1
Exhibit 3
AMENDED AND RESTATED BYLAWS
OF
HOUSTON INDUSTRIES INCORPORATED
Adopted and Amended by Resolution of the Board of Directors on
December 4, 1996
ARTICLE I
CAPITAL STOCK
Section 1. Share Ownership. Shares for the capital stock of the
Company may be certificated or uncertificated. Owners of shares of the capital
stock of the Company shall be recorded in the share transfer records of the
Company and ownership of such shares shall be evidenced by a certificate or
book entry notation in the share transfer records of the Company. Any
certificates representing such shares shall be signed by the Chairman of the
Board, if there is one, the Chief Executive Officer, if there is one, the
President or a Vice President and either the Secretary or an Assistant
Secretary and shall be sealed with the seal of the Company, which signatures
and seal may be facsimiles. In case any officer who has signed or whose
facsimile signature has been placed upon such certificate shall have ceased to
be such officer before such certificate is issued, it may be issued by the
Company with the same effect as if he were such officer at the date of its
issuance.
Section 2. Shareholders of Record. The Board of Directors of the
Company may appoint one or more transfer agents or registrars of any class of
stock of the Company. The Company may be its own transfer agent if so
appointed by the Board of Directors. The Company shall be entitled to treat
the holder of record of any shares of the Company as the owner thereof for all
purposes, and shall not be bound to recognize any equitable or other claim to,
or interest in, such shares or any rights deriving from such shares, on the
part of any other person, including (but without limitation) a purchaser,
assignee or transferee, unless and until such other person becomes the holder
of record of such shares, whether or not the Company shall have either actual
or constructive notice of the interest of such other person.
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Section 3. Transfer of Shares. The shares of the capital stock of
the Company shall be transferable in the share transfer records of the Company
by the holder of record thereof, or his duly authorized attorney or legal
representative. All certificates representing shares surrendered for transfer,
properly endorsed, shall be cancelled and new certificates for a like number of
shares shall be issued therefor. In the case of lost, stolen, destroyed or
mutilated certificates representing shares for which the Company has been
requested to issue new certificates, new certificates or other evidence of such
new shares may be issued upon such conditions as may be required by the Board
of Directors or the Secretary for the protection of the Company and any
transfer agent or registrar. Uncertificated shares shall be transferred in the
share transfer records of the Company upon the written instruction originated
by the appropriate person to transfer the shares.
Section 4. Shareholders of Record and Fixing of Record Date. For the
purpose of determining shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof, or entitled to receive a
distribution by the Company (other than a distribution involving a purchase or
redemption by the Company of any of its own shares) or a share dividend, or in
order to make a determination of shareholders for any other proper purpose
(other than determining shareholders entitled to consent to action by
shareholders proposed to be taken without a meeting of shareholders), the Board
of Directors may provide that the share transfer records shall be closed for a
stated period of not more than sixty days, and in the case of a meeting of
shareholders not less than ten days, immediately preceding the meeting, or it
may fix in advance a record date for any such determination of shareholders,
such date to be not more than sixty days, and in the case of a meeting of
shareholders not less than ten days, prior to the date on which the particular
action requiring such determination of shareholders is to be taken. If the
share transfer records are not closed and no record date is fixed for the
determination of shareholders entitled to notice of or to vote at a meeting of
shareholders, or shareholders entitled to receive a distribution (other than a
distribution involving a purchase or redemption by the Company of any of its
own shares) or a share dividend, the date on which notice of the meeting is
mailed or the date on which the resolution of the Board of Directors declaring
such distribution or share dividend is adopted, as the case may be, shall be
the record date for such determination of shareholders. When a determination
of shareholders entitled to vote at any meeting of shareholders has been made
as herein provided, such determination shall apply to any adjournment thereof
except where the determination has been made through the closing of the share
transfer records and the stated period of closing has expired.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 1. Place of Meetings. All meetings of shareholders shall be
held at the registered office of the Company, in the City of Houston, Texas, or
at such other place within or without the State of Texas as may be designated
by the Board of Directors or officer calling the meeting.
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Section 2. Annual Meeting. The annual meeting of the shareholders
shall be held on such date and at such time as shall be designated from time to
time by the Board of Directors or as may otherwise be stated in the notice of
the meeting. Failure to designate a time for the annual meeting or to hold the
annual meeting at the designated time shall not work a dissolution of the
Company.
Section 3. Special Meetings. Special meetings of the shareholders
may be called by the Chairman of the Board, if there is one, the Chief
Executive Officer, if there is one, the President, the Secretary, the Board of
Directors, the holders of not less than one-tenth of all of the shares
outstanding and entitled to vote at such meeting or such other persons as may
be authorized in the Articles of Incorporation of the Company.
Section 4. Notice of Meeting. Written or printed notice of all
meetings stating the place, day and hour of the meeting and, in case of a
special meeting, the purpose or purposes for which the meeting is called, shall
be delivered not less than ten nor more than sixty days before the date of the
meeting, either personally or by mail, by or at the direction of the Chairman
of the Board, if there is one, the Chief Executive Officer, if there is one,
the President, the Secretary or the officer or person calling the meeting to
each shareholder of record entitled to vote at such meetings . If mailed, such
notice shall be deemed to be delivered when deposited in the United States mail
addressed to the shareholder at his address as it appears on the share transfer
records of the Company, with postage thereon prepaid.
Any notice required to be given to any shareholder, under any
provision of the Texas Business Corporation Act, as amended (TBCA), the
Articles of Incorporation of the Company or these Bylaws, need not be given to
a shareholder if notice of two consecutive annual meetings and all notices of
meetings held during the period between those annual meetings, if any, or all
(but in no event less than two) payments (if sent by first class mail) of
distributions or interest on securities during a 12-month period have been
mailed to that person, addressed at his address as shown on the share transfer
records of the Company, and have been returned undeliverable. Any action or
meeting taken or held without notice to such person shall have the same force
and effect as if the notice had been duly given. If such a person delivers to
the Company a written notice setting forth his then current address, the
requirement that notice be given to that person shall be reinstated.
