<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended March 29, 1998 or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from ______ to _______
Commission file number:0-15086
SUN MICROSYSTEMS, INC.
(Exact Name of registrant as specified in its charter)
DELAWARE 94-2805249
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
901 SAN ANTONIO ROAD, PALO ALTO, CA 94303 (Address
of principal executive offices with zip code)
Registrant's telephone number, including area code: (650) 960-1300
N/A
(Former name, former address and former fiscal
year, if changed since last report)
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 [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN
BANKRUPTCY PROCEEDINGS DURING
THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
YES [ ] NO [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practical date.
<TABLE>
<CAPTION>
CLASS OUTSTANDING AT MARCH 29, 1998
----- -----------------------------
<S> <C>
Common stock - $0.00067 par value 378,811,393
</TABLE>
1
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INDEX
<TABLE>
<CAPTION>
PAGE
<S> <C>
COVER PAGE 1
INDEX 2
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Condensed Consolidated Balance Sheets 3
Condensed Consolidated Statements of Income 4
Condensed Consolidated Statements of Cash Flows 5
Notes to Condensed Consolidated Financial Statements 7
Item 2 - Management's Discussion and Analysis of
Results of Operations and Financial Condition 10
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings 16
Item 5 - Other Information 16
Item 6 - Exhibits and Reports on Form 8 - K 17
Item 7A - Quantitative and Qualitative Disclosures
About Market Risk 17
SIGNATURES 18
</TABLE>
2
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PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
SUN MICROSYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
March 29, June 30,
1998 1997
----------- -----------
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 656,765 $ 660,170
Short-term investments 357,098 452,590
Accounts receivable, net 1,675,899 1,666,523
Inventories 476,471 437,978
Deferred tax assets 315,766 286,720
Other current assets 272,566 224,469
----------- -----------
Total current assets 3,754,565 3,728,450
Property, plant and equipment, at cost 2,040,090 1,658,341
Accumulated depreciation and amortization (901,382) (858,448)
----------- -----------
1,138,708 799,893
Other assets, net 277,972 168,931
----------- -----------
$ 5,171,245 $ 4,697,274
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings $ -- $ 100,930
Accounts payable 521,938 468,912
Accrued liabilities 993,927 963,012
Other current liabilities 293,981 316,184
----------- -----------
Total current liabilities 1,809,846 1,849,038
Long-term debt and other obligations 137,637 106,299
Stockholders' equity 3,223,762 2,741,937
----------- -----------
$ 5,171,245 $ 4,697,274
=========== ===========
</TABLE>
See accompanying notes.
3
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SUN MICROSYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
-------------------------- --------------------------
March 29, March 30, March 29, March 30,
1998 1997 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net revenues $2,360,928 $2,114,618 $6,909,775 $6,055,225
Cost and expenses:
Cost of sales 1,101,636 1,053,194 3,300,700 3,058,697
Research and development 252,770 196,151 734,616 583,429
Selling, general and administrative 672,606 585,305 1,984,549 1,701,302
Purchased in-process research and
development -- 22,958 162,284 22,958
---------- ---------- ---------- ----------
Total costs and expenses 2,027,012 1,857,608 6,182,149 5,366,386
Operating income 333,916 257,010 727,626 688,839
Gain on sale of equity investment -- 62,245 -- 62,245
Interest income, net 12,366 9,438 33,134 21,331
---------- ---------- ---------- ----------
Income before income taxes 346,282 328,693 760,760 772,415
Provision for income taxes 114,273 105,182 270,886 247,173
---------- ---------- ---------- ----------
Net income $ 232,009 $ 223,511 $ 489,874 $ 525,242
========== ========== ========== ==========
Net income per common
share - basic $ 0.62 $ 0.61 $ 1.31 $ 1.43
========== ========== ========== ==========
Net income per common
share - diluted $ 0.59 $ 0.58 $ 1.24 $ 1.35
========== ========== ========== ==========
Shares used in the calculation
of net income per share - basic 374,524 368,247 373,487 367,915
========== ========== ========== ==========
Shares used in the calculation
of net income per share - diluted 394,637 388,364 394,322 389,073
========== ========== ========== ==========
</TABLE>
See accompanying notes.
4
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SUN MICROSYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
-------------------------
March 29, March 30,
1998 1997
--------- ---------
<S> <C> <C>
Cash flow from operating activities:
Net income $ 489,874 $ 525,242
Adjustments to reconcile net income
to net cash provided from
operating activities:
Depreciation, amortization and
other non-cash items 292,446 266,069
Tax benefit of options exercised 106,399 39,815
Gain on sale of equity investment -- (62,245)
Purchased in-process research
and development 162,284 22,958
Increase in accounts receivable (7,025) (214,877)
Increase in inventories (32,657) (30,556)
Increase in accounts payable 15,353 196,647
Net increase in other current
and non-current assets (114,747) (91,890)
Net increase in other current
and non-current liabilities 54,002 116,271
--------- ---------
Net cash provided from operating activities 965,929 767,434
--------- ---------
Cash flow from investing activities:
Acquisition of property, plant and equipment (571,379) (403,589)
Acquisition of other assets (84,918) (27,270)
Payment for acquisitions, net of cash acquired (227,655) (22,958)
Acquisition of short-term investments (460,278) (473,939)
Maturities of short-term investments 571,032 447,574
--------- ---------
Net cash used by investing activities (773,198) (480,182)
--------- ---------
Cash flow from financing activities:
Issuance of common stock 58,872 32,482
Acquisition of treasury stock (224,002) (398,267)
Proceeds from employee stock purchase plans 61,905 51,287
Proceeds from sale of equity investment -- 62,245
Reduction of short - term borrowings, net (100,930) (44,605)
Increase in (reduction of) long-term borrowings 8,019 (34,769)
--------- ---------
Net cash used by financing activities (196,136) (331,627)
--------- ---------
Net decrease in cash and cash equivalents $ (3,405) $ (44,375)
========= =========
</TABLE>
5
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<TABLE>
<S> <C> <C>
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 606 $ 10,616
Income taxes $ 210,632 $ 248,172
Supplemental schedule of non-cash investing and financing activities:
In conjunction with the Company's acquisitions, liabilities were assumed
as follows:
Fair value of assets acquired $ 284,294
Cash paid for assets (233,111)
---------
Liabilities assumed $ 51,183
=========
</TABLE>
See accompanying notes.
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SUN MICROSYSTEMS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
BASIS OF PRESENTATION
The consolidated financial statements include the accounts of Sun
Microsystems, Inc. ("Sun" or the "Company") and its wholly - owned
subsidiaries. Intercompany accounts and transactions have been
eliminated. Certain amounts from prior years have been reclassified to
conform to current year presentation.
While the quarterly financial information is unaudited, the financial
statements included in this report reflect all adjustments (consisting
only of normal recurring accruals) that the Company considers necessary
for a fair presentation of the results of operations for the interim
periods covered and of the financial condition of the Company at the
date of the interim balance sheet. The results for the interim periods
are not necessarily indicative of the results for the entire year. The
information included in this report should be read in conjunction with
the 1997 Annual Report to Stockholders which is incorporated by
reference in the Company's 1997 Form 10-K (as amended on Form 10-K/A).
INVENTORIES (IN THOUSANDS)
<TABLE>
<CAPTION>
March 29, 1998 June 30, 1997
-------------- -------------
<S> <C> <C>
Raw materials $200,258 $236,900
Work in process 66,813 50,577
Finished goods 209,400 150,501
-------- --------
$476,471 $437,978
======== ========
</TABLE>
INCOME TAXES
The Company accounts for income taxes under the liability method of Statement of
Financial Accounting Standards No. 109. The provision for income taxes during
the interim periods considers anticipated annual income before taxes, earnings
of foreign subsidiaries permanently invested in foreign operations, and other
differences.
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EARNINGS PER SHARE
The Company adopted Financial Accounting Standards No. 128 (FAS 128), "Earnings
Per Share" in the second quarter of fiscal 1998. Share and per share amounts for
all periods presented have been restated to comply with FAS 128.
THREE MONTHS ENDED
<TABLE>
<CAPTION>
March 29, 1998 March 30, 1997
--------------------------------- --------------------------------
Net income Shares EPS Net income Shares EPS
---------- ------ --- ---------- ------ ---
<S> <C> <C> <C> <C> <C> <C>
Basic $232,009 374,524 $0.62 $223,511 368,247 $0.61
Effect of dilutive
securities - options
and warrants 20,113 20,117
------- -------
Diluted $232,009 394,637 $0.59 $223,511 388,364 $0.58
======= =======
</TABLE>
NINE MONTHS ENDED
<TABLE>
<CAPTION>
March 29, 1998 March 30, 1997
--------------------------------- --------------------------------
Net income Shares EPS Net income Shares EPS
---------- ------ --- ---------- ------ ---
<S> <C> <C> <C> <C> <C> <C>
Basic $489,874 373,487 $1.31 $525,242 367,915 $1.43
Effect of dilutive
securities - options
and warrants 20,835 21,158
------- -------
Diluted $489,874 394,322 $1.24 $525,242 389,073 $1.35
======= =======
</TABLE>
ACQUISITIONS
On August 22, 1997, the Company acquired all of the outstanding stock of Diba,
Inc. for $25,000,000 in cash. The transaction was accounted for as a purchase.
The excess purchase price over the estimated fair value of net tangible assets
has been allocated, based upon an independent third-party valuation, to various
intangible assets, primarily consisting of purchased in-process research and
development and goodwill. In connection with this acquisition, purchased
in-process research and development of $22,300,000, associated with products
which had not achieved technological feasibility and for which no alternative
uses have been established by the Company, was written off. Intangible assets,
including goodwill, are being amortized over their estimated useful lives of
three years. The results of operations of Diba, Inc. from the date of
acquisition through March 29, 1998 are included in the Company's consolidated
statement of income and are not material to the Company.
On September 22, 1997, the Company acquired all of the outstanding stock of
Integrity Arts, Inc. for $30,200,000 in cash. The transaction was accounted for
as a purchase. The excess purchase price over the estimated fair value of net
tangible assets has been allocated, based upon an independent third-party
valuation, to various intangible assets, primarily consisting of purchased
in-process research and development and goodwill. In connection with this
acquisition, purchased in-process research and development of approximately
$29,900,000, associated with products which had not achieved technological
feasibility and for which no alternative uses have been established by the
Company, was written off. Intangible assets, including goodwill, are being
amortized over their estimated useful lives of three years. The results of
operations of Integrity Arts, Inc. from the date of acquisition through March
29, 1998 are included in the Company's consolidated statement of income and are
not material to the Company.
On October 21, 1997, the Company acquired substantially all of the assets and
certain liabilities of Chorus Systems, S.A. and its wholly-owned subsidiaries
for approximately $26,500,000 in cash. The transaction was
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accounted for as a purchase. The excess purchase price over the estimated fair
value of net tangible assets has been allocated, based upon an independent
third-party valuation, to various intangible assets, primarily consisting of
purchased in-process research and development and goodwill. In connection with
this acquisition, purchased in-process research and development of $13,100,000,
associated with products which had not achieved technological feasibility and
for which no alternative uses have been established by the Company, was written
off. Intangible assets, including goodwill, are being amortized over their
estimated useful lives of three years. The results of operations of Chorus
Systems, S.A. from the date of acquisition through March 29, 1998 are included
in the Company's consolidated statement of income and are not material to the
Company.
On November 24, 1997, the Company acquired substantially all of the assets of
Encore Computer Corporation's storage products business for approximately
$186,000,000 in cash. The transaction was accounted for as a purchase. The
excess purchase price over the estimated fair value of net tangible assets has
been allocated, based upon an independent third-party valuation, to various
intangible assets, primarily consisting of purchased in-process research and
development and goodwill. In connection with this acquisition, purchased
in-process research and development of $97,000,000, associated with products
which had not achieved technological feasibility and for which no alternative
uses have been established by the Company, was written off. Intangible assets,
including goodwill, are being amortized over their estimated useful lives of
three years. The results of operations of the storage products business of
Encore Computer Corporation from the date of acquisition through March 29, 1998
are included in the Company's consolidated statement of income and are not
material to the Company.
REGISTRATION STATEMENT
On October 16, 1997, the Company filed a Registration Statement with the
Securities and Exchange Commission relating to the registration for public
offering of senior and subordinated debt securities and common stock with an
aggregate initial public offering price of up to $1,000,000,000. On October 24,
1997, the Registration Statement became effective, so that the Company may now
choose to offer, from time to time, the debt securities and common stock
pursuant to Rule 415 in one or more separate series, in amounts, at prices and
on terms to be set forth in the prospectus contained in the Registration
Statement and in one or more supplements to the prospectus.
9
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ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
The following table sets forth items from the Condensed Consolidated Statements
of Income as a percentage of net revenues:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
---------------------- ----------------------
March 29, March 30, March 29, March 30,
1998 1997 1998 1997
------ ------ ------ ------
<S> <C> <C> <C> <C>
Net revenues 100.0% 100.0% 100.0% 100.0%
Cost of sales 46.7 49.8 47.8 50.5
------ ------ ------ ------
Gross margin 53.3 50.2 52.2 49.5
Research and development 10.7 9.3 10.6 9.6
Selling, general and administrative 28.5 27.6 28.7 28.1
Purchased in-process research and
development -- 1.1 2.4 .4
------ ------ ------ ------
Operating income 14.1 12.2 10.5 11.4
Gain on sale of equity investment -- 2.9 -- 1.0
Interest income, net 0.6 0.4 0.5 0.4
------ ------ ------ ------
Income before income taxes 14.7 15.5 11.0 12.8
Provision for income taxes 4.9 4.9 3.9 4.1
------ ------ ------ ------
Net income 9.8% 10.6% 7.1% 8.7%
====== ====== ====== ======
</TABLE>
The following sections contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. Such forward-looking
statements involve risks and uncertainties such that actual results may vary
materially. Certain factors that may affect the Company's results and financial
condition over the next few quarters are discussed under the caption "Future
Operating Results" below. Other factors that may affect such results and
financial condition are set forth in the Company's 1997 Annual Report to
Stockholders which is incorporated by reference in the Company's Form 10-K (as
amended on Form 10-K/A), and the Company's Form 10-K, as amended.
RESULTS OF OPERATIONS
NET REVENUES
Net revenues were $2.361 billion for the third quarter and $6.910 billion for
the first nine months of fiscal 1998, representing increases of 11.6% and 14.1%,
respectively, over the corresponding periods of fiscal 1997.
