-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HL0AbmNQQ75gwHi3ciKqZGKfhmVWBqnImuHkFky+sft9ZvkmXHpyVuL4BsxmAo3s zaLvF4zGusVZr6hfrfGhyw== 0000950134-01-505203.txt : 20010814 0000950134-01-505203.hdr.sgml : 20010814 ACCESSION NUMBER: 0000950134-01-505203 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20010630 FILED AS OF DATE: 20010813 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ASSOCIATED MATERIALS INC CENTRAL INDEX KEY: 0000802967 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] IRS NUMBER: 751872487 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-24956 FILM NUMBER: 1707159 BUSINESS ADDRESS: STREET 1: 2200 ROSS AVE STE 4100 E CITY: DALLAS STATE: TX ZIP: 75201 BUSINESS PHONE: 2142204600 MAIL ADDRESS: STREET 1: 2200 ROSS AVENUE STREET 2: SUITE 4100 EAST CITY: DALLAS STATE: TX ZIP: 75201 10-Q 1 d89759e10-q.txt FORM 10-Q FOR QUARTER ENDED JUNE 30, 2001 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ---------- F0RM 10-Q (Mark One) Y QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES - --- EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2001 ----------------------------------------- or TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES - --- EXCHANGE ACT OF 1934 For the transition period from to ------------------ ------------------- Commission file number: 0-24956 ASSOCIATED MATERIALS INCORPORATED - -------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in Its Charter) Delaware 75-1872487 - ------------------------------------------------------------------------------------------------------------- (State or Other Jurisdiction of Incorporation of Organization) (I.R.S. Employer Identification No.) 2200 Ross Avenue, Suite 4100 East, Dallas, Texas 75201 - ------------------------------------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (214) 220-4600 ----------------------------- Not Applicable - -------------------------------------------------------------------------------- Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report Indicate by check Y whether the registrant (1) has filed all reports required to be filed by Section 13 of 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 Y No ----- ----- Shares of Common Stock, $.0025 par value outstanding at August 13, 2001: 6,721,904 2 ASSOCIATED MATERIALS INCORPORATED FORM 10-Q FOR THE QUARTER AND SIX MONTHS ENDED JUNE 30, 2001
Page No. -------- PART I. FINANCIAL INFORMATION Item 1. Financial Statements Balance Sheets.................................................................. 1 June 30, 2001 (Unaudited) and December 31, 2000 Statements of Operations (Unaudited)............................................ 2 Quarter and six months ended June 30, 2001 and 2000 Statements of Cash Flows (Unaudited)............................................ 3 Six months ended June 30, 2001 and 2000 Notes to Financial Statements (Unaudited)....................................... 4 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition............................................... 6 Item 3. Quantitative and Qualitative Disclosures About Market Risk.................. 10 PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders......................... 11 Item 6. Exhibits and Reports on Form 8-K............................................ 12 SIGNATURES............................................................................ 13
3 Part I. Financial Information Item 1. Financial Statements ASSOCIATED MATERIALS INCORPORATED BALANCE SHEETS (In Thousands, Except Share Data)
June 30, December 31, 2001 2000 ----------- ------------ (Unaudited) ASSETS Current assets: Cash and cash equivalents .................................... $ 3,367 $ 15,879 Short-term investment ........................................ -- 5,019 Accounts receivable, net ..................................... 73,009 50,853 Inventories .................................................. 81,240 74,429 Income taxes receivable ...................................... -- 453 Other current assets ......................................... 4,016 4,213 --------- --------- Total current assets ............................................ 161,632 150,846 Property, plant and equipment, net .............................. 78,401 73,917 Investment in Amercord Inc. ..................................... -- 2,393 Other assets .................................................... 4,044 3,985 --------- --------- Total assets .................................................... $ 244,077 $ 231,141 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable ............................................. $ 39,170 $ 19,273 Accrued liabilities .......................................... 25,027 29,509 Revolving line of credit ..................................... 8,400 -- Income taxes payable ......................................... 3,583 -- --------- --------- Total current liabilities ....................................... 76,180 48,782 Deferred income taxes ........................................... 3,943 3,927 Other liabilities ............................................... 5,254 5,442 Long-term debt .................................................. 75,000 75,000 Commitments and contingencies Stockholders' equity: Preferred stock, $.01 par value: Authorized shares - 100,000 at June 30, 2001 and December 31, 2000 Issued shares - 0 at June 30, 2001 and December 31, 2000 ...................................... -- -- Common stock, $.0025 par value: Authorized shares - 15,000,000 Issued shares - 7,787,480 at June 30, 2001 and 7,164,024 at December 31, 2000 .................. 19 18 Common stock, Class B, $.0025 par value: Authorized and issued shares - 0 at June 30, 2001 and 1,550,000 shares at December 31, 2000 ........... -- 4 Less: Treasury stock, at cost - 1,065,576 shares at June 30, 2001 and 955,170 at December 31, 2000 ......... (14,228) (12,425) Capital in excess of par .................................. 16,344 14,862 Retained earnings ......................................... 81,565 95,531 --------- --------- Total stockholders' equity ................................ 83,700 97,990 --------- --------- Total liabilities and stockholders' equity ...................... $ 244,077 $ 231,141 ========= =========
See accompanying notes. -1- 4 ASSOCIATED MATERIALS INCORPORATED STATEMENTS OF OPERATIONS (Unaudited) (In Thousands, Except Per Share Data)
Quarter Ended Six Months Ended June 30, June 30, ----------------------- ------------------------ 2001 2000 2001 2000 --------- --------- --------- --------- Net sales ..................................... $ 158,745 $ 134,381 $ 267,356 $ 237,800 Cost of sales ................................. 111,479 94,648 192,893 169,474 --------- --------- --------- --------- 47,266 39,733 74,463 68,326 Selling, general and administrative expense ... 30,272 27,018 58,399 51,301 --------- --------- --------- --------- Income from operations ........................ 16,994 12,715 16,064 17,025 Interest expense .............................. 1,854 1,724 3,433 3,448 --------- --------- --------- --------- 15,140 10,991 12,631 13,577 Loss on the write-down of Amercord Inc. ....... -- -- (2,393) -- Gain on sale of UltraCraft .................... -- 8,348 -- 8,348 --------- --------- --------- --------- Income before income taxes .................... 15,140 19,339 10,238 21,925 Income tax expense ............................ 5,829 7,445 3,942 8,440 --------- --------- --------- --------- Net income .................................... $ 9,311 $ 11,894 $ 6,296 $ 13,485 ========= ========= ========= ========= Earnings Per Common Share - Basic: Net income per common share ................... $ 1.34 $ 1.48 $ 0.86 $ 1.68 ========= ========= ========= ========= Earnings Per Common Share - Assuming Dilution: Net income per common share ................... $ 1.28 $ 1.43 $ 0.83 $ 1.63 ========= ========= ========= ========= Dividends per common share .................... $ -- $ -- $ 0.10 $ 0.10 ========= ========= ========= =========
See accompanying notes. -2- 5 ASSOCIATED MATERIALS INCORPORATED STATEMENTS OF CASH FLOWS (Unaudited) (In Thousands)
Six Months Ended June 30, ---------------------- 2001 2000 -------- -------- OPERATING ACTIVITIES Net income .................................................. $ 6,296 $ 13,485 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization ......................... 5,349 4,745 Deferred income taxes ................................. 16 3,093 Loss on the write-down of Amercord Inc. ............... 2,393 -- Loss on sale of assets ................................ 38 3 Gain on sale of UltraCraft ............................ -- (8,348) Changes in operating assets and liabilities: Accounts receivable, net ........................... (22,156) (9,155) Inventories ........................................ (6,811) (12,885) Income taxes receivable/payable .................... 3,863 5,219 Accounts payable and accrued liabilities ........... 15,415 8,591 Other assets and liabilities ....................... (14) (1,625) -------- -------- Net cash provided by operating activities ................... 4,389 3,123 INVESTING ACTIVITIES Proceeds from sale of short-term investment ................. 5,019 -- Proceeds from sale of assets ................................ 69 48 Proceeds from sale of UltraCraft ............................ -- 19,220 Additions to property, plant and equipment .................. (9,803) (6,888) -------- -------- Net cash provided by (used by) investing activities ......... (4,715) 12,380 FINANCING ACTIVITIES Net increase in revolving line of credit .................... 8,400 -- Net proceeds from issuance of common stock .................. 487 488 Repurchase of Class B shares ................................ (19,500) -- Dividends paid .............................................. (765) (801) Treasury stock acquired ..................................... (1,803) -- Stock options, other ........................................ 588 -- Stock options exercised ..................................... 407 34 -------- -------- Net cash used by financing activities ....................... (12,186) (279) Net increase (decrease) in cash ............................. (12,512) 15,224 Cash at beginning of period ................................. 15,879 3,432 -------- -------- Cash at end of period ....................................... $ 3,367 $ 18,656 ======== ======== Supplemental information: Cash paid for interest ...................................... $ 3,622 $ 3,647 ======== ======== Cash paid for income taxes .................................. $ 753 $ 848 ======== ========
See accompanying notes. -3- 6 ASSOCIATED MATERIALS INCORPORATED NOTES TO FINANCIAL STATEMENTS FOR THE QUARTER AND SIX MONTHS ENDED JUNE 30, 2001 (Unaudited) NOTE 1 - BASIS OF PRESENTATION The unaudited financial statements of Associated Materials Incorporated (the "Company") for the quarter and six months ended June 30, 2001 have been prepared in accordance with generally accepted accounting principles for interim financial reporting, the instructions to Form 10-Q, and Rule 10-01 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. These financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2000 filed with the Securities and Exchange Commission. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the interim financial information have been included. The results of operations for any interim period are not necessarily indicative of the results of operations for a full year. NOTE 2 - INVENTORIES Inventories are valued at the lower of cost (first in, first out) or market. Inventories consist of the following (in thousands):
June 30, December 31, 2001 2000 ---------- ------------ Raw materials.............................................. $ 23,664 $ 23,229 Work in process............................................ 6,084 5,101 Finished goods and purchased stock......................... 51,492 46,099 ---------- ---------- $ 81,240 $ 74,429 ========== ==========
NOTE 3 - STOCKHOLDERS' EQUITY Under its stock repurchase program, the Company is authorized to purchase up to 1.6 million shares of common stock in open market transactions. The Company did not purchase any shares under this program during the second quarter of 2001. For the six months ended June 30, 2001, the Company repurchased 110,406 shares of its common stock at a cost of $1.8 million. The Class B share repurchase described below was not a part of this stock repurchase program. On April 29, 2001, the Company repurchased 1,000,000 shares of its Class B Common Stock from The Prudential Insurance Company of America ("Prudential") and its wholly owned subsidiary, PCG Finance Company II, LLC ("PCG") at $19.50 per share, or $19.5 million in the aggregate, which has been reflected primarily as a reduction to retained earnings. The share purchase was financed through available cash and borrowings under the Company's $50,000,000 credit facility. Following the purchase, Prudential and PCG converted the remaining 550,000 shares of Class B Common Stock into 550,000 shares of common stock. The Company has retired all 1,550,000 previously authorized shares of Class B Common Stock. NOTE 4 - AMERCORD INC. The Company wrote off its $2.4 million investment in Amercord Inc. during the first quarter of 2001. Amercord's operating results and financial position deteriorated during the first quarter 2001. The Company believes that it will not recover its investment in Amercord without a restructuring of Amercord. The Company's investment in Amercord consists of a $1.5 million subordinated note and 9.9% of Amercord's common stock. -4- 7 NOTE 5 - EARNINGS PER COMMON SHARE The following table sets forth the computation of basic and diluted earnings per share:
Quarter Ended Six Months Ended June 30, June 30, ------------------- ------------------- 2001 2000 2001 2000 ------- ------- ------- ------- Numerator: Numerator for basic and diluted earnings per common share .............................. $ 9,311 $11,894 $ 6,296 $13,485 Denominator: Denominator for basic earnings per common share - weighted-average shares ........... 6,980 8,021 7,327 8,020 Effect of dilutive securities: Employee stock options .................... 288 286 278 251 ------- ------- ------- ------- Denominator for diluted earnings per common share - adjusted weighted-average shares .. 7,268 8,307 7,605 8,271 Basic earnings per common share ................. $ 1.34 $ 1.48 $ 0.86 $ 1.68 ======= ======= ======= ======= Diluted earnings per common share ............... $ 1.28 $ 1.43 $ 0.83 $ 1.63 ======= ======= ======= =======
For the six months ended June 30, 2001 and for the quarter and six months ended June 30, 2000 options to purchase 20,000 and 40,000 shares of common stock, respectively, were excluded from the calculation of weighted average shares outstanding because the average exercise price of these shares was higher than the average market price of the common stock during the period. NOTE 6 - RECLASSIFICATIONS Certain prior period amounts have been reclassified to conform with the current period presentation. -5- 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations RESULTS OF OPERATIONS Quarter Ended June 30, 2001 Compared to Quarter Ended June 30, 2000 The table below sets forth for the periods indicated certain items of the Company's financial statements by segment:
Quarter Ended June 30, ---------------------------------------------------------------------------- 2001 2000 ----------------------------------- ----------------------------------- Percentage of Percentage of Amount Total Net Sales Amount Total Net Sales --------------- --------------- --------------- --------------- Total Company: Net sales - Alside(1) ........ $ 139,206 87.7% $ 119,135 88.7% Net sales - AmerCable(1) ..... 19,539 12.3 15,246 11.3 --------------- --------------- --------------- --------------- Total net sales ........... 158,745 100.0 134,381 100.0 Gross profit ................. 47,266 29.8 39,733 29.6 Selling, general and administrative expense(2).. 30,272 19.1 27,018 20.1 --------------- --------------- --------------- --------------- Income from operations ....... $ 16,994 10.7% $ 12,715 9.5% =============== =============== =============== =============== Alside: Net sales(1) ................. $ 139,206 100.0% $ 119,135 100.0% Gross profit ................. 43,346 31.1 37,045 31.1 Selling, general and administrative expense .... 26,973 19.4 24,424 20.5 --------------- --------------- --------------- --------------- Income from operations ....... $ 16,373 11.8% $ 12,621 10.6% =============== =============== =============== =============== AmerCable: Net sales(1) ................. $ 19,539 100.0% $ 15,246 100.0% Gross profit ................. 3,920 20.1 2,688 17.6 Selling, general and administrative expense .... 1,729 8.8 1,512 9.9 --------------- --------------- --------------- --------------- Income from operations ....... $ 2,191 11.3% $ 1,176 7.7% =============== =============== =============== ===============
(1) Certain prior period amounts have been reclassified to conform with the current period presentation. (2) Consolidated selling, general and administrative expenses include corporate expenses of $1,570,000 and $1,082,000 for the quarters ended June 30, 2001 and 2000, respectively. Overview The Company's net sales increased 18.1% to $158.7 million for the second quarter of 2001 as compared to $134.4 million for the same period in 2000 due to higher sales volume at the Company's Alside and AmerCable divisions. Income from operations increased 33.7% to $17.0 million for the second quarter of 2001 due to higher profits at both Alside and AmerCable. The Company's net income decreased to $9.3 million or $1.28 per share for the second quarter of 2001 as compared to $11.9 million or $1.43 per share for the same period in 2000 due to the sale of the Company's UltraCraft cabinet operation in June 2000, which resulted in a pre-tax gain of $8.3 million. The Company's second quarter 2000 net income and earnings per share were $6.8 million and $0.81 per share, respectively, exclusive of the UltraCraft sale. -6- 9 ALSIDE. Alside's net sales increased 16.8% to $139.2 million for the quarter ended June 30, 2001 as compared to $119.1 million for the same period in 2000 due primarily to higher sales volume across most product lines. Unit sales of vinyl siding increased 9.2% in the second quarter of 2001 while the Company believes the vinyl siding industry as a whole decreased 3.5%. Exclusive of the incremental window sales from the acquisition of the Alpine window operations in October 2000, unit sales of vinyl windows increased 47.6% in the second quarter of 2001 as compared to the 2000 period as Alside continues to increase sales by leveraging improvements in efficiency and customer service resulting from the restructuring of its window operations. Gross profit as a percentage of sales remained constant at 31.1%. Selling, general and administrative expense increased to $27.0 million for the second quarter of 2001 compared to $24.4 million for the 2000 period due primarily to higher personnel costs and higher lease expense due to the addition of six Supply Centers during the past 15 months. The 2001 period includes the operations of these new locations for the full quarter. Income from operations increased 29.7% to $16.4 million for the 2001 period as compared to $12.6 million for the same period in 2000 due to higher sales volume. AMERCABLE. AmerCable's net sales increased 28.2% to $19.5 million for the second quarter of 2001 as compared with $15.3 million for the same period in 2000 due primarily to higher sales volume across all product lines, particularly marine and telecommunications. Gross profit as a percentage of sales increased to 20.1% for the 2001 period as compared to 17.6% for the 2000 period due to higher sales volume which resulted in improved fixed cost absorption. Selling, general and administrative expenses increased to $1.7 million for the second quarter of 2001 as compared to $1.5 million for the same period in 2000 due to higher personnel costs which were partially offset by lower bad debt expense. Income from operations increased $1.0 million to $2.2 million for the quarter ended June 30, 2001 as compared to $1.2 million for the same period in 2000. OTHER. Net interest expense increased $130,000 or 7.5% for the second quarter of 2001 compared with the same period in 2000 due primarily to an increase in the Company's short-term borrowings incurred to finance the purchase of 1,000,000 shares of Class B Common Stock for $19.5 million in April 2001. The Company recorded interest income of $40,000 for the quarter ended June 30, 2001 as compared to $102,000 for the same period in 2000. -7- 10 Six Months Ended June 30, 2001 Compared to Six Months Ended June 30, 2000 The table below sets forth for the periods indicated certain items of the Company's financial statements by segments.
