EXHIBIT (3b)
RESTATED BY-LAWS
OF
UNIFI, INC.
(Effective October 22, 2003)
RESTATED BY-LAWS
OF
UNIFI, INC.
ARTICLE I
SHAREHOLDERS
SECTION 1.01. ANNUAL MEETING. The Annual Meeting of Shareholders for the
election of Directors and the transaction of such other business as may come
before it shall be held on such date in each calendar year, not later than the
one hundred fiftieth (150) day after the close of the Corporation's preceding
fiscal year, and at such place as shall be fixed by the President and stated in
the notice or waiver of notice of the meeting.
SECTION 1.02. SPECIAL MEETINGS. Special meetings of the shareholders, for
any purpose of purposes, may be called at any time by any Director, the
President, any Vice President, the Treasurer or the Secretary or by resolution
of the Board of Directors. Special meetings of the shareholders shall be held at
such place as shall be fixed by the person or persons calling the meeting and
stated in the notice or waiver of notice of the meeting.
SECTION 1.03. NOTICE OF MEETINGS OF SHAREHOLDERS. Whenever shareholders
are required or permitted to take any action at a meeting, written notice shall
state the place, date and hour of the meeting and, unless it is the Annual
Meeting, indicate that it is being issued by or at the direction of the person
or persons calling the meeting. Notice of a special meeting shall also state the
purpose or purposes for which the meeting is called. If, at
2
any meeting, action is proposed to be taken which would, if taken, entitle
shareholders fulfilling the requirements of Section 623 of the Business
Corporation Law to receive payment for their shares, the notice of such meeting
shall include a statement of that purpose to that effect. A copy of the notice
of any meeting shall be given, personally or by mail, not less than ten nor more
than fifty days before the date of the meeting, to each shareholder entitled to
vote at such meeting. If mailed, such notice is given when deposited in the
United States mail, with postage thereon prepaid, directed to the shareholder at
his address as it appears on the record of shareholders, or, if he shall have
filed with the Secretary of the Corporation a written request that notices to
him be mailed to some other address, then directed to him at such other address.
When a meeting is adjourned to another time or place, it shall not be
necessary to give any notice of the adjourned meeting if the time and place to
which the meeting is adjourned are announced at the meeting at which the
adjournment is taken, and at the adjourned meeting any business may be
transacted that might have been transacted on the original date of the meeting.
However, if after the adjournment, the Board of Directors fixes a new record
date for the adjourned meeting, a notice of the adjourned meeting shall be given
to each shareholder of record on the new record date entitled to notice under
the next preceding paragraph.
SECTION 1.04. WAIVERS OF NOTICE. Notice of meeting need not be given to
any shareholder who submits a signed Waiver of Notice,
3
in person or by proxy, whether before or after the meeting. The attendance of
any shareholder at a meeting, in person or by proxy, without protesting prior to
the conclusion of the meeting the lack of notice of such meeting, shall
constitute a Waiver of Notice by him.
SECTION 1.05. QUORUM. The holders of a majority of the shares entitled to
vote thereat shall constitute a quorum at a meeting of shareholders for the
transaction of any business, provided that when a specified item of business is
required to be voted on by a class or series, voting as a class, the holders of
a majority of the shares of such class or series shall constitute a quorum for
the transaction of such specified item of business.
When a quorum is once present to organize a meeting, it is not broken by
the subsequent withdrawal of any shareholders.
The shareholders present may adjourn the meeting despite the absence of a
quorum and at any such adjourned meeting at which the requisite amount of voting
stock shall be represented, any business may be transacted which might have been
transacted at the meeting as originally noticed.
SECTION 1.06. FIXING RECORD DATE. For the purpose of determining the
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment thereof, or to express consent to or dissent from any proposal
without a meeting, or for the purpose of determining shareholders entitled to
receive payment of any dividend or the allotment of any rights, or for the
purpose of any other action, the Board of Directors may fix, in
4
advance, a date as the record date for any such determination of shareholders.
Such date shall not be more than fifty or less than ten days before the date of
such meeting, nor more than fifty days prior to any other action.
When a determination of shareholders of record entitled to notice of or to
vote at any meeting or shareholders has been made as provided in this Section,
such determination shall apply to any adjournment thereof, unless the Board of
Directors fixes a new record date under this Section for the adjourned meeting.
SECTION 1.07. LIST OF SHAREHOLDERS AT MEETING. A list of shareholders as
of the record date, certified by the corporate officer responsible for its
preparation or by a transfer agent, shall be produced at any meeting of
shareholders upon the request thereat or prior thereto of any shareholder. If
the right to vote at any meeting is challenged, the inspectors of election, or
person presiding thereat, shall require such list of shareholders to be produced
as evidence of the right of the persons challenged to vote at such meeting, and
all persons who appear from such list to be shareholders entitled to vote
thereat may vote at such meeting.
SECTION 1.08. PROXIES. Every shareholder entitled to vote at a meeting of
shareholders or to express consent or dissent without a meeting may authorize
another person or persons to act for him by proxy.
