SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
[ ] Confidential for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
National Technical Systems, Inc.
------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Ralph Clements, Harry Derbyshire
------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
_______________________________________________________________
2) Aggregate number of securities to which transaction applies:
_______________________________________________________________
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):_______________________________________________
4) Proposed maximum aggregate value of transaction:_______________
5) Total fee paid:________________________________________________
[X] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
1) Amount Previously Paid: N/A
--------------------------------------
2) Form, Schedule or Registration Statement No.: N/A
----------------
3) Filing Party: N/A
------------------------------------------------
4) Date Filed: N/A
--------------------------------------------------
Page 1 of 87 <PAGE>
NATIONAL TECHNICAL SYSTEMS, INC.
24007 Ventura Boulevard
Calabasas, California 91302
NOTICE OF ANNUAL MEETING
To the Stockholders:
Notice is hereby given that the annual meeting of stockholders of
National Technical Systems, Inc., a Delaware corporation (the "Company"),
will be held at the Company's Rye Canyon Test Facility, 25100 Rye Canyon
Road, Building #202, Valencia, California 91355, on Friday, June 28, 1996
at 11:00 A.M. for the following purposes:
1. To elect three directors for terms expiring in 1999;
2. To approve the change of the Company's state of incorp-
oration from Delaware to California through a merger of
the Company with and into a newly formed California
subsidiary, and the conversion of each outstanding share
of Common Stock of the Company into a corresponding
share of Common Stock of the surviving corporation.
Approval of the Company's change of domicile will also
constitute approval of all of the provisions set forth
in the Articles of Incorporation and Bylaws of the
California company and certain other matters, as
described in the Proxy Statement attached hereto;
3. To ratify Ernst & Young as auditors for the year ending
January 31, 1997; and
4. To transact such other business and to consider and take
action upon any and all matters that may properly come
before the meeting or any adjournment or adjournments
thereof. Management has no information of any such other
matters.
Pursuant to the provisions of the Company's Bylaws, the Board of
Directors has fixed the close of business on May 20, 1996 as the record
date for the determination of stockholders entitled to notice of and to
vote at the meeting or any adjournment thereof.
Financial information concerning the Company is contained in the
Annual Report for the fiscal year ended January 31, 1996, which accompanies
this Notice of Annual Meeting.
If you are unable to attend the meeting in person, please execute
the enclosed Proxy and return it in the enclosed self-addressed, stamped
envelope. If you later find that you can be present, you may, if you wish,
vote in person, or you may revoke your proxy or file a new proxy bearing a
later date with the Secretary at any time before the voting.
By Order of the Board of Directors
Harold Lipchik
Secretary
Dated: May 30, 1996
Page 2 of 87 <PAGE>
NATIONAL TECHNICAL SYSTEMS, INC.
24007 Ventura Boulevard,
Calabasas, California 91302
_____________________
PROXY STATEMENT
_____________________
SOLICITATION
The accompanying Proxy is solicited by the Board of Directors for
use at the annual meeting of stockholders to be held on Friday, June 28,
1996, or any adjournment thereof. A Proxy may be revoked by the person
giving it at any time before it is exercised, either by giving another
proxy bearing a later date or by notifying the Secretary of the Company in
writing of such revocation. The giving of the Proxy will not affect your
right to vote in person if you later should find it convenient to attend
the meeting. The Proxy will be voted in accordance with the specifications
made.
The Company will bear the entire cost of preparing, assembling,
printing, and mailing this Proxy Statement, the Proxy, and any additional
material which may be furnished to stockholders by the Company. Copies of
solicitation material may be furnished to brokerage houses, fiduciaries,
and custodians to forward to their principals, and the Company may
reimburse them for their expenses in so doing. The Company does not expect
to pay any commission or remuneration to any person for solicitation of
proxies.
This Proxy Statement and the Proxy are being mailed to
stockholders on or about May 30, 1996.
Solicitation may be made by mail, personal interview, telephone,
and telegraph by officers and regular employees of the Company.
The close of business on May 20, 1996, has been fixed as the
record date for the determination of stockholders entitled to notice of and
to vote at the Annual Meeting.
The outstanding voting securities of the Company at May 20, 1996,
consisted of 6,702,990 shares of $.01 par value Common Stock. Each share
is entitled to one vote. Cumulative voting is not permitted for the
election of directors or otherwise.
The presence in person or by proxy of the holders of a majority
of the shares entitled to vote, will constitute a quorum for the
transaction of business at the Annual Meeting.
A plurality of the votes cast in person or by proxy and entitled
to vote at the Annual Meeting is required for the election of directors.
The affirmative vote of the holders of shares of Common Stock representing
a majority of votes is required for the change of domicile of the Company
from Delaware to California and the ratification of Ernst & Young as
auditors for the year ending January 31, 1997 and the approval of such
other matters as may properly come before the Annual Meeting.
Page 3 of 87 <PAGE>
Abstention and broker non-votes have the same effect as votes
against proposals presented to stockholders other than the election of
directors. They have no effect on the election of directors. A broker
non-vote occurs when a nominee holding shares for a beneficial owner votes
on one proposal, but does not vote on another proposal because the nominee
does not have discretionary voting power and has not received instructions
from the beneficial owner.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following tabulation indicates as of May 20, 1996, those
persons known to the Company to be beneficial owners of five percent or
more of the Company's Common Stock.
Name and Address of Number of Shares Percent
Beneficial Owner Beneficially Owned<F1> of Class
------------------- ---------------------- --------
Aaron Cohen.................... 1,151,671 17.2%
P.O. Box 1960
Fontana, California 92334
Jack Lin....................... 1,144,875<F2> 17.0%
24007 Ventura Boulevard
Calabasas, California 91302
Luis A. and Jacqueline E.
Hernandez<F3>................. 430,425 6.4%
3069 Misty Harbor
Las Vegas, Nevada 89117
Arthur Edelstein............... 350,551 5.2%
24007 Ventura Boulevard
Calabasas, California 91302
[FN]
<F1>Includes shares covered by options that are exercisable within 60 days
as follows: Cohen, 10,000, Lin, 25,000, and Edelstein, 32,659 and
shares in the National Technical Systems Employee Stock Ownership
Plan, as follows: Lin 6,456 and Edelstein 4,679.
<F2> Pursuant to an Interlocutory Judgment of Dissolution of Marriage
between Jack Lin and Lilyan P. Lin dated August 9, 1978, Mr. Lin has
Ms. Lin's Proxy to vote all shares of the Company owned by the latter,
so long as certain conditions set forth in the Judgment continue to be
met by Mr. Lin. Mr. Lin and Ms. Lin also have cross rights of first
refusal to purchase the other's shares when proposed to be sold in a
private transaction. Mr. Lin's 1,144,875 shares includes Ms. Lin's
77,042 shares of the Common Stock of the Company.
<F3> This information is based on a Schedule 13D filed with the Securities
and Exchange Commission on or about November 13, 1995.
Page 4 of 87 <PAGE>
To the knowledge of management, no other person owns beneficially
as much as 5% of the outstanding stock of the Company. The tabulation
under "Nomination and Election of Directors" indicates the number of shares
owned beneficially by each nominee as of the record date. The directors
and executive officers of the Company, as a group (10 persons), owned
beneficially (including shares owned by Lilyan P. Lin and subject to
Mr. Lin's proxy) as of the record date a total of 1,849,592 shares, or
27.0% of the outstanding stock. Mr. Cohen, a consultant to the Company,
owns an additional 17.2% of the outstanding stock. See "Certain
Transactions."
ELECTION OF DIRECTORS
The Board of Directors of the Company currently consists of nine
members, who are divided into three classes. Directors are elected for
terms of three years. At the Annual Meeting, the term of office of the
Class III directors will expire and three directors will be elected to
serve for a term of three years and until their respective successors are
elected.
The Board intends to cause the nomination of the three persons
named below for election as directors. The directors will be elected by
the holders of the Common Stock. The persons named as proxy holders in the
accompanying form of proxy have advised the Company that they intend at the
Annual Meeting to vote the shares covered by proxies held by them for the
election of the nominees named below. If any or all of such nominees
should for any reason become unable to serve or for good cause will not
serve, the persons named in the accompanying form of proxy may vote for the
election of such substitute nominees, and for such lawful term or terms, as
the Board may propose. The accompanying form of proxy contains a discre-
tionary grant of authority with respect to this matter. The Board of
Directors has no reason to believe the nominees named, or any of them, will
be unable to serve if elected.
No arrangement or understanding exists between any of the
nominees and any other person or persons pursuant to which any nominee was
or is to be selected as a director or nominee.
The names of the nominees for Class III director and the Class I
and Class II directors who will continue in office after the Annual
Meeting until the expiration of their respective terms, together with
certain information regarding them, including the amount of Common Stock
beneficially owned by them, are as follows:
Page 5 of 87 <PAGE>
<TABLE>
<CAPTION>
Common
Stock of
the
Company
Year
Beneficially
Term owned
as of
Director Will May
20, 1996 Percent
Name Age Position or Office Since Expire
<F1><F2> of Class
---- --- ------------------ -------- ------
- --------------- --------
<S> <C> <C> <C> <C> <C>
<C>
Nominees for
Class III Directors
-------------------
Aloysius Casey 64 Chairman of the 1988 1999<F*>
18,036 <F**>
Board of the Company
Jack Lin 63 President and Chief 1975 1999<F*>
1,144,875 17.0%
Executive Officer of
<F3><F4>
the Company;
Director
Robert Lin 38 Founder and 1988 1999<F*>
107,667 1.6%
President of the
Trilin Group, Inc.;
Director
Directors Continuing
in Office
--------------------
Class I Directors
-----------------
Richard Short 53 Senior Vice 1988 1997
96,645 1.4%
President of the
Company; Director
William Traw 57 Senior Vice 1988 1997
57,570 <F**>
President of the
Company; Director
William McGinnis 38 Vice President of 1994 1997
23,670 <F**>
the Company;
Director
Class II Directors
------------------
Ralph Clements 63 President of 1975 1998
1,759 <F**>
Clements and
Associates; Director
Harry Derbyshire 70 Chairman of the 1983 1998
6,000 <F**>
Board of J.C. Carter
Company, Inc.;
Director
Arthur Edelstein 58 Executive Vice 1980 1998
350,551 5.2%
President of the
Company; Director
</TABLE>
Page 6 of 87 <PAGE>
[FN]
<F*> If elected at the annual meeting
<F**> Less than 1%
<F1> Includes shares covered by options exercisable within 60 days, as
follows: J. Lin, 25,000; R. Lin, 13,610; Short, 11,250; Traw,
18,173; McGinnis, 21,858; Clements, 1,250; and Edelstein, 32,659.
<F2> Includes shares in the National Technical Systems Employee Stock
Ownership Plan, as follows: J. Lin, 6,456; Short, 2,917; Traw,
3,057; McGinnis, 1,812; and Edelstein, 4,679.
<F3> Does not include 11,238 shares owned by Mr. J. Lin's family other
than shares owned by R. Lin. Mr. Lin disclaims any beneficial
interest in shares owned by his respective family members.
<F4> Includes 77,042 shares owned by Mr. J. Lin's former wife, the
voting rights of which are subject to Mr. Lin's proxy. See
"Security Ownership of Certain Beneficial Owners."
General Casey retired from the United States Air Force on July 1,
1988 after a 34-year career. At the time of his retirement he was the
Commander of the Space Division, Air Force Systems Command, Los Angeles Air
Force Base, California.
Mr. Jack Lin is a founder and President of the Company and has
been associated with the Company and its predecessors continuously since
1961.
Mr. Robert Lin is a founder and President, of Trilin Group,
Inc., a privately-owned manufacturer and distributor of products for the
advertising specialty and premium markets. Robert Lin is the son of Jack
Lin.
Mr. Short is a Senior Vice President of the Company and has been
associated with the Company and its predecessors continuously since 1961.
Mr. Traw is a Senior Vice President of the Company and has been
associated with the Company and its predecessors continuously since 1963.
Mr. McGinnis is a Vice President of Company and has been
associated with the Company since 1980.
Mr. Clements has been President of Clements and Associates, a
Sherman Oaks, California management consulting firm, for more than five
years.
Mr. Derbyshire has since January 1987 been Chairman of the Board
of J. C. Carter Company, Inc., a manufacturer of aerospace products. Prior
to his retirement in 1985, Mr. Derbyshire was Executive Vice President,
Chief Financial Officer and a director of Whittaker Corporation, a Los
Angeles, California aerospace company.
Page 7 of 87 <PAGE>
Mr. Edelstein is Executive Vice President of the Company and has
been associated with the Company and it predecessors continuously since
1961.
The Board of Directors of the Company held four regular and two
special meetings during the last fiscal year. No Director attended fewer
than 75% of the meetings of the Board or of the Committees of which he was
a member.
The Company's Board of Directors has an Audit Committee which
consists of Messrs. Casey, Clements and Derbyshire. The function of the
Audit Committee is to meet with the independent certified public
accountants engaged by the Company to review (a) the scope and findings of
the annual audit, (b) accounting policies and procedures and the Company's
financial reports, and (c) the internal controls employed by the Company.
The Audit Committee held two meetings during the year.
The Compensation Committee of the Board of Directors considers
and makes recommendations to the Board of Directors on salaries, bonuses,
stock options and other forms of compensation for the Company's executive
officers. The Compensation Committee, which consists of Messrs. Clements
and Derbyshire, met twice during the year.
The Stock Option Committee, which consists of Messrs. Casey and
Derbyshire, met twice during the year.
The Nominating Committee which consists of Messrs. Derbyshire and
J. Lin selects nominees for election to the Board of Directors. The
Nominating Committee met once during the year.
Directors, other than employee-directors who receive no
additional compensation for serving on the Board, receive an annual
retainer of $10,000. In his capacity as Chairman of the Board, Mr. Casey
is paid an annual fee of $36,000. Directors also are reimbursed for
expenses which they reasonably incur in the performance of their duties as
directors of the Company. During the fiscal year ended January 31, 1996, a
total of $7,020 was paid to Ralph Clements for consulting services.
EXECUTIVE OFFICERS OF THE COMPANY
The only officer of the Company who is not a director is
Mr. Lloyd Blonder who is Senior Vice President and Chief Financial Officer.
Mr. Blonder is 56 years of age and has been associated with the Company
since 1983.
EXECUTIVE COMPENSATION
The following information is furnished with respect to the Chief
Executive Officer and the other most highly compensated executive officers
of the Company whose aggregate direct remuneration from the Company during
the fiscal year ended January 31, 1996 exceeded $100,000.
Page 8 of 87 <PAGE>
<TABLE> SUMMARY COMPENSATION TABLE
<CAPTION>
Long Term
Compensation
- ----------------------
Annual Compensation
Awards
---------------------
- ----------------------
All
Other
Name and Other Annual
Restricted Compen-
Principal Annual Compensation Stock
Awards Options/ sation
Position Year Salary ($) Bonus ($) ($)<F1> ($)
SARs (#) ($)
------------- ------ ---------- --------- ------------
- ----------- -------- ------
<S> <C> <C> <C> <C> <C>
<C> <C>
Jack Lin 1996 275,357 24,000 14,457<F2> 0
0 0
President and Chief 1995 289,170 0 0 0
0 0
Executive Officer 1994 261,564 8,000 12,115<F3> 0
0 0
Arthur Edelstein 1996 174,126 16,000 0 0
0 0
Executive Vice 1995 160,429 0 0 0
0 0
President 1994 166,417 4,500 0 0
0 0
Richard Short 1996 111,393 12,000 0 0
0 0
Senior Vice President 1995 110,000 0 0 0
0 0
1994 108,010 4,500 0 0
0 0
William Traw 1996 111,393 12,000 0 0
0 0
Senior Vice President 1995 110,000 0 0 0
0 0
1994 103,858 4,500 0 0
0 0
Lloyd Blonder 1996 105,553 12,000 0 0
0 0
Senior Vice President 1995 105,000 0 0 0
0 0
and Chief Financial 1994 102,688 4,500 0 0
0 0
Officer
</TABLE>
[FN]
<F1> Does not include perquisites or personal benefits which are the
lesser of $50,000 or 10% of total annual salary and bonus reported
for the named Executive Officer.
<F2> Fair market value of 9,638 shares of restricted National Technical
Systems, Inc. common stock at a value of $14,457 taken in lieu of
cash compensation.
<F3> Fair market value of 10,202 shares of restricted National Technical
Systems, Inc. common stock at a value of $12,115 taken in lieu of
cash compensation.
Page 9 of 87 <PAGE>
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors (the
"Compensation Committee") is composed of the two independent, non-employee
directors named below. See the description of the Compensation Committee
functions above.
COMPENSATION POLICIES. Policies governing the compensation of
the Company's executives are established and monitored by the Compensation
Committee. All decisions relating to the compensation of the Company's
executives during fiscal year 1996 were made by the Compensation Committee.
In administering its compensation program, the Compensation
Committee follows its belief that compensation should reflect the value
created for stockholders while supporting the Company's strategic goals.
In doing so, the compensation programs reflect the following themes:
1. The Company's compensation programs should be effective in
attracting, motivating, and retaining key executives;
2. There should be a correlation among the compensation awarded
to an executive, the performance of the Company as a whole,
and the executive's individual performance;
3. The Company's compensation programs should provide the
executives with a financial interest in the Company similar
to the interests of the Company's stockholders; and
4. The Company's compensation program should strike an
appropriate balance between short and long term performance
objectives.
The Company's executives are compensated through a combination of
salary, performance bonuses, and grants of stock options under the Option
Plans. The annual salaries of the executives are reviewed from time to
time and adjustments are made where necessary in order for the salaries of
the Company's executives to be competitive with the salaries paid by
similar companies. Performance bonuses, where appropriate, are generally
determined after the end of the Company's fiscal year based on an
assessment of the Company's results and the level of an individual's
particular performance for that year. Stock option grants are considered
by the Stock Option Committee from time to time.
CHIEF EXECUTIVE OFFICER'S COMPENSATION. Mr. Lin's compensation
is determined pursuant to the principles noted above. The last salary
increase Mr. Lin received was in June 1993.
POLICY WITH RESPECT TO INTERNAL REVENUE CODE SECTION 162(M). In
1993, the Internal Revenue Code of 1986 (the "Code") was amended to add
Section 162(m). Section 162(m), and regulations thereunder adopted in
1995, place a limit of $1,000,000 on the amount of compensation that may be
deducted by the Company in any year with respect to certain of the
Company's most highly compensated officers. Section 162(m) does not, how-
ever, disallow a deduction for qualified "performance-based compensation"
Page 10 of 87 <PAGE>
the material terms of which are disclosed to and approved by stockholders.
At the present time, the Company's executive officer compensation levels
are substantially below the $1,000,000 pay limit and the Company believes
that it will most likely not be affected by the regulation in the near
future. Where appropriate in light of specific compensation objectives,
the Board intends to take necessary actions in the future to minimize
the loss of tax deductions related to compensation.
COMPENSATION COMMITTEE
Ralph Clements
Harry Derbyshire
Page 11 of 87 <PAGE>
The following table sets forth information concerning the
exercise of stock options during the fiscal year ended January 31, 1996 by
each of the named executive officers and the fiscal year end spread on
unexercised "in-the-money" options.
<TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<CAPTION>
Number of
Unexercised
Value of
In-the-Money
Unexercised In-the-
Shares Value Options/SARs at Money
Options/SARs
Acquired on Realized FY-End(#) at
FY-End ($)<F2>
Name Exercise(#) ($) <F1> Exercisable Unexercisable
Exercisable Unexercisable
--------- ----------- -------- ----------- -------------
- ----------- -------------
<S> <C> <C> <C> <C> <C>
<C>
Jack Lin - - 25,000 25,000 -
-
Art Edelstein - - 32,659 10,000 $22,198
-
Richard Short - - 39,732 11,250 $29,805
-
William Traw - - 18,173 16,250 $13,005
-
Lloyd Blonder - - 10,250 16,750 $ 4,328
-
</TABLE>
[FN]
<F1> Market Value of underlying securities at exercise date, minus the
exercise or base price of "in-the-money" options/SARs. "Value
Realized" is on a pre-tax basis.
<F2> Represents the difference between the closing price of the Company's
Stock on January 31, 1996 and the exercise price of the options.
Page 12 of 87 <PAGE>
STOCK PRICE PERFORMANCE GRAPH
The following graph shows a five-year comparison of cumulative
total returns on investment for the Company, the Russell 2000 Index and the
S&P High Tech Composite Index. The stock price performance shown on the
graph below is not necessarily indicative of future price performance.
Cumulative Total Return
-------------------------------------------
1/91 1/92 1/93 1/94 1/95 1/96
-------------------------------------------
National Technical Sys Inc 100 100 139 292 227 206
Russell 2000 100 145 164 195 183 238
S & P High Tech Composite 100 107 112 137 153 227
COMPLIANCE WITH SECTION 16(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
The Company's officers, directors and consultants are required to
file initial reports of ownership and reports of change in ownership with
the Securities and Exchange Commission. Officers and directors are
required by Commission regulations to furnish the Company with copies of
all Section 16(a) forms they file.
Based solely on information provided to the Company by individual
officers, directors and consultants, the Company believes that during
fiscal 1996 all filing requirements applicable to officers and directors
have been complied with.
CERTAIN TRANSACTIONS
During the fiscal year ended January 31, 1996, Aaron Cohen,
beneficial owner of 1,151,671 shares or 17.2% of the Common Stock, was paid
consulting fees by the Company in the amount of $97,585 in cash and $1,800
in the Company's Common Stock which represented 1,200 shares.
Page 13 of 87 <PAGE>
PROPOSAL REGARDING REINCORPORATION
General
-------
The Board of Directors has unanimously approved a proposal (the
"Reincorporation") to change the Company's state of incorporation from
Delaware to California. The Board of Directors believes the
Reincorporation is in the best interests of the Company and its
stockholders.
The primary purpose of the proposed change in domicile is to avoid
having to continue to pay Delaware's annual franchise tax. For the year
ended January 31, 1996, the Company paid to the State of Delaware a
franchise tax totaling $19,200. The Company anticipates having to pay the
same amount or more in franchise taxes for future years if it continues as
a Delaware corporation. As a result of the Reincorporation, the Company
will become subject to California's annual franchise tax, which will be
substantially less than the Delaware annual franchise tax.
If the Reincorporation is effected, certain changes in director,
officer and stockholder rights will occur as a result of the Company being
incorporated under the General Corporation Law of the State of California
(the "CGCL") instead of the Delaware General Corporation Law (the "DGCL").
For information regarding those and other material differences between
California Law and Delaware Law, see "Significant Differences Between the
Corporation Laws of California and Delaware."
In the event the Reincorporation proposal is not adopted by the
Company's stockholders, the Company will continue to operate as a Delaware
corporation and be subject to Delaware's annual franchise tax.
Merger of the Company into Newly Formed California Subsidiary
-------------------------------------------------------------
The proposed Reincorporation would be accomplished by merging (the
"Merger") the Company into a newly formed California subsidiary, which is
named NTS Merger Corporation (the "California Company"), pursuant to an
Agreement and Plan of Merger (the "Merger Agreement"), a copy of which is
attached as Appendix "A" to this Proxy Statement. The California Company
was incorporated in California on May 29, 1996 specifically for purposes of
the Reincorporation and has conducted no business and has no material
assets or liabilities. As of the effective date of the Merger, the
California Company's name will change to National Technical Systems, Inc.
The California Company's principal executive offices are located at 24007
Ventura Boulevard, Calabasas, California 91302; telephone (818) 591-0776.
Page 14 of 87 <PAGE>
The Reincorporation would not result in any change in the Company's
business, management, directors, capitalization, assets or liabilities and
would not result in any relocation of management or other employees.
Certain Consequences of the Merger
----------------------------------
EFFECTIVE TIME. The Merger will take effect on the later of the
times (the "Effective Time") on which a Certificate of Ownership and Merger
is filed with the Secretary of State of Delaware and Agreement and Plan of
Merger is accepted for record by the California Secretary of State
("California Secretary"), which filings are anticipated to be made as soon
as practicable after the Reincorporation proposal is approved by the
stockholders of the Company. At the Effective Time, (i) the separate
corporate existence of the Company will cease, (ii) the California Company
will succeed, to the fullest extent permitted by law, to all of the
business, assets and liabilities of the Company, and (iii) stockholders of
the Company will become shareholders of the California Company.
MANAGEMENT AFTER THE MERGER. Immediately after the Merger,
members of the Board of Directors of the California Company (the
"California Board of Directors") will be composed of the then current
members of the Board of Directors of the Company. The current members of
the Board of Directors will continue to hold office as directors of the
California Company for the same terms for which they would otherwise have
served as directors of the Company. See "Election of Directors."
CONVERSION OF COMMON STOCK. As a result of the Reincorporation,
each outstanding share of Common Stock of the Company will automatically be
converted into one share of Common Stock of the California Company (the
"California Common Stock") and the outstanding shares of California Common
Stock owned by the Company will be surrendered and extinguished. Each
certificate representing issued and outstanding shares of Common Stock of
the Company will continue to represent the same number of shares of
California Common Stock. Other than changes due to the differences between
Delaware and California law (see "Significant Differences Between the
Corporation Laws of California and Delaware"), there will be no material
changes in the rights, preferences and privileges of holders of the Common
Stock as a result of the Reincorporation. The California Common Stock will
trade in the over-the-counter market and be quoted on the NASDAQ National
Market System under the same symbol as the Company's Common Stock.
NUMBER OF SHARES OUTSTANDING. The number of outstanding shares
of California Common Stock immediately following the Merger will equal the
Page 15 of 87 <PAGE>
number of shares of Common Stock of the Company outstanding immediately
prior to the Effective Time.
EMPLOYEE AND DIRECTOR STOCK PLANS. The 1994 stock option plan
(the "1994 Plan"), will be continued by the California Company following
the Merger. Approval of the proposed Reincorporation will constitute
approval of the adoption and assumption of the 1994 Plan by the California
Company. In addition, the California Company will assume all options
outstanding under the 1994 Plan and under previously expired plans.
FRANCHISE TAX. As a result of the Reincorporation, the California
Company will not be subject to Delaware's annual franchise tax. For the
year ended January 31, 1996, the Company paid to the State of Delaware an
annual franchise tax totaling $19,200. The Company anticipates having to
pay the same amount or more in franchise taxes for future years if it
continues as a Delaware corporation. Although the Company will be subject
to California franchise taxes as a result of the Reincorporation, such
taxes will be substantially less than the Delaware franchise tax.
FEDERAL INCOME TAX CONSEQUENCES. The Reincorporation is intended
to be tax free under the Code. Accordingly, no gain or loss will be
recognized by the holders of shares of the Company's Common Stock as a
result of the Reincorporation, and no gain or loss will be recognized by
the Company or the California Company. Each former holder of shares of the
Company's Common Stock will have the same basis in the California Common
Stock received by such holder pursuant to the Reincorporation as such
holder has in the shares of the Company's Common Stock held by such holder
at the Effective Time. Each stockholder's holding period with respect to
the California Common Stock will include the period during which such
holder held the shares of the Company's Common Stock, provided the
Company's Common Stock was held by such holder as a capital asset at the
Effective Time. The Company has not obtained a ruling from the Internal
Revenue Service with respect to the Federal income tax consequences of the
Reincorporation.
The foregoing is only a summary of certain federal tax
consequences. Stockholders should consult their own tax advisers regarding
the federal tax consequences of the Reincorporation as well as any
consequences under the laws of any other jurisdiction.
Accounting Treatment of the Merger
----------------------------------
Upon consummation of the Merger, all assets and liabilities of the
Company will be transferred to the California Company at book value because
the Merger will be accounted for as a pooling of interests.
Appraisal Rights
----------------
Delaware law provides that stockholders of a Delaware corporation
do not have appraisal rights when a Delaware corporation whose shares are
designated as a national market system ("NMS") security on an inter-dealer
Page 16 of 87 <PAGE>
quotation system by the National Association of Securities Dealers, Inc.
(the "NASD") merges with another corporation and receives stock of the
surviving corporation. Consequently, because the Common Stock is
designated as a NASD NMS security, appraisal rights are not available to
stockholders of the Company with respect to the Reincorporation.
Approval Required for Reincorporation
-------------------------------------
Under Delaware law, the affirmative vote of a majority of the
outstanding shares of Common Stock is required for approval of the
Reincorporation. The Reincorporation is subject to certain conditions,
including that no proceeding challenging or seeking to prevent, enjoin,
alter or materially delay the Reincorporation is pending or threatened.
The Reincorporation may be abandoned or the Merger Agreement may be amended
(with certain exceptions), either before or after stockholder approval has
been obtained, if in the opinion of the Board of Directors of the Company,
circumstances arise that make such action advisable.
Significant Differences Between the Corporation Laws of
California and Delaware
-------------------------------------------------------
As a Delaware corporation, the Company is incorporated under and
subject to the DGCL, a general corporation statute governing a wide variety
of matters, including election, tenure, duties and liabilities of directors
and officers, dividends, distributions, meetings of stockholders, and
extraordinary actions, including amendments to the certificate of
incorporation, mergers, sales of all or substantially all of the assets and
dissolution. The Company also is governed by its Restated Certificate of
Incorporation, as amended (the "Delaware Charter") and its Restated Bylaws
(the "Delaware Bylaws").
As a California corporation, the California Company is
incorporated under and subject to the CGCL, a general corporation statute
covering generally the same matters as are covered by the DGCL, and by its
Articles of Incorporation (the "California Charter") and Bylaws (the
"California Bylaws"). The material differences between the DGCL and the
CGCL and among the various charters and bylaws are summarized below. This
summary does not purport to be complete and is subject to and qualified in
its entirety by reference to the DGCL and the CGCL and also to the Delaware
Charter, the Delaware Bylaws, the California Charter and the California
Bylaws. Copies of the Delaware Charter and the Delaware Bylaws and the
expected forms of the California Charter and the California Bylaws are
attached to this Proxy Statement as Appendices "B," "C," "D" and "E,"
respectively.
LIMITATION OF LIABILITY AND INDEMNIFICATION. California and
Delaware have similar laws respecting indemnification by a corporation of
its officers, directors, employees and other agents. The laws of both
states also permit corporations to adopt a provision in their charters
eliminating the liability of a director to the corporation or its
shareholders for monetary damages for breach of the director's fiduciary
duty of care. There are nonetheless certain differences between the laws
of the two states respecting limitation of liability and indemnification.
The Restated Certificate of Incorporation of the Company, as
amended, eliminates the liability of directors except in certain
circumstances as set forth under Delaware law. Under Delaware law, such
Page 17 of 87 <PAGE>
provision may not eliminate or limit director monetary liability for (a)
breaches of the director's duty of loyalty to the corporation or its
stockholders; (b) acts or omissions not in good faith or involving
intentional misconduct or knowing violations of law; (c) the payment of
unlawful dividends or unlawful stock repurchases or redemptions; or (d)
transactions in which the director received an improper personal benefit.
Such limitation of liability provision also may not limit a director's
liability for violation of, or otherwise relieve the Company or its
directors from the necessity of complying with federal or state securities
laws, or affect the availability of non-monetary remedies such as
injunctive relief or rescission.
The Articles of Incorporation of the California Company eliminate
the liability of directors to the Company to the fullest extent permissible
under California law. California law does not permit the elimination of
monetary liability where such liability is based on: (a) intentional
misconduct or knowing and culpable violation of law; (b) acts or omissions
that a director believes to be contrary to the best interest of the
corporation or its shareholders, or that involve the absence of good faith
on the part of the director; (c) receipt of an improper personal benefit;
(d) acts or omissions that show reckless disregard for the director's duty
to the corporation or its shareholders where the director in the ordinary
course of performing a director's duties should be aware of a risk of
serious injury to the corporation or its shareholders; (e) acts or
omissions that constitute an unexcused pattern of inattention that amounts
to an abdication of the director's duty to the corporation and its
shareholders; (f) interested transactions between the corporation and a
director in which a director has a material financial interest; and
(g) liability for improper distributions, loans or guarantees.
Delaware law generally permits indemnification of expenses
incurred in the defense or settlement of a derivative or third-party
action, provided there is a determination by a majority vote of the
disinterested directors, by independent legal counsel or by the stock-
holders that the person seeking indemnification acted in good faith and in
a manner reasonably believed to be in or (in contrast to California law)
not opposed to the best interests of the corporation. Without court
approval, however, no indemnification may be made in respect of any deriva-
tive action in which such person is adjudged liable for negligence or mis-
conduct in the performance of his or her duty to the corporation. Delaware
law requires indemnification of expenses when the individual being indemni-
fied has successfully defended the action on the merits or otherwise.
California law also permits indemnification of expenses incurred
in derivative or third-party actions, except that with respect to
derivative actions (a) no indemnification may be made without court
approval when a person is adjudged liable to the corporation in the
performance of that person's duty to the corporation and its shareholders,
unless a court determines such person is entitled to indemnity for
expenses, and then such indemnification may be made only to the extent that
such court shall determine, and (b) no indemnification may be made without
court approval in respect of amounts paid or expenses incurred in settling
or otherwise disposing of a threatened or pending action or amounts
incurred in defending a pending action which is settled or otherwise
disposed of without court approval.
Indemnification is permitted by California law only for acts taken
in good faith and believed to be in the best interests of the corporation
Page 18 of 87 <PAGE>
and its shareholders, as determined by a majority vote of a disinterested
quorum of the directors, independent legal counsel (if a quorum of
independent directors is not obtainable), a majority vote of a quorum of
the shareholders (excluding shares owned by the indemnified party), or the
court handling the action. California law requires indemnification when
the individual has successfully defended the action on the merits (as
opposed to Delaware law which requires indemnification relating to a
successful defense on the merits or otherwise).
Delaware law states that the indemnification provided by statute
shall not be deemed exclusive of any other rights under any bylaw,
agreement, vote of stockholders or disinterested directors or otherwise.
The Delaware Bylaws currently authorize the Company's board of directors to
enter into indemnification contracts with any director, officer, employee
or agent of the Company, and the Company has entered into such
indemnification agreements with its officers and directors.
California corporations may include in their articles of
incorporation a provision which extends the scope of indemnification
through agreements, bylaws, or other corporate action beyond that
specifically authorized by statute.
Currently, there are no actions pending against officers or
directors of the Company in their capacities as such.
The limitation of liability and indemnification provisions of
Delaware law, and not California law, will apply to actions of the
directors and officers of the Company made prior to the proposed
Reincorporation. The board of directors of the Company recognizes that
Delaware law provides slightly expanded indemnification provisions and
limitations on liability. However, the board of directors believes that
the limitations on liability and indemnification provisions under
California law are adequate and that any slight advantage conferred by
Delaware law does not justify the additional franchise tax burden on the
Company in Delaware. The Company's board believes that the overall effect
of the Reincorporation will enhance the interests of the Company and its
stockholders.
CUMULATIVE VOTING. Under California law, if any shareholder has
given notice of his or her intention to cumulate votes for the election of
directors, any other shareholder of the corporation is also entitled to
cumulate his or her votes at such election. Under California law,
corporations such as the California Company that will have 800 or more
shareholders of record and have their stock listed on the NASD National
Market may eliminate such cumulative voting rights in their articles and
bylaws. Both the California Charter and the California Bylaws have
eliminated cumulative voting rights. Cumulative voting is not available
under Delaware law unless specifically provided for in a corporation's
certificate of incorporation. The Delaware Charter does not provide for
cumulative voting.
SIZE OF THE BOARD OF DIRECTORS. Under Delaware law, the number of
directors of a corporation, or the range of authorized directors, may be
fixed or changed by the board of directors acting alone, by amendment to
the corporation's bylaws, unless the directors are not authorized to amend
the bylaws or the number of directors is fixed in the certificate of
incorporation, in which cases stockholder approval is required. The
Page 19 of 87 <PAGE>
Delaware Bylaws establish the number of directors at nine, divided into
three classes, as nearly equal in number as reasonably possible, and the
Delaware Charter authorizes the board of directors to adopt, amend or
repeal the Bylaws. The board does not have this power under California
law.
Under California law, the number of directors of a corporation may
be fixed in the articles of incorporation or bylaws of a corporation, or a
range may be established for the number of directors, with the board of
directors given authority to fix the exact number of directors within such
range. The California Bylaws also establish the number of directors at
nine, and also divide the directors into three classes with each class
consisting of three directors.
POWER TO CALL SPECIAL SHAREHOLDERS' MEETINGS. Under California
law, a special meeting of shareholders may be called by the board of
directors, the chairman of the board, the president, the holders of shares
entitled to cast not less than ten percent of the votes at such meeting and
such additional persons as are authorized by the articles of incorporation
or the bylaws. Under Delaware law, a special meeting of stockholders may
be called by the board of directors or by any other person authorized to do
so in the certificate of incorporation or the bylaws. The Delaware Charter
and the Delaware Bylaws contain provisions granting holders of 10% or more
of the outstanding voting power of the Company the right to call a special
meeting of stockholders.
WRITTEN CONSENT OF SHAREHOLDERS. Both the CGCL and DGCL provide
that the stockholders of a corporation may take action by written consent
without a meeting, unless the corporation's charter documents provide
otherwise. Both the California Charter and the Delaware Charter do not
contain any provisions prohibiting actions by written consent and,
accordingly, the shareholders of the California Company may take action by
written consent without a meeting as before.
INSPECTIONS OF SHAREHOLDERS LIST. Both California and Delaware
law allow any stockholder to inspect the stockholders list for a purpose
reasonably related to such person's interest as a stockholder. California
law provides, in addition, for an absolute right to inspect and copy or
obtain from the transfer agent for the corporation the corporation's
shareholder list by persons holding an aggregate of five or more percent of
a corporation's voting shares, or shareholders holding an aggregate of 1%
or more of such shares who have filed a Schedule 14A with the Securities
and Exchange Commission relating to the election of directors. Delaware
law does not provide for any such absolute right of inspection, and no such
right is granted under the Delaware Charter or Delaware Bylaws. Greater
access to shareholder records, even though unrelated to the shareholder's
interest as a shareholder, could result in a shareholder's ability to
coordinate opposition to management proposals, including proposals with
respect to a change in control of the California Company.
AMENDMENT OF BYLAWS. Under Delaware law, the bylaws may be
amended only by the stockholders, unless the corporation's certificate of
incorporation confers the power to amend the bylaws on the directors also.
The Delaware Charter authorizes directors to amend the Delaware Bylaws.
Under California law, bylaws may be amended by shareholders holding a
majority of the outstanding shares, or by the board, except that if the
number or a range of directors are specified in the bylaws, this provision
can be changed only with the approval of the shareholders. Shareholders
Page 20 of 87 <PAGE>
can adopt or amend bylaw provisions to limit the ability of the board to
amend the bylaws.
