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AGREEMENT AND PLAN OF ACQUISITION
THIS AGREEMENT made as of the 25th day of January, 1999 is made by and
among Principal Cash Management Fund, Inc., a Maryland corporation (hereinafter
called "Cash Management"), Principal Tax-Exempt Cash Management Fund, Inc., a
Maryland corporation (hereinafter called "Tax-Exempt Cash Management"), and
Principal Management Corporation, an Iowa corporation (hereinafter called
"Principal Management").
WITNESSETH:
Whereas the Board of Directors of Cash Management and the Board of
Directors of Tax-Exempt Cash Management, each an open-end management investment
company, deem it advisable that Cash Management acquire all of the assets of
Tax-Exempt Cash Management in exchange for the assumption by Cash Management of
all of the liabilities of Tax-Exempt Cash Management and shares issued by Cash
Management which are thereafter to be distributed by Tax-Exempt Cash Management
pro rata to its shareholders in complete liquidation and termination of
Tax-Exempt Cash Management and in exchange for all of Tax-Exempt Cash
Management's outstanding shares;
NOW, THEREFORE, in consideration of the mutual promises herein contained, each
of the parties hereto represents and warrants to, and agrees with each of the
other parties as follows:
1. Cash Management hereby represents and warrants to Tax-Exempt Cash
Management that:
(a) Cash Management is a corporation with transferable shares duly
organized and validly existing under the laws of Maryland and has full
power to own its properties and assets and to carry on its business as
such business is now being conducted;
(b) Cash Management's statement of assets and liabilities as of October
31,1998 and the related statements of operations and changes in net
assets for the fiscal year ended October 31, 1998, all as certified by
Ernst & Young LLP, have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis. Such
statement of assets and liabilities fairly presents the financial
position and net assets of Cash Management as of such date and such
statements of operations and changes in net assets fairly present the
results of its operations for the period covered thereby,
(c) There are no claims, actions, suits or proceedings pending or, to its
knowledge, threatened against or affecting Cash Management or its
properties or business or its right to issue and sell shares, or which
would prevent or hinder consummation of the transactions contemplated
hereby, and it is not charged with, or to Cash Management's knowledge,
threatened with, any charge or investigation of any violation of any
provision of any federal, state or local law or any administrative
ruling or regulation relating to any aspect of its business or the
issuance or sale of its shares;
(d) Cash Management is not a party to or subject to any judgment or decree
or order entered in any suit or proceeding brought by any governmental
agency or by any other person enjoining it in respect of, or the
effect of which is to prohibit, any business practice or the
acquisition of any property or the conduct of business by it or the
issuance or sale of its shares in any area;
(e) Cash Management has filed all tax returns required to be filed, has no
liability for any unpaid taxes and has made a proper election to be
treated as a regulated investment company under Subchapter M of the
Internal Revenue Code of 1986 (the "Code") for each of its taxable
years. Cash Management has not committed any action or failed to
perform any necessary action that would render invalid its election to
be treated as a regulated investment company for any of its taxable
years;
(f) The authorization, execution and delivery of this Agreement on behalf
of Cash Management does not, and the consummation of the transactions
contemplated hereby will not, violate or conflict with any provision
of Cash Management's Articles of Incorporation or Bylaws, or any
provision of, or result in the acceleration of any obligation under,
any mortgage, lien, lease, agreement, instrument, order, arbitration
award, judgment or decree to which it is party or by which it or any
of its assets is bound, or violate or conflict with any other material
contractual or statutory restriction of any kind or character to which
it is subject;
(g) This Agreement has been duly authorized, executed, and delivered by
Cash Management and constitutes a valid and binding agreement of Cash
Management and all governmental and other approvals required for Cash
Management to carry out the transactions contemplated hereunder have
been or on or prior to the Closing Date (as herein after defined) will
have been obtained;
(h) Cash Management is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end, diversified
management investment company. Cash Management is currently in
compliance with the 1940 Act and the rules of the Securities and
Exchange Commission promulgated thereunder. Neither Cash Management
nor its affiliates have violated Section 9 of the 1940 Act, are
currently subject to an exemptive order of the Securities and Exchange
Commission pursuant to Section 9(c) of the 1940 Act, or are currently
subject to any current or threatened investigation or enforcement
action by the Securities and Exchange Commission or any other federal
or state authority which could result in a violation of Section 9(a)
of the 1940 Act;
(i) On the Closing Date, Cash Management will own its assets free and
clear of all liens, claims, charges, options and encumbrances;
(j) Cash Management will declare to shareholders of record on or prior to
the Closing Date a dividend or dividends which, together with all
previous such dividends, shall have the effect of distributing to its
shareholders all of its income (computed without regard to any
deduction for dividends paid) and all of its net realized capital
gains, if any, as of the Closing Date;
(k) On the Closing Date the shares of Cash Management to be delivered to
Tax-Exempt Cash Management hereunder shall have been registered under
the Securities Act of 1933, as amended (the "1933 Act") and duly
authorized, and, when issued and delivered pursuant to this Agreement,
will be validly issued, fully paid and nonassessable; and Cash
Management will comply with all applicable laws in connection with the
issuance of such shares and shall not be subject to a stop-order of
the Securities and Exchange Commission in connection therewith.
2. Tax-Exempt Cash Management hereby represents and warrants to Cash
Management that:
(a) Tax-Exempt Cash Management is a corporation with transferable shares
duly organized and validly existing under the laws of Maryland and has
full power to own its properties and assets and to carry on its
business as such business is now being conducted;
(b) Tax-Exempt Cash Management's statement of assets and liabilities as of
October 31, 1998 and the related statements of operations and changes
in net assets for the fiscal year ended October 31,1998, all as
certified by Ernst & Young LLP, have been prepared in accordance with
generally accepted accounting principles applied on a consistent
basis. Such statement of assets and liabilities fairly presents the
financial position and net assets of Tax-Exempt Cash Management as of
that date and such statements of operations and changes in net assets
fairly present the results of its operations for the periods covered
thereby.
