UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K/A-1
(Mark One)
Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
(Fee Required)
For the fiscal year ended January 28, 1995
Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
(No Fee Required)
For the transition period from
to
Commission file number _________
MERRY-GO-ROUND ENTERPRISES, INC.
(Exact name of Registrant as specified in its charter)
Maryland 52-
0913402
(State or other Jurisdiction (I.R.S. Employer
of Identification No.)
Incorporation or
Organization)
3300 Fashion Way, Joppa, 21085
Maryland
Registrant's telephone number, including area code (410)
538-1000
Securities registered pursuant to Section 12(b) of the Act
Name of Each Exchange
Title of Each Class on Which Registered
Common Stock, par value $.01 per share New York
Stock Exchange
Preferred Stock Purchase Rights New York Stock
Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check 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 No
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of
registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.
The aggregate market value of the voting stock held by non-
affiliates of the Registrant at April 25, 1995 was
$50,560,320. The aggregate market value was computed by
reference to the closing price as of that date.
The number of shares outstanding of the Registrant's only
class of common stock as of April 25, 1995 was 53,931,008.
<PAGE>
The following, constituting an amendment to Part III of
the Registrant's Annual Report on Form 10-K for the fiscal
year ended January 28, 1995, hereby replaces Part III in its
entirety:
Part III
Item 10. Directors and Executive Officers of the
Registrant
The Company's Board of Directors consists of the
following six Directors, each of whom was elected for a term
to expire at the 1995 Annual Stockholders Meeting or until
his successor is duly elected and qualifies:
<TABLE>
<CAPTION>
Name and Age Other Position with the Director
or Director's Principal Since
Occupation
<S> <C> <C>
Thomas C. Shull (43) Chairman of the Board and
Chief Executive Officer 1994
Raymond F. Altman (54) Attorney with
the law firm of
Freishtat and Sandler 1991
Alan E. Berkowitz (55) Certified
Public Accountant
with the firm of Alan E.
Berkowitz and Associates
CPAs Chartered 1991
Isaac Kaufman (48) Executive Vice President,
Chief Financial Officer,
Secretary and Treasurer 1991
Stephen Wertheimer (44) Private
investor 1995
Charles A. Yamarone (36) Executive Vice
President and
Research Director of Libra
Investments, Inc. 1995
</TABLE>
<PAGE>
Mr. Shull has been a principal stockholder and
director of Meridian Ventures Inc. ("Meridian"), a
turnaround and venture management firm, since 1990 when the
firm was founded. He was Chief Executive Officer of
Meridian from 1990 to 1992 and has held that position since
1994. During 1992 to 1994 he was with R.H. Macy, Inc. where
he served as Executive Vice President and prior to 1990 he
was a senior consultant with McKinsey and Company. He was
appointed Chief Executive Officer and President of the
Company in November 1994 in connection with the Company's
retention of Meridian to assist in the turnaround of the
Company. He was elected as a Director by the Board in
December 1994 and in January, 1995, he was named Chairman of
the Board in connection with the resignation of the former
Chairman.
Mr. Altman has been a partner with the law firm
Freishtat and Sandler for more than five years.
Mr. Berkowitz has been Chief Executive Officer of
Alan E. Berkowitz and Associates CPAs Chartered for more
than five years. He is a certified public accountant and an
attorney. He also serves on the Board of Directors of
Eastern Savings Bank, FSB.
Mr. Kaufman has been employed by the Company since
1973. He was elected Executive Vice President in April
1991. He has served as Chief Financial Officer and
Treasurer since 1983 and as Secretary since 1980. He was
Senior Vice President from 1983 to April 1991. He is a
certified public accountant. He is also a director of Trans
World Entertainment Corp., a retailer of prerecorded music
and videos.
Mr. Wertheimer has been a private investor since
1991. From 1988 to 1991 he was Managing Director, Group
Head of Investment Banking - Asia for Paine Webber. Mr.
Wertheimer is also a director of Greenwich Fine Arts, Inc.,
AMS, Inc. and Orion Pictures Corporation. Mr. Wertheimer
was recommended for election to the Board by the official
committee of equity security holders appointed by the
Bankruptcy Court in connection with the Chapter 11
proceedings. In connection with his election to the Board
he resigned as Co-Chairman of that committee.
Mr. Yamarone has been Executive Vice President and
Research Director of Libra Investments, Inc., an
institutional broker - dealer since 1994. From 1991 to 1994
he was Senior Vice President and General Counsel of Libra
Investments Inc. From 1990 to 1991 he was Senior Vice
President - Legal and Secretary of Columbia Savings. Mr.
Yamarone is also a director of Bally's Grand, Inc. and
Continental Airlines, Inc. Mr. Yamarone was recommended for
election to the Board by certain Stakeholders.
In fiscal 1995, the directors of the Company who
were not officers each received $14,000 annually, an
additional $1,000 for serving as a committee chairman, plus
$1,000 per board meeting and $750 per committee meeting (one
half of such amounts in the case of telephone meetings).
These compensation arrangements are
<PAGE>
expected to continue in fiscal 1996. In March 1992, each
director who was not an employee received an option to
purchase 10,000 shares of Common Stock at an exercise price
of $10.13 per share (the market price on the date of grant).
These options become exercisable in installments of 20% of
the shares subject to the option for each year from the
grant date and shall be exercisable for a term of 10 years
from the date of grant. Subject to Bankruptcy Court
approval, the Company will pay non-employee directors, for
services as a director other than attendance at Board and
Board committee meetings, $2,500 per full day and $1,250 per
half-day, up to a maximum of $50,000 per person in the
aggregate. This per diem policy would be in effect through
the date of confirmation of the plan of reorganization. A
former Director of the Company was paid $3,000 and
reimbursed his expenses for serving as the Board's
representative to the Chief Executive Officer Search
Committee, comprising representatives from the Company and
its Stakeholders.
The current executive officers of the Company are
set forth below, excluding Messrs. Shull and Kaufman, whose
biographies are included above.
James P. Kenney Age: 35
President and Chief Operating Officer. Mr. Kenney has
been Executive Vice President, Chief Financial Officer and a
principal stockholder of Meridian since 1990 when the firm
was founded. From 1992 to 1994 he also served as Senior
Vice President of R.H. Macy, Inc. He was appointed
Executive Vice President and Chief Operating Officer of the
Company in November 1994 in connection with the retention of
Meridian. In January 1995 he was appointed President of the
Company. From 1988 to 1990 he was a senior consultant with
McKinsey and Company.
Frank Tworecke Age: 48
President - Merry-Go-Round/Cignal Division. Mr.
Tworecke has been President of the Merry-Go-Round Division
since August 1994 and President of the Merry-Go-Round and
Cignal Divisions since December 1994. Prior thereto, from
1990 to 1994 he served as Senior Vice President and General
Merchandise Manager for men's, young men's and children's
apparel for Lazarus, a former division of Federated
Department Stores.
Louis Spagna Age: 46
President - Menz Division. Mr. Spagna has been
President of the Menz Division since June 1994. Prior
thereto, from 1993 to 1994 he served as President-Retail of
Bugle Boy Industries. From 1991 to 1993 he was employed in
the Garage and Chess King divisions of Melville Corp. as
Executive Vice President and General Manager. From 1990 to
1991 he was Operations Vice President/Assistant to the
President for Caldor, Inc.
<PAGE>
Jeffrey Austin Age: 54
Senior Vice President - Human Resources. Mr. Austin
has been Senior Vice President - Human Resources and
Development since December 1994. From February 1994 until
such time he was Vice President - Human Resources and
Development. Prior to joining the Company, he was Senior
Vice President - Human Resources of Dimension Health
Corporation, a regional health care management company.
Robert J. Reiners Age: 33
Vice President - Finance and Corporate Controller. Mr.
Reiners has been Vice President-Finance and Corporate
Controller since January 1995. Prior thereto, he was
Director-Financial Management Services for the Company since
April 1993. From 1990 until he joined the Company in April
1993, Mr. Reiners was a Manager in the Audit and Business
Advisory Division of Arthur Andersen. He is a certified
public accountant.
