<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------
FORM 10-K/A
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(MARK ONE)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
- --- ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1995
-------------------------------------------------------
OR
____ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _____________ to _____________
Commission file number 0-11223
PROFESSIONAL BANCORP, INC.
- --------------------------------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Pennsylvania 95-3701137
- ------------------------------------- ---------------------
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
606 Broadway, Santa Monica CA 90401
- -------------------------------------- ----------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (310) 458-1521
-----------------------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
------------------- -----------------------------------------
Common Stock, par value $0.008 per share American Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
<PAGE>
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in PART III of this Form 10-K or any amendment to this
Form 10-K. [ ]
Aggregate market value of Common Stock held by non-affiliates at March 20,
1996: $15,607,800.00.
Number of shares of Common Stock outstanding at March 20, 1996: 1,300,650.
<PAGE>
AMENDMENT NO. 1
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its annual report on Form 10-K by
restating such portions in their entirety as set forth in the pages attached
hereto:
Part IV, Item 14.
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) Financial Statements
See Index to Financial Statements of Professional Bancorp, Inc. and
Subsidiary which is part of this Form 10-K.
(b) Reports on Form 8-K
During the fourth quarter of 1995, the Company did not file any Current
Reports on Form 8-K.
(c) Exhibits
<PAGE>
EXHIBITS
Exhibit No.
- -----------
3.1 Articles of Incorporation (filed as Exhibit 3.3 to Bancorp's 1989
10-K Report and incorporated herein by this reference).
3.2 Bylaws adopted April 25, 1990, as amended July 25, 1990
3.3 Amendment to Articles of Incorporation, dated September 8, 1992.
4.1 Warrant to purchase 100,000 shares of Common Stock dated 12-31-
92, issued to Robert H. Leshner (filed as Exhibit 4.1 in
Bancorp's 1992 10-K Report and incorporated herein by this
reference).
10.1* 1982 Stock Option Plan and Agreement (filed as Exhibit 10(b) to
Bancorp's Registration Statement on Form S-1, File No. 2-76371
filed March 8, 1982, and incorporated herein by this reference).
10.2* Severance and Compensation Agreement entered into between Bancorp
and Joel W. Kovner dated November 2, 1989 (filed as Exhibit 10.2
in Bancorp's 1992 10-K Report and incorporated herein by this
reference).
10.3 Lease for premises at 606 Broadway, Santa Monica, California
(filed as Exhibit 10(a) to Bancorp's Registration Statement on
Form S-1, File No. 2-76371 filed March 8, 1982 and incorporated
herein by this reference).
10.4 Lease for premises at 8600 West 3rd Street, Suite #1, Los
Angeles, California (filed as Exhibit 10.6 in Bancorp's 1983 10-K
Report and incorporated herein by this reference).
10.5 Lease for second floor premises and extension of lease of entire
premises at 606 Broadway, Santa Monica, California (filed as
Exhibit 10.8 in Bancorp's 1984 10-K Report and incorporated
herein by this reference).
10.6 Lease for premises at 5525 Etiwanda Street, Tarzana, California
(filed as Exhibit 10.8 in Bancorp's 1986 10-K Report and
incorporated herein by this reference).
10.7 Lease for premises at 10 North 5th Street, Redlands, California
(filed as Exhibit 10.7 in Bancorp's 1991 10-K Report and
incorporated herein by this reference).
10.11* Indemnity Agreements in the form attached entered into between
the Company and each of Richard A. Berger, Ray T. Oyakawa,
M.D., H. Leon Brooks, M.D., Ronald L. Katz, M.D., Joel W.
Kovner, Melinda McIntyre, Lynn O. Poulson, Michael
Prochelo, Daniel S. Rader dated October 25, 1989.
<PAGE>
10.12* 1990 Stock Option Plan (filed as Exhibit 28.A in Bancorp's 1990
10-K Report on Form 8, Amendment No. 1 dated April 29, 1991 and
incorporated herein by this reference).
10.13* 1992 Stock Option Plan (filed as Exhibit A in Bancorp's 1992
Proxy Statement and incorporated herein by this reference).
10.15* Stock repurchase agreement (filed as Exhibit 10.1 to Bancorp's
Form 8-K, dated December 18, 1990 and incorporated herein by this
reference).
10.16 Placement Agent Agreement dated as of November 20, 1992 by and
between Leshner Financial Services, Inc. and Bancorp (filed as
Exhibit 10.16 in Bancorp's 1992 10-K Report and incorporated
herein by this reference).
10.21* Severance and Compensation Agreement entered into between Bancorp
and Melinda McIntyre-Kolpin dated November 2, 1989 (filed as
Exhibit 10.21 in Bancorp's 1992 10-K Report and incorporated
herein by this reference).
10.25* Salary Continuation Agreement entered into between the Bank and
Joel W. Kovner dated May 1, 1992 (filed as Exhibit 10.25 to
Bancorp's 1992 10-K Report and incorporated herein by this
reference).
10.35 Lease for premises at 520 Broadway, Santa Monica, California
(filed as Exhibit 10.5 in Bancorp's 1983 10-k Report and
incorporated herein by this reference).
10.55 Lease for premises at 9629 Brighton Way, Beverly Hills,
California (filed as Exhibit 10.9 in Bancorp's 1984 10-K Report
and incorporated herein by this reference).
10.65 Lease for premises at 55 E. California, Pasadena, California
(filed as Exhibit 10.65 in Bancorp's 1991 10-K Report and
incorporated herein by this reference).
10.75 Lease for premises at 9900 Norwalk Boulevard, Santa Fe Springs,
California, (filed as Exhibit 10.75 in Bancorp's 1992 10-K Report
and incorporated herein by this reference).
11 Earnings per share computation.
22 Subsidiaries of the Registrant (filed as Exhibit 22 in Bancorp's
1986 10-K Report and incorporated herein by this reference).
23.1 Consent of KPMG Peat Marwick LLP and consent of Deloitte & Touche
LLP
<PAGE>
*Identified as a management contract or compensatory agreement pursuant to Item
14(a)# of Form 10-K.
(d) Financial Statements
All schedules are omitted because they are not required, not applicable or
because the information is included in the financial statements or notes thereto
or is not material.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
PROFESSIONAL BANCORP, INC.
(Registrant)
Date: June 3, 1996 By: /s/ Joel W. Kovner
-----------------------------------
Joel W. Kovner, Dr. P.H., MPH
Chairman of the Board of Directors,
Chief Executive Officer and President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Richard A. Berger
- ---------------------------- Director June 3, 1996
Richard A. Berger
/s/ James B. Jacobson
- ---------------------------- Director June 3, 1996
James B. Jacobson
/s/ Ronald L. Katz
- ---------------------------- Director June 3, 1996
Ronald L. Katz, MD
/s/ Joel W. Kovner
- ---------------------------- Chairman of the Board of June 3, 1996
Joel W. Kovner, Dr. Directors, Chief Executive
P.H., M.P.H. Officer and President
/s/ Anthony R. Kovner
- ---------------------------- Director June 3, 1996
Anthony R. Kovner, P.H.D.
/s/ Lynn O. Poulson
- ---------------------------- Director June 3, 1996
Lynn O. Poulson, J.D.
/s/ Daniel S. Rader
- ---------------------------- Chief Financial Officer June 3, 1996
Daniel S. Rader and Treasurer
/s/ David G. Rodeffer
- ---------------------------- Director June 3, 1996
David G. Rodeffer, M.P.H.
<PAGE>
EXHIBIT INDEX
NO. ITEM
3.1 Articles of Incorporation (filed as Exhibit 3.3 to Bancorp's 1989
10-K Report and incorporated herein by this reference).
3.2 Bylaws adopted April 25, 1990, as amended July 25, 1990.
3.3 Amendment to Articles of Incorporation, dated September 8, 1992.
10.11* Indemnity Agreements in the form attached entered into between
the Company and each of Richard A. Berger, Ray T. Oyakawa,
M.D., H. Leon Brooks, M.D., Ronald L. Katz, M.D., Joel W.
Kovner, Melinda McIntyre, M.D., Lynn O. Poulson, Michael
Prochelo, Daniel S. Rader dated October 25, 1989.
<PAGE>
COMMONWEALTH OF PENNSYLVANIA
[CREST]
DEPARTMENT OF STATE
CERTIFICATE OF INCORPORATION
OFFICE OF THE SECRETARY OF THE COMMONWEALTH
TO ALL TO WHOM THESE PRESENTS SHALL COME, GREETING:
WHEREAS, UNDER THE PROVISIONS OF THE LAWS OF THE COMMONWEALTH, THE SECRETARY OF
THE COMMONWEALTH IS AUTHORIZED AND REQUIRED TO ISSUE A "CERTIFICATE OF
INCORPORATION" EVIDENCING THE INCORPORATION OF AN ENTITY.
WHEREAS, THE STIPULATIONS AND CONDITIONS OF THE LAW HAVE BEEN FULLY COMPLIED
WITH BY PROFESSIONAL BANCORP, INC.
THEREFORE, KNOW YE, THAT SUBJECT TO THE CONSTITUTION OF THIS COMMONWEALTH, AND
UNDER THE AUTHORITY OF THE LAWS THEREOF, I DO BY THESE PRESENTS, WHICH I HAVE
CAUSED TO BE SEALED WITH THE GREAT SEAL OF THE COMMONWEALTH, DECLARE AND CERTIFY
THE CREATION, ERECTION AND INCORPORATION OF THE ABOVE IN DEED AND IN LAW BY THE
NAME CHOSEN HEREINBEFORE SPECIFIED.