AMENDMENT OF CERTIFICATE OR ARTICLES OF INCORPORATION. Under both
Delaware and California law, a corporation's charter documents may be
amended only if such amendment is approved by the Board and by a majority
of the shareholders. In addition, under both Delaware and California law,
if a corporation has more than one class or series of stock outstanding,
certain amendments that would affect the rights of such class or series
require the vote of a majority of the shares of such class or series.
"Supermajority" requirements (requirements of a vote of more than a
majority of the shares) are permitted under both California and Delaware
law. However, California law provides that, for a corporation with
outstanding shares held of record by 100 or more persons, such provision
(1) cannot require a vote higher than 66 2/3%, (2) must be approved by at
least as large a proportion of the outstanding shares as the supermajority
provision requires, and (3) automatically expires after two years unless
renewed pursuant to a shareholder vote.
DIVIDENDS AND REPURCHASES OF SHARES. Delaware law permits a
corporation to declare and pay dividends out of surplus or, if there is no
surplus, out of net profits for the fiscal year in which the dividend is
declared and/or for the preceding fiscal year as long as the amount of
capital of the corporation following the declaration and payment of the
dividend is not less than the aggregate amount of the capital of the
corporation represented by the issued and outstanding stock of all classes
having a preference upon the distribution of assets. In addition, Delaware
law generally provides that a corporation may redeem or repurchase its
shares only if such redemption or repurchase would not impair the capital
of the corporation.
Under California law, a corporation may not make any distribution
(including dividends, whether in cash or other property, and repurchases of
its shares) unless either the corporation's retained earnings immediately
prior to the proposed distribution equal or exceed the amount of the
proposed distribution or, immediately after giving effect to such
distribution, the corporation's assets (exclusive of goodwill, capitalized
research and development expenses and deferred charges) would be at least
equal to 1.25 times its liabilities (not including deferred taxes, deferred
income and other deferred credits), and the corporation's current assets
would be at least equal to its current liabilities (or 1.25 times its
current liabilities if the average pre-tax and pre-interest expense
earnings for the preceding two fiscal years were less than the average
interest expense for such years). Such tests are applied to California
corporations on a consolidated basis.
SHAREHOLDER APPROVAL OF CERTAIN BUSINESS COMBINATIONS. In the
last several years, a number of states (but not California) have adopted
special laws designed to subject to shareholder approval certain kinds of
"unfriendly" corporate takeovers, or other transactions involving a
corporation and one or more of its significant shareholders. Under Section
203 of the DGCL ("Section 203"), certain "business combinations" with
"interested shareholders" of Delaware corporations are subject to a three-
year moratorium unless specified conditions are met. With certain
exceptions, an interested shareholder is a person or group who or which
owns 15% or more of the corporation's outstanding voting stock (including
Page 21 of 87 <PAGE>
any rights to acquire stock pursuant to an option, warrant, agreement,
arrangement or understanding, or upon the exercise of conversion or
exchange rights, and stock with respect to which the person has voting
rights only), or is an affiliate or associate of the corporation and was
the owner of 15% or more of such voting stock at any time within the
previous three years. However, a Delaware corporation may elect not to be
governed by Section 203 by a provision in its original certificate of
incorporation or an amendment thereto or to the bylaws, which amendment
must be approved by majority shareholder vote and may not be further
amended by the board of directors. The Delaware Charter and the Delaware
Bylaws have not elected to not be governed by Section 203.
LOANS TO OFFICERS AND EMPLOYEES. Under California law, any loan
or guaranty to or for the benefit of a director or officer of the
corporation or its parent requires approval of the shareholders unless such
loan or guaranty is provided under a plan approved by shareholders owning a
majority of the outstanding shares of the corporation. In addition, under
California law, shareholders of any corporation with 100 or more
shareholders of record may approve a bylaw authorizing the board of
directors alone to approve loans or guaranties to or on behalf of officers
(whether or not such officers are directors) if the board determines that
any such loan or guaranty may reasonably be expected to benefit the
corporation. The California Bylaws authorize such loans or guaranties.
Under Delaware law, a corporation may make loans to, guarantee the
obligations of or otherwise assist its officers or other employees and
those of its subsidiaries (including directors who are also officers or
employees) when such action, in the judgment of the directors, may
reasonably be expected to benefit the corporation.
DISSOLUTION. Under California law, shareholders holding 50% or
more of the total voting power may authorize a corporation's dissolution,
with or without the approval of the corporation's board of directors, and
this right may not be modified by the articles of incorporation. Under
Delaware law, unless the board of directors approves the proposal to
dissolve, in which case a simply majority may approve the dissolution, the
dissolution must be approved by shareholders holding 100% of the total
voting power of the corporation. In the event of such a board-initiated
dissolution, Delaware law allows a Delaware corporation to include in its
certificate of incorporation a supermajority voting requirement in
connection with dissolutions. The Delaware Charter contains no such
supermajority voting requirement, however, and a majority of shares voting
at a meeting at which a quorum is present would be sufficient to approve a
dissolution of the Company which had previously been approved by its Board
of Directors.
APPRAISAL RIGHTS. Under both California and Delaware law, a
shareholder of a corporation participating in certain major corporate
transactions may, under varying circumstances, be entitled to appraisal
rights pursuant to which such shareholder may receive cash in the amount of
the "fair value" (Delaware) or "fair market value" (California) of his or
her shares, as determined by a court, in lieu of the consideration he or
she would otherwise receive in the transaction. Under Delaware law, such
appraisal rights are not available (a) with respect to the sale, lease or
exchange of all or substantially all of the assets of a corporation, (b)
with respect to a merger or consolidation by a corporation the shares of
which are either designated as a NMS security on an inter-dealer quotation
system by the NASD or are held of record by more than 2,000 holders if such
Page 22 of 87 <PAGE>
shareholders receive only shares of the surviving corporation or shares of
any other corporation which are either designated as a NMS security on an
inter-dealer quotation system by the NASD or held of record by more than
2,000 holders, plus cash in lieu of fractional shares, or (c) to share-
holders of a corporation surviving a merger if no vote of the shareholders
of the surviving corporation is required to approve the merger because the
merger agreement does not amend the existing certificate of incorporation,
each share of the surviving corporation outstanding prior to the merger is
an identical outstanding or treasury share after the merger, and the number
of shares to be issued in the merger does not exceed 20% of the shares of
the surviving corporation outstanding immediately prior to the merger and
if certain other conditions are met. Consequently, because the Common
Stock is designated as a NASD NMS security, appraisal rights are not
available to stockholders of the Company with respect to the
Reincorporation.
The limitations on the availability of appraisal rights under
California law are different from those under Delaware law. Shareholders
of a California corporation whose shares are listed on a national
securities exchange or on a list of over-the-counter margin stocks issued
by the Board of Governors of the Federal Reserve System generally do not
have such appraisal rights unless the holders of at least 5% of the class
of outstanding shares claim the right or the corporation or any law
restricts the transfer of such shares. California law also generally
affords appraisal rights in sale of asset reorganizations.
The Board unanimously recommends approval of the
Reincorporation proposal.
RATIFICATION OF AUDITORS
The Board of Directors has selected Ernst & Young as auditors for
the Company for the year ending January 31, 1997. That firm became
auditors for the Company during the fiscal year ended January 31, 1990.
The Board recommends ratification of this action.
Representatives of Ernst & Young are expected to be present at
the meeting and will be given the opportunity to make a statement if they
desire to do so. It is also expected that they will be available to
respond to appropriate questions from stockholders at the meeting.
OTHER MATTERS
Management is not aware of any other matters to be presented for
action at the meeting or any adjournment thereof. However, if any matters
come before the meeting, it is intended that shares represented by Proxy
will be voted in accordance with the judgment of the persons voting them.
STOCKHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
Any proposals of stockholders intended to be presented at the
next annual meeting (to be held in June 1997) must be received by the
Company at its principal executive office located at 24007 Ventura
Boulevard, Calabasas, California 91302, not later than February 1, 1997.
Page 23 of 87 <PAGE>
P R O X Y
NATIONAL TECHNICAL SYSTEMS, INC.
BOARD OF DIRECTORS PROXY FOR ANNUAL
MEETING OF STOCKHOLDERS
Friday, June 28, 1996, at 11:00 a.m.
The undersigned hereby appoints Ralph Clements and
Harry Derbyshire, and each of them, attorneys and agents with
power of substitution, to vote, as designated below, all stock
of the undersigned at the above meeting and at any adjournment
or adjournments thereof.
1. Election of Directors
FOR all nominees listed WITHHOLD AUTHORITY
below (except as marked to vote for all nominees
to the contrary below) listed below [ ]
[ ]
Aloysius Casey, Jack Lin and Robert Lin
(INSTRUCTION: to withhold authority to vote for any individual
nominee, write that nominee's name on the space provided
below.)
_______________________________________________________________
2. To approve the change of the Company's state of incorporation
from Delaware to California.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. To ratify the selection of Ernst & Young as auditors for
the fiscal year ending January 31, 1997.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. In their discretion, the proxies are authorized to vote
upon such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
Page 24 of 87 <PAGE>
IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR EACH
OF THE NOMINEES FOR DIRECTOR AND FOR EACH OF THE PROPOSALS SET
FORTH ABOVE.
Dated__________________________, 1996
______________________________________
Signature of Stockholder
______________________________________
Signature of Stockholder
Please sign exactly as your name
appears hereon. Please date, sign and
return the Proxy promptly in the
enclosed envelope. When signing as
attorney, executor, administrator,
trustee or guardian, please give full
title. If the signature is for a
corporation, please sign full
corporate name by authorized officer.
If the shares are registered in more
than one name, all holders must sign.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND
MAY BE REVOKED PRIOR TO ITS EXERCISE.
Page 25 of 87 <PAGE>
APPENDIX A
AGREEMENT AND PLAN OF MERGER
----------------------------
THIS AGREEMENT AND PLAN OF MERGER (the "Merger
Agreement"), is entered into as of ___________, 1996, between
NATIONAL TECHNICAL SYSTEMS, INC., a Delaware corporation ("NTS
Delaware"), and NTS MERGER CORPORATION, a California corpora-
tion ("NTS California"). NTS Delaware and NTS California are
sometimes referred to herein as the "Constituent Corporations."
The authorized capital stock of NTS Delaware consists
of 20,000,000 shares of Common Stock, par value, $.01 per share.
The authorized capital stock of NTS California consists of
20,000,000 shares of Common Stock, without par value.
The directors of the Constituent Corporations deem it
advisable and to the advantage of these corporations that NTS
Delaware merge with and into NTS California upon the terms and
conditions contained herein.
It is intended that the merger described in this
Merger Agreement shall constitute a tax free reorganization
within the meaning of section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code").
NOW, THEREFORE, the parties hereby adopt the plan of
merger encompassed by this Merger Agreement and hereby agree
that NTS Delaware shall merge into NTS California as herein
provided.
SECTION 1.
TERMS AND CONDITIONS
--------------------
1.1 MERGER. Subject to compliance with all
applicable laws and to the terms and conditions of this Merger
Agreement, NTS Delaware shall be merged with and into NTS
California, and NTS California shall be the surviving corpo-
ration (the "Surviving Corporation"), effective as of the date
when this Merger Agreement is filed with the Secretary of State
of the State of Delaware (the "Effective Date").
1.2 SUCCESSION. On the Effective Date, NTS
California shall succeed to all of the rights, privileges,
powers and property, including, without limitation, all rights,
privileges, franchises, patents, trademarks, licenses, regis-
trations and other assets of every kind and description, of NTS
Delaware. All corporate acts, plans, policies, agreements,
arrangements, approvals and authorizations of NTS Delaware, its
stockholders, Board of Directors, officers and agents which
were valid and effective immediately prior to the Effective
Date shall be taken for all purposes as the acts, plans,
policies, agreements, arrangements, approvals and authoriza-
-1-
Page 26 of 87 <PAGE>
tions of NTS California and shall be as effective and binding
thereon as the same were with respect to NTS Delaware.
1.3 STOCK OF NTS DELAWARE AND NTS CALIFORNIA. Upon
the Effective Date, by virtue of the merger and without any
further action on the part of the Constituent Corporations or
their shareholders, each share of Common Stock of NTS Delaware
issued and outstanding immediately prior to the Effective Date
shall be changed and converted into and become one fully paid
and nonassessable share of the Common Stock of NTS California.
There will be no shares of capital stock of NTS California
issued and outstanding immediately prior to the Effective Date.
1.4 STOCK CERTIFICATES. On and after the Effective
Date, all of the outstanding certificates that prior to that
time represented shares of the Common Stock of NTS Delaware
shall be deemed for all purposes to evidence ownership of and
to represent the shares of NTS California into which the shares
of NTS Delaware represented by such certificates have been
converted as herein provided and shall be so registered on the
books and records of NTS California or its transfer agents.
The registered owner of any such outstanding stock certificate
shall, until such certificate shall have been surrendered for
transfer or conversion or otherwise accounted for to NTS
California or its transfer agent, have and be entitled to
exercise any voting and other rights with respect to and to
receive any dividend and other distributions upon the shares of
NTS California evidenced by such outstanding certificate as
provided above.
SECTION 2.
CHARTER DOCUMENTS, DIRECTORS AND OFFICERS
-----------------------------------------
2.1 ARTICLES OF INCORPORATION AND BYLAWS. The
Articles of Incorporation and Bylaws of NTS California as in
effect immediately prior to the Effective Date shall remain the
Articles of Incorporation and Bylaws of the Surviving
Corporation after the Effective Date.
2.2 DIRECTORS AND OFFICERS. The directors and
officers of NTS California immediately prior to the Effective
Date shall remain the directors and officers of the Surviving
Corporation after the Effective Date until such time as
successors are duly elected in accordance with the Bylaws of
the Surviving Corporation and any applicable laws.
-2-
Page 27 of 87 <PAGE>
SECTION 3.
MISCELLANEOUS
-------------
3.1 FURTHER ASSURANCES. From time to time, as and
when required by NTS California or by its successors and
assigns, there shall be executed and delivered on behalf of NTS
Delaware such deeds and other instruments, and there shall be
taken or caused to be taken by it all such further and other
action, as shall be appropriate and necessary in order to vest,
perfect or confirm, of record or otherwise, in NTS California
the title to and possession of all the property, interests,
assets, rights, privileges, immunities, powers, franchises and
authority of NTS Delaware and otherwise to carry out the
purposes of this Merger Agreement, and the officers and
directors of NTS California are fully authorized in the name
and on behalf of NTS Delaware or otherwise to take any and all
such action and to execute and deliver any and all such deeds
and other instruments.
3.2 AMENDMENT. At any time before the Effective
Date, this Merger Agreement may be amended in any manner as may
be determined in the judgment of the respective Boards of
Directors of NTS California and NTS Delaware to be necessary,
desirable or expedient in order to clarify the intention of the
parties hereto or to effect or facilitate the purpose and
intent of this Merger Agreement.
3.3 ABANDONMENT. At any time before the Effective
Date, this Merger Agreement may be terminated and the merger
may be abandoned by the Board of Directors of either NTS
Delaware or NTS California, notwithstanding the approval of
this Merger Agreement by the stockholders of NTS Delaware, or
the consummation of the merger may be deferred for a reasonable
period if, in either case, in the opinion of the Board of
Directors of either NTS Delaware or NTS California, such action
would be in the best interests of such corporation, including,
without limitation, the failure by the Constituent Corporations
to obtain (i) any and all consents or approvals from any
governmental agency having jurisdiction and other third parties
that are required for the lawful consummation of the merger and
(ii) the approval by the requisite vote of the stockholders of
NTS Delaware in accordance with Delaware law.
3.4 GOVERNING LAW. This Merger Agreement shall be
governed by and construed in accordance with the internal laws
of the State of California.
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IN WITNESS WHEREOF, this Merger Agreement, having
first been duly approved by the Boards of Directors of NTS
Delaware and NTS California, is hereby executed on behalf of
each said corporation and attested by their respective officers
thereunto duly authorized.
NATIONAL TECHNICAL SYSTEMS, INC.,
a Delaware corporation
By ___________________________________
Jack Lin
President
ATTEST:
____________________________
Harold Lipchik
Secretary
NTS MERGER CORPORATION,
a California corporation
By _______________________________
Jack Lin
President
ATTEST:
____________________________
Harold Lipchik
Secretary
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CERTIFICATE OF THE SECRETARY OF NTS MERGER CORPORATION,
A CALIFORNIA CORPORATION
-------------------------------------------------------
I, Harold Lipchik, Secretary of NTS Merger
Corporation, a California corporation ("NTS California"), do
hereby certify as such Secretary, in accordance with the
General Corporation Laws of the States of Delaware and
California, that the form of Agreement and Plan of Merger (the
"Agreement") to which this Certificate is attached, after
having been first duly signed on behalf of NTS California by
the President and Secretary under the corporate seal of NTS
California, was duly approved and adopted by the sole
shareholder of NTS California.
IN WITNESS WHEREOF, I have executed this Certificate
this ____ day of _____________, 1996.
______________________________
HAROLD LIPCHIK, SECRETARY
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CERTIFICATE OF THE SECRETARY OF NATIONAL TECHNICAL
SYSTEMS, INC.
A DELAWARE CORPORATION
--------------------------------------------------
I, Harold Lipchik, Secretary of National Technical
Systems, Inc., a Delaware corporation ("NTS Delaware"), do
hereby certify as such Secretary, in accordance with the
General Corporation Laws of the States of California and
Delaware, that (i) the form of Agreement and Plan of Merger
(the "Agreement") to which this Certificate is attached was
duly submitted to the stockholders of NTS Delaware, (ii) the
affirmative vote of a majority of all outstanding shares of
Common Stock of NTS Delaware was required for approval of the
Agreement and the merger by the stockholders of NTS Delaware,
(iii) the stockholders approved the Agreement and the merger by
the vote required, and (iv) the Agreement and the merger were
thus duly approved by the owners of the outstanding shares NTS
Delaware.
IN WITNESS WHEREOF, I have executed this Certificate
this ____ day of ___________, 1996.
______________________________
HAROLD LIPCHIK, SECRETARY
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APPENDIX B
RESTATED CERTIFICATE OF INCORPORATION
OF NATIONAL TECHNICAL SYSTEMS, INC.
NATIONAL TECHNICAL SYSTEMS, INC., a corporation
organized and existing under the laws of the state of Delaware,
hereby certifies as follows:
1. The name of this corporation is National
Technical Systems, Inc. National Technical Systems, Inc., was
originally incorporated under the same name, and the original
Certificate of Incorporation of this corporation was filed with
the Secretary of the State of Delaware on April 24, 1987.
2. Pursuant to Section 245 of the General
Corporation Law of the State of Delaware, this Restated
Certificate of Incorporation restates and integrates and
further amends the provisions of the Certificate of
Incorporation of this corporation.
3. Pursuant to Section 242 of the General
Corporation Law of the State of Delaware, the sole holder of
all of the outstanding shares of this corporation has approved
this Restated Certificate of Incorporation by written consent
after the proposal of same by this corporation's Board of
Directors.
4. The text of the Restated Certificate of
Incorporation as heretofore amended or supplemented is hereby
restated and further amended to read in its entirety as
follows:
FIRST: The name of the Corporation is National
Technical Systems, Inc. (hereinafter sometimes referred to
as the "Corporation").
SECOND: The address of the registered office of the
Corporation in the State of Delaware is Corporation Trust
Center, 1209 Orange Street, in the City of Wilmington,
County of New Castle. The name of the registered agent at
that address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage
in any lawful act or activity for which a corporation may
be organized under the General Corporation Law of
Delaware.
FOURTH: The total number of shares which this
Corporation shall have authority to issue is seven million
five hundred thousand (7,500,000) shares of Common Stock,
par value one cent ($.01) per share (the "Common Stock").