Every proxy must be signed by the shareholder or his attorney-in-fact. No
proxy shall be valid after the expiration of eleven months from the date thereof
unless otherwise provided in the
5
proxy. Every proxy shall be revocable at the pleasure of the shareholder
executing it, except as otherwise provided in this Section.
The authority of the holder of a proxy to act shall not be revoked by the
incompetence or death of the shareholder who executed the proxy unless, before
the authority is exercised, written notice of an adjudication of such
incompetence or of such death is received by the Corporate Officer responsible
for maintaining the list of shareholders.
Except when other provision shall have been made by written agreement
between the parties, the record holder of shares which are held by a pledgee as
security or which belong to another, upon demand therefor and payment of
necessary expenses thereof, shall issue to the pledgor or to such owner of such
shares a proxy to vote or take other action thereon.
A shareholder shall not sell his vote or issue a proxy to vote to any
person for any sum of money or anything of value, except as authorized in this
Section and Section 620 of the Business Corporation Law.
A proxy which is entitled "irrevocable proxy" and which states that it is
irrevocable, is irrevocable when it is held by any of the following or a nominee
of any of the following:
(1) A Pledgee;
(2) A person who has purchased or agreed to purchase the shares;
(3) A creditor or creditors of the Corporation who extend or continue
credit to the Corporation in consideration of
6
the proxy if the proxy states that it was given in consideration of
such extension or continuation of credit, the amount thereof, and
the name of the person extending or continuing credit;
(4) A person who has contracted to perform services as an Officer of the
Corporation, if a proxy is required by the contract of employment,
if the proxy states that it was given in consideration of such
contract of employment, the name of the employee and the period of
employment contracted for;
(5) A person designated by or under an agreement under paragraph (a) of
said Section 620.
Notwithstanding a provision in a proxy, stating that it is irrevocable,
the proxy becomes revocable after the pledge is redeemed, or the debt of the
Corporation is paid, or the period of employment provided for in the contract of
employment has terminated, or the agreement under paragraph (a) of said Section
620 has terminated, and becomes revocable, in a case provided for in
subparagraph (3) or (4) above, at the end of the period, if any, specified
therein as the period during which it is irrevocable, or three years after the
date of the proxy, whichever period is less, unless the period of irrevocability
is renewed from time to time by the execution of a new irrevocable proxy as
provided in this Section. This paragraph does not affect the duration of a proxy
under the second paragraph of this Section.
A proxy may be revoked, notwithstanding a provision making it irrevocable,
by a purchaser of shares without knowledge of the existence of the provision
unless the existence of the proxy and its irrevocability is noted conspicuously
on the face or back of the certificate representing such shares.
7
SECTION 1.09. SELECTION AND DUTIES OF INSPECTORS. The Board of Directors,
in advance of any shareholders' meeting, may appoint one or more inspectors to
act at the meeting or any adjournment thereof. If inspectors are not so
appointed, the person presiding at a shareholders' meeting may, and on the
request of any shareholder entitled to vote thereat shall, appoint one or more
inspectors. In case any person appointed failed to appear or act, the vacancy
may be filled by appointment made by the Board in advance of the meeting or at
the meeting by the person presiding thereat. Each inspector, before entering
upon the discharge of his duties, shall take and sign an oath faithfully to
execute the duties of inspector at such meeting with strict impartiality and
according to the best of his ability.
The inspectors shall determine the number of shares outstanding and the
voting power of each, the shares represented at the meeting, the existence of a
quorum, the validity and effect of proxies, and shall receive votes, ballots or
consents, hear and determine all challenges and questions arising in connection
with the right to vote, count and tabulate all votes, ballots or consents,
determine the result, and do such acts as are proper to conduct the election or
vote with fairness to all shareholders. On request of the person presiding at
the meeting or any shareholder entitled to vote thereat, the inspectors shall
make a report in writing of any challenge, question or matter determined by them
and execute a certificate of any fact found by them. Any report or certificate
made by them shall be prima facie evidence of the facts
8
stated and of the vote as certified by them.
Unless appointed by the Board of Directors or requested by a shareholder,
as above provided in this Section, inspectors shall be dispensed with at all
meetings of shareholders.
The vote upon any question before any shareholders' meeting need not be by
ballot.
SECTION 1.10. QUALIFICATION OF VOTERS. Every shareholder of record shall
be entitled at every meeting of shareholders to one vote for every share
standing in his name on the record of shareholders, except as expressly provided
otherwise in this Section and except as otherwise expressly provided in the
Certificate of Incorporation of the Corporation.
Treasury shares and shares held by another domestic or foreign corporation
of any type or kind, if a majority of the shares entitled to vote in the
election of Directors of such other corporation is held by the Corporation,
shall not be shares entitled to vote or to be counted in determining the total
number of outstanding shares.