SUCH CORPORATION SHALL HAVE AND ENJOY AND SHALL BE SUBJECT TO ALL THE POWERS,
DUTIES, REQUIREMENTS, AND RESTRICTIONS, SPECIFIED AND ENJOINED IN AND BY THE
APPLICABLE LAWS OF THIS COMMONWEALTH.
GIVEN UNDER MY HAND AND THE GREAT SEAL
OF THE COMMONWEALTH, AT THE CITY OF
[SEAL] HARRISBURG, THIS 23RD DAY OF MAY IN THE
YEAR OF OUR LORD ONE THOUSAND NINE
HUNDRED AND EIGHTY-NINE AND OF THE
COMMONWEALTH THE TWO HUNDRED THIRTEENTH.
/s/ James J. Haggerty
----------------------------------------------
SECRETARY OF THE COMMONWEALTH
PEPPER HAMILTON & SCHEETZ ESQS
COUNTER 1509181
08940
C , C 00000-0000 0525-0526
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
DSC8 204 (REV. 81)
PLEASE INDICATE (CHECK ONE) TYPE CORPORATION:
ARTICLES OF INCORPORATION /X/ DOMESTIC BUSINESS CORPORATION
/ / DOMESTIC BUSINESS CORPORATION FEE
A CLOSE CORPORATION - COMPLETE BACK $75.00
COMMONWEALTH OF PENNSYLVANIA
DEPARTMENT OF STATE - CORPORATION BUREAU / / DOMESTIC PROFESSIONAL CORPORATION
308 NORTH OFFICE BUILDING, HARRISBURG, PA 17120 ENTER BOARD LICENSE NO.
- ----------------------------------------------------------------------------------------------------------------------------------
010 NAME OF CORPORATION (MUST CONTAIN A CORPORATION INDICATOR UNLESS EXEMPT UNDER 19 P.S. 2908 8)
PROFESSIONAL BANCORP, INC.
- ----------------------------------------------------------------------------------------------------------------------------------
011 ADDRESS OF REGISTERED OFFICE IN PENNSYLVANIA (P.O. BOX NUMBER NOT ACCEPTABLE)
C/O CT CORPORATION SYSTEM, 123 SOUTH BROAD STREET
- ----------------------------------------------------------------------------------------------------------------------------------
012 CITY 033 COUNTY 013 STATE 044 ZIP CODE
PHILADELPHIA PHILADELPHIA PENNSYLVANIA 19109
- ----------------------------------------------------------------------------------------------------------------------------------
### EXPLAIN THE PURPOSE OR PURPOSES OF THE CORPORATION
To engage in and to do any lawful act concerning any or all lawful business for which corporations may be incorporated under the
Business Corporation Law, Act of May 5, 1933. P.L., 364, as amended other than the banking business, the trust company business
or the practice of a profession permitted to be incorporated by the Business Corporation Law, Act of May 5, 1933, P.L. 364, as
amended.
(ATTACH 8 1/2 x 11 SHEET IF NECESSARY)
- ----------------------------------------------------------------------------------------------------------------------------------
The Aggregate Number of Shares, Classes of Shares and Par Value of Shares Which the Corporation Shall Have Authority to Issue:
040 Number and Class of Shares 041 Stated Par Value Per 042 Total Authorized Capital ### Term of Existence
Share if Any
10,000,000 shares of Common Stock $.01 $100,000 Perpetual
- ----------------------------------------------------------------------------------------------------------------------------------
The Name and Address of Each Incorporator, and the Number and Class of Shares Subscribed to by Each Incorporator
061, 062
060 Name 063, 064 Address (Street, City, State, Zip Code) Number & Class of Shares
- ----------------------------------------------------------------------------------------------------------------------------------
Judith P. Matour 3000 Two Logan Square, 18th and Arch Streets One (1) share of
Philadelphia, PA 19103-2799 Common Stock
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
(ATTACH 8 1/2 x 11 SHEET IF NECESSARY)
- ----------------------------------------------------------------------------------------------------------------------------------
IN TESTIMONY WHEREOF, THE INCORPORATOR(S) HAS (HAVE) SIGNED AND SEALED THE ARTICLES OF INCORPORATION
THIS 22nd DAY OF MAY 1989
-------------- --------------------------- --
/s/ Judith P. Matour
- ------------------------------------------------------- -----------------------------------------------------------------
Judith P. Matour, Incorporator
- ------------------------------------------------------- -----------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- FOR OFFICE USE ONLY -
- ----------------------------------------------------------------------------------------------------------------------------------
030 FILED 002 CODE 003 REV BOX SEQUENTIAL NO. 100 MI## FILE NUMBER
3940 525
MAY 23 1989 ------------------------------------------------------------------------------------------
REVIEWED BY 004 SICC AMOUNT 001 CORPORATION NUMBER
/s/ James J. Haggerty
------------------
DATE APPROVED $ 1509181
Secretary of the Commonwealth
Department of State ------------------------------------------------------------------------------------------
Commonwealth of Pennsylvania DATE REJECTED CERTIFY TO INPUT BY LOG IN LOG IN (REFILE)
/ /REV.
------------------ --------------------------------------------------
MAILED BY DATE / /L & I VERIFIED BY LOG OUT LOG OUT (REFILE)
/ /OTHER
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
1. The following provisions shall regulate the status of the corporation as a
close corporation:
(a) (Strike out (i) or (ii) below, whichever is not applicable.)
(i) All of the issued shares of the corporation of all classes,
exclusive of treasury shares, shall be held of record by not more
than ________________________ persons.
(NUMBER NOT TO EXCEED)
(ii) All of the issued shares of the corporation of all classes,
exclusive of treasury shares, shall be held of record by not more
than the smaller of twenty-five "shareholders" within the meaning
of Subchapter S of the Internal Revenue Code of 1954, as amended,
or 30 persons.
(b) All of the issued shares of all classes of the corporation shall be
subject to one or more of the restrictions on transfer permitted by
section 613.1 of the Business Corporation Law (15 P.S.
Section 1618.1).
(c) The corporation shall make no offering of any of its shares of any
class which would constitute a "public offering" within the meaning of
the Securities Act of 1933, as amended.
2. (Optional: BCL Section 372B) A person (other than an estate) who is not an
"individual" or who is a "non-resident alien." In either case within the
meaning of the Internal Revenue Code of 1954, as amended ("Code"), shall
not be entitled to be a holder of record of shares of the corporation.
Only a person whose consent is currently in effect to the election of the
corporation to be treated as an electing small business corporation under
Subchapter S of the Code and a shareholder who has not affirmatively
refused to consent to the election within sixty days after he acquires his
stock, shall be entitled to be a holder of record of shares of the
corporation.
3. (Optional: BCL Section 362) The business and affairs of the corporation
shall be managed by the shareholders of the corporation rather than by a
board of directors.
4. (Optional: BCL Section 376B) The status of the corporation as a "close
corporation" within the meaning of the Business Corporation Law shall not
be terminated without the affirmative vote or written consent of (all
holders of) (shareholders holding ________________________________ of the)
(FRACTION AT LEAST TWO-THIRDS)
shares of all classes of the corporation.
5. (Optional: BCL Section 364B) (Any shareholder) (shareholders holding
_____________________ of the shares) of the corporation may apply for the
(FRACTION)
appointment of a provisional director of the corporation in the manner and
upon the circumstances provided by statute.
6. (Optional: BCL Section 386) (Any shareholder) (shareholders holding
_____________________ of the shares) of the corporation shall have the
(FRACTION)
right at will to cause the corporation to be dissolved by proceeding in the
manner provided by statute.
<PAGE>
PROFESSIONAL BANCORP, INC.
(A Pennsylvania Corporation)
BYLAWS
ARTICLE I
OFFICES
Section 1.1 PRINCIPAL EXECUTIVE OFFICE. The principal executive
office of Professional Bancorp, Inc. (the "Corporation") is hereby fixed and
located at 606 Broadway, Santa Monica, California 90401. The board of directors
of the Corporation (the "Board") may change the location of the principal
executive office, subject to any necessary regulatory approvals.
Section 1.2 REGISTERED OFFICE. The registered office of the
Corporation in the Commonwealth of Pennsylvania shall be as specified in the
original Articles of Incorporation of the Corporation or at such other place as
the Board may specify in a statement of change of registered office of
registered office filed with the Department of State of the Commonwealth of
Pennsylvania.
Section 1.3 OTHER OFFICES. The Corporation may also have an
office or offices at such other place or places either within or without the
Commonwealth of Pennsylvania as the Board may from time to time determine or the
business of the Corporation requires, subject to any necessary regulatory
approvals.
<PAGE>
ARTICLE II
MEETINGS OF THE SHAREHOLDERS
Section 2.1 PLACE. All meetings of the shareholders shall be
held at the principal executive office of the Corporation or at any other place,
within or without the Commonwealth of Pennsylvania, as the Board may from time
to time determine.
Section 2.2 ANNUAL MEETING. A meeting of the shareholders for
the election of directors and the transaction of such other business as may
properly be brought before the meeting shall be held each calendar year on the
second Monday in May at 4:00 p.m., Pacific Coast Time, or, if such date is a
legal holiday, at the same time on the first day thereafter that is not a legal
holiday, or on such other date and at such time as the Board shall determine.
If the annual meeting is not called and held within 60 days after the designated
date for such meeting, or, if no date has been designated, for a period of 15
months after the last annual meeting of shareholders of the Corporation, the
superior court of the proper county may summarily order a meeting to be held
upon the application of any shareholder after notice to the Corporation giving
it the opportunity to be heard. The shares represented at such meeting, either
in person or by proxy, and entitled to vote thereat shall constitute a quorum
for the purpose of such meeting, notwithstanding any provision of the Articles
of Incorporation of the Corporation as they may from time to time be amended
(the "Articles") or these Bylaws or any
2
<PAGE>
statute to the contrary. The court may issue such orders as may be appropriate,
including, without limitation, orders designating the time and place of such
meeting, the record date for determination of shareholders entitled to vote and
the form of notice of such meeting.