(c) There are no claims, actions, suits or proceedings pending or, to its
knowledge, threatened against or affecting Tax-Exempt Cash Management
or its properties or business or its tight to issue and sell shares,
or which would prevent or hinder consummation of the transactions
contemplated hereby, and it is not charged with, or to Tax-Exempt Cash
Management's knowledge, threatened with, any charge or investigation
of any violation of any provision of any federal, state or local law
or any administrative ruling or regulation relating to any aspect of
its business or the issuance or sale of its shares;
(d) Tax-Exempt Cash Management is not party to or subject to any judgment
or decree or order entered in any suit or proceeding brought by any
governmental agency or by any other persons enjoining it in respect
of, or the effect of which is to prohibit, any business practice or
the acquisition of any property or the conduct of business by it or
the issuance or sale of its shares in any area;
(e) Tax-Exempt Cash Management has filed all tax returns required to be
filed, has no liability for any unpaid taxes and has made a proper
election to be treated as a regulated investment company under
Subchapter M of the Code for each of its taxable years. Tax-Exempt
Cash Management has not committed any action or failed to perform any
necessary action that would render invalid its election to be treated
as a regulated investment company for any of its taxable years;
(f) The authorization, execution and delivery of this Agreement on behalf
of Tax-Exempt Cash Management does not, and the consummation of the
transactions contemplated hereby will not, violate or conflict with
any provision of Tax-Exempt Cash Management's Articles of
Incorporation or Bylaws, or any provision of, or result in the
acceleration of any obligation under, any mortgage, lien, lease,
agreement, instrument, order, arbitration award, judgment or decree to
which it is party or by which it or any of its assets is bound, or
violate or conflict with any other material contractual or statutory
restriction of any kind or character to which it is subject;
(g) This Agreement has been duly authorized, executed, and delivered by
Tax-Exempt Cash Management and constitutes a valid and binding
agreement of Tax-Exempt Cash Management, and all governmental and
other approvals required for Tax-Exempt Cash Management to carry out
the transactions contemplated hereunder have been or on or prior to
the Closing Date will have been obtained;
(h) On the Closing Date Tax-Exempt Cash Management will own its assets
free and clear of all liens, claims, charges, options, and
encumbrances and, except for the Management Agreement, Investment
Service Agreement, Distribution Agreement, Distribution and
Shareholder Servicing Agreement and the Custodian Agreement with Bank
of New York, there will be no material contracts or agreements (other
than this Agreement) outstanding to which Tax-Exempt Cash Management
is a party or to which it is subject;
(i) On the Closing Date Tax-Exempt Cash Management will have full right,
power and authority to sell, assign and deliver the assets to be sold,
assigned, transferred and delivered to Cash Management hereunder, and
upon delivery and payment for such assets, Cash Management will
acquire good, marketable title thereto free and clear of all liens,
claims, charges, options and encumbrances;
(j) Tax-Exempt Cash Management will declare to shareholders of record on
or prior to the Closing Date a dividend or dividends which, together
with all previous such dividends, shall have the effect of
distributing to the shareholders all of its income (computed without
regard to any deduction for dividends paid) and all of its net
realized capital gains, if any, as of the Closing; and
(k) Tax-Exempt Cash Management will, from time to time, as and when
requested by Cash Management, execute and deliver or cause to be
executed and delivered all such assignments and other instruments, and
will take and cause to be taken such further action, as Cash
Management may deem necessary or desirable in order to vest in and
confirm to Cash Management title to and possession of all the assets
of Tax-Exempt Cash Management to be sold, assigned, transferred and
delivered hereunder and otherwise to carryout the intent and purpose
of this Agreement.
3. Based on the respective representations and warranties, subject to the
terms and conditions contained herein, Tax-Exempt Cash Management agrees to
transfer to Cash Management and Cash Management agrees to acquire from
Tax-Exempt Cash Management, all of the assets of Tax-Exempt Cash Management
on the Closing Date and to assume from Tax-Exempt Cash Management all of
the liabilities of Tax-Exempt Cash Management in exchange for the issuance
of the number of shares of Cash Management provided in Section 4 which will
be subsequently distributed pro rata to the shareholders of Tax-Exempt Cash
Management in complete liquidation and termination -------- of Tax-Exempt
Cash Management and in exchange for all of Tax-Exempt Cash Management's
outstanding shares. Tax-Exempt Cash Management shall not issue, sell or
transfer any of its shares after the Closing Date, and only redemption
requests received by Tax-Exempt Cash Management in proper form prior to the
Closing Date shall be fulfilled by Tax-Exempt Cash Management. Redemption
requests received by Tax-Exempt Cash Management thereafter shall be treated
as requests for redemption of those shares of Cash Management allocable to
the shareholder in question as provided in Section 6 of this Agreement.
4. On the Closing Date, Cash Management will issue to Tax-Exempt Cash
Management a number of full and fractional shares of Cash Management, taken
at their then net asset value, having an aggregate net asset value equal to
the aggregate value of the net assets of Tax-Exempt Cash Management. The
aggregate value of the net assets of Tax-Exempt Cash Management and Cash
Management shall be determined in accordance with the then current
Prospectus of Cash Management as of closing of the New York Stock Exchange
on the Closing Date.
5. The closing of the transactions contemplated in this Agreement (the
"Closing") shall be held at the offices of Principal Management, 680 8th
Street, Des Moines, Iowa 50392-0200 (or at such other place as the parties
hereto may agree) at 3:00 p.m. Central Daylight Time on April 8, 1999 or on
such earlier or later date as the parties hereto may mutually agree. The
date on which the Closing is to be held as provided in this Agreement shall
be known as the "Closing Date."
In the event that on the Closing Date (a) the New York Stock Exchange is
closed for other than customary week-end and holiday closings or (b)
trading on said Exchange is restricted or (c) an emergency exists as a
result of which it is not reasonably practicable for Cash Management or
Tax-Exempt Cash Management to fairly determine the value of its assets, the
Closing Date shall be postponed until the first business day after the day
on which trading shall have been fully resumed.
6. As soon as practicable after the Closing, Tax-Exempt Cash Management shall
(a) distribute on a pro rata basis to the shareholders of record of
Tax-Exempt Cash Management at the close of business on the Closing Date the
shares of Cash Management received by Tax-Exempt Cash Management at the
Closing in exchange for all of Tax-Exempt Cash Management's outstanding
shares, and (b) be liquidated and dissolved in accordance with applicable
law and its Articles of Incorporation.
For purposes of the distribution of shares of Cash Management to
shareholders of Tax-Exempt Cash Management, Cash Management shall credit on
the books of Cash Management an appropriate number of shares of Cash
Management to the account of each shareholder of Tax-Exempt Cash
Management. Cash Management will issue a certificate or certificates only
upon request and, in the case of a shareholder of Tax-Exempt Cash
Management whose shares are represented by certificates, only upon
surrender of such certificates. No certificates will be issued for
fractional shares of Cash Management. After the Closing Date and until
surrendered, each outstanding certificate which, prior to the Closing Date,
represented shares of Tax-Exempt Cash Management, shall be deemed for all
purposes of Cash Management's Articles of Incorporation and Bylaws to
evidence the appropriate number of shares of Cash Management to be credited
on the books of Cash Management in respect of such shares of Tax-Exempt
Cash Management as provided above.