Shares held by an administrator, executor, guardian, conservator,
committee, or other fiduciary, except a Trustee, may be voted by him, either in
person or by proxy, without transfer of such shares into his name. Shares held
by a Trustee may be voted by him, either in person or by proxy, only after the
shares have been transferred into his name as Trustee or into the name of his
nominee.
Shares held by or under the control of a receiver may be voted
9
by him without the transfer thereof into his name if authority so to do is
contained in an order of the court by which such receiver was appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, or a
nominee of the pledgee.
Redeemable shares which have been called for redemption shall not be
deemed to be outstanding shares for the purpose of voting or determining the
total number of shares entitled to vote on any matter on and after the date on
which written notice of redemption has been sent to holders thereof and a sum
sufficient to redeem such shares has been deposited with a bank or trust company
with irrevocable instruction and authority to pay the redemption price to the
holders of the shares upon surrender of certificates therefor.
Shares standing in the name of another domestic or foreign corporation of
any type or kind may be voted by such Officer, agent or proxy as the By-Laws of
such corporation may provide, or, in the absence of such provision, as the Board
of Directors of such corporation may determine.
When shares are registered on the record of shareholders of the
Corporation in the name of, or have passed by operation of law or by virtue of
any deed of trust or other instrument to two or more fiduciaries, and if the
fiduciaries shall be equally divided as to voting such shares, any court having
jurisdiction of their accounts, upon petition by any of such fiduciaries or by
any party
10
in interest, may direct the voting of such shares for the best interest of the
beneficiaries. This paragraph shall not apply in any case where the instrument
or order of the court appointing such fiduciaries shall otherwise direct how
such shares shall be voted.
Notwithstanding the foregoing paragraphs of this Section, the Corporation
shall be protected in treating the persons whose names shares stand on the
record of shareholders as the owners thereof for all purposes.
SECTION 1.11. VOTE OF SHAREHOLDERS. Directors shall be elected by a
plurality of the votes cast at a meeting of shareholders by the holders of
shares entitled to vote in the election. Whenever any corporate action, other
than the election of Directors, is to be taken by vote of the shareholders, it
shall, except as otherwise required by the Business Corporation Law or by the
Certificate of Incorporation of the Corporation, be authorized by a majority of
the votes cast at a meeting of shareholders by the holders of shares entitled to
vote thereon.
SECTION 1.12. WRITTEN CONSENT OF SHAREHOLDERS. Whenever under the Business
Corporation Law shareholders are required or permitted to take any action by
vote, such action may be taken without a meeting on written consent, setting
forth the action so taken, signed by the holders of all outstanding shares
entitled to vote thereon. This paragraph shall not be construed to alter or
modify the provisions of any section of the Business Corporation Law or any
provision in the Certificate of Incorporation of the Corporation not
inconsistent with the Business Corporation Law
11
under which the written consent of the holders of less than all outstanding
shares is sufficient for corporate action.
Written consent thus given by the holders of all outstanding shares
entitled to vote shall have the same effect as a unanimous vote of shareholders.
ARTICLE II
DIRECTORS
SECTION 2.01. MANAGEMENT OF BUSINESS; QUALIFICATIONS OF DIRECTORS. The
business of the Corporation shall be managed by its Board of Directors, each of
whom shall be at least twenty-one years of age.
Directors need not be Stockholders.
The Board of Directors, in addition to the powers and authority expressly
conferred upon it herein, by statute, by the Certificate of Incorporation of the
Corporation and otherwise, is hereby empowered to exercise all such powers as
may be exercised by the Corporation, except as expressly provided otherwise by
the statutes of the State of New York, by the Certificate of Incorporation of
the Corporation and these By-Laws.
SECTION 2.02. NUMBER OF DIRECTORS. The number of Directors which shall
constitute the entire Board shall be nine (9), but this number may be increased
and subsequently again increased or decreased from time to time by the
affirmative vote of the majority of Directors, except that the number of
Directors shall not be less than seven (7).
12
SECTION 2.03. ELECTION OF DIRECTORS. At each Annual Meeting of the
Shareholders, Directors shall be elected to hold office until the next Annual
Meeting of the Shareholders, subject to prior death, resignation, retirement, or
removal from office and until his or her successor shall be elected and
qualified.
SECTION 2.04. NEWLY CREATED DIRECTORSHIP AND VACANCIES. Newly created
Directorships resulting from an increase in the number of Directors and
vacancies caused by death, resignation, retirement, or removal from office,
subject to Section 2.05(b), may be filled by the majority of the Directors
voting on the particular matter, if a quorum is present. If the number of
Directors then in office is less than a quorum, such newly created Directorships
and vacancies may be filled by the affirmative vote of a majority of the
Directors in office. Any Director elected by the Board to fill a vacancy shall
serve until the next meeting of the shareholders, at which the election of the
Directors is in the regular order of business, and until his or her successor is
elected and qualified.
In no case will a decrease in the number of Directors shorten the term of
an incumbent Director.
