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EXHIBIT 3.2
AMENDED & RESTATED
B Y E - L A W S
of
MARVELL TECHNOLOGY GROUP LTD.
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TABLE OF CONTENTS
Bye-Law
1 Interpretation
2 Board of Directors
3 Management of the Company
4 Power to appoint managing director or chief executive officer
5 Power to appoint manager
6 Power to authorize specific actions
7 Power to appoint attorney
8 Power to delegate to a committee
9 Power to appoint and dismiss employees
10 Power to borrow and charge property
11 Exercise of power to purchase shares of or discontinue the Company
12 Election of Directors
13 Defects in appointment of Directors
14 Alternate Directors
15 Removal of Directors
16 Vacancies of the Board
17 Notice of meetings of the Board
18 Quorum at meetings of the Board
19 Meetings of the Board
20 Unanimous written resolutions
21 Contracts and disclosure of Directors' interests
22 Remuneration of Directors
23 Officers of the Company
24 Appointment of Officers
25 Remuneration of Officers
26 Duties of Officers
27 Chairman of meetings
28 Register of Directors and Officers
29 Obligations of Board to keep minutes
30 Indemnification of Directors and Officers of the Company
31 Waiver of claim by Member
32 Notice of annual general meeting
33 Notice of special general meeting
34 Advance Notice
35 Accidental omission of notice of general meeting
36 Meeting called on requisition of members
37 Short notice
38 Postponement of meetings
39 Quorum for general meeting
40 Adjournment of meetings
41 Attendance at meetings
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42 Written resolutions
43 Attendance of Directors
44 Voting at meetings
45 Voting on show of hands
46 Decision of chairman
47 Demand for a poll
48 Seniority of joint holders voting
49 Proxies and Corporate Representations
50 Rights of shares
51 Power to issue shares
52 Variation of rights, alteration of share capital and purchase of shares
of the Company
53 Registered holder of shares
54 Death of a joint holder
55 Share certificates
56 Calls on shares
57 Forfeiture of Shares
58 Contents of Register of Members
59 Inspection of Register of Members
60 Determination of record dates
61 Instrument of transfer
62 Restriction on transfer
63 Transfers by joint holders
64 Representative of deceased Member
65 Registration on death or bankruptcy
66 Declaration of dividends by Board
67 Other distributions
68 Reserve fund
69 Payment of dividends and deduction of amounts due to the Company
70 Issue of bonus shares
71 Records of account
72 Financial year end
73 Financial statements
74 Appointment of Auditor
75 Remuneration of Auditor
76 Vacation of office of Auditor
77 Access to books of the Company
78 Report of the Auditor
79 Business Combinations
80 Service of notices and other documents
81 Service and delivery of notice
82 The seal
83 Manner in which seal is to be affixed
84 Winding-up/distribution by liquidator
85 Alteration of Bye-laws
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Schedules
Form A-Bye-law 58
Form B-Bye-law 65
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INTERPRETATION
1. Interpretation
(1) In these Bye-laws the following words and expressions shall, where
not inconsistent with the context, have the following meanings respectively:
(a) "Act" means the Companies Act 1981 as amended from
time to time;
(b) "Alternate Director" means an alternate Director
appointed in accordance with these Bye-laws;
(c) "Auditor" includes any individual or partnership;
(d) "Board" means the Board of Directors appointed or
elected pursuant to these Bye-laws and acting by
resolution in accordance with the Act and these
Bye-laws or the Directors present at a meeting of
Directors at which there is a quorum;
(e) "Business Combination" means any scheme of
arrangement, reconstruction, amalgamation takeover or
similar business combination involving the Company or
any subsidiaries and any other person;
(f) "Cause" means:
(i) conviction on indictment of an indictable
offence involving the management of the
Company; or
(ii) persistent breaches of the Act;
(g) "Clear Days" means, in relation to the period of a
notice, that period excluding the day on which the
notice is given or served, or deemed to be given or
served, and the day for which it is given or on which
it is to take effect;
(h) "Company" means the company for which these Bye-laws
are approved and confirmed;
(i) "Director" means a director of the Company and shall
include an Alternate Director;
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(j) "Member" means the person registered in the Register
of Members as the holder of shares in the Company
and, when two or more persons are so registered as
joint holders of shares, means the person whose name
stands first in the Register of Members as one of
such joint holders or all of such persons as the
context so requires;
(k) "notice" means written notice as further defined in
these Bye-laws unless otherwise specifically stated;
(l) "Officer" means any person appointed by the Board to
hold an office in the Company;
(m) "Register" means the Register of Members of the
Company and includes any branch register;
(n) "Registered Office" means the registered office for
the time being of the Company;
(o) "Register of Directors and Officers" means the
Register of Directors and Officers referred to in
these Bye-laws;
(p) "Register of Members" means the Register of Members
referred to in these Bye-laws;
(q) "Secretary" means the person appointed to perform any
or all the duties of secretary of the Company and
includes any deputy or assistant secretary;
(r) "Special Resolution" means a resolution passed by
both (i) a majority of not less than 66-2/3% of votes
cast by such Members as, being entitled so to do,
vote in person or by proxy or by duly authorized
corporate representative and (ii) a majority of
66-2/3% in number of the Members present in person or
by proxy or by duly authorized corporate
representative at a general meeting of which not less
than twenty-one (21) clear days' notice (save where a
longer period is required by these Bye-Laws),
specifying the intention to propose the resolution as
a Special Resolution, has been duly given provided
that when shares are held by members of another
company, firm or partnership, association or other
body corporate or unincorporate and such persons act
in concert, or when shares are held by or for a group
of Members who act in concert, such persons shall be
deemed to be one Member.
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(2) In these Bye-laws, where not inconsistent with the context:
(a) words denoting the plural number include the singular
number and vice versa;
(b) words denoting the masculine gender include the
feminine gender;
(c) words importing persons include companies,
associations or bodies of persons whether corporate
or not;
(d) the word:
(i) "may" shall be construed as permissive;
(ii) "shall" shall be construed as imperative;
and
(e) unless otherwise provided herein words or expressions
defined in the Act shall bear the same meaning in
these Bye-laws.
(3) Expressions referring to writing or written shall, unless the
contrary intention appears, include facsimile, printing, lithography,
photography and other modes of representing words in a visible form.
(4) Headings used in these Bye-laws are for convenience only and are
not to be used or relied upon in the construction hereof.
BOARD OF DIRECTORS
2. Board of Directors
The business of the Company shall be managed and conducted by the Board.
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3. Management of the Company
(1) In managing the business of the Company, the Board may exercise all
such powers of the Company as are not, by statute or by these Bye-laws, required
to be exercised by the Company in general meeting subject, nevertheless, to
these Bye-laws, the provisions of any statute and to such regulations as may be
prescribed by the Company in general meeting.
(2) No regulation or alteration to these Bye-laws made by the Company in
general meeting shall invalidate any prior act of the Board which would have
been valid if that regulation or alteration had not been made.
(3) The Board may provide that the Company pays all expenses incurred in
promoting and incorporating the Company.
4. Power to appoint managing director or chief executive officer
The Board may from time to time appoint one or more Directors to the
office of managing director or chief executive officer of the Company who shall,
subject to the control of the Board, supervise and administer all of the general
business and affairs of the Company.
5. Power to appoint manager
The Board may appoint a person to act as manager of the Company's day to
day business and may entrust to and confer upon such manager such powers and
duties as it deems appropriate for the transaction or conduct of such business.
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6. Power to authorize specific actions
The Board may from time to time and at any time authorize any company,
firm, person or body of persons to act on behalf of the Company for any specific
purpose and in connection therewith to execute any agreement, document or
instrument on behalf of the Company.
7. Power to appoint attorney
The Board may from time to time and at any time by power of attorney
appoint any company, firm, person or body of persons, whether nominated directly
or indirectly by the Board, to be an attorney of the Company for such purposes
and with such powers, authorities and discretions (not exceeding those vested in
or exercisable by the Board) and for such period and subject to such conditions
as it may think fit and any such power of attorney may contain such provisions
for the protection and convenience of persons dealing with any such attorney as
the Board may think fit and may also authorize any such attorney to sub-delegate
all or any of the powers, authorities and discretions so vested in the attorney.
Such attorney may, if so authorized under the seal of the Company, execute any
deed or instrument under such attorney's personal seal with the same effect as
the affixation of the seal of the Company.
8. Power to delegate to a committee
The Board may delegate any of its powers to a committee appointed by the
Board which may consist partly or entirely of non-Directors and every such
committee shall conform to such directions as the Board may impose on them. The
meeting and proceedings of any such committee shall be governed by the
provisions of these Bye-Laws regulating the meetings and proceedings of the
Board, so far as the same are applicable and are not superseded by directions
imposed by the Board.
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9. Power to appoint and dismiss employees
The Board may appoint, suspend or remove any manager, secretary, clerk,
agent or employee of the Company and may fix their remuneration and determine
their duties.
10. Power to borrow and charge property
The Board may exercise all the powers of the Company to borrow money and
to mortgage or charge its undertaking, property and uncalled capital, or any
part thereof, and may issue debentures, debenture stock and other securities
whether outright or as security for any debt, liability or obligation of the
Company or any third party.
11. Exercise of power to purchase shares of or discontinue the Company
(1) The Board may exercise all the powers of the Company to purchase all
or any part of its own shares pursuant to Section 42A of the Act.
(2) The Board may exercise all the powers of the Company to discontinue
the Company to a named country or jurisdiction outside Bermuda pursuant to
Section 132G of the Act.
12. Election of Directors
(1) The Board shall consist of not less than two Directors or such number
in excess thereof as the Board may from time to time determine.
(2) The Board shall consist of three classes of Directors which shall be
known as Class 1, Class 2 and Class 3. Class 1 shall retire at the first annual
general meeting after the general meeting at which the Bye-laws are adopted;
Class 2 shall retire at the second annual general meeting after the general
meeting at which the Bye-laws are adopted and Class 3 shall retire at the third
annual general meeting after the general meeting at which the Bye-laws are
adopted. This sequence shall be repeated thereafter. Each director in a Class
shall be eligible for re-election at the annual general meeting of the Company
at which such Class retires to hold office for three years or until successors
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are elected or appointed.
(3) Any additional Directors elected so as to increase the total number
of Directors then in office shall be elected to such Class as will ensure that
the number of Directors in each Class remains equal and if that is not possible
to the Class which is retiring at the annual general meeting at which such
Director is elected or, if any such Director is elected otherwise than at an
annual general meeting to the Class which was elected at the most recent prior
annual general meeting.
(4) If at the meeting at which a Director retires by rotation, the
Company does not fill the vacancy so created, the retiring Director shall, if
willing to act, be deemed to have been reappointed unless at the meeting it is
resolved not to fill the vacancy or unless a resolution for the reappointment of
the Director is put to the meeting and lost.
(5) No person other than a Director retiring by rotation shall be
appointed or reappointed a Director at any general meeting unless:
(a) he is recommended by the Board; or
(b) not less than 60 nor more than 90 clear days before the
date appointed for the meeting, notice executed by a
Member qualified to vote at the meeting has been given
to the Company of the intention of that Member to
propose that person for appointment or reappointment as
a Director; or
(c) the appointment or reappointment is approved by a
Special Resolution of the Members
(6) The appointment or re-appointment of any person proposed as a
Director shall be effected by a separate resolution.
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(7) The Board may appoint one or more persons willing to act to be a
Director, either to fill a vacancy or vacancies or, as an additional Director or
Directors. A Director so appointed shall hold office only until the next
following annual general meeting, and shall not be taken into account in
determining the Directors who are to retire by rotation at the meeting, and
shall then be eligible for re-election.
(8) The terms of this Bye-law are subject to the terms of Bye-law 50(2)
and upon the terms of Bye-law 50(2) expiring as described therein then those
directors appointed thereunder shall become Class 2 Directors.
13. Defects in appointment of Directors
All acts done bona fide by any meeting of the Board or by a committee of
the Board or by any person acting as a Director shall, notwithstanding that it
be afterwards discovered that there was some defect in the appointment of any
Director or person acting as aforesaid, or that they or any of them were
disqualified, be as valid as if every such person had been duly appointed and
was qualified to be a Director.