7. Subsequent to the execution of this Agreement and prior to the Closing
Date, Tax-Exempt Cash Management shall deliver to Cash Management a list
setting forth the assets to be assigned, delivered and transferred to Cash
Management, including the securities then owned by Tax-Exempt Cash
Management and the respective federal income tax bases (on an identified
cost basis) thereof, and the liabilities to be assumed by Cash Management
pursuant to this Agreement.
8. All of Tax-Exempt Cash Management's portfolio securities shall be delivered
by Tax-Exempt Cash Management's custodian on the Closing Date to Cash
Management or its custodian, either endorsed in proper form for transfer in
such condition as to constitute good delivery thereof in accordance with
the practice of brokers or, if such securities are held in a securities
depository within the meaning of Rule 17f-4 under the 1940 Act, transferred
to an account in the name of Cash Management or its custodian with said
depository. All cash to be delivered pursuant to this Agreement shall be
transferred from Tax-Exempt Cash Management's account at its custodian to
Cash Management's account at its custodian. If on the Closing Date
Tax-Exempt Cash Management is unable to make good delivery pursuant to this
Section 8 to Cash Management's custodian of any of Tax-Exempt Cash
Management's portfolio securities because such securities have not yet been
delivered to Tax-Exempt Cash Management's custodian by its brokers or by
the transfer agent for such securities, then the delivery requirement of
this Section 8 with respect to such securities shall be waived, and
Tax-Exempt Cash Management shall deliver to Cash Management's custodian on
or by said Closing Date with respect to said undelivered securities
executed copies of an agreement of assignment in a form satisfactory to
Cash Management, and a due bill or due bills in form and substance
satisfactory to the custodian, together with such other documents including
brokers' confirmations, as may be reasonably required by Cash Management.
9. The obligations of Cash Management under this Agreement shall be subject to
receipt by Cash Management on or prior to the Closing Date of:
(a) Copies of the resolutions adopted by the Board of Directors of
Tax-Exempt Cash Management and its shareholders authorizing the
execution of this Agreement by Tax-Exempt Cash Management and the
transactions contemplated hereunder, certified by the Secretary or
Assistant Secretary of Tax-Exempt Cash Management;
(b) A certificate of the Secretary or Assistant Secretary of Tax-Exempt
Cash Management as to the signatures and incumbency of its officers
who executed this Agreement on behalf of Tax-Exempt Cash Management
and any other documents delivered in connection with the transactions
contemplated thereby on behalf of Tax-Exempt Cash Management;
(c) A certificate of an appropriate officer of Tax-Exempt Cash Management
as to the fulfillment of all agreements and conditions on its part to
be fulfilled hereunder at or prior to the Closing Date and to the
effect that the representations and warranties of Tax-Exempt Cash
Management are true and correct in all material respects at and as of
the Closing Date as if made at and as of such date; and
(d) Such other documents, including an opinion of counsel, as Cash
Management may reasonably request to show fulfillment of the purposes
and conditions of this Agreement.
10. The obligations of Tax-Exempt Cash Management under this Agreement shall be
subject to receipt by Tax-Exempt Cash Management on or prior to the Closing
Date of:
(a) Copies of the resolutions adopted by the Board of Directors of Cash
Management authorizing the execution of this Agreement and the
transactions contemplated hereunder, certified by the Secretary or
Assistant Secretary of Cash Management,
(b) A certificate of the Secretary or Assistant Secretary of Cash
Management as to the signatures and incumbency of its officers who
executed this Agreement on behalf of Cash Management and any other
documents delivered in connection with the transactions contemplated
thereby on behalf of Cash Management,
(c) A certificate of an appropriate officer of Cash Management as to the
fulfillment of all agreements and conditions on its part to be
fulfilled hereunder at or prior to the Closing Date and to the effect
that the representations and warranties of Cash Management are true
and correct in all material respects at and as of the Closing Date as
if made at and as of such date; and
(d) Such other documents, including an opinion of counsel, as Tax-Exempt
Cash Management may reasonably request to show fulfillment of the
purposes and conditions of this Agreement.
11. The obligations of the parties under this Agreement shall be subject to:
(a) Any required approval, at a meeting duly called for the purpose, of
the holders of the outstanding shares of Tax-Exempt Cash Management of
this Agreement and the transactions contemplated hereunder, and
(b) The right to abandon and terminate this Agreement, if either party to
this Agreement believes that the consummation of the transactions
contemplated hereunder would not be in the best interests of its
shareholders.
12. Except as expressly provided otherwise in this Agreement, Principal
Management will pay or cause to be paid all out-of pocket fees and expenses
incurred by Tax-Exempt Cash Management or Cash Management in connection
with the transactions contemplated under this Agreement, including, but not
limited to, accountants' fees, legal fees, registration fees, printing
expenses, transfer taxes (if any) and the fees of banks and transfer
agents. This obligation shall survive the termination or expiration of this
Agreement regardless of the consummation of the transactions contemplated
hereunder.
13. This Agreement may be amended by an instrument executed by both the duly
authorized officers of Cash Management and Tax-Exempt Cash Management at
any time, except that after approval by the shareholders of Tax-Exempt Cash
Management no amendment may be made with respect to the Agreement which in
the opinion of the Board of Directors of Tax-Exempt Cash Management
materially adversely affects the interests of the shareholders of
Tax-Exempt Cash Management. At any time either party hereto may by written
instrument signed by it (i) waive any inaccuracies in the representations
and warranties made to it contained herein and (ii) waive compliance with
any of the covenants or conditions made for its benefit contained herein.
14. In addition to the right to terminate this Agreement described in paragraph
11, this Agreement may be terminated and the plan described in the
Agreement abandoned at any time prior to the Closing Date, whether before
or after action thereon by the shareholders of Tax-Exempt Cash Management
and notwithstanding favorable action by such shareholders, by mutual
consent of the Board of Directors of Cash Management and the Board of
Directors of Tax-Exempt Cash Management. This Agreement may also be
terminated by action of the Board of Directors of Cash Management or the
Board of Directors of Tax-Exempt Cash Management (the "Terminating Fund"),
if:
(a) The plan described in the Agreement shall not have become effective by
August 6, 1999 (hereinafter called the "Final Date") unless such Final
Date shall have been changed by mutual agreement; or
(b) Cash Management shall, at the Final Date, have failed to comply with
any of its agreements; or
(c) Prior to the Final Date any one or more of the conditions to the
obligations of Cash Management contained in this Agreement shall not
be fulfilled to the reasonable satisfaction of Tax-Exempt Cash
Management and its counsel or it shall become evident to Tax-Exempt
Cash Management that any of such conditions are incapable of being
fulfilled.