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The growth in revenues resulted primarily from increased demand for workgroup
and enterprise servers, and from high-end storage, memory and related products.
The remaining increase reflects growth in revenues from other Sun businesses,
primarily customer services.
Domestic net revenues increased by 17.8% and 17.9% while international net
revenues (including United States exports) grew 6.0% and 10.4% in the third
quarter and first nine months of fiscal 1998, respectively, compared with the
corresponding periods of fiscal 1997. In US dollars, European net revenues
increased 19.9% and 16.6%, Japanese net revenues decreased 12.2% and 2.6% and
net revenues in Rest of World decreased 3.8% and increased 10.6% in the third
quarter and first nine months of fiscal 1998, respectively, when compared with
the same periods of fiscal 1997. The increase in European revenues was
principally due to the continued strengthening of the markets and producer
acceptance. The decrease in Japanese net revenues primarily reflects the
macroeconomic issues in that country. The decrease was also reflected in local
currency. The decrease in Rest of World net revenues was primarily the result
of decreases in Korea and other South East Asian country net revenues, offset
partially by increases in net revenues generated from markets in China,
Australia and Latin America.
The Company generally manages currency exposure through the use of simple,
short-term forward foreign exchange and currency option contracts, the objective
of which is to minimize the impact of currency fluctuations on the results of
operations. As the Company utilizes projected data as a basis for its forward
foreign exchange and currency option contracts, variances which result from
forecasting differences and the extent of currency movement during the quarter
could have a material adverse effect on the results of operations and cash
flows.
GROSS MARGIN
Gross margin was 53.3% for the third quarter and 52.2% for the first nine months
of fiscal 1998, compared with 50.2% and 49.5%, respectively, for the
corresponding periods in fiscal 1997. The increase in gross margin for the
periods compared reflects principally the effects of increased revenue generated
from sales of higher margin servers and storage products, as well as decreases
in the cost of key components, including chips, memory and storage.
The factors described above resulted in a favorable impact on gross margin for
the third quarter and first nine months of fiscal 1998. The Company continuously
evaluates the competitiveness of its product offerings. These evaluations could
result in repricing actions in the near term. Sun's future operating results
would be adversely affected if such repricing actions were to occur and the
Company were unable to mitigate the resulting margin pressure by maintaining a
favorable mix of systems, software, service, and other products and by achieving
component cost reductions, operating efficiencies and increasing volumes.
RESEARCH AND DEVELOPMENT
Research and development (R&D) expenses were $252.8 million in the third quarter
and $734.6 million for the first nine months of fiscal 1998, compared with
$196.2 million and $583.4 million, respectively, for the same periods of fiscal
1997. As a percentage of net revenues, R&D expenses increased to 10.7% for the
third quarter and 10.6% for the first nine months of fiscal 1998, from 9.3% and
9.6% ,respectively, for the corresponding periods of fiscal 1997. These
increases reflect the increased expenditures focused on the development of
hardware and software products which utilize the Java architecture, as well as
the continued development of UltraSPARC systems, storage products and further
development of products acquired through acquisitions, and increased
compensation due primarily to an increase in personnel.
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SELLING, GENERAL AND ADMINISTRATIVE
Selling, general and administrative (SG&A) expenses were $672.6 million in the
third quarter and $1,984.5 million in the first nine months of fiscal 1998,
compared with $585.3 and $1,701.3 million, respectively, for the same periods of
fiscal 1997. As a percentage of net revenues, SG&A expenses were 28.5% and 28.7%
in the third quarter and first nine months of fiscal 1998, respectively, and
27.6% and 28.1%, respectively, in the corresponding periods of fiscal 1997. The
dollar increases are primarily attributable to increased compensation resulting
from higher levels of headcount (principally in the sales organization) in
addition to marketing costs related to demand creation programs. The increase is
also due to costs associated with the Company's ongoing efforts to improve
business processes and cycle times. The Company expects to continue to focus on
expansion of its demand creation programs and support organizations.
PURCHASED IN - PROCESS RESEARCH AND DEVELOPMENT
Purchased in-process research and development represents the write-off of
purchased in-process research and development associated with the Company's
acquisitions of Diba, Inc., Integrity Arts, Inc., Chorus Systems, S.A., and the
storage products business of Encore Computer Corporation in fiscal 1998 and
Longview Technologies, LLC in the third quarter of fiscal 1997.
GAIN ON SALE OF EQUITY INVESTMENT
The gain on sale of equity investment represents the net proceeds from the sale
of the Company's equity investment in Iona Technologies, plc. during the third
quarter of fiscal 1997.
INTEREST INCOME, NET
Net interest income was $12.4 million for the third quarter and $33.1 million
for the first nine months of fiscal 1998, compared with $9.4 million and $21.3
million, respectively, for the corresponding periods in fiscal 1997. The
increase for the third quarter of fiscal 1998 is primarily the result of higher
interest earnings due to a larger average portfolio of cash and short-term
investments.
INCOME TAXES
The Company's effective income tax rate for the third quarter and first nine
months of fiscal 1998 was 33% before a $19.8 million tax charge resulting from a
non-recurring write-off of in-process research and development associated with
the acquisitions of Diba, Inc. and Integrity Arts, Inc. during the first quarter
of fiscal 1998. The effective income tax rate including such tax charge was 36%.
The effective income tax rate for the third quarter and first nine months of
fiscal 1997 was 32%. The increase in the overall effective tax rate to 33% for
fiscal 1998 is attributable to an increase in anticipated worldwide earnings
without offsetting tax credits or other tax savings.
FUTURE OPERATING RESULTS
The market for Sun's products and services is intensely competitive and subject
to continuous, rapid technological change, short product life cycles and
frequent product performance improvements and price reductions. Due to the
breadth of the Company's product lines and the scalability of its products and
network computing model, Sun competes in many segments of the network computing
market across a broad spectrum of customers. The Company expects the markets for
its products and technologies, as well as its competitors within such markets,
will continue to change as the trend in enterprise computing shifts customer
buying patterns to network based systems which often employ solutions from
multiple vendors. Competition in these markets will also continue to intensify
as Sun and its competitors, principally Hewlett-Packard Co., International
Business Machines Corporation, Digital Equipment Corporation, and Silicon
Graphics, Inc., aggressively position
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themselves to benefit from this shifting of customer buying patterns and demand.
The Company is also facing competition from these competitors, as well as other
systems manufacturers, such as Compaq Computer Corporation and Dell Computer
Corporation, with respect to products based on microprocessors from Intel
Corporation coupled with the Windows NT operating system software from Microsoft
Corporation. These products demonstrate the viability of certain networked
personal computer solutions and have increased the competitive pressure,
particularly in the Company's workstation and lower-end server product lines.
Additionally, the timing of introductions of new products and services by Sun's
competitors may negatively impact the future operating results of the Company,
particularly when such introductions occur in periods leading up to the
Company's introduction of its own new enhanced products. The Company expects
this pressure to continue and intensify throughout the remainder of fiscal 1998
and into fiscal 1999. While many other technical, service and support
capabilities affect a customer's buying decision, the Company's future operating
results will depend, in part, on its ability to compete with these technologies.
The Company's future operating results will depend to a considerable extent on
its ability to rapidly and continuously develop, introduce, and deliver in
quantity new systems, storage, software, and service products, as well as new
microprocessor technologies, that offer its customers enhanced performance at
competitive prices. The development of new high - performance computer products,
such as the Company's development of the UltraSPARC microprocessor is a complex
and uncertain process requiring high levels of innovation from the Company's
designers and suppliers, as well as accurate anticipation of customer
requirements and technological trends. Once a hardware product is developed, the
Company must rapidly bring such products to volume manufacturing, a process that
requires accurate forecasting of volumes, mix of products and configurations,
among other things, in order to achieve acceptable yields and costs. Future
operating results will depend to a considerable extent on the Company's ability
to closely manage product introductions in order to minimize unfavorable
patterns of customer orders, to reduce levels of older inventory and to ensure
that adequate supplies of new products can be delivered to meet customer demand.
The ability of the Company to match supply and demand is further complicated by
the Company's need to adjust prices to reflect changing competitive market
conditions as well as the variability and timing of customer orders with respect
to the Company's older products. As a result, the Company's operating results
could be adversely affected if the Company is not able to correctly anticipate
the level of demand for the mix of products. Because the Company is continuously
engaged in this product development, introduction, and transition process, its
operating results may be subject to considerable fluctuation, particularly when
measured on a quarterly basis.
The Company is increasingly dependent on the ability of its suppliers to design,
manufacture, and deliver advanced components required for the timely
introduction of new products. The failure of any of these suppliers to deliver
components on time or in sufficient quantities, or the failure of any of the
Company's own designers to develop advanced innovative products on a timely
basis, could result in a significant adverse impact on the Company's operating
results. The inability to secure enough components to build products, including
new products, in the quantities and configurations required, or to produce, test
and deliver sufficient products to meet demand in a timely manner, would
adversely affect the Company's net revenues and operating results. To secure
components for development, production, and introduction of new products, the
Company frequently makes advanced payments to certain suppliers and often enters
into noncancelable purchase commitments with vendors early in the design
process. Due to the variability of material requirement specifications during
the design process, the Company must closely manage material purchase
commitments and respective delivery schedules. In the event of a delay or flaw
in the Company's design process, the Company's operating results could be
adversely affected due to the Company's obligations to fulfill such
noncancelable purchase commitments.
Generally, the computer systems sold by Sun, such as the UltraSPARC-based
products, are the result of hardware and software development, such that delays
in the software development can delay the ability of the Company to ship new
hardware products. In addition, adoption of a new release of an operating system
may require effort on the part of the customer and porting by software vendors
providing applications. As a result,
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<PAGE> 14
the timing of conversion to a new release is inherently unpredictable. Moreover,
delays by customers in adopting a new release of an operating system can limit
the acceptability of hardware products tied to that release. Such delays could
adversely affect the future operating results of the Company.
A significant portion of the Company's revenues is derived from international
sales and is therefore subject to inherent risks related thereto, including the
general economic and political conditions in each country, currency exchange
rate fluctuations, the effect of the tax structures of various jurisdictions,
changes to and compliance with a variety of foreign laws and regulations, trade
protection measures and import and export licensing requirements. There can be
no assurance that the economic crisis and currency issues currently being
experienced in certain parts of Asia will not have an adverse effect on the
Company's revenue or revenue growth rates in the future. The impact of any of
the foregoing factors could have an adverse effect on the Company's future
financial condition and operating results.
Seasonality also affects the Company's operating results, particularly in the
first quarter of each fiscal year. In addition, the Company's operating expenses
are increasing as the Company continues to expand its operations, and future
operating results will be adversely affected if revenues do not increase
accordingly. Additionally, the Company plans to continue to evaluate and, when
appropriate, make acquisitions of complementary technologies, products or
businesses. As part of this process, the Company will continue to evaluate the
changing value of its assets, and when necessary, make adjustments thereto.
In order to remain competitive in a rapidly changing industry, the Company is
continually improving and changing its business practices, processes, and
information systems. In this regard, the Company has begun to implement a number
of new business practices and a series of related information systems; such
activities are currently planned to be fully operational in the first half of
fiscal year 1999. Implementing a number of new business practices and
information systems is a complex process, affecting numerous operational and
financial systems and processes as well as requiring comprehensive employee
training. While the Company tests these new systems and processes in advance of
implementation, there are inherent limitations in the Company's ability to
simulate a full-scale operating environment in advance of the system cutover. To
the extent that the Company encounters problems after introduction of these new
systems and practices that prevent or limit their full utilization, there could
be a material, adverse impact on the Company's operating results.
Many installed computer systems and software products are coded to accept only
two digit entries in the date code field. As the year 2000 approaches, these
code fields will need to accept four digit entries to distinguish years
beginning with "19" from those beginning with "20" dates. As a result, in less
than two years, computer systems and/or software products used by many companies
may need to be upgraded to comply with such year 2000 requirements. The Company
is currently expending significant resources to review its products and
services, as well as its internal management information systems in order to
identify and modify those products, services and systems that are not year 2000
compliant. The Company expects such modifications will be made on a timely basis
and does not believe that the cost of such modifications will have a material
effect on the Company's operating results. There can be no assurance, however,
that the Company will be able to modify timely and successfully such products,
services and systems to comply with year 2000 requirements, which could have a
material adverse effect on the Company's operating results. Based on the
Company's assessment to date, most newly introduced products and services of the
Company are year 2000 compliant, however some of the Company's customers are
running product versions that are not year 2000 compliant. The Company has been
encouraging such customers to migrate to current product versions. In addition,
the Company faces risks to the extent that suppliers of products, services and
systems purchased by the Company and others with whom the Company transacts
business on a worldwide basis do not have business systems or products that
comply with the year 2000 requirements. In the event any such third parties
cannot timely provide the Company with products, services or systems that meet
the year 2000 requirements, the Company's operating results could be materially
adversely affected. Furthermore, there can be no assurance that these or other
factors relating to the
14
<PAGE> 15
year 2000 compliance issues, including litigation, will not have a material
adverse effect on the Company's business, operating results or financial
condition.
While the Company cannot predict what effect these various factors may have on
its financial results, the aggregate effect of these and other factors could
result in significant volatility in the Company's future performance and stock
price.
LIQUIDITY AND CAPITAL RESOURCES
Total assets at March 29, 1998 increased by approximately $474 million from June
30, 1997, due principally to increases in accounts receivable of $9.4 million,
inventory of $38.5 million, other current assets of $77.2 million, property,
plant and equipment-net of $338.8 million, and other assets of $109 million
offset by a decrease in cash, cash equivalents and short term investments of
$98.9 million. The increase in accounts receivable primarily reflects the timing
of cash receipts as compared to the fourth quarter of fiscal 1997. The increase
in inventory is due to the seasonally lower sales level in the third fiscal
quarter relative to the fourth quarter. The increase in property, plant and
equipment reflects capital spending for real estate development of the Company's
facilities, assets acquired through acquisitions and capital additions to
support increased headcount, primarily in the Company's engineering, service and
marketing organizations. Other current assets increased due to the timing of
payments for insurance and other taxes. Other assets increased due to the
recording of goodwill and other intangible assets related to the Company's
acquisitions.
