SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 31, 1998
Commission file number: 333-5753
Exigent International, Inc.
(Exact name of Registrant as specified in its charter)
Delaware 59-3379927
(State of incorporation) (I.R.S. Employer
Identification No.)
1225 Evans Road
Melbourne, Florida 32904-2314
(Address of principal executive offices) (Zip code)
407-952-7550
(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 ____
The number of shares outstanding of the registrant's common stock, $.01 par
value, on September 1, 1998 was 4,104,226.
<PAGE>
EXIGENT INTERNATIONAL, INC.
QUARTER ENDED JULY 31, 1998
INDEX
PART I - FINANCIAL INFORMATION Page
Item 1. Financial Statements 3
Consolidated Balance Sheets as of July 31, 1998 and
January 31, 1998 3
Consolidated Statements of Income for the Six Months Ended
July 31, 1998 and 1997 5
Consolidated Statements of Income for the Three Months Ended
July 31, 1998 and 1997 6
Consolidated Statements of Cash Flows for the Six Months Ended
July 31, 1998 and 1997 7
Notes to Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
PART II - OTHER INFORMATION 16
Item 2. Changes in Securities 16
Item 4. Submission of Matters to a Vote of Security Holders 18
Item 5. Other Information 19
Item 6. Exhibits and Reports on Form 8-K 19
Signatures 20
<PAGE>
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
EXIGENT INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
July 31, 1998 January 31,
(unaudited) 1998
CURRENT ASSETS
<S> <C> <C>
Cash and cash equivalents $ 1,237,621 $ 3,640,508
Accounts receivable, pledged 3,284,664 2,747,383
Costs and estimated earnings in excess of
billings on uncompleted contracts, pledged 5,099,028 3,823,768
Inventories 6,583 5,288
Prepaid expenses 62,579 64,288
Deferred income taxes 663,000 663,000
Prepaid income taxes 53,222 -
------ -------
TOTAL CURRENT ASSETS 10,406,697 10,944,235
---------- ----------
PROPERTY AND EQUIPMENT
Cost 5,828,456 5,304,630
Accumulated depreciation (3,640,314) (3,135,923)
---------- ----------
NET PROPERTY AND EQUIPMENT 2,188,142 2,168,707
--------- ---------
OTHER ASSETS
Software development costs, net of accumulated amortization 3,222,391 1,508,887
Organizational costs 10,638 10,638
Deposits 50,927 43,466
Cash surrender value of life insurance 17,028 17,028
------ ------
TOTAL OTHER ASSETS 3,300,984 1,580,019
--------- ---------
TOTAL ASSETS $ 15,895,823 $ 14,692,961
================ ===============
See accompanying Notes
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXIGENT INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS (CONTINUED)
LIABILITIES AND STOCKHOLDERS'EQUITY
July 31, 1998 January 31,
(unaudited) 1998
CURRENT LIABILITIES
<S> <C> <C>
Line of credit $ 2,300,000 $
Accounts payable 33,457 392,799
Accrued expenses 3,390,456 3,401,311
Billings in excess of costs and estimated earnings
on uncompleted contracts 322,329 1,252,700
Income taxes payable 34,334 242,524
Current portion, long-term debt 466,667 511,111
------- -------
TOTAL CURRENT LIABILITIES 6,547,243 5,800,445
--------- ---------
LONG-TERM LIABILITIES
Long-term debt, less current portion 244,445 466,667
Deferred income taxes 645,000 645,000
Other liabilities 44 -
------- ---------
TOTAL LONG-TERM LIABILITIES 889,489 1,111,667
------- ---------
TOTAL LIABILITIES 7,436,732 6,912,112
--------- ---------
STOCKHOLDERS'EQUITY
Class A Preferred Shares, $.01 par value 5,000,000
shares authorized, 612,559 and 688,792 issued and
outstanding at July 31, 1998 and January 31, 1998,
respectively at $2.50 per share liquidation/dissolution
preference 6,126 6,888
Common Shares, $.01 par value, 40,000,000 shares
authorized, 4,100,161 and 3,872,655 issued and
outstanding at July 31, 1998 and January 31, 1998,
respectively 41,001 38,726
Paid in capital 1,936,169 1,585,007
Retained earnings 6,475,795 6,150,228
--------- ---------
TOTAL STOCKHOLDERS'EQUITY 8,459,091 7,780,849
--------- ---------
TOTAL LIABILITIES & STOCKHOLDERS'EQUITY $ 15,895,823 $ 14,692,961
============ ==============
See accompanying Notes
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXIGENT INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
For the six months ending July 31,
1998 1997
(unaudited) (unaudited)
<S> <C> <C>
REVENUES FROM SERVICES $ 16,496,571 $ 16,771,603
COST OF SALES 12,741,584 12,971,878
---------- ----------
GROSS PROFIT 3,754,987 3,799,725
GENERAL AND ADMINISTRATIVE EXPENSES 3,121,248 2,691,207
RESEARCH AND DEVELOPMENT COSTS 56,636 -
------ ---------
OPERATING INCOME 577,103 1,108,518
------- ---------
OTHER INCOME (EXPENSE)
Interest income 23,096 2,346
Interest expense (64,680) (46,245)
Loss (gain) on disposal of fixed assets - (1,732)
Other, net 6,966 -
----- -------
TOTAL OTHER INCOME (EXPENSE) (34,618) (45,631)
------- --------
INCOME BEFORE INCOME TAXES 542,485 1,062,887
INCOME TAX EXPENSE 216,918 415,130
------- -------
NET INCOME $ 325,567 $ 647,757
========= =========
EARNINGS PER SHARE - BASIC $ 0.07 $ 0.14
====== =========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING - BASIC 4,625,890 4,483,847
========= =========
EARNINGS PER SHARE - DILUTED $ 0.06 $ 0.14
==== ====
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING - DILUTED 5,127,344 4,483,847
========= ===========
See accompanying Notes
</TABLE>
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<TABLE>
<CAPTION>
EXIGENT INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
For the Three Months Ended July 3 1,
1998 1997
(unaudited) (unaudited)
<S> <C> <C>
REVENUES FROM SERVICES $ 8,811,196 $ 8,657,569
COST OF SALES 6,686,789 6,642,376
--------- ---------
GROSS PROFIT 2,124,407 2,015,193
GENERAL AND ADMINISTRATIVE EXPENSES 1,708,040 1,420,416
RESEARCH AND DEVELOPMENT COSTS 8,370 -
----- -------
OPERATING INCOME 407,997 594,777
------- -------
OTHER INCOME (EXPENSE)
Interest income 14,487 2,207
Interest expense (48,716) (18,163)
Gain on disposal of fixed assets - (1,732)
Other, net 6,966 -
----- --------
TOTAL OTHER INCOME (EXPENSES) (27,263) (17,688)
------- -------
INCOME BEFORE INCOME TAXES 380,734 577,089
INCOME TAX EXPENSE 152,785 217,880
------- -------
NET INCOME $ 227,949 $ 359,209
========= ==========
EARNINGS PER SHARE - BASIC $ 0.05 $ 0.08
========= ==========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING - BASIC 4,661,198 4,483,847
========= ==========
EARNINGS PER SHARE - DILUTED $ 0.04 $ 0.08
========= ==========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING - DILUTED 5,294,890 4,483,847
========= =========
See accompanying Notes
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXIGENT INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six months ending July 31,
1998 1997
(unaudited) (unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 325,567 $ 647,757
-------- -------
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Depreciation and amortization 892,000 424,245
Deferred income taxes - 320,947
Changes in operating assets and liabilities:
Increase in accounts receivable (537,281) (343,330)
Decrease (increase) on costs and estimated earnings in
excess of billings on uncompleted contracts (1,275,260) 312,098
Decrease in prepaid expenses 1,709 2,187
Increase in inventory (1,295) -
Decrease (increase) in prepaid income taxes (53,222) 100,143
Decrease (increase) in deposits (7,461) 95
Decrease in cash surrender value of life insurance 2,571
Decrease in accounts payable (359,342) (919,897)
Increase (decrease) in accrued expenses (10,855) 289,064
Decrease in billings in excess of costs and estimated earnings
on uncompleted contracts (930,371) (55,552)
Increase in income taxes payable (208,190) -
Increase in other liabilities 44 46
-------- -------
Total adjustments (2,489,524) 132,617
---------- -------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES (2,163,957) 780,374
---------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid for acquisition of capital assets (523,826) (87,812)
Cash paid for capitalized software development (2,101,113) (794,979)
---------- --------
NET CASH USED BY INVESTING ACTIVITIES (2,624,939) (882,791)
---------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under line of credit 2,300,000 (182,000)
Principal payments on long-term debt (266,666) (137,038)
Proceeds from exercise of stock options and warrants 352,675 -
---------- --------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES 2,386,009 (319,038)
--------- --------
NET DECREASE IN CASH AND CASH EQUIVALENTS (2,402,887) (421,455)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 3,640,508 428,705
---------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,237,621 $ 7,250
========= ========
</TABLE>
<PAGE>
EXIGENT INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - GENERAL
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information in response to the requirements of Article 10 of
Regulation S-X. Accordingly, they do not contain all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. The condensed consolidated financial statements for the
six month periods ended July 31, 1998 and July 31, 1997 are unaudited and
reflect all adjustments (consisting only of normal recurring adjustments) which
are, in the opinion of management, necessary for a fair presentation of the
financial position and operating results for the interim periods. The condensed
consolidated financial statements should be read in conjunction with the
consolidated financial statements and notes thereto, together with management's
discussion and analysis of financial condition and results of operations,
contained in Exigent International, Inc.'s ("Exigent's" or the "Company's")
Annual Report on Form 10-K for the fiscal year ended January 31, 1998. The
results of operations for the six months ended July 31, 1998 are not necessarily
indicative of the results that may be expected for the entire fiscal year.
As of February 1, 1998 the Company adopted Statement 130, Reporting
Comprehensive Income. Statement 130 establishes new rules for the reporting and
display of comprehensive income and its components. However, the adoption of
this Statement had no impact on the Company's net income or shareholders' equity
for the three and six months ended July 31, 1998 and 1997.
Certain prior period amounts have been restated to correspond to the current
period presentation.
NOTE 2 - LINE OF CREDIT
Software Technology, Inc. ("STI"), Exigent's primary subsidiary, had a
$1,800,000 line of credit available from a bank as of July 31, 1998 and January
31, 1998. The note bears interest on the unpaid principal balances at a rate per
annum equal to the bank's prime rate plus .25%. As of July 31, 1998 and January
31, 1998 the outstanding draws against the line were $1,800,000 and $0,
respectively. The interest rate at July 31, 1998 and January 31, 1998 was 8.75%.
All accounts receivable, equipment, furniture and fixtures of STI are pledged as
collateral on the line of credit.
An additional line of credit for $500,000 was available to fund expenses
associated with Exigent's other subsidiary, FotoTag, Inc. ("FotoTag"). This note
bears the same terms as STI's line of credit. No amounts have been drawn as of
July 31, 1998 or January 31, 1998.
On July 1, 1998, Exigent entered into a short-term loan for $1,900,000 to fund
the continued development of the Company's products. The note bears interest at
a rate per annum equal to the prime rate plus .50%. As of July 31, 1998, there
was a balance remaining to be paid on the note of $500,000.
The weighted average interest rate on short-term borrowings outstanding at July
31, 1998 and January 31, 1998 was 8.78%.
NOTE 3 - COMMITMENTS AND CONTINGENCIES
The Company had outstanding purchase commitments of $340,110 and $145,309 as of
July 31, 1998 and January 31, 1998, respectively. These represent outstanding
purchase orders for which neither the item nor invoice has been received.
NOTE 4 - CAPITALIZED SOFTWARE DEVELOPMENT
Effective February 1, 1998, the Company determined that the amortization life of
the existing capitalized software should be changed to two years to more
appropriately reflect the life span of the product release, rather than a
three-year schedule. As a result of this change in estimate, the increase in
amortization expense for this quarter ended July 31, 1998 was approximately
$52,000. The impact for the six months ended July 31, 1998 was approximately
$82,000.
NOTE 5 - EARNINGS PER SHARE
In 1997, the FASB issued SFAS No. 128, Earnings per Share. This statement
replaced the calculation of primary and fully diluted earnings per share with
basic and diluted earnings per share. Unlike primary earnings per share, basic
earnings per share excludes any dilutive effects of options, warrants and
convertible securities. Diluted earnings per share are very similar to the
previously reported fully diluted earnings per share. All earnings per share
amounts have been presented and, were appropriately, restated to conform to
Statement 128 requirements. The following tables set the computation of basic
and diluted earnings per share for the six months ended July 31, 1998 and 1997
as well as the three and six months ended July 31, 1998 and 1997:
<TABLE>
<CAPTION>
For the Six Months Ended July 31,
1998 1997
(unaudited) (unaudited)
--------- ---------
<S> <C> <C>
Numerator:
Net income (numerator for basic and diluted
earnings per share) $ 325,567 $ 647,757
========== ==========
Denominator:
Denominator for basic earnings per share-
weighted average shares 4,625,890 4,483,847
Effect of dilutive options and warrants 501,454 -
---------- ----------
Denominator for diluted earnings per share-
adjusted weighted average shares 5,127,344 4,483,847
Basic earnings per share $ 0.07 $ 0.14
========= =========
Diluted earnings per share $ 0.06 $ 0.14
========= =========
</TABLE>
<TABLE>
<CAPTION>
For the Three Months Ended July 31,
1998 1997
(unaudited) (unaudited)
--------- ---------
<S> <C> <C>
Numerator:
Net income (numerator for basic and diluted
earnings per share) $ 227,949 $ 359,209
========== ==========
Denominator:
Denominator for basic earnings per share-
weighted average shares 4,661,198 4,483,847
Effect of dilutive options and warrants 633,692 -
----------- ----------
Denominator for diluted earnings per share-
adjusted weighted average shares 5,294,890 4,483,847
Basic earnings per share $ 0.05 $ 0.08
========= =========
Diluted earnings per share $ 0.04 $ 0.08
========= =========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NOTE 6 - STOCKHOLDERS' EQUITY
The consolidated changes in stockholders' equity for the six months ended July
31, 1998 are as follows:
Additional
Common Stock Class A Preferred Paid in Retained
Shares Amount Shares Amount Capital Earnings Total
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE February 1, 1998 3,872,655 $ 38,726 688,792 $ 6,888 $ 1,585,007 $ 6,150,228 $7,780,849
Exercise of convertible securities 151,523 1,515 - - 351,160 - 352,675
Class A preferred converted 76,233 762 (76,233) (762) - - -
to common
Cancelled shares (250) (2) - - 2 - -
Net Income - - - - - 325,567 325,567
--------- -------- ------- ------- ---------- ------------ -----------
BALANCE July 31,1998 4,100,161 $ 41,001 612,559 $ 6,126 $ 1,936,169 $ 6,475,795 $ 8,459,091
========= ======== ======= ====== ========== =========== ==========
</TABLE>
See Part II, Item 2 for an explanation as to the changes in securities during
the three months ended July 31, 1998.
