SCHEDULE 14C
Information Required in Information Statement
SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c)
of the Securities Exchange Act of 1934
(AMENDMENT NO. )
Check the appropriate box:
[X] Preliminary Information Statement
[ ] Confidential, For use of the Commission Only (as permitted
by Rule 14c-5(d)(2))
[ ] Definitive Information Statement
BEST UNIVERSAL LOCK CO.
(Name Of Registrant As Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii) or 14c-5(g).
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transaction
applies:
(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]:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] 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:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
PRELIMINARY INFORMATION STATEMENT
September _____, 1995
Best Universal Lock Co.
1995 Annual Meeting of Shareholders
Information Statement
October ___, 1995
BEST UNIVERSAL LOCK CO.
NOTICE OF ANNUAL MEETING OF THE SHAREHOLDERS
To be Held October ___, 1995
The annual meeting of Shareholders of Best Universal Lock Co.
(the "Corporation") will be held on ____________, the _____ day
of October, 1995, at _______ __.m., Indianapolis Time, at the
Omni Indianapolis North Hotel, 8181 North Shadeland Avenue,
Indianapolis, Indiana for the following purposes:
1. To consider and act upon a proposal to change the
Corporation's state of incorporation from the State of Washington
to the State of Delaware by approval and adoption of an Agreement
and Plan of Merger pursuant to which the Corporation will merge
into a newly formed Delaware corporation which is a wholly-owned
subsidiary of the Corporation.
2. To elect a Board of three Directors for the ensuing year.
3. To ratify and approve the selection of Arthur Andersen
LLP as auditors for the year 1995.
4. To transact such other business as may properly come
before the meeting.
Only Shareholders of record on [September ____, 1995] are
entitled to notice of and to vote at this meeting. You are
cordially invited to attend the meeting.
By Order of the Board of Directors,
Gregg A. Dykstra
Secretary
September ____, 1995
Indianapolis, Indiana
BEST UNIVERSAL LOCK CO.
P.O. Box 50444
Indianapolis, Indiana 46250
INFORMATION STATEMENT
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO
SEND US A PROXY. The principal executive offices of Best
Universal Lock Co. (the "Corporation") are located at 6161 E.
75th Street, Indianapolis, Indiana 46250. This Information
Statement will be mailed to Shareholders on or about September
____, 1995.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Common stock, issued in Series A and Series B, and Preferred
Stock are the only voting securities of the Corporation. As of
September 12, 1995, there were 386,469 shares of Common Stock
outstanding. Each share is entitled to one vote. Only holders
of Common Stock of record at the close of business on [September
___, 1995] will be entitled to vote at the annual meeting of the
Shareholders. On July 1, 1995, the Corporation s Board of
Directors unanimously approved a resolution directing the
redemption of the Corporation's sixty-three (63) outstanding
shares of preferred stock as of July 1, 1995 and declaring a
dividend upon such stock payable to shareholders of record on
June 30, 1995. The retirement was effected in accordance with
the Corporation's Articles of Incorporation. In accordance with
the resolution, the Corporation paid $441.00 in dividends and
$6,615.00 in exchange for the surrender and cancellation of the
preferred shares.
Stock Ownership in the Corporation by Principal Holders
The following table sets forth the information as of
September 12, 1995 with respect to shares of the Corporation's
Common Stock which are held by the only persons known to the
Corporation to be the beneficial owners of more than 5% of such
stock based upon information received from such persons. For
purposes of this report, beneficial ownership of securities is
defined in accordance with the rules of the Securities and
Exchange Commission.
Name and Address (1) Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership of Class
Frank E. Best, Inc.(Series B) 300,000 78%
The NBD Bank, N.A.(4) 27,262 7%
One Indiana Square
Indianapolis, Indiana 46204
Russell C. Best 338,176 (2)(3) 88%
Mariea L. Best 27,263 (3) 7%
Gregg A. Dykstra 27,262 (3) 7%
<FN>
___________________________
(1) Unless otherwise specified, all addresses are c/o Best Lock
Corporation, P.O. Box 50444, Indianapolis, Indiana 46250.
(2) Includes 300,000 shares held by Frank E. Best, Inc. in which
Russell C. Best is a director, president and a controlling
shareholder and 8,787 shares held by the Best Lock
Partnership in which Russell C. Best, a corporation all the
voting securities of which are owned by Russell C. Best and
Best Lock Corporation are general partners.
(3) Includes 27,262 shares held by the Best Lock Stock Bonus
Plan with respect to which such person as a member of the
Administrative Committee has shared power to direct voting
and disposition.
(4) As Trustee under the Best Lock Stock Bonus Plan. Prior to
1995, the Trustee voted the shares pursuant to the
instructions of the Administrative Committee. Commencing in
1995, pass-through voting rights have been extended to the
participants with the Administrative Committee retaining the
right to vote shares for which no voting instructions have
been received from participants.
Stock Ownership in the Corporation by Directors and Executive
Officers
The following table sets forth information as of
September 12, 1995 with respect to beneficial ownership of the
Corporation's Common Stock by its directors, director nominees,
named executive officers and all directors and executive officers
as a group.
Amount and Nature of Percent
Name and Office (1)
Beneficial Ownership of Class
Russell C. Best, President,
Chief Executive Officer and
Director (4) 338,176 (2)(3) 88%
Mariea L. Best, Director (4) 27,263 (3) 7%
Gregg A. Dykstra, Secretary/
Treasurer; Director Nominee 27,262 (3) 7%
All directors and executive 338,177 (2)(3) 88%
officers as a group (4 in number
including directors named above)
<FN>
______________________
(1) Walter E. Best resigned all of his positions with the
Corporation effective February 15, 1995. R. Gene McCullum
resigned as a director on December 30, 1994 and ceased to be
employed by the Corporation as of March 1, 1995. Roger E.
Beaverson was replaced as Secretary/Treasurer of the
Corporation on March 24, 1995 by Gregg A. Dykstra formerly
general counsel of Best Lock Corporation. Mr. Beaverson
resigned from employment on June 16, 1995. None of these
individuals owns any shares of Common Stock of the
Corporation, Best Lock Corporation or Frank E. Best, Inc.
(2) Includes 300,000 shares held by Frank E. Best, Inc. in which
Russell C. Best is a director, president and a controlling
shareholder and 8,787 shares held by the Best Lock
Partnership in which Russell C. Best, a corporation all the
voting securities of which are owned by Russell C. Best and
Best Lock Corporation are general partners.
(3) Includes 27,262 shares held by the Best Lock Stock Bonus
Plan with respect to which such person as a member of the
Administrative Committee has shared power to direct voting
and disposition.
(4) Russell C. Best is the spouse of Mariea L. Best.
Stock Ownership in Best Lock Corporation by Directors and
Executive Officers
The following table sets forth information as of
September 12, 1995 with respect to beneficial ownership of the
common stock of Best Lock Corporation ("Lock"), a subsidiary of
the Corporation, by the directors, director nominees and named
executive officers of the Corporation and all such directors and
executive officers as a group:
Amount and Nature of Percent
Name and Office Beneficial Ownership of Class
Russell C. Best, President, Chief
Executive Officer and Director (4) 107,799.53 (1)(2)(3) 89%
Mariea L. Best, Director (4) 10,558.19 (2) 9%
Gregg A. Dykstra, Secretary/Treasurer 10,557.19 (2) 9%
All directors and executive officers
as a group (4 persons) 107,800.53 (2)(3) 89%
<FN>
____________________
(1) Russell C. Best owns beneficially 44% of the outstanding
Series A Common Stock, no par value, of the Corporation and
Frank E. Best, Inc. ("Best") owns 100% of the outstanding
Series B Common Stock, no par value, of the Corporation.
Russell C. Best owns beneficially 66% of the outstanding
Common Stock of Frank E. Best, Inc. Russell C. Best is a
director, president and chief executive officer of each of
the Corporation, Lock and Best. The Corporation is the
record owner of 95,556.34 shares of Common Stock of Lock.
(2) Includes 10,557.19 shares held by the Best Lock Corporation
Stock Bonus Plan with respect to which such person as a
member of the Administrative Committee has shared power to
direct voting and disposition.
(3) Includes 95,556.34 shares held by the Corporation in which
Russell C. Best is a director, president and controlling
shareholder.
(4) Russell C. Best is the spouse of Mariea L. Best.
Stock Ownership in Frank E. Best, Inc. by Directors and Executive
Officers
The following table sets forth information as of
September 12, 1995 with respect to beneficial ownership of the
Common Stock of Frank E. Best, Inc. ("Best"), the parent of the
Corporation, by the directors, director nominees and named
executive officers of the Corporation and all such directors and
executive officers as a group.
Amount and Nature of Percent
Name and Office Beneficial Ownership of Class
Russell C. Best, President,
Chief Executive Officer and
Director (3) 395,299 (1)(2) 66%
Mariea L. Best, Director (3) 77,936 (2) 13%
Gregg A. Dykstra, Secretary/
Treasurer 77,935 (3) 13%
All directors and executive
officers as a group (4 persons) 395,300 (1)(2) 66%
<FN>
_____________________
(1) Includes 204,053 shares held by Best Lock Partnership in
which Russell C. Best, a corporation all of the voting
securities of which are owned by Russell C. Best and Best
Lock Corporation and general partners.
(2) Includes 77,935 shares held by the Best Lock Corporation
Stock Bonus Plan with respect to which such person as a
member of the Administrative Committee of the Plan has
shared power to direct voting and disposition.
(3) Russell C. Best is the spouse of Mariea L. Best.
CHANGE IN CONTROL
A change in control of the Corporation occurred on May 18,
1994. On that date, Russell C. Best, then Vice-President and a
Director of the Corporation purchased 114,325 shares of the
common stock of Best. Best has 598,710 shares of common stock
issued and outstanding. After the purchase, Russell C. Best
controlled, directly or indirectly, 50.27% of the outstanding
common stock of Best. This voting control of Best was based on
the following stock ownership in Best:
Name of Shareholder Number of Shares
Russell C. Best 115,812
Walter E. Best Co., Inc.* 185,188
-------
Total 301,000
=======
* Russell C. Best owns all of the voting
common stock of Walter E. Best Co., Inc.
("WEBCO"). Accordingly, he is in
effective control of the manner in which
Best shares owned by WEBCO are voted.
Best owns 300,000 of the 386,469 issued and outstanding
shares of common stock of the Corporation. The person in control
of Best controls the Corporation because Best owns approximately
78% of the outstanding common stock of the Corporation.
After the purchase of Best stock as described above, Russell
C. Best beneficially owned, directly or indirectly, approximately
78% of the voting securities of the Corporation, taking into
consideration the 300,000 shares of the Corporation's common
stock owned by Best and the 2,128 shares of the Corporation's
common stock individually owned by Russell C. Best. Currently,
Russell C. Best beneficially owns approximately 88% of the voting
securities of the Corporation as a result of the attribution to
him of shares held by the Best Lock Partnership in which he and
WEBCO are general partners, shares held by Best and shares held
by the Best Lock Stock Bonus Plan with respect to which he has
shared powers of voting and disposition in addition to the shares
held by him individually.
Russell C. Best purchased the 114,325 shares of Best from
Bank One, Indianapolis, NA, as Trustee of the Walter E. Best
Irrevocable Trust, under a Trust Agreement dated December 18,
1972, at a price of $29.36 per share, for a total consideration
of $3,356,582. Russell C. Best purchased the 114,325 Best shares
with the proceeds of a loan in the amount of $3,400,000 from
Lock, a subsidiary of the Corporation. The loan was made in
accordance with the terms of the Employment Agreement between
Lock and Russell C. Best, dated May 5, 1994 and described in
"Compensation Committee Interlocks and Insider Participation --
Employment Agreement and Agreement Respecting Sale of Stock."
Russell C. Best refinanced this loan on or about September ____,
1995 and the entire outstanding principal balance together with
accrued interest was repaid to Lock on that date. Prior to the
acquisition of control by Russell C. Best, no single person
possessed control of the Corporation.
NOMINEES FOR ELECTION AS DIRECTORS
At the meeting three directors are to be elected to serve for
a term of one year and until their successors shall be elected
and qualified. The following slate of three nominees has been
chosen by the Board of Directors and the Board recommends that
each be elected.
Position Held
With Corporation Director
Name
Age Or Principal Occupation Since
Russell C. Best (1) 34 Chairman of the Board of Best 1991
Lock Corporation since March, 1995;
President of Best Lock Corporation since
February 15, 1995; Chief Executive Officer
of Best Lock Corporation since May,
1994; Executive Vice President
of Best Lock Corporation from June, 1992
to May, 1994; Marketing Director
of Best Lock Corporation from 1989-1992;
President and Chief Executive Officer
of the Corporation and Frank E.
Best, Inc. since February 15,
1995; prior thereto Vice President of
the Corporation and Frank E. Best, Inc.
from prior to 1990; director
of Frank E. Best, Inc. and
Best Lock Corporation
Mariea L. Best (1) 32 Sole shareholder and president of Best 1995
Event and Travel, Inc., a travel agency,
from 1991-1994; Special Event Coordinator
for Wiersma from 1987-1990;
Director of Frank E. Best, Inc.
and Best Lock Corporation
Gregg A. Dykstra 39 Secretary/Treasurer of the Corporation, nominee
Best Lock Corporation and Frank E. Best,
Inc. since March, 1995; General Counsel
of Best Lock Corporation since November, 1989
If the Reincorporation Proposal hereinafter described is approved
by the Shareholders, the Board of Directors will consist of five
members. The directors currently intend to elect the following
individuals to fill the vacancies created thereby.
Larry W. Rottmeyer 39 Director of Business Development
of Best Lock Corporation since
________, 1994; chief executive
officer and senior marketing
consultant for Marcon Corporation,
an independent marketing and
research firm, from 1987 to ____, 1994
Eric M. Fogel 40 Partner in the law firm of Holleb &
Coff, Chicago, Illinois, since
December 1993; associate in the law
firm of Sonnenschein Nath & Rosenthal,
Chicago, Illinois, from July, 1989
to November, 1993
<FN>
______________________
(1) Russell C. Best is the spouse of Mariea L. Best.
The Board of Directors does not have standing audit,
nominating or compensation committees.
The Board of Directors of the Corporation held one meeting
and conducted business by unanimous written consent in lieu of
meeting one time during 1994. All directors were present for
such meeting.
Effective April 1, 1995, each member of the Board of
Directors of Best Lock Corporation ("Lock") will be entitled to
fees for services rendered in his or her capacity as a director
in the amount of $25,000 per calendar year.
EXECUTIVE COMPENSATION
Board of Directors Compensation Report
In General
All of the compensation received by the Corporation's
executives is paid by Lock, the Corporation's primary operating
subsidiary. Accordingly, all executive compensation decisions
are made by the Board of Directors of Lock, the members of which
typically constitute the Board of Directors of the Corporation.
The Board of Directors of Lock does not have a compensation
committee or other board committee performing similar functions.
The compensation for executive officers of the Corporation
consists primarily of salary and a cash bonus. Executive
officers also participate, along with other employees, in the
Best Lock Corporation Stock Bonus Plan, a qualified non-
contributory defined benefit pension plan, a bonus plan and a
401(k) plan. In 1994, the Corporation implemented the 401(k)
plan and ceased making contributions to the stock bonus plan.
In determining the levels of salary and bonus, the Board of
Directors of Lock considers a number of factors, including
corporate performance, internal compensation equity, external pay
practices for comparable companies and the executive's level of
responsibility, experience and expertise as well as their
subjective evaluation of the performance of the executive. The
Directors refer to several outside surveys and studies of
companies similarly situated in size and profitability, and
utilize consultants and other outsiders in establishing the
various pay levels of the executives.