FIFTH: The following provisions are inserted for the
management of the business and the conduct of the affairs
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of the Corporation, and for further definition, limitation
and regulation of the powers of the Corporation and of its
directors and shareholders:
A. The business and affairs of the Corporation
shall be managed by or under the direction of the Board of
Directors. In addition to the powers and authority
expressly conferred upon them by statute or by this
Certificate of Incorporation or the Bylaws of the
Corporation, the directors are hereby empowered to
exercise all such powers and do all such acts and things
as may be exercised or done by the Corporation.
B. The directors of the Corporation need not be
elected by written ballot unless the Bylaws so provide.
C. Special meetings of shareholders of the
Corporation may be called by the Board of Directors
pursuant to a resolution adopted by a majority of the
total number of authorized directors (whether or not there
exist any vacancies in previously authorized directorships
at the time any such resolution is presented to the Board
for adoption) or by the holders of 10% or more of the
outstanding voting power of the Corporation.
SIXTH:
A. The number of directors shall initially be eight
and, thereafter, shall be fixed from time to time
exclusively by the Board of Directors pursuant to a
resolution adopted by a majority of the total number of
authorized directors (whether or not there exist any
vacancies in previously authorized directorships at the
time any such resolution is presented to the Board for
adoption). The directors shall be divided into three
classes, as nearly equal in number as reasonably possible,
with the term of office of the first class to expire at
the 1988 annual meeting of shareholders, the term of
office of the second class to expire at the 1989 annual
meeting of shareholders and the term of office of the
third class to expire at the 1990 annual meeting of
shareholders. At each annual meeting of shareholders
following such initial classification and election,
directors elected to succeed those directors whose terms
expire shall be elected for a term of office to expire at
the third succeeding annual meeting of shareholders after
their election.
B. Newly created directorships resulting from any
increase in the authorized number of directors or any
vacancies on the Board of Directors resulting from death,
resignation, retirement, disqualification, removal from
office or other cause may be filled only by a majority
vote of the directors then in office though less than a
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quorum, and directors so chosen shall hold office for a
term expiring at the annual meeting of shareholders at
which the term of office of the class to which they have
been elected expires. No decrease in the number of
directors constituting the Board of Directors shall
shorten the term of any incumbent director.
C. Any director, or the entire Board of Directors,
may be removed from office at any time, either without
cause, or for cause, by the affirmative vote of the
holders of at least a majority of the voting power of all
of the then outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of
directors, voting together as a single class.
SEVENTH: The Board of Directors is expressly
empowered to adopt, amend or repeal Bylaws of the
Corporation. Any adoption, amendment or repeal of Bylaws
of the Corporation by the Board of Directors shall require
the approval of a majority of the total number of
authorized directors (whether or not there exist any
vacancies in previously authorized directorships at the
time any resolution providing for adoption, amendment or
repeal is presented to the Board). The shareholders shall
also have power to adopt, amend or repeal the Bylaws of
the Corporation in the manner prescribed by the laws of
the State of Delaware.
EIGHTH: A director of this Corporation shall not be
personally liable to the Corporation or its shareholders
for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the
director's duty of loyalty to the corporation or its
shareholders, (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware
General Corporation Law, or (iv) for any transaction from
which the director derived an improper personal benefit.
Any repeal or modification of the foregoing
provisions of this Article EIGHTH by the shareholders of
the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at
the time of such repeal or modification.
NINTH: The Corporation reserves the right to amend
or repeal any provision contained in this Certificate of
Incorporation in the manner prescribed by the laws of the
State of Delaware and all rights conferred upon
shareholders are granted subject to this reservation.
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TENTH: The name and mailing address of the sole
incorporator are as follows:
Name Mailing Address
---- ---------------
James J. Slaby, Jr. 725 South Figueroa Street
36th Floor
Los Angeles, California 90017
IN WITNESS WHEREOF, this Restated Certificate of
Incorporation has been signed under the seal of the Company
this 21st day of October, 1987.
NATIONAL TECHNICAL SYSTEMS, INC.
By /s/ Lloyd Blonder
--------------------------------
Lloyd Blonder, Vice President
[seal]
ATTEST:
By /s/ James J. Slaby, Jr.
--------------------------------
James J. Slaby, Jr., Secretary
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CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
NATIONAL TECHNICAL SYSTEMS, INC.
NATIONAL TECHNICAL SYSTEMS, INC., a corporation organized
and existing under and by virtue of the General Corporation Law of the
State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That at a meeting duly noticed and held, the Board of Directors
of NATIONAL TECHNICAL SYSTEMS, INC. duly adopted a resolution setting
forth a proposed amendment of the Restated Certificate of Incorporation of
said corporation, declaring said amendment to be advisable and calling for
approval of said amendment by the stockholders of said corporation. The
resolution setting forth the proposed amendment is as follows:
RESOLVED, that the Restated Certificate of Incorporation of this
corporation be amended by amending Article Fourth thereof to read
as follows:
FOURTH: The total number of shares which this
Corporation shall have authority to issue is twenty
million (20,000,000) shares of Common Stock, par value
one cent (.01) per share (the "Common Stock").
SECOND: That thereafter, the stockholders of said corporation at a
meeting duly noticed and held in accordance with Section 222 of the
General Corporation Law of the State of Delaware, at which a quorum was
present, duly adopted said amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
FOURTH: That the capital of said corporation shall not be reduced under
or by reason of said amendment.
IN WITNESS WHEREOF, said NATIONAL TECHNICAL SYSTEMS, INC. has caused this
certificate to be signed by Lloyd Blonder, its Senior Vice President, this
25th day of April 1995.
By: /s/ Lloyd Blonder
------------------------------------
Lloyd Blonder, Senior Vice President
Page 36 of 87 <PAGE>
APPENDIX C
NATIONAL TECHNICAL SYSTEMS, INC.
RESTATED BYLAWS
ARTICLE I
STOCKHOLDERS
Section 1. ANNUAL MEETING. An annual meeting of the
stockholders, for the election of directors to succeed those
whose terms expire and for the transaction of such other
business as may properly come before the meeting, shall be held
at such place, on such date, and at such time as the Board of
Directors shall each year fix, which date shall be within
thirteen months subsequent to the later of the date of
incorporation or the last annual meeting of stockholders.
Section 2. SPECIAL MEETINGS. Special meetings of
the stockholders, for any purpose or purposes described in the
notice of the meeting, may be called by the Board of Directors
or by the holders of 10% or more of the outstanding voting
power of the Corporation and shall be held at such place, on
such date, and at such time as they or he or she shall fix.
Business transacted at special meetings shall be confined to
the purpose or purposes stated in the notice.
Section 3. NOTICE OF MEETINGS. Written notice of
the place, date, and time of all meetings of the stockholders
shall be given, not less than ten (10) nor more than sixty (60)
days before the date on which the meeting is to be held, to
each stockholder entitled to vote at such meeting, except as
otherwise provided herein or required by law (meaning, here and
hereinafter, as required from time to time by the Delaware
General Corporation Law or the Certificate of Incorporation of
the Corporation).
When a meeting is adjourned to another place, date or
time, written notice need not be given of the adjourned meeting
if the place, date and time thereof are announced at the
meeting at which the adjournment is taken; provided, however,
that if the date of any adjourned meeting is more than thirty
(30) days after the date for which the meeting was originally
noticed, or if a new record date is fixed for the adjourned
meeting, written notice of the place, date, and time of the
adjourned meeting shall be given in conformity herewith. At
any adjourned meeting, any business may be transacted which
might have been transacted at the original meeting.
Section 4. QUORUM. At any meeting of the
stockholders, the holders of a majority of all of the shares of
the stock entitled to vote at the meeting, present in person or
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by proxy, shall constitute a quorum for all purposes, unless or
except to the extent that the presence of a larger number may
be required by law.
If a quorum shall fail to attend any meeting, the
chairman of the meeting or the holders of a majority of the
shares of stock entitled to vote who are present, in person or
by proxy, may adjourn the meeting to another place, date, or
time.
If a notice of any adjourned special meeting of
stockholders is sent to all stockholders entitled to vote
thereat, stating that it will be held with those present
constituting a quorum, then except as otherwise required by
law, those present at such adjourned meeting shall constitute a
quorum, and all matters shall be determined by a majority of
the votes cast at such meeting.
Section 5. ORGANIZATION. Such person as the Board
of Directors may have designated or in the absence of such a
person, the chief executive officer of the Corporation or, in
his or her absence, such person as may be chosen by the holders
of a majority of the shares entitled to vote who are present,
in person or by proxy, shall call to order any meeting of the
stockholders and act as chairman of the meeting. In the
absence of the Secretary of the Corporation, the secretary of
the meeting shall be such person as the chairman appoints.
Section 6. CONDUCT OF BUSINESS. The chairman of any
meeting of stockholders shall determine the order of business
and the procedure at the meeting, including such regulation of
the manner of voting and the conduct of discussion as seem to
him or her in order.
Section 7. NOTICE OF STOCKHOLDER BUSINESS. At an
annual or special meeting of the stockholders, only such
business shall be conducted as shall have been properly brought
before the meeting. To be properly brought before a meeting,
business must be (a) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the Board
of Directors, (b) properly brought before the meeting by or at
the direction of the Board of Directors, or (c) properly
brought before an annual meeting by a stockholder and if, and
only if, the notice of a special meeting provides for business
to be brought before the meeting by stockholders, properly
brought before the meeting by a stockholder. For business to
be properly brought before a meeting by a stockholder, the
stockholder must have given timely notice thereof in writing to
the Secretary of the Corporation. To be timely, a
stockholder's notice must be delivered to or mailed and
received at the principal executive offices of the Corporation
not less than ninety (90) days prior to the meeting; provided,
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however, that in the event that less than one hundred (100)
days' notice or prior public disclosure of the date of the
meeting is given or made to stockholders, notice by the stock-
holder to be timely must be so received not later than the
close of business on the lOth day following the day on which
such notice of the date of the annual meeting was mailed or
such public disclosure was made. A stockholder's notice to the
Secretary shall set forth as to each matter the stockholder
proposes to bring before the annual meeting (a) a brief
description of the business desired to be brought before the
annual meeting and the reasons for conducting such business at
the annual meeting, (b) the name and address, as they appear on
the Corporation's books, of the stockholder proposing such
business, (c) the class and number of shares of the Corporation
which are beneficially owned by the stockholder, and (d) any
material interest of the stockholder in such business.
Notwithstanding anything in the ByLaws to the contrary, no
business shall be conducted at an annual meeting except in
accordance with the procedures set forth in this Section 7. The
Chairman of an annual meeting shall, if the facts warrant,
determine and declare to the meeting that business was not
properly brought before the meeting and in accordance with the
provisions of this Section 7, and if he should so determine, he
shall so declare to the meeting and any such business not
properly brought before the meeting shall not be transacted.
Section 8. PROXIES AND VOTING. At any meeting of
the stockholders, every stockholder entitled to vote may vote
in person or by proxy authorized by an instrument in writing
filed in accordance with the procedure established for the
meeting.
Each stockholder shall have one vote for every share
of stock entitled to vote which is registered in his or her
name on the record date for the meeting, except as otherwise
provided herein or required by law.
All voting, including on the election of directors
but excepting where otherwise required by law, may be by a
voice vote; provided, however, that upon demand therefor by a
stockholder entitled to vote or his or her proxy, a stock vote
shall be taken. Every stock vote shall be taken by ballots,
each of which shall state the name of the stockholder or proxy
voting and such other information as may be required under the
procedure established for the meeting. Every vote taken by
ballots shall be counted by an inspector or inspectors
appointed by the chairman of the meeting.
All elections shall be determined by a plurality of
the votes cast, and except as otherwise required by law, all
other matters shall be determined by a majority of the votes
cast.
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Section 9. Stock List. A complete list of
stockholders entitled to vote at any meeting of stockholders,
arranged in alphabetical order for each class of stock and
showing the address of each such stockholder and the number of
share registered in his or her name, shall be open to the
examination of any such stockholder, for any purpose germane to
the meeting, during ordinary business hours for a period of at
least ten (10) days prior to the meeting, either at a place
within the city where the meeting is to be held, which place
shall be specified in the notice of the meeting, or if not so
specified, at the place where the meeting is to be held.
The stock list shall also be kept at the place of the
meeting during the whole time thereof and shall be open to the
examination of any such stockholder who is present. This list
shall presumptively determine the identity of the stockholders
entitled to vote at the meeting and the number of shares held
by each of them.
Section 10. ACTION BY CONSENT OF STOCKHOLDERS.
Unless otherwise restricted by the Certificate of
Incorporation, any action required or permitted to be taken at
any annual or special meeting of the stockholders may be taken
without a meeting, without prior notice and without a vote, if
a consent in writing, setting forth the action so taken, shall
be signed by the holders of outstanding stock having not less
than the minimum number of votes that would be necessary to
authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Prompt notice
of the taking of the corporate action without a meeting by less
than unanimous written consent shall be given to those
stockholders who have not consented in writing.
ARTICLE II
BOARD OF DIRECTORS
Section 1. NUMBER AND TERM OF OFFICE. The number of
directors shall initially be eight (8) and, thereafter, shall
be fixed from time to time exclusively by the Board of
Directors pursuant to a resolution adopted by a majority of the
total number of authorized directors (whether or not there
exist any vacancies in previously authorized directorships at
the time any such resolution is presented to the Board for
adoption). The directors shall be divided into three classes,
as nearly equal in number as reasonably possible, with the term
of office of the first class to expire at the 1988 annual
meeting of stockholders, the term of office of the second class
to expire at the 1989 annual meeting of stockholders and the
term of office of the third class to expire at the 1990 annual
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meeting of stockholders. At each annual meeting of
stockholders following such initial classification and
election, directors elected to succeed those directors whose
terms expire shall be elected for a term of office to expire at
the third succeeding annual meeting of stockholders after their
election.
Section 2. VACANCIES AND NEWLY CREATED
DIRECTORSHIPS. Newly created directorships resulting from any
increase in the authorized number of directors or any
vacancies in the Board of Directors resulting from death,
resignation, retirement, disqualification, removal from office
or other cause may be filled only by a majority vote of the
directors then in office, though less than a quorum, and
directors so chosen shall hold office for a term expiring at
the annual meeting of stockholders at which the term of office
of the class to which they have been elected expires. No
decrease in the number of directors constituting the Board of
Directors shall shorten the term of any incumbent director.
Section 3. REMOVAL. Any director, or the entire
Board of Directors, may be removed from office at any time, for
cause or without cause, only by the affirmative vote of the
holders of at least a majority of the voting power of all of
the then outstanding shares of capital stock of the Corporation
entitled to vote generally in the election of directors, voting
together as a single class.
Section 4. REGULAR MEETINGS. Regular meetings of
the Board of Directors shall be held at such place or places,
on such date or dates, and at such time or times as shall have
been established by the Board of Directors and publicized among
all directors. A notice of each regular meeting shall not be
required.
Section 5. SPECIAL MEETINGS. Special meetings of
the Board of Directors may be called by one-third of the
directors then in office (rounded up to the nearest whole
number) or by the chief executive officer and shall be held at
such place, on such date and at such time as they or he or she
shall fix. Notice of the place, date, and time of each such
special meeting shall be given each director by whom it is not
waived by mailing written notice not less than five (5) days
before the meeting or by telegraphing the same not less than
twenty-four (24) hours before the meeting. Unless otherwise
indicated in the notice thereof, any and all business may be
transacted at a special meeting.
Section 6. QUORUM. At any meeting of the Board of
Directors, a majority of the total number of authorized
directors shall constitute a quorum for all purposes. If a
quorum shall fail to attend any meeting, a majority of those
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present may adjourn the meeting to another place, date, or
time, without further notice or waiver thereof.
Section 7. PARTICIPATION IN MEETINGS BY CONFERENCE
TELEPHONE. Members of the Board of Directors, or of any
committee thereof, may participate in a meeting of such Board
or committee by means of conference telephone or similar
communications equipment by means of which all persons
participating in the meeting can hear each other and such
participation shall constitute presence in person at such
meeting.
Section 8. CONDUCT OF BUSINESS. At any meeting of
the Board of Directors, business shall be transacted in such
order and manner as the Board may from time to time determine,
and all matters shall be determined by the vote of a majority
of the directors present, except as otherwise provided herein
or required by law. Action may be taken by the Board of
Directors without a meeting if all members thereof consent
thereto in writing, and the writing or writings are filed with
the minutes of proceedings of the Board of Directors.
Section 9. POWERS. The Board of Directors may,
except as otherwise required by law, exercise all such powers
and do all such acts and things as may be exercised or done by
the Corporation, including, without limiting the generality of
the foregoing, the unqualified power:
(1) To declare dividends from time to time in
accordance with law;
(2) To purchase or otherwise acquire any
property, rights or privileges on such terms as it shall
determine;
(3) To authorize the creation, making and
issuance, in such form as it may determine, of written
obligations of every kind, negotiable or non-negotiable,
secured or unsecured, and to do all things necessary in
connection therewith;
(4) To remove any officer of the Corporation
with or without cause, and from time to time to devolve
the powers and duties of any officer upon any other person
for the time being;
(5) To confer upon any officer of the
Corporation the power to appoint, remove and suspend
subordinate officers, employees and agents;
(6) To adopt from time to time such stock,
option, stock purchase, bonus or other compensation plans
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for directors, officers, employees and agents of the
Corporation and its subsidiaries as it may determine;
(7) To adopt from time to time such insurance,
retirement, and other benefit plans for directors,
officers, employees and agents of the Corporation and its
subsidiaries as it may determine; and
(8) To adopt from time to time regulations, not
inconsistent with these bylaws, for the management of the
Corporation's business and affairs.
Section 10. COMPENSATION OF DIRECTORS. Directors,
as such, may receive, pursuant to resolution of the Board of
Directors, fixed fees and other compensation for their services
as directors, including, without limitation, their services as
members of committees of the Board of Directors.
Section 11. NOMINATION OF DIRECTOR CANDIDATES.
Nominations for the election of Directors may be made by the
Board of Directors or a proxy committee appointed by the Board
of Directors or by any stockholder entitled to vote in the
election of Directors generally. However, any stockholder
entitled to vote in the election of Directors generally may
nominate one or more persons for election as Directors at a
meeting only if timely notice of such stockholder's intent to
make such nomination or nominations has been given in writing
to the Secretary of the Corporation. To be timely, a
stockholder's notice must be delivered to or mailed and
received at the principal executive offices of the Corporation
not fewer than ninety (90) days prior to the meeting; provided,
however, that in the event that less than one hundred (100)
days' notice or prior public disclosure of the date of the
meeting is given or made to stockholders, notice by the
stockholder to be timely must be so received no later than the
close of business on the 10th day following the day on which
such notice of the date of the meeting was mailed or such
public disclosure was made. Each such notice shall set forth
(a) the name and address of the stockholder who intends to make
the nomination and of the person or persons to be nominated;
(b) a representation that the stockholder is a holder of record
of stock of the Corporation entitled to vote for the election
of Directors on the date of such notice and intends to appear
in person or by proxy at the meeting to nominate the person or
persons specified in the notice; (c) a description of all
arrangements or understandings between the stockholder and each
nominee and any other person or persons (naming such person or
persons) pursuant to which the nomination or nominations are to
be made by the stockholder; (d) such other information
regarding each nominee proposed by such stockholder as would be
required to be included in a proxy statement filed pursuant to
the proxy rules of the Securities and Exchange Commission, had
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the nominee been nominated, or intended to be nominated, by the
Board of Directors; and (e) the consent of each nominee to
serve as a director of the Corporation if so elected.
