UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
---- SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 2, 1998
------------------
Commission File Number 0-6072
ELECTROMAGNETIC SCIENCES, INC.
------------------------------
(Exact name of registrant as specified in its charter)
Georgia 58-1035424
------------------------------ ----------------------
(State or other jurisdiction of (IRS Employer ID Number)
incorporation of organization)
660 Engineering Drive
Norcross, Georgia 30092
-------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (770) 263-9200
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has bee
subject to such filing requirements for the past 90 days.
Yes X No
----- -----
The number of shares outstanding of each of the issuer's classes of
common stock, as of the close of business on November 1, 1998:
Class Number of Shares
Common Stock, $.10 par Value 8,680,000
FORM 10-Q
-2-
ELECTROMAGNETIC SCIENCES, INC.
AND SUBSIDIARIES
INDEX
Page No.
Part I. Financial Information
Item 1. Financial Statements
Consolidated Statements of Operations -
Three Months and Nine Months Ended
October 2, 1998 and October 3, 1997 3
Consolidated Balance Sheets - October 2,
1998 and December 31, 1997 4-5
Consolidated Statements of Cash Flows -
Nine Months Ended October 2, 1998 and
October 3, 1997 6
Notes to Interim Consolidated Financial
Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8-9
Part II Other Information
Item 6. Exhibits and Reports on Form 8-K 10
FORM 10-Q
-3-
ELECTROMAGNETIC SCIENCES, INC.
AND SUBSIDIARIES
PART I
FINANCIAL INFORMATION
ITEM 1. Financial Statements
Consolidated Statements of Operations (Unaudited)
(In thousands, except per share data)
Three months ended Nine months ended
---------------------- --------------------
October 2 October 3 October 2 October 3
1998 1997 1998 1997
--------- --------- --------- ---------
Net sales $47,393 42,306 136,300 122,983
Cost of sales 29,847 27,986 86,517 80,731
Selling, general and
administrative expenses 9,692 8,083 29,025 25,546
Research and development
expenses 3,682 2,406 9,544 7,145
------ ------ ------ ------
Operating income 4,172 3,831 11,214 9,561
Non-operating income
(expense), net 100 (66) 132 36
Interest expense (441) (506) (1,341) (1,297)
------ ------ ------ ------
Earnings before income
taxes 3,831 3,259 10,005 8,300
Income tax expense (1,480) (1,307) (3,873) (3,299)
------ ------ ------ ------
Net earnings $ 2,351 1,952 6,132 5,001
====== ====== ====== ======
Net earnings per share:
Basic $ .27 .23 .71 .59
Diluted .27 .22 .69 .57
====== ====== ====== ======
Weighted average number
of shares:
Common 8,675 8,566 8,654 8,521
Common and dilutive
common equivalent 8,843 8,846 8,874 8,805
See accompanying notes to interim consolidated financial statements.
FORM 10-Q
-4-
ELECTROMAGNETIC SCIENCES, INC.
AND SUBSIDIARIES
Consolidated Balance sheets (Unaudited)
(In thousands)
October 2 December 31
1998 1997
------------ -----------
ASSETS
Current assets:
Cash and cash equivalents $ 4,718 4,300
Trade accounts receivable, net 62,774 58,431
Inventories:
Work in process 4,411 5,994
Parts and materials 21,659 16,330
------- -------
Total inventories 26,070 22,324
------- -------
Deferred income taxes 2,697 2,697
------- -------
Total current assets 96,259 87,752
------- -------
Property, plant and equipment:
Land 1,150 1,150
Building and leasehold improvements 15,443 15,332
Machinery and equipment 60,803 55,150
Furniture and fixtures 4,661 5,134
------- -------
Total property, plant
and equipment 82,057 76,766
Less accumulated depreciation and
amortization 48,490 44,179
------- -------
Net property, plant and
equipment 33,567 32,587
Other assets 6,638 6,602
Goodwill, net of accumulated amortization 15,801 16,713
------- -------
$152,265 143,654
======= =======
See accompanying notes to interim consolidated financial statements.
FORM 10-Q
-5-
ELECTROMAGNETIC SCIENCES, INC.
AND SUBSIDIARIES
Consolidated Balance sheets (Unaudited)
(In thousands except share data)
October 2 December 31
1998 1997
------------ -----------
LIABILITIES AND STOCKHOLDERS= EQUITY
Current liabilities:
Current installments of long-term debt $ 6,294 4,521
Accounts payable 13,310 14,436
Income taxes payable 3,666 2,474
Accrued compensation costs 4,195 4,150
Accrued retirement costs 1,161 700
Deferred revenue 3,407 1,558
Other liabilities 1,280 1,357
------- -------
Total current liabilities 33,313 29,196
Long-term debt, excluding current
installments 15,725 17,160
Deferred income taxes 2,078 2,078
------- -------
Total liabilities 51,116 48,434
------- -------
Stockholders' equity:
Preferred stock of $1.00 par value
per share. Authorized 10,000,000
shares; none issued - -
Common stock of $.10 par value per
share. Authorized 75,000,000 shares;
issued and outstanding 8,695,000 in
1998 and 8,626,000 in 1997 870 863
Additional paid-in capital 34,512 34,487
Accumulated other comprehensive income
(note 3) (1,628) (1,393)
Retained earnings 67,395 61,263
------- -------
Total stockholders' equity 101,149 95,220
------- -------
$152,265 143,654
======= =======
See accompanying notes to interim consolidated financial statements.
FORM 10-Q
-6-
ELECTROMAGNETIC SCIENCES, INC.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
Nine Months Ended
------------------------
October 2 September 30
1998 1997
--------- ------------
Cash flow from operating activities:
Net earnings $ 6,132 5,001
Adjustments to reconcile net earnings
to net cash from operating activities:
Depreciation and amortization 4,400 4,212
Goodwill amortization 912 712
Changes in operating assets and liabilities:
Trade accounts receivable (3,907) (11,198)
Inventories (3,746) (2,373)
Accounts payable (1,126) (1,290)
Income taxes 1,192 2,578
Accrued costs, deferred revenue
and other current liabilities 2,278 2,445
Other (894) (373)
------ ------
Net cash provided by (used in)
operating activities 5,241 (286)
------ ------
Cash flows from investing activities:
Purchase of property, plant and equipment (5,380) (6,079)
Purchase of subsidiary common stock from
minority shareholders - (773)
------ ------
Net cash used in investing
activities (5,380) (6,852)
------ ------
Cash flows from financing activities:
Borrowing of long-term debt 338 4,779
Proceeds from exercise of stock options 32 661
------ ------
Net cash provided by
financing activities 370 5,440
------ ------
Net change in cash and cash
equivalents 231 (1,698)
Effect of exchange rates on cash 187 (302)
Cash and cash equivalents at January 1 4,300 4,321
------ ------
Cash and cash equivalents at October 2 $ 4,718 2,321
====== ======
Supplemental disclosure of cash flow
information:
Cash paid for interest $ 1,341 1,297
Cash paid for income taxes $ 2,862 1,192
See accompanying notes to interim consolidated financial statements.
FORM 10-Q
-7-
ELECTROMAGNETIC SCIENCES, INC.
AND SUBSIDIARIES
Notes to Interim Consolidated Financial Statements (Unaudited)
(1) Basis of Presentation
The interim consolidated financial statements include the accounts
of Electromagnetic Sciences, Inc., its wholly-owned subsidiaries, EMS
Technologies, Inc., LXE Inc., and CAL Corporation (collectively, "the
Company"). In the opinion of management, the interim consolidated
financial statements reflect all normal and recurring adjustments
necessary for a fair presentation of results for such periods. The
results of operations for any interim period are not necessarily
indicative of results for the full year. These consolidated financial
statements should be read in conjunction with the consolidated financial
statements and related notes contained in the Company's Annual Report on
Form 10-K for the year ended December 31, 1997.
(2) Earnings per Share
In 1997, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 128, "Earnings per Share," which established new
standards for computing and presenting earnings per share information.
Basic earnings per share is the per share allocation of income available
to common stockholders based only on the weighted average number of
common shares actually outstanding during the period. Diluted earnings
per share represents the per share allocation of income attributable to
common stockholders based on the weighted average number of common shares
actually outstanding plus all dilutive potential common shares
outstanding during the period.
In the Company's capital structure, stock options comprise the only
securities that are potentially dilutive in the future to basic earnings
per share, summarized as follows (shares in thousands):
October 2 October 3
1998 1997
--------- ---------
Dilutive stock options,
included in earnings
per share calculations:
Shares 598 707
Average price per share $ 9.78 $ 9.44
Antidilutive stock options,
excluded from earnings
per share calculations:
Shares 312 15
Average price per share $21.41 $24.34
FORM 10-Q
-9-
ELECTROMAGNETIC SCIENCES, INC.
