_____________________________________________________________________________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended December 31, 1998.
-----------------
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: 0-26170
Eagle Point Software Corporation
(Exact name of registrant as specified in its charter)
Delaware 42-1204819
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
4131 Westmark Drive, Dubuque, IA 52002-2627
(address of principal executive offices)
(319) 556-8392
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes x No____
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest applicable date.
Common Stock, par value $.01 per share, outstanding as of February 10, 1999:
4,825,853 shares.
_____________________________________________________________________________
Eagle Point Software Corporation
Form 10-Q
For the quarter ended December 31, 1998
Index
PART I. Financial Information
-----------------------------
Page
----
Item 1. Consolidated Financial Statements (Unaudited)
Consolidated Balance Sheets -
December 31, 1998 and June 30, 1998 3
Consolidated Statements of Operations -
for the three and six month periods ended December 31, 1998
and 1997 5
Consolidated Statements of Cash Flows -
for the six months ended December 31, 1998 and 1997 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Item 3. Quantitative and Qualitative Disclosure about Market Risk 11
PART II. Other Information
--------------------------
Item 1. Legal Proceedings 12
Item 2. Changes in Securities and Use of Proceeds 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURES 14
2
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
EAGLE POINT SOFTWARE CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS (Unaudited)
- --------------------------------------------------------------------------------
December 31, June 30,
---------------------------------------------------
1998 1998
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 3,443,708 $ 4,662,570
Short-term investments 10,043,740 8,011,236
Accounts receivable (net of allowances of
$290,776 and $161,545, respectively) 1,322,811 1,600,282
Interest receivable 101,099 87,643
Deferred income taxes 663,475 663,475
Inventories 154,557 137,071
Prepaid expenses and other assets 166,342 137,474
------------ ------------
Total current assets 15,895,732 15,299,751
INVESTMENTS 2,017,575 2,002,748
PROPERTY & EQUIPMENT, NET 6,823,649 7,048,077
SOFTWARE DEVELOPMENT COSTS
(net of accumulated amortization of
$203,458 and $82,675 respectively) 205,063 300,832
NON-COMPETE AGREEMENTS (net of
accumulated amortization of $225,969
and $194,592 respectively) 124,096 155,472
DEFERRED INCOME TAXES 613,497 613,497
------------ ------------
TOTAL ASSETS $ 25,679,612 $ 25,420,377
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 43,052 $ 100,172
Accounts payable 133,205 190,297
Accrued expenses 1,184,975 1,095,713
Deferred revenues 2,577,444 3,164,794
Income taxes payable 181,389 139,602
------------ ------------
Total current liabilities 4,120,065 4,690,578
LONG-TERM DEBT 100,237 220,029
DEFERRED REVENUES 188,173 184,486
------------ ------------
Total liabilities 4,408,475 5,095,093
------------ ------------
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3
EAGLE POINT SOFTWARE CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS (Unaudited)
December 31, June 30,
---------------------- -------------------
1998 1998
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value; 1,000,000 shares authorized; none issued
at December 31, 1998 and June 30, 1998
Common stock, $.01 par value; 20,000,000 shares authorized, 4,941,730
Shares issued and outstanding at December 31, 1998 and June 30, 1998 49,417 49,417
Additional paid-in capital 17,535,942 17,535,942
Retained earnings 4,235,368 3,326,457
21,820,727 20,911,816
Treasury stock, at cost; 109,238 shares at December 31, 1998
and 150,276 shares at June 30, 1998 (549,590) (586,532)
Total stockholders' equity 21,271,137 20,325,284
---------------------- -------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $25,679,612 $25,420,377
====================== ===================
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
EAGLE POINT SOFTWARE CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
- ---------------------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
December 31, December 31,
------------------------- ---------------------------
1998 1997 1998 1997
Net revenues
Product sales $ 2,710,927 $2,789,482 $5,381,773 $5,054,467
Training and support 978,847 807,829 1,949,704 1,444,655
----------- ---------- ---------- ----------
Total net revenues 3,689,774 3,597,311 7,331,477 6,499,122
----------- ---------- ---------- ----------
Cost of revenues
Product sales 546,246 861,611 1,084,294 1,649,855
Training and support 98,178 140,734 193,336 285,034
----------- ---------- ---------- ----------
Total cost of revenues 644,424 1,002,345 1,277,630 1,934,889
----------- ---------- ---------- ----------
Gross Profit 3,045,350 2,594,966 6,053,847 4,564,233
----------- ---------- ---------- ----------
Operating expenses:
Selling and marketing 1,141,621 1,331,105 2,308,430 2,318,407
Research and development 721,207 791,084 1,431,993 1,637,214
General and administrative 653,835 522,590 1,283,633 1,018,229
----------- ---------- ---------- ----------
Total operating expenses 2,516,663 2,644,779 5,024,056 4,973,850
----------- ---------- ---------- ----------
Operating income (loss) from continuing
operations 528,687 (49,813) 1,029,791 (409,617)
Other income (expense):
Interest income, net of expense 191,160 173,554 389,917 320,800
Other income (expense) 277 4,629 924 6,891
----------- ---------- ---------- ----------
Income (loss) from continuing operations
before income taxes 720,124 128,370 1,420,632 (81,926)
Income tax expense benefit 232,450 22,707 476,198 (68,652)
----------- ---------- ---------- ----------
Net income (loss) $ 487,674 $ 105,663 $ 944,434 $ (13,274)
=========== ========== ========== ==========
Weighted average common shares outstanding 4,825,853 4,799,778 4,821,066 4,813,118
=========== ========== ========== ==========
Basic income (loss) per share $ 0.10 $ 0.02 $ 0.20 $ (0.00)
=========== ========== ========== ==========
Weighted average common and common
Equivalent shares outstanding 5,016,556 4,805,275 5,005,235 4,817,003
=========== ========== ========== ==========
Diluted income (loss) per share $ 0.10 $ 0.02 $ 0.19 $ 0.00
=========== ========== ========== ==========
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5
EAGLE POINT SOFTWARE CORPORATION AND SUBSIDIARY
STATEMENTS OF CASH FLOWS (Unaudited)
Six Months Ended
December 31,
----------------------------------------------
1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 944,434 $ (13,274)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 579,230 542,546
Amortization of software development costs 120,784 36,906
Changes in assets and liabilities:
Accounts receivable 277,471 205,027
Interest receivable (13,456) (101,583)
Income taxes payable 41,786 318,944
Inventories (17,486) 177,365
Prepaid expenses (28,868) (121,307)
Accounts payable (57,092) (121,737)
Deferred revenues (583,663) 1,183,804
Accrued expenses 89,262 167,745
Other (35,522) 40,746
------------ ------------
Net cash provided by operating activities 1,316,880 2,315,182
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment, net (323,426) (232,490)
Software development costs:
Capitalized software costs (25,014) (34,823)
Purchases of software (25,000)
Purchase of investments (10,075,643) (10,032,375)
Proceeds from maturities of investments 8,028,311 2,501,979
------------ ------------
Net cash used in investing activities (2,395,772) (7,822,709)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of long-term debt (176,912) (209,880)
Purchases of treasury stock (242,603) (164,178)
Proceeds from issuance of treasury stock 279,545 80,453
------------ ------------
Net cash used in financing activities (139,970) (293,605)
NET CHANGE IN CASH AND CASH EQUIVALENTS (1,218,862) (5,801,132)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 4,662,570 8,806,452
------------ ------------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 3,443,708 $ 3,005,320
============ ============
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid (received) for:
Interest 425 6,285
Income taxes 342,808 (390,175)
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998
1. Interim Financial Statements
The accompanying consolidated financial statements of Eagle Point Software
Corporation and subsidiary (the "Company" or "Eagle Point") are unaudited. In
the opinion of the Company's management, the financial statements include all
adjustments, consisting only of normal recurring adjustments, necessary to state
fairly the financial position of the Company as of December 31, 1998 and June
30, 1998, and the results of operations and cash flows for the six-month period
ended December 31, 1998.