Six Months Ended June 30, ---------------------------------------------------------------------------- 2001 2000 ----------------------------------- ----------------------------------- Percentage of Percentage of Amount Total Net Sales Amount Total Net Sales --------------- --------------- --------------- --------------- Total Company: Net sales - Alside(1) $ 229,145 85.7% $ 206,276 86.7% Net sales - AmerCable(1) 38,211 14.3 31,524 13.3 --------------- --------------- --------------- --------------- Total net sales 267,356 100.0 237,800 100.0 Gross profit 74,463 27.9 68,326 28.8 Selling, general and administrative expense(2) 58,399 21.9 51,301 21.6 --------------- --------------- --------------- --------------- Income from operations $ 16,064 6.0% $ 17,025 7.2% =============== =============== =============== =============== Alside: Net sales(1) $ 229,145 100.0% $ 206,276 100.0% Gross profit 67,064 29.3 62,543 30.4 Selling, general and administrative expense 51,848 22.7 46,173 22.4 --------------- --------------- --------------- --------------- Income from operations $ 15,216 6.6% $ 16,370 8.0% =============== =============== =============== =============== AmerCable: Net sales(1) $ 38,211 100.0% $ 31,524 100.0% Gross profit 7,399 19.4 5,783 18.3 Selling, general and administrative expense 3,605 9.5 3,083 9.7 --------------- --------------- --------------- --------------- Income from operations $ 3,794 9.9% $ 2,700 8.6% =============== =============== =============== ===============
(1) Certain prior period amounts have been reclassified to conform with the current period presentation. (2) Consolidated selling, general and administrative expenses include corporate expenses of $2,946,000 and $2,045,000 for the six-month periods ended June 30, 2001 and 2000, respectively. Overview The Company's net sales increased 12.4% to $267.4 million for the six months ended June 30, 2001 as compared to $237.8 million for the same period in 2000 due to higher sales volume at both Alside and AmerCable. Income from operations decreased 5.6% to $16.1 million for the six months ended June 30, 2001 as compared to $17.0 million for the 2000 period. The Company's net income decreased to $6.3 million or $0.83 per share for the six months ended June 30, 2001 as compared to $13.5 million or $1.63 per share for the same period in 2000 due to the $2.4 million loss on the write-down of the Company's investment in Amercord in the first quarter of 2001 and the sale of the Company's UltraCraft operation in June 2000, which resulted in a pre-tax gain of $8.3 million. Exclusive of the write-down of the Company's Amercord investment in the first quarter of 2001 and the gain on the sale of UltraCraft in June 2000, net income and earnings per share were $7.8 million or $1.02 per share and $8.4 million or $1.01 per share, respectively, for the six months ended June 30, 2001 and 2000. ALSIDE. Alside's net sales increased 11.1% to $229.1 million for the six months ended June 30, 2001 as compared to $206.3 million for the same period in 2000 due primarily to increased vinyl window sales. Unit sales of vinyl siding increased 3.9%. The Company believes that the vinyl siding industry as a whole decreased 10.9% in the six months ended June 30, 2001. Gross profit as a percentage of net sales decreased to 29.3% for the six -8- 11 months ended June 30, 2001 as compared to 30.4% for the same period in 2000 due to the shift in product mix to lower margin vinyl windows, the loss of profits generated by the UltraCraft cabinet operation and the losses from the start-up of the Northwest window plant, which were incurred primarily during the first quarter of 2001. Selling, general and administrative expense increased to $51.8 million for the six-month period ended June 30, 2001 as compared to $46.2 million for the 2000 period due primarily to higher personnel costs and lease expense including costs associated with the expansion of Alside's Supply Center network. Since January 1, 2000, Alside has opened 10 new locations bringing the total number of locations to 80. In addition, selling, general and administrative expense for 2000 included an $850,000 gain on the demutualization of an insurance company. Income from operations decreased to $15.2 million for the six months ended June 30, 2001 as compared to $16.4 million for the same period in 2000. The 2000 period included operating income of $1.3 million generated by the Company's UltraCraft cabinet operation which was sold in June 2000 and the 2001 period included $1.1 million in losses from the Company's Northwest window plant which was purchased from Alpine Industries in October 2000. AMERCABLE. AmerCable's net sales increased 21.2% to $38.2 million for the six months ended June 30, 2001 as compared to $31.5 million in the 2000 period due primarily to higher sales volume of marine and telecommunications products. AmerCable does not anticipate any significant sales of power cable for the telecommunications industry for the second half of 2001 as infrastructure expenditures in telecommunications have declined dramatically. Gross profit increased 27.9% to $7.4 million for the six months ended June 30, 2001 as compared to $5.8 million for the same period in 2000 due to higher sales volume and improved fixed cost absorption. Selling, general and administrative expenses increased to $3.6 million due primarily to higher personnel costs and higher marketing expenditures. Income from operations increased $1.1 million to $3.8 million for the six months ended 2001 as compared to $2.7 million for the same period in 2000 as higher sales volume and improved fixed cost absorption was partially offset by higher selling, general and administrative expense. OTHER. Net interest expense remained constant at $3.4 million for the six months ended June 30, 2001 and 2000 as higher interest expense during the second quarter of 2001 due to higher short-term borrowings was offset by increased interest income in the first quarter of 2001. The Company recorded interest income of $216,000 for the six months ended June 30, 2001. The Company wrote off its $2.4 million investment in Amercord Inc. during the first quarter of 2001 due to the deterioration of Amercord's operating results and financial position during the quarter. The Company believes that it will not recover its investment in Amercord without a restructuring of Amercord. The Company's investment in Amercord consists of a $1.5 million subordinated note and 9.9% of Amercord's common stock. LIQUIDITY AND CAPITAL RESOURCES Borrowing under the Company's existing credit facility were $8.4 million at June 30, 2001, excluding outstanding letters of credit totaling $2.1 million securing various insurance letters of credit. At June 30, 2001, the Company had available borrowing capacity of approximately $39.5 million. At June 30, 2001, the Company had cash and cash equivalents of $3.4 million. Net cash provided by operations was $4.4 million in the six months ended June 30, 2001 compared with $3.1 million in the same period in 2000. The increase in cash provided by operations for the 2001 period was due primarily to lower working capital requirements. Capital expenditures totaled $9.8 million for the six months ended June 30, 2001 compared with $6.9 million during the same period in 2000. Alside's expenditures in the 2001 period were incurred primarily to increase fence and window capacity and for a new financial and ERP system which will be implemented over a two-year period at an estimated cost of $10.3 million. Capital expenditures on the new ERP system were $2.6 million for the six months ended June 30, 2001. AmerCable's expenditures were incurred primarily to expand manufacturing capacity. The Company has guaranteed a $3.0 million note secured by Amercord's real property. Should the guarantee be exercised by Amercord's lender, the Company and Ivaco, Inc. have the option to assume the loan. Ivaco, Inc. has indemnified the Company for 50% of any loss under the guarantee up to $1.5 million. The Company believes that it is adequately secured under its guarantee of the $3.0 million Amercord note such that no losses are anticipated with respect to this guarantee. -9- 12 On April 29, 2001, the Company repurchased 1,000,000 shares of its Class B Common Stock from Prudential Insurance Company of America and its wholly owned subsidiary, PCG Finance Company II, LLC, at $19.50 per share, or $19.5 million in the aggregate. The share purchase was financed through available cash and borrowings under the Company's $50,000,000 credit facility. Following the purchase, Prudential and PCG converted the remaining 550,000 shares of Class B Common Stock into 550,000 shares of common stock. The Company has retired all 1,550,000 previously authorized shares of Class B Common Stock. The Company believes the future cash flows from operations and its borrowing capacity under its existing credit agreement will be sufficient to satisfy its obligations to pay principal and interest on its outstanding debt, maintain current operations, provide sufficient capital for presently anticipated capital expenditures and fund its stock repurchase program. However, there can be no assurances that the cash so generated by the Company will be sufficient for these purposes. EFFECTS OF INFLATION The Company believes that the effects of inflation have not been material to its operating results for each of the past three years. Alside's principal raw material, vinyl resin, has been subject to rapid price changes, including 1999 and 2000. Alside has historically been able to pass on price increases to its customers. The results of operations for individual quarters can and have been negatively impacted by a delay between the time of vinyl resin price increases and price increases in Alside's products. However, over longer periods of time, the impact of the price increases in vinyl resin has historically not been material. No assurances can be given that Alside will be able to pass on any price increases in the future. Alside does not presently expect any significant change in the price of vinyl resin for 2001. CERTAIN FORWARD-LOOKING STATEMENTS This report contains "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on the beliefs of, and estimates and assumptions made by and information currently available to, the Company's management. When used in this report, the words "anticipate," "believe," "estimate," "expect," "intend," and similar words, as they relate to the Company or the Company's management, identify forward-looking statements. These statements reflect the current views of the Company's management regarding the operations and results of operations of the Company as well as its customers and suppliers, including as a result of the availability of consumer credit, interest rates, employment trends, changes in levels of consumer confidence, changes in consumer preferences, national and regional trends in new housing starts, raw material costs, weather conditions, pricing pressures, shifts in market demand and general economic conditions. These statements are subject to certain risks and uncertainties. Certain factors that might cause a difference are discussed in more detail in the Company's Annual Report on Form 10-K for the year ended December 31, 2000. Should one or more of these risks or uncertainties occur, or should management's assumptions or estimates prove incorrect, actual results and events may vary materially from those discussed in the forward-looking statements. Item 3. Quantitative and Qualitative Disclosures About Market Risk The Company is subject to commodity price risk, interest rate risk and foreign currency exchange rate risk. The Company has experienced no significant changes in market risk during the quarter or six months ended June 30, 2001. The Company's market risk is described in more detail in the Company's Annual Report on Form 10-K for the year ended December 31, 2000. -10- 13 Part II. Other Information Item 4. Submission of Matters to a Vote of Security Holders. The 2001 Annual Meeting of Stockholders of the Company was held on May 24, 2001. The stockholders voted upon and approved the amendment of the Company's certificate of incorporation to provide that all members of the Company's Board of Directors be elected each year.
For Against Abstain --------- ------- ------- 6,234,783 2,200 1,950
The following nominees for director were elected to serve as directors until the 2002 Annual Meeting of Stockholders:
Withhold For Authority --------- --------- William W. Winspear 5,248,773 101,000 Michael Caporale, Jr. 5,247,705 102,068 Richard I. Galland 5,248,873 100,900 John T. Gray 5,248,873 100,900 James F. Leary 5,248,873 100,900 Alan B. Lerner 5,248,873 100,900 A. A. Meitz 5,248,873 100,900
The stockholders also voted upon and approved the amendment of the Associated Materials Stock Incentive Plan to increase the number of shares authorized to be issued under the plan.
Broker For Against Abstain Non-vote --------- ------- ------- -------- 4,354,064 305,069 29,800 660,840
The stockholders also voted upon and approved the amendment of the Associated Materials Employee Stock Purchase Plan to increase the number of shares authorized to be issued under the plan.
Broker For Against Abstain Non-vote --------- ------- ------- -------- 4,649,693 10,340 28,900 660,840
The stockholders also voted upon and ratified the appointment of Ernst & Young LLP as the independent auditors of the Company for the fiscal year 2001.
For Against Abstain --------- ------- ------- 5,340,497 7,153 2,123
-11- 14 Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits 4.1 - Restated Certificate of Incorporation, as amended, of Associated Materials Incorporated. 4.2 - Restated Bylaws of Associated Materials Incorporated. 10.1 - Amended and Restated 1994 Stock Incentive Plan. 10.2 - Associated Materials Incorporated Employee Stock Purchase Plan. (b) Reports on Form 8-K The Company filed a current report on Form 8-K dated April 29, 2001, under Item 5 - Other Events. The report related to the Company's repurchase of 1,000,000 shares of Class B Common Stock from The Prudential Insurance Company of America and its wholly owned subsidiary, PCG Finance Company II, LLC. The purchase price was $19.50 per Class B share, or $19,500,000 in the aggregate. -12- 15 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. ASSOCIATED MATERIALS INCORPORATED --------------------------------- (Registrant) Date: August 13, 2001 By: \s\ Robert L. Winspear ------------------------------------------ Robert L. Winspear Vice President and Chief Financial Officer Date: August 13, 2001 \s\ Robert L. Winspear -------------------------------------------- Robert L. Winspear Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) -13- 16 INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION - ------- ----------- 4.1 - Restated Certificate of Incorporation, as amended, of Associated Materials Incorporated. 4.2 - Restated Bylaws of Associated Materials Incorporated. 10.1 - Amended and Restated 1994 Stock Incentive Plan. 10.2 - Associated Materials Incorporated Employee Stock Purchase Plan.