In fiscal 1995, Messrs. Shull, Kenney, Tworecke,
Spagna, Austin and Reiners did not file Forms 3 in
connection with their respective appointments as executive
officers of the Company. On such forms or on a subsequent
Form 5, Messrs. Tworecke, Spagna and Austin would have
reported one grant of options each.
Item 11. Executive Compensation
Summary Compensation Table
The following table sets forth information
concerning compensation paid by the Company to the two
individuals who served as Chief Executive Officer during
fiscal 1995, each of the four most highly compensated
executive officers of the Company (based on salary and
bonus), other than the Chief Executive Officers, who were
serving as executive officers as of the end of fiscal 1995,
and two executive officers whose actual compensation, but
for their departure, would have placed them among the four
most highly compensated executive officers excluding the
Chief Executive Officers (collectively, the "Named Executive
Officers"), for services rendered in all capacities to the
Company and its subsidiaries during the three fiscal years
ended January 28, 1995.
<PAGE>
<TABLE>
<CAPTION>
Annual Compensation Long-Term
Compensation Awards
Other Restricted
Name and Fiscal Annual Stock Options
All Other
Principal Position Year Salary(1) Bonus (1) Compen-
Award (3) (#) Compensation
sation (2) (4)
<S> <C> <C> <C> <C> <C> <C> <C>
Leonard Weinglass(5) 1995 $261,373 0 0 0
0 0
Chairman and 1994 150,780 0 0 0 0
0
Chief Executive 1993 150,780 0 0 0
0 0
Officer
Thomas C. Shull (6) 1995 -- -- -- -- --
- --
Chairman and 1994
Chief Executive 1993
Officer
Michael D. Sullivan (7) 1995 329,207 0 -- 0
0 $42,333
President 1994 415,780 0 -- 0
75,000 42,757
1993 401,530 $250,000 -- 0 0
46,934
James Kenney (6) 1995 -- -- -- -- -- --
President and 1994
Chief Operating 1993
Officer
Isaac Kaufman 1995 225,780 0(8) -- 0 0
22,255
Executive Vice 1994 192,780 100,000 -- 0
50,000 23,570
President, Chief 1993 196,498 145,000
- -- 0 0 25,448
Financial Officer
Secretary and
Treasurer
Ken Rodriguez (7) 1995 162,965 0(9) -- 0 0
21,744
Cignal Division 1994 177,780 50,000
- -- 0 40,000 21,706
President 1993 171,530 110,000 -- 0
0 24,049
Frank Tworecke (10) 1995 162,500 40,000
56,472 0 200,000 0
Merry-Go-Round/ 1994
Cignal Division 1993
President
Louis Spagna (10) 1995 183,333 55,000 52,639
0 200,000 0
Menz Division 1994
President 1993
Jeffrey Austin (10) 1995 112,500 45,000
- -- 0 5,000 0
Senior Vice 1994
President -- Human 1993
Resources
</TABLE>
<PAGE>
_________________________________
(1) Includes amounts deferred by the officer under the
Thrift and Savings Plan and Executive Deferred
Compensation Plan.
(2) In accordance with SEC rules, perquisites constituting
less than the lesser of $50,000 or 10% of total salary
and bonus are not reported. Amounts reported comprise,
as to Mr. Tworecke, $36,566 for relocation expenses and
$19,906 for the reimbursement of related taxes and, as
to Mr. Spagna, $34,849 for relocation expenses and
$17,790 for the reimbursement of related taxes.
(3) The aggregate restricted stock holdings of Mr. Kaufman
as of January 28, 1995, were 14,000 shares of Common
Stock, having an aggregate fair market value as of
January 28, 1995 of $21,000, based upon the 1995 fiscal
year-end closing price of the Company stock of $1.50
per share, net of the purchase price paid by the
officer. See "--Severance Arrangements" with respect
to restricted stock held by Messrs. Sullivan and
Rodriguez which is no longer subject to restrictions,
subject to Bankruptcy Court approval.
(4) For fiscal 1995 comprises employer matching
contributions under the Thrift and Savings Plan and the
Executive Deferred Compensation Plan and premiums paid
on life insurance policies held under Supplemental
Retirement Agreements for the Named Executive Officers
who received such compensation, in the following
amounts, respectively: Weinglass - $0, $0, $0;
Sullivan - $5,544, $2,355; $34,434; Kaufman - $5,544,
$0, $16,711; and Rodriguez - $5,168, $1,264, $15,312.
Does not include payments to be made to Messrs.
Sullivan and Rodriguez in connection with their
resignation in fiscal 1995 and which require the
approval of the Bankruptcy Court. See "--Severance
Arrangements" below.
(5) Mr. Weinglass became Chief Executive Officer in January
1994, resigned as Chief Executive Officer in November
1994 and resigned as Chairman of the Board in January
1995.
(6) Messrs. Shull and Kenney became officers of the Company
in November 1994, in connection with the Company's
retention of Meridian. Mr. Shull succeeded Mr.
Weinglass as Chief Executive Officer in November 1994
and as Chairman in January 1995. Messrs. Shull and
Kenney receive compensation for their services only
pursuant to a Management Agreement between the Company
and Meridian. See "Item 13. Certain Relationships and
Related Transactions."
(7) Messrs. Rodriguez and Sullivan resigned as officers
from the Company in December 1994 and November 1994,
respectively.
(8) Does not include a $50,000 bonus which has been
approved by the Board, subject to notice to certain
parties involved in the Chapter 11 proceeding.
(9) Does not include a $35,556 bonus which has been
approved by the Board and is subject to Bankruptcy
Court approval.
(10) Messrs. Austin, Spagna and Tworecke joined the Company
in February 1994, June 1994 and August 1994,
respectively.
<PAGE>
Employment Arrangements
Mr. Tworecke has an employment agreement with the
Company for a term expiring on December 31, 1996, subject to
earlier termination for Cause (as defined in such
agreement). The agreement contains an agreement not to
compete against the Company. Pursuant to the agreement, Mr.
Tworecke is entitled to a minimum salary of $325,000 and to
a bonus of up to 40% of salary (based on achievement of
Company earnings and return on investment targets
established by the Board), with a minimum bonus for fiscal
1995 of $40,000. The agreement provides for a grant of
options to purchase 200,000 shares of common stock at an
exercise price of $2.00 per share (the fair market value on
the date of grant) pursuant to the 1989 Long Term Incentive
Plan. The agreement also provides for such additional
benefits as are customary for executives of the Company, and
for the payment of certain relocation expenses.
If the Company terminates Mr. Tworecke's
employment without Cause and other than for death and
disability or if, following a change of control of the
Company Mr. Tworecke is assigned substantially modified
duties and he terminates his employment, he is entitled
under his agreement to receive one year's salary and
benefits, a pro rata share of any accrued bonus and the
vested portion of his retirement benefit (See "- Retirement
Plan"), offset by any earnings and benefits from new
employment.
Mr. Spagna's employment agreement is on
substantially the same terms as Mr. Tworecke's agreement,
except that the agreement provides for an annual salary for
Mr. Spagna of $275,000 and for a minimum bonus for fiscal
1995 of $55,000.
Severance Arrangements
In December 1994, Mr. Rodriguez, former officer,
resigned from the Company after 23 years with the Company.
In January 1995, Mr. Sullivan, former officer, resigned
after 23 years of service. The Board of Directors has
approved, subject to approval by the Bankruptcy Court,
severance arrangements with Messrs. Rodriguez and Sullivan.
Pursuant to these arrangements, the Company has agreed to
pay Messrs. Sullivan and Rodriguez up to $440,967 and
$298,792, respectively, representing, in the case of Mr.
Sullivan, one year's salary, and in the case of Mr.