NOTE 7 - FISCAL YEAR CHANGE
The Company will change its fiscal year to correspond with a calendar year end,
effective December 31, 1998. The current fiscal year will therefore end on
December 31, 1998. The fiscal quarters will remain unchanged with the exception
of the fourth quarter, which will be a two-month quarter ending on December 31,
1998.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
The following is management's discussion and analysis of (i) the consolidated
financial condition as of July 31, 1998 as compared with the fiscal year ended
January 31, 1998; and (ii) the consolidated results of operations for the six
and three months ended July 31, 1998 and 1997, of Exigent and its subsidiaries
STI and FotoTag. It should be read together with Exigent's Form 10-K for the
fiscal year ended January 31, 1998.
LIQUIDITY As of July 31, 1998, Exigent's ratio of current assets to current
liabilities was down slightly at 1.6 compared to 1.9 at January 31, 1998. The
quick liquidity ratios were also down at 1.5 and 1.8 at July 31, 1998 and at
January 31, 1998, respectively. These decreases were due largely to the use of
cash over the six months as well as the draw on the Company's line of credit.
The uses of this cash are explained in detail below.
Exigent's cash portfolio (cash and cash equivalents) decreased $2,402,887 during
the six months ended July 31, 1998. The decrease was due to cash used in
operating activities of $2,163,957, cash used in investing activities of
$2,624,939 and cash provided by financing activities of $2,386,009. Exigent's
cash portfolio decreased $421,465 for the six months ended July 31, 1997. The
decrease was due to cash provided by operating activities of $780,374, cash used
in investing activities of $882,791 and cash used in financing activities of
$319,038. The decrease in cash from operating activities from January 31, 1998
to July 31, 1998 was primarily the result of the timing differences related to
the start up of the new government contracts and the efforts associated with
potential acquisitions. In addition, the Company invested approximately $600,000
in the ongoing support of the strategic agreement with Motorola Inc. This
investment will help position Exigent for future Commercial Satellite Market
programs.
In the six months ended July 31, 1998, Exigent acquired $523,826 of capital
assets compared to $87,812 in the six months ended July 31, 1997. This was due
primarily to the expansion of the Company's Melbourne, Florida office
facilities. Capital needs are expected to continue, as Exigent remains current
with computing technologies. This expansion will be funded in part through
operating leases set up with external leasing companies. The leases will extend
for a period of three years from each draw against the funding limits totaling
$1,000,000. Through the six-month period ended July 31, 1998, Exigent had drawn
down $450,000 against these lease lines of credit. In the six months ended July
31, 1998 and July 31, 1997, Exigent also spent $2,101,113 and $794,979,
respectively, in capitalized software development costs primarily related to
several products. The increase in the first six months of fiscal year 1998
resulted from costs incurred in completing the development of FotoTag,
developing product additions for the OS/COMET product family including the NT
version of OS/COMET, and development of its newest product, Active Tracking
Engine (ATE). Exigent used $266,666 of cash during the six months ended July 31,
1998 to reduce its total debt position. For the six months ended July 31, 1998,
Exigent borrowed $2,300,000 under the line of credit and a short-term loan to
fund its operations and reduced long-term debt by $222,222.
Results of Operations for the six months ended July 31, 1998 and 1997 Sales for
the six months ended July 31, 1998 were $16,496,571, down 1.6% from $16,771,603
for the six months ended July 31, 1997, due to a significant decrease in the
volume of commercial contracts. The breakdown between government and commercial
sales for each of the six-month periods is as follows:
<TABLE>
<CAPTION>
July 31, 1998 July 31, 1997
--------------- -----------------
<S> <C> <C> <C> <C>
Government $ 12,416,022 75% $ 10,203,501 61%
Commercial 4,080,549 25% 6,568,102 39%
------
=============== ================= =======
$ 16,496,571 100% $ 16,771,603 100%
=============== ====== ================= =======
</TABLE>
Gross profit was consistent at $3,754,987 (22.8% of sales) compared to
$3,799,725 (22.7% of sales) for the six months ended July 31, 1998 and July 31,
1997, respectively. Net income was down significantly at $325,567 (2.0% of
sales) for the six months ended July 31, 1998 versus $647,757 (3.9% of sales)
for the six months ended July 31, 1997. This decrease was due to the increase in
general and administrative expenses (explained below) and a decrease in revenue
from commercial customers. This decrease in revenue was the result of the
winding down of development work on a major fixed price contract, cost growth in
support of the same contract and a delay in payment of maintenance fees owed to
the Company for the OS/COMET licensed product. These factors decreased the
six-month operating income by approximately $500,000. The change in amortization
schedule for the internally developed software products also decreased first
quarter profit. After completing a review of the current releases and the
schedule for new releases, management determined that a twenty-four month
amortization would be more appropriate than a thirty-six month schedule. This
change in amortization schedule impacted net income before taxes by
approximately $82,000 for the six months ended July 31, 1998.
General and administrative expenses for the six months ended July 31, 1998 were
$3,121,248, 16.0% or $430,041 higher than expenses of $2,691,207 for the six
months ended July 31, 1997. This increase resulted primarily from $250,000 in
administrative labor costs associated with the resources required to manage a
public company, including the addition of the CEO and several other key
executives. Additional increases in general and administrative expenses include
$200,000 in professional fees for marketing support and outside legal counsel.
Management believes existing cash, funds generated by operations and the
available line of credit will fall slightly short of Exigent's current operating
requirements through the fiscal year ending December 31, 1998. The Company
intends to obtain an increase of approximately $700,000 to the current line of
credit, which will enable the Company to continue its current product
development schedule. Additional funds will be required to fulfill the
development schedule for new Exigent products and to finance any acquisitions.
Results of Operations for the three months ended July 31, 1998 and 1997 Sales
for the three months ended July 31, 1998 were $8,811,196, up 1.8% from
$8,657,569 for the three months ended July 31, 1997, due to an increase in the
volume of government contracts, offsetting a decrease in commercial revenue. The
breakdown between government and commercial sales for each of the three-month
periods is as follows:
July 31, 1998 July 31, 1997
--------------- ---------------
Government $ 6,966,314 79% $ 5,193,355 60%
Commercial 1,844,882 21% 3,464,214 40%
-------
=============== =============== =======
$ 8,811,196 100% $ 8,657,569 100%
=============== ======= =============== =======
Gross profit was up slightly at $2,124,407 (24.1% of sales) compared to
$2,015,193 (23.3% of sales) for the three months ended July 31, 1998 and July
31, 1997, respectively. Net income was down significantly at $227,949 (2.6% of
sales) for the three months ended July 31, 1998 versus $359,209 (4.1% of sales)
for the three months ended July 31, 1997. This decrease was due to a decrease in
revenue from commercial customers and cost growth in support of the major
commercial fixed price development project completion. In addition, after
completing a review of the current releases and the schedule for new releases,
management determined that a twenty-four month amortization would be more
appropriate than the thirty-six month schedule. This change in amortization
schedule impacted net income before taxes by approximately $52,000 for the three
months ended July 31, 1998.
Analysis of Operations In 1995, STI obtained its first significant commercial
contracts from Motorola, Inc. to provide satellite ground station software for a
constellation of satellites that will provide a direct link with portable
handsets for worldwide cellular telephone service. The Motorola multi-year
contract allowed STI to leverage its technology into the commercial arena. In
1996, STI was awarded a contract to provide similar software for the Global
Positioning Satellite (GPS) System. With these two contracts, STI is involved in
two premier satellite endeavors.
The second quarter results reflect a lull in the Company's commercial satellite
business; however, Exigent continued to invest during this period in the
advanced features for its OS/COMET basic product as well as the next generation
NT version of OS/COMET. The Company anticipates that the NT version will have
its first customer delivery in the third quarter of 1998. In addition, the
Company continues to invest in its strategic alliance with Motorola for the
Celestri/Teledesic effort, with an anticipated start date in late 1998. The
Company has also invested significantly in the identification of and the due
diligence associated with potential acquisitions.
STI has recently been involved in developing proposals for new commercial
satellite constellations. The Company believes that its investments in OS/COMET,
the Integrated Control Center (ICC) and Active Tracking Engine (ATE) will
position it well as it enters 1999.
STI's government business continues at a record setting pace with orders coming
in from both existing and new customers. The sales volume of OS/COMET licenses
and maintenance, for use on government programs, continues to run approximately
the same as 1997, a record year.
The backlog as of July 31, 1998 for commercial and government contracts was
$86,695,528, of which $67,451,853 is unfunded. In April 1998, STI executed a
contract with the Naval Research Laboratory to provide services over the next
five years for a value of $61,538,419. With the addition of this contract, the
current contract base provides sufficient backlog to maintain STI's operations
through December 31, 2001.
STI has invested in excess of $4,000,000 over the last three years in its
premier software product OS/COMET. This investment facilitated the significant
contract awards that management believes would have been otherwise unattainable.
Commitment to maintain support for the product and research of new product
opportunities will continue with expenditures planned at approximately
$2,500,000 to $4,000,000 per year.
Exigent continued development of a new commercial software product, FotoTag, and
has invested approximately $850,000 during the last three fiscal years.
Management is committed to support the promotion of this product, which was
completed in June 1998. FotoTag is currently being marketed worldwide to address
the growing need for airport security and baggage and passenger reconciliation
products.
<PAGE>
OUTLOOK
Exigent completed expansion of its corporate headquarters in February 1998 with
the completion of a new building at its Melbourne, Florida location. This new
facility houses the corporate staff as well as the Product Development team and
the FotoTag staff. These increased facility costs should not have an impact on
the Company's indirect expense rates as the growth is needed to support the
current business as well as growth planned into 1999. The commercial satellite
business is projected to continue with strong sales worldwide and is expected to
show moderate increases through the end of the decade, providing additional
opportunities for Exigent.
Demand for software engineers continues to provide new opportunities for
Exigent, but will place a premium on the efforts to retain the current work
force. This risk will put additional pressure on overall payroll costs. This is
an industry wide challenge. Management believes that benefits offered by Exigent
remain above the level of its competition and should help to stabilize its
workforce. Overhead costs for benefits should remain at the same percentage of
wages for the fiscal year ending December 31, 1998 as compared to the fiscal
year ended January 31, 1998. Management believes it is important that Exigent
not reduce benefits. To do so and hold costs stable has been a management
challenge and will continue to be so in the near future. Maintaining Exigent's
comprehensive benefit plan will also facilitate its ability to sustain an
effective recruiting campaign.
The Company's current long-term business plan is to seek opportunities for
growth and diversification of its product and service offerings through
acquisitions and internal growth. To implement its long-term growth strategy,
the Company may seek to raise capital through private or public debt or equity
financings.
RISKS AND UNCERTAINTIES
Statements contained in this Form 10-Q that are not historical facts are
forward-looking statements made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. In addition, words such as
"believes," "anticipates," "expects" and similar expressions are intended to
identify forward-looking statements. Such forward-looking statements involve
known and unknown risks, uncertainties, and other factors which may cause the
actual results, performance or achievements of the Company or events, or timing
of events, relating to the Company to differ materially from any future results,
performance or achievements of the Company or events, or timing of events,
relating to the Company expressed or implied by such forward-looking statements.
The more prominent known risks and uncertainties inherent in the Company's
business are set forth below. However, not all possible risks and uncertainties
to which the Company is subject are discussed herein, nor can it be assumed that
there are not other risks and uncertainties which may be more significant to the
Company.
Such other factors include, among others, those described in "Outlook" and the
following:
continued dependence on a small number of significant customers for
substantially all of the Company's revenue and the potential loss of one or
more of the Company's principal customers;
continued dependence on government agencies for a significant portion of
the Company's revenue;
the shortage of qualified and competent software engineers and the risk
that the Company will be unable to retain its key employees and managers,
especially in the event the Company loses one or more contracts or
principal customers;
dependence on the satellite command and control industry and the potential
failure to diversify the Company's product and service offerings and to
expand its markets for commercial applications;
possible difficulties in raising private or public capital for financing
working capital needs and potential acquisitions on terms favorable or
acceptable to the Company;
the possible inability of the Company to find or secure acquisitions on
terms favorable or acceptable to the Company in pursuit of its plan for
growth and diversification;
the unanticipated expense of new product development, the potential failure
by the Company to develop new products under development and others to be
developed in the future successfully or on a timely basis, and the failure
of such products to achieve substantial market acceptance;
the potential loss of customers or opportunities because of the Company's
relationship as a competitor to some of its principal customers;
the potential loss of other customer opportunities because of the Company's
subcontractor relationship with Motorola Inc. on the IRIDIUM project;
the possibility that Motorola will elect not to move forward with the
Celestri/Teledesic project, or that Motorola may choose a vendor other than
the Company; and
the potential impact of increases in salary rates due to the amount of
revenue related to services.
The Company cannot assure that it will be able to anticipate or respond timely
to changes which could adversely affect its operating results in one or more
fiscal quarters. Results of operations in any past period should not be
considered indicative of results to be expected in future periods. Fluctuations
in operating results may result in fluctuations in the price of the Company's
common stock.
YEAR 2000 ISSUES
Some existing computer programs will be unable to recognize dates properly in
the Year 2000 ("Y2K") and beyond. During 1997, Exigent conducted an informal
study of its products, systems and operations, including systems under
development, to improve business functionality, to identify those of its
computer hardware, software and process control systems that do not properly
recognize dates after December 31, 1999, and those that are linked to third
parties' systems. Based on this informal study, Exigent recognized that the
OS/COMET product required certain modifications to be Y2K compliant. Those
modifications have been made to the software and are available in the current
release, Version 3.5. Exigent has also initiated communications with certain
third parties whose computer systems' functionality could adversely impact the
Company. These communications will facilitate coordination of any necessary Y2K
conversions and will, additionally, permit Exigent to determine the extent to
which the Company may be vulnerable to the failure of third parties to address
their own Y2K issues.
The costs of Exigent's Y2K compliance efforts are being funded with cash flows
from operations. Some of these costs relate solely to the modification of
existing systems, while others are for new systems that will improve business
functionality. In total, these costs are not expected to be substantially
different from the normal, recurring costs that are incurred for systems
development and implementation, in part due to the reallocation of internal
resources and the deferral of other projects. As a result, these costs are not
expected to have a material adverse effect on Exigent's overall results of
operations or cash flows.