Total current liabilities decreased $39.2 million from June 30, 1997, due
principally to increases in accounts payable of $53 million and accrued
liabilities of $30.9 million, offset by decreases in short-term borrowings of
$100.9 million and other current liabilities of $22.2 million. The increase in
accounts payable reflects increased inventory levels and a payment due on one of
the Company's acquisitions. The increase in accrued liabilities is due to
increases in warranty and the employee stock participation program. The decrease
in short-term borrowings reflects payments related to the debt of subsidiaries
and the decrease in other current liabilities primarily reflects the decrease in
income taxes payable.
At March 29, 1998, the Company's primary sources of liquidity consisted of cash,
cash equivalents and short-term investments of $1,013.9 million and a revolving
credit facility with banks aggregating $500 million, which was available subject
to compliance with certain covenants. On October 16, 1997, the Company filed a
Registration Statement with the Securities and Exchange Commission relating to
the registration for public offering of senior and subordinated debt securities
and common stock with an aggregate initial public offering price of up to
$1,000,000,000. On October 24, 1997, the Registration Statement became
effective, so that the Company may now choose to offer, from time to time, the
debt securities and common stock pursuant to Rule 415 in one or more separate
series, in amounts, at prices and on terms to be set forth in the prospectus
contained in the Registration Statement and in one or more supplements to the
prospectus. The Company believes that the liquidity provided by existing cash
and short-term investment balances and the offering and borrowing arrangements
described above will be sufficient to meet the Company's capital requirements
through fiscal 1999. However, the Company believes the level of financial
resources is a significant competitive factor in its industry and may choose at
any time to raise additional capital through debt or equity financing to
strengthen its financial position, facilitate growth and provide the Company
with additional flexibility to take advantage of business opportunities that may
arise.
15
<PAGE> 16
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
On October 7, 1997, the Company filed suit against Microsoft Corporation in the
United States District Court for the Northern District of California alleging
breach of contract, trademark infringement, false advertising, unfair
competition, interference with prospective economic advantage and inducing
breach of contract. The Company filed an amended complaint on October 14, 1997.
Microsoft Corporation filed its answer, affirmative defenses and counterclaims
to the amended complaint. The counterclaims include breach of contract, breach
of the covenant of good faith and fair dealing, violation of the California
Business & Professions Code and declaratory judgment. The Company believes that
the counterclaims are without merit and/or that the Company has affirmative
defenses and intends vigorously to defend itself with respect thereto. On March
24, 1998 the United States District Court judge granted a preliminary injunction
that prevents Microsoft Corporation from using the Company's Java Compatible
(TM) logo. The Company believes that the outcome of this matter will not have a
material adverse impact on Sun's financial condition, results of operations or
cash flows in any given fiscal year.
ITEM 5 - OTHER INFORMATION
SCHEDULE OF SALES BY EXECUTIVE OFFICERS DURING THE QUARTER
The following is a summary of all sales of the Company's Common Stock by
the Company's executive officers and directors who are subject to Section
16 of the Securities Exchange Act of 1934, as amended, during the fiscal
quarter ended March 29, 1998:
<TABLE>
<CAPTION>
OFFICER/ DATE PRICE NUMBER OF
DIRECTOR SHARES SOLD
=====================================================================
<S> <C> <C> <C>
Alan E. Baratz 2/27/98 $47.625 8,000
2/27/98 $47.5625 8,000
2/27/98 $47.6875 8,000
Lawrence W. 2/27/98 $47.4375 10,000
Hambly 2/27/98 $47.8125 5,000
2/27/98 $48.0625 5,000
Michael E. Lehman 2/25/98 $46.00 20,000
2/26/98 $46.5625 3,420
Michael H. Morris 2/19/98 $46.3125 3,020
Alton D. Page 2/25/98 $46.50 5,000
2/27/98 $47.6875 5,000
Frank Pinto 2/27/98 $48.00 47,000
George Reyes 2/26/98 $46.5625 10,000
Edward Saliba 2/19/98 $46.8750 8,000
</TABLE>
16
<PAGE> 17
<TABLE>
<S> <C> <C> <C>
Janpieter T. 2/13/98 $44.4895 8,000
Scheerder 2/13/98 $44.4895 40,000
John Shoemaker 2/19/98 $46.3375 3,620
A. Michael Spence 2/20/98 $45.8125 7,500
2/25/98 $45.5625 4,500
2/25/98 $45.6250 3,000
William Sutherland 2/24/98 $45.1875 2,400
Kevin Walsh 2/25/98 $46.50 7,000
2/25/98 $46.4375 2,300
2/25/98 $46.3125 5,700
2/26/98 $46.8125 15,000
2/26/98 $47.00 11,600
Edward J. Zander 2/23/98 $46.3125 5,000
2/24/98 $45.00 5,000
2/25/98 $45.25 5,000
2/25/98 $46.00 5,000
2/26/98 $47.00 2,500
2/27/98 $47.875 2,500
</TABLE>
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
a) EXHIBITS
3.1 Registrant's Restated Certificate of Incorporation, as
amended February 11, 1998
3.2 Registrant's Bylaws, as amended February 11, 1998
4.3(1) Second Amended and Restated Shares Rights Agreement
dated as of February 11, 1998
27.0 Financial data schedule for the period ended
March 29, 1998
(1) Incorporated herein by reference to the Registrant's Registration
Statement on Form 8-A/A Amendment No. 6 filed on February 13, 1998.
b) REPORTS ON FORM 8-K
No reports on form 8-K were filed during the quarter ended March
29, 1998.
ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's market risk disclosures set forth in the 1997 Annual
Report to Stockholders have not changed significantly through the third quarter
ended March 29, 1998.
17
<PAGE> 18
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SUN MICROSYSTEMS, INC.
BY
/s/ Michael E. Lehman
-------------------------------------------
Michael E. Lehman
Vice President, Corporate Resources and
Chief Financial Officer
/s/ George Reyes
-------------------------------------------
George Reyes
Vice President and Corporate Controller,
Chief Accounting Officer
Dated: May 6, 1998
18
<PAGE> 1
Exhibit 3.1
RESTATED CERTIFICATE OF INCORPORATION
OF
SUN MICROSYSTEMS, INC.
(ORIGINALLY INCORPORATED ON SEPTEMBER 17, 1986)
1. The name of the corporation is Sun Microsystems, Inc. (the
"Corporation").
2. The address of the Corporation's registered office in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle, zip code 19801. The name of its registered
agent at such address is The Corporation Trust Company.
3. The nature of the business or purposes to be conducted or promoted
by the Corporation is to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of Delaware.
4. (a) This Corporation is authorized to issue two classes of
shares designated "Common Stock" and "Preferred Stock". The total number of
shares which this corporation shall have authority to issue is One Hundred
Thirty-Five Million (135,000,000), of which One Hundred Twenty-Five Million
(125,000,000) shall be Common Stock with a par value of $.00067 per share and
Ten Million (10,000,000) shall be Preferred Stock with a par value of $.001 per
share.
(b) The shares of Preferred Stock may be issued from time to
time in one or more series. The Board of Directors is authorized, subject to
limitations prescribed by law and the provisions of this Article 4, to provide
for the issuance of the shares of Preferred Stock in series, and by filing a
certificate pursuant to the applicable law of the State of Delaware, to
establish from time to time the number of shares to be included in each such
series, and to fix the designation, powers, preferences and rights of the shares
of each such series and the qualifications, limitations or restrictions thereof.
The authority of the Board with respect to each series shall include, but
not be limited to, determination of the following:
(i) The number of shares constituting that series and the
distinctive designation of that series;
(ii) The dividend rate on the shares of that series, whether
dividends shall be cumulative, and, if so, from which date or dates, and the
relative rights of priority, if any, of payment of dividends on shares of that
series;
(iii) Whether that series shall have voting rights, in addition
to the voting rights provided by law, and, if so, the terms of such voting
rights;
(iv) Whether that series shall have conversion privileges, and,
if so, the terms and conditions of such conversion, including provision for
adjustment of the conversion rate in such events as the Board of Directors shall
determine;
(v) Whether or not the shares of that series shall be
redeemable, and, if so, the terms and conditions of such redemption, including
the date or date upon or after which they shall be
<PAGE> 2
redeemable, and the amount per share payable in case of redemption, which amount
may vary under different conditions and at different redemption dates;
(vi) Whether that series shall have a sinking fund for the
redemption or purchase of shares of that series, and, if so, the terms and
amount of such sinking fund;
(vii) The rights of the shares of that series in the event of
voluntary or involuntary liquidation, dissolution or winding up of the
corporation, and the relative rights of priority, if any, of payment of shares
of that series.
(viii) Any other relative or participating rights, preferences
and limitations of that series.
5. The name and mailing address of the incorporator are as follows:
Judith M. O'Brien
Wilson, Sonsini, Goodrich & Rosati
Two Palo Alto Square, Suite 900
Palo Alto, CA 94306
6. The Corporation is to have perpetual existence.
7. In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make, alter, amend or
repeal the By-Laws of the Corporation.
8. The number of directors which will constitute the whole Board of
Directors of the Corporation shall be as specified in the By-laws of the
Corporation.
9. At all elections of directors of the Corporation, each holder of
stock or of any class or classes or of a series thereof shall be entitled to as
many votes as shall equal the number of votes which (except for this provision
as to cumulative voting) he would be entitled to cast for the election of
directors with respect to his shares of stock multiplied by the number of
directors to be elected, and he may cast all of such votes for a single
candidate or may distribute them among the number to be elected, or for any two
or more of them as he may see fit.
10. Meetings of stockholders may be held within or without the State
of Delaware, as the By-Laws may provide. The books of the Corporation may be
kept (subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the By-Laws of the Corporation.
11. To the fullest extent permitted by the Delaware General
Corporation Law as the same exists or as may hereafter be amended, a director of
the Corporation shall not be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director.
Neither any amendment nor repeal of this Article 11, nor the adoption of any
provision of this Certification of Incorporation inconsistent with this Article
11, shall eliminate or reduce the effect of this Article 11 in respect of any
matter occurring, or any cause of action, suit or claim that, but for this
Article 11, would accrue or arise, prior to such amendment, repeal or adoption
of an inconsistent provision.
12. The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute,
2
<PAGE> 3
and all rights conferred upon stockholders herein are granted subject to this
reservation. This Certificate of Incorporation may not be amended to eliminate
Section 9 hereof or to divide the directors of the Corporation who are elected
by the holders of Common Stock and any Preferred Stock entitled to vote
generally with the holders of Common Stock in elections of directors, into two
or three classes without the approval of holders of seventy-five percent (75%)
of the outstanding shares of the Corporation entitled to vote thereon.
13. Elections for directors need not be by ballot unless a stockholder
demands election by ballot at the meeting and before the voting begins or unless
the By-laws so require.
I, THE UNDERSIGNED, this 23rd day of June, 1987, being the sole
incorporator of Sun Microsystems, Inc., do hereby certify that the Corporation
has not received any payment for any of its stock and that this Restated
Certificate of Incorporation has been adopted in accordance with the provisions
of Sections 241 and 245 of the General Corporation Law of the State of Delaware.
/s/ JUDITH M. O'BRIEN
-----------------------------------------
Judith M. O'Brien
3
<PAGE> 4
CERTIFICATE OF MERGER
OF
SUN MICROSYSTEMS, INC.
A CALIFORNIA CORPORATION
INTO
SUN MICROSYSTEMS, INC.
The undersigned corporation does hereby certify:
FIRST: That the name and state of incorporation of each of the
constituent corporations of the merger are as follows:
NAME STATE OF INCORPORATION
---- ----------------------
Sun Microsystems, Inc. California
Sun Microsystems, Inc. Delaware
SECOND: That an Agreement and Plan of Merger (the "Merger Agreement")
between the parties to the merger has been approved, adopted, certified,
executed and acknowledged by each of the constituent corporations in accordance
with the requirements of subsection (c) of Section 252 of the General
Corporation Law of the State of Delaware and that the effective time of the
merger shall be noon eastern standard time on the day on which this Certificate
is filed with the Secretary of State of the State of Delaware.
THIRD: That the name of the surviving corporation of the merger is Sun
Microsystems, Inc., a Delaware corporation.
FOURTH: That the Restated Certificate of Incorporation of Sun
Microsystems, Inc., a Delaware corporation, shall be the certificate of
incorporation of the surviving corporation.
FIFTH: That the executed Merger Agreement is on file at the principal
place of business of the surviving corporation. The address of said principal
place of business is 2550 Garcia Avenue, Mountain View, California 94043.
SIXTH: That a copy of the Merger Agreement will be furnished by the
surviving corporation, on request and without cost, to any stockholder of any
constituent corporation.
SEVENTH: That the authorized capital stock of Sun Microsystems, Inc., a
California corporation, is 125,000,000 shares of Common Stock, $.00067 par
value, and 10,000,000 shares of Preferred Stock, $.001 par value.
SUN MICROSYSTEMS, INC.
a Delaware corporation
By: /s/ SCOTT G. MCNEALY
-------------------------------------
Scott G. McNealy, President
ATTEST:
/s/ ROBERT G. SMITH
- ---------------------------------------
Robert G. Smith, Assistant Secretary
<PAGE> 5
CERTIFICATE OF OWNERSHIP AND MERGER
MERGING TRANCEPT SYSTEMS, INC.
INTO SUN MICROSYSTEMS, INC.
Sun Microsystems, Inc., a corporation incorporated on the 17th day of
September, 1987, pursuant to the provisions of the General Corporation Law of
the State of Delaware does hereby certify that this corporation owns all the
capital stock of Trancept Systems, Inc., a corporation incorporated under the
laws of the State of North Carolina, and that this corporation, by a resolution
of its board of directors duly adopted at a meeting held on the 28th day of
October, 1987 determined to and did merge into itself said Trancept Systems,
Inc. which resolution is in the following words to wit:
WHEREAS, this corporation lawfully owns all the outstanding stock of
Trancept Systems, Inc., a corporation organized and existing under the laws
of North Carolina, and
WHEREAS, this corporation desires to merge into itself the said Trancept
Systems, Inc. and to be possessed of all the estate, property, rights,
privileges and franchises of said corporation.
NOW, THEREFORE, BE IT RESOLVED: That this corporation merge into itself,
and it does hereby merge into itself said Trancept systems, Inc. and
assumes all of its liabilities and obligations, and
RESOLVED FURTHER: That the President and the Secretary of this corporation
be and they hereby are directed to make and execute, under the corporate
seal of this corporation, a Certificate of Ownership setting forth a copy
of the resolution, to merge said Trancept Systems, Inc. and assume its
liabilities and obligations, and the date of adoption thereof, and to file
the same in the office of the Secretary of the State of Delaware, and a
certified copy thereof in the office of the Recorder of Deeds of Newcastle
County; and
RESOLVED FURTHER: That the officers of this corporation be and they hereby
are authorized and directed to do all acts and things whatsoever, whether
within or without the State of Delaware; which may be in anyway necessary
or proper to effect said merger.