Chief Executive Officer
On May 5, 1994, Lock and Russell C. Best entered into an
Employment Agreement pursuant to which Russell C. Best assumed
the duties of Chief Executive Officer of the Corporation. The
initial term of this agreement expires December 31, 1998;
however, the term is automatically extended by one additional
year on December 31 of each year unless earlier terminated by
notice of either party to the other at least thirty (30) days
prior to December 31 of each year. The agreement provides for a
base salary of $425,000 per year, subject to increases for
inflation, individual performance of Mr. Best, overall corporate
performance and adjustments to salary of other senior management,
plus the participation of Russell C. Best in all general and
executive compensation and benefit plans of Lock, including any
incentive or bonus plans.
In March, 1995, the Board of Directors of Lock reviewed the
performance of Mr. Best since he assumed the duties of Chief
Executive Officer in May, 1994 and recognized the following
factors as evidence of the excellent performance of Mr. Best:
1. Lock's net income before provision for income taxes
increased from $1,149,518 in the year ended December
31, 1993 to $2,208,155 in the year ended December 31,
1994;
2. Lock's earnings per share increased by 92% from $8.76
for the 1993 year to $16.83 for the 1994 year;
3. Lock's sales revenues increased by 6.24% from
$98,521,396 for the 1993 year to $104,669,003 for the
1994 year;
Certain members of the Board of Directors also reviewed certain
compensation survey research data analyzed by an outside
consultant with respect to compensation levels of chief executive
officers of corporations comparable to Lock. In light of these
factors and the review of compensation survey research data and
consistent with the terms of the employment agreement, the Board
of Directors of Lock determined that Mr. Best should be paid a
bonus in the amount of $340,000 for his performance in calendar
year 1994 and as an incentive for him to continue to perform at
an excellent level. In light of these same factors and in
accordance with the employment agreement, the Board of Directors
also determined to increase Mr. Best's annual base compensation
from $425,000 to $615,000 effective as of April 1, 1995.
Submitted by Board of Directors
Russell C. Best, Mariea L. Best
Compensation
The information in the following table discloses all
remuneration paid to the five most highly compensated executive
officers of the Corporation, for services in all capacities to
the Corporation and its parent and subsidiaries during the fiscal
years ended December 31, 1994, 1993, and 1992.
Summary Compensation Table
Annual Compensation
All Other (6)
Name and Principal Position Year Salary Bonus (5) Compensation
Walter E. Best (1) 1994 $444,965 $ 3,655 $ 1,450
Chairman and President 1993 435,668 1,779 $ 1,817
1992 430,443 420 1,997
Russell C. Best (2) 1994 $406,657 $343,665 -0-
Chief Executive Officer 1993 250,705 1,779 $ 1,750
Director 1992 238,591 420 1,920
R. Gene McCullum 1994 $191,473 $ 2,015 $ 3,000
Vice-President, 1993 196,706 1,779 1,474
Administration 1992 209,674 420 1,762
Director (3)
Roger E. Beaverson 1994 $182,019 $ 2,015 $ 3,000
Secretary/Treasurer (4) 1993 189,777 1,779 1,438
1992 204,099 420 1,733
Gregg A. Dykstra 1994 $165,732 $ 11,475 $ 1,067
Secretary/Treasurer (4) 1993 147,148 1,779 1,099
1992 124,891 420 1,045
<FN>
_____________________
(1) Resigned February 15, 1995.
(2) Appointed Chief Executive Officer of Best Lock Corporation
effective May, 1994.
(3) Resigned as Director on December 30, 1994. Employment
terminated March 1, 1995.
(4) Roger E. Beaverson was replaced as Secretary/Treasurer of
the Corporation on March 24, 1995, by Gregg A. Dykstra
formerly General Counsel of Lock. Mr. Beaverson resigned
from employment on June 16, 1995.
(5) In 1992 and 1993, the bonus payments were flat amounts. In
1994, the bonus payments consisted of a flat base amount
plus a percentage based on the employee's achievement of
certain business objectives. In the case of Gregg A.
Dykstra, the bonus amount for 1994 includes $9,900 in
recognition of services performed in connection with the
internal reorganization of the Corporation. In the case of
Russell C. Best, the bonus amount for 1994 includes an
amount equal to $340,000 in recognition of services
performed in calendar year 1994, payable in accordance with
the employment agreement with Russell C. Best as described
in the Board of Directors Compensation Report.
(6) For 1992 and 1993, these amounts represent contributions by
Lock to the Best Lock Corporation Stock Bonus Plan, a
defined contribution plan, on behalf of the named executive
officers. For 1994, these amounts represent contributions
by Lock to the 401(k) plan on behalf of the named executive
officers.
Compensation Pursuant To Plans
The Best Lock Corporation Stock Bonus Plan is a qualified
noncontributory defined contribution plan available to all
employees above the age of 21 with one year of full-time service.
Voluntary contributions by Lock, a subsidiary of the Corporation,
to the plan are made upon the authority of the Board of
Directors, and are allocated on the basis of annual compensation
and years of service. The funds of the Plan are to be invested
primarily in securities of the Corporation or its affiliates.
Amounts are distributed from the Plan upon the resignation,
retirement, termination, or death of the employee in accordance
with Plan provisions. Employer contributions for the account of
the individuals named in the Summary Compensation Table are
included in that table under All Other Compensation.
Lock implemented a 401(k) profit sharing plan during 1994
covering all employees who had completed one year of continuous
service and had reached the age of 21 years as of October 1,
1994. Employer contributions to the 401(k) Plan are determined
by the Board of Directors. Participants begin vesting in
employer contributions after 1 year of service at which time they
are 20% vested. Employees become 100% vested after 5 years of
service. Employer contributions for the account of the
individuals named in the Summary Compensation Table are included
in that table under All Other Compensation.
Messrs. Roger E. Beaverson, Russell C. Best and R. Gene
McCullum, along with all other employees as of September 1989,
participate in a qualified noncontributory defined benefit
pension plan approved by Lock's Board of Directors in 1989. The
monthly benefit payable thereunder is based on the employee's
compensation and years of past service as of September 1, 1989.
The benefits under the Plan are stated in terms of a monthly
payment at age 65 determined by the product of three components:
(1) September 1, 1989 basic monthly pay rate; (2) one percent;
and (3) the greater of (a) two or (b) the participant's period of
employment (in years and months) through August 31, 1989. Normal
retirement age is 65, with provisions for earlier retirement with
reduced benefits. Such payments are to be made for their
lifetime, following which 50% of the monthly amount will be
provided for the lifetime of a surviving spouse. The estimated
annual benefits payable upon retirement at 65 to each of Mr.
Best, Mr. McCullum and Mr. Beaverson are $5,920, $37,489 and
$35,870, respectively.
Effective in 1989, Lock executed a Supplemental Retirement
Benefit Agreement with Walter E. Best. The payments to be made
under this agreement are based on his compensation and years of
past service as of September 1, 1989, and are payable on a
monthly basis following his retirement. Such payments are to be
made for his lifetime, following which 50% of the monthly amount
will be provided for the lifetime of his surviving spouse. The
estimated annual benefits payable to Walter E. Best under this
benefit agreement as of December 31, 1994 are $132,300.
Compensation Committee Interlocks and Insider Participation
Russell C. Best, President and Chief Executive Officer of
the Corporation, Walter E. Best, former President and director of
the Corporation, and R. Gene McCullum, former Vice-President
Administration and director of the Corporation participated in
deliberations of the Board of Directors of Lock concerning
executive officer compensation. During calendar year 1994, each
of these individuals was also a member of the Board of Directors
and an executive officer of Frank E. Best, Inc. ("Best") and
Lock, each of which is an affiliate of the Corporation. The
Board of Directors of Lock sets the compensation for executive
officers and does not have a compensation committee.
On February 15, 1995, Lock settled all claims arising from a
derivative action threatened against it by a director, as well as
all claims against Lock's Chief Executive Officer and another
officer. The material components of the settlement include: (1)
the resignation of Walter E. Best from the Board of Directors and
as President of each of the Corporation, Lock and Best; (ii) the
resignation of Richard E. Best and Marshall W. Best as officers
and employees of Lock, Best and the Corporation and the
resignation of Robert W. Best as an employee; (iii) the payment
of the total sum of $2,134,349 as severance, vacation and bonus
payments to Walter E. Best, Robert W. Best, Richard E. Best,
Marshall W. Best and Edwina McLemore, an employee of Lock; (iv)
the payment of the total sum of $1,240,000 in exchange for
covenants not to compete from Walter E. Best, Robert W. Best,
Richard E. Best and Marshall W. Best; and (v) the payment of the
total sum of $8,178,296 for the acquisition of shares of Lock and
interests in a partnership as described below.
On February 15, 1995, Lock purchased an eighty-seven percent
(87%) non-voting partnership interest in Best Lock Partnership, a
newly formed Indiana general partnership (the "Partnership") for
the total consideration of $5,582,625.59. This acquisition was
made in two steps. First, On February 15, 1995, Lock acquired an
eighty-four and one-half percent (84.5%) interest in the
Partnership by purchasing non-voting interests in the Partnership
from the following persons for the following amounts:
Best Lock Partnership
(Non-Voting Interest) Purchase Price
Robert W. Best $ 250,323.45
Denise Best 31,223.14
Richard E. Best 250,323.45
Amber Best 31,223.14
Marshall W. Best 250,323.45
Tracey Best 31,223.14
Walter E. Best as the
trustee of the Walter E.
Best Revocable Trust 3,532,521.46
Dona J. Best as the trustee
of the Dona J. Best
Revocable Trust 144,272.44
-------------
Total $4,521,433.67
=============
Second, Lock acquired a two and one-half percent (2.5%)
interest in the Partnership directly from the Partnership for
$1,061,191.92.
On February 15, 1995, the Partnership acquired shares of
capital stock in the Corporation and in Best, an affiliated
corporation of the Corporation, for the aggregate purchase price
of $1,061,191.92. The sellers of such shares and the purchase
price paid for the shares of these corporations are as follows:
Frank E. Best, Inc.
(Common Shares) Purchase Price
Walter E. Best $ 293.60
Robert W. Best 43,746.40
Richard E. Best 43,658.32
Marshall W. Best 43,658.32
The Huntington Trust
Company, NA, as the trustee
of the Walter E. Best
Irrevocable Trust 349,119.76
-----------
Total $480.476.40
===========
The Corporation
(Common Shares) Purchase Price
Walter E. Best $ 329.80
Robert W. Best 140,362.88
Richard E. Best 140,362.88
Marshall W. Best 140,362.88
Dona J. Best as the trustee
of the Dona J. Best
Revocable Trust 158,172.08
-----------
Total $579,590.52
===========
The Corporation
(Preferred Shares) Purchase Price
Robert W. Best $ 375.00
Richard E. Best 375.00
Marshall W. Best 375.00
-----------
Total $ 1,125.00
===========
Also, on February 15, 1995, Lock acquired shares of its own
common stock at an aggregate purchase price of $2,595,670.00.
The sellers of such shares and the purchase price for such shares
are as follows:
Best Lock Corporation
(Common Shares) Purchase Price
Walter E. Best $ 770.00
Robert W. Best 734,195.00
Richard E. Best 649,495.00
Marshall W. Best 649,495.00
Dona J. Best as the trustee
of the Dona J. Best
Revocable Trust 561,715.00
-------------
Total $2,595,670.00
=============
The total assets of the Partnership are $6,571,711.60.
Russell C. Best, President of the Corporation and a member of the
Corporation's Board of Directors, and Walter E. Best Company,
Inc., an affiliated corporation the voting shares of which are
all owned by Russell C. Best, are the holders of the remaining
thirteen percent (13%) interest in the Partnership, which
thirteen percent (13%) interest represents the entire voting
interests of the Partnership.
The relationships among the parties are as follows: Prior
to February 15, 1995, Walter E. Best was President, Chairman, and
a member of the Board of Directors of each of the Corporation,
Lock, Best, and Walter E. Best Company, Inc. He is the father of
the Corporation's current President, Russell C. Best, Robert W.
Best, Richard E. Best and Marshall W. Best. Prior to
February 15, 1995, Robert W. Best was Assistant to the President
of Lock. He is a brother of the Corporation's current President,
Russell C. Best. Prior to February 15, 1995, Richard E. Best was
a Vice President of Lock. He also is a brother of the
Corporation's current President, Russell C. Best. Prior to
February 15, 1995, Marshall W. Best was a Vice President of Lock.
He also is a brother of the Corporation's current President,
Russell C. Best. The Walter E. Best Revocable Trust is a
revocable trust established by Walter E. Best. The Dona J. Best
Revocable Trust is a revocable trust established by Dona J. Best
who is the mother of Russell C. Best. Denise Best is the spouse
of Robert W. Best; Amber Best is the spouse of Richard E. Best;
and Tracey Best is the spouse of Marshall W. Best.
The purchase price of the shares of the Corporation, Best,
and Lock were based on the respective appraised values of such
shares as of December 31, 1993 as determined by an independent
appraiser, Sigurd R. Wendin & Associates, Inc. of Birmingham,
Michigan.
Lock's acquisition of its interest in the Partnership and
its redemption of its own common shares were funded through a
line of credit obtained by Lock from Huntington National Bank of
Indianapolis, Indiana.
The series of transactions described above was approved
unanimously by the Boards of Directors of the Corporation and of
Lock and was undertaken pursuant to an Agreement dated
February 15, 1995. An opinion was rendered by Merrill Lynch,
Pierce, Fenner & Smith Incorporation to Lock's Board of Directors
that the settlement transactions were fair to Lock.
Employment Agreement and Agreement Respecting Sale of Stock
On May 5, 1994, Lock and Russell C. Best entered into an
Employment Agreement pursuant to which Russell C. Best assumed
the duties of Chief Executive Officer of Lock. The initial term
of the Employment Agreement expires December 31, 1998; however,
the term is automatically extended by one additional year on
December 31 of each year unless earlier terminated by notice by
either party to the other at least thirty (30) days prior to
December 31 of such year.
The Employment Agreement provides for a base salary of a
minimum of $425,000 per year, subject to increases for inflation
and other factors, plus the participation of Russell C. Best in
all general and executive compensation and benefit plans of Lock,
including any incentive or bonus plans. See "Board of Directors
Compensation Report - Chief Executive Officer." The Employment
Agreement further provides for a loan of up to $3,400,000 to
Russell C. Best, to be repaid to Lock over a thirty year period
with interest at 7.2% per annum.
The Employment Agreement also provides severance benefits in
the event of termination of employment under certain
circumstances. In the event of termination of employment by Lock
without "cause" or by Russell C. Best with "cause" (as such terms
are defined in the Employment Agreement), he will receive in each
year throughout the unexpired portion of the term of the
Employment Agreement, including any extensions occurring prior to
the date of termination, his then current base salary, plus the
average of the aggregate amounts of any bonuses, incentive
payments, and/or contingent compensation received by him in each
of the three immediately preceding calendar years. If Lock
terminates Russell C. Best's employment with "cause," or if he
terminates employment without "cause," Russell C. Best would
forfeit all compensation and benefits following such termination.
Consistent with the terms of the Employment Agreement, on
May 18, 1994, Lock loaned $3,400,000 to Russell C. Best pursuant
to the terms of a Loan Agreement dated May 5, 1994, to which Lock
and Russell C. Best are parties. The terms of the loan were as
provided in the Employment Agreement. The current outstanding
principal balance of the loan is $3,357,562. The loan is secured
by ____ shares of Best common stock acquired with the proceeds.