Certain notes and other information have been condensed or omitted from the
interim financial statements presented in this quarterly report on Form 10-Q.
Accordingly, these financial statements should be read in conjunction with the
Company's annual report on Form 10-K for the year ended June 30, 1998.
2. Deferred Revenues and Revenue Recognition
The Company derives substantially all of its product revenues from the license
of its software products. Revenue is recognized upon shipment of the product,
provided that no significant vendor, post-contract support, or product upgrade
obligations remain outstanding and collection of the resulting receivable is
deemed probable. The Company has no significant vendor and post-contract support
obligations associated with its product sales. Dependent upon the timing of
future product upgrade releases and market conditions, the Company may extend
promotions where product upgrade obligations are associated with the shipment of
software products. Based upon the terms of the promotions extended, a portion or
all of the product revenues may be deferred until the promotional product
upgrade is released and subsequently shipped. The Company recognizes its service
revenues from maintenance and support contracts ratably over the period of the
arrangements. These contracts generally have terms of one year or less. The
Company recognizes its service revenues from training arrangements in the period
in which the training occurs. The Company's product returns historically have
been insignificant.
7
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Forward Looking Information
This quarterly report on Form 10-Q contains forward looking statements,
including without limitation the results of any litigation brought against the
Company. These forward looking statements involve risks and uncertainties, which
could cause actual results to differ from those projected. These as well as
other risks and uncertainties are detailed from time to time in reports filed by
the Company with the Securities and Exchange Commission, including this report
on Form 10-Q for the quarter ended December 31, 1998 and the Company's report on
Form 10-K for the year ended June 30, 1998.
RESULTS OF OPERATIONS
Net revenues increased $832,000 or 12.8% to $7.3 million for the six months
ended December 31, 1998 (the "1998 Period"), from $6.5 million for the six
months ended December 31, 1997 (the "1997 Period"). The Company experienced
growth in both product sales and training and support revenues. The increase in
product sales was attributable primarily to increased sales and marketing
efforts and also the release of product upgrades in the Company's civil
surveying and landscape architectural product lines. Training and support
revenues were favorably affected in the 1998 Period by the release of product
upgrades and an increased emphasis by the Company on support and maintenance
programs. $296,000 of the 1998 Period's software revenues that were part of a
continuing upgrade promotion were deferred. Additionally, $1.2 million of
previously deferred software revenues were recognized during the 1998 Period as
the product upgrades, for which the revenue was initially deferred, were
shipped.
Gross profit increased $1.5 million, or 32.6% to $6.1 million for the 1998
Period from $4.6 million in the 1997 Period. Gross profit as a percentage of net
revenues increased to 82.6% in the 1998 Period from 70.2% in the 1997 Period.
Gross profit as a percentage of corresponding net revenues relating to product
sales increased to 79.9% in the 1998 Period from 67.4% in the 1997 Period. This
increase is attributable to a shift in the sales mix of product sales. Sales of
Eagle Point products, which have higher gross profit margins than resales of
third party products (i.e. AutoCAD and IntelliCAD), increased to 96.7% of
product sales in the 1998 Period from 72.0% in the 1997 Period. Gross profit as
a percentage of corresponding net revenue relating to training and support
increased to 90.1% in the 1998 Period from 80.3% in the 1997 Period primarily
due to an improvement in the sales mix toward support and maintenance revenues,
which have higher gross profit margins than training revenues.
8
Selling and marketing expense remained at $2.3 million for both the 1998
Period and the 1997 Period. As a percentage of net revenues, selling and
marketing expenses decreased to 31.5% in the 1998 Period from 35.7%. The
decrease as a percentage of net revenues is as a result of the growth in sales
volume while sales and marketing expenses were unchanged.
Research and development expense decreased $205,000, or 12.5% to $1.4
million in the 1998 Period from $1.6 million in the 1997 Period. As a percentage
of net revenues, research and development costs decreased to 19.5% in the 1998
Period from 25.2% in the 1997 Period. The decrease was primarily attributable to
lower personnel costs associated with research and development.
General and administrative expense increased $265,000, or 26.1% to $1.3
million in the 1998 Period from $1.0 million in the 1997 Period. As a percentage
of net revenues, general and administrative costs increased to 17.5% in the 1998
Period from 15.7% in the 1997 Period. The increase is due primarily to higher
personnel costs and an increase in the general and administrative staff.
The operating income from continuing operations increased to net income of
$1.0 million in the 1998 Period from a net loss of $410,000 in the 1997 Period.
As a percentage of net revenues, operating income from continuing operations was
14.0% in the 1998 Period as compared to an operating loss of 6.3% in the 1997
Period as a result of the factors described above.
Interest expense decreased $2,200 to $2,300 in the 1998 Period from $4,500
in the 1997 Period. Interest income increased $67,000 to $392,000 in the 1998
Period from $325,000 in the 1997 Period. The increase in interest was primarily
attributed to higher balances of cash, cash equivalents, and investments. Other
income decreased $6,000 to $900 in the 1998 Period from $6,900 in the 1997
Period.
Liquidity and Capital Resources
The Company's financial position remains strong, with working capital of
$11.80 million and long-term debt of only $100,000. Cash, short-term, and long-
term investments aggregated approximately $15.5 million at December 31, 1998.
The Company also has available a $2.0 million unsecured line of credit from its
principal bank. At December 31, 1998, the Company had no borrowings outstanding
under this line of credit.
The Company believes that existing cash balances, together with funds
generated from operations and borrowings available under its line of credit,
will be sufficient to fund its operations through fiscal 1999.
9
Impact of the Year 2000 Issue
The Year 2000 ("Y2K") issue is the result of computer programs using a two-
digit format, as opposed to four digits, to indicate the year. Computer systems
based on a two-digit format will be unable to interpret dates beyond the year
1999 which could cause a system failure or other computer errors, leading to
disruptions in operations. The Company believes that it has four general areas
of potential exposure with respect to the Y2K problem: (1) its own software
products; (2) internal informational systems; (3) computer hardware and other
equipment related systems; and (4) external. Based on the Company's analysis
through February 10, 1999, the Company does not believe that the Y2K issue will
materially affect its business.
The Company believes that its own software products will not be affected by
the Y2K issue because the Company's products are graphical computer aided design
software involving geometric and analytical computations and graphic
representations which do not store or manipulate date-related fields.