The assessment of the costs of Exigent's Y2K compliance effort, and the
timetable for the Company's planned completion of its own Y2K modifications, are
management's best estimates. These estimates were based upon numerous
assumptions regarding future events, including assumptions as to the continued
availability of certain resources, and, in particular, personnel with expertise
in this area, and as to the ability of such personnel to locate and either
re-program or replace, and test, all affected computer hardware, software and
process control systems in accordance with the Company's planned schedule. There
can be no guarantee that these estimates will prove accurate, and actual results
could differ from those estimated if these assumptions prove inaccurate.
Based upon progress to date, however, Exigent believes that it is unlikely that
the foregoing factors will cause actual results to differ significantly from
those estimated. As to the systems of the third parties that are linked to
Exigent's, there can be no guarantee that those of such systems that are not now
Y2K-compliant will be timely converted to compliance. Additionally, there can be
no guarantee that third parties of business importance to Exigent will
successfully and timely reprogram or replace, and test, all of their own
computer hardware, software and process control systems. Exigent has no
specific contingency plan in the event that systems of third parties that are
linked to Exigent's prove to be non-Y2K-compliant. Exigent does not anticipate
the impact of such non-compliance to be material.
Part II. Other Information
Item 2. Changes in Securities
At the Company's Annual Meeting of Stockholders held June 30, 1998, stockholders
approved a Second Amended and Restated Certificate of Incorporation (the "New
Charter"), which superseded the Company's existing Certificate of Incorporation
(the "Old Charter"). The New Charter is attached hereto as Exhibit 3.1 and is
incorporated herein by reference.
The Old Charter provided for 45,600,000 shares, of which 30,000,000 shares were
designated as "Common Shares", 600,000 shares were designated as "Class B Common
Shares", and 15,000,000 shares were designated as "Preferred Shares" of which
5,000,000 shares were designated as "Class A Preferred Shares". The New Charter
provides for 45,700,000 authorized shares, of which 40,000,000 are designated as
"Common Shares", 5,000,000 shares are designated as "Preferred Shares" and
700,000 are designated as "Class A Preferred Shares". The New Charter thus
eliminates the authorized but unissued Class B common shares and reduces the
number of authorized Preferred Shares and Class A Preferred Shares.
The New Charter eliminates preemptive rights for the holders of Class A
Preferred Shares with respect to the issuance of Class A Preferred Shares. The
Corporation is no longer authorized to issue Class A Preferred Shares.
Both the Old Charter and the New Charter provide that the Common Shares and
Class A Preferred Shares shall have equal dividend rights, and the Corporation
shall not declare/pay dividends on one of such classes unless an equal amount is
paid/declared on the other class. The Old Charter provided that Common Shares
shall be distributed only as stock dividends on Common Shares and that dividends
can only be declared with respect to Common Shares or Class A Preferred Shares
if a stock dividend of the same number of shares is declared with respect to
both such classes. The New Charter does not contain a parallel provision (since
there are no authorized Class A Preferred Shares available for dividend
distribution) but gives the Board greater flexibility by providing that
dividends regarding Common Shares, Preferred Shares and Class A Preferred Shares
are in the discretion of the Board.
The voting provisions in Section 4(d) of the Old Charter have been significantly
modified:
1. Section 4(d)(i) of the Old Charter gave holders of Common Shares and
voting Preferred Shares (other than Class A Preferred Shares) the right to
designate 25% of the members of the Board of Directors; holders of Class A
Preferred Shares had the right to designate 75% of the members of the
Board. The New Charter does not give any class of stockholders the right to
designate a specific percentage of directors. Under the New Charter,
directors shall be elected by stockholders on the basis of one vote for
each share of voting stock held, including Common Shares and Class A
Preferred Shares. Under the New Charter, special voting rights could be
given to the holders of Preferred Shares if the Board so desired (see
Sections 6.1 and 6.2 of the New Charter which authorizes the Board to
designate such rights and preferences to a series of Preferred Shares as it
deems appropriate).
2. Section 4(d)(ii) of the Old Charter provided that holders of Common
Shares and all classes of voting Preferred Shares, other than the Class A
Preferred Shares, were entitled to vote together as a separate class on the
removal, with or without cause, of any director elected by such holders.
Section 9.6 of the New Charter provides that, subject to the right of the
holders of Preferred Shares, directors may be removed by holders of at
least 60% of the Common Shares, with or without cause, unless the Board is
classified in which case removal can only be for cause. Under the New
Charter, the Board will be classified commencing with the election of
directors at the 1999 Annual Meeting of Stockholders.
3. Section 4(d)(iii) of the Old Charter set forth how vacancies in the
Board were to be filled, specifying that any vacancy in the office of a
director elected by one or more classes of stockholders (other than Class A
Preferred Shares) was to be filled by a vote of such holders and in the
absence of such a vote, such vacancy was to be filled by the remaining
directors. Since the New Charter does not provide for directors designated
by a particular class of stockholders, vacancies are to be filled by a
majority vote of the directors then in office (see Section 9.5 of the
Proposed Charter) subject to the rights of any holder of Preferred Shares
should such holders be given such right in the future.
4. Section 4(d)(iii) of the Old Charter provided that the Board may
increase the number of directors. Section 9.2 of the New Charter provides
that the Board shall fix the number of directors in accordance with the
bylaws.
5. Section 4(d)(iii) of the Old Charter provided that if the size of the
Board was increased, the percentage of Board seats reserved for election by
the holders of Common Shares and voting Preferred Shares, and by holders of
Class A Preferred Shares, respectively, should be maintained. The New
Charter does not have a parallel provision since no class of shares has the
right to designate a specific percentage of the directors.
6. Section 4(d)(iv) of the Old Charter provided that the holders of Common
Shares and voting Preferred Shares (other than Class A Preferred Shares)
shall not have the right to elect 25% of the directors if, on the
applicable record, the number of such issued and outstanding shares is less
than 10% of the aggregate issued and outstanding voting shares of all
classes. The New Charter does not have a parallel provision since no class
of shares has the right to designate a specific percentage of directors.
The New and Old Charters are substantively the same relating to the liquidation
rights, voluntary conversion rights and right to one vote per share of the
holders of Class A Preferred Shares. The New Charter does not contain the
provisions set forth in Section 6(a) of the Old Charter which included (a) a
requirement for 100% consent of holders of Class A Preferred Shares to approve
transfers of Class A Preferred Shares, (b) share dividends of Class A Preferred
Shares only with respect to Class A Preferred Shares, and (c) provisions
relating to the right of holders of Class A Preferred Shares to elect 75% of the
directors and remove and replace such directors.
<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders
(a) The Company held its Annual Meeting of Stockholders on June 30, 1998.
(b) Each of the persons named in the Proxy Statement as a nominee for director
was elected at the Annual Meeting.
(c) The following are the voting results of each of the matters voted on by the
stockholders at the Annual Meeting:
1. The adoption of the Second Amended and Restated Certificate of Incorporation
of the Company was approved by the following vote: For, 2,524,002; Against,
744,524; Abstain, 13,622; and Broker Non-Votes, 451,666.
2. The election of the following directors, who will serve until their
successors are elected and qualified, or their earlier death or resignation:
BROKER
FOR ABSTAIN NON-VOTES
- ----------------------- ----------------- ----------------- -------------------
B.R. "Bernie" Smedley 2,932,922 332,821 451,666
- ----------------------- ----------------- ----------------- -------------------
Don F. Riordan, Jr. 2,519,826 745,917 451,666
- ----------------------- ----------------- ----------------- -------------------
William K. Presley 2,436,898 828,845 451,666
- ----------------------- ----------------- ----------------- -------------------
Robert M. Janowiak 2,994,023 271,720 451,666
- ----------------------- ----------------- ----------------- -------------------
Arthur H. Collier 3,092,138 173,605 451,666
- ----------------------- ----------------- ----------------- -------------------
Scott B. Helm 2,968,163 297,580 451,666
- ----------------------- ----------------- ----------------- -------------------
Daniel J. Stark 3,059,975 205,768 451,666
- ----------------------- ----------------- ----------------- -------------------
3. The adoption of Incentive Stock Option Plan 1Q was approved by the following
vote: For, 2,601,494; Against, 526,844; Abstain, 145,628; and Broker Non-Votes,
451,666.
4. The adoption of Incentive Stock Option Plan 3Q was approved by the following
vote: For, 2,665,131; Against, 459,211; Abstain, 149,624; and Broker Non-Votes,
451,666.
5. The adoption of Incentive Stock Option Plan 4Q was approved by the following
vote: For, 2,799,523; Against, 330,228; Abstain, 144,215; and Broker Non-Votes,
451,666.
6. The adoption of Independent Director Stock Option Plan 5NQ was approved by
the following vote: For, 2,483,922; Against, 639,250; Abstain, 150,794; and
Broker Non-Votes, 451,666.
7. The adoption of Stock Option Plan 6NQ was approved by the following vote:
For, 1,998,610; Against, 1,126,264; Abstain, 149,092; and Broker Non-Votes,
451,666.
8. The ratification of the selection of the firm of Ernst & Young LLP as
independent auditors of the Company for its fiscal year ending December 31, 1998
was approved by the following vote: For, 3,385,324; Against, 198,764; Abstain,
142,394; and Broker Non-Votes, 0.
The text of the items referred to under this Item 4 is set forth in the Proxy
Statement dated June 4, 1998 previously filed with the Commission and
incorporated herein by reference.
Item 5. Other Information
Stockholders who intend to submit proposals at the 1999 Annual Meeting of
Stockholders without including them in the Proxy Statement for such meeting must
notify the Company of this intention no later than March 30, 1999. Such
proposals must otherwise be in compliance with the Company's Certificate of
Incorpration, Bylaws and applicable laws, rules and regulations for
consideration at the 1999 Annual Meeting.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
List of Exhibits Description
3.1 Second Amended and Restated Certificate of Incorporation.
3.2 Amended and Restated Bylaws.
27 Financial Data Schedule.
(b) Reports on Form 8-K:
A Report on Form 8-K was filed on May 21, 1998 to report: (i) the adoption by
the Company of an employee stock option plan, Stock Option Plan 6NQ, permitting
employees who are granted options thereunder to purchase up to 500,000 Common
Shares of Exigent for a period of not more than three years from the date of
grant of the option, at an exercise price of $2.25 per share, and the
registration on Form S-8 of the 500,000 Common Shares underlying such options,
(ii) the award to Exigent in May 1998 of a $61.5 million contract, and (iii) the
appointment in May 1998 of Scott Bradford Helm to Exigent's Board of Directors.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Exigent International, Inc.
September 14, 1998 By:/s/ B.R. Smedley
Date ------------------------------------
B.R. "Bernie" Smedley,
Chief Executive Officer
September 14, 1998 By:/s/ Don F. Riordan, Jr.,
Date ------------------------------------
Don F. Riordan, Jr.,
Chief Financial Officer
Exhibit 3.1
SECOND AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
EXIGENT INTERNATIONAL, INC.
1. The original name of this corporation is Exigent International, Inc.
(the "Corporation") and the date of filing of the original Certificate of
Incorporation of the Corporation with the Secretary of State of the State of
Delaware is March 25, 1996, which Certificate of Incorporation was amended and
restated by the Amended and Restated Certificate of Incorporation of the
Corporation filed with the Secretary of the State of Delaware on October 28,
1996.
2. This Second Amended and Restated Certificate of Incorporation was
proposed for adoption by the Board of Directors and adopted by vote of the
stockholders of the Corporation pursuant to Sections 242 and 245 of the General
Corporation Law of the State of Delaware.
3. Accordingly, the Restated Certificate of Incorporation of the
Corporation, as previously amended, is hereby deleted in its entirety and is
amended and restated to read as follows:
ARTICLE ONE
NAME
1.1 The name of the Corporation is Exigent International, Inc. (the
"Corporation").
ARTICLE TWO
REGISTERED OFFICE
2.1 The address of the registered office of the Corporation in the County
of New Castle of the State of Delaware is Corporation Trust Center, 1209 Orange
Street, Wilmington, Delaware 19801, and the name of the registered agent at such
address is The Corporation Trust Company.
ARTICLE THREE
PURPOSE AND DURATION
3.1 The nature of the business or purposes of the Corporation is to engage
in any lawful act or activity for which corporations may be organized under the
General Corporation Law of the State of Delaware, and by such statement all
lawful acts and activities shall be within the purposes of the Corporation,
except for express limitations, if any. The Corporation shall possess and
exercise all the powers and privileges granted by the General Corporation Law of
the State of Delaware, by any other law or by this Second Amended and Restated
Certificate of Incorporation, together with any powers incidental thereto as far
as such powers and privileges are necessary or convenient to the conduct,
promotion, or attainment of the purposes of the Corporation. The period of
duration of the Corporation shall be perpetual.
ARTICLE FOUR
CAPITAL STRUCTURE
4.1 The total number of shares which the Corporation is authorized to issue
is 45,700,000 shares of which 40,000,000 shares shall be designated Common
Shares par value $0.01 per share ("Common Shares"), 5,000,000 shall be
designated Preferred Shares par value $0.01 per share ("Preferred Shares") and
700,000 shall be designated Class A Preferred Shares par value $0.01 per share
("Class A Preferred Shares"). For purposes of this Second Amended and Restated
Certificate of Incorporation, "Class A Preferred Shares" are not part of and are
distinct from the "Preferred Shares." No holder of shares of any class of stock
of the Corporation now or hereafter authorized shall be entitled to cumulative
voting or shall have any preferential or preemptive right to subscribe for,
purchase or receive any shares of the Corporation of any class now or hereafter
authorized, or any portions or warrants for such shares, or any securities
convertible into or exchangeable for such shares, which may at any time be
issued, sold or offered for sale by the Corporation.
4.2 The designations, preferences, powers, qualifications and special or
relative rights or privileges of the capital stock of the Corporation shall be
as set forth in ARTICLES FIVE, SIX and SEVEN below.
ARTICLE FIVE
COMMON SHARES
5.1 Except as herein otherwise expressly provided in this ARTICLE FIVE, all
Common Shares shall be identical and shall entitle the holders thereof to the
same rights and privileges.
5.2 (a) When, as and if dividends on Common Shares are declared by the
Corporation's Board of Directors, whether payable in cash, in property or in
securities of the Corporation, the holders of Common Shares shall be entitled to
share equally in and to receive, in accordance with the number of Common Shares
held by each such holder, all such dividends.
