<PAGE> 1
UNITED STATES 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 June 30, 1995
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 1-7744
PACIFIC SCIENTIFIC COMPANY
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
CALIFORNIA 94-0744970
---------- ----------
(State or other jurisdiction of (IRS Employer ID Number)
incorporation or organization)
620 Newport Center Drive, Suite 700, Newport Beach, California 92660
- -------------------------------------------------------------- -----
(Address of principal executive offices) (Zip Code)
</TABLE>
714/720-1714
(Registrant's telephone number, including area code)
N/A
(Former name, address and 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 .
--- ---
Shares outstanding of the Registrant's common stock as of June 30, 1995
<TABLE>
<S> <C> <C>
Class Outstanding at June 30, 1995
Common Stock, $1.00 par value 11,001,383
</TABLE>
<PAGE> 2
PART 1--FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Pacific Scientific Company
Consolidated Balance Sheets
(in thousands)
<TABLE>
<CAPTION>
JUNE 30 DECEMBER 30
1995 1994
-------- --------
<S> <C> <C>
ASSETS
- ------
CURRENT ASSETS:
Cash $ 4,039 $ 1,655
Short-term investments 1,435 1,758
Trade receivables (less allowance for doubtful
accounts of $1,599 and $929, respectively) 46,589 43,435
Inventories, lower of cost (principally average)
or market:
Finished goods 4,882 4,263
Work-in-process 10,962 11,866
Raw materials and purchased parts 26,131 21,151
Deferred income taxes 4,085 4,205
Other current assets 2,941 2,100
-------- --------
Total Current Assets 101,064 90,433
-------- --------
PROPERTY AT COST:
Land and buildings 13,157 13,187
Machinery and equipment 78,495 70,630
-------- --------
Total 91,652 83,817
Less accumulated depreciation 56,645 52,649
-------- --------
Net Property 35,007 31,168
-------- --------
RESTRICTED CASH 6,136 6,071
NOTE RECEIVABLE 623 711
PROPERTY HELD FOR SALE 3,300 3,300
NOTES, PATENTS AND OTHER 8,548 8,272
EXCESS OF COST OVER NET ASSETS ACQUIRED 40,843 32,714
-------- --------
TOTAL $ 195,521 $ 172,669
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Short-term borrowings $ 4,000 $ 3,700
Accounts payable 19,000 15,826
Accrued employee compensation and benefits 5,918 5,717
Note payable for business acquisition 2,316 0
Other current liabilities 6,894 9,904
-------- --------
Total Current Liabilities 38,128 35,147
-------- --------
BANK BORROWING 32,525 19,400
CONVERTIBLE SUBORDINATED DEBENTURES 17,281 17,286
INDUSTRIAL DEVELOPMENT BONDS 5,625 5,625
OTHER LONG TERM LIABILITIES 5,646 4,073
-------- --------
STOCKHOLDERS' EQUITY:
Common stock, $1 par value 11,001 10,939
Additional paid-in-capital 1,179 727
Currency Translation Adjustment (122) 0
Retained earnings 84,258 79,472
-------- --------
Total Stockholders' Equity 96,316 91,138
-------- --------
TOTAL $ 195,521 $ 172,669
-------- --------
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of this statement.
2
<PAGE> 3
PART 1--(Continued)
Pacific Scientific Company
Consolidated Statements of Income (unaudited)
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
QUARTER ENDED YEAR-TO-DATE
JUNE 30 JULY 1 JUNE 30 JULY 1
1995 1994 1995 1994
------- ------- -------- --------
<S> <C> <C> <C> <C>
SALES:
Electrical Equipment $52,155 $39,818 $101,110 $ 77,048
Safety Equipment 16,738 17,370 32,627 31,725
------- ------- -------- --------
68,893 57,188 133,737 108,773
COST OF SALES 46,178 38,684 91,187 74,324
------- ------- -------- --------
Gross Profit 22,715 18,504 42,550 34,449
------- ------- -------- --------
EXPENSES:
Selling and marketing 7,412 6,431 14,023 11,805
General and administrative 6,265 5,573 12,175 10,729
Research and development 3,392 2,233 6,300 4,357
------- ------- -------- --------
Total Expenses 17,069 14,237 32,498 26,891
------- ------- -------- --------
OPERATING INCOME 5,646 4,267 10,052 7,558
INTEREST & OTHER (Net) (1,003) (591) (1,339) (1,137)
------- ------- -------- --------
INCOME BEFORE INCOME TAX PROVISION 4,643 3,676 8,713 6,421
INCOME TAX PROVISION (1,742) (1,433) (3,268) (2,504)
------- ------- -------- --------
NET INCOME $ 2,901 $ 2,243 $ 5,445 $ 3,917
------- ------- -------- --------
EARNINGS PER COMMON AND COMMON
EQUIVALENT SHARE:
PRIMARY $ 0.25 $ 0.20 $ 0.47 $ 0.35
------- ------- -------- --------
FULLY DILUTED $ 0.25 $ 0.20 $ 0.47 $ 0.35
------- ------- -------- --------
CASH DIVIDENDS PER COMMON SHARE $ 0.030 $ 0.015 $ 0.060 $ 0.030
------- ------- -------- --------
</TABLE>
The accompanying notes to the consolidated financial statements are an integral
part of this statement.
3
<PAGE> 4
PART 1--(Continued)
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
Pacific Scientific Company
Consolidated Statements of Cash Flows (unaudited, in thousands)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
---------- ----------
JUNE 30 JULY 1
1995 1994
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 5,445 $ 3,917
Depreciation and amortization 5,455 5,731
Deferred income taxes 120 0
Decrease in accrued employee benefit plan liabilities (428) (222)
Loss on disposal of property 11 91
Effect on cash of changes in assets and liabilities,
net of the effects of business acquisitions:
Trade receivables (639) (1,252)
Inventories (1,421) (4,156)
Other current assets (794) (80)
Accounts payable 2,227 (1,000)
Accrued employee compensation and benefits 201 510
Other current liabilities (516) (129)
---------- ----------
Net cash flows from operating activities 9,661 3,410
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for business acquisitions, net of cash acquired (11,625) (1,290)
Purchases of property (7,851) (4,766)
Decrease in short-term investments 323 2
Decrease (increase) in restricted cash and other assets (1,277) 231
---------- ----------
Net cash flows from investing activities (20,430) (5,823)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of convertible subordinated debentures (5) 0
Issuance (repayments) of short-term debt 300 (1,250)
Issuance of long-term debt 13,125 4,250
Cash dividends on common stock (659) (326)
Issuances of common stock 514 585
---------- ----------
Net cash flows from financing activities 13,275 3,259
---------- ----------
EFFECT OF EXCHANGE RATE CHANGES (122) 0
---------- ----------
NET INCREASE IN CASH 2,384 846
CASH, Beginning of Period 1,655 2,081
---------- ----------
CASH, End of Period $ 4,039 $ 2,927
---------- ----------
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of this statement.
4
<PAGE> 5
PART I - (Continued)
Item 1. Financial Statements (Continued)
Pacific Scientific Company, Notes to Consolidated Financial Statements
1) INTERIM ACCOUNTING POLICY
Interim periods are viewed as an integral part of the annual period.
Accordingly, the results for each of the interim periods presented are
based on the accounting principles and practices followed by the
Company in the preparation of its annual financial statements.
Certain costs and expenses are assigned to the periods presented so
that the interim periods bear a reasonable portion of the anticipated
annual amount. Included among these are estimated amounts for
inventory adjustments, performance bonuses, employee fringe benefits
and income taxes. The financial statements presented, in the opinion
of management, include all adjustments necessary to present fairly the
Company's interim financial statements.
5
<PAGE> 6
PART I - (Continued)
Item 1. Financial Statements (Continued)
2) EARNINGS PER SHARE
Earnings per common and common equivalent share were computed by
dividing net income by the weighted average number of common and
common equivalent shares outstanding during each period. Common
equivalent shares consist of the estimated number of shares issuable
upon exercise of dilutive stock options reduced by the number of
common shares assumed to have been reacquired with the proceeds from
exercise of the options.