Russell C. Best refinanced this loan on or about September ___,
1995 and the entire outstanding principal balance together with
accrued interest was repaid to Lock on that date. See "Change In
Control." Such shares will be released pro rata from the pledge
as the principal of the loan is repaid to Lock.
On May 16, 1994, Lock entered into an Agreement Respecting
Sale of Stock (the "Put Agreement") with Russell C. Best. The
Put Agreement provides that Russell C. Best has the right,
exercisable at any time on or before December 31, 1994, to
require Lock to purchase from him any shares of Best owned by him
at the time of exercise at a price of $29.36 per share. That
right was not exercised and the Put Agreement has expired.
Other Transactions
Walter E. Best is the president and owns in excess of 10% of
the stock of Best Aircraft Corporation. During the past fiscal
year, Lock leased aircraft and automobiles from Best Aircraft
Corporation, paying $180,656 for such services. Larry Rottmeyer,
who became Director of New Business of Lock in 1994, was the
president of, and owned in excess of 10% of, Marcon, Inc. Lock
purchased market research services from Marcon, Inc. during 1994
paying $291,716 for such services. Mr. Rottmeyer is no longer an
officer or shareholder of Marcon, Inc.
PERFORMANCE GRAPH
The information in the following line graph compares the
yearly change in the cumulative total shareholder return on the
Corporation's Series A common stock with the cumulative total
return of the S & P Composite 500 Index and a selected peer group
of companies for the period of five years commencing December 31,
1989 and ending December 31, 1994.
The graph and table that follows assume that $100 was
invested on December 31, 1989 in Best Universal Lock Co., Series
A common stock, the S & P 500 Index and stock of the peer group.
The peer group consists of publicly traded companies in
industries similar to the Company: Ingersoll-Rand Co., Knape &
Vogt Mfg. Co., Masco Corporation, Stanley Works and L.S. Starrett
Co. Total return assumes that all dividends are reinvested.
1989 1990 1991 1992 1993 1994
Best Universal
Lock Co. $100.00 $101.99 $111.95 $147.85 $154.19 $154.19
S & P 500 $100.00 $ 97.00 $126.00 $136.00 $150.00 $152.00
Peer Group $100.00 $ 75.14 $109.13 $127.20 $159.12 $129.14
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS.
The Board of Directors has selected the firm of Arthur
Andersen LLP as independent auditors of the accounts of the
Corporation and its consolidated subsidiaries for the fiscal year
1995.
The Board of Directors recommends a vote for the proposal to
approve the appointment of Arthur Andersen LLP. In the event the
appointment of Arthur Andersen LLP should not be approved by the
Shareholders, the Board of Directors will make another
appointment to be effective at the earliest feasible time, either
this fiscal year or the next.
Representatives of Arthur Andersen LLP are not expected to
be at the shareholders' meeting.
PROPOSAL TO REINCORPORATE IN DELAWARE
The following discussion summarizes certain aspects of the
proposed reincorporation of the Corporation from the State of
Washington to the State of Delaware (the "Reincorporation")
pursuant to the Agreement and Plan of Merger (the "Merger
Agreement") between the Corporation and Best Universal Lock Co.,
a Delaware corporation ("Universal-Delaware") (the
"Reincorporation Proposal"). This summary is not intended to be
complete and is subject to, and qualified in its entirety by,
reference to the Delaware General Corporation Law ("Delaware
Law") and the Washington Business Corporation Act ("Washington
Law"), the Merger Agreement, a copy of which is attached to this
Information Statement as Exhibit A, the Certificate of
Incorporation of Universal-Delaware (the "Delaware Certificate"),
a copy of which is attached to this Information Statement as
Exhibit B, and the Bylaws of Universal-Delaware (the "Delaware
Bylaws"), a copy of which is attached to this Information
Statement as Exhibit C.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED, AND FOR THE
REASONS DESCRIBED BELOW UNDER "PRINCIPAL REASONS FOR THE
REINCORPORATION" UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS
APPROVE AND ADOPT, THE MERGER AGREEMENT AND THE REINCORPORATION
PROPOSAL.
Principal Reasons for the Reincorporation
For many years the State of Delaware has followed a policy
of encouraging incorporation in that state and, in furtherance of
that policy, has adopted comprehensive, modern and flexible
corporate laws which are periodically updated and revised to meet
changing business needs. As a result, many corporations have
been initially incorporated in Delaware or have subsequently
reincorporated in Delaware in a manner similar to that proposed
by the Corporation. Because of Delaware's prominence as a state
of incorporation for many corporations, the Delaware courts have
developed considerable expertise in dealing with corporate issues
and a substantial body of case law has developed construing the
Delaware Law and establishing public policies with respect to
corporations incorporated in Delaware. Consequently, Delaware
Law is comparatively well known and understood. It is
anticipated that, as in the past, Delaware Law will continue to
be interpreted and explained in a number of significant court
decisions. The Board of Directors believes that reincorporation
in Delaware should provide greater predictability with respect to
the Corporation's corporate affairs.
Principal Features of the Reincorporation
The Reincorporation will be effected by the merger (the
"Merger") of the Corporation with and into Universal-Delaware, a
wholly-owned subsidiary of the Corporation which will be
incorporated under Delaware Law for purposes of the Merger.
Universal-Delaware will be the surviving corporation in the
Merger and will continue under the name of Best Universal Lock
Co. The Corporation will cease to exist as a result of the
Merger.
The Merger will not become effective until the requisite
shareholder approval of the Reincorporation Proposal has been
obtained and the Merger Agreement or an appropriate certificate
of merger is filed with the Secretary of State of the State of
Delaware and the Secretary of State of the State of Washington.
At the effective time of the Merger, the Corporation will be
governed by the Delaware Certificate, the Delaware Bylaws and
Delaware Law.
Upon completion of the Merger, each outstanding share of
Common Stock of the Corporation will be converted into one share
of Common Stock of Universal-Delaware. As a result, the existing
shareholders of the Corporation will automatically become
shareholders of Universal-Delaware, the Corporation will cease to
exist and Universal-Delaware will continue to operate the
business of the Corporation under the name Best Universal Lock
Co. The stock certificates of the Corporation will be deemed to
represent the same number of Universal-Delaware shares as were
represented by the Corporation's stock certificates prior to the
Reincorporation. IT WILL NOT BE NECESSARY FOR SHAREHOLDERS TO
EXCHANGE THEIR STOCK CERTIFICATES FOR Universal-Delaware STOCK
CERTIFICATES. Following the Reincorporation, previously
outstanding stock of the Corporation will constitute "good
delivery" in connection with sales through a broker, or
otherwise, of shares of Universal-Delaware. Upon completion of
the Reincorporation, the authorized capital stock of Universal-
Delaware will consist of 300,000 shares of Series A Common Stock,
without par value, 300,000 shares of Series B Common Stock
without par value and 20,000 shares of preferred stock, par value
$100 per share, which is identical to the authorized capital
stock of the Corporation.
The Reincorporation will not result in any change to the
daily business operations of the Corporation or the present
location of the principal executive offices of the Corporation in
Indianapolis, Indiana. The consolidated financial condition and
results of operations of Universal-Delaware immediately after the
consummation of the Reincorporation will be identical to that of
the Corporation immediately prior to the consummation of the
Reincorporation. In addition, at the effective time of the
Merger the Board of Directors of Universal-Delaware will consist
of those persons elected directors of the Corporation at the
Annual Meeting. The size of the Board of Directors will be
increased to five and the directors intend to elect the persons
described in "Nominees for Election As Directors" to fill the
vacancies. In addition, the individuals serving as executive
officers of the Corporation immediately prior to the Merger will
serve as executive officers of Universal-Delaware upon the
effectiveness of the Merger.
A vote for approval and adoption of the Merger Agreement and
Reincorporation Proposal will also constitute specific approval
of the Delaware Certificate and the Delaware Bylaws.
Confirmation and adoption of the Merger Agreement and the
Reincorporation Proposal will affect certain rights of
shareholders. Accordingly, shareholders are urged to read
carefully this entire Information Statement and the Exhibits to
the Information Statement before voting.
Dissenters' Rights of Appraisal
In China Products North America, Inc. v. Manewal, et al, 69
Wash. App. 767, 850 P.2d 565 (1993), the Washington Court of
Appeals held that although a merger is among the corporate
actions that would trigger dissenters' rights under the
Washington Law, a merger of an existing corporation into a shell
subsidiary corporation formed for the sole purpose of changing
corporate domicile from the State of Washington to the State of
Delaware is not a significant enough change in the scope of the
business enterprise or in shareholders rights to warrant the
triggering of dissenters' rights. In reaching this conclusion
the court was persuaded by the fact that the majority shareholder
group in China Products owned more than two-thirds of the voting
stock. The court reasoned that since the controlling shareholder
group had the power to eliminate most of the statutory
differences between Washington and Delaware law by approving
amendments to the articles and bylaws of the Washington
corporation, this substantially undermined a claim that a change
in the state of incorporation would have significance to the
dissenters. Similarly, Russell C. Best beneficially owns 66% of
the Corporation's shares and, thus, has the power to cause the
adoption of most of the changes in shareholders rights which will
result from reincorporation through amendments to the
Corporation's Articles and Bylaws. Accordingly, although under
Washington Law shareholders have the right, under certain
circumstances, to dissent from certain corporate reorganizations
and receive cash for their shares, Washington Law does not permit
dissenters' rights in connection with the Reincorporation.
Amendment, Deferral or Termination of the Merger Agreement
If approved by the shareholders at the Annual Meeting, it is
anticipated that the Reincorporation will become effective at the
earliest practicable time. However, the Merger Agreement
provides that the Merger Agreement may be amended, modified or
supplemented before or after approval by the shareholders of the
Corporation; but no such amendment, modification or supplement
may be made if it would have a material adverse effect upon the
rights of the Corporation's shareholders unless it has been
approved by the shareholders. The Merger Agreement also provides
that the Corporation may terminate and abandon the Merger or
defer its consummation for a reasonable period, notwithstanding
shareholder approval, if in the opinion of the Board of Directors
such action would be in the best interests of the Corporation and
its shareholders. The Merger Agreement provides that the
consummation of the Merger is subject to certain conditions,
including the absence of pending or threatened litigation
regarding the Reincorporation.
Comparison of Washington and Delaware Corporate Law and Summary
of Charter and Bylaw Changes
Washington Law and Delaware Law are similar in many respects
but there are differences that may affect the rights of
stockholders. The following includes a summary of certain
similarities and differences between Washington Law and Delaware
Law. Approval by stockholders of the Reincorporation will also
constitute approval of the Delaware Certificate and Delaware
Bylaws. The following discussion also highlights certain
differences in stockholder rights which will result from the
implementation of the Delaware Certificate and Delaware Bylaws.
This discussion is not exhaustive and is qualified in its
entirety by reference to the specific provisions of Delaware Law
and Washington Law, the Delaware Certificate and Delaware Bylaws.
Vote Required For Mergers, Consolidations and Dissolution
Delaware Law relating to mergers and other corporate
reorganizations differs from Washington Law in several respects.
Both Washington and Delaware Law provide for a shareholder vote
(except as indicated below and for certain "short-form" mergers
between a parent corporation and its 90% subsidiaries) of both
the acquiring and acquired corporations to approve mergers and of
the selling corporation for the sale by such corporation of all
or substantially all of its assets. Both Washington and Delaware
Law provide for a shareholder vote to approve the dissolution of
a corporation. In addition, Washington Law requires the approval
of the shareholders of an "acquired corporation" (which is
defined as a corporation whose shares will be acquired in the
transaction) in a share exchange transaction. Delaware Law does
not have specific provisions relating to share exchanges.
Delaware Law does not require a shareholder vote of the
surviving corporation in a merger if (i) the merger agreement
does not amend the existing certificate of incorporation; (ii)
each outstanding or treasury share of the surviving corporation
in the merger is unchanged after the merger; and (iii) the number
of shares to be issued by the surviving corporation in the merger
does not exceed 20% of the shares outstanding immediately prior
to such issuance. By contrast, Washington Law requires a
shareholder vote of the surviving corporation in a merger if the
merger results in any increase in the number of "participating
shares" (defined as shares that entitle their holders to
participate without limitation in distributions) or "voting
shares" (defined as shares that entitle their holders to vote
unconditionally in elections of directors) outstanding.
To obtain shareholder approval of a merger or consolidation,
or a sale of all or substantially all of its assets, Delaware Law
requires a corporation to receive an affirmative vote of holders
of at least a majority of the outstanding stock of the
corporation entitled to vote thereon. Generally, Washington Law
provides that shareholder approval of a merger, share exchange or
sale of all or substantially all of the assets requires the
affirmative vote of holders of at least two-thirds (2/3) of all
shares entitled to vote on the matter. Additionally, separate
voting by voting groups may be required in connection with such
transactions under Washington Law. See "Separate Voting by
Voting Groups." Delaware Law also requires an affirmative vote
of holders of a majority of the outstanding stock to approve a
dissolution of the corporation. By contrast, Washington Law
generally requires approval by holders of at least two-thirds
(2/3) of all votes entitled to be cast on a dissolution proposal.
Washington Law also permits the board of directors to
condition its submission of a proposal for a merger, share
exchange, sale of all or substantially of the assets or
dissolution on any basis, including a greater vote and separate
voting by voting groups (if not otherwise required).
Appraisal Rights
Both Delaware Law and Washington Law allow stockholders,
under certain circumstances, to dissent from certain corporate
transactions and to receive fair value for their shares in lieu
of the consideration they would otherwise receive in the
transactions. Unless a corporation's certificate of
incorporation provides otherwise, Delaware Law does not require
such dissenters' rights of appraisal with respect to a merger or
consolidation by (i) holders of shares a class of which is either
listed on a national securities exchange or held by more than
2,000 stockholders if such stockholders receive consideration
consisting solely of one or more of the following: (a) shares of
the surviving corporation, (b) shares of such a listed or widely
held corporation or (c) cash in lieu of fractional shares, or
(ii) holders of shares of a surviving corporation in a merger if
the merger does not require approval of such stockholders.
Delaware Law does not provide stockholders of a corporation with
appraisal rights in a merger of the corporation into a subsidiary
of the corporation or in a reorganization where the corporation
acquires another business through the issuance of its stock in
exchange for the assets or the outstanding stock of the business
to be acquired. Washington Law allows for appraisal rights in
connection with, among other transactions, (i) a merger requiring
shareholder approval, (ii) a short form merger with a subsidiary
of the corporation, and (iii) a share exchange requiring
shareholder approval. However, as discussed under
"Reincorporation Proposal -- Dissenters' Rights of Appraisal,"
Washington Law does not generally recognize dissenters' rights of
appraisal with respect to a reincorporation merger.
Cumulative Voting
Under Delaware Law, cumulative voting (which permits holders
of less than a majority of the voting securities of a corporation
to cumulate their votes and elect a director in certain
situations) is not available unless expressly provided for in the
corporation's certificate of incorporation. Washington Law
provides for cumulative voting for elections of directors, but
permits the elimination of cumulative voting if such exclusion is
specified in the corporation's articles of incorporation. If
cumulative voting is authorized (i.e., not expressly eliminated
in the articles of incorporation), Washington Law requires that
at least three (3) directors be elected at each annual meeting.