-14- EX-4.1 3 d89759ex4-1.txt RESTATED CERTIFICATE OF INCORPORATION 1 EXHIBIT 4.1 RESTATED CERTIFICATE OF INCORPORATION OF ASSOCIATED MATERIALS INCORPORATED Associated Materials Incorporated, a corporation organized and existing under the laws of the State of Delaware, hereby certifies as follows: 1. The name of the Corporation is Associated Materials Incorporated. 2. The original Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on April 4, 1983. 3. This Restated Certificate of Incorporation amends, restates and integrates the provisions of the Certificate of Incorporation, and all previously filed amendments and restatements thereto, and has been duly adopted pursuant to Sections 228, 242 and 245 of the General Corporation Law of the State of Delaware. 4. The text of the Certificate of Incorporation, and all previously filed amendments and restatements thereto, is hereby amended and restated to read as follows: ARTICLE I NAME The name of the Corporation is: Associated Materials Incorporated ARTICLE II DELAWARE OFFICE AND REGISTERED AGENT The address of the Corporation's registered office in the State of Delaware is 1209 Orange Street in the City of Wilmington, County of New Castle 19801. The name of its registered agent at such address is The Corporation Trust Company. ARTICLE III PURPOSE The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware (the "DGCL"). 2 ARTICLE IV CAPITALIZATION 4.1. Number of Shares. The total number of shares of all classes of stock which the Corporation shall have authority to issue is 17,800,000 consisting of (i) 100,000 shares of Preferred Stock, $.01 par value per share issuable in series ("Preferred Stock"), (ii) 15,000,000 shares of Common Stock, $.0025 par value per share ("Common Stock"), and (iii) 2,700,000 shares of Class B Common Stock, $.0025 par value per share ("Class B Common Stock"). 4.2. Designations. The following are the powers, designations, preferences and rights, and the qualifications, limitations or restrictions thereof of each class of stock of the Corporation: A. Preferred Stock: The Preferred Stock may be issued in one or more series. The Board of Directors is hereby authorized to issue the shares of Preferred Stock in such series and to fix from time to time before issuance the number of shares to be included in any series and the designation, relative powers, preferences and rights and qualifications, limitations or restrictions of all shares of such series. The authority of the Board of Directors with respect to each series shall include, without limiting the generality of the foregoing, the determination of any or all of the following: 1. the number of shares of any series and the designation to distinguish the shares of such series from the shares of all other series; 2. the voting powers, if any, and whether such voting powers are full or limited, in such series; 3. the redemption provisions, if any, applicable to such series, including the redemption price or prices to be paid; 4. whether dividends, if any, shall be cumulative or noncumulative, the dividend rate of such series, and the dates and preferences of dividends on such series; 5. the rights of such series upon the voluntary or involuntary dissolution of, or upon any distribution of the assets of, the Corporation; 6. the provisions, if any, pursuant to which the shares of such series are convertible into, or exchangeable for, shares of any other class or classes or of any other series of the same or any other class or classes of stock, or any other security, of the Corporation or any other corporation, and price or prices or the rates of exchange applicable thereto; 7. the right, if any, to subscribe for or to purchase any securities of the Corporation or any other corporation; 8. the provisions, if any, of a sinking fund applicable to such series; and 9. any other relative, participating, optional or other special powers, preferences, rights, qualifications, limitations or restrictions thereof; all as shall be determined from time to time by the Board of Directors and shall be stated in a resolution or resolutions providing for the issuance of such Preferred Stock (a "Preferred Stock Designation"). 3 Holders of Preferred Stock shall not be entitled to receive notice of any meeting of stockholders at which they are not entitled to vote. B. Common Stock and Class B Common Stock: 1. Subject to Preferred Stock. The Common Stock and Class B Common Stock shall be subject to the express terms of the Preferred Stock and any series thereof. 2. Identical Rights of Common Stock and Class B Common Stock. Except as otherwise expressly provided in this Restated Certificate of Incorporation, all shares of Common Stock and Class B Common Stock shall be identical and shall entitle the holders thereof to the same rights and privileges. 3. Dividends. When and as dividends are declared, whether payable in cash, in property or in securities of the Corporation, the holders of the Common Stock and Class B Common Stock shall be entitled to share equally, share for share, in such dividends. However, if dividends are declared which are payable in shares of Common Stock or Class B Common Stock, dividends shall be declared which are payable at the same rate on both classes of stock and such dividends shall be payable only in shares of Common Stock to holders of the Common Stock and shall be payable only in shares of Class B Common Stock to holders of the Class B Common Stock. 4. Liquidation. Upon any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, after the payment in full of all amounts to which holders of Preferred Stock shall be entitled, the remaining assets of the Corporation to be distributed to the holders of the capital stock of the Corporation shall be distributed ratably among the holders of the shares of Common Stock and Class B Common Stock. 5. Subdivision and Combination. If the Corporation shall in any manner subdivide (by stock split, stock dividend or otherwise) or combine (by reverse stock split or otherwise) the outstanding shares of either the Common Stock or the Class B Common Stock, the outstanding shares of the other shall be proportionately subdivided or combined. 6. Conversion. (a) General. Subject to and upon compliance with the provisions of this Section 4.2(B)(6), each holder of record of the Class B Common Stock shall be entitled at any time and from time to time to convert any or all of the shares of Class B Common Stock held by such holder into the same number of shares of Common Stock; provided, however, that no holder of the Class B Common Stock shall be entitled to convert any share or shares of Class B Common Stock unless such holder represents in writing to the Corporation that, as a result of such conversion, such holder and its affiliates, directly or indirectly, would not own, control or have power to vote a greater quantity of securities of any kind issued by the Corporation than such holder and its affiliates are permitted to own, control or have power to vote under any law or under any regulation, rule or other requirement of any governmental authority at the time applicable to such holder and its affiliates. (b) Conversion Procedures. Each conversion of shares of Class B Common Stock into shares of Common Stock shall be effected by (and the Corporation shall be obligated to issue such shares of Common Stock upon) the surrender of the certificate or certificates representing such shares of Class B Common Stock to be converted at the principal office of the Corporation (or at such other office or agency of the Corporation as the Corporation may designate by notice in writing to the holders of the Class B Common Stock or, if such conversion 4 shall be in connection with an underwritten public offering of shares of Common Stock, at the location at which the Corporation shall agree to deliver the shares of Common Stock subject to such offering) at any time during its usual business hours, together with written notice by the holder of such Class B Common Stock (i) stating that such holder desires to convert the shares, or a stated number of the shares, of Class B Common Stock represented by such certificate or certificates into shares of Common Stock and (ii) representing that upon such conversion, such holder and its affiliates shall not, directly or indirectly, own, control or have power to vote a greater quantity of securities of any kind issued by the Corporation than such holder and its affiliates are permitted to own, control or have power to vote under any applicable law, regulation, rule or other governmental requirement. Such notice shall also state the name or names (with addresses) and denominations in which the certificate or certificates for shares of Common Stock are to be issued and shall include instructions for delivery thereof. In case such notice shall specify that the new certificates to be issued are to be issued in a name or names other than that of the holder of Class B Common Stock, such notice shall be accompanied by payment of all transfer taxes, if any. Promptly after such surrender and the receipt of such written notice and payment of transfer taxes, if applicable, the Corporation shall issue and deliver in accordance with such instructions the certificate or certificates for the Common Stock issuable upon such conversion, and the Corporation shall deliver to the converting holder a certificate representing any shares of Class B Common Stock which were represented by the certificate or certificates surrendered to the Corporation in connection with such conversion but which were not converted. Such conversion to the extent permitted by law shall be deemed to have been effected as of the close of business on the date on which such certificate or certificates have been surrendered, such notice has been received and such transfer taxes paid, if applicable, and at such time the rights of the holder of such Class B Common Stock (or specified portion thereof) as such holder shall cease and the person or persons in whose name or names the certificate or certificates for shares of Common Stock are to be issued upon such conversion shall be deemed to have become the holder or holders of record of the shares of Common Stock represented thereby. (c) Reservation of Shares, Validity, Etc. The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock or its treasury shares, for the purpose of issuance upon the conversion of the Class B Common Stock as provided in this Section 4.2(B)(6) such number of shares of Common Stock as are then issuable upon the conversion of all outstanding shares of Class B Common Stock (assuming that all such shares of Class B Common Stock are held by persons entitled to convert such shares fully into shares of Common Stock). The Corporation covenants that all shares of Common Stock which are issuable upon conversion shall, when issued, be duly and validly issued, fully paid and nonassessable and free from all taxes, liens and charges. The Corporation shall take all such action as may be necessary to assure that all such shares of Common Stock may be so issued without violation of any law or any regulation, rule or other requirement of any governmental authority applicable to the Corporation or any requirement of any domestic securities exchange upon which shares of Common Stock may be listed; provided, however, that the Corporation shall be entitled to rely on the representations of the holders of the Class B Common Stock required under subsections (a) or (b) of this Section 4.2(B)(6). The Corporation shall not take any action which would affect the number of shares of Common Stock outstanding or issuable for any purposes unless immediately following such action the Corporation would have authorized but unissued shares of Common Stock or treasury shares, not then reserved or required to be reserved for any purpose other than the purpose of issue upon conversion of the Class B Common Stock, sufficient to meet the reservation requirements of the first sentence of this subsection (c). (d) Registration and Listing. If any shares of Common Stock required to be reserved for purposes of conversion hereunder require, before such shares may be issued upon conversion, registration with or approval of any governmental authority under any federal or state law (other than any registration under the Securities Act of 1933, as then in effect, or any similar 5 federal statute then in force, or any state securities law, required by reason of any transfer involved in such conversion), or listing on any domestic securities exchange, the Corporation shall, at its expense and as expeditiously as possible, use its best efforts to cause such shares to be duly registered or approved or listed, as the case may be. (e) Charges. The issuance of certificates for shares of Common Stock upon conversion of shares of Class B Common Stock shall be made without charge to the holders of such shares of Class B Common Stock for any issue tax in respect thereof or other cost incurred by the Corporation in connection with such conversion and the related issue of shares of Common Stock; provided, however, that the Corporation shall not be required to pay any tax which may be payable in respect of any transfer involved in the issue and delivery of any certificate in a name other than that of the holder of the Class B Common Stock converted. (f) Converted or Otherwise Acquired Shares To Be Retired. Any shares of Class B Common Stock which are converted into shares of Common Stock pursuant to this Section 4.2(B)(6) or otherwise acquired by the Company in any manner whatsoever shall be permanently retired promptly on the acquisition thereof and shall not under any circumstances be reissued, and the Corporation shall from time to time take such appropriate action as may be necessary to reduce the authorized number of shares of Class B Common Stock accordingly. 7. Voting Rights. (a) General. Except as otherwise provided by law or this Article IV, the holders of the Common Stock shall be entitled to vote as a class for the election or removal of all Directors of the Corporation and on all other matters to be voted on by the stockholders of the Corporation and the holders of the Class B Common Stock shall have no right to vote on matters to be voted on by the stockholders of the Corporation, and the Class B Common Stock shall not be included in determining the number of shares voting or entitled to vote on such matters. (b) Special Voting Rights. The holders of the Class B Common Stock shall be entitled to vote on, and shall be included in determining the number of shares of Common Stock and Class B Common Stock voting or entitled to vote on, the following matters: (i) any amendment to this Restated Certificate of Incorporation, (ii) any sale, lease, transfer or other disposition of all or substantially all of the property and assets of the Corporation on which the holders of the Common Stock have the right to vote, (iii) any merger or consolidation of the Corporation with or into any other corporation on which the holders of the Common Stock have the right to vote, and (iv) any liquidation, dissolution or winding up of the Corporation on which the holders of the Common Stock have the right to vote. (c) Meeting Procedures. At every meeting of the holders of the Common Stock, such holders shall vote together as a class. At every meeting of the holders of the Common Stock and Class B Common Stock, at which the holders of the Class B Common Stock are entitled to vote on any matter, the holders of the Class B Common Stock and the holders of the Common Stock shall vote thereon together as a single class; provided, however, that the holders of the Class B Common Stock shall be entitled to vote separately as a class on any amendment to the provisions pertaining to Class B Common Stock set forth in this Article IV.B. (d) One Vote Per Share. On all matters to be voted on by the holders of Common Stock or the Class B Common Stock, the holders of such class shall be entitled to one vote for each share thereof held of record. 6 ARTICLE V POWERS OF BOARD OF DIRECTORS 5.1. Expanded Powers of the Board. In furtherance of, and not in limitation of, the powers conferred by law, the Board of Directors is expressly authorized and empowered: A. to adopt, amend or repeal the Bylaws of the Corporation; provided, however, that the Bylaws adopted by the Board of Directors under the powers hereby conferred may be amended or repealed by the Board of Directors or by the stockholders entitled to vote with respect thereto; and B. from time to time to determine whether and to what extent, and at what times and places, and under what conditions and regulations, the accounts and books of the Corporation, or any of them, shall be open to inspection of stockholders; and, except as so determined or as so provided in any Preferred Stock Designation, no stockholder shall have any right to inspect any account, book or document of the Corporation other than such rights as may be conferred by applicable law. 5.2. Powers Specified in Bylaws. The Corporation may in its Bylaws confer powers upon the Board of Directors in addition to the foregoing and in addition to the powers and authorities expressly conferred upon the Board of Directors by applicable law. ARTICLE VI NO STOCKHOLDER ACTION BY WRITTEN CONSENT Subject to the rights of the holders of any series of Preferred Stock as set forth in a Preferred Stock Designation to elect additional Directors under specific circumstances, upon the closing of the Corporation's first public offering of Common Stock under a registration statement filed with the Securities and Exchange Commission, any action required or permitted to be taken by the stockholders of the Corporation must be effected at a duly called annual or special meeting of stockholders of the Corporation and may not be effected by any consent in writing of such stockholders. ARTICLE VII ELECTION OF DIRECTORS 7.1. Number, Election and Terms of Directors. Subject to the rights of the holders of Preferred Stock to elect additional Directors under specific circumstances, the number of the Directors of the Corporation shall be fixed from time to time by or pursuant to the Bylaws of the Corporation. The Directors, other than those who may be elected by the holders of Preferred Stock, shall be classified with respect to the time for which they severally hold office into three classes, as nearly their equal in number as possible, as shall be provided in the manner specified in the Bylaws of the Corporation. At each annual meeting of the stockholders of the Corporation, the successors of the class of Directors whose term expires at that meeting shall be elected by plurality vote of all votes cast at such meeting to hold office for a term expiring at the annual meeting of stockholders held in the third year following the year of their election. 7.2. Removal of Directors. Until such time as The Prudential Insurance Company of America ("Prudential") and its Affiliates (as defined) are the record holders of shares of Common Stock and/or Class B Common Stock representing less than 5% of the then issued and outstanding Common Stock, on a Fully-Diluted Basis (as defined) that, when acquired by Prudential and/or its Affiliates, had not been 7 registered pursuant to the Securities Act of 1933, as amended, any Director or the entire Board of Directors may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of Directors and the holders of 25% or more of the outstanding Common Stock shall have the right to call a special meeting of stockholders solely for the purpose of removing any Director and filling any vacancy created thereby. Notwithstanding Article VI hereof, the removal of a director pursuant to this Section 7.2 may be effected by the written consent of stockholders. 7.3. Stockholder Nomination of Director Candidates and Introduction of Business. Advance notice of stockholder nominations for the election of Directors and advance notice of business to be brought by stockholders before an annual meeting shall be given in the manner provided in the Bylaws of the Corporation. 7.4. Newly Created Directorships and Vacancies. Except as otherwise provided for or fixed by or pursuant to the provisions of Article IV of this Restated Certificate of Incorporation relating to the rights of the holders of Preferred Stock to elect Directors under specified circumstances, newly created directorships resulting from any increase in the number of Directors and any vacancies on the Board of Directors resulting from death, resignation, disqualification, removal or other cause shall be filled only by the affirmative vote of a majority of the remaining Directors then in office, even though less than a quorum of the Board of Directors. Any Director elected in accordance with the preceding sentence shall hold office for the remainder of the full term of the class of Directors in which the new directorship was created or the vacancy occurred and until such Director's successor shall have been elected and qualified. Notwithstanding the foregoing provisions of this Section 7.4, until such time as Prudential and its Affiliates are the record holders of shares of Common Stock and/or Class B Common Stock representing less than 5% of the then issued and outstanding shares of Common Stock, on a Fully-Diluted Basis that, when acquired by Prudential and/or its Affiliates, had not been registered pursuant to the Securities Act of 1933, as amended, at any meeting of stockholders at which action is taken resulting in the removal of a Director, the vacancy on the Board of Directors resulting from such removal may be filled by the holders of a majority of the shares then entitled to vote at an election of Directors and, if so filled, such Director shall hold office for the remainder of the full term of the class of Directors in which the vacancy occurred and until such Director's successor shall have been elected and qualified. Notwithstanding Article VI hereof, any action permitted to be taken at a meeting pursuant to the preceding sentence of this Section 7.4 may be effected by the written consent of stockholders. 7.5. Decrease in Number of Directors. No decrease in the number of Directors constituting the Board of Directors shall shorten the term of an incumbent Director. 