Section 2.3 WRITTEN BALLOT. Except upon demand by a shareholder
entitled to vote at the election and before the voting begins, elections of
directors need not be by written ballot.
Section 2.4 SPECIAL MEETINGS. Special meetings of the
shareholders, for any purpose or purposes, may be called at any time by the
Chairman of the Board, the President, or the Board, upon written request
delivered to the Secretary of the Corporation. In addition, an "interested
shareholder" (as defined in Section 2553 of the Pennsylvania Business
Corporation Law of 1988 as it may from time to time be amended (the "1988 BCL"))
may, upon written request delivered to the Secretary of the Corporation, call a
special meeting for the purpose of approving a business combination under either
subsection (3) or (4) of Section 2555 of the 1988 BCL. Any request for a
special meeting of shareholders shall state the purpose or purposes of the
proposed meeting. Upon receipt of any such request, it shall be the duty of the
Secretary to give notice, in a manner consistent with Section 2.6 of these
Bylaws, of a special meeting of the shareholders to be held at such time as the
Secretary may fix, which time may not be, if the meeting is called pursuant to
3
<PAGE>
a statutory right, more than sixty (60) days after receipt of the request. If
the Secretary shall neglect or refuse to fix the date of the meeting and give
notice thereof, the person or persons calling the meeting may do so.
Section 2.5 SCOPE OF SPECIAL MEETINGS. Business transacted at
any special meeting shall be confined to the business stated in the notice.
Section 2.6 NOTICE. Written notice of every meeting of the
shareholders, stating the place, the date and hour thereof and the matters to be
acted on at such meeting, shall be given in a manner consistent with the
applicable provisions of Section 14 of the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder, or any successor act or
regulation (the "Exchange Act"), by, or at the direction of, the Secretary of
the Corporation or, in the absence of the Secretary of the Corporation, any
Assistant Secretary of the Corporation, at least ten (10) days prior to the day
named for such meeting, to each shareholder entitled to vote thereat on the date
fixed as a record date in accordance with Section 7.1 of these Bylaws or, if no
record date be fixed, then of record at the close of business on the 40th day
next preceding the date of the meeting, at such address as appears on the
transfer books of the Corporation. Any notice of any meeting of shareholders
may state that, for purposes of any meeting that has been previously adjourned
for one or more periods aggregating at least fifteen (15) days because of an
absence of a quorum, the shareholders entitled to
4
<PAGE>
vote who attend such a meeting, although less than a quorum pursuant to Section
2.7 of these Bylaws, shall nevertheless constitute a quorum for the purpose of
acting upon any matter set forth in the original notice of the meeting that was
so adjourned.
Section 2.7 QUORUM. The shareholders present in person or by
proxy, entitled to cast at least a majority of the votes that all shareholders
are entitled to cast on any particular matter to be acted upon at the meeting,
shall constitute a quorum for the purposes of consideration of, and action on,
such matter. Shares of the Corporation owned by it, directly or indirectly,
shall not be counted in determining the total number of outstanding shares for
quorum purposes. The shareholders present in person or by proxy at a duly
organized meeting can continue to do business until the adjournment thereof
notwithstanding the withdrawal of enough shareholders to leave less than a
quorum. If a meeting cannot be organized because a quorum has not attended, the
shareholders present in person or by proxy may, except as otherwise provided by
the 1988 BCL and subject to the provisions of Section 2.8 of these Bylaws,
adjourn the meeting to such time and place as they may determine.
Section 2.8 ADJOURNMENT. Any meeting of the shareholders,
including one at which directors are to be elected, may be adjourned for such
period as the shareholders present in person or by proxy and entitled to vote
shall direct. If notice is given as provided in the last sentence of Section
2.6 of these
5
<PAGE>
Bylaws, no other notice of the adjourned meeting or the business to be
transacted thereat need be given, other than announcement at the meeting at
which adjournment is taken, unless the Board fixes a new record date for the
adjourned meeting. At any adjourned meeting at which a quorum is present, any
business may be transacted that might have been transacted at the meeting as
originally noticed.
Unless otherwise provided in a bylaw adopted by the shareholders,
those shareholders entitled to vote present in person or by proxy, although less
than a quorum pursuant to Section 2.7 of these Bylaws, shall nevertheless
constitute a quorum for the purpose of (i) electing directors at a meeting
called for the election of directors that has been previously adjourned for lack
of a quorum, and (ii) acting, at a meeting that has been adjourned for one or
more periods aggregating fifteen (15) days because of an absence of a quorum,
upon any matter set forth in the original notice of such adjourned meeting,
provided that such original notice shall have contained the statement referred
to in the last sentence of Section 2.6 of these Bylaws.
Section 2.9 MAJORITY VOTING. Any matter brought before a duly
organized meeting for a vote of the shareholders shall be decided by a majority
of the votes cast at such meeting by the shareholders present in person or by
proxy and entitled to vote thereon, unless the matter is one for which a
different vote is required by express provision of the 1988 BCL, the Articles,
6
<PAGE>
Section 2.10 of these Bylaws or a bylaw adopted by the shareholders, in any of
which case(s) such express provision shall govern and control the decision on
such matter.
Section 2.10 VOTING RIGHTS. Except as otherwise provided in the
Articles, at every meeting of the shareholders, every shareholder entitled to
vote shall have the right to one vote for each share having voting power
standing in his or her name on the books of the Corporation; provided, however,
that subject to the requirements of the next sentence, every shareholder
entitled to vote at any election for directors shall have the right to cumulate
his votes and give one candidate a number of votes equal to the number of
directors to be elected multiplied by the number of votes to which his shares
are entitled, or to distribute his votes on the same principle among as many
candidates as he shall think fit. No shareholder shall be entitled to cumulate
votes unless the name of the candidate or candidates for whom such votes would
be cast has been placed in nomination prior to the voting and at least one
shareholder has given notice at the meeting prior to the voting of such
shareholder's intention to cumulate his votes. The candidates receiving the
highest number of votes of shares entitled to be voted for them, up to the
number of directors to be elected, shall be elected. Shares of the Corporation
owned by it, directly or indirectly, shall not be voted.
Section 2.11 PROXIES. Every shareholder entitled to vote at a
meeting of the shareholders may authorize another
7
<PAGE>
person to act for such shareholder by proxy. The presence of, or vote or other
action at a meeting of shareholders by a proxy of, a shareholder shall
constitute the presence of, or vote or action by, the shareholder. Every proxy
shall be executed in writing by the shareholder or by the shareholder's duly
authorized attorney in fact and filed with the Secretary of the Corporation. A
proxy, unless coupled with an interest, shall be revocable at will,
notwithstanding any other agreement or any provision in the proxy to the
contrary, but the revocation of a proxy shall not be effective until written
notice of revocation has been given to the Secretary of the Corporation. No
unrevoked proxy shall be valid after three (3) years from the date of its
execution, unless a longer time is expressly provided therein. A proxy shall
not be revoked by the death or incapacity of the maker unless, before the vote
is counted, written notice of such death or incapacity is given to the Secretary
of the Corporation.
Section 2.12 VOTING LISTS. The officer or agent having charge of
the transfer books for securities of the Corporation shall make a complete list
of the shareholders entitled to vote at a meeting of the shareholders, arranged
in alphabetical order, with the address of and the number of shares held by each
shareholder, which list shall be produced and kept open at the time and place of
the meeting and shall be subject to the inspection of any shareholder during the
whole time of the meeting.
8
<PAGE>
Section 2.13 JUDGES OF ELECTION. In advance of any meeting of
the shareholders, the Board may appoint judges of election, who need not be
shareholders, to act at such meeting or any adjournment thereof. If judges of
election are not so appointed, the presiding officer of any such meeting may,
and on the request of any shareholder shall, appoint judges of election at the
meeting. The number of judges shall be one or three, as determined by the Board
to be appropriate under the circumstances. No person who is a candidate for
office to be filled at the meeting shall act as a judge at the meeting. The
judges of election shall do all such acts as may be proper to conduct the
election or vote with fairness to all shareholders, and shall make a written
report of any matter determined by them and execute a certificate of any fact
found by them, if requested by the presiding officer of the meeting or any
shareholder or the proxy of any shareholder. If there are three judges of
election, the decision, act or certificate of a majority shall be effective in
all respects as the decision, act or certificate of all.
Section 2.14 PARTICIPATION BY CONFERENCE CALL. No shareholder
may participate in any meeting of shareholders by means of conference telephone
or similar communications equipment.
9
<PAGE>
ARTICLE III
DIRECTORS
Section 3.1 NUMBER AND QUALIFICATIONS. The Board shall consist
of one or more directors as determined from time to time by the Board. Except
as provided in Section 3.4 of these Bylaws in the case of vacancies, directors
shall be elected by the shareholders. Directors shall be natural persons of
full age and need not be residents of the Commonwealth of Pennsylvania or
security holders of the Corporation.
Section 3.2 TERM. Each director elected at an annual meeting of
shareholders shall be elected to hold office until the next annual meeting of
shareholders. Each director, including a director elected to fill a vacancy,
shall hold office until the expiration of the term for which he or she was
elected and until a successor has been elected and qualified or until the
director's earlier death, resignation or removal.
