FORM 10 - Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended August 31, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________________ to __________________
Commission File No. 1-8399
Ohio 31-1189815
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(State of Incorporation) (IRS Employer Identification No.)
1205 Dearborn Drive, Columbus, Ohio 43085
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(Address of principal executive offices) (Zip Code)
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Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
YES [X] NO [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the Issuer's classes of common stock as of the latest practicable date.
As of September 30, 2000, 85,754,525 of the Registrant's common shares, without par value, were outstanding.
WORTHINGTON INDUSTRIES, INC.
INDEX
PAGE
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets -
August 31, 2000 and May 31, 2000..............................3
Condensed Consolidated Statements of Earnings -
Three Months Ended August 31, 2000 and 1999 ..................5
Condensed Consolidated Statements of Cash Flows -
Three Months Ended August 31, 2000 and 1999 ..................6
Notes to Condensed Consolidated Financial Statements..........7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS................9
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS............13
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K...............................14
SIGNATURES...................................................................14
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
WORTHINGTON INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
ASSETS
August 31, May 31,
2000 2000
---------- ----------
(Unaudited) (Audited)
CURRENT ASSETS
Cash and cash equivalents $ 240 $ 538
Accounts receivable, net 272,028 301,175
Inventories
Raw materials 158,548 144,903
Work in process 74,194 81,632
Finished products 68,404 64,669
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Total Inventories 301,146 291,204
Other current assets 30,578 31,312
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TOTAL CURRENT ASSETS 603,992 624,229
Property, plant and equipment 1,196,871 1,180,622
Less accumulated depreciation 333,856 318,110
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Property, plant and equipment, net 863,015 862,512
Other Assets 191,564 187,132
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TOTAL ASSETS $1,658,571 $1,673,873
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See notes to condensed consolidated financial statements.
WORTHINGTON INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
LIABILITIES AND SHAREHOLDERS' EQUITY
August 31, May 31,
2000 2000
--------------- --------------
(Unaudited) (Audited)
CURRENT LIABILITIES
Accounts payable $ 160,752 $ 157,998
Notes payable 173,517 160,194
Current maturities of long-term debt 2,546 2,688
Other current liabilities 79,033 112,390
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TOTAL CURRENT LIABILITIES 415,848 433,270
Long-Term Debt 361,721 362,190
Other Liabilities 79,410 79,117
Deferred Income Taxes 129,619 125,942
Shareholders' Equity 671,973 673,354
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,658,571 $1,673,873
========== ==========
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See notes to condensed consolidated financial statements.
WORTHINGTON INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(In Thousands, Except Per Share)
(Unaudited)
Three Months Ended
August 31,
--------------------------------------
2000 1999
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Net sales $ 484,224 $ 462,911
Cost of goods sold 420,346 379,736
--------- ---------
GROSS MARGIN 63,878 83,175
Selling, general & administrative expense 41,991 41,879
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OPERATING INCOME 21,887 41,296
Other income (expense):
Miscellaneous income 83 962
Interest expense (9,357) (10,215)
Equity in net income of unconsolidated affiliates 7,036 6,770
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EARNINGS BEFORE INCOME TAXES 19,649 38,813
Income taxes 7,172 14,555
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NET EARNINGS $ 12,477 $ 24,258
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AVERAGE COMMON SHARES OUTSTANDING - DILUTED 85,755 89,953
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EARNINGS PER COMMON SHARE - BASIC & DILUTED $ 0.15 $ 0.27
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CASH DIVIDENDS DECLARED PER COMMON SHARE $ 0.16 $ 0.15
========= =========
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See notes to condensed consolidated financial statements.
WORTHINGTON INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
Three Months Ended
August 31,
-------------------------------------
2000 1999
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OPERATING ACTIVITIES
Net Earnings $ 12,477 $ 24,258
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 17,843 17,251
Other adjustments (1,068) (864)
Changes in current assets and liabilities (8,512) 21,535
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Net Cash Provided By Operating Activities 20,740 62,180
INVESTING ACTIVITIES
Investment in property, plant and equipment, net (18,165) (13,914)
Proceeds from sale of assets 221 523
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Net Cash Used By Investing Activities (17,944) (13,391)
FINANCING ACTIVITIES
Proceeds from (payments on) short-term borrowings 13,323 (20,368)
Proceeds from long-term debt 482 86
Principal payments on long-term debt (1,001) (3,798)
Repurchase of common shares (737) (11,597)
Dividends paid (13,721) (13,492)
Other (1,440) (207)
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Net Cash Used By Financing Activities (3,094) (49,376)
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Decrease in cash and cash equivalents (298) (587)
Cash and cash equivalents at beginning of period 538 7,641
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Cash and cash equivalents at end of period $ 240 $ 7,054
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See notes to condensed consolidated financial statements.
WORTHINGTON INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands)
(Unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended August 31, 2000 are not necessarily indicative of the results that may be expected for the year ended May 31, 2001. For further information, refer to the consolidated financial statements and footnotes thereto included in the Worthington Industries, Inc. 2000 Annual Report to Shareholders and incorporated by reference in the Form 10-K for the fiscal year ended May 31, 2000 of Worthington Industries, Inc.
NOTE B - INDUSTRY SEGMENT DATA
Three Months Ended
August 31,
--------------------------------
($000) 2000 1999
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NET SALES:
Processed Steel Products $ 318,113 $ 300,404
Metal Framing 95,010 88,487
Pressure Cylinders 69,976 73,040
Other 1,125 980
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$ 484,224 $ 462,911
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OPERATING INCOME:
Processed Steel Products $ 9,364 $ 23,761
Metal Framing 9,027 10,602
Pressure Cylinders 5,313 8,202
Other (1,817) (1,269)
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$ 21,887 $ 41,296
========= =========
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NOTE C - COMPREHENSIVE INCOME
Total comprehensive income was $12,340 and $22,398 for the three months ended August 31, 2000 and 1999, respectively.
NOTE D - SUBSEQUENT EVENT
On October 13, 2000, Worthington Techs, L.P., a subsidiary of Worthington Industries, Inc., signed an agreement to acquire substantially all of the net assets of MetalTech, NexTech and GalvTech (collectively "the Techs") for $260 million in cash. The acquisition is expected to close during the second fiscal quarter of Worthington Industries, Inc. Under the terms of the agreement, the purchase price may increase by up to $60 million over a three-year period following the closing, depending upon capacity utilization and certain market conditions. The cash purchase price is also subject to adjustment based upon certain changes in working capital. The transaction is contingent upon obtaining financing satisfactory to the Company and other typical closing conditions.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Statements contained in this Quarterly Report on Form 10-Q, as filed with the Securities and Exchange Commission (the SEC), including, without limitation, the Management's Discussion and Analysis that follows, constitute "forward-looking statements" that are based on management's beliefs, estimates, assumptions and currently available information. Such forward-looking statements include, without limitation, statements relating to future operating results, growth, stock appreciation, projected capacity levels, pricing trends, anticipated capital expenditures, plant start-ups and capabilities and other non-historical information. Because they are based on beliefs, estimates and assumptions, forward-looking statements are inherently subject to risks and uncertainties that could cause actual results to differ materially from those projected. Any number of factors could affect actual results, including, without limitation, product demand, changes in product mix and market acceptance of products; changes in pricing or availability of raw materials, particularly steel; capacity restraints and efficiencies; conditions in major product markets; delays in construction or equipment supply; ability to integrate recent acquisitions; inherent risks of international development, including foreign currency risks; the ability to improve processes and business practices to keep pace with the economic, competitive and technological environment; general economic conditions, business environment and the impact of governmental regulations, both in the United States and abroad; and other risks described from time to time in filings with the SEC.
OVERVIEW
Worthington Industries, Inc. is a diversified steel processor that focuses on value-added steel processing and metals-related businesses. We operate 40 facilities worldwide, principally in three reportable business segments: Processed Steel Products, Metal Framing and Pressure Cylinders. We also hold equity positions in seven joint ventures, which operate 15 facilities worldwide.
RESULTS FROM OPERATIONS
The following discussion and analysis of financial condition and results of operations should be read in conjunction with our Condensed Consolidated Financial Statements included elsewhere in this report. Our Annual Report on Form 10-K for the fiscal year ended May 31, 2000, includes additional information about Worthington, our operations and our financial position, and should be read in conjunction with this Quarterly Report on Form 10-Q.
For the first quarter ended August 31, 2000 (the "first quarter") of the fiscal year ending May 31, 2001 ("fiscal 2001"), net sales increased 5% to $484.2 million, up $21.3 million from the comparable quarter of the fiscal year ended May 31, 2000 ("fiscal 2000"). The overall increase in net sales was due to volume growth within the Processed Steel Products and Metal Framing segments partially offset by lower volume
in the Pressure Cylinders segment. The following provides further information on net sales by segment:
- Processed Steel Products. Net sales increased 6% to $318.1 million for the first quarter of fiscal 2001 from $300.4 million in the comparable quarter of fiscal 2000. Net sales were up due to increased volume at the Decatur, Alabama facility where our recently completed annealing expansion is allowing us to ship additional tons and at our Monroe, Ohio facility where our dry-lube line started to make a significant contribution. Volume increases from these newer facilities helped offset a 19% decline in our toll processing volume.
- Metal Framing. Net sales of $95.0 million for the first quarter of fiscal 2001 increased 7% from $88.5 million in the comparable quarter of fiscal 2000. The increase in net sales was due to increased volume particularly in the building products line of business partially offset by lower selling prices resulting from competitive pressures.
- Pressure Cylinders. Net sales decreased 4% to $70.0 million for the first quarter of fiscal 2001 from $73.0 million in the comparable quarter of fiscal 2000. The decrease was due to reduced demand and increased competition in the European market and lower domestic sales volume in the refrigerant products line of business resulting from the unusually cool summer season.