Rodriguez, eighteen months' salary. These payments may be
reduced by the Company by an amount equal to any earnings
received from new employment during the period commencing
six months from the date of termination. The Company also
has agreed to accelerate the vesting of 36,000 shares of
restricted stock and options to purchase 165,000 shares as
to Mr. Sullivan and of 15,000 shares of restricted stock and
options to purchase 69,392 shares as to Mr. Rodriguez. All
of such stock and options had previously been issued.
The Board of Directors has approved, subject to
approval by the Bankruptcy Court, severance arrangements
with Mr. Kaufman. Pursuant to these
<PAGE>
arrangements, the Company has agreed to pay Mr. Kaufman one
year's salary plus salary equal to one week for each year of
service with the Company. These payments may be reduced by
the Company by an amount equal to any earnings received from
new employment during the period commencing six months from
the date of termination.
Mr. Austin is a participant in the Company's
severance plan for certain employees. In accordance with
the terms of such plan, upon termination other than for
cause, Mr. Austin would receive cash equal to 10 months'
salary and additional cash equal to one week's salary for
each year of service as of the date of termination. Amounts
in excess of the equivalent of six months' salary would be
subject to reduction by the Company in an amount equal to
any earnings received by the officer within a stated period
following termination.
Option Grants
The following table shows, as to each Named
Executive Officer, options to purchase Common Stock granted
by the Company under the 1989 Long Term Incentive Plan in
fiscal 1995.
<TABLE>
<CAPTION>
Option Grants in Fiscal 1995
Potential
realizable value at
Individual Grants assumed annual
rates of
% of Options appreciation for
stock price
Options Granted to all Exercise appreciation for
option term
Granted Employees in Price Expiration
(end-of-year value) (1)
Name (Shares) Fiscal 1995 Per Share Date 0% 5% 10%
<S> <C> <C> <C> <C> <C> <C> <C>
L. Weinglass 0 0 -- -- 0 0 0
T. Shull 0 0 -- -- 0 0 0
M. Sullivan 0 0 -- -- 0 0 0
J. Kenney 0 0 -- -- 0 0 0
I. Kaufman 0 0 -- -- 0 0 0
K. Rodriguez 0 0 -- -- 0 0 0
F. Tworecke 200,000 9.10% $2.00 8/1/04 0 $251,558 $637,497
L. Spagna 200,000 9.10 2.00 6/1/04 0 251,558
637,497
J. Austin 5,000 0.23 3.50 2/15/04 0 11,006
27,890
</TABLE>
<PAGE>
(1) Represents arbitrarily assumed rates of
appreciation of the Common Stock price, mandated by the
SEC's rules, compounded annually over the term of the
option and are not intended to forecast possible future
appreciation, if any, of the Company's Common Stock.
The Company did not use an alternative valuation for a
grant date valuation, as the Company is not aware of any
formula which will determine with reasonable accuracy a
present value of such options based on future unknown or
volatile factors. The market value of the Common Stock
on the date of grant was $2.00; the value of the Common
Stock at the end of the options' term, based on a 5%
compounded growth rate, would be $3.26 per share and
based on a 10% compounded growth rate would be $5.19 per
share. No gain to the optionees is possible without an
increase in stock price which will benefit all
shareholders commensurately. A zero percent gain in
stock price will result in zero dollars for the
optionee.
<PAGE>
<TABLE>
<CAPTION>
Aggregate Option Exercises in Fiscal 1995
and Fiscal 1995 Year-End Option Values
Number of UnexercisedValue of Unexe
rcised In-
Options at the-Money Options at
Shares AcquiredValue1995 Fiscal Year End1995 Fiscal
Year (1)
Name on ExerciseRealizedExercisable/Unexercisable
Exercisable/Unexercisable
<S> <C> <C> <C> <C>
L. Weinglass 0 0 0/0 0/0
T. Shull 0 0 0/0 0/0
M. Sullivan 0 0 481,893/0 0/0
J. Kenney 0 0 0/0 0/0
I. Kaufman 0 0149,814/85,750 0/0
K. Rodriguez 0 0 169,393/0 0/0
F. Tworecke 0 0 0/200,000 0/0
L. Spagna 0 0 0/200,000 0/0
J. Austin 0 0 0/5000 0/0
</TABLE>
- --------------------
(1) Based upon an assumed fair market value of $1.50 per
share, which was the closing price on January 28, 1995.
Retirement Plan
The Company has supplemental retirement agreements with
Messrs. Sullivan, Kaufman, Rodriguez, Tworecke, Spagna and
Austin. The agreements provide for lifetime annual benefits
payable upon retirement at age 65, adjusted annually for
inflation up to 5% per year, or upon retirement at age 60,
without such adjustment. If an officer dies, his designated
beneficiary will receive up to 15 annual payments. If he is
disabled, annual benefits will be paid commencing at age
65. If his employment ends prior to retirement, he will
receive the full annual benefit commencing at age 65 if he
has been employed for seven years and a pro rata benefit if
for fewer than seven years. The Company has obtained
insurance on each officer to fund benefits payable under the
agreements. The annual benefits payable to each Named
Executive Officer upon retirement at age 65, based upon
amounts payable as of January 28, 1995, are: Sullivan,
$150,000; Kaufman and Rodriguez, $100,000 each; Tworecke,
Spagna and Austin, $0 each.
<PAGE>
Compensation Committee Interlocks and Insider Participation.
Messrs. Berkowitz, Altman and Robert Bank, a
former Director, served as the Compensation Committee of the
Board of Directors during the 1995 fiscal year.
The Company leases three cooperative apartments in
a building in New York City from a partnership of which the
Estate of Harold Goldsmith, of which Mr. Berkowitz is a
personal representative, is a 50% partner for use during
approximately 40 weeks of each year by the Company's
merchandise managers and buyers when they travel to New York
City's garment district. The apartments are not used as
residences by any corporate personnel. In fiscal 1995, the
Company paid aggregate rent of $103,200 with respect to
these apartments. The monthly rentals paid by the Company
for the three apartments currently total $8,600. The
Company pays for all utilities and repairs not paid by the
cooperative association.
The Company leases storage space, totaling
approximately 136,000 square feet, in Towson, Maryland from
The Arcade Partnership. The Estate of Harold Goldsmith is a
50% partner in the partnership. The aggregate payments by
the Company under the leases were approximately $166,000 in
fiscal 1995.
In fiscal 1995, the Company was billed
approximately $135,000 and $200,000 by Freishtat and
Sandler, with which Mr. Altman is associated, and Alan E.
Berkowitz & Associates, with which Mr. Berkowitz is
associated, respectively, for services rendered during
fiscal 1995. In fiscal 1996, the Company expects to
continue to obtain services from the firms with which
Messrs. Altman and Berkowitz are associated.
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners
and Management
The following table sets forth information as of May
15, 1995, based on information known to the Company or, in
the case of certain persons, on Schedules 13D or 13G filed
to date, with respect to beneficial ownership of shares of
the Company's Common Stock by each person known to the
Company to own 5% or more of its Common Stock (determined in
accordance with the applicable rules of the SEC) including
outstanding options exercisable within 60 days, by each
director, Named Executive Officer, and by all directors, and
current executive officers as a group.