14. Alternate Directors
(1) Any general meeting of the Company may elect a person or persons to
act as a Director in the alternative to any one or more of the Directors of the
Company or may authorize the Board to appoint such Alternate Directors. Unless
the Members otherwise resolve, any Director may appoint a person or persons to
act as a Director in the alternative to himself or herself by notice in writing
deposited with the Secretary. Any person so appointed shall have all the rights
and powers of the Director or Directors for whom such person is appointed in the
alternative provided that such person shall not be counted more than once in
determining whether or not a quorum is present.
(2) An Alternate Director shall be entitled to receive notice of all
meetings of the Board and to attend and vote at any such meeting at which a
Director for whom such
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Alternate Director was appointed in the alternative is not personally present
and generally to perform at such meeting all the functions of such Director for
whom such Alternate Director was appointed.
(3) An Alternate Director shall cease to be such if the Director for whom
such Alternate Director was appointed ceases for any reason to be a Director but
may be re-appointed by the Board as alternate to the person appointed to fill
the vacancy in accordance with these Bye-laws.
15. Removal of Directors
(1) The Members may, at any special general meeting convened and held in
accordance with these Bye-laws only, remove a Director for Cause provided that:
(a) the notice of any such meeting convened for the purpose of
removing a Director shall contain a statement of the intention
so to do and be served on such Director not less than 14 days
before the meeting and at such meeting such Director shall be
entitled to be heard on the motion for such Director's
removal;
(b) the resolution is passed as a Special Resolution;
(c) no more than one third of the Directors for the time being in
office shall be removed at any general meeting.
(2) A vacancy on the Board created by the removal of a Director under the
provisions of subparagraph (1) of this Bye-law may be filled by the Members at
the meeting at which such Director is removed and, in the absence of such
election or appointment, the Board may fill the vacancy.
16. Vacancies on the Board
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(1) The Board shall have the power from time to time and at any time to
appoint any person as a Director to fill a vacancy on the Board occurring as the
result of the death, disability, disqualification or resignation of any Director
and to appoint an Alternate Director to any Director so appointed.
(2) The Board may act notwithstanding any vacancy in its number but, if
and so long as its number is reduced below the number fixed by these Bye-laws as
the quorum necessary for the transaction of business at meetings of the Board,
the continuing Directors or Director may act for the purpose of (i) summoning a
general meeting of the Company or (ii) preserving the assets of the Company.
(3) The office of Director shall be vacated if the Director:
(a) is removed from office pursuant to these Bye-laws or is
prohibited from being a Director by law;
(b) is or becomes bankrupt or makes any arrangement or
composition with his creditors generally;
(c) is or becomes of unsound mind or dies; or
(d) resigns his or her office by notice in writing to the
Company.
17. Notice of meetings of the Board
(1) A Director may, and the Secretary on the requisition of a Director
shall, at any time summon a meeting of the Board.
(2) Notice of a meeting of the Board shall be deemed to be duly given to
a Director if it is given to such Director verbally in person or by telephone or
otherwise communicated or sent to such Director by post, cable, telex,
telecopier, facsimile or other
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mode of representing words in a legible and non-transitory form at such
Director's last known address or any other address given by such Director to the
Company for this purpose.
18. Quorum at meetings of the Board
The quorum necessary for the transaction of business at a meeting of the
Board may be fixed by the Directors and, unless so fixed, shall be a majority of
the Directors.
19. Meetings of the Board
(1) The Board may meet for the transaction of business, adjourn and
otherwise regulate its meetings as it sees fit.
(2) Directors may participate in any meeting of the Board by means of such
telephone, electronic or other communication facilities as permit all persons
participating in the meeting to communicate with each other simultaneously and
instantaneously, and participation in such a meeting shall constitute presence
in person at such meeting.
(3) A resolution put to the vote at a meeting of the Board shall be
carried by the affirmative votes of a majority of the votes cast and in the case
of an equality of votes the resolution shall fail. Notwithstanding the
foregoing, a resolution to approve any of the following shall require the
affirmative vote of at least four directors:
(a) the issue of shares in the capital of the Company or any
obligations, charges or debts convertible into shares or
involving rights to vote under any circumstances;
(b) the winding up, dissolution or termination of the corporate
existence of the Company;
(c) borrowing of any amount by the Company which exceeds in the
aggregate $1,000,000 or the mortgage, pledge or grant of a
security interest in any property of the Company which exceeds
in the aggregate $1,000,000;
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(d) entering into or material modification by the Company of any
contract or commitment which requires payment in excess of
$1,000,000 in the aggregate; and
(e) purchasing, acquiring, selling or disposing of any tangible or
intangible asset for amounts in excess of $1,000,000.
20. Unanimous written resolutions
A resolution in writing signed by all the Directors which may be in
counterparts, shall be as valid as if it had been passed at a meeting of the
Board duly called and constituted, such resolution to be effective on the date
on which the last Director signs the resolution. For the purposes of this
Bye-law only, "Director" shall not include an Alternate Director except that an
Alternate Director may sign such a resolution on behalf of a principal Director.
21. Contracts and disclosure of Directors' interests
(1) Any Director, or any Director's firm, partner or any company with whom
any Director is associated, may act in a professional capacity for the Company
and such Director or such Director's firm, partner or such company shall be
entitled to remuneration for professional services as if such Director were not
a Director, provided that nothing herein contained shall authorize a Director or
Director's firm, partner or such company to act as Auditor of the Company.
(2) A Director who is directly or indirectly interested in a contract or
proposed contract or arrangement with the Company shall declare the nature of
such interest as required by the Act.
(3) Following a declaration being made pursuant to this Bye-law, and
unless disqualified by the chairman of the relevant Board meeting, a Director
may vote in respect of any contract or proposed contract or arrangement in which
such Director is interested and may be counted in the quorum at such meeting.
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22. Remuneration of Directors
The remuneration, (if any) of the Directors shall be determined by the
Company in general meeting and shall be deemed to accrue from day to day. The
Directors may also be paid all travel, hotel and other expenses properly
incurred by them in attending and returning from meetings of the Board, any
committee appointed by the Board, general meetings of the Company, or in
connection with the business of the Company or their duties as Directors
generally.
OFFICERS
23. Officers of the Company
The Officers of the Company shall consist of a President and a Vice
President or a Chairman and a deputy Chairman, a Secretary and such additional
Officers as the Board may from time to time determine all of whom shall be
deemed to be Officers for the purposes of these Bye-laws.
24. Appointment of Officers
(1) The Board shall, as soon as possible after the statutory meeting of
Members and after each annual general meeting appoint a President and Vice
President or a Chairman and Deputy Chairman who shall be Directors.
(2) The Secretary and additional Officers, if any, shall be appointed by
the Board from time to time.
25. Remuneration of Officers
The Officers shall receive such remuneration as the Board may from time to
time determine.
26. Duties of Officers
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The Officers shall have such powers and perform such duties in the
management, business and affairs of the Company as may be delegated to them by
the Board from time to time.
27. Chairman of meetings
Unless otherwise agreed by a majority of those attending and entitled to
attend and vote thereat, the Chairman, if there be one, and if not the President
shall act as chairman at all meetings of the Members and of the Board at which
such person is present. In their absence the Deputy Chairman or Vice President,
if present, shall act as chairman and in the absence of all of them a chairman
shall be appointed or elected by those present at the meeting and entitled to
vote.
28. Register of Directors and Officers
(1) The Board shall cause to be kept in one or more books at its
registered office a Register of Directors and Officers and shall enter therein
the following particulars with respect to each Director and the President, each
Vice-President, the Chairman, and each Deputy Chairman, provided that each such
person is a Director and the Secretary, that is to say:
(a) first name and surname; and
(b) address.
(2) The Board shall, within the period of fourteen days from the
occurrence of:
(a) any change among its Directors, the President, any
Vice-President, the Chairman, and any Deputy Chairman,
provided that each such person is a Director, and in the
Secretary; or
(b) any change in the particulars contained in the Register of
Directors and Officers,
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cause to be entered on the Register of Directors and Officers the particulars of
such change and the date on which such change occurred.
(3) The Register of Directors and Officers shall be open to inspection at
the office of the Company on every business day, subject to such reasonable
restrictions as the Board may impose, so that not less than two hours in each
business day be allowed for inspection.
MINUTES
29. Obligations of Board to keep minutes
The Board shall cause minutes to be duly entered in books provided for the
purpose:
(a) of all elections and appointments of Officers;
(b) of the names of the Directors present at each meeting of the Board
and of any committee appointed by the Board; and
(c) of all resolutions and proceedings of general meetings of the
Members, meetings of the Board, meetings of managers and meetings of
committees appointed by the Board.
INDEMNITY
30. Indemnification of Directors and Officers of the Company
The Directors, Secretary and other Officers (such term to include any
person appointed to any committee by the Board) for the time being of the
Company and the liquidator or trustees (if any) for the time being acting in
relation to any of the affairs of the Company and every one of them, and their
heirs, executors and administrators, shall be
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indemnified and secured harmless out of the assets of the Company from and
against all actions, costs, charges, losses, damages and expenses which they or
any of them, their heirs, executors or administrators, shall or may incur or
sustain by or by reason of any act done, concurred in or omitted in or about the
execution of their duty, or supposed duty, or in their respective offices or
trusts, and none of them shall be answerable for the acts, receipts, neglects or
defaults of the others of them or for joining in any receipts for the sake of
conformity, or for any bankers or other persons with whom any moneys or effects
belonging to the Company shall or may be lodged or deposited for safe custody,
or for insufficiency or deficiency of any security upon which any moneys of or
belonging to the Company shall be placed out on or invested, or for any other
loss, misfortune or damage which may happen in the execution of their respective
offices or trusts, or in relation thereto, provided that this indemnity shall
not extend to any matter in respect of any fraud or dishonesty which may attach
to any of said persons.
31. Waiver of claim by Member
Each Member agrees to waive any claim or right of action such Member might
have, whether individually or by or in the right of the Company, against any
Director or Officer on account of any action taken by such Director or Officer,
or the failure of such Director or Officer to take any action in the performance
of his duties with or for the Company, provided that such waiver shall not
extend to any matter in respect of any fraud or dishonesty which may attach to
such Director or Officer or to any matter arising under United States federal
securities laws.
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MEETINGS
32. Notice of annual general meeting
The annual general meeting of the Company shall be held in each year other
than the year of incorporation at such time and place as the President or the
Chairman or any two Directors or any Director and the Secretary or the Board
shall appoint. At least five days notice of such meeting shall be given to each
Member stating the date, place and time at which the meeting is to be held, that
the election of Directors will take place thereat, and as far as practicable,
the other business to be conducted at the meeting.
33. Notice of special general meeting
The President or the Chairman or any two Directors or any Director and the
Secretary or the Board may convene a special general meeting of the Company
whenever in their judgment such a meeting is necessary, upon not less than five
days' notice which shall state the date, time, place and the general nature of
the business to be considered at the meeting.
34. Advance notice
Not less than sixty nor more than ninety days advance notice in writing
shall at all times be required for the nomination, other than by or at the
direction of the Board, of candidates for election as directors, as well as any
other proposals, statements or resolutions to be put forward by Members for
consideration at an annual general meeting or special general meeting. In the
case of an annual general meeting such notice must be received by the Company
not less than sixty nor more than ninety days prior to the anniversary of the
prior year's annual general meeting. The notice must contain the name and
business background of the person to be nominated as director and all material
information on the proposal, statement or resolution to be put to the meeting
and details of the Member submitting the proposal, statement or resolution as
well as other information
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which may from time to time be specified by the Board. The notice shall be
exclusive of the day on which it is served or deemed to be served and of the day
for which it is given.
35. Accidental omission of notice of general meeting
The accidental omission to give notice of a general meeting to, or the
non-receipt of notice of a general meeting by, any person entitled to receive
notice shall not invalidate the proceedings at that meeting.
36. Meeting called on request of Members
Notwithstanding anything herein, the Board shall, on the request of
Members holding at the date of the deposit of the request not less than
one-tenth of such of the paid-up share capital of the Company as at the date of
the deposit carries the right to vote at general meetings of the Company,
forthwith proceed to convene a special general meeting of the Company and the
provisions of section 74 of the Act shall apply.
37. Short notice
A general meeting of the Company shall, notwithstanding that it is called
by shorter notice than that specified in these Bye-laws, be deemed to have been
properly called if it is so agreed by (i) all the Members entitled to attend and
vote thereat in the case of an annual general meeting; and (ii) by a majority in
number of the Members having the right to attend and vote at the meeting, being
a majority together holding not less than 95% in nominal value of the shares
giving a right to attend and vote thereat in the case of a special general
meeting.