In the event that a person is validly designated as a
nominee in accordance with this Section 11 and shall thereafter
become unable or unwilling to stand for election to the Board
of Directors, the Board of Directors or the stockholder who
proposed such nominee, as the case may be, may designate a
substitute nominee upon delivery, not fewer than five days
prior to the date of the meeting for the election of such
nominee of a written notice to the Secretary setting forth such
information regarding such substitute nominee as would have
been required to be delivered to the Secretary pursuant to this
Section 11 had such substitute nominee been initially proposed
as a nominee. Such notice shall include a signed consent to
serve as a Director of the Corporation, if elected, of each
such substitute nominee.
If the chairman of the meeting for the election of
Directors determines that a nomination of any candidate for
election as a Director at such meeting was not made in
accordance with the applicable provisions of this Section 11,
such nomination shall be void; provided, however, that nothing
in this Section 11 shall be deemed to limit any voting rights
upon the occurrence of dividend arrearages provided to holders
of Preferred Stock pursuant to the Preferred Stock designation
for any series of Preferred Stock.
ARTICLE III
COMMITTEES
Section 1. COMMITTEES OF THE BOARD OF DIRECTORS.
The Board of Directors, by a vote a majority of the whole
Board, may from time to time designate committees of the Board,
with such lawfully delegable powers and duties as it thereby
confers, to serve at the pleasure of the Board and shall, for
those committees and any others provided for herein, elect a
director or directors to serve as the member or members,
designating, if it desires, other directors as alternate
members who may replace any absent or disqualified member at
any meeting of the committee. Any committee so designated may
exercise the power and authority of the Board of Directors to
declare a dividend, to authorize the issuance of stock or to
adopt a certificate of ownership and merger pursuant to Section
253 of the Delaware General Corporation Law if the resolution
which designates the committee or a supplemental resolution of
the Board of Directors shall so provide. In the absence or
disqualification of any member of any committee and any
alternate member in his place, the member or members of the
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committee present at the meeting and not disqualified from
voting, whether or not he or she or they constitute a quorum,
may by unanimous vote appoint another member of the Board of
Directors to act at the meeting in the place of the absent or
disqualified member.
Section 2. CONDUCT OF BUSINESS. Each committee may
determine the procedural rules for meeting and conducting its
business and shall act in accordance therewith, except as
otherwise provided herein or required by law. Adequate
provision shall be made for notice to members of all meetings;
one-third of the authorized members shall constitute a quorum
unless the committee shall consist of one or two members, in
which event one member shall constitute a quorum; and all
matters shall be determined by a majority vote of the members
present. Action may be taken by any committee without a
meeting if all members thereof consent thereto in writing, and
the writing or writings are filed with the minutes of the
proceedings of such committee.
ARTICLE IV
OFFICERS
Section 1. GENERALLY. The officers of the
Corporation shall consist of a President, one or more Vice
Presidents, a Secretary, a Treasurer and such other offices as
may from time to time be appointed b, the Board of Directors.
Officers shall be elected by the Board of Directors, which
shall consider that subject at its first meeting after every
annual meeting of stockholders. Each officer shall hold office
until his or her successor is elected and qualified or until
his or her earlier resignation or removal. The President shall
be a member of the Board of Directors. Any number of offices
may be held by the same person.
Section 2. PRESIDENT. The President shall be the
chief executive officer of the Corporation. Subject to the
provisions of these bylaws and to the direction of the Board of
Directors, he or she shall have the responsibility for the
general management and control of the business and affairs of
the Corporation and shall perform all duties and have all
powers which are commonly incident to the office of chief
executive or which are delegated to him or her by the Board of
Directors. He or she shall have power to sign all stock
certificates, contracts and other instruments of the
Corporation which are authorized and shall have general
supervision and direction of all of the other officers,
employees and agents of the Corporation.
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Section 3. VICE PRESIDENT. Each Vice President
shall have such powers and duties as may be delegated to him or
her by the Board of Directors. One Vice President shall be
designated by the Board to perform the duties and exercise the
powers of the President in the event of the President's absence
or disability.
Section 4. TREASURER. The Treasurer shall have the
responsibility for maintaining the financial records of the
Corporation and shall have custody of all monies and securities
of the Corporation. He or she shall make such disbursements of
the funds of the Corporations as are authorized and shall
render from time to time an account of all such transactions
and of the financial condition of the Corporation. The
Treasurer shall also perform such other duties as the Board of
Directors may from time to time prescribe.
Section 5. SECRETARY. The secretary shall issue all
authorized notices for, and shall keep minutes of, all meetings
of the stockholders and the Board of Directors. He or she
shall have charge of the corporate books and shall perform such
other duties as the Board of Directors may from time to time
prescribe.
Section 6. DELEGATION OF AUTHORITY. The Board of
Directors may from time to time delegate the powers or duties
of any officer to any other officers or agents, notwithstanding
any provision hereof.
Section 7. REMOVAL. Any officer of the Corporation
may be removed at any time, with or without cause, by the Board
of Directors.
Section 8. ACTION WITH RESPECT TO SECURITIES OF
OTHER CORPORATIONS. Unless otherwise directed by the Board of
Directors, the President or any officer of the Corporation
authorized by the President shall have power to vote and
otherwise act on behalf of the Corporation, in person or by
proxy, at any meeting of stockholders of or with respect to any
action of stockholders of any other corporation in which this
Corporation may hold securities and otherwise to exercise any
and all rights and powers which this Corporation may possess by
reason of its ownership of securities in such other
corporation.
ARTICLE V
STOCK
Section 1. CERTIFICATES OF STOCK. Each stockholder
shall be entitled to a certificate signed by, or in the name of
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the Corporation by, the President or a Vice President, and by
the Secretary or an Assistant Secretary, or the Treasurer or an
Assistant Treasurer, certifying the number of shares owned by
him or her. Any of or all the signatures on the certificate
may be facsimile.
Section 2. TRANSFERS OF STOCK. Transfers of stock
shall be made only upon the transfer books of the Corporation
kept at an office of, the Corporation or by transfer agents
designated to transfer shares of the stock of the Corporation.
Except where a certificate is issued in accordance with Section
4 of Article V of these bylaws, an outstanding certificate for
the number of shares involved shall be surrendered for
cancellation before a new certificate is issued therefor.
Section 3. RECORD DATE. The Board of Directors may
fix a record date, which shall not be more than sixty nor fewer
than ten days before the date of any meeting of stockholders,
nor more than sixty days prior to the time for the other action
hereinafter described, as of which there shall be determined
the stockholders who are entitled: to notice of or to vote at
any meeting of stockholders or any adjournment thereof; to
express consent to corporate action in writing without a
meeting; to receive payment of any dividend or other
distribution or allotment of any rights; or to exercise any
rights with respect to any change, conversion or exchange of
stock or with respect to any other lawful action.
Section 4. LOST, STOLEN OR DESTROYED CERTIFICATES.
In the event of the loss, theft or destruction of any
certificate of stock, another may be issued in its place
pursuant to such regulations as the Board of Directors may
establish concerning proof of such loss, theft or destruction
and concerning the giving of a satisfactory bond or bonds of
indemnity.
Section 5. REGULATIONS. The issue, transfer,
conversion and registration of certificates of stock shall be
governed by such other regulations as the Board of Directors
may establish.
ARTICLE VI
NOTICES
Section 1. NOTICES. Except as otherwise
specifically provided herein or required by law, all notices
required to be given to any stockholder, director, officer,
employee or agent shall be in writing and may in every instance
be effectively given by hand delivery to the recipient thereof,
by depositing such notice in the mails, postage paid, or by
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sending such notice by prepaid telegram or mailgram. Any such
notice shall be addressed to such stockholder, director,
officer, employee or agent at his or her last known address as
the same appears on the books of the Corporation. The time
when such notice is received by such stockholder, director,
officer, employee or agent, or by any person accepting such
notice on behalf of such person, if hand delivered, or
dispatched, if delivered through the mails or by telegram or
mailgram, shall be the time of the giving of the notice.
Section 2. WAIVERS. A written waiver of any notice,
signed by a stockholder, director, officer, employee or agent,
whether before or after the time of the event for which notice
is to be given, shall be deemed equivalent to the notice
required to be given to such stockholder, director, officer,
employee or agent. Neither the business nor the purpose of any
meeting need be specified in such a waiver.
ARTICLE VII
MISCELLANEOUS
Section 1. FACSIMILE SIGNATURES. In addition to the
provisions for use of facsimile signatures elsewhere
specifically authorized in these bylaws, facsimile signatures
of any officer or officers of the Corporation may be used
whenever and as authorized by the Board of Directors or a
committee thereof.
Section 2. CORPORATE SEAL. The Board of Directors
may provide a suitable seal, containing the name of the
Corporation, which seal shall be in the charge of the
Secretary. If and when so directed by the Board of Directors
or a committee thereof, duplicates of the seal may be kept and
used by the Treasurer or by an Assistant Secretary or Assistant
Treasurer.
Section 3. RELIANCE UPON BOOKS, REPORTS AND RECORDS.
Each director, each member of any committee designated by the
Board of Directors, and each officer of the Corporation shall,
in the performance of his duties, be fully protected in relying
in good faith upon the books of account or other records of the
Corporation, including reports made to the Corporation by any
of its officers, by an independent certified public accountant,
or by an appraiser selected with reasonable care.
Section 4. FISCAL YEAR. The fiscal year of the
Corporation shall be as fixed by the Board of Directors.
Section 5. TIME PERIODS. In applying any provision
of these bylaws which require that an act be done or not done a
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specified number of days prior to an event or that an act be
done during a period of a specified number of days prior to an
event, calendar days shall be used, the day of the doing of the
act shall be excluded, and the day of the event shall be
included.
ARTICLE VIII
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 1. RIGHT TO INDEMNIFICATION. Each person
who was or is made a party or is threatened to be made a party
to or is involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative
("proceeding"), by reason of the fact that he or she or a
person of whom he or she is the legal representative, is or was
a director, officer or employee of the Corporation or is or was
serving at the request of the Corporation as a director,
officer or employee of another corporation, or of a
partnership, joint venture, trust or other enterprise including
service with respect to employee benefit plans, whether the
basis of such proceeding is alleged action in an official
capacity as a director, officer or employee or in any other
capacity while serving as a director, officer or employee,
shall be indemnified and held harmless by the Corporation to
the fullest extent authorized by Delaware Law, against all
expenses, liability and loss (including attorneys' fees,
judgments, fines, ERISA excise taxes or penalties, amounts paid
or to be paid in settlement and amounts expended in seeking
indemnification So granted to such person under applicable law,
this by-law or any agreement with the Corporation) reasonably
incurred or suffered by such person in connection therewith and
such indemnification shall continue as to a person who has
ceased to be a director, officer or employee and shall inure to
the benefit of his or her heirs, executors and administrators;
provided, however, that, except as provided in Section 2 of
this Article VIII, the Corporation shall indemnify any such
person seeking indemnity in connection with an action, suit or
proceeding (or part thereof) initiated by such person only if
such action, suit or proceeding (or part thereof) was
authorized by the board of directors of the Corporation. Such
right shall be a contract right and shall include the right to
be paid by the Corporation expenses incurred in defending any
such proceeding in advance of its final disposition; provided,
however, that if the Delaware General Corporation Law then so
requires, the payment of such expenses incurred by a director
or officer of the Corporation in his or her capacity as a
director or officer (and not in any other capacity in which
service was or is rendered by such person while a director or
officer, including, without limitation, service to an employee
benefit plan) in advance of the final disposition of such
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proceeding, shall be made only upon delivery to the Corporation
of an undertaking, by or on behalf of such director or officer,
to repay all amounts so advanced if it should be determined
ultimately that such director or officer is not entitled to be
indemnified under this Section or otherwise.
Section 2. RIGHT OF CLAIMANT TO BRING SUIT. If a
claim under Section 1 is not paid in full by the Corporation
within twenty (20) days after a written claim has been received
by the Corporation, the claimant may at any time thereafter
bring suit against the Corporation to recover the unpaid amount
of the claim and, if such suit is not frivolous or brought in
bad faith, the claimant shall be entitled to be paid also the
expense of prosecuting such claim. It shall be a defense to
any such action (other than an action brought to enforce a
claim for expenses incurred in defending any proceeding in
advance of its final disposition where the required
undertaking, if any, has been tendered to this Corporation)
that the claimant has not met the standards of conduct which
make it permissible under the Delaware General Corporation Law
for the Corporation to indemnify the claimant for the amount
claimed, but the burden of proving such defense shall be on the
Corporation. Neither the failure of the Corporation (including
its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the
commencement of such action that indemnification of the
claimant is proper in the circumstances because he or she has
met the applicable standard of conduct set forth in the
Delaware General Corporation Law, nor an actual determination
by the Corporation (including its Board of Directors,
independent legal counsel, or its stockholders that the
claimant has not met such applicable standard of conduct, shall
be a defense to the action or create a presumption that
claimant has not met the applicable standard of conduct.
Section 3. NON-EXCLUSIVITY OF RIGHTS. The rights
conferred on any person in Sections 1 and 2 shall not be
exclusive of any other right which such persons may have or
hereafter acquire under any statute, provision of the
Certificate of Incorporation, bylaw, agreement, vote of
stockholders or disinterested directors or otherwise.
Section 4. INDEMNIFICATION CONTRACTS. The board of
directors is authorized to enter into a contract with any
director, officer, employee or agent of the Corporation, or any
person serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, including employee
benefit plans, providing for indemnification rights equivalent
to or, if the board of directors so determines, greater than,
those provided for in this Article VIII.
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Section 5. INSURANCE. The Corporation shall
maintain insurance to the extent reasonably available, at
expense, to protect itself and any such director, officer,
employee or agent of the Corporation or another corporation,
partnership, joint venture, trust or other enterprise against
any such expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person
against such expense, liability or loss under the Delaware
General Corporation Law.
Section 6. EFFECT OF AMENDMENT. Any amendment,
repeal or modification of any provision of this Article VIII by
the stockholders and the directors of the Corporation shall not
adversely affect any right or protection of a director or
officer of the Corporation existing at the time of such
amendment, repeal or modification.
ARTICLE IX
AMENDMENTS
The Board of Directors is expressly empowered to
adopt, amend or repeal ByLaws of the Corporation. Any
adoption, amendment or repeal of ByLaws of the Corporation by
the Board of Directors shall require the approval of a majority
of the total number of authorized directors (whether or not
there exist any vacancies in previously authorized
directorships at the time any resolution providing for
adoption, amendment or repeal is presented to the Board). The
stockholders shall also have power to adopt, amend or repeal
the ByLaws of the Corporation in the manner prescribed by the
laws of the State of Delaware.
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AMENDMENT TO RESTATED BYLAWS
----------------------------
The Board of Directors of National Technical Systems,
Inc., a Delaware corporation, at a duly convened meeting held
on April 19, 1994, adopted the following resolution:
WHEREAS, this corporation's Board of
Directors deems an increase in the number
of authorized directorships on desirable
for and beneficial to this corporation and
its shareholders;
NOW, THEREFORE, BE IT RESOLVED, that
pursuant to ARTICLE SIXTH, PARAGRAPH A, of
this corporation's Restated Certificate of
Incorporation, the authorized number of
directors on this corporation's Board of
Directors is hereby increased from eight
(8) to nine (9).
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APPENDIX D
ARTICLES OF INCORPORATION
OF
NTS MERGER CORPORATION
I.
The name of this corporation is:
NTS MERGER CORPORATION
II.
The purpose of this corporation is to engage in any lawful act
or activity for which a corporation may be organized under the
General Corporation Law of California other than the banking
business, the trust company business or the practice of a
profession permitted to be incorporated by the California
Corporations Code.
III.
The name and address in the State of California of this
corporation's initial agent for service of process is:
Mr. Lloyd Blonder
24007 Ventura Blvd.
Calabasas, California 91302
IV.
This corporation is authorized to issue only one class of
shares; and the total number of shares which this corporation
is authorized to issue is twenty million (20,000,000).
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No holder of any class of stock of this corporation shall be
entitled to cumulate votes at any election of directors of
this corporation.
V.
The liability of the directors of this corporation for monetary
damages shall be eliminated to the fullest extent permissible
under California law.
VI.
This corporation is authorized to provide indemnification of
agents (as defined in Section 317 of the Corporations Code) to
the fullest extent permissible under California law.
VII.
Any repeal or modification of the provisions of Articles V or
VI or this Article VII by the shareholders of the corporation
shall not adversely affect any right or protection of a
director or agent of this corporation existing at the time of
such repeal or modification.
Dated: May 29, 1996.
/s/ James J. Slaby
---------------------------------
James J. Slaby
Incorporator
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APPENDIX E
BYLAWS
OF
NTS MERGER CORPORATION
ARTICLE I
OFFICES
Section 1.1 PRINCIPAL OFFICES. The board of
directors shall fix the location of the principal executive
office of the corporation at any place within or outside the
State of California. If the principal executive office is
located outside this state, and the corporation has one or more
business offices in this state, the board of directors shall
likewise fix and designate a principal business office in the
State of California.
Section 1.2 OTHER OFFICES. The board of directors
may at any time establish branch or subordinate offices at any
place or places where the corporation is qualified to do
business.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 2.1 PLACE OF MEETINGS. Meetings of share-
holders shall be held at any place within or outside the State
of California designated by the board of directors. In the
absence of any such designation, shareholders' meetings shall
be held at the principal executive office of the corporation.
Section 2.2 ANNUAL MEETINGS OF SHAREHOLDERS. The
annual meeting of shareholders shall be held each year at a
time designated by the board of directors. At each annual
meeting, directors shall be elected and any other proper
business may be transacted. No shareholder of this corporation
shall be entitled to cumulate votes at any election of
directors of this corporation.
Section 2.3 SPECIAL MEETINGS. A special meeting of
shareholders may be called at any time by the board of
directors, or by the chairman of the board, or by the
president, or by one or more shareholders holding shares in the
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aggregate entitled to cast not less than 10% of the votes at
any such meeting.
If a special meeting is called by any person or
persons other than the board of directors, the request shall be
in writing, specifying the time of such meeting and the general
nature of the business proposed to be transacted, and shall be
delivered personally or sent by registered mail or by
telegraphic or other facsimile transmission to the chairman of
the board, the president, any vice president or the secretary
of the corporation. The officer receiving such request
forthwith shall cause notice to be given to the shareholders
entitled to vote, in accordance with the provisions of
Sections 2.4 and 2.5 of this Article II, that a meeting will be
held at the time requested by the person or persons calling the
meeting, not less than thirty-five (35) nor more than
sixty (60) days after the receipt of the request. If the
notice is not given within twenty (20) days after receipt of
the request, the person or persons requesting the meeting may
give the notice. Nothing contained in this paragraph of this
Section 2.3 shall be construed as limiting, fixing or affecting
the time when a meeting of shareholders called by action of the
board of directors may be held.
Section 2.4 NOTICE OF SHAREHOLDERS' MEETINGS. All
notices of meetings of shareholders shall be sent or otherwise
given in accordance with Section 2.5 of this Article II not
less than ten (10) nor more than sixty (60) days before the
date of the meeting being noticed. The notice shall specify
the place, date and hour of the meeting and (i) in the case of
a special meeting, the general nature of the business to be
transacted, or (ii) in the case of the annual meeting, those
matters which the board of directors, at the time of giving the
notice, intends to present for action by the shareholders. The
notice of any meeting at which directors are to be elected
shall include the name of any nominee or nominees which, at the
time of the notice, the board of directors intends to present
for election.