<TABLE>
<CAPTION>
Name Number of SharesPercent Outstanding
<S> <C> <C>
FMR Corp. 7,201,602(l) 13.35%
82 Devonshire Street
Boston, Massachusetts
Beth H. Goldsmith 5,006,277(2) 9.29
c/o Alan E. Berkowitz & Associates
802 Mercantile Bank & Trust Building
Baltimore, Maryland 21201
Alan E. Berkowitz 4,937,356(2)(3) 9.16
Alan E. Berkowitz & Associates
802 Mercantile Bank & Trust Building
Baltimore, Maryland 21201
Neil Ambach 4,536,588(2) 8.41
c/o Alan E. Berkowitz &: Associates
802 Mercantile Bank & Trust Building
Baltimore, Maryland 21201
Leonard Weinglass
2,853,019(4) 5.29
P.O. Box 1509
Aspen, Colorado 81612
T. Rowe Price Associates, Inc. 2,757,200 (5) 5.11
100 East Pratt Street
Baltimore, Maryland 21202
<PAGE>
Michael D. Sullivan 607,841(6) 1.12
Isaac Kaufman 323,586(7) *
Ken Rodriguez 175,062(8) *
Steve Wertheimer 50,000 *
Charles Yamarone 0 *
Frank Tworecke 0 *
Louis Spagna 40,000 *
Raymond F. Altman 406,732(9) *
Thomas Shull 0 *
James Kenney 0 *
Jeffrey Austin 1,000(10) *
All current directors and
executive officers as a group
(11 persons) 5,282,924(11) 9.77%
- -----------------
* Less than 1%
</TABLE>
(1) FMR Corp. beneficially owns, through Fidelity
Management Research Company ("Fidelity"), a wholly
owned subsidiary, as investment advisor to certain
funds generally offered to limited groups of investors
("Fidelity Funds"), 3,067,921 shares, or approximately
5.49% of the outstanding shares of the Company, and
through Fidelity Management Trust Co., ("FMTC"), the
managing agent for various private investment accounts,
primarily employee benefit plans and certain other
funds which are generally offered to limited groups of
investors (the "Accounts"), 4,133,681 shares, or
approximately 7.39% of the outstanding shares of the
Company. The number of shares held by the Fidelity
Funds includes 792,321 shares of Common Stock resulting
from the assumed conversion of $11,884,934 principal
amount of a Convertible Fixed Rate Note due May 16,
1997 ("Convertible Note") (66.666 shares of Common
Stock for each $1,000 principal amount of the note).
The number of shares held by the Accounts includes
1,188,481 shares of Common Stock resulting from the
assumed conversion of $17,827,400 principal amount of
the Convertible Note.
<PAGE>
The Fidelity Funds and the Accounts have the
option to convert the Convertible Note until May 31,
1995, although the Fidelity Funds and the Accounts have
informed the Company that they do not intend to
exercise the conversion option. Without converting the
Convertible Note the Fidelity Funds and Accounts own
9.33% of the outstanding shares of the Company.
FMR, through its control of Fidelity, investment
advisor to the Fidelity Funds, and the Funds each has
sole power to dispose of the shares. FMR does not have
the sole power to vote or direct the voting of the
3,067,921 Shares owned directly by the Fidelity Funds,
which power resides with the Funds' Boards of
Trustees. Fidelity carries out the voting of the
shares under written guidelines established by the
Funds' Board of Trustees. FMR, through its control of
FMTC, investment manager to the Accounts, and the
Accounts each has sole dispositive power over 4,133,681
shares and sole power to vote or to direct the voting
of 4,133,681 shares.
(2) Schedule 13D states that Beth H. Goldsmith, Alan E.
Berkowitz and Neil Ambach are trustees with shared
voting and dispositive power with respect to four
testamentary trusts which each holds 946,500 shares of
Company Common Stock. Mrs. Goldsmith is the
beneficiary of one of these trusts and her deceased
husband's three children are beneficiaries of the
remaining three trusts. She may disclaim beneficial
ownership of shares held by such three trusts. Mrs.
Goldsmith is a trustee of The Goldsmith Foundation,
Inc., which holds 75,939 shares of Company Common
Stock, with respect to which she has shared voting and
dispositive power and of which she may disclaim
beneficial ownership. Mrs. Goldsmith and Mr. Berkowitz
are trustees and officers of the Goldsmith Family
Foundation, Inc. and Mrs. Goldsmith, Mr. Berkowitz and
Mr. Ambach are trustees of the Goldsmith Life Insurance
Trust which hold 393,750 and 750,000 shares,
respectively, of Company Common Stock, with respect to
which they have shared voting and dispositive power and
of which they each may disclaim beneficial ownership.
Mrs. Goldsmith and Messrs. Berkowitz and Ambach also
are the personal representatives of the Estate of
Harold Goldsmith, which holds 588 shares, with respect
to which they have shared voting and investment power
and as to which each of such persons may disclaim
beneficial ownership.
The shares held by the testamentary trusts, The
Goldsmith Family Foundation, Inc., The Goldsmith Life
Insurance Trust and the Estate are included in the
numbers of shares owned beneficially by Mr. Berkowitz
and Mrs. Goldsmith shown in the table above. Also
included in Mrs. Goldsmith's number are the shares held
by The Goldsmith Foundation, Inc. The shares held by
the testamentary trusts and the Estate are also
included in the number of shares owned beneficially by
Mr. Ambach.
<PAGE>
(3) Includes 6,000 shares which may be acquired upon
exercise of options exercisable within 60 days and 18
shares owned by Mr. Berkowitz's daughter. Mr.
Berkowitz may disclaim beneficial ownership of these
shares.
(4) Includes 72,294 shares held of record by The Weinglass
Foundation, Inc., of which Mr. Weinglass is president
and a trustee. Mr. Weinglass may disclaim beneficial
ownership of these shares. The shares owned by Mr.
Weinglass individually are owned with sole voting and
investment powers.
(5) These shares are held by various individual and
institutional investors for which T. Rowe Price
Associates, Inc. ("Price Associates") serves as
investment adviser with power to direct investments
and/or sole power to vote the shares. Price Associates
expressly disclaims beneficial ownership of such
shares.
(6) Includes 481,893 shares which may be acquired upon
exercise of options within 60 days.
(7) Includes 149,894 shares which may be acquired upon
exercise of options within 60 days and 14,000
restricted shares subject to forfeiture as to which Mr.
Kaufman has sole voting and no investment power.
(8) Includes 169,393 shares which may be acquired upon
exercise of options within 60 days.
(9) Includes 6,000 shares which may be acquired upon
exercise of options within 60 days and 5,287 shares
owned by Mr. Altman's minor children. Mr. Altman may
disclaim beneficial ownership of these shares. Mr.
Altman is a trustee of the Goldsmith Family Foundation,
Inc. which holds 393,750 shares of Company Common Stock
with respect to which he shares voting and dispositive
power and of which he may disclaim beneficial
ownership.
(10) Includes 1,000 shares which may be acquired upon
exercise of options within 60 days.
(11) Includes 164,894 shares which may be acquired upon
exercise of options within 60 days and 14,000
restricted shares subject to forfeiture as to which the
officers have sole voting and no investment power.
The shares owned beneficially by directors, nominees
and executive officers were owned with sole voting and
investment powers except as indicated above.
<PAGE>
Item 13. Certain Relationships and Related Transactions.
In November 1994, the Company retained the services of
Meridian Ventures, Inc. ("Meridian") to assist in the
turnaround and management of the Company. In accordance
with the terms of the agreement, Thomas C. Shull and James
P. Kenney, both principals of Meridian, serve as full-time
officers of the Company. Messrs. Shull and Kenney, and any
other Meridian personnel deemed appropriate by Meridian, are
responsible for providing the management services required
of Meridian under the agreement in a manner consistent with
the policies adopted by the Board of Directors of the
Company and consistent with Chapter 11 of the United States
Bankruptcy Code. Under the agreement, the Company provides
director and officer liability insurance coverage for
Messrs. Shull and Kenney and has agreed under certain
circumstances to indemnify and hold harmless Meridian and
Messrs. Shull and Kenney for claims arising in connection
with the agreement and the services provided thereunder.
The agreement obligates the Company to pay Meridian a
monthly management fee of $95,000. In addition to the
monthly management fee, and provided that the Bankruptcy
Court confirms a plan of reorganization on or before October
2, 1995, the Company is obligated to pay Meridian bonus
compensation (the "Bonus Fee"). The Bonus Fee comprises
four components: (i) compensation determined by the amount
of cash distributed to unsecured creditors under the plan;
(ii) compensation determined by the amount of the allowed
unsecured claims; (iii) compensation determined by the date
of the plan's confirmation and (iv) compensation determined
by the value of certain property distributed under the plan
plus the value of the shares of the Company during the year
following the effective date of the plan. The Bonus Fee
will be paid only if certain targets are met with respect to
such components, and the amount of the Bonus Fee if paid
will vary depending on the size of such components. The
agreement also provides that Messrs. Shull and Kenney shall
be entitled to be reimbursed by the Company for reasonable
out-of-pocket business expenses incurred by them.