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
-------------------------- --------------------------
June 30, July 1, June 30, July 1,
PRIMARY 1995 1994 1995 1994
------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
AVERAGE NUMBER OF
SHARES OUTSTANDING 10,994,874 10,845,472 10,984,109 10,830,484
AVERAGE NUMBER OF
SHARES ASSUMING EXERCISE
OF DILUTIVE EMPLOYEE
STOCK OPTIONS 476,581 322,238 489,824 318,814
---------- ---------- ---------- ----------
COMMON AND COMMON
EQUIVALENT SHARES 11,471,455 11,167,710 11,473,933 11,149,298
========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
--------------------------- --------------------------
June 30, July 1, June 30, July 1,
FULLY DILUTED 1995 1994 1995 1994
------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
AVERAGE NUMBER OF
SHARES OUTSTANDING 10,994,874 10,845,472 10,984,109 10,830,484
CONVERTIBLE DEBENTURES 909,526 --- 909,564 ---
AVERAGE NUMBER OF
SHARES ASSUMING EXERCISE
OF DILUTIVE EMPLOYEE
STOCK OPTIONS 476,677 324,036 479,284 329,996
---------- ---------- ---------- ----------
COMMON AND COMMON
EQUIVALENT SHARES 12,381,077 11,169,508* 12,372,957 11,160,480*
========== ========== ========== ==========
</TABLE>
*The computation of fully diluted shares for the periods ended July
1, 1994 is antidilutive and accordingly was not included in the
computation of earnings per share.
NOTE: The Company has outstanding convertible subordinated
debentures. Inclusion of these debentures would be
antidilutive and, accordingly, they have been excluded
from the above totals.
3) RECLASSIFICATIONS
Certain reclassifications have been made to the 1994 amounts to
conform to the 1995 financial statement presentation.
6
<PAGE> 7
PART I - (Continued)
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations - Second Quarter 1995 vs. Second Quarter 1994
Net sales were $68,893,000 in the second quarter of 1995, a 20% or $11,705,000
increase in sales over the same period in the prior year. Second quarter sales
in the Electrical Equipment segment were $52,155,000, a 31% or $12,337,000
increase over the same period of the prior year. The acquisitions of Royce
Thompson Ltd. in the second quarter of 1994 and Eduard Bautz GmbH in the first
quarter of 1995 accounted for $6,626,000 of the increase in sales of the
Electrical Equipment segment. The sales from the Safety Equipment segment were
$16,738,000, a 4% or $632,000 decrease compared to the same period of the prior
year.
Gross margin on sales increased $4,211,000 to 33% of sales in the second
quarter of 1995 from 32% in the prior year reflecting improved margins mainly
within the Automation Technology Group. Selling, general and administrative
expenses were less than 20% of sales in the second quarter of 1995. This was a
decline from approximately 21% in the same period of the prior year reflecting
control of expenses and the economics of scale associated with the higher sales
base. Research and development expenses increased $1,159,000 or 52% in the
second quarter of 1995 over the same period in the prior year. R&D expenses
are now equal to 4.9% of sales reflecting continued emphasis on new product
development which should accelerate future growth in sales.
Interest and Other (Net) increased $412,000 in the current quarter compared to
the second quarter of 1994 due to a combination of higher borrowings caused
principally by the acquisition of Eduard Bautz GmbH and by the 1.0% higher
average rate of interest being paid on the amount borrowed.
Income before taxes increased 26% due to a 20% increase in sales and control of
operating expenses. Pre-tax income was effected by $1,424,000 of additional
income from acquisitions and approximately $825,000 of additional expense due
to increasing R&D expenses as a percentage of sales.
The estimated annual effective tax rate for 1995 is 37.5% as compared to the
prior year's effective rate of 39% for the second quarter.
Net income of $0.25 per share in 1995 compares to $0.20 per share in the second
quarter of 1994. The 1994 earnings reflect the 2 for 1 stock split effective
December 16, 1994. In addition to the stock split, the remaining increase in
the number of shares is accounted for by the exercise of employee stock options
and the effect of options outstanding at stock prices below the current market
price.
Total orders received in the second quarter of 1995 were $69,644,000, up 18%
from the prior year. Orders for the Electrical Equipment segment during the
second quarter totaled $54,750,000, up 27% while orders for the Safety
Equipment segment totaled $14,894,000, down 6% as compared to the same quarter
of the prior year. The decline in Safety Equipment orders is due to both
delays and reductions in procurement by the military and the aerospace
industry. Orders for spare parts from the worldwide airline industry increased
compared to the prior year.
The backlog of orders at June 30, 1995 and July 1, 1994 was $93,851,000 and
96,709,000, respectively. As the ratio of sales between Electrical Equipment
and Safety Equipment increases, backlog is expected to be a less significant
indication of future business due to the shorter delivery cycle of Electrical
Equipment. In the just completed quarter, sales of Electrical Equipment
equaled 75.7% of total sales as compared to 69.6% in the same quarter of the
prior year.
7
<PAGE> 8
PART I - (Continued)
Item 2. Management's Discussion - (Continued)
The Company's inertia reels, used as personnel restraints on military aircraft,
which were temporarily suspended in 1991, have not yet been requalified by the
U.S. Air Force and relisted on the "Qualified Product List" (QPL). However,
certain military agencies are again purchasing the Company's inertia reels by
waiving the QPL requirement. Although the Company continues to believe, after
more than thirty years experience, that its inertia reels are designed and
manufactured to meet all known requirements, it is not possible to project when
the U.S. Air Force will approve our products for the QPL.
Six Months Comparison - First Half 1995 vs. First Half 1994
Net sales were $133,737,000 in the first half of 1995, a 23% or $24,964,000
increase in sales over the same period in the prior year. First half sales in
the Electrical Equipment segment were $101,110,000, a 31% or $24,062,000
increase over the same period of the prior year. The acquisitions of Royce
Thompson Ltd. in the second quarter of 1994 and Eduard Bautz GmbH in the first
quarter of 1995 accounted for $11,462,000 of the increase in sales of the
Electrical Equipment segment. The sales from the Safety Equipment segment were
$32,627,000, a 3% or $902,000 increase compared to the same six month period of
the prior year.
Gross margin on sales increased $8,101,000 to 32% of sales in the first half of
1995 compared to the prior year reflecting improved margins mainly within the
Automation Technology Group.
Selling, general and administrative expenses were less than 20% of sales
the first half of 1995. This is a decline from approximately 21% in the
same period of the prior year reflecting control of expenses and the economics
of scale associated with the higher sales base.
Research and development expenses increased $1,943,000 or 45% in the first half
of 1995 over the same period in the prior year. R&D expenses are equal to 4.7%
of the six month sales reflecting continued emphasis on new product
development.
Income before taxes increased 36% primarily due to a 23% increase in sales and
control of operating expenses. Pre-Tax income was affected by $2,603,000 of
additional income from acquisitions and approximately $950,000 of additional
expenses due to increased R&D expenses as a percent of sales.
The estimated annual effective tax rate for 1995 is 37.5% as compared to the
prior year's effective rate of 39% for the first half.
Net income of $0.47 per share in 1995 compares to $0.35 per share in the first
half of 1994. The 1994 earnings reflect the 2 for 1 stock split effective
December 16, 1994. In addition to the stock split, the remaining increase in
the number of shares is accounted for by the exercise of employee stock options
and the effect of options outstanding at stock prices below the current market
price.
Orders for the Electrical Equipment segment during the first half totaled
$106,888,000 up 30% while total orders received in the first half of 1995 total
$136,647,000, up 20% from the prior year.
Orders for the Safety Equipment segment totaled $29,759,000 down 6% as compared
to the same period of the prior year. The decline in Safety Equipment orders
is due to both delays and reductions in procurement by the military and the
aerospace industry. Orders for spare parts from the worldwide airline industry
increased compared to the prior year.
8
<PAGE> 9
PART I - (Continued)
Item 2. Management's Discussion (Continued)
Financial Position and Liquidity
Debt less cash, restricted cash, and short-term investments was $47,820,000 at
the end of the first six months in 1995 as compared to the $41,380,000 in the
same period of the prior year. This increase of $6,440,000 resulted
principally from the acquisition of Eduard Bautz, GmbH at the beginning of
1995.
Operations provided cash of $9,661,000 in the first six months of 1995 as
compared to $3,410,000 in the same period of the prior year.
The increase in cash flow from operations is primarily due to:
<TABLE>
<S> <C>
Increase in accounts payables $3,227,000
Decrease in inventories 2,735,000
Increase in income 1,528,000
Other (1,239,000)
----------
Increase in Cash Flow from Operating Activities $6,251,000
==========
</TABLE>
The Company's working capital was $62,936,000 on June 30, 1995 for a current
ratio of 2.7:1. On July 1, 1994 working capital was $57,416,000.
At the end of the second quarter of 1995, the Company had unused lines of
credit of $20.9 million.
The Company believes that internally generated funds will provide sufficient
capital resources to finance operations, fund planned capital expenditures, pay
interest and dividends on outstanding debt and common stock, and reduce
outstanding debt.
9
<PAGE> 10
PART II - OTHER INFORMATION
Item 4. Submission of Matters of a Vote of Security Holders
At the annual meeting of the Company's stockholders held on April 26,
1995, the stockholders approved (a) the amendment of the Company's
Restated Articles of Incorporation to increase the authorized number
of shares of common stock from 15,000,000 to 30,000,000, by a vote of
8,003,000 shares in favor, 1,131,943 against or withheld, 210,285
abstentions and 0 broker non-votes; and (b) the Company's 1995 Stock
Option Plan (incorporated herein by reference to the Company's proxy
statement filed March 16, 1995), by a vote of 5,386,431 shares in
favor, 1,370,533 against or withheld, 187,718 abstentions and
2,401,327 broker non-votes.