If action is proposed to be taken at any meeting for
approval of (i) a contract or transaction in which a director
has a direct or indirect financial interest, pursuant to
Section 310 of the Corporations Code of California, (ii) an
amendment of the articles of incorporation, pursuant to
Section 902 of such Code, (iii) a reorganization of the cor-
poration, pursuant to Section 1201 of such Code, (iv) a
voluntary dissolution of the corporation, pursuant to Section
1900 of such Code, or (v) a distribution in dissolution other
than in accordance with the rights of outstanding preferred
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shares, pursuant to Section 2007 of such Code, the notice shall
also state the general nature of such proposal.
Section 2.5 MANNER OF GIVING NOTICE; AFFIDAVIT OF
NOTICE. Notice of any meeting of shareholders shall be given
either personally or by first-class mail or telegraphic or
other written communication, charges prepaid, addressed to the
shareholder at the address of such shareholder appearing on the
books of the corporation or given by the shareholder to the
corporation for the purpose of notice. If no such address
appears on the corporation's books or is given, notice shall be
deemed to have been given if sent by mail or telegram to the
corporation's principal executive office, or if published at
least once in a newspaper of general circulation in the county
where this office is located. Notice shall be deemed to have
been given at the time when delivered personally or deposited
in the mail or sent by telegram or other means of written
communication.
If any notice addressed to a shareholder at the
address of such shareholder appearing on the books of the cor-
poration is returned to the corporation by the United States
Postal Service marked to indicate that the United States Postal
Service is unable to deliver the notice to the shareholder at
such address, all future notices or reports shall be deemed to
have been duly given without further mailing if the same shall
be available to the shareholder upon written demand of the
shareholder at the principal executive office of the
corporation for a period of one year from the date of the
giving of such notice.
An affidavit of the mailing or other means of giving
any notice of any shareholders' meeting shall be executed by
the secretary, assistant secretary or any transfer agent of the
corporation giving such notice, and shall be filed and
maintained in the minute book of the corporation.
Section 2.6 QUORUM. The presence in person or by
proxy of the holders of a majority of the shares entitled to
vote at a meeting of shareholders shall constitute a quorum for
the transaction of business. The shareholders present at a
duly called or held meeting at which a quorum is present may
continue to do business until adjournment, notwithstanding the
withdrawal of enough shareholders to leave less than a quorum,
if any action taken (other than adjournment) is approved by at
least a majority of the shares required to constitute a quorum.
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Section 2.7 ADJOURNED MEETING AND NOTICE THEREOF.
Any shareholders' meeting, annual or special, whether or not a
quorum is present, may be adjourned from time to time by the
vote of the majority of the shares represented at such meeting,
either in person or by proxy, but in the absence of a quorum,
no other business may be transacted at such meeting, except as
provided in Section 2.6 of this Article II.
When any meeting of shareholders, either annual or
special, is adjourned to another time or place, notice need not
be given of the adjourned meeting if the time and place thereof
are announced at a meeting at which the adjournment is taken,
unless a new record date for the adjourned meeting is fixed, or
unless the adjournment is for more than forty-five (45) days
from the date set for the original meeting, in which case the
board of directors shall set a new record date. Notice of any
such adjourned meeting shall be given to each shareholder of
record entitled to vote at the adjourned meeting in accordance
with the provisions of Sections 2.4 and 2.5 of this Article II.
At any adjourned meeting the corporation may transact any
business which might have been transacted at the original
meeting.
Section 2.8 VOTING. The shareholders entitled to
vote at any meeting of shareholders shall be determined in
accordance with the provisions of Section 2.11 of this
Article II, subject to the provisions of Sections 702 to 704,
inclusive, of the Corporations Code of California (relating to
voting shares held by a fiduciary, in the name of a corporation
or in joint ownership). Such vote may be by voice vote or by
ballot; provided, however, that all elections for directors
must be by ballot upon demand by a shareholder at any election
and before the voting begins. Any shareholder entitled to vote
on any matter (other than elections of directors) may vote part
of the shares in favor of the proposal and refrain from voting
the remaining shares or vote them against the proposal, but, if
the shareholder fails to specify the number of shares such
shareholder is voting affirmatively, it will be conclusively
presumed that the shareholder's approving vote is with respect
to all shares such shareholder is entitled to vote. Except as
provided in Section 2.6 of this Article II, the affirmative
vote of a majority of the shares represented and voting at a
duly held meeting at which a quorum is present (which shares
voting affirmatively also constitute at least a majority of the
required quorum) shall be the act of the shareholders, unless
the vote of a greater number or voting by classes is required
by the Corporations Code of California or the articles of
incorporation.
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At a shareholders' meeting involving the election of
directors, no shareholder shall be entitled to cumulate votes
(i.e., cast for any candidate a number of votes greater than
the number of votes which such shareholder normally is entitled
to cast) unless such candidate or candidates' names have been
placed in nomination prior to the voting and a shareholder has
given notice at the meeting prior to the voting of the
shareholder's intention to cumulate votes. If any shareholder
has given such notice, then every shareholder entitled to vote
may cumulate such shareholder's votes for candidates in
nomination and give one candidate a number of votes equal to
the number of directors to be elected multiplied by the number
of votes to which such shareholder's shares are normally
entitled, or distribute the shareholder's votes on the same
principle among any or all of the candidates, as the
shareholder thinks fit. The candidates receiving the highest
number of affirmative votes up to the number of directors to be
elected, shall be elected. Votes against a director and votes
withheld shall have no legal effect.
Section 2.9 WAIVER OF NOTICE OR CONSENT BY ABSENT
SHAREHOLDERS. The transactions at any meeting of sharehold-
ers, either annual or special, however called and noticed, and
wherever held, shall be as valid as though had at a meeting
duly held after regular call and notice, if a quorum be present
either in person or by proxy, and if, either before or after
the meeting, each person entitled to vote, not present in
person or by proxy, signs a written waiver of notice or a
consent to a holding of the meeting, or an approval of the
minutes thereof. The waiver of notice, consent to the holding
of the meeting or approval of the minutes thereof need not
specify either the business to be transacted or the purpose of
any annual or special meeting of shareholders, except that if
action is taken or proposed to be taken for approval of any of
those matters specified in the second paragraph of Section 2.4
of this Article II, the waiver of notice, consent to the
holding of the meeting or approval of the minutes thereof shall
state the general nature of such proposal. All such waivers,
consents or approvals shall be filed with the corporate records
or made a part of the minutes of the meeting.
Attendance of a person at a meeting shall also
constitute a waiver of notice of and presence at such meeting,
except when the person objects, at the beginning of the
meeting, to the transaction of any business because the meeting
is not lawfully called or convened, and except that attendance
at a meeting is not a waiver of any right to object to the
consideration of matters required by the Corporations Code of
California to be included in the notice but which were not
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included in the notice, if such objection is expressly made at
the meeting.
Section 2.10 SHAREHOLDER ACTION BY WRITTEN CONSENT
WITHOUT A MEETING. Any action which may be taken at any annual
or special meeting of shareholders may be taken without a
meeting and without prior notice, if a consent in writing,
setting forth the action so taken, is signed by the holders of
outstanding shares having not less than the minimum number of
votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were
present and voted. In the case of election of directors, such
consent shall be effective only if signed by the holders of all
outstanding shares entitled to vote for the election of
directors; provided, however, that a director may be elected at
any time to fill a vacancy not filled by the directors by the
written consent of the holders of a majority of the outstanding
shares entitled to vote for the election of directors. All
such consents shall be filed with the secretary of the
corporation and shall be maintained in the corporate records.
Any shareholder giving a written consent, or the shareholder's
proxy holders, or a transferee of the shares or a personal
representative of the shareholder or their respective proxy
holders, may revoke the consent by a writing received by the
secretary of the corporation prior to the time that written
consents of the number of shares required to authorize the
proposed action have been filed with the secretary.
If the consents of all shareholders entitled to vote
have not been solicited in writing, and if the unanimous
written consent of all such shareholders shall not have been
received, the secretary shall give prompt notice of the cor-
porate action approved by the shareholders without a meeting.
Such notice shall be given in the manner specified in
Section 2.5 of this Article II. In the case of approval of
(i) contracts or transactions in which a director has a direct
or indirect financial interest, pursuant to Section 310 of the
Corporations Code of California, (ii) indemnification of agents
of the corporation, pursuant to Section 317 of such Code,
(iii) a reorganization of the corporation, pursuant to
Section 1201 of such Code, and (iv) a distribution in dissolu-
tion other than in accordance with the rights of outstanding
preferred shares, pursuant to Section 2007 of such Code, such
notice shall be given at least ten (10) days before the
consummation of any such action authorized by any such
approval.
Section 2.11 RECORD DATE FOR SHAREHOLDER NOTICE,
VOTING, AND GIVING CONSENTS. For purposes of determining the
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shareholders entitled to notice of any meeting or to vote or
entitled to give consent to corporate action without a meeting,
the board of directors may fix, in advance, a record date,
which shall not be more than sixty (60) days nor less than
ten (10) days prior to the date of any such meeting nor more
than sixty (60) days prior to such action without a meeting,
and in such case only shareholders at the close of business on
the record date so fixed are entitled to notice and to vote or
to give consents, as the case may be, notwithstanding any
transfer of any shares on the books of the corporation after
the record date fixed as aforesaid, except as otherwise
provided in the Corporations Code of California.
If the board of directors does not so fix a record
date:
(a) The record date for determining shareholders
entitled to notice of or to vote at a meeting of shareholders
shall be at the close of business on the business day next
preceding the day on which notice is given or, if notice is
waived, at the close of business on the business day next
preceding the day on which the meeting is held.
(b) The record date for determining shareholders
entitled to give consent to corporate action in writing without
a meeting, (i) when no prior action by the board has been
taken, shall be the day on which the first written consent is
given, or (ii) when prior action of the board has been taken,
shall be at the close of business on the day on which the board
adopts the resolution relating thereto, or the sixtieth (60th)
day prior to the date of such other action, whichever is later.
Section 2.12 PROXIES. Every person entitled to vote
for directors or on any other matter shall have the right to do
so either in person or by one or more agents authorized by a
written proxy signed by the person and filed with the secretary
of the corporation. A proxy shall be deemed signed if the
shareholder's name is placed on the proxy (whether by manual
signature, typewriting, telegraphic transmission or otherwise)
by the shareholder or the shareholder's attorney in fact. A
validly executed proxy which does not state that it is
irrevocable shall continue in full force and effect unless
(i) revoked by the person executing it, prior to the vote
pursuant thereto, by a writing delivered to the corporation
stating that the proxy is revoked or by a subsequent proxy
executed by the person executing the prior proxy and presented
to the meeting, or as to any meeting by attendance at such
meeting and voting in person by the person executing the proxy;
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or (ii) written notice of the death or incapacity of the maker
of such proxy is received by the corporation before the vote
pursuant thereto is counted; provided, however, that no such
proxy shall be valid after the expiration of eleven (11) months
from the date of such proxy, unless otherwise provided in the
proxy. The revocability of a proxy that states on its face
that it is irrevocable shall be governed by the provisions of
Section 705(e) and (f) of the Corporations Code of California.
Section 2.13 INSPECTORS OF ELECTION. Before any
meeting of shareholders, the board of directors may appoint any
persons other than nominees for office to act as inspectors of
election at the meeting or its adjournment. If no inspectors
of election are so appointed, the chairman of the meeting may,
and on the request of any shareholder or a shareholder's proxy
shall, appoint inspectors of election at the meeting. The
number of inspectors shall be either one (1) or three (3). If
inspectors are appointed at a meeting on the request of one or
more shareholders or proxies, the holders of a majority of
shares or their proxies present at the meeting shall determine
whether one (1) or three (3) inspectors are to be appointed.
If any person appointed as inspector fails to appear or fails
or refuses to act, the chairman of the meeting may, and upon
the request of any shareholder or a shareholder's proxy shall,
appoint a person to fill such vacancy.
The duties of these inspectors shall be as follows:
(a) Determine the number of shares outstanding and
the voting power of each, the shares represented at the
meeting, the existence of a quorum, and the authenticity,
validity and effect of proxies;
(b) Receive votes, ballots or consents;
(c) Hear and determine all challenges and questions
in any way arising in connection with the right to vote;
(d) Count and tabulate all votes or consents;
(e) Determine when the polls shall close;
(f) Determine the result; and
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(g) Do any other acts that may be proper to conduct
the election or vote with fairness to all shareholders.
ARTICLE III
DIRECTORS
Section 3.1 POWERS. Subject to the provisions of
the Corporations Code of California Law and any limitations in
the articles of incorporation and these bylaws relating to
action required to be approved by the shareholders or by the
outstanding shares, the business and affairs of the corporation
shall be managed and all corporate powers shall be exercised by
or under the direction of the board of directors.
Without prejudice to such general powers, but subject
to the same limitations, it is hereby expressly declared that
the directors shall have the power and authority to:
(a) Select and remove all officers, agents, and
employees of the corporation, prescribe such powers and
duties for them as may not be inconsistent with law, with
the articles of incorporation or these bylaws, fix their
compensation, and require from them security for faithful
service.
(b) Change the principal executive office or
the principal business office in the State of California
from one location to another; cause the corporation to be
qualified to do business in any other state, territory,
dependency, or foreign country and conduct business within
or outside the State of California; designate any place
within or without the State of California for the holding
of any shareholders' meeting, or meetings, including
annual meetings; adopt, make and use a corporate seal, and
prescribe the forms of certificates of stock, and alter
the form of such seal and of such certificates from time
to time as in their judgment they may deem best, provided
that such forms shall at all times comply with the
provisions of law.
(c) Authorize the issuance of shares of stock
of the corporation from time to time, upon such terms as
may be lawful, in consideration of money paid, labor done
or services actually rendered, debts or securities
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cancelled or tangible or intangible property actually
received.
(d) Borrow money and incur indebtedness for the
purposes of the corporation, and cause to be executed and
delivered therefor, in the corporate name, promissory
notes, bonds, debentures, deeds of trust, mortgages,
pledges, hypothecations, or other evidences of debt and
securities therefor.
Section 3.2 NUMBER AND QUALIFICATION OF DIRECTORS.
The authorized number of directors shall be NINE (9) until
changed by a duly adopted amendment to the articles of
incorporation or by an amendment to this bylaw adopted by the
vote or written consent of holders of a majority of the
outstanding shares entitled to vote; provided, however, that an
amendment reducing the fixed number of directors to a number
less than five (5) cannot be adopted if the votes cast against
its adoption at a meeting, or the shares not consenting in the
case of action by written consent, are equal to more than
16-2/3% of the outstanding shares entitled to vote.
Section 3.3 ELECTION AND TERM OF OFFICE OF DIRECTORS.
The directors shall be divided into three classes,
designated Class I, Class II and Class III. Each class shall
consist of three directors. The term of the initial Class I
directors shall terminate on the date of the 1997 annual
meeting of shareholders; the term of the initial Class II
directors shall terminate on the date of the 1998 annual
meeting of shareholders; and the term of the initial Class III
directors shall terminate on the date of the 1999 annual
meeting of shareholders. At each annual meeting of
shareholders beginning in 1997, successors to the class of
directors whose term expires at that annual meeting shall be
elected for a three-year term. If the number of directors is
changed, any increase or decrease shall be apportioned among
the classes so as to maintain the number of directors in each
class as nearly equal as possible, and any additional directors
of any class elected to fill a vacancy resulting from an
increase in such a class shall hold office for a term that
shall coincide with the remaining term of that class, but in no
case will a decrease in the number of directors shorten the
term of any incumbent director. A director shall hold office
until the annual meeting for the year in which his or her term
expires and until his or her successor shall be elected and
shall qualify, subject, however, to prior death, resignation,
retirement, disqualification or removal from office.
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Section 3.4 VACANCIES. Any vacancy on the Board of
Directors, howsoever resulting, may be filled by a majority of
the directors then in office, even if less than a quorum, or by
a sole remaining director. Any director elected to fill a
vacancy shall hold office for a term that shall coincide with
the term of the class to which such director shall have been
elected.
A vacancy or vacancies in the board of directors
shall be deemed to exist in the case of the death, resignation
or removal of any director, or if the board of directors by
resolution declares vacant the office of a director who has
been declared of unsound mind by an order of court or con-
victed of a felony, or if the authorized number of directors be
increased, or if the shareholders fail at any meeting of
shareholders at which any director or directors are elected, to
elect the full authorized number of directors to be voted for
at that meeting.
The shareholders may elect a director or directors at
any time to fill any vacancy or vacancies not filled by the
directors, but any such election by written consent shall
require the consent of a majority of the outstanding shares
entitled to vote.
Any director may resign effective upon giving written
notice to the chairman of the board, the president, the
secretary or the board of directors, unless the notice
specifies a later time for the effectiveness of such resigna-
tion. If the resignation of a director is effective at a
future time, the board of directors may elect a successor to
take office when the resignation becomes effective.
No reduction of the authorized number of directors
shall have the effect of removing any director prior to the
expiration of his term of office.
Section 3.5 PLACE OF MEETINGS AND TELEPHONIC
MEETINGS. Regular meetings of the board of directors may be
held at any place within or without the State of California
that has been designated from time to time by resolution of the
board. In the absence of such designation, regular meetings
shall be held at the principal executive office of the
corporation. Special meetings of the board shall be held at
any place within or without the State of California that has
been designated in the notice of the meeting or, if not stated
in the notice or there is no notice, at the principal executive
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office of the corporation. Any meeting, regular or special,
may be held by conference telephone or similar communication
equipment, so long as all directors participating in such
meeting can hear one another, and all such directors shall be
deemed to be present in person at such meeting.
Section 3.6 ANNUAL MEETING. Immediately following
each annual meeting of shareholders, the board of directors
shall hold a regular meeting for the purpose of organization,
any desired election of officers and the transaction of other
business. Notice of this meeting shall not be required.
Section 3.7 OTHER REGULAR MEETINGS. Other regular
meetings of the board of directors shall be held without call
at such time as shall from time to time be fixed by the board
of directors. Such regular meetings may be held without
notice.
Section 3.8 SPECIAL MEETINGS. Special meetings of
the board of directors for any purpose or purposes may be
called at any time by the chairman of the board or the
president or any vice president or the secretary or any two
directors.
Notice of the time and place of special meetings
shall be delivered personally or by telephone to each director
or sent by first-class mail or telegram, charges pre-paid,
addressed to each director at his or her address as it is shown
upon the records of the corporation. In case such notice is
mailed, it shall be deposited in the United States mail at
least four (4) days prior to the time of the holding of the
meeting. In case such notice is delivered personally, or by
telephone or telegram, it shall be delivered personally or by
telephone or to the telegraph company at least forty-eight (48)
hours prior to the time of the holding of the meeting. Any
oral notice given personally or by telephone may be
communicated to either the director or to a person at the
office of the director who the person giving the notice has
reason to believe will promptly communicate it to the director.
The notice need not specify the purpose of the meeting nor the
place if the meeting is to be held at the principal executive
office of the corporation.
Section 3.9 QUORUM. A majority of the authorized
number of directors shall constitute a quorum for the
transaction of business, except to adjourn as hereinafter
provided. Every act or decision done or made by a majority of
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the directors present at a meeting duly held at which a quorum
is present shall be regarded as the act of the board of
directors, subject to the provisions of Section 310 of the
Corporations Code of California (approval of contracts or
transactions in which a director has a direct or indirect
material financial interest), Section 311 of that Code
(appointment of committees), and Section 317(e) of that Code
(indemnification of directors). A meeting at which a quorum is
initially present may continue to transact business
notwithstanding the withdrawal of directors, if any action
taken is approved by at least a majority of the required quorum
for such meeting.