Section 5. Voting List. The officer or agent having charge of the
share transfer records for shares of the Company shall make, at least ten days
before each meeting of shareholders, a complete list of the shareholders
entitled to vote at such meeting or any adjournment thereof, arranged in
alphabetical order, with the address of and the number of shares held by each,
which list, for a period of ten days prior to such meeting, shall be kept on
file at the registered office of the Company and shall be subject to inspection
by any shareholder at any time during usual business hours. Such list shall
also be produced and kept open at the time and place of the meeting and shall
be subject to the inspection of any shareholder during the whole time of the
meeting. The original share transfer records shall be prima facie evidence as
to who are the shareholders entitled to examine such list or to vote at any
meeting of shareholders. Failure to comply with any requirements of this
Section 5 shall not affect the validity of any action taken at such meeting.
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Section 6. Voting; Proxies. Except as otherwise provided in the
Articles of Incorporation of the Company or as otherwise provided in the TBCA,
each holder of shares of capital stock of the Company entitled to vote shall be
entitled to one vote for each share standing in his name on the records of the
Company, either in person or by proxy executed in writing by him or by his duly
authorized attorney-in-fact. A proxy shall be revocable unless expressly
provided therein to be irrevocable and the proxy is coupled with an interest.
At each election of directors, every holder of shares of the Company entitled
to vote shall have the right to vote, in person or by proxy, the number of
shares owned by him for as many persons as there are directors to be elected,
and for whose election he has a right to vote, but in no event shall he be
permitted to cumulate his votes for one or more directors.
Section 7. Quorum and Vote of Shareholders. Except as otherwise
provided by law, the Articles of Incorporation of the Company or these Bylaws,
the holders of a majority of shares entitled to vote, represented in person or
by proxy, shall constitute a quorum at a meeting of shareholders, but, if a
quorum is not represented, a majority in interest of those represented may
adjourn the meeting from time to time. Directors shall be elected by a
plurality of the votes cast by the holders of shares entitled to vote in the
election of directors at a meeting of shareholders at which a quorum is
present. With respect to each matter other than the election of directors as
to which no other voting requirement is specified by law, the Articles of
Incorporation of the Company or in this Section 7 or in Article VII of these
Bylaws, the affirmative vote of the holders of a majority of the shares
entitled to vote on that matter and represented in person or by proxy at a
meeting at which a quorum is present shall be the act of the shareholders.
With respect to a matter submitted to a vote of the shareholders as to which a
shareholder approval requirement is applicable under the shareholder approval
policy of the New York Stock Exchange, Rule 16b-3 under the Securities Exchange
Act of 1934, as amended (Exchange Act), or any provision of the Internal
Revenue Code, in each case for which no higher voting requirement is specified
by law, the Articles of Incorporation of the Company or these Bylaws, the
affirmative vote of the holders of a majority of the shares entitled to vote
on, and voted for or against, that matter at a meeting at which a quorum is
present shall be the act of the shareholders, provided that approval of such
matter shall also be conditioned on any more restrictive requirement of such
shareholder approval policy, Rule 16b- 3 or Internal Revenue Code provision, as
applicable, being satisfied. With respect to the approval of independent
public accountants (if submitted for a vote of the shareholders), the
affirmative vote of the holders of a majority of the shares entitled to vote
on, and voted for or against, that matter at a meeting of shareholders at which
a quorum is present shall be the act of the shareholders.
Section 8. Presiding Officer and Conduct of Meetings. The Chairman
of the Board, if there is one, or in his absence, the Chief Executive Officer,
if there is one, or in his absence, the President shall preside at all meetings
of the shareholders or, if such officers are not present at a meeting, by such
other person as the Board of Directors shall designate or if no such person is
designated by the Board of Directors, the most senior officer of the Company
present at the meeting. The Secretary of the Company, if present, shall act as
secretary of each meeting of shareholders; if he is not present at a meeting,
then such person as may be designated by the presiding officer shall act as
secretary of the meeting. Meetings of shareholders shall follow reasonable and
fair procedure. Subject to the
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foregoing, the conduct of any meeting of shareholders and the determination of
procedure and rules shall be within the absolute discretion of the officer
presiding at such meeting (Chairman of the Meeting), and there shall be no
appeal from any ruling of the Chairman of the Meeting with respect to procedure
or rules. Accordingly, in any meeting of shareholders or part thereof, the
Chairman of the Meeting shall have the sole power to determine appropriate
rules or to dispense with theretofore prevailing rules. Without limiting the
foregoing, the following rules shall apply:
(a) If disorder should arise which prevents continuation of
the legitimate business of meeting, the Chairman of the Meeting may
announce the adjournment of the meeting; and upon so doing, the
meeting shall be immediately adjourned.
(b) The Chairman of the Meeting may ask or require that
anyone not a bona fide shareholder or proxy leave the meeting.
(c) A resolution or motion shall be considered for vote only
if proposed by a shareholder or a duly authorized proxy, and seconded
by an individual who is a shareholder or a duly authorized proxy,
other than the individual who proposed the resolution or motion,
subject to compliance with any other requirements concerning such
proposed resolution or motion contained in these Bylaws. The Chairman
of the Meeting may propose any motion for vote.
(d) The order of business at all meetings of shareholders
shall be determined by the Chairman of the Meeting.
(e) The Chairman of the Meeting may impose any reasonable
limits with respect to participation in the meeting by shareholders,
including, but not limited to, limits on the amount of time taken up
by the remarks or questions of any shareholder, limits on the number
of questions per shareholder and limits as to the subject matter and
timing of questions and remarks by shareholders.
(f) Before any meeting of shareholders, the Board of
Directors may appoint three persons other than nominees for office to
act as inspectors of election at the meeting or its adjournment. If
no inspectors of election are so appointed, the Chairman of the
Meeting may, and on the request of any shareholder or a shareholder's
proxy shall, appoint inspectors of election at the meeting of the
shareholders and the number of such inspectors shall be three. If any
person appointed as inspector fails to appear or fails or refuses to
act, the Chairman of the Meeting may, and upon the request of any
shareholder or a shareholder's proxy shall, appoint a person to fill
such vacancy.
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The duties of the inspectors shall be to:
(i) determine the number of shares outstanding and
the voting power of each, the shares represented at the
meeting, the existence of a quorum, and the authenticity,
validity and effect of proxies and ballots;
(ii) receive votes or ballots;
(iii) hear and determine all challenges and
questions in any way arising in connection with the vote;
(iv) count and tabulate all votes;
(v) report to the Board of Directors the results
based on the information assembled by the inspectors; and
(vi) do any other acts that may be proper to conduct
the election or vote with fairness to all shareholders.
