SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-11498
SARATOGA RESOURCES, INC.
(Exact name of small business issuer in its charter)
Delaware 76-0453392
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2000 Dairy Ashford South, Suite 410 Houston, Texas 77077
(Address of principal executive offices, including Zip Code)
(713) 531-0022
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports to
be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes [ X ] No [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to distribution of securities under a plan
confirmed by a court.
Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of October 16, 1996, there were 6,809,400 issued and outstanding shares
of Registrant's common stock, $.001 par value.
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SARATOGA RESOURCES, INC. FORM 10-QSB
SARATOGA RESOURCES, INC.
QUARTERLY REPORT ON FORM 10-QSB
INDEX
Page No.
PART I. Financial Information
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets -
September 30, 1996 and December 31, 1995 3
Consolidated Statements of Operations -
Quarter ended September 30, 1996 and 1995
Nine Months ended September 30, 1996 and 1995 5
Consolidated Statements of Cash Flows -
Nine months ended September 30, 1996 and 1995 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 11
PART II. Other Information 13
Item 1. Legal Proceedings 13
Item 2. Changes in Securities 13
Item 4. Submission of Matters to a
Vote of Security Holders 13
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 15
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SARATOGA RESOURCES, INC. FORM 10-QSB
SARATOGA RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands)
(Unaudited)
ASSETS
SEPTEMBER 30, DECEMBER 31,
1996 1995
------- ---------
Current assets:
Cash ....................................... $ 1,439 $ 604
Accounts Receivable ........................ -- 399
Prepaid expenses ........................... 84 105
Other ...................................... 15 15
------- --------
Total current assets ............................. $ 1,538 $ 1,123
Property and equipment:
Oil and gas properties (full cost method) .. -- $ 17,582
Equipment .................................. 23 255
Less accumulated depletion,
depreciation and amortization ............. (2) (10,847)
------- --------
$ 21 $ 6,990
Other assets, net of accumulated amortization
of $117 .................................... 236 254
------- --------
Total Assets ..................................... $ 1,795 $ 8,367
======= ========
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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SARATOGA RESOURCES, INC. FORM 10-QSB
SARATOGA RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(In Thousands)
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
SEPTEMBER 30, DECEMBER 31,
1996 1995
------- --------
Current liabilities:
Accounts payable and accrued liabilities ...... $ 62 $ 2,800
Legal suspense ................................ 18 288
Royalties Payable ............................. -- 237
Interest payable .............................. -- 685
Advance from partners ......................... -- 73
Current maturities of debt .................... -- 13,698
------- --------
Total current liabilities ..................... 80 $ 17,781
Stockholders' Equity (Deficit)
Common stock .................................. 7 7
Treasury stock ................................ (2) (2)
Additional paid in capital .................... 2,909 2,909
Accumulated deficit ........................... (1,199) (12,328)
------- --------
Total Stockholders' Equity (Deficit) ................ 1,715 (9,414)
Total Liabilities and
Stockholders' Equity (Deficit) .................. $ 1,795 $ 8,367
======= ========
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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SARATOGA RESOURCES, INC. FORM 10-QSB
SARATOGA RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
QUARTER ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------- -----------------------
1996 1995 1996 1995
------- -------- ------- -------
<S> <C> <C> <C> <C>
Revenues:
Oil and gas .............................................. $ -- $ 891 $ 684 $ 2,155
Other .................................................... 13 -- 21 34
Gain (Loss) on Foreclosure Sale ................................ (135) -- 12,066 --
------- -------- ------- -------
$ (122) $ 891 $12,771 $ 2,189
Costs and Expenses:
Production ............................................... -- 435 278 1,175
Severance tax ............................................ -- 60 43 127
Depletion, depreciation and amortization ................ -- 516 362 1,204
General and administrative ............................... 23 226 504 616
Interest expense ......................................... -- 442 437 1,111
------- -------- ------- -------
23 1,679 1,624 4,233
------- -------- ------- -------
Net income (loss) before taxes ................................. (145) (788) 11,147 (2,044)
Income tax benefit ............................................. -- -- -- 199
------- -------- ------- -------
Net income (loss) .............................................. $ (145) $ (788) $11,147 $(1,845)
======= ======== ======= =======
Net income (loss) per share .................................... $ (.02) $ (.12) $ 1.66 $ (.28)
======= ======== ======= =======
Weighted average number of common
shares outstanding ........................................... 6,699 6,680 6,699 6,680
======= ======== ======= =======
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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SARATOGA RESOURCES, INC. FORM 10-QSB
SARATOGA RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
----------------------------
1996 1995
-------- -------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ....................................................................... $ 11,147 $(1,845)
ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH
PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Depreciation, depletion and amortization ................................................ 362 1,204
Deferred income taxes ................................................................... -- (178)
Amortization of debt discount ........................................................... 23 81
Gain on Foreclosure Sale ................................................................ (12,066) --
CHANGES IN OPERATING ASSETS AND LIABILITIES:
Decrease in accounts receivable ......................................................... 1,046 3
Decrease in prepaid expenses ............................................................ 21 --
Increase (decrease) in accounts payable and accrued liabilities ......................... (249) 799
Other, net .............................................................................. -- (87)
-------- -------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES ....................................... 284 (23)
-------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property and equipment additions ........................................................ (38) (1,243)
Acquisition of oil and gas properties ................................................... -- (4,642)
-------- -------
NET CASH USED IN INVESTING ACTIVITIES ..................................................... (38) (5,885)
-------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Proceeds from Foreclosure Sale ...................................................... 668 --
Proceeds from borrowings ................................................................ -- 5,363
Payments on borrowings .................................................................. (79) --
-------- -------
NET CASH PROVIDED BY FINANCING ACTIVITIES ................................................. 589 5,363
-------- -------
NET (DECREASE) INCREASE IN CASH ........................................................... 835 (545)
CASH AT BEGINNING OF PERIOD ............................................................... 604 670
-------- -------
CASH AT END OF PERIOD ..................................................................... $ 1,439 $ 125
======== =======
SUPPLEMENT DISCLOSURE OF CASH FLOW INFORMATION
AND NONCASH ACTIVITIES:
Cash paid during period for interest ..................................................... $ -- $ 541
Retire common stock for operating rights ................................................. -- (300)
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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SARATOGA RESOURCES, INC. FORM 10-QSB
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The unaudited consolidated financial statements included herein have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission and include all adjustments which, in the opinion of management, are
necessary in order to make the financial statements not misleading. The
unaudited consolidated financial statements included herein are those of the
Company and its subsidiaries, all of which are wholly owned. All significant
intercompany accounts and transactions have been eliminated in consolidation.
For further information, refer to the consolidated financial statements and
footnotes thereto included in the Company's annual report on Form 10-KSB for the
period ended December 31, 1995.
NOTE 2 - DEBT
On March 30, 1995, the Company along with two of its subsidiaries,
Saratoga Resources, Inc., a Texas corporation ("Saratoga-Texas") and Lobo
Energy, Inc., a Texas corporation ("LEI"), executed a Credit Agreement ("Credit
Agreement") with Internationale Nederlanden (U.S.) Capital Corporation, a
Delaware corporation ("ING") which, in part, refinanced the existing LEI debt to
ING. In the Credit Agreement, ING established two credit facilities in favor of
Saratoga-Texas in the combined maximum principal amount of $19,000,000, subject
to the borrowing base limitations set forth therein. At March 31, 1996 an
aggregate of $15,500,000 was available under these facilities; $13,765,721 was
advanced; and $13,397,410 was outstanding, net of unamortized loan commitment
fees of $368,311. All oil and gas properties owned by the Company were pledged
as collateral under the Credit Agreement and all obligations to ING were also
guaranteed by the Company and all of its subsidiaries.
The Credit Agreement contained numerous covenants with respect to the
operation of the Company. One of the covenants provided that at no time shall
the Company's current liabilities, without including payments required under the
Credit Agreement, exceed the Company's current assets. Additionally, the
Company's net worth, (essentially defined as total tangible assets less total
liabilities, minus half of the net proceeds of an equity transaction), was not
to fall below $1,500,000. Also, the Company's general and administrative
expenses actually incurred and paid during any fiscal year was not to exceed
$1,600,000. At December 31, 1995 and May 7, 1996, the Company was in default of
numerous covenants associated with this Credit Agreement.
As discussed in Note 4, on May 7, 1996 in connection with a Foreclosure
Sale and Compromise and Settlement Agreement, a majority of the assets (the
"Interests") of Saratoga-Texas, Lobo Operating, Inc., a Texas corporation
("LOI"), and LEI were sold to ING in exchange for ING's forgiveness of all debt
owed by the Company to ING. The remainder of the Company's debt, consisting of a
note payable to a stockholder, note payable to an individual, and other note
payable, will be settled with each lender by the Trustee from the cash proceeds
of the Foreclosure Sale, pursuant to the Disbursement Agreement dated May 7,
1996, also discussed in Note 4.
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SARATOGA RESOURCES, INC. FORM 10-QSB
NOTE 3 - LITIGATION
On May 13, 1996, the Company, along with two of its three directors,
Thomas F. Cooke ("Cooke") and Randall F. Dryer ("Dryer"), filed a lawsuit (the
"Company Lawsuit"), as amended, against the remaining director, Joseph T.
Kaminski ("Kaminski") [Cause No. 96-05540, SARATOGA RESOURCES, INC., THOMAS F.
COOKE AND RANDALL F. DRYER V. JOSEPH T. KAMINSKI, 261st Judicial District Court,
Travis County, Texas]. The Company filed this lawsuit against Kaminski alleging
fraud, breach of fiduciary duty, intentional and negligent misrepresentation,
and other claims. This lawsuit involves the assignment of certain seismic data
and seismic license agreements by Kaminski to the Company in exchange for the
forgiveness of $320,000 in debt owed by the Company to Kaminski, and the
issuance of additional Common Stock of the Company to Kaminski. The lawsuit
further alleges intentional and negligent misrepresentation of oil and gas
reserves by Kaminski while serving as President and Chief Executive Officer of
the Company. Actual and exemplary damages are being sought from Kaminski.