(b) Dividends payable under this Paragraph 5.2 shall be paid to the holders
of record of the outstanding Common Shares as their names shall appear on the
stock register of the Corporation on the record date fixed by the Board of
Directors of the Corporation in advance of declaration and payment of each
dividend. Any dividends paid in shares shall be paid in Common Shares. Any
Common Shares issued as a dividend pursuant to this Paragraph 5.2 shall, when so
issued, be duly authorized, validly issued, fully paid and non-assessable and
free of all liens and charges. The Corporation shall not issue fractions of
Common Shares on payment of such dividend but shall issue a whole number of
shares to such holder of Common Shares rounded up or down in the Corporation's
sole discretion to the nearest whole number, without compensation to the
stockholder whose fractional share has been rounded down or from any stockholder
whose fractional share has been rounded up.
(c) Notwithstanding anything contained herein to the contrary, no dividends
on Common Shares shall be declared by the Corporation's Board of Directors or
paid or set apart for payment by the Corporation at any time that such
declaration, payment, or setting apart is prohibited by applicable law.
5.3 The Corporation shall not in any manner subdivide (by any stock split,
reclassification, stock dividend, recapitalization or otherwise) or combine the
outstanding shares of one class of Common Shares unless the outstanding shares
of all classes of Common Shares shall be proportionately subdivided or combined.
5.4 Upon any voluntary or involuntary liquidation, dissolution or
winding-up of the affairs of the Corporation, after payment shall have been made
to holders of outstanding Preferred Shares and Class A Preferred Shares, if any,
of the full amount of which they are entitled pursuant to this Second Amended
and Restated Certificate of Incorporation and any resolutions that may be
adopted from time to time by the Corporation's Board of Directors, in accordance
with ARTICLE SIX below (for the purpose of fixing the voting rights,
designations, preferences and relative participating, optional or other special
rights of any class or series of Preferred Shares), the holders of Common Shares
shall be entitled, to the exclusion of the holders of Preferred Shares and Class
A Preferred Shares, if any, to share ratably, in accordance with the number of
Common Shares held by each such holder, in all remaining assets of the
Corporation available for distribution among the holders of Common Shares,
whether such assets are capital, surplus, or earnings. For the purposes of this
Paragraph 5.4, neither the consolidation or merger of the Corporation with or
into any other corporation or corporations in which the stockholders of the
Corporation receive capital stock and/or other securities (including debt
securities) of the acquiring corporation (or of the direct or indirect parent
corporation of the acquiring corporation), nor the sale, lease or transfer by
the Corporation of all or any part of its assets, nor the reduction of the
capital stock of the Corporation, shall be deemed to be a voluntary or
involuntary liquidation, dissolution, or winding-up of the Corporation as those
terms are used in this Paragraph 5.4.
5.5 Each holder of Common Shares shall be entitled to one vote for each
share of such stock issued and outstanding and registered in such holder's name
and shall be entitled to vote upon such matters and in such manner as may be
provided by Delaware law and this Second Amended and Restated Certificate of
Incorporation.
ARTICLE SIX
PREFERRED SHARES
6.1 Shares of Preferred Shares may be issued from time to time in one or
more series as may be determined by the Board of Directors of the Corporation.
Subject to the provisions of this Second Amended and Restated Certificate of
Incorporation and this ARTICLE SIX, the Board of Directors of the Corporation is
authorized to determine or alter the rights, preferences, privileges and
restrictions granted to or imposed upon any wholly unissued class or series of
Preferred Shares and, within the limits and restrictions stated in any
resolution or resolutions of the Board of Directors of the Corporation
originally fixing the number of shares constituting any such additional series,
to increase or decrease (but not below the number of shares of such series then
outstanding) the number of shares of any such additional series subsequent to
the issue of shares of that series.
6.2 Authorized and unissued shares of Preferred Shares may be issued with
such designations, voting powers, preferences and relative participating
optional or other special rights, and qualifications, limitations and
restrictions on such rights, as the Board of Directors of the Corporation may
authorize by resolutions duly adopted prior to the issuance of any shares of any
class or series of Preferred Shares, including, but not limited to: (i) the
distinctive designation of each series and the number of shares that will
constitute such series; (ii) the voting rights, if any, of shares of such series
and whether the shares of any such series having voting rights shall have
multiple votes per share; (iii) the dividend rate on the shares of such series,
any restriction, limitation or condition upon the payment of such dividends,
whether dividends shall be cumulative and the dates on which dividends are
payable; (iv) the prices at which, and the terms and conditions on which, the
shares of such series may be redeemed, if such shares are redeemable; (v) the
purchase or sinking fund provisions, if any, for the purchase or redemption of
shares of such series; (vi) any preferential amount payable upon shares of such
series in the event of the liquidation, dissolution or winding-up of the Company
or the distribution of its assets; and (vii) the prices or rates of conversion
at which, and the terms and conditions on which, the shares are convertible.
6.3 Any and all shares issued and for which full consideration has been
paid or delivered shall be deemed fully paid stock and the holder thereof shall
not be liable for any further payment thereon.
ARTICLE SEVEN
CLASS A PREFERRED SHARES
7.1 Class A Preferred Shares shall have a stated value of $2.50 per share
and shall be identical in all respects and have equal rights and privileges with
Common Shares, except as otherwise provided herein.
7.2 (a) The Common Shares and Class A Preferred Shares shall have equal
dividend rights and the Corporation shall not declare or pay dividends on shares
of one of such classes unless an equal amount is declared and paid on shares of
the other class on a per share basis.
(b) Dividends payable under this Paragraph 7.2 shall be paid to the holders
of record of the outstanding Class A Preferred Shares as their names shall
appear on the stock register of the Corporation on the record date fixed by the
Board of Directors of the Corporation in advance of declaration and payment of
each dividend.
(c) Notwithstanding anything contained herein to the contrary, no dividends
on Class A Preferred Shares shall be declared by the Corporation's Board of
Directors or paid or set apart for payment by the Corporation at any time that
such declaration, payment, or setting apart is prohibited by applicable law.
7.3 The Corporation shall not in any manner subdivide (by any stock split,
reclassification, stock dividend, recapitalization or otherwise) or combine the
outstanding shares of either Common Shares or Class A Preferred Shares without
at the same time making a proportionate subdivision or combination of shares of
both such classes; except that any dividends paid in shares shall be paid in
Common Shares.
7.4 Each holder of Class A Preferred Shares shall be entitled to one vote
for each share of such stock issued and outstanding and registered in such
holder's name and shall vote with the holders of Common Shares, as a single
class, and shall be entitled to vote upon such matters and in such manner as may
be provided by Delaware law and this Second Amended and Restated Certificate of
Incorporation.
7.5 (a) Each holder of record of Class A Preferred Shares may at any time
or from time to time, in such holder's sole discretion and at such holder's
option, convert any whole number or all of such holder's Class A Preferred
Shares into fully paid and non-assessable Common Shares at the rate (subject to
adjustment as hereinafter provided) of one Common Share for each Class A
Preferred Share surrendered for conversion. Any such conversion may be effected
by surrendering the certificate or certificates for the Class A Preferred Shares
to be converted, duly endorsed, at the office of the Corporation, or the
transfer agent, if any, together with a written notice to the Corporation that
such holder elects to convert all or a specified number of Class A Preferred
Shares and stating the name or names in which the certificate or certificates
for such Common Shares are to be issued. The conversion shall be deemed to have
been made at the close of business on the date of surrender and the person or
persons entitled to receive the Common Shares issuable on conversion shall be
treated for all purposes as the record holder or holders of such Common Shares
on that date.
(b) The Corporation shall hold in reserve the number of authorized but
unissued Common Shares as may be necessary to convert all issued and outstanding
Class A Preferred Shares to Common Shares.
(c) No fraction of a Common Share shall be issued on conversion of any
Class A Preferred Share. In lieu thereof, the Corporation shall pay the holder
the fair market value of any such fraction in cash. The fair market value shall
be based, in the case of publicly traded securities, on the last sale price for
such securities on the business day next prior to the date such fair market
value is to be determined (or, in the event no sale is made on that day, the
average of the closing bid and asked prices for that day on the principal stock
exchange on which Common Shares are traded or, if the Common Shares are not then
listed on any national securities exchange, the average of the closing bid and
asked prices for the day quoted by the NASDAQ System), or, in the case of
non-publicly traded securities, the fair market value on such day determined by
a qualified independent appraiser appointed by the board of directors of the
Corporation. Any such determination of fair market value shall be conclusive and
binding on the Corporation and on each holder of Class A Preferred Shares and
Common Shares.
7.6 Holders of issued and outstanding Class A Preferred Shares shall have
preference over the Common Shares upon the voluntary or involuntary liquidation
of the Corporation, but only to the extent that the holders of Class A Preferred
Shares shall be paid the stated value of $2.50 per share prior to any
distribution being made to the holders of Common Shares. In such case, after
receiving the stated value of their shares, the holders of Class A Preferred
Shares shall receive no further distribution.
ARTICLE EIGHT
MANAGEMENT OF THE CORPORATION
8.1 The following provisions relate to the management of the business and
the conduct of the affairs of the Corporation and are inserted for the purpose
of creating, defining, limiting and regulating the powers of the Corporation and
its directors and stockholders:
(i) The business and affairs of the Corporation shall be managed by and
under the direction of the Board of Directors of the Corporation.
(ii) The Board of Directors of the Corporation shall have the power to
make, alter, amend or repeal the By-Laws of the Corporation, except to the
extent that the By-Laws of the Corporation otherwise provide.
(iii) All corporate powers and authority of the Corporation (except as at
the time otherwise provided by statute, this Second Amended and Restated
Certificate of Incorporation or the By-Laws of the Corporation) shall be vested
in and exercised by the Board of Directors of the Corporation.
(iv) The stockholders and directors shall have the power, if the By-Laws of
the Corporation so provide, to hold their respective meetings within or without
the State of Delaware and may (except as otherwise required by statute) keep the
Corporation's books outside the State of Delaware, at such places as from time
to time may be designated by the By-Laws of the Corporation or the Board of
Directors of the Corporation.
ARTICLE NINE
NUMBER, ELECTION AND TERMS OF DIRECTORS
9.1 Elections of directors need not be by written ballot unless the By-Laws
of the Corporation shall so provide.
9.2 The number of directors which will constitute the whole Board of
Directors of the Corporation shall be fixed exclusively by one or more
resolutions adopted by the Board of Directors of the Corporation or as otherwise
provided in the By-Laws of the Corporation.
9.3 (a) With respect to the annual meeting of stockholders of the
Corporation following the Corporation's fiscal year ended January 31, 1998, the
persons, not exceeding the authorized number of directors, receiving the
greatest number of votes of the holders of Common Shares and Class A Preferred
Shares, voting as a single class, entitled to vote thereon, present in person or
by proxy, shall be the directors of the Corporation. Each such director shall
hold office until the annual meeting of the stockholders of the Corporation next
following his election and until his successor shall have been duly elected and
qualified, or until his death or resignation or until he shall have been removed
in the manner provided herein.
(b) Commencing with the annual meeting of stockholders of the Corporation
following the Corporation's fiscal year ending December 31, 1998, the directors
of the Corporation, other than those who may be elected by holders of any class
of series of Preferred Shares, shall be divided, with respect to the time for
which they severally hold office, into three classes, as nearly equal in number
as possible, with the term of office of the first class to expire at the annual
meeting of the stockholders of the Corporation following the Corporation's
fiscal year ending December 31, 1999, the term of office of the second class to
expire at the annual meeting of the stockholders of the Corporation following
the Corporation's fiscal year ending December 31, 2000 and the term of office of
the third class to expire at the annual meeting of the stockholders of the
Corporation following the Corporation's fiscal year ending December 31, 2001,
with each director to hold office until his successor shall have been duly
elected and qualified, or until his death or resignation or until he shall have
been removed in the manner provided herein. At each annual meeting of
stockholders of the Corporation, commencing with the annual meeting of
stockholders of the Corporation following the Corporation's fiscal year ending
December 31, 1999 (i) directors elected to succeed those directors whose terms
then expire shall be elected for a term of office to expire at the third
succeeding annual meeting of stockholders of the Corporation after their
election unless, by reason of any intervening changes in the authorized number
of directors, the Board of Directors of the Corporation shall designate one or
more of the then expiring directorships as directorships of another class in
order more nearly to achieve equality of number of directors among the classes,
and (ii) if authorized by a resolution of the Board of Directors of the
Corporation, directors may be elected to fill any vacancy on the Board of
Directors of the Corporation regardless of how such vacancy shall have been
created. Subject to the rights of the holders of any class or series of
Preferred Shares, commencing with the annual meeting of stockholders of the
Corporation following the Corporation's fiscal year ended December 31, 1998, the
persons, not exceeding the authorized number of directors to be elected at each
such annual meeting, receiving the greatest number of votes of the holders of
Common Shares and Class A Preferred Shares, voting together as a single class,
entitled to vote thereon, present in person or by proxy, shall be the directors
elected at such meeting.
9.4 Advance notice of stockholder nominations for the election of directors
and of business to be brought by stockholders before any meeting of the
stockholders of the Corporation shall be given in the manner provided in the
By-Laws of the Corporation.
9.5 Subject to the rights of the holders of any class or series of
Preferred Shares, and unless the Board of Directors of the Corporation otherwise
determines, newly created directorships resulting from any increase in the
authorized number of directors or any vacancies of the Board of Directors of the
Corporation resulting from death, resignation, retirement, disqualification,
removal from office or other cause shall be filled only by a majority vote of
the directors then in office, though less than a quorum, and directors so chosen
shall hold office for a term expiring at the annual meeting of stockholders at
which the term of office of the class to which they have been elected expires
and until such director's successor shall have been duly elected and qualified.
No decrease in the numbers of authorized directors constituting the entire Board
of Directors of the Corporation shall shorten the term of any incumbent
director.
9.6 Subject to the rights of the holders of any class or series of
Preferred Shares, any director may be removed from office at any time, with or
without cause, by the affirmative vote of the holders of at least sixty percent
(60%) of the then-outstanding Common Shares and Class A Preferred Shares, voting
together as a single class; provided, however, that such removal may only be for
cause if at such time the Corporation has a classified Board of Directors, as
provided in Paragraph 9.3 above.