AND SUBSIDIARIES
Following is a reconciliation of the denominator for basic and
diluted earnings per share calculations (shares in thousands):
Three months ended Nine months ended
---------------------- --------------------
October 2 October 3 October 2 October 3
1998 1997 1998 1997
--------- --------- --------- ---------
Basic earnings per
share denominator 8,675 8,566 8,654 8,521
Common equivalent shares
from dilutive stock options 168 280 220 284
----- ----- ----- -----
Diluted earnings per
share denominator 8,843 8,846 8,874 8,805
===== ===== ===== =====
(3) Comprehensive Income
Beginning in fiscal 1998, the Company has adopted SFAS 130,
"Reporting Comprehensive Income," which establishes standards for the
reporting and display of comprehensive income and its components. Under
SFAS 130, all items that are recognized under accounting standards as
components of comprehensive income must be reported in the financial
statements. The only element of comprehensive income, other than net income,
that is applicable to the Company is the change in the foreign currency
translation adjustment. Following is a summary of comprehensive income (in
thousands):
Three months ended Nine months ended
---------------------- --------------------
October 2 October 3 October 2 October 3
1998 1997 1998 1997
--------- --------- --------- ---------
Net income $2,351 1,952 6,132 5,001
Other comprehensive
expense - foreign
currency adjustment 50 (208) (235) (1,229)
----- ----- ----- -----
Comprehensive income $2,401 1,744 5,897 3,772
====== ===== ===== =====
FORM 10-Q
-10-
ELECTROMAGNETIC SCIENCES, INC.
AND SUBSIDIARIES
ITEM 2. Management's Discussion And Analysis Of Financial Condition And
Results Of Operations
Results of Operations
- ---------------------
Consolidated net sales for the third quarter and first nine months of
1998 were $47 million and $136 million respectively, compared with $42
million and $123 million for the same respective periods in 1997. Most
of the 1998 revenue growth related to antennas and other infrastructure
products for PCS/cellular communications; revenues for these products
benefited from development of the North American market and expansion,
particularly in the first six months of the year, of the Latin American
market. Consolidated revenues also increased due to sales of network and
system integration products for logistics and healthcare applications in
North America.
Cost of sales, as a percentage of consolidated net sales, decreased to
63% for the third quarter and first nine months of 1998, compared with
66% for the same periods in 1997. This lower percentage was due to a
increased proportion of sales being derived from antennas and other
infrastructure products for PCS/cellular communications, as well as
airborne SATCOM antenna systems from within the space and technology
segment.
Selling, general and administrative expenses, as a percentage of
consolidated net sales, were 20% for the third quarter of 1998, compared
with 19% for the third quarter of 1997. This slight increase related to
additional marketing efforts in the healthcare and transportation markets
for network and systems integration products. For the first nine months
of 1998, consolidated selling, general and administrative expenses were
greater in absolute dollars than in 1997, but as a percentage of net
sales were unchanged at 21%.
Research and development expenses increased in 1998 from 1997 as a result
of internally funded efforts to develop new capabilities in the space and
technology segment and to enhance the Company's wireless products lines.
In the Company's space and technology segment, significant research and
development effort also occurs under many specific customer orders and,
accordingly, is reflected in cost of sales.
Liquidity and Capital Resources
- -------------------------------
The increase in cash during the first nine months of 1998 was mainly a
result of cash provided by operating activities. For the remainder of
the year, the Company expects to generate further positive cash flow
before financing activities.
FORM 10-Q
-9-
ELECTROMAGNETIC SCIENCES, INC.
AND SUBSIDIARIES
At October 2, 1998, the Company had three immediate sources of credit:
$6.5 million remaining under one revolving credit agreement, $4.3 million
under another revolving credit agreement, and $2.1 million under a line
of credit in Canada.
Management believes that the Company's present liquidity, together with
cash from operations and sources of external financing, will support its
current business activities and near term capital investment plans.
However, management expects that additional sources of liquidity will be
needed over the next few years if sales and production levels continue to
grow at rates similar to those of the past two years.
Year 2000
- ---------
The Company has developed a plan to modify existing information systems or
implement new systems, as necessary, to become "Year 2000" compliant in a
timely manner; the Company believes that the implementation of this plan
is proceeding on schedule. The Company also believes that neither (1) the
cost of addressing Year 2000 issues, nor (2) the consequences of untimely
resolution of remaining Year 2000 issues, would cause reported data
not to be necessarily indicative of future operating results. Furthermore,
cost of becoming Year 2000 compliant is not expected to have a material
effect on the Company's results of operations.
Risk Factors and Forward-Looking Statements
- -------------------------------------------
Forward-looking statements with respect to expected cash flows
are included in management's discussion and analysis of financial
condition and results of operations. Actual results could differ
materially from those suggested in any forward-looking statements as a
result of a variety of factors. Such factors include, but are not limited
to, the Company's ability to achieve product development and
manufacturing objectives within the cost and timing parameters created by
customers and end-users, and timeliness of orders and payments from
customers, and availability of funding for major new space programs, and
the strength and timing of end-user acceptance of new communications
services, such as high-data-rate mobile services.
FORM 10-Q
-10-
ELECTROMAGNETIC SCIENCES, INC.
AND SUBSIDIARIES
PART II
OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits - The following exhibits are filed as part of this report:
3.1 Amendments to Bylaws of Electromagnetic Sciences, Inc.
adopted July 31, 1998.
3.2 Bylaws of Electromagnetic Sciences, Inc., as amended through
July 31, 1998.
10.1 Form of note evidencing indebtedness to the Company of its
Chief Executive Officer and certain other executive officers.
27.1 Financial Data Schedule
(b) Reports on Form 8-K - The Company has not filed any reports on Form
8-K during the three months ended October 2, 1998.
FORM 10-Q
-11-
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
ELECTROMAGNETIC SCIENCES, INC.
By: /s/ Date: 11/16/98
----------------------------- -----------
Thomas E. Sharon
President and Chief Executive
Officer
By: /s/ Date: 11/16/98
----------------------------- -----------
Don T. Scartz
Treasurer and Chief Financial
Officer
Exhibit 3.1
Electromagnetic Sciences, Inc.
Amendments to Bylaws dated
July 31, 1998
2.12 Matters Considered at Annual Meetings. At any annual meeting of
the shareholders, only matters shall be considered as shall have been (a)
brought before such meeting (i) by or at the direction of the Board of
Directors or (ii) by any shareholder of the Corporation who is entitled
to vote with respect thereto and who complies with the notice procedures
set forth in this Section 2.12, and (b) seconded by any other shareholder
of the Corporation who is entitled to vote with respect thereto. For
business to be properly brought before an annual meeting by a
shareholder, the shareholder must have given timely notice thereof in
writing to the Secretary of the Corporation. To be timely, a
shareholder's notice must be delivered or mailed to and received at the
principal executive offices of the Corporation not less than AMENDMENT
BEGINS: 60 days prior to the anniversary of the date on which the annual
meeting of shareholders was held in the prior year, except that if the
actual date of the annual meeting at issue is more than 30 days earlier
or later than such anniversary, such shareholder's notice must be so
delivered or received not less than 60 days before such actual date.
AMENDMENT ENDS A shareholder's notice to the Secretary shall set
forth as to each matter such shareholder proposes to bring before the
meeting (i) a brief description of the business desired to be brought
before the meeting and the reasons for conducting such business at the
meeting, (ii) the name and address, as they appear on the Corporation's
books, of the shareholder proposing such business, (iii) the series or
class and number of shares of the Corporation's capital stock that are
beneficially owned by such shareholder, and (iv) any material interest of
such shareholder in such business. Notwithstanding anything in the
Bylaws to the contrary, no business shall be brought before or conducted
at an annual meeting except in accordance with the provisions of this
Section 2.12. The person presiding over an annual meeting shall, if the
facts so warrant, determine and declare to such meeting that business
proposed to be considered at an annual meeting in a manner inconsistent
with this Section 2.12 is out of order and that such business shall not
be transacted at such meeting.