Also, under Washington Law, directors may not be removed by the
shareholders if the number of votes sufficient to elect that
director under cumulative voting is cast against the director's
removal. The Corporation's Articles of Incorporation are silent
on the subject of cumulative voting, and the Corporation's
shareholders, thus, currently possess the ability to cumulate
votes in the election of directors. However, since the Delaware
Certificate does not provide for cumulative voting, the
shareholders will not have cumulative voting rights after the
consummation of the Merger. Accordingly, after the Merger,
holders of a majority of the Corporation's common stock will be
able to elect all directors to be elected at each annual meeting
and to remove any director at a special meeting held for such
purpose. Members of the Corporation's Board of Directors
currently own or control the majority of the Corporation's
outstanding common stock.
When cumulative voting for the election of directors
applies, a small minority shareholder or shareholders may be able
to elect a member to the Corporation's Board of Directors, over
the wishes of the majority, by casting all of his cumulated votes
for that individual. For example, if seven directors are elected
annually, one or more stockholders holding more than 12.5% of the
voting power could elect a director. With conventional voting,
on the other hand, each director is elected by a simple majority
vote.
The Board of Directors believes that cumulative voting
should be eliminated for certain reasons. First, one of the
principal effects of cumulative voting is to make it more likely
that an individual or group of individuals who own less than a
plurality of the voting stock would be able to obtain
representation on the Board of Directors. Such an individual or
group may have interests and goals which are not consistent with
and may be in conflict with those of a majority of the
shareholders. The Corporation's Board of Directors believes that
each Director should represent the interests of all the
shareholders, rather than the interests of any special
constituency, and that the presence on the Board of one or more
directors representing such a constituency could disrupt and
impair the efficient management of the Corporation. Second, if
cumulative voting were eliminated, minority shareholders would
not in the future be able to use cumulative voting as a coercive
device, such as by threatening to obtain representation on the
Board of Directors as a means of forcing the Corporation to
purchase their stock at a price above market or by otherwise
unduly influencing management.
While the Board of Directors does not consider the
elimination of cumulative voting to be an anti-takeover measure,
the elimination may have the effect of discouraging certain
purchases of the Corporation's stock because of the reduced
likelihood of obtaining board representation. Under certain
circumstances, the elimination might also render more difficult
or discourage a merger, tender offer or proxy contest, the
assumption of control by a holder of a large block of the
Corporation's stock or the removal of incumbent managers. The
Board of Directors is not currently aware of any accumulation of
its stock for the purpose of utilizing cumulative voting to
obtain board representation. Further, the Board of Directors is
not aware of the nomination of a candidate for the office of
director in opposition to management-nominated director
candidates at any time since the organization of the Corporation
in the 1920's.
The Board is not aware of, and this proposal is not in
response to, any effort to invoke cumulative voting or to remove
any directors.
Preemptive Rights
Under Washington Law, holders of certain shares of capital
stock of a corporation have preemptive rights (which permit them
to maintain their percentage ownership in the corporation by
enabling them to purchase a portion of newly-issued shares),
unless preemptive rights are expressly eliminated in the articles
of incorporation. A shareholder generally may waive his or her
preemptive rights under Washington Law. By contrast, Delaware
Law provides that shareholders of a corporation do not have
preemptive rights unless the certificate of incorporation
expressly specifies the existence of such rights.
Since the Corporation's Articles of Incorporation do not
expressly eliminate pre-emptive rights, the Corporation's
shareholders currently possess these rights. The Delaware
Certificate does not specify the existence of pre-emptive rights
and, upon consummation of the Merger, the shareholders will no
longer be entitled to exercise these rights. As a result, the
Corporation will be able to issue its capital stock to any public
or private investor without first offering such stock to the
Corporation's current shareholders. If any such shares are
issued, present shareholders' ownership as a percentage of the
total outstanding stock would be diluted. Any such issuances
would be on such terms as determined by the Board of Directors in
its lawfully exercised discretion.
Compliance with the requirements of preemptive rights, if
the Corporation should desire to issue additional common stock or
securities convertible into common stock in the future, would
involve considerable delay and substantial expense to the
Corporation. In most situations, the Corporation would be
required to initiate and complete a rights offering or solicit
and obtain Shareholders' consent to a waiver of the preemptive
rights before issuing any shares of stock. This may limit the
Corporation's flexibility to take advantage of opportunities to
raise capital for business growth or to finance acquisitions that
may become available in the rapidly changing financial markets.
Historically, preemptive rights originated at a time when
companies were generally small and had relatively few
stockholders, shares were not widely traded and there was little
opportunity to purchase additional shares at a reasonable price
except when the company had a new issue. Today, investors
wishing to maintain or increase their holdings of the
Corporation's stock may do so by purchasing shares through a
broker-dealer making a market in the Corporation's shares.
The Board of Directors believes that preemptive rights are
not a significant benefit to the Shareholders, and that any
benefit to shareholders of preemptive rights is outweighed by the
benefit to the shareholders of increased flexibility and reduced
costs in financing the operations of the Corporation.
Distributions to Shareholders
Delaware Law permits a corporation to declare and pay
dividends out of surplus or, if there is no surplus, out of net
profits for the fiscal year in which the dividend is declared
and/or for the immediately preceding fiscal year, provided that
the amount of capital of the corporation is not less than the
aggregate amount of capital represented by the issued and
outstanding stock of all classes having a preference upon the
distribution of assets. In addition, Delaware Law provides that
a corporation may redeem or repurchase its shares if such
redemption or repurchase would not impair the capital of the
corporation. In determining the amount of surplus of a
corporation under Delaware Law, the assets of the corporation may
be valued at their fair market value as determined by the board
of directors.
Under Washington Law, the payment of dividends and
repurchases or redemptions of stock are permitted if, after
giving effect to such action, the corporation is able to pay its
debts as they become due in the ordinary course of business and
the corporation's total assets exceed its total liabilities plus
the amount that would be needed for preferential rights upon
dissolution. The board of directors may base its determination
that these requirements have been met on the corporation's
financial statements prepared on the basis of accounting
practices and principles that are reasonable under the
circumstances or on a fair valuation or other method that is
reasonable under the circumstances.
Removal of Directors
Under Delaware Law, any director or the entire board of
directors generally may be removed with or without cause by a
majority vote of shareholders. Delaware Law also provides,
however, that a director of a corporation with a classified board
of directors may be removed only for cause unless the certificate
of incorporation provides otherwise. Under Washington Law,
shareholders may remove directors with or without cause unless
the articles of incorporation provide for removal only for cause.
The Articles of Incorporation of the Corporation do not provide
for removal only for cause. Under both Delaware and Washington
Law, if a director is elected by a voting group consisting of the
holders of any class or series of shares, only shareholders of
that voting group may participate in a vote to remove that
director.
Shareholders' Action by Written Consent
Delaware Law provides that, unless the corporation's
certificate of incorporation specifies otherwise, shareholders
may take any action without a meeting by written consent signed
by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or
take such action at a meeting at which all shares entitled to
vote thereon were present and voted. Washington Law also permits
shareholders to take action by written consent, but requires such
written consent to be unanimous.
Power to Amend Articles or Certificate of Incorporation
Under Delaware Law, all amendments to a corporation's
certificate of incorporation must be approved by a majority of
the outstanding stock entitled to vote thereon; provided,
however, that voting by class is required if a proposed amendment
would increase or decrease the aggregate number of authorized
shares of such class, increase or decrease the par value of
shares of such class, or alter or change the powers, preferences
or special rights of shares of such class so as to affect
adversely them.
The Corporation's Articles of Incorporation contain no
provision governing the amendment of the Articles of
Incorporation. Under Washington Law, in the case of a "public
company," the Articles may be amended by the affirmative vote of
a majority of the shares entitled to vote. A public company is
defined to include a company which has a class of shares
registered with the federal Securities and Exchange Commission
pursuant to Section 12 of the Securities Exchange Act of 1934 or
any successor statute, and which has more that 300 shareholders.
The Corporation has more than 300 shareholders and thus is a
"public company" for this purpose. Accordingly, the
Corporation's Articles of Incorporation may currently be amended
by a majority of the outstanding stock under the statute. In
addition, should the Corporation have 300 or fewer shareholders
at any time, Washington Law would provide that amendments to the
Articles of Incorporation must have the approval of 2/3 of the
outstanding stock for approval. Washington Law does, however,
permit the articles of incorporation to specify that the articles
may be amended by holders of a majority of outstanding voting
stock regardless whether the corporation is public or not. The
Board of Directors believes that a simple majority is the
appropriate standard regardless of the number of the
Corporation's shareholders.
Upon consummation of the Merger the holders of a majority of
the Corporation's outstanding stock will have the authority under
Delaware Law to amend the Corporation's Certificate of
Incorporation at any annual or special meeting of shareholders,
regardless of the then current number of such shareholders.
Since Russell C. Best, Chairman of the Board, President and Chief
Executive Officer of the Corporation, currently owns beneficially
approximately 88% of the outstanding shares of Common Stock of
the Corporation, the Reincorporation would not have the effect of
enhancing the ability of the incumbent Board of Directors or
management to amend the corporate charter, even if the
Corporation were not a public company under Washington Law. The
Board of Directors does not intend this proposed change as an
anti-takeover measure.
Voting by separate voting groups on amendments to the
articles is also required under Washington Law in certain
circumstances. In addition, Washington Law also permits the
board of directors to condition its submission of a proposal to
amend the articles of incorporation on any basis, including a
greater vote and separate voting by voting groups (if not
otherwise required).
Power to Adopt, Amend or Repeal Bylaws
Delaware Law gives the power to adopt, amend or repeal
bylaws to the corporation's shareholders, provided that the
corporation's certificate of incorporation may give concurrent
power to the board of directors. The Delaware Certificate
includes such a concurrent grant of authority to the Board.
Washington Law provides that a corporation's board of directors
may amend or repeal a corporation's bylaws, or adopt new bylaws,
unless (a) the articles of incorporation or Washington Law
reserve such power exclusively to the shareholders; or (b) the
shareholders, in amending or repeating a particular bylaw,
provide expressly that the board of directors may not amend or
repeal that bylaw. Washington Law also provides that a
corporation's shareholders may also amend or repeal the
corporation's bylaws, or adopt new bylaws, even though the board
of directors also has such powers. Article VIII of the
Corporation's Bylaws currently provides that the Board of
Directors may amend the bylaws by a majority vote.
After consummation of the Merger, the Board of Directors as
well as the shareholders will have concurrent authority to amend,
repeal or adopt the Delaware Bylaws provided, however, that the
Board of Directors will not have the power to amend or repeal any
by-law with respect to which the shareholders have provided may
not be amended or repealed by the Board. The Board of Directors
believes that it is in the best interests of the shareholders
that the Board be in a position to adopt, amend or repeal the
Bylaws whenever such action becomes desirable for the benefit of
the Corporation and its Shareholders, without the necessity and
expense of obtaining shareholder approval at an annual or special
shareholders meeting. The Bylaws generally pertain to matters of
internal corporate governance within the particular competence of
the Board of Directors and management of the Corporation. This
change is not intended to have any anti-takeover effect. Since
Russell C. Best, Chairman of the Board, President and Chief
Executive Officer of the Corporation, currently beneficially owns
approximately 88% of the outstanding Common Stock of the
Corporation, he currently effectively has the power to cause the
amendment, repeal or making of the Bylaws.
Shareholder Demand for Special Meeting
Under Delaware Law, only the board of directors and persons
authorized in the corporation's bylaws may call a special meeting
of shareholders. The Delaware Bylaws provide that the Chairman
of the Board, the President, the Board and holders of 50% of the
shares entitled to be voted at the meeting may call a special
meeting of shareholders. By contrast, Washington Law provides
that in addition to the board of directors and persons authorized
in the corporation's articles of incorporation, holders of 10% of
the shares entitled to be cast at the meeting may call a special
meeting of shareholders. Washington Law also provides that the
articles of incorporation or bylaws of a non-public corporation
may contain provisions that increase the percentage of shares
needed to call a special meeting up to 25%, and that the articles
of incorporation of a publicly-held corporation may deny or
otherwise limit a shareholder's right to call a special meeting.
The articles of incorporation of the Corporation do not contain
any provisions relating to shareholders' rights to call a special
meeting.
Upon consummation of the Reincorporation, only the holders
of a majority of shares entitled to vote will be permitted to
call a special meeting thereby eliminating the possibility that a
minority shareholder could force stockholder consideration of a
proposal over the opposition of the Board of Directors by calling
a special meeting of stockholders prior to such time as the Board
of Directors believes such consideration to be appropriate. This
change is not intended to have any anti-takeover effect. Since
Russell C. Best, Chairman of the Board, President and Chief
Executive Officer of the Corporation, currently beneficially owns
approximately 88% of the outstanding common stock of the
Corporation, no shareholder proposal can be adopted without his
concurrence.
Director Liability
Delaware Law permits Delaware corporations, in their
certificates of incorporation, to limit or eliminate director
liability for money damages for a breach of the fiduciary duty,
except for liability (i) for any breach of the director's duty of
loyalty to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) arising from the
payment of a dividend or approval of a stock repurchase in
violation of the Delaware Law, or (iv) for any transaction from
which the director derived an improper personal benefit. The
Delaware Certificate contains a provision eliminating such
liability. The proposed change would not eliminate the
directors' duty of care, but it would eliminate the financial
exposure of directors of the Corporation for certain breaches of
such duty. Directors would remain liable to the Corporation and
its stockholders for the acts that are specifically excluded from
the scope of the provision as listed above. The change would not
be retroactive and therefore would not limit the liability of
directors for any act or omission occurring prior to the adoption
of the proposed amendment. Washington Law contains comparable
provisions and prohibits retroactive application of any provision
eliminating or limiting the liability of a director.
Although the Corporation has had little difficulty in
attracting and retaining directors, the Board of Directors
believes that the Corporation should take all reasonable steps to
ensure that it will continue to be able to attract and retain
qualified persons for such positions and that directors will not
be inhibited in their decision-making because of undue concerns
about personal liability. Further, the change should have the
effect of reducing the cost to the Corporation of obtaining
directors and officers liability insurance as well as the risk
that the Corporation's assets will be depleted in defending and
indemnifying its officers and directors against frivolous
stockholder litigation. After the Merger, a stockholder will be
able to prosecute an action against a director for monetary
damages only if the stockholder alleges a breach of the duty of
loyalty, a failure to act in good faith, intentional misconduct,
a knowing violation of law, an unlawful dividend payment or stock
purchase or redemption or a breach of duty resulting in receipt
of an improper personal benefit. A stockholder will not be able
to prosecute such an action (including an action relating to an
attempted takeover of the Corporation) based on "negligence" or
"gross negligence" of a director in the performance of the
director's duties. However, the proposed change will not limit
or eliminate the right of the Corporation or any stockholder to
seek an injunction, rescission or other form of non-monetary
relief in the event of a breach of the duty of care by a director
(although such relief may not be an effective remedy in certain
circumstances). In addition, the proposed change applies only to
claims against a director arising out of service in such capacity
and, depending upon judicial interpretation, it may not be
effective to relieve a director from liability under the laws of
jurisdictions other than Delaware, such as liabilities imposed
under the federal securities laws. The proposed change will have
no effect on tort or other claims by third parties against
directors. The proposed change will not preclude indemnification
of a director by the Corporation for any liability which has not
been eliminated by the change as permitted by the Delaware
General Corporation Law and the Corporation's Bylaws.
The Corporation has not received notice of any pending or
threatened litigation to which any current director is a party or
threatened to be made a party in such capacity to which the
protections and benefits under the proposed change might apply;
and the proposed change is not being proposed in response to any
specific resignation, threat of resignation or refusal to serve
by any director or potential director of the Corporation.