Section 3.3 NOMINATIONS OF DIRECTORS. Nominees for election to
the Board shall be selected by the Board or a committee of the Board to which
the Board has delegated the authority to make such selections pursuant to
Section 3.11 of these Bylaws. Effective May 1, 1990, the Board or such
committee, as the case may be, will consider written recommendations from
shareholders for nominees for election to the Board provided such
recommendations, together with (i) such information regarding each nominee as
would be required to be included in a proxy statement filed pursuant to the
Exchange Act,
10
<PAGE>
(ii) a description of all arrangements or other understandings among the
recommending shareholders and each nominee and any other person with respect to
such nomination, and (iii) the consent of each nominee to serve as a director
are received by the Secretary of the Corporation, in the case of an annual
meeting of shareholders, not later than the date specified in the most recent
proxy statement of the Corporation as the date by which shareholder proposals
for consideration at the next annual meeting of shareholders must be received,
and, in the case of a special meeting of shareholders, not later than the tenth
day after the giving of notice of such meeting. Only persons duly nominated for
election to the Board in accordance with this Section 3.3 and persons with
respect to whose nominations proxies have been solicited pursuant to the proxy
statement filed pursuant to the Exchange Act shall be eligible for election to
the Board. Each notice to shareholders of a meeting of shareholders at which
directors are to be elected shall contain a statement to the effect set forth in
this Section 3.3.
Section 3.4 VACANCIES. Vacancies in the Board, including
vacancies resulting from an increase in the number of directors, shall be filled
by a majority vote of the remaining members of the Board, even though less than
a quorum, or by a sole remaining director. If one or more directors shall
resign from the Board effective at a future date, the directors then in office,
including those who have resigned, shall have the power to fill the vacancies by
a majority vote, the vote thereon to
11
<PAGE>
take effect when the resignations become effective. Anything in these Bylaws to
the contrary notwithstanding, if, after the filling of any vacancy by the Board
or a sole remaining director, the directors then in office who have been elected
by the shareholders shall constitute less than a majority of all of the
directors then in office, any holder or holders of an aggregate of 5 percent or
more of the shares then outstanding having the right to vote for those directors
may (i) call a special meeting of shareholders to elect directors to replace the
directors appointed by the Board or a sole remaining director, as the case may
be, to fill the vacancies, or (ii) apply to the superior court of the proper
county for an order requiring a special meeting of shareholders to be held to
elect all directors. Notice of the special meeting of shareholders called
pursuant to clause (i) above shall be given in accordance with Sections 2.4 and
2.6 of these Bylaws.
Section 3.5 POWERS. The business and affairs of the Corporation
shall be managed under the direction of the Board, which may exercise all powers
of the Corporation and do all such lawful acts and things as are not by statute
or by the Articles or these Bylaws directed or required to be exercised and done
by the shareholders.
Section 3.6 PLACE OF BOARD MEETINGS. Meetings of the Board may
be held at such place within or without the Commonwealth of Pennsylvania as the
Board may from time to time appoint or as may be designated in the notice of the
meeting. In
12
<PAGE>
the absence of such appointment or designation, meetings of the Board shall be
held at the principal executive office of the Corporation.
Section 3.7 FIRST MEETING OF NEWLY ELECTED BOARD. The first
meeting of each newly elected Board shall be held at the same place and
immediately after the meeting at which such directors were elected and no notice
of such meeting shall be required.
Section 3.8 REGULAR BOARD MEETINGS; NOTICE. Regular meetings of
the board may be held at such times and places as shall be determined from time
to time by resolution of at least a majority of the whole Board at a duly
convened meeting, or by unanimous written consent. Notice of regular meetings
of the Board need not be given.
Section 3.9 SPECIAL BOARD MEETINGS; NOTICE. Special meetings of
the Board may be called by the Chairman of the Board, by the President or by any
two directors on notice to each director, specifying the general nature of the
business to be transacted and the date, place and hour of the meeting. Such
notice, if given orally in person or by telephone, shall be given at least 24
hours prior to the time of the meeting, and, if given in writing, at least 48
hours prior to the time of the meeting. Written notices shall be given in a
manner consistent with Section 10.4 of these Bylaws.
Section 3.10 QUORUM OF THE BOARD. At all meetings of the Board,
the presence of a majority of the directors in office
13
<PAGE>
shall constitute a quorum for the transaction of business, and the acts of a
majority of the directors present and voting at a meeting at which a quorum is
present shall be the acts of the Board. If a quorum shall not be present at any
meeting of directors, the directors present thereat may adjourn the meeting. It
shall not be necessary to give any notice of the adjourned meeting or of the
business to be transacted thereat other than by announcement at the meeting at
which such adjournment is taken.
Section 3.11 COMMITTEES OF DIRECTORS. The Board may, by
resolution adopted by a majority of the directors in office, establish one or
more committees, each committee to consist of one or more of the directors, and
may designate one or more directors as alternate members of any committee who
may replace any absent or disqualified member at any meeting of the committee or
for the purposes of any written action by the committee. Any such committee, to
the extent provided in such resolution of the Board or in these Bylaws, shall
have and may exercise all of the powers and authority of the Board; provided,
however, that no such committee shall have any power or authority to (i) submit
to the shareholders any action requiring approval of the shareholders under the
1988 BCL, (ii) create or fill vacancies on the Board, (iii) amend or repeal
these Bylaws or adopt new bylaws, (iv) amend or repeal any resolution of the
Board that by its terms is amendable or repealable only by the Board, (v) act on
any matter committed by these Bylaws or by resolution of the Board to another
committee of the Board, (vi) amend the Articles
14
<PAGE>
or adopt a resolution proposing an amendment to the Articles, or (vii) adopt a
plan or an agreement of merger or consolidation. In the absence or
disqualification of a member or alternate member or members of a committee, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not a quorum is present, may unanimously appoint another
director to act at the meeting in the place of any absent or disqualified
member. Minutes of all meetings of any committee of the Board shall be kept by
the person designated by such committee to keep such minutes. Copies of such
minutes and any writing setting forth any action taken by written consent
without a meeting shall be distributed to each member of the Board promptly
after such meeting is held or such action is taken. Each committee of the Board
shall serve at the pleasure of the Board.
Section 3.12 PARTICIPATION IN BOARD MEETINGS BY TELEPHONE. One
or more directors may participate in a meeting of the Board or of a committee of
the Board by means of conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other,
and all directors so participating shall be deemed present at the meeting.
Section 3.13 ACTION BY CONSENT OF DIRECTORS. Any action required
or permitted to be taken at a meeting of the Board or of a committee of the
Board may be taken without a meeting if, prior or subsequent to the action, a
consent or
15
<PAGE>
consents in writing setting forth the action so taken shall be signed by all of
the directors in office or all of the members of the committee, as the case may
be, and filed with the Secretary of the Corporation.
Section 3.14 COMPENSATION OF DIRECTORS. The Board may, by
resolution, fix the compensation of directors for their services as directors.
A director may also serve the Corporation in any other capacity and receive
compensation therefor.
Section 3.15 INDEMNIFICATION OF AGENTS OF THE CORPORATION;
PURCHASE OF LIABILITY INSURANCE.
(a) For the purposes of this Section, "agent" means any
person who is or was a director, officer, employee or other agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another foreign or domestic corporation,
partnership, joint venture, trust or other enterprise, or was a director,
officer, employee or agent of a foreign or domestic corporation which was a
predecessor corporation of the Corporation or of another enterprise at the
request of such predecessor corporation; "proceeding" means any threatened,
pending or completed action or proceeding, whether civil, criminal,
administrative or investigative; and "expense" includes, without limitation,
attorneys' fees and any expenses of establishing a right to indemnification
under subdivision (d) or subdivision (e)(3) of this Section.
16
<PAGE>
(b) The Corporation shall indemnify any director or officer,
and may indemnify any other agent, who was or is a party, or is threatened to be
made a party, to any proceeding (other than an action by or in the right of the
Corporation) by reason of the fact that the person is or was an agent of the
Corporation, against expenses, judgments, fines, settlements and other amounts
actually and reasonably incurred in connection with the proceeding if that
person acted in good faith and in a manner the person reasonably believed to be
in the best interests of the Corporation, in the case of a criminal proceeding,
had no reasonable cause to believe the conduct of the person was unlawful. The
termination of any proceeding by judgment, order, settlement, conviction or upon
a plea of NOLO CONTENDERE or its equivalent shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which the
person reasonably believed to be in the best interests of the Corporation or
that the person had reasonable cause to believe that the person's conduct was
unlawful.
(c) The Corporation shall indemnify any director or officer,
and may indemnify any other agent, who was or is a party, or is threaten to be
made a party, to any threatened, pending or completed action by or in the right
of the Corporation to procure a judgment in its favor by reason of the fact that
the person is or was an agent of the Corporation, against expenses actually and
reasonably incurred by that person in connection with the defense or settlement
of the action if the person acted
17
<PAGE>
in good faith, and in a manner the person believed to be in the best interests
of the Corporation and its shareholders. No indemnification shall be made under
this subdivision (c):
(1) In respect to any claim, issue or matter as to
which person shall have been adjudged to be liable to the Corporation in the
performance of that person's duty to the Corporation, unless and only to the
extent that the court in which the proceeding is or was pending, shall determine
upon application that, in view of all the circumstances of the case, the person
is fairly and reasonably entitled to indemnity for the expenses which such court
shall determine;
(2) Of amounts paid in settling or otherwise disposing
of (i) a threatened action without Board approval, or (ii) a pending action
without court approval; or
(3) Of expenses incurred in defending a pending action
which is settled or otherwise disposed of without court approval; or
(4) Of amounts incurred in defending a threatened
action which is settled or otherwise disposed of without Board approval.
(d) To the extent that an agent of the Corporation has been
successful on the merits in defense of any proceedings referred to in
subdivision (b) or (c) or in defense of any claim, issue or matter therein, the
agent shall be indemnified against expenses actually and reasonably incurred by
the agent in connection therewith.