Notwithstanding the foregoing, the final certification of the
results of the election or other matter acted upon at a
meeting of shareholders shall be made by the Board of
Directors.
All determinations of the Chairman of the Meeting shall be conclusive
unless a matter is determined otherwise upon motion duly adopted by the
affirmative vote of the holders of at least 80% of the voting power of the
shares of capital stock of the Company entitled to vote in the election of
directors held by shareholders present in person or represented by proxy at
such meeting.
ARTICLE III
DIRECTORS
Section 1. Number and Classification of Board of Directors;
Qualifications. The business and affairs of the Company shall be managed by
the Board of Directors. The number of directors that shall constitute the
whole Board of Directors of the Company shall be not less than nine nor more
than eighteen as specified from time to time by the affirmative vote of at
least 80% of all directors then in office at any regular or special meeting of
the Board of Directors called for that purpose. The directors shall be divided
into three classes, Class I, Class II and Class III. Such classes shall be as
nearly equal in number of directors as possible. Each director, other than
those who may be elected by the holders of Preference Stock pursuant to Section
6 of Division A of Article VI of the Articles of Incorporation of the Company
(or elected by such directors to fill a vacancy) and except as provided in the
penultimate paragraph of this Section 1, shall serve for a term ending
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on the third annual meeting following the annual meeting at which such director
was elected. Each director elected by the holders of Preference Stock pursuant
to Section 6 of Division A of Article VI of the Articles of Incorporation of
the Company (or elected by such directors to fill a vacancy) shall serve for a
term ending upon the earlier of the election of his successor or the
termination at any time of a right of the holders of Preference Stock to elect
members of the Board of Directors.
At each annual election, the directors chosen to succeed those whose
terms then expire shall be of the same class as the directors they succeed,
unless, by reason of any intervening changes in the authorized number of
directors, the Board of Directors shall designate one or more directorships
whose term then expires as directorships of another class in order more nearly
to achieve equality of number of directors among the classes.
Notwithstanding the rule that the three classes shall be as nearly
equal in number of directors as possible, in the event of any change in the
authorized number of directors, each director then continuing to serve as such
shall nevertheless continue as a director of the class of which he is a member
until the expiration of his current term, or his prior death, resignation,
disqualification or removal. If any newly created directorship may, consistent
with the rule that the three classes shall be as nearly equal in number of
directors as possible, be allocated to any of the three classes, the Board of
Directors shall allocate it to that available class whose term of office is due
to expire at the earliest date following such allocation. No decrease in the
number of directors constituting the Board of Directors shall shorten the term
of any incumbent director.
No person shall be eligible to serve as a director of the Company
subsequent to the annual meeting of shareholders occurring on or after the
first day of the month immediately following the month of such person's
seventieth birthday. No person shall be eligible to stand for reelection at
the annual meeting of shareholders on or immediately following the tenth
anniversary of such person's initial election or appointment to the Board of
Directors. Any vacancy on the Board of Directors resulting from any director
being rendered ineligible to serve as a director of the Company by the
immediately preceding two sentences shall be filled by the shareholders
entitled to vote thereon at such annual meeting of shareholders. Any director
chosen to succeed a director who is so rendered ineligible to serve as a
director of the Company shall be of the same class as the director he succeeds.
Notwithstanding the rule that a director may not stand for reelection at the
annual meeting of shareholders on or immediately following the tenth
anniversary of such person's initial election or appointment to the Board of
Directors, an incumbent director may nevertheless continue as a director until
the expiration of his current term, or his prior death, resignation,
disqualification or removal; provided, however, that no person serving as a
director as of April 1, 1992 shall be affected by such term limitation
provision, nor shall such term limitation provision apply to directors who are
also employees of the Company or its corporate affiliates.
The above notwithstanding, each director shall serve until his
successor shall have been duly elected and qualified, unless he shall resign,
become disqualified, disabled or shall otherwise be removed.
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No person shall be eligible for election or reelection or to continue
to serve as a member of the Board of Directors who is an officer, director,
agent, representative, partner, employee, or nominee of, or otherwise acting at
the direction of, or acting in concert with, (a) a "public-utility company"
(other than any direct or indirect subsidiary of the company) as such term is
defined in Section 2(a)(5) of the Public Utility Holding Company Act of 1935,
as in effect on May 1, 1996 (35 Act), or (b) an "affiliate" (as defined in
either Section 2(a)(11) of the 35 Act or in Rule 405 under the Securities Act
of 1933, as amended) of any such "public-utility company" specified in clause
(a) immediately preceding.
Section 2. Newly Created Directorships and Vacancies. Newly created
directorships resulting from any increase in the number of directors may be
filled by the affirmative vote of a majority of the directors then in office
for a term of office continuing only until the next election of one or more
directors by the shareholders entitled to vote thereon, or may be filled by
election at an annual or special meeting of the shareholders called for that
purpose; provided, however, that the Board of Directors shall not fill more
than two such directorships during the period between two successive annual
meetings of shareholders. Except as provided in Section 1 of this Article III,
any vacancies on the Board of Directors resulting from death, resignation,
disqualification, removal or other cause may be filled 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, or may be filled by election at an annual
or special meeting of the shareholders called for that purpose. Any director
elected to fill any such vacancy shall hold office for the remainder of the
full term of the director whose departure from the Board of Directors created
the vacancy and until such newly elected director's successor shall have been
duly elected and qualified.
Notwithstanding the foregoing paragraph of this Section 2, whenever
holders of outstanding shares of Preference Stock are entitled to elect members
of the Board of Directors pursuant to the provisions of Section 6 of Division A
of Article VI of the Articles of Incorporation of the Company, any vacancy or
vacancies resulting by reason of the death, resignation, disqualification or
removal of any director or directors or any increase in the number of directors
shall be filled in accordance with the provisions of such section.