IN WITNESS WHEREOF, said corporation has caused this certificate to be
signed by its president and attested by its secretary, and its corporate seal to
be hereto affixed, the 28th day of October 1987.
By /s/ SCOTT G. MCNEALY
-------------------------------------
Scott G. McNealy, President
ATTEST:
/s/ MICHAEL H. MORRIS
- -------------------------------------
Michael H. Morris, Secretary
(SEAL)
<PAGE> 6
CERTIFICATE OF OWNERSHIP
MERGING
CENTRAM SYSTEMS WEST OF CALIFORNIA, INC.
INTO
SUN MICROSYSTEMS, INC.
(PURSUANT TO SECTION 253 of the
GENERAL CORPORATION LAW OF DELAWARE)
Sun Microsystems, Inc., a corporation incorporated on the 17th day of
September, 1986, pursuant to the provisions of the General Corporation Law of
the State of Delaware, does hereby certify that this corporation owns all the
capital stock of Centram Systems West of California, Inc. ("CSW"), a
corporation incorporated under the laws of the State of California, and that
this corporation, by a resolution of its board of directors duly adopted at a
meeting held on the 23rd day of June, 1988, determined to and did merge into
itself said CSW which resolution is in the following words to wit:
WHEREAS this corporation lawfully owns all the outstanding stock of
Centram Systems West of California, Inc. ("CSW"), a corporation organized and
existing under the laws of California, and
WHEREAS this corporation desires to merge into itself the said CSW and to
be possessed of all the estate, property, rights, privileges and franchises of
said corporation;
NOW, THEREFORE, BE IT RESOLVED, that this corporation merge into itself,
and it does hereby merge into itself said CSW and assumes all of its
liabilities and obligations; and
FURTHER RESOLVED, that the merger shall be effective upon the date of
filing with the Secretary of State of Delaware; and
FURTHER RESOLVED, that the president or a vide-president, and the
secretary or treasurer of this corporation be and they hereby are directed to
make and execute, under the corporate seal of this corporation, a certificate
of ownership setting forth a copy of the resolution, to merge said CSW and
assume its liabilities and obligations, and the date of adoption thereof, and
to file the same in the office of the Secretary of the State of Delaware, and a
certified copy thereof in the office of the Recorder of Deeds of New Castle
County; and
<PAGE> 7
FURTHER RESOLVED, that the officers of this corporation be and they hereby are
authorized and directed to do all acts and things whatsoever, whether within or
without the State of Delaware; which may be in anywise necessary or proper to
effect said merger.
IN WITNESS WHEREOF, said corporation has caused this certificate to be
signed by its president and attested by its secretary, and its corporate seal
to be hereto affixed, the 23rd day of June, 1988.
BY: /s/ SCOTT G. MCNEALY
-----------------------------
Scott G. McNealy, President
ATTEST:
/s/ MICHAEL H. MORRIS
- ------------------------------
Michael H. Morris, Secretary
(Seal)
<PAGE> 8
CERTIFICATE OF AMENDMENT
OF THE RESTATED CERTIFICATE OF
INCORPORATION OF SUN MICROSYSTEMS, INC.
William J. Raduchel and Michael H. Morris certify that:
1. They are the Vice President, Chief Financial Officer and Vice President,
General Counsel and Corporate Secretary, respectively, of Sun
Microsystems, Inc., a Delaware corporation.
2. So much of Section (a) of Article 4 of the Restated Certificate of
Incorporation of this Corporation as now reads:
"This Corporation is authorized to issue two classes of shares
designated "Common Stock" and "Preferred Stock". The total number
of shares which this corporation shall have authority to issue is
One Hundred Thirty Five Million (135,000,000), of which One
Hundred Twenty Five Million (125,000,000) shall be Common Stock
with a par value of $.00067 per share and Ten Million (10,000,000)
shall be Preferred Stock with a par value of $.001 per share."
is amended to read as follows:
"This Corporation is authorized to issue two classes of shares
designated "Common Stock" and "Preferred Stock". The total number
of shares which this corporation shall have authority to issue is
Three Hundred Ten Million (310,000,000), of which Three Hundred
Million (300,000,000) shall be Common Stock with a par value of
$.00067 per share and Ten Million (10,000,000) shall be Preferred
Stock with a par value of $.001 per share."
3. The foregoing Certificate of Amendment of the Restated Certificate of
Incorporation has been duly approved by the Board of Directors.
4. The foregoing Certificate of Amendment of the Restated and Amended
Certificate of Incorporation has been duly approved by the required vote
of stockholders in accordance with Section 242 of the Delaware
Corporations Code. The total number of outstanding shares of Common Stock
of the corporation is 85,177,733. No shares voting in favor of the
amendment equaled or exceeded the vote required. The percentage vote
required was more than 50% of the outstanding Common Stock.
<PAGE> 9
We further declare under penalty of perjury under the laws of the State of
Delaware that the matters set forth in the foregoing certificate are true and
correct of our own knowledge.
Executed at Mountain View, California, this 6th day of December, 1989.
SUN MICROSYSTEMS, INC.
[Corporate Seal] /s/ WILLIAM J. RADUCHEL
-----------------------------------------
William J. Raduchel
ATTEST: /s/ MICHAEL H. MORRIS
-----------------------------------------
Michael H. Morris
2
<PAGE> 10
CERTIFICATE OF OWNERSHIP AND MERGER
MERGING
FOLIO, INC.
INTO
SUN MICROSYSTEMS, INC.
(Pursuant to Section 253 of
the Delaware Corporation Law)
Sun Microsystems, Inc., a Delaware corporation (the "Corporation"), does
hereby certify:
FIRST: That the Corporation is incorporated pursuant to the General
Corporation Law of the State of Delaware.
SECOND: That the Corporation owns 100% of the outstanding shares of
capital stock of Folio, Inc., a California corporation ("Subsidiary").
THIRD: That upon the merger of the Corporation with Subsidiary, all
issued and outstanding shares of capital stock of Subsidiary will be cancelled
and no shares of the Corporation will be issued to replace such shares.
FOURTH: That the Corporation, by the following resolutions of its Board
of Directors, duly adopted on the 13th day of November, 1990, determined to
merge Subsidiary into itself on the conditions set forth in the following
resolutions of the Board of Directors:
WHEREAS: this Corporation owns all the issued and outstanding shares
of Subsidiary;
RESOLVED: That the Corporation merge Subsidiary into itself and
assume all of Subsidiary's liabilities and obligations;
RESOLVED FURTHER: That the appropriate officers of this Corporation
be, and they hereby are, directed to make, execute and acknowledge a
Certificate of Ownership and Merger setting forth a copy of the resolutions
to merge Subsidiary into this Corporation and date of adoption thereof, and
cause the same to be filed in the offices of the Secretaries of State of
Delaware and California and a certified copy recorded in the Office of the
Recorder of Deeds of New Castle County;
RESOLVED FURTHER: That the merger shall be effective upon filing
with the Secretary of State of Delaware;
RESOLVED FURTHER: Anything herein or elsewhere to the contrary
notwithstanding, this merger may be amended or terminated and abandoned by
the Board of Directors
RESOLVED FURTHER: That the officers of this Corporation be and
hereby are authorized and directed to do all acts and things whatsoever,
whether within or without the States of Delaware and California; which may
be in any way necessary or proper to effect said merger.
<PAGE> 11
RESOLVED: That all prior actions taken by the Officers of this corporation
in connection with the foregoing resolutions are hereby ratified and
approved.
IN WITNESS WHEREOF, the Corporation has caused this certificate to be
signed by Scott G. McNealy, its President and Chief Executive Officer, and
Michael H. Morris, its Vice President, General Counsel and Corporate Secretary,
this 13th day of November, 1990.
Sun Microsystems, Inc.
By: /s/ SCOTT G. MCNEALY
-----------------------------
Scott G. McNealy
President and Chief Executive
Officer
ATTEST:
By: /s/ MICHAEL H. MORRIS
--------------------------------------
Michael H. Morris, Vice President
General Counsel & Corporate Secretary
<PAGE> 12
CERTIFICATE OF AMENDMENT
OF THE RESTATED CERTIFICATE OF
INCORPORATION OF
SUN MICROSYSTEMS, INC.
Michael E. Lehman and Michael H. Morris, certify that:
1. They are the Vice-President, Chief Financial Officer and Vice President,
General Counsel and Corporate Secretary, respectively, of Sun Microsystems,
Inc., a Delaware corporation.
2. So much of Section (a) of Article 4 of the Restated Certificate of
Incorporation of this Corporation as now reads.
"This Corporation is authorized to issue two classes of shares designated
"Common Stock" and "Preferred Stock". The total number of shares which
this corporation shall have authority to issue is Three Hundred Ten
Million (310,000,000), of which Three Hundred Million (300,000,000) shall
be Common Stock with a par value of $.00067 per share and Ten Million
(10,000,000) shall be Preferred Stock with a par value of $.001 per
share."
is amended to read as follows:
"The Corporation is authorized to issue two classes of shares designated
"Common Stock" and "Preferred Stock". The total number of shares which
this corporation shall have authority to issue is Nine Hundred Fifty
Million (950,000,000), of which Nine Hundred Forty Million (940,000,000)
shall be Common Stock with a par value of $.00067 per share and Ten
Million (10,000,000) shall be Preferred Stock with a par value of $.001
per share."
3. The foregoing Certificate of Amendment of the Restated Certificate of
Incorporation has been duly approved by the Board of Directors.
4. The foregoing Certificate of Amendment of the Restated Certificate of
Incorporation has been duly approved by the required vote of stockholders in
accordance with Section 242 of the Delaware Corporations Code. The total number
of outstanding shares of Common Stock of the corporation is 183,648,532. No
shares of Preferred Stock are outstanding. The number of shares voting in favor
of the amendment equaled or exceeded the vote required. The percentage vote
required was more than 50% of the outstanding Common Stock.
We further declare under penalty of perjury under the laws of the State of
Delaware that the matters set forth in the foregoing certificate are true and
correct of our own knowledge.
IN WITNESS WHEREOF, the Corporation has caused its corporate seal to be hereunto
affixed and the Certificate of Amendment to be signed by Michael E. Lehman, its
Vice President, Chief Financial Officer and attested by Michael H. Morris, its
Vice President, General Counsel and Corporate Secretary, this 13th day of
November, 1996.
SUN MICROSYSTEMS, INC.
[Corporate Seal] /s/ MICHAEL E. LEHMAN
-----------------------------------------
Michael E. Lehman
ATTEST: /s/ MICHAEL H. MORRIS
-----------------------------------------
Michael H. Morris
<PAGE> 13
CERTIFICATE OF DESIGNATIONS OF RIGHTS, PREFERENCES
AND PRIVILEGES OF
SERIES A PARTICIPATING PREFERRED STOCK
OF SUN MICROSYSTEMS, INC.
The undersigned, Scott G. McNealy and Michael H. Morris do hereby certify:
1. That they are the duly elected and acting President and Secretary,
respectively, of Sun Microsystems, Inc., a Delaware corporation (the
"CORPORATION").
2. That pursuant to the authority conferred upon the Board of Directors
by the Certificate of Incorporation of the said Corporation, the said Board of
Directors on February 11, 1998 adopted the following resolution creating a
series of 1,000,000 shares of Preferred Stock designated as Series A
Participating Preferred Stock:
"RESOLVED, that pursuant to the authority vested in the Board of Directors
of the corporation by the Restated Certificate of Incorporation, the Board of
Directors does hereby provide for the issue of a series of Preferred Stock of
the Corporation and does hereby fix and herein state and express the
designations, powers, preferences and relative and other special rights and the
qualifications, limitations and restrictions of such series of Preferred Stock
as follows:
Section I. Designation and Amount. The shares of such series shall be
designated as "SERIES A PARTICIPATING PREFERRED STOCK." The Series A
Participating Preferred Stock shall have a par value of $0.001 per share, and
the number of shares constituting such series shall be 1,000,000.
Section II. Proportional Adjustment. In the event the Corporation shall at
any time after the issuance of any share or shares of Series A Participating
Preferred Stock (i) declare any dividend on Common Stock of the Corporation
("COMMON STOCK") payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock or (iii) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the Corporation shall
simultaneously effect a proportional adjustment to the number of outstanding
shares of Series A Participating Preferred Stock.
Section III. Dividends and Distributions.
A. Subject to the prior and superior right of the holders of any
shares of any series of Preferred Stock ranking prior and superior to the shares
of Series A Participating Preferred Stock with respect to dividends, the holders
of shares of Series A Participating Preferred Stock shall be entitled to receive
when, as and if declared by the Board of Directors out of funds legally
available for the purpose, quarterly dividends payable in cash on the last day
of January, April, July and October in each year (each
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<PAGE> 14
such date being referred to herein as a "QUARTERLY DIVIDEND PAYMENT DATE"),
commencing on the first Quarterly Dividend Payment Date after the first issuance
of a share or fraction of a share of Series A Participating Preferred Stock, in
an amount per share (rounded to the nearest cent) equal to 1,000 times the
aggregate per share amount of all cash dividends, and 1,000 times the aggregate
per share amount (payable in kind) of all non-cash dividends or other
distributions other than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date, or, with respect to the first Quarterly
Dividend Payment Date, since the first issuance of any share or fraction of a
share of Series A Participating Preferred Stock.
B. The Corporation shall declare a dividend or distribution on
the Series A Participating Preferred Stock as provided in paragraph (a) above
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock).
C. Dividends shall begin to accrue on outstanding shares of
Series A Participating Preferred Stock from the Quarterly Dividend Payment Date
next preceding the date of issue of such shares of Series A Participating
Preferred Stock, unless the date of issue of such shares is prior to the record
date for the first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date or is a date after
the record date for the determination of holders of shares of Series A
Participating Preferred Stock entitled to receive a quarterly dividend and
before such Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue from such Quarterly Dividend Payment Date.
Accrued but unpaid dividends shall not bear interest. Dividends paid on the
shares of Series A Participating Preferred Stock in an amount less than the
total amount of such dividends at the time accrued and payable on such shares
shall be allocated pro rata on a share-by-share basis among all such shares at
the time outstanding. The Board of Directors may fix a record date for the
determination of holders of shares of Series A Participating Preferred Stock
entitled to receive payment of a dividend or distribution declared thereon,
which record date shall be no more than 30 days prior to the date fixed for the
payment thereof.