18
<PAGE>
(e) Except as provided in subdivision (d), any
indemnification under this Section shall be made by the Corporation only if
authorized in the specific case, upon a determination that indemnification of
that agent is proper in the circumstances because the agent has met the
applicable standard of conduct set forth in subdivision (b) or (c), by:
(1) A majority vote of a quorum consisting of
directors who are not parties to such proceeding;
(2) Approval or ratification by the affirmative vote
of a majority of the shares of the Corporation represented and voting at a duly
held meeting at which a quorum is present (which shares voting affirmatively
also constitute at least a majority of the required quorum). For such purpose,
the shares owned by the person to be indemnified shall not be considered
outstanding or entitled to vote thereon; or
(3) The court in which the proceeding is or was
pending, upon application made by the Corporation or the agent or the attorney
or other person rendering services in connection with the defense, whether or
not the application by the agent, attorney or other person is opposed by the
Corporation.
(f) Expenses incurred in defending any proceeding may be
advanced by the Corporation prior to the final disposition of the proceeding
upon receipt of an undertaking by or on behalf of the agent to repay that amount
unless it shall be determined
19
<PAGE>
ultimately that the agent is entitled to be indemnified as authorized in this
Section.
(g) Nothing contained in this Section shall affect any right
to indemnification to which persons (other than directors and officers of the
Corporation or any subsidiary hereof) may be entitled by contract or otherwise.
(h) No indemnification or advance shall be made under this
Section, except as provided in subdivision (d) or subdivision (e)(3), in any
circumstance where it appears:
(1) That it would be inconsistent with a provision of
the Articles, these Bylaws, a resolution of the shareholders or an agreement in
effect at the time of the accrual of the alleged cause of action asserted in the
proceeding in which the expenses were incurred or other amounts were paid, which
prohibits or otherwise limits indemnification; or
(2) That it would be inconsistent with any condition
expressly imposed by a court in approving a settlement.
(i) Upon and in the event of a determination by the Board to
purchase such insurance, the Corporation may purchase and maintain insurance on
behalf of any agent of the Corporation against any liability asserted against or
incurred by the agent in that capacity or arising out of the agent's status as
such whether or not the Corporation would have the power to indemnify the agent
against that liability under the provisions of this Section.
20
<PAGE>
ARTICLE IV
OFFICERS
Section 4.1. PRINCIPAL OFFICERS. The officers of the Corporation
shall be chosen by the Board, and shall include a President, one or more Vice
Presidents and a Secretary (collectively, the "Principal Officers"). The Board
shall designate one officer (who need not be a principal Officer but shall not
be an assistant officer) to be the chief financial officer of the Corporation,
and an officer (who need not be a Principal Officer but shall not be an
assistant officer) to be the chief accounting officer of the Corporation. All
Principal Officers shall be natural persons of full age. Any number of offices,
including without limitation the office of chief financial officer and the
office of chief accounting officer, may be held by the same person.
Section 4.2. ELECTING PRINCIPAL OFFICERS. The Board, immediately
after each annual meeting of the shareholders, shall elect the Principal
Officers of the Corporation, none of whom need be members of the Board.
Section 4.3. OTHER OFFICERS. The Corporation may have such other
officers, assistant officers, agents and employees as the Board or the President
may deem necessary, each of whom shall hold office for such period, have such
authority and perform such duties as the Board or the President may from time to
time determine. The Board may delegate to the President the power to appoint or
remove, set the compensation of, and fill vacancies
21
<PAGE>
with respect to, any such other officers and any such agents or employees.
Section 4.4. COMPENSATION. Except as provided in Section 4.3 of
these Bylaws, the salaries of all officers of the Corporation shall be fixed by
the Board.
Section 4.5. TERM OF OFFICE; REMOVAL. Each officer of the
Corporation shall hold office until his or her successor has been chosen and
qualified or until his or her earlier death, resignation or removal. Except as
otherwise set forth in Section 4.3 of these Bylaws, vacancies of any office
shall be filled by the Board. Any Principal Officer, other officer, assistant
officer or agent may be removed by the Board, or by the President to the extent
permitted by Section 4.3 of these Bylaws, with or without cause, but such
removal shall be without prejudice to the contract rights, if any, of the person
so removed. The election or appointment of a Principal Officer, officer,
assistant officer or agent shall not of itself create any contract rights.
Section 4.6. THE PRESIDENT. The President shall be the chief
executive officer of the Corporation; he or she shall, if present, preside at
all meetings of the shareholders and (if the President is a director) all Board
meetings, shall, subject to the direction and control of the Board, have general
and active management of the business of the Corporation and shall see that all
orders and resolutions of the Board are carried into effect.
22
<PAGE>
Section 4.7. THE VICE PRESIDENTS. The Vice-President or
Vice-Presidents, in the order designated by the Board, shall, in the absence or
disability of the President, perform the duties and exercise the powers of the
President, and shall perform such other duties as the Board may prescribe or the
President may delegate to them.
Section 4.8. THE SECRETARY. The Secretary shall attend all
meetings of the Board and all meetings of the shareholders and record all the
votes of the Corporation and the minutes of all actions taken at all such
meetings in a book to be kept for that purpose, and shall perform like duties
for the committees of the Board when required. The Secretary shall give, or
cause to be given, notice of all meetings of the shareholders and of the Board
required by law or these Bylaws to be given, and shall perform such other duties
as may be prescribed by the Board or the President, under whose supervision the
Secretary shall be. He or she shall keep in safe custody the corporate seal, if
any, of the Corporation.
Section 4.9. THE CHIEF FINANCIAL OFFICER.
(a) The chief financial officer shall have the custody of
the corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation, and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as shall be designated by the Board.
23
<PAGE>
(b) The chief financial officer shall disburse the funds of
the Corporation as may be ordered by the Board, taking proper vouchers for such
disbursements, and shall render to the President and directors, at the regular
meetings of the Board, or whenever the Board or the President may so require, an
account of all his or her transactions as chief financial officer.
ARTICLE V
CERTIFICATES FOR SHARES
Section 5.1. SHARE CERTIFICATES. The certificates representing
shares of the Corporation shall be numbered and registered in a share register
as they are issued. The share register shall exhibit the names and addresses of
all registered holders and the number and class of shares and the series, if
any, held by each.
Each share certificate shall state that the Corporation is
incorporated under the laws of the Commonwealth of Pennsylvania, the name of the
registered holder and the number and class of shares and the series, if any,
represented thereby. If, under its Articles, the Corporation is authorized to
issue shares of more than one class or series, each share certificate shall set
forth, or shall contain a statement that the Corporation will furnish to any
shareholder upon request and without charge, a full or summary statement of the
designations, voting rights, preferences, limitations and special rights of the
24
<PAGE>
shares of each class or series authorized to be issued so far as they have been
fixed and determined and the authority of the Board to fix and determine such
rights.
Section 5.2. EXECUTION OF CERTIFICATES. Every share certificate
shall be executed, by facsimile or otherwise, by or on behalf of the
Corporation, by the President, by any Vice-President or by the Secretary. In
case any officer who has signed or whose facsimile signature has been placed
upon any share certificate shall have ceased to be such officer, because of
death, resignation or otherwise, before the certificate is issued, it may be
issued by the Corporation with the same effect as if the officer had not ceased
to be such at the time of issue.
ARTICLE VI
TRANSFER OF SHARES
Section 6.1. TRANSFER; DUTY OF INQUIRY. Upon presentment to the
Corporation or its transfer agent of a share certificate indorsed by the
appropriate person or accompanied by proper evidence of succession, assignment
or authority to transfer, a new certificate shall be issued to the person
entitled thereto and the old certificate cancelled and the transfer registered
upon the books of the Corporation, unless the Corporation or its transfer agent
has a duty to inquire as to adverse claims with respect to such transfer which
has not been discharged. The Corporation shall have no duty to inquire into
adverse claims with respect to transfers of its securities or the
25
<PAGE>
rightfulness thereof unless (a) the Corporation has received written
notification of an adverse claim at a time and in a manner which affords the
Corporation a reasonable opportunity to act on it before the issuance of a new,
reissued or re-registered share certificate and the notification identifies the
claimant, the registered owner and the issue of which the share or shares are a
part and provides an address for communications directed to the claimant; or (b)
the Corporation has required and obtained, with respect to a fiduciary, a copy
of a will, trust, indenture, articles of co-partnership, bylaws or other
controlling instruments, for a purpose other than to obtain appropriate evidence
of the appointment or incumbency of the fiduciary, and such documents indicate,
upon reasonable inspection, the existence of an adverse claim.
Section 6.2. DISCHARGING DUTY OF INQUIRY. The Corporation may
discharge any duty of inquiry by any reasonable means, including notifying an
adverse claimant by registered or certified mail at the address furnished by the
claimant or, if there is no such address, at the claimant's residence or regular
place of business, that the security has been presented for registration of
transfer by a named person, and that the transfer will be registered unless
within thirty (30) days from the date of mailing the notification, either (a) an
appropriate restraining order, injunction or other process issues from a court
of competent jurisdiction or (b) an indemnity bond, sufficient in the
Corporation's judgment to protect the
26
<PAGE>
Corporation and any transfer agent, registrar or other agent of the Corporation
involved from any loss which it or they may suffer by complying with the adverse
claim, is filed with the Corporation.