7.6. No Requirement of Written Ballot. The election of the Directors may be conducted in any form adopted by the Board of Directors, and need not be by written ballot. In the event, however, that a majority of the stockholders vote to require written ballots, written ballots shall be used. 7.7. Certain Defined Terms. As used in this Article VII, (i) the term "Affiliate" shall mean a person that directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such person; (ii) the term "control" shall mean the power to cause the election of a majority of the members of the board of directors or other governing body of any entity; and (iii) the term "Fully-Diluted Basis" shall mean after giving effect to the exercise, conversion and exchange of all securities or other rights then exercisable or convertible into or exchangeable for Common Stock (including, without limitation, any subscriptions, options, warrants, conversions or other rights pursuant to any agreements, arrangements or commitments of any kind obligating the Corporation to issue or sell any shares of Common Stock or any securities exercisable or convertible into or exchangeable for Common Stock). 8 ARTICLE VIII INDEMNIFICATION Each person who is or was a Director or officer of the Corporation, or each such person who is or was serving at the request of the Board of Directors or an officer of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise (including the heirs, executors, administrators or estate of such person), shall be indemnified by the Corporation to the full extent permitted from time to time by the DGCL as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than said law permitted the Corporation to provide prior to such amendment) or any other applicable laws as presently or hereafter in effect. Without limiting the generality or the effect of the foregoing, the Corporation may enter into one or more agreements with any person which provide for indemnification greater or different than that provided in this Article VIII. Any amendment or repeal of this Article VIII shall not adversely affect any right or protection existing hereunder immediately prior to such amendment or repeal. ARTICLE IX NO MONETARY LIABILITY OF DIRECTORS TO STOCKHOLDERS To the full extent permitted by the DGCL or any other applicable laws presently or hereafter in effect, no Director of the Corporation shall be personally liable to the Corporation or its stockholders for or with respect to any acts or omissions in the performance of his or her duties as a Director of the Corporation. Any repeal or modification of this Article Ninth shall not adversely affect any right or protection of a Director of the Corporation existing immediately prior to such repeal or modification. ARTICLE X AMENDMENT The Corporation reserves the right at any time and from time to time to amend, alter, change or repeal any provision contained in this Restated Certificate of Incorporation or a Preferred Stock Designation, and any other provisions authorized by the laws of the State of Delaware at the time in force may be added or inserted, in the manner now or hereafter prescribed herein or by applicable law, and all rights, preferences and privileges of whatsoever nature conferred upon stockholders, Directors or any other persons whomsoever by and pursuant to this Restated Certificate of Incorporation in its present form or as hereafter amended are granted subject to the right reserved in this Article X; provided, however, that any amendment or repeal of Article VIII or Article IX of this Restated Certificate of Incorporation shall not adversely affect any right or protection existing hereunder immediately prior to such amendment or repeal, and provided further that no Preferred Stock Designation shall be amended after the issuance of any shares of the series of Preferred Stock created thereby, except in accordance with the terms of such Preferred Stock Designation and the requirements of applicable law. 5. In lieu of a vote of the stockholders, written consents to this Restated Certificate of Incorporation have been signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted, in accordance with the provisions of Sections 228, 242 and 245 of the DGCL. 9 IN WITNESS WHEREOF, the said ASSOCIATED MATERIALS INCORPORATED has caused this certificate to be signed by William W. Winspear, its President, under its corporate seal attested by Robert L. Winspear, its Secretary, this 12th day of October, 1994. ASSOCIATED MATERIALS INCORPORATED /s/ William W. Winspear --------------------------------- William W. Winspear, President /s/ Robert L. Winspear - ------------------------------------ Robert L. Winspear, Secretary 10 CERTIFICATE OF RETIREMENT OF STOCK OF ASSOCIATED MATERIALS INCORPORATED Associated Materials Incorporated, a corporation organized and existing under the General Corporation Law of the State of Delaware (the "Corporation"), DOES HEREBY CERTIFY: FIRST: That the Board of Directors of the Corporation duly adopted a resolution which identified shares of the capital stock of the Corporation, which to the extent hereinafter set forth, had the status of retired shares, and which retired shares had capital applied in connection with their conversion. SECOND: The shares of capital stock of the Corporation which are retired are identified as being 1,150,000 shares of Class B Common Stock, par value of $.0025 per share ("Class B Common Stock"). THIRD: That the Restated Certificate of Incorporation of the corporation prohibits the reissuance of the shares of Class B Common Stock when so retired and, pursuant to the provisions of Section 243 of the General Corporation Law of the State of Delaware, upon the effective date of the filing of this Certificate, the Restated Certificate of Incorporation of the Corporation shall be amended so as to effect a reduction in the authorized number of shares of the Class B Common Stock to the extent of 1,150,000 shares, being the total number of shares of Class B Common Stock retired. FOURTH: This Certificate of Retirement of Stock shall be effective upon filing with the Secretary of State of the State of Delaware. IN WITNESS WHEREOF, the Corporation has caused this Certificate to be signed by William W. Winspear, its Chairman of the Board, President and Chief Executive Officer and attested by Robert L. Winspear, its Vice President, Treasurer and Secretary, this 31st day of March, 1998. ASSOCIATED MATERIALS INCORPORATED By: /s/ William W. Winspear ------------------------------------ William W. Winspear Chairman of the Board, President and Chief Executive Officer ATTEST: By: /s/ Robert L. Winspear - ------------------------------------- Robert L. Winspear Secretary 11 CERTIFICATE OF AMENDMENT OF RESTATED CERTIFICATE OF INCORPORATION OF ASSOCIATED MATERIALS INCORPORATED Associated Materials Incorporated (the "Corporation"), a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY: FIRST: That at a meeting of the Board of Directors of the Corporation held on February 22, 2001, resolutions were duly adopted setting forth a proposed amendment to the Amended and Restated Certificate of Incorporation of the Corporation, declaring said amendment to be advisable and directing that said amendment be considered at the next annual meeting of the stockholders of the Corporation. The resolution setting forth the proposed amendment is as follows: "RESOLVED, that Section 7.1 of Article VII of the Certificate of Incorporation be amended and restated in its entirety as follows: 7.1 Number, Election and Terms of Directors. Subject to the rights of the holders of Preferred Stock to elect additional Directors under specific circumstances, the number of the Directors of the Corporation shall be fixed from time to time by or pursuant to the Bylaws of the Corporation. At each annual meeting of the stockholders of the Corporation, the Directors, other than those who may be elected by the holders of Preferred Stock, shall be elected by plurality vote of all votes cast at such meeting to hold office for a term expiring at the immediately following annual meeting of stockholders." SECOND: That an annual meeting of the stockholders of the Corporation was duly called and held on May 24, 2001, upon notice in accordance with Section 222 of the General Corporation Law of the State of Delaware, at which meeting the necessary number of shares as required by statute were voted in favor of the amendment. THIRD: That said amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, the Corporation has caused this Certificate to be signed by William W. Winspear, its Chairman, President and Chief Executive Officer and attested by Robert L. Winspear, its Vice President, Chief Financial Officer and Secretary, on this 24th day of May, 2001. ASSOCIATED MATERIALS INCORPORATED By: /s/ William W. Winspear -------------------------------------- William W. Winspear, Chairman, President and Chief Executive Officer Attest: By: /s/ Robert L. Winspear ------------------------------------- Robert L. Winspear, Vice President, Chief Financial Officer and Secretary 12 CERTIFICATE OF RETIREMENT OF STOCK OF ASSOCIATED MATERIALS INCORPORATED Associated Materials Incorporated, a corporation organized and existing under the General Corporation Law of the State of Delaware (the "Corporation"), DOES HEREBY CERTIFY: FIRST: That the Board of Directors of the Corporation duly adopted a resolution which identified 1,550,000 shares of the capital stock of the Corporation, which, to the extent hereinafter set forth, had the status of retired shares and of which 1,000,000 retired shares represented a reduction of capital and 550,000 retired shares had capital applied in connection with their conversion. SECOND: The shares of capital stock of the Corporation which are retired are identified as being 1,550,000 shares of Class B Common Stock, par value of $.0025 per share ("Class B Common Stock"). THIRD: That the Restated Certificate of Incorporation of the Corporation prohibits the reissuance of the shares of Class B Common Stock when so retired and, pursuant to the provisions of Section 243 of the General Corporation Law of the State of Delaware, upon the effective date of the filing of this Certificate, the Restated Certificate of Incorporation of the Corporation shall be amended so as to effect a reduction in the authorized number of shares of the Class B Common Stock to the extent of 1,550,000 shares, being the total number of shares of Class B Common Stock retired. FOURTH: This Certificate of Retirement of Stock shall be effective upon filing with the Secretary of State of the State of Delaware. IN WITNESS WHEREOF, the Corporation has caused this Certificate to be signed by William W. Winspear, its Chairman, President and Chief Executive Officer and attested by Robert L. Winspear, its Vice President, Chief Financial Officer and Secretary, this 24th day of May 2001. ASSOCIATED MATERIALS INCORPORATED By: /s/ William W. Winspear ---------------------------------------- William W. Winspear, Chairman, President and Chief Executive Officer Attest: By: /s/ Robert L. Winspear ------------------------------------- Robert L. Winspear, Vice President, Chief Financial Officer and Secretary EX-4.2 4 d89759ex4-2.txt RESTATED BYLAWS 1 EXHIBIT 4.2 RESTATED BYLAWS of ASSOCIATED MATERIALS INCORPORATED As Amended and Restated as of May 24, 2001 2 TABLE OF CONTENTS
PAGE ---- ARTICLE I OFFICES......................................................1 1.1. Registered Office and Agent......................................1 1.2. Other Offices....................................................1 ARTICLE II MEETINGS OF STOCKHOLDERS.....................................1 2.1. Annual Meeting...................................................1 2.2. Special Meeting..................................................1 2.3. Place of Meetings................................................2 2.4. Notice...........................................................2 2.5. Notice of Stockholder Business...................................2 2.6. Inspectors.......................................................3 2.7. Order of Business................................................3 2.8. Nomination of Director Candidates................................3 2.9. Substitution of Nominees.........................................4 2.10. Compliance with Procedures.......................................4 2.11. Voting List......................................................4 2.12. Quorum...........................................................5 2.13. Majority Vote; Withdrawal of Quorum..............................5 2.14. Method of Voting; Proxies........................................5 2.15. Record Date......................................................6 2.16. Chairman of Stockholders' Meetings...............................6 ARTICLE III DIRECTORS....................................................6 3.1. Management.......................................................6 3.2. Powers...........................................................6 3.3. Number, Election and Term........................................6 3.4. Newly Created Directorships and Vacancies........................7 3.5. Meetings.........................................................7 3.6. Notices..........................................................7 3.7. Quorum; Majority Vote............................................7 3.8. Procedure........................................................7 3.9. Presumption of Assent............................................8
-i- 3 3.10. Compensation.....................................................8 ARTICLE IV COMMITTEES...................................................8 4.1. Designation of Committees........................................8 4.2. Committee Powers and Authority...................................8 4.3. Committee Procedures.............................................9 ARTICLE V NOTICE.......................................................9 5.1. Method...........................................................9 5.2. Waiver...........................................................9 ARTICLE VI OFFICERS.....................................................9 6.1. Number; Titles; Term of Office...................................9 6.2. Removal.........................................................10 6.3. Vacancies.......................................................10 6.4. Authority.......................................................10 6.5. Compensation....................................................10 6.6. Chairman of the Board...........................................10 6.7. Chief Executive Officer.........................................10 6.8. President.......................................................10 6.9. Vice Presidents.................................................10 6.10. Secretary.......................................................11 6.11. Treasurer.......................................................11 6.12. General Counsel.................................................11 6.13. Appointed Officers..............................................11 ARTICLE VII INDEMNIFICATION.............................................11 7.1. Suits By Third Parties..........................................11 7.2. Suits in the Name of the Corporation............................12 7.3. Successful Defense..............................................12 7.4. Determination to Indemnify......................................12 7.5. Provisions Nonexclusive.........................................13 7.6. Insurance.......................................................13 7.7. Surviving Corporation...........................................13
-ii- 4 7.8. Continuing Indemnification......................................13 ARTICLE VIII STOCK CERTIFICATES AND STOCKHOLDERS.........................13 8.1. Certificates for Shares.........................................13 8.2. Replacement of Lost or Destroyed Certificates...................14 8.3. Transfer of Shares..............................................14 8.4. Registered Stockholders.........................................14 8.5. Regulations.....................................................14 8.6. Legends.........................................................14 ARTICLE IX MISCELLANEOUS PROVISIONS....................................14 9.1. Dividends.......................................................14 9.2. Reserves........................................................15 9.3. Books and Records...............................................15 9.4. Fiscal Year.....................................................15 9.5. Seal............................................................15 9.6. Resignation.....................................................15 9.7. Securities of Other Corporations................................15 9.8. Amendment of Bylaws.............................................15 9.9. Telephonic Meetings.............................................15 9.10. Headings........................................................16 9.11. References......................................................16
-iii- 5 RESTATED BYLAWS of ASSOCIATED MATERIALS INCORPORATED A Delaware Corporation PREAMBLE These Bylaws are subject to, and governed by, the General Corporation Law of the State of Delaware (the "DGCL") and the Restated Certificate of Incorporation of Associated Materials Incorporated (the "Corporation"). In the event of a direct conflict between the provisions of these Bylaws and the mandatory provisions of the DGCL or the provisions of the Restated Certificate of Incorporation of the Corporation (the "Restated Certificate of Incorporation"), such provisions of the DGCL or the Restated Certificate of Incorporation, as the case may be, will be controlling. ARTICLE I OFFICES 1.1. Registered Office and Agent. The registered office and registered agent of the Corporation shall be as designated from time to time by the appropriate filing by the Corporation in the office of the Secretary of State of the State of Delaware. 1.2. Other Offices. The Corporation may also have offices at such other places, both within and without the State of Delaware, as the Board of Directors in its discretion may from time to time determine or as the business of the Corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS 2.1. Annual Meeting. An annual meeting of stockholders of the Corporation shall be held each calendar year on such date and at such time as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting. At such meeting, the stockholders shall elect Directors and transact such other business as properly may be brought before the meeting. 2.2. Special Meeting. A special meeting of the stockholders may be called at any time by the Chairman of the Board, the Chief Executive Officer or a majority of the Board of Directors or as otherwise provided by the Restated Certificate of Incorporation; provided, however, that until such time as The Prudential Insurance Company of America ("Prudential") and its Affiliates (as defined) are the record holders of shares of Common Stock and/or Class B Common Stock representing less than 5% of the then issued and outstanding shares of Common 6 Stock, on a Fully-Diluted Basis (as defined) that, when acquired by Prudential and/or its Affiliates, had not been registered pursuant to the Securities Act of 1933, as amended, the holders of 25% or more of the outstanding Common Stock shall have the right to call a special meeting of stockholders solely for the purpose of removing any Director of the Corporation, filling any vacancy created thereby or amending these Bylaws. Only such business shall be transacted at a special meeting as may be stated or indicated in the notice of such meeting. For the purpose of this Section 2.2 (i) the term "Affiliate" shall mean a person that directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such person; (ii) the term "control" shall mean the power to cause the election of a majority of members of the board of directors or other governing body of any entity; and (iii) the term "Fully-Diluted Basis" shall mean after giving effect to the exercise, conversion and exchange of all securities or other rights then exercisable or convertible into or exchangeable for Common Stock (including, without limitation, any subscriptions, options, warrants, conversions or other rights pursuant to any agreements, arrangements or commitments of any kind obligating the corporation to issue or sell any shares of Common Stock or any securities exercisable or convertible into or exchangeable for Common Stock). 2.3. Place of Meetings. Any meeting of the stockholders may be held at such time and such place, either within or without the State of Delaware, as shall be designated by the Board of Directors, as designated in the notice or waiver of notice of such meeting. If no designation is made by the Board of Directors in the notice or waiver of notice, the place of the meeting shall be the principal office of the Corporation. Notwithstanding the foregoing provisions of this Section 2.3, any special meeting of stockholders that has been called by the stockholders pursuant to Section 2.2 hereof, shall be held at such time and such place as shall be designated by the stockholders in the notice to the Corporation calling such meeting. 2.4. Notice. Written notice stating the place, date, and hour of each meeting of the stockholders and the purpose or purposes for which the meeting is called, shall be given not less than 10 nor more than 60 calendar days before the date of the meeting to each stockholder entitled to vote at such meeting. Such further notice shall be given as may be required by law. Any previously scheduled meeting of the stockholders (other than a special meeting of stockholders called by the stockholders pursuant to Section 2.2 hereof) may be postponed by resolution of the Board of Directors upon public notice given prior to the date previously scheduled for such meeting of stockholders. 