SECTION 2.05(a). RESIGNATIONS. Any Director of the Corporation may resign
at any time by giving written notice to the Board of Directors, the President or
the Secretary of the Corporation. Such resignation shall take effect at the time
specified therein, if any, or if no time is specified therein, then upon receipt
of such notice by the addressee; and, unless otherwise provided therein, the
acceptance of such resignation shall not be
13
necessary to make it effective.
SECTION 2.05(b). REMOVAL OF DIRECTORS. Any or all of the Directors may be
removed at any time (i) for cause by vote of the shareholders or by action on
the Board of Directors or (ii) without cause by vote of the shareholders, except
as expressly provided otherwise by Section 706 of the Business Corporation Law.
The Board of Directors shall fill vacancies occurring in the Board by reason of
removal of Directors for cause. Vacancies occurring by reason of removal without
cause shall be filled by the Shareholders.
SECTION 2.06. QUORUM OF DIRECTORS. At all meetings of the Board of
Directors, a majority of the number of Directors then office shall be necessary
and sufficient to constitute a quorum for the transaction of business and the
act 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, except as expressly provided
otherwise by the statutes of the State of New York and except as provided in the
third sentence of Section 2.04, in Section 2.11 and Section 7.09 hereof.
A majority of the Directors present, whether or not a quorum is present,
may adjourn any meeting of the Directors to another time and place. Notice of
any adjournment need not be given if such time and place are announced at the
meeting.
SECTION 2.07. ANNUAL MEETING. The Board of Directors shall meet
immediately following the adjournment of the Annual Meeting of shareholders in
each year at the same place and no notice of such
14
meeting shall be necessary.
SECTION 2.08. REGULAR MEETINGS. Regular meetings of the Board of Directors
may be held at such time and place as shall from time to time be fixed by the
Board and no notice thereof shall be necessary.
SECTION 2.09. SPECIAL MEETINGS. Special meetings may be called at any time
by any Director, the President, any Vice President, the Treasurer, or the
Secretary or by resolution of the Board of Directors. Special meetings shall be
held at such place as shall be fixed by the person or persons calling the
meeting and stated in the notice or waiver of notice of the meeting.
SECTION 2.10. COMPENSATION. Directors shall receive such fixed sums and
expenses of attendance for attendance at each meeting of the Board or of any
committee and/or such salary as may be determined from time to time by the Board
of Directors; provided that nothing herein contained shall be construed to
preclude any Director from serving the Corporation in any other capacity and
receiving compensation therefor.
SECTION 2.11. COMMITTEES. The Board of Directors, by resolution adopted by
a majority of the entire Board, may designate from among its members an
Executive Committee and other committees, each consisting of three or more
Directors, and each of which, to the extent provided in the resolution, shall
have the authority of the Board of Directors, except that no such committee
shall have authority as to the following matters:
(a) The submission to shareholders of any action that needs
15
shareholder's authorization under the Business Corporation Law.
(b) The filling of vacancies in the Board of Directors or in any
committee.
(c) The fixing of compensation of the Directors for serving on the Board
of Directors or on any committee.
(d) The amendment or repeal of the By-Laws, or the adoption of new
By-Laws.
(e) The amendment or repeal of any resolution of the Board of Directors
which by its terms shall not be so amendable or repealable.
The Board may designate one or more Directors as alternate members of any
such committee, who may replace any absent member or members at any meeting of
such committee. Each such committee shall serve at the pleasure of the Board of
Directors.
Regular meetings of any such committee shall be held at such time and
place as shall from time to time be fixed by such committee and no notice
thereof shall be necessary. Special meetings may be called at any time by any
Officer of the Corporation or any member of such committee. Notice of each
special meeting of each such committee shall be given (or waived) in the same
manner as notice of a special meeting of the Board of Directors. A majority of
the members of any such committee shall constitute a quorum for the transaction
of business and the act of a majority of the members present at the time of the
vote, if a quorum is present at such time, shall be the act of the committee.
SECTION 2.12. INTERESTED DIRECTORS. No contract or other transaction
between the Corporation and one or more of its Directors, or between the
Corporation and any other corporation,
16
firm, association or other entity in which one or more of the Corporation's
Directors are Directors or Officers, or are financially interested, shall be
either void or voidable for this reason alone or by reason alone that such
Director or Directors are present at the meeting of the Board of Directors, or
of a committee thereof, which approves such contract or transaction, or that his
or their votes are counted for such purpose:
(1) If the fact of such common Directorship, Officership or
financial interest is disclosed or known to the Board or
committee, and the Board or committee approves such contract
or transaction by a vote sufficient for such purpose without
counting the vote or votes of such interested Director or
Directors;
(2) If such common Directorship, Officership or financial interest
is disclosed or known to the shareholders entitled to vote
thereon, and such contract or transaction is approved by vote
of the shareholders; or
(3) If the contract or transaction is fair and reasonable as to
the Corporation at the time it is approved by the Board, a
committee of the shareholders.
Common or interested Directors may be counted in determining the presence
of a quorum at a meeting of the Board or of a committee which approves such
contract or transaction.