The Board of Directors believes that the diligence exercised
by directors stems primarily from their fiduciary duty and desire
to act in the best interests of the Corporation and its
Stockholders and not from fear of monetary damages. Consequently,
they believe that the level of care exercised by them in the
performance of their duties would not be lessened by the adoption
of the proposed change. The Board of Directors recognizes that
it and future members of the Board of Directors could personally
benefit from approval of the proposed change, but for the reasons
stated above, the Board of Directors believes that the proposed
change is in the best interests of the Corporation and its
Stockholders.
Indemnification
Delaware Law permits indemnification of officers, directors,
employees and agents against liabilities and expenses incurred in
proceedings if such person acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests
of the corporation and, with respect to any criminal action, had
no reasonable cause to believe his conduct was unlawful.
Indemnification in connection with a proceeding by or in the
right of a corporation is limited to expenses actually and
reasonably incurred by the indemnified person, and no
indemnification may be made in respect of any claim, issue or
matter as to which such person has been adjudged to be liable to
the corporation unless indemnification is otherwise authorized by
a court. Delaware Law requires indemnification of officers,
directors, employees and agents to the extent such person has
been successful on the merits or otherwise in proceedings in
which the person was involved by reason of his or her status as
an officer, director, employee or agent. Delaware Law also
provides that the statutory indemnification is not exclusive of
rights to indemnification provided in the charter, bylaws or
agreement, or through resolutions of its board of directors or
shareholders.
Washington Law permits indemnification of officers,
directors, employees and agents against liabilities and expenses
incurred in proceedings if the individual acted in good faith and
reasonably believed (1) in the case of conduct in his official
capacity with the corporation, that his conduct was in its best
interests, and (2) in all other cases, that his conduct was at
least not opposed to its best interests. In the case of any
criminal proceeding, the individual must either have had
reasonable cause to believe the conduct was lawful or had no
reasonable cause to believe the conduct was unlawful. Washington
Law prohibits indemnification of any person adjudged to be liable
to the corporation and, unlike Delaware, does not permit a court
to authorize indemnification in such a circumstance. Washington
Law contains a mandatory indemnification provision similar to
Delaware's provisions, but Washington Law permits a corporation
to limit such indemnification in its articles of incorporation.
Anti-Takeover Law
In general, Delaware Law prevents an "interested
stockholder" (which is defined as any person who, individually or
with others, owns 15% or more of the outstanding voting
securities of a corporation), from engaging in certain business
combinations (including, among other transactions, any merger or
consolidation with, or sale or disposition of a substantial
amount of assets to, an interested stockholder) with a Delaware
corporation for three (3) years following the date such person
became an interested stockholder unless certain conditions (such
as approval by the Board of Directors prior to such date or by
the affirmative vote of at least two-thirds (2/3) of the
outstanding voting stock not owned by the interested stockholder
on or after such date) are met. These anti-takeover provisions
under Delaware Law do not apply to certain corporations
(including those which do not have a class of voting stock listed
on a national securities exchange, authorized for quotation on an
inter-dealer quotation system, or held of record by more than
2,000 stockholders). However, these provisions will apply to any
corporation which so specifies in its certificate of
incorporation (or an amendment thereto).
Washington Law contains provisions regulating "interested
shareholder transactions" and "significant business transactions"
which are more restrictive than the above-described provisions
under Delaware Law. Washington Law prohibits an "interested
shareholder transaction" unless such transaction is approved by
each voting group entitled to vote separately on the transaction
by two-thirds (2/3) of the votes of disinterested holders of each
such voting group. These provisions do not apply to a
transaction (i) by a corporation with fewer than 300 holders of
record of its shares (unless its articles of incorporation
provide otherwise); (ii) approved by a majority of the
corporation's disinterested directors; (iii) in which a majority
of the disinterested directors determines that the fair market
value of the consideration to be received by noninterested
shareholders for shares of any class for which shares are owned
by any interested shareholder is not less than the highest fair
market value of the consideration paid by any interested
shareholder in acquiring shares of the same class within 24
months of the proposed transaction; (iv) by a corporation whose
original Articles of Incorporation includes a provision, or whose
shareholders adopt an amendment to its Articles of Incorporation
by two-thirds (2/3) of the votes of disinterested shareholders,
expressly electing not to be covered by these statutory
provisions. For purposes of these provisions, an "interested
shareholder" is defined to include any person or group of
affiliated persons who beneficially own 20% or more of the
outstanding voting shares of a corporation.
Washington Law also prohibits a Washington corporation from
engaging in any "significant business transaction" (which is
defined as (i) a merger or consolidation with an acquiring person
or an affiliate or an associate of an acquiring person; or (ii) a
sale, lease, exchange, transfer or other disposition or
encumbrance to or with an acquiring person or an affiliate or an
associate of an acquiring person of assets of the corporation (x)
having an aggregate market value equal to 5% or more of the
aggregate market value of all assets, (y) having an aggregate
market value equal to 5% or more of all outstanding shares, or
(z) representing 5% or more of the earning power or net income of
the target corporation) for a period of 5 years following the
date on which the acquiring person obtained such status unless
such transaction is approved prior to such date by a majority of
the members of the Board of Directors. A corporation that
engages in a significant business transaction without obtaining
such approval will have its certificate of incorporation revoked,
and such significant transaction is void. For purposes of these
provisions, an acquiring person is defined as a person or group
of persons who beneficially owns 10% or more of the outstanding
voting shares of the target corporation. The provisions
restricting significant business transactions do not apply to a
corporation which does not have a class of securities registered
under Section 12 of the Securities Exchange Act of 1934, as
amended.
Separate Voting by Voting Groups
Under certain circumstances, Washington Law requires
separate voting by voting groups in connection with a merger,
share exchange, and sale of all or substantially all assets.
Delaware Law generally does not require such class voting, except
in circumstances where the transaction involves certain
amendments to the certificate of incorporation.
Number of Directors
Unless the articles of incorporation specify otherwise,
Washington Law permits the Board of Directors, as well as the
shareholders, to increase the number of directors by a simple
majority vote. Currently, the Corporation's Articles of
Incorporation provide that the shareholders may increase the
number of the Corporation's directors from three to a greater
number not exceeding seven by a vote of 75% of the outstanding
stock of the Corporation. Delaware Law provides that the number
of directors shall be fixed by, or in the manner provided in, the
bylaws unless the certificate of incorporation fixes the number.
The Delaware Bylaws provide that the board shall be composed of
five members. The number of directors can be changed from time
to time by amending the bylaws. Thus, after the Merger, either
the Board or the shareholders can amend the bylaws by a majority
vote to change the number of directors without any minimum or
maximum constraints.
The Board believes that it is capable, just as the
shareholders are, of determining the advisability of expansion of
the Board of Directors, due to the Board's familiarity with the
Corporation's management and opportunities. The Board of
Directors desires to have the flexibility to respond quickly to
the availability of an excellent candidate for an additional
director position, without the burden and expense of calling a
special meeting of the shareholders. With respect to the
reduction in the percentage of the stockholders who must approve
an expansion of the board, the Board of Directors believes that
such a decision is not one of such gravity that a supermajority
decision standard is appropriate.
Federal Income Tax Consequences of the Reincorporation
The Reincorporation will constitute a reorganization
described in Section 368(a)(1)(F) of the Internal Revenue Code of
1986, as amended. Accordingly, no gain or loss will be
recognized by the holders of Common Stock as a result of the
consummation of the Reincorporation and no gain or loss will be
recognized by the Corporation or Universal-Delaware. Each holder
of Common Stock will have the same basis in the Universal-
Delaware Common Stock received pursuant to the Reincorporation as
such holder had in the Common Stock held immediately prior to the
Reincorporation, and the holding period with respect to the
Universal-Delaware Common Stock will include the period during
which such holder held the corresponding Common Stock of the
Corporation, so long as the Common Stock was held as a capital
asset at the time of consummation of the Reincorporation.
ALTHOUGH IT IS NOT ANTICIPATED THAT STATE OR LOCAL INCOME
TAX CONSEQUENCES TO SHAREHOLDERS WILL VARY FROM THE FEDERAL
INCOME TAX CONSEQUENCES DESCRIBED ABOVE, SHAREHOLDERS SHOULD
CONSULT THEIR OWN TAX ADVISOR AS TO THE EFFECT OF THE
REINCORPORATION UNDER STATE, LOCAL OR FOREIGN INCOME TAX LAWS.
The Corporation has also been advised by legal tax counsel
that Universal-Delaware will succeed without adjustment to the
tax attributes of the Corporation. If the Reincorporation is
approved, Universal-Delaware will be obligated to pay an annual
franchise tax in Delaware.
The Board of Directors unanimously recommends that the
shareholders vote "FOR" the approval and adoption of the Merger
Agreement and the Reincorporation Proposal.
VOTE REQUIRED TO APPROVE MATTERS
A quorum for the meeting requires the presence in person or
by proxy of holders of a majority of the outstanding shares of
the common stock of the Corporation. Votes cast by proxy or in
person at the meeting will be tabulated by the inspector(s) of
election appointed for the meeting. Abstentions, "broker non-
votes" (i.e., where brokers or nominees indicate that such
persons have not received instructions from the beneficial owner
or other person entitled to vote shares as to a matter with
respect to which the brokers or nominees do not have
discretionary power to vote) and votes withheld will be treated
as present for purposes of determining the presence of a quorum.
Brokers that do not receive instructions are entitled to vote on
the election of directors and the ratification of appointment of
auditors. With respect to the Reincorporation Proposal, no
broker may vote shares held for beneficial owners or other
persons entitled to vote without specific instructions from such
persons.
The election of each director requires a plurality of the
votes cast. Votes withheld will be deemed not to have been cast.
Pursuant to Washington Law, shareholders are currently entitled
to cumulate votes in the election of directors by multiplying the
number of votes they are entitled to cast by the number of
directors for whom they are entitled to vote and to cast the
product for a single candidate or distribute the product among
two or more candidates. If, however, Proposal Number 1 which
would permit the reincorporation of the Corporation in Delaware
is approved by the requisite vote of shareholders, thereby
eliminating cumulative voting upon the effectiveness of the
Merger, the Corporation intends to file Articles of Merger with
the Washington Secretary of State and the Delaware Secretary of
State promptly.
The approval of the Merger Agreement and Reincorporation
Proposal requires the affirmative vote of the holders of shares
representing two-thirds of the shares outstanding on the record
date.
Russell C. Best, Chairman of the Board, President and Chief
Executive Officer of the Corporation, currently beneficially owns
approximately 88% of the outstanding Common Stock of the
Corporation and intends to vote his shares in favor of the
Reincorporation Proposal. With respect to such proposed
amendments, abstentions and broker non-votes will have the same
effect as a vote against the proposal.
The ratification of the appointment of the auditors requires
the affirmative vote of a majority of the shares present in
person and entitled to vote at the annual meeting.
OTHER BUSINESS
As of the date of this Information Statement, the Board of
Directors knows of no other business which will be presented for
consideration at the meeting.
AVAILABILITY OF 10-K REPORT
Copies of the 1994 Annual Report on Form 10-K will be
forwarded without charge to security holders as of the record
date upon written request to the Secretary.
By Order of the Board of Directors,
Gregg A. Dykstra, Secretary
P.O. Box 50444
Indianapolis, Indiana 46250
EXHIBITS TO INFORMATION STATEMENT
Exhibit A Merger Agreement
Exhibit B Certificate of Incorporation
Exhibit C Bylaws
EXHIBIT A
AGREEMENT AND PLAN OF MERGER
BEST UNIVERSAL LOCK CO.
Parties:
THIS AGREEMENT AND PLAN OF MERGER ("Merger Agreement") is
entered into by and between Best Universal Lock Co., a Washington
corporation ("Universal-Washington") and Best Universal Lock Co.,
a Delaware corporation ("Universal-Delaware").
Recitals:
1. Universal-Washington is a corporation duly organized
and existing under the laws of the State of Washington.
2. Universal-Delaware is a corporation duly organized and
existing under the laws of the State of Delaware.
3. On the date of this Merger Agreement, Universal-
Washington's authorized capital consists of ______ shares of
stock, consisting of ___ shares of Common Stock, par value ___
per share (the "Universal-Washington Common Stock"), of which
______ shares are issued and outstanding, and __________ shares
of preferred stock, par value $____ per share, none of which
shares are issued and outstanding.
4. On the date of this Merger Agreement, Universal-
Delaware's authorized capital consists of __________ shares of
stock, consisting of __________ shares of Common Stock, par value
$___ per share (the "Universal-Delaware Common Stock"), of which
____ shares are issued and outstanding and owned by Universal-
Washington and __________ shares of preferred stock, par value
$____ per share, none of which shares are issued and outstanding.
5. The respective Boards of Directors of Universal-
Washington and Universal-Delaware have determined that it is
advisable and in the best interests of each such corporation that
Universal-Washington merge with and into Universal-Delaware upon
the terms and subject to the conditions of this Merger Agreement
for the purpose of effecting the reincorporation of Universal-
Washington in the State of Delaware.
6. The respective Boards of Directors of Universal-
Washington and Universal-Delaware have approved and adopted this
Merger Agreement. Universal-Washington has adopted this Merger
Agreement as the sole stockholder of Universal-Delaware and the
Board of Directors of Universal-Washington has directed that this
Merger Agreement be submitted to a vote of its shareholders. The
affirmative vote of the holders of two-thirds of the shares of
Universal-Washington Common Stock outstanding must approve this
Merger Agreement for the merger to become effective.
7. The parties intend by this Merger Agreement to effect a
"reorganization" under Section 368 of the Internal Revenue Code
of 1986, as amended.
Terms and Provisions:
In consideration of the foregoing recitals and of the
following terms and provisions, and subject to the following
conditions, it is agreed:
1. Merger. At the Effective Time (as defined in this
Section 1), Universal-Washington shall be merged with and into
Universal-Delaware (the "Merger"). Universal-Delaware shall be
the surviving corporation of the Merger (hereinafter sometimes
referred to as the "Surviving Corporation") and the separate
corporate existence of Universal-Washington shall cease. The
Merger shall become effective upon the filing of a Certificate of
Merger with the Secretary of State of the State of Delaware. The
date and time when the Merger shall become effective is herein
referred to as the "Effective Time."
2. Governing Documents.
a. The Certificate of Incorporation Universal-
Delaware as it may be amended or restated subject to applicable
law, as in effect immediately prior to the Effective Time, shall
constitute the Certificate of Incorporation of the Surviving
Corporation without further change or amendment until thereafter
amended in accordance with the provisions thereof and applicable
law.
b. The Bylaws of Universal-Delaware as in effect
immediately prior to the Effective Time shall constitute the
Bylaws of the Surviving Corporation without change or amendment
until thereafter amended in accordance with the provisions
thereof and applicable law.
3. Officers and Directors. The persons who are officers
and directors of Universal-Washington immediately prior to the
Effective Time shall, after the Effective Time, be the officers
and directors of the Surviving Corporation, without change until
their successors have been duly elected or appointed and
qualified or until their earlier death, resignation or removal in
accordance with the Surviving Corporation's Certificate of
Incorporation and Bylaws and applicable law.
4. Name. The name of the Surviving Corporation shall
continue to be Best Universal Lock Co.