Gross margin on sales decreased to 13.2% for the first quarter of fiscal 2001 from 18.0% in the comparable quarter of fiscal 2000. The majority of the decrease occurred in the Processed Steel Products segment because of the inability to pass along the cost of higher priced steel in a declining market as well as lower toll processing volumes.
For the first quarter of fiscal 2001, selling, general and administrative ("SG&A") costs of $42.0 million were virtually unchanged from the comparable quarter of fiscal 2000. Expenditures on Y2K in fiscal 2000 were replaced by higher health care costs and spending on systems initiatives in fiscal 2001.
Operating income decreased 47% to $21.9 million for the first quarter of fiscal 2001 from $41.3 million in the comparable quarter of fiscal 2000. The operating income decline resulted mostly from lower gross margins in the Processed Steel Products segment, higher raw material costs in the Metal Framing segment and reduced demand in certain Pressure Cylinders' markets. The following provides further information on operating income by segment:
- Processed Steel Products. Operating income decreased 61% to $9.4 million for the first quarter of fiscal 2001 from $23.8 million in the comparable quarter of fiscal 2000. The inability to pass along the cost of higher priced steel in a
rapidly declining market as well as lower toll processing volumes were the main reasons for the decrease.
- Metal Framing. Operating income decreased 15% to $9.0 million for the first quarter of fiscal 2001 from $10.6 million in the comparable quarter of fiscal 2000. The increase in net sales was more than offset by unfavorable raw material prices resulting in decreased operating income.
- Pressure Cylinders. Operating income decreased 35% to $5.3 million for the first quarter of fiscal 2001 from $8.2 million in the comparable quarter of fiscal 2000. Lower net sales were the major cause of the decreased operating income.
Interest expense decreased 8% to $9.4 million for the first quarter of fiscal 2001 from $10.2 million in the comparable quarter of fiscal 2000. The decrease was mostly due to the absence of the interest expense for the DECS paid off during the fourth quarter of fiscal 2000, which was partially offset by higher average short-term debt levels and increased interest rates. The first quarter average interest rate on short-term unsecured notes payable was 6.74% for fiscal 2001 compared to 5.25% in the first quarter of fiscal 2000. At August 31, 2000, approximately 68% of the Company's $537.8 million of debt was at fixed rates of interest.
Equity in net income of unconsolidated affiliates increased 4% to $7.0 million for the first quarter of fiscal 2001 from $6.8 million in the comparable quarter of fiscal 2000. Increased sales and operating income for the WAVE and Acerex joint ventures contributed to the increase over the prior year.
The effective tax rate for the first quarter of fiscal 2001 was 36.5%, down from 37.5% in fiscal 2000 due to ongoing tax planning initiatives, primarily in state and local areas.
LIQUIDITY AND CAPITAL RESOURCES
For the first quarter of fiscal 2001, we generated $20.7 million in cash from operating activities representing a $41.4 million decrease from the comparable period of fiscal 2000. The decrease was due to lower net earnings and a $31.0 million tax payment relating to the tax gain from the disposition of our investment in the common shares of Rouge Industries which occurred in the fourth quarter of fiscal 2000.
During the first quarter of fiscal 2001, we invested $18.2 million in capital projects, paid our shareholders $13.7 million in dividends and provided for our working capital requirements. These transactions were funded by the cash flow from operations and short-term borrowings.
Capital investments during the first quarter included amounts for expanding the annealing capacity at the Decatur, Alabama plant, adding the ability to apply a dry film
lubricant at the Monroe, Ohio facility and continued construction on Gerstenlager's Clyde facility all within the Processed Steel Products segment. Additional expenditures were made in Pressure Cylinders segment's new low-pressure cylinder line in Portugal and for additional weld cells at our steel pallet business, SteelPac.
Net working capital decreased $2.8 million from May 31, 2000 to $188.1 million on August 31, 2000. The decrease was mostly due to a $29.1 million decrease in accounts receivable which is normal for the first quarter of each fiscal year offset by the previously mentioned tax payment.
During the first three months of fiscal 2001, we did not repurchase any of our common shares. However, we did disburse $737,000 in cash for shares that were purchased in the fourth quarter of fiscal 2000. Approximately 2.9 million common shares remain available for repurchase under programs authorized by our Board of Directors. The timing and amount of any future repurchases will be at our discretion and will depend upon market conditions and our operating performance and liquidity. Any repurchase will also be subject to the covenants contained in our credit facilities as well as our other debt instruments.
We use short-term uncommitted lines of credit extended by various commercial banks to finance our business operations. Maturities on these borrowings typically range from one to ninety days. In addition, we maintain a $300 million revolving credit facility with a group of commercial banks. As of August 31, 2000, our $300 million revolving credit facility included a $190 million tranche expiring May 2003 and a $110 million facility expiring September 2000. The $110 million tranche expired in September and was not renewed. The Company intends to negotiate a new $300 million credit facility. At August 31, 2000, there were no outstanding borrowings under the revolving credit facility.
At August 31, 2000, our total debt was $537.8 million compared to $525.1 million at the end of fiscal 2000. Total debt to committed capital increased to 44.5% from 43.8% at the end of fiscal 2000 due mainly to the increase in short-term debt.
From time to time we engage in discussions with respect to selected acquisitions and expect to continue to assess these and other acquisition opportunities as they arise. Accordingly, on October 13, 2000, Worthington Techs, L.P., a subsidiary of Worthington Industries, Inc., signed an agreement to acquire substantially all of the net assets of MetalTech, NexTech and GalvTech (collectively "the Techs") for $260 million in cash. The acquisition is expected to close during our second fiscal quarter. Under the terms of the agreement, the purchase price may increase by up to $60 million over a three-year period following the closing, depending upon capacity utilization and certain market conditions. The cash purchase price is also subject to adjustment based upon certain changes in working capital. The transaction is contingent upon obtaining satisfactory financing and other typical closing conditions. We currently plan to issue long-term debt to finance this acquisition.
We may also require additional financing if we decide to make additional acquisitions. There can be no assurance, however, that any such opportunities will arise, any such acquisitions will be consummated or that any needed additional financing will be available when required on satisfactory terms. Absent any acquisitions, we anticipate that cash flows from operations, working capital and unused short-term borrowing capacity should be more than sufficient to fund expected normal operating costs, dividends, and capital expenditures for existing businesses.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Registrant's Annual Meeting of Shareholders was held on September 28, 2000. In connection with the meeting, proxies were solicited. Following are the voting results on the proposals considered and voted upon.
1. All nominees for election to the class of directors whose terms expire in 2003 were elected by the following vote:
VOTES FOR VOTES WITHHELD
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John B. Blystone 72,455,698 1,563,792
William S. Dietrich 72,455,089 1,564,400
Sidney A. Ribeau 72,218,982 1,800,508
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Continuing directors through 2001 are as follows: John P. McConnell, Robert B. McCurry, Gerald B. Mitchell and Mary Fackler Schiavo
Continuing directors through 2002 are as follows: John S. Christie, Michael J. Endres, Peter Karmanos, Jr. and John H. McConnell.
2. The amendment to Section 1.10 of the Registrant's Code of Regulations to permit the Registrant's shareholders to appoint proxies in any manner permitted under Ohio law was adopted by the following vote (there were no broker non-votes):
FOR: 72,088,069 AGAINST: 606,643 ABSTAIN: 1,324,778
3. The Worthington Industries, Inc. 2000 Stock Option Plan for Non-Employee Directors was approved by the following vote (there were no broker non-votes):
FOR: 67,303,586 AGAINST: 5,004,386 ABSTAIN: 1,711,518
4. The selection of Ernst & Young LLP as auditors of the Registrant for the fiscal year ending May 31, 2001 was ratified by the following vote (there were no broker non-votes):
FOR: 72,581,433 AGAINST: 272,287 ABSTAIN: 1,165,769
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
Exhibits:
3(b) Code of Regulations of Worthington Industries, Inc., as
amended through September 28, 2000, for SEC reporting
compliance purposes only.
10(g) Worthington Industries, Inc. 2000 Stock Option Plan for
Non-Employee Directors.*
27 Financial Data Schedule
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* Management Compensation Plan.
Reports on Form 8-K:
There were no reports on Form 8-K filed during the three months ended August 31, 2000.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
WORTHINGTON INDUSTRIES, INC.
Date: October 13, 2000 By: /s/John T. Baldwin
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John T. Baldwin
Vice President & Chief Financial Officer
(On behalf of the Registrant and as
Principal Financial Officer)
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Exhibit 3(b)
REGULATIONS
OF
WORTHINGTON INDUSTRIES, INC.