SECTION 2.13. LOANS TO DIRECTORS. A loan shall not be made by the
Corporation to any Director unless it is authorized by vote of the shareholders.
For this purpose, the shares of the Director who would be the borrower shall not
be shares entitled to vote. A loan made in violation of this Section shall be a
violation of the duty to the Corporation of the Directors approving it, but the
obligation of the borrower with respect to the loan shall not be affected
thereby.
17
SECTION 2.14. CONSENT TO ACTION. Any action required or permitted to be
taken by the Board of Directors or any committee thereof may be taken without a
meeting if all members of the Board or committee consent in writing, whether
done before or after the action so taken, to the adoption of a resolution
authorizing the action. The resolution and the written consent thereto shall be
filed with the Minutes of the proceeding of the Board or the committee.
ARTICLE III
OFFICERS
SECTION 3.01. ELECTION OR APPOINTMENT: NUMBER. The Chairman of the Board
of Directors and Officers of the Corporation shall be elected or appointed by
the Board of Directors. The Officers shall be a President, a Secretary, a
Treasurer, and such number of Executive Vice Presidents, Vice Presidents,
Assistant Secretaries and Assistant Treasurers, and such other Officers, as the
Board may from time to time determine. Any person may hold two or more offices
at the same time, except the offices of President and Secretary. An Officer may,
but no Officer need, be chosen from among the Board of Directors.
SECTION 3.02. TERM. Subject to the provisions of Section 3.03 hereof, all
officers shall be elected or appointed to hold office until the meeting of the
Board of Directors following the next Annual Meeting of shareholders, and each
officer shall hold office for the term for which he is elected or appointed and
until
18
his successor has been elected or appointed and qualified. The Board may require
any Officer to give security for the faithful performance of his duties.
SECTION 3.03. REMOVAL. Any Officer elected or appointed by the Board of
Directors may be removed by the Board with or without cause.
The removal of an Officer without cause shall be without prejudice to his
contract rights, if any. The election or appointment of an Officer shall not of
itself create contract rights.
SECTION 3.04. AUTHORITY. Any Director or such other person as may be
designated by the Board of Directors, and in the absence of such Director or
other person, the President shall be the Chief Executive Officer ("CEO") of the
Corporation. The CEO shall oversee the general operations of the Corporation and
set company policy that would be implemented, interpreted and carried out by the
President of the Corporation who will report directly to the CEO. The Chairman
of the Board shall preside at all meetings of the Board of Directors unless some
other person is designated by the Board.
SECTION 3.05. VOTING SECURITIES OWNED BY THE CORPORATION. Powers of
attorney, proxies, waivers or notice of meeting, consents and other instruments
relating to securities owned by the Corporation may be executed in the name of
and on behalf of the Corporation by the President or any Vice-President and any
such
19
officer may, in the name of and on behalf of the Corporation, take all such
action as any such officer may deem advisable to vote in person or by proxy at
any meeting of security holders of any Corporation in which the Corporation may
own securities and at any such meeting shall possess and may exercise any and
all rights and powers incident to the ownership of such securities and which, as
the owner thereof, the Corporation might have exercised and possessed if
present. The Board of Directors may, by resolution, from time to time confer
like powers upon any other person or persons.
ARTICLE IV
CAPITAL STOCK
SECTION 4.01. STOCK CERTIFICATES. The shares of the Corporation shall be
represented by certificates signed by the Chairman of the Board or the President
or a Vice-President and the Secretary or an Assistant Secretary or the Treasurer
or an Assistant Treasurer of the Corporation, and may be sealed with the seal of
the Corporation or a facsimile thereof. The signatures of the Officers upon a
certificate may be facsimiles if the certificate is countersigned by a transfer
agent or registered by a registrar other than the Corporation itself or its
employee. In case any Officer who has signed or whose facsimile signature has
20
been placed upon a certificate shall have ceased to be such Officer before such
certificate is issued, it may be issued by the Corporation with the same effect
as if he were such Officer at the date of issue.
Each certificate representing shares shall also set fort such additional
material as is required by subdivisions (b) and (c) of Section 508 of the
Business Corporation Law.
SECTION 4.02. TRANSFERS. Stock of the Corporation shall be transferable in
the manner prescribed by the laws of the State of New York and in these By-Laws
Transfers of stock shall be made on the books of the Corporation only by the
person named in the certificate or by attorney lawfully constituted in writing
and upon the surrender of the certificate therefor, which shall be canceled
before the new certificate shall be issued.
SECTION 4.03. REGISTERED HOLDERS. The Corporation shall be entitled to
treat and shall be protected in treating the persons in whose names shares or
any warrants, rights or options stand on the record of shareholders, warrant
holders, right holders or option holders, as the case may be, as the owners
thereof for all purposes and shall not be bound to recognize any equitable or
other claim to, or interest in, any such share, warrant, right or option on the
part of any other person, whether or not the Corporation shall have notice
thereof, except as expressly provided otherwise by the Statutes of the State of
New York.