* * * * * * * * * * * * * * * * * * * * *
3.7 Certain Nomination Requirements. No person may be nominated for
election as a director at any annual or special meeting of the
shareholders of the Corporation unless (a) the nomination has been or is
being made pursuant to a recommendation or approval of the Board of
Directors of the Corporation or a properly constituted committee of the
Board of Directors previously delegated authority to recommend or approve
nominees for director; (b) the person is nominated by a shareholder of
the Corporation who is entitled to vote for the election of such nominee
at the subject meeting, and such nominating shareholder has furnished
written notice to the Secretary of the Corporation, at the Corporation's
principal business address, AMENDMENT BEGINS not less than 60 days prior
to the anniversary of the date on which the annual meeting of
shareholders was held in the prior year, except that if the actual date
of the annual meeting at issue is more than 30 days earlier or later than
such anniversary, such shareholder's notice must be so furnished not less
than 60 days before such actual date, which notice must AMENDMENT ENDS
(i) sets forth with respect to the person to be nominated his or her
name, age, business and residence addresses, principal business or
occupation during the past five years, any affiliation with or material
interest in the Corporation or any transaction involving the Corporation,
and any affiliation with or material interest in any person or entity
having an interest materially adverse to the Corporation, and (ii) the
shareholder that the nominee has consented to being nominated and that
the shareholder believes the nominee will stand for election and will
serve if elected; or (c) (i) the person is nominated to replace a person
previously identified as a proposed nominee (in accordance with the
provisions of subpart (b) of this Section 3.7) who has since become
unable or unwilling to be nominated or to serve if elected, (ii) the
shareholder who furnished such previous identification makes the
replacement nomination and delivers to the Secretary of the Corporation
(at the time of or prior to making the replacement nomination) an
affidavit or other sworn statement affirming that the shareholder had no
reason to believe the original nominee would be so unable or unwilling,
and (iii) such shareholder also furnishes in writing to the Secretary of
the Corporation (at the time of or prior to making the replacement
nomination) the same type of information about the replacement nominee as
required by subpart (b) of this Section 3.7 to have been furnished about
the original nominee. The presiding officer of any meeting of
shareholders of the Corporation at which one or more directors are to be
elected, for good cause shown and with proper regard for the orderly
conduct of business at the meeting, may waive in whole or in part the
operation of this Section 3.7.
Exhibit 3.2
BYLAWS
OF
ELECTROMAGNETIC SCIENCES, INC.
As Amended Through
July 31, 1998
TABLE OF CONTENTS PAGE
ARTICLE ONE - OFFICES
Section 1.1 Registered Office and Agent 1
Section 1.2 Principal Office 1
Section 1.3 Other Offices 1
ARTICLE TWO - SHAREHOLDERS' MEETINGS 1
Section 2.1 Place of Meetings 1
Section 2.2 Annual Meetings 1
Section 2.3 Special Meetings 2
Section 2.4 Notice of Meetings 2
Section 2.5 Waiver of Notice 2
Section 2.6 Quorum; Manager of Acting 2
Section 2.7 Voting of Shares 3
Section 2.8 Proxies 3
Section 2.9 Presiding Officer 3
Section 2.10 Adjournments 3
Section 2.11 Conduct of the Meeting 3
Section 2.12 Matters Considered at Annual Meetings 4
ARTICLE THREE - THE BOARD OF DIRECTORS 4
Section 3.1 General Powers 4
Section 3.2 Number, Election and Terms of Office 4
Section 3.3 Removal 4
Section 3.4 Vacancies 5
Section 3.5 Compensation 5
Section 3.6 Committees of the Board of Directors 5
Section 3.7 Certain Nomination Requirements 5
Section 3.8 Qualification of Directors 6
Section 3.9 Related-Party Transactions 6
ARTICLE FOUR - MEETINGS OF THE BOARD OF DIRECTORS 6
Section 4.1 Regular Meetings 6
Section 4.2 Special Meetings 6
Section 4.3 Place of Meetings 6
Section 4.4 Notice of Meetings 6
Section 4.5 Quorum 6
Section 4.6 Vote Required for Action 7
Section 4.7 Participation by Conference Telephone 7
Section 4.8 Action by Directors Without a Meeting 7
Section 4.9 Adjournments 7
Section 4.10 Waiver of Notice 7
ARTICLE FIVE - OFFICERS 7
Section 5.1 Offices 7
Section 5.2 Term 7
Section 5.3 Compensation 8
Section 5.4 Removal 8
Section 5.5 Chairman of the Board 8
Section 5.6 Chief Executive Officer 8
Section 5.7 President 8
Section 5.8 Vice Presidents 8
Section 5.9 Secretary 8
Section 5.10 Treasurer 8
Section 5.11 Assistant Secretaries and Assistant
Treasurers 9
Section 5.12 Bonds 9
ARTICLE SIX - DIVIDENDS 9
ARTICLE SEVEN - SHARES 9
Section 7.1 Authorization and Issuance of Shares 9
Section 7.2 Share Certificates 9
Section 7.3 Rights of Corporation with Respect to
Registered Owner 10
Section 7.4 Transfers of Shares 10
Section 7.5 Duty of Corporation to Register
Transfer 10
Section 7.6 Lost, Stolen or Destroyed Certificates 10
Section 7.7 Fixing of Record Date 10
Section 7.8 Record Date if None Fixed 11
ARTICLE EIGHT - INDEMNIFICATION 11
Section 8.1 Indemnification of Directors and
Officers 11
Section 8.2 Indemnification of Directors and
Officers for Derivative Actions 11
Section 8.3 Indemnification of Employees and Agents 11
Section 8.4 Subsidiaries and Other Organizations 12
Section 8.5 Determination 12
Section 8.6 Advances 12
Section 8.7 Non-Exclusivity 13
Section 8.8 Insurance 13
Section 8.9 Notice 13
Section 8.10 Security 13
Section 8.11 Amendment 13
Section 8.12 Agreements 14
Section 8.13 Continuing Benefits 14
Section 8.14 Sucessors 14
Section 8.15 Severability 14
Section 8.16 Additional Indemnification 14
ARTICLE NINE - MISCELLANEOUS 14
Section 9.1 Inspection of Books and Records 14
Section 9.2 Fiscal Year 14
Section 9.3 Seal 15
Section 9.4 Election of "Fair Price" Statute 15
Section 9.5 Election of "Business Combination"
Statute 15
Section 9.6 Notice 15
ARTICLE TEN - AMENDMENTS 15
BYLAWS
OF
ELECTROMAGNETIC SCIENCES, INC.
All of these Bylaws are subject to contrary provisions, if any, of
the Corporation's Articles of Incorporation, of the Georgia Business
Corporation Code (the "Code") and of other applicable law.
References herein to "Articles of Incorporation" are to the articles
of incorporation of Electromagnetic Sciences, Inc., a Georgia corporation
(the "Corporation"), as the same may be amended and restated from time to
time.
ARTICLE ONE
Offices
1.1 Registered Office and Agent. The Corporation shall maintain a
registered office and shall have a registered agent whose business office
is identical with such registered office.
1.2 Principal Office. The principal office of the Corporation shall be
at 660 Engineering Drive, Norcross, Georgia, or at such other place,
within or without the State of Georgia, as the Board of Directors may
from time to time determine or as the business of the Corporation may
require or make desirable.
1.3 Other Offices. In addition to its registered office and principal
office, the Corporation may have offices at such other place or places,
within or without the State of Georgia, as the Board of Directors may
from time to time appoint or as the business of the Corporation may
require or make desirable.
ARTICLE TWO
Shareholders' Meetings
2.1 Place of Meetings. Meetings of the shareholders may be held
at any place within or without the State of Georgia designated by
the Board of Directors and, if required, as set forth in the
notice thereof, or if no place is so specified, at the principal
office of the Corporation.
2.2 Annual Meetings. Annual meetings of shareholders of such
classes or series of shares as are entitled to notice thereof and
to vote thereat shall be held on such dates as may be determined
by the Board of Directors, for the purpose of electing directors
and transacting any and all other business that may properly come
before the meeting. The annual meeting may be combined with any
other meeting of shareholders, whether annual or special.
2.3 Special Meetings. Special meetings of the shareholders of
any class or series or of all classes or series of the
Corporation's shares may be called at any time by the Chairman of
the Board or the Board of Directors; and shall be called by the
Corporation upon the written request as required by law (stating
the purpose or purposes of such meeting) of the holders of
two-thirds or more of all the shares of capital stock of the
Corporation entitled to vote on any issue or issues proposed to
be considered at such special meeting. The date, time and place
for the holding of any special meeting of shareholders shall be
determined by the Board of Directors. The business that may be
transacted at any special meeting of shareholders shall consist
only of and be limited to the purpose or purposes stated in the
notice of such special meeting delivered to shareholders in
accordance with Section 2.4 of these Bylaws.