Beginning in the second quarter of 1998, the Company began to develop a
systematic plan to evaluate its Y2K exposure with respect to its internal
informational systems. In accordance with this plan, the Company identified two
primary internal information systems pursuant to which the Company could have
exposure -- its accounting and financial support system (the "Accounting
System") and its sales database (the "Sales Database"). The Company believes
that, based on industry reports, the Accounting System is already Y2K compliant,
but has not yet received formal certification of such compliance from the
Accounting System's manufacturer. The Company intends to seek such certification
in the near future. If the Accounting System is already Y2K compliant, the
Company will not incur any significant Y2K related costs with respect to the
Accounting System. The Company has determined that the Sales Database is not
currently Y2K compliant. However, the Company has received, at no cost to the
Company, from the Sales Database's manufacturer the necessary software upgrade
to cause the Sales Database to become Y2K compliant. While the Company expects
the Sales Database upgrade to be effective, the Company has not yet tested such
upgrade and there can be no assurance that it will be successful.
The third type of potential Y2K exposure relates to the Company's computer
hardware and other equipment related systems (such as the Company's workstations
and phone system). The Company is well along the stage of identifying and
evaluating such systems' Y2K exposure and has begun remediation procedures on
system servers and workstations.
The fourth aspect of the Company's Y2K analysis involves evaluating major
vendors' Y2K exposure and their efforts to address such exposure. The Company
has begun to obtain documentation and certification from third parties regarding
their Y2K compliance. The Company has already taken the steps to upgrade several
3rd party products in enterprise-wide use. If the Company determines, after
conducting the aforementioned surveys and inquiries, that its vendors' Y2K
issues could result in material disruptions to their respective businesses, the
Company may seek alternative suppliers.
The Company expects to be Y2K compliant with respect to its own systems,
and have completed its Y2K analysis with respect to third parties, no later than
mid-calendar 1999.
10
Item 3. Quantitative and Qualitative Disclosure about Market Risk
Inflation has not had a significant impact on the Company's operating
results to date, nor does the Company expect it to have a significant impact in
fiscal year 1999. The Company has experienced insignificant gains or losses on
foreign currency transactions since substantially all of its international sales
to date have been billed in U.S. dollars. As the Company continues to expand its
international operations, it may begin billing in foreign currencies, which
would increase the Company's exposure to gains and losses on foreign currency
transactions. The Company may choose to limit such exposure by the purchase of
forward foreign exchange contracts if deemed appropriate at that time. To date,
the Company has not entered into any interest rate, currency or other market
risk hedging instruments.
11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Computer Integrated Building Corporation ("CIBC"), a corporation from whom
the Company purchased substantially all of the assets on July 29, 1996, has
initiated arbitration proceedings against the Company relating to the earnout
provision of the purchase agreement relating thereto. The plaintiff is seeking
unspecified damages. The Company has denied the plaintiff's allegations and is
vigorously defending the action.
Item 2. Changes in Securities and Use of Proceeds
The Company amended and restated its By-laws on October 16, 1999 to amend
the period in which a stockholder must give the Company notice if such
stockholder desires to bring any business at the Company's annual meeting of
stockholders. A copy of the Company's Amended and Restated By-laws are filed as
Exhibit 3(ii) to this Report on Form 10-Q.
Item 3. Defaults upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
The Company held its Annual Meeting of Stockholders on December 1, 1998. The
following matters were voted upon at the Annual Meeting of Stockholders:
1. The stockholders elected as directors to serve until the 2001 Annual
Meeting of Stockholders:
Dennis J. George (4,370,097 votes FOR; 19,714 votes WITHHELD)
Thomas O. Miller (4,370,461 votes FOR; 19,350 votes WITHHELD)
2. The stockholders ratified the appointment of Deloitte & Touche, LLP,
the Company's independent public accountants for the fiscal year
ending June 30, 1999.
(4,364,106 votes FOR; 12,725 votes AGAINST; votes 12,980 WITHHELD)
Item 5. Other Information
None.
12
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
3(ii) Amended and Restated By-laws
11 Statement Regarding Computation of Net Earnings Per Share
27 Financial Data Schedule
(b) Reports on Form 8-K:
None.
13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed by the undersigned,
thereunto duly authorized.
EAGLE POINT SOFTWARE CORPORATION
--------------------------------
(Registrant)
Date: February 12, 1999 BY: /s/ Rodney L. Blum
- ------------------------ --------------------------------
Rodney L. Blum
Chairman, President and Chief
Executive Officer
Date: February 12, 1999 BY: /s/ Dennis J. George
- ------------------------ --------------------------------
Dennis J. George
Vice President, Chief Financial
Officer, Treasurer and Secretary
(Principal Financial and Accounting
Officer)
14
EXHIBIT INDEX
-------------
Exhibit No. Description
- ----------- -----------
3(ii) Amended and Restated By-laws
11 Statement re: computation of net earnings per share
27 Financial Data Schedule
15
AMENDED AND RESTATED
BY-LAWS
OF
EAGLE POINT SOFTWARE CORPORATION
ARTICLE I
STOCKHOLDERS MEETINGS
---------------------
Section 1.1 Annual Meetings.
---------------
(a) An annual meeting of stockholders shall be held for the election
of directors at such date, time and place as may be fixed by resolution of the
Board of Directors from time to time. Subject to paragraph (b) of this Section
1.1, any other proper business may be transacted at an annual meeting.
(b) Only such business shall be conducted at an annual meeting of
stockholders as shall have been properly brought before the meeting. For
business to be properly brought before the meeting, it must be: (i) authorized
by the Board of Directors and specified in the notice, or a supplemental notice,
of the meeting, (ii) otherwise brought before the meeting by or at the direction
of the Board of Directors or the chairman of the meeting, or (iii) otherwise
properly brought before the meeting by a stockholder. For business to be
properly brought before an annual meeting by a stockholder, the stockholder must
have given written notice thereof to the Secretary, delivered or mailed to and
received at the principal executive offices of the Corporation not less than 75
days nor more than 100 days prior to the first anniversary of the preceding
year's annual meeting of stockholders, except that if no annual meeting was held
in the previous year or the date of the annual meeting is more than 30 calendar
days before or more than 30 calendar days after such anniversary date, notice by
the stockholder to be timely delivered must be so delivered not earlier than the
close of business on the 100th calendar day prior to such annual meeting and not
later than the close of business on the 75th calendar day prior to such annual
meeting or the 10th calendar day following the day on which public announcement
of the date of such meeting is first made. A stockholder's notice to the
Secretary shall set forth as to each item of business the stockholder proposes
to bring before the meeting (1) a brief description of such item and the reasons
for conducting such business at the meeting, (2) the name and address, as they
appear on the Corporation's records, of the stockholder proposing such business,
(3) the class and number of shares of stock of the Corporation which are
beneficially owned by the stockholder (for purposes of the regulations under
Sections 13 and 14 of the Securities Exchange Act of 1934, as amended), and (4)
any material interest of the stockholder in such business. No business shall be
conducted at any annual meeting except in accordance with the procedures set
forth in this paragraph (b). The chairman of the meeting at which any business
is proposed by a stockholder shall, if the facts warrant, determine and declare
to the meeting that such business was not properly brought before the meeting in
accordance with the provisions of this paragraph (b), and, in such event, the
business not properly before the meeting shall not be transacted.
16
Section 1.2. Special Meetings. Special meetings of stockholders for
any purpose or purposes may be called at any time only by the Chairman of the
Board, if any, the President or a majority of the Board of Directors, and by no
other person. The business transacted at a special meeting of stockholders shall
be limited to the purpose or purposes for which such meeting is called, except
as otherwise determined by the Board of Directors or the chairman of the
meeting.