ARTICLE TEN
AMENDMENTS
10.1 The Corporation reserves the right to amend or repeal any provisions
contained in this Second Amended and Restated Certificate of Incorporation from
time to time and at any time in the manner now or hereafter prescribed in this
Second Amended and Restated Certificate of Incorporation and by the laws of the
State of Delaware, and all rights herein conferred upon stockholders are granted
subject to such reservation; provided that with respect to the powers of holders
of capital stock of the Corporation to alter, amend or repeal this Second
Amended and Restated Certificate of Incorporation, notwithstanding any other
provision of this Second Amended and Restated Certificate of Incorporation or
any provision of law which might otherwise permit a lesser vote or no vote, in
addition to any affirmative vote of the holders of any particular class or
series of the capital stock of the Corporation required by law, this Second
Amended and Restated Certificate of Incorporation or any designation relating to
any class or series of Preferred Shares, the affirmative vote of the holders of
at least sixty percent (60%) of the then-outstanding Common Shares and Class A
Preferred Shares, voting together as a single class, shall be required to alter,
amend or repeal any provision of this Second Amended and Restated Certificate of
Incorporation.
ARTICLE ELEVEN
LIMITATION OF LIABILITY OF DIRECTORS
11.1 No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director; provided that the foregoing clause shall not apply to any
liability of a director (i) for any breach of the director's duty of loyalty to
the Corporation or its stockholders, (ii) for acts or omissions not in good
faith or that involve intentional misconduct or a knowing violation of law,
(iii) under Section 174 of the General Corporation Law of the State of Delaware,
or (iv) for any transaction from which the director derived an improper personal
benefit. This ARTICLE ELEVEN shall not eliminate or limit the liability of a
director for any act or omission occurring prior to the time this ARTICLE ELEVEN
became effective.
ARTICLE TWELVE
INDEMNIFICATION
12.1 The Corporation shall indemnify and hold harmless any director or
officer of the Corporation from and against any and all expenses and liabilities
that may be imposed upon or incurred by him in connection with, or as a result
of, any proceeding in which he may become involved, as a party or otherwise, by
reason of the fact that he is or was such a director or officer of the
Corporation or any subsidiary or parent of the Corporation, or, at the request
of the Corporation, of any other corporation, joint venture, trust or other
enterprise, whether or not he continues to be such at the time such expense and
liabilities shall have been imposed or incurred. It is the intention of this
ARTICLE TWELVE to provide indemnification to the fullest extent permitted by the
laws of the State of Delaware, as they may be amended from time to time.
ARTICLE THIRTEEN
AMENDMENT OF BY-LAWS
13.1 In furtherance and not in limitation of the powers conferred by law,
the Board of Directors of the Corporation is expressly authorized to make,
alter, amend and repeal the By-Laws of the Corporation, subject to the power of
the holders of the capital stock of the Corporation to alter, amend or repeal
the By-Laws of the Corporation; provided, however, that, with respect to the
powers of holders of capital stock of the Corporation to alter, amend and repeal
By-Laws of the Corporation, notwithstanding any other provision of this Second
Amended and Restated Certificate of Incorporation or any provision of law which
might otherwise permit a lesser vote or no vote, in addition to any affirmative
vote of the holders of any particular class or series of the capital stock of
the Corporation required by law, this Second Amended and Restated Certificate of
Incorporation or any designation relating to any class or series of Preferred
Shares, the affirmative vote of the holders of at least sixty percent (60%) of
the then-outstanding Common Shares and Class A Preferred Shares, voting together
as a single class, shall be required to alter, amend or repeal any provision of
the By-Laws of the Corporation.
ARTICLE FOURTEEN
CLASS VOTES
14.1 The holders of each class of capital stock of the Corporation shall be
entitled to vote as a separate class only when required to do so under
applicable law or when required or expressly permitted to do so by the terms and
provisions of this Second Amended and Restated Certificate of Incorporation or
any designation relating to the Preferred Shares. Notwithstanding the foregoing,
the holders of each class of capital stock of the Corporation shall not be
entitled to vote as a separate class, but shall vote together as a single class,
with respect to any amendment to this Second Amended and Restated Certificate of
Incorporation in order to increase or decrease the aggregate number of
authorized shares of any class or series of shares of the Corporation.
ARTICLE FIFTEEN
COMPROMISE OR ARRANGEMENT BETWEEN
CORPORATION AND CREDITORS OR STOCKHOLDERS
15.1 Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of Section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this Corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or if the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this Corporation, as the case may be,
and also on this Corporation.
I, THE UNDERSIGNED, being the President of the Corporation, hereby declare
and certify that this is my act and deed and the facts herein stated are true,
and accordingly, I have executed this Second Amended and Restated Certificate of
Incorporation the 30th day of June, 1998.
EXIGENT INTERNATIONAL, INC.
By:/s/ Bernard R. Smedley
----------------------------
Bernard R. Smedley,
President
ATTESTED:
By: /s/ Patricia A. Frank
----------------------------------------
Patricia A. Frank, Secretary
Exhibit 3.2
EXIGENT INTERNATIONAL, INC.
AMENDED AND RESTATED BYLAWS
Effective June 30, 1998
ARTICLE 1.
OFFICES
SECTION 1.01. Registered Office. The address of the registered office of
the Corporation in the County of New Castle of the State of Delaware is
Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801, and
the name of the registered agent at such address is The Corporation Trust
Company.
SECTION 1.02. Other Offices. The Corporation may also have an office in the
State of Florida and at such other place or places either within or without the
State of Delaware as the Board of Directors of the Corporation may from time to
time determine or the business of the Corporation may require.
ARTICLE 2.
MEETINGS OF STOCKHOLDERS
SECTION 2.01. Place of Meetings. All meetings of the stockholders of the
Corporation shall be held at such place either within or without the State of
Delaware as shall be fixed by the Board of Directors of the Corporation and
specified in the respective notices or waivers of notice of said meetings.
SECTION 2.02. Annual Meetings.
(a) The annual meeting of the stockholders of the Corporation for the
election of directors of the Corporation and for the transaction of such other
business as may come before the meeting shall be held at such time and place and
on such date as the Board of Directors of the Corporation may designate and
state in the notice of such annual meeting.
(b) At an annual meeting of the stockholders of the Corporation, only such
business shall be conducted as shall have been properly brought before such
meeting. To be properly brought before an annual meeting, business must be (i)
specified in the notice of such meeting (or any supplement thereto) given by or
at the direction of the Board of Directors of the Corporation, (ii) otherwise
properly brought before such meeting by or at the direction of the Board of
Directors of the Corporation in accordance with these Bylaws, the Certificate of
Incorporation of the Corporation as in effect from time to time (the "Charter"
or the "Certificate of Incorporation") and applicable laws, rules and
regulations, or (iii) otherwise properly brought before such meeting by a
stockholder of the Corporation in accordance with these Bylaws, the Charter and
applicable laws, rules and regulations. Without limiting the foregoing, for
business to be properly brought before an annual meeting by a stockholder of the
Corporation, such stockholder must have given timely notice thereof in writing
to the Secretary of the Corporation. To be timely, such stockholder's notice
must be delivered in writing either by personal delivery or by registered or
certified mail, return receipt requested, to the principal executive offices of
the Corporation (addressed to the Secretary) not less than one hundred twenty
(120) calendar days prior to the anniversary date of the release of the
Corporation's proxy statement to its stockholders in connection with the
preceding year's annual meeting of its stockholders, except that if no annual
meeting of its stockholders was held in the previous year or the date of the
annual meeting of its stockholders has been changed by more than sixty (60)
calendar days from the anniversary of the annual meeting of its stockholders
stated in the previous year's proxy statement, a proposal of a stockholder of
the Corporation shall be received by the Corporation a reasonable time before
the solicitation is made. Such stockholder's notice shall set forth, as to each
matter such stockholder proposes to bring before an annual meeting, (i) a brief
description of the business desired to be brought before such annual meeting and
the reasons for conducting such business at the annual meeting, (ii) a
representation that such stockholder is a holder of record of stock of the
Corporation entitled to vote with respect to such business and that such
stockholder intends to appear in person or by proxy at the annual meeting to
move the consideration of such business, (iii) the name and address, as they
appear on the Corporation's books, of the stockholder proposing such business,
(iv) the class and number of shares of stock of the Corporation which are
beneficially owned by such stockholder, and (v) any interest of such stockholder
in such business. Notwithstanding anything in the Bylaws of the Corporation to
the contrary, no business shall be conducted at an annual meeting except in
accordance with the procedures set forth in this Section 2.02. The Chairman of
an annual meeting may refuse to acknowledge a motion to consider any business
that he/she determines was not made in compliance with the foregoing procedures
and if he/she should so determine and declare to such meeting, then any such
business not properly brought before such meeting shall not be transacted.
(c) Only persons who are nominated in accordance with the procedures set
forth in this Section 2.02, the Charter and applicable laws, rules and
regulations shall be eligible for election as directors of the Corporation.
Without limiting the foregoing, nomination of persons for election to the Board
of Directors of the Corporation may be made at a meeting of stockholders of the
Corporation (i) by or at the direction of the Board of Directors of the
Corporation or any nominating or similar committee thereof, or (ii) by any
stockholder of the Corporation entitled to vote for the election of directors of
the Corporation at such meeting who complies with the notice procedures set
forth in this Section 2.02. Such nominations, other than those made by or at the
direction of the Board of Directors of the Corporation or any nominating or
similar committee thereof, shall be made pursuant to timely notice in writing to
the Secretary of the Corporation. To be timely, a stockholder's notice shall be
delivered in writing either by personal delivery or by registered or certified
mail, return receipt requested, to the principal executive offices of the
Corporation (addressed to the Secretary) not less than one hundred twenty (120)
calendar days prior to the anniversary date of the release of the Corporation's
proxy statement to its stockholders in connection with the preceding year's
annual meeting of its stockholders, except that if no annual meeting of its
stockholders was held in the previous year or the date of the annual meeting of
its stockholders has been changed by more than sixty (60) calendar days from the
anniversary of the annual meeting of its stockholders stated in the previous
year's proxy statement, a proposal of a stockholder of the Corporation shall be
received by the Corporation a reasonable time before the solicitation is made.
Such stockholder's notice shall set forth (i) as to each person whom such
stockholder proposes to nominate for election or re-election as a director of
the Corporation (A) the name, age, business address and residence address of
such nominee, (B) the principal occupation or employment of such nominee, (C)
the class and number of shares of the Corporation, if any, which are
beneficially owned by such nominee, (D) a description of all arrangements or
understandings between such stockholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which such nomination is
made by such stockholder, and (E) any other information relating to such nominee
that is required to be disclosed in solicitations of proxies for election of
directors, or as otherwise required, in each case, pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended (including, without
limitation, such nominee's written consent to being named in the proxy statement
as a nominee and to serving as a director of the Corporation if elected); and
(ii) as to such stockholder (A) the name and address, as they appear on the
Corporation's books, of such stockholder, (B) a representation that such
stockholder is a holder of record of stock of the Corporation entitled to vote
at such meeting and that such stockholder intends to appear in person or by
proxy at such meeting to nominate the person or persons specified in such
notice, and (C) the class and number of shares of stock of the Corporation which
are beneficially owned by such stockholder. At the request of the Board of
Directors of the Corporation, any person nominated by the Board of Directors of
the Corporation for election as a director of the Corporation shall furnish to
the Secretary of the Corporation that information required to be set forth in a
stockholder's notice of nomination, as provided above in this clause (c), which
pertains to such nominee. No person shall be eligible for election as a director
of the Corporation unless nominated in accordance with the procedures set forth
in this Section 2.02. The chairman of the meeting may refuse to acknowledge a
motion to consider any nominee as a director of the Corporation that he/she
determines was not made in compliance with the foregoing procedures and if
he/she should so determine and declare to such meeting, then the defective
nomination shall be disregarded.
SECTION 2.03. Special Meetings. Special meetings of stockholders of the
Corporation may be called only by the Chairman of the Board or by the Board of
Directors of the Corporation pursuant to a resolution adopted by a majority of
the Board of Directors of the Corporation and must be called by the Secretary of
the Corporation upon the written request of stockholders of the Corporation
having not less than sixty percent (60%) of the votes that would be necessary to
authorize or take the action proposed to be taken at such special meeting if all
stockholders of the Corporation having the right to vote thereon were present
and voted. The business transacted at a special meeting of stockholders of the
Corporation shall be limited to the purpose or purposes for which such meeting
is called, except as otherwise determined by the Board of Directors of the
Corporation or the chairman of the meeting.
SECTION 2.04. Notice of Meetings.
(a) Except as otherwise required by statute, notice of each annual or
special meeting of the stockholders of the Corporation shall be given to each
stockholder of the Corporation of record entitled to vote at such meeting not
less than ten days nor more than sixty days before the day on which such meeting
is to be held by delivering written notice thereof to him or her personally or
by mailing such notice, postage prepaid, addressed to him or her at his or her
address last shown in the records of the Corporation or by transmitting notice
thereof to him or her at such address by telegraph, facsimile, cable or any
other available method. Each such notice shall state the time and place of the
applicable meeting and, in case of a special meeting, shall state briefly the
purposes thereof.
(b) Notice of any meeting of stockholders of the Corporation shall not be
required to be given to any stockholder of the Corporation who shall attend such
meeting in person (except where such person attends the meeting for the express
purpose of objecting at the beginning of such meeting to the transaction of
business because such meeting was not lawfully called or convened) or by proxy
or who shall, in person or by attorney thereunto authorized, waive such notice
in writing or by telegraph, cable or any other available method either before or
after such meeting. Notice of any adjourned meeting of the stockholders of the
Corporation shall not be required to be given except when expressly required by
law. At the adjourned meeting, the Corporation may transact any business which
could have been transacted at the original meeting.
SECTION 2.05. Quorum.
(a) At each meeting of the stockholders of the Corporation, except where
otherwise provided by statute, the Corporation's Certificate of Incorporation or
these Bylaws, the holders of record of a majority of the issued and outstanding
shares of stock of the Corporation entitled to vote at such meeting, present in
person or represented by proxy, shall constitute a quorum for the transaction of
business.
(b) In the absence of a quorum, a majority in interest of the stockholders
of the Corporation entitled to vote at, present in person or represented by
proxy, or, in the absence of all such stockholders, any officer entitled to
preside at, or act as secretary of, such meeting shall have the power to adjourn
such meeting from time to time until stockholders of the Corporation holding the
requisite amount of stock of the Corporation shall be present or represented. At
any such adjourned meeting at which a quorum shall be present any business may
be transacted which might have been transacted at the meeting as originally
called.
SECTION 2.06. Organization. At each meeting of the stockholders of the
Corporation, the Chairman of the Board or, in his or her absence, the President,
any Vice President or any other officer designated by the Board of Directors of
the Corporation, shall act as chairman of such meeting. The Secretary or an
Assistant Secretary of the Corporation or, in the absence of the Secretary and
all Assistant Secretaries, a person whom the chairman of such meeting shall
appoint, shall act as secretary of such meeting and keep the minutes thereof.