On May 15, 1996, Kaminski filed a lawsuit (the "Kaminski Lawsuit"), as
amended, against Cooke, Dryer, Dryer, Ltd. and the Company [Cause No. 96-24469,
JOSEPH T. KAMINSKI V. THOMAS F. COOKE, RANDALL F. DRYER, SARATOGA RESOURCES,
INC., AND DRYER, LTD., A TEXAS FAMILY PARTNERSHIP, 113th Judicial District
Court, Harris County, Texas]. Kaminski filed this lawsuit individually and
derivatively as a shareholder of the Company and alleged fraud, breach of
fiduciary duty, gross negligence, slander, libel per se, and other claims on the
part of Cooke and Dryer individually and as directors of the Company. This
lawsuit involves further allegations of mismanagement and waste of corporate
assets by Cooke and Dryer. Kaminski had requested the Court to remove Cooke and
Dryer as directors and to appoint a receiver to conduct the affairs of the
Company and preserve the assets of the Company, which request has been denied by
the Court. Actual and exemplary damages are being sought from Cooke and Dryer.
With respect to the May 15, 1996 "Kaminski Lawsuit", a Temporary
Injunction was initially granted by the Court on May 15 which, in essence,
prevented the Company, Cooke and Dryer from conducting any Company business
outside of the ordinary course of business without first conducting a Board
Meeting and giving Kaminski advance notice and an agenda of such meeting, or in
any other manner interfering with Kaminski's duties as president and director of
the Company for so long as he held such office. On May 20, at a hearing on the
Temporary Injunction granted by the Court, the parties entered into an Agreed
Temporary Injunction which made the terms of the Temporary Injunction permanent
until such time as a shareholders meeting had been held, which the parties
agreed would be held "as soon as is practicable" (see Item 4). On July 8,
Kaminski asked the Court to appoint a receiver for the Company, which request
was denied. Additional matters were argued including the validity of a
Shareholders Agreement (the "agreement") which had been circulated to certain
shareholders by Cooke providing for the removal of Kaminski as a director of the
Company. The Court asked for the parties to submit written briefs on the
validity of such "agreement". Additionally, Kaminski requested that the Court
order the Company not to pay any attorney's fees on behalf of Cooke and Dryer in
the instant lawsuit or any other lawsuit. Upon final hearing and submission of
written briefs, the Court signed an order dated July 23 which held that the
"agreement" was void and unenforceable, and ordered the Company, Cooke and Dryer
to communicate such ruling to each shareholder that had been solicited. Further,
the Court ordered that the Company was prohibited from paying any attorneys'
fees for or on behalf of Cooke or Dryer in this or any lawsuit unless such
payment was in compliance with Delaware law (see Item 4). Cooke complied with
the Court's ruling and advised all such shareholders that the "agreement" had
been held void and unenforceable.
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SARATOGA RESOURCES, INC. FORM 10-QSB
The May 13, 1996 "Company Lawsuit" filed by the Company, Cooke and Dryer
against Kaminski in state district court in Travis County, Texas has been
non-suited, and the Company, Cooke and Dryer have subsequently re-filed their
respective claims as counter-claims in the May 15, 1996 "Kaminski Lawsuit" in
state district court in Harris County, Texas, in order that all claims could be
heard in the one case pending in Harris County (the "Harris County Lawsuit").
The "Harris County Lawsuit" had been set for trial on October 7, 1996.
On or about August 23, the Company obtained a copy of a letter dated
August 22, 1996 (the "Kaminski Letter") written by Kaminski, one of the
Company's then current directors, addressed to the Company's shareholders.
Kaminski purported to represent himself as Chairman of the "Saratoga Resources,
Inc. Stockholders Committee". Kaminski, who was not renominated as a director by
the Company (see Item 4), had indicated in such soliciting material filed with
the Securities and Exchange Commission that he and the committee intended to run
an opposing slate of nominees, to wit: Joseph T. Kaminski, Ronald F. Bearden and
Kevin M. Smith. Smith was one of the Company's nominees as well. The "Kaminski
Letter" also falsely represented that Smith and his wife Sandra Smith, along
with Lobo Energy, Inc., one of the Company's subsidiaries, were members of such
committee. Upon receiving this "Kaminski Letter", Smith notified Kaminski and
the committee to remove his name from the proposed opposition slate of nominees
and that he was not a member of the committee. Sandra Smith likewise advised
Kaminski and the committee that she was not a member of the committee. Lobo
Energy, Inc. advised Kaminski and the committee as well that it was not a member
of the committee. Additionally, Kaminski indicated in such soliciting material
that he and the committee intended to oppose Proposals 4, 5 and 6 made by the
Company (see Item 4).
On August 28, the Company along with Cooke and Dryer, the two then
remaining directors of the Company, filed for injunctive relief with respect to
said Kaminski Letter in the United States District Court for the Southern
District of Texas, Houston Division, Civil Action No. H-96-2839, SARATOGA
RESOURCES, INC., THOMAS F. COOKE, AND RANDALL F. DRYER VS. JOSEPH T. KAMINSKI
(the "Company Federal Lawsuit"). On September 3, the parties in open court
reached a stipulation with respect to the "Kaminski Letter" whereby Kaminski
agreed to correct certain false and misleading statements contained in the
letter. As a result, Kaminski filed with the Commission corrective letters,
identifying the members of the committee and the committee's proposed slate of
nominees, which consisted of Joseph T. Kaminski, Ronald F. Bearden and W. Wayne
Hardin.
On August 30, Kaminski filed a counterclaim for injunctive relief in the
"Company Federal Lawsuit", alleging that the Company, along with Cooke and
Dryer, had violated Section 14a of the Securities and Exchange Act of 1934, in
that the Proxy Statement previously filed by the Company was false and
misleading in numerous respects. Additionally, on September 5, Kaminski filed a
supplemental motion for injunctive relief in the "Company Federal Lawsuit",
seeking to prevent the annual shareholder meeting scheduled for September 14
from being held on that date. On September 6, the United States District Court
in Houston denied all of Kaminski's motions for injunctive relief.
On September 14, the Company held an annual meeting of the shareholders.
As a result, the Agreed Temporary Injunction dated May 20 in the "Kaminski
Lawsuit" expired on its own terms. At the annual meeting, all nominees for the
position of director recommended by the Company were elected, and all proposals
recommended by the Company passed by a majority vote of the shareholders (see
Item 4).
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SARATOGA RESOURCES, INC. FORM 10-QSB
On September 17, the Company, along with Cooke and Dryer, filed
Plaintiffs' First Amended Complaint and Answer to Counterclaim in the "Company
Federal Lawsuit". At the same time (September 17), the Company, along with Cooke
and Dryer, filed a Motion to Dismiss or Abate the Derivative Action, a Plea in
Abatement and other related pleadings in the "Harris County Lawsuit", citing the
contemporaneous filing of the "Company Federal Lawsuit" which involved all of
the issues currently being asserted in the "Harris County Lawsuit".
By Agreed Order of Continuance dated September 19, the parties agreed to
allow the "Harris County Lawsuit" to be continued and removed from the Court's
current trial docket setting of October 7.
On October 1, by Agreed Order entered in the "Harris County Lawsuit", the
Court ordered that: (i) the parties abate the lawsuit for the period commencing
October 1 and ending December 6, except as otherwise provided in the Agreed
Order; (ii) during the abatement period, Kaminski is to file his individual
claims, if any, against the Company, Cooke, Dryer, and Dryer, Ltd. as
counterclaims or third party claims in the "Company Federal Lawsuit"; (iii) not
later than December 6, Kaminski will non-suit without prejudice all of his
individual claims and with prejudice all derivative claims asserted by Kaminski,
except that no dismissal of the derivative claims will be filed if a substitute
shareholder is approved by the Court as further set forth under (v) hereof;
additionally, the Company, Cooke and Dryer will non-suit without prejudice their
claims against Kaminski upon receipt of Kaminski's non-suit; (iv) on or before
December 6, the parties will move for their respective attorneys' fees in
connection with the derivative action only to be awarded upon final disposition
of the derivative action; (v) no later than October 30, Kaminski will notify all
shareholders of the Company of his intent to dismiss the derivative claims
unless, prior to October 30, a shareholder has been substituted for Kaminski and
approved by the Court; additionally, Kaminski will dismiss with prejudice his
derivative claim on or before December 6 unless a shareholder, other than
Kaminski, appears as a derivative plaintiff and, after order by the Court, is
allowed to pursue the derivative claims in substitution for Kaminski who will
then withdraw as the representative derivative plaintiff; and (vi) Kaminski will
serve notice of such dismissal on the shareholders of the Company in a form to
be approved by the Court.
On October 9, Kaminski filed Defendant's Answer to Plaintiffs' First
Amended Complaint, First Amended Counterclaim and Third-Party Claim with respect
to the "Company Federal Lawsuit". Kaminski is asserting the matters previously
asserted in the "Harris County Lawsuit", including breach of fiduciary duty,
negligent misrepresentation, fraud, breach of contract, federal and state
securities violations, fraud in the inducement, rescission and/or damages,
defamation, interference with contract, and shareholder oppression.
The "Company Federal Lawsuit", which includes all claims and counterclaims
of the respective parties, has been set for trial on January 6, 1997. The
Company intends to vigorously pursue its claims against Kaminski as well as
vigorously defend those claims being asserted by Kaminski.
NOTE 4 - FORECLOSURE SALE
As of May 7, 1996, The Company owed $13,765,721 plus accrued interest to
ING under the Credit Agreement described in Note 2. The Company was in default
under the Credit Agreement and all obligations were due and payable in full.
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SARATOGA RESOURCES, INC. FORM 10-QSB
In connection with a Foreclosure Sale and pursuant to the terms and
provisions of a Compromise and Settlement Agreement dated May 7, 1996, a
majority of the assets (the "Interests") of Saratoga-Texas, LOI and LEI were
sold to ING in exchange for ING's forgiveness of all amounts owed under the
Credit Agreement.
Upon completion of the Foreclosure Sale on May 7, 1996, at which ING was
the highest bidder, ING concurrently sold the Interests to PrimeEnergy for cash
consideration in the amount of $7,180,000 less an adjustment for net revenue due
the purchaser from the effective date of the purchase (January 1, 1996) through
May 7, 1996, not to exceed $372,000, plus additional consideration as provided
in that certain Purchase and Sale Agreement dated May 7, 1996, by and between
ING and PrimeEnergy.