15. This Agreement shall bind and inure to the benefit of the parties hereto
and is not intended to confer upon any other person any rights or remedies
hereunder.
16. The parties hereto represent and warrant that they have not employed any
broker, finder or intermediary in connection with this transaction who
might be entitled to a finder's fee or other similar fee or commission.
17. All prior or contemporaneous agreements and representations are hereby
merged into this Agreement, which constitutes the entire contract between
the parties hereto.
18. This Agreement shall be governed by and construed in accordance with the
laws of the State of Iowa.
19. This Agreement maybe executed in one or more counterparts, all of which
shall be considered one and the same agreement, and shall become effective
when one or more of the counterparts has been signed by all parties hereto.
20. Principal Management shall indemnify, defend and hold harmless the Cash
Management Fund, its officers, directors, employees and agents against all
losses, claims, demands, liabilities and expenses, including reasonable
legal and other expenses incurred in defending claims or liabilities,
whether or not resulting in any liability to the Cash Management Fund, its
officers, directors, employees or agents, arising out of (1) breach by the
Tax-Exempt Fund of any warranty made by the Tax-Exempt Fund herein or (2)
any untrue statement or alleged untrue statement of a material fact
contained in any prospectus or registration statement for the Tax-Exempt
Fund, as filed with the SEC or any state, or any amendment or supplement
thereto, or in any information provided by the Tax-Exempt Fund included in
any registration statement filed by the Cash Management Fund with the SEC
or any state or any amendment or supplement thereto; or which shall arise
out of or be based upon any omission or alleged omission to state therein a
material fact required to be stated in any such prospectus, registration
statement or application necessary to make the statements therein not
misleading. This indemnity provision shall survive the termination of this
Agreement.
21. Cash Management shall indemnify, defend and hold harmless Tax-Exempt Cash
Management, its officers, trustees, employees and agents against all
losses, claims, demands, liabilities and expenses, including reasonable
legal and other expenses incurred in defending claims or liabilities,
whether or not resulting in any liability to Tax-Exempt Cash Management,
its officers, trustees, employees or agents, arising out of any untrue
statement or alleged untrue statement of a material fact contained in any
prospectus or registration statement for Cash Management, as filed with the
SEC or any state, or any amendment or supplement thereto, or any
application prepared by or on behalf of Cash Management and filed with any
state regulatory agency in order to register or qualify shares of Cash
Management under the securities laws thereof; or which shall arise out of
or be based upon any omission or alleged omission to state therein a
material fact required to be stated in any such prospectus, registration
statement or application necessary to make the statements therein not
misleading; provided, however, Cash Management shall not be required to
indemnify Tax-Exempt Cash Management, its officers, trustees, employees and
agents against any loss, claim,demand, liability or expense arising out of
any information provided by Tax-Exempt Cash Management included in any
registration statement filed by Cash Management with the SEC or any state,
or any amendment or supplement thereto. This indemnity provision shall
survive the termination of this Agreement.
22. The execution of this Agreement has been authorized by the Board of
Directors of Cash Management and by the Board of Directors of Tax-Exempt
Cash Management.
IN WlTNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and attested by their officers thereunto duly authorized, as of the
date first written above.
PRINCIPAL CASH MANAGEMENT FUND, INC.
Attest: By: /s/ A. S. Filean
By: /s/ Ernest H. Gillum Title: Vice President and Secretary
Title: Assistant Secretary
PRINCIPAL TAX-EXEMPT CASH MANAGEMENT FUND, INC.
Attest: By: /s/ A. S. Filean
By: /s/ Ernest H. Gillum Title: Vice President and Secretary
Title: Assistant Secretary
PRINCIPAL MANAGEMENT CORPORATION
Attest: By: /s/ A. S. Filean
By: /s/ Ernest H. Gillum Title: Vice President
Title: Vice President
BYLAWS
OF
PRINCIPAL CASH MANAGEMENT FUND, INC.
ARTICLE 1
Name, Fiscal Year
1.01 The name of this Corporation shall be Principal Cash Management
Fund, Inc. Except as otherwise from time to time provided by the Board of
Directors, the fiscal year of the Corporation shall begin November 1 and end
October 31.
ARTICLE 2
Stockholders' Meetings
2.01 Place of Meetings. All meetings of the stockholders shall be held
at such place within or without the State of Maryland, as is stated in the
notice of meeting.
2.02 Annual Meetings. The Board of Directors of the Fund shall determine
whether or not an annual meeting of stockholders shall be held. In the event
that an annual meeting of stockholders is held, such meeting shall be held on
the first Tuesday after the first Monday of February in the year or on such
other day during the 31-day period following the first Tuesday after the first
Monday of February as the directors may determine.
2.03 Special Meetings. Special meetings of the stockholders shall be
held whenever called by the chairman of the board, the president or the Board of
Directors.
2.04 Notice of Shareholders' Meetings. Notice of each shareholders'
meeting stating the place, date and hour of the meeting and the purpose or
purposes for which the meeting is called shall be given by mailing such notice
to each shareholder of record at his address as it appears on the records of the
Corporation not less than 10 nor more than 90 days prior to the date of the
meeting. Any meeting at which all shareholders entitled to vote are present
either in person or by proxy or of which those not present have waived notice in
writing shall be a legal meeting for the transaction of business notwithstanding
that notice has not been given as herein provided.
2.05 Quorum. Except as otherwise expressly required by law, these bylaws
or the Certificate of Incorporation, as from time to time amended, at any
meeting of the shareholders the presence in person or by proxy of the holders of
one-third of the shares of capital stock of the Corporation issued and
outstanding and entitled to vote, shall constitute a quorum, but a lesser
interest may adjourn any meeting from time to time and the meeting may be held
and adjourned without further notice. When a quorum is present at any meeting a
majority of the stock represented thereat shall decide any question brought
before such meeting unless the question is one upon which by express provision
of law or of these bylaws or the Articles of Incorporation a larger or different
vote is required, in which case such express provision shall govern.