2.5. Notice of Stockholder Business. At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be (i) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (ii) otherwise properly brought before the meeting by or at the direction of Directors constituting a majority of the total number of Directors that the Corporation would have if there were no vacancies on the Board of Directors, or (iii) otherwise properly be requested to be brought before the meeting by a stockholder. For business to be properly requested to be brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation. To be timely, a stockholder's notice must be delivered to or mailed and received at the principal executive offices of the Corporation, not less than 80 calendar days prior to the meeting; provided, however, that in the event that the date of 2 7 the meeting is not publicly announced by the Corporation by mail, press release or otherwise more than 90 calendar days prior to the meeting, notice by the stockholder to be timely must be delivered to the Secretary of the Corporation not later than the close of business on the 10th calendar day following the day on which such announcement of the date of the meeting was communicated to stockholders. A stockholder's notice to the Secretary shall set forth as to each matter the stockholder proposes to bring before the annual meeting (a) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (b) the name and address, as they appear on the Corporation's books, of the stockholder proposing such business, (c) the class and number of shares of the Corporation which are beneficially owned by the stockholder, and (d) any material interest of the stockholder in such business. Notwithstanding anything in these Bylaws to the contrary, no business shall be conducted at an annual meeting except in accordance with the procedures set forth in this Section 2.5. The chairman of the stockholders' meeting, as specified in Section 2.16 hereof, shall, if the facts warrant, determine and declare at the meeting that business was not properly brought before the meeting and in accordance with the provisions of this Section 2.5, and if he should so determine, he shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted. 2.6. Inspectors. The Board of Directors shall appoint one or more inspectors of election, which inspector or inspectors may include individuals who serve the Corporation in other capacities, including, without limitation, as officers, employees, agents or representatives of the Corporation, to act as judges of the voting and to determine those entitled to vote at any stockholders' meeting, or any adjournment thereof, in advance of such meeting, but if the Board of Directors fails to make any such appointment or if an appointee fails to serve, the chairman of the stockholders' meeting may appoint substitute inspectors. 2.7. Order of Business. Unless otherwise determined by the Board of Directors prior to the stockholders' meeting, the chairman of the stockholders' meeting shall determine the order of business and shall have the authority in his discretion to regulate the conduct of any such meeting, including, without limitation, by imposing restrictions on the persons (other than stockholders of the Corporation or their duly appointed proxies) who may attend any such stockholders' meeting, whether any stockholder or his proxy may be excluded from any stockholders' meeting based upon any determination by the chairman of the stockholders' meeting, in his sole discretion, that any such person has unduly disrupted or is likely to disrupt the proceedings thereat, and the circumstances in which any person may make a statement or ask questions at any stockholders' meeting. 2.8. Nomination of Director Candidates. Subject to the rights of holders of Preferred Stock, if any, nominations for the election of Directors may be made by the Board of Directors or a committee appointed by the Board of Directors for such purpose or by any stockholder entitled to vote in the election of Directors generally. However, any stockholder entitled to vote in the election of Directors generally may nominate one or more persons for election as Directors at a meeting only if written notice of such stockholder's intent to make such nomination or nominations has been received by the Secretary of the Corporation not less than 50 calendar days in advance of such meeting; provided, however, that in the event that the date of the meeting was not publicly announced by the Corporation by mail, press release or otherwise more than 60 calendar days prior to the meeting, notice by the stockholder to be timely must be delivered to 3 8 the Secretary of the Corporation not later than the close of business on the 10th calendar day following the day on which such announcement of the date of the meeting was communicated to stockholders. Each such notice shall set forth: (i) the name and address of the stockholder who intends to make the nomination and of the person or persons to be nominated; (ii) a representation that the stockholder is a holder of record of stock of the Corporation entitled to vote for the election of Directors on the date of such notice and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; (iii) a description of all arrangements or understandings between the stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the stockholder; (iv) such other information regarding each nominee proposed by such stockholder as would be required to be included in a proxy statement filed pursuant to the applicable rules of the Securities and Exchange Commission, had the nominee been nominated, or intended to be nominated, by the Board of Directors; and (v) the signed consent of each nominee to serve as a Director of the Corporation if so elected. Notwithstanding anything in these Bylaws to the contrary, in the event that the number of Directors to be elected to the Board of Directors of the Corporation is increased and there is no public announcement (i.e., disclosure in a press release or in a document publicly filed with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(a) of the Securities Exchange Act of 1934, as amended) naming all of the nominees for Director or specifying the size of the increased Board of Directors made by the Corporation at least 50 calendar days prior to the first anniversary of the preceding year's annual meeting, a stockholder's notice required by this Section 2.8 shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the 10th calendar day following the day on which such public announcement is first made by the Corporation. 2.9. Substitution of Nominees. In the event that a person is validly designated as a nominee in accordance with Section 2.8 hereof and shall thereafter become unable or unwilling to stand for election to the Board of Directors, the Board of Directors or the stockholder who proposed such nominee, as the case may be, may designate a substitute nominee upon delivery, not fewer than five calendar days prior to the date of the meeting for the election of such nominee of a written notice to the Secretary setting forth such information regarding such substitute nominee as would have been required to be delivered to the Secretary pursuant to Section 2.8 hereof had such substitute nominee been initially proposed as a nominee. Such notice shall include a signed consent to serve as a Director of the Corporation, if elected, of each such substitute nominee. 2.10. Compliance with Procedures. If the chairman of the stockholders' meeting at which the election of Directors determines that a nomination of any candidate for election as a Director at such meeting was not made in accordance with the applicable provisions of Sections 2.8 and 2.9 hereof, such nomination shall be void; provided, however, that nothing in Sections 2.8 and 2.9 hereof shall be deemed to limit any rights of holders of Preferred Stock. 2.11. Voting List. At least 10 calendar days before each meeting of stockholders, the Secretary shall prepare or cause to be prepared a complete list of stockholders entitled to vote thereat, arranged in alphabetical order, with the address of, and number of voting shares held by, 4 9 each. For a period of 10 calendar days prior to such meeting, such list shall be kept on file at a place within the city where the meeting is to be held, which place shall be specified in the notice of meeting, or, if not so specified, at the place where the meeting is to be held, which place shall be specified in the notice of meeting, and shall be subject to inspection by any stockholder during ordinary business hours for any purpose germane to the meeting. Such list shall be produced at such meeting and kept at the meeting at all times during such meeting, and shall be subject to inspection by any stockholder who is present. 2.12. Quorum. Except as otherwise provided by applicable law, the Restated Certificate of Incorporation or these Bylaws, the holders of a majority of the outstanding shares entitled to vote, present in person or by proxy at any meeting of stockholders, shall constitute a quorum at such meeting; provided, however, that when specified business is to be voted on by a class or series voting as a class, the holders of a majority of the shares of such class or series shall be required for the transaction of such business. If a quorum shall not be present or represented at any meeting of stockholders, the stockholders entitled to vote thereat who are present, in person or by proxy, or, if no stockholder entitled to vote is present, any officer of the Corporation may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At any adjourned meeting at which a quorum shall be present, in person or by proxy, any business may be transacted which may have been transacted at the original meeting had a quorum been present; provided, however, that if the adjournment is for more than 30 calendar days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the adjourned meeting. 2.13. Majority Vote; Withdrawal of Quorum. When a quorum is present at any meeting, the vote of the holders of a majority of the outstanding shares entitled to vote who are present, in person or by proxy, shall decide any question brought before such meeting, unless the question is one on which, by express provision of applicable law, the Restated Certificate of Incorporation or these Bylaws, a different vote is required, in which case such express provision shall govern and control the decision of such question. The stockholders present at a duly constituted meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum. 2.14. Method of Voting; Proxies. Except as otherwise provided in the Restated Certificate of Incorporation, in any designation of rights of a series of Preferred Stock pursuant to the Restated Certificate of Incorporation or by applicable law, each outstanding share, regardless of class, shall be entitled to one vote on each matter submitted to a vote at a meeting of stockholders. Elections of Directors need not be by written ballot. At any meeting of stockholders, every stockholder having the right to vote may vote either in person or by a proxy executed in writing by the stockholder or by his duly authorized attorney-in-fact. Each such proxy shall be filed with the Secretary of the Corporation before or at the time of the meeting. No proxy shall be valid after three years from the date of its execution, unless otherwise provided in the proxy. If no date is stated on the proxy, such proxy shall be presumed to have been executed on the date of the meeting at which it is to be voted. Each proxy shall be revocable unless expressly provided therein to be irrevocable and coupled with an interest sufficient in law to support an irrevocable power or unless otherwise made irrevocable by law. 5 10 2.15. Record Date. For the purpose of determining stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix in advance a date for any such determination of stockholders, such date in any case to be not more than 60 calendar days and not less than 10 calendar days prior to such meeting, nor more than 60 calendar days prior to any other action. If no record date is fixed: (i) the record date for determining stockholders entitled to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting was held; and (ii) the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. 2.16. Chairman of Stockholders' Meetings. The Chairman of the Board shall serve as chairman of any meeting of stockholders and the Secretary shall keep the records of each meeting of stockholders, and in the absence of either such officer, that officer's duties shall be performed by the officer given the authority to act for such absent officer under these Bylaws or by some other person appointed by the Board of Directors. ARTICLE III DIRECTORS 3.1. Management. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors, subject to the restrictions imposed by applicable law, the Restated Certificate of Incorporation or these Bylaws. 3.2. Powers. In addition to the powers and authority expressly conferred by these Bylaws, the Board of Directors may exercise all such powers of the Corporation and do all lawful acts and things as are not by applicable law or the Restated Certificate of Incorporation or by these Bylaws directed or required to be exercised or done by the stockholders. 3.3. Number, Election and Term. Except as otherwise fixed by, or pursuant to the provisions of, the Restated Certificate of Incorporation relating to the rights of the holders of any Preferred Stock to elect additional Directors under specified circumstances, the number of the Directors of the Corporation shall be fixed from time to time by the Board of Directors but shall be no fewer than three. The Directors, other than those who may be elected by the holders of Preferred Stock, shall be elected at each annual meeting of the stockholders of the Corporation, by plurality vote by written ballot to hold office for a term expiring at the immediately following annual meeting of stockholders. 6 11 3.4. Newly Created Directorships and Vacancies. Subject to the rights of holders of Preferred Stock and except as provided in the Restated Certificate of Incorporation, newly created directorships resulting from any increase in the number of Directors and any vacancies on the Board of Directors resulting from death, resignation, disqualification, removal or other cause shall be filled only by the affirmative vote of a majority of the remaining Directors then in office, even though less than a quorum of the Board of Directors. Any Director elected in accordance with the preceding sentence shall hold office until the next annual meeting of stockholders and until such Director's successor shall have been elected and qualified. No decrease in the number of Directors constituting the Board of Directors shall shorten the term of any incumbent Director. 3.5. Meetings. Immediately after the adjournment of the annual meeting of the stockholders each year, the Directors elected thereat shall, without notice, convene the annual meeting of Directors for the organization of the Board of Directors, the election of officers and members of committees and the transaction of any other business which may properly come before such meeting. If a quorum of the Board of Directors shall not be present, the Chairman of the Board shall call a meeting for such purposes as promptly as is practicable. Except as otherwise provided in this Section 3.5, Directors may hold their regular and special meetings at such times and places and have one or more offices and keep the books of the Corporation at such places as the Board of Directors determines. 3.6. Notices. No notice of regular meetings of the Board of Directors need be given. Special meetings of the Board of Directors may be called by the Chairman of the Board, the Chief Executive Officer or the President upon notice to each Director, given either in person or by mail, telephone, telegram, facsimile or similar medium of communication; special meetings shall be called by the Chairman of the Board, the Chief Executive Officer or the Secretary on like notice, on the written request of a majority of the Directors. At least 24 hours' notice of special meetings shall be given to each Director. Notwithstanding Article V hereto, for purposes of this Section 3.6, if notice is sent by mail, notice is deemed delivered on the date actually received. 3.7. Quorum; Majority Vote. At all meetings of the Board of Directors, a majority of the Directors fixed in the manner provided in these Bylaws shall constitute a quorum for the transaction of business, but if at any meeting of the Board of Directors there be less than a quorum present, a majority of those present or any Director solely present may adjourn the meeting from time to time without further notice if the time and place to which the meeting is adjourned are announced at the meeting. At any adjourned meeting at which a quorum is present, any business may be transacted that may have been transacted at the meeting originally called. The act of a majority of the Directors at a meeting at which a quorum is present shall be the act of the Board of Directors, unless the act of a greater number is required by applicable law, the Restated Certificate of Incorporation or these Bylaws. 3.8. Procedure. At meetings of the Board of Directors, business shall be transacted in such order as the Board of Directors may determine from time to time. The Chairman of the Board, if such office has been filled, and, if not or if the Chairman of the Board is absent or otherwise unable to act, a chairman shall be chosen by the Board of Directors from among the Directors present. The Secretary of the Corporation shall act as the secretary of the meetings of 7 12 the Board of Directors unless the Board of Directors appoints another person to act as secretary of the meeting. The Board of Directors shall keep regular minutes of its proceedings which shall be placed in the minute book of the Corporation. 3.9. Presumption of Assent. A Director of the Corporation who is present at the meeting of the Board of Directors at which action on any corporate matter is taken shall be presumed to have assented to the action unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent to such action with the person acting as secretary of the meeting before the adjournment thereof or shall forward any dissent by certified or registered mail to the Secretary of the Corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a Director who voted in favor of such action. 3.10. Compensation. The Board of Directors shall have authority to fix the compensation, including fees and reimbursement of expenses, paid to Directors for attendance at regular or special meetings of the Board of Directors, any committee thereof or for any other services to the Corporation; provided, however, that nothing contained in these Bylaws shall be construed to preclude any Director from serving the Corporation in any other capacity or receiving compensation therefor. ARTICLE IV COMMITTEES 4.1. Designation of Committees. The Board of Directors may establish committees for the performance of delegated or designated functions to the extent permitted by law. Each committee shall consist of one or more Directors of the Corporation. 4.2. Committee Powers and Authority. The Board of Directors may provide, by resolution or by amendment to these Bylaws, that a committee may exercise all the power and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; provided, however, that a committee may not exercise the power or authority of the Board of Directors in reference to amending the Restated Certificate of Incorporation (except that a committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the Board of Directors pursuant to the Restated Certificate of Incorporation, fix the designations and any of the preferences or rights of shares of authorized Preferred Stock of the Corporation relating to dividends, redemption, dissolution, any distribution of property or assets of the Corporation, or the conversion into, or the exchange of shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the Corporation or fix the number of shares of any series of stock or authorize the increase or decrease of the shares of any series), adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease, or exchange of all or substantially all of the Corporation's property and assets, recommending to the stockholders a dissolution of the Corporation or a revocation of a dissolution, or amending these Bylaws; and, unless the resolution expressly so provides, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock. 8 13 4.3. Committee Procedures. Except as may be otherwise provided in a resolution or resolutions duly adopted by the Board of Directors, a majority of the members of a committee shall constitute a quorum and a majority vote of the members at a meeting at which a quorum is present shall be the act of the committee. A committee shall keep minutes of its proceedings, and shall report its proceedings to the Board of Directors when required or when requested by a Director to do so. ARTICLE V NOTICE 5.1. Method. Whenever by applicable law, the Restated Certificate of Incorporation or these Bylaws, notice is required to be given to any Director, committee member or stockholder and no provision is made as to how such notice shall be given, such provision shall not be construed to mean personal notice, but any such notice may be given (i) in writing, by mail, postage prepaid, addressed to such Director, committee member or stockholder at his address as it appears on the books or, in the case of a stockholder, the stock transfer records of the Corporation, or (ii) by any other method permitted by applicable law (including but not limited to telegram). Except as set forth in Section 3.6 hereof, any notice required or permitted to be given by mail shall be deemed to be delivered and given at the time transmitted with all charges prepaid and addressed as aforesaid. 5.2. Waiver. Whenever any notice is required to be given to any Director, committee member or stockholder of the Corporation by applicable law, the Restated Certificate of Incorporation or these Bylaws, a waiver thereof in writing signed by the person or persons entitled to such notice, whether before or after the time stated therein shall be equivalent to the giving of such notice. Attendance of a Director, committee member or stockholder at a meeting shall constitute a waiver of notice of such meeting, except where such person attends for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business on the ground that the meeting is not lawfully called or convened. ARTICLE VI OFFICERS 6.1. Number; Titles; Term of Office. The elected officers of the Corporation may include a Chairman of the Board, Chief Executive Officer, President, one or more Vice Presidents, a Secretary, a Treasurer, a General Counsel and such other officers as the Board of Directors may from time to time elect. The Chairman of the Board shall be chosen from the Directors. Each officer shall hold office until his successor shall have been duly elected and shall have qualified, until his death or until he shall resign or shall have been removed in the manner hereinafter provided. Any two or more offices may be held by the same person. None of the officers need be a stockholder or a Director of the Corporation or a resident of the State of Delaware. 