Item 6. Exhibits and Reports on Form 8-K
Exhibits:
3(i) Articles of Incorporation.
3(ii) Bylaws
22(a) Pacific Scientific Company 1995 Stock Option Plan. (1)
22(b) Amendment to Article Fourth of the Registrant's Restated
Articles of Incorporation which increased the authorized
number of shares of the Registrant from 15 million to 30
million. (1)
Reports on Form 8-K:
None
__________________________________________________
(1) Incorporated by reference to Registrant's Proxy Statement filed March
16, 1995.
10
<PAGE> 11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
PACIFIC SCIENTIFIC COMPANY, Registrant
By: /s/ Richard V. Plat
------------------------------
Richard V. Plat
Executive Vice President
Date: July 28, 1995
11
<PAGE> 1
ARTICLES OF INCORPORATION
OF
PACIFIC SCIENTIFIC COMPANY
FIRST: The name of this corporation is: PACIFIC SCIENTIFIC COMPANY
SECOND: The purpose of this corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of California other than the banking business, the trust company business
or the practice of a profession permitted to be incorporated by the California
Corporations Code.
THIRD: The corporation elects to be governed by all the provisions of the
General Corporation Law of California as effective January 1, 1977 and as
subsequently amended not other wise applicable to it under Chapter 23 thereof.
FOURTH: This corporation is authorized to issue two classes of shares to be
designated respectively "Preferred Stock" and "Common Stock"; the total number
of shares which this corporation is authorized to issue is thirty-two million
(32,000,000), and the aggregate par value of all shares that are to have a par
value is thirty-two million dollars ($32,000,000) and (a) the number of shares
of Preferred Stock is two million (2,000,000) and the par value of each of such
shares shall be one dollar ($1), and (b) the number of shares of Common Stock
is thirty million (30,000,000) and the par value of each of such shares shall
be one dollar ($1).
The shares of Preferred Stock may be issued from time to time in one or more
series. The board of directors is hereby authorized to fix or alter the
dividend rights, dividend rate, conversion rights, voting rights, rights and
terms of redemption (including sinking fund provisions), the redemption price
or prices, and the liquidation preferences of any wholly
1
<PAGE> 2
unissued series of shares of Preferred Stock, and the number of shares
constituting any such series and the designation thereof, or any of these; and,
within the limitations and restrictions stated in any resolution or resolutions
of the board of directors originally fixing the number of shares constituting
any series, to increase or decrease the number of shares of any such series
subsequent to the issue of shares of that series, but not below the number of
shares of such series then outstanding. The term "fixed for such series" and
correlative terms shall mean stated in a resolution or resolutions lawfully
adopted by the board of directors in exercise of such authority thus granted.
All shares of Preferred Stock shall be of equal rank and shall be identical in
all respects except in respect of the particulars that may be fixed by the
board of directors as hereinabove in this Article Fourth provided.
Except as provided in the resolution or resolutions fixing the terms of any
series of Preferred Stock or as otherwise provided by law, the holders of
shares of Common Stock shall have and possess the exclusive voting rights and
owners, and the holders of shares of Preferred Stock shall have no voting
rights or powers.
FIFTH:
(a) The provisions of paragraph (b) of this Article Fifth shall not apply
to any transaction (i) between the corporation and any one or more of
its wholly owned subsidiaries; (ii) that is a merger for which, except
for the requirements of this Article Fifth, approval by the
stock-holders of the corporation is not required by the General
Corporation Law of California; (iii) that is a merger in which the
corporation is the surviving entity (as hereinafter defined); (iv)
that has been approved by the board of directors of the corporation
either (a) unanimously, or (b) prior to the acquisition by any Person
that is an associate of the corporation (as those terms are
hereinafter defined) of the beneficial ownership of five percent (5%)
or more of the outstanding shares of stock of this corporation; or (v)
in which all of the following conditions are satisfied:
2
<PAGE> 3
(1) The cash or fair market value of the property, securities or
other consideration to be received per share by holders of the
stock of this corporation in such transaction is not less than
the higher of (i) the highest per share price (as hereinafter
defined) paid by such
associated Person in acquiring any of its holdings of this
corporation's stock or (ii) an amount which bears the same or
a greater percentage relationship to the market price of this
corporation's stock immediately prior to the announcement of
such transaction as the highest per share price determined in
(i) above bears to the market price of this corporation's
stock immediately prior to the commencement of acquisition of
this corporation's stock by such associated Person, but in no
event in excess of two times the highest per share price
determined in (i), above; and
(2) After becoming an associated Person and prior to the
consummation of such business combination, (i) such associated
Person shall not have acquired any newly issued shares of
capital stock, directly or indirectly, from this corporation
(except upon conversion of convertible securities acquired by
it prior to becoming an associated Person or upon compliance
with the provisions of this Article Fifth or as a result of a
pro rata stock dividend or stock split), (ii) such associated
Person shall not have received the benefit, directly or
indirectly (except proportionately as a stockholder) of any
loans, other financial assistance or tax credits provided by
this corporation, or made any major changes in this
corporation's business or equity capital structure, and (iii)
there shall have been no reduction in the rate of dividends
payable on the corporation's Common Stock, except as may have
been approved by unanimous vote of the directors; and
3
<PAGE> 4
(3) A proxy statement responsive to the requirements of the
Securities Exchange Act of 1934, whether or not this
corporation is then subject to such requirements, shall be
mailed to the public stockholders of this corporation for the
purpose of soliciting stockholder approval of such transaction
and shall contain at the front thereof, in a prominent place
(i) any recommendations as to the advisability (or
inadvisability) of the transaction which any of the directors
may choose to state, and (ii) the opinion of a reputable
national investment banking firm as to the fairness (or not)
of the terms of such business combination, from the point of
view of the remaining public stockholders of this corporation
(such
investment banking firm to be engaged solely on behalf of the
remaining public stockholders, to be paid a reasonable fee for
its services by this corporation upon receipt of such opinion,
to be one of the so-called major bracket investment banking
firms which has not previously been associated with such
associated Person and, if there are at the time any such
directors, to be selected by a majority of the outside
directors).
(b) Except as set forth in paragraph (a) of this Article Fifth,
(1) The adoption of any agreement for the merger of the
corporation with or into any other Person that is an associate
of the corporation, or
(2) The authorization of any sale, lease, transfer, exchange or
other disposition to any other Person that is an associates of
the corporation of all or substantially all of the assets of
the corporation, or any part of such assets having a then fair
market value equal to or greater than fifty percent (50%) of
the then fair market value of the total assets of the
corporation, shall require (i) the affirmative vote of
the
4
<PAGE> 5
holders of at least a majority of the outstanding shares of
stock of the corporation entitled to vote exclusive of shares
owned beneficially (as hereinafter defined) by any such other
Person, and (ii) the affirmative vote of the holders of at
least two-thirds of the outstanding shares of stock of the
corporation entitled to vote.
(c) For the purposes of this Article Fifth:
(1) Any specified Person shall be deemed to be the "beneficial
owner" of shares of stock of the corporation (A) which such
specified Person or any affiliate or associate (as such terms
are hereinafter defined) or such Person beneficially owns,
directly or indirectly, whether of record or not, (B) which
such specified Person or any affiliate or associate of such
Person has the right to acquire pursuant to any agreement or
(C) which are beneficially owned,
directly or indirectly [including shares deemed owned through
application of clauses (A) or (B) above], by any other Person
with which such specified Person or any affiliate or associate
of such specified Person has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or
disposing of voting securities of the corporation.
(2) A "Person" is an individual corporation, partnership, joint
venture, trust or unincorporated organization, or a government
or any agency or political subdivision thereof.
(3) An "affiliate" of a specified Person is any Person that
directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control
with, the specified Person.
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(4) An "associate" of a specified Person is (A) any Person who is,
directly or indirectly, the beneficial owner of five percent
(5%) or more of any class of equity securities of such
specified Person or who is an officer, director, trustee or
partner of such specified Person or any affiliate of such
specified Person, (B) any trust or estate in which such
specified Person has a substantial beneficial interest or as
to which such specified Person serves as a trustee or in a
similar fiduciary capacity, and (C) any relative or spouse of
such specified Person, or any relative of such spouse, who has
the same home as such specified Person.