ARTICLE VII
RECORD DATE; IDENTITY OF SHAREHOLDERS
Section 7.1. RECORD DATE. The Board may fix a time, prior to the
date of any meeting of the shareholders, as a record date for the determination
of the shareholders entitled to notice of, or to vote at, the meeting, which
time, except in the case of an adjourned meeting, shall not be more than ninety
(90) days prior to the date of the meeting. Except as otherwise provided in
Section 7.2 of these Bylaws, only the shareholders of record at the close of
business on the date so fixed shall be entitled to notice of, or to vote at,
such meeting, notwithstanding any transfer of securities on the books of the
Corporation after any record date so fixed. The Board may similarly fix a
record date for the determination of shareholders for any other purpose. When a
determination of shareholders of record has been made as herein provided for
purposes of a meeting, the determination shall apply to any adjournment thereof
unless the Board fixes a new record date for the adjourned meeting.
Section 7.2. CERTIFICATION OF NOMINEE. The Board may adopt a
procedure whereby a shareholder may certify in writing to the Secretary of the
Corporation that all or a portion of the
27
<PAGE>
shares registered in the name of the shareholder are held for the account of a
specified person or persons. The Board, in adopting such procedure, may specify
(i) the classification of shareholder who may certify, (ii) the purpose or
purposes for which the certification may be made, (iii) the form of
certification and the information to be contained therein, (iv) as to
certifications with respect to a record date, the date after the record date by
which the certification must be received by the Secretary of the Corporation,
and (v) such other provisions with respect to the procedure as the Board deems
necessary or desirable. Upon receipt by the Secretary of the Corporation of a
certification complying with the procedure, the persons specified in the
certification shall be deemed, for the purpose or purposes set forth in the
certification, to be the holders of record of the number of shares specified
instead of the persons making the certification.
ARTICLE VIII
REGISTERED SHAREHOLDERS
Section 8.1. Before due presentment for transfer of any shares, the
Corporation shall treat the registered owner thereof as the person exclusively
entitled to vote, to receive notifications and otherwise to exercise all the
rights and powers of an owner, and shall not be bound to recognize any equitable
or other claim or interest in such securities, whether or not it shall have
express or other notice thereof, except as otherwise
28
<PAGE>
provided by the laws of the Commonwealth of Pennsylvania or Section 7.2 of these
Bylaws.
ARTICLE IX
LOST CERTIFICATES
Section 9.1. If the owner of a share certificate claims that is
has been lost, destroyed, or wrongfully taken, the Corporation shall issue a new
certificate in place of the original certificate if the owner so requests before
the Corporation has notice that the certificate has been acquired by a bona fide
purchaser, and if the owner has filed with the Corporation an indemnity bond and
an affidavit of the facts satisfactory to the Board or its designated agent, and
has complied with such other reasonable requirements, if any, as the Board may
deem appropriate.
ARTICLE X
GENERAL PROVISIONS
Section 10.1. CHECKS AND NOTES. All checks or demands for money
and notes of the Corporation shall be signed by such officer or officers as the
Board may from time to time designate.
Section 10.2. FISCAL YEAR. The fiscal year of the Corporation
shall be the calendar year.
Section 10.3. SEAL. The corporate seal shall have inscribed
thereon the name of the Corporation, the year of its organization and the words
"Corporate Seal, Pennsylvania." Such
29
<PAGE>
seal may be used by causing it or a facsimile thereof to be impressed or affixed
or in any manner reproduced. The affixation of the corporate seal shall not be
necessary for the valid execution, assignment or endorsement of any instrument
or other document by the Corporation or the valid issuance of any share
certificate by the Corporation.
Section 10.4. NOTICES. Except as provided in Section 2.6 of
these Bylaws, whenever, under the provisions of the 1988 BCL or of the Articles
or of these Bylaws or otherwise, written notice is required to be given to any
person, it may be given to such person either personally or by sending a copy
thereof by first class or express mail, postage prepaid, telegram (with
messenger service specified), telex, TWX (with answerback received), courier
service (with charges prepaid) or telecopier, to his or her address (or to his
or her telex, TWX, telecopier or telephone number), appearing on the books of
the Corporation or, in the case of directors, supplied by the director to the
Corporation for the purpose of notice. If the notice is sent by mail, telegraph
or courier service, it shall be deemed to have been given to the person entitled
thereto when deposited in the United States mail or with a telegraph office or
courier service for delivery to that person. A notice given by telex or TWX
shall be deemed to have been given when dispatched.
Section 10.5. WAIVER OF NOTICE. Whenever any notice is required
to be given by the 1988 BCL or by the Articles or these Bylaws, a waiver thereof
in writing, signed by the person
30
<PAGE>
or persons entitled to the notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice. The business
to be transacted at the meeting shall be specified in the waiver of notice of
the meeting. Attendance of a person at any meeting shall constitute a waiver of
notice of the meeting, except where any person attends a meeting for the express
purpose of objecting to the transaction of any business because the meeting was
not lawfully called or convened, and the person so objects at the beginning of
the meeting.
Section 10.6. ANNUAL AND OTHER REPORTS. The Board shall cause an
annual report to be sent to the shareholders not later than one hundred and
twenty (120) days after the close of the fiscal year. The requirement for such
annual report is dispensed with so long as the Corporation has less than one
hundred (100) shareholders of record. Such report shall contain a balance sheet
as of the end of such fiscal year and an income statement and a statement of
changes in financial position for such fiscal year, accompanied by any report
thereon of independent accountants or, if there is no such report, the
certificate of an authorized officer of the Corporation that such statements
were prepared without audit from the books and records of the Corporation.
A shareholder or shareholders holding at least 5 percent of the
outstanding shares of any class of the Corporation may make a written request to
the Corporation for an income statement of the Corporation for the three-month,
six-month or
31
<PAGE>
nine-month period of the current fiscal year ended more than thirty (30) days
prior to the date of the request and a balance sheet of the Corporation as of
the end of such period. The Corporation shall mail or deliver the statements to
the person making the request within thirty (30) days after receipt of such
request. Thereafter a copy of any such statements shall be kept on file in the
principal executive office of the Corporation for twelve (12) months, and shall
be exhibited at all reasonable times to any shareholder demanding an examination
of them, of a copy shall be mailed to such shareholder.
Section 10.7. INSPECTION OF CORPORATE RECORDS. The accounting
books and records, the record of shareholders, and minutes of proceedings of the
shareholders and the Board and committees of the Board of the Corporation and
any subsidiary of the Corporation shall be open to inspection upon the written
demand on the Corporation of any shareholder or holder of a voting trust
certificate at any reasonable time during usual business hours, for a purpose
reasonably related to such holder's interests as a shareholder or as the holder
of such voting trust certificate. Such inspection by a shareholder or holder of
a voting trust certificate may be made in person or by agent or attorney, and
the right of inspection includes the right to copy and make extracts.
Section 10.8. REPRESENTATION OF SHARES OF OTHER CORPORATIONS.
Each Principal Officer is authorized to vote, represent and exercise on behalf
of the Corporation all rights
32
<PAGE>
incident to and any and all shares of any other corporation or corporations
standing in the name of the Corporation, which authority may be exercised either
in person or by proxy or power of attorney duly executed by such Principal
Officer.
ARTICLE XI
AMENDMENTS
Section 11.1. AMENDMENTS. New Bylaws may be adopted, or these
Bylaws may be amended or repealed, by a majority vote of the shareholders
entitled to vote thereon at any regular or special meeting duly convened or,
except for a bylaw on a subject expressly committed to the shareholders by the
1988 BCL, by a majority vote of the members of the Board, subject always to the
power of the shareholders to change such action by the directors. In the case
of a meeting of shareholders, written notice shall be given to each shareholder
that the purpose, or one of the purposes, of the meeting is to consider the
adoption, amendment or repeal of these Bylaws. There shall be included in, or
enclosed with the notice, a copy of the proposed amendment or a summary of the
changes to be effected thereby. Any change in these Bylaws shall take effect
when adopted unless otherwise provided in the resolution effecting the change.
ARTICLE XII
SPECIAL PROVISIONS
Section 12.1. DISGORGEMENT. Pursuant to the authority granted
under the Pennsylvania Business Corporation Law, Subchapter H of Chapter 25,
of the Pennsylvania Business Corporation Law is new, shall be, and will
remain, inapplicable to this corporation, its equity securities and its
shareholders.
33
<PAGE>
MICROFILM NUMBER FILED WITH THE DEPARTMENT OF STATE ON SEP 10 1992
--------- -----------
ENTITY NUMBER
------------ -------------------------------------
SECRETARY OF THE COMMONWEALTH
ARTICLES OF AMENDMENT-DOMESTIC BUSINESS CORPORATION
DSCB:15-1915(REV 90)
In compliance with the requirements of 15 Pa.C.S. Section 1915 (relating to
articles of amendment), the undersigned business corporation, desiring to amend
its Articles, hereby states that:
1. The name of the corporation is: Professional Bancorp, Inc.
------------------------------------------
2. The (a) address of this corporation's current registered office in this
Commonwealth or (b) name of its commercial registered office provider and the
county of venue is (the Department is hereby authorized to correct the following
information to conform to the records of the Department):
(a)
------------------------------------------------------------------------
Number and Street City State Zip County
(b) c/o: CT Corporation System Philadelphia
------------------------------------------------------------------------
Name of Commercial Registered Office Provider County
For a corporation represented by a commercial registered office provider,
the county in (b) shall be deemed the county in which the corporation is
located for venue and official publication purposes.
3. The statute by or under which it was incorporated is: SECTION 1309
PENNSYLVANIA BUSINESS CORPORATION LAW
----------------------------------------------------------------------
4. The date of its incorporation is: May 23, 1989
-----------------------------------------
5. (Check, and if appropriate complete, one of the following):
X The amendment shall be effective upon filing these Articles of
Amendment in the Department of State.
The amendment shall be effective on: at
--- -------------- ---------------
Date Hour
6. (Check one of the following):
The amendment was adopted by the shareholders (or members) pursuant
--- to 15 Pa.C.S. Section 1914(a) and (b).