Section 1.3. Notice of Meetings. A written notice of each annual or
special meeting of stockholders shall be given stating the place, date and time
of the meeting, and, in the case of a special meeting, the purpose or purposes
for which the meeting is called. Unless otherwise provided by law, the
Certificate of Incorporation or these By-laws, such notice of meeting shall be
given not less than ten nor more than 60 days before the date of the meeting to
each stockholder of record entitled to vote at such meeting. If mailed, such
notice shall be deemed to be given when deposited in the mail, postage prepaid,
directed to the stockholder at such stockholder's address as it appears on the
records of the Corporation.
Section 1.4. Adjournments. Any annual or special meeting of
stockholders may be adjourned from time to time to reconvene at the same or some
other place, and notice need not be given of any such adjourned meeting if the
date, time and place thereof are announced at the meeting at which the
adjournment is taken. At the adjourned meeting any business may be transacted
which might have been transacted at the original meeting. If the adjournment is
for more than 30 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 in
accordance with Section 1.3.
Section 1.5. Quorum. Except as otherwise provided by law, the
Certificate of Incorporation or these By-laws, the presence in person or by
proxy of the holders of stock having a majority of the votes which could be cast
by the holders of all outstanding stock entitled to vote at the meeting shall
constitute a quorum at each meeting of stockholders. In the absence of a quorum,
the stockholders so present may, by the affirmative vote of the holders of stock
having a majority of the votes which could be cast by all such holders, adjourn
the meeting from time to time in the manner provided in Section 1.4 of these By-
laws until a quorum is present. If a quorum is present when a meeting is
convened, the subsequent withdrawal of stockholders, even though less than a
quorum remains, shall not affect the ability of the remaining stockholders
lawfully to transact business.
Section 1.6. Organization. Meetings of stockholders shall be
presided over by the Chairman of the Board, if any, or if there is none or in
his or her absence, by the President, or in his or her absence, by a chairman
designated by the Board of Directors, or in the absence of such designation by a
chairman chosen at the meeting. The Secretary shall act as secretary of the
meeting, but in his or her absence the chairman of the meeting may appoint any
person to act as secretary of the meeting.
Section 1.7. Voting.
------
(a) Except as otherwise provided by the Certificate of Incorporation,
each stockholder entitled to vote at any meeting of stockholders shall be
entitled to one vote for each share of stock held by such stockholder which has
voting power on the matter in question.
17
(b) Voting at meetings of stockholders need not be by written ballot
and need not be conducted by inspectors of election unless so required by
Section 1.9 of these By-laws or so determined by the holders of stock having a
majority of the votes which could be cast by the holders of all outstanding
stock entitled to vote which are present in person or by proxy at such meeting.
Unless otherwise provided in the Certificate of Incorporation, directors shall
be elected by a plurality of the votes cast in the election of directors. Each
other question shall, unless otherwise provided by law, the Certificate of
Incorporation or these By-laws, be decided by the vote of the holders of stock
having a majority of the votes which could be cast by the holders of all stock
entitled to vote on such question which are present in person or by proxy at the
meeting.
(c) Stock of the Corporation standing in the name of another
corporation and entitled to vote may be voted by such officer, agent or proxy as
the by-laws or other internal regulations of such other corporation may
prescribe or, in the absence of such provision, as the board of directors or
comparable body of such other corporation may determine.
(d) Stock of the Corporation standing in the name of a deceased
person, a minor, an incompetent or a debtor in a case under Title 11, United
States Code, and entitled to vote may be voted by an administrator, executor,
guardian, conservator, debtor-in-possession or trustee, as the case may be,
either in person or by proxy, without transfer of such shares into the name of
the official or other person so voting.
(e) A stockholder whose voting stock of the Corporation is pledged
shall be entitled to vote such stock unless on the transfer records of the
Corporation the pledgor has expressly empowered the pledgee to vote such shares,
in which case only the pledgee, or such pledgee's proxy, may represent such
shares and vote thereon.
(f) If voting stock is held of record in the names of two or more
persons, whether fiduciaries, members of a partnership, joint tenants, tenants
in common, tenants by the entirety or otherwise, or if two or more persons have
the same fiduciary relationship respecting the same shares, unless the Secretary
is given written notice to the contrary and is furnished with a copy of the
instrument or order appointing them or creating the relationship wherein it is
so provided, their acts with respect to voting shall have the following effect:
(i) if only one votes, such act binds all; (ii) if more than one vote, the act
of the majority so voting binds all; and (iii) if more than one votes, but the
vote is evenly split on any particular matter each faction may vote such stock
proportionally, or any person voting the shares, or a beneficiary, if any, may
apply to the Court of Chancery of the State of Delaware or such other court as
may have jurisdiction to appoint an additional person to act with the persons so
voting the stock, which shall then be voted as determined by a majority of such
persons and the person appointed by the Court. If the instrument so filed shows
that any such tenancy is held in unequal interests, a majority or even split for
the purpose of this subsection shall be a majority or even split in interest.
(g) Stock of the Corporation belonging to the Corporation, or to
another corporation a majority of the shares entitled to vote in the election of
directors of which are held by the Corporation, shall not be voted at any
meeting of stockholders and shall not be counted in the total number of
outstanding shares for the purpose of determining whether a quorum is present.
Nothing in the Section 1.7 shall limit the right of the Corporation to vote
shares of stock of the Corporation held by it in a fiduciary capacity.
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Section 1.8. Proxies.
-------
(a) Each stockholder entitled to vote at a meeting of stockholders
may authorize another person or persons to act for such stockholder by proxy
filed with the Secretary before or at the time of the meeting. No such proxy
shall be voted or acted upon after three years from its date, unless the proxy
provides for a longer period. A duly executed proxy shall be irrevocable if it
states that it is irrevocable and if, and only as long as, it is coupled with an
interest sufficient in law to support an irrevocable power. A stockholder may
revoke any proxy which is not irrevocable by attending the meeting and voting in
person or by filing with the Secretary an instrument in writing revoking the
proxy or another duly executed proxy bearing a later date.
(b) A stockholder may authorize another person or persons to act for
such stockholder as proxy (i) by executing a writing authorizing such person or
persons to act as such, which execution may be accomplished by such stockholder
or such stockholder's authorized officer, director, partner, employee or agent
(or, if the stock is held in a trust or estate, by a trustee, executor or
administrator thereof) signing such writing or causing his or her signature to
be affixed to such writing by any reasonable means, including, but not limited
to, facsimile signature, or (ii) by transmitting or authorizing the transmission
of a telegram, cablegram or other means of electronic transmission (a
"Transmission") to the person who will be the holder of the proxy or to a proxy
solicitation firm, proxy support service organization or like agent duly
authorized by the person who will be the holder of the proxy to receive such
Transmission; provided that any such Transmission must either set forth or be
submitted with information from which it can be determined that such
Transmission was authorized by such stockholder.
(c) Any inspector or inspectors appointed pursuant to Section 1.9 of
these By-Laws shall examine Transmissions to determine if they are valid. If no
inspector or inspectors are so appointed, the Secretary or such other person or
persons as shall be appointed from time to time by the Board of Directors shall
examine Transmissions to determine if they are valid. If it is determined a
Transmission is valid, the person or persons making that determination shall
specify the information upon which such person or persons relied. Any copy,
facsimile telecommunication or other reliable reproduction of such a writing or
Transmission may be substituted or used in lieu of the original writing or
Transmission for any and all purposes for which the original writing or
Transmission could be used; provided that such copy, facsimile telecommunication
or other reproduction shall be a complete reproduction of the entire original
writing or Transmission.