INDEX
PAGE
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ARTICLE ONE - MEETINGS OF SHAREHOLDERS....................................................1
Section 1.01. Annual Meetings...................................................1
Section 1.02. Calling of Meetings...............................................1
Section 1.03. Place of Meetings.................................................1
Section 1.04. Notice of Meetings................................................1
Section 1.05. Waiver of Notice..................................................2
Section 1.06. Quorum............................................................2
Section 1.07. Votes Required....................................................2
Section 1.08. Notice and Order of Business; Procedure............................2
Section 1.09. Shareholders Entitled to Vote.....................................3
Section 1.10. Proxies...........................................................4
Section 1.11. Inspectors of Election............................................4
Section 1.12. Organization......................................................4
ARTICLE TWO - DIRECTORS...................................................................4
Section 2.01. Authority and Qualifications......................................4
Section 2.02. Number of Directors and Term of Office............................4
Section 2.03. Nomination and Election...........................................5
Section 2.04. Resignation.......................................................6
Section 2.05. Removal...........................................................6
Section 2.06. Vacancies.........................................................6
Section 2.07. Meetings..........................................................7
Section 2.08. Notice of Meetings................................................7
Section 2.09. Waiver of Notice..................................................7
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Index i
Section 2.10. Quorum............................................................8
Section 2.11. Executive Committee...............................................8
Section 2.12. Compensation......................................................8
Section 2.13. By-Laws...........................................................8
Section 2.14. Action by Directors Without a Meeting.............................8
ARTICLE THREE - OFFICERS..................................................................9
Section 3.01. Officers..........................................................9
Section 3.02. Tenure of Office..................................................9
Section 3.03. Duties of the Chairman of the Board...............................9
Section 3.04. Duties of the President...........................................9
Section 3.05. Duties of the Vice Presidents....................................10
Section 3.06. Duties of the Secretary..........................................10
Section 3.07. Duties of the Treasurer..........................................10
ARTICLE FOUR - SHARES....................................................................10
Section 4.01. Certificates.....................................................10
Section 4.02. Transfers........................................................11
Section 4.03. Transfer Agents and Registrars...................................11
Section 4.04. Lost, Wrongfully Taken or Destroyed Certificates.................11
ARTICLE FIVE - INDEMNIFICATION AND INSURANCE.............................................12
Section 5.01. Indemnification..................................................12
Section 5.02. Court-Approved Indemnification...................................12
Section 5.03. Indemnification for Expenses.....................................13
Section 5.04. Determination Required...........................................13
Section 5.05. Advances for Expenses............................................14
Section 5.06. Article FIVE Not Exclusive.......................................14
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Index ii
Section 5.07. Insurance........................................................14
Section 5.08. Certain Definitions..............................................14
Section 5.09. Venue............................................................15
ARTICLE SIX - MISCELLANEOUS..............................................................15
Section 6.01. Amendments.......................................................15
Section 6.02. Section 1701.831 of the Ohio Revised Code Not Applicable.........15
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Index iii
CODE OF REGULATIONS
OF
WORTHINGTON INDUSTRIES, INC.
ARTICLE ONE
MEETINGS OF SHAREHOLDERS
Section 1.01. Annual Meetings. The annual meeting of the shareholders for the election of directors, for the consideration of reports to be laid before such meeting and for the transaction of such other business as may properly come before such meeting, shall be held on such date, at such time and at such place as may be fixed from time to time by the directors.
Section 1.02. Calling of Meetings. Meetings of the shareholders may be called only by the chairman of the board, the president, or, in case of the president's absence, death or disability, the vice president authorized to exercise the authority of the president; the secretary; the directors by action at a meeting, or a majority of the directors acting without a meeting; or the holders of at least fifty percent (50%) of all shares outstanding and entitled to vote thereat.
Section 1.03. Place of Meetings. Meetings of shareholders shall be held at such place as the person or persons calling the meetings shall decide, unless the board of directors decides that a meeting shall be held at some other place and causes the notice thereof to so state.
Section 1.04. Notice of Meetings. (A) Written notice stating the time, place and purposes of a meeting of the shareholders shall be given either by personal delivery or by mail not less than seven nor more than sixty days before the date of the meeting, (1) to each shareholder of record entitled to vote at the meeting, (2) by or at the direction of the president or the secretary. If mailed, such notice shall be addressed to the shareholder at his address as it appears on the records of the Corporation. Notice of adjournment of a meeting need not be given if the time and place to which it is adjourned are fixed and announced at such meeting. In the event of a transfer of shares after the record date for determining the shareholders who are entitled to receive notice of a meeting of shareholders, it shall not be necessary to give notice to the transferee. Nothing herein contained shall prevent the setting of a record date in the manner provided by law, the Articles or the Regulations for the determination of shareholders who are entitled to receive notice of or to vote at any meeting of shareholders or for any purpose required or permitted by law.
(B) Following receipt by the president or the secretary of a request in writing, specifying the purpose or purposes for which the persons properly making such request have called a meeting of the shareholders, delivered either in person or by registered mail to such officer by any persons entitled to call a meeting of shareholders, such officer shall cause to be given to the shareholders entitled thereto notice of a meeting to be held on a date not less than seven nor more than sixty days after the receipt of such request, as such officer may fix. If such
notice is not given within fifteen days after the receipt of such request by the president or the secretary, then, and only then, the persons properly calling the meeting may fix the time of meeting and give notice thereof in accordance with the provisions of the Regulations.
Section 1.05. Waiver of Notice. Notice of the time, place and purpose or purposes of any meeting of shareholders may be waived in writing, either before or after the holding of such meeting, by any shareholder, which writing shall be filed with or entered upon the records of such meeting. The attendance of any shareholder, in person or by proxy, at any such meeting without protesting the lack of proper notice, prior to or at the commencement of the meeting, shall be deemed to be a waiver by such shareholder of notice of such meeting.
Section 1.06. Quorum. A meeting of the shareholders duly called shall not be organized for the transaction of business unless a quorum is present. Except as otherwise expressly provided by law, the Articles or the Regulations, (A) at any meeting called by the board of directors, the presence in person or by proxy of holders of record of voting shares entitling them to exercise at least one-third of the voting power of the Corporation shall constitute a quorum for such meeting and (B) at any meeting called other than by the Board of Directors, the presence in person or proxy of holders of record of voting shares of the Corporation entitling them to exercise at least a majority of the voting power of the Corporation shall constitute a quorum for such meeting. The shareholders present at a duly organized meeting can continue to do business until adjournment, notwithstanding the withdrawal of enough shareholders to leave less than a quorum. The holders of a majority of the voting shares represented at a meeting, whether or not a quorum is present, or the chairman of the board, the president, or the officer of the Corporation acting as chairman of the meeting, may adjourn such meeting from time to time to such time (not more than 30 days after the previously adjourned meeting) and place as they (or he) may determine, without notice other than by announcement at the meeting of the time and place of the adjourned meeting, and if a quorum is present at such adjourned meeting, any business may be transacted as if the meeting had been held as originally called.
Section 1.07. Votes Required. At all elections of directors, the candidates receiving the greatest number of votes shall be elected. Except as otherwise required by law, the Articles or the Regulations, any other matter submitted to the shareholders for their vote shall be decided by the vote of the holders of a majority of the votes entitled to be cast by the holders of all then outstanding voting shares, present in person or by proxy, and entitled to vote with respect to such matter provided a quorum is present.
Section 1.08. Notice and Order of Business; Procedure. (A) At any meeting of the shareholders, only such business shall be conducted as shall have been brought before the meeting (1) by or at the direction of the board of directors or (2) by any shareholder of the Corporation who is a shareholder of record at the time of giving of the notice provided for in this Subsection 1.08(A), who shall be entitled to vote at such meeting and who complies with the notice procedures set forth in this Subsection 1.08(A). For business to be properly brought before a shareholder meeting by a shareholder, the shareholder must have given timely notice thereof in writing to the secretary of the Corporation. To be timely, a shareholder's notice must be delivered to or mailed and received at the principal executive offices of the Corporation not
less than 30 days prior to the meeting; provided, however, that in the event that less than 40 days' notice or prior public disclosure of the date of the meeting is given or made to shareholders, notice by the shareholder to be timely must be received no later than the close of business on the tenth day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made. A shareholder's notice to the secretary shall set forth as to each matter the shareholder proposes to bring before the meeting (1) a brief description of the business desired to be brought before the meeting and the reasons for conducting such business at the meeting, (2) the name and address, as they appear on the Corporation's books, of the shareholder proposing such business, (3) the class and number of shares of the Corporation which are beneficially owned by the shareholder and (4) any material interest of the shareholder in such business. Notwithstanding anything in the Regulations to the contrary, no business shall be conducted at a shareholder meeting except in accordance with the procedures set forth in this Subsection 1.08(A). The chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting and in accordance with the provisions of the Regulations, and if he shall so determine, he shall so declare to the meeting and any business not properly brought before the meeting shall not be transacted. Notwithstanding the foregoing provisions of this Subsection 1.08(A), a shareholder shall also comply with all applicable requirements of the Securities Exchange Act of 1934, and the rules and regulations thereunder, with respect to the matters set forth in this Subsection 1.08(A).
(B) The order of business at any meeting of shareholders and all matters relating to the manner of conducting the meeting shall be determined by the officer of the Corporation acting as chairman of such meeting unless otherwise determined by a vote of the holders of a majority of the voting shares of the Corporation then outstanding, present in person or by proxy, and entitled to vote at such meeting. Meetings shall be conducted in a manner designed to accomplish the business of the meeting in a prompt and orderly fashion and to be fair and equitable to all shareholders, but it shall not be necessary to follow any manual of parliamentary procedure.
Section 1.09. Shareholders Entitled to Vote. Each shareholder of record on the books of the Corporation on the record date for determining the shareholders who are entitled to vote at a meeting of shareholders shall be entitled at such meeting to vote each share of the Corporation standing in his name on the books of the Corporation on such record date. The directors may fix a record date for the determination of the shareholders who are entitled to receive notice of and to vote at a meeting of shareholders, which record date shall not be a date earlier than the date on which the record date is fixed and which record date may be a maximum of sixty days preceding the date of the meeting of shareholders. The record date for the purpose of determining the shareholders who are entitled to receive notice of and vote at a meeting of the shareholders shall continue to be the record date for all adjournments of such meeting, unless the directors or the persons who fixed the original record date fix another date. Anything contained in these Regulations or elsewhere to the contrary, unless otherwise authorized by law, the Corporation may not directly or indirectly vote any shares issued by it and such shares shall not be considered as outstanding for the purpose of computing the voting power of the Corporation or of shares of any class.
Section 1.10. Proxies. At meetings of the shareholders, any shareholder of record entitled to vote thereat may be represented and may vote by proxy or proxies appointed by an instrument in writing signed by such shareholder or appointed in any other manner permitted by Ohio law. Any such instrument in writing or record of any such appointment shall be filed with or received by the secretary of the meeting before the person holding such proxy shall be allowed to vote thereunder. No appointment of a proxy is valid after the expiration of eleven months after it is made unless the writing or other communication which appoints such proxy specifies the date on which it is to expire or the length of time it is to continue in force.