X The amendment was adopted by the board of directors pursuant to 15
--- Pa.C.S. Section 1914(c).
7. (Check, and if appropriate complete, one of the following):
X The amendment adopted by the corporation, set forth in full, is as
--- follows:
040 Number and Class of Shares
12,500,000 shares of Common Stock
041 Stated Par Value Per Share If Any
$.008
The amendment adopted by the corporation as set forth in full in
--- Exhibit A attached hereto and made a part hereof.
<PAGE>
8. (Check if the amendment restates the Articles):
The restated Articles of Incorporation supersede the original
--- Articles and all amendments thereto.
IN TESTIMONY WHEREOF, the undersigned corporation has caused these
Articles of Amendment to be signed by a duly authorized officer thereof this 8th
day of September, 1992.
Professional Bancorp, Inc.
----------------------------------------
(Name of Corporation)
BY: /s/ JOEL W. KOVNER
----------------------------------------
(Signature)
TITLE: Chairman and CEO
----------------------------------------
<PAGE>
INDEMNITY AGREEMENT
THIS AGREEMENT is made as of the 25th day of October, 1989 by an
between Professional Bancorp,Inc., a Pennsylvania corporation (the "Company"),
and Joel W. Kovner, ("Indemnitee"), a director of the Company with reference to
the following facts:
A. The Company and the Indemnitee recognize that interpretations of
ambiguous statutes, regulations, court opinions, and the Company's Articles of
Incorporation and Bylaws, are too uncertain to provide the Company's officers
and directors with adequate or reliable advance knowledge or guidance with
respect to the legal risks and potential liabilities to which they may become
personally exposed as a result of performing their duties in good faith for the
Company;
B. The Company and the Indemnitee are aware of the substantial
growth in the number of lawsuits filed against corporate officers and directors
in connection with their activities in such capacities and by reason of their
status as such;
C. The Company and the Indemnitee recognize that the cost of
defending such lawsuits, whether or not meritorious, is typically beyond the
financial resources of most officers and directors of the Company;
1
<PAGE>
D. The Company and the Indemnitee recognize that the legal risks and
potential officer or director liabilities, or the very threat thereof, and the
resultant substantial time and expense endured in defending against such
lawsuits, bear no reasonable logical relationship to the amount of compensation
received by the Company's officers or directors. These factors pose a
significant deterrent to, and induce increased reluctance on the part of,
experienced and capable individuals to serve as officers or directors of the
Company;
E. The Company has investigated the availability and deficiency of
liability insurance to provide its officers and directors with adequate
protection against the foregoing legal risks and potential liabilities. It has
concluded that such insurance provides only marginal protection to its officers
and directors. Thus, it would be in the best interests of the Company and its
shareholders to contract with its officers and directors, including the
Indemnitee, to indemnify them to the fullest extent permitted by law against
personal liability for actions taken in the good faith performance of their
duties to the Company;
F. The Board of Directors of the Company has determined, after due
consideration and investigation of this Agreement and various other options
available in lieu hereof, that the following Agreement is reasonable, prudent
and necessary to promote and ensure the best interests of the Company and its
shareholders. This Agreement is intended to: (1) induce and
2
<PAGE>
encourage highly experienced and capable persons such as the Indemnitee to serve
as officers and/or directors of the Company; (2) encourage such persons to
resist what they consider unjustifiable suits and claims made against them in
connection with the good faith performance of their duties to the Company,
secure in knowledge that certain expenses, costs and liabilities incurred by
them in their defense of such litigation will be borne by the Company and that
they will receive the maximum protection against such risks and liabilities as
legally may be made available to them; and (3) encourage officers and directors
to exercise their best business judgment regarding matters which come before the
Board of Directors without undue concern for the risk that claims may be made
against them on account thereof.
G. The Company desires to have the Indemnitee continue to serve as
an officer or director of the Company free from concern for unpredictable,
inappropriate or unreasonable legal risk and personal liabilities by reason of
his acting in good faith in the performance of his duty to the Company. The
Indemnitee desires to continue to serve as an officer or director of the
Company, provided, and on the express condition, that he is furnished with the
indemnity set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth below and based on the premises set forth above, the
Company and Indemnitee do hereby agree as follows:
3
<PAGE>
1. DEFINITIONS. For the purposes of this Agreement, the following
definitions shall apply:
(a) The term "Proceeding" shall include any threatened, pending
or completed action, suit or proceeding, whether brought in the name of the
Company or otherwise and whether of a civil, criminal, administrative or
investigative nature, including, but not limited to, actions, suits or
proceedings brought under and/or predicated upon the Securities Act of 1933, as
amended, and/or the Securities Exchange Act of 1934, as amended and/or their
respective state counterparts and/or any rule or regulation promulgated
thereunder, in which Indemnitee may be or may have been involved as a party or
otherwise (other than as plaintiff against the Company), by reason of the fact
that Indemnitee is or was an Agent of the Company or by reason of any action
taken by him or of any inaction on his part while acting as such Agent.
(b) The term "Expenses," includes, without limitation, expenses
of investigations, judicial or administrative proceedings or appeals, court
costs, attorneys' fees and disbursements and any expenses of establishing a
right to indemnification under law or Paragraph 7 of this Agreement. "Expenses"
shall not include the amount of any judgment, fines or penalties actually levied
against Indemnitee or amounts paid in settlement of a Proceeding by or on behalf
of Indemnitee.
4
<PAGE>
(c) References to "other enterprise" shall include employee
benefit plans; references to "fines" shall include any excise tax assessed with
respect to any employee benefit plan; references to "serving at the request of
the Company" shall include any service as a director or officer of the Company
which imposes duties on, or involves services by, such director or officer with
respect to an employee benefit plan, its participants, or beneficiaries; and a
person who acts in good faith and in a manner he reasonably believes 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 Company" as referred to in this Agreement.
(d) The term "Agent" shall mean any person who is or was acting in
his capacity as a director or officer of the Company, or is or was serving as a
director, officer, employee or agent of any other enterprise at the request of
the Company, and whether or not he is serving in any such capacity at the time
any liability or expense is incurred for which indemnification or reimbursement
can be provided under this Agreement.
(e) The term "Applicable Standard" means that a person acted in good
faith and in a manner such person reasonably believed to be in the best
interests of the Company; except that in a criminal proceeding, such person must
also have had no reasonable cause to believe that such person's conduct was
unlawful. The termination of any Proceeding by judgment, order,
5
<PAGE>
settlement, conviction or upon a plea of nolo contendere or its equivalent shall
not, of itself, create any presumption, or establish, that the person did not
meet the "Applicable Standard."
(f) "Independent Legal Counsel" shall include any firm of
attorneys selected by lot by the regular outside counsel for the Company from a
list of firms which meet minimum size criteria and other reasonable criteria
established by the Board of Directors of the Company, so long as such firm has
not represented the Company, Indemnitee or any entity controlled by Indemnitee
within the preceding 24 calendar months.
2. AGREEMENT TO SERVE. Indemnity agrees to serve or continue to
serve as a director and/or officer of the Company at the will of the Company or
in accordance with the terms of any agreement with the Company, as the case may
be, for so long as he is duly elected or appointed, or until such time as he
tenders his resignation in writing or his service is terminated.
3. INDEMNITY IN THIRD PARTY PROCEEDINGS. The Company shall
indemnify Indemnitee if Indemnitee is made a party to or threatened to be made a
party to, or otherwise involved in, any Proceeding (other than a Proceeding,
which is an action by or in the right of the Company to procure a judgment in
its favor), by reason of the fact that Indemnitee is or was an Agent of the
Company. This indemnity shall apply, and be limited, to and against all
expenses, judgments, fines, penalties, settlements,
6
<PAGE>
and other amounts, actually and reasonably incurred by Indemnitee in connection
with the defense or settlement of the Proceeding, so long as it is determined
pursuant to Paragraph 7 of this Agreement or by the court before which such
action was brought, that Indemnitee met the Applicable Standard.
4. INDEMNITY IN PROCEEDINGS BY OR IN THE NAME OF THE COMPANY. The
Company shall indemnify Indemnitee if Indemnitee is made a party to, or
threatened to be made a party to, or otherwise involved in, any Proceeding which
is an action by or in the right of the Company to procure a judgment in its
favor by reason of the fact that Indemnitee is or was an Agent of the Company.
This indemnity shall apply, and be limited, to and against all expenses actually
and reasonably incurred by Indemnitee in connection with the defense or
settlement of such Proceeding, but only if: (a) Indemnitee met the Applicable
Standard (except that the Indemnitee's belief regarding the best interests of
the Company need not have been reasonable; (b) Indemnitee also acted in a manner
he believed to be in the best interests of the Company's shareholders; and (c)
the action is not settled or otherwise disposed of without court approval. No
indemnification shall be made under this Paragraph 4 in respect of any claim,
issue or matter as to which Indemnitee shall have been adjudged to be liable to
the Company in the performance of such person's duty or the Company, unless, and
only to the extent that, the court in which such proceeding is or was pending
shall determined upon application that, in view of all the circumstances of the
case, Indemnitee is fairly and reasonably
7
<PAGE>
entitled to indemnification for the expenses which such court shall determine.
5. EXPENSES OF SUCCESSFUL INDEMNITEE. Notwithstanding any other
provision of this Agreement, to the extent that Indemnitee has been successful
on the merits in defense of any Proceeding or in defense of any claim or portion
thereof without prejudice, Indemnitee shall be indemnified against all Expenses
actually and reasonably incurred in connection therewith.