Section 1.9. Voting Procedures and Inspectors of Elections.
---------------------------------------------
(a) If the Corporation has a class of voting stock that is (i) listed
on a national securities exchange, (ii) authorized for quotation on an
interdealer quotation system of a registered national securities association or
(iii) held of record by more than 2,000 stockholders, the Board of Directors
shall, in advance of any meeting of stockholders, appoint one or more inspectors
(individually an "Inspector," and collectively the "Inspectors") to act at such
meeting and make a written report thereof. The Board of Directors may designate
one or more persons as alternate Inspectors to replace any Inspector who shall
fail to act. If no Inspector or alternate is able to act at such meeting, the
chairman of the meeting shall appoint one or more other persons to act as
Inspectors. Each Inspector, before entering upon the discharge of his or her
duties, shall
19
take and sign an oath faithfully to execute the duties of Inspector with strict
impartiality and according to the best of his or her ability.
(b) The Inspectors shall (i) ascertain the number of shares of stock
of the Corporation outstanding and the voting power of each, (ii) determine the
number of shares of stock of the Corporation present in person or by proxy at
such meeting and the validity of proxies and ballots, (iii) count all votes and
ballots, (iv) determine and retain for a reasonable period a record of the
disposition of any challenges made to any determination by the Inspectors and
(v) certify their determination of the number of such shares present in person
or by proxy at such meeting and their count of all votes and ballots. The
Inspectors may appoint or retain other persons or entities to assist them in the
performance of their duties.
(c) The date and time of the opening and the closing of the polls for
each matter upon which the stockholders will vote at a meeting shall be
announced at such meeting. No ballots, proxies or votes, nor any revocations
thereof or changes thereto, shall be accepted by the Inspectors after the
closing of the polls unless the Court of Chancery of the State of Delaware upon
application by any stockholder shall determine otherwise.
(d) In determining the validity and counting of proxies and ballots,
the Inspectors shall be limited to an examination of the proxies, any envelopes
submitted with such proxies, any information referred to in paragraphs (b) and
(c) of Section 1.8 of these By-laws, ballots and the regular books and records
of the Corporation, except that the Inspectors may consider other reliable
information for the limited purpose of reconciling proxies and ballots submitted
by or on behalf of banks, brokers, their nominees or similar persons which
represent more votes than the holder of a proxy is authorized by a stockholder
of record to cast or more votes than such stockholder holds of record. If the
Inspectors consider other reliable information for the limited purpose permitted
herein, the Inspectors, at the time they make their certification pursuant to
paragraph (b) of this Section 1.9, shall specify the precise information
considered by them, including the person or persons from whom such information
was obtained, when and the means by which such information was obtained and the
basis for the Inspectors' belief that such information is accurate and reliable.
Section 1.10. Fixing Date of Determination of Stockholders of Record.
------------------------------------------------------
(a) In order that the Corporation may determine the stockholders
entitled (i) to notice of or to vote at any meeting of stockholders or any
adjournment thereof, (ii) to receive payment of any dividend or other
distribution or allotment of any rights, (iii) to exercise any rights in respect
of any change, conversion or exchange of stock or (iv) to take, receive or
participate in any other action, the Board of Directors may fix a record date,
which shall not be earlier than the date upon which the resolution fixing the
record date is adopted by the Board of Directors and which (1) in the case of a
determination of stockholders entitled to notice of or to vote at any meeting of
stockholders or adjournment thereof, shall, unless otherwise required by law, be
not more than 60 nor less than ten days before the date of such meeting; (2) in
the case of a determination of stockholders entitled to express consent to
corporate action in writing without a meeting, shall be not more than ten days
after the date upon which the resolution fixing the record date is adopted by
the Board of Directors; and (3) in the case of any other action, shall be not
more than 60 days before such action.
20
(b) If no record date is fixed, (i) the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders shall
be at the close of business on the 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 is 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.
(c) 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, but the Board of Directors may fix a new record date for the adjourned
meeting.
Section 1.11. List of Stockholders Entitled to Vote. The Secretary
shall prepare, at least ten days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address and the number of shares registered
in the name of each stockholder. Such list shall be open to the examination of
any stockholder, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least ten days prior to the meeting, either
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. The list shall also be produced and kept at the time
and place of the meeting during the whole time thereof and may be inspected by
any stockholder who is present. The stock ledger shall be the only evidence as
to who are the stockholders entitled to examine the stock ledger, the list of
stockholders or the books of the corporation, or to vote in person or by proxy
at any meeting of stockholders.
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ARTICLE II
BOARD OF DIRECTORS
------------------
Section 2.1. Number. The Board of Directors shall consist of at
least three but not more than twelve directors, the number thereof to be
determined from time to time by resolution of the Board of Directors. The Board
of Directors shall be and is divided into three classes: Class I, Class II and
Class III. Each director shall serve for a term ending on the date of the third
annual meeting following the annual meeting at which such director was elected;
provided, however, that each initial director in Class I shall serve for a term
ending on the date of the annual meeting next following the end of the
Corporation's fiscal year ending June 30, 1995; each initial director in Class
II shall serve for a term ending on the date of the annual meeting next
following the end of the Corporation's fiscal year ending June 30, 1996; and
each initial director in Class III shall serve for a term ending on the date of
the annual meeting next following the end of the Corporation's fiscal year
ending on June 30, 1997.
Section 2.2. Election; Resignation; Vacancies.
--------------------------------
(a) At each annual meeting at which the term of office of a class of
directors expires, the stockholders shall elect directors of such class each to
hold office until the annual meeting at which the terms of office of such class
of directors expire and the election and qualification of his or her successor,
or until his or her earlier death, resignation or removal.
(b) Only persons who are nominated in accordance with the procedures
set forth in this paragraph (b) shall be eligible for election as directors of
the Corporation. Nominations of persons for election to the Board of Directors
may be made at a meeting of stockholders by the Board of Directors or by any
stockholder of the Corporation entitled to vote in the election of directors at
the meeting who complies with the notice procedures set forth in this paragraph
(b). Any nomination by a stockholder must be made by written notice to the
Secretary delivered or mailed to and received at the principal executive offices
of the Corporation (i) not less than 60 days nor more than 90 days prior to the
meeting, or (ii) if less than 70 days' notice of the meeting or prior public
disclosure of the date of the meeting is given or made to stockholders, not
later than the close of business on the tenth day following the day on which the
notice of the meeting was mailed or, if earlier, the day on which such public
disclosure was made. A stockholder's notice to the Secretary shall set forth (x)
as to each person whom the stockholder proposes to nominate for election or re-
election as a director: (1) the name, age, business address and residence
address of such person, (2) the principal occupation or employment of such
person, (3) the class and number of shares of stock of the Corporation which are
beneficially owned by such person (for the purposes of the regulations under
Sections 13 and 14 of the Securities Exchange Act of 1934, as amended), and (4)
any other information relating to such person that would be required to be
disclosed in solicitations of proxies for the election of such person as a
director of the Corporation pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended, and such person's written consent to being
named in any proxy statement as a nominee and to serving as a director if
elected; and (y) as to the stockholder giving notice (1) the name and address,
as they appear on the Corporation's records, of such stockholder and (2) the
22
class and number of shares of stock of the Corporation which are beneficially
owned by such stockholder (determined as provided in clause (x)(3) above). At
the request of the Board of Directors any person nominated by the Board of
Directors for election as a director shall furnish to the Secretary that
information required to be set forth in a stockholder's notice of nomination
which pertains to the nominee. The chairman of the meeting at which a
stockholder nomination is presented shall, if the facts warrant, determine and
declare to the meeting that such nomination was not made in accordance with the
procedures prescribed by this paragraph (b), and, in such event, the defective
nomination shall be disregarded.