5. Succession. At the Effective Time, the separate
corporate existence of Universal-Washington shall cease, and the
Surviving Corporation shall possess all the rights, privileges,
powers and franchises of a public or private nature and be
subject to all the restrictions, disabilities and duties of
Universal-Washington and all the rights, privileges, powers and
franchises of Universal-Washington, and all property, real,
personal and mixed, and all debts due to Universal-Washington on
whatever account, as well for share subscriptions and all other
things in action, shall be vested in the Surviving Corporation;
and all property, rights, privileges, powers and franchises, and
all and every other interest shall be thereafter as effectively
the property of the Surviving Corporation as the same were of
Universal-Washington, and the title to any real estate vested by
deed or otherwise shall not revert or be in any way impaired by
reason of the Merger, but all rights of creditors and liens upon
any property of Universal-Washington shall be preserved
unimpaired, and all debts, liabilities and duties of Universal-
Washington shall thenceforth attach to the Surviving Corporation
and may be enforced against it to the same extent as if such
debts, liabilities and duties have been incurred or contracted by
it; provided, however, that such liens upon property of
Universal-Washington will be limited to the property affected
thereby immediately prior to the Merger. All corporate acts,
plans, policies, agreements, arrangements, approvals and
authorizations of Universal-Washington, its shareholders, Board
of Directors and committees thereof, officers and agents which
were valid and effective immediately prior to the Effective Time,
shall be taken for all purposes as the acts, plans, policies,
agreements, arrangements, approvals and authorizations of the
Surviving Corporation, its stockholders, Board of Directors and
committees thereof, respectively, and shall be as effective and
binding thereon as the same were with respect to Universal-
Washington.
6. Conversion of Shares. At the Effective Time, by virtue
of the Merger and without any action on the part of the holder
thereof:
a. Each share of Universal-Washington Common Stock
outstanding immediately prior to the Effective Time shall be
converted into, and shall become, one fully paid and
nonassessable share of Universal-Delaware Common Stock.
b. The _____ shares of Universal-Delaware Common
Stock issued and outstanding in the name of Universal-Washington
shall be cancelled and retired, and no payment shall be made with
respect thereto, and such shares shall resume the status of
unauthorized and unissued shares of Universal-Delaware Common
Stock.
7. Stock Certificates. At and after the Effective Time,
all of the outstanding certificates which immediately prior to
the Effective Time represented shares of Universal-Washington
Common Stock shall be deemed for all purposes to evidence
ownership of, and to represent shares of, Universal-Delaware
Common Stock into which the shares of Universal-Washington Common
Stock formerly represented by such certificates have been
converted as herein provided. The registered owner on the books
and records of Universal-Washington or its transfer agent of any
such outstanding stock certificate shall, until such certificate
shall have been surrendered for transfer or otherwise accounted
for to the Surviving Corporation or its transfer agent, have and
be entitled to exercise any voting or other rights with respect
to and to receive any dividends and other distributions upon the
shares of Universal-Delaware Common Stock evidenced by such
outstanding certificate as above provided. Nothing contained
herein shall be deemed to require the holder of any shares of
Universal-Washington Common Stock to surrender the certificate or
certificates representing such shares in exchange for a
certificate or certificates representing shares of Universal-
Delaware Common Stock.
8. Other Employee Benefit Plans. As of the Effective
Time, the Surviving Corporation hereby assumes all obligations of
Universal-Washington under any and all employee benefit plans in
effect as of the Effective Time or with respect to which employee
rights or accrued benefits are outstanding as of the Effective
Time.
9. Conditions. The consummation of the Merger is subject
to satisfaction of the following conditions prior to the
Effective Time.
a. The Merger shall have received the requisite
approval of the holders of Universal-Washington Common Stock and
all necessary action shall have been taken to authorize the
execution, delivery and performance of the Merger Agreement by
Universal-Washington and Universal-Delaware.
b. All approvals and consents necessary or desirable,
if any, in connection with the consummation of the Merger shall
have been obtained.
c. No suit, action, proceeding or other litigation
shall have been commenced or threatened to be commenced which, in
the opinion of Universal-Washington or Universal-Delaware, would
pose a material restriction on or impair consummation of the
Merger, performance of this Merger Agreement or the conduct of
the business of Universal-Delaware after the Effective Time, or
create a risk of subjecting Universal-Washington or Universal-
Delaware, or their respective shareholders, officers or
directors, to material damages, costs, liability or other relief
in connection with the Merger or this Merger Agreement.
10. Governing Law. This Merger Agreement shall be governed
by and construed in accordance with the laws of the State of
Delaware applicable to contracts entered into and to be performed
wholly within the State of Delaware, except to the extent that
the laws of the State of Washington are mandatorily applicable to
the Merger.
11. Amendment. Subject to applicable law and subject to
the rights of Universal-Washington's shareholders further to
approve any amendment which would have a material adverse effect
on such shareholders, this Merger Agreement may be amended,
modified or supplemented by written agreement of the parties
hereto at any time prior to the Effective Time with respect to
any of the terms contained herein.
12. Deferral or Abandonment. At any time prior to the
Effective Time, this Merger Agreement may be terminated and the
Merger may be abandoned or the time of consummation of the Merger
may be deferred for a reasonable time by the Board of Directors
of either Universal-Washington or Universal-Delaware or both,
notwithstanding approval of this Merger Agreement by the
shareholders of Universal-Washington or the stockholders of
Universal-Delaware or both, if circumstances arise which, in the
opinion of the Board of Directors of Universal-Washington or
Universal-Delaware, make the Merger inadvisable or such deferral
of the time of consummation thereof advisable.
13. Counterparts. This Merger Agreement may be executed in
any number of counterparts each of which when taken alone shall
constitute an original instrument and when taken together shall
constitute one and the same Agreement.
14. Further Assurances. From time to time, as and when
required or requested by either Universal-Washington or
Universal-Delaware, as applicable, or by its respective
successors and assigns, there shall be executed and delivered on
behalf of the other corporation, or by its respective successors
and assigns, such deeds, assignments and other instruments, and
there shall be taken or caused to be taken by it all such further
and other action, as shall be appropriate or necessary in order
to vest, perfect or confirm, of record or otherwise, in the
Surviving Corporation the title to and possession of all
property, interests, assets, rights, privileges, immunities,
powers, franchise and authority of Universal-Washington and
otherwise to carry out the purposes of this Merger Agreement, and
the officers and directors of each corporation are fully
authorized in the name and on behalf of such corporation or
otherwise, to take any and all such action and to execute and
deliver any and all such deeds, assignments and other
instruments.
IN WITNESS WHEREOF, Universal-Washington and Universal-
Delaware have caused this Merger Agreement to be signed by their
respective duly authorized officers and delivered this ____ day
of __________, 1995.
BEST UNIVERSAL LOCK CO.,
a Washington corporation
By: ________________________
Title: ______________
ATTEST:
By: ________________________
Title: ______________
BEST UNIVERSAL LOCK CO.,
a Delaware corporation
By: ________________________
Title: _______________
ATTEST:
By: ______________________
Title: ____________
EXHIBIT B
CERTIFICATE OF INCORPORATION OF
BEST UNIVERSAL LOCK CO.
ARTICLE I
The name of this corporation is Best Universal Lock Co.
ARTICLE II
The address of the registered office of the Corporation in
the State of Delaware is 1209 Orange Street, in the City of
Wilmington, County of New Castle. The name of its registered
agent at such address if The Corporation Trust Company.
ARTICLE III
The nature of the business or purposes to be conducted or
promoted is to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law
of Delaware.
ARTICLE IV
(A) Classes of Stock. This Corporation is authorized to
issue two classes of stock to be designated, respectively,
"Common Stock" and "Preferred Stock." The Preferred Stock may be
issued in one or more series. The total number of shares that
this Corporation is authorized to issue is ___________ Million
(_____________) shares. ______ Million (___________) shares
shall be Common Stock, par value of ________ ($___) per share,
and ________ Million (____) shares shall be Preferred Stock, par
value of _________ ($___) per share.
(B) Rights, Preferences and Restrictions of Preferred
Stock. The Preferred Stock authorized by these Articles of
Incorporation may be issued from time to time in series. The
Board of Directors is hereby authorized to fix or alter the
rights (including voting rights), preferences, privileges and
restrictions granted to or imposed upon series of Preferred
Stock, and the number of shares constituting any such series and
the designation thereof, or of any of them.
ARTICLE V
The name and mailing address of the incorporator is Gregg A.
Dykstra, 6161 E. 75th Street, Indianapolis, Indiana 46250
ARTICLE VI
The Board of Directors is expressly authorized to make,
repeal, alter, amend and rescind any or all of the Bylaws of the
Corporation.
ARTICLE VII
No director shall be personally liable to the corporation or
its stockholders for monetary damages for breach of fiduciary
duty as a director, provided, however, that this Article VII
shall not limit or eliminate the liability of a director, to the
extent provided by applicable law: (i) for any breach of the duty
of loyalty to the corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174
of the Delaware General Corporation Law, or (iv) for any
transaction from which the director derived an improper personal
benefit. It is the intention of this Article VII to eliminate
the liability of the corporation's directors to the corporation
or its stockholders to the fullest extent permitted by Section
102(b)(7) of the Delaware General Corporation Law.
Any repeal or modification of the foregoing provisions of
this Article VII by the stockholders of the Corporation shall not
adversely affect any right or protection of a director of the
Corporation existing at the time of such repeal or modification.
ARTICLE VIII
The Corporation reserves the right to amend, alter, change
or repeal any provision contained in this Certificate of
Incorporation, in the manner now or hereafter prescribed by
statute, and all rights conferred upon stockholders herein are
granted subject to this reservation.
IN WITNESS WHEREOF, the undersigned has signed this
Certificate this ____ day of __________________, 1995.
____________________________
EXHIBIT C
BYLAWS
OF
BEST UNIVERSAL LOCK CO.
ARTICLE l. OFFICES . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE 2. SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . 5
2.1 Annual Meeting . . . . . . . . . . . . . . . . . . 5
2.2 Special Meetings . . . . . . . . . . . . . . . . . 5
2.3 Meetings by Communication Equipment . . . . . . . . 5
2.4 Date, Time and Place of Meeting . . . . . . . . . . 5
2.5 Notice of Meeting . . . . . . . . . . . . . . . . . 6
2.6 Waiver of Notice . . . . . . . . . . . . . . . . . 6
2.7 Fixing of Record Date for Determining
Shareholders . . . . . . . . . . . . . . . . . . . 6
2.8 Voting Record . . . . . . . . . . . . . . . . . . . 7
2.9 Quorum . . . . . . . . . . . . . . . . . . . . . . 7
2.10 Manner of Acting . . . . . . . . . . . . . . . . . 7
2.11 Proxies . . . . . . . . . . . . . . . . . . . . . . 7
2.12 Voting of Shares . . . . . . . . . . . . . . . . . 8
2.13 Voting for Directors . . . . . . . . . . . . . . . 8
2.14 Action by Shareholders Without a Meeting . . . . . 8
ARTICLE 3. BOARD OF DIRECTORS . . . . . . . . . . . . . . . . . . 9
3.1 General Powers . . . . . . . . . . . . . . . . . . 9
3.2 Number and Tenure . . . . . . . . . . . . . . . . . 9
3.3 Chairman of the Board . . . . . . . . . . . . . . . 9
3.4 Annual and Regular Meetings . . . . . . . . . . . . 10
3.5 Special Meetings . . . . . . . . . . . . . . . . . 10
3.6 Meetings by Communications Equipment . . . . . . . 10
3.7 Notice of Special Meetings . . . . . . . . . . . . 10
3.7.1 Personal Delivery . . . . . . . . . . . . 10
3.7.2 Delivery by Mail . . . . . . . . . . . . 10
3.7.3 Delivery by Private Carrier . . . . . . . 10
3.7.4 Facsimile Notice . . . . . . . . . . . . 11
3.7.5 Oral Notice . . . . . . . . . . . . . . . 11
3.8 Waiver of Notice . . . . . . . . . . . . . . . . . 11
3.8.1 In Writing . . . . . . . . . . . . . . . 11
3.8.2 By Attendance . . . . . . . . . . . . . . 11
3.9 Quorum . . . . . . . . . . . . . . . . . . . . . . 11
3.10 Manner of Acting . . . . . . . . . . . . . . . . . 11
3.11 Presumption of Assent . . . . . . . . . . . . . . . 12
3.12 Action by Board or Committees Without a Meeting . . 12
3.13 Resignation . . . . . . . . . . . . . . . . . . . . 12
3.14 Removal . . . . . . . . . . . . . . . . . . . . . . 12
3.15 Vacancies . . . . . . . . . . . . . . . . . . . . . 12
3.16 Executive and Other Committees . . . . . . . . . . 13
3.16.1 Creation of Committees . . . . . . . . . . . 13
3.16.2 Authority of Committees . . . . . . . . . . 13
3.16.3 Quorum and Manner of Acting . . . . . . . . 13
3.16.4 Minutes of Meetings . . . . . . . . . . . . 13
3.16.5 Resignation . . . . . . . . . . . . . . . . 14
3.16.6 Removal . . . . . . . . . . . . . . . . . . 14
3.17 Compensation . . . . . . . . . . . . . . . . . . . 14
ARTICLE 4. OFFICERS . . . . . . . . . . . . . . . . . . . . . . . 14
4.1 Appointment and Term . . . . . . . . . . . . . . . 14
4.2 Resignation . . . . . . . . . . . . . . . . . . . . 14
4.3 Removal . . . . . . . . . . . . . . . . . . . . . . 15
4.4 Contract Rights of Officers . . . . . . . . . . . . 15
4.5 Chief Executive Officer . . . . . . . . . . . . . . 15
4.6 President . . . . . . . . . . . . . . . . . . . . . 15
4.7 Vice President . . . . . . . . . . . . . . . . . . 15
4.8 Secretary. . . . . . . . . . . . . . . . . . . . . 16
4.9 Treasurer . . . . . . . . . . . . . . . . . . . . . 16
4.10 General Counsel . . . . . . . . . . . . . . . . . . 16
4.11 Salaries and Other Compensation . . . . . . . . . . 16
ARTICLE 5. CONTRACTS, LOANS, CHECKS AND DEPOSITS . . . . . . . . . 16
5.1 Contracts . . . . . . . . . . . . . . . . . . . . . 16
5.2 Loans to the Corporation . . . . . . . . . . . . . 17
5.3 Checks and Drafts . . . . . . . . . . . . . . . . . 17
5.4 Deposits . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE 6. CERTIFICATES FOR SHARES AND THEIR TRANSFER . . . . . . 17
6.1 Issuance of Shares . . . . . . . . . . . . . . . . 17
6.2 Certificates for Shares . . . . . . . . . . . . . . 17
6.3 Stock Records . . . . . . . . . . . . . . . . . . . 17
6.4 Transfer of Shares . . . . . . . . . . . . . . . . 18
6.5 Lost or Destroyed Certificates . . . . . . . . . . 18
ARTICLE 7. BOOKS AND RECORDS . . . . . . . . . . . . . . . . . . . 18
ARTICLE 8. ACCOUNTING YEAR . . . . . . . . . . . . . . . . . . . . 19
ARTICLE 9. SEAL . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE 10. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . 19
10.1 Right to Indemnification . . . . . . . . . . . . . 19
10.2 Prepayment of Expenses . . . . . . . . . . . . . . 20
10.3 Claims . . . . . . . . . . . . . . . . . . . . . . 20
10.4 Non-Exclusivity of Rights . . . . . . . . . . . . . 20
10.5 Other Indemnification . . . . . . . . . . . . . . . 20
10.6 Amendment or Repeal . . . . . . . . . . . . . . . . 20
ARTICLE 11. INTERESTED DIRECTOR CONTRACTS AND TRANSACTIONS . . . . 21
ARTICLE 12. AMENDMENTS . . . . . . . . . . . . . . . . . . . . . 21
BYLAWS
OF
BEST UNIVERSAL LOCK CO.