Section IV. Voting Rights. The holders of shares of Series A Participating
Preferred Stock shall have the following voting rights:
A. Each share of Series A Participating Preferred Stock shall
entitle the holder thereof to 1,000 votes on all matters submitted to a vote of
the stockholders of the Corporation.
B. Except as otherwise provided herein or by law, the holders of
shares of Series A Participating Preferred Stock and the holders of shares of
Common Stock shall vote together as one class on all matters submitted to a vote
of stockholders of the Corporation.
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<PAGE> 15
C. Except as required by law, holders of Series A Participating
Preferred Stock shall have no special voting rights and their consent shall not
be required (except to the extent they are entitled to vote with holders of
Common Stock as set forth herein) for taking any corporate action.
Section V. Certain Restrictions.
A. The Corporation shall not declare any dividend on, make any
distribution on, or redeem or purchase or otherwise acquire for consideration
any shares of Common Stock after the first issuance of a share or fraction of a
share of Series A Participating Preferred Stock unless concurrently therewith it
shall declare a dividend on the Series A Participating Preferred Stock as
required by Section III hereof.
B. Whenever quarterly dividends or other dividends or
distributions payable on the Series A Participating Preferred Stock as provided
in Section III are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on shares of Series A
Participating Preferred Stock outstanding shall have been paid in full, the
Corporation shall not
1. declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire for consideration
any shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Participating Preferred Stock;
2. declare or pay dividends on, make any other
distributions on any shares of stock ranking on a parity (either as to dividends
or upon liquidation, dissolution or winding up) with Series A Participating
Preferred Stock, except dividends paid ratably on the Series A Participating
Preferred Stock and all such parity stock on which dividends are payable or in
arrears in proportion to the total amounts to which the holders of all such
shares are then entitled;
3. redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series A Participating
Preferred Stock, provided that the Corporation may at any time redeem, purchase
or otherwise acquire shares of any such parity stock in exchange for shares of
any stock of the Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series A Participating Preferred
Stock;
4. purchase or otherwise acquire for consideration any
shares of Series A Participating Preferred Stock, or any shares of stock ranking
on a parity with the Series A Participating Preferred Stock, except in
accordance with a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of such shares upon such
terms as the Board of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the respective
series and classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
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<PAGE> 16
C. The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (a) of
this Section 5, purchase or otherwise acquire such shares at such time and in
such manner.
Section VI. Reacquired Shares. Any shares of Series A Participating
Preferred Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition thereof.
All such shares shall upon their cancellation become authorized but unissued
shares of Preferred Stock and may be reissued as part of a new series of
Preferred Stock to be created by resolution or resolutions of the Board of
Directors, subject to the conditions and restrictions on issuance set forth
herein and, in the Restated Certificate of Incorporation, as then amended.
Section VII. Liquidation, Dissolution or Winding Up. Upon any liquidation,
dissolution or winding up of the Corporation, the holders of shares of Series A
Participating Preferred Stock shall be entitled to receive an aggregate amount
per share equal to 1000 times the aggregate amount to be distributed per share
to holders of shares of Common Stock plus an amount equal to any accrued and
unpaid dividends on such shares of Series A Participating Preferred Stock.
Section VIII. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Series A Participating Preferred Stock shall at the same time be similarly
exchanged or changed in an amount per share equal to 1,000 times the aggregate
amount of stock, securities, cash and/or any other property (payable in kind),
as the case may be, into which or for which each share of Common Stock is
changed or exchanged.
Section IX. No Redemption. The shares of Series A Participating Preferred
Stock shall not be redeemable.
Section X. Ranking. The Series A Participating Preferred Stock shall rank
junior to all other series of the Corporation's Preferred Stock as to the
payment of dividends and the distribution of assets, unless the terms of any
such series shall provide otherwise.
Section XI. Amendment. The Restated Certificate of Incorporation of the
Corporation shall not be further amended in any manner which would materially
alter or change the powers, preference or special rights of the Series A
Participating Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of a majority of the outstanding shares of
Series A Participating Preferred Stock, voting separately as a class.
Section XII. Fractional Shares. Series A Participating Preferred Stock may
be issued in fractions of a share which shall entitle the holder, in proportion
to such holder's fractional shares, to
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<PAGE> 17
exercise voting rights, receive dividends, participate in distributions and to
have the benefit of all other rights of holders of Series A Participating
Preferred Stock.
* * *
-5-
<PAGE> 18
RESOLVED FURTHER, that the President or any Vice President and the
Secretary or any Assistant Secretary of this corporation be, and they hereby
are, authorized and directed to prepare and file a Certificate of Designation of
Rights, Preferences and Privileges in accordance with the foregoing resolution
and the provisions of Delaware law and to take such actions as they may deem
necessary or appropriate to carry out the intent of the foregoing resolution."
We further declare under penalty of perjury that the matters set forth in
the foregoing Certificate of Designation are true and correct of our own
knowledge.
Executed at Palo Alto, California on February 11, 1998.
/s/ SCOTT G. MCNEALY
-----------------------------------------
Scott G. McNealy, President
/s/ MICHAEL H. MORRIS
-----------------------------------------
Michael H. Morris, Secretary
-6-
<PAGE> 1
BYLAWS
OF
SUN MICROSYSTEMS, INC.
(As adopted on December 14, 1990
and amended as of February 11, 1998)
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE I - CORPORATE OFFICES ................................................5
1.1 REGISTERED OFFICE ...............................................5
1.2 OTHER OFFICES ...................................................5
ARTICLE II - STOCKHOLDERS ....................................................5
2.1 PLACE OF MEETINGS ...............................................5
2.2 ANNUAL MEETING ..................................................5
2.3 SPECIAL MEETING .................................................6
2.4 NOTICE OF STOCKHOLDERS' MEETINGS ................................7
2.5 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE ....................7
2.6 QUORUM ..........................................................8
2.7 ADJOURNED MEETING; NOTICE .......................................8
2.8 CONDUCT OF BUSINESS .............................................8
2.9 WAIVER OF NOTICE ................................................8
2.10 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING .........9
2.11 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS .....9
2.12 VOTING ..........................................................10
2.13 PROXIES .........................................................11
2.14 LIST OF STOCKHOLDERS ENTITLED TO VOTE ...........................11
2.15 INSPECTORS OF ELECTION ..........................................12
ARTICLE III - DIRECTORS ......................................................12
3.1 POWERS ..........................................................12
3.2 NUMBER OF DIRECTORS .............................................12
3.3 ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS .........13
3.4 RESIGNATION AND VACANCIES .......................................13
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE ........................14
3.6 REGULAR MEETINGS ................................................15
3.7 SPECIAL MEETINGS; NOTICE ........................................15
3.8 QUORUM ..........................................................15
3.9 WAIVER OF NOTICE ................................................15
3.10 CONDUCT OF BUSINESS .............................................16
2
<PAGE> 3
3.11 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING ...............16
3.12 FEES AND COMPENSATION OF DIRECTORS ..............................16
3.13 APPROVAL OF LOANS TO OFFICERS ...................................16
3.14 REMOVAL OF DIRECTORS ............................................16
ARTICLE IV - COMMITTEES ......................................................17
4.1 COMMITTEES OF DIRECTORS .........................................17
4.2 COMMITTEE MINUTES ...............................................18
4.3 MEETINGS AND ACTION OF COMMITTEES ...............................18
ARTICLE V - OFFICERS .........................................................18
5.1 GENERAL MATTERS .................................................18
5.2 APPOINTMENT OF OFFICERS .........................................18
5.3 SUBORDINATE OFFICERS ............................................18
5.4 REMOVAL AND RESIGNATION OF OFFICERS .............................19
5.5 VACANCIES IN OFFICES ............................................19
5.6 CHAIRMAN OF THE BOARD ...........................................19
5.7 CHIEF EXECUTIVE OFFICER .........................................19
5.8 PRESIDENT .......................................................20
5.9 VICE PRESIDENTS .................................................20
5.10 SECRETARY .......................................................20
5.11 CHIEF FINANCIAL OFFICER .........................................21
5.12 REPRESENTATION OF SHARES OF OTHER CORPORATIONS ..................21
5.13 AUTHORITY AND DUTIES OF OFFICERS ................................21
ARTICLE VI - INDEMNITY .......................................................21
6.1 THIRD PARTY ACTIONS .............................................21
6.2 ACTIONS BY OR IN THE RIGHT OF THE CORPORATION ...................22
6.3 SUCCESSFUL DEFENSE ..............................................22
6.4 DETERMINATION OF CONDUCT ........................................22
6.5 PAYMENT OF EXPENSES IN ADVANCE ..................................23
6.6 INDEMNITY NOT EXCLUSIVE .........................................23
6.7 INSURANCE INDEMNIFICATION .......................................23
6.8 THE CORPORATION .................................................23
6.9 EMPLOYEE BENEFIT PLANS ..........................................24
6.10 INDEMNITY FUND ..................................................24
6.11 INDEMNIFICATION OF OTHER PERSONS ................................24
6.12 SAVINGS CLAUSE ..................................................24
3
<PAGE> 4
6.13 CONTINUATION OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES .....25
ARTICLE VII - RECORDS AND REPORTS ............................................25
7.1 MAINTENANCE AND INSPECTION OF RECORDS ...........................25
7.2 INSPECTION BY DIRECTORS .........................................25
7.3 ANNUAL STATEMENT TO STOCKHOLDERS ................................26
ARTICLE VIII - GENERAL MATTERS ...............................................26
8.1 CHECKS ...........................................................26
8.2 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS .................26
8.3 STOCK CERTIFICATES; PARTLY PAID SHARES ...........................26
8.4 SPECIAL DESIGNATION ON CERTIFICATES ..............................27
8.5 LOST CERTIFICATES ................................................27
8.6 CONSTRUCTION; DEFINITIONS ........................................27
8.7 DIVIDENDS ........................................................28
8.8 FISCAL YEAR ......................................................28
8.9 SEAL .............................................................28
8.10 TRANSFER OF STOCK ...............................................28
8.11 STOCK TRANSFER AGREEMENTS .......................................28
8.12 REGISTERED STOCKHOLDERS .........................................28
8.13 NOTICES .........................................................29
ARTICLE IX - AMENDMENTS ......................................................29
4
<PAGE> 5
BYLAWS
OF
SUN MICROSYSTEMS, INC.
ARTICLE I
CORPORATE OFFICES
1.1 REGISTERED OFFICE
The registered office of the corporation shall be in the City of
Wilmington, County of New Castle, State of Delaware. The name of the registered
agent of the corporation at such location is The Corporation Trust Company.
1.2 OTHER OFFICES
The board of directors may at any time establish other offices at any
place or places where the corporation is qualified to do business.
ARTICLE II
STOCKHOLDERS
2.1 PLACE OF MEETINGS
Meetings of stockholders shall be held at any place, within or outside
the State of Delaware, designated by the board of directors. In the absence of
any such designation, stockholders' meetings shall be held at the registered
office of the corporation.
2.2 ANNUAL MEETING
The annual meeting of the stockholders of this corporation shall be held
each year on a date and at a time designated by the board of directors. At the
meeting, directors shall be elected and any other proper business may be
transacted. Nominations of persons for election to the board of directors of the
corporation and the proposal of business to be considered by the stockholders
may be made at an annual meeting of stockholders only (a) pursuant to the
corporation's notice of meeting, (b) by or at the direction of the board of
directors or (c) by any stockholder of the corporation who was a stockholder of
record at the time of giving of notice provided for in these Bylaws, who is
entitled to vote at the meeting and who complies with the notice procedures set
forth in this Bylaw.
For nominations or other business to be properly brought before an
annual meeting by a stockholder pursuant to clause (c) of the preceding
sentence, the stockholder must have given timely notice thereof in writing to
the secretary of the corporation and such other business must otherwise be a
proper matter for stockholder action. To be timely, a stockholder's notice shall
be delivered to
5
<PAGE> 6
the secretary at the principal executive offices of the corporation not later
than the close of business on the 60th day nor earlier than the close of
business on the 90th day prior to the meeting; provided, however, that in the
event that less than 65 days notice of the meeting is given to stockholders,
notice by the stockholder to be timely must be so delivered not earlier than the
close of business on the seventh (7th) day following the day on which the notice
of meeting was mailed. In no event shall the public announcement of an
adjournment of an annual meeting commence a new time period for the giving of a
stockholder's notice as described above. Such stockholder's notice shall set
forth (a) as to each person whom the stockholder proposes to nominate for
election or reelection as a director all information relating to such person
that is required to be disclosed in solicitations of proxies for election of
directors in an election contest, or is otherwise required, in each case
pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended
(or any successor thereto) (the "Exchange Act") and Rule 14a-11 thereunder (or
any successor thereto) (including such person's written consent to being named
in the proxy statement as a nominee and to serving as a director if elected);
(b) as to any other business that the stockholder proposes to bring before the
meeting, a brief description of the business desired to be brought before the
meeting, the reasons for conducting such business at the meeting and any
material interest in such business of such stockholder and the beneficial owner,
if any, on whose behalf the proposal is made; and (c) as to the stockholder
giving the notice and the beneficial owner, if any, on whose behalf the
nomination or proposal is made (i) the name and address of such stockholder, as
they appear on the corporation's books, and of such beneficial owner, and (ii)
the class and number of shares of the corporation which are owned beneficially
and of record by such stockholder and such beneficial owner. Notwithstanding any
provision herein to the contrary, no business shall be conducted at an annual
meeting except in accordance with the procedures set forth in this Section 2.2.
2.3 SPECIAL MEETING
A special meeting of the stockholders may be called at any time by the
board of directors, or by the chairman of the board, or by any executive officer
of the corporation, or by one or more stockholders holding shares in the
aggregate entitled to cast not less than ten percent of the votes at that
meeting.