Section 3. Nomination of Directors. Nominations for the election of
directors may be made by the Board of Directors or by any shareholder
(Nominator) entitled to vote in the election of directors. Such nominations,
other than those made by the Board of Directors, shall be made in writing
pursuant to timely notice delivered to or mailed and received by the Secretary
of the Company as set forth in this Section 3. To be timely in connection with
an annual meeting of shareholders, a Nominator's notice, setting forth the name
and address of the person to be nominated, shall be delivered to or mailed and
received at the principal executive offices of the Company not less than ninety
days nor more than 180 days prior to the date on which the immediately
preceding year's annual meeting of shareholders was held. To be timely in
connection with any election of a director at a special meeting of the
shareholders, a Nominator's notice, setting forth the name of the person to be
nominated, shall be delivered to or mailed and received at the principal
executive offices of the Company not less than forty days nor more than sixty
days prior to the date of such
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meeting; provided, however, that in the event that less than forty-seven days'
notice or prior public disclosure of the date of the special meeting of the
shareholders is given or made to the shareholders, the Nominator's notice to be
timely must be so received not later than the close of business on the seventh
day following the day on which such notice of date of the meeting was mailed or
such public disclosure was made. At such time, the Nominator shall also submit
written evidence, reasonably satisfactory to the Secretary of the Company, that
the Nominator is a shareholder of the Company and shall identify in writing (a)
the name and address of the Nominator, (b) the number of shares of each class
of capital stock of the Company owned beneficially by the Nominator, (c) the
name and address of each of the persons with whom the Nominator is acting in
concert, (d) the number of shares of capital stock beneficially owned by each
such person with whom the Nominator is acting in concert, and (e) a description
of all arrangements or understandings between the Nominator and each nominee
and any other persons with whom the Nominator is acting in concert pursuant to
which the nomination or nominations are to be made. At such time, the
Nominator shall also submit in writing (i) the information with respect to each
such proposed nominee that would be required to be provided in a proxy
statement prepared in accordance with Regulation 14A under the Exchange Act and
(ii) a notarized affidavit executed by each such proposed nominee to the effect
that, if elected as a member of the Board of Directors, he will serve and that
he is eligible for election as a member of the Board of Directors. Within
thirty days (or such shorter time period that may exist prior to the date of
the meeting) after the Nominator has submitted the aforesaid items to the
Secretary of the Company, the Secretary of the Company shall determine whether
the evidence of the Nominator's status as a shareholder submitted by the
Nominator is reasonably satisfactory and shall notify the Nominator in writing
of his determination. The failure of the Secretary of the Company to find such
evidence reasonably satisfactory, or the failure of the Nominator to submit the
requisite information in the form or within the time indicated, shall make the
person to be nominated ineligible for nomination at the meeting at which such
person is proposed to be nominated. The presiding person at each meeting of
shareholders shall, if the facts warrant, determine and declare to the meeting
that a nomination was not made in accordance with the procedures prescribed by
these Bylaws, and if he should so determine, he shall so declare to the meeting
and the defective nomination shall be disregarded. Beneficial ownership shall
be determined in accordance with Rule 13d-3 under the Exchange Act.
Section 4. Place of Meetings and Meetings by Telephone. Meetings of
the Board of Directors may be held either within or without the State of Texas,
at whatever place is specified by the officer calling the meeting. Meetings of
the Board of Directors may also be held by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other. Participation in such a meeting by means of
conference telephone or similar communications equipment shall constitute
presence in person at such meeting, except where a director participates in a
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. In the
absence of specific designation by the officer calling the meeting, the
meetings shall be held at the principal office of the Company.
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Section 5. Regular Meetings. The Board of Directors shall meet each
year immediately following the annual meeting of the shareholders for the
transaction of such business as may properly be brought before the meeting.
The Board of Directors shall also meet regularly at such other times as shall
be designated by the Board of Directors. No notice of any kind to either
existing or newly elected members of the Board of Directors for such annual or
regular meetings shall be necessary.
Section 6. Special Meetings. Special meetings of the Board of
Directors may be held at any time upon the call of the Chairman of the Board,
if there is one, the Chief Executive Officer, if there is one, the President or
the Secretary of the Company or a majority of the directors then in office.
Notice shall be sent by mail, facsimile or telegram to the last known address
of the director at least two days before the meeting, or oral notice may be
substituted for such written notice if received not later than the day
preceding such meeting. Notice of the time, place and purpose of such meeting
may be waived in writing before or after such meeting, and shall be equivalent
to the giving of notice. Attendance of a director at such meeting shall also
constitute a waiver of notice thereof, except where he attends for the express
purpose of objecting to the transaction of any business on the ground that the
meeting is not lawfully called or convened. Except as otherwise provided by
these Bylaws, neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Board of Directors need be specified in the
notice or waiver of notice of such meeting.
Section 7. Quorum and Voting. Except as otherwise provided by law,
the Articles of Incorporation of the Company or these Bylaws, a majority of the
number of directors fixed in the manner provided in these Bylaws as from time
to time amended shall constitute a quorum for the transaction of business.
Except as otherwise provided by law, the Articles of Incorporation of the
Company or these Bylaws, the affirmative vote of a majority of the directors
present at any meeting at which there is a quorum shall be the act of the Board
of Directors. Any regular or special directors' meeting may be adjourned from
time to time by those present, whether a quorum is present or not.
Section 8. Compensation. Directors shall receive such compensation
for their services as shall be determined by the Board of Directors.
Section 9. Removal. No director of the Company shall be removed from
his office as a director by vote or other action of the shareholders or
otherwise except (a) with cause, as defined below, by the affirmative vote of
the holders of at least a majority of the voting power of all outstanding
shares of capital stock of the Company entitled to vote in the election of
directors, voting together as a single class, or (b) without cause by (i) the
affirmative vote of at least 80% of all directors then in office at any regular
or special meeting of the Board of Directors called for that purpose or (ii)
the affirmative vote of the holders of at least 80% of the voting power of all
outstanding shares of capital stock of the Company entitled to vote in the
election of directors, voting together as a single class.
Except as may otherwise be provided by law, cause for removal of a
director shall be construed to exist only if: (a) the director whose removal
is proposed has been convicted, or where
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a director is granted immunity to testify where another has been convicted, of
a felony by a court of competent jurisdiction and such conviction is no longer
subject to direct appeal; (b) such director has been found by the affirmative
vote of at least 80% of all directors then in office at any regular or special
meeting of the Board of Directors called for that purpose or by a court of
competent jurisdiction to have been negligent or guilty of misconduct in the
performance of his duties to the Company in a matter of substantial importance
to the Company; or (c) such director has been adjudicated by a court of
competent jurisdiction to be mentally incompetent, which mental incompetency
directly affects his ability as a director of the Company.