2.06 Proxies and Voting. Stockholders of record may vote at any meeting
either in person or by written proxy signed by the stockholder or by the
stockholder's duly authorized attorney-in-fact dated not more than eleven months
before the date of exercise, which shall be filed with the Secretary of the
meeting before being voted. Each stockholder shall be entitled to one vote for
each share of stock held, and to a fraction of a vote equal to any fractional
share held.
2.07 Stock Ledger. The Corporation shall maintain at the office of the
stock transfer agent of the Corporation, or at the office of any successor
thereto as stock transfer agent of the Corporation, an original stock ledger
containing the names and addresses of all stockholders and the number of shares
of each class held by each stockholder. Such stock ledger may be in written form
or any other form capable of being converted into written form within a
reasonable time for visual inspection.
ARTICLE 3
Board of Directors
3.01 Number, Service. The Corporation shall have a Board of Directors
consisting of not less than three and no more than fifteen members. The number
of Directors to constitute the whole board within the limits above-stated shall
be fixed by the Board of Directors. The Directors may be chosen (i) by
stockholders at any annual meeting of stockholders held for the purpose of
electing directors or at any meeting held in lieu thereof, or at any special
meeting called for such purpose, or (ii) by the Directors at any regular or
special meeting of the Board to fill a vacancy on the Board as provided in these
bylaws and Maryland General Corporation Law. Each director should serve until
the next annual meeting of shareholders and until a successor is duly qualified
and elected, unless sooner displaced.
3.02 Powers. The Board of Directors shall be responsible for the entire
management of the business of the Corporation. In the management and control of
the property, business and affairs of the Corporation the Board of Directors is
hereby vested with all the powers possessed by the Corporation itself so far as
this designation of authority is not inconsistent with the laws of the State of
Maryland, but subject to the limitations and qualifications contained in the
Articles of Incorporation and in these bylaws.
3.03 Executive Committee and Other Committees. The Board of Directors
may elect from its members an executive committee of not less than three which
may exercise certain powers of the Board of Directors when the board is not in
session pursuant to Maryland law. The executive committee may make rules for the
holding and conduct of its meetings and keeping the records thereof, and shall
report its action to the Board of Directors.
The Board of Directors may elect from its members such other
committees from time to time as it may desire. The number composing such
committees and the powers conferred upon them shall be determined by the Board
of Directors at its own discretion.
3.04 Meetings. Regular meetings of the Board of Directors may be held in
such places within or without the State of Maryland, and at such times as the
board may from time to time determine, and if so determined, notices thereof
need not be given. Special meetings of the Board of Directors may be held at any
time or place whenever called by the president or a majority of the directors,
notice thereof being given by the secretary or the president, or the directors
calling the meeting, to each director. Special meetings of the Board of
Directors may also be held without formal notice provided all directors are
present or those not present have waived notice thereof.
3.05 Quorum. A majority of the members of the Board of Directors from
time to time in office but in no event not less than one-third of the number
constituting the whole board shall constitute a quorum for the transaction of
business provided, however, that where the Investment Company Act requires a
different quorum to transact business of a specific nature, the number of
directors so required shall constitute a quorum for the transaction of such
business.
A lesser number may adjourn a meeting from time to time and the
meeting may be held without further notice. When a quorum is present at any
meeting a majority of the members present thereat shall decide any question
brought before such meeting except as otherwise expressly required by law, the
Articles of Incorporation or these bylaws.
3.06 Action by Directors other than at a Meeting. Any action required or
permitted to be taken at any meeting of the Board of Directors, or of any
committee thereof, may be taken without a meeting, if a written consent to such
action is signed by all members of the Board of Directors or such committee, as
the case may be, and such written consent is filed with the minutes of
proceedings of the Board of Directors or committee.
3.07 Holding of Meetings by Conference Telephone Call. At any regular or
special meeting, members of the Board of Directors or any committee thereof may
participate by conference telephone or similar communications equipment by means
of which all persons participating in the meeting can hear each other.
Participation in a meeting pursuant to this Section shall constitute presence in
person at such meeting.
ARTICLE 4
Officers
4.01 Selection. The officers of the Corporation shall be a president,
one or more vice presidents, a secretary and a treasurer. The Board of Directors
may, if it so determines, also elect a chairman of the board. All officers shall
be elected by the Board of Directors and shall serve at the pleasure of the
board. The same person may hold more than one office except the offices of
president and vice president.
4.02 Eligibility. The chairman of the board, if any, and the president
shall be directors of the Corporation. Other officers need not be directors.
4.03 Additional Officers and Agents. The Board of Directors may appoint
one or more assistant treasurers, one or more assistant secretaries and such
other officers or agents as it may deem advisable, and may prescribe the duties
thereof.
4.04 Chairman of the Board of Directors. The chairman of the board, if
any, shall preside at all meetings of the Board of Directors at which he is
present. He shall have such other authority and duties as the Board of Directors
shall from time to time determine.
4.05 The President. The president shall be the chief executive officer
of the Corporation; he shall have general and active management of the business,
affairs and property of the Corporation, and shall see that all orders and
resolutions of the Board of Directors are carried into effect. He shall preside
at meetings of stockholders, and of the Board of Directors unless a chairman of
the board has been elected and is present.
4.06 The Vice Presidents. The vice presidents shall respectively have
such powers and perform such duties as may be assigned to them by the Board of
Directors or the president. In the absence or disability of the president, the
vice presidents, in the order determined by the Board of Directors, shall
perform the duties and exercise the powers of the president.
4.07 The Secretary. The secretary shall keep accurate minutes of all
meetings of the stockholders and directors, and shall perform all duties
commonly incident to his office and as provided by law and shall perform such
other duties and have such other powers as the Board of Directors shall from
time to time designate. In his absence an assistant secretary or secretary pro
tempore shall perform his duties.
4.08 The Treasurer. The treasurer shall, subject to the order of the
Board of Directors and in accordance with any arrangements for performance of
services as custodian, transfer agent or disbursing agent approved by the board,
have the care and custody of the money, funds, securities, valuable papers and
documents of the Corporation, and shall have and exercise under the supervision
of the Board of Directors all powers and duties commonly incident to his office
and as provided by law. He shall keep or cause to be kept accurate books of
account of the Corporation's transactions which shall be subject at all times to
the inspection and control of the Board of Directors. He shall deposit all funds
of the Corporation in such bank or banks, trust company or trust companies or
such firm or firms doing a banking business as the Board of Directors shall
designate. In his absence, an assistant treasurer shall perform his duties.