If a special meeting is called by any person or persons other than the
board of directors, the request shall be in writing to the secretary of the
corporation, and shall set forth (a) as to each person whom such person or
persons propose to nominate for election or reelection as a director at such
meeting all information relating to such proposed nominee that is required to be
disclosed in solicitations of proxies for election of directors in an election
contest, or is otherwise required, in each case pursuant to Regulation 14A under
the Exchange Act (or any successor thereto) and Rule 14a-11 thereunder (or any
successor thereto)(including such proposed nominee's written consent to being
named in the proxy statement as a nominee and to serving as a director if
elected); (b) as to any other business to be taken the meeting, a brief
description of such business, the reasons for conducting such business and any
material interest in such business of the person or persons calling such meeting
and the beneficial owners, if any, on whose behalf such meeting is called; and
(c) as to
6
<PAGE> 7
the person or persons calling such meeting and the beneficial owners, if any, on
whose behalf the meeting is called (i) the name and address of such persons, as
they appear on the corporation's books, and of such beneficial owners, and (ii)
the class and number of shares of the corporation which are owned beneficially
and of record by such persons and such beneficial owners. No business may be
transacted at such special meeting otherwise than specified in such notice or by
or at the direction of the corporation's board of directors. The corporation's
secretary shall cause notice to be promptly given to the stockholders entitled
to vote, in accordance with the provisions of Sections 2.4 and 2.5, that a
meeting will be held at the time reasonably requested by the person or persons
who called the meeting, not less than 60 nor more than 90 days after the receipt
of the request. If the notice is not given within 20 days after the receipt of a
valid request, the person or persons requesting the meeting may give the notice.
Nothing contained in this paragraph 2.3 shall be construed as limiting, fixing
or affecting the time when a meeting of stockholders called by action of the
board of directors may be held.
Only such business shall be conducted at a special meeting of
stockholders called by action of the board of directors as shall have been
brought before the meeting pursuant to the corporation's notice of meeting.
This Section 2.3 may not be amended to eliminate the right of one or
more stockholders holding shares in the aggregate entitled to cast not less than
ten percent of the votes at a special meeting of stockholders to call such a
special meeting of stockholders, unless holders of at least seventy-five percent
of the shares entitled to vote thereon approve such an amendment.
2.4 NOTICE OF STOCKHOLDERS' MEETINGS
All notices of meetings with stockholders shall be in writing and shall
be sent or otherwise given in accordance with Section 2.5 of these Bylaws not
less than ten (10) nor more than sixty (60) days before the date of the meeting
to each stockholder entitled to vote at such meeting, except as otherwise
provided herein or required by law (meaning, here and hereinafter, as required
from time to time by the General Corporation Law of Delaware or the certificate
of incorporation of the corporation). The notice shall specify the place, date,
and hour of the meeting, and, in the case of a special meeting, the purpose or
purposes for which the meeting is called.
2.5 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE
Written notice of any meeting of stockholders, if mailed, is given when
deposited in the United States mail, postage prepaid, directed to the
stockholder at his address as it appears on the records of the corporation. An
affidavit of the secretary or an assistant secretary or of the transfer agent of
the corporation that the notice has been given shall, in the absence of fraud,
be prima facie evidence of the facts stated therein.
7
<PAGE> 8
2.6 QUORUM
At any meeting of the stockholders, the holders of a majority of all of
the shares of the stock entitled to vote at the meeting, present in person or by
proxy, shall constitute a quorum for all purposes, unless or except to the
extent that the presence of a larger number may be required by law. Where a
separate vote by a class or classes is required, a majority of the shares of
such class or classes entitled to take action with respect to that vote on that
matter, present in person or by proxy, shall constitute a quorum. If a quorum
shall fail to attend any meeting, the chairman of the meeting may adjourn the
meeting to another place, date or time.
If a notice of any adjourned special meeting of stockholders is sent to
all stockholders entitled to vote thereat, stating that it will be held with
those present constituting a quorum, those present at such adjourned meeting
shall constitute a quorum, and all matters shall be determined by a majority of
the votes cast at such meeting, except as otherwise required by law.
2.7 ADJOURNED MEETING; NOTICE
When a meeting is adjourned to another time or place, unless these
Bylaws otherwise require, notice need not be given of the adjourned meeting if
the time and place thereof are announced at the meeting at which the adjournment
is taken. At the adjourned meeting the corporation may transact any business
that might have been transacted at the original meeting. If the adjournment is
for more than thirty (30) days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.
2.8 CONDUCT OF BUSINESS
Such person as the board of directors may have designated or, in the
absence of such a person, any executive officer of the corporation, shall call
to order any meeting of the stockholders and act as chairman of the meeting. In
the absence of the secretary of the corporation, the secretary of the meeting
shall be such person as the chairman appoints. The chairman of any meeting of
stockholders shall determine the order of business and the procedure at the
meeting, including such regulation of the manner of voting and the conduct of
discussion as seem to him in order. The date and time of the opening and closing
of the polls for each matter upon which the stockholders will vote at the
meeting shall be announced at the meeting.
2.9 WAIVER OF NOTICE
Whenever notice is required to be given under any provision of the
General Corporation Law of Delaware or of the certificate of incorporation or
these Bylaws, a written waiver thereof, signed by the person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
notice. Attendance of a person at a meeting shall constitute a waiver of notice
of such
8
<PAGE> 9
meeting, except when the person attends a meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened. Neither the business to
be transacted at, nor the purpose of, any regular or special meeting of the
stockholders need be specified in any written waiver of notice unless so
required by the certificate of incorporation or these Bylaws.
2.10 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Any action required or able to be taken at any annual or special meeting
of stockholders may be taken without a meeting, without prior notice, and
without a vote if a consent or consents in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted and shall be delivered to the corporation at its registered office in
Delaware, its principal place of business, or to an officer or agent of the
corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery to the corporation's registered office shall
be made by hand or by certified or registered mail, return receipt requested.
Every written consent shall bear the date of signature of each
stockholder who signs the consent and no written consent shall be effective to
take the corporate action referred to therein unless, within sixty (60) days of
the date the earliest dated consent is delivered to the corporation, a written
consent or consents signed by a sufficient number of holders to take action are
delivered to the corporation in the manner prescribed in the first paragraph of
this section.
Prompt notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing. If the action which is consented to is such as
would have required the filing of a certificate under any section of the General
Corporation Law of Delaware if such action had been voted on by stockholders at
a meeting thereof, then the certificate filed under such section shall state, in
lieu of any statement required by such section concerning any vote of
stockholders, that written notice and written consent have been given as
provided in Section 228 of the General Corporation Law of Delaware.
2.11 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS
In order that the corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any adjournment thereof
or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any other lawful
action, the board of directors may fix a record date, which shall not be more
than sixty (60) nor less than ten (10) days before the date of such meeting, nor
more than sixty (60) days prior to any other action.
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If the board of directors does not so fix a record date:
(i) The record date for determining stockholders entitled to notice
of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or,
if notice is waived, at the close of business on the day next preceding
the day on which the meeting is held.
(ii) The record date for determining stockholders entitled to receive
payment of any dividend or other distribution or allotment of rights or
to exercise any rights of change, conversion or exchange of stock or for
any other purpose shall be at the close of business on the day on which
the board of directors adopts the resolution relating thereto.
In order that the corporation may determine the stockholders entitled to
consent to corporate action in writing without a meeting, the board of directors
may fix a record date, which record date shall neither precede nor be more than
ten (10) days after the date upon which such resolution is adopted by the board
of directors. Any stockholder of record seeking to have the stockholders
authorize or take action by written consent shall, by written notice to the
secretary, request the board of directors to fix a record date. The board of
directors shall promptly, but in all events within ten (10) days after the date
on which such noticed is received, adopt a resolution fixing the record date.
If the board of directors has not fixed a record date within such time,
the record date for determining stockholders entitled to consent to corporate
action in writing without a meeting, when no prior action by the board of
directors is required by law, shall be the first date on which a signed written
consent setting forth the action taken or proposed to be taken is delivered to
the corporation in the manner prescribed in the first paragraph of Section 2.10
of these Bylaws. If the board of directors has not fixed a record date within
such time and prior action by the board of directors is required by law, the
record date for determining stockholders entitled to consent to corporate action
in writing without a meeting shall be at the close of business on the date on
which the board of directors adopts the resolution taking such prior action.
A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix a new record date for the
adjourned meeting.
2.12 VOTING
The stockholders entitled to vote at any meeting of stockholders shall
be determined in accordance with the provisions of Section 2.11 of these Bylaws,
subject to the provisions of Sections 217 and 218 of the General Corporation Law
of Delaware (relating to voting rights of fiduciaries, pledgors and joint owners
of stock and to voting trusts and other voting agreements).
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Each stockholder shall have one (1) vote for every share of stock
entitled to vote that is registered in his or her name on the record date for
the meeting (as determined in accordance with Section 2.11 of these Bylaws),
except as otherwise provided herein or required by law.
At a stockholders' meeting at which directors are to be elected, each
stockholder shall be entitled to cumulate votes (i.e., cast for any candidate a
number of votes greater than the number of votes which such stockholder normally
is entitled to cast) if the candidates' names have been properly placed in
nomination (in accordance with these Bylaws) prior to commencement of the voting
and the stockholder requesting cumulative voting has given notice prior to
commencement of the voting of the stockholder's intention to cumulate votes. If
cumulative voting is properly requested, each holder of stock, or of any class
or classes or of a series or series thereof, who elects to cumulate votes shall
be entitled to as many votes as equals the number of votes which (absent this
provision as to cumulative voting) he would be entitled to cast for the election
of directors with respect to his shares of stock multiplied by the number of
directors to be elected by him, and he may cast all of such votes for a single
director or may distribute them among the number to be voted for, or for any two
or more of them, as he may see fit.
Every stock vote shall be taken by ballots, each of which shall state
the name of the stockholder or proxy voting and such other information as may be
required under the procedure established for the meeting. All elections shall be
determined by a plurality of the votes cast, and except as otherwise required by
law or provided herein, all other matters shall be determined by a majority of
the votes cast affirmatively or negatively.
2.13 PROXIES
Each stockholder entitled to vote at a meeting of stockholders or to
express consent or dissent to corporate action in writing without a meeting may
authorize another person or persons to act for him by a written proxy, filed in
accordance with the procedure established for the meeting or taking of action in
writing, but no such proxy shall be voted or acted upon after three (3) years
from its date, unless the proxy provides for a longer period. Any copy,
facsimile telecommunication or other reliable reproduction of the writing or
transmission created pursuant to this Section 2.13 may be substituted or used in
lieu of the original writing or transmission for any and all purposes for which
the original writing or transmission could be used, provided that such copy,
facsimile telecommunication or other reproduction shall be a complete
reproduction of the entire original writing or transmission. The revocability of
a proxy that states on its face that it is irrevocable shall be governed by the
provisions of Section 212(c) of the General Corporation Law of Delaware.
2.14 LIST OF STOCKHOLDERS ENTITLED TO VOTE
The officer who has charge of the stock ledger of a corporation shall
prepare and make, at least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder
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and the number of shares registered in the name of each stockholder. Such list
shall be open to the examination of any stockholder, for any purpose germane to
the meeting, during ordinary business hours, for a period of at least ten (10)
days prior to the meeting, either at a place within the city where the meeting
is to be held, which place shall be specified in the notice of the meeting, or,
if not so specified, at the place where the meeting is to be held. The list
shall also be produced and kept at the time and place of the meeting during the
whole time thereof, and may be inspected by any stockholder who is present. Such
list shall presumptively determine the identity of the stockholders entitled to
vote at the meeting and the number of shares held by each of them.
2.15 INSPECTORS OF ELECTION
The corporation may, and to the extent required by law, shall, in
advance of any meeting of stockholders, appoint one or more inspectors to act at
the meeting and make a written report thereof. The corporation may designate one
or more persons as alternate inspectors to replace any inspector who fails to
act. If no inspector or alternate is able to act at a meeting of stockholders,
the person presiding at the meeting may, and to the extent required by law,
shall, appoint one or more inspectors to act at the meeting. Each inspector,
before entering upon the discharge of his duties, shall take and sign an oath
faithfully to execute the duties of inspector with strict impartiality and
according to the best of his ability. Every vote taken by ballots shall be
counted by an inspector or inspectors appointed by the chairman of the meeting.
ARTICLE III
DIRECTORS
3.1 POWERS
Subject to the provisions of the General Corporation Law of Delaware and
any limitations in the Certificate of Incorporation or these Bylaws relating to
action required to be approved by the stockholders or by the outstanding shares,
the business and affairs of the corporation shall be managed and all corporate
powers shall be exercised by or under the direction of the board of directors.
3.2 NUMBER OF DIRECTORS
The number of directors of the corporation shall be no less than five
(5) more more than nine (9). The exact number of directors shall be seven (7),
until changed, within the limits specified above, by a Bylaw amending this
Section 3.2, duly adopted by the board of directors or by the shareholders. The
indefinite number of directors may be changed, or a definite number fixed
without provision for an indefinite number, by an adopted amendment to this
Bylaw duly adopted by the vote or written consent of holders of a majority of
the outstanding shares entitled to vote; provided, however, that an amendment
reducing the number or the minimum number of directors to a number less than
five (5) cannot be adopted if the votes cast against its adoption at a meeting
of the
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shareholders, or the shares not consenting in the case of action by written
consent, are equal to more than sixteen and two-thirds percent (16-2/3%) of the
outstanding shares entitled to vote thereon. No amendment may change the stated
maximum number of authorized directors to a number greater than two (2) times
the stated number of directors minus one (1).
No reduction of the authorized number of directors shall have the effect
of removing any director before that director's term of office expires.
3.3 ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS
Except as provided in Section 3.4 of these Bylaws, directors shall be
elected at each annual meeting of stockholders to hold office until the next
annual meeting. Directors need not be stockholders unless so required by the
certificate of incorporation or these Bylaws, wherein other qualifications for
directors may be prescribed. Each director, including a director elected to fill
a vacancy, shall hold office until his successor is elected and qualified or
until his earlier resignation or removal.
Nominations for election to the board of directors of the corporation at
an annual meeting of stockholders may be made by the board or on behalf of the
board by a nominating committee appointed by the board, or by any stockholder of
the corporation entitled to vote for the election of directors at such meeting.
Such nominations, other than those made by or on behalf of the board, shall be
made by notice in writing received by the secretary of the corporation not less
than thirty (30) days nor more than sixty (60) days prior to the date of the
annual meeting; provided, however, that if less than thirty-five (35) days
notice of the meeting is given to stockholders, such nomination shall have been
received by the secretary not later than the close of business on the seventh
(7th) day following the day on which the notice was mailed. Such notice shall
set forth as to each proposed nominee who is not an incumbent director (i) the
name, age, business address and, if known, residence address of each nominee
proposed in such notice, (ii) the principal occupation or employment of such
nominee, (iii) the number of shares of stock of the corporation beneficially
owned by each such nominee and by the nominating stockholder, and (iv) any other
information concerning the nominee that must be disclosed of nominees in proxy
solicitations pursuant to Regulation 14A under the Securities Exchange Act of
1934.