Notwithstanding the first paragraph of this Section 9, whenever
holders of outstanding shares of Preference Stock are entitled to elect members
of the Board of Directors pursuant to the provisions of Section 6 of Division A
of Article VI of the Articles of Incorporation of the Company, any director of
the Company may be removed in accordance with the provisions of such section.
No proposal by a shareholder to remove a director of the Company,
regardless of whether such director was elected by holders of outstanding
shares of Preference Stock (or elected by such directors to fill a vacancy),
shall be voted upon at a meeting of the shareholders unless such shareholder
shall have delivered or mailed in a timely manner (as set forth in this Section
9) and in writing to the Secretary of the Company (a) notice of such proposal,
(b) a statement of the grounds, if any, on which such director is proposed to
be removed, (c) evidence, reasonably satisfactory to the Secretary of the
Company, of such shareholder's status as such and of the number of shares of
each class of the capital stock of the Company beneficially owned by such
shareholder, (d) a list of the names and addresses of other beneficial owners
of shares of the capital stock of the Company, if any, with whom such
shareholder is acting in concert, and of the number of shares of each class of
the capital stock of the Company beneficially owned by each such beneficial
owner, and (e) an opinion of counsel, which counsel and the form and substance
of which opinion shall be reasonably satisfactory to the Board of Directors of
the Company (excluding the director proposed to be removed), to the effect
that, if adopted at a duly called special or annual meeting of the shareholders
of the Company by the required vote as set forth in the first paragraph of this
Section 9, such removal would not be in conflict with the laws of the State of
Texas, the Articles of Incorporation of the Company or these Bylaws. To be
timely in connection with an annual meeting of shareholders, a shareholder's
notice and other aforesaid items shall be delivered to or mailed and received
at the principal executive offices of the Company not less than ninety nor more
than 180 days prior to the date on which the immediately preceding year's
annual meeting of shareholders was held. To be timely in connection with the
removal of any director at a special meeting of the shareholders, a
shareholder's notice and other aforesaid items shall be delivered to or mailed
and received at the principal executive offices of the Company not less than
forty days nor more than sixty days prior to the date of such meeting;
provided, however, that in the event that less than forty-seven days' notice or
prior public disclosure of the date of the special meeting of shareholders is
given or made to the shareholders, the shareholder's notice and other aforesaid
items to be timely must be so received not later than the close of business on
the seventh day following the day on which such notice of date of the meeting
was mailed or such public disclosure was made. Within thirty days (or such
shorter period that may exist prior to the date of the meeting) after such
shareholder shall have
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delivered the aforesaid items to the Secretary of the Company, the Secretary
and the Board of Directors of the Company shall respectively determine whether
the items to be ruled upon by them are reasonably satisfactory and shall notify
such shareholder in writing of their respective determinations. If such
shareholder fails to submit a required item in the form or within the time
indicated, or if the Secretary or the Board of Directors of the Company
determines that the items to be ruled upon by them are not reasonably
satisfactory, then such proposal by such shareholder may not be voted upon by
the shareholders of the Company at such meeting of shareholders. The presiding
person at each meeting of shareholders shall, if the facts warrant, determine
and declare to the meeting that a proposal to remove a director of the Company
was not made in accordance with the procedures prescribed by these Bylaws, and
if he should so determine, he shall so declare to the meeting and the defective
proposal shall be disregarded. Beneficial ownership shall be determined as
specified in accordance with Rule 13d-3 under the Exchange Act.
Section 10. Executive and Other Committees. The Board of Directors,
by resolution or resolutions adopted by a majority of the full Board of
Directors, may designate one or more members of the Board of Directors to
constitute an Executive Committee, and one or more other committees, which
shall in each case be comprised of such number of directors as the Board of
Directors may determine from time to time. Subject to such restrictions as may
be contained in the Company's Articles of Incorporation or that may be imposed
by the TBCA, any such committee shall have and may exercise such powers and
authority of the Board of Directors in the management of the business and
affairs of the Company as the Board of Directors may determine by resolution
and specify in the respective resolutions appointing them, or as permitted by
applicable law, including, without limitation, the power and authority to (a)
authorize a distribution, (b) authorize the issuance of shares of the Company
and (c) exercise the authority of the Board of Directors vested in it pursuant
to Article 2.13 of the TBCA or such successor statute as may be in effect from
time to time. Each duly- authorized action taken with respect to a given
matter by any such duly-appointed committee of the Board of Directors shall
have the same force and effect as the action of the full Board of Directors and
shall constitute for all purposes the action of the full Board of Directors
with respect to such matter.
The designation of any such committee and the delegation thereto of
authority shall not operate to relieve the Board of Directors, or any member
thereof, of any responsibility imposed upon it or him by law, nor shall such
committee function where action of the Board of Directors cannot be delegated
to a committee thereof under applicable law. The Board of Directors shall have
the power at any time to change the membership of any such committee and to
fill vacancies in it. A majority of the members of any such committee shall
constitute a quorum. The Board of Directors shall name a chairman at the time
it designates members to a committee. Each such committee shall appoint such
subcommittees and assistants as it may deem necessary. Except as otherwise
provided by the Board of Directors, meetings of any committee shall be
conducted in accordance with the provisions of Sections 4 and 6 of this Article
III as the same shall from time to time be amended. Any member of any such
committee elected or appointed by the Board of Directors may be removed by the
Board of Directors whenever in its judgment the best interests of the Company
will be served
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thereby, but such removal shall be without prejudice to the contract rights, if
any, of the person so removed. Election or appointment of a member of a
committee shall not of itself create contract rights.
ARTICLE IV
OFFICERS
Section 1. Officers. The officers of the Company shall consist of a
President and a Secretary and such other officers and agents as the Board of
Directors may from time to time elect or appoint, which may include, without
limitation, a Chairman of the Board, a Chief Executive Officer, one or more
Vice Presidents (whose seniority and titles, including Executive Vice
Presidents, Senior Vice Presidents and such assistant or subordinate Vice
Presidents, may be specified by the Board of Directors), a Treasurer, one or
more Assistant Treasurers, and one or more Assistant Secretaries. Each officer
shall hold office until his successor shall have been duly elected and shall
qualify or 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. Except for the Chairman of the Board, if any, no officer need be
a director.