The Company's agreement with Meridian terminates on
June 30, 1995. By its terms the agreement may be extended
on a month-to-month basis upon 30 days' written notice until
a plan of reorganization is confirmed. Each extension is
subject to the prior unanimous consent of the official
committee of unsecured creditors, the official committee of
equity security holders, Fidelity Management & Research
Company and Bear, Stearns Securities, Inc. See "Item 1.
Business - Post Petition Matters - Management" for a
discussion of the search for a permanent Chief Executive
Officer for the Company. In addition, the Company and
Meridian each may terminate the agreement for cause as
defined in the agreement.
The Company leases three cooperative apartments in a
building in New York City from a partnership of which Mr.
Weinglass is a 50% partner and which the Estate of Harold
Goldsmith, of which Mr. Berkowitz is a personal
representative, is a 50% partner,
<PAGE>
for use during approximately 40 weeks of each year by the
Company's merchandise managers and buyers when they travel
to New York City's garment district. The apartments are not
used as residences by any corporate personnel. In fiscal
1995, the Company paid aggregate rent of $103,200 with
respect to these apartments. The monthly rentals paid by
the Company for the three apartments currently total $8,600.
The Company pays for all utilities and repairs not paid by
the cooperative association.
The Company leases storage space, totaling
approximately 136,000 square feet, in Towson, Maryland from
The Arcade Partnership. Mr. Weinglass and the Estate of
Harold Goldsmith are each a 50% partner in the partnership.
The aggregate payments by the Company under the leases were
approximately $166,000 in fiscal 1995.
In fiscal 1995, the Company was billed approximately
$135,000 and $200,000 by Freishtat and Sandler, with which
Mr. Altman is associated, and Alan E. Berkowitz &
Associates, with which Mr. Berkowitz is associated,
respectively, for services rendered during fiscal 1995. In
fiscal 1996, the Company expects to continue to obtain
services from the firms with which Messrs. Altman and
Berkowitz are associated.
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
MERRY-GO-ROUND ENTERPRISES, INC.
Date: May 30, 1995 By: /s/ Isaac Kaufman
Name: Isaac Kaufman
Title: Executive Vice
President, Chief
Financial Officer,
Secretary and
Treasurer
Exhibit 3(b)
Amended as of February 22, 1995
BYLAWS
MERRY-GO-ROUND ENTERPRISES, INC.
ARTICLE I.
Stockholders
Section 1. Annual Meetings.
The annual meeting of the stockholders of the
Corporation shall be held on such date within the month of
June as may be fixed from time to time by the Board of
Directors. Not less than ten nor more than 90 days written
or printed notice stating the place, day and hour of each
annual meeting shall be given in the manner provided in
Section 1 of Article IX hereof. The business to be
transacted at the annual meetings shall include the election
of directors and may include consideration and action upon
the reports of officers and directors and any other business
within the power of the Corporation. All annual meetings
shall be general meetings at which any business may be
considered without being specified as a purpose in the
notice unless otherwise required by law.
Section 2. Special Meetings Called by Chairman of the
Board, President or Board of Directors.
At any time in the interval between annual meetings,
special meetings of stockholders may be called by the
Chairman of the Board, or by the President, or by the Board
of Directors. Not less than ten days nor more than 90 days'
written notice stating the place, day and hour of such
meeting and the matters proposed to be acted on thereat
shall be given in the manner provided in Section 1 of
Article IX. No business shall be transacted at any special
meeting except that specified in the notice.
Section 3. Special Meeting Called by Stockholders.
Upon the request in writing delivered to the Secretary
by stockholders entitled to cast at least 25% of all the
<PAGE>
votes entitled to be cast at the meeting, it shall be the
duty of the Secretary to call forthwith a special meeting of
the stockholders. Such request shall state the purpose of
such meeting and the matters proposed to be acted on
thereat, and no other business shall be transacted at any
such special meeting. The Secretary shall inform such
stockholders of the reasonably estimated costs of preparing
and mailing the notice of the meeting, and upon payment to
the Corporation of such costs, the Secretary shall give not
less than ten nor more than 90 days' notice of the time,
place and purpose of the meeting in the manner provided in
Section I of Article IX. If, upon payment of such costs the
Secretary shall fail to issue a call for such meeting within
thirty days after the receipt of such payment (unless such
failure is excused by law), then the stockholders entitled
to cast 25% or more of the outstanding shares entitled to
vote may do so upon giving not less than ten days' nor more
than 90 days' notice of the time, place and purpose of the
meeting in the manner provided in Section I of Article IX.
Unless requested by stockholders entitled to cast a majority
of all the votes entitled to be cast at the meeting, a
special meeting need not be called to consider any matter
which is substantially the same as a matter voted on at any
special meeting of the stockholders held during the
preceding l2 months.
Section 4. Place of Meetings.
All meetings of stockholders shall be held at the
principal office of the Corporation in the State of Maryland
or at such other place within the United States as may be
fixed from time to time by the Board of Directors and
designated in the notice.
Section 5. Quorum.
At any meeting of stockholders the presence in person
or by proxy of stockholders entitled to cast a majority of
the votes thereat shall constitute a quorum.
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<PAGE>
Section 6. Adjourned Meetings.
A meeting of stockholders convened on the date for
which it was called may be adjourned from time to time
without further notice to a date not more than 120 days
after the record date, and any business may be transacted at
any adjourned meeting which could have been transacted at
the meeting as originally called. If notice of the
adjourned meeting is given in the manner required for a
special meeting, any business specified in the notice may be
transacted.
Section 7. Voting.
A majority of the votes cast at a meeting of
stockholders, duly called and at which a quorum is present,
shall be sufficient to take or authorize action upon any
matter which may properly come before the meeting, unless
more than a majority of votes cast is required by statute or
by the Charter. A plurality of all the votes cast at a
meeting at which a quorum is present is sufficient to elect
a director. The Board of Directors may fix the record date
for the determination of stockholders entitled to vote in
the manner provided in Article VIII, Section 3 of these
Bylaws.
Section 8. Proxies.
A stockholder may vote the shares owned of record by
him either in person or by proxy executed in writing and
signed by the stockholder or by his duly authorized attorney-
in-fact. Every proxy shall be dated, but need not be
sealed, witnessed or acknowledged. No proxy shall be valid
after 11 months from its date, unless otherwise provided in
the proxy. In the case of stock held of record by more than
one person, any co-owner or co-fiduciary may execute the
proxy without the joinder of his co-owner(s) or co-
fiduciary(ies), unless the Secretary of the Corporation is
notified in writing by any co-owner or co-fiduciary that the
joinder of more than one is to be required. At all meetings
of stockholders, the proxies shall be filed with
3
<PAGE>
and verified by the Secretary of the Corporation, or, if the
meeting shall so decide, by the Secretary of the meeting.
Section 9. Order of Business.
At all meetings of stockholders, unless otherwise
determined by the Chairman of the meeting, the order of
business shall be as follows:
(1) Organization
(2) Proof of notice of meeting or of waivers
thereof. (The certificate of the Secretary of the
Corporation, or the affidavit of any other person who
mailed or published the notice or caused the same to be
mailed or published, shall be proof of service of
notice.)
(3) If an annual meeting, or a special meeting
called for that purpose, the election of directors.
(4) Other business.
(5) Adjournment.
Section 10. Removal of Directors.
At any special meeting of the stockholders called in
the manner provided for by this Article, the stockholders,
by the affirmative vote of a majority of all the votes
entitled to be cast for the election of directors, may
remove any director or directors from office, with or
without cause, and may elect a successor or successors to
fill any resulting vacancies for the remainder of his or
their terms.
Section 11. Informal Action by Stockholders.