2.4 Notice of Meetings. The Corporation shall give written
notice, delivered in person or by mail, of the date, time and
place of each annual and special shareholders' meeting, no fewer
than ten days nor more than 60 days before the meeting date, to
each shareholder of record entitled to vote at such meeting. In
the case of an annual meeting, the notice of the meeting need not
state the purpose or purposes of the meeting unless the purpose
or purposes constitute a matter which these Bylaws or the Code
require to be so stated. In the case of a special meeting, the
notice of meeting shall state the purpose or purposes for which
the meeting is called. If an annual or special shareholders'
meeting is adjourned to a different date, time or place, the
Corporation may but shall not be required to give notice of the
new date, time or place of such meeting if the new date, time and
place is announced at the meeting before adjournment thereof;
provided, however, that if a new record date is or must be fixed
in accordance with Section 7.7 of these Bylaws, notice of the
adjourned meeting shall be given by the Corporation to
shareholders as of the new record date.
2.5 Waiver of Notice. A shareholder may waive any notice
required by the Code, the Corporation's Articles of Incorporation
or these Bylaws, before or after the date and time of the matter
to which the notice relates, by delivery to the Corporation of a
waiver of such notice signed by the shareholder entitled to such
notice. In addition, a shareholder's attendance at a meeting
shall be (i) a waiver of objection to lack of notice or defective
notice of such meeting unless such shareholder at the beginning
of the meeting objects to holding the meeting or transacting
business at the meeting, and (ii) a waiver of objection to
consideration of a particular matter at such meeting that is not
within the purpose or purposes stated in the meeting notice,
unless the shareholder objects to considering the matter when it
is presented. Except as otherwise required by the Code, none of
the business transacted, the purpose of the meeting or any other
matter need be specified in any waiver.
2.6 Quorum; Manner of Acting. (a) All classes or series of the
Corporation's shares entitled to vote generally on a matter,
shall for that purpose be considered a single voting group (a
"Voting Group"). At any meeting of shareholders, action on a
matter by a Voting Group may be taken only if a quorum of such
Voting Group exists at such meeting. Unless the Articles of
Incorporation, these Bylaws, or the Code otherwise provide, a
majority of the votes entitled to be cast on a matter by a Voting
Group constitutes a quorum of that Voting Group with regard to
that matter once a share is represented at any meeting other than
solely to object to holding the meeting or transacting business
at the meeting, such share shall be deemed present for quorum
purposes for the remainder of the meeting and for any
adjournments of that meeting, unless a new record date is or must
be set pursuant to Section 7.7 of these Bylaws for such adjourned
meeting. (b) If a quorum exists, action on a matter (other than
the election of directors) by a Voting Group is approved if the
votes cast within the Voting Group favoring the action exceed the
votes cast opposing the action, unless the Articles of
Incorporation, a Bylaw adopted by the shareholders under the
Code, or the Code requires
a greater number of affirmative votes. If voting by two or more
Voting Groups is required on a matter, action on that matter is
approved only when approved by each of such Voting Groups, voting
separately, as provided in the preceding sentence.
2.7 Voting of Shares. Subject to the provisions of any
Preferred Stock at the time outstanding, each outstanding share
of any class or series having voting rights shall be entitled to
one vote on each matter that such class or series is entitled to
vote on and that is submitted to a vote at a meeting of
shareholders.
2.8 Proxies. A shareholder entitled to vote pursuant on a
matter may vote in person or by a proxy appointed in writing by
the shareholder or by his attorney-in-fact. An appointment of a
proxy shall be valid for eleven months from the date of its
receipt by the Secretary or other officer or agent of the
Corporation authorized to tabulate votes, unless a longer period
is expressly stated therein. If the validity of any appointment
of a proxy is questioned, it must be submitted to the secretary
of the shareholders' meeting for examination or to a proxy
officer or committee appointed by the person presiding at the
meeting. The secretary of the meeting or, if appointed, the
proxy officer or committee shall determine, consistent with
requirements of the Code, the validity or invalidity of any
appointment of a proxy submitted. Reference by the secretary in
the minutes of the meeting to the regularity of a proxy, or to
the presence of shareholders or representation of shares by
proxy, shall be received as prima facie evidence of the facts
stated for the purpose of establishing the presence of a quorum
at such meeting and for all other purposes.
2.9 Presiding Officer. Except as otherwise provided in this
Section 2.9, the Chairman of the Board, and in his absence or
disability the Chief Executive Officer (if a different person,
and if not, the President), shall serve as the chairman of every
shareholders' meeting, if either of them is present and willing
to so serve. If neither the Chairman of the Board nor the Chief
Executive Officer is present at and willing to serve as chairman
of the meeting, and if the Chairman of the Board has not
designated another person who is present and willing to so serve,
then a majority of the Corporation's directors present at the
meeting shall be entitled to designate a person to serve as
chairman. If no directors of the Corporation are present at such
meeting or no majority of the directors can be established, a
chairman of the meeting shall be selected by a majority vote of
the shares present at the meeting and entitled to vote in an
election of directors. The chairman of the meeting shall appoint
such persons as he deems appropriate to assist with the meeting.
2.10 Adjournments. Any meeting of the shareholders may be
adjourned by an affirmative vote of the holders of a majority of
the shares represented, entitled to vote and voting on the matter
to reconvene at a specific time and place, regardless of whether
a quorum is then present. It shall not be necessary to give any
notice of the reconvened meeting if the date, time and place of
the reconvened meeting are announced at the meeting that was
adjourned, unless required by the Code or Section 7.7 of these
Bylaws. At any such reconvened meeting, only such business may
be transacted that could have been transacted at the meeting that
was adjourned.
2.11 Conduct of the Meeting. At any meeting of the shareholders
of the Corporation, the chairman of such meeting, as determined
in accordance with Section 2.9, shall be entitled to establish
conclusively the rules of order that shall govern the conduct of
business at the meeting, which rules may include, without
limitation, in the discretion of such presiding officer a
requirement that nominations of persons for election as directors
of the Corporation be made, seconded and voted upon one nominee
at a time.
2.12 Matters Considered at Annual Meetings. At any annual
meeting of shareholders, only matters shall be considered as
shall have been (a) brought before such meeting (i) by or at the
direction of the Board of Directors or (ii) by any shareholder of
the Corporation who is entitled to vote with respect thereto and
who complies with the notice procedures set forth in this Section
2.12, and (b) seconded by any other shareholder of the
Corporation who is entitled to vote with respect thereto. For
business to be properly brought before an annual meeting by a
shareholder, the shareholder must have given timely notice
thereof in writing to the Secretary of the Corporation. To be
timely, a shareholder's notice must be delivered or mailed to and
received at the principal executive offices of the Corporation
not less than 60 days prior to the anniversary of the date on
which the annual meeting of shareholders was held in the prior
year, except that if the actual date of the annual meeting at
issue is more than 30 days earlier or later than such
anniversary, such shareholder's notice must be so delivered or
received not less than 60 days before such actual date. A
shareholder's notice to the Secretary shall set forth as to each
matter such shareholder proposes to bring before the meeting (i)
a brief description of the business desired to be brought before
the meeting and the reasons for conducting such business at the
meeting, (ii) the name and address, as they appear on the
Corporation's books, of the shareholder proposing such business,
(iii) the series or class and number of shares of the
Corporation's capital stock that are beneficially owned by such
shareholder, and (iv) any material interest of such shareholder
in such business. Notwithstanding anything in the Bylaws to the
contrary, no business shall be brought before or conducted at an
annual meeting except in accordance with the provisions of this
Section 2.12. The person presiding over an annual meeting shall,
if the facts so warrant, determine and declare to such meeting
that business proposed to be considered at an annual meeting in a
manner inconsistent with this Section 2.12 is out of order and
that such business shall not be transacted at such meeting.
ARTICLE THREE
The Board of Directors
3.1 General Powers. The business and affairs of the Corporation
shall be managed under the direction of the Board of Directors.
In addition to the power and authority expressly conferred upon
it by these Bylaws, the Board of Directors may exercise all such
powers of the Corporation and do all such lawful acts and things
as are not by law, by any legal agreement among shareholders, by
the Articles of Incorporation or by these Bylaws directed or
required to be exercised or done by the shareholders.
3.2 Number, Election and Terms of Office. Subject to the
provisions of any Preferred Stock at the time outstanding, the
number of directors of the Corporation shall be fixed by
resolution adopted from time to time by the Board of Directors or
the shareholders, but no decrease in the number of directors
shall have the effect of shortening the term of an incumbent
director. Except as provided in Section 3.4, and subject to the
provisions of any Preferred Stock at the time outstanding,
election of directors at any annual or special meeting shall be
by a plurality of votes cast by the shares of common stock
entitled to vote and represented in person or by proxy at such
meeting, if a quorum exists therefor. Each director, except in
case of death, resignation, retirement, disqualification, or
removal, shall serve until the next succeeding annual meeting and
thereafter until his successor, if there is to be any, shall have
been elected and qualified.