38. Postponement of meetings
The Secretary may postpone any general meeting called in accordance with
the provisions of these Bye-laws (other than a meeting requisitioned under these
Bye-laws) provided that notice of postponement is given to each Member before
the time for such meeting. Fresh notice of the date, time and place for the
postponed meeting shall be given to each Member in accordance with the
provisions of these Bye-laws.
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39. Quorum for general meeting
At any general meeting of the Company two persons present in person and
representing in person or by proxy in excess of 50% of the total issued voting
shares in the Company throughout the meeting shall form a quorum for the
transaction of business, provided that if the Company shall at any time have
only one Member, one Member present in person or by proxy shall form a quorum
for the transaction of business at any general meeting of the Company held
during such time. If within half an hour from the time appointed for the meeting
a quorum is not present, the meeting shall stand adjourned to the same day one
week later, at the same time and place or to such other day, time or place as
the Board may determine.
40. Adjournment of meetings
(1) The chairman of a general meeting may, with the consent of the Members
at any general meeting at which a quorum is present (and shall if so directed),
adjourn the meeting. Unless the meeting is adjourned to a specific date and
time, fresh notice of the date, time and place for the resumption of the
adjourned meeting shall be given to each Member in accordance with the
provisions of these Bye-laws. In addition the chairman may adjourn the meeting
to another time and place without such consent or direction if it appears to him
that:
(a) it is likely to be impracticable to hold or continue that meeting
because of the number of Members wishing to attend who are not
present; or
(b) the unruly conduct of persons attending the meeting prevents, or is
likely to prevent, the orderly continuation of the business of the
meeting; or
(c) an adjournment is otherwise necessary so that the business of the
meeting may be properly conducted.
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(2) Unless the meeting is adjourned to a specific date and time, fresh
notice of the date, time and place for the resumption of the adjourned meeting
shall be given to each Member in accordance with the provisions of these
Bye-laws.
41. Attendance at meetings
(1) A meeting of the Members or any class thereof may be held by means of
such telephone, electronic or other communication facilities as permit all
persons participating in the meeting to communicate with each other
simultaneously and instantaneously, and participation in such a meeting shall
constitute presence in person at such meeting. In addition, the Board may
resolve to enable persons entitled to attend a general meeting of the Company or
of any class of Members to do so by simultaneous attendance and participation at
a satellite meeting place anywhere in the world. The Members present at any such
satellite meeting place in person or by proxy and entitled to vote shall be
counted in the quorum for, and shall be entitled to vote at, the general meeting
in question if the chairman of the general meeting is satisfied that adequate
facilities are available throughout the general meeting to ensure that Members
attending at all the meeting places are able to:
(a) communicate simultaneously and instantaneously with the
persons present at the other meeting place or places, whether
by the use of microphones, loud-speakers, audio-visual or
other communications equipment or facilities; and
(b) have access to all documents which are required by the Act and
these Bye-Laws to be made available at the meeting.
The chairman of the general meeting shall be present at, and the meeting
shall be deemed to take place at, the principal meeting place.
If it appears to the chairman of the general meeting that the facilities
at the principal meeting place or any satellite meeting place are or become
inadequate for the purposes
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referred to above, then the chairman may, without the consent of the meeting,
interrupt or adjourn the general meeting. All business conducted at that general
meeting up to the time of such adjournment shall be valid.
(2) The Board and the chairman of any general meeting may make any
arrangement and impose any requirement or restriction it or he considers
appropriate to ensure the security of a general meeting including, without
limitation, requirements for evidence of identity to be produced by those
attending the meeting, the searching of their personal property and the
restriction of items that may be taken into the meeting place. The Board and the
chairman of any general meeting shall be entitled to refuse entry to a person
who refuses to comply with any such arrangements, requirements or restrictions.
42. Written resolutions
(1) Subject to subparagraph (6) of this Bye-Law, anything which may be
done by resolution of the Company in general meeting or by resolution of a
meeting of any class of the Members of the Company, may, without a meeting and
without any previous notice being required, be done by resolution in writing
signed by, or, in the case of a Member that is a corporation whether or not a
company within the meaning of the Act, on behalf of, all the Members who at the
date of the resolution would be entitled to attend the meeting and vote on the
resolution.
(2) A resolution in writing may be signed by, or, in the case of a Member
that is a corporation whether or not a company within the meaning of the Act, on
behalf of, all the Members, or any class thereof, in as many counterparts as may
be necessary.
(3) For the purposes of this Bye-law, the date of the resolution is the
date when the resolution is signed by, or, in the case of a Member that is a
corporation whether or not a company within the meaning of the Act, on behalf
of, the last Member to sign and any reference in any Bye-law to the date of
passing of a resolution is, in relation to a resolution made in accordance with
this Bye-law, a reference to such date.
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(4) A resolution in writing made in accordance with this Bye-law is as
valid as if it had been passed by the Company in general meeting or by a meeting
of the relevant class of Members, as the case may be, and any reference in any
Bye-law to a meeting at which a resolution is passed or to Members voting in
favor of a resolution shall be construed accordingly.
(5) A resolution in writing made in accordance with this Bye-law shall
constitute minutes for the purposes of sections 81 and 82 of the Act.
(6) This Bye-law shall not apply to:
(a) a resolution passed pursuant to section 89(5) of the Act; or
(b) a resolution passed for the purpose of removing a Director
before the expiration of his term of office under Bye-law 15.
43. Attendance of Directors
The Directors of the Company shall be entitled to receive notice of and to
attend and be heard at any general meeting.
44. Voting at meetings
(1) Subject to the provisions of the Act and these Bye-laws, any question
proposed for the consideration of the Members at any general meeting shall be
decided by the affirmative votes of a majority of the votes cast in accordance
with the provisions of these Bye-laws and in the case of an equality of votes
the resolution shall fail.
(2) No Member shall be entitled to vote at any general meeting unless such
Member has paid all the calls on all shares held by such Member.
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45. Voting on show of hands
At any general meeting a resolution put to the vote of the meeting shall,
in the first instance, be voted upon by a show of hands and, subject to any
rights or restrictions for the time being lawfully attached to any class of
shares and subject to the provisions of these Bye-laws, every Member present in
person and every person holding a valid proxy at such meeting shall be entitled
to one vote and shall cast such vote by raising his or her hand.
46. Decision of chairman
(1) At any general meeting if an amendment is proposed to any resolution
under consideration and the chairman of the meeting rules on whether the
proposed amendment is out of order, the proceedings on the substantive
resolution shall not be invalidated by any error in such ruling.
(2) At any general meeting a declaration by the chairman of the meeting
that a question proposed for consideration has, on a show of hands, been
carried, or carried unanimously, or by a particular majority, or lost, and an
entry to that effect in a book containing the minutes of the proceedings of the
Company shall, subject to the provisions of these Bye-laws, be conclusive
evidence of that fact.
47. Demand for a poll
(1) Notwithstanding the provisions of the immediately preceding two
Bye-laws, at any general meeting of the Company, in respect of any question
proposed for the consideration of the Members (whether before or on the
declaration of the result of a show of hands as provided for in these Bye-laws),
a poll may be demanded by any of the following persons:
(a) the chairman of such meeting; or
(b) at least three Members present in person or represented by
proxy; or
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(c) any Member or Members present in person or represented by
proxy and holding between them not less than one-tenth of the
total voting rights of all the Members having the right to
vote at such meeting; or
(d) any Member or Members present in person or represented by
proxy holding shares in the Company conferring the right to
vote at such meeting, being shares on which an aggregate sum
has been paid up equal to not less than one-tenth of the total
sum paid up on all such shares conferring such right.
(2) Where, in accordance with the provisions of subparagraph (1) of this
Bye-law, a poll is demanded, subject to any rights or restrictions for the time
being lawfully attached to any class of shares, every person present at such
meeting shall have one vote for each share of which such person is the holder or
for which such person holds a proxy and such vote shall be counted in the manner
set out in sub-paragraph (4) of this Bye-Law or in the case of a general meeting
at which one or more Members are present by telephone in such manner as the
chairman of the meeting may direct and the result of such poll shall be deemed
to be the resolution of the meeting at which the poll was demanded and shall
replace any previous resolution upon the same matter which has been the subject
of a show of hands.
(3) A poll demanded in accordance with the provisions of subparagraph (1)
of this Bye-law, for the purpose of electing a chairman or on a question of
adjournment, shall be taken forthwith and a poll demanded on any other question
shall be taken in such manner and at such time and place as the chairman may
direct and any business other than that upon which a poll has been demanded may
be proceeded with pending the taking of the poll.
(4) Where a vote is taken by poll, each person present and entitled to
vote shall be furnished with a ballot paper on which such person shall record
his or her vote in such manner as shall be determined at the meeting having
regard to the nature of the
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question on which the vote is taken, and each ballot paper shall be signed or
initialed or otherwise marked so as to identify the voter and the registered
holder in the case of a proxy. At the conclusion of the poll, the ballot papers
shall be examined and counted by a committee of not less than two Members or
proxy holders appointed by the chairman for the purpose and the result of the
poll shall be declared by the chairman.
48. Seniority of joint holders voting
In the case of joint holders the vote of the senior who tenders a vote,
whether in person or by proxy, shall be accepted to the exclusion of the votes
of the other joint holders, and for this purpose seniority shall be determined
by the order in which the names stand in the Register of Members.
49. Proxies and Corporate Representatives
(1) The instrument appointing a proxy shall be in writing under the hand
of the appointer or the appointer's attorney authorized in writing
or, if the appointer is a corporation, either under its seal or
under the hand of an officer, attorney or other person authorized to
sign the same.
(2) Any Member may appoint a standing proxy or (if a corporation) a
standing corporate representative by delivery to the Registered
Office (or such other place as the Board may from time to time
specify for such purposes) of evidence of such appointment. The
appointment of such a standing proxy or representative shall be
valid for all general meetings and adjournments thereof or,
resolutions in writing, as the case may be, until notice of
revocation is received at the Registered Office. Where an
appointment of a standing proxy or corporate representative has been
made, its operation shall be deemed to have been suspended at any
general meeting or adjournment thereof at which the Member is
present or in respect of which the Member has specially appointed a
proxy or corporate representative.
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The Board may from time to time require such evidence as it shall
deem necessary as to the due execution and continuing validity of
any such appointment of the standing proxy or corporate
representative and the operation of any such appointment shall be
deemed to be suspended until such time as the Board determines that
it has received the requested evidence or other evidence
satisfactory to it.
(3) The instrument appointing a proxy or corporate representative,
together with such other evidence as to its due execution as the
Board may from time to time require, shall be delivered at the
Registered Office (or at such place as may be specified in the
notice convening the meeting or in any notice of any adjournment or,
in either case or the case of a written Resolution, in any document
sent therewith) prior to the holding of the relevant meeting or
adjourned meeting at which the person named in the instrument
proposes to vote or, in the case of a poll taken subsequently to the
date of a meeting or adjourned meeting, before the time appointed
for the taking of the poll, or, in the case of a written Resolution,
prior to the effective date of the written Resolution, and in
default the instrument of proxy shall not be treated as valid.
Delivery of the proxy or instrument appointing a corporate
representative may be effected by facsimile communication to any
facsimile number specified in the notice convening the general
meeting.
(4) A proxy may be appointed by an instrument in any common form or in
such other form as the Board may approve, and the Board may, if it
thinks fit, send out with the notice of any meeting or any written
Resolution forms of instruments of proxy for use at that meeting.
The instrument of proxy shall be deemed to confer authority to
demand or join in demanding a poll and to vote on any amendment of a
written Resolution or amendment of a Resolution put to the meeting
for which it is given as the proxy thinks fit. The
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instrument of proxy shall, unless the contrary is stated therein, be
valid as well for any adjournment of the meeting as for the meeting
to which it relates.
(5) A vote given by proxy shall be valid notwithstanding the previous
death or insanity of the principal, or revocation of the instrument
of proxy or of the authority under which it was executed; provided,
however, that no intimation in writing of such death, insanity or
revocation shall have been received by the Company at the Registered
Office (or such other place as may be specified for the delivery of
instruments of proxy in the notice convening the meeting or other
documents sent therewith) one hour at least before the commencement
of the meeting or adjourned meeting, or the taking of the poll, or
the day before the effective date of any written Resolution at which
the instrument of proxy is used.