Any action required or permitted to be taken at any
meeting of stockholders may be taken without a meeting if a
consent in writing setting forth such action is signed by
all the stockholders entitled to vote thereon and such
consent is filed with the records of stockholders' meetings.
4
<PAGE>
Section 12. Advance Notice of Matters to be Presented at an
Annual Meeting of Stockholders.
At an annual meeting of the stockholders, only such
business shall be conducted as shall have been properly
brought before the meeting. To be properly brought before
an annual meeting, business must be specified in the notice
of the meeting (or any supplement thereto) given by or at
the direction of the Board of Directors, otherwise be
properly brought before the meeting by or at the direction
of the Board of Directors or otherwise be properly brought
before the meeting by a stockholder. In addition to any
other applicable requirements, for business to be properly
brought before an annual meeting by a stockholder, the
stockholder must have given timely notice thereof in writing
to the Secretary. To be timely, a stockholder's notice must
be delivered to or mailed and received at the principal
executive offices of the Corporation, not less than 15 days
nor more than 30 days prior to the meeting (or, with respect
to a proposal required to be included in the Company's proxy
statement pursuant to Rule 14a-8 of the Securities Exchange
Act of 1934, or its successor provision, the earlier date
such proposal was received); provided, however, that in the
event that less than 30 days' notice or prior public
disclosure of the date of the date of the meeting is given
or made to stockholders, notice by the stockholder to be
timely must be so received not later than the close of
business on the 10th day following the day on which such
notice of the date of the annual meeting was mailed or such
public disclosure was made. A stockholder's notice to the
Secretary shall set forth as to each matter the stockholder
proposes to bring before the annual meeting (i) a brief
description of the business desired to be brought before the
annual meeting and the reasons for conducting such business
at the annual meeting, (ii) the name and record address of
the stockholder proposing such business, (iii) the class and
number of shares of the Corporation which are beneficially
owned by the stockholder, and (iv) any material interest of
the stockholder in such business.
Notwithstanding anything in the By-Laws to the
contrary, no business shall be conducted at the annual
5
<PAGE>
meeting except in accordance with the procedures set forth
in this Section 12; provided, however, that nothing in this
Section 12 shall be deemed to preclude discussion by any
stockholder of any business properly brought before the
annual meeting in accordance with said procedure.
No matter shall be considered at any meeting of the
stockholders except upon a motion duly made and seconded.
Any motion or second of a motion shall be made only by a
natural person present at the meeting who either is a
stockholder of the Company or is acting on behalf of a
stockholder of the Company; provided, that if the person is
acting on behalf of a stockholder, he or she must present a
written statement executed by the stockholder or the duly
authorized attorney of the stockholder on whose behalf he or
she purports to act.
The presiding officer at the meeting shall, if the
facts warrant, determine and declare to the meeting that
business was not properly brought before the meeting in
accordance with the provisions of this Section 12, and if he
should so determine, he shall so declare to the meeting and
any such business not properly brought before the meeting
shall not be transacted.
Section 13. Advance Notice of Nominees for Directors.
Only persons who are nominated in accordance with the
following procedures shall be eligible for election as
Directors. Nominations of persons for election to the Board
of Directors of the Corporation may be made at a meeting of
stockholders by or at the direction of the Board of
Directors, or by any nominating committee or person
appointed by the Board of Directors, or by any stockholder
of the Corporation entitled to vote for the election of
Directors at the meeting who complies with the notice
procedures set forth in this Section 13. Such nominations,
other than those made by or at the direction of the Board of
Directors, shall be made pursuant to timely notice in
writing to he Secretary. To be timely, a stockholder's
notice shall be delivered to or mailed and received at the
principal executive offices of the Corporation not less than
6
<PAGE>
15 days nor more than 30 days prior to the meeting;
provided, however, that in the event that less than 30 days'
notice or prior public disclosure of the date of the meeting
is given or made to stockholders, notice by the stockholder
to be timely must be so received no later than the close of
business on the 10th day following the day on which such
notice of the date of the meeting was mailed or such public
notice of the date of the meeting was mailed or such public
disclosure was made. Such stockholder's notice shall set
forth: (a) as to each person who the stockholder proposes
to nominate for election or re-election as a Director, (i)
the name, age, business address and residence address of the
person, (ii) the principal occupation or employment of the
person, (iii) the class and number of shares of stock of the
Corporation which are beneficially owned by the person and
(iv) any other information relating to the person that is
required to be disclosed in solicitations for proxies for
election of Directors pursuant to Rule 14a under the
Securities Exchange Act of 1934 or any successor rule
thereto; and (b) as to the stockholder giving the notice,
(i) the name and record address of the stockholder and (ii)
the class and number of shares of the Corporation which are
beneficially owned by the stockholder. The Corporation may
require any proposed nominee to furnish such other
information as may reasonably be required by the Corporation
to determine the eligibility of such proposed nominee to
serve as a Director of the Corporation. No person shall be
eligible for election as a Director of the Corporation
unless nominated in accordance with the procedures set forth
herein.
The presiding officer at the meeting shall, if the
facts warrant, determine and declare to the meeting that a
nomination was not made in accordance with the foregoing
procedure, and if he should so determine, he shall so
declare to the meeting and the defective nomination shall be
disregarded.
Section 14. Maryland Control Share Act
The provisions of Subtitle 7 of Title 3 of the Maryland
General Corporation Law shall not apply to the voting rights
of
7
<PAGE>
shares of capital stock of the Corporation acquired by any
person, and any acquisition of such shares is hereby
exempted from said Subtitle 7."
ARTICLE II.
Directors
Section 1. Powers.
The business and affairs of the Corporation shall be
managed under the direction of its Board of Directors. All
powers of the Corporation may be exercised by or under the
authority of the Board of Directors except as conferred on
or reserved to the stockholders by law, by the Charter or by
these Bylaws. A director need not be a stockholder. The
Board of Directors shall keep minutes of its meetings and
full and fair accounts of its transactions.
Section 2. Number; Term of Office; Removal.
The number of directors of the Corporation shall be not
less than three or the same number as the number of
stockholders, whichever is less; provided, however, that
such number may be increased and/or decreased from time to
time by vote of a majority of the entire Board of Directors
to a number not exceeding 15. Directors shall hold office
for the term of one year, or until their successors are
elected and qualify. A director may be removed from office
as provided in Article I, Section 10 of these Bylaws.
Section 3. Annual Meeting; Regular Meetings.
As soon as practicable after each annual meeting of
stockholders, the Board of Directors shall meet for the
purpose of organization and the transaction of other
business. No notice of the annual meeting of the Board of
Directors need be given if it is held immediately following
the annual meeting of stockholders and at the same place.
Other regular meetings of the Board of Directors may be held
8
<PAGE>
at such times and at such places, within or without the
State of Maryland, as shall be designated in the notice for
such meeting by the party making the call. All annual and
regular meetings shall be general meetings, and any business
may be transacted thereat.
Section 4. Special Meetings.
Special meetings of the Board of Directors may be
called by the Chairman of the Board, or the President, or by
a majority of the directors.
Section 5. Quorum; Voting.
A majority of the Board of Directors shall constitute a
quorum for the transaction of business at every meeting of
the Board of Directors; but, if at any meeting there be less
than a quorum present, a majority of those present may
adjourn the meeting from time to time, but not for a period
exceeding ten days at any one time or 60 days in all,
without notice other than by announcement at the meeting,
until a quorum shall attend. At any such adjourned meeting
at which a quorum shall be present, any business may be
transacted which might have been transacted at the meeting
as originally called. Except as hereinafter provided or as
otherwise provided by the Charter or by law, directors shall
act by a vote of a majority of those members in attendance
at a meeting at which a quorum is present.
Section 6. Notice of Meetings.
Notice of the time and place of every regular and
special meeting of the Board of Directors shall be given to
each director in the manner provided in Section 2 of Article
VIII hereof. Subsequent to each Board meeting, each
director shall be furnished with a copy of the minutes of
said meeting. The purpose of any meeting of the Board of
Directors need not be stated in the notice.