(5) The corporation shall be the "surviving entity" in any merger
in which: (A) the stockholders of the corporation immediately
prior to the merger own immediately after the merger the same
stock of the corporation they owned immediately prior to the
merger, subject to their rights, if any, under the General
Corporation Law of California as dissenting stockholders; and
(B) the stockholders of the corporation immediately prior to
the merger (other than any Person with or into which the
corporation merges or any affiliate or associate of such
Person) own immediately after the merger, subject to the same
rights, if any, as dissenting stockholders, stock
possessing at least a majority of the voting power of the
corporation. For the purpose of the preceding clause (B), (i)
the voting power of the corporation shall be calculated by
assuming the conversion of all equity securities convertible
(immediately or at some future time) into stock entitled to
vote but not assuming the exercise of any warrant or right to
subscribe to or purchase such stock, and (ii) in determining
the ownership of voting stock of the corporation immediately
after the merger, voting stock received by reason of the
ownership of stock of another party to the merger owned
immediately prior to the merger shall be disregarded.
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(6) A "merger" is a merger in accordance with Chapter 11 of the
General Corporation Law of California.
(7) All references to the "highest per share price" shall mean the
per share price inclusive of brokerage commissions, soliciting
dealers' fees, dealer-management compensation, and other
expenses, including, but not limited to, costs of newspaper
advertisements, printing expenses and attorneys' fees.
(8) All references to the "General Corporation Law of California"
shall mean Division 1 of Title 1 of the California
Corporations Code as in effect at the time of this amendment
and all amendments thereto thereafter adopted.
(d) The board of directors of the corporation shall have the power to
determine, for purposes of this Article Fifth on the basis of
information then known to the board:
(1) The fair market value of any assets of the corporation
proposed to be disposed of in a transaction of the character
referred to in paragraph (b)(2) of this Article Fifth, and the
fair market value of the total assets of the corporation;
(2) Whether any Person referred to in paragraph (b) of this
Article Fifth is the beneficial owner of the outstanding
securities of the corporation entitled to vote and the extent
of such beneficial ownership; and
(3) Whether by reason of paragraph (a) of this Article Fifth,
paragraph (b) of this Article Fifth does not apply to a
transaction.
Any such determination shall be conclusive and binding for all purposes of this
Article Fifth.
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(e) This article Fifth may be amended only upon receiving the affirmative
vote of the holders of at least two-thirds of all outstanding shares
of the corporation entitled to vote.
SIXTH: The personal liability of the directors of the corporation for
monetary damages shall be eliminated to the fullest extent permissible under
California law, as the same exists and to such greater extent as California law
may hereafter permit.
SEVENTH: The corporation is authorized to indemnify any agent (as hereinafter
defined) to the maximum and broadest extent permitted by California law, as the
same exists when this Article Seventh becomes effective and to such greater
extent as California law may thereafter permit, if and to the extent such agent
becomes entitled to indemnification by bylaw, agreement, vote of shareholders
or disinterested directors or otherwise. This authorization includes, without
limitation, the authority to indemnify any agent in excess of that otherwise
expressly permitted by Section 317 of the California Corporations Code as to
action in an official capacity and as to action in another capacity while
holding such office for breach of duty to the corporation and its shareholders,
provided, however, that the corporation is not authorized to indemnify any
agent for any acts or omissions from which a director may not be relieved of
liability as set forth in the exceptions to Paragraph (10) of Section 204(a) of
the California Corporations Code or as to circumstances in which indemnity is
expressly prohibited by Section 317 of the California Corporations Code. When
used in this Article Seventh, "agent" shall have the meaning assigned to this
term in Section 317 of the California Corporations Code. Each reference in
this Article Seventh to a provision of the California Corporations Code shall
mean that provision when this Article Seventh becomes effective and as the same
may be amended thereafter from time to time, but only to the extent that such
amendment would broaden or increase the scope or magnitude of permissible
indemnification.
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BYLAWS
PACIFIC SCIENTIFIC COMPANY
ARTICLE I
OFFICES
SECTION 1 PRINCIPAL OFFICES. The board of directors shall fix the
location of the principal executive office of the corporation at any place
within or outside the State of California. If the principal executive office
is located outside this state, and the corporation has one or more business
offices in this state, the board of directors shall fix and designate a
principal business office in the State of California.
SECTION 2 OTHER OFFICES. The board of directors may at any time
establish, or may designate an officer of the corporation to establish branch
or subordinate offices at any place or places where the corporation is
qualified to do business.
ARTICLE II
MEETING OF SHAREHOLDERS
SECTION 1 PLACE OF MEETINGS. Meetings of shareholders shall be
held at any place within or outside the State of California designated by the
board of directors. In the absence of any such designation, shareholders'
meetings shall be held at the principal executive office of the corporation.
SECTION 2 ANNUAL MEETING. The annual meeting of shareholders shall be
held each year on a date and at a time designated by the board of directors.
At each annual meeting, directors shall be elected, and any other proper
business may be transacted.
SECTION 3 SPECIAL MEETING. A special meeting of the
shareholders may be called at any time by the board of directors, or by the
chairman of the board, or by the president, or by one or more shareholders
holding shares in the aggregate entitled to cast not less than 10% 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, specifying the time of such meeting
and the general nature of the business proposed to be transacted, and shall be
delivered personally or sent by registered mail or by telegraphic or other
facsimile transmission to the chairman of the board, the president, any vice
president, or the secretary of the corporation. The officer receiving the
request shall cause notice to be promptly given to the shareholders entitled to
vote, in accordance with the provisions of Sections 4 and 5 of this Article II,
that a meeting will be held at the time requested by the person or persons
calling the meeting, not less than thirty-five (35) nor more than sixty (60)
days after the receipt of the request. If the notice is not given within
twenty (20) days after receipt of the request, the person or persons requesting
the meeting may give the notice. Nothing contained in this paragraph of this
Section 3 shall be construed as limiting, fixing or affecting the time when a
meeting of shareholders called by action of the board of directors may be held.
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SECTION 4 NOTICE OF SHAREHOLDERS' MEETINGS. All notices of
meeting of shareholders shall be sent or otherwise given in accordance with
Section 5 of this Article II not less than ten (10) nor more than sixty (60)
days before the date of the meeting. The notice shall specify the place, date
and hour of the meeting and (i) in the case of a special meeting, the general
nature of the business to be transacted or (ii) in the case of the annual
meeting, those matters which the board of directors, at the time of giving the
notice, intends to present for action by the shareholders. The notice of any
meeting at which directors are to be elected shall include the name of any
nominee or nominees whom, at the time of the notice, management intends to
present for election.
If action is proposed to be taken at any meeting for approval of (i) a contract
or transaction in which a director has a direct or indirect financial interest,
pursuant to Section 310 of the Corporations Code of California, (ii) an
amendment of the Articles of Incorporation, pursuant to Section 902 of that
Code, (iii) a reorganization of the corporation, pursuant to Section 1201 of
that Code, (iv) a voluntary dissolution of the corporation, pursuant to Section
1900 of that Code, or (v) a distribution in dissolution other than in
accordance with the rights of outstanding preferred shares, pursuant to Section
2007 of that Code, the notice shall also state the general nature of that
proposal.
SECTION 5 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE. Notice of
any meeting of shareholders shall be given either personally or by first-class
mail or telegraphic or other written communication, charges prepaid, addressed
to the shareholder at the address of that shareholder appearing on the books of
the corporation or given by the shareholder to the corporation for the purpose
of notice. If no such address appears on the corporation's books or is given,
notice shall be deemed to have been given if sent to that shareholder by
first-class mail or telegraphic or other written communication to the
corporation's principal executive office, or if published at least once in a
newspaper of general circulation in the county where that office is located.
Notice shall be deemed to have been given at the time when delivered personally
or deposited in the mail or sent by telegram or other means of written
communication.
If any notice addressed to a shareholder at the address of that shareholder
appearing on the books of the corporation is returned to the corporation by the
United States Postal Service marked to indicate that the United States Postal
Service is unable to deliver the notice to the shareholder at that address, all
future notices or report shall be deemed to have been duly given without
further mailing if these shall be available to the shareholder on written
demand of the shareholder at the principal executive office of the corporation
for a period of one year from the date of the giving of the notice.
An affidavit of the mailing or other means of giving any notice of any
shareholders' meeting shall be executed by the secretary, assistant secretary,
or any transfer agent of the corporation giving the notice, and shall be filed
and maintained in the minute book of the corporation.
SECTION 6 QUORUM. The presence in person or by proxy of the holders of
a majority of the shares entitled to vote at any meeting of shareholders shall
constitute a quorum for the transaction of business. The shareholders present
at a duly called or held meeting at which a quorum is present may continue to
do business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum, if any action taken (other than
adjournment) is approved by at least a majority of the shares required to
constitute a quorum.
SECTION 7 ADJOURNED MEETING; NOTICE. Any shareholders' meeting,
annual or special, whether or not a quorum is present, may be adjourned from
time to time by the vote of the majority of the shares represented at that
meeting, either in person or by proxy, but in the absence of a quorum, no other
business may be transacted at that meeting, except as provided in Section 6 of
this Article II.