(6) Subject to the Act, the Board may at its discretion waive any of the
provisions of these Bye-Laws related to proxies or authorizations
and, in particular, may accept such verbal or other assurances as it
thinks fit as to the right of any person to attend and vote on
behalf of any Member at general meetings or to sign written
resolutions.
SHARE CAPITAL AND SHARES
50. Subject to any resolution of the Members to the contrary, the share capital
of the Company is divided into two classes of shares to be designated
respectively Common Stock (the "Common") and Preferred Stock (the "Preferred").
The Preferred may be issued from time to time in one or more series. The Board
of Directors is authorized to fix the number of shares of any series of the
Preferred and to determine or alter the rights, preferences, privileges, and
restrictions granted to or imposed upon any wholly unissued series of the
Preferred and, within the limits and restrictions stated in any resolution or
resolutions of the Board of Directors originally fixing the number of shares
constituting any
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series of the Preferred, to increase or decrease (but not below the number of
shares of any such series then outstanding) the number of shares of any such
series subsequent to the issue of shares of that series. The first series of the
Preferred shall be designated Series A Preferred Stock ("Series A Preferred")
and shall consist of up to 525,000 shares. The second series of the Preferred
shall be designated Series B Preferred Stock ("Series B Preferred") and shall
consist of up to 1,119,091 shares. The third series of the Preferred shall be
designated Series C Preferred Stock (the "Series C Preferred") and shall consist
of up to 2,184,280 shares. The fourth series of the Preferred shall be
designated Series D Preferred Stock (the "Series D Preferred") and shall consist
of up to 3,750,000 shares. The fifth series of the Preferred shall be designated
Series E Preferred Stock (the "Series E Preferred") and shall consist of up to
421,629 shares.
(1) The holders of the shares of Common Stock shall, subject to the
provisions of these Bye-laws:
(a) be entitled to one vote per share;
(b) be entitled to such dividends as the Board may from time to time
declare, but only if dividends at the annual rate set forth in (b) below
shall have been paid or declared and set apart upon all shares of
Preferred for such fiscal year, and no dividend shall be declared or paid
with respect to the Common Stock unless at the same time an equivalent
dividend (which shall be in addition to the dividend on the Preferred
referred to immediately previously) is declared or paid with respect to
the Preferred;
(c) in the event of a winding-up or dissolution of the Company,
whether voluntary or involuntary or for the purpose of a reorganization or
otherwise or upon any distribution of capital, be entitled to the surplus
assets of the Company, subject to the rights of the Preferred shares; and
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(d) generally be entitled to enjoy all of the rights attaching to
shares.
(2) The holders of shares of Series A Preferred, Series B Preferred,
Series C Preferred, Series D Preferred and Series E Preferred shall be subject
to the provisions of the following Bye-laws so long as such shares are
outstanding. The provisions of this Bye-Law 50(2) shall expire and be of no
further force or effect upon the automatic conversion of Series A Preferred,
Series B Preferred, Series C Preferred, Series D Preferred and Series E
Preferred Shares:
(a) Voting Rights; Directors.
1. Except as otherwise required by law, the holder of each
share of Preferred shall be entitled to the number of votes equal to the
number of shares of Common Stock into which such share of Preferred
could be converted at the record date for determination of the Members
entitled to vote on such matters, or, if no such record date is
established, at the date such vote is taken or any written consent of
Members is solicited, such votes to be counted together with all other
shares of stock of the Company having general voting power and not
separately as a class. Fractional votes by the holders of Preferred
shall not, however, be permitted and any fractional voting rights shall
(after aggregating all shares into which shares of the Preferred held by
each holder could be converted) be rounded to the nearest whole number.
Holders of Common Stock and the Preferred shall be entitled to notice of
any Members' meeting in accordance with the Bye-laws of the Company.
2. The holders of a majority of the outstanding shares of
Series B Preferred, voting as a class, shall be entitled to elect one
(1) member of the Board of Directors (the "Series B Director").
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3. The holders of a majority of the outstanding shares of
Series C Preferred, voting as a class, shall be entitled to one (1)
member of the Board of Directors (the "Series C Director").
4. In the case of a vacancy in the office of the Series B
Director, a majority of the holders of the Series B Preferred shall
elect a successor to serve for the unexpired term of the Series B
Director whose office is vacant.
5. The Series B Director may only be removed by the vote
or written consent of the majority of the holders of the Series B
Preferred.
6. In the case of a vacancy in the office of the Series C
Director, a majority of the holders of the Series C Preferred shall
elect a successor to serve for the unexpired term of the Series C
Director whose office is vacant.
7. The Series C Director may only be removed by the vote
or written consent of the majority of the holders of the Series C
Preferred.
(b) Dividends. The holders of outstanding Series A Preferred, Series
B Preferred, Series C Preferred, Series D Preferred and Series E Preferred
shall be entitled to receive in any fiscal year, when, if and as declared
by the Board of Directors, out of any assets at the time legally available
therefor, dividends in cash at an annual rate of $0.047, $0.077 per share,
$0.245 per share, $0.303 per share and $0.70 per share (as appropriately
adjusted for any combinations, consolidations, subdivisions, or stock
dividends with respect to such shares of Preferred), respectively. Such
dividends shall be payable, when, as and if declared by the Board of
Directors. The right to such dividends shall not be cumulative, and no
right shall accrue to holders of Series A Preferred, Series B Preferred,
Series C Preferred, Series D Preferred or Series E Preferred by reason of
the fact that dividends on such shares were not declared in any prior
year, nor shall any
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undeclared or unpaid dividends bear or accrue interest. Any declared but
unpaid dividends on Series A Preferred, Series B Preferred, Series C
Preferred, Series D Preferred or Series E Preferred shall be paid upon the
conversion of such shares into Common Stock either (at the option of the
Company) by payment of cash or by the issuance of additional shares of
Common Stock based upon the fair market value of the Common Stock at the
time of conversion, as determined by the Board of Directors.
(c) Liquidation Preference. In the event of any liquidation,
dissolution, or winding up of the Company, either voluntary or
involuntary, distributions to the Members of the Company shall be made in
the following manner:
1. The holders of the Series A Preferred, Series B Preferred,
Series C Preferred, Series D Preferred and Series E Preferred shall be
entitled, on a pari passu basis, to receive, prior and in preference to
any distribution of any of the assets or surplus funds of the Company to
the holders of the Common Stock by reason of their ownership of such
stock, the amount of $0.667, $1.10, $3.50, $4.33 and $10.00 per share,
respectively, for each share of Series A Preferred, Series B Preferred,
Series C Preferred, Series D Preferred or Series E Preferred then held by
them, (as appropriately adjusted for any combinations, consolidations,
subdivisions, or stock dividends with respect to such shares of Preferred)
and, in addition, an amount equal to all declared but unpaid dividends on
the Series A Preferred (the "Series A Preferred Per Share Liquidation
Preference"), all declared but unpaid dividends on the Series B Preferred
(the "Series B Preferred Per Share Liquidation Preference"), all declared
but unpaid dividends on the Series C Preferred (the "Series C Preferred
Per Share Liquidation Preference"), all declared but unpaid dividends on
the Series D Preferred (the "Series D Preferred Per Share Liquidation
Preference") and all declared but unpaid dividends on the Series E
Preferred (the "Series E Preferred Per Share Liquidation Preference"). If
the assets and funds thus distributed among the holders of Series A
Preferred, Series B
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Preferred, Series C Preferred, Series D Preferred and Series E Preferred
shall be insufficient to permit the payment to such holders of the full
aforesaid respective preferential amounts for such series of Preferred,
then the entire assets and funds of the Company legally available for
distribution shall be distributed ratably among the holders of Series A
Preferred, Series B Preferred, Series C Preferred, Series D Preferred and
Series E Preferred on a pari passu basis, in proportion to the full
respective preferential amount each such holder is otherwise entitled to
receive with respect to such series of Preferred.
2. If the assets and funds of the Company available for
distribution to Members exceed the aggregate amount of the Series A
Preferred Per Share Liquidation Preference, the Series B Preferred Per
Share Liquidation Preference, the Series C Preferred Per Share Liquidation
Preference, the Series D Preferred Per Share Liquidation Preference and
the Series E Preferred Per Share Liquidation Preference payable with
respect to all shares of Series A Preferred, Series B Preferred, Series C
Preferred, Series D Preferred and Series E Preferred, respectively, then,
after payment required by paragraph (1) above shall have been made or
irrevocably set aside, the remaining assets of the Company available for
distribution to Members shall be distributed among the holders of Series A
Preferred, Series B Preferred, Series C Preferred, Series D Preferred,
Series E Preferred and Common Stock pro rata based on the number of shares
of Common Stock then outstanding and the number of shares of Common Stock
into which the outstanding shares of Preferred are then convertible;
provided, however, that such pro rata participation by the Series A
Preferred shall cease upon the receipt by the holders of the Series A
Preferred (pursuant to this Section (c)(2)) of an amount equal to $1.667
per share of the Series A Preferred (as appropriately adjusted for any
combinations, consolidations, subdivisions, or stock dividends with
respect to such shares of Preferred), and further provided, that such pro
rata participation by the Series B Preferred shall cease upon the receipt
by the holders of the Series B Preferred (pursuant to this subsection
(c)(2)) of an amount equal to $2.750 per
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share of the Series B Preferred (as appropriately adjusted for any
combinations, consolidations, subdivisions, or stock dividends with
respect to such shares of Preferred), and further provided, that such pro
rata participation by the Series C Preferred shall cease upon the receipt
by the holders of the Series C Preferred (pursuant to this subsection
(c)(2)) of an amount equal to $8.75 per share of the Series C Preferred
(as appropriately adjusted for any combinations, consolidations,
subdivisions, or stock dividends with respect to such shares of
Preferred), and further provided, that such pro rata participation by the
Series D Preferred shall cease upon receipt by the holders of the Series D
Preferred (pursuant to this subsection (c)(2)) of an amount equal to
$10.833 per share of the Series D Preferred (as appropriately adjusted for
any combinations, consolidations, subdivisions, or stock dividends with
respect to such shares of Preferred), and further provided, that such pro
rata participation by the Series E Preferred shall cease upon receipt by
the holders of the Series E Preferred (pursuant to this subsection (c)(2))
of an amount equal to $25.00 per share of the Series E Preferred (as
appropriately adjusted for any combinations, consolidations, subdivisions,
or stock dividends with respect to such shares of Preferred), and
thereafter the holders of Common Stock shall be entitled to receive all
remaining assets of the Company available for distribution to Members pro
rata based on the number of shares of Common Stock then outstanding.
3. For purposes of this Section (c), an amalgamation, merger
or consolidation of the Company with or into any other company or
companies, or the amalgamation, merger or consolidation of any other
company or companies into the Company, which results in the Members of the
Company prior to the transaction owing less than 50% of the voting power
of the surviving entity or a sale of all or substantially all the assets
of the Company unless the stockholders prior to the sale own at least 50%
of the surviving entity receive distributions in cash or securities of
another company or companies as a result of such amalgamation,
consolidation or
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merger, or a sale of all or substantially all of the assets of the Company
shall be treated as a liquidation, dissolution or winding up of the
Company.
4. If any of the assets of the Company are to be distributed
other than in cash under this Section (c) or for any purpose, then the
Board of Directors of the Company shall in good faith determine the value
of such assets to be distributed to the holders of Series A Preferred,
Series B Preferred, Series C Preferred, Series D Preferred, Series E
Preferred and Common Stock.