9 14 6.2. Removal. Any elected officer may be removed by the Board of Directors whenever in its judgment the best interest of the Corporation will be served thereby. No elected officer shall have any contractual rights against the Corporation for compensation by virtue of such election beyond the date of the election of his successor, his death, his resignation or his removal, whichever event shall first occur, except as otherwise provided in an employment contract or under an employee benefit plan. 6.3. Vacancies. Any vacancy occurring in an elected office of the Corporation (by death, resignation, removal or otherwise) may be filled by the Board of Directors. 6.4. Authority. Elected officers shall have such authority and perform such duties in the management of the Corporation as are provided in these Bylaws or as may be determined by resolution of the Board of Directors not inconsistent with these Bylaws. 6.5. Compensation. The compensation of elected officers shall be fixed from time to time by the Board of Directors or a committee thereof. 6.6. Chairman of the Board. The Chairman of the Board shall preside at all meetings of the stockholders and of the Board of Directors. He shall make reports to the Board of Directors and the stockholders, and shall perform all such other duties as are properly required of him by the Board of Directors. He shall see that all orders and resolutions of the Board of Directors and of any committee thereof are carried into effect. 6.7. Chief Executive Officer. The Chief Executive Officer, subject to the direction and control of the Board of Directors, shall have general and active management of the business of the Corporation. The Chief Executive Officer may negotiate for, approve, and execute contracts, deeds and other instruments on behalf of the Corporation. The Chief Executive Officer, in the absence of the Chairman of the Board or in the event of his disability, inability or refusal to act, shall perform the duties and exercise the powers of the Chairman of the Board. The Chief Executive Officer shall perform such additional functions and duties as the Board of Directors may from time to time prescribe. 6.8. President. The President, subject to the direction and control of the Chairman of the Board, the Chief Executive Officer or the Board of Directors, shall manage the business of the Corporation. The President may execute contracts, deeds and other instruments on behalf of the Corporation. The President, in the absence of the Chief Executive Officer or in the event of his disability, inability or refusal to act, shall perform the duties and exercise the power of the Chief Executive Officer. Upon the death, absence or disability of the President, the Chief Executive Officer shall perform or delegate the duties and powers of the President. 6.9. Vice Presidents. Each Vice President shall have such powers and perform such duties as from time to time may be assigned to him by the Board of Directors or be delegated to him by the President. The Board of Directors may assign to any Vice President general supervision and charge over any territorial or functional division of the business and affairs of the Corporation. In the absence or incapacity of the President, the powers, duties, and functions of the President shall be temporarily performed and exercised by such one of the Vice Presidents as shall be designated by the Board of Directors. 10 15 6.10. Secretary. The Secretary shall give, or cause to be given, notice of all meetings of stockholders and Board of Directors and all other notices required by applicable law or by these Bylaws, and in case of his absence or refusal or neglect so to do, any such notice may be given by an person thereunto directed by the Chairman of the Board or the President or by the Board of Directors, upon whose request the meeting is called as provided in these Bylaws. He shall record all the proceedings of the meetings of the Board of Directors, any committees thereof and the stockholders of the Corporation in a book to be kept for that purpose, and shall perform such other duties as may be assigned to him by the Board of Directors or the President. He shall have the custody of the seal of the Corporation and shall affix the same to all instruments requiring it, when authorized by the Board of Directors or the President, and attest to the same. 6.11. Treasurer. The Treasurer shall have the custody of the corporate funds and securities and shall deposit all moneys and other valuables in the name and to the credit of the Corporation in such depositaries as may be designated by the Board of Directors. The Treasurer shall disburse the funds and pledge the credit of the Corporation as may be ordered by the Board of Directors, the Chairman of the Board or the President, taking proper vouchers for any such disbursements. The Treasurer shall render to the Chairman of the Board, the President and the Board of Directors, as and when requested by them, or any of them, an account of all his transactions as Treasurer and of the financial condition of the Corporation. If required by the Board of Directors, the Treasurer shall give the Corporation a bond for the faithful discharge of his duties in such amount and with such surety as the Board of Directors shall prescribe. 6.12. General Counsel. The General Counsel shall be the chief legal officer of the Corporation. He shall provide legal counsel and advice to the Board of Directors and to the officers with respect to compliance with applicable laws and regulations. He shall also provide or obtain legal defense of the Corporation. He shall render to the Board of Directors, the Chairman of the Board and the President, as and when requested by them, or any of them, a report on the status of claims against, and pending litigation of, the Corporation. 6.13. Appointed Officers. The Chairman of the Board may appoint such Assistant Secretaries, Assistant Treasurers and other officers and agents as the Chairman of the Board shall deem necessary or proper in the conduct of the affairs of the Corporation with such designations, titles, seniority, duties and responsibilities as he shall deem advisable. All officers appointed by the Chairman of the Board shall perform their duties under the direction of the Chairman of the Board and shall receive compensation as from time to time fixed by the Chairman of the Board and shall hold their offices at the pleasure of either the Chairman of the Board or the Board of Directors. The Chairman of the Board shall report appointments of officers pursuant to this Section 6.13 to the Board of Directors. ARTICLE VII INDEMNIFICATION 7.1. Suits By Third Parties. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or 11 16 in the right of the Corporation) by reason of the fact that he is or was a Director or officer of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, association or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, that he had reasonable cause to believe that his conduct was unlawful. 7.2. Suits in the Name of the Corporation. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit 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 or officer of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, association or other enterprise, against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery of the State of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery of the State of Delaware or such other court shall deem proper. 7.3. Successful Defense. To the extent that any person referred to in Sections 7.1 and 7.2 hereof has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in such Sections, or in defense or any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith. 7.4. Determination to Indemnify. Any indemnification under Sections 7.1 and 7.2 hereof (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the Director or officer is proper in the circumstances because he has met the applicable standard of conduct set forth therein. Such determination shall be made (i) by the Board of Directors by a majority vote of a quorum consisting of Directors who were not parties to such action, suit or proceeding, (ii) if such quorum is not obtainable or, even if obtainable, a quorum of disinterested Directors so directs, by independent legal counsel in a written opinion, or (iii) by the stockholders. 12 17 7.5. Provisions Nonexclusive. The indemnification provided by, or granted pursuant to, this Article VII shall not be deemed exclusive of any other rights to which any person seeking indemnification may be entitled, under the Restated Certificate of Incorporation or under any other bylaw, agreement, insurance policy, vote of stockholders or disinterested Directors, applicable law or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office. 7.6. Insurance. By action of the Board of Directors, notwithstanding any interest of the Directors in the action, the Corporation shall have power to purchase and maintain insurance, in such amounts as the Board of Directors deems appropriate, on behalf of any person who is or was a Director or officer of the Corporation, or is or was serving at the request of the Corporation as director, officer, employee or agent of another Corporation, partnership, joint venture, trust, association 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 he is indemnified against such liability or expense under the provisions of this Article VII and whether or not the Corporation would have the power or would be required to indemnify him against such liability under the provisions of this Article VII or of the DGCL or by any other applicable law. 7.7. Surviving Corporation. The Board of Directors may provide by resolution that references to "the Corporation" in this Article VII shall include, in addition to this Corporation, all constituent corporations absorbed in a merger with the Corporation so that any person who was a director or officer of such a constituent corporation or is or was serving at the request of such constituent corporation as a director, employee or agent of another corporation, partnership, joint venture, trust, association or other entity shall stand in the same position under the provisions of this Article VII with respect to this Corporation as he would if he had served this Corporation in the same capacity or is or was so serving such other entity at the request of this Corporation, as the case may be. 7.8. Continuing Indemnification. The indemnification provided by, or granted pursuant to, this Article VII shall continue as to a person who has ceased to be a Director or officer and shall inure to the benefit of the heirs, executors, and administrators of such person. ARTICLE VIII STOCK CERTIFICATES AND STOCKHOLDERS 8.1. Certificates for Shares. Certificates for shares of stock of the Corporation shall be in such form as shall be approved by the Board of Directors. The certificates shall be signed by the Chairman of the Board or the President or a Vice President and also by the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer. Any and all signatures on the certificate may be a facsimile and each such certificate may be sealed with the seal of the Corporation or a facsimile thereof. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. 13 18 The certificates shall be consecutively numbered and shall be entered in the books of the Corporation as they are issued and shall exhibit the holder's name and the number of shares. 8.2. Replacement of Lost or Destroyed Certificates. The Board of Directors may direct a new certificate or certificates representing shares of stock be issued in place of a certificate or certificates representing shares of stock theretofore issued by the Corporation and alleged to have been lost or destroyed upon the making of an affidavit of that fact by the person claiming the certificate or certificates representing shares of stock that was or were lost or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors may be in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the Corporation a bond with a surety or sureties satisfactory to the Corporation in such sum as it may direct as indemnity against any claim or expense resulting from a claim, that may be made against the Corporation with respect to the certificate or certificates alleged to have been lost or destroyed. 8.3. Transfer of Shares. Shares of stock of the Corporation shall be transferable only on the books of the Corporation by the holders thereof in person or by their duly authorized attorneys or legal representatives. Upon surrender to the Corporation or the transfer agent of the Corporation of a certificate representing shares duly endorsed or accompanied by proper evidence of succession, assignment, or authority to transfer, the Corporation or its transfer agent shall issue a new certificate to the person entitled thereto, cancel the old certificate, and record the transaction upon its books. 8.4. Registered Stockholders. The Corporation shall be entitled to treat the holder of record of any share or shares of stock as the holder in fact thereof and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by law. 8.5. Regulations. The Board of Directors shall have the power and authority to make all such rules and regulations as it may deem expedient concerning the issue, transfer and registration or the replacement of certificates for shares of stock of the Corporation. 8.6. Legends. The Board of Directors shall have the power and authority to provide the certificates representing shares of stock bear such legends as the Board of Directors deems appropriate to assure that the Corporation does not become liable for violations of federal or state securities laws or other applicable law. ARTICLE IX MISCELLANEOUS PROVISIONS 9.1. Dividends. Subject to provisions of applicable law and the Restated Certificate of Incorporation, dividends may be declared by the Board of Directors at any time and from time to time and may be paid in cash, in property or in shares of stock of the Corporation. Such declaration and payment shall be at the discretion of the Board of Directors. 14 19 9.2. Reserves. There may be created by the Board of Directors out of funds of the Corporation legally available therefor such reserve or reserves as the Directors from time to time, in their discretion, consider proper to provide for contingencies, to equalize dividends, to repair or maintain any property of the Corporation, or for such other purpose as the Board of Directors shall consider beneficial to the Corporation, and the Board of Directors may modify or abolish any such reserve in the manner in which it was created. 9.3. Books and Records. The Corporation shall keep correct and complete books and records of account, shall keep minutes of the proceedings of its stockholders, Board of Directors, and any committee of the Board of Directors, and shall keep at its registered office or principal place of business or at the office of its transfer agent or registrar, a record of its stockholders, giving the names and addresses of all stockholders and the number and class of the shares held by each. 9.4. Fiscal Year. The fiscal year of the Corporation shall be fixed by the Board of Directors; provided, however, that if such fiscal year is not fixed by the Board of Directors and the Board of Directors does not defer determination of the fiscal year, the fiscal year shall be the calendar year. 9.5. Seal. The seal of the Corporation shall be such as from time to time may be approved by the Board of Directors. 9.6. Resignation. Any Director, committee member or officer may resign by so stating at any meeting of the Board of Directors or by giving written notice to the Board of Directors, the Chairman of the Board, the Chief Executive Officer, the President or the Secretary. Such resignation shall take effect at the time specified therein, or immediately if no time is specified therein. Unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. 9.7. Securities of Other Corporations. The Chairman of the Board, the Chief Executive Officer, the President or any Vice President of the Corporation shall have the power and authority to transfer, endorse for transfer, vote, and take any other action with respect to any securities of another issuer which may be held or owned by the Corporation and to make, execute, and deliver any waiver, proxy or consent with respect to any such securities. 9.8. Amendment of Bylaws. These Bylaws may be altered, amended or repealed: (i) at any meeting of the Board of Directors at which a quorum is present by the affirmative vote of a majority of the Directors present at any such meeting, provided notice of the proposed alteration, amendment or repeal is contained in the notice of the meeting; or (ii) at any meeting of the stockholders at which a quorum is present, in person or by proxy, by the affirmative vote of a majority of the shares represented and entitled to vote thereat, provided notice of the proposed alteration, amendment or repeal is contained in the notice of the meeting. 9.9. Telephonic Meetings. The Board of Directors, and members of any committee thereof, may participate in and hold a meeting of the Board of Directors or such committee by means of a conference telephone or similar communications equipment by means of which persons participating in the meeting can hear each other, and participation in such a meeting shall 15 20 constitute presence in person at such meeting, except where a person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened. 9.10. Headings. The headings used in these Bylaws have been inserted for administrative convenience only and do not constitute matter to be construed in interpretation. 9.11. References. Whenever in these Bylaws the singular number is used, the same shall include the plural where appropriate, and words of any gender should include each other gender where appropriate. 16 EX-10.1 5 d89759ex10-1.txt AMENDED AND RESTATED 1994 STOCK INCENTIVE PLAN 1 EXHIBIT 10.1 ASSOCIATED MATERIALS INCORPORATED AMENDED AND RESTATED 1994 STOCK INCENTIVE PLAN 2 ASSOCIATED MATERIALS INCORPORATED AMENDED AND RESTATED 1994 STOCK INCENTIVE PLAN TABLE OF CONTENTS
PAGE ---- 1. Purpose................................................................. 1 2. Definitions............................................................. 1 3. Shares Available under the Plan......................................... 2 4. Option Rights........................................................... 3 5. Restricted Shares....................................................... 4 6. Deferred Shares......................................................... 5 7. Transferability......................................................... 5 8. Adjustments............................................................. 6 9. Fractional Shares....................................................... 6 10. Withholding Taxes....................................................... 6 11. Certain Terminations of Employment or Consulting Services, Hardship and Approved Leaves of Absence....................... 7 12. Administration of the Plan ............................................. 7 13. Foreign Employees....................................................... 7 14. Amendments and Other Matters............................................ 7 15. Options Issued Pursuant to Other Plans or Agreements.................... 8 16. Termination of the Plan................................................. 8
i 3 ASSOCIATED MATERIALS INCORPORATED AMENDED AND RESTATED 1994 STOCK INCENTIVE PLAN 1. Purpose. The purpose of this Associated Materials Incorporated Amended and Restated 1994 Stock Incentive Plan is to attract and retain directors and officers and other salaried employees of and consultants to Associated Materials Incorporated, a Delaware corporation and its Subsidiaries and to provide such persons with incentives and rewards for superior performance. 2. Definitions. As used in this Plan, "Board" means the Board of Directors of the Corporation and, to the extent of any delegation by the Board to a committee thereof pursuant to Section 12 of this Plan, such committee. "Code" means the Internal Revenue Code of 1986, as amended from time to time. "Common Shares" means (i) shares of the Common Stock, $.0025 par value per share, of the Corporation and (ii) any security into which Common Shares may be converted by reason of any transaction or event of the type referred to in Section 8 of this Plan. "Corporation" means Associated Materials Incorporated, a Delaware corporation. "Date of Grant" means the date specified by the Board on which a grant of Option Rights or a grant or sale of Restricted Shares or Deferred Shares shall become effective, which shall not be earlier than the date on which the Board takes action with respect thereto. "Deferral Period" means the period of time during which Deferred Shares are subject to deferral limitations under Section 6 of this Plan. "Deferred Shares" means an award pursuant to Section 6 of this Plan of the right to receive Common Shares at the end of a specified Deferral Period. "Incentive Stock Option" means an Option Right that is intended to qualify as an "incentive stock option" under Section 422 of the Code or any successor provision thereto. "Market Value per Share" means the fair market value of the Common Shares as determined by the Board from time to time. "Optionee" means the person so designated in an agreement evidencing an outstanding Option Right. "Option Price" means the purchase price payable upon the exercise of an Option Right. 1 4 "Option Right" means the right to purchase Common Shares from the Corporation upon the exercise of an option granted pursuant to Section 4 of this Plan. "Participant" means a person who is selected by the Board to receive benefits under this Plan and (i) is at that time an officer, including without limitation an officer who may also be a member of the Board, or other salaried employee of or a consultant to the Corporation or any Subsidiary, (ii) any member of the Board, or (iii) has agreed to commence serving in any such capacity. "Plan" means this Associated Materials Incorporated Amended and Restated 1994 Stock Incentive Plan. "Restricted Shares" means Common Shares as to which neither the substantial risk of forfeiture nor the restrictions on transfer referred to in Section 5 hereof has expired. "Subsidiary" means a corporation, partnership, joint venture, unincorporated association or other entity in which the Corporation has a direct or indirect ownership or other equity interest; provided, however, for purposes of determining whether any person may be a Participant for purposes of any grant of Incentive Stock Options, "Subsidiary" means any corporation in which the Corporation owns or controls directly or indirectly at least 50 percent of the total combined voting power represented by all classes of stock issued by such corporation at the time of the grant. 