SECTION 2.07. Voting.
(a) Except as otherwise provided by law, the Charter or these Bylaws, at
every meeting of the stockholders of the Corporation each such stockholder shall
be entitled to one vote, in person or by proxy, for each share of capital stock
of the Corporation registered in his or her name on the books of the
Corporation:
(i) on the date fixed pursuant to Section 9.03 of these Bylaws as
the record date for the determination of stockholders entitled to vote
at such meeting; or
(ii) if no such record date shall have been fixed, then the
record date shall be at the close of business on the day next
preceding the day on which notice of such meeting is given.
(b) Persons holding stock of the Corporation in a fiduciary capacity shall
be entitled to vote the shares so held. In the case of stock held jointly by two
or more executors, administrators, guardians, conservators, trustees or other
fiduciaries, such fiduciaries may designate, in writing, one or more of their
number to represent such stock and vote the shares so held, unless there is a
provision to the contrary in the instrument, if any, defining their powers and
duties and if any one of them votes, such act binds all of them and if more than
one of them votes, the act of the majority binds all of them.
(c) Persons whose stock of the Corporation is pledged shall be entitled to
vote thereon until such stock is transferred on the books of the Corporation to
the pledgee and thereafter only the pledgee shall be entitled to vote.
(d) Any stockholder of the Corporation entitled to vote may do so in person
or by his or her proxy appointed by an instrument in writing subscribed by such
stockholder or by his or her attorney thereunto authorized or by a telegram,
facsimile, cable or any other available method delivered to the secretary of the
meeting before or at the time of such meeting; provided, however, that no proxy
shall be voted after three years from its date unless said proxy provides for a
longer period.
(e) At all meetings of the stockholders of the Corporation at which a
quorum is present, all matters (except where other provision is made by law, the
Charter or these Bylaws) shall be decided by the affirmative vote of a majority
of the shares of stock of the Corporation represented at such meeting and
entitled to vote thereon, present in person or by proxy. The vote upon any
matter, including the election of directors of the Corporation, need not be by
written ballot.
SECTION 2.08. Inspectors. The chairman of the meeting shall, in advance of
any meeting of stockholders of the Corporation, appoint one or more inspectors
to serve at such meeting. Such inspectors shall decide upon the qualifications
of voters, the validity of all proxies and ballots, accept and count the votes
for and against the questions presented, report the results of such votes and
subscribe and deliver to the secretary of the meeting a certificate stating the
number of shares of stock of the Corporation issued and outstanding and entitled
to vote thereon and the number of shares voted for and against the questions
presented. The inspectors shall determine and retain for a reasonable period a
record of the disposition of any challenges made to any determination by the
inspectors. An inspector need not be a stockholder of the Corporation and any
director or officer of the Corporation may be an inspector on any question other
than a vote for or against his or her election to any position with the
Corporation or on any other question in which he or she may be directly
interested. The inspectors may appoint or retain other persons or entities to
assist them in the performance of their duties as inspectors. Before acting as
herein provided, each inspector shall subscribe an oath to execute faithfully
the duties of an inspector with strict impartiality and according to the best of
his or her ability.
SECTION 2.09. List of Stockholders.
(a) It shall be the duty of the Secretary or other officer of the
Corporation who shall have charge of its stock ledger to prepare and make, or
cause to be prepared and made, at least ten days before every meeting of the
stockholders of the Corporation, a complete list of such stockholders entitled
to vote arranged in alphabetical order and showing the name and address of each
stockholder of the Corporation and the number and class of shares of stock of
the Corporation registered in the name of such stockholder. Such list shall be
open during ordinary business hours to the examination of any stockholder of the
Corporation for any purpose germane to such meeting for a period of at least ten
days prior to the meeting, either at a place within the city where such meeting
is to be held, which place shall be specified in the notice of such meeting or,
if not so specified, at the place where such meeting is to be held.
(b) Such list shall be produced and kept at the time and place of such
meeting during the whole time thereof and may be inspected by any stockholder of
the Corporation who is present.
(c) The stock ledger of the Corporation shall be conclusive evidence as to
who are the stockholders of the Corporation entitled to examine the stock ledger
and the list of stockholders required by this Section 2.09 on the books of the
Corporation or to vote in person or by proxy at any meeting of stockholders of
the Corporation.
(d) As used in this clause (d), "stockholder" means a stockholder of record
of the Corporation. Any stockholder in person or by attorney or other agent,
upon written demand under oath stating the purpose thereof, has the right during
the Corporation's ordinary business hours to inspect for any proper purpose the
Corporation's stock ledger, a list of its stockholders and its other books and
records, and, at such stockholder's expense, to make copies of extracts
therefrom. A proper purpose shall mean a purpose reasonably related to such
person's interest as a stockholder. In every instance where an attorney or other
agent shall be the person who seeks the right to inspection, the demand under
oath must be accompanied by a power of attorney or such other writing which
authorizes the attorney or other agent to so act on behalf of the stockholder.
The demand under oath shall be directed to the Corporation at its registered
office in Delaware or at its principal place of business.
ARTICLE 3.
BOARD OF DIRECTORS OF THE CORPORATION
SECTION 3.01. General Powers. The business, property and affairs of the
Corporation shall be managed by the Board of Directors of the Corporation.
SECTION 3.02. Number, Qualifications, Terms and Removal from Office.
(a) The number of directors of the Corporation on the date of adoption of
these Bylaws shall be seven (7). The number of directors of the Corporation may
be increased or decreased by resolution of the Board of Directors of the
Corporation. All directors of the Corporation shall hold office for the term for
which they are elected or until their successors shall have been elected and
qualified, whichever period is longer. The directors of the Corporation need not
be residents of the State of Delaware.
(b) A director of the Corporation need not be a stockholder of the
Corporation.
(c) Directors of the Corporation may be removed from office as provided in
the Charter.
(d) Vacancies and newly created directorships of the Corporation resulting
from any increase in the authorized number of directors of the Corporation shall
be filled as provided in the Charter. If there are no directors of the
Corporation in office, then an election of directors may be held in the manner
provided by statute. Except as otherwise contemplated by written agreement among
the stockholders of the Corporation or the Charter, whenever the holders of any
class or classes of stock or series thereof are entitled to elect one or more
directors of the Corporation by the provisions of the Charter or any designation
of any class or series of preferred shares, vacancies and newly created
directorships of such class or classes or series may be filled by a majority of
the directors elected by such class or classes or series thereof then in office
or by a sole remaining director so elected.
SECTION 3.03. Quorum and Manner of Acting.
(a) Except as otherwise provided by statute or by the Charter, a majority
of the directors of the Corporation at the time in office shall constitute a
quorum for the transaction of business at any meeting and the affirmative action
of a majority of the directors of the Corporation present at any meeting at
which a quorum is present shall be required for the taking of any action by the
Board of Directors of the Corporation.
(b) In the event one or more of the directors of the Corporation shall be
disqualified to vote at such meeting then the required quorum shall be reduced
by one for each such director so disqualified; provided, however, that in no
event shall the quorum as adjusted be less than one third of the total number of
directors of the Corporation. A director who is present at a meeting of the
Board of Directors of the Corporation, or a committee of the Board of Directors,
when corporate action is taken, shall be deemed to have assented to the action
taken unless such director:
(i) objects at the beginning of such meeting (or promptly upon
arrival) to holding such meeting or transacting business at such
meeting;
(ii) dissents or abstains from the action taken and such dissent
or abstention is entered in the minutes of such meeting; or
(iii) delivers written notice of dissent or abstention to the
presiding officer of such meeting before its adjournment or to the
Corporation immediately after adjournment of such meeting. The right
of dissent or abstention shall not be available to a director who
votes in favor of the action taken.
(c) In the absence of a quorum at any meeting of the Board of Directors of
the Corporation, such meeting need not be held or a majority of the directors of
the Corporation present or, if no director of the Corporation be present, the
Secretary of the Corporation, may adjourn such meeting from time to time until a
quorum shall be present. Notice of any adjourned meeting need not be given.
SECTION 3.04. Offices, Place of Meeting and Records. The Board of Directors
of the Corporation may hold meetings, have an office or offices and keep the
books and records of the Corporation at such place or places within or without
the State of Delaware as the Board may from time to time determine. The place of
meeting shall be specified or fixed in the respective notices or waivers of
notice thereof except where otherwise provided by statute, the Charter or these
Bylaws. Any director of the Corporation shall have the right to examine the
Corporation's stock ledger, list of stockholders and its other books and records
for any purpose reasonably related to such person's position as a director.
SECTION 3.05. Annual Meeting. The Board of Directors of the Corporation
shall meet for the purpose of organization, the election of officers and the
transaction of other business as soon as practicable following each annual
election of directors of the Corporation. Such meeting shall be called and held
at the place and time specified in the notice or waiver of notice thereof as in
the case of a special meeting of the Board of Directors of the Corporation.
SECTION 3.06. Regular Meetings. Regular meetings of the Board of Directors
of the Corporation shall be held at such places and at such times as such Board
shall from time to time by resolution determine. If any day fixed for a regular
meeting shall be a legal holiday at the place where the meeting is to be held
then the meeting which would otherwise be held on that day shall be held at said
place at the same hour on the next succeeding business day. Notice of regular
meetings need not be given.
SECTION 3.07. Special Meetings; Notice. Special meetings of the Board of
Directors of the Corporation shall be held whenever called by the Chairman of
the Board, the President or by any two (2) of the directors of the Corporation.
Notice of each such meeting (i) shall be mailed to each director of the
Corporation, addressed to him or her at his or her residence or usual place of
business, at least two days before the day on which such meeting is to be held,
(ii) shall be sent to him or her at his or her residence or at such place of
business by facsimile, telegraph, cable or other available means at least two
days before the day on which such meeting is to be held, or (iii) shall be
delivered personally or by telephone not later than one day before the day on
which the meeting is to be held. Each such notice shall state the date, time and
place of the meeting but need not state the purposes thereof except as otherwise
herein expressly provided. Oral or telephonic notice shall be effective when
communicated provided that it is promptly confirmed in writing. Notice of any
such meeting need not be given to any director of the Corporation, however, if
waived by him or her in writing or by facsimile, telegraph, cable or otherwise,
whether before or after such meeting shall be held or if he or she shall be
present at such meeting (except where such person attends the meeting for the
express purpose of objecting at the beginning of such meeting to the transaction
of business because such meeting was not lawfully called or convened). Written
notice is effective at the earliest of the following:
(a) when received;
(b) five (5) days after deposit in the United States mail as
evidenced by the postmark, if mailed postpaid and correctly addressed;
or
(c) on the date shown on the return receipt, if sent by
registered or certified mail, return receipt requested, and the
receipt is signed by, or on behalf of, the addressee.
SECTION 3.08. Organization. At each meeting of the Board of Directors of
the Corporation, the Chairman of the Board or, in his or her absence, the
President or, in his or her absence, a director of the Corporation chosen by a
majority of the directors of the Corporation present, shall act as chairman. The
Secretary or, in his or her absence, an Assistant Secretary or, in the absence
of the Secretary and all Assistant Secretaries, a person whom the chairman of
such meeting shall appoint, shall act as secretary of such meeting and keep the
minutes thereof.
SECTION 3.09. Order of Business. At all meetings of the Board of Directors
of the Corporation business shall be transacted in the order determined by the
Board.
SECTION 3.10. Resignation. Any director of the Corporation may resign at
any time by giving written notice of his or her resignation to the Board of
Directors of the Corporation, the Chairman of the Board, the President, any Vice
President or the Secretary of the Corporation. Such resignation shall take
effect at the date of receipt of such notice or at any later time specified
therein; and, unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
SECTION 3.11. Compensation. Each director of the Corporation, in
consideration of serving as such, who is neither an employee of, nor a
compensated consultant to, the Corporation, shall be entitled to receive from
the Corporation such amount per annum or such fees for attendance at directors'
meetings, or both, as the Board of Directors of the Corporation shall from time
to time determine. Each director of the Corporation shall be entitled to
reimbursement for the reasonable expenses incurred by him or her in connection
with the performance of his or her duties; provided that nothing herein
contained shall be construed to preclude any director of the Corporation from
serving the Corporation or its subsidiaries in any other capacity and receiving
proper compensation therefor.
SECTION 3.12. Telephonic Meetings. Members of the Board of Directors of the
Corporation or a committee of the Board may participate in a meeting by means of
a conference telephone or similar communications equipment if all persons
participating in the meeting can hear each other at the same time. Participation
in a meeting by these means constitutes presence in person at the meeting.
ARTICLE 4.
COMMITTEES
SECTION 4.01. Executive Committee.
(a) The Board of Directors of the Corporation may, by resolution or
resolutions passed by a majority of the whole Board, appoint an Executive
Committee to consist of two or more members of the Board of Directors of the
Corporation, including the President if the President is then a director, and
shall designate one of the members as its chairman.
(b) The chairman of the Executive Committee or, in his or her absence, a
member of the Executive Committee chosen by a majority of the members present
shall preside at meetings of the Executive Committee and the Secretary or an
Assistant Secretary of the Corporation, or such other person as the Executive
Committee shall from time to time determine, shall act as secretary of the
Executive Committee.
(c) The Board of Directors of the Corporation, by action of the majority of
the whole Board, shall fill vacancies in the Executive Committee.
(d) Any member of the Executive Committee may be removed, either with or
without cause, by the vote of a majority of the whole Board of Directors of the
Corporation.
SECTION 4.02. Powers. During the intervals between the meetings of the
Board of Directors of the Corporation, the Executive Committee shall have and
may exercise all of the powers of the Board of Directors of the Corporation in
all cases in which specific directions shall not have been given by the Board of
Directors of the Corporation.
SECTION 4.03. Procedure; Meetings; Quorum. The Executive Committee shall
fix its own rules of procedure, subject to the approval of the Board of
Directors of the Corporation, and shall meet at such times and at such place or
places as may be provided by such rules. At every meeting of the Executive
Committee the presence of a majority of all the members thereof shall be
necessary to constitute a quorum and the affirmative vote of a majority of the
members present shall be necessary for the adoption by it of any resolution. In
the absence of a quorum at any meeting of the Executive Committee such meeting
need not be held or a majority of the members present or, if no members be
present, the secretary of the meeting may adjourn such meeting from time to time
until a quorum be present.
SECTION 4.04. Compensation. Each member of the Executive Committee shall be
entitled to receive from the Corporation reimbursement for the reasonable
expenses incurred by him or her in connection with the performance of his or her
duties and, with respect to any member of the Executive Committee who is neither
an employee of nor compensated consultant to the Corporation, such fee, if any,
as shall be fixed from time to time by the Board of Directors of the
Corporation.