Upon receipt of the cash proceeds from the sale of the Interests by ING to
PrimeEnergy, ING deposited approximately $5,500,000 with the Trustee, of which
approximately $4,000,000 was set aside under that certain Disbursement Agreement
dated May 7, 1996, for the settlement of outstanding vendor claims and other
related liabilities of the Saratoga Companies. The remaining $1,500,000 has been
paid to the Company and made available for the Company to pursue other business
opportunities and for other corporate purposes.
The Foreclosure Sale and Compromise and Settlement Agreement resulted in a
gain of approximately $12.1 million. No tax liability was generated from the
transaction; however the Company's net operating loss and other tax attributes
were eliminated.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
On March 30, 1995, the Company, Saratoga-Texas, LEI and ING entered into
the Credit Agreement to facilitate the settlement of a lawsuit brought by Peter
P. Pickup ("Pickup") against the Company and ING, and fund the acquisition by
Saratoga-Texas of the LEI assets previously owned by Pickup. Under the terms of
the Credit Agreement, ING established two credit facilities in favor of
Saratoga-Texas in the combined maximum principal amount of $19,000,000, subject
to the borrowing base limitations set forth therein. All of the Properties owned
by the "Saratoga Entities" were pledged as collateral under the Credit Agreement
and all obligations to ING were also guaranteed by the Company and all of its
subsidiaries. Funds obtained from these credit facilities were anticipated to be
used for the development of the Properties by the Company. Saratoga-Texas, LOI
and LEI are sometimes collectively referred to herein as the "Saratoga
Entities".
Subsequent to entering into the Credit Agreement, the Company engaged ING
Securities, a subsidiary of ING, to assist the Company in a private placement of
Company stock. It was anticipated that funds raised from such private placement
would enable the Company to meet its financial obligations under the Credit
Agreement. The private placement efforts were not successful. Additionally,
funds necessary for the development of the Properties were not provided by ING
under the Credit Agreement.
The failure of the private placement efforts combined with the lack of
availability of funds necessary for the development of its Properties placed the
Company in a severe financial crisis. In an attempt to salvage the maximum value
of the Saratoga Companies for the benefit of the other
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SARATOGA RESOURCES, INC. FORM 10-QSB
creditors (the "Other Creditors") and the Company and its shareholders, the
Saratoga Companies spent several months examining and pursuing various
alternatives with respect to (i) the possible refinancing and/or restructuring
of the debt of the Saratoga Companies, (ii) the sale of the Saratoga Companies
or their underlying assets, and (iii) the prosecution or settlement of certain
potential claims against ING and ING Securities.
Unable to meet its financial obligations under the Credit Agreement, the
Company received notices of default from ING, whereupon ING threatened to
foreclose its perfected first lien security interests in the Properties and
Interests. At the same time the Company was receiving notices of default from
ING, the Company was attempting to negotiate a transaction with PrimeEnergy
involving either a merger of the two entities or a sale of the assets of the
Saratoga Entities to PrimeEnergy. The situation with ING obviously complicated
the Company's efforts with PrimeEnergy, as it had with other companies with
which the Company had been involved in similar negotiations.
Facing what the Company believed to be an eminent foreclosure action by
ING which would restrict the Company's objectives and its ability to consummate
negotiations with PrimeEnergy, in April of 1996, the Saratoga Companies filed an
Original Petition and Application for Injunctive Relief against ING and ING
Securities, C96-399-D3 in the 341st Judicial District Court of Webb County,
Texas. Subsequently, the Company and ING entered into discussions in an attempt
to reach a final resolution of ING's rights under the Credit Agreement and the
Company's asserted claims.
In reviewing its options, the Company believed that the proceeds from a
contested foreclosure by ING would be substantially less than the debt owed ING
under the Credit Agreement, and that the Saratoga Companies would have no, or
virtually no, assets, the Other Creditors of the Saratoga Companies would not be
paid, and the stock of the Company would be worthless. Accordingly, exercising
its best business judgment, the Company determined that the best (and in all
probability the only) alternative available to the Saratoga Companies to
preserve value for the Other Creditors, the Company and its shareholders was to
consent, on its own behalf and as sole shareholder (directly or indirectly) of
the Saratoga Entities, to the compromise and settlement of the claims against
ING and ING Securities, and in connection therewith, the foreclosure by ING with
respect to all of the assets of the Saratoga Entities, all in accordance with
the terms and provisions of the Agreement dated May 7, 1996.
The Agreement provided for a Foreclosure Sale of a majority of the assets
(the "Interests") of the Saratoga Entities to ING pursuant to ING's rights under
the Credit Agreement. Upon completion of the Foreclosure Sale on May 7, 1996, at
which ING was the highest bidder, ING concurrently sold the Interests to
PrimeEnergy for $7,180,000 in cash and additional consideration as provided in
that certain Purchase and Sale Agreement dated May 7, 1996, by and between ING
and PrimeEnergy.
Upon receipt of the cash proceeds from the sale of the Interests by ING to
PrimeEnergy, ING deposited approximately $5,500,000 with the Trustee, of which
approximately $4,000,000 was set aside under the Disbursement Agreement for the
settlement of outstanding vendor debt and other related liabilities of the
Saratoga Companies. Upon the settlement of all such debt and liabilities, the
Company anticipates that there will be no material debt or liabilities going
forward, other than those incurred since May 7, 1996, in the ordinary course of
business and certain liabilities with respect to prior matters which the Company
does not believe are material (See "Note 4 to Consolidated Financial
Statements"). The Company was paid the remaining $1,500,000 by ING, which amount
became available to pursue new business opportunities and for other proper
corporate purposes.
<PAGE>
13 of 15
SARATOGA RESOURCES, INC. FORM 10-QSB
RESULTS OF OPERATIONS
As discussed in Note 4 to the Consolidated Financial Statements, the
Foreclosure Sale and Compromise and Settlement Agreement resulted in a gain of
approximately $12.1 million.
COMPARATIVE ANALYSIS OF FINANCIAL CONDITION. As a result of the
Foreclosure Sale and Compromise and Settlement Agreement, a comparative analysis
of the financial condition of the Company comparing the last two fiscal years
and the nine month periods ended 9/30/96 and 9/30/95 reflects that significant
and material changes have occurred. The Company's total assets dropped from
$8.367 million at 12/31/95 to $1.795 million at 9/30/96. The Company's total
current liabilities also showed a marked reduction from $17.781 million at
12/31/95 to $0.80 million at 9/30/96. The Company has reduced the number of
employees from 18 at 12/31/95 to 2 at 9/30/96.
CURRENT OPERATIONS
Pursuant to a majority vote by the shareholders of the Company at the
Annual Meeting of the shareholders held on September 14 (see Item 4), the Board
of Directors has been in the process of reviewing various business opportunities
for the Company going forward. Notwithstanding the pending litigation, the
Company continued to have meaningful discussions with interested parties
regarding merger and other possibilities. There can be no assurances, however,
that the Company will be able to take advantage of any merger opportunities
until resolution of all pending litigation between the parties. However, the
Company intends to continue to pursue its other options regardless of such
litigation. Substantial legal fees and expenses continue to be incurred by the
Company in order to pursue the Company's claims against Kaminski and to defend
against Kaminski's counterclaims. Through September 30, the Company has incurred
$100,543 in such costs.
PART II. - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
See Note 3 to Consolidated Financial Statements.
ITEM 2. CHANGES IN SECURITIES
See Notes 2, 3 and 4 to Consolidated Financial Statements.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES - None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On September 14, the Company held an annual meeting of the shareholders.
The following named individuals were elected as the three (3) directors of the
Company: Thomas F. Cooke (incumbent), Randall F. Dryer (incumbent), and Kevin M.
Smith. Messrs. Cooke, Dryer and Smith were the nominees proposed and recommended
by the Company. Additional nominations made from the floor at the annual meeting
for the position of director were Joseph T. Kaminski, Ronald F. Bearden and W.
Wayne Hardin. The vote tabulation for each nominee was as follows:
<PAGE>
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SARATOGA RESOURCES, INC. FORM 10-QSB
Kevin M. Smith - 3,804,164 (ELECTED)
Randall F. Dryer -3,804,144 (ELECTED)
Thomas F. Cooke - 3,795,141 (ELECTED)
Joseph T. Kaminski - 2,561,052
Ronald F. Bearden - 2,561,052
W. Wayne Hardin - 2,561,052
Other matters presented for a vote at the annual meeting were as follows:
Proposal No. 2: To ratify and confirm the May 7, 1996 Agreements
(Foreclosure Sale; Compromise and Settlement Agreement and related documents;
the "Agreements"), by and among the Company (and its subsidiaries),
Internationale Nederlanden (U.S.) Capital Corporation, and PrimeEnergy
Corporation. The proposal passed by a majority vote of the shareholders: FOR -
6,258,453; AGAINST - 942; ABSTAIN - 118,429.
Proposal No. 3: To authorize the proposed amendment of the By-laws
providing for the indemnification of the Company's directors, officers,
employees and agents to the fullest extent allowed under the laws of the State
of Delaware. The proposal passed by a majority vote of the shareholders: FOR -
3,796,910; AGAINST - 13,193; ABSTAIN - 2,567,721.
Proposal No. 4: To approve payment by the Company of all attorneys' fees
and expenses relative to the defense of Cooke and Dryer, as defendants in their
individual and representative capacities on behalf of the Company, in that
certain lawsuit currently pending in Harris County, Texas: Cause No. 96-24469,
JOSEPH T. KAMINSKI V. THOMAS F. COOKE, RANDALL F. DRYER, SARATOGA RESOURCES,
INC., AND DRYER, LTD., A TEXAS FAMILY PARTNERSHIP, 113th Judicial District
Court. The proposal passed by a majority vote of the shareholders: FOR -
3,795,657; AGAINST - 2,581,566; ABSTAIN - 601.
Proposal No. 5: To approve and ratify reimbursement by the Company to
Cooke for all travel and living expenses incurred by Cooke and related to his
services as Chairman of the Board of Directors, Chief Executive Officer and
Chief Operating Officer of the Company during 1995 and thus far incurred in
1996, and which may hereafter be incurred while serving in any such
representative capacity on behalf of the Company, subject to standard procedures
for verification of expenses and review and approval by the Board of Directors.
