes of the
meeting.
A majority of the Directors present, whether or not a quorum is
present, may adjourn any meeting to another time and place. If the meeting
is adjourned for more than twenty-four hours, notice of any adjournment to
another time or place shall be given prior to the time of the adjourned
meeting to the Directors who were not present at the time of the
adjournment.
Meetings of the Board of Directors may be held at any place
within or without the state which has been designated in the notice of the
meeting or, if not stated in the notice or there is no notice, designated in
the Bylaws or by resolution of the Board of Directors.
Members of the Board of Directors may participate in a meeting
through use of conference telephone or similar communications equipment, so
long as all members participating in such meeting can hear one another.
Participation in a meeting pursuant to this section constitutes presence in
person at such meeting.
<PAGE>
Section 7. Quorum.
A majority of the authorized number of directors constitutes a
quorum of the Board of Directors for the transaction of business.
Every act or decision done or made by a majority of the
Directors present at a meeting duly held at which a quorum is present is the
act of the Board of Directors, unless otherwise provided by law or unless a
greater number be required by the Certificate of Incorporation or these
Bylaws. A meeting at which a quorum is initially present may continue to
transact business notwithstanding the withdrawal of directors, if any action
taken is approved by at least a majority of the required quorum for such
meeting.
Section 8. Action Without a Meeting.
Any action required or permitted to be taken by the Board of
Directors may be taken without a meeting, if all members of the Board shall
individually or collectively consent in writing to such action. Such
written consent or consents shall be filed with the minutes of the
proceedings of the Board. Such action by written consent shall have the
same force and effect as a unanimous vote of the Board of Directors.
Section 9. Fees and Compensation.
Directors and members of committees may receive such
compensation, if any, for their services, and such reimbursement for
expenses, as may be fixed or determined by resolution of the Board of
Directors.
Section 10. Committees.
The provisions of this Article III shall also apply, with
necessary changes in points of detail, to committees of the Board of
Directors, if any, and to actions by such committees (except that special
meetings of a committee may be called at any time by any two members of the
committee), unless otherwise provided by these Bylaws or by the resolution
of the Board of Directors designating such committees. For such purpose,
references to "the Board of Directors" shall be deemed to refer to each such
committee and references to "Directors" and "members of the Board" shall be
deemed to refer to members of the committee. Committees of the Board of
Directors may be designated and shall be subject to limitations on their
authority as provided in section 141 of the Delaware General Corporations
Law.
ARTICLE IV
Officers
Section 1. Designation of Officers.
The Board of Directors shall appoint the officers of the
Corporation, including the Chairman of the Board or the President or both,
the Secretary, and the Chief Financial Officer. The Corporation may also
have such other officers as may be appointed by the Board of Directors with
such titles and duties as may be determined by the Board of Directors and as
may be necessary to enable it to sign instruments and share certificates.
If the Board shall name one or more persons as Vice Presidents, the order of
their seniority shall be in the order of their appointment, unless otherwise
specified by the Board of Directors. Any number of offices may be held by
the same person. All officers of the Corporation shall hold office from the
date appointed to the date of the next succeeding regular meeting of the
Board of Directors following the meeting of stockholders at which the Board
of Directors is elected and until their successors are appointed; provided,
that any officers may be removed at any time with or without cause by the
Board of Directors. On the removal, resignation, death or incapacity of any
<PAGE>
officer, the Board of Directors may declare such office vacant and fill such
vacancy. Any officer may resign at any time on written notice to the
Corporation without prejudice to the rights, if any, of the Corporation
under any contract to which the officer is a party. The salary and other
compensation of the officers shall be fixed from time to time by resolution
of the Board of Directors.
Section 2. Chairman of the Board.
The Chairman of the Board shall, when present, preside at all
meetings of the Board of Directors, shall preside at all meetings of the
stockholders, shall have authority to execute in the name of the Corporation
bonds, contracts, deeds, leases and other written instruments to be executed
by the Corporation (except where by law the signature of another officer is
required) and shall perform such other duties as the Board of Directors may
prescribe from time to time.
Section 3. President.
Subject to the control of the Board of Directors and to such
supervisory powers, if any, as may be given by the Board of Directors to the
Chairman of the Board, the President shall be the general manager and chief
executive officer of the Corporation, shall have general supervision,
direction and control of the business and officers of the Corporation and
shall perform all the duties customarily incident to that office. In the
absence of the Chairman of the Board or if there be no Chairman of the
Board, the President shall preside at all meetings of the Board of Directors
and of the stockholders and shall perform the duties of and may exercise all
other authority otherwise given to the Chairman of the Board, and shall
perform such other duties as the Board of Directors may prescribe from time
to time.