3.3 Removal. The entire Board of Directors or any individual
director may be removed from office for cause, but only by the
affirmative vote of the holders of a majority of all of the
shares entitled to be cast by the Voting Group entitled to elect
any such director. Removal action may be taken only at a
shareholders' meeting called expressly for that purpose and with
respect to which notice of such purpose has been given, and a
removed director's successor may be elected at the same meeting
to serve the unexpired term.
3.4 Vacancies. Subject to the terms of any Preferred Stock at
the time outstanding, a vacancy occurring in the Board of
Directors may be filled for the unexpired term, unless and until
the shareholders shall have elected a successor, by the
affirmative vote of a majority of the directors remaining in
office, though less than a quorum of the Board of Directors;
provided, however, that if the vacant office was held by a
director elected by a Voting Group of shareholders, only the
holders of shares of that Voting Group shall be entitled to vote
to fill the vacancy, unless the Articles of Incorporation
otherwise provide. A vacancy or vacancies in the Board of
Directors shall be deemed to exist in case of the death,
resignation, retirement or removal of any director, or if the
shareholders fail to elect the fully authorized number of
directors to be voted for at an annual or special meeting of
shareholders at which any director or directors are elected, or
if there are newly created directorships resulting from any
increase in the authorized number of directors.
3.5 Compensation. Directors may receive such compensation for
their services as directors as may from time to time be fixed by
vote of the Board of Directors. A director may also serve the
Corporation in a capacity other than that of director and receive
compensation for services rendered in such other capacity.
3.6 Committees of the Board of Directors. The Board of
Directors by resolution adopted by a majority of the full Board
of Directors may designate from among its members an executive
committee and one or more other standing or ad hoc committees,
each consisting of one or more directors who serve at the
pleasure of the Board of Directors. Except as prohibited by law,
each committee shall have the authority set forth in the
resolution establishing such committee or in any other resolution
adopted by a majority of the full Board of Directors specifying,
enlarging or limiting the authority of the committee.
3.7 Certain Nomination Requirements. No person may be nominated
for election as a director at any annual or special meeting of
the shareholders of the Corporation unless (a) the nomination has
been or is being made pursuant to a recommendation or approval of
the Board of Directors of the Corporation or a properly
constituted committee of the Board of Directors previously
delegated authority to recommend or approve nominees for
director; (b) the person is nominated by a shareholder of the
Corporation who is entitled to vote for the election of such
nominee at the subject meeting, and such nominating shareholder
has furnished written notice to the Secretary of the Corporation,
at the Corporation's principal business address, not less than 60
days prior to the anniversary of the date on which the annual
meeting of shareholders was held in the prior year, except that
if the actual date of the annual meeting at issue is more than 30
days earlier or later than such anniversary, such shareholder's
notice must be so furnished not less than 60 days before such
actual date, which notice must (i) set forth with respect to the
person to be nominated his or her name, age, business and
residence addresses, principal business or occupation during the
past five years, any affiliation with or material interest in the
Corporation or any transaction involving the Corporation, and any
affiliation with or material interest in any person or entity
having an interest materially adverse to the Corporation, and
(ii) be accompanied by the sworn or certified statement of the
shareholder that the nominee has consented to being nominated and
that the shareholder believes the nominee will stand for election
and will serve if elected; or (c) (i) the person is nominated to
replace a person previously identified as a proposed nominee (in
accordance with the provisions of subpart (b) of this Section
3.7) who has since become unable or unwilling to be nominated or
to serve if elected, (ii) the shareholder who furnished such
previous identification makes the replacement nomination and
delivers to the Secretary of the Corporation (at the time of or
prior to making the replacement nomination) an affidavit or other
sworn statement affirming that the shareholder had no reason to
believe the original nominee would be so unable or unwilling, and
(iii) such shareholder also furnishes in writing to the Secretary
of the Corporation (at the time of or prior to making the
replacement nomination) the same type of information about the
replacement nominee as required by subpart (b) of this Section
3.7 to have been furnished about the original nominee. The
presiding officer of any meeting of shareholders of the
Corporation at which one or more directors are to be elected, for
good cause shown and with proper regard for the orderly conduct
of business at the meeting, may waive in whole or in part the
operation of this Section 3.7.
3.8 Qualification of Directors. No person elected to serve as a
director of the Corporation shall assume such office and commence
such service unless and until such persons shall be duly
qualified therefor. Such a director-elect shall not be deemed to
be duly qualified to assume the office of and serve as a director
if such assumption or service by the person would violate, or
would cause the Corporation to be in violation of, any applicable
federal or state law or regulation.
3.9 Related-Party Transactions. All contracts or transactions
between the Corporation and one or more of its directors or
officers, or between the Corporation and any other corporation,
firm or association in which one or more of its directors or
officers are directors or officers, or have a material financial
interest, shall be reviewed by a committee of the Board of
Directors designated by the whole board as having such
responsibility.
ARTICLE FOUR
Meetings of the Board of Directors
4.1 Regular Meetings. Unless the Chairman of the Board shall
cause notice to be given of a different date and time, a regular
meeting of the Board of Directors shall be held at 10:00 a.m. on
the date of each annual meeting of shareholders or any meeting
held in lieu or substitute thereof. In addition, the Board of
Directors may schedule other meetings to occur at regular
intervals throughout the year.
4.2 Special Meetings. Special meetings of the Board of
Directors may be called by or at the request of the Chairman of
the Board or any two directors in office at that time.
4.3 Place of Meetings. Directors may hold their meetings at any
place within or without the State of Georgia as the Chairman of
the Board may from time to time establish. Unless the Chairman
of the Board shall cause notice to be given of a different place,
each regular meeting held on the date of an annual meeting of
shareholders (or of a meeting in lieu or substitute thereof)
shall be held at the location of such annual meeting.
4.4 Notice of Meetings. No notice shall be required for any
regular scheduled meetings of the Board of Directors. Unless
waived as contemplated in Section 4.10, the Corporation shall
give not less than two days' notice to each director of the date,
time and place of each special meeting. Notice of a subsequent
meeting shall be deemed to have been given to any director in
attendance at any duly convened meeting at which the date, time
and place of each subsequent meeting is announced.
4.5 Quorum. At meetings of the Board of Directors, a majority
of the directors then in office shall be necessary to constitute
a quorum for the transaction of business. In no case shall less
than one-third of the minimum number of directors authorized at
that time, nor less than two directors, constitute a quorum.
4.6 Vote Required for Action. The act of a majority of the
directors present at a meeting at which a quorum is present shall
be the act of the Board of Directors.
4.7 Participation by Conference Telephone. 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 or such
committee by means of conference telephone or similar
communications equipment through which all persons participating
in the meeting can simultaneously hear each other. Participation
in a meeting pursuant to this Section 4.7 shall constitute
presence in person at such meeting.
4.8 Action by Directors Without a Meeting. Any action required
or permitted to be taken at any meeting of the Board of Directors
or any action that may be taken at a meeting of a committee of
directors may be taken without a meeting if one or more written
consents describing the action taken shall be signed by all the
directors, or all the members of the committee, as the case may
be, and delivered to the Corporation for inclusion in the minutes
or filing with the corporate records. Such consent shall have
the same force and effect as a unanimous vote of the Board of
Directors or the committee.
4.9 Adjournments. A meeting of the Board of Directors, whether
or not a quorum is present, may be adjourned by a majority of the
directors present. It shall not be necessary to give notice of
the reconvened meeting or of the business to be transacted, other
than by announcement at the meeting that was adjourned. At any
such reconvened meeting at which a quorum is present, any
business may be transacted that could have been transacted at the
meeting that was adjourned.
4.10 Waiver of Notice. A director may waive any notice required
by the Code, the Corporation's Articles of Incorporation or these
Bylaws before or after the date and time of the matter to which
the notice relates, by a written waiver signed by such director
and delivered to the Corporation for inclusion in the minutes or
filing with the corporate records. Attendance by a director at a
meeting shall constitute waiver of notice of such meeting, except
where a director at the beginning of the meeting (or promptly
upon his or her arrival ) objects to holding the meeting or to
the transacting of business at the meeting and does not
thereafter vote for or assent to action taken at the meeting.
ARTICLE FIVE
Officers
5.1 Offices. The officers of the Corporation shall be as
determined by the Board of Directors, and may include a Chief
Executive Officer, a President, a Secretary and a Treasurer, each
of whom shall be elected or appointed by the Board of Directors.