3. Shares Available under the Plan. (a) Subject to adjustment as provided in Section 8 of this Plan, the number of Common Shares issued or transferred and covered by outstanding awards granted under this Plan shall not in the aggregate exceed 1,200,000 Common Shares, which may be Common Shares of original issuance or Common Shares held in treasury or a combination thereof. For the purposes of this Section 3(a): (i) Upon payment in cash of the benefit provided by any award granted under this Plan, any Common Shares that were covered by that award shall again be available for issuance or transfer hereunder. (ii) Common Shares covered by any award granted under this Plan shall be deemed to have been issued or transferred, and shall cease to be available for future issuance or transfer in respect of any other award granted hereunder, at the earlier of the time when they are actually issued or transferred or the time when dividends or dividend equivalents are paid thereon; provided, however, that Restricted Shares shall be deemed to have been issued or transferred at the earlier of the time when they cease to be subject to a substantial risk of forfeiture or the time when dividends are paid thereon. (b) Notwithstanding anything to the contrary contained in this Plan, including without limitation Section 3(a) hereof, the aggregate number of Common Shares actually issued or transferred by the Corporation upon the exercise of the Incentive Stock Options shall not exceed 1,200,000 Common Shares. 2 5 4. Option Rights. The Board may from time to time authorize grants to Participants of options to purchase Common Shares upon such terms and conditions as the Board may determine in accordance with the following provisions: (a) Each grant shall specify the number of Common Shares to which it pertains. (b) Except for any options to purchase Common Shares issued in accordance with Section 15 below, each grant shall specify an Option Price per Common Share, which shall be equal to or greater than the Market Value per Share on the Date of Grant. (c) Each grant shall specify the form of consideration to be paid in satisfaction of the Option Price and the manner of payment of such consideration, which may include (i) cash in the form of currency or check or other cash equivalent acceptable to the Corporation, (ii) nonforfeitable, unrestricted Common Shares, which are already owned by the Optionee and have a value at the time of exercise that is equal to the Option Price, (iii) any other legal consideration that the Board may deem appropriate, including without limitation any form of consideration authorized under Section 4(d) below, on such basis as the Board may determine in accordance with this Plan and (iv) any combination of the foregoing. (d) On or after the Date of Grant of any Option Right (other than an Incentive Stock Option), the Board may determine that payment of the Option Price may also be made in whole or in part in the form of Restricted Shares or other Common Shares that are subject to risk of forfeiture or restrictions on transfer. Unless otherwise determined by the Board on or after the Date of Grant, whenever any Option Price is paid in whole or in part by means of any of the forms of consideration specified in this Section 4(d), the Common Shares received by the Optionee upon the exercise of the Nonqualified Option shall be subject to the same risks of forfeiture or restrictions on transfer as those that applied to the consideration surrendered by the Optionee; provided, however, that such risks of forfeiture and restrictions on transfer shall apply only to the same number of Common Shares received by the Optionee as applied to the forfeitable or restricted Common Shares surrendered by the Optionee. (e) Any grant may provide for deferred payment of the Option Price from the proceeds of sale through a broker of some or all of the Common Shares to which the exercise relates. (f) Successive grants may be made to the same Participant regardless of whether any Option Rights previously granted to the Participant remain unexercised. (g) Each grant shall specify the period or periods of continuous employment, or continuous engagement of the consulting services, of the Optionee by the Corporation or any Subsidiary that are necessary before the Option Rights or installments thereof shall become exercisable, and any grant may provide for the earlier exercise of the Option Rights in the event of a change in control of the Corporation or other similar transaction or event. 3 6 (h) Option Rights granted pursuant to this Section 4 may be (i) options, including, without limitation, Incentive Stock Options, that are intended to qualify under particular provisions of the Code, (ii) options that are not intended so to qualify, or (iii) combinations of the foregoing. (i) On or after the Date of Grant of any Option Rights (other than Incentive Stock Options), the Board may provide for the payment to the Optionee of dividend equivalents thereon in cash or Common Shares on a current, deferred or contingent basis, or the Board may provide that any dividend equivalents shall be credited against the Option Price. (j) No Option Right granted pursuant to this Section 4 may be exercised more than 10 years from the Date of Grant. (k) Each grant shall be evidenced by an agreement, in the form the Board may approve consistent with this Plan, which shall be executed on behalf of the Corporation by any officer thereof and delivered to and accepted by the Optionee. 5. Restricted Shares. The Board may also authorize grants or sales to Participants of Restricted Shares upon such terms and conditions as the Board may determine in accordance with the following provisions: (a) Each grant or sale shall constitute an immediate transfer of the ownership of Common Shares to the Participant in consideration of the performance of services, entitling such Participant to dividend, voting and other ownership rights, subject to the substantial risk of forfeiture and restrictions on transfer hereinafter referred to. (b) Each grant or sale may be made without additional consideration from the Participant or in consideration of a payment by the Participant that is less than the Market Value per Share on the Date of Grant. (c) Each grant or sale shall provide that the Restricted Shares covered thereby shall be subject to a "substantial risk of forfeiture" within the meaning of Section 83 of the Code for a period to be determined by the Board on the Date of Grant, and any grant or sale may provide for the earlier termination of such period in the event of a change in control of the Corporation or other similar transaction or event. (d) Each grant or sale shall provide that, during the period for which such substantial risk of forfeiture is to continue, the transferability of the Restricted Shares shall be prohibited or restricted in the manner and to the extent prescribed by the Board on the Date of Grant. Such restrictions may include without limitation rights of repurchase or first refusal in the Corporation or provisions subjecting the Restricted Shares to a continuing substantial risk of forfeiture in the hands of any transferee. (e) Any grant or sale may require that any or all dividends or other distributions paid on the Restricted Shares during the period of such restrictions be automatically sequestered and reinvested on an immediate or deferred basis in additional Common Shares, 4 7 which may be subject to the same restrictions as the underlying award or such other restrictions as the Board may determine. (f) Each grant or sale shall be evidenced by an agreement, in the form the Board may approve consistent with this Plan, which shall be executed on behalf of the Corporation by any officer thereof and delivered to and accepted by the Participant. Unless otherwise directed by the Board, all certificates representing Restricted Shares, together with a stock power that shall be endorsed in blank by the Participant with respect to the Restricted Shares, shall be held in custody by the Corporation until all restrictions thereon lapse. 6. Deferred Shares. The Board may also authorize grants or sales of Deferred Shares to Participants upon such terms and conditions as the Board may determine in accordance with the following provisions: (a) Each grant or sale shall constitute the agreement by the Corporation to issue or transfer Common Shares to the Participant in the future in consideration of the performance of services, subject to the fulfillment during the Deferral Period of such conditions as the Board may specify. (b) Each grant or sale may be made without additional consideration from the Participant or in consideration of a payment by the Participant that is less than the Market Value per Share on the Date of Grant. (c) Each grant or sale shall provide that the Deferred Shares covered thereby shall be subject to a Deferral Period, which shall be fixed by the Board on the Date of Grant, and any grant or sale may provide for the earlier termination of the Deferral Period in the event of a change in control of the Corporation or other similar transaction or event. (d) During the Deferral Period, the Participant shall not have any right to transfer any rights under the subject award, shall not have any rights of ownership in the Deferred Shares and shall not have any right to vote the Deferred Shares, but the Board may on or after the Date of Grant authorize the payment of dividend equivalents on the Deferred Shares in cash or additional Common Shares on a current, deferred or contingent basis. (e) Each grant or sale shall be evidenced by an agreement in the form the Board may approve consistent with this Plan, which shall be executed on behalf of the Corporation by any officer thereof and delivered to and accepted by the Participant. 7. Transferability. (a) Unless otherwise permitted under the terms of the applicable agreement approved by the Board, (i) no Option Right or other derivative security granted under this Plan may be transferred by a Participant except by will or the laws of descent and distribution, or (ii) Option Rights granted under this Plan may not be exercised during a Participant's lifetime except by the Participant or, in the event of the Participant's legal incapacity, by his guardian or legal representative acting in a fiduciary capacity on behalf of the Participant under state law and court supervision. 5 8 (b) Any grant made under this Plan may provide that all or any part of the Common Shares that are to be issued or transferred by the Corporation upon the exercise of Option Rights or upon the termination of the Deferral Period applicable to Deferred Shares or upon the termination of the period during which Restricted Shares are subject to the substantial risk of forfeiture and restrictions on transfer referred to in Section 5 of this Plan, shall be subject to further restrictions upon transfer. 8. Adjustments. The Board may make or provide for such adjustments in the number of Common Shares covered by outstanding Option Rights, Restricted Shares and Deferred Shares granted hereunder, the Option Prices per Common Share applicable to any such Option Rights and the kind of shares (including shares of another issuer) covered thereby, as the Board may in good faith determine to be equitably required in order to prevent dilution or expansion of the rights of Participants that otherwise would result from (i) any stock dividend, stock split, combination of shares, recapitalization or other change in the capital structure of the Corporation, or (ii) any merger, consolidation, spin-off, spin-out, split-off, split-up, reorganization, partial or complete liquidation or other distribution of assets, issuance of warrants or other rights to purchase securities or any other corporate transaction or event having an effect similar to any of the foregoing. In the event of any such transaction or event, the Board may provide in substitution for any or all outstanding awards under this Plan such alternative consideration as it may in good faith determine to be equitable under the circumstances and may require in connection therewith the surrender of all awards so replaced. Moreover, the Board may on or after the Date of Grant provide in the agreement evidencing any award under this Plan that the holder of the award may elect to receive an equivalent award in respect of securities of the surviving entity of any merger, consolidation or other transaction or event having a similar effect, or the Board may provide that the holder will automatically be entitled to receive such an equivalent award. The Board may also make or provide for such adjustments in the maximum number of Common Shares specified in Section 3 of this Plan as the Board may in good faith determine to be appropriate in order to reflect any transaction or event described in this Section 8. 9. Fractional Shares. The Corporation shall not be required to issue any fractional Common Shares pursuant to this Plan. The Board may provide for the elimination of fractions or for the settlement thereof in cash. 10. Withholding Taxes. To the extent that the Corporation is required to withhold federal, state, local or foreign taxes in connection with any payment made or benefit realized by a Participant or other person under this Plan, and the amounts available to the Corporation for the withholding are insufficient, it shall be a condition to the receipt of any such payment or the realization of any such benefit that the Participant or such other person make arrangements satisfactory to the Corporation for payment of the balance of any taxes required to be withheld. At the discretion of the Board, any such arrangements may include relinquishment of a portion of any such payment or benefit. The Corporation and any Participant or such other person may also make similar arrangements with respect to the payment of any taxes with respect to which withholding is not required. 6 9 11. Certain Terminations of Employment or Consulting Services, Hardship and Approved Leaves of Absence. Notwithstanding any other provision of this Plan to the contrary, in the event of termination of employment or consulting services by reason of death, disability, normal retirement, early retirement with the consent of the Corporation, termination of employment or consulting services to enter public service with the consent of the Corporation or leave of absence approved by the Corporation, or in the event of hardship or other special circumstances, of a Participant who holds an Option Right that is not immediately and fully exercisable, any Restricted Shares as to which the substantial risk of forfeiture or the prohibition or restriction on transfer has not lapsed or any Deferred Shares as to which the Deferral Period is not complete, the Board may take any action that it deems to be equitable under the circumstances or in the best interests of the Corporation, including without limitation waiving or modifying any limitation or requirement with respect to any award under this Plan. 12. Administration of the Plan. (a) This Plan shall be administered by the Board; provided however, the Board may delegate all or any portion of its authorities under this Plan to a committee thereof. In the event, and to the extent, of any such delegation, the term "Board" as used in this Plan shall be deemed to mean the such committee. (b) The interpretation and construction by the Board of any provision of this Plan or any agreement, notification or document evidencing the grant of Option Rights, Restricted Shares or Deferred Shares, and any determination by the Board pursuant to any provision of this Plan or any such agreement, notification or document, shall be final and conclusive. No member of the Board shall be liable for any such action taken or determination made in good faith. 13. Foreign Employees. In order to facilitate the making of any grant or combination of grants under this Plan, the Board may provide for such special terms for awards to Participants who are foreign nationals, or who are employed by the Corporation or any Subsidiary outside of the United States of America, as the Board may consider necessary or appropriate to accommodate differences in local law, tax policy or custom. Moreover, the Board may approve such supplements to, or amendments, restatements or alternative versions of, this Plan as it may consider necessary or appropriate for such purposes without thereby affecting the terms of this Plan as in effect for any other purpose; provided, however, that no such supplements, amendments, restatements or alternative versions shall include any provisions that are inconsistent with the terms of this Plan as then in effect, unless this Plan could have been amended to eliminate such inconsistency without further approval by the stockholders of the Corporation. 14. Amendments and Other Matters. (a) This Plan may be amended from time to time by the Board; provided, however, except as expressly authorized by this Plan, no such amendment shall increase the maximum numbers of Common Shares specified in Section 3(a) hereof, without the further approval of the stockholders of the Corporation. (b) The Board may condition the grant of any award or combination of awards authorized under this Plan on the surrender or deferral by the Participant of his or her right to 7 10 receive a cash bonus or other compensation otherwise payable by the Corporation or a Subsidiary to the Participant. (c) This Plan shall not confer upon any Participant any right with respect to continuance of employment or other service with the Corporation or any Subsidiary and shall not interfere in any way with any right that the Corporation or any Subsidiary would otherwise have to terminate any Participant's employment or other service at any time. (d) To the extent that any provision of this Plan would prevent any Option Right that was intended to qualify as an Incentive Stock Option from so qualifying, any such provision shall be null and void with respect to any such Option Right; provided, however, that any such provision shall remain in effect with respect to other Option Rights, and there shall be no further effect on any provision of this Plan. (e) The Board may permit Participants to elect to defer the issuance of Common Shares or the settlement of awards in cash under the Plan pursuant to such rules, procedures or programs as it may establish for purposes of this Plan. The Board also may provide that deferred settlements include the payment or crediting of dividend equivalents or interest on the deferral amounts. 15. Options Issued Pursuant to Other Plans or Agreements. Notwithstanding anything to the contrary contained in this Plan, upon the consent of the holder thereof, each option to purchase one Common Share issued pursuant to any other plan of, or agreement with, the Corporation, which has neither been exercised nor expired pursuant to its terms, shall be converted into an Option Right to purchase one Common Share, as the same shall be adjusted pursuant to the terms of Section 8 hereof as if in effect from the date such option was granted, with substantially similar terms as the terms of the original option. 16. Termination of the Plan. No further awards shall be granted under this Plan after the passage of 10 years from the date on which this Plan is first approved by the stockholders of the Corporation. 