Section 1.11. Inspectors of Election. In advance of any meeting of shareholders, the directors may appoint inspectors of election to act at such meeting or any adjournment thereof; if inspectors are not so appointed, the officer of the Corporation acting as chairman of any such meeting may make such appointment. In case any person appointed as inspector fails to appear or act, the vacancy may be filled only by appointment made by the directors in advance of such meeting or, if not so filled, at the meeting by the officer of the Corporation acting as chairman of such meeting. No other person or persons may appoint or require the appointment of inspectors of election.
Section 1.12. Organization. At each meeting of the shareholders, the chairman of the board, or in the absence of the chairman of the board, the president, or, in the absence of the president, any vice president or, in the absence of the chairman, the president or a vice president, a chairman chosen by a majority of the voting shares of the Corporation then outstanding, present in person or by proxy, and entitled to vote at such meeting, shall act as chairman of the meeting, and the secretary of the Corporation, or, if the secretary of the Corporation shall not be present, the assistant secretary, or if the secretary and the assistant secretary shall not be present, a person whom the chairman of the meeting shall appoint, shall act as secretary of the meeting.
ARTICLE TWO
DIRECTORS
Section 2.01. Authority and Qualifications. Except where the law, the Articles or the Regulations otherwise provide, all authority of the Corporation shall be vested in and exercised by its directors. Directors need not be shareholders of the Corporation.
Section 2.02. Number of Directors and Term of Office.
(A) The number of directors of the Corporation may be determined at a meeting of the shareholders called for the purpose of electing directors at which a quorum is present, by the affirmative vote of the holders of shares entitling them to exercise not less than 75% of the voting power of the Corporation on such proposal; or by resolution adopted by the affirmative vote of a majority of the Whole Board of Directors. As used in the Regulations, the term "Whole Board of Directors" shall mean the total number of directors which the Corporation would have if there were no vacancies. Notwithstanding the foregoing, the number of directors shall in no event be fewer than three or more than eighteen.
(B) The board of directors shall be divided into three classes as nearly equal in number as the then fixed number of directors permits, with the term of office of one class expiring each year. The election of each class of directors shall be a separate election. At the first meeting of shareholders, directors of one class shall be elected to hold office for a term expiring at the 1999 annual meeting, directors of another class shall be elected to hold office for a term expiring at the 2000 annual meeting and directors of another class shall be elected to hold office for a term expiring at the 2001 annual meeting. At the 1999 annual meeting of shareholders and each succeeding annual meeting, successors to the class of directors whose term then expires shall be elected to hold office for a three-year term. A director shall hold office until the annual meeting for the year in which his term expires and until his successor is duly elected and qualified, or until his earlier resignation, removal from office or death. In the event of any increase in the number of directors of the Corporation, the additional directors shall be similarly classified in such a manner that each class of directors shall be as equal in number as possible. In the event of any decrease in the number of directors of the Corporation, such decrease shall be effected in such a manner that each class of directors shall be as equal in number as possible.
(C) The directors may fix or change the number of directors and may fill any director's office that is created by an increase in the number of directors.
(D) No reduction in the number of directors shall of itself have the effect of shortening the term of any incumbent director.
Section 2.03. Nomination and Election.
(A) Only persons who are nominated in accordance with the procedures set forth in the Regulations shall be eligible to serve as directors of the Corporation. Nominations of persons for election to the board of directors of the Corporation may be made at a meeting of shareholders (1) by or at the direction of the board of directors (or a committee thereof) or (2) by any shareholder of the Corporation who is a shareholder of record at the time of giving of notice provided for in this Subsection 2.03(A), who shall be entitled to vote for the election of directors at the meeting and who complies with the notice procedures set forth in this Section 2.03(A). Such nominations, other than those made by or at the direction of the board of directors (or a committee thereof), shall be made pursuant to timely notice in writing to the secretary of the Corporation. To be timely, a shareholder's notice shall be delivered to or mailed and received at the principal executive offices of the Corporation, not less than 14 days nor more than 50 days prior to the meeting; provided, however, that if less than 21 days' notice or prior public disclosure of the date of the meeting is given or made to shareholders, notice by the shareholder to be timely must be so received not later than the close of business on the seventh day following the day on which such notice of the date of the meeting or such public disclosure was made. Such shareholder's nomination shall set forth (1) as to each person whom the shareholder proposes to nominate for election or re-election as a director, (i) the name, age, business address and, if known, residence address of the proposed nominee; (ii) the principal occupation or employment of the proposed nominee; (iii) the number of shares of the Corporation which are beneficially owned by the proposed nominee; and (iv) any other information relating to the proposed nominee that is required to be disclosed in solicitations of proxies for election of
directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934 or any successor rule or regulation (including such person's written consent to be named in the proxy statement as a nominee and to serving as a director if elected); and (2) as to the shareholder giving the notice (a) the name and address, as they appear on the Corporation's books, of such shareholder and (b) the class and number of shares of the Corporation which are beneficially owned by such shareholder. At the request of the board of directors, any person nominated by the board of directors for election as a director shall furnish to the secretary of the Corporation that information required to be set forth in a shareholder's notice of nomination which pertains to the nominee. No person shall be eligible to serve as a director of the Corporation unless nominated in accordance with the procedures set forth in the Regulations. The chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the procedures prescribed by the Regulations, and if he shall so determine, he shall so declare to the meeting and the defective nomination shall be disregarded. Notwithstanding the foregoing provisions of this Subsection 2.03(A), a shareholder shall also comply with all applicable requirements of the Securities Exchange Act of 1934, and the rules and regulations thereunder, with respect to the matters set forth in this Subsection 2.03(A).
(B) The election of directors shall be by ballot whenever requested by the presiding officer of the meeting or by the holders of a majority of the voting shares outstanding, entitled to vote at such meeting and present in person or by proxy, but unless such request is made, the election shall be viva voce.
Section 2.04. Resignation. Any director of the Corporation may resign at any time by giving written notice to the chairman of the board, the president or the secretary of the Corporation. Such resignation shall take effect at the time specified therein, and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.
Section 2.05. Removal. A director or directors may be removed from office only in accordance with the provisions of the Articles. In case of any such removal, a new director may be elected at the same meeting for the unexpired term of each director removed. Failure to elect a director to fill the unexpired term of any director removed shall be deemed to create a vacancy in the board.
Section 2.06. Vacancies. The remaining directors, though less than a majority of the Whole Board of Directors, may, by the vote of a majority of their number, fill any vacancy in the board of directors for the unexpired term. A vacancy in the board of directors exists within the meaning of this Section 2.05 in case the shareholders increase the authorized number of directors but fail at the meeting at which such increase is authorized, or an adjournment thereof, to elect the additional directors provided for, or in case the shareholders fail at any time to elect the whole authorized number of directors.
Section 2.07. Meetings. Regular meetings of the board of directors may be held at such intervals and at such time and place as shall from time to time be determined by the board of
directors. After such determination and notice thereof has been once given to each person then a member of the board of directors, regular meetings may be held at such intervals and time and place without further notice being given. The directors shall hold such special meetings as may from time to time be called, and such special meetings of directors may be called only by the chairman of the board, the president or a majority of directors then in office. All meetings of directors shall be held at the principal office of the Corporation in the State of Ohio or at such other place within or without the State of Ohio, as the directors may from time to time determine by a resolution. Meetings of the directors may be held through any communications equipment if all persons participating can hear each other and participation in a meeting pursuant to this provision shall constitute presence at such meeting.
Section 2.08. Notice of Meetings. Notice of the time and place of each meeting of directors for which such notice is required by law, the Articles, the Regulations or the By-Laws shall be given to each of the directors by at least one of the following methods:
(A) In a writing mailed not less than three days before such meeting and addressed to the residence or usual place of business of a director, as such address appears on the records of the Corporation; or
(B) By telegraph, cable, radio, wireless, facsimilie transmission, overnight delivery or a writing sent or delivered to the residence or usual place of business of a director as the same appears on the records of the Corporation, not later than the day before the date on which such meeting is to be held; or
(C) Personally, by electronic mail or by telephone not later than the day before the date on which such meeting is to be held.
Notice given to a director by any one of the methods specified in the Regulations shall be sufficient, and the method of giving notice to all directors need not be uniform. Notice of any meeting of directors may be given only by the chairman of the board, the president or the secretary of the Corporation. Any such notice need not specify the purpose or purposes of the meeting. Notice of adjournment of a meeting of directors need not be given if the time and place to which it is adjourned are fixed and announced at such meeting.
Section 2.09. Waiver of Notice. Notice of any meeting of directors may be waived in writing, either before or after the holding of such meeting, by any director, which writing shall be filed with or entered upon the records of the meeting. The attendance of any director at any meeting of directors without protesting, prior to or at the commencement of the meeting, the lack of proper notice, shall be deemed to be a waiver by him of notice of such meeting.
Section 2.10. Quorum. A majority of the directors then in office shall be necessary to constitute a quorum for a meeting of directors. The act of a majority of the directors present at a meeting at which a quorum is present is the act of the board, except as otherwise provided by law, the Articles or the Regulations. At all meetings of the board of directors, each director shall have one vote.
Section 2.11. Executive Committee. The directors may create an executive committee or any other committee of directors, to consist of not less than three directors, and may authorize the delegation to such executive committee or other committees of any of the authority of the directors, however conferred, other than that of filling vacancies among the directors or in the executive committee or in any other committee of the directors.
Such executive committee or any other committee of directors shall serve at the pleasure of the directors, shall act only in the intervals between meetings of the directors, and shall be subject to the control and direction of the directors. Such executive committee or other committee of directors may act by a majority of its members at a meeting or by a writing or writings signed by all of its members.