(d) Conversion. Notwithstanding the terms of this Bye-law, no
account shall be taken of any shares of Common Stock issued or issuable as
a result of the issue of stock dividends in June 1998, which issue would
otherwise lead to an adjustment to the Conversion Price calculated
pursuant to this Bye-law 50(2)(d). The holders of the Preferred have
conversion rights as follows (the "Conversion Rights"):
1. Right to Convert. Each share of Series A Preferred shall be
convertible, at the option of the holder thereof, at any time after the
date of issuance of such share at the office of the Company or any
transfer agent for the Series A Preferred, into such number of fully paid
and nonassessable shares of Common Stock as is determined by dividing the
Series A Conversion Value per share of the Series A Preferred by the
Conversion Price for the Series A Preferred (determined as hereinafter
provided) in effect at the time of the conversion. Each share of Series B
Preferred shall be convertible, at the option of the holder thereof, at
any time after the date of issuance of such share at the office of the
Company or any transfer agent for the Series B Preferred, into such number
of fully paid and nonassessable shares of Common Stock as is determined by
dividing the Series B Conversion Value per share of the Series B Preferred
by the Conversion Price for the Series B Preferred (determined as
hereinafter provided) in effect at the time of the conversion. Each share
of Series C Preferred shall be convertible, at the option of the holder
thereof, at any time after the date of issuance of such share at the
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office of the Company or any transfer agent for the Series C Preferred,
into such number of fully paid and nonassessable shares of Common Stock as
is determined by dividing the Series C Conversion Value per share of the
Series C Preferred by the Conversion Price for the Series C Preferred
(determined as hereinafter provided) in effect at the time of the
conversion. Each share of Series D Preferred shall be convertible, at the
option of the holder thereof, at any time after the date of issuance of
such share at the office of the Company or any transfer agent for the
Series D Preferred, into such number of fully paid and nonassessable
shares of Common Stock as is determined by dividing the Series D
Conversion Value per share of the Series D Preferred by the Conversion
Price for the Series D Preferred (determined as hereinafter provided) in
effect at the time of the conversion. Each share of Series E Preferred
shall be convertible, at the option of the holder thereof, at any time
after the date of issuance of such share at the office of the Company or
any transfer agent for the Series E Preferred, into such number of fully
paid and nonassessable shares of Common Stock as is determined by dividing
the Series E Conversion Value per share of the Series E Preferred by the
Conversion Price for the Series E Preferred (determined as hereinafter
provided) in effect at the time of the conversion. The initial Conversion
Price per share of Series A Preferred shall be $0.667. The Series A
Conversion Value per share of Series A Preferred shall be $0.667. The
initial Conversion Price per share of Series B Preferred shall be $1.10.
The Series B Conversion Value per share of Series B Preferred shall be
$1.10. The initial Conversion Price per share of Series C Preferred shall
be $3.50. The Series C Conversion Value per share of Series C Preferred
shall be $3.50. The initial Conversion Price per share of Series D
Preferred shall be $4.333. The Series D Conversion Value per share of
Series D Preferred shall be $4.333. The Series E Conversion Value per
share of Series E Preferred shall be $10.00. The initial Conversion Price
per share of Series E Preferred shall be $10.00. The initial Conversion
Price of each of the Series A Preferred, Series B Preferred, Series C
Preferred, Series D Preferred and Series E Preferred shall be subject to
adjustment as hereinafter provided.
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2. Automatic Conversion. Each share of Series A Preferred,
Series B Preferred, Series C Preferred, Series D Preferred and Series E
Preferred shall automatically be converted into shares of Common Stock at
the then effective Conversion Price (i) upon the closing of a firm
commitment underwritten public offering pursuant to an effective
registration statement under the Securities Act of 1933, as amended,
covering the offer and sale of Common Stock for the account of the Company
to the public at a price per share (prior to deduction of underwriter
commissions and offering expenses) of not less than $13.00 per share
(appropriately adjusted for any recapitalizations, combinations, stock
dividends, subdivisions or split-ups) and an aggregate offering price to
the public of not less than $10,000,000 (prior to deduction of underwriter
commissions and offering expenses), (ii) in respect of the Series A
Preferred, upon the Company's receipt of the written consent of the
holders of greater than one-half (1/2) of the then outstanding shares of
Series A Preferred to the conversion of all then outstanding Series A
Preferred under this Section (d), (iii) in respect of the Series B
Preferred, upon the Company's receipt of the written consent of the
holders of greater than one-half (1/2) of the then outstanding shares of
Series B Preferred to the conversion of all then outstanding Series B
Preferred under this Section (d), (iv) in respect of the Series C
Preferred, upon the Company's receipt of the written consent of the
holders of greater than one-half (1/2) of the then outstanding shares of
Series C Preferred to the conversion of all then outstanding Series C
Preferred under this Section (d), (v) in respect of the Series D
Preferred, upon the Company's receipt of the written consent of the
holders of greater than one-half (1/2) of the then outstanding shares of
Series D Preferred to the conversion of all then outstanding Series D
Preferred under this Section (d) or (vi) in respect of the Series E
Preferred, upon the Company's receipt of the written consent of the
holders of greater than one-half (1/2) of the then outstanding shares of
Series E Preferred to the conversion of all then outstanding Series E
Preferred under this Section (d). In the event of the automatic conversion
of the Preferred upon a public offering as aforesaid, the
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<PAGE> 41
person(s) entitled to receive the Common Stock issuable upon such
conversion of the Preferred shall not be deemed to have converted such
shares of Preferred until immediately prior to the closing of such sale of
securities.
3. Mechanics of Conversion. No fractional shares of Common
Stock shall be issued upon conversion of shares of Preferred. In lieu of
any fractional shares to which the holder would otherwise be entitled, the
Company shall pay cash equal to such fraction multiplied by the then
effective Conversion Price for such series of Preferred. Before any holder
of Preferred shall be entitled to convert the same into full shares of
Common Stock and to receive certificates therefor, such holder shall
surrender the certificate or certificates therefor, duly endorsed, at the
office of the Company or of any transfer agent for the Preferred, and
shall give written notice to the Company at such office that such holder
elects to convert the same; provided, however, that in the event of an
automatic conversion pursuant to subsection (d)(2), the outstanding shares
of Preferred that is the subject of such automatic conversion shall be
converted automatically without any further action by the holders of such
shares and whether or not the certificates representing such shares are
surrendered to the Company or its transfer agent, and provided further
that the Company shall not be obligated to issue certificates evidencing
the shares of Common Stock issuable upon such automatic conversion unless
the certificates evidencing such shares of Preferred are either delivered
to the Company or its transfer agent as provided above, or the holder
notifies the Company or its transfer agent that such certificates have
been lost, stolen or destroyed and executes an agreement satisfactory to
the Company to indemnify the Company from any loss incurred by it in
connection with such certificates. The Company shall, as soon as
practicable after delivery of such certificate, or such agreement and
indemnification in the case of a lost certificate, issue and deliver at
such office to such holder of Preferred, a certificate or certificates for
the number of shares of Common Stock to which such holder shall be
entitled as aforesaid and a cheque payable to the holder in the amount of
any cash amounts payable as the result of a conversion into
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<PAGE> 42
fractional shares of Common Stock. Such conversion shall be deemed to have
been made immediately prior to the close of business on the date of such
surrender of the shares of Preferred to be converted, or in the case of
automatic conversion on the date of closing of the offering or the
effective date of such written consent, and the person or persons entitled
to receive the shares of Common Stock issuable upon such conversion shall
be treated for all purposes as the record holder or holders of such shares
of Common Stock on such date.
4. Adjustments to Conversion Price.
(a) Adjustments for Stock Dividends, Subdivisions,
Combinations or Consolidation of Common Stock. In the event the
outstanding shares of Common Stock shall be subdivided (by stock split, or
otherwise), into a greater number of shares of Common Stock, or the
Company shall declare or pay any dividend on the Common Stock payable in
Common Stock, and the proportionate sub-division (by stock split or
otherwise) or dividend is not made to the holders of the Preferred, then
in each such event provision shall be made so that the holders of the
Preferred shall receive upon conversion thereof, in addition to the number
of shares of Common Stock receivable thereupon, the amount of securities
of the Company which they would have received had their shares of
Preferred been converted into Common Stock on the date of such event and
had they thereafter during the period from the date of such event to and
including the date of conversion, retained such securities receivable by
them as aforesaid during such period. In the event the outstanding shares
of Common Stock shall be combined or consolidated, by reclassification or
otherwise, into a lesser number of shares of Common Stock, the applicable
Conversion Price for the Series A Preferred, Series B Preferred, Series C
Preferred, Series D Preferred and Series E Preferred then in effect shall,
concurrently with the effectiveness of such combination or consolidation,
be proportionately increased on the same basis as set forth above.
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<PAGE> 43
(b) Adjustments for Other Distributions. In the event the
Company at any time or from time to time makes, or fixes a record date for
the determination of holders of Common Stock entitled to receive any
distribution payable in securities of the Company other than shares of
Common Stock, and other than as otherwise adjusted for in this subsection
(d)(4), then and in each such event provision shall be made so that the
holders of Preferred shall receive upon conversion thereof, in addition to
the number of shares of Common Stock receivable thereupon, the amount of
securities of the Company which they would have received had their shares
of Preferred been converted into Common Stock on the date of such event
and had they thereafter, during the period from the date of such event to
and including the date of conversion, retained such securities receivable
by them as aforesaid during such period, subject to all other adjustments
called for during such period under this subsection (d)(4) with respect to
the rights of the holders of such series of Preferred.
(c) Adjustments for Reclassification, Exchange and
Substitution. If the Common Stock issuable upon conversion of shares of
Preferred shall be changed into the same or a different number of shares
of any other class or classes of stock, whether by capital reorganization,
reclassification or otherwise (other than a subdivision or combination of
shares provided for above), the applicable Conversion Price of the Series
A Preferred, Series B Preferred, Series C Preferred, Series D Preferred
and Series E Preferred then in effect shall, concurrently with the
effectiveness of such reorganization or reclassification, be
proportionately adjusted such that the shares of Series A Preferred,
Series B Preferred, Series C Preferred, Series D Preferred and Series E
Preferred shall be convertible into, in lieu of the number of shares of
Common Stock which the holders would otherwise have been entitled to
receive, a number of shares of such other class or classes of stock
equivalent to the number of shares of Common Stock that would be subject
to receipt by the holders upon conversion of the Series A Preferred,
Series B Preferred, Series C Preferred, Series D Preferred and Series
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<PAGE> 44
E Preferred, respectively, immediately prior to such reclassification or
capital reorganization.
(d) Preferred Conversion Price Adjustments. The Conversion
Price for the Series A Preferred, Conversion Price for the Series B
Preferred, the Conversion Price for the Series C Preferred, the Conversion
Price for the Series D Preferred and the Conversion Price for the Series E
Preferred shall be subject to adjustment from time to time as follows:
(i) Special Definitions. For purposes of this
subsection 4(d), the following definitions shall apply:
(1) "Options" shall mean rights, options or
warrants to subscribe for, purchase or otherwise acquire either Common or
Convertible Securities.
(2) "Series A Original Issue Date" shall mean
the date on which the first share of Series A Preferred was first issued.
(3) "Series B Original Issue Date" shall mean
the date on which the first share of Series B Preferred was first issued.
(4) "Series C Original Issue Date" shall mean
the date on which the first share of Series C Preferred was first issued.
(5) "Series D Original Issue Date" shall mean
the date on which the first share of Series D Preferred was first issued.
(6) "Series E Original Issue Date" shall mean
the date on which the first share of Series E Preferred was first issued.
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(7) "Convertible Securities" shall mean any
evidences of indebtedness, shares or other securities convertible into or
exchangeable for Common.
(8) "Additional Shares of Common" shall mean all
shares of Common issued (or, pursuant to subsection 4(d)(iii) below,
deemed to be issued) by the Company after the Series E Original Issue
Date, other than shares of Common issued or issuable:
(a) upon conversion of shares of the
Preferred.
(b) up to 32,400,000 shares issued or
issuable to officers, directors, employees and consultants of the Company
pursuant to incentive plans or arrangements, including the Company's 1995
Stock Option Plan and 1997 Director's Stock Option Plan (as amended from
time to time), or other stock arrangements which have been approved by the
Board;
(c) up to 150,000 shares issued or
issuable to commercial banking or equipment leases financing entities in
connection with such commercial transactions as the Board shall approve,
or issued or issuable to corporations or other entities in connection with
such strategic or commercial transactions as the Board shall approve,
provided that the Board shall also approve the grant of shares or other
securities exercisable for such shares in connection therewith;
(d) pursuant to any event for which
adjustment has already been made pursuant to this subsection (d)(4); or
(e) as a dividend or distribution on the
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Preferred.
(ii) No Adjustment of Conversion Price. No
adjustment in the Series A Conversion Price, Series B Conversion Price ,
Series C Conversion Price, Series D Conversion Price or Series E
Conversion Price shall be made in respect of the issuance of Additional
Shares of Common unless the consideration per share for an Additional
Share of Common issued or deemed to be issued by the Company is less than
the Series A Conversion Price, Series B Conversion Price, Series C
Conversion Price, Series D Conversion Price or Series E Conversion Price,
as applicable, in effect on the date of and immediately prior to such
issue.