The chairman of the annual meeting may, if the facts warrant, determine
and declare to the meeting that a nomination was not made in accordance with the
foregoing procedure. If such determination and declaration is made, the
defective nomination shall be disregarded.
3.4 RESIGNATION AND VACANCIES
Any director may resign at any time upon written notice to the attention
of the Secretary of the corporation. When one or more directors so resigns and
the resignation is effective at a future date, only a majority of the directors
then in office, including those who have so resigned, shall have power to fill
such vacancy or vacancies, the vote thereon to take effect when such resignation
or resignations shall become effective, and each director so chosen shall hold
office as provided in this
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section in the filling of other vacancies.
Unless otherwise provided in the certificate of incorporation or these
Bylaws:
(i) Vacancies and newly created directorships resulting from any
increase in the authorized number of directors elected by all of the
stockholders having the right to vote as a single class may be filled
only by a majority of the directors then in office, although less than a
quorum, or by a sole remaining director.
(ii) Whenever the holders of any class or classes of stock or series
thereof are entitled to elect one or more directors by the provisions of
the certificate of incorporation, vacancies and newly created
directorships of such class or classes or series may be filled only by a
majority of the directors elected by such class or classes or series
thereof then in office, or by a sole remaining director so elected.
If at any time, by reason of death or resignation or other cause, the
corporation should have no directors in office, then any officer or any
stockholder or an executor, administrator, trustee or guardian of a stockholder,
or other fiduciary entrusted with like responsibility for the person or estate
of a stockholder, may call a special meeting of stockholders in accordance with
the provisions of the certificate of incorporation or these Bylaws, or may apply
to the Court of Chancery for a decree summarily ordering an election as provided
in Section 211 of the General Corporation Law of Delaware.
If, at the time of filling any vacancy or any newly created
directorship, the directors then in office constitute less than a majority of
the whole board (as constituted immediately prior to any such increase), then
the Court of Chancery may, upon application of any stockholder or stockholders
holding at least ten (10) percent of the total number of the shares at the time
outstanding having the right to vote for such directors, summarily order an
election to be held to fill any such vacancies or newly created directorships,
or to replace the directors chosen by the directors then in office as aforesaid,
which election shall be governed by the provisions of Section 211 of the General
Corporation Law of Delaware as far as applicable.
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE
The board of directors of the corporation may hold meetings, both
regular and special, either within or outside the State of Delaware.
Unless otherwise restricted by the certificate of incorporation or these
Bylaws, members of the board of directors, or any committee designated by the
board of directors, may participate in a meeting of the board of directors, or
any committee, by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each
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other, and such participation in a meeting shall constitute presence in person
at the meeting.
3.6 REGULAR MEETINGS
Regular meetings of the board of directors shall be held at such place
or places, on such date or dates, and at such time or times as shall have been
established by the board of directors and publicized among all directors. A
notice of each regular meeting shall not be required.
3.7 SPECIAL MEETINGS; NOTICE
Special meetings of the board of directors for any purpose or purposes
may be called at any time by any executive officer of the corporation, or by
one-third of the directors then in office (rounded up to the nearest whole
number) and shall be held at a place, on a date and at a time as such officer or
such directors shall fix. Notice of the place, date and time of special
meetings, unless waived, shall be given to each director by mailing written
notice not less than two (2) days before the meeting or by sending a facsimile
transmission of the same not less than two (2) hours before the time of the
holding of the meeting. If the circumstances warrant, notice may also be given
personally or by telephone not less than two (2) hours before the time of the
holding of the meeting. Oral notice given personally or by telephone may be
communicated either to the director or to a person at the office of the director
who the person giving the notice has reason to believe will promptly communicate
it to the director. Unless otherwise indicated in the notice thereof, any and
all business may be transacted at a special meeting.
3.8 QUORUM
At all meetings of the board of directors, a majority of the authorized
number of directors shall constitute a quorum for the transaction of business
and the act of a majority of the directors present at any meeting at which there
is a quorum shall be the act of the board of directors, except as may be
otherwise specifically provided by statute or by the certificate of
incorporation. If a quorum is not present at any meeting of the board of
directors, then the directors present thereat may adjourn the meeting from time
to time, without notice other than announcement at the meeting, until a quorum
is present.
A meeting at which a quorum is initially present may continue to
transact business notwithstanding the withdrawal of directors, if any action
taken is approved by at least a majority of the required quorum for that
meeting.
3.9 WAIVER OF NOTICE
Whenever notice is required to be given under any provision of the
General Corporation Law of Delaware or of the certificate of incorporation or
these Bylaws, a written waiver thereof, signed by the person entitled to notice,
whether before or after the time stated therein, shall be deemed
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equivalent to notice. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends a meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the directors, or members of a committee of
directors, need be specified in any written waiver of notice unless so required
by the certificate of incorporation or these Bylaws.
3.10 CONDUCT OF BUSINESS
At any meeting of the board of directors, business shall be transacted
in such order and manner as the board may from time to time determine, and all
matters shall be determined by the vote of a majority of the directors present,
except as otherwise provided herein or required by law.
3.11 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Unless otherwise restricted by the certificate of incorporation or these
Bylaws, 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 all
members of the board or committee, as the case may be, consent thereto in
writing and the writing or writings are filed with the minutes of proceedings of
the board or committee.
3.12 FEES AND COMPENSATION OF DIRECTORS
Unless otherwise restricted by the certificate of incorporation or these
Bylaws, the board of directors shall have the authority to fix the compensation
of directors.
3.13 APPROVAL OF LOANS TO OFFICERS
The corporation may lend money to, or guarantee any obligation of, or
otherwise assist any officer or other employee of the corporation or of its
subsidiary, including any officer or employee who is a director of the
corporation or its subsidiary, whenever, in the judgment of the directors, such
loan, guaranty or assistance may reasonably be expected to benefit the
corporation. The loan, guaranty or other assistance may be with or without
interest and may be unsecured, or secured in such manner as the board of
directors shall approve, including, without limitation, a pledge of shares of
stock of the corporation. Nothing in this section contained shall be deemed to
deny, limit or restrict the powers of guaranty or warranty of the corporation at
common law or under any statute.
3.14 REMOVAL OF DIRECTORS
Unless otherwise restricted by statute, by the certificate of
incorporation or by these Bylaws, any director or the entire board of directors
may be removed, with or without cause, by the holders of a majority of the
shares then entitled to vote at an election of directors; provided, however,
that, so
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long as shareholders of the corporation are entitled to cumulative voting, if
less than the entire board is to be removed, no director may be removed without
cause if the votes cast against his removal would be sufficient to elect him if
then cumulatively voted at an election of the entire board of directors.
No reduction of the authorized number of directors shall have the effect
of removing any director prior to the expiration of such director's term of
office.
ARTICLE IV
COMMITTEES
4.1 COMMITTEES OF DIRECTORS
The board of directors may, by resolution passed by a majority of the
whole board, designate one or more committees, with each committee to consist of
one or more of the directors of the corporation. The board 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. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the board of
directors to act at the meeting in the place of any such absent or disqualified
member. Any such committee, to the extent provided in the resolution of the
board of directors or in the Bylaws of the corporation, shall have and may
exercise all the powers and authority of the board of directors in the
management of the business and affairs of the corporation, and may authorize the
seal of the corporation to be affixed to all papers that may require it; but no
such committee shall have the power or authority to (i) amend the certificate of
incorporation (except that a committee may, to the extent authorized in the
resolution or resolutions providing for the issuance of shares of stock adopted
by the board of directors as provided in Section 151(a) of the General
Corporation Law of Delaware, fix the designations and any of the preferences or
rights of such shares relating to dividends, redemption, dissolution, any
distribution of assets of the corporation or the conversion into, or the
exchange of such shares for, shares of any other class or classes or any other
series of the same or any other class or classes of stock of the corporation or
fix the number of shares of any series of stock or authorize the increase or
decrease of the shares of any series), (ii) adopt an agreement of merger or
consolidation under Sections 251 or 252 of the General Corporation Law of
Delaware, (iii) recommend to the stockholders the sale, lease or exchange of all
or substantially all of the corporation's property and assets, (iv) recommend to
the stockholders a dissolution of the corporation or a revocation of a
dissolution, or (v) amend the Bylaws of the corporation; and, unless the board
resolution establishing the committee, a supplemental resolution of the board of
directors, the Bylaws or the certificate of incorporation expressly so provide,
no such committee shall have the power or authority to declare a dividend, to
authorize the issuance of stock, or to adopt a certificate of ownership and
merger pursuant to Section 253 of the General Corporation Law of Delaware.
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4.2 COMMITTEE MINUTES
Each committee shall keep regular minutes of its meetings and report the
same to the board of directors when required.
4.3 MEETINGS AND ACTION OF COMMITTEES
Meetings and actions of committees shall be governed by, and held and
taken in accordance with, the provisions of Article III of these Bylaws, Section
3.5 (place of meetings and meetings by telephone), Section 3.6 (regular
meetings), Section 3.7 (special meetings and notice), Section 3.8 (quorum),
Section 3.9 (waiver of notice), and Section 3.11 (action without a meeting),
with such changes in the context of those Bylaws as are necessary to substitute
the committee and its members for the board of directors and its members;
provided, however, that the time of regular meetings of committees may be
determined either by resolution of the board of directors or by resolution of
the committee, that special meetings of committees may also be called by
resolution of the board of directors and that notice of special meetings of
committees shall also be given to all alternate members, who shall have the
right to attend all meetings of the committee. The board of directors may adopt
rules for the government of any committee not inconsistent with the provisions
of these Bylaws.
ARTICLE V
OFFICERS
5.1 GENERAL MATTERS
The officers of the corporation shall be a president, a secretary, and a
chief financial officer. The corporation may also have, at the discretion of the
board of directors, a chairman of the board, a chief executive officer, one or
more vice presidents, one or more assistant secretaries, one or more assistant
treasurers, and any such other officers as may be appointed in accordance with
the provisions of Section 5.3 of these Bylaws. Any number of offices may be held
by the same person.
5.2 APPOINTMENT OF OFFICERS
The officers of the corporation, except such officers as may be
appointed in accordance with the provisions of Sections 5.3 or 5.5 of these
Bylaws, shall be appointed by the board of directors, subject to the rights, if
any, of an officer under any contract of employment.
5.3 SUBORDINATE OFFICERS
The board of directors may appoint, or empower the chief executive
officer or the president to appoint, such other officers and agents as the
business of the corporation may require, each of whom shall hold office for such
period, have such authority, and perform such duties as are provided
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in these Bylaws or as the board of directors may from time to time determine.
Officers appointed by the board of directors shall constitute executive officers
of the corporation. Officers appointed by the president or chief executive
officer shall be subordinate officers, unless otherwise specified by the board
of directors.
5.4 REMOVAL AND RESIGNATION OF OFFICERS
Subject to the rights, if any, of an officer under any contract of
employment, any officer may be removed, either with or without cause, by an
affirmative vote of the majority of the board of directors at any regular or
special meeting of the board or, except in the case of an officer chosen by the
board of directors, by any officer upon whom such power of removal may be
conferred by the board of directors.
Any officer may resign at any time by giving written notice to the
corporation. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless otherwise
specified in that notice, the acceptance of the resignation shall not be
necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of the corporation under any contract to which the officer is a
party.
5.5 VACANCIES IN OFFICES
Any vacancy occurring in any office of the corporation shall be filled
by the board of directors if such officer was appointed by the board of
directors, or by such other person as appointed by the board of directors to
fill such vacancy.
5.6 CHAIRMAN OF THE BOARD
The chairman of the board, if such an officer be elected, shall, if
present, preside at meetings of the board of directors and exercise and perform
such other powers and duties as may from time to time be assigned to him by the
board of directors or as may be prescribed by these Bylaws. If there is no chief
executive officer or president, then the chairman of the board shall also be the
chief executive officer of the corporation and shall have the powers and duties
prescribed in Section 5.7 of these Bylaws.
5.7 CHIEF EXECUTIVE OFFICER
Subject to such supervisory powers, if any, as may be given by the board
of directors to the chairman of the board, if there be such an officer, the
chief executive officer of the corporation shall, subject to the control of the
board of directors, have general supervision, direction, and control of the
business and the officers of the corporation. He shall preside at all meetings
of the stockholders and, in the absence or nonexistence of a chairman of the
board, at all meetings of the board of directors. He shall have the general
powers and duties of management usually vested in the chief executive
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officer of a corporation and shall have such other powers and duties as may be
prescribed by the board of directors or these Bylaws.
5.8 PRESIDENT
Subject to such supervisory powers, if any, as may be given by the board
of directors to the chairman of the board or the chief executive officer, if
there be such officers, the president shall have general supervision, direction,
and control of the business and other officers of the corporation. He shall have
the general powers and duties of management usually vested in the office of
president of a corporation and shall have such other powers and duties as may be
prescribed by the board of directors or these Bylaws.
5.9 VICE PRESIDENTS
In the absence or disability of the chief executive officer and
president, the vice presidents, if any, in order of their rank as fixed by the
board of directors or, if not ranked, a vice president designated by the board
of directors, shall perform all the duties of the president and when so acting
shall have all the powers of, and be subject to all the restrictions upon, the
president and chief executive officer. The vice presidents shall have such other
powers and perform such other duties as from time to time may be prescribed for
them respectively by the board of directors, these Bylaws, the president, chief
executive officer or the chairman of the board.
5.10 SECRETARY
The secretary shall keep or cause to be kept, at the principal executive
office of the corporation or such other place as the board of directors may
direct, a book of minutes of all meetings and actions of directors, committees
of directors, and stockholders. The minutes shall show the time and place of
each meeting, whether regular or special (and, if special, how authorized and
the notice given), the names of those present at directors' meetings or
committee meetings, the number of shares present or represented at stockholders'
meetings, and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal
executive office of the corporation or at the office of the corporation's
transfer agent or registrar, as determined by resolution of the board of
directors, a share register, or a duplicate share register, showing the names of
all stockholders and their addresses, the number and classes of shares held by
each, the number and date of certificates evidencing such shares, and the number
and date of cancellation of every certificate surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all meetings
of the stockholders and of the board of directors required to be given by law or
by these Bylaws. He shall keep the seal of the corporation, if one be adopted,
in safe custody and shall have such other powers and perform such
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other duties as may be prescribed by the board of directors or by these Bylaws.