SECTION 4.05. Nominating Committee.
(a) The Board of Directors of the Corporation may, by resolution or
resolutions passed by a majority of the whole Board, appoint a Nominating
Committee to consist of two or more members of the Board of Directors of the
Corporation, including the President if the President is then a director, and
shall designate one of the members as its chairman.
(b) The chairman of the Nominating Committee or, in his or her absence, a
member of the Nominating Committee chosen by a majority of the members present
shall preside at meetings of the Nominating Committee and the Secretary or an
Assistant Secretary of the Corporation, or such other person as the Nominating
Committee shall from time to time determine, shall act as secretary of the
Nominating Committee.
(c) The Board of Directors of the Corporation, by action of the majority of
the whole Board, shall fill vacancies in the Nominating Committee.
(d) Any member of the Nominating Committee may be removed, either with or
without cause, by the vote of a majority of the whole Board of Directors of the
Corporation.
SECTION 4.06. Powers. The Nominating Committee shall have the power to
nominate such persons as it may determine to stand for election to the Board of
Directors of the Corporation, all in accordance with the Charter and these
Bylaws.
SECTION 4.07. Procedure; Meetings; Quorum. The Nominating Committee shall
fix its own rules of procedure, subject to the approval of the Board of
Directors of the Corporation, and shall meet at such times and at such place or
places as may be provided by such rules. At every meeting of the Nominating
Committee the presence of a majority of all the members shall be necessary to
constitute a quorum and the affirmative vote of a majority of the members
present shall be necessary for the adoption by it of any resolution. In the
absence of a quorum at any meeting of the Nominating Committee such meeting need
not be held or a majority of the members present or, if no members be present,
the secretary of the meeting may adjourn such meeting from time to time until a
quorum be present.
SECTION 4.08. Compensation. Each member of the Nominating Committee shall
be entitled to receive from the Corporation reimbursement for the reasonable
expenses incurred by him or her in connection with the performance of his or her
duties and, with respect to any member of the Nominating Committee who is
neither an employee of nor compensated consultant to the Corporation, such fee,
if any, as shall be fixed from time to time by the Board of Directors of the
Corporation.
SECTION 4.09. Other Board Committees.
(a) The Board of Directors of the Corporation may from time to time, by
resolution passed by a majority of the whole Board, designate one or more
committees in addition to the Executive Committee and the Nominating Committee.
Each such additional committee shall consist of two or more of the directors of
the Corporation. Any such additional committee, to the extent provided in the
resolution or in these Bylaws, shall have and may exercise the powers of the
Board of Directors of the Corporation in the management of the business and
affairs of the Corporation, including the power or authority to authorize the
issuance of stock, and may authorize the seal of the Corporation to be affixed
to all papers which may require it but no such committee shall have the power or
authority in reference to amending the Charter, adopting an agreement of merger
or consolidation under Section 251 or 252 of the Delaware General Corporation
Law ("DGCL"), recommending to the stockholders of the Corporation the sale,
lease or exchange of all or substantially all of the Corporation's property and
assets, recommending to the stockholders of the Corporation a dissolution of the
Corporation or a revocation of a dissolution, amending the Bylaws of the
Corporation, declaring a dividend or adopting a certificate of ownership and
merger pursuant to Section 253 of the DGCL. Such additional committee or
committees shall have such name or names as may be determined from time to time
by resolution adopted by the Board of Directors of the Corporation. Each
additional committee so formed shall keep regular minutes of its meetings and
report the same to the Board of Directors of the Corporation when required.
(b) A majority of all the members of any such committee may determine its
action and fix the time and place of its meetings unless the Board of Directors
of the Corporation shall otherwise provide. The Board of Directors of the
Corporation shall have power to change the members of any committee at any time,
to fill vacancies and to discharge any such committee, either with or without
cause, at any time.
SECTION 4.10. Alternates. The Chairman of the Board or the President of the
Corporation may designate one or more directors of the Corporation as alternate
members of any committee who may act in the place and stead of members who
temporarily cannot attend any such meeting.
SECTION 4.11. Additional Committees.
(a) The Board of Directors of the Corporation may from time to time create
such additional committees of directors, officers, employees or other persons
designated by it (or any combination of such persons) for the purpose of
advising the Board, the Executive Committee and the officers and employees of
the Corporation in all such matters as the Board shall deem advisable and with
such functions and duties as the Board shall by resolutions prescribe.
(b) A majority of all the members of any such committee may determine its
action and fix the time and place of its meetings, unless the Board of Directors
of the Corporation shall otherwise provide. The Board of Directors of the
Corporation shall have the power to change the members of any committee at any
time, to fill vacancies and to discharge any such committee, either with or
without cause, at any time.
ARTICLE 5.
ACTION BY CONSENT
SECTION 5.01. Consent by Directors. Any action required or permitted to be
taken at any meeting of the Board of Directors of the Corporation or of any
committee thereof may be taken without a meeting if prior to such action a
written consent thereto is signed by all members of the Board or of such
committee, as the case may be, and such written consent is filed with the
minutes of the proceedings of the Board or such committee.
SECTION 5.02. Consent of Stockholders.
(a) Any action required to be taken at any annual or special meeting of
stockholders of the Corporation, or any action which may be taken at any annual
or special meeting of such stockholders, may be taken without a meeting, without
prior notice and without a vote, if a consent or consents in writing, setting
forth the action so taken, shall be signed by stockholders of the Corporation
having not less than sixty percent (60%) of the votes that would be necessary to
authorize or take such action at a meeting at which all stockholders of the
Corporation having the right to vote thereon were present and voted. Every
written consent shall bear the date of signature of each stockholder of the
Corporation who signs the consent and no written consent shall be effective to
take the corporate action referred to therein unless written consents signed by
a sufficient number of holders to take action are delivered to the Corporation
by certified or registered mail, return receipt requested, to its registered
office in Delaware, its principal place of business or an officer or agent of
the Corporation having custody of the book in which proceedings of meetings of
stockholders of the Corporation are recorded within sixty days of the earliest
dated consent so delivered to the Corporation. Prompt notice of the taking of
the corporate action without a meeting by less than unanimous written consent
shall be given to those stockholders of the Corporation who have not consented
in writing, by a stockholder who signed the consent, or by the Corporation, at
its option, pursuant to Section 5.02(b).
(b) With respect to any written consent submitted for execution and
delivery by the requisite number of stockholders of the Corporation pursuant to
this Section 5.02, such stockholder(s) may request that the Corporation provide
such stockholder(s), at the sole cost and expense of such stockholder(s), with a
list of the names and addresses of the other stockholders of the Corporation and
the number and class of shares of the Corporation held of record by such other
stockholders. The Corporation may, at its option, either provide such list or,
at the sole cost and expense of such stockholder(s), mail such written consent
on behalf of such stockholder(s). The Corporation may in its sole discretion
advance such stockholder(s) for the costs and expenses of the preparation and
mailing of such written consent. If the Corporation provides such list, such
requesting stockholder(s) must undertake, in writing, that such stockholder(s)
(a) will not use the information set forth in such list for any purpose other
than the mailing or other delivery of such written consent or the solicitation
of stockholders of the Corporation with respect to the subject matter thereof,
and (b) will return such list to the Secretary of the Corporation after such
mailing, other delivery or solicitation without retaining any copies thereof.
ARTICLE 6.
OFFICERS
SECTION 6.01. Number. The principal officers of the Corporation shall be a
President, a Secretary and a Treasurer. The Board of Directors of the
Corporation may also elect a Chairman of the Board and one or more Vice
Presidents (the number thereof and variations in title to be determined by the
Board of Directors of the Corporation). In addition, there may be such other or
subordinate officers, agents and employees as may be appointed in accordance
with the provisions of Section 6.03. Any two or more offices may be held by the
same person.
SECTION 6.02. Election, Qualifications and Term of Office. Each officer of
the Corporation, except such officers as may be appointed in accordance with the
provisions of Section 6.03, shall be elected annually by the Board of Directors
of the Corporation and shall hold office until a successor shall have been duly
elected and qualified, or until death, or until he or she shall have resigned or
shall have been removed in the manner herein provided.
SECTION 6.03. Other Officers. The Corporation may have such other officers,
agents, and employees as the Board of Directors of the Corporation may deem
necessary, including a Controller, one or more Assistant Controllers, one or
more Assistant Treasurers and one or more Assistant Secretaries, each of whom
shall hold office for such period, have such authority and perform such duties
as the Board of Directors of the Corporation may from time to time determine.
The Board of Directors of the Corporation may delegate to any principal officer
the power to appoint or remove any such subordinate officers, agents or
employees.
SECTION 6.04. Removal. Any officer of the Corporation may be removed,
either with or without cause, by the vote of a majority of the whole Board of
Directors of the Corporation or, except in case of any officer appointed by the
Board of Directors of the Corporation, by any committee of officers upon whom
the power of removal may be conferred by the Board of Directors of the
Corporation, but such removal shall be without prejudice to the contract rights,
if any, of the officer so removed.
SECTION 6.05. Resignation. Any officer may resign at any time by giving
written notice to the Board of Directors of the Corporation or the President.
Any such resignation shall take effect as of the date of receipt of such notice
or at any later time specified therein and, unless otherwise specified therein,
the acceptance of such resignation shall not be necessary to make it effective.
SECTION 6.06. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or any other cause shall be filled for
the unexpired portion of the term in the manner prescribed in these Bylaws for
regular election or appointment to such office.
SECTION 6.07. Powers of Officers. The Board of Directors of the Corporation
shall have the authority to fix or limit the powers and authority of the
officers of the Corporation to conduct transactions between the Corporation and
other parties, to enter into contracts proposed to be entered into by or on
behalf of the Corporation and with respect to all other areas of business
operation in which the officers of the Corporation may engage.
SECTION 6.08. Chairman of the Board. The Chairman of the Board, if one is
elected, shall be a director of the Corporation and shall preside at all
meetings of the Board of Directors of the Corporation and shareholders of the
Corporation. The Chairman shall have such specific powers and duties as from
time to time may be conferred or assigned by the Board of Directors of the
Corporation.
SECTION 6.09. President. Subject to determination by the Board of Directors
of the Corporation, the President shall be the chief executive officer of the
Corporation, shall have general executive powers and shall have such specific
powers and duties as from time to time may be conferred upon or assigned to him
or her by the Board of Directors of the Corporation.
SECTION 6.10. Vice President. Each Vice President shall have such powers
and perform such duties as the Board of Directors of the Corporation or the
Executive Committee may from time to time prescribe or as shall be assigned by
the President.
SECTION 6.11. Treasurer. The Treasurer shall have charge and custody of,
and be responsible for, all funds and securities of the Corporation, and shall
deposit all such funds to the credit of the Corporation in such banks, trust
companies or other depositories as shall be selected in accordance with the
provisions of these Bylaws. The Treasurer shall disburse the funds of the
Corporation as may be ordered by the Board of Directors of the Corporation or
the Executive Committee, making proper vouchers for such disbursements, and
shall render to the Board of Directors of the Corporation or the stockholders of
the Corporation, whenever the Board may so require, a statement of all
transactions as Treasurer or the financial condition of the Corporation and, in
general, the Treasurer shall perform all the duties as from time to time may be
assigned by the Board of Directors of the Corporation, any committee of the
Board designated by it so to act or the President.
SECTION 6.12. Secretary. The Secretary shall record or cause to be recorded
in books provided for the purpose the minutes of the meetings of the
stockholders of the Corporation, the Board of Directors of the Corporation and
all committees of which a secretary shall not have been appointed. The Secretary
(i) shall see that all notices are duly given in accordance with the provisions
of these Bylaws and as required by law, (ii) shall be custodian of all corporate
records (other than financial) and of the seal of the Corporation, (iii) shall
see that the seal is affixed to all documents the execution of which on behalf
of the Corporation under its seal is duly authorized in accordance with the
provisions of these Bylaws, (iv) shall keep, or cause to be kept, the list of
stockholders of the Corporation as required by Section 2.09, which include the
post-office addresses of the stockholders of the Corporation and the number of
shares held by them, respectively, and shall make or cause to be made, all
proper changes therein, (v) shall see that the books, reports, statements,
certificates and all other documents and records required by law are properly
kept and filed, and (vi) shall, in general, perform all duties incident to the
office of Secretary and such other duties as may from time to time be assigned
by the Board of Directors of the Corporation, the Executive Committee or the
President.
SECTION 6.13. Salaries. The salaries of the principal officers of the
Corporation shall be fixed from time to time by the Board of Directors of the
Corporation or a special committee thereof, and none of such officers shall be
prevented from receiving a salary by reason of the fact that he or she is a
director of the Corporation.
ARTICLE 7.
INDEMNIFICATION OF DIRECTORS, OFFICERS AND
OTHER AUTHORIZED REPRESENTATIVES
SECTION 7.01. Indemnification of Authorized Representatives in Third Party
Proceedings. The Corporation shall indemnify any person who was or is an
authorized representative of the Corporation and who was or is a party, or is
threatened to be made a party, to any third party proceeding by reason of the
fact that such person was or is an authorized representative of the Corporation,
against expenses, judgments, penalties, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such third
party proceeding if such person acted in good faith and in a manner such person
reasonably believed to be in, or not opposed to, the best interests of the
Corporation and, with respect to any criminal third party proceeding, had no
reasonable cause to believe such conduct was unlawful. The termination of any
third party proceeding by judgment, order, settlement, indictment, conviction or
upon a plea of nolo contendere or its equivalent shall not of itself create a
presumption that the authorized representative did not act in good faith and in
a manner which such person reasonably believed to be in or not opposed to, the
best interests of the Corporation, and, with respect to any criminal third party
proceeding, had reasonable cause to believe that such conduct was unlawful.
SECTION 7.02. Indemnification of Authorized Representatives in Corporate
Proceedings. The Corporation shall indemnify any person who was or is an
authorized representative of the Corporation and who was or is a party, or is
threatened to be made a party, to any corporate proceeding by reason of the fact
that such person was or is an authorized representative of the Corporation,
against expenses actually and reasonably incurred by such person in connection
with the defense or settlement of such corporate action if such person acted in
good faith and in a manner reasonably believed to be in, or not opposed to, the
best interests of the Corporation, except that no indemnification shall be made
in respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the Corporation unless, and only to the extent that,
the Court of Chancery or the court in which such corporate proceeding was
pending shall determine upon application that, despite the adjudication or
liability but in view of all the circumstances of the case, such authorized
representative is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.