(iii) Deemed Issue of Additional Shares of
Common. Except as provided in Section 4(b) above, in the event the Company
at any time or from time to time after the Series A Original Issue Date
with respect to the Series A Preferred, after the Series B Original Issue
Date with respect to the Series B Preferred, after the Series C Original
Issue Date with respect to the Series C Preferred, after the Series D
Original Issue Date with respect to the Series D Preferred and after the
Series E Original Issue Date with respect to the Series E Preferred, shall
issue any Options or Convertible Securities or shall fix a record date for
the determination of holders of any class of securities entitled to
receive any such Options or Convertible Securities, then the maximum
number of shares (as set forth in the instrument relating thereto without
regard to any provisions contained therein for a subsequent adjustment of
such number) of Common issuable upon the exercise of such Options or, in
the case of Convertible Securities and Options therefor, the conversion or
exchange of such Convertible Securities, shall be deemed to be Additional
Shares of Common issued as of the time of such issue or, in case such a
record date shall have been fixed, as of the close of business on such
record date, provided that in any such case in which Additional Shares of
Common are deemed to be issued:
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(1) no further adjustment in the Series A
Conversion Price, or Series B Conversion Price, Series C Conversion Price,
Series D Conversion Price or Series E Conversion Price, as applicable,
shall be made upon the subsequent issue of Convertible Securities or
shares of Common upon the exercise of such Options or conversion or
exchange of such Convertible Securities;
(2) if such Options or Convertible
Securities by their terms provide, with the passage of time or otherwise,
for any increase or decrease in the consideration payable to the Company,
or increase or decrease in the number of shares of Common issuable upon
the exercise, conversion or exchange thereof, the Series A Conversion
Price, Series B Conversion Price, Series C Conversion Price, Series D
Conversion Price or Series E Conversion Price, as applicable, computed
upon the initial conversion prices thereof set forth in subsection (d)(1)
above (or upon the occurrence of a record date with respect thereto), and
any subsequent adjustments based thereon, shall, upon any such increase or
decrease becoming effective, be recomputed to reflect such increase or
decrease insofar as it affects such Options or the rights of conversion or
exchange under such Convertible Securities; and
(3) upon the expiration of any such
Options or any rights of conversion or exchange under such Convertible
Securities which shall not have been exercised, the Series A Conversion
Price, Series B Conversion Price, Series C Conversion Price, Series D
Conversion Price or Series E Conversion Price, as applicable, computed
upon the initial conversion prices set forth in subsection (d)(1) above,
and any subsequent adjustments based thereon, shall, upon such expiration,
be recomputed as if:
(a) in the case of Convertible
Securities
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or Options for Common, the only Additional Shares of Common issued were
shares of Common, if any, actually issued upon the exercise of such
Options or the conversion or exchange of such Convertible Securities, and
the consideration received therefor was the consideration actually
received by the Company for the issue of all such Options, whether or not
exercised, plus the consideration actually received by the Company upon
such exercise, or for the issue of all such Convertible Securities which
were actually converted or exchanged plus the consideration actually
received by the Company upon such conversion or exchange, if any, and
(b) in the case of Options for
Convertible Securities, only the Convertible Securities, if any, actually
issued upon the exercise thereof were issued at the time of issue of such
Options and the consideration received by the Company for the Additional
Shares of Common deemed to have been then issued was the consideration
actually received by the Company for the issue of all such Options,
whether or not exercised, plus the consideration deemed to have been
received by the Company upon the issue of the Convertible Securities with
respect to which such Options were actually exercised; and
(4) no readjustment pursuant to clause
(2) or (3) above shall have the effect of: (v) increasing the Series A
Conversion Price to an amount which exceeds the initial Series A
Conversion Price set forth in subsection (d)(1) above, (w) increasing the
Series B Conversion Price to an amount which exceeds the initial Series B
Conversion Price set forth in subsection (d)(1) above, (x) increasing the
Series C Conversion Price to an amount which exceeds the initial Series C
Conversion Price set forth in subsection (d)(1) above, (y) increasing the
Series D Conversion Price to an amount which exceeds the initial Series D
Conversion Price set forth in subsection (d)(1) above or (z) increasing
the Series E Conversion Price to an amount which exceeds the initial
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Series E Conversion Price set forth in subsection (d)(1) above.
(iv) Adjustment of Conversion Price Upon
Issuance of Additional Shares of Common. In the event this Company shall
issue Additional Shares of Common (including Additional Shares of Common
deemed to be issued pursuant to subsection 4(d)(iii) but excluding stock
dividends, subdivisions or split-ups that are the subject of adjustment
pursuant to Section 4(a)) without consideration or for a consideration per
share less than the Series A Conversion Price, Series B Conversion Price,
Series C Conversion Price, Series D Conversion Price and/or Series E
Conversion Price applicable on and immediately prior to such issue, then
and in such event, the Series A Conversion Price, Series B Conversion
Price, Series C Conversion Price, Series D Conversion Price and/or Series
E Conversion Price as applicable, shall be reduced, concurrently with such
issue, to a price (calculated to the nearest cent) determined by
multiplying the Series A Conversion Price, Series B Conversion Price,
Series C Conversion Price, Series D Conversion Price and/or Series E
Conversion Price, as applicable, in effect on the date of and immediately
prior to such issue by a fraction, the numerator of which shall be the
number of shares of Common Stock issuable upon conversion of any class or
series of Preferred Stock (or shares issued upon conversion thereof)
outstanding immediately prior to such issue, plus 10,600,000 shares (as
appropriately adjusted for any combinations, consolidations, subdivisions,
or stock dividends with respect to such shares of Common) of Common, plus
the number of shares of Common which the aggregate consideration received
by the Company for the total number of Additional Shares of Common so
issued would purchase at the Series A Conversion Price, Series B
Conversion Price, Series C Conversion Price, Series D Conversion Price,
and/or Series E Conversion Price, as applicable, in effect on the date of
and immediately prior to such issue; and the denominator of which shall be
the number of shares of Common Stock issuable upon conversion of any class
or series of Preferred Stock (or shares issued upon conversion thereof)
outstanding immediately prior to such issue, plus 10,600,000 shares (as
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<PAGE> 50
appropriately adjusted for any combinations, consolidations, subdivisions,
or stock dividends with respect to such shares of Common) of Common, plus
the number of such Additional Shares of Common so issued.
(v) Determination of Consideration. For purposes
of this Section 4(d), the consideration received by the Company for the
issue of any Additional Shares of Common shall be computed as follows:
(1) Cash and Property. Such consideration
shall:
(a) insofar as it consists of cash, be
computed at the aggregate amount of cash received by the Company;
(b) insofar as it consists of property
other than cash, be computed at the fair value thereof at the time of such
issue, as determined in good faith by the Board; and
(c) in the event Additional Shares of
Common are issued together with other shares or securities or other assets
of the Company for consideration which covers both, be the proportion of
such consideration so received, computed as provided in clauses (A) and
(B) above, as determined in good faith by the Board.
(2) Options and Convertible Securities.
The consideration per share received by the Company for Additional Shares
of Common deemed to have been issued pursuant to subsection 4(d)(iii),
relating to Options and Convertible Securities, shall be determined by
dividing:
(a) the total amount, if any, received
or
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receivable by the Company as consideration for the issue of such Options
or Convertible Securities, plus the minimum aggregate amount of additional
consideration (as set forth in the instruments relating thereto, without
regard to any provision contained therein for a subsequent adjustment of
such consideration) payable to the Company upon the exercise of such
Options or the conversion or exchange of such Convertible Securities, or
in the case of Options for Convertible Securities, the exercise of such
options for Convertible Securities and the conversion or exchange of such
Convertible Securities by:
(b) the maximum number of shares of
Common (as set forth in the instruments relating thereto, without regard
to any provision contained therein for a subsequent adjustment of such
number) issuable upon the exercise of such Options or the conversion or
exchange of such Convertible Securities.
5. Certificate as to Adjustments. Upon the occurrence of
each adjustment or readjustment of the then applicable Conversion Price
for the Series A Preferred, Series B Preferred, Series C Preferred, Series
D Preferred and/or Series E Preferred pursuant to subsection (d)(4), the
Company at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each
holder of such series of Preferred a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The Company shall, upon the written
request at any time of any holder of Preferred, furnish or cause to be
furnished to such holder a like certificate setting forth (i) such
adjustments and readjustments, (ii) the applicable Conversion Price in
effect at the time for such series, and (iii) the number of shares of
Common Stock and the amount, if any, of other property which at the time
would be received upon the conversion of such shares of Preferred.
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6. Notices of Record Date. In the event that the Company
shall propose at any time:
(a) to declare any dividend or distribution upon its
Common Stock, whether in cash, property, stock or other securities,
whether or not a regular cash dividend and whether or not out of earnings
or earned surplus;
(b) to offer for subscription pro rata to the
holders of any class or series of its stock any additional shares of stock
of any class or series or any other similar rights;
(c) to effect any reclassification or
recapitalization of its Common Stock outstanding which results in a change
in the Common Stock; or
(d) to merge or consolidate with or into any other
corporation, or sell, lease or convey all or substantially all its
property or business, or to liquidate, dissolve or wind up;
then, in connection with each such event, the
Company shall send to the holders of the Series A Preferred, Series B
Preferred, Series C Preferred, Series D Preferred and Series E Preferred:
(i) at least 20 days' prior written notice of
the date on which a record shall be taken for such dividend, distribution
or subscription offer (and specifying the date on which the holders of
Common Stock shall be entitled thereto) or for determining rights to vote
on the matters referred to in (c) and (d) above; and
(ii) in the case of the matters referred to in
(c) and (d) above, at least 20 days' prior written notice of the date when
the same shall
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take place and specifying the date on which the holders of Common Stock
shall be entitled to exchange their Common Stock for securities or other
property deliverable upon the occurrence of such event or the record date
for the determination of such holders if such record date is earlier.
Each such written notice shall be delivered personally or given by first
class mail, postage prepaid, addressed to the holders of the Series A
Preferred, the Series B Preferred, the Series C Preferred, the Series D
Preferred and the Series E Preferred at the address for each such holder
as shown on the books of the Company.
7. Certain Covenants.
(a) In addition to any other rights provided by law,
so long as any shares of Series A Preferred, Series B Preferred, Series C
Preferred, Series D Preferred and Series E Preferred shall be outstanding,
the Company shall not, without first obtaining the affirmative vote or
written consent of the holders of not less than a majority of the
outstanding shares of the Series A Preferred, Series B Preferred, Series C
Preferred, Series D Preferred and Series E Preferred (voting together as a
single class):
(i) authorize or issue (a) any additional shares of
Series A Preferred, (b) any additional shares of Series B Preferred, (c)
any additional shares of Series C Preferred, (d) any additional shares of
Series D Preferred or (e) any additional shares of Series E Preferred;
(ii) declare or pay any dividend on shares of Common
Stock, other than such dividends as are payable solely in shares of Common
Stock, or repurchase or redeem any shares of Common Stock or Preferred
other than such repurchases or redemptions of shares made from employees,
officers, directors or consultants upon their termination at their
original issue price;
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(iii) authorize or issue any series or class of
shares having rights or preferences superior to the Series A Preferred,
Series B Preferred, Series C Preferred, Series D Preferred or Series E
Preferred as to dividend rights or liquidation preferences, or having
redemption rights, ratchet or narrower-based weighted average
anti-dilution protection than that afforded the Series A Preferred, Series
B Preferred, Series C Preferred, Series D Preferred or Series E Preferred
or a liquidation preference per share that exceeds two times the aggregate
amount invested per share with respect to such series or class of shares,
or that is afforded separate voting rights with respect to subject matters
in addition to those set forth in this subsection 8 (or afforded by
operation of law) for which Series A Preferred, Series B Preferred, Series
C Preferred, Series D Preferred or Series E Preferred has such voting
rights or other extraordinary voting rights not afforded the Series A
Preferred, Series B Preferred, Series C Preferred, Series D Preferred or
Series E Preferred herein or by operation of law;
(iv) merge or consolidate with or into, or permit
subsidiary to merge with into, any other corporation, corporations or
other entity or entities unless Members of the Company immediately prior
to such merger or consolidation continue to hold not less than fifty
percent of the outstanding voting power of the surviving corporation or
entity, or sell or otherwise dispose of all or substantially all of its
assets; or
(v) adversely alter or change any of the powers,
preferences, privileges or rights of the Series A Preferred, Series B
Preferred, Series C Preferred, Series D Preferred or Series E Preferred.