ARTICLE 5
Vacancies
5.01 Removals. The stockholders may at any meeting called for the
purpose, by vote of the holders of a majority of the capital stock issued and
outstanding and entitled to vote, remove from office any director and, unless
the number of directors constituting the whole board is accordingly decreased,
elect a successor. To the extent consistent with the Investment Company Act of
1940, the Board of Directors may by vote of not less than a majority of the
directors then in office remove from office any director, officer or agent
elected or appointed by them and may for misconduct remove any thereof elected
by the stockholders.
5.02 Vacancies. If the office of any director becomes or is vacant by
reason of death, resignation, removal, disqualification, an increase in the
authorized number of directors or otherwise, the remaining directors may by vote
of a majority of said directors choose a successor or successors who shall hold
office for the unexpired term; provided that vacancies on the Board of Directors
may be so filled only if, after the filling of the same, at least two-thirds of
the directors then holding office would be directors elected to such office by
the stockholders at a meeting or meetings called for the purpose. In the event
that at any time less than a majority of the directors were so elected by the
stockholders, a special meeting of the stockholders shall be called forthwith
and held as promptly as possible and in any event within sixty days for the
purpose of electing an entire new Board of Directors.
ARTICLE 6
Certificates of Stock
6.01 Certificates. The Board of Directors may adopt a policy of not
issuing certificates except in extraordinary situations as may be authorized
from time to time by an officer of the Corporation. If such a policy is adopted,
a stockholder may obtain a certificate or certificates of the capital stock of
the Corporation owned by such stockholder only if the stockholder demonstrates a
specific reason for needing a certificate. If issued, the certificate shall be
in such form as shall, in conformity to law, be prescribed from time to time by
the Board of Directors. Such certificates shall be signed by the chairman of the
Board of Directors or the president or a vice president and by the treasurer or
an assistant treasurer or the secretary or an assistant secretary. If such
certificates are countersigned by a transfer agent or registrar other than the
Corporation or an employee of the Corporation, the signatures of the
aforementioned officers upon such certificates may be facsimile. In case any
officer or officers who have signed, or whose facsimile signature or signatures
have been used on, any such certificate or certificates shall cease to be such
officer or officers of the Corporation, whether because of death, resignation or
otherwise, before such certificate or certificates have been delivered by the
Corporation, such certificate or certificates may nevertheless be adopted by the
Corporation and be issued and delivered as though the person or persons who
signed such certificate or certificates or whose facsimile signature or
signatures have been used thereon had not ceased to be such officer or officers
of the Corporation.
6.02 Replacement of Certificates. The Board of Directors may direct a
new certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation alleged to have been lost or
destroyed. When authorizing such issue of a new certificate or certificates, the
Board of Directors may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost or destroyed certificate or
certificates, or its legal representative, to advertise the same in such manner
as it shall require and/or to give the Corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the Corporation
with respect to the certificate alleged to have been lost or destroyed.
6.03 Stockholder Open Accounts. The Corporation may maintain or cause to
be maintained for each stockholder a stockholder open account in which shall be
recorded such stockholder's ownership of stock and all changes therein, and
certificates need not be issued for shares so recorded in a stockholder open
account unless requested by the stockholder and such request is approved by an
officer.
6.04 Transfers. Transfers of stock for which certificates have been
issued will be made only upon surrender to the Corporation or the transfer agent
of the Corporation of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, whereupon
the Corporation will issue a new certificate to the person entitled thereto,
cancel the old certificate and record the transaction on its books. Transfers of
stock evidenced by open account authorized by Section 6.03 will be made upon
delivery to the Corporation or the transfer agent of the Corporation of
instructions for transfer or evidence of assignment or succession, in each case
executed in such manner and with such supporting evidence as the Corporation or
transfer agent may reasonably require.
6.05 Closing Transfer Books. The transfer books of the stock of the
Corporation may be closed for such period from time to time in anticipation of
stockholders' meetings or the declaration of dividends as the directors may from
time to time determine.
6.06 Record Dates. The board of directors may fix in advance a date,
not exceeding ninety days preceding the date of any meeting of stockholders, or
the date for the payment of any dividend, or the date for the allotment of
rights, or the date when any change or conversion or exchange of capital stock
shall go into effect, or a date in connection with obtaining any consent of for
any other lawful purpose, as a record date for the determination of the
stockholders entitled to notice of, and to vote at, any such meeting, and any
adjournment thereof, or entitled to receive payment of any such dividend, or to
any such allotment of rights, or to exercise the rights in respect of any such
change, conversion or exchange of capital stock, or to give such consent, and in
such case such stockholders and only such stockholders as shall be stockholders
of record on the date as fixed shall be entitled to such notice of, and to
receive such allotment of rights, or to exercise such rights, or to give such
consent, as the case may be, notwithstanding any transfer of any stock on the
books of the Corporation after any such record date fixed as aforesaid."
6.07 Registered Ownership. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner and shall not be bound
to recognize any equitable or other claim to or interest in such share or shares
on the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by the laws of the State of
Maryland.
ARTICLE 7
Notices
7.01 Manner of Giving. Whenever under the provisions of the statutes or
of the Articles of Incorporation or of these bylaws notice is required to be
given to any director, committee member, officer or stockholder, it shall not be
construed to mean personal notice, but such notice may be given, in the case of
stockholders, in writing, by mail, by depositing the same in a United States
post office or letter box, in a postpaid sealed wrapper, addressed to each
stockholder at such address as it appears on the books of the Corporation, or,
in default to other address, to such stockholder at the General Post Office in
the City of Baltimore, Maryland, and, in the case of directors, committee
members and officers, by telephone, or by mail or by telegram to the last
business address known to the secretary of the Corporation, and such notice
shall be deemed to be given at the time when the same shall be thus mailed or
telegraphed or telephoned.
7.02 Waiver. Whenever any notice is required to be given under the
provisions of the statutes or of the Articles of Incorporation or of these
bylaws, a waiver thereof in writing, signed by the person or persons entitled to
said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE 8
General Provisions
8.01 Disbursement of Funds. All checks, drafts, orders or instructions
for the payment of money and all notes of the Corporation shall be signed by
such officer or officers or such other person or persons as the Board of
Directors may from time to time designate.