ARTICLE l. OFFICES
The principal office of the corporation shall be located at
the principal place of business or such other place as the Board
of Directors ("Board") may designate. The corporation may have
such other offices, either within or without the State of
Delaware, as the Board may designate or as the business of the
corporation may require from time to time.
ARTICLE 2. SHAREHOLDERS
2.1 Annual Meeting.
The annual meeting of the shareholders shall be held on the
fourth Saturday in June of each year at the principal office of
the Corporation or at such other location as the Board may
designate, at a time to be determined by the Board, for the
purpose of electing Directors and transacting such other business
as may properly come before the meeting.
2.2 Special Meetings.
The Chairman of the Board, the President or the Board may
call special meetings of the shareholders for any purpose.
Further, a special meeting of the shareholders shall be held if
the holders of not less than 50% of all the votes entitled to be
cast on any issue proposed to be considered at such special
meeting have dated, signed and delivered to the Secretary one or
more written demands for such meeting, describing the purpose or
purposes for which it is to be held.
2.3 Meetings by Communication Equipment.
Shareholders may participate in any meeting of the
shareholders by any means of communication by which all persons
participating in the meeting can hear each other during the
meeting. Participation by such means shall constitute presence in
person at a meeting.
2.4 Date, Time and Place of Meeting.
Except as otherwise provided herein, all meetings of
shareholders, including those held pursuant to demand by
shareholders as provided herein, shall be held on such date and
at such time and place, within or without the State of Delaware,
designated by or at the direction of the Board.
2.5 Notice of Meeting.
Written notice stating the place, day and hour of the
meeting and, in the case of a special meeting, the purpose or
purposes for which the meeting is called shall be given by or at
the direction of the Board, the Chairman of the Board, the
President or the Secretary to each shareholder entitled to notice
of or to vote at the meeting not less than 10 nor more than 60
days before the meeting, except that notice of a meeting to act
on an amendment to the Certificate of Incorporation, a plan of
merger or share exchange, the sale, lease, exchange or other
disposition of all or substantially all of the corporation's
assets other than in the regular course of business or the
dissolution of the corporation shall be given no less than 20 nor
more than 60 days before such meeting. Such notice may be
transmitted by mail, private carrier, personal delivery or
communications equipment which transmits a facsimile of the
notice to like equipment which receives and reproduces such
notice. If such notice is mailed, it shall be deemed effective
when deposited in the official government mail, first-class
postage prepaid, properly addressed to the shareholder at such
shareholder's address as it appears in the corporation's current
record of shareholders. Notice given in any other manner shall be
deemed effective when dispatched to the shareholder's address,
telephone number or other number appearing on the records of the
corporation.
2.6 Waiver of Notice.
Whenever any notice is required to be given to any
shareholder under the provisions of these Bylaws, the Certificate
of Incorporation or the Delaware General Corporation Law, a
waiver thereof in writing, signed by the person or persons
entitled to such notice and delivered to the corporation, whether
before or after the date and time of the meeting, shall be deemed
equivalent to the giving of such notice. Further, notice of the
time, place and purpose of any meeting will be deemed to be
waived by any shareholder by attendance thereat in person or by
proxy, unless such shareholder at the beginning of the meeting
objects to holding the meeting or transacting business at the
meeting.
2.7 Fixing of Record Date for Determining Shareholders.
For the purpose of determining shareholders entitled (a) to
notice of or to vote at any meeting of shareholders or any
adjournment thereof, (b) to demand a special meeting, or (c) to
receive payment of any dividend, or in order to make a
determination of shareholders for any other purpose, the Board
may fix a future date as the record date for any such
determination. Such record date shall be not more than 60 days,
and in case of a meeting of shareholders not less than 10 days
prior to the date on which the particular action requiring such
determination is to be taken. If no record date is fixed for the
determination of shareholders entitled to notice of or to vote at
a meeting, the record date shall be the day immediately preceding
the date on which notice of the meeting is first given to
shareholders. Such a determination shall apply to any adjournment
of the meeting unless the Board fixes a new record date, which it
shall do if the meeting is adjourned to a date more than 120 days
alter the date fixed for the original meeting. If no record date
is set for the determination of shareholders entitled to receive
payment of any stock dividend or distribution (other than one
involving a purchase, redemption, or other acquisition of the
corporation's shares) the record date shall be the date the Board
authorizes the stock dividend or distribution.
2.8 Voting Record.
At least 10 days before each meeting of shareholders, an
alphabetical list of the shareholders entitled to notice of such
meeting shall be made, with the address of and number of shares
held by each shareholder. This record shall be kept at the
principal office of the corporation for 10 days prior to such
meeting, and shall be kept open at such meeting, for the
inspection of any shareholder or any shareholder's agent.
2.9 Quorum.
A majority of the votes entitled to be cast on a matter by
the holders of shares that, pursuant to the Certificate of
Incorporation or the Delaware General Corporation Law, are
entitled to vote and be counted collectively upon such matter,
represented in person or by proxy, shall constitute a quorum of
such shares at a meeting of shareholders. If less than a majority
of such votes are represented at a meeting, a majority of the
votes so represented may adjourn the meeting from time to time
without further notice if the new date, time or place is
announced at the meeting before adjournment. Any business may be
transacted at a reconvened meeting that might have been
transacted at the meeting as originally called, provided a quorum
is present or represented thereat. Once a share is represented
for any purpose at a meeting other than solely to object to
holding the meeting or transacting business thereat, it is deemed
present for quorum purposes for the remainder of the meeting and
any adjournment thereof (unless a new record date is or must be
set for the adjourned meeting) notwithstanding the withdrawal of
enough shareholders to leave less than a quorum.
2.10 Manner of Acting.
If a quorum is present, action on a matter shall be approved
if the votes cast in favor of the action by the shares entitled
to vote and be counted collectively upon such matter exceed the
votes cast against such action by the shares entitled to vote and
be counted collectively thereon, unless the Certificate of
Incorporation or the Delaware General Corporation Law requires a
greater number of affirmative votes.
2.11 Proxies.
A shareholder may vote by proxy executed in writing by the
shareholder or by his or her attorney-in-fact or agent. Such
proxy shall be effective when received by the Secretary or other
officer or agent authorized to tabulate votes. A proxy shall
become invalid 11 months alter the date of its execution, unless
otherwise provided in the proxy. A proxy with respect to a
specified meeting shall entitle the holder thereof to vote at any
reconvened meeting following adjournment of such meeting but
shall not be valid alter the final adjournment thereof.
2.12 Voting of Shares.
Except as otherwise provided in the Certificate of
Incorporation, each outstanding share entitled to vote with
respect to a matter submitted to a meeting of shareholders shall
be entitled to one vote upon such matter.
2.13 Voting for Directors.
Each shareholder entitled to vote at an election of
Directors may vote, in person or by proxy, the number of shares
owned by such shareholder for as many persons as there are
Directors to be elected and for whose election such shareholder
has a right to vote. Unless otherwise provided in the Certificate
of Incorporation, the candidates elected shall be those receiving
the largest number of votes cast, up to the number of Directors
to be elected. Cumulative voting for Directors is prohibited.
2.14 Action by Shareholders Without a Meeting.
Any action which could be taken at a meeting of the
shareholders may be taken without a meeting if one or more
written consents setting forth the action so taken are signed by
the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon
were present and voted and delivered to the corporation. If not
otherwise fixed by the Board, the record date for determining
shareholders entitled to take action without a meeting is the
first date on which a signed written consent setting forth the
action taken or proposed to be taken is delivered to the
corporation. If no record date has been fixed by the Board of
Directors and prior action by the Board of Directors is required
by this chapter, the record date for determining stockholders
entitled to consent to corporate action in writing without a
meeting shall be at the close of business on the day on which the
Board of Directors adopts the resolution taking such prior
action. Action taken by written consent of shareholders without a
meeting is effective when all required consents are in the
possession of the corporation, unless the consent specifies a
later effective date. Any such consent shall be inserted in the
minute book as if it were the minutes of a meeting of the
shareholders. Prompt notice of the taking of the corporate action
without a meeting by less than unanimous written consent shall be
given to those stockholders or members, as the case may be, who
have not consented in writing.
ARTICLE 3. BOARD OF DIRECTORS
3.1 General Powers.
All corporate powers shall be exercised by or under the
authority of, and the business and affairs of the corporation
shall be managed under the direction of, the Board, except as may
be otherwise provided in these Bylaws, the Certificate of
Incorporation or the Delaware General Corporation Law.
3.2 Number and Tenure.
The Board shall be composed of five Directors. The number of
Directors may be changed from time to time by amendment to these
Bylaws, but no decrease in the number of Directors shall have the
effect of shortening the term of any incumbent Director. Unless a
Director dies, resigns, or is removed, his or her term of office
shall expire at the next annual meeting of shareholders;
provided, however, that a Director shall continue to serve until
his or her successor is elected and qualified or until there is a
decrease in the authorized number of Directors. Directors need
not be shareholders of the corporation or residents of the State
of Delaware and need not meet any other qualifications.
3.3 Chairman of the Board.
The Board shall elect a director as chairman, which director
shall be known as the Chairman of the Board. The Chairman of the
Board shall preside at all meetings of the Board, and in
addition, shall perform the following functions:
a. general planning and management of all functions
of the Board of Directors;
b. organization of Board committees and assignments
thereto;
c. recruitment and nomination of additional or successor
directors;
d. determining the agenda for all Board meetings;
and
e. development of Board members as appropriate for
effectiveness on behalf of shareholders.
The Chairman of the Board shall serve for a term of one (1) year
and shall be elected at the annual meeting; provided, however,
that the initial Chairman of the Board shall be elected by
Written Consent of the Board of Directors and shall serve until
the next ensuing annual meeting.
3.4 Annual and Regular Meetings.
An annual Board meeting shall be held without notice
immediately alter and at the same place as the annual meeting of
shareholders. By resolution, the Board, or any committee thereof,
may specify the time and place either within or without the State
of Delaware for holding other regular meetings thereof without
notice other than such resolution.
3.5 Special Meetings.
Special meetings of the Board or any committee designated by
the Board may be called by or at the request of the Chairman of
the Board, the President, or, in the case of special Board
meetings, any _____ Directors and, in the case of any special
meeting of any committee designated by the Board, by the Chairman
thereof. The person or persons authorized to call special
meetings may fix any place either within or without the State of
Delaware as the place for holding any special Board or committee
meeting called by them.
3.6 Meetings by Communications Equipment.
Members of the Board or any committee designated by the
Board may participate in a meeting of such Board or committee by,
or conduct the meeting through the use of, any means of
communication by which all Directors participating in the meeting
can hear each other during the meeting. Participation by such
means shall constitute presence in person at a meeting.
3.7 Notice of Special Meetings.
Notice of a special Board or committee meeting stating the
place, day and hour of the meeting shall be given to a Director
in writing or orally. Neither the business to be transacted at,
nor the purpose of, any special meeting need be specified in the
notice of such meeting.
3.7.1 Personal Delivery.
If notice is given by personal delivery, the notice shall be
effective if delivered to a Director at least two days before the
meeting.
3.7.2 Delivery by Mail.
If notice is delivered by mail, the notice shall be deemed
effective if deposited in the official government mail at least
five days before the meeting, properly addressed to a Director at
his or her address shown on the records of the corporation, with
postage thereon prepaid.
3.7.3 Delivery by Private Carrier.
If notice is given by private carrier, the notice shall be
deemed effective when dispatched to a Director at his or her
address shown on the records of the corporation at least three
days before the meeting.
3.7.4 Facsimile Notice.
If notice is delivered by wire or wireless equipment which
transmits a facsimile of the notice, the notice shall be deemed
effective when dispatched at least two days before the meeting to
a Director at his or her telephone number or other number
appearing on the records of the corporation.
3.7.5 Oral Notice.
If notice is delivered orally, by telephone or in person,
the notice shall be deemed effective if personally given to the
Director at least two days before the meeting.
3.8 Waiver of Notice.
3.8.1 In Writing.
Whenever any notice is required to be given to any Director
under the provisions of these Bylaws, the Certificate of
Incorporation or the Delaware General Corporation Law, a waiver
thereof in writing, signed by the person or persons entitled to
such notice and delivered to the corporation, whether before or
alter the date and time of the meeting, shall be deemed
equivalent to the giving of such notice. Neither the business to
be transacted at, nor the purpose of, any regular or special
meeting of the Board or any committee designated by the Board
need be specified in the waiver of notice of such meeting.
3.8.2 By Attendance.
A Director's attendance at or participation in a Board or
committee meeting shall constitute a waiver of notice of such
meeting, unless the Director at the beginning of the meeting, or
promptly upon his or her arrival, objects to holding the meeting
or transacting business thereat and does not thereafter vote for
or assent to action taken at the meeting.
3.9 Quorum.
A majority of the number of Directors fixed by or in the
manner provided in these Bylaws shall constitute a quorum for the
transaction of business at any Board meeting but, if less than a
majority are present at a meeting, a majority of the Directors
present may adjourn the meeting from time to time without further
notice.
3.10 Manner of Acting.
If a quorum is present when the vote is taken, the act of
the majority of the Directors present at a Board meeting shall be
the act of the Board, unless the vote of a greater number is
required by these Bylaws, the Certificate of Incorporation or the
Delaware General Corporation Law.
3.11 Presumption of Assent.
A Director of the corporation who is present at a Board or
committee meeting at which any action is taken shall be deemed to
have assented to the action taken unless (a) the Director objects
at the beginning of the meeting, or promptly upon the Director's
arrival, to holding the meeting or transacting any business
thereat, (b) the Director's dissent or abstention from the action
taken is entered in the minutes of the meeting, or (c) the
Director delivers written notice of the Director's dissent or
abstention to the presiding officer of the meeting before its
adjournment or to the corporation within a reasonable time alter
adjournment of the meeting. The right of dissent or abstention is
not available to a Director who votes in favor of the action
taken.
3.12 Action by Board or Committees Without a Meeting.
Any action which could be taken at a meeting of the Board or
of any committee created by the Board may be taken without a
meeting if one or more written consents setting forth the action
so taken are signed by each of the Directors or by each committee
member either before or alter the action is taken and delivered
to the corporation. Action taken by written consent of Directors
without a meeting is effective when the last Director signs the
consent, unless the consent specifies a later effective date. Any
such written consent shall be inserted in the minute book as if
it were the minutes of a Board or a committee meeting.
3.13 Resignation.
Any Director may resign at any time by delivering written
notice to the Chairman of the Board, the President or the
Secretary. Any such resignation is effective upon delivery
thereof unless the notice of resignation specifies a later
effective date and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it
effective.
3.14 Removal.
At a meeting of shareholders called expressly for that
purpose, one or more members of the Board, including the entire
Board, may be removed with or without cause by the holders of a
majority of the shares then entitled to vote at an election of
Directors.
3.15 Vacancies.
Unless the Certificate of Incorporation provides otherwise,
any vacancy occurring on the Board may be filled by the
shareholders, the Board or, if the Directors in office constitute
fewer than a quorum, by the affirmative vote of a majority of the
remaining Directors. A Director elected to fill a vacancy shall
serve only until the next election of Directors by the
shareholders.
3.16 Executive and Other Committees.
3.16.1 Creation of Committees.
The Board, by resolution adopted by the greater of a
majority of the Directors then in office or the number of
Directors required to take action in accordance with these
Bylaws, may create standing or temporary committees, including an
Executive Committee, and appoint members thereto from its own
number and invest such committees with such powers as it may see
fit, subject to such conditions as may be prescribed by the
Board, these Bylaws and applicable law. Each committee must have
two or more members, who shall serve at the pleasure of the
Board.