Section 4. Vice Presidents.
If the Board of Directors shall appoint one or more Vice
Presidents, the Vice Presidents, in the order of their seniority, may assume
and perform the duties of the President in the absence or disability of the
President or whenever the office of President is vacant. The Vice
Presidents shall have such titles, perform such other duties, and have such
other powers as the Board of Directors may prescribe from time to time.
Section 5. Secretary.
The Secretary shall attend all meetings of the stockholders, the
Board of Directors and any committee appointed pursuant to section 9 of
Article III of these Bylaws and shall keep or cause to be kept at the
principal executive office or such other place as the Board of Directors may
order, a minute book of all such meetings, containing all acts and
proceedings thereof, the time and place of holding thereof, whether regular
or special, and, if special, how authorized, the notice thereof given, the
names of those present at directors' or committee meetings and the number of
shares present or represented at stockholders, meetings. The Secretary
shall give notice, in conformity with these Bylaws, of all meetings of the
stockholders, the Board of Directors or any such committee requiring notice.
The Secretary shall keep or cause to be kept at the principal executive
office, if any, or, if none, the principal business office in California, or
at the office of the Corporation's transfer agent a share register or a
duplicate share register showing the names of the stockholders and their
addresses, the number and classes of shares held by each, the number and
date of certificates issued for same, and the number and date of
cancellation of every certificate surrendered for cancellation. The
Secretary shall perform such other duties and have such other powers as the
Board of Directors may prescribe from time to time. The President may
direct any Assistant Secretary to assume and perform the duties of the
Secretary in the absence or disability of the Secretary and each Assistant
Secretary shall perform such other duties and have such other powers as the
Board of Directors may prescribe from time to time.
<PAGE>
Section 6. Chief Financial Officer.
The Chief Financial Officer shall keep or cause to be kept the
books of account of the Corporation in a thorough and proper manner, and
shall render statements of the financial affairs of the Corporation in such
form and as often as required by the Board of Directors. The Chief
Financial Officer, subject to the direction of the Board of Directors, shall
have the custody of all funds and securities of the Corporation. The Chief
Financial officer shall perform all other duties customarily incident to
that office and shall perform such other duties and have such other powers
as the Board of Directors may prescribe from time to time. The President
may direct any Deputy Financial Officer to assume and perform the duties of
the Chief Financial Officer in the absence or disability of the Chief
Financial Officer and each Deputy Financial Officer shall perform such other
duties and have such other powers as the Board of Directors may prescribe
from time to time.
ARTICLE V
Execution of Corporate Instruments and Exercise of
Rights Under Securities Owned by the Corporation
Section 1. Execution of Corporate Instruments.
The Board of Directors may, in its discretion, determine the
method and designate the signatory officer or officers or other person or
persons to execute any corporate instrument or document, or to sign the
corporate name without limitation, except where otherwise provided by law,
and such execution or signature shall bind the Corporation.
Unless otherwise required by law, any note, mortgage, evidence
of indebtedness, contract, share certificate, conveyance or other instrument
in writing, and any assignment or endorsement thereof, executed or entered
into between the Corporation and any other person, when signed by the
Chairman of the Board, the President or any Vice President and the
Secretary, any Assistant Secretary, the Chief Financial Officer or any
Deputy Financial Officer of the Corporation, is not invalidated as to the
Corporation by any lack of authority of the signing officers in the absence
of actual knowledge on the part of the other person that the signing
officers had no authority to execute the same.
All checks and drafts drawn on banks or other depositories of
funds to the credit of the Corporation, or in special accounts of the
Corporation, shall be signed by such person or persons as the Board of
Directors shall authorize so to do.
Section 2. Securities Owned by Corporation.
All securities of other corporations or other entities owned or
held by the Corporation for itself, or for other parties in any capacity,
shall be voted, all proxies and other powers with respect thereto shall be
executed, and all rights appurtenant or pursuant thereto shall be exercised
on behalf of the Corporation by the person authorized so to do by resolution
of the Board of Directors, or, in the absence of such authorization, by the
Chairman of the Board, the President or any Vice President.
ARTICLE VI
Shares of Stock
Section 1. Form of Certificates.