(c) Any director may resign at any time by giving written notice to
the Chairman of the Board, if any, the President or the Secretary. Unless
otherwise stated in a notice of resignation, it shall take effect when received
by the officer to whom it is directed, without any need for its acceptance.
(d) Any newly created directorship or any vacancy occurring in the
Board of Directors for any reason may be filled by a majority of the remaining
directors, although less than a quorum, or by a plurality of the votes cast in
the election of directors at a meeting of stockholders. Each director elected
to replace a former director shall hold office until the expiration of the term
of office of the director whom he or she has replaced and the election and
qualification of his or her successor, or until his or her earlier death,
resignation or removal. A director elected to fill a newly created directorship
shall serve until the annual meeting at which the term of office of the class of
directors to which he or she is assigned expires, the election and qualification
of his or her successor, or until his or her earlier death, resignation or
removal.
Section 2.3. Regular Meetings. A regular annual meeting of the Board
of Directors shall be held, without call or notice, immediately after and at the
same place as the annual meeting of stockholders, for the purpose of organizing
the Board of Directors, electing officers and transacting any other business
that may properly come before such meeting. Additional regular meetings of the
Board of Directors may be held without call or notice at such times as shall be
fixed by resolution of the Board of Directors.
Section 2.4. Special Meetings. Special meetings of the Board of
Directors may be called by the Chairman of the Board, if any, the President, the
Secretary, or by any member of the Board of Directors. Notice of a special
meeting of the Board of Directors shall be given by the person or persons
calling the meeting at least twenty-four hours before the special meeting. The
purpose or purposes of a special meeting need not be stated in the call or
notice.
Section 2.5. Organization. Meetings of the Board of Directors shall
be presided over by the Chairman of the Board, if any, or if there is none or in
his or her absence, by the President, or in his or her absence by a chairman
chosen at the meeting. The Secretary shall act as secretary of the meeting, but
in his or her absence the chairman of the meeting may appoint any person to act
as secretary of the meeting. A majority of the directors present at a meeting,
whether or not they constitute a quorum, may adjourn such meeting to any other
date, time or place without notice other than announcement at the meeting.
Section 2.6. Quorum; Vote Required for Action. At all meetings of
the Board of Directors a majority of the whole Board of Directors shall
constitute a quorum for the transaction of business. Unless the Certificate of
Incorporation or these By-laws otherwise
23
provide, the vote of a majority of the directors present at a meeting at which
a quorum is present shall be the act of the Board of Directors.
Section 2.7. Committees. The Board of Directors may, by resolution
passed by a majority of the whole Board of Directors, designate one or more
committees, each committee to consist of one or more directors of the
Corporation. The Board of Directors may designate one or more directors as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of the committee. In the absence or disqualification of a
member of the committee, the member or members present at any meeting and not
disqualified from voting, whether or not a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in place of any
such absent or disqualified member. Any such committee, to the extent permitted
by law and provided in the resolution of the Board of Directors designating such
committee, or an amendment to such resolution, shall have and may exercise all
the powers 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.
Section 2.8. Telephonic Meetings. Directors, or any committee of
directors designated by the Board of Directors, may participate in a meeting of
the Board of Directors or such committee by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and participation in a meeting pursuant to this
Section 2.8 shall constitute presence in person at such meeting.
Section 2.9. Informal Action by Directors. Unless otherwise
restricted by the Certificate of Incorporation or these By-laws, any action
required or permitted to be taken at any meeting of the Board of Directors, or
of any committee thereof, may be taken without a meeting if all members of the
Board of Directors or such committee, as the case may be, consent thereto in
writing (which may be in counterparts), and the written consent or consents are
filed with the minutes of proceedings of the Board of Directors or such
committee.
Section 2.10. Committee Rules. Unless the Board of Directors
otherwise provides, each committee designated by the Board of Directors may
make, alter and repeal rules for the conduct of its business. In the absence of
such rules each committee shall conduct its business in the same manner as the
Board of Directors conducts its business pursuant to this Article II of these
By-laws.
Section 2.11. Reliance upon Records. Every director, and every
member of any committee of the Board of Directors, shall, in the performance of
his or her duties, be fully protected in relying in good faith upon the records
of the Corporation and upon such information, opinions, reports or statements
presented to the Corporation by any of its officers or employees, or committees
of the Board of Directors, or by any other person as to matters the director or
member reasonably believes are within such other person's professional or expert
competence and who has been selected with reasonable care by or on behalf of the
Corporation, including, but not limited to, such records, information, opinions,
reports or statements as to the value and amount of the assets, liabilities
and/or net profits of the Corporation, or any other facts pertinent to the
existence and amount of surplus or other funds from which dividends might
properly be declared and paid, or with which the Corporation's capital stock
might properly be purchased or redeemed.
24
Section 2.12. Interested Directors. A director who is directly or
indirectly a party to a contract or transaction with the Corporation, or is a
director or officer of or has a financial interest in any other corporation,
partnership, association or other organization which is a party to a contract or
transaction with the Corporation, may be counted in determining whether a quorum
is present at any meeting of the Board of Directors or a committee thereof at
which such contract or transaction is considered or authorized, and such
director may participate in such meeting and vote on such authorization to the
extent permitted by applicable law, including Section 144 of the General
Corporation Law of the State of Delaware.
Section 2.13. Compensation. Unless otherwise restricted by the
Certificate of Incorporation, the Board of Directors shall have the authority to
fix the compensation of directors. The directors shall be paid their reasonable
expenses, if any, of attendance at each meeting of the Board of Directors or a
committee thereof and may be paid a fixed sum for attendance at each such
meeting and an annual retainer or salary for services as a director or committee
member. No such payment shall preclude any director from serving the Corporation
in any other capacity and receiving compensation therefor.
Section 2.14. Presumption of Assent. Unless otherwise provided by
the laws of the State of Delaware, a director who is present at a meeting of the
Board of Directors or a committee thereof at which action is taken on any matter
shall be presumed to have assented to the action taken unless his or her dissent
shall be entered in the minutes of such meeting or unless he or she shall file
his or her written dissent to such action with the person acting as secretary of
such meeting before the adjournment thereof or shall forward such dissent by
registered mail to the Secretary immediately after the adjournment of such
meeting. Such right to dissent shall not apply to a director who voted in favor
of such action.
ARTICLE III
OFFICERS
--------
Section 3.1. Executive Officers; Election; Qualification; Term of
Office. The Board of Directors shall elect a President and may, if it so
determines, a Chairman of the Board from among its members. The Board of
Directors shall also elect a Secretary and may elect one or more Vice
Presidents, one or more Assistant Secretaries, a Treasurer and one or more
Assistant Treasurers. Any number of offices may be held by the same person. Each
officer shall hold office until the first meeting of the Board of Directors
after the annual meeting of stockholders next succeeding his or her election,
and until his or her successor is elected and qualified or until his or her
earlier death, resignation or removal.