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51. Power to issue shares
(1) Subject to these Bye-laws and to any resolution of the Members to the
contrary and without prejudice to any special rights previously conferred on the
holders of any existing shares or class of shares, the Board shall have power to
issue any unissued shares of the Company on such terms and conditions as it may
determine and any shares or class of shares may be issued with such preferred,
deferred or other special rights or such restrictions, whether in regard to
dividend, voting, return of capital or otherwise as the Company may from time to
time by resolution of the Members prescribe.
(2) The Board shall, in connection with the issue of any share, have the
power to pay such commission and brokerage as may be permitted by law.
(3) The Company shall not give, whether directly or indirectly, whether by
means of loan, guarantee, provision of security or otherwise, any financial
assistance for the purpose of a purchase or subscription made or to be made by
any person of or for any shares in the Company, but nothing in this Bye-Law
shall prohibit transactions mentioned in Sections 39A, 39B and 39C of the Act.
(4) The Company may from time to time do any one or more of the following
things:
(a) make arrangements on the issue of shares for a difference
between the Members in the amounts and times of payments of
calls on their shares;
(b) accept from any Member the whole or a part of the amount
remaining unpaid on any shares held by him, although no part
of that amount has been called up;
(c) pay dividends in proportion to the amount paid up on each
share where a larger amount is paid up on some shares than on
others; and
(d) issue its shares in fractional denominations and deal with
such fractions to the same extent as its whole shares and
shares in
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fractional denominations shall have in proportion to the
respective fractions represented thereby all of the rights of
whole shares including (but without limiting the generality of
the foregoing) the right to vote, to receive dividends and
distributions and to participate in a winding up.
52. Variation of rights, alteration of share capital and purchase of shares of
the Company
(1) Subject to the provisions of Sections 42 and 43 of the Act any
preference shares may be issued or converted into shares that, at a determinable
date or at the option of the Company, are liable to be redeemed on such terms
and in such manner as the Company before the issue or conversion may by
resolution of the Members determine.
(2) If at any time the share capital is divided into different classes of
shares, the rights attached to any class (unless otherwise provided by the terms
of issue of the shares of that class) may, whether or not the Company is being
wound-up, be varied with the consent in writing of the holders of three-fourths
of the issued shares of that class or with the sanction of a resolution passed
by a majority of the votes cast at a separate general meeting of the holders of
the shares of the class in accordance with Section 47 (7) of the Act. The rights
conferred upon the holders of the shares of any class issued with preferred or
other rights shall not, unless otherwise expressly provided by the terms of
issue of the shares of that class, be deemed to be varied by the creation or
issue of further shares ranking pari passu therewith.
(3) The Company may from time to time by resolution of the Members change
the currency denomination of, increase, alter or reduce its share capital in
accordance with the provisions of Sections 45 and 46 of the Act. Where, on any
alteration of share capital, fractions of shares or some other difficulty would
arise, the Board may deal with or resolve the same in such manner as it thinks
fit including, without limiting the generality of the foregoing, the issue to
Members, as appropriate, of fractions of shares and/or arranging for the sale or
transfer of the fractions of shares of Members.
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(4) The Company may from time to time purchase its own shares in
accordance with the provisions of Section 42A of the Act.
53. Registered holder of shares
(1) The Company shall be entitled to treat the registered holder of any
share as the absolute owner thereof and accordingly shall not be bound to
recognize any equitable or other claim to, or interest in, such share on the
part of any other person.
(2) Any dividend, interest or other moneys payable in cash in respect of
shares may be paid by cheque or draft sent through the post directed to the
Member at such Member's address in the Register of Members or, in the case of
joint holders, to such address of the holder first named in the Register of
Members, or to such person and to such address as the holder or joint holders
may in writing direct. If two or more persons are registered as joint holders of
any shares any one can give an effectual receipt for any dividend paid in
respect of such shares.
54. Death of a joint holder
Where two or more persons are registered as joint holders of a share or
shares then in the event of the death of any joint holder or holders the
remaining joint holder or holders shall be absolutely entitled to the said share
or shares and the Company shall recognize no claim in respect of the estate of
any joint holder except in the case of the last survivor of such joint holders.
55. Share certificates
(1) Shares shall be issued in registered form. Unless otherwise provided
by the rights attaching to or by the terms of issue of any particular Shares,
each Member shall, upon becoming the holder of any Share, be entitled to a Share
certificate for all the Shares of each class held by such Member (and, on
transferring a part of such Member's holding, to a certificate for the balance),
but the Board may decide not to issue certificates for any
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Shares held by, or by the nominee of, any securities exchange or depository or
any operator of any clearance or settlement system except at the request of any
such person. In the case of a Share held jointly by several persons, delivery of
a certificate in their joint names to one of several joint holders shall be
sufficient delivery to all.
(2) If a Share certificate is defaced, lost or destroyed, it may be
replaced without fee but on such terms (if any) as to evidence and indemnity and
to payment of the costs and out-of-pocket expenses of the Company in
investigating such evidence and preparing such indemnity as the Board may think
fit and, in case of defacement, on delivery of the old certificate to the
Company.
(3) The Board may by resolution determine, either generally or in any
particular case, that any signatures on any such certificates need not be
autographic but may be affixed to such certificates by some mechanical means or
may be printed thereon or that such certificates need not be signed by any
persons.
(4) Nothing in these Bye-Laws shall preclude title to a Share being
evidenced or transferred otherwise than in writing to the extent permitted by
the Act and as may be determined by the Board from time to time.
56. Calls on shares
(1) The Board may from time to time make such calls as it thinks fit upon
the Members in respect of any monies unpaid on the shares allotted to or held by
such Members and, if a call is not paid on or before the day appointed for
payment thereof, the Member may at the discretion of the Board be liable to pay
the Company interest on the amount of such call at such rate as the Board may
determine, from the date when such call was payable up to the actual date of
payment. The joint holders of a share shall be jointly and severally liable to
pay all calls in respect thereof.
(2) The Board may, on the issue of shares, differentiate between the
holders
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as to the amount of calls to be paid and the times of payment of such calls.
57. Forfeiture of shares
(1) If any Member fails to pay, on the day appointed for payment thereof,
any call in respect of any share allotted to or held by such Member, the Board
may, at any time thereafter during such time as the call remains unpaid, direct
the Secretary to forward to such Member a notice in the form, or as near thereto
as circumstances admit, of Form "A" in the Schedule hereto.
(2) If the requirements of such notice are not complied with, any such
share may at any time thereafter before the payment of such call and the
interest due in respect thereof be forfeited by a resolution of the Board to
that effect, and such share shall thereupon become the property of the Company
and may be disposed of as the Board shall determine.
(3) A Member whose share or shares have been forfeited as aforesaid shall,
notwithstanding such forfeiture, be liable to pay to the Company all calls owing
on such share or shares at the time of the forfeiture and all interest due
thereon.
(4) The Board may accept the surrender of any share which it is in a
position to forfeit on such terms and conditions as may be agreed. Subject to
those terms and conditions, a surrendered share shall be treated as if it had
been forfeited.
REGISTER OF MEMBERS
58. Contents of Register of Members
The Board shall cause to be kept in one or more books a Register of
Members and shall enter therein required by the Act.
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59. Inspection of Register of Members
The Register of Members shall be open to inspection at the registered
office of the Company on every business day, subject to such reasonable
restrictions as the Board may impose, so that not less than two hours in each
business day be allowed for inspection. The Register of Members may, after
notice has been given by advertisement in an appointed newspaper to that effect,
be closed for any time or times not exceeding in the whole thirty days in each
year.
60. Determination of record dates
Notwithstanding any other provision of these Bye-laws, the Board may fix
any date as the record date for:
(a) determining the Members entitled to receive any dividend; and
(b) determining the Members entitled to receive notice of and to vote at
any general meeting of the Company.
TRANSFER OF SHARES
61. Instrument of Transfer
(1) An instrument of transfer shall be in such common form as the Board
may accept. Such instrument of transfer shall be signed by or on behalf of the
transferor and transferee provided that, in the case of a fully paid share, the
Board may accept the instrument signed by or on behalf of the transferor alone.
The transferor shall be deemed to remain the holder of such share until the same
has been transferred to the transferee in the Register of Members.
(2) The Board may refuse to recognize any instrument of transfer unless it
is accompanied by the certificate in respect of the shares to which it relates
and by such other evidence as the Board may reasonably require to show the right
of the transferor to
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make the transfer.
62. Restriction on Transfer
(1) Subject to the Act and to such of the restrictions contained in these
Bye-Laws as may be applicable and to any agreement relating to the transfer of
Shares to which any Member is a party or by which any Member may be bound, any
Member may transfer all or any of such Member's Shares by an instrument of
transfer in the usual common form or in any other form that the Board may
approve.
(2) The instrument of transfer of a Share shall be signed by or on behalf
of the transferor, and where any Share is not fully paid the transferee, and the
transferor shall be deemed to remain the holder of the Share until the name of
the transferee is entered in the Register in respect thereof. All instruments of
transfer when registered may be retained by the Company. The Board may, in its
absolute discretion and without assigning any reason therefor, decline to
register any transfer of any Share that is not a fully paid Share or that is in
violation of these Bye-Laws or of any agreement of which the Company has notice.
The Board may also decline to register any transfer unless:
(a) the instrument of transfer is duly stamped, if required, and
lodged with the Company at the registered office or any other
place as the Board may from time to time specify, accompanied
by the certificate (if any) for the Shares to which it
relates, and such other evidence as the Board may reasonably
require to show the right of the transferor to make the
transfer;
(b) the instrument of transfer is in respect of only one class of
Share;
(c) where applicable, the permission of the Bermuda Monetary
Authority with respect thereto has been obtained; and
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(d) where applicable, the Board is satisfied that the transfer
complies with the Securities Laws.
(3) If the Board declines to register a transfer it shall, within three
months after the date on which the instrument of transfer was lodged, send to
the transferee notice of such refusal.
(4) No fee shall be charged by the Company for registering any transfer,
or otherwise making an entry in the Register concerning any other document
relating to or affecting the title to any Share.
(5) Subject to any directions of the Board from time to time in force, the
Secretary may exercise the powers and discretions of the Board under Bye-Laws
62(1), 62(2) and 62(3).
63. Transfers by joint holders
The joint holders of any share or shares may transfer such share or shares
to one or more of such joint holders, and the surviving holder or holders of any
share or shares previously held by them jointly with a deceased Member may
transfer any such share to the executors or administrators of such deceased
Member.
TRANSMISSION OF SHARES
64. Representative of deceased Member
In the case of the death of a Member, the survivor or survivors where the
deceased Member was a joint holder, and the legal personal representatives of
the deceased Member where the deceased Member was a sole holder, shall be the
only persons recognized by the Company as having any title to the deceased
Member's interest in the shares. Nothing herein contained shall release the
estate of a deceased joint holder from
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any liability in respect of any share which had been jointly held by such
deceased Member with other persons. Subject to the provisions of Section 52 of
the Act, for the purpose of this Bye-law, legal personal representative means
the executor or administrator of a deceased Member or such other person as the
Board may in its absolute discretion decide as being properly authorized to deal
with the shares of a deceased Member.
65. Registration on death or bankruptcy
Any person becoming entitled to a share in consequence of the death or
bankruptcy of any Member may be registered as a Member upon such evidence as the
Board may deem sufficient or may elect to nominate some person to be registered
as a transferee of such share, and in such case the person becoming entitled
shall execute in favor of such nominee an instrument of transfer in the form, or
as near thereto as circumstances admit, of Form "B" in the Schedule hereto. On
the presentation thereof to the Board, accompanied by such evidence as the Board
may require to prove the title of the transferor, the transferee shall be
registered as a Member but the Board shall, in either case, have the same right
to decline or suspend registration as it would have had in the case of a
transfer of the share by that Member before such Member's death or bankruptcy,
as the case may be.