Section 7. Vacancies.
(a) If the office of a director becomes vacant for any
reason other than removal or increase in the size of the
9
<PAGE>
Board, such vacancy may be filled by the Board by a vote of
a majority of directors then in office, although such
majority is less than a quorum.
(b) If the vacancy occurs as a result of the removal
of a director, the stockholders may elect a successor or may
delegate that authority to the Board of Directors.
(c) If the vacancy occurs as a result of an increase
in the number of directors, it may be filled by vote of a
majority of the entire Board of Directors.
(d) If the entire Board of Directors shall become
vacant, any stockholder may call a special meeting in the
same manner that the Chairman of the Board, the Vice
Chairman of the Board or the President may call such
meeting, and directors for the unexpired term may be elected
at such special meeting in the manner provided for their
election at annual meetings.
(e) A director elected by the Board of Directors to
fill a vacancy shall serve until the next annual meeting of
stockholders and until his successor is elected and
qualifies. A director elected by the stockholders to fill a
vacancy shall serve for the unexpired term and until his
successor is elected and qualifies.
Section 8. Rules and Regulations.
The Board of Directors may adopt such rules and
regulations for the conduct of its meetings and the
management of the affairs of the Corporation as it may deem
proper and not inconsistent with the laws of the State of
Maryland or these Bylaws or the Charter.
Section 9. Committees.
The Board of Directors may appoint from among its
members an executive committee and other committees of the
Board of Directors, each committee to be composed of two or
more of the directors of the Corporation. The Board of
Directors may, to the extent provided in the resolution and
10
<PAGE>
except those powers specifically denied by law, delegate to
any committee, in the intervals between meetings of the
Board of Directors, any or all of the powers of the Board of
Directors in the management of the business and affairs of
the Corporation. A committee or committees shall have the
name or names as may be determined from time to time by the
Board of Directors. Unless the Board of Directors
designates one or more directors as alternate members of any
committee, who may replace an absent or disqualified member
at any meeting of the committee, the members of the
committee present at any meeting and not disqualified from
voting may, whether or not they constitute a quorum,
unanimously appoint another member of the Board of Directors
to act at the meeting in the place of any absent or
disqualified member of the committee. Two members of a
committee shall constitute a quorum for the transaction of
business and the act of a majority of the members and
alternate members present at any meeting at which a quorum
is present shall be the act of the committee. Action may be
taken without a meeting if unanimous written consent is
signed by all of the members of the Committee, and if such
consent is filed with the records of the Committee. A
committee shall have the power to elect one of its members
to serve as its Chairman unless the Board of Directors shall
have designated such Chairman. Any action taken by a
committee within the limits permitted by law shall have the
force and effect of Board action unless and until revised or
altered by the Board.
Section 10. Compensation.
The directors may receive reasonable compensation for
their services, including an annual retainer and a fixed sum
and expenses of attendance at each regular or special
meeting, as determined by resolution of the Board; provided,
however, that nothing herein contained shall be construed as
precluding a director from serving the Corporation in any
other capacity and receiving compensation therefor.
Section 11. Place of Meetings.
Regular or special meetings of the Board may be held
within or without the State of Maryland, as the Board may
11
<PAGE>
from time to time determine. The time and place of meeting
may be fixed by the party making the call.
Section 12. Informal Action by the Directors.
Any action required or permitted to be taken at any
meeting of the Board may be taken without a meeting, if a
written consent to such action is signed by all members of
the Board and such consent is filed with the minutes of the
Board.
Section 13. Telephone Conference.
Members of the Board of Directors or any committee
thereof may participate in a meeting of the Board or such
committee by means of a conference telephone or similar
communications equipment by means of which all persons
participating in the meeting can hear each other at the same
time and participation by such means shall constitute
presence in person at the meeting.
ARTICLE III.
Officers
Section 1. In General.
The Board of Directors may choose a Chairman of the
Board and a Vice Chairman of the Board from among the
directors. The Board of Directors shall elect a President,
one or more Vice Presidents, a Treasurer, a Secretary, and
such Assistant Secretaries and Assistant Treasurers as may
be chosen by the Board of Directors. All officers shall
hold office for a term of one year and until their
successors are chosen and qualify. Any two of the above
offices, except those of President and Vice President, may
be held by the same person, but no officer shall execute,
acknowledge or verify any instrument in more than one
capacity when such instrument is required to be executed,
acknowledged or verified by any two or more officers. The
Board of Directors may from time to time appoint such other
agents and employees with such powers and duties as they may
12
<PAGE>
deem proper. In its discretion, the Board of Directors may
leave unfilled any offices except those of President,
Treasurer and Secretary.
Section 2. Chairman of the Board.
The Chairman of the Board, if one is elected, shall
preside over the meetings of the Board at which he is
present and shall have such other duties as may be
determined by the Board of Directors.
Section 3. Vice Chairman of the Board.
The Vice Chairman, if one is elected, shall have such
duties as may be determined by the Board of Directors and,
in the absence of the Chairman of the Board, shall preside
over the meetings of the Board at which he is present.
Section 4. President.
The President shall have such duties as may be
determined by the Board of Directors. In the absence of the
Chairman of the Board and Vice Chairman of the Board, he
shall preside over the meetings of the Board at which he is
present. He shall preside over meetings of the stockholders
at which he is present and shall perform such other duties
as may be assigned to him by the Board of Directors. The
President shall have the authority on the Corporation's
behalf to endorse securities owned by the Corporation and to
execute any documents requiring the signature of an
executive officer.
Section 5. Vice Presidents.
The Board of Directors may elect one or more Executive,
Senior or other Vice Presidents. The Vice Presidents, in
the order of priority designated by the Board of Directors,
shall be vested with all the power and may perform all the
duties of the President in his absence. They may perform
such other duties as may be prescribed by the Board of
Directors or the President.
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<PAGE>
Section 6. Treasurer.
The Treasurer shall be the chief financial officer of
the Corporation and shall have general supervision over its
finances. He shall perform such other duties as may be
assigned to him by the Board of Directors or the President.
If required by resolution of the Board, he shall furnish
bond (which may be a blanket bond) with such surety and in
such penalty for the faithful performance of his duties as
the Board of Directors may from time to time require, the
cost of such bond to be defrayed by the Corporation.
Section 7. Secretary.
The Secretary shall keep the minutes of the meetings of
the stockholders and of the Board of Directors and shall
attend to the giving and serving of all notices of the
Corporation required by law or these Bylaws. He shall
maintain at all times in the principal office of the
Corporation at least one copy of the Bylaws with all
amendments to date, and shall make the same, together with
the minutes of the meeting of the stockholders, the annual
statement of affairs of the Corporation and any voting trust
or other stockholders agreement on file at the office of the
Corporation, available for inspection by any officer,
director or stockholder during reasonable business hours.
He shall perform such other duties as may be assigned to him
by the Board of Directors.
Section 8. Assistant Treasurer and Secretary.
The Board of Directors may designate from time to time
Assistant Treasurers and Secretaries, who shall perform such
duties as may from time to time be assigned to them by the
Board of Directors or the President.
Section 9. Compensation; Removal; Vacancies.
The Board of Directors shall have power to fix the
compensation of all officers of the Corporation. It may
authorize any committee or officer, upon whom the power of
appointing subordinate officers may have been conferred, to
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fix the compensation of such subordinate officers. The
Board of Directors shall have the power at any regular or
special meeting to remove any officer, if in the judgment of
the Board the best interest of the Corporation will be
served by such removal. The Board of Directors may
authorize any officer to remove subordinate officers. The
Board of Directors may authorize the Corporation's
employment of an officer for a period in excess of the term
of the Board. The Board of Directors at any regular or
special meeting shall have power to fill a vacancy occurring
in any office for the unexpired portion of the term.
Section 10. Substitutes.