The Board of Directors may also elect or appoint a Chairman of
the Board from among its members. The Board of Directors from
time to time may, or may authorize the Chief Executive Officer
to, create and establish the duties of other officers and elect
or appoint other officers as it or he deems necessary for the
efficient management of the Corporation, including one or more
Vice Presidents, one or more Assistant Secretaries and one or
more Assistant Treasurers.
5.2 Term. Each officer shall serve at the will of the Board of
Directors (or, if the Chief Executive Officer appointed such
officer, at the will of the Board of Directors and the Chief
Executive Officer) or until his death, resignation, retirement or
disqualification.
5.3 Compensation. The compensation of all officers of the
Corporation shall be fixed by the Board of Directors or by a
committee or officer appointed by the Board of Directors.
5.4 Removal. Any officer (regardless of how elected or
appointed) may be removed by the Board of Directors whenever in
its judgment the best interests of the Corporation will be served
thereby, and any officer appointed by the Chief Executive Officer
may be removed by the appointing officer whenever in his judgment
the best interests of the Corporation will be served thereby.
5.5 Chairman of the Board. The Chairman of the Board (if there
be one) shall call to order meetings of the shareholders and of
the Board of Directors, and shall act as chairman of such
meetings (unless another person is selected under Section 2.9 to
act as chairman). The Chairman of the Board shall perform such
other duties and have such other authority as may from time to
time be delegated by the Board of Directors.
5.6 Chief Executive Officer. The Chief Executive Officer shall
be charged with the general and active management of the business
of the Corporation, shall see that all orders and resolutions of
the Board of Directors are carried into effect, shall have the
authority to select and appoint employees and agents of the
Corporation, and shall, in the absence or disability of the
Chairman of the Board, perform the duties and exercise the powers
of the Chairman of the Board. The Chief Executive Officer shall
perform such other duties and have such other authority as shall
be delegated from time to time by the Board of Directors.
5.7 President. The President shall have general supervision of
the business of the corporation. The President shall perform
such other duties and have such other authority as may from time
to time be delegated by the Board of Directors or the Chief
Executive Officer.
5.8 Vice Presidents. The Vice President (if there be one)
shall, in the absence or disability of the President, or at the
direction of the President, perform the duties and exercise the
powers, whether such duties and powers are specified in these
Bylaws or otherwise, of the President. If the Corporation has
more than one Vice President, the one designated by the Board of
Directors or the Chief Executive Officer shall act in lieu of the
President. Vice Presidents shall perform such other duties and
have such other authority as may from time to time be delegated
by the Board of Directors, the Chief Executive Officer or the
President.
5.9 Secretary. The Secretary shall be responsible for preparing
minutes of the directors' and shareholders' meetings and for
authenticating records of the Corporation. The Secretary shall
have authority to give all notices required by law or these
Bylaws. The Secretary shall be responsible for the custody of
the corporate books, records, contracts and other documents. The
Secretary may affix the corporate seal to any lawfully executed
documents requiring it and shall sign such instruments as may
require the Secretary's signature. The Secretary shall perform
such other duties and have such other authority as may from time
to time be delegated by the Board of Directors or the Chief
Executive Officer.
5.10 Treasurer. The Treasurer shall be responsible for the
custody of all funds and securities belonging to the Corporation
and for the receipt, deposit or disbursement of such funds and
securities in a manner consistent with policies established by
the Board of Directors or Chief Executive Officer. The Treasurer
shall cause full and true accounts of all receipts and
disbursements to be maintained and shall make such reports of the
same to the Board of Directors, Chief Executive Officer and
President upon request. The
Treasurer shall perform such other duties and have such other
authority as may from time to time be delegated by the Board of
Directors or the Chief Executive Officer.
5.11 Assistant Secretaries and Assistant Treasurers. The Board
of Directors and Chief Executive officer each may appoint one or
more persons to serve as Assistant Secretary or Assistant
Treasurer, or both. The Assistant Secretary and Assistant
Treasurer (or if there be more than one of either such officer,
the one so designated by the Board of Directors or Chief
Executive Officer) shall, in the absence or disability, or at the
direction, of the Secretary or the Treasurer, respectively,
perform the duties and exercise the authority of those offices.
Each Assistant Secretary may affix the corporate seal to any
corporate document and attest the signature of any officer of the
Corporation. Each Assistant Secretary and Assistant Treasurer
shall perform such other duties and have such other authority as
may from time to time be delegated by the Board of Directors or
the Chief Executive Officer.
5.12 Bonds. The Board of Directors may by resolution require
any or all of the officers, agents or employees of the
Corporation to give bonds to the Corporation, with sufficient
surety or sureties, conditioned on the faithful performance of
the duties of their respective offices or positions, and to
comply with such other conditions as may from time to time be
required by the Board of Directors.
ARTICLE SIX
Dividends
Dividends upon the capital stock of the Corporation may be
declared by the Board of Directors, payable in cash, in property
or in shares of the Corporation.
ARTICLE SEVEN
Shares
7.1 Authorization and Issuance of Shares. The maximum number of
shares of any class of stock of the Corporation which may be
issued and outstanding shall be set forth from time to time in
the Articles of Incorporation. The Board of Directors may
increase or decrease the number of issued and outstanding shares
of any class of stock of the Corporation within the maximum
authorized by the Articles of Incorporation and the minimum
requirements of the Articles of Incorporation or the Code.
7.2 Share Certificates. The interest of each shareholder in the
Corporation shall be evidenced by a certificate or certificates
representing shares of the Corporation which shall be in such
form as the Board of Directors may from time to time adopt in
accordance with the Code. Share certificates shall be
consecutively numbered, in registered form, and indicate the date
of issue and state such other information as may be required by
the Code. Each certificate shall be signed by the Chief
Executive Officer, the President or a Vice President and the
Secretary or an Assistant Secretary and shall be sealed with the
seal of the Corporation or a facsimile thereof; provided,
however, that where such certificate is signed by a transfer
agent, or registered by a registrar, the signatures of such
officers may be facsimiles. In case any officer or officers who
shall have signed (or whose facsimile signature has been placed
upon) a share certificate has ceased for any reason to be such
officer or officers before such certificate is issued, such
certificate may be issued by the Corporation with the same effect
as if the person or persons who signed such certificate or whose
facsimile signatures has been used thereon had not ceased to be
such officer or officers.
7.3 Rights of Corporation with Respect to Registered Owner:
Prior to due presentation for transfer of registration of its
shares, the Corporation may treat the registered owner of the
shares (or the beneficial owner of the shares to the extent of
any rights granted by a nominee certificate on file with the
Corporation pursuant to any procedure that may be established by
the Corporation in accordance with the Code) as the person
exclusively entitled to vote such shares, to receive any dividend
or other distribution with respect to such shares, and for all
other purposes, and the Corporation shall not be bound to
recognize any equitable or other claim to or interest in such
shares on the part of any other person, whether or not it has
express or other notice thereof, except as otherwise provided by
law.
7.4 Transfers of Shares. Transfers of shares shall be made upon
the books of the Corporation kept at the office of the transfer
agent designated to transfer the shares, only upon direction of
the person named in the certificate or by an attorney lawfully
constituted in writing, and before a new certificate is issued,
the old certificate shall be surrendered for cancellation or, in
the case of a certificate alleged to have been lost, stolen or
destroyed, the provisions of Section 7.6 of these Bylaws shall
have been complied with.
7.5 Duty of Corporation to Register Transfer. Notwithstanding
any of the provisions of Section 7.4 of these Bylaws, the
Corporation is under a duty to register the transfer of its
shares only if:
(a) the share certificate is endorsed by the
appropriate person or persons;
(b) reasonable assurance is given that the
endorsements are genuine and effective;
(c) the Corporation has no duty to inquire into
adverse claims or has discharged any such duty;
(d) any applicable law relating to the collection of
taxes has been complied with; and
(e) the transfer is in compliance with applicable
provisions of any transfer restrictions of which the Corporation
shall have notice.
7.6 Lost, Stolen or Destroyed Certificates. Any person claiming
a share certificate to be lost, stolen or destroyed shall make an
affidavit or affirmation of the fact in such manner as the Board
of Directors may require and shall, if the Board of Directors so
requires, give the Corporation a bond of indemnity in form and
amount, and with one or more sureties satisfactory to the Board
of Directors, as the Board of Directors may require, whereupon an
appropriate new certificate may be issued in lieu of the one
alleged to have been lost, stolen or destroyed.