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When any meeting of shareholders, either annual or special, is adjourned to
another time or place, notice need not be given of the adjourned meeting if the
time and place are announced at a meeting at which the adjournment is taken,
unless a new record date for the adjourned meeting is fixed, or unless the
adjournment is for more than forty-five (45) days from the date set for the
original meeting, in which case the board of directors shall set a new record
date. Notice of any such adjourned meeting shall be given to each shareholder
of record entitled to vote at the adjourned meeting in accordance with the
provisions of Sections 4 and 5 of this Article II. At any adjourned meeting
the corporation may transact any business which might have been transacted at
the original meeting.
SECTION 8 VOTING. The shareholders entitled to vote at any meeting of
shareholders shall be determined in accordance with the provisions of Section
11 of this Article II, subject to the provisions of Sections 702 to 704,
inclusive, of the Corporations Code of California (relating to voting shares
held by a fiduciary, in the name of a corporation, or in joint ownership). The
shareholders' vote may be by voice vote or by ballot; provided, however, that
any election for directors must be by ballot if demanded by any shareholder
before the voting has begun. On any matter other than elections of directors,
any shareholder may vote part of the shares in favor of the proposal and
refrain from voting the remaining shares or vote them against the proposal,
but, if the shareholder fails to specify the number of shares which the
shareholder is voting affirmatively, it will be conclusively presumed that the
shareholder's approving vote is with respect to all shares that the shareholder
is entitled to vote. If a quorum is present, the affirmative vote of the
majority of the shares represented at the meeting and entitled to vote on any
matter (other than the election of directors) shall be the act of the
shareholders, unless the vote of a greater number or voting by classes is
required by California General Corporation Law or by the Articles of
Incorporation.
At a shareholders' meeting at which directors are to be elected, no shareholder
shall be entitled to cumulate votes (i.e., cast for any one or more candidates
a number of votes greater than the number of the shareholder's shares) unless
the candidates' names have been placed in nomination prior to commencement of
the voting and a shareholder has given notice prior to commencement of the
voting of the shareholder's intention to cumulate votes. If any shareholder
has given such a notice, then every shareholder entitled to vote may cumulate
votes for candidates in nomination and give one candidate a number of votes
equal to the number of directors to be elected multiplied by the number of
votes to which that shareholder's shares are entitled, or distribute the
shareholder's votes on the same principle among any or all of the candidates,
as shareholder thinks fit. The candidates receiving the highest number of
votes, up to the number of directors to be elected, shall be elected.
SECTION 9 WAIVER OF NOTICE OR CONSENT BY ABSENT SHAREHOLDERS.
The transactions of any meeting of shareholders, either annual or special,
however called and notice, and wherever held, shall be as valid as though had
at a meeting duly held after regular call and notice, if a quorum, be present
either in person or by proxy, and if, either before or after the meeting, each
person entitled to vote, who was not present in person or by proxy, signs a
written waiver of notice or a consent to a holding of the meeting, or an
approval of the minutes. The waiver of notice or consent need not specify
either the business to be transacted for the purpose of any annual or special
meeting of shareholders, except that, if action is taken or proposed to be
taken for approval of any of those matters specified in the second paragraph of
Section 4 of this Article II, the waiver of notice or consent shall state the
general nature of the proposal. All such waivers, consents or approvals shall
be filed with the corporate records or made a part of the minutes of the
meeting.
Attendance by a person at a meeting shall also constitute a waiver of notice of
that meeting, except when the person objects, at the beginning of the meeting,
to the transaction of any business because the meeting is not lawfully called
or convened, and except that attendance at a meeting is not a waiver of any
right to object to the consideration of matters not included in the notice of
the meeting if that objection is expressly made at the meeting.
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SECTION 10 SHAREHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING.
Any action which may be taken at any annual or special meeting of shareholders
may be taken without a meeting and without prior notice, if a consent in
writing, setting forth the action so taken, is signed by the holders of
outstanding shares having not less than the minimum number of votes that would
be necessary to authorize or take that action at a meeting at which all shares
entitled to vote thereon were present and voted. In the case of election of
directors, such a consent shall be effective only if signed by the holders of
all outstanding shares entitled to vote for the election of directors;
provided, however, that a director may be elected at any time to fill a vacancy
on the board of directors that has not been filled by directors, by the written
consent of the holders of a majority of the outstanding shares entitled to vote
for the election of directors. All such consents shall be filed with the
secretary of the corporation and shall be maintained in the corporate records.
Any shareholder giving a written consent, or the shareholder's proxy holders,
or a transferee of the shares or a personal representative of the shareholder
or their respective proxy holders, may revoke the consent by a writing received
by the secretary of the corporation before written consents of the number of
shares required to authorize the proposed action have been filed with the
secretary.
If the consents of all shareholders entitled to vote have not been solicited in
writing, and if the unanimous written consent of all such shareholders shall
not have been received, the secretary shall give prompt notice of the corporate
action approved by the shareholders without a meeting. This notice shall be
given in the manner specified in Section 5 of this Article II. In the case of
approval of (i) contracts or transactions in which a director has a direct or
indirect financial interest, pursuant to Section 310 of the Corporations Code
of California, (ii) indemnification of agents of the corporation, pursuant to
Section 317 of that Code, (iii) a reorganization of the corporation, pursuant
to Section 1201 of that Code, and (iv) a distribution in dissolution other than
in accordance with the rights of outstanding preferred shares, pursuant to
Section 2007 of that Code, the notice shall be given at least ten (10) days
before the consummation of any action authorized by that approval.
SECTION 11 RECORD DATE FOR SHAREHOLDER NOTICE, VOTING, AND GIVING
CONSENTS.
For purposes of determining the shareholders entitled to notice of any meeting
or to vote or entitled to give consent to corporate action without a meeting,
the board of directors may fix, in advance, a record date which shall not be
more than sixty (60) days nor less than ten (10) days before the date of any
such meeting nor more than sixty (60) days before any such action without a
meeting, and in this event only shareholders of record on the date so fixed are
entitled to notice and to vote or to give consents, as the case may be,
notwithstanding any transfer of any shares on the books of the corporation
after the record date, except as otherwise provided in the California General
Corporation Law.
If the board of directors does not so fix a record date:
(a) The record date for determining shareholders entitled to notice
of or to vote at a meeting of shareholders shall be at the close of
business on the business day next preceding the day on which notice is
given or, if notice is waived, at the close of business on the
business day next preceding the day on which the meeting is held.
(b) The record date for determining shareholders entitled to give
consent to corporate action in writing without a meeting, (i) when no
prior action by the board has been taken, shall be the day on which
the first written consent is given or (ii) when prior action of the
board has been taken, shall be at the close of business on the day on
which the board adopts the resolution relating to that action, or the
sixtieth (60th) day before the date of such other action, whichever is
later.
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SECTION 12 PROXIES. Every person entitled to vote for
directors or on any other matter shall have the right to do so either in person
or by one or more agents authorized by a written proxy signed by the person and
filed with the secretary of the corporation. A proxy shall be deemed signed if
the shareholder's name is placed on the proxy (whether by manual signature,
typewriting, telegraphic transmission, or otherwise) by the shareholder or the
shareholder's attorney in fact. A validly executed proxy which does not state
that it is irrevocable shall continue in full force and effect unless (i)
revoked by the person executing it, before the vote pursuant to that proxy, by
a writing delivered to the corporation stating that the proxy is revoked, or by
a subsequent proxy executed by, or attendance at the meeting and voting in
person by, the person executing the proxy; or (ii) written notice of the death
or incapacity of the maker of that proxy is received by the corporation before
the vote pursuant to that proxy is counted; provided, however, that no proxy
shall be valid after the expiration of eleven (11) months from the date of the
proxy, unless otherwise provided in the proxy. The revocability of a proxy
that states on its face that it is irrevocable shall be governed by the
provisions of Sections 705(e) and 705(f) of the Corporations Code of
California.
SECTION 13 INSPECTORS OF ELECTION. Before any meeting of
shareholders, the board of directors may appoint any persons other than
nominees for office to act as inspectors of election at the meeting or its
adjournment. If no inspectors of election are so appointed, the chairman of
the meeting may, and on the request of any shareholder or a shareholder's proxy
shall, appoint inspectors of election at the meeting. The number of inspectors
shall be either one (1) or three (3). If inspectors are appointed at a meeting
on the request of one or more shareholders or proxies, the holders of a
majority of shares or their proxies present at the meeting shall determine
whether one (1) or three (3) inspectors are to be appointed. If any person
appointed as inspector fails to appear or fails or refuses to act, the chairman
of the meeting may, and upon the request of any shareholder or a shareholder's
proxy shall, appoint a person to fill that vacancy.