The proposal passed by a majority vote of the shareholders: FOR - 3,793,936;
AGAINST - 2,581,622; ABSTAIN - 2,266.
Proposal No. 6: To authorize the Board of Directors to evaluate and decide
on a business plan going forward, to include any of the following possible
alternatives: (i) rebuilding the management team and continuing in the oil and
gas business; (ii) entering into a business combination with one or more
businesses at the discretion of the Board of Directors; or (iii) any other
potential alternative which the Board of Directors may deem to be in the best
interest of the
Company and its shareholders, including but not limited to (a) the sale of one
or more subsidiaries, (b) a divisive reorganization of the Company pursuant to
which the Company or a subsidiary would register the issuance and sale of any
securities to be issued in such reorganization or (c) the sale and liquidation
of all hard assets of the Company and disposition to the shareholders; and to
take such proper actions as may be necessary to accomplish same. The proposal
passed by a majority vote of the shareholders: FOR - 3,797,678; AGAINST -
2,579,462; ABSTAIN - 684.
Floor Proposal No 1: To expedite the "entering into a business
combination" with one or more businesses as proposed in Proposal No. 6 by
retaining an investment firm outside the Company to identify and recommend a
business plan of merger; in the alternative a reorganization of the Company
again as directed by a qualified investment banking firm. The proposal did not
pass by a majority vote of the shareholders: FOR - 2,561,052; AGAINST -
3,816,772; ABSTAIN - 0.
ITEM 5. OTHER INFORMATION
Effective October 16, ChaseMellon Shareholder Services became Successor
Transfer Agent for the Company's stock. Their address is as follows:
ChaseMellon Shareholder Services
2323 Bryan Street, Suite 2300
Dallas, Texas 75201-2656
Shareholder Communications Center
1-800-635-9270
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS.
NO. EXHIBIT DESCRIPTION
(3) ARTICLES OF INCORPORATION AND BY-LAWS:
3.2 By-Laws of Registrant, Saratoga Resources, Inc., a Delaware
Corporation, adopted January 20, 1994, as amended September
14, 1996 and filed as Exhibit 3.2 hereto.
(10) MATERIAL CONTRACTS - None
(B) REPORTS ON FORM 8-K - None
<PAGE>
15 of 15
SARATOGA RESOURCES, INC. FORM 10-QSB
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SARATOGA RESOURCES, INC.
By: \s\ THOMAS F. COOKE
Thomas F. Cooke
Chairman of the Board
Chief Executive Officer and
Principal Accounting and Financial Officer
Date: November 13, 1996
BY-LAWS
OF
SARATOGA RESOURCES, INC.
A Delaware Corporation
Date of Adoption:January 21, 1994
As Amended: September 14, 1996
<PAGE>
BY-LAWS
Table of Contents
PAGE
Article I. OFFICES
Section 1.1 Registered Office ............................................1
Section 2.1 Other Offices ................................................1
Article II.STOCKHOLDERS
Section 2.1 Place of Meetings ............................................1
Section 2.2 Voting List ..................................................1
Section 2.3 Annual Meetings ..............................................1
Section 2.4 Special Meetings .............................................1
Section 2.5 Notices of Meeting ...........................................2
Section 2.6 Quorum; Adjournments .........................................2
Section 2.7 Voting; Proxies ..............................................2
Section 2.8 Action Without Meeting .......................................3
Section 2.9 Voting of Stock of Certain Holders; Elections; Inspections ...3
Section 2.10 Conduct of Meetings .........................................4
Section 2.11 Treasury Stock ..............................................4
Section 2.12 Fixing Record Date ..........................................4
Article III.BOARD OF DIRECTORS
Section 3.1 Powers .......................................................5
Section 3.2 Number, Election and Term ....................................5
Section 3.3 Vacancies, Additional Directors and Removal From Office ......6
Section 3.4 Regular Meetings .............................................6
Section 3.5 Special Meetings .............................................6
Section 3.6 Notice of Special Meeting ....................................7
Section 3.7 Place of Meetings; Books; Order of Business ..................7
Section 3.8 Quorum and Participation .....................................7
Section 3.9 Presumption of Assent ........................................7
Section 3.10 Meetings By Telephone or Similar Communications Equipment ...7
Section 3.11 Action Without Meeting ......................................7
Section 3.12 Compensation ................................................8
Section 3.13 Approval or Ratification of Acts or Contracts by
Stockholders ................................................8
Article IV.COMMITTEE OF DIRECTORS
Section 4.1 Designation, Powers and Name .................................8
Section 4.2 Procedure; Meetings; Quorum ..................................9
(i)
<PAGE>
Section 4.3 Compensation .................................................9
Article V. NOTICE
Section 5.1 Methods of Giving Notice .....................................9
Section 5.2 Written Waiver ...............................................9
Article VI.OFFICERS
Section 6.1 Officers .....................................................9
Section 6.2 Election and Term of Office .................................10
Section 6.3 Removal and Resignation .....................................10
Section 6.4 Resignation .................................................10
Section 6.5 Vacancies ...................................................10
Section 6.6 Salaries ....................................................10
Section 6.7 President ...................................................10
Section 6.8 Vice Presidents .............................................11
Section 6.9 Secretary ...................................................11
Section 6.10 Treasurer ..................................................11
Section 6.11 Assistant Secretaries and Assistant Treasurers .............12
Article VII.CONTRACTS, CHECKS AND DEPOSITS
Section 7.1 Contracts ...................................................12
Section 7.2 Checks and Notes ............................................12
Section 7.3 Deposits ....................................................12
Article VIII. STOCK CERTIFICATES
Section 8.1 Issuance ....................................................12
Section 8.2 Lost Certificates ...........................................13
Section 8.3 Transfers ...................................................14
Section 8.4 Registered Stockholders .....................................14
Section 8.5 Regulations Regarding Certificates ..........................14
Article IX.DIVIDENDS
Section 9.1 Declaration .................................................14
Section 9.2 Reserve .....................................................14
Article X. INDEMNIFICATION ...................................................14
Article XI.MISCELLANEOUS
Section 11.1 Seal .......................................................17
Section 11.2 Books ......................................................17
Section 11.3 Fiscal Year ................................................17
Section 11.4 Resignations ...............................................17
Section 11.5 Facsimile Signatures .......................................17
Section 11.6 Reliance upon Books, Reports and Records ...................17
(ii)
<PAGE>
Section 11.7 Gender and Number ..........................................17
Section 11.8 Laws and Statutes ..........................................17
Section 11.9 Headings ...................................................17
Article XII.AMENDMENT ........................................................18
(iii)
<PAGE>
BY-LAWS
OF
SARATOGA RESOURCES, INC.
ARTICLE I
OFFICES
SECTION 1.1. REGISTERED OFFICE. The registered office of the
Corporation required by the General Corporation Law of the State of Delaware to
be maintained in the State of Delaware shall be the registered office named in
the original Certificate of Incorporation of the Corporation, or such other
office as may be designated from time to time by the Board of Directors in the
manner provided by law. Should the Corporation maintain a principal office or
place of business within the State of Delaware, such registered office need not
be identical to such principal office or place of business of the Corporation.
SECTION 1.2. OTHER OFFICES. The Corporation may also have offices at
such other places both within and without the State of Delaware as the Board of
Directors may from time to time determine or the business of the Corporation may
require.
ARTICLE II
STOCKHOLDERS
SECTION 2.1. PLACE OF MEETINGS. All meetings of the stockholders shall
be held at the principal office of the Corporation, or at such other place
either within or without the State of Delaware and at such date and time as
shall be designated from time to time by the Board of Directors and stated in
the notice or waivers of notice of the meeting.
SECTION 2.2. VOTING LIST. The officer who has charge of the stock
ledger of the Corporation shall prepare and make, at least 10 days before every
meeting of stockholders, a complete list of the stockholders entitled to vote at
the meeting, arranged in alphabetical order for each class of stock, and showing
the address of each stockholder and the number of shares registered in the name
of each stockholder. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least 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, or if not so specified, at the place where the meeting is to be
held. The list shall also be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by any stockholder
who is present.
SECTION 2.3 ANNUAL MEETINGS. 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, within or without the State of Delaware, on such
date, and at such time as the Board of Directors shall fix each year and set
forth in the notice of the meeting, which date shall be within 13 months
subsequent to the later of the date of incorporation or the last annual meeting
of stockholders.
SECTION 2.4 SPECIAL MEETINGS. Special meetings of the stockholders, for
any purpose
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or purposes, unless otherwise prescribed by statute or by the Certificate of
Incorporation, may be called by the Chairman of the Board, by the President or
by the Board of Directors, or by written order of a majority of the directors,
and shall be called by the Chairman of the Board, the President or the Secretary
at the request in writing of stockholders owning a majority of the common stock
of the Corporation issued and outstanding and entitled to vote. Special meetings
of holders of the outstanding shares of preferred stock of the Corporation may
be called in the manner and for the purposes provided in the resolutions of the
Board of Directors providing for the issue of such stock (a "Preferred Stock
Designation"). All requests for special meetings shall state the purposes of the
proposed meeting. The President or directors so calling, or the stockholders so
requesting, any such meeting shall fix the date and time of, and the place
(either within or without the State of Delaware) for, the meeting.
SECTION 2.5 NOTICES OF MEETING. Written notice of the annual and each
special meeting of stockholders, stating the place, date and hour and, in the
case of a special meeting, the purpose or purposes for which the meeting is
called, shall be given to each stockholder entitled to vote thereat not less
than 10 nor more than 60 days before the meeting. Such notice may be delivered
either personally or by mail. If mailed, notice is given when deposited in the
United States mail, postage prepaid, directed to the stockholder at his address
as it appears on the records of the Corporation.
SECTION 2.6 QUORUM; ADJOURNMENTS. Except as otherwise provided in a
Preferred Stock Designation, the holders of stock having a majority of voting
power entitled to vote at any stockholders' meeting, present in person or
represented by proxy, shall constitute a quorum at any meeting of stockholders
for the transaction of business except as otherwise provided by applicable law
or by the Certificate of Incorporation. The stockholders present at a duly
organized meeting may continue to transact business until adjournment,
notwithstanding the departure at said meeting of enough stockholders to leave
less than a quorum present.