7.7 Fixing of Record Date. For the purpose of determining
shareholders (i) entitled to notice of or to vote at any meeting
of shareholders or, if necessary, any adjournment thereof, or
(ii) entitled to receive payment of any dividend, and in order to
make a determination of shareholders for any other proper
purpose, the Board of Directors may fix in advance a date as the
record date, such date to be not more than 70 days prior to the
date on which the particular action, requiring such determination
of shareholders, is to be taken. A determination of shareholders
of record entitled to notice of or to vote at a meeting of
shareholders shall apply to any adjournment of such meeting,
unless the Board of Directors shall fix a new record date for the
reconvened meeting; provided, however, the Board of Directors
shall set a new record date if such meeting is adjourned to a
date more than 120 days after the date fixed for the original
meeting.
7.8 Record Date if None Fixed. If no record date is fixed as
provided in Section 7.7, then the record date for any
determination of shareholders that may be proper or required by
law shall be: the close of business on the last business day
before notice is first delivered to shareholders, in the case of
a shareholders' meeting; the date on which the Board of Directors
adopts a resolution declaring a dividend, in the case of a
payment of a dividend; and the date on which any other action is
taken by the Corporation, in the case of such other action
requiring a determination of shareholders.
ARTICLE EIGHT
Indemnification
8.1 Indemnification of Directors and Officers. The Corporation
shall indemnify and hold harmless any person (an "Indemnified
Person") who is or was 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 or suit by or in the right of
the Corporation) by reason of the fact that he is or was a
director or officer of the Corporation, against expenses
(including, but not limited to, attorneys' fees and
disbursements, court costs and expert witness fees), and against
any judgments, 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; provided, in any case, that no indemnification shall be
made in respect of expenses, judgments, fines and amounts paid in
settlement attributable to circumstances as to which, under
applicable provisions of the Code as in effect from time to time,
such indemnification may not be authorized by action of the Board
of Directors, the shareholders or otherwise.
8.2 Indemnification of Directors and Officers for Derivative
Actions. The Corporation shall indemnify and hold harmless any
Indemnified Person who is or was 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, by or in the right of the Corporation, by reason
of the fact that he is or was a director or officer of the
Corporation, against expenses (including, but not limited to,
attorneys' fees and disbursements, court costs and expert witness
fees) 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. No indemnification shall be
made pursuant to this Section 8.2 for any claim, issue or matter
as to which an Indemnified Person shall have been adjudged by a
court of competent jurisdiction, after exhaustion of all appeals
therefrom, to be liable to the Corporation, or for amounts paid
in settlement to the Corporation, unless and only to the extent
that the court in which such action or suit was brought or other
court of competent jurisdiction shall determine upon application
that such person is fairly and reasonably entitled to indemnity
for such expenses which the court shall deem proper.
8.3 Indemnification of Employees and Agents. The Board of
Directors shall have the power to cause the Corporation to
provide to any person who is or was an employee or agent of the
Corporation all or any part of the right to indemnification and
other rights of the type provided under Sections 8.1, 8.2, 8.6
and 8.12 of this Article Eight (subject to the conditions,
limitations, obligations and other provisions specified herein),
upon a resolution to that effect identifying such employee or
agent (by position or name) and specifying the particular rights
provided, which may be different for each employee or agent
identified. Each employee or agent of the Corporation so
identified shall be an "Indemnified Person" for purposes of the
provisions of this Article Eight.
8.4 Subsidiaries and Other Organizations. The Board of Directors
shall have the power to cause the Corporation to provide to any
person who is or was a director, officer, employee or agent of
the Corporation who also is or was a director, officer, trustee,
partner, employee or agent of a Subsidiary (as defined below), or
is or was serving at the Corporation's request in such a position
with any other organization, all or any part of the right to
indemnification and other rights of the type provided under
Sections 8.1, 8.2, 8.6 and 8.12 of this Article Eight (subject to
the conditions, limitations, obligations and other provisions
specified herein), with respect to service by such person in such
position with a Subsidiary or other organization, upon a
resolution identifying such person, the Subsidiary or other
organization involved (by name or other classification), and the
particular rights provided, which may be different for each
person so identified. Each person so identified shall be an
"Indemnified Person" for purposes of the provisions of this
Article Eight. As used in this Article Eight, "Subsidiary" shall
mean (i) another corporation, joint venture, trust, partnership
or unincorporated business association more than 20% of the
voting capital stock or other voting equity interest of which
was, at or after the time of the circumstances giving rise to
such action, suit or proceeding, owned, directly or indirectly,
by the Corporation, or (ii) a nonprofit corporation that receives
its principal financial support from the Corporation or its
Subsidiaries.
8.5 Determination. Notwithstanding any judgment, order,
settlement, conviction or plea in any action, suit or proceeding
of the kind referred to in Sections 8.1 and 8.2 of this Article
Eight, an Indemnified Person shall be entitled to indemnification
as provided in such Sections 8.1 and 8.2 if a determination that
such Indemnified Person is entitled to such indemnification shall
be made (i) by the Board of Directors by a majority vote of a
quorum consisting of directors who are not at the time parties to
the proceeding; or (ii) if a quorum cannot be obtained under (i)
above, by majority vote of a committee duly designated by the
Board of Directors (in which designation interested directors may
participate), consisting solely of two or more directors who are
not at the time parties to the proceeding; or (iii) in a written
opinion by special legal counsel selected as required by law. To
the extent that an Indemnified Person has been successful on the
merits or otherwise in defense of any action, suit or proceeding
of the kind referred to in Sections 8. 1 and 8. 2 of this Article
Eight, 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.
8.6 Advances. Expenses (including, but not limited to, attorneys'
fees and disbursements, court costs, and expert witness fees)
incurred by the Indemnified Person in defending any action, suit
or proceeding of the kind described in Sections 8.1 and 8.2
hereof (or in Section 8.4 hereof if applicable to such
Indemnified Person) shall be paid by the Corporation in advance
of the final disposition of such action, suit or proceeding as
set forth herein. The Corporation shall promptly pay the amount
of such expenses to the Indemnified Person, but in no event later
than ten days following the Indemnified Person's delivery to the
Corporation of a written request for an advance pursuant to this
Section 8. 6, together with a reasonable accounting of such
expenses; provided, however, that the Indemnified Person shall
furnish the Corporation a written affirmation of his good faith
belief that the Indemnified Person shall furnish the Corporation
a written affirmation of his good faith belief that he has met
the standard of conduct set forth in the Code and a written
undertaking and agreement to repay to the Corporation any
advances made pursuant to this Section 8.6 if it shall be
determined that the Indemnified Person is not entitled to be
indemnified by the Corporation for such amounts. The Corporation
shall make the advances contemplated by this Section 8.6
regardless of the Indemnified Person's financial ability to make
repayment. Any advances and undertakings to repay pursuant to
this Section 8.6 shall be unsecured and interest-free.
8.7 Non-Exclusivity. Subject to any applicable limitation
imposed by the Code or the Articles of Incorporation, the
indemnification and advancement of expenses provided by or
granted pursuant to this Article Eight shall not be exclusive of
any other rights to which a person seeking indemnification or
advancement of expenses may be entitled under any Bylaw,
resolution or agreement specifically or in general terms approved
or ratified by the affirmative vote of holders of a majority of
the shares entitled to be cast thereon.
8.8 Insurance. 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 as a director, officer, trustee, general partner,
employee or agent of a Subsidiary or, at the request of the
Corporation, of any other organization, 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 liability
under the provisions of this Article Eight.
8.9 Notice. If any expenses or other amounts are paid by way of
indemnification, otherwise than by court order or action by the
shareholders or by an insurance carrier pursuant to insurance
maintained by the Corporation, the Corporation shall, not later
than the next annual meeting of shareholders, unless such meeting
is held within three months from the date of such payment, and in
any event within 15 months from the date of such payment, send by
first class mail to its shareholders of record at the time
entitled to vote for the election of directors a statement
specifying the persons paid, the amount paid and the nature and
status at the time of such payment of the litigation or
threatened litigation.
8.10 Security. The Corporation may designate certain of its
assets as collateral, provide self-insurance or otherwise secure
its obligations under this Article Eight, or under any
indemnification agreement or plan of indemnification adopted and
entered into in accordance with the provisions of this Article
Eight, as the Board of Directors deems appropriate.
8.11 Amendment. Any amendment to this Article Eight that
limits or otherwise adversely affects the right of
indemnification, advancement of expenses, or other rights of any
Indemnified Person hereunder shall, as to such Indemnified
Person, apply only to claims, actions, suits or proceedings based
on actions, events or omissions (collectively, "Post Amendment
Events") occurring after such amendment and after delivery of
notice of such amendment to the Indemnified Person so affected.