SECTION 4.04. NEW CERTIFICATES. The Corporation may issue a new
certificate of stock in the place of any certificate
21
theretofore issued by it, alleged to have been lost, stolen or destroyed, and
the Directors may, in their discretion, require the owner of the lost, stolen or
destroyed certificate, or his legal representatives, to give the Corporation a
bond sufficient (in the judgment of the Directors) to indemnify the Corporation
against any claim that may be made against it on account of the alleged loss or
theft of any such certificate or the issuance of such new certificate. A new
certificate may be issued without requiring any bond when, in the judgment of
the Directors, it is proper so to do.
ARTICLE V
FINANCIAL NOTICES TO SHAREHOLDERS
SECTION 5.01. DIVIDENDS. When any dividend is paid or any other
distribution is made, in whole or in part, from sources other than earned
surplus, it shall be accompanied by a written notice (1) disclosing the amounts
by which such dividend or distribution affects stated capital, capital surplus
and earned surplus, or (2) if such amounts are not determinable at the time of
such notice, disclosing the approximate effect of such dividend or distribution
upon stated capital, capital surplus and earned surplus and stating that such
amounts are not yet determinable.
SECTION 5.02. SHARE DISTRIBUTION AND CHANGES. Every distribution to
shareholders of certificates representing a share distribution or a change of
shares which affects stated capital, capital surplus or earned surplus shall be
accompanied by a written notice (1) disclosing the amounts by which such
distribution or
22
change affects stated capital, capital surplus or earned surplus, or (2) if such
amounts are not determinable at the time of such notice, disclosing the
approximate effect of such distribution or change upon stated capital, capital
surplus and earned surplus and stating that such amounts are not yet
determinable.
When issued shares are changed in any manner which affects stated capital,
capital surplus or earned surplus, and no distribution to shareholders of
certificates representing any shares resulting from such change is made,
disclosure of the effect of such change upon the stated capital, capital surplus
and earned surplus shall be made in the next financial statement covering the
period in which such change is made that is furnished by the Corporation to
holders of shares of the class or series so changed or, if practicable, in the
first notice of dividend or share distribution or change that is furnished to
such shareholders between the date of the change and shares and the next such
financial statement, and in any event within six months of the date of such
change.
SECTION 5.03. CANCELLATION OF REACQUIRED SHARES. When reacquired shares
other than converted shares are canceled, the stated capital of the Corporation
shall be reduced by the amount of stated capital then represented by such shares
plus any stated capital not theretofore allocated to any designated class or
series which is thereupon allocated to the shares canceled. The amount by which
stated capital has been reduced by cancellation of required shares during a
stated period of time shall be disclosed in the
23
next financial statement covering such period that is furnished by the
Corporation to all its shareholders or, if practicable, in the first notice of
dividend or share distribution that is furnished to the holders of each class or
series of its shares between the end of the period and the next such financial
statement, and in any event to all its shareholders within six months of the
date of the reduction of capital.
SECTION 5.04. REDUCTION OF STATED CAPITAL. When a reduction of stated
capital has been effected under Section 516 of the Business Corporation Law, the
amount of such reduction shall be disclosed in the next financial statement
covering the period in which such reduction is made that is furnished by the
Corporation to all its shareholders or, if practicable, in the first notice of
dividend or share distribution that is furnished to the holders of each class or
series of its shares between the date of such reduction and the next such
financial statement, and in any event to all its shareholders within six months
of the date of such reduction.
SECTION 5.05. APPLICATION OF CAPITAL SURPLUS TO ELIMINATION OF A DEFICIT.
Whenever the Corporation shall apply any part or all of its capital surplus to
the elimination of any deficit in the earned surplus account, such application
shall be disclosed in the next financial statement covering the period in which
such elimination is made that is furnished by the Corporation to all its
shareholders or, if practicable, in the first notice of dividend or share
distribution that is furnished to holders of each class or
24
series of its shares between the date of such elimination and the next such
financial statement, and in any event to all its shareholders within six months
of the date of such action.
SECTION 5.06. CONVERSION OF SHARES. Should the Corporation issue any
convertible shares, then, when shares have been converted, disclosure of the
conversion of shares during a stated period of time and its effect, if any, upon
stated capital shall be made in the next financial statement covering such
period that is furnished by the Corporation to all its shareholders or, if
practicable, in the first notice of dividend or share distribution that is
furnished to the holders of each class or series of its shares between the end
of such period and the next financial statement, and in any event to all its
shareholders within six months of the date of the conversion of shares.