Notwithstanding the other provisions of the Certificate of
Incorporation or these By-laws, the chairman of the meeting or the holders of a
majority of the shares of such stock, present in person or represented by proxy,
although not constituting a quorum, shall have power to adjourn the meeting from
time to time, without notice other than announcement at the meeting of the time
and place of the adjourned meeting, until a quorum shall be present or
represented. If the adjournment is for more than 30 days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting. At such adjourned meeting at which a quorum shall be
present or represented, any business may be transacted which might have been
transacted at the meeting as originally notified.
SECTION 2.7 VOTING; PROXIES. When a quorum is present at any meeting of
the stockholders, the vote of the holders of a majority of the stock having
voting power present in person or represented by proxy shall decide any question
brought before such meeting, unless the question is not one upon which, by
express provision of the statutes, of the Certificate of Incorporation or of
these By-laws, a different vote is required, in which case such express
provision shall govern and control the decision of such question. Where a
separate vote by class is required, the affirmative vote of the majority of
shares of such class present in person or represented by proxy at the meeting
shall be the act of such class. Every stockholder having the right to vote at a
meeting of stockholders or to express consent or dissent to a corporate action
in writing without a meeting shall be entitled to vote in person, or by proxy
appointed by an instrument in writing subscribed by such stockholder, bearing a
date not more than three years prior to voting, unless such instrument provides
for a longer period, and filed with the Secretary of the Corporation, or such
other officer as the Board of Directors may from time to time
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<PAGE>
determine by resolution, before, or at the time of, the meeting.
All proxies shall be received and taken charge of and all ballots shall
be received and canvassed by the secretary of the meeting who shall decide all
questions touching upon the qualification of voters, the validity of the
proxies, and the acceptance or rejection of votes, unless an inspector or
inspectors shall have been appointed by the chairman of the meeting, in which
event such inspector or inspectors shall decide all such questions. Each proxy
shall be revocable unless expressly provided therein to be irrevocable and
coupled with an interest sufficient in law to support an irrevocable power. If
such instrument shall designate two or more persons to act as proxies, unless
such instrument shall provide the contrary, a majority of such persons present
at any meeting at which their powers thereunder are to be exercised shall have
and may exercise all of the powers of voting or giving consents thereby
conferred, or if only one be present, then such powers may be exercised by that
one, or, if an even number attend and a majority do not agree on any particular
issue, each proxy so attending shall be entitled to exercise such powers in
respect of the same portion of the shares as he represents of the proxies
representing such shares.
SECTION 2.8 ACTION WITHOUT MEETING. Unless otherwise provided in the
Certificate of Incorporation, any action required to be taken at any annual or
special meeting of stockholders of the Corporation or any action which may be
taken at any annual or special meeting of such stockholders may be taken without
a meeting, without prior notice and without a vote, if a consent 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 thereupon 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 by the Secretary of the Corporation to those stockholders who have not
consented in writing.
SECTION 2.9 VOTING OF STOCK OF CERTAIN HOLDERS; ELECTIONS; INSPECTORS.
Shares standing in the name of another corporation, domestic or foreign, may be
voted by such officer, agent or proxy as the by-laws of such corporation may
prescribe, or in the absence of such provision, as the Board of Directors of
such corporation may determine. Shares standing in the name of a deceased person
may be voted by the executor or administrator of such deceased person, either in
person or by proxy. Shares standing in the name of a guardian, conservator or
trustee may be voted by such fiduciary, either in person or by proxy, but no
fiduciary shall be entitled to vote shares held in such fiduciary capacity
without a transfer of such shares into the name of such fiduciary. Shares
standing in the name of a receiver may be voted by such receiver. A stockholder
whose shares are pledged shall be entitled to vote such shares, unless in the
transfer by the pledgor on the books of the Corporation, he has expressly
empowered the pledgee to vote thereon, in which case only the pledgee, or his
proxy, may represent the stock and vote thereon.
If shares or other securities having voting power stand of record in
the names of two or more persons, whether fiduciaries, members of a partnership,
joint tenants, tenants in common, tenants by the entirety or otherwise, or if
two or more persons have the same fiduciary relationship respecting the same
shares, unless the Secretary of the Corporation is given written notice to the
contrary and is furnished with a copy of the instrument or order appointing them
or creating the relationship wherein it is so provided, their acts with respect
to voting shall have the following effect:
(1) If only one votes, his act binds all;
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<PAGE>
(2) If more than one vote, but the vote is evenly split on any particular
matter, each faction may vote the securities in question proportionately,
or any person voting the shares, or a beneficiary, if any, may apply to the
Court of Chancery or such other court as may have jurisdiction to appoint
an additional person to act with the persons so voting the shares, which
shall then be voted as determined by a majority of such persons and the
person appointed by the Court. If the instrument so filed shows that any
such tenancy is held in unequal interests, a majority or even split for the
purpose of this subsection shall be a majority or even split in interest.
All voting, except as required by the Certificate of Incorporation or
where otherwise required by law, may be by a voice vote; provided, however, that
upon demand therefor by stockholders holding a majority of the issued and
outstanding stock present in person or by proxy at any meeting, a stock vote
shall be taken. Every stock vote shall be taken by written 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.
All elections of directors shall be by ballot, unless otherwise provided in the
Certificate of Incorporation.
At any meeting at which a vote is taken by ballots, the chairman of the
meeting may appoint one or more inspectors, each of whom shall subscribe an oath
or affirmation to execute faithfully the duties of inspector at such meeting
with strict impartiality and according to the best of his ability. Such
inspector shall receive the ballots, count the votes and make and sign a
certificate of the result thereof. The chairman of the meeting may appoint any
person to serve as inspector, except no candidate for the office of director
shall be appointed as an inspector.
Unless otherwise provided in the Certificate of Incorporation,
cumulative voting for the election of directors shall be prohibited.
SECTION 2.10 CONDUCT OF MEETINGS. The meetings of the stockholders
shall be presided over by a chairman of the meeting, who shall be the Chairman
of the Board, or if he is not present, by the President, or if neither the
Chairman of the Board nor the President is present, by a chairman elected at the
meeting. The Secretary of the Corporation, if present, shall act as secretary of
such meetings, or if he is not present, an Assistant Secretary shall so act, and
if neither the Secretary nor an Assistant Secretary is present, then a secretary
shall be appointed by the chairman of the meeting. 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 in order. Unless the chairman of the meeting of
stockholders shall otherwise determine, the order of business shall be as
follows:
(a) Calling of meeting to order.
(b) Election of a chairman and the appointment of a secretary, if necessary.
(c) Presentation of proof of the due calling of the meeting.
(d) Presentation and examination of proxies and determination of a quorum.
(e) Reading and settlement of the minutes of the previous meeting.
(f) Reports of officers and committees.
(g) The election of directors if an annual meeting, or a meeting called for
that purpose.
(h) Unfinished business.
(i) New business.
(j) Adjournment.
SECTION 2.11. TREASURY STOCK. The Corporation shall not vote, directly
or indirectly, shares of its own stock owned by it, and such shares shall not be
counted in determining the total number of outstanding shares.
-4-
<PAGE>
SECTION 2.12. FIXING RECORD DATE. The Board of Directors may fix in
advance a date, not exceeding 60 days preceding the date of any meeting of
stockholders or any adjournment thereof, or the date for payment of any dividend
or distribution, or the date for the allotment of rights, or the date when any
change, conversion or exchange of capital stock shall go into effect, or a date
in connection with obtaining express consent to corporate action in writing
without a meeting, as a record date for the determination of the stockholders
entitled to notice of or to vote at, any such meeting and any adjournment
thereof, or entitled to receive payment of such dividend or distribution, or to
receive any such allotment of rights, or to exercise the rights in respect of
any such change, conversion or exchange of capital stock, or to give such
consent, and in such case such stockholders and only such stockholders as shall
be stockholders of record on the date so fixed shall be entitled to such notice
of, and to vote at, any such meeting and any adjournment thereof, or to receive
payment of such dividends or distribution, or to receive such allotment of
rights, or to exercise such rights, or to give such consent, as the case may be,
notwithstanding any such record date fixed as aforesaid. With respect to a
meeting of stockholders, the record date shall not be less than 10 days before
the date of such meeting.
If the Board of Directors does not fix a record date for any meeting of
the stockholders, the record date for determining stockholders entitled to
notice of or to vote at such meeting shall be at the close of business on the
date next preceding the day on which notice is given, or, if in accordance with
Section 5.2 of these By-laws notice is waived, at the close of business on the
day next preceding the day on which the meeting is held. If, in accordance with
Section 2.8 of this Article II, corporate action without a meeting of
stockholders is to be taken, the record date for determining stockholders
entitled to express consent to such corporate action in writing without a
meeting, when no prior action by the Board of Directors is necessary, shall be
the day on which the first written consent is expressed. The record date for
determining stockholders for any other purpose shall be at the close of business
on the day on which the Board of Directors adopts the resolution relating
thereto. A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
ARTICLE III
BOARD OF DIRECTORS
SECTION 3.1. POWERS. The business and affairs of the Corporation shall
be managed by or under the direction of the Board of Directors, which may
exercise all such powers of the Corporation and do all such lawful acts and
things as are not by law or by the Certificate of Incorporation or by these
By-laws directed or required to be exercised or done by the stockholders.
SECTION 3.2. NUMBER, ELECTION AND TERM. The number of directors which
shall constitute the whole Board shall from time to time be fixed and determined
by resolution of the Board of Directors and shall be set forth in the notice of
any meeting of stockholders held for the purpose of electing directors (provided
that no decrease in the number of directors which would have the effect of
shortening the term of an incumbent director may be made by the Board of
Directors and further provided that the number of directors shall never less
than one [1]). If the Board of Directors makes no such determination, the number
of directors shall be the number set forth in the Certificate of Incorporation.
Each director shall hold office for the term for which he is elected, and until
his successor shall have been elected and qualified or until his earlier death,
resignation or removal. The directors shall be elected at the annual meeting of
stock holders, except as provided in Section 3.3 of these By-laws. Unless
otherwise provided in the
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<PAGE>
Certificate of Incorporation, directors need not be residents of Delaware or
stockholders of the Corporation.
SECTION 3.3. VACANCIES, ADDITIONAL DIRECTORS AND REMOVAL FROM OFFICE.