Any act or authorization of any act by the executive committee or any other committee within the authority delegated to it shall be as effective for all purposes as the act or authorization of the directors. No notice of a meeting of the executive committee or of any other committee of directors shall be required. A meeting of the executive committee or of any other committee of directors may be called only by the chairman of the board, the president or by a member of such executive or other committee of directors. Meetings of the executive committee or of any other committee of directors may be held through any communications equipment if all persons participating can hear each other and participation in such a meeting shall constitute presence thereat.
Section 2.12. Compensation. Directors shall be entitled to receive as compensation for services rendered and expenses incurred as directors, such amounts as the directors, by the affirmative vote of a majority of those in office, may determine.
Section 2.13. By-Laws. The directors may adopt, and amend from time to time, By-Laws for their own government, which By-Laws shall not be inconsistent with the law, the Articles or the Regulations.
Section 2.14. Action by Directors Without a Meeting. Anything contained in the Regulations to the contrary notwithstanding, any action which may be authorized or taken at a meeting of the directors or of a committee of the directors, as the case may be, may be authorized or taken without a meeting with the affirmative vote or approval of, and in a writing or writings signed by, all the directors, or all the members of such committee of the directors, respectively, which writings shall be filed with or entered upon the records of the Corporation.
ARTICLE THREE
OFFICERS
Section 3.01. Officers. The officers of the Corporation to be elected by the directors shall be a chairman of the board (who shall be a director), a president, a secretary, a treasurer and, if desired, one or more vice presidents and such other officers and assistant officers as the directors may from time to time elect. Officers need not be shareholders of the Corporation, and may be paid such compensation as the board of directors may determine. Any two or more
offices (other than the offices of president and vice president) may be held by the same person, but no officer shall execute, acknowledge or verify any instrument in more than one capacity if such instrument is required by law, the Articles, the Regulations or the By-Laws to be executed, acknowledged or verified by two or more officers.
Section 3.02. Tenure of Office. The officers of the Corporation shall hold office at the pleasure of the directors. Any officer of the Corporation may be removed, either with or without cause, at any time, by the affirmative vote of a majority of all the directors then in office; such removal, however, shall be without prejudice to the contract rights, if any, of the person so removed.
Section 3.03. Duties of the Chairman of the Board. The chairman of the board, if there be one, shall preside at all meetings of the shareholders and of the board of directors. He shall be the chief executive officer of the Corporation, and except where by law the signature of the president is required, the chairman of the board shall possess the same power as the president to sign all contracts, certificates and other instruments of the Corporation which may be authorized by the board of directors. During the absence or disability of the president, the chairman of the board shall exercise all the powers and discharge all the duties of the president. The chairman of the board shall also perform such duties and may exercise such other powers as from time to time may be assigned to him by the Regulations or by the board of directors.
Section 3.04. Duties of the President. The president shall, subject to the control of the board of directors, and, if there be one, the chairman of the board, have general supervision of the business of the Corporation and shall see that all orders and resolutions of the board of directors are carried in to effect. He shall execute all bonds, mortgages, contracts and other instruments of the Corporation, except where required or permitted by law to be otherwise signed and executed and except that the other officers of the Corporation may sign and execute documents when so authorized by the Resolutions, the board of directors, the chairman or the president. In the absence or disability of the chairman of the board, or if there be none, the president shall preside at all meetings of the shareholders and the board of directors. If there be no chairman of the board, the president shall be the chief executive officer of the Corporation. The president shall also perform such other duties and may exercise such other powers as from time to time may be assigned to him by the Regulations or by the board of directors.
Section 3.05. Duties of the Vice Presidents. The vice presidents shall perform such duties as are conferred upon them by the Regulations or as may from time to time be assigned to them by the board of directors, the chairman of the board or the president. At the request of the chairman of the board, in the absence or disability of the president, the vice president designated by the board of directors shall perform all the duties of the president, and when so acting, shall have all the powers of the president. The authority of the vice president to sign in the name of the Corporation all certificates for shares and authorize deeds, mortgages, leases, bonds, contracts, notes and other instruments, shall be coordinated with like authority of the president.
Section 3.06. Duties of the Secretary. It shall be the duty of the secretary, or of an assistant secretary, if any, in case of the absence or inability to act of the secretary, to keep
minutes of all the proceedings of the shareholders and the directors and to make a proper record of the same; to perform such other duties as may be required by law, the Articles or the Regulations; to perform such other and further duties as may from time to time be assigned to him by the directors; and to deliver all books, paper and property of the Corporation in his possession to his successor, or to the chairman of the board or the president.
Section 3.07. Duties of the Treasurer. The treasurer, or an assistant treasurer, if any, in case of the absence or inability to act of the treasurer, shall receive and safely keep in charge all money, bills, notes, choses in action, securities and similar property belonging to the Corporation, and shall do with or disburse the same as directed by the chairman of the board, the president or the directors; shall keep an accurate account of the finances and business of the Corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, stated capital and shares, together with such other accounts as may be required and hold the same open for inspection and examination by the directors; shall give bond in such sum with such security as the directors may require for the faithful performance of his duties; shall, upon the expiration of his term of office, deliver all money and other property of the Corporation in his possession or custody to his successor or to the chairman of the board or the president; and shall perform such other duties as from time to time may be assigned to him by the directors.
ARTICLE FOUR
SHARES
Section 4.01. Certificates. Certificates evidencing ownership of shares of the Corporation shall be issued to those entitled to them. Each certificate evidencing shares of the Corporation shall bear a distinguishing number; the signatures of the chairman of the board, the president or a vice president, and of the secretary or an assistant secretary, or the treasurer or an assistant treasurer (except that when any such certificate is countersigned by an incorporated transfer agent or registrar, such signatures may be facsimile, engraved, stamped or printed); and such recitals as may be required by law. Certificates evidencing shares of the Corporation shall be of such tenor and design as the directors may from time to time adopt and may bear such recitals as are permitted by law.
Section 4.02. Transfers. Where a certificate evidencing a share or shares of the Corporation is presented to the Corporation or its proper agents with a request to register transfer, the transfer shall be registered as requested if:
(1) An appropriate person signs on each certificate so presented or signs on a separate document an assignment or transfer of shares evidenced by each such certificate, or signs a power to assign or transfer such shares, or when the signature of an appropriate person is written without more on the back of each such certificate; and
(2) Reasonable assurance is given that the endorsement of each appropriate person is genuine and effective; the Corporation or its agents may refuse to register a transfer of shares unless the signature of each appropriate person is guaranteed by an "eligible guarantor
institution" as defined in Rule 17Ad-15 under the Securities Exchange Act of 1934 or any successor rule or regulation; and
(3) All applicable laws relating to the collection of transfer or other taxes have been complied with; and
(4) The Corporation or its agents are not otherwise required or permitted to refuse to register such transfer.
Section 4.03. Transfer Agents and Registrars. The directors may appoint one or more agents to transfer or to register shares of the Corporation, or both.
Section 4.04. Lost, Wrongfully Taken or Destroyed Certificates. Except as otherwise provided by law, where the owner of a certificate evidencing shares of the Corporation claims that such certificate has been lost, destroyed or wrongfully taken, the directors must cause the Corporation to issue a new certificate in place of the original certificate if the owner:
(1) So requests before the Corporation has notice that such original certificate has been acquired by a bona fide purchaser; and
(2) Files with the Corporation, unless waived by the directors, an indemnity bond, with surety or sureties satisfactory to the Corporation, in such sums as the directors may, in their discretion, deem reasonably sufficient as indemnity against any loss or liability that the Corporation may incur by reason of the issuance of each such new certificate; and
(3) Satisfies any other reasonable requirements which may be imposed by the directors, in their discretion.
ARTICLE FIVE
INDEMNIFICATION AND INSURANCE
Section 5.01. Indemnification. The Corporation shall indemnify any officer or director of the Corporation who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (including, without limitation, any action threatened or instituted by or in the right of the Corporation), by reason of the fact that he is or was a director, officer, employee, agent or volunteer of the Corporation, or is or was serving at the request of the Corporation as a director, trustee, officer, employee, member, manager, agent or volunteer of another corporation (domestic or foreign, nonprofit or for profit), limited liability company, partnership, joint venture, trust or other enterprise, against expenses (including, without limitation, attorneys' fees, filing fees, court reporters' fees and transcript costs), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if his act or omission giving rise to any claim for indemnification under this Section 5.01 was not occasioned by his intent to cause injury to the Corporation or by his reckless disregard for the best interests of the Corporation, and in respect of any criminal action or
proceeding, he had no reasonable cause to believe his conduct was unlawful. It shall be presumed that no act or omission of a person claiming indemnification under this Section 5.01 that gives rise to such claim was occasioned by an intent to cause injury to the Corporation or by a reckless disregard for the best interests of the Corporation and, in respect of any criminal matter, that such person had no reasonable cause to believe his conduct was unlawful; the presumption recited in this Section 5.01 can be rebutted only by clear and convincing evidence, and the termination of any action, suit or proceeding by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, rebut such presumption.
Section 5.02. Court-Approved Indemnification. Anything contained in the Regulations or elsewhere to the contrary notwithstanding:
(A) the Corporation shall not indemnify any officer or director of the Corporation who was a party to any completed action or suit instituted by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee, agent or volunteer of the Corporation, or is or was serving at the request of the Corporation as a director, trustee, officer, employee, member, manager, agent or volunteer of another corporation (domestic or foreign, nonprofit or for profit), limited liability company, partnership, joint venture, trust or other enterprise, in respect of any claim, issue or matter asserted in such action or suit as to which he shall have been adjudged to be liable for an act or omission occasioned by his deliberate intent to cause injury to the Corporation or by his reckless disregard for the best interests of the Corporation, unless and only to the extent that the Court of Common Pleas of Franklin County, Ohio or the court in which such action or suit was brought shall determine upon application that, despite such adjudication of liability, and in view of all the circumstances of the case, he is fairly and reasonably entitled to such indemnity as such Court of Common Pleas or such other court shall deem proper; and
(B) the Corporation shall promptly make any such unpaid indemnification as is determined by a court to be proper as contemplated by this Section 5.02.