These inspectors shall:
(a) Determine the number of shares outstanding and the voting
power of each, the shares represented at the meeting, the
existence of a quorum, and the authenticity, validity, and
effect of proxies;
(b) Receive votes, ballots, or consents;
(c) Hear and determine all challenges and questions in any way
arising in connection with the right to vote;
(d) Count and tabulate all votes or consents;
(e) Determine when the polls shall close;
(f) Determine the result; and
(g) Do any other acts that may be proper to conduct the election
or vote with fairness to all shareholders.
ARTICLE III
DIRECTORS
SECTION 1 POWERS. Subject to the provisions of the California
General Corporation Law and any limitations in the Articles of Incorporation
and these Bylaws relating to action required to be approved by the shareholders
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.
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Without prejudice to these general powers, and subject to the same limitations,
the directors shall have the power to:
(a) Select and remove all officers, agents, and employees of the
corporation; prescribe any powers and duties for them that are
consistent with law, with the Articles of Incorporation, and
with these Bylaws; fix their compensation; and require from
them security for faithful service.
(b) Change the principal executive office or the principal
business office in the State of California from one location
to another; cause the corporation to be qualified to do
business in any other state, territory, dependency, or country
and conduct business within or without the State of
California; and designate any place within or without the
State of California for the holding of any shareholders'
meeting, or meetings, including annual meetings.
(c) Adopt, make, and use a corporate seal; prescribe the forms of
certificates of stock; and alter the form of the seal and
certificates.
(d) Authorize the issuance of shares of stock of the corporation
on any lawful terms, in consideration of money paid, labor
done, services actually rendered, debts or securities
canceled, or tangible or intangible property actually
received.
(e) Borrow money and incur indebtedness on behalf of the
corporation, and cause to be executed and delivered for the
corporation's purposes, in the corporate name, promissory
notes, bonds, debentures, deeds of trust, mortgages, pledges,
hypothecations, and other evidences of debt and securities.
(f) Designate a director to be chairman of the board if that
office is not filled by an officer of the Company, said
chairman to exercise and perform those powers and duties as
are set forth in Article V Section 6 of these Bylaws.
SECTION 2 NUMBER AND QUALIFICATION OF DIRECTORS. The number
of directors of the corporation shall not be less than five (5) nor more than
eight (8). The exact number of directors shall be eight (8) until changed,
within the limits specified above by a bylaw amending this Section 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 a duly adopted amendment to the Articles
of Incorporation or by an amendment to this Bylaw duly adopted by a vote or
written consent of holders of a majority of the outstanding shares entitled to
vote; provided, however, that any such amendment reducing the fixed 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
shareholders, or the shares not consenting in the case of action by written
consent, are equal to more than 16-2/3 percent of the outstanding shares
entitled to vote. No amendment may change the stated maximum number of
authorized directors to a number greater than two times the stated minimum
number of directors minus one.
SECTION 3 ELECTION AND TERM OF OFFICE OF DIRECTORS. Directors
shall be elected at each annual meeting of the shareholders to hold office
until the next annual meeting. Each director, including a director elected to
fill a vacancy, shall hold office until the expiration of the term for which
elected and until a successor has been elected and qualified.
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SECTION 4 VACANCIES. Vacancies in the board of directors
may be filled by a majority of the remaining directors, though less than a
quorum, or by a sole remaining director, except that a vacancy created by the
removal of a director by the vote or written consent of the shareholders or by
court order may be filled only by the vote of a majority of the shares entitled
to vote represented at a duly held meeting at which a quorum is present, or by
the written consent of holders of a majority of the outstanding shares entitled
to vote. Each director so elected shall hold office until the next annual
meeting of the shareholders and until a successor has been elected and
qualified.
A vacancy or vacancies in the board of directors shall be deemed to exist in
the event of the death, resignation, or removal of any director, or if the
board of directors by resolution declares vacant the office of a director who
has been declared of unsound mind by an order of court or convicted of a
felony, or if the authorized number of directors is increased, or if the
shareholders fail, at any meeting of shareholders at which any director or
directors are elected, to elect the number of directors to be voted for at that
meeting.
The shareholders may elect a director or directors at any time to fill any
vacancy or vacancies not filled by the directors, but any such election by
written consent shall require the consent of a majority of the outstanding
shares entitled to vote.
Any director may resign effective on giving written notice to the chairman of
the board, the president, the secretary, or the board of directors, unless the
notice specifies later time for that resignation to become effective. If the
resignation of a director is effective at a future time, the board of directors
may elect a successor to take office when the resignation becomes effective.
No reduction of the authorized number of directors shall have the effect of
removing any director before that director's term of office expires.
SECTION 5 PLACE OF MEETINGS AND MEETINGS BY TELEPHONE.
Regular meetings of the board of directors may be held at any place
within or outside the State of California that has been designated from time to
time by resolution of the board. In the absence of such a designation, regular
meetings shall be held at the principal executive office of the corporation.
Special meetings of the board shall be held at any place within or outside the
State of California that has been designated in the notice of the meeting or,
if not stated in the notice or there is no notice, at the principal executive
office of the corporation. Any meeting, regular or special, may be held by
conference telephone or similar communication equipment, so long as all
directors participating in the meeting can hear one another, and all such
directors shall be deemed to be present in person at the meeting.
SECTION 6 ANNUAL MEETING. Immediately following each annual
meeting of shareholders, the board of directors shall hold a regular meeting
for the purpose of organization, any desired election of officers, and the
transaction of other business. Notice of this meeting shall not be required.
SECTION 7 OTHER REGULAR MEETINGS. Other regular meetings of
the board of directors shall be held without call at such time as shall from
time to time be fixed by the board of directors. Such regular meetings may be
held without notice.
SECTION 8 SPECIAL MEETINGS. Special meetings of the
board of directors for any purpose or purposes may be called at any time by the
chairman of the board or the president or any vice president or the secretary
or any two directors.
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Notice of the time and place of special meetings shall be delivered personally
or by telephone to each director or sent by first-class mail or telegram,
charges prepaid, addressed to each director at that director's address as it is
shown on the records of the corporation. In case the notice is mailed, it
shall be deposited in the United States mail at least four (4) days before the
time of the holding of the meeting. In case the notice is delivered
personally, or by telephone or telegram, it shall be delivered personally or by
telephone or to the telegraph company at least forty-eight (48) hours before
the time of the holding of the meeting. Any 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. The notice need not specify the
purpose of the meeting nor the place if the meeting is to be held at the
principal executive office of the corporation.
SECTION 9 QUORUM. A majority of the authorized number of
directors shall constitute a quorum for the transaction of business, except to
adjourn as provided in Section 11 of this Article III. Every act or decision
done or made by a majority of the directors present at a meeting duly held at
which a quorum is present shall be regarded as the act of the board of
directors, subject to the provisions of Section 310 of the Corporations Code of
California (as to approval of contracts or transactions in which a director has
a direct or indirect material financial interest), Section 311 of that Code (as
to appointment of committees), and Section 317(e) of that Code (as to
indemnification of directors). 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.
SECTION 10 WAIVER OF NOTICE. The transactions of any
meeting of the board of directors, however called and noticed or wherever held,
shall be as valid as though had at a meeting duly held after regular call and
notice if a quorum is present and if, either before or after the meeting, each
of the directors not present signs a written waiver of notice, a consent to
holding the meeting or an approval of the minutes. The waiver of notice or
consent need not specify the purpose of the meeting. All such waivers,
consents, and approvals shall be filed with the corporate records or made a
part of the minutes of the meeting. Notice of a meeting shall also be deemed
given to any director who attends the meeting without protesting before or at
its commencement, the lack of notice to that director.
SECTION 11 ADJOURNMENT. A majority of the directors present,
whether or not constituting a quorum, may adjourn any meeting to another time
and place.
SECTION 12 NOTICE OF ADJOURNMENT. Notice of the time and place
of holding an adjourned meeting need not be given, unless the meeting is
adjourned for more than twenty-four (24) hours, in which case notice of the
time and place shall be given before the time of the adjourned meeting, in the
manner specified in Section 8 of this Article III, to the directors who were
not present at the time of the adjournment.
SECTION 13 ACTION WITHOUT MEETING. Any action required or
permitted to be taken by the board of directors may be taken without a meeting,
if all members of the board shall individually or collectively consent in
writing to that action. Such action by written consent shall have the same
force and effect as a unanimous vote of the board of directors. Such written
consent or consents shall be filed with the minutes of the proceedings of the
board.
-8-
<PAGE> 9
SECTION 14 FEES AND COMPENSATION OF DIRECTORS. Directors
and members of committees may receive such compensation, if any, for their
services, and such reimbursement of expenses, as may be fixed or determined by
resolution of the board of directors. This Section 14 shall not be construed
to preclude any director from serving the corporation in any other capacity as
an officer, agent, employee, or otherwise, and receiving compensation for those
services.