3.16.2 Authority of Committees.
Each committee shall have and may exercise all of the
authority of the Board to the extent provided in the resolution
of the Board creating the committee and any subsequent
resolutions pertaining thereto and adopted in like manner, except
that no such committee shall have the authority to: (1) authorize
or approve a distribution except according to a general formula
or method prescribed by the Board, (2) fill vacancies on the
Board or any committee thereof, (3) adopt, amend or repeal
Bylaws, (4) amend the Certificate of Incorporation, (5) adopt an
agreement of merger or consolidation under Sections 251 or 252 of
the Delaware General Corporation Law, (6) authorize or approve
the issuance or sale or contract for sale of shares, or determine
the designation and relative rights, preferences and limitations
of a class or series of shares except that the Board may
authorize a committee or a senior executive officer of the
corporation to do so within limits specifically prescribed by the
Board; (7) recommend to the stockholders the sale, lease, or
exchange of all or substantially all of the corporation's
property or assets; or (8) recommend to the stockholders a
dissolution of the corporation or a revocation of a dissolution.
3.16.3 Quorum and Manner of Acting.
A majority of the number of Directors composing any
committee of the Board, as established and fixed by resolution of
the Board, shall constitute a quorum for the transaction of
business at any meeting of such committee but, if less than a
majority are present at a meeting, a majority of such Directors
present may adjourn the meeting from time to time without further
notice. Except as may be otherwise provided in the Delaware
General Corporation Law, if a quorum is present when the vote is
taken, the act of a majority of the members present shall be the
act of the committee.
3.16.4 Minutes of Meetings.
All committees shall keep regular minutes of their meetings
and shall cause them to be recorded in books kept for that
purpose.
3.16.5 Resignation.
Any member of any committee may resign at any time by
delivering written notice thereof to the Chairman of the Board,
the President, the Secretary or the Board. Any such resignation
is effective upon delivery thereof, unless the notice of
resignation specifies a later effective date, and the acceptance
of such resignation shall not be necessary to make it effective.
3.16.6 Removal.
The Board may remove any member of any committee elected or
appointed by it but only by the affirmative vote of the greater
of a majority of the Directors then in office or the number of
Directors required to take action in accordance with these
Bylaws.
3.17 Compensation.
By Board resolution, Directors and committee members may be
paid their expenses, if any, of attendance at each Board or
committee meeting, or a fixed sum for attendance at each Board or
committee meeting, or a stated salary as Director or a committee
member, or a combination of the foregoing. No such payment shall
preclude any Director or committee member from serving the
corporation in any other capacity and receiving compensation
therefor.
ARTICLE 4. OFFICERS
4.1 Appointment and Term.
The officers of the corporation shall be a Chief Executive
Officer, a President, one or more Vice Presidents, a Secretary, a
Treasurer, a General Counsel, and any other officers appointed
from time to time by the Board or by any other officer empowered
to do so. The Board shall have sole power and authority to
appoint executive officers. As used herein, the term "executive
officer" shall mean the Chief Executive Officer, the President,
any Vice President in charge of a principal business unit,
division or function or any other officer who performs a policy-
making function. The Board or the President may appoint such
other officers and assistant officers to hold office for such
period, have such authority and perform such duties as may be
prescribed. The Board may delegate to any other officer the power
to appoint any subordinate officers and to prescribe their
respective terms of office, authority and duties. Any two or more
offices may be held by the same person. Unless an officer dies,
resigns or is removed from office, he or she shall hold office
until his or her successor is appointed.
4.2 Resignation.
Any officer may resign at any time by delivering written
notice thereof to the corporation. Any such resignation is
effective upon delivery thereof, unless the notice of resignation
specifies a later effective date; and, unless otherwise specified
therein, the acceptance of such resignation shall not be
necessary to make it effective.
4.3 Removal.
Any officer may be removed at any time, with or without
cause, by the Board or by a signed writing delivered to the
Secretary of the Corporation by the holders of a majority of the
Corporation's outstanding common stock. An officer or assistant
officer, if appointed by another officer, may be removed by any
officer authorized to appoint officers or assistant officers.
4.4 Contract Rights of Officers.
The appointment of an officer does not itself create
contract rights.
4.5 Chief Executive Officer.
The Chief Executive Officer shall perform such duties as
shall be assigned to him or her by the Board from time to time.
4.6 President.
The President shall be the chief executive officer of the
corporation unless some other officer is so designated by the
Board, shall preside over meetings of the Board and shareholders
in the absence of a Chairman of the Board, and, subject to the
Board's control, shall supervise and control all of the assets,
business and affairs of the corporation. In general, the
President shall perform all duties incident to the office of
President and such other duties as are prescribed by the Board
from time to time. Unless the Board expressly directs otherwise,
the President shall have the duty and the authority to cast the
corporation's vote with respect to any shares of the stock or
securities of any other corporation or entity which are held by
the corporation. If no person is serving as Secretary, the
President shall have responsibility for the preparation of
minutes of meetings of the Board and shareholders and for
authentication of the records of the corporation.
4.7 Vice President.
In the event of the death of the President or his or her
inability to act, the Vice President (or if there is more than
one Vice President, the Vice President who was designated by the
Board as the successor to the President, or if no Vice President
is so designated, the Vice President first elected to such
office) shall perform the duties of the President, except as may
be limited by resolution of the Board, with all the powers of and
subject to all the restrictions upon the President. Vice
Presidents shall perform such other duties as from time to time
may be assigned to them by the President or by or at the
direction of the Board.
4.8 Secretary.
The Secretary shall be responsible for preparation of
minutes of the meetings of the Board and shareholders,
maintenance of the corporation's records and stock registers, and
authentication of the corporation's records and shall in general
perform all duties incident to the office of Secretary and such
other duties as from time to time may be assigned to him or her
by the President or by or at the direction of the Board. In the
absence of the Secretary, an Assistant Secretary may perform the
duties of the Secretary.
4.9 Treasurer.
The Treasurer shall have charge and custody of and be
responsible for all funds and securities of the corporation,
receive and give receipts for moneys due and payable to the
corporation from any source whatsoever, and deposit all such
moneys in the name of the corporation in banks, trust companies
or other depositories selected in accordance with the provisions
of these Bylaws, and in general perform all of the duties
incident to the office of Treasurer and such other duties as from
time to time may be assigned to him or her by the President or by
or at the direction of the Board. In the absence of the
Treasurer, an Assistant Treasurer may perform the duties of the
Treasurer. If required by the Board, the Treasurer or any
Assistant Treasurer shall give a bond for the faithful discharge
of his or her duties in such amount and with such surety or
sureties as the Board shall determine.
4.10 General Counsel.
The General Counsel shall be responsible for all legal
matters and affairs affecting the business of the corporation,
and shall have such additional duties and responsibilities as
from time to time may be assigned to him or her by the President
or by or at the direction of the Board.
4.11 Salaries and Other Compensation.
The salaries and other compensation of the officers shall be
fixed from time to time by the Board or by any person or persons
to whom the Board has delegated such authority. No officer shall
be prevented from receiving such salary by reason of the fact
that he or she is also a Director of the corporation.
ARTICLE 5. CONTRACTS, LOANS, CHECKS AND DEPOSITS
5.1 Contracts.
The Board may authorize any officer or officers, or agent or
agents, to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the corporation. Such
authority may be general or confined to specific instances.
5.2 Loans to the Corporation.
No significant loans shall be contracted on behalf of the
corporation and no evidences of indebtedness shall be issued in
its name unless authorized by a resolution of the Board. Such
authority may be general or confined to specific instances.
5.3 Checks and Drafts.
All checks, drafts or other orders for the payment of money,
notes or other evidences of indebtedness issued in the name of
the corporation shall be signed by such officer or officers, or
agent or agents, of the corporation and in such manner as is from
time to time determined by resolution of the Board.
5.4 Deposits.
All funds of the corporation, except for petty cash, not
otherwise employed shall be deposited from time to time to the
credit of the corporation in such banks, trust companies or other
depositories as the Board may select.
ARTICLE 6. CERTIFICATES FOR SHARES AND THEIR TRANSFER
6.1 Issuance of Shares.
No shares of the corporation shall be issued unless
authorized by the Board, or by a committee designated by the
Board to the extent such committee is empowered to do so.
6.2 Certificates for Shares.
All stock certificates shall be signed by the Secretary and
any one of the following officers: (i) the Chairman of the Board
of Directors, (ii) the President, or (iii) any Vice President.
Any or all signatures on a certificate may be a facsimile. A
record of each certificate shall be kept with the stub, and a
stock record book shall be kept showing the holders of all
outstanding certificates of stock.
6.3 Stock Records.
The stock transfer books shall be kept at the principal
office of the corporation or at the office of the corporation's
transfer agent or registrar. The name and address of each person
to whom certificates for shares are issued, together with the
class and number of shares represented by each such certificate
and the date of issue thereof, shall be entered on the stock
transfer books of the corporation. The person in whose name
shares stand on the books of the corporation shall be deemed by
the corporation to be the owner thereof for all purposes.
6.4 Transfer of Shares.
The transfer of shares of the corporation shall be made only
on the stock transfer books of the corporation pursuant to
authorization or document of transfer made by the holder of
record thereof or by his or her legal representative, who shall
furnish proper evidence of authority to transfer, or by his or
her attorney-in-fact authorized by power of attorney duly
executed and filed with the Secretary of the corporation. All
certificates surrendered to the corporation for transfer shall be
canceled and no new certificate shall be issued until the former
certificates for a like number of shares shall have been
surrendered and canceled.
6.5 Lost or Destroyed Certificates.
In the case of a lost, destroyed or mutilated certificate, a
new certificate may be issued therefor upon such terms and
indemnity to the corporation as the Board may prescribe.
ARTICLE 7. BOOKS AND RECORDS
The corporation shall:
(a) Keep as permanent records minutes of all meetings of
its shareholders and the Board, a record of all actions taken by
the shareholders or the Board without a meeting, and a record of
all actions taken by a committee of the Board exercising the
authority of the Board on behalf of the corporation.
(b) Maintain appropriate accounting records.
(c) Maintain a record of its shareholders, in a form that
permits preparation of a list of the names and addresses of all
shareholders, in alphabetical order by class of shares showing
the number and class of shares held by each; provided, however,
such record may be maintained by an agent of the corporation.
(d) Maintain its records in written form or in another form
capable of conversion into written form within a reasonable time.
(e) Keep a copy of the following records at its principal
office:
1. the Certificate of Incorporation and all
amendments thereto as currently in effect;
2. the Bylaws and all amendments thereto as currently
in effect;
3. the minutes of all meetings of shareholders and
records of all action taken by shareholders without a meeting,
for the past three years;
4. financial statements for the past three years;
5. all written communications to shareholders
generally within the past three years;
6. a list of the names and business addresses of the
current Directors and officers; and
7. the most recent annual report delivered to the
Delaware Secretary of State.
ARTICLE 8. ACCOUNTING YEAR
The accounting year of the corporation shall be the calendar
year, provided that if a different accounting year is at any time
selected by the Board for purposes of federal income taxes, or
any other purpose, the accounting year shall be the year so
selected.
ARTICLE 9. SEAL
The Board may provide for a corporate seal which shall
consist of the name of the corporation, the state of its
incorporation and the year of its incorporation.
ARTICLE 10. INDEMNIFICATION
10.1 Right to Indemnification.
The corporation shall indemnify and hold harmless, to the
fullest extent permitted by applicable law as it presently exists
or may hereafter be amended, any person who was or is made or is
threatened to be made a party to or is otherwise involved in any
action, suit or proceeding, whether civil, criminal,
administrative, or investigative (a "Proceeding") by reason of
the fact that he, or a person for whom he is the legal
representative, is or was a director, officer, employee or agent
of the corporation or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation or of a partnership, joint venture, trust enterprise
or non-profit entity, including service with respect to employee
benefits plans, against all liability and loss suffered and
expenses reasonably incurred by such person. The corporation
shall be required to indemnify a person in connection with a
proceeding initiated by such person only if the proceeding was
authorized by the Board of Directors of the corporation.
10.2 Prepayment of Expenses.
The corporation shall pay the expenses incurred in defending
any proceeding in advance of its final disposition, provided,
however, that the payment of expenses incurred by a director,
officer or employee in advance of the final disposition of the
proceeding shall be made only upon receipt of an undertaking by
the director, officer or employee to repay all amounts advanced
if it should be ultimately determined that the director, officer
or employee is not entitled to be indemnified under this Article
or otherwise.
10.3 Claims.
If a claim for indemnification or payment of expenses under
this Article is not paid in full with sixty days alter a written
claim therefore has been received by the corporation, the
claimant may file suit to recover the unpaid amount of such claim
and, if successful in whole or in part, shall be entitled to be
paid the expense of prosecuting such claim. In any such action
the corporation shall have the burden of proving that the
claimant was not entitled to the requested indemnification or
payment of expenses under applicable law.
10.4 Non-Exclusivity of Rights.
The rights conferred on any person by this Article shall not
be exclusive of any other rights which such person may have or
hereafter acquire under any statute, provision of the Certificate
of Incorporation, these by-laws, agreement, vote of stockholders
or disinterested directors or otherwise.
10.5 Other Indemnification.
The corporation's obligation, if any, to indemnify any
person who was or is serving at its request as a director,
officer, employee or agent of another corporation, partnership,
joint venture, trust, enterprise or non-profit entity shall be
reduced by any amount such person may collect as indemnification
from such other corporation, partnership, joint venture, trust,
enterprise or nonprofit enterprise.
10.6 Amendment or Repeal.
Any repeal or modification of the foregoing provisions of
this Article shall not adversely affect any right or protection
hereunder of any person in respect of any act or omission
occurring prior to the time of such repeal or modification.
ARTICLE 11. INTERESTED DIRECTOR CONTRACTS AND TRANSACTIONS
No contract or transaction between the corporation and one
or more of its directors or officers, or between the corporation
and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers
are directors or officers, or have a financial interest, shall be
void or voidable solely for this reason, or solely because the
director or officer is present at or participates in the meeting
of the Board of Directors or committee thereof which authorizes
the contract or transaction, or solely because his or their votes
are counted for such purpose, if: (1) the material facts as to
his relationship or interest and as to the contract or
transaction are disclosed or are known to the Board of directors
or the committee, and the Board of Directors or committee in good
faith authorizes the contract or transaction by the affirmative
votes of a majority of the disinterested directors, even though
the disinterested directors be less than a quorum; or (2) the
material facts as to his relationship or interest and as to the
contract or transaction are disclosed or are known to the
stockholders entitled to vote thereon, and the contract or
transaction is specifically approved in good faith by vote of the
stockholders; or (3) the contract or transaction is fair as to
the corporation as of the time it is authorized, approved or
ratified, by the Board of directors, a committee thereof, or the
stockholders. Common or interested directors may be counted in
determining the presence of a quorum at a meeting of the Board of
Directors or of a committee which authorizes the contract or
transaction.
ARTICLE 12. AMENDMENTS
These Bylaws may be altered, amended or repealed and new
Bylaws may be adopted by the Board, except that the Board may not
repeal or amend any Bylaw that the shareholders have adopted, and
at the time of such adoption, have expressly provided may not be
amended or repealed by the Board. The shareholders may also
alter, amend and repeal these Bylaws or adopt new Bylaws. All
Bylaws made by the Board may be amended, repealed, altered or
modified by the shareholders.
The foregoing Bylaws were adopted by the Board on
__________.
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Chairman of the Board