Section 5.03. Indemnification for Expenses. Anything contained in the Regulations or elsewhere to the contrary notwithstanding, to the extent that an officer or director of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Section 5.01, or in defense of any claim, issue or matter therein, he shall be promptly indemnified by the Corporation against expenses (including, without limitation, attorneys' fees, filing fees, court reporters' fees and transcript costs) actually and reasonably incurred by him in connection therewith.
Section 5.04. Determination Required. Any indemnification required under Section 5.01 and not precluded under Section 5.02 shall be made by the Corporation only upon a determination that such indemnification is proper in the circumstances because the officer or director has met the applicable standard of conduct set forth in Section 5.01. Such determination may be made only (A) by a majority vote of a quorum consisting of directors of the Corporation who were not and are not parties to, or threatened with, any such action, suit or proceeding, or
(B) if such a quorum is not obtainable or if a majority of a quorum of disinterested directors so directs, in a written opinion by independent legal counsel other than an attorney, or a firm having associated with it an attorney, who has been retained by or who has performed services for the Corporation, or any person to be indemnified, within the past five years, or (C) by the shareholders, or (D) by the Court of Common Pleas of Franklin County, Ohio or (if the Corporation is a party thereto) the court in which such action, suit or proceeding was brought, if any; any such determination may be made by a court under division (D) of this Section 5.04 at any time [including, without limitation, any time before, during or after the time when any such determination may be requested of, be under consideration by or have been denied or disregarded by the disinterested directors under division (A) or by independent legal counsel under division (B) or by the shareholders under division (C) of this Section 5.04]; and no failure for any reason to make any such determination, and no decision for any reason to deny any such determination, by the disinterested directors under division (A) or by independent legal counsel under division (B) or by the shareholders under division (C) of this Section 5.04 shall be evidence in rebuttal of the presumption recited in Section 5.01. Any determination made by the disinterested directors under division (A) or by independent legal counsel under division (B) of this Section 5.04 to make indemnification in respect of any claim, issue or matter asserted in an action or suit threatened or brought by or in the right of the Corporation shall be promptly communicated to the person who threatened or brought such action or suit, and within ten days after receipt of such notification, such person shall have the right to petition the Court of Common Pleas of Franklin County, Ohio or the court in which such action or suit was brought, if any, to review the reasonableness of such determination.
Section 5.05. Advances for Expenses. The provisions of Section 1701.13(E)(5)(a) of the Ohio Revised Code do not apply to the Corporation. Expenses (including, without limitation, attorneys' fees, filing fees, court reporters' fees and transcript costs) incurred in defending any action, suit or proceeding referred to in Section 5.01 shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding to or on behalf of the officer or director promptly as such expenses are incurred by him, but only if such officer or director shall first agree, in writing, to repay all amounts so paid in respect of any claim, issue or other matter asserted in such action, suit or proceeding in defense of which he shall not have been successful on the merits or otherwise if it is proved by clear and convincing evidence in a court of competent jurisdiction that, in respect of any such claim, issue or other matter, his relevant action or failure to act was occasioned by his deliberate intent to cause injury to the Corporation or his reckless disregard for the best interests of the Corporation, unless, and only to the extent that, the Court of Common Pleas of Franklin County, Ohio or the court in which such action or suit was brought shall determine upon application that, despite such determination, and in view of all of the circumstances, he is fairly and reasonably entitled to all or part of such indemnification.
Section 5.06. Article Five Not Exclusive. The indemnification provided by this Article Five shall not be exclusive of, and shall be in addition to, any other rights to which any person seeking indemnification may be entitled under the Articles, the Regulations, any agreement, a vote of disinterested directors, or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has
ceased to be an officer or director of the Corporation and shall inure to the benefit of the heirs, executors, and administrators of such a person.
Section 5.07. Insurance. The Corporation may purchase and maintain insurance, or furnish similar protection, including but not limited to trust funds, letters of credit, or self-insurance, for or on behalf of any person who is or was a director, officer, employee, agent or volunteer of the Corporation, or is or was serving at the request of the Corporation as a director, trustee, officer, employee, member, manager, agent or volunteer of another corporation (domestic or foreign, nonprofit or for profit), limited liability company, partnership, joint venture, trust or other enterprise, against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the obligation or the power to indemnify him against such liability under the provisions of this Article FIVE. Insurance may be purchased from or maintained with a person in which the Corporation has a financial interest.
Section 5.08. Certain Definitions. For purposes of this Article Five, and as an example and not by way of limitation:
(A) A person claiming indemnification under this Article Five shall be deemed to have been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Section 5.01, or in defense of any claim, issue or other matter therein, if such action, suit or proceeding shall be terminated as to such person, with or without prejudice, without the entry of a judgment or order against him, without a conviction of him, without the imposition of a fine upon him and without his payment or agreement to pay any amount in settlement thereof (whether or not any such termination is based upon a judicial or other determination of the lack of merit of the claims made against him or otherwise results in a vindication of him).
(B) References to an "other enterprise" shall include employee tax benefit plans; references to a "fine" shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to "serving at the request of the Corporation" shall include any service as a director, officer, employee or agent of the Corporation which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries.
Section 5.09. Venue. Any action, suit or proceeding to determine a claim for, or for repayment to the Corporation of, indemnification under this Article FIVE may be maintained by the person claiming such indemnification, or by the Corporation, in the Court of Common Pleas of Franklin County, Ohio. The Corporation and (by claiming or accepting such indemnification) each such person consent to the exercise of jurisdiction over its or his person by the Court of Common Pleas of Franklin County, Ohio in any such action, suit or proceeding.
ARTICLE SIX
MISCELLANEOUS
Section 6.01. Amendments. The Regulations may only be amended in accordance with the provisions of the Articles.
Section 6.02. Section 1701.831 of the Ohio Revised Code Not Applicable.
Section 1701.831 of the Ohio Revised Code does not apply to control share
acquisitions of shares of the Corporation.
Exhibit 10(g)
WORTHINGTON INDUSTRIES, INC.
2000 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
1. PURPOSE
The purpose of the Worthington Industries, Inc. 2000 Stock Option Plan for Non-Employee Directors is to promote the interests of Worthington Industries, Inc. and its shareholders by (a) increasing the proprietary interest of Eligible Directors in the growth and performance of the Company by granting such Eligible Directors options to purchase Common Shares of the Company and (b) encouraging the Eligible Directors to remain as directors of the Company and put forth maximum efforts for the success of the Company.
2. DEFINITIONS
As used in the Plan, the following terms shall have the meanings set forth below:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Change in Control" shall mean the following:
(i) A Change in Control shall have occurred when any Person (other than (A) the Company or any Subsidiary of the Company, (B) any employee benefit plan of the Company or of any Subsidiary of the Company or any trustee of or fiduciary with respect to any such plan when acting in such capacity, or (C) any Person who, on the Effective Date of the Plan, is an Affiliate of the Company and owning in excess of ten percent (10%) of the outstanding Common Shares of the Company and the respective successors, executors, legal representatives, heirs and legal assigns of such Person), alone or together with its Affiliates and Associates, has acquired or obtained the right to acquire the beneficial ownership of twenty-five percent (25%) or more of the Common Shares then outstanding.
(ii) "Acquiring Person" means any Person who or which, together with all Affiliates and Associates, has acquired or obtained the right to acquire the beneficial ownership of twenty-five percent (25%) or more of the Common Shares then outstanding.
(iii) "Affiliate" and "Associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Exchange Act.
(iv) "Continuing Director" means any individual who was a member of the Board on the Effective Date of the Plan or thereafter elected by the shareholders or appointed by the Board prior to the date as of which the Acquiring Person became a Substantial Shareholder (as such term is defined in Article SEVENTH of the Company's Amended Articles of
Incorporation), or an individual designated (before his initial election or appointment as a director) as a Continuing Director by three-fourths of the Whole Board, but only if a majority of the Whole Board shall then consist of Continuing Directors.
(v) "Whole Board" means the total number of directors which the Company would have if there were no vacancies.
(c) "Change in Control Exercise Period" shall have the meaning set forth in paragraph (ii) of Subsection 6(d) of the Plan.
(d) "Change in Control Price Per Common Share" shall mean the highest price per Common Share (i) paid by the Acquiring Person in connection with the transaction that results in the Change in Control; or (ii) paid or offered by the Acquiring Person, to acquire other Common Shares in excess of one percent (1%) of the outstanding Common Shares, at any time after the Change in Control and before the Eligible Director exercises his/her election under paragraph (ii) of Subsection 6(d).
(e) "Change in Control Spread" shall have the meaning set forth in paragraph (ii) of Subsection 6(d) of the Plan.
(f) "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time, and any successor provisions thereto.
(g) "Company" shall mean Worthington Industries, Inc., an Ohio corporation, together with any successor thereto.
(h) "Common Shares" shall mean the common shares, without par value, of the Company.
(i) "Director Option" shall mean a Non-Qualified Stock Option granted to each Eligible Director under the provisions of the Plan without any action by the Board.
(j) "Director Retirement" shall mean the retirement of an Eligible Director from service on the Board after having (i) attained the age of 65 or (ii) served at least nine years as a member of the Board, unless the Board specifies a shorter period of required service which shall in no event be fewer than six years.
(k) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended from time to time, and any successor provisions thereto.
(l) "Effective Date" shall mean the date of the approval of the Plan by the Company's shareholders.
(m) "Eligible Director" shall mean, on any date, an individual who is serving as a member of the Board but shall not include any individual who is an employee of the Company or of any Subsidiary or Affiliate of the Company.