If any vacancy occurs in the Board of Directors caused by death, resignation,
retirement, disqualification or removal from office of any director, or
otherwise, or if any new directorship is created by an increase in the
authorized number of directors, a majority of the directors then in office,
though less than a quorum, or a sole remaining director, may choose a successor
or fill the newly created directorship and a director so chosen shall hold
office until the next annual election and until his successor shall be duly
elected and shall qualify, unless sooner displaced.
Whenever the holders of any class or classes of stock or series thereof
are entitled to elect one or more directors by the provisions of the Certificate
of Incorporation, vacancies and newly created directorships of such class or
classes or series may be filled by a majority of the directors elected by such
class or classes or series therein then in office, or by a sole remaining
director so elected. If the directors of the Corporation are divided into
classes, any directors elected to fill vacancies or newly created directorships
shall hold office until the next election of the class for which such directors
shall have been chosen, and until their successors shall be duly elected and
shall qualify.
Any director or the entire Board of Directors may be removed, with or
without cause, by the holders of a majority of the shares then entitled to vote
at an election of directors; provided that, unless the Certificate of
Incorporation otherwise provides, if the Board of Directors is elected by class
or classes or series thereof, then the stockholders may effect such removal only
for cause, and provided further that, if the Certificate of Incorporation
expressly grants to stockholders the right to cumulate votes for the election of
directors and if less than the entire Board is to be removed, no director may be
removed without cause if the votes cast against his removal would be sufficient
to elect him if then cumulatively voted at an election of the entire Board of
Directors, or, if there be classes of directors, at an election of the class of
directors of which such director is a part.
SECTION 3.4. REGULAR MEETINGS; ELECTION OF CHAIRMAN OF THE BOARD. A
regular meeting of the Board of Directors shall be held each year, without
notice other than this By-law, at the place of, and immediately following, the
annual meeting of stockholders if a quorum is present, and other regular
meetings of the Board of Directors shall be held each year, at such time and
place as the Board of Directors may provide, by resolution, either within or
without the State of Delaware, without notice other than such resolution. At the
first meeting of the Board of Directors in each year at which a quorum shall be
present, held next after the annual meeting of stockholders, the Board of
Directors shall proceed to the election of the officers of the Corporation and a
Chairman of the Board. The Chairman of the Board shall be elected from among the
directors and shall preside at all meetings of the Board of Directors or of the
stockholders of the Corporation. In the Chairman's absence, such duties shall be
attended to by the Vice Chairman of the Board, if any. The Chairman may delegate
to any qualified person the chairmanship of any meeting of the stockholders,
either on a temporary or a permanent basis. The Chairman of the Board shall
formulate and submit to the Board of Directors or the executive committee (if
any) matters of general policy of the Corporation and shall perform such other
duties as usually appertain to the office or as may be prescribed by the Board
of Directors or the executive committee.
SECTION 3.5. SPECIAL MEETINGS. A special meeting of the Board of
Directors may be called by the Chairman of the Board or by the President and
shall be called by the Secretary on the written request of any two directors.
The Chairman of the Board or President so calling, or
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the directors so requesting, any such meeting shall fix the time and place,
either within or without the State of Delaware, of such meeting.
SECTION 3.6. NOTICE OF SPECIAL MEETING. Personal written, telegraphic,
cable or wireless notice of special meetings of the Board of Directors shall be
given to each director at least 24 hours prior to the time of such meeting. Any
director may waive notice of any meeting. The attendance of a director at any
meeting shall constitute a waiver of notice of such meeting, except where a
director attends a meeting for the purpose of objecting to the transaction of
any business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any special meeting of the
Board of Directors need be specified in the notice or waiver of notice of such
meeting, except that notice shall be given of any proposed amendment to the
by-laws if it is to be adopted at any special meeting or with respect to any
other matter where notice is required by statute.
SECTION 3.7. PLACE OF MEETINGS; BOOKS; ORDER OF BUSINESS. The directors
may hold their meetings and may have an office and keep the books of the
Corporation, except as otherwise provided by law, in such place or places,
within or without the State of Delaware, as the Board of Directors may from time
to time determine by resolution. At all meetings of the Board of Directors,
business shall be transacted in such order as shall from time to time be
determined by the Chairman of the Board (if any), or in his absence by the
President, or by resolution of the Board of Directors.
SECTION 3.8. QUORUM AND PARTICIPATION. A majority of the Board of
Directors shall constitute a quorum for the transaction of business at any
meeting of the Board of Directors, and the act of a majority of the directors
present at any meeting at which there is a quorum shall be the act of the Board
of Directors, except as may be otherwise specifically provided by statute, by
the Certificate of Incorporation or by these By-laws. If a quorum shall not be
present at any meeting of the Board of Directors, the directors present thereat
may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
SECTION 3.9. PRESUMPTION OF ASSENT. A director who is present at a
meeting of the Board of Directors at which action on any corporate matter is
taken shall be presumed to have assented to the action unless his dissent shall
be entered in the minutes of the meeting or unless he shall file his written
dissent to such action with the person acting as secretary of the meeting before
the adjournment thereof. Such right to dissent shall not apply to a director who
voted in favor of such action.
SECTION 3.10. MEETINGS BY TELEPHONE OR SIMILAR COMMUNICATIONS
EQUIPMENT. Members of the Board of Directors, or members of any committee
designated by the Board of Directors, may participate in a meeting of the Board
of Directors or such committee, as the case may be, 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 and attendance at such meeting, except where a
person participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
SECTION 3.11. ACTION WITHOUT MEETING. Unless otherwise restricted by
the Certificate of Incorporation or these By-laws, any action required or
permitted to be taken at any meeting of the Board of Directors, or of any
committee thereof as provided in Article IV of these By-laws, may be taken
without a meeting, if a written consent thereto is signed by all members of the
Board or of such committee, as the case may be, and such written consent is
filed with the minutes of
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proceedings of the Board or committee. Such consent shall have the same force
and effect as a unanimous vote at a meeting, and may be stated as such in any
document or instrument filed with the Secretary of State of Delaware.
SECTION 3.12. COMPENSATION. Unless otherwise restricted by the
Certificate of Incorporation, the Board of Directors shall have the authority to
fix the compensation of directors. No provision of these By-laws shall be
construed to preclude any director from serving the corporation in any other
capacity and receiving compensation therefor.
SECTION 3.13. APPROVAL OR RATIFICATION OF ACTS OR CONTRACTS BY
STOCKHOLDERS. The Board of Directors in its discretion may submit any act or
contract for approval or ratification at any annual meeting of the stockholders,
or at any special meeting of the stockholders called for the purpose of
considering any such act or contract, and any act or contract that shall be
approved or be ratified by the vote of the stockholders holding a majority of
the issued and outstanding shares of stock of the Corporation entitled to vote
and present in person or by proxy at such meeting (provided that a quorum is
present), shall be as valid and as binding upon the Corporation and upon all of
the stockholders as if it had been approved or ratified by every stockholder of
the Corporation. In addition, any such act or contract may be approved or
ratified by the written consent of stockholders holding a majority of the issued
and outstanding shares of capital stock of the Corporation entitled to vote and
such consent shall be as valid and as binding upon the Corporation and upon all
of the stockholders as if it had been approved or ratified by every stockholder
of the Corporation.
ARTICLE IV
COMMITTEE OF DIRECTORS
SECTION 4.1. DESIGNATION, POWERS AND NAME. The Board of Directors may,
by resolution passed by a majority of the whole Board, designate one or more
committees, including, if they shall so determine, an executive committee, each
such committee to consist of one or more of the directors of the Corporation.
Any such designated committee shall have and may exercise such of the powers and
authority of the Board of Directors in the management of the business and
affairs of the Corporation as may be provided in such resolution. Any such
designated committee may authorize the seal of the Corporation to be affixed to
all papers which may require it. No such committee shall have the power or
authority in reference to amending the Certificate of Incorporation (except that
a committee may, to the extent authorized in the resolution or resolutions
providing for the issuance of shares of stock adopted by the Board of Directors
as provided by statute, fix any of the preferences or rights of such shares
relating to dividends, redemption, dissolution, any distribution of assets of
the Corporation or the conversion into, or the exchange of such shares for,
shares of any other class or classes or any other series of the same or any
other class or classes of stock of the Corporation), adopting an agreement of
merger or consolidation, recommending to the stockholders the sale, lease or
exchange of all or substantially all of the Corporation's property and assets,
recommending to the stockholders a dissolution of the Corporation or a
revocation of a dissolution, or amending the By-laws of the Corporation and,
unless the resolution, By-laws, or Certificate of Incorporation expressly so
provide, no such committee shall have the power or authority to declare a
dividend, to authorize the issuance of stock, or to adopt a certificate of
ownership and merger. The Board of Directors may designate one or more directors
as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of such committee. In the absence or
disqualifi cation of any member of such committee or committees, the member or
members thereof present at any meeting and not disqualified from voting, whether
or not he or they constitute a quorum,
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may unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member. Such committee
or committees shall have such name or names and such limitations of authority as
may be determined from time to time by resolution adopted by the Board of
Directors.
SECTION 4.2. PROCEDURE; MEETINGS; QUORUM. Any committee designated
pursuant to Section 4.1 of these By-laws shall choose its own chairman, shall
keep regular minutes of its proceedings and report the same to the Board of
Directors when requested, shall fix its own rules or procedures, and shall meet
at such times and at such place or places as may be provided by such rules, or
by resolution of such committee or resolution of the Board of Directors. At
every meeting of any such committee, the presence of a majority of all of the
members thereof shall constitute a quorum and the affirmative vote of a majority
of the members present shall be necessary for the adoption by it of any
resolution.
SECTION 4.3. COMPENSATION. Members of special or standing committees
may be allowed compensation for attending committee meetings, if the Board of
Directors shall so determine.