ARTICLE VI
INDEMNIFICATION
SECTION 6.01. RIGHT TO INDEMNIFICATION. The Corporation shall indemnify,
defend and hold harmless any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative, investigative or other, including
appeals, by reason of the fact that he 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 or employee of
25
any Corporation, partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, whether the basis of
such proceeding is alleged action in an official capacity as a Director, Officer
or employee or in any other capacity while serving as a Director, Officer or
employee, to the fullest extent authorized by the New York Business Corporation
Law, as the same exists or may hereafter be amended, against all expenses,
liability and loss (including attorneys' fees, judgments, fines, ERISA excise
taxes or penalties and amounts paid or to be paid in settlement) reasonably
incurred or suffered by such person in connection therewith; provided, however,
that except as provided in Section 6.02 hereof with respect to proceedings
seeking to enforce rights to indemnification, the Corporation shall indemnify
any such person seeking indemnification in connection with a proceeding (or part
thereof) initiated by such person only if the proceeding (or part thereof) was
authorized by the Board of Directors of the Corporation.
The right to indemnification conferred in this Article shall be a contract
right and shall include the right to be paid by the Corporation expenses
incurred in defending any such proceeding in advance of its final disposition;
provided, however, that if required by law at the time of such payment, the
payment of such expenses incurred by a Director or Officer in his capacity as a
Director or Officer (and not in any other capacity in which service was or is
rendered by such person while a Director or Officer, including, without
limitation, service to an employee benefit plan)
26
in advance of the final disposition of such proceeding, shall be made only upon
delivery to the Corporation of an undertaking, by or on behalf of such Director
or Officer, to repay all amounts so advanced if it should be determined
ultimately that such Director or Officer is not entitled to be indemnified under
this Section or otherwise.
"Employee" as used herein, includes both an active employee in the
Corporation's service, as well as a retired employee who is or has been a party
to a written agreement under which he might be, or might have been, obligated to
render services to the Corporation.
SECTION 6.02. RIGHT OF CLAIMANT TO BRING SUIT. If a claim under Section
6.01 is not paid in full by the Corporation within sixty (60) days or, in cases
of advances of expenses, twenty (20) days after a written claim has been
received by the Corporation, the claimant may at any time thereafter bring suit
against the Corporation to recover the unpaid amount of the claim and, if
successful in whole or in part, the claimant shall be entitled to be paid also
the expense of prosecuting such claim. It shall be a defense to any such action
(other than an action brought to enforce claim for expenses incurred in
defending any proceeding in advance of its final disposition where the required
undertaking has been tendered to the Corporation) that the claimant has not met
the standards of conduct which make it permissible under the New York Business
Corporation Law for the Corporation to indemnify the claimant for the amount
claimed, but the burden of proving such defense shall be on the Corporation.
Neither the failure of the
27
Corporation (including its Board of Directors, independent legal counsel, or its
shareholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he has met the applicable standard of conduct set forth in the New York
Business Law, nor an actual determination by the Corporation (including its
Board of Directors, independent legal counsel, or its shareholders) that the
claimant had not met such applicable standard of conduct shall be a defense to
the action or create a presumption that claimant had not met the applicable
standard of conduct. The Corporation shall be precluded from asserting in any
judicial proceeding commenced pursuant to this Article that the procedures and
presumptions of this Article are not valid, binding and enforceable and shall
stipulate in any such proceeding that the Corporation is bound by all provisions
of this Article.
SECTION 6.03. NONEXCLUSIVENESS. The indemnification and advances of
expenses granted pursuant to, or provided by, this Article shall not be deemed
exclusive of any other rights to which a Director or Officer seeking
indemnification or advancement or expenses may be entitled, whether contained in
the Certificate of Incorporation or these By-Laws, and the Board of Directors is
authorized, from time to time in its discretion, to enter into agreements with
one or more Directors, Officers and other persons providing for the maximum
indemnification allowed by applicable law.
The right to indemnification and the payment of expenses
28
incurred in defending a proceeding in advance of its final disposition conferred
in this Article (a) shall apply to acts or omissions antedating the adoption of
this By-Law, (b) shall be severable, (c) shall not be exclusive of other rights
to which any Director, Officer or employee may now or hereafter become entitled
apart from this Article, (d) shall continue as to a person who has ceased to be
such Director, Officer or employee and (e) shall inure to the benefit of the
heirs, Executors and Administrators of such a person.
SECTION 6.04. INSURANCE FOR INDEMNIFICATION OF DIRECTORS AND OFFICERS. The
Corporation shall have the power to purchase and maintain insurance (a) to
indemnify the Corporation for any obligations which it incurs as the result of
the indemnification of Directors and Officers under the provisions of this
Article; (b) to indemnify Directors and Officers in instances which they may be
indemnified by the Corporation under the provisions of this Article; and (c) to
indemnify Directors and Officers in instances in which they may not otherwise be
indemnified by the Corporation under the provisions of this Article, provided
the contract of insurance covering such Directors and Officers provides, in a
manner acceptable to the Superintendent of Insurance of the State of New York,
for a retention amount and for co-insurance.