SECTION 7.03. Mandatory Indemnification of Authorized Representatives. To
the extent that an authorized representative of the Corporation has been
successful on the merits or otherwise in defense of any third party or corporate
proceeding or in defense of any claim, issue or matter therein, such person
shall be indemnified against expenses actually and reasonably incurred by such
person in connection therewith.
SECTION 7.04. Determination of Entitlement to Indemnification. Any
indemnification under Section 7.01, 7.02 or 7.03 of this Article (unless ordered
by a court) shall be made by the Corporation only as authorized in the specific
case upon a determination that indemnification of the authorized representative
is proper in the circumstances because such person has either met the applicable
standard of conduct set forth in Section 7.01 or 7.02 or has been successful on
the merits or otherwise as set forth in Section 7.03 and that the amount
requested has been actually and reasonably incurred. Such determination shall be
made:
(a) By the Board of Directors of the Corporation by a majority of a quorum
consisting of directors of the Corporation who were not parties to such third
party or corporate proceeding, or
(b) If such a quorum is not obtainable or, even if obtainable, a majority
vote of such a quorum so directs, by independent legal counsel in a written
opinion, or
(c) By the stockholders of the Corporation.
SECTION 7.05. Advancing Expenses. Expenses actually and reasonably incurred
in defending a third party or corporate proceeding may be paid on behalf of an
authorized representative by the Corporation in advance of the final disposition
of such third party or corporate proceeding upon receipt of an undertaking by or
on behalf of such authorized representative to repay such amount if it shall
ultimately be determined that such person is not entitled to be indemnified by
the Corporation as authorized in this Article. The financial ability of such
authorized representative to make such repayment shall not be a prerequisite to
the making of an advance.
SECTION 7.06. Definitions. For purposes of this Article:
(a) "authorized representative" shall mean a director or officer of the
Corporation or a person serving at the request of the Corporation as a director,
officer or trustee of another Corporation, partnership, joint venture, trust or
other enterprise;
(b) "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, employees or agents, so that any person who is or was a director,
officer, employee or agent of such constituent Corporation, or is or was serving
at the request of such constituent Corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, shall stand in the same position under the provisions of this
Article with respect to the resulting or surviving corporation as such person
would have with respect to such constituent corporation if its separate
existence had continued;
(c) "corporate proceeding" shall mean any threatened, pending or completed
action or suit by or in the right of the Corporation to procure a judgment in
its favor or investigative proceeding by the Corporation;
(d) "criminal third party proceeding" shall include any action or
investigation which could or does lead to a criminal third party proceeding;
(e) "expenses" shall include attorneys' fees and disbursements;
(f) "fines" shall include any excise taxes assessed on a person with
respect to an employee benefit plan;
(g) "not opposed to the best interest of the Corporation" shall include
actions taken in good faith and in a manner the authorized representative
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan;
(h) "other enterprises" shall include employee benefit plans;
(i) "party" shall include the giving of testimony or similar involvement;
(j) "serving at the request of the Corporation" shall include any service
as a director, officer or employee of the Corporation which imposes duties on,
or involves services by, such director, officer or employee with respect to an
employee benefit plan, its participants or beneficiaries; and
(k) "third party proceeding" shall mean any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, other than an action by or in the right of the Corporation.
SECTION 7.07. Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the Corporation or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against
him and incurred by him in any such capacity, or arising out of his status as
such, whether or not the Corporation would have the power or the obligation to
indemnify such person against such liability under the provisions of this
Article.
SECTION 7.08. Scope of Article. The indemnification of authorized
representatives and advancement of expenses, as authorized by the preceding
provisions of this Article, shall not be deemed exclusive of any other rights to
which those seeking indemnification or advancement of expenses may be entitled
under any statute, agreement, vote of stockholders of the Corporation or
disinterested directors of the Corporation or otherwise, both as to action in an
official capacity and as to action in another capacity. The indemnification and
advancement of expenses provided by or granted pursuant to this Article shall,
unless otherwise provided when authorized or ratified, continue as to a person
who has ceased to be an authorized representative and shall insure to the
benefit of the heirs, executors and administrators of such a person.
SECTION 7.09. Reliance on Provisions. Each person who shall act as an
authorized representative of the Corporation shall be deemed to be doing so in
reliance upon the rights of indemnification provided by this Article.
ARTICLE 8.
CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.
SECTION 8.01. Execution of Contracts. Unless the Board of Directors of the
Corporation or the Executive Committee shall otherwise determine, (a) the
Chairman of the Board, the President, any Vice President or the Treasurer, and
(b) the Secretary or any Assistant Secretary, may enter into any contract or
execute any contract or other instrument, the execution of which is not
otherwise specifically provided for, in the name and on behalf of the
Corporation. The Board of Directors of the Corporation, or any committee
designated thereby with power so to act, except as otherwise provided in these
Bylaws, may authorize any other or additional officer or officers or agent or
agents of the Corporation, and such authority may be general or confined to
specific instances. Unless authorized so to do by these Bylaws or by the Board
of Directors of the Corporation or by any such committee, no officer, agent or
employee shall have any power or authority to bind the Corporation by any
contract or engagement or to pledge its credit or to render it liable
pecuniarily for any purpose or to any amount.
SECTION 8.02. Loans. No loan shall be contracted on behalf of the
Corporation, and no evidence of indebtedness shall be issued, endorsed or
accepted in its name, unless authorized by the Board of Directors of the
Corporation or Executive Committee or other committee designated by the Board to
act. Such authority may be general or confined to specific instances. When so
authorized, the officer or officers thereunto authorized may effect loans and
advances at any time for the Corporation from any bank, trust company or other
institution, or from any firm, corporation or individual, and for such loans and
advances may make, execute and deliver promissory notes or other evidences of
indebtedness of the Corporation, and, when authorized as aforesaid, as security
for the payment of any and all loans, advances, indebtedness and liabilities of
the Corporation, may mortgage, pledge, hypothecate or transfer any real or
personal property at any time owned or held by the Corporation, and to that end
execute instruments of mortgage or pledge or otherwise transfer such property.
SECTION 8.03. Checks, Drafts, etc. All checks, drafts, bills or exchange or
other orders for the payment of money, obligations, notes, or other evidence of
indebtedness, bills of lading, warehouse receipts and insurance certificates of
the Corporation shall be signed or endorsed by such officer or officers, agent
or agents, attorney or attorneys, employee or employees, of the Corporation as
shall from time to time be determined by resolution of the Board of Directors of
the Corporation or Executive Committee or other committee designated by the
Board so to act.
SECTION 8.04. Deposits. All funds of the Corporation not otherwise employed
shall be deposited from time to time to the credit of the Corporation in such
banks, trust companies or other depositories as the Board of Directors of the
Corporation or Executive Committee or other committee designated by the Board so
to act may from time to time designate, or as may be designated by any officer
or officers or agent or agents of the Corporation to whom such power may be
delegated by the Board of Directors of the Corporation or Executive Committee or
other committee designated by the Board so to act and, for the purpose of such
deposit and for the purposes of collection for the account of the Corporation
may be endorsed, assigned and delivered by any officer, agent or employee of the
Corporation or in such other manner as may from time to time be designated or
determined by resolution of the Board of Directors of the Corporation or
Executive Committee or other committee designated by the Board so to act.
SECTION 8.05. Proxies in Respect of Securities of Other Corporations.
Unless otherwise provided by resolution adopted by the Board of Directors of the
Corporation or the Executive Committee or other committee so designated to act
by the Board, the President may from time to time appoint an attorney or
attorneys or agent or agents of the Corporation, in the name and on behalf of
the Corporation, to cast the votes that the Corporation may be entitled to cast
as the holder of stock or other securities in any other corporation, association
or trust any of whose stock or other securities may be held by the Corporation,
at meetings of the holders of the stock or other securities of such other
corporation, association or trust, or to consent in writing, in the name of the
Corporation as such holder, to any action by such other corporation, association
or trust, and may instruct the person or persons so appointed as to the manner
of casting such votes or giving such consent, and may execute or cause to be
executed in the name and on behalf of the Corporation and under its corporate
seal, or otherwise, all such written proxies or other instruments as he or she
may deem necessary or proper in the premises.
ARTICLE 9.
BOOKS AND RECORDS
SECTION 9.01. Place. The books and records of the Corporation may be kept
at such places within or without the State of Delaware as the Board of Directors
of the Corporation may from time to time determine. The stock record books and
the blank stock certificate books shall be kept by the Secretary or by any other
officer or agent designated by the Board of Directors of the Corporation.
SECTION 9.02 Addresses of Stockholders. Each stockholder of the Corporation
shall furnish to the Secretary of the Corporation or to the transfer agent of
the Corporation an address at which notices of meetings and all other corporate
notices may be served upon or mailed to him and if any such stockholder shall
fail to designate such address, corporate notices may be served upon him or her
by mail, postage prepaid, to him or her at his or her post-office address last
known to the Secretary or to the transfer agent of the Corporation or by
transmitting a notice thereof to him or her at such address by telegraph, cable
or other available method.
SECTION 9.03. Record Dates. The Board of Directors of the Corporation may
fix in advance a date, not less than ten days nor more than sixty days prior to
the date of any meeting of stockholders of the Corporation, or the date for the
payment of any dividend, or the date for the allotment of any rights, or the
date when any change or conversion or exchange of capital stock of the
Corporation shall go into effect, or a date in connection with obtaining such
consent, as a record date for the determination of the stockholders of the
Corporation entitled to notice of, and to vote at, any such meeting or any
adjournment thereof, or entitled to receive payment of any such dividend, or to
any such allotment of rights, or to exercise the rights in respect of any
change, conversion or exchange of capital stock of the Corporation, or to give
such consent, and in each such case such stockholders and only such stockholders
as shall be stockholders of record on the date so fixed shall be entitled to
notice of, or to vote at, such meeting and any adjournment thereof, or to
receive payment of such dividend, or to receive such allotment of rights, or to
exercise such rights or to give such consent, as the case may be,
notwithstanding any transfer of any stock on the books of the Corporation after
any such record date fixed as aforesaid.
SECTION 9.04. Audit of Books and Accounts. The books and accounts of the
Corporation shall be audited at least once in each fiscal year by certified
public accountants of good standing selected by the Board of Directors of the
Corporation.
ARTICLE 10.
SHARES AND THEIR TRANSFER
SECTION 10.01. Certificates of Stock. Every owner of stock of the
Corporation shall be entitled to have a certificate certifying the number of
shares owned by him or her in the Corporation and designating the class of stock
to which such shares belong, which shall otherwise be in such form as the Board
of Directors of the Corporation shall prescribe. Every such certificate shall be
signed by the President or a Vice President and by the Treasurer or any
Assistant Treasurer or the Secretary or any Assistant Secretary of the
Corporation; provided, however, that where such certificate is signed or
countersigned by a transfer agent or registrar the signatures of such officers
of the Corporation and the seal of the Corporation may be in facsimile form. In
case any officer or officers who shall have signed, or whose facsimile signature
or signatures shall have been used on, any such certificate or certificates
shall cease to be such officer or officers of the Corporation, whether because
of death, resignation or otherwise, before such certificate or certificates
shall have been delivered by the Corporation, such certificate or certificates
may nevertheless be issued and delivered by the Corporation as though the person
or persons who signed such certificate or whose facsimile signature or
signatures shall have been used thereof had not ceased to be such officer or
officers of the Corporation.
SECTION 10.02 Record. A record shall be kept of the name of the person,
firm or corporation owning the stock represented by each certificate for stock
of the Corporation issued, the number of shares represented by each such
certificate, and the date of issuance thereof and, in case of cancellation, the
date of cancellation. The person in whose name shares of stock of the
Corporation stand on the books of the Corporation shall be deemed the owner
thereof for all purposes as regards the Corporation.
SECTION 10.03. Transfer of Stock. Transfers of shares of the stock of the
Corporation shall be made only on the books of the Corporation by the registered
holder thereof, or by his or her attorney thereunto authorized, and on the
surrender of the certificate or certificates for such shares properly endorsed.
All certificates surrendered to the Corporation or its agent for transfer shall
be canceled.
SECTION 10.04. Transfer Agent and Registrar; Regulations. The Corporation
shall, if and whenever the Board of Directors of the Corporation or Executive
Committee shall so determine, maintain one or more transfer offices or agencies,
each in charge of a transfer agent designated by the Board of Directors of the
Corporation, where the shares of the capital stock of the Corporation shall be
directly transferable and also, if and whenever the Board of Directors of the
Corporation shall so determine, maintain one or more offices, each in charge of
a registrar designated by the Board of Directors of the Corporation, where such
shares of stock shall be registered. The Board of Directors of the Corporation
may make such rules and regulations as it may deem expedient, not inconsistent
with these Bylaws, concerning the issue, transfer and registration of
certificates for shares of the capital stock of the Corporation.
SECTION 10.05. Lost, Destroyed or Mutilated Certificates. In case of the
alleged loss or destruction or the mutilation of a certificate representing
capital stock of the Corporation, a new certificate may be issued in place
thereof, in the manner and upon such terms as the Board of Directors of the
Corporation may prescribe.
ARTICLE 11.
SEAL
The Board of Directors of the Corporation shall provide a corporate seal,
which shall be in the form of a circle and shall bear the name of the
Corporation and the state and year of incorporation.
ARTICLE 12.
FISCAL YEAR
The fiscal year of the Corporation shall commence on the first day of
January and shall end on the last day of December in each year, except as
otherwise provided from time to time by the Board of Directors of the
Corporation.
ARTICLE 13.
WAIVER OF NOTICE
Whenever any notice is required to be given by statute, these Bylaws or the
Charter, a waiver thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice.
ARTICLE 14.
AMENDMENTS
Subject to the terms and provisions of the Charter, these Bylaws may be
altered, amended or repealed or new Bylaws may be adopted by the stockholders of
the Corporation or by the Board of Directors of the Corporation, when such power
is conferred upon the Board of Directors of the Corporation by the Charter, at
any regular meeting of the stockholders of the Corporation or of the Board of
Directors of the Corporation or at any special meeting of the stockholders or of
the Board of Directors of the Corporation if notice of such alteration,
amendment, repeal or adoption of new Bylaws is contained in the notice of such
special meeting; provided that notwithstanding any other provisions of these
Bylaws, the Charter as in effect from time to time or any provision of law which
might otherwise permit a lesser vote or no vote, but in addition to any
affirmative vote of the holders of any particular class or series of the capital
stock required by law, these Bylaws or the Charter, the affirmative vote of the
holders of at least sixty percent (60%) of the then-outstanding "Common Shares"
and "Class A Preferred Shares" (as defined in the Charter) entitled to vote,
voting together as a single class, shall be required to alter, amend or repeal
any provision of these Bylaws.
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