DIVIDENDS AND OTHER DISTRIBUTIONS
66. Declaration of dividends by the Board
The Board may, subject to these Bye-laws and in accordance with Section 54
of the Act, declare a dividend to be paid to the Members, in proportion to the
number of shares held by them, and such dividend may be paid in cash or wholly
or partly in specie in which case the Board may fix the value for distribution
in specie of any assets. No unpaid dividend shall bear interest as against the
Company.
67. Other distributions
The Board may declare and make such other distributions (in cash or in
specie) to
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the Members as may be lawfully made out of the assets of the Company. No unpaid
dividend shall bear interest as against the Company.
68. Reserve fund
The Board may from time to time before declaring a dividend set aside, out
of the surplus or profits of the Company, such sum as it thinks proper as a
reserve fund to be used to meet contingencies or for equalizing dividends or for
any other special purpose.
69. Payment of Dividends and deduction of Amounts due to the Company
(1) Any dividend or other monies payable in respect of a share may be paid
by cheque or warrant sent through the post to the registered address of the
Members (in the case of joint Members, the senior joint holder, seniority being
determined by the order in which the names stand in the Register of Members) or
person entitled thereto, or by direct bank transfer to such bank account as such
Member or person entitled thereto may direct. Every such cheque shall be made
payable to the order of the person to whom it is sent or to such persons as the
Member may direct, and payment of the cheque or warrant shall be a good
discharge to the Company. Every such cheque or warrant shall be sent at the risk
of the person entitled to the money represented thereby.
(2) Any dividend or other monies payable in respect of a share which has
remained unclaimed for 12 years from the date when it became due for payment
shall, if the Board so resolves, be forfeited and cease to remain owing by the
Company. The payment of any unclaimed dividend or other moneys payable in
respect of a share may (but need not) be paid by the Company into an account
separate from the Company's own account. Such payment shall not constitute the
Company a trustee in respect thereof.
(3) The Company shall be entitled to cease sending dividend warrants and
cheques by post or otherwise to a Member if those instruments have been returned
undelivered to, or left uncashed by, that Member on at least two consecutive
occasions,
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or, following one such occasion, reasonable enquiries have failed to establish
the Member's new address. The entitlement conferred on the Company by this
Bye-law 69(3) in respect of any Member shall cease if the Member claims a
dividend or cashes a dividend warrant or cheque.
(4) The Board may deduct from the dividends or distributions payable to
any Member all monies due from such Member to the Company on account of calls or
otherwise.
CAPITALIZATION
70. Issue of bonus shares
(1) The Board may resolve to capitalize any part of the amount for the
time being standing to the credit of any of the Company's share premium or other
reserve accounts or to the credit of the profit and loss account or otherwise
available for distribution by applying such sum in paying up unissued shares to
be allotted as fully paid bonus shares pro rata to the Members.
(2) The Company may capitalize any sum standing to the credit of a reserve
account or sums otherwise available for dividend or distribution by applying
such amounts in paying up in full partly paid shares of those Members who would
have been entitled to such sums if they were distributed by way of dividend or
distribution.
ACCOUNTS AND FINANCIAL STATEMENTS
71. Records of account
The Board shall cause to be kept proper records of account with respect to
all transactions of the Company and in particular with respect to:
(a) all sums of money received and expended by the Company and the
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matters in respect of which the receipt and expenditure relates;
(b) all sales and purchases of goods by the Company; and
(c) the assets and liabilities of the Company.
Such records of account shall be kept at the registered office of the Company
or, subject to Section 83 (2) of the Act, at such other place as the Board
thinks fit and shall be available for inspection by the Directors during normal
business hours.
72. Financial year end
The financial year end of the Company may be determined by resolution of
the Board and failing such resolution shall be 31st December in each year.
73. Financial statements
Subject to any rights to waive laying of accounts pursuant to Section 88
of the Act, financial statements as required by the Act shall be laid before the
Members in general meeting.
AUDIT
74. Appointment of Auditor
Subject to Section 88 of the Act, at the annual general meeting or at a
subsequent special general meeting in each year, an independent representative
of the Members shall be appointed by them as Auditor of the accounts of the
Company. Such Auditor may be a Member but no Director, Officer or employee of
the Company shall, during his or her continuance in office, be eligible to act
as an Auditor of the Company.
75. Remuneration of Auditor
The remuneration of the Auditor shall be fixed by the Company in general
meeting or in such manner as the Members may determine.
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76. Vacation of office of Auditor
If the office of Auditor becomes vacant by the resignation or death of the
Auditor, or by the Auditor becoming incapable of acting by reason of illness or
other disability at a time when the Auditor's services are required, the Board
shall, as soon as practicable, convene a special general meeting to fill the
vacancy thereby created.
77. Access to books of the Company
The Auditor shall at all reasonable times have access to all books kept by
the Company and to all accounts and vouchers relating thereto, and the Auditor
may call on the Directors or Officers of the Company for any information in
their possession relating to the books or affairs of the Company.
78. Report of the Auditor
(1) Subject to any rights to waive laying of accounts or appointment of an
Auditor pursuant to Section 88 of the Act, the accounts of the Company shall be
audited at least once in every year.
(2) The financial statements provided for by these Bye-laws shall be
audited by the Auditor in accordance with generally accepted auditing standards.
The Auditor shall make a written report thereon in accordance with generally
accepted auditing standards and the report of the Auditor shall be submitted to
the Members in general meeting.
(3) The generally accepted auditing standards referred to in subparagraph
(2) of this Bye-law may be those of a country or jurisdiction other than
Bermuda. If so, the financial statements and the report of the Auditor must
disclose this fact and name such country or jurisdiction.
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79. Business Combinations
Any Business Combination shall require the approval of the Board and a
Special Resolution of the Members.
NOTICES
80. Service of Notices and Other Documents
(1) Any notice or other document (including a Share certificate) may be
served on or delivered to any Member by the Company either personally or by
sending it through the post in a prepaid letter addressed to such Member at the
address appearing in the Register or by delivering it to or leaving it at such
registered address. In the case of joint holders of a Share, service or delivery
of any notice or other document on or to one of the joint holders shall for all
purposes be deemed as sufficient service on or delivery to all the joint
holders. Any notice or other document if sent by post shall be deemed to have
been served or delivered five Clear Days after it was put in the post, and, in
proving such service or delivery, it shall be sufficient to prove that the
notice or document was properly addressed, stamped and put in the post.
(2) Any notice of a general meeting of the Company shall be deemed to be
duly given to a Member, or other person entitled to it, if it is sent by air
courier, facsimile, telex, telecopier, electronic mail or other mode of
representing or reproducing words in a legible and non-transitory form to the
address as it appears in the Register or any other address given to the Company
for this purpose. Any such notice shall be deemed to have been served 24 hours
after its dispatch except in the case of air courier in which case such notice
shall be deemed to have been served 48 hours after its dispatch.
(3) Any notice or other document delivered, sent or given to a Member in
any manner permitted by these Bye-Laws shall, notwithstanding that such Member
is then dead or bankrupt or that any other event has occurred, and whether or
not the Company has notice of the death or bankruptcy or other event, be deemed
to have been duly served
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or delivered in respect of any Share registered in the name of such Member as
sole or joint holder unless such Member's name shall, at the time of the service
or delivery of the notice or document, have been removed from the Register as
the holder of the Share, and such service or delivery shall for all purposes be
deemed as sufficient service or delivery of such notice or document on all
persons interested (whether jointly with or as claiming through or under such
Member) in the Share.
Any notice or other document (including without limitation a proxy, appointment
of corporate representative or nomination form for a director) may be delivered
by any Member to the Company either personally, by air courier or by sending it
through the post in a pre-paid letter addressed to the Company and the
registered office of the Company. Where a notice convening a general meeting
indicates that any document which is to be delivered by a Member to the Company
in connection with such general meeting may be delivered by facsimile and
indicates a facsimile number for delivery, then any Member may deliver such
document or documents by facsimile transmission to the number identified in the
notice of general meeting.
81. Service and delivery of notice
Any notice shall be deemed to have been served at the time when the same
would be delivered in the ordinary course of transmission save for notices sent
by post which shall be deemed to have been served five (5) days after posting
and, in proving such service, it shall be sufficient to prove that the notice
was properly addressed and prepaid, if posted, and the time when it was posted,
delivered to the courier or to the cable company or transmitted by telex,
facsimile or other method as the case may be.
SEAL OF THE COMPANY
82. The seal
(1) The Board shall provide for the safe custody of the Seal. The Seal
shall only be used by the authority of the Board or of a committee authorized by
the Board in that
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behalf. The Board may determine who (if anyone) shall sign any instrument to
which the Seal is affixed and shall unless otherwise determined by resolution of
the Board be signed by one Director.
(2) The Board may by resolution determine either generally or in any
particular case that any certificates or warrants for Shares or debentures or
representing any other form of security to which the Seal is to be affixed may
have signatures affixed to them by some mechanical means, or printed thereon or
that such certificates need not bear any signature.
(3) Where the Company engages in business outside Bermuda the Company may,
if the Board so determines, have for use in any country, territory or place
outside Bermuda a seal which shall be a duplicate of the Seal and which shall be
affixed in the same manner as the Seal.
(4) The Company may, if the Board so determines, have for use for sealing
securities issued by the Company and for sealing documents creating or
evidencing securities so issued an official seal which shall be a facsimile of
the Seal with the addition on its face of the word "Securities".
83. Manner in which seal is to be affixed
The seal of the Company shall not be affixed to any instrument except
attested by the signature of a Director and the Secretary or any two Directors,
or some other person appointed by the Board for the purpose, provided that any
Director, or Officer, may affix the seal of the Company attested by such
Director or Officer's signature only to any authenticated copies of these
Bye-laws, the incorporating documents of the Company, the minutes of any
meetings or any other documents required to be authenticated by such Director or
Officer.
WINDING-UP
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84. Winding-up/distribution by liquidator
If the Company shall be wound up the liquidator may, with the sanction of
a resolution of the Members, divide amongst the Members in specie or in kind the
whole or any part of the assets of the Company (whether they shall consist of
property of the same kind or not) and may, for such purpose, set such value as
he or she deems fair upon any property to be divided as aforesaid and may
determine how such division shall be carried out as between the Members or
different classes of Members. The liquidator may, with the like sanction, vest
the whole or any part of such assets in trustees upon such trusts for the
benefit of the Members as the liquidator shall think fit, but so that no Member
shall be compelled to accept any shares or other securities or assets whereon
there is any liability.
ALTERATION OF BYE-LAWS
85. Alteration of Bye-laws
No Bye-law shall be rescinded, altered or amended and no new Bye-law shall
be made until the same has been approved by a resolution of the Board and by a
Special Resolution of the Members.
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SCHEDULE - FORM A (Bye-law 58)
NOTICE OF LIABILITY TO FORFEITURE FOR NON PAYMENT OF CALL
You have failed to pay the call of [amount of call] made on the ...... day of
........, 20.. last, in respect of the [number] share(s) [numbers in figures]
standing in your name in the Register of Members of the Company, on the ......
day of ........., 20.. last, the day appointed for payment of such call. You are
hereby notified that unless you pay such call together with interest thereon at
the rate of .......... per annum computed from the said ....... day of
........., 20... last, on or before the ....... day of ........., 20... next at
the place of business of the said Company the share(s) will be liable to be
forfeited.
Dated this ....... day of .............., 20...
[Signature of Secretary]
By order of the Board
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SCHEDULE - FORM B (Bye-law 65)
TRANSFER BY A PERSON BECOMING ENTITLED ON DEATH/BANKRUPTCY
OF A MEMBER
I/We having become entitled in consequence of the [death/bankruptcy] of [name of
the deceased Member] to [number] share(s) numbered [number in figures] standing
in the register of members of [Company] in the name of the said [name of
deceased Member] instead of being registered myself/ourselves elect to have
[name of transferee] (the "Transferee") registered as a transferee of such
share(s) and I/we do hereby accordingly transfer the said share(s) to the
Transferee to hold the same unto the Transferee his or her executors
administrators and assigns subject to the conditions on which the same were held
at the time of the execution thereof; and the Transferee does hereby agree to
take the said share(s) subject to the same conditions.
WITNESS our hands this ........ day of ..........., 20...
Signed by the above-named )
[person or persons entitled] )
in the presence of: )
Signed by the above-named )
[transferee] )
in the presence of: )
69