Section 3.2. Resignation; Removal; Vacancies. Any officer may resign
at any time by giving written notice to the Chairman of the Board, if any, the
President or the Secretary. Unless otherwise stated in a notice of resignation,
it shall take effect when received by the officer to whom it is directed,
without any need for its acceptance. The Board of Directors may remove any
officer with or without cause at any time, but such removal shall be without
prejudice to the contractual rights of such officer, if any, with the
Corporation. A vacancy occurring in any office
25
of the Corporation may be filled for the unexpired portion of the term thereof
by the Board of Directors at any regular or special meeting.
Section 3.3. Powers and Duties of Executive Officers. The officers
of the Corporation shall have such powers and duties in the management of the
Corporation as may be prescribed by the Board of Directors and, to the extent
not so provided, as generally pertain to their respective offices, subject to
the control of the Board of Directors. The Board of Directors may require any
officer, agent or employee to give security for the faithful performance of his
or her duties.
Section 3.4. Chief Executive Officer. Unless the Board of Directors
elects a Chairman of the Board who is designated as such, the President shall be
the Chief Executive Officer of the Corporation and shall in general supervise
and control all of the business affairs of the Corporation, subject to the
direction of the Board of Directors. The President may execute, in the name and
on behalf of the Corporation, any deeds, mortgages, bonds, contracts or other
instruments which the Board of Directors or a committee thereof has authorized
to be executed, except in cases where the execution shall have been expressly
delegated by the Board of Directors or a committee thereof to some other officer
or agent of the corporation.
Section 3.5. Secretary. In addition to such other duties, if any, as
may be assigned to the Secretary by the Board of Directors, the Chairman of the
Board, if any, or the President, the Secretary shall (a) keep the minutes of
proceedings of the stockholders, the Board of Directors and any committee of the
Board of Directors in one or more books provided for that purpose; (b) see that
all notices are duly given in accordance with the provisions of these By-laws or
as required by law; (c) be the custodian of the records and seal of the
Corporation; (d) affix or cause to be affixed the seal of the Corporation or a
facsimile thereof, and attest the seal by his or her signature, to all
certificates for shares of stock of the Corporation and to all other documents
the execution of which under seal is authorized by the Board of Directors; and
(e) unless such duties have been delegated by the Board of Directors to a
transfer agent of the Corporation, keep or cause to be kept a register of the
name and address of each stockholder, as the same shall be furnished to the
Secretary by such stockholder, and have general charge of the stock transfer
records of the Corporation.
ARTICLE IV
STOCK CERTIFICATES AND TRANSFERS
--------------------------------
Section 4.1. Certificate. Every holder of stock shall be entitled to
have a certificate signed by or in the name of the Corporation by the Chairman
of the Board, if any, or the President or a Vice President, and by the Secretary
or an Assistant Secretary, of the Corporation, certifying the number of shares
owned by such stockholder in the Corporation. Any of or all the signatures on
the certificate may be facsimile. In case any officer, transfer agent, or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have 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 such officer, transfer agent, or registrar continued to be
such at the date of issue.
26
Section 4.2. Lost, Stolen or Destroyed Certificates; Issuance of New
Certificates. The Corporation may issue a new certificate for stock in the
place of any certificate theretofore issued by it, alleged to have been lost,
stolen or destroyed, and the Corporation may require the owner of the lost,
stolen or destroyed certificate, or such stockholder's legal representative, to
give the Corporation a bond sufficient to indemnify it against any claim that
may be made against it on account of the alleged loss, theft or destruction of
any such certificate or the issuance of such new certificate.
4.3 Transfers of Stock. Upon surrender to the Corporation or the
transfer agent of the Corporation of a certificate for stock of the Corporation
duly endorsed or accompanied by proper evidence of succession, assignment or
authority to transfer or, if the relevant stock certificate is claimed to have
been lost, stolen or destroyed, upon compliance with the provisions of Section
4.2 of these By-laws, and upon payment of applicable taxes with respect to such
transfer, and in compliance with any restrictions on transfer applicable to such
stock certificate or the shares represented thereby of which the Corporation
shall have notice and subject to such rules and regulations as the Board of
Directors may from time to time deem advisable concerning the transfer and
registration of stock certificates, the Corporation shall issue a new
certificate or certificates for such stock to the person entitled thereto,
cancel the old certificate and record the transaction upon its books. Transfers
of stock shall be made only on the books of the Corporation by the registered
holder thereof or by such holder's attorney or successor duly authorized as
evidenced by documents filed with the Secretary or transfer agent of the
Corporation. Whenever any transfer of stock shall be made for collateral
security, and not absolutely, it shall be so expressed in the entry of transfer
if, when the certificate or certificates representing such stock are presented
to the Corporation for transfer, both the transferor and transferee request the
Corporation to do so.
Section 4.4 Stockholders of Record. The Corporation shall be
entitled to treat the holder of record of any stock of the Corporation as the
holder thereof and shall not be bound to recognize any equitable or other claim
to or interest in such stock on the part of any other person, whether or not it
shall have express or other notice thereof, except as otherwise required by the
laws of the State of Delaware.
ARTICLE V
NOTICES
-------
Section 5.1. Manner of Notice. Except as otherwise provided by law,
the Certificate of Incorporation or these By-laws, whenever notice is required
to be given to any stockholder, director or member of any committee of the Board
of Directors, such notice may be given by personal delivery or by depositing it,
in a sealed envelope, in the United States mails, first class, postage prepaid,
addressed, or by delivering it to a telegraph company, charges prepaid, for
transmission, or by transmitting it via telecopier, to such stockholder,
director or member, either at the address of such stockholder, director or
member as it appears on the records of the Corporation or, in the case of such a
director or member, at his or her business address; and such notice shall be
deemed to be given at the time when it is thus personally delivered, deposited,
delivered or transmitted, as the case may be. Such requirement for notice shall
also be deemed
27
satisfied, except in the case of stockholder meetings, if actual notice is
received orally or by other writing by the person entitled thereto as far in
advance of the event with respect to which notice is being given as the minimum
notice period required by law or these By-laws.
Section 5.2. Dispensation with Notice.
(a) Whenever notice is required to be given by law, the Certificate
of Incorporation or these By-laws to any stockholder to whom (i) notice of two
consecutive annual meetings of stockholders, and all notices of meetings of
stockholders or of the taking of action by stockholders by written consent
without a meeting to such stockholder during the period between such two
consecutive annual meetings, or (ii) all, and at least two, payments (if sent by
first class mail) of dividends or interest on securities of the Corporation
during a 12-month period, have been mailed addressed to such stockholder at the
address of such stockholder as shown on the records of the Corporation and have
been returned undeliverable, the giving of such notice to such stockholder shall
not be required. Any action or meeting which shall be taken or held without
notice to such stockholder shall have the same force and effect as if such
notice had been duly given. If any such stockholder shall deliver to the
Corporation a written notice setting forth the then current address of such
stockholder, the requirement that notice be given to such stockholder shall be
reinstated.
(b) Whenever notice is required to be given by law, the Certificate
of Incorporation or these By-laws to any person with whom communication is
unlawful, the giving of such notice to such person shall not be required, and
there shall be no duty to apply to any governmental authority or agency for a
license or permit to give such notice to such person. Any action or meeting
which shall be taken or held without notice to any such person with whom
communication is unlawful shall have the same force and effect as if such notice
had been duly given.