Every holder of shares in the Corporation shall be entitled to
have a certificate signed in the name of the Corporation by the Chairman of
the Board, the President or a Vice President, and by the Chief Financial
Officer, a Deputy Financial officer, the Secretary or any Assistant
Secretary, certifying the number and class or series of shares owned by such
stockholder. Any or all of the signatures on any such certificate may be
facsimile. In case any officer, transfer agent or registrar who has signed
or whose facsimile signature has been placed on a certificate shall have
ceased to be such officer, transfer agent or registrar before such
certificate is issued, the issuance of such certificate by the Corporation
shall have the same effect as if such person were such officer, transfer
agent or registrar at the date of issue.
<PAGE>
If the shares of the Corporation are classified or if any class
of shares is divided into two or more series, any certificate representing
such shares shall bear conspicuously on its face, or on the reverse thereof
with conspicuous reference thereto on its face, one of the following: (a) a
statement of the rights, preferences, privileges and restrictions granted to
or imposed on the class or series of shares represented by such certificate
and on the holders thereof; (b) a summary of such rights, preferences,
privileges and restrictions with reference to the provisions of the
Certificate of Incorporation and any Certificate of Determination
establishing the same; or (c) a statement setting forth the office or agency
of the Corporation from which stockholders may obtain, on request and
without charge, a copy of the statement prescribed by clause (a) of this
paragraph.
Each such certificate shall also bear, conspicuously on its face
or on the reverse thereof with conspicuous reference thereto on its face,
any of the following, to the extent applicable: (a) that the shares are
subject to restrictions on transfer; (b) that the shares are assessable or
are not fully paid, including, in the case of partly paid shares, the total
amount of the consideration to be paid therefor and the amount paid thereon;
(c) that the shares are subject to a close corporation voting agreement or
an irrevocable proxy or restrictions on voting rights contractually imposed
by the Corporation; (d) that the shares are redeemable; and (e) that the
shares are convertible and the period for conversion.
When the Certificate of Incorporation is amended in any way
affecting the statements contained in certificates representing outstanding
shares, or it becomes desirable for any reason, in the discretion of the
Board of Directors, to cancel any outstanding certificate representing
shares and issue a new certificate therefor conforming to the rights of the
holder, the Board of Directors may order any holders of outstanding
certificates representing shares to surrender and exchange them for new
certificates within a reasonable time to be fixed by the Board of Directors.
Section 2. Transfer of Shares.
Shares of stock of the Corporation may be transferred in any
manner permitted or provided by law. Before any transfer of stock is
entered on the books of the Corporation, or any new certificate issued
therefor, the outstanding certificate properly endorsed shall be surrendered
and canceled, unless such outstanding certificate has been lost, stolen or
destroyed.
Section 3. Lost Certificates.
The Corporation shall issue a new certificate representing
shares in the place of any certificate theretofore issued by it, alleged to
have been lost, stolen or destroyed; provided, that, prior and as a
condition to the issuance of such new certificate, the Board of Directors
may require the owner of the lost, stolen or destroyed certificate or the
owner's legal representative to give the Corporation a bond (or other
adequate security) sufficient to indemnify it against any claim that may be
made against it (including any expense or liability) on account of the
alleged loss, theft or destruction of any such certificate or the issuance
of such new certificate and may require such owner to furnish to the
Corporation such other affidavits, certificates or other documents as the
Board of Directors may deem necessary or advisable.
Section 4. Electronic Securities Recordation.
Notwithstanding the provisions of sections 1, 2 and 3 of this
Article VI, the Corporation may adopt a system of issuance, recordation and
transfer of its shares by electronic or other means not involving any
issuance of certificates, provided the use of such system by the Corporation
is permitted by and in accordance with applicable law.
<PAGE>
ARTICLE VII
Corporate Seal
The corporate seal shall consist of a circular die bearing the
name of the Corporation and the state and date of its incorporation and
shall be kept and used by the Secretary or any Assistant Secretary as the
Secretary may direct. If and when authorized by the Board of Directors, a
duplicate of the corporate seal may be kept and used by such officer or
person as the Board of Directors may designate. Failure to affix the
corporate seal does not affect the validity of any instrument of the
Corporation.