(n) The "Fair Market Value" of a Common Share on any relevant date for purposes of any provision of the Plan shall be the last reported sales price of a Common Share as shown on the national securities exchange on which the Company's Common Shares are then traded, or, if there are no reported sales on such date, then the last reported sales price on the next preceding day on which such a sale was transacted.
(o) "For Cause" shall mean removal from office for cause in accordance with Article SIXTH of the Company's Amended Articles of Incorporation and the Ohio General Corporation Law.
(p) "Non-Qualified Stock Option" shall mean a right to purchase Common Shares from the Company that is granted under the Plan and is not intended to meet the requirements of Section 422 of the Code or any successor provision thereto.
(q) "Option Agreement" shall mean any written agreement, contract or other instrument or document evidencing any Director Option granted under the Plan.
(r) "Permissible Transferee" shall mean any member of the immediate family of an Eligible Director, any trust, whether revocable or irrevocable, solely for the benefit of members of the Eligible Director's immediate family, or any partnership or limited liability company whose only partners or members are members of the Eligible Director's immediate family.
(s) "Person" shall mean any individual, corporation, partnership, limited liability company, association, joint-stock company, trust, unincorporated organization, government or political subdivision thereof or other entity.
(t) "Plan" shall mean the Worthington Industries, Inc. 2000 Stock Option Plan for Non-Employee Directors, as the same may be amended from time to time.
(u) "SEC" shall mean the Securities and Exchange Commission or any successor thereto and shall include the staff thereof.
(v) "Subsidiary" shall mean any corporation which, on the date of
determination, qualified as a subsidiary corporation of the
Company under Section 424(f) of the Code. In addition, the
term "Subsidiary" shall include any trade or business which is
under common control with the Company, as determined under
Section 414(c) of the Code.
(w) "Total Disability" shall be deemed to be the inability, by reason of a medically determinable physical or mental impairment, to engage in any substantial gainful activity, for a period of 180 days after its commencement and such condition, in the opinion of a physician selected by the Company and reasonably acceptable to the Eligible Director or his/her legal representative is total and permanent.
3. ADMINISTRATION
(a) The Plan shall be administered by the Board.
(b) The Board shall have full power and authority in its discretion, subject to and not inconsistent with the express provisions of the Plan, to administer the Plan and to exercise all the power and authority specifically granted to the Board under the Plan or necessary or advisable, in the sole and absolute discretion of the Board, in the administration of the Plan including, without limitation, the authority to: interpret and construe any provision of the Plan or any Director Option granted under the Plan; make all required or appropriate determinations under the Plan or any Director Option granted under the Plan; adopt, amend and rescind such rules and regulations relating to the Plan as the Board shall determine in its discretion subject to the express provisions of the Plan; and make all other determinations deemed by the Board necessary or advisable for the administration of the Plan. Notwithstanding the preceding sentence, the Board shall have no discretion with respect to the selection of members of the Board to receive Director Options, the number of Common Shares subject to any Director Option, the purchase price per Common Share under each Director Option or the timing of grants of Director Options under the Plan.
(c) The interpretation and construction of any provision of the Plan or any Director Option granted under the Plan and all determinations by the Board in each case shall be final, binding and conclusive with respect to all interested parties, unless otherwise determined by the Board. No member of the Board shall be personally liable for any action, failure to act, determination, interpretation or construction made in good faith with respect to the Plan or any Director Option or transaction under the Plan.
(d) Nothing contained in the Plan, nor any Director Option granted pursuant to the Plan, shall confer upon any Eligible Director any right to continue as a director of the Company nor limit in any the right of the shareholders of the Company to remove him/her as a director in accordance with the Company's Amended Articles of Incorporation and the Ohio General Corporation Law.
(e) The validity, construction and effect of the Plan and any rules and regulations relating to the Plan and any Option Agreement evidencing a Director Option granted under the Plan shall be determined in accordance with the laws of the State of Ohio.
4. ELIGIBILITY
The class of individuals eligible to receive grants of Director Options shall be the Eligible Directors.
5. COMMON SHARES SUBJECT TO THE PLAN
Subject to adjustment as provided in Section 7 of the Plan, an aggregate of 250,000 Common Shares shall be available for issuance under the Plan. The Common Shares deliverable upon the exercise of Director Options may be made available from authorized but unissued
Common Shares or issued Common Shares which have been reacquired by the Company. If any Director Option granted under the Plan shall terminate for any reason without having been exercised in full, the Common Shares subject to, but not delivered under, such Director Option shall be available for issuance under the Plan.
6. GRANT, TERMS AND CONDITIONS OF DIRECTOR OPTIONS
(a) On the date an Eligible Director is first elected or appointed to the Board, such Eligible Director shall be granted a Director Option to purchase 4,000 Common Shares; provided, however, in respect of the first election to the Board of Eligible Directors prior to the Effective Date, such Director Option shall be granted on the Effective Date.
(b) On the date on which each annual meeting of the shareholders of the Company is held, beginning with the annual meeting of shareholders to be held in 2001, each Eligible Director who has served as a director of the Company for more than six months and will continue to serve as a member of the Board on and after such date, shall receive a grant of a Director Option to purchase 2,000 Common Shares.
(c) The Director Options granted shall have the following terms and conditions:
(i) Purchase Price. The purchase price per Common Share deliverable upon the exercise of each Director Option shall be 100% of the Fair Market Value per Common Share on the date the Director Option is granted.
(ii) Payment. Director Options may be exercised only upon payment of the purchase price thereof in full. Such payment may be made in cash, or its equivalent, or, if and to the extent permitted by the Board, by tendering, either by actual delivery of Common Shares or by attestation, Common Shares acceptable to the Board or by a combination of the foregoing, as determined by the Board, provided that the combined value of all cash and cash equivalents and the Fair Market Value of any Common Shares so tendered to the Company as of the date of such tender is at least equal to the purchase price for the Common Shares underlying the portion of the Director Option being exercised. The Board may permit an Eligible Director to elect to pay the purchase price upon the exercise of a Director Option by irrevocably authorizing a third party to sell Common Shares (or a sufficient number of Common Shares) acquired upon exercise of the Director Option and remit to the Company a sufficient portion of the sale proceeds to pay the entire purchase price and tax withholding resulting from such exercise.
(iii) Vesting and Term of Director Options. Each Director Option granted pursuant to the Plan shall become vested and fully exercisable on the first to occur of (A) the first anniversary of the date of grant or (B) as to any Director Option granted as of the date of an annual meeting of shareholders of the Company, the date on which the next annual meeting of shareholders of the Company is held following the date of grant, provided that in each case the Eligible Director who was granted the Director Option is a director of the Company on the relevant date or the Eligible Director's term as a director of the Company is ending on the relevant date. Once vested, each Director Option shall
be exercisable until the earlier of ten years from the date of grant and the expiration of the applicable period described in paragraph (iv) below.
(iv) Termination of Service as Eligible Director.
(A) Upon termination of an Eligible Director's service as a director of the Company for any reason other than death, Director Retirement, Total Disability or For Cause, all outstanding Director Options held by such Eligible Director, to the extent then exercisable, shall be exercisable in whole or in part for a period of one year from the date upon which the Eligible Director ceases to be a member of the Board, provided that in no event shall the Director Options be exercisable beyond the period provided for in paragraph (iii) of Subsection 6(c) above. Notwithstanding the foregoing, the Board shall have the right to accelerate the exercisability of any outstanding Director Option, in its discretion, upon the termination of an Eligible Director's service on the Board.
(B) If an Eligible Director shall die while serving as a director of the Company, all outstanding Director Options held by such Eligible Director (whether or not then exercisable by their terms) shall become immediately exercisable in full by the Eligible Director's estate or by the Person who acquires the right to exercise such Director Options upon the Eligible Director's death by bequest or inheritance. Such exercise may occur at any time within three years after the date of the Eligible Director's death, provided that in no event shall such Director Options be exercisable beyond the period provided for in paragraph (iii) of Subsection 6(c) above.
(C) If an Eligible Director's service as a director of the Company ceases as a result of the Eligible Director's becoming Totally Disabled, all outstanding Director Options held by such Eligible Director (whether or not then exercisable by their terms) shall become immediately exercisable in full. Such exercise may occur at any time within three years after the Eligible Director's service as a director of the Company has ceased, provided that in no event shall such Director Options be exercisable beyond the period provided for in paragraph (iii) of Subsection 6(c) above.
(D) If an Eligible Director's service as a director of the Company ceases due to a Director Retirement, all outstanding Director Options held by such Eligible Director (whether or not then exercisable by their terms) shall become immediately exercisable in full. Such exercise may occur at any time within three years after the date of the Director Retirement, provided that in no event shall such Director Options be exercisable beyond the period provided for in paragraph (iii) of Subsection 6(c) above.
(E) If an Eligible Director's service as a director of the Company is terminated For Cause, each of the Director Options of such Eligible Director shall be cancelled on the date the Eligible Director ceases to be a director of the Company.
(v) Assignability of Director Options. With the permission of the Board, an Eligible Director who has been granted a Director Option under the Plan, may transfer such Director Option to a revocable inter vivos trust as to which the Eligible Director is the settlor or may transfer such Director Option to a Permissible Transferee. Any such transferee shall remain subject to all of the terms and conditions applicable to such Director Option and subject to the rules and regulations prescribed by the Board. A Director Option may not be retransferred by a Permissible Transferee except by will or the laws of descent and distribution and then only to another Permissible Transferee. Other than as described above, no Director Option may be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by an Eligible Director otherwise than by will or the laws of descent and distribution, or pursuant to a qualified domestic relations order, and during the lifetime of the Eligible Director to whom a Director Option is granted, the Director Option may be exercised only by the Eligible Director or by the Eligible Director's guardian or legal representative.
(vi) Option Agreement. Each Director Option granted under the Plan shall be evidenced by an Option Agreement with the Company which shall contain the terms and provisions set forth in the Plan and shall otherwise be consistent with the provisions of the Plan.