ARTICLE IV
COMMITTEES
SECTION 1 COMMITTEES OF DIRECTORS. The board of directors may,
by resolution adopted by a majority of the authorized number of directors,
designate one or more committees, each consisting of two or more directors, to
serve at the pleasure of the board. The board may designate one or more
directors as alternate members of any committee, who may replace any absent
member at any meeting of the committee. Any committee, to the extent provided
in the resolution of the board, shall have all the authority of the board,
except with respect to:
(a) the approval of any action which, under the General
Corporation Law of California, also requires shareholders'
approval or approval of the outstanding shares;
(b) the filling of vacancies on the board of directors or in any
committee;
(c) the fixing of compensation of the directors for serving on the
board or on any committee;
(d) the amendment or repeal of bylaws or the adoption of new
bylaws;
(e) the amendment or repeal of any resolution of the board of
directors which by its express terms is not so amendable or
repealable;
(f) a distribution to the shareholders of the corporation, except
at a rate or in a periodic amount or within a price range
determined by the board of directors; or
(g) the appointment of any other committees of the board of
directors or the members of these committees.
SECTION 2 MEETINGS AND ACTION OF COMMITTEES. Meetings
and action of committees shall be governed by, and held and taken in
accordance with, the provisions of Article III of these Bylaws, Sections 5
(Place of Meetings), 7 (Regular Meetings), 8 (Special Meetings and Notice), 9
(Quorum), 10 (Waiver of Notice), 11 (Adjournment), 12 (Notice of Adjournment),
and 13 (Action Without 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, except 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; special meetings of committees may also be
called by resolution of the board of directors; and 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.
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<PAGE> 10
ARTICLE V
OFFICERS
SECTION 1 OFFICERS. 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, one or more vice presidents, one or more assistant
secretaries, one or more assistant treasurers, and such other officers as may
be appointed in accordance with the provisions of Section 3 of this Article V.
Any number of offices may be held by the same person.
SECTION 2 ELECTION OF OFFICERS. The officers of the
corporation, except such officers as may be appointed in accordance with the
provisions of Section 3 or Section 5 of this Article V, shall be chosen by the
board of directors, and each shall serve at the pleasure of the board, subject
to the rights, if any, of an officer under any contract of employment.
SECTION 3 SUBORDINATE OFFICERS. The board of directors may
appoint, and may empower the president to appoint, such other officers 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 in the
Bylaws or as the board of directors may from time to time determine.
SECTION 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 the board of directors, at any
regular or special meeting of the board, or except in 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.
SECTION 5 VACANCIES IN OFFICES. A vacancy in any office
because of death, resignation, removal, disqualification or any other cause
shall be filled in the manner prescribed in these Bylaws for regular
appointments to that office.
SECTION 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
be from time to time assigned to him by the board of directors or prescribed by
the Bylaws. If there is no president, the chairman of the board shall, in
addition, be the chief executive officer of the corporation and shall have the
powers and duties prescribed in Section 7 of this Article V.
SECTION 7 PRESIDENT. 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 president shall be the chief executive officer
of the corporation and 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
shareholders and, in the absence of the chairman of the board, or if there be
none, at all meetings of the board of directors. 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 the Bylaws.
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<PAGE> 11
SECTION 8 VICE PRESIDENTS. In the absence or disability
of the 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. 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 or the Bylaws, and the president, or the
chairman of the board.
SECTION 9 SECRETARY. The secretary shall keep or cause to
be kept, at the principal executive office 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 shareholders, with the time and place
of holding, whether regular or special, and, if special, how authorized, the
notice given, the names of those present at directors' meetings or committee
meetings, the number of shares present or represented at shareholders'
meetings, and the proceedings.
The secretary shall keep, or cause to be kept, at the principal executive
office 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 shareholders and their
addresses, the number and classes of shares held by each, the number and date
of certificates issued for the same and the number and date of cancelation of
every certificate surrendered for cancelation.
The secretary shall give, or cause to be given, notice of all meetings of the
shareholders and of the board of directors required by the Bylaws or by law to
be given, and he shall keep the seal of the corporation if one be adopted, in
safe custody, and shall have such other powers and perform such other duties as
may be prescribed by the board of directors or by the Bylaws.
SECTION 10 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
president and directors, whenever they request it, an account of all of 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.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS, OFFICERS
EMPLOYEES AND OTHER AGENTS
SECTION 1 DIRECTORS. The corporation shall, to the
maximum extent permitted by California law, indemnify each of its directors
against expenses, judgments, fines, settlements and other amounts actually and
reasonably incurred in connection with any proceeding arising by reason of the
fact that any such person is or was a director of the corporation. Expenses
incurred by any director in defending any proceedings shall be advanced by the
corporation to the maximum extent permitted by California law.
-11-
<PAGE> 12
SECTION 2 AGENTS. The corporation shall have the authority to
the maximum extent authorized by the Articles of Incorporation and not
expressly prohibited by the California General Corporations Code, to indemnify
each of its agents (as defined below) against expenses, judgments, fines,
settlements, and other amounts actually and reasonably incurred in connection
with any proceeding arising by reason of the fact that any such person is or
was an agent of the corporation. The corporation shall also have the
authority, to the maximum extent permitted by California law, to enter into
indemnity agreements with its agents and to advance expenses incurred by any
agent of the corporation in defending any proceeding.
SECTION 3 OTHER RIGHTS. The indemnification provided by this
Article shall not be deemed exclusive of any other rights to which those
seeking indemnification may be entitled under California law, any bylaw,
agreement, vote of shareholders or disinterested directors or otherwise, both
as to action in an official capacity and as to action in another capacity while
holding such office, and shall continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to be a benefit of the
heirs, executors and administrators of the person.
SECTION 4 INSURANCE. The corporation shall have the
authority to purchase and maintain insurance on behalf of agents of the
corporation against any liability asserted against or incurred by any agent in
such capacity or arising out of the agent's status as agent.
SECTION 5 DEFINITIONS. For the purposes of this Article, an
"agent" of the corporation includes any person who is or was a director,
officer, employee, or other agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee, or agent of
another foreign or domestic corporation, partnership, joint venture, trust, or
other enterprise; or was a director, officer, employee or agent of a
corporation which was a predecessor corporation of the corporation or of
another enterprise at the request of such predecessor corporation. For
purposes of this Article, "proceeding" means any threatened, pending or
completed action or proceeding, whether civil, criminal, administrative or
investigative. For purposes of this Article, "expenses" includes, without
limitation, attorneys' fees and any expenses of establishing a right to
indemnification.
ARTICLE VII
RECORDS AND REPORTS
SECTION 1 MAINTENANCE AND INSPECTION OF SHARE REGISTER.
The corporation shall keep at its principal executive office, or at
the office of its transfer agent or registrar, if either be appointed and as
determined by resolution of the board of directors, a record of its
shareholders, giving and names and addresses of all shareholders and the number
of class of shares held by each shareholder.
A shareholder or shareholders of the corporation holding at least five percent
(5%) in the aggregate of the outstanding voting shares of the corporation may
(i) inspect and copy the records of shareholders' names and addresses and
shareholdings during usual business hours on five days prior written demand on
the corporation, and (ii)) obtain from the transfer agent of the corporation,
on written demand and on the tender of such transfer agent's usual charges for
such list, a list of the shareholders' names and addresses, who are entitled to
vote for the election of directors, and their shareholdings, as of the most
recent record date for which that list has been compiled or as of a date
specified by the shareholder after the date of demand. This list shall be made
available to any such
-12-
<PAGE> 13
shareholder by the transfer agent on or before the later of five (5) days after
the demand is received or the date specified in the demand as the date as of
which the list is to be compiled. The record of shareholders shall also be
open to inspection on the written demand of any shareholder or holder of a
voting trust certificate, at any time during usual business hours, for a
purpose reasonably related to the holder's interests as a shareholder or as the
holder of a voting trust certificate. Any inspection and copying under this
Section 1 may be made in person or by an agent or attorney of the shareholder
or holder of a voting trust certificate making the demand.
SECTION 2 MAINTENANCE AND INSPECTION OF BYLAWS.
The corporation shall keep at its principal executive office, or if
its principal executive office is not in the State of California, at its
principal business office in this state, the original or a copy of the Bylaws
as amended to date, which shall be open to inspection by the shareholders at
all reasonable times during office hours. If the principal executive office of
the corporation is outside the State of California and the corporation has no
principal business office in this state, the Secretary shall, upon the written
request of any shareholder, furnish to that shareholder a copy of the Bylaws as
amended to date.
SECTION 3 MAINTENANCE AND INSPECTION OF OTHER CORPORATE RECORDS.