Section 2. Vacancies; Removal. Whenever any vacancies shall occur in
any office by death, resignation, increase in the number of offices of the
Company, or otherwise, the officer so elected shall hold office until his
successor is chosen and qualified. The Board of Directors may at any time
remove any officer of the Company, whenever in its judgment the best interests
of the Company will be served thereby, but such removal shall be without
prejudice to the contract rights, if any, of the person so removed. Election
or appointment of an officer or agent shall not of itself create contract
rights.
Section 3. Powers and Duties of Officers. The officers of the
Company shall have such powers and duties as generally pertain to their offices
as well as such powers and duties as from time to time shall be conferred by
the Board of Directors.
ARTICLE V
INDEMNIFICATION
Section 1. General. The Company shall indemnify and hold harmless
the Indemnitee (as this and all other capitalized words are defined in this
Article or in Article 2.02-1 of the TBCA), to the fullest extent permitted, or
not prohibited, by the TBCA or other applicable law as the same exists or may
hereafter be amended (but in the case of any such amendment, with respect to
Matters occurring before such amendment, only to the extent that such amendment
permits the Company to
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provide broader indemnification rights than said law permitted the Company to
provide prior to such amendment). The provisions set forth below in this
Article are provided as means of furtherance and implementation of, and not in
limitation on, the obligation expressed in this Section 1.
Section 2. Advancement or Reimbursement of Expenses. The rights of
the Indemnitee provided under Section 1 of this Article shall include, but not
be limited to, the right to be indemnified and to have Expenses advanced
(including the payment of expenses before final disposition of a Proceeding) in
all Proceedings to the fullest extent permitted, or not prohibited, by the TBCA
or other applicable law. If the Indemnitee is not wholly successful, on the
merits or otherwise, in a Proceeding, but is successful, on the merits or
otherwise, as to any Matter in such Proceeding, the Company shall indemnify the
Indemnitee against all Expenses actually and reasonably incurred by him or on
his behalf relating to each Matter. The termination of any Matter in a
Proceeding by dismissal, with or without prejudice, shall be deemed to be a
successful result as to such Matter. In addition, to the extent the Indemnitee
is, by reason of his Corporate Status, a witness or otherwise participates in
any Proceeding at a time when he is not named a defendant or respondent in the
Proceeding, he shall be indemnified against all Expenses actually and
reasonably incurred by him or on his behalf in connection therewith. The
Indemnitee shall be advanced Expenses, within ten days after any request for
such advancement, to the fullest extent permitted, or not prohibited, by
Article 2.02-1 of the TBCA; provided that the Indemnitee has provided to the
Company all affirmations, acknowledgments, representations and undertakings
that may be required of the Indemnitee by Article 2.02-1 of the TBCA.
Section 3. Determination of Request. Upon written request to the
Company by an Indemnitee for indemnification pursuant to these Bylaws, a
determination, if required by applicable law, with respect to an Indemnitee's
entitlement thereto shall be made in accordance with Article 2.02-1 of the
TBCA; provided, however, that notwithstanding the foregoing, if a Change in
Control shall have occurred, such determination shall be made by Special Legal
Counsel selected by the Indemnitee, unless the Indemnitee shall request that
such determination be made in accordance with Article 2.02-1F (1) or (2). The
Company shall pay any and all reasonable fees and expenses of Special Legal
Counsel incurred in connection with any such determination. If a Change in
Control shall have occurred, the Indemnitee shall be presumed (except as
otherwise expressly provided in this Article) to be entitled to
indemnification under this Article upon submission of a request to the Company
for indemnification, and thereafter the Company shall have the burden of proof
in overcoming that presumption in reaching a determination contrary to that
presumption. The presumption shall be used by Special Legal Counsel, or such
other person or persons determining entitlement to indemnification, as a basis
for a determination of entitlement to indemnification unless the Company
provides information sufficient to overcome such presumption by clear and
convincing evidence or the investigation, review and analysis of Special Legal
Counsel or such other person or persons convinces him or them by clear and
convincing evidence that the presumption should not apply.
Section 4. Effect of Certain Proceedings. The termination of any
Proceeding or of any Matter therein, by judgment, order, settlement or
conviction, or upon a plea of nolo contendere or
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its equivalent, shall not (except as otherwise expressly provided in this
Article) of itself adversely affect the right of the Indemnitee to
indemnification or create a presumption that (a) the Indemnitee did not conduct
himself in good faith and in a manner which he reasonably believed, in the case
of conduct in his official capacity as a director of the Company, to be in the
best interests of the Company, or, in all other cases, that at least his
conduct was not opposed to the Company's best interests, or (b) with respect to
any criminal Proceeding, that the Indemnitee had reasonable cause to believe
that his conduct was unlawful.
Section 5. Expenses of Enforcement of Article. In the event that an
Indemnitee, pursuant to this Article, seeks a judicial adjudication to enforce
his rights under, or to recover damages for breach of, rights created under or
pursuant to this Article, the Indemnitee shall be entitled to recover from the
Company, and shall be indemnified by the Company against, any and all Expenses
actually and reasonably incurred by him in such judicial adjudication but only
if he prevails therein. If it shall be determined in said judicial
adjudication that the Indemnitee is entitled to receive part but not all of the
indemnification or advancement of Expenses sought, the Expenses incurred by
Indemnitee in connection with such judicial adjudication shall be reasonably
prorated in good faith by counsel for the Indemnitee. Notwithstanding the
foregoing, if a Change in Control shall have occurred, Indemnitee shall be
entitled to indemnification under this Section regardless of whether indemnitee
ultimately prevails in such judicial adjudication.
Section 6. Nonexclusive Rights. The rights of indemnification and to
receive advancement of Expenses as provided by this Article shall not be deemed
exclusive of any other rights to which the Indemnitee may at any time be
entitled under applicable law, the Articles of Incorporation of the Company,
these Bylaws, agreement, insurance, arrangement, a vote of shareholders or a
resolution of directors, or otherwise. No amendment, alteration or repeal of
this Article or any provision thereof shall be effective as to any Indemnitee
for acts, events and circumstances that occurred, in whole or in part, before
such amendment, alteration or repeal. The provisions of this Article shall
continue as to an Indemnitee whose Corporate Status has ceased and shall inure
to the benefit of his heirs, executors and administrators.