6. ADVANCES OF EXPENSES. The Expenses incurred by Indemnitee in any
Proceeding shall be advanced by the Company prior to the final disposition of
such proceeding at the written request of Indemnitee, but only if Indemnitee
shall undertake to repay such advances if Indemnitee is reimbursed or paid any
of such Expenses by court order or otherwise or it is ultimately determined that
the Indemnitee is not entitled to indemnification. Any advance required
hereunder shall be deemed to have been approved by the Board of Directors of the
Company to the extent this Agreement was so approved. In determining whether or
not to make an advance hereunder, the ability to Indemnitee to repay shall not
be a factor. However, in a Proceeding brought by the Company directly, in its
own right (as distinguished from an action brought derivatively or by any
receiver or trustee), the Company shall have discretion whether or not to make
the advances called for hereby if Independent Legal Counsel advises in writing
that the Company has probable
8
<PAGE>
cause to believe, and the Company does believe, that Indemnitee did not act in
good faith with regard to the subject matter of the Proceeding or a material
portion thereof.
7. RIGHT OF INDEMNITEE TO INDEMNIFICATION UPON APPLICATION;
PROCEDURE UPON APPLICATION. Any indemnification or advance under Paragraphs 5
and/or 6 hereof shall be made no later than 45 days after receipt of a written
request of Indemnitee in accordance with Paragraph 11 hereof. In all other
cases, indemnification shall be made by the Company only if authorized in the
specific case, upon a determination that indemnification of the Agent is proper
under the circumstances and the terms of this Agreement by: (a) a majority vote
of a quorum of the Board of Directors (or a duly constituted committee thereof),
consisting of directors who are not parties of such Proceedings; (b) approval of
the shareholders (as defined in Section 153 of the California Corporations Code,
as that Section reads at present), with the Indemnitee's shares not being
entitled to vote thereon; (c) the court in which such Proceeding is or was
pending upon application made by the Company, the Indemnitee or any person
rendering services in connection with Indemnitee's defense, whether or not the
Company opposes such application; or (d) to the extent permitted by law, by
Independent Legal Counsel in a written opinion.
The right to indemnification or advances as provided by this
Agreement shall be enforceable by Indemnitee in any court of competent
jurisdiction. The burden of proving that
9
<PAGE>
indemnification or advances are not appropriate shall be on the Company.
Neither the failure of the Company (including its Board of Directors,
Independent Legal Counsel, or its shareholders) to have made a determination
prior to the commencement of such action that indemnification or advance are
proper in the circumstances because Indemnitee has met the Applicable Standard
of Conduct, nor an actual determination by the Company (including its Board of
Directors or Independent Legal Counsel) that Indemnitee has not met such
Applicable Standard of Conduct, shall be a a defense to the action or create a
presumption that Indemnitee has not met the Applicable Standard of Conduct.
Indemnitee's Expenses incurred in connection with successfully establishing his
right to indemnification or advances in any such Proceeding shall also be
indemnified by the Company; provided, however, that if Indemnitee is only
partially successful in establishing his right to indemnification or advances,
only an equitably allocated portion of such Expenses, as determined by the
court, shall be indemnified.
If Indemnitee is entitled under any provision of this Agreement
or indemnification by the Company for some or a portion of the Expenses,
judgments, fines or penalties actually and reasonably incurred by him in the
investigation, defense, appeal or settlement of any Proceeding but not, however,
for the total amount thereof, the Company shall nevertheless indemnify
Indemnitee for the portion (determined on an equitable basis) of such Expenses,
judgments, fines or penalties to which Indemnitee is entitled.
10
<PAGE>
8. INDEMNIFICATION HEREUNDER NOT EXCLUSIVE. The indemnification
provided by this Agreement shall not be deemed exclusive of any other rights to
which Indemnitee may be entitled under the Articles of Incorporation, the
Bylaws, any agreement, any vote of shareholders or disinterested directors, the
General Corporation Law of the State of California, or otherwise, both as to
action in his official capacity and as to action in another capacity while
holding such office. The indemnification under this Agreement shall continue as
to Indemnitee even though he may have ceased to be a director or officer and
shall inure to the benefit of the heirs and personal representatives of
Indemnitee.
9. LIMITATIONS. The Company shall not be liable under this
Agreement to make any payment in connection with any claim made against the
Indemnitee:
(a) for which payment is actually made to the Indemnitee under a
valid and collectible insurance policy, provided however, that the Company shall
remain liable for any payments required by this Agreement in excess of the
amount of payments under such insurance;
(b) for which the Indemnitee is indemnified by the Company
otherwise than pursuant to this Agreement;
(c) for an accounting of profits made from the purchase or sale
by the Agent of securities of the Company within the meaning of Section 16(b) of
the Securities Exchange Act of
11
<PAGE>
1934 and amendments thereto or similar provisions of any state statutory law or
common law;
(d) for acts or omissions that involve intentional misconduct or
a knowing and culpable violation of law;
(e) for acts or omissions that the Indemnitee believes to be
contrary to the best interests of the Company or its shareholders or that
involve the absence of good faith on the part of the Indemnitee;
(f) for any transaction from which the Indemnitee derived an
improper personal benefit;
(g) for acts or omissions that show a reckless disregard for the
Indemnitee's duty to the Company or its shareholders in circumstances in which
the Indemnitee was aware, or should have been aware, in the ordinary course of
performing his duties, of a risk of serious injury to the Company or its
shareholders;
(h) for acts or omissions that constitute an unexcused pattern
of inattention that amounts to an abdication of the Indemnitee's duty to the
Company or its shareholders;
12
<PAGE>
(i) under Section 310 of the General Corporation Law of the
State of California, as that Section reads at present; or
(j) under Section 316 of the General Corporation Law of the
State of California, as that Section reads at present.
10. SAVINGS CLAUSE. If this Agreement or any portion hereof is
invalidated on any ground by any court of competent jurisdiction, the Company
shall nevertheless indemnify Indemnitee as to Expenses, judgment, fines and
penalties with respect to any Proceeding to the full extent permitted by any
applicable portion of this Agreement by any other applicable law.
11. NOTICES. Indemnitee shall, as a condition precedent to his right
to be indemnified under this Agreement, give to the Company notice in writing
within thirty (30) days after he becomes aware of any claim made against him for
which he believes, or should reasonably believe, indemnification will or could
be sought under this Agreement. Notice to the Company shall be directed to the
Company's main office, Attention: President (or such other address as the
Company shall designate in writing to Indemnitee). Failure to so notify the
Company shall not relieve the Company of any liability which it may have to
Indemnitee otherwise than under this Agreement.
All notices, requests, demands and other communications
(collectively "notices") provided for under this
13
<PAGE>
Agreement shall be in writing (including communications by telephone, telex or
telecommunication facilities providing facsimile transmission) and mailed
(postage prepaid and return receipt requested), telegraphed, telexed,
transmitted or personally served to each party at the address set forth at the
end of this Agreement or at such other address as any party affected may
designate in a written notice to the other parties in compliance with this
section. All such notices shall be effective when received; provided, however,
receipt shall be deemed to be effective within three (3) business days of any
properly addressed notice having been deposited in the mail, within twenty-four
(24) hours from the time electronic transmission was made, or upon actual
receipt of electronic delivery, whichever occurs first.
No costs, charges or expenses for which indemnity shall be sought
hereunder shall be incurred without the Company's consent, which consent shall
not be unreasonably withheld.
12. CHOICE OF LAW. This Agreement shall be interpreted and enforced
in accordance with the laws of the State of California, including applicable
statutes of limitation and other procedural statutes.
13. ATTORNEYS' FEES. If any legal action is necessary to enforce the
terms of this Agreement, the prevailing party shall be entitled to recover, in
addition to other amounts to
14
<PAGE>
which the prevailing party may be entitled, actual attorneys' fees and court
costs as may be awarded by the court.
14. AMENDMENTS. Provisions of this Agreement may be waived, altered,
amended or repealed in whole or in part only by the written consent of all
parties.
15. PARTIES IN INTEREST. Nothing in this Agreement, whether express
or implied, is intended to confer any right or remedies under or by reason of
this Agreement to any persons other than the parties to it and their respective
successors and assigns (including an estate of Indemnitee), nor is anything in
this Agreement intended to relieve or discharge the obligation or liability of
any third persons to any party hereto. Furthermore, no provision of this
Agreement shall give any third persons any right of subrogation or action
against any party hereto.
16. SEVERABILITY. If any portion of this Agreement shall be deemed
by a court of competent jurisdiction to be unenforceable, the remaining portion
shall be valid and enforceable only if, after excluding the portion deemed to be
unenforceable, the remaining terms shall provide for the consummation of the
transaction contemplated herein in substantially the same manner as originally
set forth at the date this Agreement was executed.
17. SUCCESSOR AND ASSIGNS. All terms and conditions of this
Agreement shall be binding upon and shall inure to the
15
<PAGE>
benefit of the parties and their respective transferees, successors and assigns;
provided, however, that this Agreement and all rights, privileges, duties and
obligations of the parties, may not be assigned or delegated by any party
without the prior written consent of the other parties.
18. COUNTERPARTS. This Agreement may be executed simultaneously in
one or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
19. ENTIRE AGREEMENT. Except as provided in Paragraph 8 hereof, this
Agreement represents and contains the entire agreement and understanding between
and among the parties, and all previous statements or understandings, whether
express or implied, oral or written, relating to the subject matter hereof are
fully and completely extinguished and superseded by this Agreement. This
Agreement shall not be altered or varied except by a writing duly signed by all
of the parties.
16
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
"Company"
By: /S/ LYNN O. POULSON
------------------------------
Lynn O. Poulson, Secretary
"Indemnitee"
/S/ JOEL W. KOVNER
- ---------------------------------
Address:
-----------------------
-----------------------
17