8.02 Voting of Stock in Other Corporations. Unless otherwise ordered by
the board of directors, any officer or, at the direction of any such officer,
any Manager shall have full power and authority to attend and act and vote at
any meeting of stockholders of any corporation in which this Corporation may
hold stock, at of any such meeting may exercise any and all the rights and
powers incident to the ownership of such stock. Any officer of this corporation
or, at the direction of any such officer, any Manager may execute proxies to
vote shares of stock of other corporations standing in the name of this
Corporation." `
8.03 Execution of Instruments. Except as otherwise provided in these
bylaws, all deeds, mortgages, bonds, contracts, stock powers and other
instruments of transfer, reports and other instruments may be executed on behalf
of the Corporation by the president or any vice president or by any other
officer or agent authorized to act in such matters, whether by law, the Articles
of Incorporation, these bylaws, or any general or special authorization of the
Board of Directors. If the corporate seal is required, it shall be affixed by
the secretary or an assistant secretary.
8.04 Seal. The corporate seal shall have inscribed thereon the name of
the Corporation, the year of its incorporation and the words "Corporate Seal,
Maryland." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
ARTICLE 9
Regulations
9.01 Investment and Related Matters. The Corporation shall not purchase
or hold securities in violation of the investment restrictions enumerated in its
then current prospectus and the registration statement or statements filed with
the Securities and Exchange Commission pursuant to the Securities Act of 1933
and the Investment Company Act of 1940, as amended, nor shall the Corporation
invest in securities the purchase of which would cause the Corporation to
forfeit its rights to continue to publicly offer its shares under the laws,
rules or regulations of any state in which it may become authorized to so offer
its shares unless, by specific resolution of the Board of Directors, the
Corporation shall elect to discontinue the sale of its shares in such state.
9.02 Other Matters. When used in this Section the following words shall
have the following meanings: "Sponsor" shall mean any one or more corporations,
firms or associations which have distributor's contracts in effect with this
Corporation. "Manager" shall mean any corporation, firm or association which may
at the time have an investment advisory contract with this Corporation.
(a) Limitation of Holdings by this Corporation of Certain
Securities and of Dealings with Officers or Directors. This Corporation shall
not purchase or retain securities of any issuer if those officers and directors
of the Fund or its Manager owning beneficially more than one-half of one per
cent (0.5%) of the shares or securities of such issuer together own beneficially
more than five per cent (5%) of such shares or securities; and each officer and
director of this Corporation shall keep the treasurer of this Corporation
informed of the names of all issuers (securities of which are held in the
portfolio of this Corporation) in which such officer or director owns as much as
one-half of one percent (1/2 of 1%) of the outstanding shares or securities and
(except in the case of a holding by the treasurer) this Corporation shall not be
charged with knowledge of any such security holding in the absence of notice
given if as aforesaid if this Corporation has requested such information not
less often than quarterly. The Corporation will not lend any of its assets to
the Sponsor or Manager or to any officer or director of the Sponsor or Manager
or of this Corporation and shall not permit any officer or director, and any
officer or director of the Sponsor or Manager, to deal for or on behalf of the
Corporation with himself as principal agent, or with any partnership,
association or corporation in which he has a financial interest. Nothing
contained herein shall prevent (1) officers and directors of the Corporation
from buying, holding or selling shares in the Corporation, or from being
partners, officers or directors of or otherwise financially interested in the
Sponsor or the Manager or any company controlling the Sponsor or the Manager;
(2) employment of legal counsel, registrar, transfer agent, dividend disbursing
agent or custodian who is, or has a partner shareholder, officer or director who
is, an officer or director of the Corporation, if only customary fees are
charged for services to the Corporation; (3) sharing statistical and research
expenses and office hire and expenses with any other investment company in which
an officer or director of the Corporation is an officer or director or otherwise
financially interested.
(b) Limitation Concerning Participating by Interested Persons in
Investment Decisions. In any case where an officer or director of the
Corporation or of the Manager, or a member of an advisory committee or portfolio
committee of the Corporation, is also an officer or a director of another
corporation, and the purchase or sale of shares issued by that other corporation
is under consideration, the officer or director or committee member concerned
will abstain from participating in any decision made on behalf of the
Corporation to purchase or sell any securities issued by such other corporation.
(c) Limitation on Dealing in Securities of this Corporation by
certain Officers, Directors, Sponsor or Manager. Neither the Sponsor nor
Manager, nor any officer or director of this Corporation or of the Sponsor or
Manager shall take long or short positions in securities issued by this
Corporation, provided, however, that:
(1) The Sponsor may purchase from this Corporation shares
issued by this Corporation if the orders to purchase from this Corporation are
entered with this Corporation by the Sponsor upon receipt by the Sponsor of
purchase orders for shares of this Corporation and such purchases are not in
excess of purchase orders received by the Sponsor.
(2) The Sponsor may in the capacity of agent for this
Corporation buy securities issued by this Corporation offered for sale by other
persons.
(3) Any officer or director of this Corporation or of the
Sponsor or Manager or any Company controlling the Sponsor or Manager may at any
time, or from time to time, purchase from this Corporation or from the Sponsor
shares issued by this Corporation at a price not lower than the net asset value
of the shares, no such purchase to be in contravention of any applicable state
or federal requirement.
(d) Securities and Cash of this Corporation to be held by
Custodian subject to certain Terms and Conditions.
(1) All securities and cash owned by this Corporation
shall as hereinafter provided, be held by or deposited with a bank or trust
company having (according to its last published report) not less than two
million dollars ($2,000,000) aggregate capital, surplus and undivided profits
(which bank or trust company is hereby designated as "Custodian"), provided such
a Custodian can be found ready and willing to act.
(2) This Corporation shall enter into a written contract
with the Custodian regarding the powers, duties and compensation of the
Custodian with respect to the cash and securities of this Corporation held by
the Custodian. Said contract and all amendments thereto shall be approved by the
Board of Directors of this Corporation.
(3) This Corporation shall upon the resignation or
inability to serve of its Custodian or upon change of the Custodian:
(aa) in case of such resignation or inability to
serve, use its best efforts to obtain a successor Custodian;
(bb) require that the cash and securities owned by
this Corporation be delivered directly to the successor Custodian; and
(cc) In the event that no successor Custodian can be
found, submit to the stockholders, before permitting delivery of the cash and
securities owned by this Corporation otherwise than to a successor Custodian,
the question whether or not this Corporation shall be liquidated or shall
function without a Custodian.
(e) Amendment of Investment Advisory Contract. Any investment
advisory contract entered into by this Corporation shall not be subject to
amendment except by (1) affirmative vote at a shareholders meeting, of the
holders of a majority of the outstanding stock of this Corporation, and (2) a
majority of such directors who are not interested persons (as the term is
defined in the Investment Company Act of 1940) of the parties to such agreement,
cast in person at a board meeting called for the purpose of voting on such
amendment.