ARTICLE V
NOTICE
SECTION 5.1. METHODS OF GIVING NOTICE. Whenever under the provisions of
the statutes, the Certificate of Incorporation or these By-laws, notice is
required to be given to any director, member of any committee or stockholder,
such notice shall be in writing and delivered personally or mailed to such
director, member or stockholder; provided that in the case of a director or a
member of any committee, such notice may be given orally or by telephone,
telegram, telegraphic, cable or wireless transmission. If mailed, notice to a
director, member of a committee or stockholder shall be deemed to be given when
deposited in the United States mail first class in a sealed envelope, with
postage thereon prepaid, addressed, in the case of a stockholder, to the
stockholder at the stockholder's address as it appears on the records of the
corporation or, in the case of a director or a member of a committee, to such
person at his business address. If sent by telegram, notice to a director or
member of a committee shall be deemed to be given when the telegram, so
addressed, is delivered to the telegraph company. Notice shall be deemed to have
been given on the date of any telegraphic, cable or wireless transmission.
SECTION 5.2. WRITTEN WAIVER. Whenever any notice is required to be
given under the provisions of the statutes, the Certificate of Incorporation or
these By-laws, a waiver thereof in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed equivalent thereto. Attendance of a person at a meeting shall
constitute a waiver of notice of such meeting, except when the person attends a
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders, directors, or members of a
committee of directors need be specified in any written waiver of notice unless
so required by the Certificate of Incorporation or these By-laws.
ARTICLE VI
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OFFICERS
SECTION 6.1. OFFICERS. The officers of the Corporation shall be a
President and a Secretary, and may include one or more Vice Presidents, any one
or more of which may be designated Executive Vice President or Senior Vice
President, a Treasurer, and such other officers as the Board of Directors may
elect or appoint. The Board of Directors, in its discretion, may also choose a
Chairman of the Board of Directors (who must be a director). The Board of
Directors may appoint such other officers and agents, including Assistant Vice
Presidents, Assistant Secretaries and Assistant Treasurers, as it shall deem
necessary, who shall hold their offices for such terms and shall exercise such
powers and perform such duties as shall be determined by the Board. Any two or
more offices may be held by the same person unless the Certificate of
Incorporation provides otherwise. No officer shall execute, acknowledge, verify
or countersign any instrument on behalf of the Corporation in more than one
capacity, if such instrument is required by law, by these By-laws or by any act
of the Corporation to be executed, acknowledged, verified or countersigned by
two or more officers. None of the officers need be a director, except in the
case of the Chairman of the Board of Directors, and none of the officers need be
a stockholder of the Corporation.
SECTION 6.2. ELECTION AND TERM OF OFFICE. The officers of the
Corporation shall be elected annually by the Board of Directors at its first
regular meeting held after the annual meeting of stockholders or as soon
thereafter as is conveniently possible. Each officer shall hold office until his
successor shall have been chosen and shall have qualified or until his death or
the effective date of his resignation or removal, or until he shall cease to be
a director in the case of the Chairman and the Vice Chairman.
SECTION 6.3. REMOVAL. Any officer or agent elected or appointed by the
Board of Directors may be removed, with or without cause, by the affirmative
vote of a majority of the Board of Directors whenever, in its judgment, the best
interests of the Corporation shall be served thereby, but such removal shall be
without prejudice to the contractual rights, if any, of the person so removed.
Election or appointment of an officer or agent shall not of itself create
contract rights.
SECTION 6.4. RESIGNATION. 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.
SECTION 6.5. VACANCIES. Any vacancy occurring in any office of the
Corporation by death, resignation, removal or otherwise may be filled by the
Board of Directors for the unexpired portion of the term.
SECTION 6.6. SALARIES. The salaries of all officers and agents of the
Corporation shall be fixed by the Board of Directors or pursuant to its
direction. No officer shall be prevented from receiving such salary by reason of
his also being a director.
SECTION 6.7. PRESIDENT. The President shall be the chief executive
officer of the Corporation and, subject to the control of the Board of
Directors, the Chairman of the Board, and the Vice Chairman of the Board, shall
in general manage, supervise and control the properties, business and affairs of
the Corporation with all such powers as may be reasonably incident to such
responsibilities. Unless the Board of Directors, the Chairman of the Board, or
the Vice Chairman of the Board otherwise determines, the President shall have
the authority to agree upon and execute all leases, contracts, evidences of
indebtedness and other obligations in the name of the
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Corporation. In the absence of the Chairman of the Board and the Vice Chairman
of the Board, the President shall preside at all meetings of the stockholders
and (should he be a director) of the Board of Directors. He may also preside at
any such meeting attended by the Chairman of the Board if he is so designated by
the Chairman of the Board. He shall have the power to appoint and remove
subordinate officers, agents and employees, except those elected or appointed by
the Board of Directors. The President shall keep the Board of Directors and the
executive committee fully informed and shall consult them concerning the
business of the Corporation. He may sign with the Secretary or any other officer
of the Corporation thereunto authorized by the Board of Directors certificates
for shares of the Corporation and any deeds, bonds, mortgages, contracts,
checks, notes, drafts or other instruments which the Board of Directors has
authorized to be executed, except in cases where the signing and execution
thereof has been expressly delegated by these By-laws or by the Board of
Directors to some other officer or agent of the Corporation, or is required by
law to be otherwise executed. He shall vote, or give a proxy to any other
officer of the Corporation to vote, all shares of stock of any other corporation
standing in the name of the Corporation and shall exercise any and all rights
and powers which the Corporation may possess by reason of its ownership of
securities in such other corporation and in general he shall perform all other
duties, and shall have such other powers, as may be prescribed by the
stockholders, the Board of Directors, the Chairman of the Board, the Vice
Chairman of the Board, or the executive committee from time to time.
SECTION 6.8. VICE PRESIDENTS. In the absence of the President, or in
the event of his inability or refusal to act, the Executive Vice President (or
in the event there shall be no Vice President designated Executive Vice
President, any Vice President designated by the Board) shall perform the duties
and exercise the powers of the President, and when so acting shall have all of
the powers of and be subject to all of the restrictions upon the President. In
the absence of a designation by the Board of Directors of a Vice President to
perform the duties of the President, or in the event of his absence or inability
or refusal to act, the Vice President who is present and who is senior in terms
of time as a Vice President of the Corporation shall so act. Any Vice President
may sign, with the Secretary or Assistant Secretary, certificates for shares of
the Corporation. The Vice Presidents shall perform such other duties, and shall
have such other powers, as from time to time may be assigned to them by the
President, the Board of Directors or the executive committee (if any).
SECTION 6.9. SECRETARY. The Secretary shall (a) keep the minutes of the
meetings of the stockholders, the Board of Directors and committees of
directors, (b) see that all notices are duly given in accordance with the
provisions of these By-laws and as required by law, (c) be custodian of the
corporate records and of the seal of the Corporation, see that the seal of the
Corporation or a facsimile thereof is affixed to all certificates for shares
prior to the issuance thereof and to all documents, the execution of which on
behalf of the Corporation under its seal is duly authorized in accordance with
the provisions of these By-laws and attest the affixation of the seal of the
Corporation thereto, (d) keep or cause to be kept a register of the post office
address of each stockholder which shall be furnished by such stockholder, (e)
sign with the President, or an Executive Vice President or Vice President,
certificates for shares of the Corporation, the issue of which shall have been
authorized by resolution of the Board of Directors, (f) have general charge of
the stock transfer books of the Corporation, and (g) in general, perform all
duties normally incident to the office of Secretary and such other duties, and
shall have such other powers, as from time to time may be assigned to him by the
President, the Board of Directors or the executive committee (if any).
SECTION 6.10. TREASURER. If required by the Board of Directors, the
Treasurer shall give a bond for the faithful discharge of his duties in such sum
and with such surety or sureties as the Board of Directors shall determine. He
shall (a) have charge and custody of and be responsible
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for all funds and securities of the Corporation, receive and give receipts for
moneys due and payable to the Corporation from any source whatsoever and deposit
all such moneys in the name of the Corporation in such banks, trust companies or
other depositories as shall be selected in accordance with the provisions of
Section 7.3 of these By-laws, (b) prepare, or cause to be prepared, for
submission at each regular meeting of the Board of Directors, at each annual
meeting of the stockholders, and at such other times as may be required by the
Board of Directors, the President or the executive committee (if any), a
statement of financial condition of the Corporation in such detail as may be
required, and (c) in general, perform all of the duties incident to the office
of Treasurer and such other duties, and shall have such other powers, as from
time to time may be assigned to him by the President, the Board of Directors or
the executive committee (if any).
SECTION 6.11. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The
Assistant Secretaries and Assistant Treasurers shall, in general, perform such
duties and have such powers as shall be assigned to them by the Secretary or the
Treasurer, respectively, or by the President, the Board of Directors or the
executive committee. The Assistant Secretaries and Assistant Treasurers shall,
in the absence or inability or refusal to act of the Secretary or Treasurer,
respectively, perform all functions and duties which such absent officers may
delegate, but such delegation shall not relieve the absent officer from the
responsibilities and liabilities of his office. The Assistant Secretaries may
sign, with the President or a Vice President, certificates for shares of the
Corporation, the issuance of which shall have been authorized by a resolution of
the Board of Directors. The Assistant Treasurers shall respectively, if required
by the Board of Directors, give bonds for the faithful discharge of their duties
in such sums and with such sureties as the Board of Directors shall determine.
ARTICLE VII
CONTRACTS, CHECKS AND DEPOSITS
SECTION 7.1. CONTRACTS. Subject to the provisions of Section 6.1 of
these By-laws, the Board of Directors may authorize any officer, officers, agent
or agents, to enter into any contract or execute and deliver any instrument in
the name of and on behalf of the Corporation, and such authority may be general
or confined to specific instances.
SECTION 7.2. CHECKS AND NOTES. All checks, demands, drafts or other
orders for the payment of money, notes or other evidences of indebtedness issued
in the name of the Corporation shall be signed by such officer or officers or
such agent or agents of the Corporation, and in such manner, as shall be
determined by the Board of Directors.
SECTION 7.3. DEPOSITS. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the Corporation
in such banks, trust companies or other depositories as the Board of Directors
may select.