5.11 CHIEF FINANCIAL OFFICER
The chief financial officer shall keep and maintain, or cause to be kept
and maintained, adequate and correct books and records of accounts of the
properties and business transactions of the corporation, including accounts of
its assets, liabilities, receipts, disbursements, gains, losses, capital
retained earnings, and shares. The books of account shall at all reasonable
times be open to inspection by any director.
The chief financial officer shall deposit all moneys and other valuables
in the name and to the credit of the corporation with such depositories as may
be designated by the board of directors. He shall disburse the funds of the
corporation as may be ordered by the board of directors, shall render to the
chief executive officer, president and directors, whenever they request it, an
account of all his transactions as chief financial officer and of the financial
condition of the corporation, and shall have other powers and perform such other
duties as may be prescribed by the board of directors or the Bylaws.
5.12 REPRESENTATION OF SHARES OF OTHER CORPORATIONS
The chairman of the board, any executive officer of this corporation, or
any other person designated by the board of directors, shall be authorized to
vote, represent, and exercise on behalf of this corporation all rights incident
to any and all shares of any other corporation or corporations standing in the
name of this corporation. The authority granted herein may be exercised either
by such person directly or by any other person authorized to do so by proxy or
power of attorney duly executed by such person having the authority.
5.13 AUTHORITY AND DUTIES OF OFFICERS
In addition to the foregoing authority and duties, all officers of the
corporation shall respectively have such authority and perform such duties in
the management of the business of the corporation as may be designated from time
to time by the board of directors or the stockholders.
ARTICLE VI
INDEMNITY
6.1 THIRD PARTY ACTIONS
The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending, or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director or officer of the corporation, or that such
director or officer is or
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was serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture trust or other
enterprise (collectively "Agent"), against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement (if such settlement is approved
in advance by the Company, which approval shall not be unreasonably withheld)
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be in or
not opposed to the best interest of the corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his conduct
was unlawful.
6.2 ACTIONS BY OR IN THE RIGHT OF THE CORPORATION
The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was an Agent (as defined in Section 6.1)
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if he
acted in good faith and in manner he reasonably believed to be in or not opposed
to the best interests of the corporation and except that no indemnification
shall be made in respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable to the corporation unless and only to the
extent that the Delaware Court of Chancery or the court in which such action or
suit was brought shall determine upon application that, despite the adjudication
of liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the Delaware
Court of Chancery or such other court shall deem proper.
6.3 SUCCESSFUL DEFENSE
To the extent that an Agent of the corporation has been successful on
the merits or otherwise in defense of any action, suit or proceeding referred to
in Sections 6.1 and 6.2, or in defense of any claim, issue or matter therein, he
shall be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
6.4 DETERMINATION OF CONDUCT
Any indemnification under Sections 6.1 and 6.2 (unless ordered by a
court) shall be made by the corporation only as authorized in the specific case
upon a determination that the indemnification of the Agent is proper in the
circumstances because he has met the applicable standard of conduct set forth in
Sections 6.l and 6.2. Such determination shall be made (1) by the board of
directors or the executive committee by a majority vote of a quorum consisting
of directors who were not parties to
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<PAGE> 23
such action, suit or proceeding or (2) or if such quorum is not obtainable or,
even if obtainable, a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, or (3) by the stockholders.
6.5 PAYMENT OF EXPENSES IN ADVANCE
Expenses incurred in defending a civil or criminal action, suit or
proceeding shall be paid by the corporation in advance of the final disposition
of such action, suit or proceeding upon receipt of an undertaking by or on
behalf of the director, officer, employee or agent to repay such amount if it
shall ultimately be determined that he is not entitled to be indemnified by the
corporation as authorized in this Article VI.
6.6 INDEMNITY NOT EXCLUSIVE
The indemnification and advancement of expenses provided or granted
pursuant to the other sections of this Article VI shall not be deemed exclusive
of any other rights to which those seeking indemnification or advancement of
expenses may be entitled under any Bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office.
6.7 INSURANCE INDEMNIFICATION
The corporation shall have the power to purchase and maintain on behalf
any person who is or was an Agent of the corporation, or is or was serving at
the request of the corporation, as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the corporation
would have the power to indemnify him against such liability under the
provisions of this Article VI.
6.8 THE CORPORATION
For purposes of this Article VI, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors and officers, so that any person who is or
was a director or Agent of such constituent corporation, or is or was serving at
the request of such constituent corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, shall stand in the same position under and subject to the provisions
of this Article VI (including, without limitation the provisions of Section 6.4)
with respect to the resulting or surviving corporation as he would have with
respect to such constituent corporation if its separate existence had continued.
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<PAGE> 24
6.9 EMPLOYEE BENEFIT PLANS
For purposes of this Article VI, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any excise
taxes assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee, or
agent with respect to an employee benefit plan, its participants, or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this Article
VI.
6.10 INDEMNITY FUND
Upon resolution passed by the board, the corporation may establish a
trust or other designated account, grant a security interest or use other means
(including, without limitation, a letter of credit), to ensure the payment of
certain of its obligations arising under this Article VI and/or agreements which
may be entered into between the company and its officers and directors from time
to time.
6.11 INDEMNIFICATION OF OTHER PERSONS
The provisions of this Article VI shall not be deemed to preclude the
indemnification of any person who is not an agent (as defined in Section 6.1),
but whom the corporation has the power or obligation to indemnify under the
provisions of the General Corporation Law of the State of Delaware or
otherwise. The corporation may, in its sole discretion, indemnify an employee,
trustee or other agent as permitted by the General Corporation Law of the State
of Delaware. The corporation shall indemnify an employee, trustee or other agent
where required by law.
6.12 SAVINGS CLAUSE
If this article or any portion thereof shall be invalidated on any
ground by any court of competent jurisdiction, then the corporation shall
nevertheless indemnify each agent against expenses (including attorney's fees),
judgments, fines and amounts paid in settlement with respect to any action,
suit, proceeding or investigation, whether civil, criminal or administrative,
and whether internal or external, including a grand jury proceeding and an
action or suit brought by or in the right of the corporation, to the full extent
permitted by any applicable portion of this Article that shall not have been
invalidated, or by any other applicable law.
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<PAGE> 25
6.13 CONTINUATION OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES
The indemnification and advancement of expenses provided by, or granted
pursuant to, this Article VI shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
ARTICLE VII
RECORDS AND REPORTS
7.1 MAINTENANCE AND INSPECTION OF RECORDS
The corporation shall, either at its principal executive office or at
such place or places as designated by the board of directors, keep a record of
its stockholders listing their names and addresses and the number of class of
shares held by each stockholder, a copy of these Bylaws as amended to date,
accounting books, and other records.
Any stockholder of record, in person or by attorney or other agent,
shall, upon written demand under oath stating the purpose thereof, have the
right during the usual hours for business to inspect for any proper purpose the
corporation's stock ledger, a list of its stockholders, and its other books and
records and to make copies or extracts therefrom. A proper purpose shall mean a
purpose reasonably related to such person's interest as a stockholder. In every
instance where an attorney or other agent is the person who seeks the right to
inspection, the demand under oath shall be accompanied by a power of attorney or
such other writing that authorizes the attorney or other agent to so act on
behalf of the stockholder. The demand under oath shall be directed to the
corporation at its registered office in Delaware or at its principal place of
business.
7.2 INSPECTION BY DIRECTORS
Any director shall have the right to examine the corporation's stock
ledger, a list of its stockholders, and its other books and records for a
purpose reasonably related to his position as a director. The Court of Chancery
is hereby vested with the exclusive jurisdiction to determine whether a director
is entitled to the inspection sought. The court may summarily order the
corporation to permit the director to inspect any and all books and records, the
stock ledger, and the stock list and to make copies or extracts therefrom. The
Court may, in its discretion, prescribe any limitations or conditions with
reference to the inspection, or award such other and further relief as the Court
may deem just and proper.
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<PAGE> 26
7.3 ANNUAL STATEMENT TO STOCKHOLDERS
The board of directors shall present at each annual meeting, and at any
special meeting of the stockholders when called for by vote of the stockholders,
a full and clear statement of the business and condition of the corporation.
ARTICLE VIII
GENERAL MATTERS
8.1 CHECKS
From time to time, the board of directors shall determine by resolution
which person or persons may sign or endorse all checks, drafts, other orders for
payment of money, notes or other evidences of indebtedness that are issued in
the name of or payable to the corporation, and only the persons so authorized
shall sign or endorse those instruments.
8.2 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS
The board of directors, except as otherwise provided in these Bylaws,
may authorize any officer or officers, or agent or agents, to enter into any
contract or execute any instrument in the name of and on behalf of the
corporation; such authority may be general or confined to specific instances.
Unless so authorized or ratified by the board of directors or within the agency
power of an officer, no officer, agent or employee shall have any power or
authority to bind the corporation by any contract or engagement or to pledge its
credit or to render it liable for any purpose or for any amount.
8.3 STOCK CERTIFICATES; PARTLY PAID SHARES
The shares of a corporation shall be represented by certificates,
provided that the board of directors of the corporation may provide by
resolution or resolutions that some or all of any or all classes or series of
its stock shall be uncertified shares. Any such resolution shall not apply to
shares represented by a certificate until such certificate is surrendered to the
corporation. Notwithstanding the adoption of such a resolution by the board of
directors, every holder of stock represented by certificates and upon request
every holder of uncertificated shares shall be entitled to have a certificate
signed by, or in the name of the corporation by the chairman of or vice-chairman
of the board of directors, or the secretary or an assistant secretary of such
corporation representing the number of shares registered in certificate form.
Any or all of the signatures on the certificate may be a facsimile. In case any
officer, transfer agent or registrar who has signed or whose facsimile signature
has been placed upon a certificate has ceased to be such officer, transfer agent
or registrar before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer, transfer agent or
registrar at the date of issue.
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<PAGE> 27
The corporation may issue the whole or any part of its shares as partly
paid and subject to call for the remainder of the consideration to be paid
therefor. Upon the face or back of each stock certificate issued to represent
any such partly paid shares, upon the books and records of the corporation in
the case or uncertificated partly paid shares, the total amount of the
consideration to be paid therefor and the amount paid thereon shall be stated.
Upon the declaration of any dividend on fully paid shares, the corporation shall
declare a dividend upon partly paid shares of the same class, but only upon the
basis of the percentage of the consideration actually paid thereon.
8.4 SPECIAL DESIGNATION ON CERTIFICATES
If the corporation is authorized to issue more than one class of stock
or more than one series of any class, then the powers, the designations, the
preferences, and the relative, participating, optional or other special rights
of each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate that the corporation shall
issue to represent such class or series of stock; provided, however, that,
except as otherwise provided in Section 202 of the General Corporation Law or
Delaware, in lieu of the foregoing requirements there may be set forth on the
face or back of the certificate that the corporation shall issue to represent
such class or series of stock a statement that the corporation will furnish
without charge to each stockholder who so requests the powers, the designations,
the preferences, and the relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights.
8.5 LOST CERTIFICATES
Except as provided in this Section 8.5, no new certificates for shares
shall be issued to replace a previously issued certificate unless the latter is
surrendered to the corporation and cancelled at the same time. The corporation
may issue a new certificate of stock or uncertificated shares in the place of
any certificate theretofore issued by it, alleged to have been lost, stolen or
destroyed, and the corporation may require the owner of the lost, stolen or
destroyed certificate, or his legal representative, to give the corporation a
bond sufficient to indemnify it against any claim that may be made against it on
account of the alleged loss, theft or destruction of any such certificate or the
issuance of such new certificate or uncertificated shares.
8.6 CONSTRUCTION; DEFINITIONS
Unless the context requires otherwise, the general provisions, rules of
construction, and definitions in the General Corporation Law of Delaware shall
govern the construction of these Bylaws. Without limiting the generality of this
provision, the singular number includes the plural, the plural number includes
the singular, and the term "person" includes both a corporation and a natural
person.
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<PAGE> 28
8.7 DIVIDENDS
The directors of the corporation, subject to any restrictions contained
in (i) the General Corporation Law of Delaware or (ii) the certificate of
incorporation, may declare and pay dividends upon the shares of its capital
stock. Dividends may be paid in cash, in property, or in shares of the
corporation's capital stock.
The directors of the corporation may set apart out of any of the funds
of the corporation available for dividends a reserve or reserves for any proper
purpose and may abolish any such reserve. Such purposes shall include but not be
limited to equalizing dividends, repairing or maintaining any property of the
corporation, and meeting contingencies.
8.8 FISCAL YEAR
The fiscal year of the corporation shall be fixed by resolution of the
board of directors and may be changed by the board of directors.
8.9 SEAL
The corporation may adopt a corporate seal, which may be altered at
pleasure, and may use the same by causing it or a facsimile thereof, to be
impressed or affixed or in any other manner reproduced.
8.10 TRANSFER OF STOCK
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, assignation or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate, and record the transaction in its books.
8.11 STOCK TRANSFER AGREEMENTS
The corporation shall have power to enter into and perform any agreement
with any number of stockholders of any one or more classes of stock of the
corporation to restrict the transfer of shares of stock of the corporation of
any one or more classes owned by such stockholders in any manner not prohibited
by the General Corporation Law of Delaware.
8.12 REGISTERED STOCKHOLDERS
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, shall be entitled to hold liable for calls and
assessments the person registered on its hooks as the owner of shares, and shall
not
28
<PAGE> 29
be bound to recognize any equitable or other claim to or interest in such share
or shares on the part of another person, whether or not it shall have express or
other notice thereof, except as otherwise provided by the laws of Delaware.
8.13 NOTICES
Except as otherwise specifically provided herein or required by law, all
notices required to be given to any stockholder, director, officer, employee or
agent shall be in writing and may in every instance be effectively given by hand
delivery, by mail, postage paid, or by facsimile transmission. Any such notice
shall be addressed to such stockholder, director, officer, employee or agent at
his last known address as it appears on the books of the corporation. The time
when such notice shall be deemed received, if hand delivered, or dispatched, if
sent by mail or facsimile, transmission, shall be the time of the giving of the
notice.
ARTICLE IX
AMENDMENTS
Any of these Bylaws may be altered, amended or repealed by the
affirmative vote of a majority of the board of directors or, with respect to
Bylaw amendments placed before the stockholders for approval and except as
otherwise provided herein or required by law, by the affirmative vote of the
holders of seventy-five percent of the shares of the corporation's stock
entitled to vote in the election of directors, voting as one class.
29
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