Section 7. Invalidity. If any provision or provisions of this
Article shall be held to be invalid, illegal or unenforceable for any reason
whatsoever, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby; and, to the
fullest extent possible, the provisions of this Article shall be construed so
as to give effect to the intent manifested by the provision held invalid,
illegal or unenforceable.
Section 8. Definitions. For purposes of this Article:
"Change of Control" means a change in control of the Company
occurring after the date of adoption of these Bylaws in any of the
following circumstances: (a) there shall have occurred an event
required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A (or in response to any similar item on any similar
schedule or form) promulgated under the Exchange Act, whether or not
the Company is then subject to such
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reporting requirement; (b) any "person" (as such term is used in
Section 13(d) and 14(d) of the Exchange Act), other than a trustee or
other fiduciary holding securities under an employee benefit plan of
the Company or a corporation or other entity owned directly or
indirectly by the shareholders of the Company in substantially the
same proportions as their ownership of stock of the Company, shall
have become the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company
representing 30% or more of the combined voting power of the Company's
then outstanding voting securities without prior approval of at least
two-thirds of the members of the Board of Directors in office
immediately prior to such person attaining such percentage interest;
(c) the Company is a party to a merger, consolidation, share exchange,
sale of assets or other reorganization, or a proxy contest, as a
consequence of which members of the Board of Directors in office
immediately prior to such transaction or event constitute less than a
majority of the Board of Directors thereafter; (d) during any fifteen
month period, individuals who at the beginning of such period
constituted the Board of Directors (including for this purpose any new
director whose election or nomination for election by the Company's
shareholders was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning of
such period) cease for any reason to constitute at least a majority of
the Board of Directors.
"Corporate Status" means the status of a person who is or was
a director, officer, partner, venturer, proprietor, trustee, employee
(including an employee acting in his Designated Professional
Capacity), or agent or similar functionary of the Company or of any
other foreign or domestic corporation, partnership, joint venture,
sole proprietorship, trust, employee benefit plan or other enterprise
which such person is or was serving in such capacity at the request of
the Company. The Company hereby acknowledges that unless and until
the Company provides the Indemnitee with written notice to the
contrary, the Indemnitee's service as a director, officer, partner,
venturer, proprietor, trustee, employee, agent or similar functionary
of an Affiliate of the Company shall be conclusively presumed to be at
the Company's request. An Affiliate of the Company shall be deemed to
be (a) any foreign or domestic corporation in which the Company owns
or controls, directly or indirectly, 5% or more of the shares entitled
to be voted in the election of directors of such corporation; (b) any
foreign or domestic partnership, joint venture, proprietorship or
other enterprise in which the Company owns or controls, directly or
indirectly, 5% or more of the revenue interests in such partnership,
joint venture, proprietorship or other enterprise; or (c) any trust or
employee benefit plan the beneficiaries of which include the Company,
any Affiliate of the Company as defined in the foregoing clauses (a)
and (b) or any of the directors, officers, partners, venturers,
proprietors, employees, agents or similar functionaries of the Company
or of such Affiliates of the Company.
"Expenses" shall include all reasonable attorneys' fees,
retainers, court costs, transcript costs, fees of experts, witness
fees, travel expenses, duplicating costs, printing and binding costs,
telephone charges, postage, delivery service fees, and all other
disbursements or expenses of the types customarily incurred in
connection with prosecuting, defending,
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preparing to prosecute or defend, investigating, or being or preparing
to be a witness in a Proceeding.
"Indemnitee" includes any person who is, or is threatened to
be made, a witness in or a party to any Proceeding as described in
Section 1 or 2 of this Article by reason of his Corporate Status.
"Matter" is a claim, a material issue, or a substantial
request for relief.
"Proceeding" includes any threatened, pending or completed
action, suit, arbitration, alternate dispute resolution proceeding,
investigation, administrative hearing and any other proceeding,
whether civil, criminal, administrative, investigative or other, any
appeal in such action, suit, arbitration, proceeding or hearing, or
any inquiry or investigation, whether conducted by or on behalf of the
Company, a subsidiary of the Company or any other party, formal or
informal, that the Indemnitee in good faith believes might lead to the
institution of any such action, suit, arbitration, proceeding,
investigation or hearing, except one initiated by an Indemnitee
pursuant to Section 5 of this Article.
"Special Legal Counsel" means a law firm, or member of a law
firm, that is experienced in matters of corporation law and neither
presently is, nor in the five years previous to his selection or
appointment has been, retained to represent: (a) the Company or the
Indemnitee in any matter material to either such party; (b) any other
party to the Proceeding giving rise to a claim for indemnification
hereunder; or (c) the beneficial owner, directly or indirectly, of
securities of the Company representing 30% or more of the combined
voting power of the Company's then outstanding voting securities.
Notwithstanding the foregoing, the term "Special Legal Counsel" shall
not include any person who, under the applicable standards of
professional conduct then prevailing, would have a conflict of
interest in representing either the Company or the Indemnitee in an
action to determine the Indemnitee's rights to indemnification under
these Bylaws.
For the purposes of this Article, an employee acting in his
"Designated Professional Capacity" shall include, but not be limited
to, a physician, nurse, psychologist or therapist, registered
surveyor, registered engineer, registered architect, attorney,
certified public accountant or other person who renders such
professional services within the course and scope of his employment,
who is licensed by appropriate regulatory authorities to practice such
profession and who, while acting in the course of such employment,
committed or is alleged to have committed any negligent acts, errors
or omissions in rendering such professional services at the request of
the Company or pursuant to his employment (including, without
limitation, rendering written or oral opinions to third parties).
Section 9. Notice. Any communication required or permitted to the
Company under this Article shall be addressed to the Secretary of the Company
and any such communication to the
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Indemnitee shall be addressed to his home address unless he specifies otherwise
and shall be personally delivered or delivered by overnight mail or courier
delivery.