ARTICLE VIII
STOCK CERTIFICATES
SECTION 8.1. ISSUANCE. The shares of the Corporation shall be
represented by certificates, provided that the Board of Directors may provide by
resolution that some or all classes or series of the Corporation's stock may be
uncertificated shares. Any such resolution
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shall not apply to shares represented by a certificate until such certificate is
surrendered. Notwith standing the adoption of such a resolution by the Board of
Directors, every holder of stock represented by certificates and upon request
every holder of uncertificated shares shall be entitled to a certificate or
certificates showing the number of shares of stock registered in his name on the
books of the Corporation. The certificates shall be in such form as may be
determined by the Board of Directors, shall be issued in numerical order and
shall be entered in the books of the Corporation as they are issued. They shall
exhibit the holder's name and number of shares (and if the stock of the
Corporation shall be divided into classes or series, the class or series of such
shares) and shall be signed by the President or a Vice President and by the
Secretary or an Assistant Secretary. Any or all of the signatures on the
certificate may be facsimiles. The stock record books and the blank stock
certificate books shall be kept by the Secretary, or at the office of such
transfer agent or transfer agents as the Board of Directors may from time to
time by resolution determine. In case any officer, transfer agent or registrar
who shall have signed or whose facsimile signature or signatures shall have been
placed upon any such certificate or certificates shall have ceased to be such
officer, transfer agent or registrar before such certificate is issued by the
Corporation, such certificate may nevertheless be issued by the Corporation with
the same effect as if such person were such officer, transfer agent or registrar
at the date of issue.
If the Corporation shall be authorized to issue more than one class of
stock or more than one series of any class, the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate which the Corporation shall
issue to represent such class of stock; provided that, except as otherwise
provided by statute, in lieu of the foregoing requirements there may be set
forth on the face or back of the certificate which the Corporation shall issue
to represent such class or series of stock a statement that the Corporation will
furnish to each stockholder who so requests the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights. Within a reasonable time after
the issuance or transfer of uncertificated stock, the Corporation shall send to
the registered owner thereof a written notice containing the information
required to be set forth or stated on certificates pursuant to this Section 8.1
or otherwise required by law or with respect to this Section 8.1 a statement
that the Corporation will furnish without charge to each stockholder who so
requests the powers, designations, preferences and relative, participating,
optional or other special rights of each class of stock or series thereof and
the qualifications, limitations or restrictions of such preferences and/or
rights. Except as otherwise expressly provided by law, the rights and
obligations of the holders of uncertificated stock and the rights and
obligations of the holders of certificates representing stock of the same class
and series shall be identical.
All certificates surrendered to the Corporation for transfer shall be
cancelled and no new certificate shall be issued until the former certificate
for a like number of shares shall have been surrendered and cancelled, except
that in the case of a lost, stolen, destroyed or mutilated certificate a new one
may be issued therefor upon such terms and with such indemnity, if any, to the
Corporation as the Board of Directors may prescribe. Certificates shall not be
issued representing fractional shares of stock.
SECTION 8.2. LOST CERTIFICATES. The Board of Directors may direct a new
certificate of stock or uncertificated shares to be issued in place of any
certificate theretofore issued by the Corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost,
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stolen or destroyed certificate, or his legal representative, to advertise the
same in such manner as it shall require or to give the Corporation a bond in
such sum as it may deem sufficient to indemnify it against any claim that may be
made against the Corporation on account of the alleged loss, theft or
destruction of any such certificate or the issuance of such new certificate or
uncertificated shares, or both.
SECTION 8.3. TRANSFERS. Upon surrender to the Corporation or the
transfer agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and register the
transaction upon its books. Upon presentation to the Corporation or the transfer
agent of the Corporation of an instruction with a request to transfer, pledge or
release an uncertificated share or shares, it shall be the duty of the
Corporation to register the transfer, pledge or release upon its books, and
shall provide the registered owner with such notices as may be required by law.
Transfers of shares shall be made only on the books of the Corporation by the
registered holder thereof, or by his attorney thereunto authorized by power of
attorney and filed with the Secretary of the Corporation or the transfer agent.
SECTION 8.4. REGISTERED STOCKHOLDERS. The Corporation shall be entitled
to treat the registered owner of any share or shares of stock whether
certificated or uncertificated as the holder in fact thereof and, accordingly,
shall not be bound to recognize any equitable or other claim to or interest in
such share or shares on the part of any other person, whether or not it shall
have express or other notice thereof, except as otherwise provided by the laws
of the State of Delaware.
SECTION 8.5. REGULATIONS REGARDING CERTIFICATES. The Board of Directors
shall have the power and authority to make all such rules and regulations as
they may deem expedient concerning the issue, transfer and registration or the
replacement of certificates for shares of capital stock of the Corporation.
ARTICLE IX
DIVIDENDS
SECTION 9.1. DECLARATION. Dividends upon the capital stock of the
Corporation, subject to the provisions of the Certificate of Incorporation, if
any, may be declared by the Board of Directors at any regular or special
meeting, pursuant to applicable law. Dividends may be paid in cash, in property
or in shares of capital stock, subject to the provisions of the Certificate of
Incorporation.
SECTION 9.2. RESERVE. Before payment of any dividend, there may be set
aside out of any funds of the Corporation available for dividends such sum or
sums as the Board of Directors from time to time, in their absolute discretion,
think proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the Corporation, or
for such other purpose as the Board of Directors shall think conducive to the
interest of the Corporation, and the Directors may modify or abolish any such
reserve in the manner in which it was created.
ARTICLE X
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INDEMNIFICATION
(i) The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgment, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(ii) The Corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the Corporation to procure a judgment in
its favor by reason of the fact that he is or was a director, officer, employee
or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Corporation and except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable to the Corporation unless and only to the extent that
the Court of Chancery or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of Chancery
or such other court shall deem proper.
(iii) To the extent that a director, officer, employee or agent of
the Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (i) and (ii) hereof, or in
defense of any claim, issue or matter therein, he shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
(iv) Any indemnification under subsections (i) and (ii) hereof
(unless ordered by a court) shall be made by the Corporation only as authorized
in the specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in subsections (i) and (ii) hereof.
Such determination shall be made (i) by a majority vote of the directors who are
not parties to such action, suit or proceeding, even though less than a quorum,
or (2) if there are no such directors, or if such directors so direct, by
independent legal counsel in a written opinion, or (3) by the stockholders.
(v) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or investigative
action, suit or proceeding may be
-15-
<PAGE>
paid by the Corporation in advance of the final disposition of such action, suit
or proceeding upon receipt of an undertaking by or on behalf of such director or
officer to repay such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the Corporation as authorized herein. Such
expenses (including attorneys' fees) incurred by other employees and agents may
be so paid upon such terms and conditions, if any, as the board of directors
deems appropriate.
(vi) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office.
(vii) The Corporation shall have the power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against
him and incurred by him in any such capacity, or arising out of his status as
such, whether or not the Corporation would have the power to indemnify him
against such lability under this section.
(viii)For purposes of this section, references to "the Corporation"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued, would
have had the power and authority to indemnify its directors, officers, and
employees and agents, so that any person who is or was a director, officer,
employee or agent of such constituent corporation, or is or was serving at the
request of such constituent corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, shall stand in the same position under this section with respect to
the resulting or surviving corporation as he would have with respect to such
constituent corporation if its separate existence had continued.
(ix) For purposes of this section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on a person with respect to any employee benefit plan; and
references to "serving at the request of the Corporation" shall include any
service as a director, officer, employee or agent of the Corporation which
imposes duties on, or involves services by, such director, officer, employee, or
agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the Corporation" as referred to in this
section.
(x) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such person.
(xi) The Court of Chancery of the State of Delaware is hereby vested
with exclusive jurisdiction to hear and determine all actions for advancement of
expenses or indemnification brought under this section or under any bylaw,
agreement, vote of stockholders or disinterested directors, or otherwise. The
Court of Chancery of the State of Delaware may summarily determine the
Corporation's obligation to advance expenses (including attorneys' fees).
-16-
<PAGE>
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. SEAL. The Board of Directors may provide a suitable seal,
containing the name of the corporation, and the words "Corporate Seal,
Delaware." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or otherwise reproduced.
SECTION 11.2. BOOKS. The books of the Corporation may be kept (subject
to any provision of law) outside the State of Delaware at such place or places
as may be designated from time to time by the Board of Directors.
SECTION 11.3. FISCAL YEAR. The fiscal year of the Corporation shall be
as established from time to time by the Board of Directors.
SECTION 11.4. RESIGNATIONS. Any director, member of a committee or
officer may resign at any time. Such resignation shall be made in writing and
shall take effect at the time specified therein, or if no time be specified, at
the time of its receipt by the President or Secretary. The acceptance of a
resignation shall not be necessary to make it effective, unless expressly so
provided in the resignation.
SECTION 11.5. FACSIMILE SIGNATURES. In addition to the provisions for
the use of facsimile signatures elsewhere specifically authorized in these
By-laws, facsimile signatures of any officer or officers of the Corporation may
be used whenever and as authorized by the Board of Directors.
SECTION 11.6. RELIANCE UPON BOOKS, REPORTS AND RECORDS. Each director
and each member of any committee designated by the Board of Directors shall, in
the performance of his duties, be fully protected in relying in good faith upon
the books of account or reports made to the Corporation by any of its officers,
or by an independent certified public accountant, or by an appraiser selected
with reasonable care by the Board of Directors or by any such committee, or in
relying in good faith upon other records of the Corporation.
SECTION 11.7. GENDER AND NUMBER. Wherever used or appearing in these
By-laws, pronouns of the masculine gender shall include the persons of the
female sex as well as the neuter gender and the singular shall include the
plural wherever appropriate.
SECTION 11.8. LAWS AND STATUTES. Wherever used or appearing in these
By-laws, the words "law" or "laws" or "statute" or "statutes," respectively,
shall mean and refer to laws and statutes, or a law or statute, of the State of
Delaware, to the extent only that such is or are expressly applicable, except
where otherwise expressly stated or the context requires that such words not be
so limited.
SECTION 11.9. HEADINGS. The headings of the Articles and Sections of
these By-laws are inserted for convenience of reference only and shall not be
deemed to be a part thereof or used in the construction or interpretation
thereof.
-17-
<PAGE>
ARTICLE XII
AMENDMENT
If provided in the Certificate of Incorporation of the Corporation, the
Board of Directors shall have the power to adopt, amend and repeal from time to
time By-laws of the Corporation, subject to the right of the stockholders
entitled to vote with respect thereto to amend or repeal such By-laws as adopted
or amended by the Board of Directors.
-18-
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<PERIOD-END> SEP-30-1996
<CASH> 1,439,000
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0
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<TOTAL-LIABILITY-AND-EQUITY> 1,715,000
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