The Board of Directors may from time to time in the
absence of any one of its officers or at any other time,
designate any other person or persons, on behalf of the
Corporation to sign any contracts, deeds, notes or other
instruments in the place or stead of any of such officers,
and may designate any person to fill any one of said
offices, temporarily or for any particular purpose; and any
instruments so signed in accordance with a resolution of the
Board shall be the valid act of the Corporation as fully as
if executed by any regular officer.
ARTICLE IV.
Resignation
Any director or officer may resign his office at any
time. Such resignation shall be made in writing and shall
take effect from the time of its receipt by the Corporation,
unless some time be fixed in the resignation, and then from
that date. The acceptance of a resignation shall not be
required to make it effective.
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ARTICLE V.
Commercial Paper, Etc.
All bills, notes, checks, drafts and commercial paper
of all kinds to be executed by the Corporation as maker,
acceptor, endorser or otherwise, and all assignments and
transfers of stock, contracts, or written obligations of the
Corporation, and all negotiable instruments, shall be made
in the name of the Corporation and shall be signed by any
one or more of the following officers, i.e., the Chairman of
the Board, the President, any Vice President, or the
Treasurer, or by such other person or persons as the Board
of Directors may from time to time designate.
ARTICLE VI.
Seal
The seal of the Corporation shall be in the form of two
concentric circles inscribed with the name of the
Corporation and the year and State in which it is
incorporated. The Secretary or Treasurer, or any Assistant
Secretary or Assistant Treasurer, or any other person
authorized to do so the Board of Directors, is authorized to
attest and to affix to the corporate seal to any document of
the Corporation. In lieu of affixing the corporate seal to
any document, it shall be sufficient to meet the
requirements of any law, rule or regulation relating to a
corporate seal to affix the word "(SEAL)" adjacent to the
signature of the authorized officer or other person.
ARTICLE VII.
Stock
Section 1. Issue.
Each stockholder shall be entitled to a certificate or
certificates which shall represent and certify the number
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and class of shares of stock owned by him in the
Corporation. Each certificate shall be signed by the
Chairman of the Board, the President or any Vice President,
and countersigned by the Secretary or any Assistant
Secretary or the Treasurer or any Assistant Treasurer, and
may be sealed with the seal of the Corporation. The
signatures of the Corporation's officers and its corporate
seal appearing on stock certificates may be facsimiles if
each such certificate is authenticated by the manual
signature of an officer of a duly authorized transfer agent.
Stock certificates shall be in such form not inconsistent
with law or with the Charter, as shall be approved by the
Board of Directors. In case any officer of the Corporation
who has signed any certificate ceases to be an officer of
the Corporation, whether by reason of death, resignation or
otherwise, before such certificate is issued, then the
certificate may nevertheless be issued by the Corporation
with the same effect as if the officer had not ceased to be
such officer as of the date of such issuance.
Section 2. Transfers.
The Board of Directors shall have power and authority
to make all such rules and regulations as they may deem
expedient concerning the issue, transfer and registration of
stock certificates. The Board of Directors may appoint one
or more transfer agents and/or registrars for its
outstanding stock, and their duties may be combined. No
transfer of stock shall be recognized or binding upon the
Corporation until recorded on the books of the Corporation,
or, as the case may be, of its transfer agent and/or of its
registrar, upon surrender and cancellation of a certificate
or certificates for a like number of shares.
Section 3. Record Dates for Dividends and Stockholders'
Meeting.
The Board of Directors may fix a date not exceeding 90
days preceding the date of any meeting of stockholders, any
dividend payment date or any date for the allotment of
rights, as a record date for the determination of the
stockholders entitled to notice of and to vote at such
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meeting, or entitled to receive such dividends or rights, as
the case may be, and only stockholders of record on such
date shall be entitled to notice of and to vote at such
meeting or to receive such dividends or rights, as the case
may be. In the case of a meeting of stockholders, the
record date shall be fixed not less than ten days prior to
the date of the meeting.
Section 4. New Certificates.
In case any certificate of stock is lost, stolen,
mutilated or destroyed, the Board of Directors may authorize
the issue of a new certificate in place thereof upon
indemnity to the Corporation against loss and upon such
other terms and conditions as it may deem advisable. The
Board of Directors may delegate such power to any officer or
officers of the Corporation or to any transfer agent or
registrar of the Corporation; but the Board of Directors,
such officer or officers or such transfer agent or registrar
may, in their discretion, refuse to issue such new
certificate save upon the order of some court having
jurisdiction in the premises.
ARTICLE VIII
Notice
Section 1. Notice to Stockholders.
Whenever by law or these Bylaws notice is required to
be given to any stockholder, such notice shall be in writing
and may be given to each stockholder by leaving the same
with him or at his residence or usual place of business, or
by mailing it, postage prepaid, and addressed to him at his
address as it appears on the books of the Corporation or its
transfer agent. Such leaving or mailing of notice shall be
deemed the time of giving such notice.
Section 2. Notice to Directors and Officers.
Whenever by law or these Bylaws notice is required to
be given to any director or officer, such notice may be
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given in any one of the following ways: by personal notice
to such director or officer, by telephone communication with
such director or officer personally, by telecopy, telegram,
cablegram or radiogram, addressed to such director or
officer at his then address or at his address as it appears
on the books of the Corporation, or by depositing the same
in writing in the post office or in a letter box in a
postage paid, sealed wrapper addressed to such director or
officer at his address as it appears on the books of the
Corporation. The time when such notice shall be consigned
to a communication company for delivery shall be deemed to
be the time of the giving of such notice, and 48 hours after
the time when such notice shall be mailed shall be deemed to
be the time of the giving of such notice by mail.
Section 3. Waiver of Notice.
Notice to any stockholder or director of the time,
place and/or purpose of any meeting of stockholders or
directors required by these Bylaws may be dispensed with if
such stockholder shall either attend in person or by proxy,
or if such director shall attend in person, or if such
absent stockholder or director shall, in writing filed with
the records of the meeting either before or after the
holding thereof, waive such notice.
ARTICLE IX.
Voting of Stock in Other Corporations
Any stock in other corporations, which may from time to
time be held by the Corporation, may be represented and
voted at any meeting of stockholders of such other
corporations by the President or a Vice-President or by
proxy or proxies appointed by the President or a Vice-
President, or otherwise pursuant to authorization of the
Board of Directors.
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ARTICLE X.
Indemnification
The Corporation shall indemnify its directors to the
fullest extent that indemnification of directors is
permitted by the Maryland General Corporation Law. The
Corporation shall indemnify its officers to the same extent
as its directors and to such further extent as is consistent
with law. The Corporation shall indemnify its directors and
officers who, while serving as directors or officers of the
Corporation, also serve at the request of the Corporation as
a director, officer, partner, trustee, employee, agent or
fiduciary of another corporation, partnership, joint
venture, trust, other enterprise or employee benefit plan to
the fullest extent consistent with law. The indemnification
and other rights provided by this Section shall continue as
to a person who has ceased to be a director or officer and
shall inure to the benefit of the heirs, executors and
administrators of such a person.
Any director or officer seeking indemnification within
the scope of this Section shall be entitled to advances from
the Corporation for payment of the reasonable expenses
incurred by him in connection with the matter as to which he
is seeking indemnification in the manner and to the fullest
extent permissible under the Maryland General Corporation
Law without a preliminary determination of ultimate
entitlement to indemnification.
The Board of Directors may make further provision
consistent with law for indemnification and advance of
expenses to directors, officers, employees and agents by
resolution, agreement or otherwise. The indemnification
provided by this Section shall not be deemed exclusive of
any other right, with respect to indemnification or
otherwise, to which those seeking indemnification may be
entitled under any insurance or other agreement or
resolution of stockholders or disinterested directors or
otherwise.
References in this Section are to the Maryland General
Corporation Law as from time to time amended. No amendment
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of these By-Laws shall affect any right of any person under
this Section based on any event, omission or proceeding
prior to the amendment.
ARTICLE XI.
Amendments
These Bylaws may be added to, altered, amended,
repealed or suspended by the Board of Directors.
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