Section 10. Insurance and Self-Insurance Arrangements. The Company
may procure or maintain insurance or other similar arrangements, at its
expense, to protect itself and any Indemnitee against any expense, liability or
loss asserted against or incurred by such person, incurred by him in such a
capacity or arising out of his Corporate Status as such a person, whether or
not the Company would have the power to indemnify such person against such
expense or liability. In considering the cost and availability of such
insurance, the Company (through the exercise of the business judgment of its
directors and officers) may, from time to time, purchase insurance which
provides for any and all of (a) deductibles, (b) limits on payments required to
be made by the insurer, or (c) coverage which may not be as comprehensive as
that previously included in insurance purchased by the Company. The purchase
of insurance with deductibles, limits on payments and coverage exclusions will
be deemed to be in the best interest of the Company but may not be in the best
interest of certain of the persons covered thereby. As to the Company,
purchasing insurance with deductibles, limits on payments, and coverage
exclusions is similar to the Company's practice of self-insurance in other
areas. In order to protect the Indemnitees who would otherwise be more fully
or entirely covered under such policies, the Company shall indemnify and hold
each of them harmless as provided in Section 1 or 2 of this Article, without
regard to whether the Company would otherwise be entitled to indemnify such
officer or director under the other provisions of this Article, or under any
law, agreement, vote of shareholders or directors or other arrangement, to the
extent (i) of such deductibles, (ii) of amounts exceeding payments required to
be made by an insurer or (iii) that prior policies of officer's and director's
liability insurance held by the Company or its predecessors would have provided
for payment to such officer or director. Notwithstanding the foregoing
provision of this Section, no Indemnitee shall be entitled to indemnification
for the results of such person's conduct that is intentionally adverse to the
interests of the Company. This Section is authorized by Section 2.02-1(R) of
the TBCA as in effect on May 1, 1996, and further is intended to establish an
arrangement of self-insurance pursuant to that section.
ARTICLE VI
MISCELLANEOUS PROVISIONS
Section 1. Offices. The principal office of the Company shall be
located in Houston, Texas, unless and until changed by resolution of the Board
of Directors. The Company may also have offices at such other places as the
Board of Directors may designate from time to time, or as the business of the
Company may require. The principal office and registered office may be, but
need not be, the same.
Section 2. Resignations. Any director or officer may resign at any
time. Such resignations shall be made in writing and shall take effect at the
time specified therein, or, if no time be specified, at the time of its receipt
by the Chairman of the Board, if there is one, the Chief Executive Officer,
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if there is one, the President or the Secretary. The acceptance of a
resignation shall not be necessary to make it effective, unless expressly so
provided in the resignation.
Section 3. Seal. The seal of the Company shall be circular in form,
with the name "HOUSTON INDUSTRIES INCORPORATED."
Section 4. Separability. If one or more of the provisions of these
Bylaws shall be held to be invalid, illegal or unenforceable, such invalidity,
illegality or unenforceability shall not affect any other provision hereof and
these Bylaws shall be construed as if such invalid, illegal or unenforceable
provision or provisions had never been contained herein.
ARTICLE VII
AMENDMENT OF BYLAWS
Section 1. Vote Requirements. The Board of Directors shall have the
power to alter, amend or repeal the Bylaws or adopt new Bylaws by the
affirmative vote of at least 80% of all directors then in office at any regular
or special meeting of the Board of Directors, subject to repeal or change by
the affirmative vote of the holders of at least 80% of the voting power of all
the shares of the Company entitled to vote in the election of directors, voting
together as a single class.
Section 2. Shareholder Proposals. No proposal by a shareholder made
pursuant to Section 1 of this Article VII may be voted upon at a meeting of
shareholders unless such shareholder shall have delivered or mailed in a timely
manner (as set forth in this Section 2) and in writing to the Secretary of the
Company (a) notice of such proposal and the text of the proposed alteration,
amendment or repeal, (b) evidence reasonably satisfactory to the Secretary of
the Company, of such shareholder's status as such and of the number of shares
of each class of capital stock of the Company of which such shareholder is the
beneficial owner, (c) a list of the names and addresses of other beneficial
owners of shares of the capital stock of the Company, if any, with whom such
shareholder is acting in concert, and the number of shares of each class of
capital stock of the Company beneficially owned by each such beneficial owner
and (d) an opinion of counsel, which counsel and the form and substance of
which opinion shall be reasonably satisfactory to the Board of Directors of the
Company, to the effect that the Bylaws (if any) resulting from the adoption of
such proposal would not be in conflict with the Articles of Incorporation of
the Company or the laws of the State of Texas. To be timely in connection with
an annual meeting of shareholders, a shareholder's notice and other aforesaid
items shall be delivered to or mailed and received at the principal executive
offices of the Company not less than ninety nor more than 180 days prior to the
date on which the immediately preceding year's annual meeting of shareholders
was held. To be timely in connection with the voting on any such proposal at a
special meeting of the shareholders, a shareholder's notice and other aforesaid
items shall be delivered to or mailed and received at the principal executive
offices of the Company not less than forty days nor more than sixty days prior
to the date of such meeting; provided, however, that in the event that less
than forty-seven days' notice or prior public disclosure
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of the date of the special meeting of the shareholders is given or made to the
shareholders, the shareholder's notice and other aforesaid items to be timely
must be so received not later than the close of business on the seventh day
following the day on which such notice of date of the meeting was mailed or
such public disclosure was made. Within thirty days (or such shorter period
that may exist prior to the date of the meeting) after such shareholder shall
have submitted the aforesaid items, the Secretary and the Board of Directors of
the Company shall respectively determine whether the items to be ruled upon by
them are reasonably satisfactory and shall notify such shareholder in writing
of their respective determinations. If such shareholder fails to submit a
required item in the form or within the time indicated, or if the Secretary or
the Board of Directors of the Company determines that the items to be ruled
upon by them are not reasonably satisfactory, then such proposal by such
shareholder may not be voted upon by the shareholders of the Company at such
meeting of shareholders. The presiding person at each meeting of shareholders
shall, if the facts warrant, determine and declare to the meeting that a
proposal made pursuant to Section 1 of this Article VII was not made in
accordance with the procedures prescribed by these Bylaws, and if he should so
determine, he shall so declare to the meeting and the defective proposal shall
be disregarded. Beneficial ownership shall be determined in accordance with
Rule 13d-3 under the Exchange Act.
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