Section 3.10 WAIVER OF NOTICE. Notice of a meeting
need not be given to any director who signs a waiver of notice
or a consent to holding the meeting or an approval of the
minutes thereof, whether before or after the meeting, or who
attends the meeting without protesting, prior thereto or at its
commencement, the lack of notice. The waiver of notice or
consent need not specify the purpose of the meeting. All such
waivers, consents and approvals shall be filed with the
corporate records or made a part of the minutes of the meeting.
Section 3.11 ADJOURNMENT. A majority of the
directors present, whether or not constituting a quorum, may
adjourn any meeting to another time and place.
Section 3.12 NOTICE OF ADJOURNMENT. Notice of the
time and place of holding an adjourned meeting need not be
given, unless the meeting is adjourned for more than twenty-
four hours, in which case notice of such time and place shall
be given prior to the time of the adjourned meeting, in the
manner specified in Section 3.8 of this Article III, to the
directors who were not present at the time of the adjournment.
Section 3.13 ACTION WITHOUT MEETING. Any action
required or permitted to be taken by the board of directors may
be taken without a meeting, if all members of the board shall
individually or collectively consent in writing to such action.
Such action by written consent shall have the same force and
effect as a unanimous vote of the board of directors. Such
written consent or consents shall be filed with the minutes of
the proceedings of the board.
Section 3.14 FEES AND COMPENSATION OF DIRECTORS.
Directors and members of committees may receive such compensa-
tion, if any, for their services, and such reimbursement of
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expenses, as may be fixed or determined by resolution of the
board of directors. Nothing contained herein shall be con-
strued to preclude any director from serving the corporation in
any other capacity as an officer, agent, employee, or
otherwise, and receiving compensation for such services.
ARTICLE IV
COMMITTEES
Section 4.1 COMMITTEES OF DIRECTORS. The board of
directors may, by resolution adopted by a majority of the
authorized number of directors, designate one or more com-
mittees, each consisting of two or more directors, to serve at
the pleasure of the board. The board may designate one or more
directors as alternate members of any committee, who may
replace any absent member at any meeting of the committee. The
appointment of members or alternate members of a committee
requires the vote of a majority of the authorized number of
directors. Any such committee, to the extent provided in the
resolution of the board, shall have all the authority of the
board, except with respect to:
(a) the approval of any action which, under the
Corporations Code of California, also requires shareholders'
approval or approval of the outstanding shares;
(b) the filling of vacancies on the board of
directors or in any committee;
(c) the fixing of compensation of the directors for
serving on the board or on any committee;
(d) the amendment or repeal of bylaws or the
adoption of new bylaws;
(e) the amendment or repeal of any resolution of the
board of directors which by its express terms is not so
amendable or repealable;
(f) a distribution to the shareholders of the
corporation, except at a rate or in a periodic amount or within
a price range determined by the board of directors; or
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(g) the appointment of any other committees of the
board of directors or the members thereof.
Section 4.2 MEETINGS AND ACTION OF COMMITTEES.
Meetings and action of committees shall be governed by, and
held and taken in accordance with, the provisions of
Article III of these bylaws, Sections 3.5 (place of meetings),
3.7 (regular meetings), 3.8 (special meetings and notice), 3.9
(quorum), 3.10 (waiver of notice), 3.11 (adjournment), 3.12
(notice of adjournment) and 3.13 (action without meeting), with
such changes in the context of those bylaws as are necessary to
substitute the committee and its members for the board of
directors and its members, except that the time of regular
meetings of committees may be determined by resolution of the
board of directors as well as by resolution of the committee;
special meetings of committees may also be called by resolution
of the board of directors; and notice of special meetings of
committees shall also be given to all alternate members, who
shall have the right to attend all meetings of the committee.
The board of directors may adopt rules for the government of
any committee not inconsistent with the provisions of these
bylaws.
ARTICLE V
OFFICERS
Section 5.1 OFFICERS. The officers of the corpora-
tion shall be a president, a secretary and a chief financial
officer. The corporation may also have, at the discretion of
the board of directors, a chairman of the board, one or more
vice-presidents, one or more assistant secretaries, one or more
assistant treasurers, and such other officers as may be
appointed in accordance with the provisions of Section 5.3 of
this Article V. Any number of offices may be held by the same
person.
Section 5.2 ELECTION OF OFFICERS. The officers of
the corporation, except such officers as may be appointed in
accordance with the provisions of Section 5.3 or Section 5.5 of
this Article V, shall be chosen by the board of directors, and
each shall serve at the pleasure of the board, subject to the
rights, if any, of an officer under any contract of employment.
Section 5.3 SUBORDINATE OFFICERS, ETC. The board of
directors may appoint, and may empower the president to
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appoint, such other officers as the business of the corpora-
tion may require, each of whom shall hold office for such
period, have such authority and perform such duties as are
provided in the bylaws or as the board of directors may from
time to time determine.
Section 5.4 REMOVAL AND RESIGNATION OF OFFICERS.
Subject to the rights, if any, of an officer under any con-
tract of employment, any officer may be removed, either with or
without cause, by the board of directors, at any regular or
special meeting thereof, or, except in case of an officer
chosen by the board of directors, by any officer upon whom such
power of removal may be conferred by the board of directors.
Any officer may resign at any time by giving written
notice to the corporation. Any such resignation shall take
effect at the date of the receipt of such notice or at any
later time specified therein; and, unless otherwise specified
therein, the acceptance of such resignation shall not be
necessary to make it effective. Any such resignation is with-
out prejudice to the rights, if any, of the corporation under
any contract to which the officer is a party.
Section 5.5 VACANCIES IN OFFICES. A vacancy in any
office because of death, resignation, removal, disquali-
fication or any other cause shall be filled in the manner
prescribed in these bylaws for regular appointments to such
office.
Section 5.6 CHAIRMAN OF THE BOARD. The chairman of
the board, if such an officer be elected, shall, if present,
preside at all meetings of the board of directors and exercise
and perform such other powers and duties as may be from time to
time assigned to him by the board of directors or prescribed by
the bylaws. If there is no president, the chairman of the
board shall in addition be the chief executive officer of the
corporation and shall have the powers and duties prescribed in
Section 5.7 of this Article V.
Section 5.7 PRESIDENT. Subject to such supervisory
powers, if any, as may be given by the board of directors to
the chairman of the board, if there be such an officer, the
president shall be the chief executive officer of the
corporation and shall, subject to the control of the board of
directors, have general supervision, direction and control of
the business and the officers of the corporation. He shall
preside at all meetings of the shareholders and, in the absence
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of the chairman of the board, or if there be none, at all
meetings of the board of directors. He shall have the general
powers and duties of management usually vested in the office of
president of a corporation, and shall have such other powers
and duties as may be prescribed by the board of directors or
the bylaws.
Section 5.8 VICE PRESIDENTS. In the absence or
disability of the president, the vice presidents, if any, in
order of their rank as fixed by the board of directors or, if
not ranked, a vice president designated by the board of
directors, shall perform all the duties of the president, and
when so acting shall have all the powers of, and be subject to
all restrictions upon, the president. The vice presidents
shall have such other powers and perform such other duties as
from time to time may be prescribed for them respectively by
the board of directors or the bylaws, the president or the
chairman of the board.
Section 5.9 SECRETARY. The secretary shall keep or
cause to be kept, at the principal executive office or such
other place as the board of directors may order, a book of
minutes of all meetings and actions of directors, committees of
directors and shareholders, with the time and place of holding,
whether regular or special, and, if special, how authorized,
the notice thereof given, the names of those present at
directors' and committee meetings, the number of shares present
or represented at shareholders' meetings, and the proceedings
thereof.
The secretary shall keep, or cause to be kept, at the
principal executive office or at the office of the cor-
poration's transfer agent or registrar, as determined by
resolution of the board of directors, a share register, or a
duplicate share register, showing the names of all share-
holders and their addresses, the number and classes of shares
held by each, the number and date of certificates issued for
the same, and the number and date of cancellation of every
certificate surrendered for cancellation.
The secretary shall give, or cause to be given,
notice of all meetings of the shareholders and of the board of
directors required by the bylaws or by law to be given, and he
shall keep the seal of the corporation, if one be adopted, in
safe custody, and shall have such other powers and perform such
other duties as may be prescribed by the board of directors or
by the bylaws.
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Section 5.10 CHIEF FINANCIAL OFFICER. The chief
financial officer shall keep and maintain, or cause to be kept
and maintained, adequate and correct books and records of
accounts of the properties and business transactions of the
corporation, including accounts of its assets, liabilities,
receipts, disbursements, gains, losses, capital, retained
earnings and shares. The books of account shall at all
reasonable times be open to inspection by any director.
The chief financial officer shall deposit all moneys
and other valuables in the name and to the credit of the
corporation with such depositaries as may be designated by the
board of directors. He shall disburse the funds of the
corporation as may be ordered by the board of directors, shall
render to the president and directors, whenever they request
it, an account of all of his transactions as chief financial
officer and of the financial condition of the corporation, and
shall have such other powers and perform such other duties as
may be prescribed by the board of directors or the bylaws.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES
AND OTHER AGENTS
Section 6.1 INDEMNIFICATION - THIRD PARTY
PROCEEDINGS. The corporation shall indemnify any person (the
"Indemnitee") who is or was a party or is threatened to be made
a party to any proceeding (other than an action by or in the
right of the corporation to procure a judgment in its favor) by
reason of the fact that Indemnitee is or was a director or
officer of the corporation, or any subsidiary of the
corporation, and the corporation may indemnify a person who is
or was a party or is threatened to be made a party to any
proceeding (other than an action by or in the right of the
corporation to procure a judgment in its favor) by reason of
the fact that such person is or was an employee or other agent
of the corporation (the "Indemnitee Agent") by reason of any
action or inaction on the part of Indemnitee or Indemnitee
Agent while an officer, director or agent or by reason of the
fact that Indemnitee or Indemnitee Agent is or was serving at
the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture,
trust or other enterprise, against expenses (including subject
to Section 6.19, attorneys' fees and any expenses of
establishing a right to indemnification pursuant to this
Article VI or under California law), judgments, fines,
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settlements (if such settlement is approved in advance by the
corporation, which approval shall not be unreasonably withheld)
and other amounts actually and reasonably incurred by
Indemnitee or Indemnitee Agent in connection with such
proceeding if Indemnitee or Indemnitee Agent acted in good
faith and in a manner Indemnitee or Indemnitee Agent reasonably
believed to be in or not opposed to the best interests of the
corporation and, in the case of a criminal proceeding, if
Indemnitee or Indemnitee Agent had no reasonable cause to
believe Indemnitee's or Indemnitee Agent's conduct was
unlawful. The termination of any proceeding by judgment,
order, settlement, conviction or upon a plea of nolo contendere
or its equivalent shall not, of itself, create a presumption
that Indemnitee or Indemnitee Agent did not act in good faith
and in a manner which Indemnitee or Indemnitee Agent reasonably
believed to be in or not opposed to the best interests of the
corporation, or with respect to any criminal proceedings, would
not create a presumption that Indemnitee or Indemnitee Agent
had reasonable cause to believe that Indemnitee's or Indemnitee
Agent's conduct was unlawful.
Section 6.2 INDEMNIFICATION - PROCEEDINGS BY OR IN
THE RIGHT OF THE CORPORATION. The corporation shall indemnify
Indemnitee and may indemnify Indemnitee Agent if Indemnitee, or
Indemnitee Agent, as the case may be, was or is a party or is
threatened to be made a party to any threatened, pending or
completed action by or in the right of the corporation or any
subsidiary of the corporation to procure a judgment in its
favor by reason of the fact that Indemnitee or Indemnitee Agent
is or was a director, officer, employee or other agent of the
corporation, or any subsidiary of the corporation, by reason of
any action or inaction on the part of Indemnitee or Indemnitee
Agent while an officer, director or agent or by reason of the
fact that Indemnitee or Indemnitee Agent is or was serving at
the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture,
trust or other enterprise, against expenses (including subject
to Section 6.19, attorneys' fees and any expenses of
establishing a right to indemnification pursuant to this
Article VI or under California law) and, to the fullest extent
permitted by law, amounts paid in settlement, in each case to
the extent actually and reasonably incurred by Indemnitee or
Indemnitee Agent in connection with the defense or settlement
of the proceeding if Indemnitee or Indemnitee Agent acted in
good faith and in a manner Indemnitee or Indemnitee Agent
believed to be in or not opposed to the best interests of the
corporation and its shareholders, except that no
indemnification shall be made with respect to any claim, issue
or matter to which Indemnitee (or Indemnitee Agent) shall have
been adjudged to have been liable to the corporation in the
performance of Indemnitee's or Indemnitee Agent's duty to the
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corporation and its shareholders, unless and only to the extent
that the court in which such proceeding is or was pending shall
determine upon application that, in view of all the
circumstances of the case, Indemnitee (or Indemnitee Agent) is
fairly and reasonably entitled to indemnity for expenses and
then only to the extent that the court shall determine.
Section 6.3 SUCCESSFUL DEFENSE ON MERITS. To the
extent that Indemnitee (or Indemnitee Agent) without limita-
tion has been successful on the merits in defense of any
proceeding referred to in Sections 6.1 or 6.2 above, or in
defense of any claim, issue or matter therein, the corporation
shall indemnify Indemnitee (or Indemnitee Agent) against
expenses (including attorneys' fees) actually and reasonably
incurred by Indemnitee (or Indemnitee Agent) in connection
therewith.
Section 6.4 CERTAIN TERMS DEFINED. For purposes of
this Article VI, references to "other enterprises" shall
include employee benefit plans, references to "fines" shall
include any excise taxes assessed on Indemnitee or Indemnitee
Agent with respect to an employee benefit plan, and references
to "proceeding" shall include any threatened, pending or com-
pleted action or proceeding, whether civil, criminal,
administrative or investigative. References to "corporation"
include all constituent corporations absorbed in a consolida-
tion or merger as well as the resulting or surviving corpora-
tion, so that any person who is or was a director, officer,
employee, or other agent of such a constituent corporation or
who, being or having been such a director, officer, employee or
other agent of another corporation, partnership, joint venture,
trust or other enterprise shall stand in the same position
under the provisions of this Article VI with respect to the
resulting or surviving corporation as such person would if he
or she had served the resulting or surviving corporation in the
same capacity.
Section 6.5 ADVANCEMENT OF EXPENSES. The
corporation shall advance all expenses incurred by Indemnitee
and may advance all or any expenses incurred by Indemnitee
Agent in connection with the investigation, defense, settlement
(excluding amounts actually paid in settlement of any action,
suit or proceeding) or appeal of any civil or criminal action,
suit or proceeding referenced in Sections 6.1 or 6.2 hereof.
Indemnitee or Indemnitee Agent hereby undertakes to repay such
amounts advanced only if, and to the extent that, it shall be
determined ultimately that Indemnitee or Indemnitee Agent is
not entitled to be indemnified by the corporation as authorized
hereby. The advances to be made hereunder shall be paid by the
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corporation (i) to Indemnitee within twenty (20) days following
delivery of a written request therefor by Indemnitee to the
corporation; and (ii) to Indemnitee Agent within twenty (20)
days following the later of a written request therefor by
Indemnitee Agent to the corporation and determination by the
corporation to advance expenses to Indemnitee Agent pursuant to
the corporation's discretionary authority hereunder.
Section 6.6 NOTICE OF CLAIM. Indemnitee shall, as a
condition precedent to his or her right to be indemnified under
this Article VI, and Indemnitee Agent shall, as a condition
precedent to his or her ability to be indemnified under this
Article VI, give the corporation notice in writing as soon as
practicable of any claim made against Indemnitee or Indemnitee
Agent, as the case may be, for which indemnification will or
could be sought under this Article VI. Notice to the
corporation shall be directed to the secretary of the
corporation at the principal business office of the corpora-
tion (or such other address as the corporation shall designate
in writing to Indemnitee). In addition, Indemnitee or
Indemnitee Agent shall give the corporation such information
and cooperation as it may reasonably require and as shall be
within Indemnitee's or Indemnitee Agent's power.
Section 6.7 ENFORCEMENT RIGHTS. Any indemnifica-
tion provided for in Sections 6.1 or 6.2 or 6.3 shall be made
no later than sixty (60) days after receipt of the written
request of Indemnitee. If a claim or request under this
Article VI, under any statute, or under any provision of the
corporation's Articles of Incorporation providing for indemni-
fication is not paid by the corporation, or on its behalf,
within sixty (60) days after written request for payment
thereof has been received by the corporation, Indemnitee may,
but need not, at any time thereafter bring suit against the
corporation to recover the unpaid amount of the claim or
request, and subject to Section 6.19, Indemnitee shall also be
entitled to be paid for the expenses (including attorneys'
fees) of bringing such action. It shall be a defense to any
such action (other than an action brought to enforce a claim
for expenses incurred in connection with any action, suit or
proceeding in advance of its final disposition) that Indemni-
tee has not met the standards of conduct which make it per-
missible under applicable law for the corporation to indemnify
Indemnitee for the amount claimed, but the burden of proving
such defense shall be on the corporation, and Indemnitee shall
be entitled to receive interim payments of expenses pursuant to
Section 6.5 unless and until such defense may be finally
adjudicated by court order or judgment for which no further
right of appeal exists. The parties hereto intend that if the
corporation contests Indemnitee's right to indemnification, the
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question of Indemnitee's right to indemnification shall be a
decision for the court, and no presumption regarding whether
the applicable standard has been met will arise based on any
determination or lack of determination of such by the
corporation (including its Board or any subgroup thereof,
independent legal counsel or its shareholders). The board of
directors may, in its discretion, provide by resolution for
similar or identical enforcement rights for any Indemnitee
Agent.
Section 6.8 ASSUMPTION OF DEFENSE. In the event the
corporation shall be obligated to pay the expenses of any
proceeding against the Indemnitee (or Indemnitee Agent), the
corporation, if appropriate, shall be entitled to assume the
defense of such proceeding with counsel approved by Indemnitee
(or Indemnitee Agent), which approval shall not be unreason-
ably withheld, upon the delivery to Indemnitee (or Indemnitee
Agent) of written notice of its election so to do. After
delivery of such notice, approval of such counsel by Indem-
nitee (or Indemnitee Agent) and the retention of such counsel
by the corporation, the corporation will not be liable to
Indemnitee (or Indemnitee Agent) under this Article VI for any
fees of counsel subsequently incurred by Indemnitee (or
Indemnitee Agent) with respect to the same proceeding, unless
(i) the employment of counsel by Indemnitee (or Indemnitee
Agent) is authorized by the corporation, (ii) Indemnitee (or
Indemnitee Agent) shall have reasonably concluded that there
may be a conflict of interest of such counsel retained by the
corporation between the corporation and Indemnitee (or
Indemnitee Agent) in the conduct of such defense, or (iii) the
corporation ceases or terminates the employment of such coun-
sel with respect to the defense of such proceeding, in any of
which events then the fees and expenses of Indemnitee's (or
Indemnitee Agent's) counsel shall be at the expense of the
corporation. At all times, Indemnitee (or Indemnitee Agent)
shall have the right to employ other counsel in any such pro-
ceeding at Indemnitee's (or Indemnitee Agent's) expense.
Section 6.9 APPROVAL OF EXPENSES. No expenses for
which indemnity shall be sought under this Article VI, other
than those in respect of judgments and verdicts actually
rendered, shall be incurred without the prior consent of the
corporation, which consent shall not be unreasonably withheld.