(f) Reports relating to Certain Dividends. Dividends paid from
net profits from the sale of securities shall be clearly revealed by this
Corporation to its shareholders and the basis of calculation shall be set forth.
ARTICLE 10
Purchases and Redemption of Shares:
Suspension of Sales
10.01 Purchase by Agreement. The Corporation may purchase its shares by
agreement with the owner at a price not exceeding the net asset value next
computed following the time when the purchase or contract to purchase is made.
10.02 Redemption. The Corporation shall redeem such shares as are
offered by any stockholder for redemption upon the presentation of a written
request therefor, duly executed by the record owner, to the office or agency
designated by the Corporation. If the shareholder has received stock
certificates, the request must be accompanied by the certificates, duly endorsed
for transfer, in acceptable form; and the Corporation will pay therefor the net
asset value of the shares next effective following the time at which the
request, in acceptable form, is so presented. Payment for said shares shall
ordinarily be made by the Corporation to the stockholder within seven days after
the date on which the shares are presented.
10.03 Suspension of Redemption. The obligations set out in Section 10.02
may be suspended (i) for any period during which the New York Stock Exchange,
Inc. is closed other than customary week-end and holiday closings, or during
which trading on the New York Stock Exchange, Inc. is restricted, as determined
by the rules and regulations of the Securities and Exchange Commission or any
successor thereto; (ii) for any period during which an emergency, as determined
by the rules and regulations of the Securities and Exchange Commission or any
successor thereto, exists as a result of which disposal by the Corporation of
securities owned by it is not reasonably practicable or as a result of which it
is not reasonably practicable for the Corporation to fairly determine the value
of its net assets; or (iii) for such other periods as the Securities and
Exchange Commission or any successor thereto may by order permit for the
protection of security holders of the Corporation. Payment of the redemption or
purchase price may be made in cash or, at the option of the Corporation, wholly
or partly in such portfolio securities of the Corporation as the Corporation may
select.
10.04 Suspension of Sales. The Corporation reserves the right to suspend
sales of its shares if, in the judgment of the majority of the Board of
Directors or a majority of the executive committee of its board, if such
committee exists, it is in the best interest of the Corporation to do so, such
suspension to continue for such period as may be determined by such majority.
ARTICLE 11
Fractional Shares
11.01 The Board of Directors may authorize the issue from time to time
of shares of the capital stock of the corporation in fractional denominations,
provided that the transactions in which and the terms upon which shares in
fractional denominations may be issued may from time to time be determined and
limited by or under authority of the Board of Directors.
ARTICLE 12
Indemnification
12.01 (a) Every person who is or was a director, officer or employee of
this Corporation or of any other corporation which he served at the request of
this Corporation and in which this Corporation owns or owned shares of capital
stock or of which it is or was a creditor shall have a right to be indemnified
by this Corporation against all liability and reasonable expenses incurred by
him in connection with or resulting from a claim, action, suit or proceeding in
which he may become involved as a party or otherwise by reason of his being or
having been a director, officer or employee of this Corporation or such other
corporation, provided (1) said claim, action, suit or proceeding shall be
prosecuted to a final determination and he shall be vindicated on the merits, or
(2) in the absence of such a final determination vindicating him on the merits,
the Board of Directors shall determine that he acted in good faith and in a
manner he reasonably believed to be in the best interest of the Corporation in
the case of conduct in the director's official capacity with the Corporation and
in all other cases, that the conduct was at least not opposed to the best
interest of the Corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful; said
determination to be made by the Board of Directors acting through a quorum of
disinterested directors, or in its absence on the opinion of counsel.
(b) For purposes of the preceding subsection: (1) "liability and
reasonable expenses" shall include but not be limited to reasonable counsel fees
and disbursements, amounts of any judgment, fine or penalty, and reasonable
amounts paid in settlement; (2) "claim, action, suit or proceeding" shall
include every such claim, action, suit or proceeding, whether civil or criminal,
derivative or otherwise, administrative, judicial or legislative, any appeal
relating thereto, and shall include any reasonable apprehension or threat of
such a claim, action, suit or proceeding; (3) the termination of any proceeding
by judgment, order, settlement, conviction or upon a plea of nolo contendere or
its equivalent creates a rebuttable presumption that the director did not meet
the standard of conduct set forth in subsection (a)(2), supra.
(c) Notwithstanding the foregoing, the following limitations
shall apply with respect to any action by or in the right of the Corporation:
(1) no indemnification shall be made in respect of claim, issue or matter as to
which the person seeking indemnification shall have been adjudged to be liable
for negligence or misconduct in the performance of his duty to the Corporation
unless and only to the extent that the Court of Chancery of the State of
Maryland or the court in which such action or suit was brought shall determine
upon application that despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper; and (2) indemnification shall extend only to reasonable
expenses, including reasonable counsel's fees and disbursements.
(d) The right of indemnification shall extend to any person
otherwise entitled to it under this bylaw whether or not that person continues
to be a director, officer or employee of this Corporation or such other
corporation at the time such liability or expense shall be incurred. The right
of indemnification shall extend to the legal representative and heirs of any
person otherwise entitled to indemnification. If a person meets the requirements
of this bylaw with respect to some matters in a claim, action, suit, or
proceeding, but not with respect to others, he shall be entitled to
indemnification as to the former. Advances against liability and expenses may be
made by the Corporation on terms fixed by the Board of Directors subject to an
obligation to repay if indemnification proves unwarranted.
(e) This bylaw shall not exclude any other rights of
indemnification or other rights to which any director, officer or employee may
be entitled to by contract, vote of the stockholders or as a matter of law.
If any clause, provision or application of this Section shall be
determined to be invalid, the other clauses, provisions or applications of this
Section shall not be affected but shall remain in full force and effect. The
provisions of this bylaw shall be applicable to claims, actions, suits or
proceedings made or commenced after the adoption hereof, whether arising from
acts or omissions to act occurring before or after the adoption hereof.
(f) Nothing contained in this bylaw shall be construed to protect
any director or officer of the Corporation against any liability to the
Corporation or its security holders to which he would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his office.
ARTICLE 13
Amendments
13.01 These bylaws may be amended or added to, altered or repealed at
any annual or special meeting of the stockholders by the affirmative vote of the
holders of a majority of the shares of capital stock issued and outstanding and
entitled to vote, provided notice of the general purport of the proposed
amendment, addition, alteration or repeal is given in the notice of said
meeting, or, at any meeting of the Board of Directors by vote of a majority of
the directors then in office, except that the Board of Directors cannot amend
Article 5 to permit removal by said board without cause of any director elected
by the stockholders.