Any Indemnified Person shall, as to any claim, action, suit or
proceeding based on actions, events or omissions occurring prior
to the date of receipt of such notice, be entitled to the right
of indemnification, advancement of expenses and other rights
under this Article Eight to the same extent as if such provisions
had continued as part of the Bylaws of the Corporation without
such amendment. This Section 8.11 cannot be altered, amended or
repealed in a manner effective as to any Indemnified Person
(except as to Post Amendment Events) without the prior written
consent of such Indemnified Person. The Board of Directors may
not alter, amend or repeal any provision of this Article Eight in
a manner that extends or enlarges the right of any person to
indemnification or advancement of expenses hereunder, except with
the approval of the holders of a majority of all the shares of
capital stock of the Corporation entitled to vote thereon at a
meeting called for such purpose.
8.12 Agreements. The provisions of this Article Eight shall
be deemed to constitute an agreement between the Corporation and
each person entitled to indemnification hereunder. In addition
to the rights provided in this Article Eight, the Corporation
shall have the power, upon authorization by the Board of
Directors, to enter into an agreement or agreements providing to
any person who is or was a director, officer, employee or agent
of the Corporation indemnification rights substantially similar
to those provided in this Article Eight.
8.13 Continuing Benefits. The indemnification and
advancement of expenses provided by or granted pursuant to this
Article Eight 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 a
person.
8.14 Successors. For purposes of this Article Eight, the
terms "the Corporation" or "this Corporation" shall include any
corporation, joint venture, trust, partnership or unincorporated
business association that is the successor to all or
substantially all of the business or assets of this Corporation,
as a result of merger, consolidation, sale, liquidation or
otherwise, and any such successor shall be liable to the persons
indemnified under this Article Eight on the same terms and
conditions and to the same extent as this Corporation.
8.15 Severability. Each of the sections of this Article
Eight, and each of the clauses set forth herein, shall be deemed
separate and independent, and should any part of any such section
or clause be declared invalid or unenforceable by any court of
competent jurisdiction, such invalidity or unenforceability shall
in no way render invalid or unenforceable any other part thereof
or any other separate section or clause of this Article Eight
that is not declared invalid or unenforceable.
8.1 Additional Indemnification. In addition to the
specific indemnification rights set forth herein, the Corporation
shall indemnify each of its directors and officers to the full
extent permitted by action of the Board of Directors without
shareholder approval under the Code or other laws of the State of
Georgia as in effect from time to time.
ARTICLE NINE
Miscellaneous
9.1 Inspection of Books and Records. The Board of
Directors shall have power to determine which accounts, books and
records of the Corporation shall be opened to the inspection of
shareholders, except such as may by law be specifically open to
inspection, and shall have power to fix reasonable rules and
regulations not in conflict with applicable law for the
inspection of accounts, books and records that by law or by
determination of the Board of Directors shall be open to
inspection. Unless required by the Code or otherwise provided by
the Board of Directors, a shareholder of the Corporation holding
two percent or less of the total shares of the Corporation then
outstanding shall have no right to inspect the books and records
of the Corporation.
9.2 Fiscal Year. The Board of Directors is authorized to
fix the fiscal year of the Corporation and to change the same
from time to time as it deems appropriate.
9.3 Seal. The corporate seal shall be in such form as the Board
of Directors may from time to time determine.
9.4 Election of "Fair Price" Statute. All the requirements of
Sections 14-2-1110 through 14-2-1113 of the Code, as they may be
amended from time to time, are hereby made applicable to the
Corporation, to the extent permitted thereby, effective July 1,
1989.
9.5 Election of "Business Combination" Statute. All the
requirements of Sections 14-2-1131 through 14-2-1133 of the Code,
as they may be amended from time to time, are hereby made
applicable to the Corporation, to the extent permitted thereby,
effective July 1, 1989.
9.6 Notice. Whenever these Bylaws require notice to be given to
any shareholder, the notice shall be given as prescribed in
Section 2.4. Whenever these Bylaws require notice to be given to
any director, the notice may be given as provided in Section 4.4,
by mail, by personal or courier delivery, by telephone or by
telecopier, telegraph or similar electronic means. Whenever
notice is given to a shareholder or director by mail, the notice
shall be sent first class mail by depositing the same in a post
office or letter box in a postage prepaid sealed envelope
addressed to the shareholder or director at his or her address as
it appears on the books of the Corporation. Such notice shall be
deemed to have been given at the time the same is deposited in
the United States mail, except in the case of a notice to a
director of a special meeting of the Board of Directors, which
shall be deemed to have been given five days after the same is
deposited in the United States mail. Whenever notice is given to
a shareholder or director by any means other than mail, such
notice shall be deemed given when received.
ARTICLE TEN
Amendments
The Board of Directors shall have the power to alter, amend
or repeal these Bylaws or adopt new Bylaws. Any Bylaws adopted
by the Board of Directors may be altered, amended or repealed and
new Bylaws adopted by the shareholders. The shareholders may
prescribe that any Bylaws shall not be altered, amended or
repealed by the Board of Directors.
Exhibit 10.1
PROMISSORY NOTE
Principal
$100,000.00
Norcross, Georgia
FOR VALUE RECEIVED, the undersigned, [ ] (hereafter
referred to as "Borrower") promises to pay to the order of
ELECTROMAGNETIC SCIENCES, INC., a Georgia corporation
(hereinafter, together with any holder hereof, referred to as
("Lender"), the principal sum of One Hundred Thousand Dollars
($100,000.00), or so much thereof as shall have been advanced
and not previously repaid, with interest from the date hereof at
a rate of 8.0% per centum per annum on the amount of said
principal sum as may from time to time remain unpaid, said
principal being payable on such schedule as shall result in the
remaining principal balance not exceeding the following specified
amounts on or after the indicated dates:
Maximum Outstanding
Date Principal Balance
---- -------------------
September 15, 1999 $ 87,500.00
September 15, 2000 $ 75,000.00
September 15, 2001 $ 62,500.00
September 15, 2002 $ 50,000.00
September 15, 2003 $ - 0 -
Each installment of principal shall be paid together with all
unpaid accrued interest to the date of such payment, and unpaid
accrued interest shall at a minimum be paid on each September 15
following the date of this Promissory Note.
Notwithstanding the foregoing schedule, the entire unpaid
principal balance shall be immediately due and payable in the
event Borrower shall cease to be an employee of Lender or any of
its affiliates, except as a result of death, disability or
involuntary termination without cause.
Principal and interest are payable to Lender in lawful money
of the United States at the Lender's offices located at 660
Engineering Drive, Technology Park/Atlanta, Norcross, Georgia
30092, or at such other place as the Lender may designate in
writing.
The entire unpaid principal balance of this Promissory Note,
or partial payments in even hundreds of dollars, may be paid at
any time prior to maturity, without penalty. Any such payment
shall be accompanied by payment of all unpaid, accrued interest
to the date of such prepayment.
If for any reason any of the required payments are not paid
promptly on or before the due date, the Borrower shall be in
default hereunder. The Borrower shall also be in default
hereunder if the Borrower (i) files a voluntary petition in
bankruptcy, (ii) is adjudicated a bankrupt or insolvent, (iii)
files a petition or answer seeking or acquiescing in any
reorganization or arrangement under the bankruptcy laws, (iv)
seeks or acquiesces in the appointment of a trustee or receiver
(v) makes a general assignment for the benefit of creditors, (vi)
admits in writing of the inability to pay debts generally as they
become due, or (vii) is the subject of an involuntary petition in
bankruptcy, and same is not withdrawn or dismissed within sixty
days from the filing thereof.
Upon default and at any time thereafter, but only after
Borrower fails to cure said default within ten days after
furnishing of written notice thereof from the Lender, the Lender
may declare the entire unpaid balance of this Promissory Note,
with interest, immediately due and payable without presentment,
demand, protest, or notice of any kind, all of which are hereby
expressly waived.
If this Promissory Note is placed in the hands of an
attorney for collection, the Borrower will pay all costs of
collection incurred by the Lender, including a reasonable
attorney's fee.
This Promissory Note is to be construed in all respects and
enforced according to the laws of the State of Georgia.
Executed this [ ] day of September, 1998.
Signed, sealed and
delivered in the
presence of:
-----------------------
Borrower
- -------------------------------
Witness
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<PERIOD-END> OCT-02-1998
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<CURRENT-ASSETS> 96,259
<PP&E> 82,057
<DEPRECIATION> 48,490
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0
0
<COMMON> 870
<OTHER-SE> 100,279
<TOTAL-LIABILITY-AND-EQUITY> 152,265
<SALES> 136,300
<TOTAL-REVENUES> 136,300
<CGS> 86,517
<TOTAL-COSTS> 86,517
<OTHER-EXPENSES> 38,569
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (1,341)
<INCOME-PRETAX> 10,005
<INCOME-TAX> 3,873
<INCOME-CONTINUING> 6,132
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