Section 6.10 SUBROGATION. In the event of payment
under this Article VI, the corporation shall be subrogated to
the extent of such payment to all of the rights of recovery of
the Indemnitee (or Indemnitee Agent), who shall do all things
that may be necessary to secure such rights, including the
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execution of such documents necessary to enable the corporation
effectively to bring suit to enforce such rights.
Section 6.11 EXCEPTIONS. Notwithstanding any other
provision herein to the contrary, the corporation shall not be
obligated pursuant to this Article VI:
(a) Excluded Acts. To indemnify Indemnitee (i) as
to circumstances in which indemnity is expressly prohibited
pursuant to California law, or (ii) for any acts or omissions
or transactions from which a director may not be relieved of
liability pursuant to California law; or
(b) Claims Initiated by Indemnitee. To indemnify or
advance expenses to Indemnitee with respect to proceedings or
claims initiated or brought voluntarily by Indemnitee and not
by way of defense, except with respect to proceedings brought
to establish or enforce a right to indemnification under this
Article VI or any other statute or law or as otherwise required
under the Corporations Code of California, but such
indemnification or advancement of expenses may be provided by
the corporation in specific cases if the board of directors has
approved the initiation or bringing of such suit; or
(c) Lack of Good Faith. To indemnify Indemnitee for
any expenses incurred by the Indemnitee with respect to any
proceeding instituted by Indemnitee to enforce or interpret
this Article VI, if a court of competent jurisdiction
determines that such proceeding was not made in good faith or
was frivolous; or
(d) Insured Claims. To indemnify Indemnitee for
expenses or liabilities of any type whatsoever (including, but
not limited to, judgments, fines, ERISA excise taxes or
penalties, and amounts paid in settlement) which have been paid
directly to Indemnitee by an insurance carrier under a policy
of officers' and directors' liability insurance maintained by
the corporation; or
(e) Claims Under Section 16(b). To indemnify
Indemnitee for expenses and the payment of profits arising from
the purchase and sale by Indemnitee of securities in violation
of Section 16(b) of the Securities Exchange Act of 1934, as
amended, or any similar successor statute.
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Section 6.12 PARTIAL INDEMNIFICATION. If Indemnitee
is entitled under any provision of this Article VI to
indemnification by the corporation for some or a portion of the
expenses, judgments, fines or penalties actually or reasonably
incurred by the Indemnitee in the investigation, defense,
appeal or settlement of any civil or criminal action, suit or
proceeding, but not, however, for the total amount thereof, the
corporation shall nevertheless indemnify Indemnitee for the
portion of such expenses, judgments, fines or penalties to
which Indemnitee is entitled.
Section 6.13 COVERAGE. This Article VI shall, to
the extent permitted by law, apply to acts or omissions of
(i) Indemnitee which occurred prior to the adoption of this
Article VI if Indemnitee was a director or officer of the
corporation or was serving at the request of the corporation as
a director or officer of another corporation, partnership,
joint venture, trust or other enterprise, at the time such act
or omission occurred; and (ii) Indemnitee Agent which occurred
prior to the adoption of this Article VI if Indemnitee Agent
was an employee or other agent of the corporation or was
serving at the request of the corporation as an employee or
agent of another corporation, partnership, joint venture, trust
or other enterprise at the time such act or omission occurred.
All rights to indemnification under this Article VI shall be
deemed to be provided by a contract between the corporation and
the Indemnitee in which the corporation hereby agrees to
indemnify Indemnitee to the fullest extent permitted by law,
notwithstanding that such indemnification is not specifically
authorized by the corporation's Articles of Incorporation,
these Bylaws or by statute. Any repeal or modification of
these Bylaws, the Corporations Code of California or any other
applicable law shall not affect any rights or obligations then
existing under this Article VI. The provisions of this
Article VI shall continue as to Indemnitee and Indemnitee Agent
for any action taken or not taken while serving in an
indemnified capacity even though the Indemnitee or Indemnitee
Agent may have ceased to serve in such capacity at the time of
any action, suit or other covered proceeding. This Article VI
shall be binding upon the corporation and its successors and
assigns and shall inure to the benefit of Indemnitee and
Indemnitee Agent and Indemnitee's and Indemnitee Agent's
estate, heirs, legal representatives and assigns.
Section 6.14 NON-EXCLUSIVITY. Nothing herein shall
be deemed to diminish or otherwise restrict any rights to which
Indemnitee or Indemnitee Agent may be entitled under the
corporation's Articles of Incorporation, these Bylaws, any
agreement, any vote of shareholders or disinterested directors,
or under the laws of the State of California.
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Section 6.15 SEVERABILITY. Nothing in this
Article VI is intended to require or shall be construed as
requiring the corporation to do or fail to do any act in
violation of applicable law. If this Article VI or any portion
hereof shall be invalidated on any ground by any court of
competent jurisdiction, then the corporation shall nevertheless
indemnify Indemnitee or Indemnitee Agent to the fullest extent
permitted by any applicable portion of this Article VI that
shall not have been invalidated.
Section 6.16 MUTUAL ACKNOWLEDGMENT. Both the
corporation and Indemnitee acknowledge that in certain
instances, Federal law or applicable public policy may prohibit
the corporation from indemnifying its directors and officers
under this Article VI or otherwise. Indemnitee understands and
acknowledges that the corporation has undertaken or may be
required in the future to undertake with the Securities and
Exchange Commission to submit the question of indemnification
to a court in certain circumstances for a determination of the
corporation's right under public policy to indemnify
Indemnitee.
Section 6.17 OFFICER AND DIRECTOR LIABILITY
INSURANCE. The corporation shall, from time to time, make the
good faith determination whether or not it is practicable for
the corporation to obtain and maintain a policy or policies of
insurance with reputable insurance companies providing the
officers and directors of the corporation with coverage for
losses from wrongful acts, or to ensure the corporation's
performance of its indemnification obligations under this
Article VI. Among other considerations, the corporation will
weigh the costs of obtaining such insurance coverage against
the protection afforded by such coverage. Notwithstanding the
foregoing, the corporation shall have no obligation to obtain
or maintain such insurance if the corporation determines in
good faith that such insurance is not reasonably available, if
the premium costs for such insurance are disproportionate to
the amount of coverage provided, if the coverage provided by
such insurance is limited by exclusions so as to provide an
insufficient benefit, or if Indemnitee is covered by similar
insurance maintained by a subsidiary or parent of the
corporation.
Section 6.18 NOTICE TO INSURERS. If, at the time of
the receipt of a notice of a claim pursuant to Section 6.6
hereof, the corporation has director and officer liability
insurance in effect, the corporation shall give prompt notice
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of the commencement of such proceeding to the insurers in
accordance with the procedures set forth in the respective
policies. The corporation shall thereafter take all necessary
or desirable action to cause such insurers to pay, on behalf of
the Indemnitee, all amounts payable as a result of such
proceeding in accordance with the terms of such policies.
Section 6.19 ATTORNEYS' FEES. In the event that any
action is instituted by Indemnitee under this Article VI to
enforce or interpret any of the terms hereof, Indemnitee shall
be entitled to be paid all court costs and expenses, including
reasonable attorneys' fees, incurred by Indemnitee with respect
to such action, unless as a part of such action, the court of
competent jurisdiction determines that the action was not
instituted in good faith or was frivolous. In the event of an
action instituted by or in the name of the corporation under
this Article VI, or to enforce or interpret any of the terms of
this Article VI, Indemnitee shall be entitled to be paid all
court costs and expenses, including attorneys' fees, incurred
by Indemnitee in defense of such action (including with respect
to Indemnitee's counterclaims and cross-claims made in such
action), unless as a part of such action the court determines
that Indemnitee's defenses to such action were not made in good
faith or were frivolous. The board of directors may, in its
discretion, provide by resolution for payment of such
attorneys' fees to any Indemnitee Agent.
Section 6.20 NOTICE. All notices, requests, demands
and other communications under this Article VI shall be in
writing and shall be deemed duly given (i) if delivered by hand
and receipted for by the addressee, on the date of such
receipt, or (ii) if mailed by domestic certified or registered
mail with postage prepaid, on the third business day after the
date postmarked.
ARTICLE VII
RECORDS AND REPORTS
Section 7.1 MAINTENANCE AND INSPECTION OF SHARE
REGISTER. The corporation shall keep at its principal
executive office, or at the office of its transfer agent or
registrar, if either be appointed and as determined by
resolution of the board of directors, a record of its share-
holders, giving the names and addresses of all shareholders and
the number and class of shares held by each shareholder.
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A shareholder or shareholders of the corporation
holding at least five percent (5%) in the aggregate of the
outstanding voting shares of the corporation may (i) inspect
and copy the records of shareholders' names and addresses and
shareholdings during usual business hours upon five days prior
written demand upon the corporation, and/or (ii) obtain from
the transfer agent of the corporation, upon written demand and
upon the tender of such transfer agent's usual charges for such
list, a list of the shareholders' names and addresses, who are
entitled to vote for the election of directors, and their
shareholdings, as of the most recent record date for which such
list has been compiled or as of a date specified by the
shareholder subsequent to the date of demand. Such list shall
be made available by the transfer agent on or before the later
of five (5) days after the demand is received or the date
specified therein as the date as of which the list is to be
compiled. The record of shareholders shall also be open to
inspection upon the written demand of any shareholder or holder
of a voting trust certificate, at any time during usual
business hours, for a purpose reasonably related to such
holder's interests as a shareholder or as the holder of a
voting trust certificate. Any inspection and copying under
this Section may be made in person or by an agent or attorney
of the shareholder or holder of a voting trust certificate
making such demand.
Section 7.2 MAINTENANCE AND INSPECTION OF BYLAWS.
The corporation shall keep at its principal executive office,
or if its principal executive office is not in the State of
California at its principal business office in this state, the
original or a copy of the bylaws as amended to date, which
shall be open to inspection by the shareholders at all reason-
able times during office hours. If the principal executive
office of the corporation is outside this State and the
corporation has no principal business office in this state, the
Secretary shall, upon the written request of any shareholder,
furnish to such shareholder a copy of the bylaws as amended to
date.
Section 7.3 MAINTENANCE AND INSPECTION OF OTHER
CORPORATE RECORDS. The accounting books and records and
minutes of proceedings of the shareholders and the board of
directors and any committee or committees of the board of
directors shall be kept at such place or places designated by
the board of directors, or, in the absence of such desig-
nation, at the principal executive office of the corporation.
The minutes shall be kept in written form and the accounting
books and records shall be kept either in written form or in
any other form capable of being converted into written form.
Such minutes and accounting books and records shall be open to
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inspection upon the written demand of any shareholder or holder
of a voting trust certificate, at any reasonable time during
usual business hours, for a purpose reasonably related to such
holder's interests as a shareholder or as the holder of a
voting trust certificate. Such inspection may be made in
person or by an agent or attorney, and shall include the right
to copy and make extracts. The foregoing rights of inspection
shall extend to the records of each subsidiary of the
corporation.
Section 7.4 INSPECTION BY DIRECTORS. Every director
shall have the absolute right at any reasonable time to inspect
all books, records, and documents of every kind and the
physical properties of the corporation and each of its
subsidiary corporations. This inspection by a director may be
made in person or by an agent or attorney and the right of
inspection includes the right to copy and make extracts of
documents.
Section 7.5 ANNUAL REPORT TO SHAREHOLDERS. The
annual report to shareholders referred to in Section 1501 of
the Corporations Code of California is expressly dispensed
with, but nothing herein shall be interpreted as prohibiting
the board of directors from issuing annual or other periodic
reports to the shareholders of the corporation as they deem
appropriate.
Section 7.6 FINANCIAL STATEMENTS. A copy of any
annual financial statement and any income statement of the
corporation for each quarterly period of each fiscal year, and
any accompanying balance sheet of the corporation as of the end
of each such period, that has been prepared by the corporation
shall be kept on file in the principal executive office of the
corporation for twelve (12) months and each such statement
shall be exhibited at all reasonable times to any shareholder
demanding an examination of any such statement or a copy shall
be mailed to any such shareholder.
If no annual report for the last fiscal year has been
sent to shareholders, the corporation shall, upon the written
request of any shareholder made more than 120 days after the
close of such fiscal year, deliver or mail to such shareholder,
within thirty (30) days after such request a balance sheet as
of the end of such fiscal year and an income statement and
statement of changes in financial position for such fiscal
year.
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If a shareholder or shareholders holding at least
five percent (5%) of the outstanding shares of any class of
stock of the corporation make a written request to the cor-
poration for an income statement of the corporation for the
three-month, six-month or nine-month period of the then current
fiscal year ended more than thirty (30) days prior to the date
of the request and a balance sheet of the corporation as of the
end of such period and, in addition, if no annual report for
the last fiscal year has been sent to shareholders, a balance
sheet as of the end of such fiscal year and an income statement
and statement of changes in financial position for such fiscal
year, then, the chief financial officer shall cause such
statements to be prepared, if not already prepared, and shall
deliver personally or mail such statement or statements to the
person making the request within thirty (30) days after the
receipt of such request.
The income statements and balance sheets referred to
in this section shall be accompanied by the report thereon, if
any, of any independent accountants engaged by the corporation
or the certificate of an authorized officer of the corporation
that such financial statements were prepared without audit from
the books and records of the corporation.
Section 7.7 ANNUAL STATEMENT OF GENERAL INFORMA-
TION. The corporation shall file annually with the Secretary
of State of the State of California, on the prescribed form, a
statement setting forth the names and complete business or
residence addresses of all incumbent directors, the number of
vacancies on the board of directors, if any, the names and
complete business or residence addresses of the chief execu-
tive officer, secretary and chief financial officer, the street
address of its principal executive office or principal business
office in this state and the general type of business
constituting the principal business activity of the corpora-
tion, together with a designation of the agent of the
corporation for the purpose of service of process, all in
compliance with Section 1502 of the Corporations Code of
California.
ARTICLE VIII
GENERAL CORPORATE MATTERS
Section 8.1 RECORD DATE FOR PURPOSES OTHER THAN
NOTICE AND VOTING. For purposes of determining the share-
holders entitled to receive payment of any dividend or other
distribution or allotment of any rights or entitled to exercise
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any rights in respect of any other lawful action (other than
action by shareholders by written consent without a meeting),
the board of directors may fix, in advance, a record date,
which shall not be more than sixty (60) days prior to any such
action, and in such case only shareholders of record on the
date so fixed are entitled to receive the dividend,
distribution or allotment of rights or to exercise the rights,
as the case may be, notwithstanding any transfer of any shares
on the books of the corporation after the record date fixed as
aforesaid, except as otherwise provided in the Corporations
Code of California.
If the board of directors does not so fix a record
date, the record date for determining shareholders for any such
purpose shall be at the close of business on the day on which
the board adopts the resolution relating thereto, or the
sixtieth (60th) day prior to the date of such action, whichever
is later.
Section 8.2 CHECKS, DRAFTS, EVIDENCES OF INDEBTED-
NESS. All checks, drafts or other orders for payment of money,
notes or other evidences of indebtedness, issued in the name of
or payable to the corporation, shall be signed or endorsed by
such person or persons and in such manner as, from time to
time, shall be determined by resolution of the Board of
Directors.
Section 8.3 CORPORATE CONTRACTS AND INSTRUMENTS; HOW
EXECUTED. The board of directors, except as otherwise provided
in these bylaws, may authorize any officer or officers, agent
or agents, to enter into any contract or execute any instrument
in the name of and on behalf of the corporation, and such
authority may be general or confined to specific instances;
and, unless so authorized or ratified by the board of directors
or within the agency power of an officer, no officer, agent or
employee shall have any power or authority to bind the
corporation by any contract or engagement or to pledge its
credit or to render it liable for any purpose or for any
amount.
Section 8.4 CERTIFICATES FOR SHARES. A certificate
or certificates for shares of the capital stock of the cor-
poration shall be issued to each shareholder when any such
shares are fully paid, and the board of directors may authorize
the issuance of certificates for shares as partly paid provided
that such certificates shall state the amount of the
consideration to be paid therefor and the amount paid thereon.
All certificates shall be signed in the name of the corporation
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by the chairman of the board or vice chairman of the board or
the president or a vice president and by the chief financial
officer or an assistant treasurer or the secretary or any
assistant secretary, certifying the number of shares and the
class or series of shares owned by the shareholder. Any or all
of the signatures on the certificate may be facsimile. In case
any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or
registrar before such certificate is issued, it may be issued
by the corporation with the same effect as if such person were
an officer, transfer agent or registrar at the date of issue.
Section 8.5 LOST CERTIFICATES. Except as herein-
after in this Section provided, no new certificates for shares
shall be issued in lieu of an old certificate unless the latter
is surrendered to the corporation and cancelled at the same
time. The board of directors may in case any share certificate
or certificate for any other security is lost, stolen or
destroyed, authorize the issuance of a new certificate in lieu
thereof, upon such terms and conditions as the board may
require including provision for indemnification of the
corporation secured by a bond or other adequate security
sufficient to protect the corporation against any claim that
may be made against it, including any expense or liability, on
account of the alleged loss, theft or destruction of such
certificate or the issuance of such new certificate.
Section 8.6 REPRESENTATION OF SHARES OF OTHER
CORPORATIONS. The chairman of the board, the president, or any
vice president, or any other person authorized by resolution of
the board of directors by any of the foregoing designated
officers, is authorized to vote on behalf of the corporation
any and all shares of any other corporation or corporations,
foreign or domestic, standing in the name of the corporation.
The authority herein granted to said officers to vote or
represent on behalf of the corporation any and all shares held
by the corporation in any other corporation or corporations may
be exercised by any such officer in person or by any person
authorized to do so by proxy duly executed by said officer.
Section 8.7 CONSTRUCTION AND DEFINITIONS. Unless
the context requires otherwise, the general provisions, rules
of construction, and definitions in the Corporations Code of
California shall govern the construction of these bylaws.
Without limiting the generality of the foregoing, the singular
number includes the plural, the plural number includes the
singular, and the term "person" includes both a corporation and
a natural person.
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ARTICLE IX
AMENDMENTS
Section 9.1 AMENDMENT BY SHAREHOLDERS. New bylaws
may be adopted or these bylaws may be amended or repealed by
the vote or written consent of holders of a majority of the
outstanding shares entitled to vote; provided, however, that if
the articles of incorporation of the corporation set forth the
number of authorized directors of the corporation, the
authorized number of directors may be changed only by an amend-
ment of the articles of incorporation.
Section 9.2 AMENDMENT BY DIRECTORS. Subject to the
rights of the shareholders as provided in Section 9.1 of this
Article IX, bylaws, other than a bylaw or an amendment thereof
changing the authorized number of directors, may be adopted,
amended or repealed by the board of directors.
ARTICLE X
LOANS AND GUARANTEES TO
OFFICERS AND DIRECTORS
A loan of money or property to, or a guarantee of the
obligation of, an officer or director of the corporation or any
parent or subsidiary, or an employee benefit plan authorizing
such a loan or guarantee to such officer or director may be
approved by the board of directors alone by a vote sufficient
without counting the vote of any interested director or
directors, if the board of directors determines that such a
loan or guarantee or plan may reasonably be expected to benefit
the corporation.
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CERTIFICATE OF INCORPORATOR
OF
NTS MERGER CORPORATION
I, the undersigned, do hereby certify:
(1) That I am the Incorporator of NTS Merger
Corporation, a California corporation; and
(2) That the foregoing Bylaws consisting of 32 pages
constitute the Bylaws of said corporation as duly adopted by
the Incorporator as of May 29, 1996.
IN WITNESS WHEREOF, I have executed this Certificate
as of this 29th day of May, 1996.
/s/ James J. Slaby
-------------------------------
James J. Slaby,
Incorporator
-33-
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