8 EX-10.2 6 d89759ex10-2.txt EMPLOYEE STOCK PURCHASE PLAN 1 EXHIBIT 10.2 ASSOCIATED MATERIALS INCORPORATED EMPLOYEE STOCK PURCHASE PLAN I. PURPOSE OF THE PLAN This Employee Stock Purchase Plan is intended to promote the interests of Associated Materials Incorporated by providing eligible employees with the opportunity to acquire a proprietary interest in the Company through participation in a payroll-deduction based employee stock purchase plan designed to qualify under Section 423 of the Code. Capitalized terms herein shall have the meanings assigned to such terms in the attached Appendix. II. ADMINISTRATION OF THE PLAN A. The Plan Administrator shall administer the Plan and shall have full authority and discretion to interpret and construe any provision of the Plan and to adopt such rules and regulations for administering the Plan as it may deem necessary, and to take any action it may deem necessary in order to comply with the requirements of Section 423 of the Code. Decisions of the Plan Administrator and the Board shall be final and binding on all parties having an interest in the Plan. The Plan Administrator shall have full authority and discretion to retain and engage such third party firms (including, without limitation, brokerage and record keeping firms) as it shall from time to time deem advisable or appropriate. B. The Board shall have the full authority and discretion to designate Corporate Affiliates as Participating Companies from time to time and to terminate any such designation; to decide any questions relating to the administration of the Plan that are referred to the Board by the Plan Administrator; and to amend the Plan as provided in Section X. III. STOCK SUBJECT TO PLAN A. The stock purchasable under the Plan shall be shares of authorized but unissued Common Stock or shares of Common Stock held in the Company's treasury. The maximum number of shares of Common Stock which may be issued over the term of the Plan shall not exceed 500,000 shares. B. Should any change be made to the Common Stock by reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of shares or other change affecting the outstanding Common Stock as a class without the Company's receipt of consideration, appropriate adjustments shall be made to (i) the maximum number and class of securities issuable under the Plan, (ii) the maximum number and class of securities purchasable per Participant on any one Purchase Date and (iii) the number and class of securities and the price 1 2 per share in effect under each outstanding purchase right in order to prevent the dilution or enlargement of benefits thereunder. IV. PURCHASE PERIODS Shares of Common Stock shall be offered for purchase under the Plan through a series of successive Purchase Periods until such time as (i) the maximum number of shares of Common Stock available for issuance under the Plan shall have been purchased or (ii) the Plan shall have been sooner terminated. V. ELIGIBILITY A. Each individual who is an Eligible Employee on the Effective Date shall be eligible to participate in the Plan on the first day of any Purchase Period under the Plan, provided such individual remains an Eligible Employee on such day. Eligibility to participate in the Plan shall be limited to Eligible Employees employed by the Company or by a Corporate Affiliate that is a U.S. subsidiary of the Company. B. Each individual who becomes an Eligible Employee after the Effective Date shall be eligible to participate in the Plan on the first day of any Purchase Period commencing thereafter, provided such individual remains an Eligible Employee on such day. C. To participate in the Plan for a particular Purchase Period, an Eligible Employee must complete the enrollment forms prescribed by the Plan Administrator and file such forms with the Plan Administrator (or its designee) before the first day of such Purchase Period. An Eligible Employee's enrollment in the Plan for a Purchase Period will remain in effect for all subsequent Purchase Periods until modified or terminated by the Eligible Employee or until he or she no longer qualifies as an Eligible Employee. VI. PAYROLL DEDUCTIONS; SHORTFALL CONTRIBUTIONS A. The payroll deduction authorized by the Participant for purposes of acquiring shares of Common Stock under the Plan may be (i) any whole multiple of one percent (1%) of the Eligible Compensation paid to the Participant during each Purchase Period or (ii) any whole dollar amount of the Eligible Compensation paid to the Participant during each Purchase Period, provided that the Participant's payroll deduction for any Purchase Period shall not exceed a maximum of twenty-five percent (25%) of such Eligible Compensation. The deduction rate so authorized shall continue in effect for the entire Purchase Period. The Participant may not increase his or her rate of payroll deduction during a Purchase Period. However, the Participant may, at any time prior to the tenth (10th) Business Day immediately preceding the Purchase Date for the Purchase Period, reduce his or her rate of payroll deduction to any whole percentage or whole dollar amount or to zero, such reduction to become effective prospectively as soon as administratively feasible after filing the appropriate form with the Plan Administrator. The Participant may not, however, effect more than one (1) such reduction per Purchase Period. If a Participant reduces his or her payroll deductions to zero, the Participant's previous payroll deductions for the Purchase Period will still be applied to the purchase of shares of Common 2 3 Stock on the Purchase Date, unless the Participant elects to terminate his or her purchase rights for the Purchase Period in accordance with Section VII.E. B. Payroll deductions shall begin on the first pay day of each Purchase Period and shall (unless sooner terminated) continue through the pay day ending on or immediately prior to the last day of the Purchase Period. The amounts so collected shall be credited to the Participant's Account under the Plan. Payroll deduction amounts need not be held in any segregated account or trust fund and may be commingled with the general assets of the Company and used for general corporate purposes. C. Payroll deductions shall automatically cease upon the termination of the Participant's purchase right in accordance with the provisions of the Plan. D. A Participant whose net pay after all deductions therefrom on any given pay day is not sufficient to fund the payroll deduction authorized by the Participant for a Purchase Period shall be permitted to fund any such shortfall by contributing the amount thereof to the Plan in cash, by personal check or in any other form permitted from time to time by the Plan Administrator ("Shortfall Contributions"). Shortfall Contributions must be contributed to the Plan before the tenth (10th) Business Day immediately preceding the Purchase Date for the Purchase Period. All references in this Plan to payroll deductions also shall be deemed to refer to and include Shortfall Contributions, except where the context clearly requires otherwise. E. No interest shall accrue on the payroll deductions of a Participant in the Plan. VII. PURCHASE RIGHTS A. A Participant shall be granted a separate purchase right on the first day of each Purchase Period in which he or she participates. The purchase right shall provide the Participant with the right to purchase shares of Common Stock on the Purchase Date upon the terms set forth below. Under no circumstances shall purchase rights be granted under the Plan to any Eligible Employee if such individual would, immediately after the grant, own (within the meaning of Section 424(d) of the Code) or hold outstanding options or other rights to purchase, stock possessing five percent (5%) or more of the total combined voting power or value of all classes of stock of the Company or any Corporate Affiliate. B. Each purchase right shall be automatically exercised on the Purchase Date, and shares of Common Stock shall accordingly be purchased on such date on behalf of each Participant participating in the related Purchase Period (other than any Participant whose payroll deductions have previously been refunded in accordance with paragraph E below). The purchase shall be effected by applying the Participant's Account balance as of the last day of the Purchase Period to the purchase of shares of Common Stock (subject to the limitation on the maximum number of shares purchasable per Participant) at the Purchase Price in effect for that Purchase Period. C. The number of shares of Common Stock purchasable by a Participant on each Purchase Date shall be the number of whole and fractional shares obtained by dividing the Participant's Account balance on the last day of the Purchase Period by the Purchase Price in effect for that 3 4 Purchase Date. However, the maximum number of shares of Common Stock purchasable per Participant on any one Purchase Date shall not exceed 3,000 shares. D. Any portion of the Participant's Account balance that is not applied to the purchase of Common Stock by reason of the limitation on the maximum number of shares purchasable by the Participant on the Purchase Date shall be refunded as soon as administratively feasible. E. The following provisions shall govern the termination of outstanding purchase rights: (i) A Participant may, at any time prior to the tenth (10th) Business Day immediately preceding the Purchase Date for the Purchase Period, terminate his or her outstanding purchase right by filing the appropriate form with the Plan Administrator (or its designee), and no further payroll deductions shall be collected from or made by the Participant with respect to such terminated purchase right. The Participant's entire Account balance as of the effective date of such termination shall be refunded as soon as administratively feasible. (ii) The termination of such purchase right shall be irrevocable, and the Participant may not subsequently rejoin the Purchase Period for which the terminated purchase right was granted. In order to resume participation in any subsequent Purchase Period, such individual must re-enroll in the Plan (by making a timely filing of the prescribed enrollment forms) before the first day of the new Purchase Period. (iii) Should the Participant cease to remain an Eligible Employee for any reason (including death, disability or change in employment status) while his or her purchase right remains outstanding, then that purchase right shall immediately terminate, and the Participant's entire Account balance shall be refunded as soon as administratively feasible. However, should the Participant cease to remain in active service by reason of an approved unpaid leave of absence, then the Participant shall have the right, exercisable up until the tenth (10th) Business Day immediately preceding the Purchase Date for the Purchase Period in which such leave commences, to withdraw his or her entire Account balance. If a Participant on such an unpaid leave does not exercise this right, such Participant's Account balance shall be held for the purchase of shares at the next Purchase Date. In no event, however, shall any further payroll deductions be collected on the Participant's behalf during any such unpaid leave. Upon the return to active service of any Participant previously on unpaid leave, his or her payroll deductions under the Plan shall automatically resume at the rate in effect at the time the leave began, unless the Participant elected to withdraw his or her Account balance for the Purchase Period in which the leave commenced. (iv) Notwithstanding any other provision of the Plan to the contrary, a Participant's purchase rights with respect to a Purchase Period shall terminate, and his or her Account balance shall be refunded as soon as administratively feasible, if the Participant's employment with the Participating Companies terminates for any reason on or before the Purchase Date for such Purchase Period. 4 5 F. Each outstanding purchase right shall automatically be exercised, immediately prior to the date any Corporate Transaction is consummated, by applying the Participant's Account balance to the purchase of whole and fractional shares of Common Stock at a purchase price per share equal to eighty-five percent (85%) of the lower of (i) the Fair Market Value per share of Common Stock on the first day of the Purchase Period in which such Corporate Transaction occurs or (ii) the Fair Market Value per share of Common Stock immediately prior to the date such Corporate Transaction is consummated. However, the applicable limitation on the number of shares of Common Stock purchasable per Participant shall continue to apply to any such purchase. The Company shall use reasonable efforts to provide prior written notice of the occurrence of any Corporate Transaction, and Participants shall, following the receipt of such notice, have the right to terminate their outstanding purchase rights prior to the effective date of the Corporate Transaction. G. Should the total number of shares of Common Stock which are to be purchased pursuant to outstanding purchase rights on any particular date exceed the number of shares then available for issuance under the Plan, the Plan Administrator shall make a pro-rata allocation of the available shares on a uniform and nondiscriminatory basis, and the Account balance of each Participant, to the extent in excess of the aggregate Purchase Price payable for the Common Stock pro-rated to such individual, shall be refunded as soon as administratively feasible. H. The purchase right shall be exercisable only by the Participant and shall not be assignable or transferable by the Participant. I. A Participant shall have no stockholder rights with respect to the shares subject to his or her outstanding purchase right until the shares are purchased on the Participant's behalf in accordance with the provisions of the Plan and the Participant has become the owner of the purchased shares. VIII. ACCRUAL LIMITATIONS A. No Participant shall be entitled to accrue rights to acquire Common Stock pursuant to any purchase right outstanding under this Plan if and to the extent such rights, when aggregated with (i) rights to purchase Common Stock accrued under any other purchase right granted under this Plan and (ii) similar rights accrued under other employee stock purchase plans (within the meaning of Section 423 of the Code) of the Company or any Corporate Affiliate, would otherwise permit such Participant to purchase more than Twenty-Five Thousand Dollars ($25,000) worth of stock of the Company and of any Corporate Affiliate (determined on the basis of the Fair Market Value of such stock on the date or dates such rights are granted) for each calendar year such rights are at any time outstanding, subject to the following: (i) The right to acquire Common Stock under each outstanding purchase right shall accrue on the Purchase Date in effect for the Purchase Period for which such right is granted. (ii) No right to acquire Common Stock under any outstanding purchase right shall accrue to the extent the Participant has already accrued in the same calendar 5 6 year the right to acquire Common Stock under one (1) or more other purchase rights at a rate equal to Twenty-Five Thousand Dollars ($25,000) worth of Common Stock (determined on the basis of the Fair Market Value per share on the date or dates of grant) for each calendar year such rights were at any time outstanding. B. If by reason of such accrual limitations, any purchase right of a Participant does not accrue for a particular Purchase Period, then the Participant's Account balance with respect to such purchase right shall be refunded as soon as administratively feasible. C. In the event there is any conflict between the provisions of this Article and one or more provisions of the Plan or any instrument issued thereunder, the provisions of this Article shall be controlling. IX. EFFECTIVE DATE AND TERM OF THE PLAN A. The Plan was adopted by the Board on August 26, 1998 and shall become effective on the Effective Date, provided no purchase rights granted under the Plan shall be exercised, and no shares of Common Stock shall be issued hereunder, until the Company shall have complied with all applicable requirements of the 1933 Act (including the registration of the shares of Common Stock issuable under the Plan on a Form S-8 registration statement filed with the Securities and Exchange Commission), all applicable listing requirements of any stock exchange on which the Common Stock is listed for trading and all other applicable requirements established by law or regulation other than approval of the Plan by the Company's stockholders. In the event stockholder approval of the Plan by majority vote of the shares represented in person or by proxy at a meeting of the stockholders of the Company at which a quorum is present is not obtained, or such compliance is not effected, within twelve (12) months after the date on which the Plan is adopted by the Board, the Plan shall terminate and have no further force or effect, and the Participants' Account balances shall be distributed as soon as administratively feasible. B. Unless sooner terminated by the Board, the Plan shall terminate upon the earliest to occur of (i) the last Business Day in December 2008, (ii) the date on which all shares available for issuance under the Plan shall have been sold to Participants pursuant to purchase rights exercised under the Plan or (iii) the date on which all purchase rights are exercised in connection with a Corporate Transaction. Following such termination, no further purchase rights shall be granted or exercised, and no further payroll deductions shall be collected under the Plan. X. AMENDMENT OF THE PLAN A. The Plan may be amended from time to time by the Board or any duly authorized committee thereof, and all purchase rights outstanding at the effective date of any such amendment will be subject to such amendment. In the event any law, or any rule or regulation issued or promulgated by the Internal Revenue Service, the Securities and Exchange Commission, the National Association of Securities Dealers, Inc., any stock exchange upon which the Common Stock is listed for trading, or any other governmental or quasi-governmental agency having jurisdiction over the Company, the Common Stock or the Plan, requires the Plan to be amended, or in the event any of the rules under Section 16 of the 1934 Act are amended or 6 7 supplemented (e.g., by addition of alternative rules), in either event to require or permit the Company to add, remove or lessen any restrictions on or with respect to purchase rights under the Plan, the Board reserves the right to amend the Plan to the extent of any such requirement, amendment or supplement, and all purchase rights then outstanding will be subject to such amendment. B. The Plan may be terminated at any time by action of the Board; provided, however, that the termination of the Plan shall not adversely affect the terms of any outstanding purchase rights. C. Notwithstanding the foregoing, the Board may not, without the approval of the Company's stockholders, increase the number of shares of Common Stock issuable under the Plan, except to the extent permitted under Section III.B. D. With respect to any Participating Corporation which employs Eligible Employees who reside outside of the United States, and notwithstanding anything herein to the contrary, the Board may in its sole discretion amend the terms of the Plan, or any purchase right granted under the Plan, in order to comply with the requirements of local law, and may, where appropriate, establish one or more sub-plans to reflect such amended provisions applicable to such Eligible Employees. XI. GENERAL PROVISIONS A. All costs and expenses incurred in the administration of the Plan shall be paid by the Company. B. Nothing in the Plan shall confer upon any Participant any right to continue in the employ of the Company or any Corporate Affiliate for any period of specific duration, or interfere with or otherwise restrict in any way the rights of the Company (or any Corporate Affiliate employing such person) or of the Participant, which rights are hereby expressly reserved by each, to terminate such Participant's employment at any time for any reason, with or without cause. 7 8 APPENDIX The following definitions shall be in effect under the Plan: A. ACCOUNT shall mean the account established by the Plan Administrator to record a Participant's payroll deductions as of any given date. B. BOARD shall mean the Company's Board of Directors. C. BUSINESS DAY shall mean a day on which the New York Stock Exchange is open for trading. D. CODE shall mean the Internal Revenue Code of 1986, as amended. E. COMMON STOCK shall mean the Company's common stock, par value $.0025 per share. F. COMPANY shall mean Associated Materials Incorporated, a Delaware corporation, and any corporate successor to all or substantially all of the assets or voting stock of Associated Materials Incorporated which shall by appropriate action adopt the Plan. G. CORPORATE AFFILIATE shall mean any parent or subsidiary corporation of the Company (as determined in accordance with Section 424 of the Code), whether now existing or subsequently established. H. CORPORATE TRANSACTION shall mean either of the following stockholder-approved transactions to which the Company is a party: (i) a merger, consolidation or reorganization of the Company into or with another corporation or legal person as a result of which securities possessing less than fifty percent (50%) of the total combined voting power of the then-outstanding voting securities of such corporation or person immediately after such transaction are held in the aggregate by the holders of the voting securities of the Company immediately prior to such transaction, or (ii) a sale or other transfer of all or substantially all of the assets of the Company to another corporation or other legal person as a result of which securities possessing less than fifty percent (50%) of the total combined voting power of the then-outstanding voting securities of such corporation or person immediately after such sale or transfer are held in the aggregate by the holders of the voting securities of the Company immediately prior to such sale or transfer. I. EFFECTIVE DATE shall mean October 1, 1998. 8 9 J. ELIGIBLE COMPENSATION means the following items of remuneration paid to a Participant by one or more Participating Companies during each Purchase Period: base salary, overtime pay, commissions and cash incentive compensation, computed before giving effect to the Participant's salary reduction elections under Section 125 or Section 401(k) of the Code or the Participant's deferral elections under any nonqualified deferred compensation plan of the Company or any Corporate Affiliate. K. ELIGIBLE EMPLOYEE shall mean an Employee who is employed by a Participating Company on a basis under which he or she is regularly expected to render at least twenty (20) hours of service per week for more than five (5) months per calendar year for earnings considered wages. Notwithstanding the foregoing, a person who is an independent contractor performing services for a Participating Company shall not be eligible to participate in the Plan. L. EMPLOYEE shall mean an individual who is a common law employee of the Company or any Corporate Affiliate. M. FAIR MARKET VALUE per share of Common Stock on any relevant date shall be the closing selling price per share of Common Stock on the date in question on the stock exchange determined by the Plan Administrator to be the primary market for the Common Stock or the NASDAQ, as such price is officially quoted in the composite tape of transactions on such exchange or NASDAQ. If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists. N. 1933 ACT shall mean the Securities Act of 1933, as amended. O. 1934 ACT shall mean the Securities Exchange Act of 1934, as amended. P. PARTICIPANT shall mean any Eligible Employee of a Participating Company who is actively participating in the Plan. Q. PARTICIPATING COMPANY shall mean the Company, each Corporate Affiliate that is a direct or indirect domestic subsidiary of the Company and each other Corporate Affiliate that is authorized from time to time by the Board to extend the benefits of the Plan to its Eligible Employees. For purposes of the foregoing, the term "subsidiary" has the meaning set forth in Section 424(f) of the Code. R. PLAN shall mean the Company's Employee Stock Purchase Plan, as set forth in this document. S. PLAN ADMINISTRATOR shall mean the person or persons appointed by the Board from time to time as the plan administrator of the Plan. T. PURCHASE DATE shall mean the last Business Day of each Purchase Period or, with respect to a Corporate Transaction, the date specified for the purchase in Section VII.F. 9 10 U. PURCHASE PERIOD shall mean a period of six (6) months extending from January 1 to June 30 and from July 1 to December 31 of each year; provided, however, that the first Purchase Period shall begin on October 1, 1998, and shall end on December 31, 1998. V. PURCHASE PRICE shall mean the purchase price per share at which Common Stock will be purchased on the Participant's behalf on each Purchase Date and shall be equal to eighty-five percent (85%) of the lower of (i) the Fair Market Value per share of Common Stock on the first day of the Purchase Period in which the Purchase Date occurs or (ii) the Fair Market Value per share of Common Stock on that Purchase Date. W. SERVICE shall mean the performance of services to the Company or any Corporate Affiliate by a person in the capacity of an Employee. X. SHORTFALL CONTRIBUTIONS shall have the meaning ascribed to such term in Section VI.D. of the Plan. 10 -----END PRIVACY-ENHANCED MESSAGE-----