ARTICLE VIII
Amendments
New Bylaws may be adopted or these Bylaws may be amended or
repealed by the affirmative vote or written consent of a majority of the
outstanding shares entitled to vote, except as otherwise provided by law,
the Certificate of Incorporation or these Bylaws. Subject to such right of
the stockholders to adopt, amend or repeal Bylaws, and except as otherwise
provided by law or the Certificate of Incorporation, Bylaws may be adopted,
amended or repealed by the Board of Directors.
ARTICLE IX
Indemnification of Agents
The Corporation shall indemnify each Corporate Servant (as
hereinafter defined) to the maximum extent that the Corporation is permitted
or empowered to do so under section 145 of the Delaware General Corporations
Law. In addition, the Corporation shall indemnify any person who is or was
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 foreign or domestic
corporation, partnership, joint venture, trust or other enterprise, or was a
director or officer of a foreign or a domestic corporation which was a
predecessor corporation of the Corporation or of another enterprise at the
request of such predecessor corporation, and the Corporation shall hold such
director or officer harmless, from and against any and all claims,
liabilities, damages and expenses suffered or incurred by such director or
officer as a result of or in connection with any act or omission or
transaction of such director or officer in his or her capacity as such
director or officer; provided that no such director or officer shall be
indemnified by the Corporation for any acts or omissions or transactions
from which a director may not be relieved of liability pursuant to the
Delaware General Corporations Law, or for any acts, omissions or
transactions for which indemnity is expressly prohibited thereby.
As used in this Article IX, "Corporate Servant" shall mean any
natural person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, manager, partner, trustee, employee or agent of another
foreign or domestic corporation, partnership, joint venture, trust or other
organization or enterprise, nonprofit or otherwise, including an employee
benefit plan.
<PAGE>
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF
SIMPSON MANUFACTURING CO., INC.
The undersigned hereby appoints Barclay Simpson and Thomas J Fitzmyers,
and each of them, attorneys and proxies of the undersigned, with full
power of substitution and resubstitution, to vote on behalf of the
undersigned all shares of the common stock of Simpson Manufacturing Co.,
Inc. that the undersigned is entitled to vote at the Annual Meeting of
Shareholders to be held on May 20, 1999, at 1470 Doolittle Drive, San
Leandro, California, and at all adjournments thereof, hereby revoking any
proxy heretofore given with respect to such common stock, and the
undersigned authorizes and instructs said proxies to vote as indicated on
the reverse side hereof. The shares represented by this proxy will be
voted as directed, or if directions are not indicated, will be voted for
the election as directors of some or all of the persons listed on this
proxy, in the manner described in the proxy statement. This proxy confers
on the proxyholders the power of cumulative voting and the power to vote
cumulatively for less than all of the nominees as described in such proxy
statement.
(Continued and to be signed on the reverse side)
<PAGE>
THIS IS YOUR PROXY.
YOUR VOTE IS IMPORTANT.
Regardless of whether you plan to attend the Annual Meeting of
Shareholders, you can be sure your shares are represented at the meeting
by promptly returning your proxy in the enclosed envelope.
DETACH HERE DETACH HERE
..........................................................................
[ X ] Please mark votes as in this example
Unless otherwise specified, this proxy will be voted for all of the
nominees listed below as directors and for proposal 2 and proposal 3, and
will be voted in the discretion of the proxies on such other matters as
may properly come before the meeting or any adjournment thereof. Such
other matters are not related.
1. Election of Directors to serve for one-year terms
[ ] FOR all nominees listed below, except as specified (to withhold
authority to vote for any individual nominee, line through the
nominee's name), or
[ ] WITHHOLD AUTHORITY to vote for all nominees listed below
Barclay Simpson, Thomas J Fitzmyers, Stephen B. Lamson, Earl F.
Cheit, Peter N. Louras, Sunne Wright McPeak and Barry Lawson
Williams
FOR AGAINST ABSTAIN
2. Ratification of appointment of [ ] [ ] [ ]
PricewaterhouseCoopers LLP as
independent auditors
3. Delaware Reincorporation with [ ] [ ] [ ]
New Charter Provisions:
A. Reincorporation under Delaware Law [ ] [ ] [ ]
B. Classified Board [ ] [ ] [ ]
C. No Shareholder Activity by Written [ ] [ ] [ ]
Consent
(Please sign exactly as name appears, at left, indicating
title or representative capacity, where applicable)
PLEASE SIGN, DATE AND MAIL THIS PROXY
TODAY IN THE ENCLOSED ENVELOPE
Signature: Date:
----------------------------- ----------
Signature: Date:
----------------------------- ----------