(d) Change in Control Provisions.
(i) Notwithstanding any other provision of the Plan to the contrary, but subject to the provisions of paragraph (iv) of this Subsection 6(d), in the event of a Change in Control, any Director Options outstanding as of the date such Change in Control is determined to have occurred, and which are not then exercisable, shall become fully exercisable.
(ii) Notwithstanding any other provision of the Plan, during the 60-day period from and after a Change in Control (the "Change in Control Exercise Period"), if the Board shall determine at, or at any time after the time of grant, an Eligible Director holding a Director Option shall have the right, whether or not the Director Option is fully exercised and in lieu of the payment of the purchase price for the Common Shares being purchased under the Director Option and by giving notice to the Company, to elect (within the Change in Control Exercise Period) to surrender all or part of the Director Option to the Company and to receive cash, within 30 days of such notice, in an amount equal to the amount by which the Change in Control Price per Common Share on the date of such election shall exceed the purchase price per Common Share under the Director Option (the "Change in Control Spread") multiplied by the number of Common Shares granted under the Director Option as to which the right granted under this paragraph (ii) shall have been exercised; provided, that if the Change in Control is within six months of the date of grant of a particular Director Option held by an Eligible Director, no such election shall be made by such Eligible Director with respect to such Director Option prior to six months from the date of grant. However, if the end of such sixty-day period from and after a Change in Control is within six months of the date of grant of a Director Option, such Director Option (unless theretofore exercised) shall be cancelled in exchange for a cash payment to the Eligible Director, effected on the day which is six
months and one day after the date of grant of such Director Option, equal to the Change in Control Spread multiplied by the number of Common Shares granted under the Director Option.
(iii) Notwithstanding any other provision of the Plan, if any right granted pursuant to the Plan would make a Change in Control transaction ineligible for pooling-of-interests accounting treatment under APB No. 16 that (after giving effect to any other actions taken to cause such transaction to be eligible for such pooling-of-interests accounting treatment) but for the nature of such grant would otherwise be eligible for such accounting treatment, the Board shall have the ability to substitute for the cash payable pursuant to such right Common Shares with a Fair Market Value equal to the cash that would have otherwise been payable pursuant thereto.
(iv) The provisions of this Subsection 6(d) shall not apply (A) if the Board determines at the time of grant that such Section shall not apply or (B) to any Change in Control when expressly provided otherwise by a three-fourths vote of the Whole Board, but only if a majority of the members of the Board then in office and acting upon such matters shall be Continuing Directors.
7. ADJUSTMENT AND CHANGES IN COMMON SHARES
(a) In the event that the outstanding Common Shares shall be changed into or exchanged for a different kind of shares, other securities or other property of the Company or of another corporation or for cash (whether by reason of merger, consolidation, recapitalization, reclassification, split-up, combination of shares or otherwise) or if the number of Common Shares of the Company shall be increased through the payment of a share dividend, then unless such change results in the termination of all outstanding Director Options granted pursuant to the Plan, there shall be substituted for or added to each Common Share subject to the Director Option, the number and kind of shares, other securities or other property and the amount of cash into which each outstanding Common Share of the Company shall be changed, or for which each such Common Share shall be exchanged, or to which the holder of each Common Share shall be entitled, as the case may be. The Director Option shall also be appropriately amended as to the purchase price and other terms as may be necessary to reflect the foregoing events. Fractional shares resulting from any adjustment in the Director Options pursuant to this Section 7 shall be rounded down to the nearest whole number of shares.
(b) Notice of any adjustment shall be given by the Company to each holder of a Director Option which shall have been so adjusted, provided that such adjustment (whether or not such notice is given) shall be effective and binding for all purposes of the Plan and any Option Agreements issued under the Plan.
(c) The grant of Director Options under the Plan shall in no way affect the right of the Company to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.
8. NO RIGHTS AS SHAREHOLDERS
Neither an Eligible Director nor any holder or beneficiary of any Director Option shall be, or have any of the rights and privileges of, a shareholder of the Company in respect of any Common Shares purchasable upon the exercise of any Director Option, in whole or in part, unless and until ownership of such Common Shares shall have been recorded in the share transfer books of the Company. To the extent that the Plan provides for issuance of certificates to reflect the issuance of Common Shares, the issuance may be effected on a non-certificated basis, to the extent not prohibited by applicable law or the applicable rules of any national securities exchange on which the Common Shares are then listed or traded.
9. PLAN AMENDMENTS
The Board may amend, alter, suspend, discontinue or terminate the Plan or any portion thereof at any time, in its sole and absolute discretion; provided that no such amendment, alteration, suspension, discontinuation or termination shall be made without shareholder approval if such approval is necessary to comply with any tax or regulatory requirement, including for these purposes any approval requirement which is a prerequisite for exemptive relief from Section 16(b) of the Exchange Act for which or with which the Board deems it necessary or desirable to qualify or comply.
10. TAX WITHHOLDING
The Company shall have the power to withhold, or require an Eligible Director to remit to the Company, an amount sufficient to satisfy federal, state and local tax withholding requirements on any Director Option granted under the Plan, and the Company may withhold payment of cash or issuance of Common Shares until such requirements are satisfied. The Board may, in its discretion, permit an Eligible Director to elect, subject to such conditions as the Board shall impose, (a) to have Common Shares otherwise issuable under the Plan withheld by the Company or (b) to tender, either by actual delivery of Common Shares or by attestation, Common Shares acceptable to the Board, in each case having a Fair Market Value sufficient to satisfy all or part of the Eligible Director's estimated total federal, state and local tax obligations associated with the transaction.
11. REQUIREMENTS OF LAW
The granting of Director Options and the issuance of Common Shares upon exercise of Director Options shall be subject to all applicable laws, rules and regulations, and to such approval by any governmental agencies or national securities exchanges as may be required. Notwithstanding the foregoing, no Common Shares shall be issued under the Plan unless the Company is satisfied that such issuance will be in compliance with applicable federal and state securities laws. Certificates for Common Shares delivered under the Plan may be subject to such stock transfer orders and other restrictions as the Board may deem advisable under the rules, regulations and other requirements of the SEC, any national securities exchange upon which the Common Shares are then listed or traded, or any applicable federal or state securities laws. The Board may cause a legend or legends to be placed on any such certificate to make appropriate reference to such restrictions.
12. SEVERABILITY
If any provision of the Plan or any Director Option is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction or as to any Person or Director Option or would disqualify the Plan or any Director Option under any law deemed applicable by the Board, such provision shall be construed or deemed amended to conform to the applicable laws, or if it cannot be construed or deemed amended without, in the determination of the Board, materially altering the intent of the Plan or the Director Option, such provision shall be stricken as to such jurisdiction, Person or Director Option and the remainder of the Plan and any such Director Options shall remain in full force and effect.
13. INDEMNIFICATION
Each individual who is or shall have been a member of the Board shall be indemnified and held harmless by the Company against and from any loss, cost, liability or expense that may be imposed upon or reasonably incurred by him/her in connection with or resulting from any claim, action, suit or proceeding to which he/she may be made a party or in which he/she may be involved by reason of any action taken or failure to act by the Board under the Plan and against and from any and all amounts paid by him/her in settlement thereof, with the Company's approval, or paid by him/her in satisfaction of any judgment in any such action, suit or proceeding against him/her, provided he/she shall give the Company an opportunity, at its own expense, to handle and defend the same before he/she undertakes to handle and defend it on his/her own behalf. The foregoing right of indemnification shall not be exclusive and shall be independent of any other rights of indemnification to which such individuals may be entitled under the Company's Amended Articles of Incorporation or Code of Regulations, by contract, as a matter of law.
14. EFFECTIVE DATE AND DURATION OF PLAN
The Plan shall become effective on the date of the approval of the Plan by the Company's shareholders ("Effective Date"). The Plan shall terminate the day following the tenth annual meeting of shareholders of the Company at which directors are elected succeeding the Effective Date unless the Plan is terminated by exhaustion of the Common Shares available for issuance under the Plan. Director Options outstanding on the date the Plan is terminated shall continue to have force and effect in accordance with the provisions of the Option Agreements evidencing such Director Options.
| ARTICLE 5 |
| This schedule contains summary financial information extracted from the condensed consolidated financial statements as of and for the three month period ended August 31, 2000 and is qualified in its entirety by reference to such financial statements. |
| MULTIPLIER: 1,000 |
| PERIOD TYPE | 3 MOS |
| FISCAL YEAR END | MAY 31 2001 |
| PERIOD START | JUN 01 2000 |
| PERIOD END | AUG 31 2000 |
| CASH | 240 |
| SECURITIES | 0 |
| RECEIVABLES | 276,362 |
| ALLOWANCES | 4,334 |
| INVENTORY | 301,146 |
| CURRENT ASSETS | 603,992 |
| PP&E | 1,196,871 |
| DEPRECIATION | 333,856 |
| TOTAL ASSETS | 1,658,571 |
| CURRENT LIABILITIES | 415,848 |
| BONDS | 361,721 |
| PREFERRED MANDATORY | 0 |
| PREFERRED | 0 |
| COMMON | 0 |
| OTHER SE | 671,973 |
| TOTAL LIABILITY AND EQUITY | 1,658,571 |
| SALES | 484,224 |
| TOTAL REVENUES | 484,224 |
| CGS | 420,346 |
| TOTAL COSTS | 420,346 |
| OTHER EXPENSES | 0 |
| LOSS PROVISION | 0 |
| INTEREST EXPENSE | 9,357 |
| INCOME PRETAX | 19,649 |
| INCOME TAX | 7,172 |
| INCOME CONTINUING | 12,477 |
| DISCONTINUED | 0 |
| EXTRAORDINARY | 0 |
| CHANGES | 0 |
| NET INCOME | 12,477 |
| EPS BASIC | .15 |
| EPS DILUTED | .15 |