The accounting books and records and minutes of proceedings of the shareholders
and the board of directors and any committee or committees of the board of
directors shall be kept at such place or places designated by the board of
directors, or, in the absence of such designation, at the principal executive
office of the corporation. The minutes shall be kept either in written form or
any other form capable of being converted into written form. The minutes and
accounting books and records shall be open to inspection upon the written
demand of any shareholder or holder of a voting trust certificate, at any
reasonable time during usual business hours, for a purpose reasonably related
to the holder's interests as a shareholder or as the holder of a voting trust
certificate. The inspection may be made in person or by an agent or attorney,
and shall include the right to copy and make extracts. These rights of
inspection shall extend to the records of each subsidiary corporation of the
corporation.
SECTION 4 INSPECTION BY DIRECTORS. Every director
shall have the absolute right at any reasonable time to inspect all books,
records, and documents of every kind and the physical properties of the
corporation and each of its subsidiary corporations. This inspection by a
director may be made in person or by an agent or attorney and the right of
inspection includes the right to copy and make extracts of documents.
SECTION 5 ANNUAL REPORT TO SHAREHOLDERS. The board
of directors shall cause an annual report to be sent to the shareholders not
later than one hundred twenty (120) days after the close of the fiscal year
adopted by the corporation. This report shall be sent at least fifteen (15)
days before the annual meeting of shareholders to be held during the next
fiscal year and in the manner specified in Section 5 of Article II of these
Bylaws for giving notice to shareholders of the corporation. The annual report
shall contain a balance sheet as of the end of the fiscal year and an income
statement and statement of changes in financial position for the fiscal year,
accompanied by any report of independent accountants or, if there is no such
report, the certificate of an authorized officer of the corporation that the
statements were prepared without audit from the books and records of the
corporation.
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<PAGE> 14
SECTION 6 FINANCIAL STATEMENTS. A copy of any
annual financial statement and any income statement of the corporation for each
quarterly period of each fiscal year, and any accompanying balance sheet of the
corporation as of the end of each such period, that has been prepared by the
corporation shall be kept on file in the principal executive office of the
corporation for twelve (12) months and each such statement shall be exhibited
at all reasonable times to any shareholder demanding an examination of any such
statement or a copy shall be mailed to any such shareholder.
If a shareholder or shareholders holding at least five percent (5%) of the
outstanding shares of any class of stock of the corporation makes a written
request to the corporation for an income statement of the corporation for the
three-month, six-month or nine-month period of the then current fiscal year
ended more than thirty (30) days before the date of the request, and a balance
sheet of the corporation as of the end of that period, the chief financial
officer shall cause that statement to be prepared, if not already prepared, and
shall deliver personally or mail that statement or statements to the person
making the request within thirty (30) days after the receipt of the request.
If the corporation has not sent to the shareholders its annual report for the
last fiscal year, this report shall likewise be delivered or mailed to the
shareholder or shareholders within thirty (30) days after the request.
The corporation shall also, on the written request of any shareholder, mail to
the shareholder a copy of the last annual, semi-annual, or quarterly income
statement which it has prepared, and a balance sheet as of the end of that
period.
The quarterly income statement and balance sheets referred to in this section
shall be accompanied by the report, if any, of any independent accountants
engaged by the corporation or the certificate of an authorized officer of the
corporation that the financial statements were prepared without audit from the
books and records of the corporation.
SECTION 7 ANNUAL STATEMENT OF GENERAL INFORMATION.
The corporation shall, during the period commencing on January 1 and ending on
June 30 of each year, file with the Secretary of State of the State of
California, on the prescribed form, a statement setting forth the authorized
number of directors, the names and complete business or residence addresses of
all incumbent directors, the names and complete business or residence addresses
of the chief executive officer, secretary, and chief financial officer, the
street address of its principal executive office or principal business office
in this state, and the general type of business constituting the principal
business activity of the corporation, together with a designation of the agent
of the corporation for the purpose of service of process, all in compliance
with Section 1502 of the Corporations Code of California.
ARTICLE VIII
GENERAL CORPORATE MATTERS
SECTION 1 RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND
VOTING. For purposes of determining the shareholders 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 other lawful action (other
than action by shareholders by written consent without a meeting), the board of
directors may fix, in advance, a record date, which shall not be more than
sixty (60) days before any such action, and in that case only shareholders of
record on the date so fixed are entitled to receive the dividend, distribution
or allotment of rights or to exercise the rights, as the case may be,
notwithstanding any transfer of any shares on the books of the corporation
after the record date so fixed, except as otherwise provided in the California
General Corporation Law.
If the board of directors does not so fix a record date, the record date for
determining shareholders for any such purpose shall be at the close of business
on the day on which the board adopts the applicable resolution or the sixtieth
(60th) day before the date of that action, whichever is later.
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<PAGE> 15
SECTION 2 CHECKS, DRAFTS, EVIDENCES OF INDEBTEDNESS.
All checks, drafts, or other orders for payment of money, notes, or other
evidences of indebtedness, issued in the name of or payable to the corporation,
shall be signed or endorsed by such person or persons and in such manner as,
from time to time, shall be determined by resolution of the board of directors.
SECTION 3 CORPORATE CONTRACTS AND INSTRUMENTS: HOW EXECUTED.
The board of directors, except as otherwise provided in these Bylaws, may
authorize an officer or officers, agent or agents, to enter into any contract
or execute any instrument in the name of and on behalf of the corporation, and
this authority may be general or confined to specific instances; and, 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.
SECTION 4 CERTIFICATES FOR SHARES. A certificate or
certificates for shares of the capital stock of the corporation shall be issued
to each shareholder when any of these shares are fully paid, and the board of
directors may authorize the issuance of certificates or shares as partly paid
provided that these certificates shall state the amount of the consideration to
be paid for them and the amount paid. All certificates shall be signed in the
name of the corporation by the chairman of the board or vice chairman of the
board or the president or vice president and by the chief financial officer or
the treasurer or any assistant treasurer or the secretary or any assistant
secretary, certifying the number of shares and the class or series of shares
owned by the shareholder. Any or all of the signatures on the certificate may
be facsimile. In case any officer, transfer agent, or registrar who has signed
or whose facsimile signature has been placed on a certificate shall have ceased
to be that officer, transfer agent, or registrar before that certificate is
issued, it may be issued by the corporation with the same effect as if that
person were an officer, transfer agent, or registrar at the date of issue.
SECTION 5 LOST CERTIFICATES. Except as provided
in this Section 5, no new certificates for shares shall be issued to replace an
old certificate unless the latter is surrendered to the corporation and
canceled at the same time. The board of directors may, in case any share
certificate or certificate for any other security is lost, stolen, or
destroyed, authorize the issuance of a replacement certificate on such terms
and conditions as the board may require, including provision for
indemnification of the corporation secured by a bond or other adequate security
sufficient to protect the corporation against any claim that may be made
against it, including any expense or liability, on account of the alleged loss,
theft, or destruction of the certificate or the issuance of the replacement
certificate.
SECTION 6 REPRESENTATION OF SHARES OF OTHER CORPORATIONS.
The chairman of the board, the president, or any vice president, or any other
person authorized by resolution of the board of directors or by any of the
foregoing designated officers, is authorized to vote on behalf of the
corporation any and all shares of any other corporation or corporations,
foreign or domestic, standing in the name of the corporation. The authority
granted to these officers to vote or represent on behalf of the corporation any
and all shares held by the corporation in any other corporation or corporations
may be exercised by any of these officers in person or by any person authorized
to do so by a proxy duly executed by these officers.
SECTION 7 CONSTRUCTION AND DEFINITIONS.
Unless the context requires otherwise, the general provisions,
rules of construction, and definitions in the California General Corporation
Law 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.
-15-
<PAGE> 16
ARTICLE IX
AMENDMENTS
SECTION 1 AMENDMENT BY SHAREHOLDERS. New bylaws
may be adopted or these Bylaws may be amended or repealed by the vote or
written consent of holders of a majority of the outstanding shares entitled to
vote; provided, however, that if the Articles of Incorporation of the
corporation set forth the number of authorized directors of the corporation,
the authorized number of directors may be changed only by an amendment of the
Articles of Incorporation.
SECTION 2 AMENDMENT BY DIRECTORS. Subject to the
rights of the shareholders as provided in Section 1 of this Article IX, to
adopt, amend, or repeal bylaws, bylaws may be adopted, amended or repealed by
the board of directors provided, however, that the board of directors may adopt
a bylaw or amendment of a bylaw changing the authorized number of directors
only for the purpose of fixing the exact number of directors within the limits
specified in the Articles of Incorporation or in Section 2 of Article III of
these Bylaws.
-16-
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TO SUCH (B) FORM 10-Q FOR SIX MONTHS ENDED JUNE 30, 1995
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<PP&E> 91,652,000
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