Section 5.3. Waivers of Notice. Any written waiver of notice, signed
by the person entitled to notice, whether before or after the time stated
therein, shall be deemed equivalent to notice. Attendance of a person at a
meeting shall constitute a waiver of notice of such meeting, except when the
person attends a meeting for the express purpose of objecting, at the beginning
of the meeting, to the transaction of any business because the meeting is not
lawfully called or convened. Neither the business to be transacted at, nor the
purpose of any regular special meeting of the stockholders, directors, or
members of a committee or directors need be specified in any written waiver of
notice.
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ARTICLE VI
INDEMNIFICATION
---------------
Section 6.1. Right to Indemnification.
(a) The Corporation shall indemnify and hold harmless, to the fullest
extent permitted by law as in effect on the date of adoption of these By-laws or
as it may thereafter 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 such law permitted the Corporation to provide prior
to such amendment), any person who was or is made or is threatened to be made a
party or is otherwise involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (including any action by or in the
right of the Corporation) (a "proceeding") by reason of the fact that he or she,
or a person for whom he or she is the legal representative, is or was a
director, officer or employee 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 or other enterprise, against any and all
liability and loss (including judgments, fines, penalties and amounts paid in
settlement) suffered or incurred and expenses reasonably incurred by such person
(including attorneys' fees and related expenses); provided that any standard of
conduct applicable to whether a director or officer may be indemnified shall be
equally applicable to an employee under this Article VI. The Corporation shall
not be required to indemnify a person in connection with a proceeding initiated
by such person, including a counterclaim or crossclaim, unless the proceeding
was authorized by the Board of Directors.
(b) For purposes of this Article VI: (i) any reference to "other
enterprise" shall include all plans, programs, policies, agreements, contracts
and payroll practices and related trusts for the benefit of or relating to
employees of the Corporation and its related entities ("employee benefit
plans"); (ii) any reference to "fines", "penalties", "liability" and "expenses"
shall include any excise taxes, penalties, claims, liabilities and reasonable
expenses (including reasonable legal fees and related expenses) assessed against
or incurred by a person with respect to any employee benefit plan; (iii) any
reference to "serving at the request of the Corporation" shall include any
service as a director, officer, employee or agent of the Corporation or trustee
or administrator of any employee benefit plan which imposes duties on, or
involves services by, such director, officer, employee or agent with respect to
an employee benefit plan, its participants, beneficiaries, fiduciaries,
administrators and service providers; (iv) any reference to serving at the
request of the Corporation as a director, officer, employee or agent of a
partnership or trust shall include service as a partner or trustee; and (v) a
person who acted in good faith and in a manner he or she reasonably believed to
be in the interest of the participants and beneficiaries of an employee benefit
plan shall be deemed to have acted in a manner "not opposed to the best
interests of the Corporation" for purposes of this Article VI.
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Section 6.2. Prepayment of Expenses. The Corporation may pay or
reimburse the reasonable expenses incurred in defending any proceeding in
advance of its final disposition if the Corporation has received in advance an
undertaking by the person receiving such payment or reimbursement to repay all
amounts advanced if it should be ultimately determined that he or she is not
entitled to be indemnified under this Article VI or otherwise. The Corporation
may require security for any such undertaking.
Section 6.3. Claims. If a claim for indemnification or payment of
expenses under this Article VI is not paid in full within 30 days after a
written claim therefor has been received by the Corporation, the claimant may
file suit to recover the unpaid amount of such claim and, if successful in whole
or in part, shall be entitled to be paid the expense of prosecuting such claim.
In any such action the Corporation shall have the burden of proving that the
claimant was not entitled to the requested indemnification or payment of
expenses under applicable law.
Section 6.4. Insurance. The Corporation may purchase and maintain
insurance on its own behalf and on behalf of any person who is or was a
director, officer or employee of the Corporation or was serving at the request
of the Corporation as a director, officer or employee of another corporation,
partnership, joint venture, trust or other enterprise (including service with
respect to any employee benefit plan) against any liability asserted against him
and incurred by him in any such capacity, whether or not the Corporation would
have the power to indemnify such person against such liability under this
Article VI.
Section 6.5. Non-Exclusivity of Rights. The rights conferred on any
person by this Article VI shall not be exclusive of any other rights which such
person may have or hereafter acquire under any statute, provision of the
Certificate of Incorporation, these By-laws, agreement, vote of stockholders or
disinterested directors or otherwise, and shall continue as to a person who has
ceased to be a director, officer or employee and shall inure to the benefit of
the heirs, executors, administrators and personal representatives of such a
person.
Section 6.6. Other Indemnification. The Corporation's obligation, if
any, to indemnify any person who was or is serving at its request as a director,
officer, employee, partner or agent of another corporation, partnership, joint
venture or other enterprise shall be reduced by any amount such person may
collect as indemnification from such other corporation, partnership, joint
venture or other enterprise.
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Section 6.7. Amendment or Repeal. Any repeal or modification of the
foregoing provisions of this Article VI shall not adversely affect any right or
protection hereunder of any person in respect of any act or omission occurring
prior to the time of such repeal or modification.
Section 6.8. Merger or Consolidation. For purposes of this Article
VI, references to "the Corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers and employees, so that any person who is or was a director,
officer or employee of such a constituent corporation, or is or was serving at
the request of such a constituent corporation as a director, officer or employee
of another corporation, partnership, joint venture, trust or other enterprise
(including service with respect to any employee benefit plan), shall stand in
the same position under this Article VI with respect to the resulting or
surviving corporation as he would have with respect to such constituent
corporation if its separate existence had continued.
Section 6.9. Indemnification of Agents. The Corporation may, to the
extent authorized from time to time by the Board of Directors, grant rights to
indemnification and to the advancement of expenses to any agent of the
Corporation to the fullest extent of the provisions of this Article VI with
respect to the indemnification and advancement of expenses of directors,
officers and employees of the Corporation.
ARTICLE VII
GENERAL
-------
Section 7.1. Fiscal year. The fiscal year of the Corporation shall
be determined by resolution of the Board of Directors.
Section 7.2. Seal. The corporate seal shall have the name of the
Corporation inscribed thereon and shall be in such form as may be approved from
time to time by the Board of Directors.
Section 7.3. Form of Records. Any records maintained by the
Corporation in the regular course of its business, including its stock ledger,
books of account, and minute books, may be kept on, or be in the form of, punch
cards, magnetic tape, photographs, microphotographs, or any other information
storage device, provided that the records so kept can be converted into clearly
legible form within a reasonable time. The Corporation shall so convert any
records so kept upon the request of any person entitled to inspect the same.
Section 7.4. Amendment of By-Laws by the Board of Directors. These
By-Laws may be altered, amended or repealed, or new By-Laws may be adopted, by
the affirmative vote of a majority of the directors present at any regular or
special meeting of the Board of Directors at which a quorum is present.
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Section 7.5. Amendment of the By-Laws by the Stockholders. These By-
Laws may be altered, amended or repealed, or new By-Laws may be adopted, by the
affirmative vote of the holders of seventy-five (75%) of the shares of the
capital stock of the Corporation issued and outstanding and entitled to vote at
any regular meeting of the stockholders or at any special meeting of the
stockholders, provided notice of such alternation, amendment, repeal or adoption
of new By-Laws shall have been stated in the notice of such meeting.
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