No insurance under the preceding paragraph of this Section may provide for
any payment, other than the cost of defense, to or on behalf of any Director of
Officer: (i) if a judgment or other final adjudication adverse to the insured
Director or Officer
29
establishes that his acts of active and deliberate dishonesty were material to
the cause of action so adjudicated or that he personally gained in fact a
financial profit or other advantage to which he was not legally entitled, or
(ii) in relation to any risk the insurance of which is prohibited under the
insurance laws of the State of New York.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. OFFICES. The principal office of the Corporation shall be in
the City of New York, County of New York, State of New York. The Corporation may
also have offices at other places, within and/or without the State of New York.
SECTION 7.02. SEAL. The corporate seal shall have inscribed thereon the
name of the Corporation, the year of its incorporation and the words "Corporate
Seal of New York".
SECTION 7.03. CHECKS. All checks or demands for money shall be signed by
such person or persons as the Board of Directors may from time to time
determine.
SECTION 7.04. FISCAL YEAR. The fiscal year of the Corporation shall begin
on the 1st day of July in each year and shall end on the 30th day of June of the
ensuing year and the first fiscal year shall end on June 30, 1969.
SECTION 7.05. BOOKS AND RECORDS. The Corporation shall keep correct and
complete books and records of accounts and shall keep minutes of the proceedings
of its shareholders, Board of Directors
30
and Executive Committee, if any, and shall keep at the office of the Corporation
in New York State or at the office of its transfer agent or registrar in New
York State, a record containing the names and addresses of all shareholders, the
number and class of shares held by each and the dates when they respectively
became the owners of record thereof. Any of the foregoing books, minutes or
records may be in written form or in any other form capable of being converted
into written form within a reasonable time.
SECTION 7.6. DUTY OF DIRECTORS AND OFFICERS. Directors and Officers shall
discharge the duties of their respective positions in good faith and with that
degree of diligence, care and skill which ordinarily prudent men would exercise
under similar circumstances in like positions. In discharging their duties,
Directors and Officers, when acting in good faith, may rely upon financial
statements of the Corporation represented to them to be correct by the President
or the Officer of the Corporation having charge of its books of accounts, or
stated in a written report by an independent public or certified public
accountant or firm of such accountants fairly to reflect the financial condition
of the Corporation.
SECTION 7.07. WHEN NOTICE OR LAPSE OF TIME UNNECESSARY; NOTICE DISPENSED
WITH WHEN DELIVERY IS PROHIBITED. Whenever, under the Business Corporation Law
or the Certificate of Incorporation or the By-Law of the Corporation or by the
terms of any agreement or instrument, the Corporation or the Board of Directors
or any committee thereof is authorized to take any action after notice to
31
any person or persons or after the lapse of a prescribed period of time, such
action may be taken without notice and without the lapse of such period of time,
if at any time before or after such action is completed the person or persons
entitled to such notice or entitled to participate in the action to be taken or,
in the case of a shareholder, by his attorney-in-fact, submit a signed waiver of
notice of such requirements.
Whenever any notice or communication is required to be given to any person
by the Business Corporation Law, the Certificate of Incorporation of the
Corporation or theses By-Laws, or by the terms of any agreement or instrument,
or as a condition precedent to taking any corporate action and communication
with such person is then unlawful under any statute of the State of New York or
of the United States or any regulation, proclamation or order issued under said
statutes, then the giving of such notice or communication to such person shall
not be required and there shall be no duty to apply for license or other
permission to do so. Any affidavit, certificate or other instrument which is
required to be made or filed as proof of the giving of any notice or
communication required the Business Corporation Law shall, if such notice or
communication to any person is dispensed with under this paragraph, include a
statement that such notice or communication was not given to any person with
whom communication is unlawful. Such affidavit, certificate or other instrument
shall be as effective for all purposes as though such notice or communication
had been personally given to such person.
32
SECTION 7.08. ENTIRE BOARD. As used in these By-Laws, the term "Entire
Board" means the total number of Directors which the Corporation would have if
there were no vacancies.
SECTION 7.09. AMENDMENT OF BY-LAWS. These By-Laws may be amended or
repealed and new By-Laws adopted by the Board of Directors or by vote of the
holders of the shares at the time entitled to vote of the holders of the shares
at the time entitled to vote in the election of any Directors, except that any
amendment by the Board changing the number of Directors shall require the vote
of a majority of the Entire Board and except that any By-Laws adopted by the
Board may be amended or repealed by the shareholders entitled to vote thereon as
provided in the Business Corporation Law.
If any By-Law regulating an impending election of Directors is adopted,
amended or repealed by the Board, the shall be set forth in the notice of the
next meeting of shareholders for the election of Directors the By-Law so
adopted, amended or repealed, together with a concise statement of the changes
made.
SECTION 7.10 NONAPPLICATION OF NORTH CAROLINA SHAREHOLDER PROTECTION ACT.
The provisions of North Carolina General Statutes 55-75 through 55-79 shall not
be applicable to this Corporation.
SECTION 7.11. SECTION HEADINGS. The Headings to the Articles and Sections
of these By-Laws have been inserted for convenience of reference only and shall
not be deemed to be a part of these By-Laws.
33